Currencies
EUR/USD – with very strong data out of the US, which saw the number of job openings at a record high, the USD strengthened a lot and broke below the upwards trendline. The steady and continuous improvement in the labor market should lead to an uptick in wages and as a result also of inflation levels, which in turn would pave the way for another rate hike by the FOMC. As such the next NFP will be interesting to watch with a special focus on the wages, although that is a month away. The inflation data out of the US tomorrow and Friday will be important, as strong data there could boost the USD further.
USD/JPY – after escalating rhetoric in in the past 24 hours, we see the JPY strengthen amid a flight to safe havens and reach the lowest level in nearly 2 months. The JPY was nearly the only currency able to strengthen against the USD as there was very strong data out of the US lifting the USD, but that was short-lived against the JPY. We also shortly dropped under the support just below the 110 level, but are currently trading slightly above the support level.
GBP/USD – dropped below the 1.30 level after the strong US data which lifted the USD but the GBP has currently nearly recovered those losses and it trading above the 1.30 level as the USD weakens amid a flight to sage havens which usually weakens the USD. Tomorrow will see an important day for the GBP as we get important data out of the UK and inflation data out of the US.
AUD/USD – moved further down after the AUD weakened after Chinese inflation data came in slightly below expectation. The weakening of the AUD is something the RBA is not sorry about as they have been warning that a too strong AUD would have a slowing effect on growth.
NZD/USD – dropped further as tonight the RBNZ will make its rate decision known alongside the statement and policy statement. RBNZ Governor Wheeler will also speak and could move the NZD further as it could be that the RBNZ will focus on the recent strength of the NZD and the effects on growth.
USD/ZAR – moved sharply up after President Zuma survived a no-confidence vote which saw an immediate weakening of the ZAR and is currently trading near the resistance.
Indices
AEX – last week I mentioned that the AEX continues to do well unlike other European indices. It is doing so well in fact, that the AEX is edging closer and closer to its record high reached 3 months ago, as Dutch data remains strong. There is still no new Dutch government after the March elections, but that apparently is not hindering the economy.
Dollar Index – moved up for another day after the strong US data which increased the possibility of a rate hike later this year, as we are slowly getting closer to upper band of the downwards trendline. However, the flight to safe havens weakened the USD so we are seeing the gains trimmed this morning.
S&P 500 – reached a new intraday day but moved sharply down yesterday with nearly all sectors in the red after the rhetoric between the US and North Korea escalated further. We didn’t see a panic in the market (yet) as, while the market is nervous about the comments by President Trump, there also is a belief that it will remain with a war of words and not action. Any indication that this could change would likely result in a much larger drop.
Commodities
Gold – saw quite a bit of volatility yesterday, as it moved up during the day, only to drop $10 after the very strong US data. However, a few hours later gold moved up again as a result of safe haven buying after the escalating rhetoric between the US and North Korea.
Oil – dropped as OPEC reported increased exports by as production from Nigeria and Libya kept on increasing, offsetting news that Saudi Arabia plans to lower exports by another 520,000 bpd next month. Out of the meeting in Abu Dhabi between OPEC and non-OPEC countries there was a reaffirmation to the production cut deal by countries which have been lagging in their compliance as Iraq reported a decline in production of 150K bpd in July.
The API data also showed a much larger drop in inventories than expected with a draw of 7.8 million barrels. That is a large number and if confirmed by the EIA we continue to see an inventory level much lower than this time last year. However, as mentioned we can see a large discrepancy between the API and EIA data, something we have seen in recent weeks with difference of over 6 and 3 million barrels.
Stocks
Disney – is down almost 4% in afterhours trading after its earnings report with revenue falling short of expectations. However, the biggest reason for the drop is that it plans to withdraw its movies from Netflix (NASDAQ:NFLX) and start a streaming service of its own, something which takes time to build up as it also plans to launch a separate streaming service for ESPN.
Snapchat – after 2 days of moving up from the lowest level ever, Snapchat has been trading down for 3 days in a row again, ahead of its possible make or break earnings report tomorrow.
Teva – traded up for part of the day for the first time since its major drop but nonetheless closed lower yet again. Even so, it does signal that there are more buyers around these levels which could indicate a bottom, although it could also just be a pause before the next leg down.
