Search

Client support: Phone: +357 (22) 008796

Market panorama. 11 April 2018

ATTENTION: Free access to the material presented in the Market Panorama is granted six hours after its publication. To get this material immediately, you are recommended to subscribe.

I. Market focus:

11/04/2018

Market participants are awaiting the U.S. decision on the situation in Syria. On Monday, the U.S. president announced that he would decide on the U.S. response to Syria gas attack “in the next 24 to 48 hours.” Yesterday, the media reported that the U.S. aircraft carrier strike group, led by the aircraft carrier USS Harry S. Truman, will depart the Norfolk base in Virginia today for deployment to Europe and the Middle East. There was also information that the Pentagon had already prepared military options for the U.S. president to respond to the Assad regime's latest use of chemical weapons on Syrian civilians. On the weekend, the Syrian regime carried out a chemical attack on a rebel-held town of Douma, which is believed to have killed at least 70 people. Given the information available, a military strike against Syria is now extremely likely. It is expected that this strike will have a negative impact on market sentiment, undermining investor risk appetite and increasing the demand for relatively safe assets.

In the light of the expectations of the decision on the Syrian issue, the trade tensions have receded into the background. Against this backdrop, the bunch of macroeconomic data, released by the beginning of the European session, did not have a significant influence on the dynamics of the markets. In particular, investors received Japanese data on the producer price index and core machinery orders, the Chinese inflation statistics and report on consumer confidence in Australia.

Although today’s session will be busy with the releases of important macroeconomic data, the main topic in the markets will remain the escalating situation in the Middle East. Among the scheduled reports, attention should be paid to the British data on industrial production (08:30 GMT), the U.S. data on the consumer price index (12:30 GMT) and crude oil inventories (14:30 GMT), as well as the minutes of the Fed’s March policy meeting (18:00 GMT).


II. The market highlights are:

  • The Canada Mortgage And Housing Corp. (CMHC) reported on Tuesday the Canadian housing starts rose at a seasonally adjusted rate of 225,213 units in March, down from an upwardly revised 231,026 units in February (originally 229,737). Economists had forecast housing starts increasing by 218,000. According to the report, urban starts fell 2.8 percent m-o-m last month to 208,237, as multiple urban starts dropped by 7.3 percent m-o-m to 144,578 units, while single-detached urban starts surged by 9.5 percent m-o-m to 63,659 units. At the same time, rural starts were estimated at a seasonally adjusted annual rate of 16,976 units (+0.6 percent m-o-m).

  • Statistics Canada announced on Tuesday that the value of building permits issued by the Canadian municipalities fell 2.6 percent m-o-m in February, following a 5.2 percent m-o-m gain in January (revised from an originally reported a 5.6 percent m-o-m increase). Economists had forecast a 1.3 percent advance in February from the previous month. According to the report, non-residential building permits tumbled 6.6 percent m-o-m due to sharp declines in commercial (-8.7 percent m-o-m) and institutional (-9.7 percent m-o-m) components, which more than offset the increase in the industrial component (+4.8 percent m-o-m). Meanwhile, residential permits (-0.3 percent m-o-m) edged down, as a gain in permits for multi-family buildings (+1.0 percent m-o-m) was offset by a drop in permits for single-family dwellings (-1.6 percent m-o-m). In y-o-y terms, building permits rose 6.5 percent in February.

  • The Labor Department announced on Tuesday the U.S. producer-price index (PPI) rose 0.3 percent m-o-m in March, following an unrevised 0.2 percent m-o-m increase in February. For the 12 months through February, the PPI surged 3.0 percent compared to a 2.8 percent gain recorded in the prior month. Economists had forecast the headline PPI would rise 0.1 m-o-m last month and 2.9 percent over the past 12 months. According to the report, a 70 percent of the March rise in the PPI was attributable to a 0.3-percent advance in prices for final demand services. The index for final demand goods also increased 0.3 percent. Excluding volatile prices for food and energy, the PPI rose 0.3 percent m-o-m and 2.7 percent over 12 months, while economists forecast advances of 0.2 percent and 2.6 percent, respectively.

  • The report released by the Cabinet Office on Tuesday showed Japan's core machinery orders unexpectedly rose in February. According to the report, core machinery orders, an indicator of capital expenditures in the coming six to nine months, increased 2.5 percent m-o-m in February, following a revised 8.2 percent m-o-m surge in January (originally a 4.5 percent m-o-m gain), while economists expected a 2.5 percent m-o-m decrease. According to the report, manufacturing orders climbed 8.0 percent m-o-m in February, while non-manufacturing orders were flat m-o-m. Government orders surged 23.6 percent m-o-m and orders from agencies rose 3.3 percent m-o-m, while orders from overseas plunged 7.8 percent m-o-m. In y-o-y terms, core orders, which excludes those of ships and electricity, rose 2.4 percent in February, compared to a 2.9 percent y-o-y advance recorded in January and a 0.6 percent y-o-y increase projected by the economists.

  • The National Bureau of Statistics (NBS) revealed on Wednesday that China’s producer price index (PPI) rose 3.1 percent y-o-y in March, after gaining 3.7 percent y-o-y in the prior month. That was the lowest increase since October 2016. Economists had expected producer inflation would increase by 3.2 percent y-o-y in March. Compared with a month ago, costs increased at a slower pace for both production materials (+4.1 percent y-o-y in March versus +4.8 percent y-o-y in February) and consumer goods (+0.2 percent y-o-y in March versus +0.3 percent y-o-y in February). The PPI fell 0.2 percent m-o-m in March, following a 0.3 percent drop in February. At the same time, the consumer price index (CPI) increased 2.1 percent y-o-y in March, decelerating from the prior month’s 2.9 percent y-o-y rise, due to holiday factors. That was below economists‘ forecast for a 2.6 percent y-o-y gain. The deceleration was attributable to a softer growth in food prices (+2.1 percent y-o-y compared in March versus +4.4 percent y-o-y in the prior month) and non-food costs (+2.1 percent y-o-y last month compared to +2.5 percent y-o-y in February). On a monthly basis, consumer prices declined 1.1 percent in March, following a 1.2 percent gain in February. That was the first monthly fall since June 2017.


III. Market Situation
Currency Market
The currency pair EUR/USD traded slightly higher, near yesterday's peak, which was achieved in response to the statements of the European Central Bank (ECB) Governing Council member Ewald Nowotny, who said that the Bank’s bond-buying program would be wound down by the end of this year. At the same time, he noted that it was “too early to say” when the ECB’s interest rates would start to rise. Today, investors will pay particular attention to the speech of the ECB President Mario Draghi. In addition, they will adjust their positions ahead of the release of the inflation data in the U.S. (due later today). Economists forecast the consumer price index (CPI) was flat m-o-m and rose 2.4 percent y-o-y in March after gaining 0.2 percent m-o-m and 1.8 percent y-o-y in February. Meanwhile, the core CPI, which excludes food and energy prices, is expected to post increases of 0.2 percent m-o-m (the same as in February) and 2.1 percent y-o-y (versus 1.8 percent in February). Resistance level - $1.2421 (low of March 28). Support level - $1.2214 (low of April 6).

The currency pair GBP/USD rose slightly, approaching its two-week high, helped by the weakening of the U.S. dollar. Market participants are awaiting the UK’s data on industrial production for February, which will provide analysts more information about the state of the British economy in the first quarter. The UK’s industrial production was little changed in the summer of 2016, in part due to uncertainty about the economic prospects, triggered by the Brexit referendum. Later, however, uncertainty vanished, and industrial production demonstrated an increase. According to the forecast, industrial output in February rose by 0.3 percent m-o-m and by 2.9 percent y-o-y. In addition, investors will pay attention to the UK’s data on construction for February. Real construction output in January decreased by 3.9 percent y-o-y, partially due to a decline in government spending on construction. Resistance level - $1.4243 (high of March 27). Support level - $1.3964 (low of April 5).

The currency pair AUD/USD declined moderately from almost three-week high due to partial profit-taking after the recent rally, as well as the release of weaker-than-expected data on China (Australia's main trading partner) and consumer confidence statistics in Australia. The National Bureau of Statistics (NBS) revealed that China’s producer price index (PPI) rose 3.1 percent y-o-y in March, after gaining 3.7 percent y-o-y in the prior month. That was the lowest increase since October 2016. Economists had expected producer inflation would increase by 3.2 percent y-o-y in March. At the same time, the consumer price index (CPI) increased 2.1 percent y-o-y in March, decelerating from the prior month’s 2.9 percent y-o-y rise, due to holiday factors. That was below economists‘ forecast for a 2.6 percent y-o-y gain. Westpac Bank reported its gauge for consumer sentiment in Australia fell 0.6 percent to 102.4 in April following a 0.2 percent gain in March. That was the lowest score since November 2017. A reading above 100 indicates more optimists than pessimists. Resistance level - AUD0.7784 (high of March 22). Support level - AUD0.7643 (low of March 29).

The currency pair USD/JPY traded slightly lower. Some support was provided by the Japanese data. The report released by the Cabinet Office showed Japan's core machinery orders unexpectedly rose in February. According to the report, core machinery orders, an indicator of capital expenditures in the coming six to nine months, increased 2.5 percent m-o-m in February, following a revised 8.2 percent m-o-m surge in January (originally a 4.5 percent m-o-m gain), while economists expected a 2.5 percent m-o-m decrease. According to the report, manufacturing orders climbed 8.0 percent m-o-m in February, while non-manufacturing orders were flat m-o-m. Government orders surged 23.6 percent m-o-m and orders from agencies rose 3.3 percent m-o-m, while orders from overseas plunged 7.8 percent m-o-m. In y-o-y terms, core orders, which excludes those of ships and electricity, rose 2.4 percent in February, compared to a 2.9 percent y-o-y advance recorded in January and a 0.6 percent y-o-y increase projected by the economists. Resistance level - Y107.67 (high of February 27). Support level - Y105.98 (low of April 4).


Stock Market

Index

Value

Change

S&P

2,656.87

+1.67%

Dow

24,408.00

+1.79%

NASDAQ

7,094.30

+2.07%

Nikkei

21,687.10

-0.49%

Hang Seng

30,908.19

+0.58%

Shanghai

3,208.32

+0.56%

S&P/ASX

5,828.70

-0.48%


U.S. stock indexes closed solidly higher on Tuesday, as a statement of China's President Xi Jinping at the Boao Forum for Asia helped soothe investor worries about escalating U.S.-China trade tensions. In his speech, the PRC's leader announced plans to further open up the Chinese economy, including lowering import tariffs for automobiles and other products, enforcing the legal intellectual property of foreign companies and improving the investment environment for international companies. Focus also was on the U.S. producer prices for February. The Labor Department announced the U.S. producer-price index (PPI) rose 0.3 percent m-o-m in March, following an unrevised 0.2 percent m-o-m increase in February. For the 12 months through February, the PPI surged 3.0 percent compared to a 2.8 percent gain recorded in the prior month. Economists had forecast the headline PPI would rise 0.1 m-o-m last month and 2.9 percent over the past 12 months. The index for final demand goods also increased 0.3 percent. Excluding volatile prices for food and energy, the PPI rose 0.3 percent m-o-m and 2.7 percent over 12 months, while economists forecast advances of 0.2 percent and 2.6 percent, respectively.

Asian stock indexes closed mixed on Wednesday, despite Wall Street’s rally, as investors remained cautious due to uncertainties over the U.S-China trade relations and escalating tensions in Syria. The Japanese equity benchmark, the Nikkei, fell, as the yen’s growth against the U.S. dollar put pressure on the Japanese large export-oriented companies.

European stock indexes are expected to trade higher in the morning trading session.


Bond Market
Yields of US 10-year notes hold at 2.80% (-1 basis points)
Yields of German 10-year bonds hold at 0.52% (0 basis points)
Yields of UK 10-year gilts hold at 1.41% (0 basis points)

Commodity Markets
Light Sweet Crude Oil (WTI) futures traded lower. Crude oil for delivery in May settled at $65.33 (-0.24%). The crude oil prices fell, correcting after yesterday's rally. The latest data from the American Petroleum Institute (API) also weighed on oil quotations. According to the API, the U.S. crude supplies rose by roughly 1.8 million barrels for the week ended April 6. Economists had forecast a decline of 189,000 barrels. Meanwhile, gasoline stockpiles increased by 2 million barrels, while inventories of distillates fell by 3.8 million barrels. Market participants are now awaiting weekly data on U.S. crude inventories from the U.S. Energy Information Administration (EIA).

Gold traded at $1,343.70 (+0.33%). Gold prices rose moderately, helped by the negative dynamics of the U.S. currency, and the continuing political tensions connected with the trade disputes between the U.S. and China. The index, measuring the value of the U.S. dollar relative to a basket of six major currencies, fell 0.05 percent to 89.55. Since gold prices are tied to the dollar, a weaker dollar makes the precious metal cheaper for holders of foreign currencies.

IV. The most important scheduled events (time GMT 0)


08:30

United Kingdom

Industrial Production

08:30

United Kingdom

Manufacturing Production

08:30

United Kingdom

Total Trade Balance

11:00

Eurozone

ECB President Mario Draghi Speaks

12:00

United Kingdom

NIESR GDP Estimate

12:30

U.S.

CPI

12:30

U.S.

CPI excluding food and energy

14:30

U.S.

Crude Oil Inventories

18:00

U.S.

Federal budget

18:00

U.S.

FOMC meeting minutes


Market Focus

  • UK gross domestic product (GDP) grew by 0.4% in the three months to October
  • In December, the sentix overall index for the economy in Euro Area falls for the 4th time in a row to -0.3
  • St. Louis Fed Chief James Bullard Suggests Fed Hold Rates Steady
  • Fed's Brainard: Gradual Rate Increases Still Appropriate 'In the Near Term'
April 2018
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
  • 2010
  • 2009
  • 2008
  • 2007
  • 2006
  • 2005
  • 2004
  • 2003
  • 2002

Quotes

All posted material is a marketing communication solely for informational purposes and reliance on this may lead to loss. Past performance is not a reliable indicator of future results. Please read our full disclaimer.

Subscribe

Privacy Policy

To maximize our visitors browsing experience TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies. If you disagree, you may change your browser settings at any time. Read more

  • To maximize our visitors browsing experience TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies. If you disagree, you may change your browser settings at any time. Read more

    © 2011-2018 TeleTrade DJ Limited

  • Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work both to your advantage and disadvantage. There is a possibility that you may lose all of your initial investments, so you should not risk more than you are prepared to lose.

  • Prior to trading you should make sure you fully understand all the risks involved and take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but if the risks seem still unclear to you, please seek independent advice.

  • The information presented on this website should not be perceived as a basis for investment decision making and is intended solely for informational purposes.

Connect with Us
Share on
social networks
Online
consultant
Request a callback
Top Page