BoE Meeting, US Jobless Numbers, Twitter Earnings
The US dollar extended its series of gains, with the US Dollar Index (USDX), which measures the performance of the dollar against six other major currencies reaching a new 2-week high. A notable exception was the Indian rupee (INR), which stopped its series of losses after the Reserve Bank of India (RBI) lowered the repo rate by 0.25% to 6.25%, while also announcing that the monetary policy would experience a “calibrated tightening”.
Oil prices edged higher with the EIA reporting crude oil inventories up by only 1.3 million barrels, while a recent survey indicated that OPEC countries participating in the production cut measures reduced the production by almost one million barrels per day in January.
Stock markets traded mixed on Wednesday, with losses in US indices, while Chinese indices edged higher in the early trading session on Thursday due to gains mostly in tech stocks in those markets.
On Thursday the French trade balance and Italian retail sales for December are expected to be reported. The Bank of England (BoE) will announce its interest rate decision, with most analysts not expecting immediate changes from the current level of 0.75%. Also in the UK, the Halifax house price index for January will be published. From the US data on consumer credit and jobless new claims is due.
After the already disappointing manufacturers’ orders data on Wednesday, the industrial production data release from Thursday morning was again negative at -0.4% m/m, making it now the third consecutive month with slowing production levels, something that was last seen in 2014.
The US trade balance was reported at a deficit of $49.3 bn. in November (expected $-54.0 bn.).
Given the continued strength of the dollar, the euro is now on track to decline for the fourth day in a row against the greenback.
On Thursday the French trade balance and Italian retail sales for December are expected to be reported. From the US data on consumer credit and jobless new claims is due.
The pound sterling (GBP) continued its negative move against the dollar trading on Wednesday for the fifth consecutive day lower, reaching a two-week low on Thursday morning. The British Prime Minister Theresa May is going to meet representatives of the European Union to likely try to negotiate changes to the within her party disputed Irish backstop regime. However according to some reports even the UK side does not really expect any concessions from the side of the EU ahead of the vote about the revised Brexit deal next week in parliament.
On Thursday the Halifax house price index and the interest rate decision by the Bank of England will be of interest to the markets. Investors expect the central bank to remain observing the situation without significant policy changes at this meeting. The last change in interest rates was announced in August last year, bringing the interest rate to the current level of 0.75%.
Shortly after reaching a one week low, oil prices reversed direction around the time when the Energy Information Administration (EIA) released its weekly inventory statistics. Crude oil inventories were reported up by only 1.3 million barrels, which was lower than anticipated and also less of an increase compared to the data from the American Petroleum Institute (API) reporting earlier a rise of inventories by 2.5 million barrels.
A recent survey released by S&P Platts indicated that the measures of the OPEC cartel to curb production levels are actually being implemented, with production levels in January down by 0.97 million barrels per day for the 11 participating OPEC countries.
Gasoline inventories were also rising at a slower pace than expected, gaining only 0.5 million barrels compared to the previous week.
For Friday the release of the US Baker Hughes oil rig count is expected. The number of operating oil rigs dropped significantly over the past weeks, with the last report indicating 847 oil rigs in operation, while at the end of 2018 885 oil rigs were reported for this statistic.
US indices closed overall moderately lower on Wednesday after a strong run since the start of the previous week. Sector-by-sector performance was mixed, with chip stocks rallying (US Semiconductors ETF +2.52%), while material (US Basic Materials ETF -0.56%) and consumer discretionary stocks (US Cyclicals ETF -0.38%) lagged behind.
Electronic Arts (-13.17%) stocks erased almost all gains from this year after the company announced in its earnings disclosure that its sales numbers, that missed the expectations for the holiday season and also lowered its guidance for this year.
Snapchat (+22.19%) edged significantly higher after the company released better than expected earnings, indicating a stable number of users and lower losses than anticipated by investors.
Sonos (-6.03%), which makes smart speakers was under pressure despite better than anticipated earnings and revenue reported. Investors were reportedly concerned about the declining sales numbers for some models and the announcement that the CFO will leave the company.
For Thursday more earnings releases are scheduled, now from companies like Kellogg’s and Twitter.
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