Market participants were in the mood for more risk in the latest New York session as White House officials sounded open to the idea of trade talks with China.
Stocks and commodity currencies closed strongly in the green while the dollar drew a bit of support against its lower-yielding peers, also buoyed by upbeat PPI data.
- U.S. NFIB Small Business Index down from 107.6 to 104.7 vs. 107.0 forecast
- Canadian housing starts up from 231K to 245K vs. 219K forecast
- Canada’s building permits fell 2.6% vs. projected 1.5% decline
- U.S. headline PPI up 0.3% in March vs. 0.1% consensus, 0.2% previous
- U.S. core PPI up 0.3% in March vs. 0.2% consensus, 0.2% previous
Another day of risk-on flows
Following Chinese President Xi Jinping’s diplomatic tone in his speech earlier in the day, U.S. officials also sounded less hostile than usual in talking about trade relations with the world’s second largest economy.
White House Trade Adviser Peter Navarro reiterated that the U.S. is open to trade talks with China, which many deemed more conciliatory versus firing fresh sets of higher tariffs against one another.
Even the Donald himself tweeted his thanks:
Very thankful for President Xi of China’s kind words on tariffs and automobile barriers…also, his enlightenment on intellectual property and technology transfers. We will make great progress together!
— Donald J. Trump (@realDonaldTrump) April 10, 2018
Equities started off on a strong note and ended with even stronger gains:
- Dow 30 index is up 428.90 points to 24,408.00 (+1.79%)
- S&P 500 index is up 43.71 points to 2,656.87 (+1.67%)
- Nasdaq is up 143.96 points to 7,094.30 (+2.07%)
Upbeat U.S. PPI data
Uncle Sam’s reports were mostly in the green, save for the NFIB Small Business Index which posted a steeper fall from 107.6 to 104.7 versus the estimated dip to 107.0.
Headline PPI was up 0.3% in March versus the projected 0.1% uptick while the core reading also posted a 0.3% gain instead of the estimated 0.2% increase. Underlying data revealed that most of the gains came from a 0.3% advance in prices for final demand services.
Besides, the NFIB report also indicated that the share of small businesses planning to increase prices rose to its highest level since March 2008, further stoking inflation expectations. It also showed a larger proportion of firms increasing wages to attract workers, lifting employment prospects as well.
Analysts say that this threw some of the focus back on improving fundamentals, spurring expectations of upside surprises in the CPI release due later this week.
Major Market Mover(s):
The comdoll gang staged quite the rebound from the previous trading session as risk-taking picked up later in the day.
AUD/USD is up from .7723 to .7766, NZD/USD advanced to .7370, USD/CAD slumped to the 1.2600 mark, AUD/JPY rallied to the 83.00 handle, and GBP/AUD is down to 1.8271.
Watch Out For:
- 11:50 pm GMT: Japanese core machinery orders (-2.6% expected)
- 11:50 pm GMT: Japanese PPI y/y (2.1% expected, 2.6% previous)
- 12:30 am GMT: Australia Westpac consumer sentiment (0.2% previous)
- 1:30 am GMT: Chinese CPI y/y (drop from 2.9% to 2.6% expected)
- 1:30 am GMT: Chinese PPI y/y (drop from 3.7% to 3.2% expected)
- 5:00 am GMT: RBA head Lowe to give a speech