U.S. indices are close to testing record highs after a strong bullish trading session on Thursday lifted by shares in the Software & Services (+0.86%), Household & Personal Products (+0.84%) and Commercial & Professional Services (+0.81%) sectors. Chinese importers have asked U.S. suppliers for a market in soybeans, pork and other farm goods which could be a signal that China may step up purchases of American agricultural products which has helped boosting optimism of a trade deal. The S&P 500 (3,009.57) trades above its 20d moving average (2,925.77 – positive slope) and its 50d moving average (2,949.77 – flat slope).
On the economic data front, CPI rose 1.7% YoY in August (vs. +1.8% estimated and in July), while core CPI was up 2.4%, stronger than +2.3% expected and +2.2% in July. Jobless Claims fell to 204K (estimated 215K) for the week ended September 7 from 219K in the prior week. On Friday we can expect a MoM decrease in retail sales of 0.5%. The University of Michigan Sentiment for September is predicted to be 90.8, up from 89.8 in the prior month.
Crude Oil fell 1.12% marking a third day of declines after OPEC urged members to adhere to agreed upon production cuts. OPEC has been facing challenges balancing the supply market as supply from competitors continues to grow.
European markets are expected to start on a flat note.
Foreign Exchange
The US dollar was bearish against most of its major pairs with the exception of CAD and JPY on Thursday. On the economic data front, US CPI data for August gained 0.1% in-line with forecasts compared to 0.3% in the prior month. US Jobless Claims fell to 204K (estimated 215K) for September 7th compared to a revised 219K last week, reaching a low not seen since April. On Friday we can expect a MoM decrease in US Retail Sales of 0.5%. The University of Michigan Sentiment for September is predicted to be 90.8, up 1 from the prior month.
The Euro was bullish against all of its major pairs. In Europe, the European Central Bank (ECB) announced that the interest rate on the deposit facility will be decreased by 10 basis points to -0.50%. Net purchases (Quantitative Easing) will be restarted at a monthly pace of E20 billion from November 1st and Banks’ holding excess liquidity will be exempt from the negative deposit facility rate thanks to a two-tier system. The ECB’s economic projection points to significantly lower economic growth and inflation pressures heading into next year. In Eurozone, the industrial production contracted 0.4% in July more than -0.1% expected, and after a decline of 1.4% the previous month. In Germany, the consumer price index fell to 1.4% in August from 1.7% in July on a yearly basis, compared to analysts’ estimate of 1.5%.
The Australian dollar was bullish against most of its major pairs with the exception of CHF and EUR.
Commodities
After the close of Wall Street, WTI Crude Future (OCT 19) was down $0.7 to $55.04. The contract was below its 20D MA (@ $55.6) and below its 50D MA (@ $56.15).
Gold was about flat to $1499.2. The precious metal was below its 20D MA (@ $1517) and above its 50D MA (@ $1473).
Copper Future (DEC 19) on Comex was up 2.7c to 264.1c/lb. The contract was above its 20D MA (@ 258.99c) and above its 50D MA (@ 263.65c). In Europe, the London Metal Exchange reported its copper inventories decreased 5475 tons to 299750 tons.