Stock markets are bouncing back on Friday, although I don’t think anyone is getting excited by the moves which pale in comparison to the losses that preceded them. This looks like nothing more than a dead cat bounce after a steep decline over the last couple of weeks as investors have been forced to once again accept that interest rates are going to rise further and faster than hoped. Double-digit eurozone inflation Inflation in the eurozone hit 10% in September ahead of schedule, with markets expecting a jump to 9.7% from 9.1% in August. In normal circumstances that may have triggered a reaction but these are anything but normal. Markets are still pricing in a more than 70% chance of a 75 basis point rate hike … [Read More...]

The New Zealand dollar is down sharply today. In the European session, NZD/USD is trading at 0.5676, down 0.85%. New Zealand dollar can’t find its footing It has been a tumultuous week in the currency markets, and the New Zealand dollar is about to record a losing week for a seventh straight time. This week was book-ended by sharp losses, and NZD/USD fell as low as 0.5565, its lowest level since March 2020, at the start of the Covid pandemic. Why no love for the New Zealand dollar? The risk-sensitive currency has been pummelled as risk apprehension has soared, particularly over the escalation of the war in Ukraine. Earlier this week, the Nord Stream pipelines were rocked by explosions, and Russian President Putin is poised … [Read More...]

Oil goes on rollercoaster ride Oil prices went on a rollercoaster as energy traders watched President Putin escalate the war in Ukraine and as the EIA report signals some crude demand weakness. ? The EIA crude oil inventory report was a lot to process, but it really didn’t deliver that many surprises: Production remains steady at 12.1 million b/d, which is impressive considering oil rig counts have been declining, Imports from Canada are roaring back and that should help restore stockpiles, Jet fuel demand is rather soft despite solid TSA passenger throughput data, and the Strategic Petroleum Reserve steadily draws down. ? WTI crude seems to have solid support at the $80 level and even as the Fed seems positioned to deliver a hard landing, the oil … [Read More...]

The British pound is in negative territory today and has fallen below the 1.15 line. In the North American session, GBP/USD is trading at 1.1497, down 0.38%. US retail sales, jobless claims beat forecast US retail sales rose 0.3% MoM in August, rebounding from -0.4% in July. Excluding gasoline, retail sales were up 0.8%, as consumers responded to lower gas prices by increasing spending on other items. The data indicates that consumer spending is holding up, despite an inflation rate of 8.3%. There was more positive news as US initial job claims fell for a fifth consecutive week, falling to 213 thousand. This follows the previous release of 218 thousand and beat the consensus of 226 thousand. These releases are especially significant, as the Federal Reserve relies on a strong labour … [Read More...]

US stocks edged lower as investors stare at a weakening economy that will get tested by an inflation-fighting Fed. ? The latest round of data suggests the Fed can stick to aggressive rate hikes as the labor market remains strong and as the economy slowly softens. ? The risks of the Fed sending the economy into a severe recession are growing but right now the data doesn’t support that argument. ? The consumer is still spending and apparently is not having any trouble finding work. The Nasdaq was led lower by Adobe shares, which were under pressure after announcing a deal to acquire software company Figma in a deal worth around $20 billion. ? Another severe market rout was avoided after railroad companies and unions reached … [Read More...]

The British pound continues to lose ground after a brutal retail sales report. The pound dropped as low as 1.1350 earlier today, its lowest level since March 2020. GBP/USD is trading at 1.1373 in the European session, down 0.73%. UK retail sales decline The week wrapped up on a sour note in the UK, as retail sales for August were sharply lower. The headline reading declined by 5.4% YoY, lower than the July release of -3.2% and missing the forecast of -4.2%. It was a similar story with core retail sales, which declined by 5.0%, below the July reading of -3.1% and shy of the estimate of -3.4%. On a monthly basis, retail sales slid by 1.6%, missing the consensus of -0.7% and marking the sharpest decline in eight … [Read More...]

The Australian dollar is showing little movement today after the solid Australian employment report. Australian employment rebounds The Australian labour market remains resilient, as indicated by a solid August employment report. The increase in employment of 33.5 thousand was very close to the consensus of 35 thousand, with the gain of 58.8 thousand full-time jobs especially impressive. The release was within expectations and the Australian dollar’s response has been muted. The unemployment rate ticked higher to 3.5%, up from 3.4%. The employment data likely will not change things for the RBA, which meets on October 6th. The RBA has delivered 50bp rate hikes four straight times, but may be looking to ease its tightening and guide the economy to a soft landing. If the RBA needs an excuse … [Read More...]