- Equities: Nikkei (+0.10 %), Hang Seng (-0.22 %), CSI 300 (-0.96 %), KOSPI (-0.19 %), S&P/ASX 200 (+1.10 %)
- Commodities: WTI Crude $46.05 (-0.88 %), Brent Crude $48.36 (-0.74 %), Natural Gas $2.97 (+0.27 %), Gold $1269.64 (+0.24 %), Copper $259.85 (+0.08 %)
What traders are talking about:
APAC equity markets had a mixed performance overnight. While sentiment in global stock markets improved somewhat yesterday, some of the major indices came under pressure today. China’s CSI 300 is down almost one percent on the day, despite better than expected Chinese retail sales data. Japan’s Nikkei 225 and Australia’s ASX 225 are up on the day, though.
Precious metals recovered slightly. Gold bounced off $1260 support and rallied to $1270. Immediate resistance is noted at $1275/76, followed by stronger resistance around $1282. Silver failed to rally significantly, and the outlook still looks weak. Expect decent resistance ahead of the $17.00 level and again at $17.20.
WTI is again under pressure. Price fell back below $46 overnight, and the outlook is negative. A break below $45.15 support would signal that another test of $44 support is likely.
In FX, it remains quiet as traders are waiting for the Fed’s rate decision tonight. The market is clearly expecting a 25bps rate hike, and there is little doubt that the Fed will deliver. However, traders seem to be expecting a rather “dovish hike”.
While the US economy is still running strong, recent economic data has not been stellar. Wage growth remains relatively low, and inflation has eased slightly. Further, expectations for Donald Trump’s economic plan – which could have boosted inflation quite a lot – have fallen significantly. Therefore, forecasts that the Fed will deliver two more rate hikes following the one today seem a bit too optimistic.
A dovish hike is what the market is expecting, and would be a neutral to USD-negative scenario. Should the Fed surprise the market with a hawkish dot plot or comments, the US dollar will rally, while US stock markets could come under slight pressure.
Meanwhile, the British pound has recovered after higher than anticipated inflation data yesterday. This increases the pressure on the BoE, which will decide on rates this Thursday. While a change in rates this week is highly unlikely, it could push more MPC members into the hawkish camp.
Today, we will also get the latest UK employment figures. The market is expecting the unemployment rate to remain steady at 4.6 %, while the Claimant Count Change is expected to arrive at 20.3k. Average earnings should increase 2.4 %.
UK employment data
US CPI & Retail Sales
Fed Rate Decision
By Milan Cutkovic – Jun 14, 2017
Source: Originally published by AxiTrader