Risk appetite continues with DJIA and S&P closed at 2016 high overnight. DJIA rose 49.44 pts or 0.27% to 18053.6. S&P 500 rose 6.46 pts, or 0.31% to 2100.8. Nikkei follows and is trading up 0.38% at the time of writing but other Asian markets are mixed. WTI continues to find follow through buying above 40 handle as it struggles in tight range. Gold strengthened but is staying in familiar range. Dollar index dived sharply yesterday and is back pressing 94 handle and the development suggests that recent down trend from 100.51 is going to dip extend lower through 93.62 support. Release in Asia, Japan trade surplus widened to JPY 0.28T in March but missed expectation of 0.45T. Australia Westpac leading index dropped -0.1% mom in March.
Testifying to the House of Lords yesterday, BoE governor Mark Carney warned that Brexit could lead to "an extended period of uncertainty about the economic outlook, including about the prospects for export growth." And, "this uncertainty would be likely to push down on demand in the short run." He said that "there are financial stability risks that are raised by this vote. There is the possibility that this will reinforce existing vulnerabilities in the economy." Also, "these are balances of probability, but the likelihood is that it will become more expensive to fund that deficit [if the UK leaves the EU] and, with a shift in the structure of it, it may mean that for a period the UK economy cannot run as large a current account deficit – it means that there would be less activity in the economy, less growth."
BoC governor Stephen Poloz warned in a parliamentary hearing yesterday that "the global economy retains the capacity to disappoint further." And, Canada's growth could slow for years by the "difficult adjustment" to lower oil and metal prices. He added that the three factors of slower global growth, falling investment in energy sectors and rise in Canada's exchange rate "would have meant a lower projected growth profile for the Canadian economy than we had in January." Meanwhile, recent strength in the economy could be "temporary factors that will unwind in the second quarter." Meanwhile, he also noted that "Monetary policy is clearly very stimulative globally, and is close to its maximum ability. Fiscal policy is less widely engaged." And, "the third and probably the most important at this stage is structural changes to the economy, the barriers to growth."
Looking ahead, UK job data will be the main focus in European session today while Germany will release PPI. Swiss will release ZEW expectations. US will release existing home sales.