Wall Street was off to a bit of a slow start as there were no major headlines or economic catalysts. Higher-yielders slowly crawled their way back up from last week’s sharp falls while the safe-haven dollar gave up some ground.
- BOE official McCafferty: Need to hike due to strong growth and above-target inflation
- McCafferty: Rates need to be up to a level where they can cut if needed
- U.S. federal budget surplus at $49.2B vs. projected $50.2B
- U.S. government unveiled infrastructure spending plan
- White House upgraded GDP forecasts from 2.4% to 3.0% for 2018
- Equity indices all closed in the green
- OPEC cut compliance hit record in January, forecasts higher demand
Trump’s infrastructure spending plan
U.S. investors were in an upbeat mode as the White House geared up to release the deets of the Trump administration’s budget and infrastructure spending plan.
The Department of Treasury announced that the federal budget balance swung from a deficit of $23.2 billion to a surplus of $49.2 billion, slightly lower than the estimated $50.2 billion surplus. The Donald is proposing $1.7 trillion in cuts to mandatory spending, which would include a nearly $300 billion reduction to Medicare.
Furthermore, the new budget sets aside $80 billion in IT and cyberfunding, $716 billion for military programs, and $18 billion for building the infamous border wall. It also adds $576 million in funding to hire 2,000 more Immigration and Customs Enforcement officers and agents to handle illegal migrants.
With these plans, the White House predicts that it could shore up economic growth from their initial 2.4% estimate to an upgraded 3.0% expansion for 2018. According to their estimates, this should make up for the $1.5 trillion in tax cuts approved last year.
Stock markets were already off to a good start this week, and the slow but positive streak continued throughout the U.S. session.
- Dow 30 index is up 417.37 points to 24,601.27 (+1.70%)
- S&P 500 index is up 36.45 points to 2,656.00 (+1.39%)
- Nasdaq is up 107.47 points to 6,981.96 (+1.56%)
Gold gave up some of its safe-haven winnings from earlier on while WTI crude oil drew support from the OPEC update. As it turned out, member nations hit a compliance record for January, easing oversupply concerns.
- Gold is down to $1,325.20 per troy ounce (-0.09%)
- Silver is down to $15.920 per troy ounce (-0.33%)
- WTI crude oil is up to $59.42 per barrel (+0.22%)
Major Market Mover(s):
The Aussie continued its ascent from the earlier trading session, with some analysts pointing to the positive sentiment ahead of the Chinese New Year festivities later this week as a likely bullish factor.
AUD/USD advanced from .7830 to a high of .7864, AUD/JPY is up to 85.36, EUR/AUD tumbled to a low of 1.5628, and AUD/CAD rallied up to a high of .9890.
Interestingly enough, the Loonie lagged behind its comdoll buddies and some of its major currency rivals, despite slightly stronger crude oil prices.
USD/CAD climbed from a low of 1.2557 to a high of 1.2623, CAD/JPY is treading sideways at 83.40, EUR/CAD bounced to a high of 1.5494, and NZD/CAD is up to a high of .9147.
USD & JPY
The lower-yielding tandem retreated to the European currencies and the comdolls as traders were in the mood to take on more risk.
EUR/USD is up to the 1.2300 area, GBP/USD rebounded to a high of 1.3854, NZD/USD is up to a high of .7260, USD/JPY is flat at 108.70, EUR/JPY edged to a high of 133.79, and NZD/JPY is testing the resistance at 79.00.
Watch Out For:
- 12:30 am GMT: Australian NAB business confidence index (previous reading of 11)
- 6:00 am GMT: Japanese preliminary machine tool orders (previous reading of 48.3%)