Market View – September 13, 2018

Europe

Interest rate decisions will be coming from Brussels and London today within an hour of each other. The ECB’s decision will probably be marked by US tariff concerns and Italy’s weakness. While the British bankers will also keep a hold on rates as inter-party squabbles continue to foment against PM Terry May. Bank head mark carney, however has had HIS tenure extended till January 2020, according to chancellor of the exchequer Phillip Hammond. Besides the Bank of England and the European Central Bank, Turkey will also be announcing interest rates. After yesterday’s 1/10% decrease in industrial production, we’re seeing consumer inflation figures disappointingly flat in Germany and France and housing prices up by 2% – half the July figure.

Asia

Japanese data was relatively stable, except machine orders, which climbed for the first time in 3 months. 11% month on month, 13% on the yearly scale. Employment was nicely up in Australia overnight – the data sufficiently positive to push the dollar up about 15 pips.

Yesterday, meanwhile, China and Russia launched joint military manoeuvres while the national leaders agreed they were against unilateralism and protectionism. Putin and Xi also discussed cooperation in science and counterterrorism – most of this seen as a signal to the trump administration as the Donald offers to restart talks with China.

US

As public support for Trump plummets and the democrats seen as capturing congress, Goldman Sachs yesterday published a report putting the projected price tag of a trade war at about $6 tn. The company’s head analyst, David Costin estimates that the 25% tariff on Chinese goods would basically wipe out next year’s expected growth figures for most companies quoted on the S&P 500. An American chamber of commerce survey has 30% of US companies operating in China cancelling investments and 50% expecting a loss of profits. Meanwhile, yesterday’s producer inflation figures were all red, down half a percent in August compared to last year’s figure. The fed’s beige book reports a weak to moderate August and a slowdown in business thanks to Trump’s tariff policies.

Commodities

Gold jumped by $15 overnight, placing it at a 2-week high and pulling it out of its 5-month bear channel. We’re seeing support quite clearly above the 12-00 mark at this point, with a new level perhaps developing at 12-10. Oil ALSO added a dollar a barrel after the EIA yesterday confirmed the API’s drawdown with a 5.3 mn barrel withdrawal. Supply concerns due to hurricane Florence are providing some backwind; and, once again – action just below the 70 line will be deciding the next trend.

Events

00:50 JPY PPI y/y
02:30 AUD Employment Change
02:30 AUD Unemployment Rate
All Day EUR ECOFIN Meetings
12:00 GBP MPC Official Bank Rate Votes
12:00 GBP Monetary Policy Summary
12:00 GBP Official Bank Rate
12:45 EUR Main Refinancing Rate
13:30 CAD NHPI m/m
13:30 EUR ECB Press Conference
13:30 USD CPI m/m
13:30 USD Core CPI m/m
13:30 USD Unemployment Claims
19:00 USD Federal Budget Balance

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