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The pound extended its rally from the previous trading session while the Greenback caught up to its lead when U.S. equities soared to new record highs. Once again, the lower-yielding yen and franc gave up ground while the oil-related Loonie joined the losers’ bench.

  • U.S. NFIB Small Business index up from 105.2 to 105.3 vs. 104.8 forecast
  • U.S. JOLTS job openings rose from 6.12M to 6.17M in July vs. 5.96M forecast
  • EIA downgraded 2017 oil demand growth forecast by 70,000 barrels per day
  • EIA raised 2018 oil demand growth forecast by 80,000 barrels per day
  • OPEC raised 2017 supply growth forecast from 1.37M to 1.42M barrels per day
  • OPEC increased 2018 demand forecast by 410,000 barrels per day
  • OPEC compliance to output deal down from 86% in July to 83% in Aug
  • Treasury Secretary Mnuchin: Backdating tax reform to be considered

Major Events/Reports

Equities jump on tax reform remarks

With the market spotlight turning away from North Korean jitters at the moment and concerns about the recent U.S. hurricanes starting to subside, traders paid closer attention to Treasury Secretary Mnuchin’s remarks on tax reform.

Mnuchin reiterated that tax reform is at the top of the administration’s priority list and that the recent decision to extend the debt limit reveals that lawmakers can be able to put politics aside. He even went on to say that backdating tax reform as early as January 2017 is something that’s being considered because “it would be a big boon for the economy.”

The Treasury Secretary also added that he would be meeting with the Donald and his economic adviser Cohn to discuss the details on tax reform, adding that he remains hopeful that it will get done before the end of this year. Not something we haven’t heard before but U.S. equities seem to be chomping on it:

  • S&P 500 is up 8.37 points to 2,496.48 (+0.34%)
  • Dow 30 index is up 61.49 points to 22,118.36 (+0.28%)
  • Nasdaq is up 22.02 points to 6,454.28 (+0.34%)

Updated crude oil forecasts

The U.S. Energy Information Administration and the OPEC both released their respective monthly updates today, and these contained the revised forecasts for global demand and supply of crude oil.

The EIA downgraded 2017 oil demand growth forecast by 70,000 barrels per day while the OPEC projected that supply will reach 1.42 million barrels per day, up from their earlier 1.37 million barrels per day forecast. However, both groups upgraded their global demand estimates for crude oil for 2018.

The oil cartel also reported that compliance has dropped from 86% in July to 83% in August as member nations are having a tough time sticking to their production limits. On a less downbeat note, the OPEC did note that Hurricane Harvey likely had a negligible impact on U.S. oil demand.

Meanwhile, the American Petroleum Institute just came out with its latest report that indicated private inventory of crude oil rose by 6.181 million barrels in the previous week, hinting that the EIA report due later on might print a similar buildup.

  • WTI crude oil is up to $48.34 per barrel (+0.56%)
  • Brent crude oil is up to $54.27 per barrel (+0.80%)

Upbeat U.S. data

Medium-tier U.S. reports came in stronger than expected, giving the Greenback another kick higher. The NFIB Small Business index for August ticked up from 105.2 to 105.3 instead of dipping to the estimated 104.8 figure.

Underlying components revealed that 18% of respondents have plans to increase employment while 32% have plans to make capital outlays. Among the small businesses included in the survey, 27% think that it’s a good time to expand operations and 37% believe that economic conditions will continue to improve.

Meanwhile, the JOLTS job openings figure rose from 6.12 million to 6.17 million in July to indicate a higher number of hiring opportunities available instead of falling to the projected 5.96 million reading. The report showed that job openings increased for educational services, transportation, warehousing, and utilities, as well as other services.

Major Market Mover(s):

GBP

The pound kept climbing throughout the day, buoyed by upbeat CPI results and positive expectations for the BOE decision later this week.

GBP/JPY is up from 144.00 to 146.27 (+1.59%), GBP/CAD jumped to a high of 1.6199 (+1.49%), GBP/CHF is up from 1.2588 to 1.2758 (+1.37%), and GBP/AUD rose to 1.6565 (+1.03%)

USD

The scrilla closed another day in the green against most of its peers after a solid start for the week as North Korean tensions were absent from the headlines. However, some analysts also attributed these gains to short-covering.

USD/JPY advanced from 109.40 to 110.15 (+0.69%), USD/CHF is up to the .9600 handle (+0.48%), and USD/CAD reached a high of 1.2190 (+0.57%). The Kiwi and the pound managed to hold on to their gains against the dollar, however, with NZD/USD up to .7290 (+0.50%), and GBP/USD up to 1.3285 (+0.92%)

Watch Out For:

  • 11:45 pm GMT: New Zealand food price index m/m (-0.2% previous)
  • 12:50 am GMT: Japanese BSI manufacturing index (4.8 expected, -2.9 previous)
  • 12:50 am GMT: Japanese PPI y/y (3.0% expected, 2.6% previous)
  • 1:30 am GMT: Australian Westpac consumer sentiment (-1.2% previous)