Macro Events & News

FX News

European Outlook: Asian stock markets are mostly down, with Japan outperforming and managing a marginal gain. Chinese shares traded in Hong Kong are heading for the biggest monthly advance since August, but after hopes of a “phenomenal” tax package from Trump helped to push markets higher earlier in the month, investors remain cautious ahead of Trump’s speech in Congress today. The Nikkei closed with marginal gains today, after moving down from earlier highs as the Yen strengthened. U.K. stock futures are rising, but U.S. futures are slightly in the red. Oil prices are up and the front-end Oil is trading at USD 54.16 per barrel. The European calendar today has French and Italian inflation data for February, French consumer spending and Q4 GDP, as well as the Swiss KOF.

Fedspeak:  Dallas Fed’s Kaplan is confident that U.S. economic growth will be higher than 2% in 2017, while monetary policy is currently “highly accommodative” and the Fed should start removing that accommodation slowly. He noted that even by raising rates a “few times” this year would leave that policy stance accommodative and the Fed should hike sooner than later. Kaplan also believes the U.S. can go “a little deeper” in reducing the jobless rate before creating price pressures. This is about par for the course from moderate voter and won’t really move the needle on the policy outlook, though March remains a “live” meeting. Furthermore, he said there’s not a question that low rates are distorting. But, he still expects low rate to prevail for a long time and even cautioned that ramping up too quickly causes distortions too. And he reiterated that when the Fed normalizes rates, the surprise could be that it does so at a lower rate than has historically been the case. Indeed, he thinks the neutral rate might be in the 2.25% to 2.5% area.

US reports: U.S. durable goods orders rebounded 1.8% in January, stronger than expected. The firm 1.8% US durable orders rise reflected a 6.0% pop for transportation orders despite declines for Boeing orders and vehicle assemblies, as reversed the opposite divergence in December, alongside a 0.2% decline in orders ex-transportation that matched assumptions. We saw a firm round of equipment data but lean shipments and inventories, and the mix modestly lifted both Q4 and Q1 growth prospects. Pending home sales index drops 2.8% to 106.4 in January after rebounding 0.8% to 109.5 in December, which followed November’s 1.3% tumble to 108.6. It’s the lowest level in a year. But, contract signings are up 2.7% y/y versus December’s -2.0% rate. Declines in the West (-10.3%) and Midwest (-5.2%) paced the weakness and offset small gains in the Northeast (2.2%) and South (0.5%). The National Association of Realtors said insufficient supply are making for a lull in pending home sales, while worries over rising mortgage rates, as well as declining home affordability (particularly in the West) could be impacting too.

Main Macro Events Today

  • US President – US President Trump delivers his first State of the Union address to Congress.
  • US GDP – The second release on US Q4 GDP is out today and we expect to see the headline revised up to 2.2% from 1.9% in the first release and 3.5% in Q3 of last year. Upward revisions should be broad based but we expect the major drives to be an $11 bln upward revision to consumption and a $6 bln upward revision to inventories.
  • US Consumer Confidence – February consumer confidence will be out and should reveal a headline increase to 112.0 from 111.8 in January and 113.3 in December. Other measures of confidence have been mixed on the month with Michigan Sentiment dipping to 96.3 from 98.5 in January.
  • CAD IPPI – Industrial product price index (IPPI) expected to expand 0.5% m/m in January after the 0.4% gain in December. Gasoline prices were sharply higher in January, commodity prices were modestly firmer but the loonie was stronger against the U.S. dollar. The IPPI is expected to post a 2.4% y/y rate of increase in January after the 2.2% y/y gain in December.


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Andria Pichidi

Market Analyst


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