Risk appetite extended its stay in the financial markets, lifting higher-yielders like stocks and commodity currencies while sapping demand for the safe-haven dollar. It didn’t help the Greenback’s cause that medium-tier U.S. data also disappointed.
- U.S. headline durable goods orders dropped 4.4% vs. expected 2.2% slide
- U.S. core durable goods orders posted 0.1% uptick vs. expected 0.4% gain
- Canadian wholesale sales down 0.5% vs. projected 0.1% uptick
- U.S. initial jobless claims up from 221K to 224K vs. 215K consensus
- U.S. CB leading index up 0.1% vs. 0.2% forecast
- UoM consumer sentiment index downgraded from 98.3 to 97.5
- EIA crude oil stockpiles up 4.9M barrels vs. estimated 2.5M gain
- U.S. existing home sales up from 5.15M to 5.22M
Mostly downbeat U.S. data
Uncle Sam’s latest batch of reports came in the red, further dampening hopes of a December Fed hike. This put a bit more weight on dovish whispers circulating in the earlier session:
🇺🇸 The Federal Reserve is starting to consider at least a pause to its gradual monetary tightening and could end its cycle of interest rate hikes as early as the spring, MNI reports, citing senior people at the #Fed they didn’t identify.
— Christophe Barraud🛢 (@C_Barraud) November 21, 2018
Headline durable goods orders slumped 4.4% in October, twice as much as the estimated 2.2% drop, while the core version of the report posted a bleak 0.1% uptick versus the projected 0.4% increase.
This marked the third straight month that these figures missed the mark, supporting speculations that the ongoing trade war with China is already hurting demand for business equipment. Components of the report revealed that non-military capital goods orders, which is seen as a proxy for business investment, barely budged during the month.
Initial jobless claims also came in weaker than expected as the number of first-time claimants rose from 221K to 224K last week, failing to hit the consensus at 215K. The consumer sentiment index reported by the University of Michigan was downgraded from the initial 98.3 figure to 97.5 to signal lower optimism this month. The CB leading index also came up short at a 0.1% uptick versus the 0.2% consensus.
The only bright spot among the reports was the existing home sales figure, which advanced from 5.15 million to 5.22 million, outpacing the forecast at 5.20 million.
Risk stays on
After a positive run in the previous trading session, commodities were able to hold on to their gains and chalk up a bit more. Even though the EIA reported a larger than expected buildup in U.S. oil inventories at 4.9 million barrels the estimate at 2.5 million barrels, Black Crack stayed in the green.
- Gold is up $4.40 to $1,226.11 per troy ounce (+0.36%)
- WTI crude oil climbed to $54.41 per barrel (+1.83%)
As it turned out, underlying data reflected strong demand for other energy sources like gasoline and diesel. Stock indices also capped their declines from earlier in the week and most closed with meager gains.
- Dow 30 index is down 0.95 points to 24,464.69 (0.00%)
- Nasdaq is up 63.43 points to 6,972.25 (+0.92%)
- S&P 500 index is up 8.04 points to 2,649.93 (+0.30%)
U.S. bond yields were mixed but mostly lower for the day.
Major Market Mover(s):
AUD & NZD
These commodity currencies held on to their top spots as traders stayed hungry for more risk (and turkey!) and probably booked profits off previous short positions ahead of the Thanksgiving holidays.
AUD/USD is up from .7228 to a high of .7277; NZD/USD climbed from .6812 to .6847; AUD/JPY advanced to the 82.00 levels; NZD/JPY is up to 77.17; EUR/AUD dipped to 1.5687, and EUR/NZD is down to 1.6681.
USD & JPY
The lower-yielding yen was already in a weak spot for the most part of the day then was joined by the Greenback as the U.S. session rolled along.
USD/CHF sank from .9955 to a low of .9928 then popped back up to the .9950 area; USD/JPY is still higher at the 113.10 mark; EUR/USD bounced to a high of 1.1425, and USD/CAD retreated to 1.3230.
EUR/JPY rose to a high of 129.06 but slipped back to 128.75; GBP/JPY is holding on to 144.50; CAD/JPY is up to 85.45, and CHF/JPY is up to 113.71.
Watch Out For:
- 11:30 pm GMT: Japanese national core CPI (another 1.0% reading expected)
- U.S. banks closed on Thanksgiving holiday