28 Feb: US$ firm, stocks, commodities lower after Powell testimony. China Mfg PMIs, EU CPI, US GDP today

By | February 28, 2018

 

The US$ has strengthened, while stocks (-0.5%/-0.6%) and commodities are lower (Gold -1.2%, WTI -1.3%) following Fed chair Jerome Powell’s prepared remarks for his first Congressional testimony on Tuesday. Overall he was fairly upbeat, hinting at a more hawkish stance from the Fed while at the same time not telling us a great deal that we did not already know. He was tactful in saying that he would not prejudge what will happen but did list all the items that he feels positive about, including the better economic data, the tax cut, increasing global growth, hopes for better exports and the prospect for mildly stronger inflation.  He also suggested that the upbeat outlook opens the door for a forecast adjustment (dot plot) at the March meeting while giving no hint of what that might mean to the current outlook of 3 rate hikes this year.

In terms of data today, almost forgotten in the wake of Powell’s testimony, the US trade deficit widened to US$ -74.4b in January, while the Durable Goods Orders dropped sharply by -3.7% in January (ex-transport orders dropped -0.3%). Wholesale inventories rose by 0.7% mm in January. Earlier in the session, the German CPI came in lower than expected and initiated the downside pressure on the Euro..

Wednesday will begin with the NZ Visitor Arrivals and the ANZ Activity Outlook/Business Confidence, while Australia will have the Private Sector Credit; Japan will deal with the January Industrial Production, Housing Starts, Construction Orders and Retail Trade while from China we get the NBS Mfg/Non-Mfg PMIs. Europe will then follow on with the German Consumer Confidence and the EU CPI for Feb (exp 1.2%; Core 1.1%). Finally, it will be another busy day in the US with Jerome Powell speaking once again, and the day will also include the Q4 Provisional US GDP Annualised (exp 2.5%), the Core Personal Consumption/Expenditure Prices/Index (exp 1.9%/2.8%). Oil traders will look out for the EIA weekly crude oil stock change. Have a good day.

CURRENCIES
EURUSD: 1.2232
Res  1.2255  1.2280  1.2300
Sup  1.2220  1.2205  1.2165
USDJPY: 107.37
Res  107.50  107.70  107.90
Sup  107.20  107.00  106.80
GBPUSD: 1.3912
Res  1.3940  1.3970  1.3995
Sup  1.3890  1.3860  1.3825
USDCHF: 0.9389
Res  0.9410  0.9435  0.9455
Sup  0.9365  0.9340  0.9325
AUDUSD: 0.7792
Res  0.7815  0.7835  0.7865
Sup  0.7780  0.7760  0.7745
NZDUSD: 0.7236
Res  0.7255  0.7280  0.7300
Sup  0.7230  0.7200  0.7175
INDICES / COMMODITIES
S&P: 2754
Res  2765  2775  2790
Sup  2750  2740  2730
DJI: 25496
Res  25570  25645  25700
Sup  25455  25405  25295
ASX SPI: 6005
Res  6025  6045  6060
Sup  6000  5985  5965
XAUUSD: 1318
Res  1325  1330  1335
Sup  1310  1305  1300
XAGUSD: 16.43
Res  16.50  16.60  16.70
Sup  16.40  16.30  16.20
WTI: 62.87
Res  63.30  63.75  64.25
Sup  62.30  61.85  61.10