Markets have mostly spent the day consolidating the previous session’s gains following the Fed’s dovish stance at the FOMC meeting although the Euro has lost a bit of ground after some soft EU data. Elsewhere the Jpy saw a bit of safe haven demand taking the dollar a bit lower but the dollar then recovered and spent the US session pretty much tracking the US stock markets. At the end of the session, stocks finished mixed, with the DJI ending -0.25%, the S+P +0.7% and the Nasdaq +1.2%, helped along by Facebook, +12%. The metals have been steady while WTI was 0.7% lower.
In terms of the data, the German retail sales dropped the most in 11 years, down 4.3% mm in December, well below the expectation of -0.5% mm. EU GDP growth was stuck at a 4 year low in Q4, at 0.2% qq, matching expectations and unchanged from Q3, but at the lowest rate in four years since Q2 of 2014. Italy was in technical recession in H2 2018, contracting by -0.2% qq in Q4, worse than expectation of -0.1% qq. The US also had some soft data, with the weekly initial jobless claims jumped 53k to 253k in the week ending January 26, well above expectation of 210k.
Friday will be another busy session, as traders wait for news of developments in trade talks between the US and China. Donald Trump will meet with Chinese Vice-Premier Liu He in the Oval office later in the day although no deal is expected before Trump meets with Chinese President Xi Jinping in the near future.
In terms of the economic calendar, Friday begins with the release of the Australian Performance of Mfg Index and Q4 PPI (exp 0.6%qq), the Japan Nikkei Mfg PMI and Unemployment figures, and the Caixin China Flash Manufacturing PMI. The EU will also focus on the PMIs but the main event of the day will be on the USA Jobs data (exp 3.9%, +166K, AHE 0.3%m/3.2%yy, AWH 34.5) and the ISM Mfg PMI/Prices Paid. Also due from the US will be the Total Vehicle Sales, Wholesale Inventories and the Michigan Consumer Sentiment Index. Have a good weekend.
Economic data highlights will include:
Fri: AIG Performance of Mfg Index, Nikkei Mfg PMI, Caixin China Flash Manufacturing PMI, RBA Commodity Index, EU Manufacturing PMI, UK Manufacturing PMI, US ISM Mfg PMI/Prices Paid, Jobs/NFP/Average Hourly Earnings data
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