The majors seem to have reached for that extra cup of coffee during the New York trading session as price action was a little more jumpy than usual. At the end of the day, the higher-yielding Aussie and Kiwi won out while the lower-yielding yen, franc, and dollar lagged behind.
- U.S. building permits up from 1.23M to 1.30M vs. 1.22M forecast
- U.S. housing starts down from 1.19M to 1.18M vs. 1.17M forecast
- U.S. import prices rose by 0.6% in August vs. projected 0.4% uptick
- U.S. current account deficit widened from $114B to $123B vs. $115B forecast
- Canadian manufacturing sales sank by 2.6% in July vs. estimated 1.7% drop
- Trump: “We must do much more” on North Korea missile threats, Iran must also be addressed
- New Zealand GDT auction yielded 0.9% gain in prices, 0.3% previous
- API: Private crude oil stockpiles increased by 1.44 million barrels
Mixed U.S. data
On the day before the highly-anticipated FOMC decision, economic data from Uncle Sam came in mixed and barely offered clues on how this central bank event could turn out.
Data from the construction industry was a tad optimistic as building permits jumped from 1.22 million to 1.30 million in August, outpacing the forecast at 1.23 million, while housing starts dipped from 1.19 million to 1.18 million, still higher than the estimated 1.17 million figure.
However, this particular release had a special notice indicating that only 60% of the stats were completed compared to the usual response rate of 95% as several counties in Texas and Florida were already prepping for the hurricanes at that time.
Moving on, the U.S. current account deficit widened from $114 billion to $123 billion in Q2, accounting for 2.6% of the country’s GDP for the period compared to 2.4% in Q1.
Underlying data revealed that exports were up $2.2 billion for Q2, buoyed by gains in portfolio investment income and services exports in the travel industry. Imports increased by $11.8 billion.
Lastly, import prices ticked 0.6% higher in August versus the projected 0.4% gain and the previous 0.1% decline. This capped off three consecutive monthly declines, supporting the view that underlying inflation is picking up. This also marks the largest monthly increase since January this year as fuel import prices jumped 4% in August.
Weak Canadian manufacturing sales
Loonie bulls already got spooked by BOC policymaker Lane’s remarks on watching the currency’s gains closely, and they found more reason to pause from their rallies upon seeing the Canadian manufacturing sales report.
The actual figure indicated a 2.6% slump in July, much worse than the projected 1.7% fall and the previous 1.9% drop. Components of the report revealed that this was mostly due to lower sales of motor vehicles and motor vehicle parts for the second month in a row.
Furthermore, manufacturing sales slumped in nine out of the 21 industries included in the survey. The food industry also reported a drop in sales as order volumes were lower across the board.
Equities up, commodities mixed
Crude oil gave back some of its gains from the earlier trading sessions while precious metals retained their lead. Stock indices are all in the green, with the Dow climbing to fresh highs on financial industry gains.
Expectations that the Fed will simply sit on its hands and either maintain its economic outlook or sound a bit more cautious in this week’s meeting were enough to boost banking shares. After all, a longer period of low interest rates could mean larger profit margins for financial institutions.
- Dow 30 index is up to 22,375.50 (+0.20%)
- S&P 500 index is up to 2,506.88 (+0.12%)
- Nasdaq is up to 6,461.32 (+0.10%)
Meanwhile, gold and silver remained supported as several market watchers are still wary of geopolitical risks stemming from Trump’s latest batch of threats on North Korea. In his speech to the UN General Assembly, the U.S. President declared:
“The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea.”
He also called North Korean President Kim Jong-Un as “Rocket Man” who is on a suicide mission. To top it off, the Donald also lambasted Iran’s nuclear program, Venezuela’s political troubles, and radical Islamic terrorism.
- Gold is up to $1,314.64 per troy ounce (+0.29%)
- Silver is up to $17.362 per troy ounce (+1.20%)
- Crude oil is down to $49.99 per barrel (-0.71%)
- Brent crude oil is down to $55.22 per barrel (-0.49%)
Major Market Mover(s):
CHF & JPY
Risk-taking weighed on the lower-yielding Swiss franc and Japanese yen for the most part of the day.
EUR/JPY is up 44 pips to 133.80 (+0.33%), GBP/JPY is up to 150.87 (+0.20%), and CAD/JPY is up to 80.87 (+0.20%). EUR/CHF advanced from 1.1496 to 1.1548 (+0.46%), GBP/CHF is up to 1.3021 (+0.32%), and USD/CHF is holding steady around .9625 (+0.10%)
AUD & NZD
The Aussie and Kiwi were in the lead, taking advantage of both risk appetite and upbeat reports. In New Zealand, the GDT auction yielded a 0.9% gain in dairy prices.
NZD/USD is up 58 pips to .7316 (+0.80%), NZD/JPY rose to 81.60 (+0.73%), and NZD/CHF is up from .6982 to .7041 (+0.89%), AUD/USD is hovering around .8010 (+0.65%), AUD/JPY is up to 89.35 (+0.62%), and GBP/AUD is down to 1.6885 (-0.44%)
Watch Out For:
- 11:45 pm GMT: New Zealand current account balance (0.82 billion NZD deficit expected from previous 0.24 billion NZD surplus)
- 12:50 am GMT: Japanese trade balance (0.41T JPY surplus expected, 0.34T previous)
- 1:30 am GMT: Australia MI leading index (0.1% previous)
- 4:00 am GMT: RBA policymaker Ellis’ testimony