Persistent oversupply troubles in the crude oil market forced Loonie bulls to pause while the pound continued to bleed due to Brexit jitters.
- Canadian wholesale sales jumped 1.0% vs. projected 0.5% uptick
- U.S. current account deficit widened from $114B to $117B vs. $124B forecast
- Chinese CB leading index improved from 1.0% to 1.3%
- New Zealand GDT auction yielded 0.8% drop in dairy prices
- API inventory report reveals 2.72M reduction in oil stockpiles
U.S. fiscal reform back in focus?
With the Russian intelligence leak probe still ongoing, the White House seemed eager to cast the spotlight back on its fiscal reform plans.
House Speaker Paul Ryan reiterated the GOP’s plan to push through with the tax code overhaul before the end of the year, on top of their repeal of Obamacare and Dodd-Frank.
“We are going to get this done in 2017. We need to get this done in 2017,” Ryan said in his speech. “Transformational tax reform can be done, and we are moving forward. Full speed ahead.”
Treasury Secretary Mnuchin echoed these remarks in saying that the focus is on lower rates and on broadening the base, as well as simplifying the tax code. U.S. equity indices, however, seemed unimpressed:
- S&P 500 index closed 11.25 points down to 2,436.25 (-0.46%)
- Nasdaq is down 35.88 points to 5,730.12 (-0.62%)
- Dow 30 index is lower by 61.85 points to 21,467.14 (-0.29%)
Crude oil keeps sliding
Black Crack is trading at its nine-month low as reports indicating that Libya is shoring up production after its Wintershall deal kept oversupply concerns in play.Keep in mind that Libya is exempted from the OPEC output deal, which means that it can ramp up production as it pleases. According to an official from the state National Oil Corp, the country has pumped out 902,000 barrels per day. This is their highest output in four years and it keeps them on track towards hitting 1 million barrels per day in production by next month.
In Nigeria, another OPEC member exempted from the output deal, exports are projected to reach 226,000 barrels per day in August, significantly higher than the estimated 164,000 barrels per day in July.
The API report revealed that stockpiles are down 2.720 million barrels versus the projected drop of 2.106 million barrels, but the commodity barely recovered upon hearing the news.
- WTI crude oil is down to $43.99 per barrel (-2.23%)
- Brent crude oil is down to $45.88 per barrel (-2.20%)
Major Market Mover(s):
Sterling barely pulled up from its dive as Brexit uncertainties continued to weigh on the U.K. economic outlook.
GBP/NZD is down from 1.7615 to 1.7429 (-1.04%), GBP/JPY is down 133 pips to 140.71 (-0.93%), GBP/CHF tumbled from 1.2429 to 1.2315 (-0.92%), and GBP/USD is down to 1.2629 (-0.85%).
The oil-related Loonie was also generally weaker as the grim outlook for the commodity kept post-BOC gains in check.
USD/CAD is up from 1.3219 to 1.3261 (+0.32%), CAD/JPY is down from 84.37 to 84.01 (-0.40%), CAD/CHF is lower by 25 pips to .7354 (-0.34%), and NZD/CAD is testing the .9600 handle (+0.50%)
Watch Out For:
- 12:50 am GMT: BOJ monetary policy meeting minutes
- 1:30 am GMT: Australia MI leading index (-0.1% previous)
- 5:30 am GMT: Japanese all industries activity index (+1.7% expected, -0.6% previous)