11
Sep
11
Sep

US Mortgage Data, EIA Oil Inventories, Producer Price Index

While overall the US dollar traded almost unchanged according to the currency basket performance of the US Dollar Index (USDX), still noticeable difference were seen in-between different currency pairs. The greenback continued appreciating against the Japanese yen (JPY), which around a month ago with the market turmoil was seen by some analysts as a ‘safe-haven’. In emerging markets also a mixed picture was seen. By Wednesday morning the Turkish lira (TRY) continued to decline against the dollar for the fifth day in a row. Investors are weary of the influence of the government over the central bank, which is under pressure to continue easing the monetary policy conditions. The USD/ZAR pair meanwhile reached its lowest level in more than a month despite the manufacturing production levels for July rising by only 0.4%, which was below expectations.

As the market sentiment seems to point towards expectations of a calmer market with the Volatility Index VIX lower and yields on high-grade government bonds picking up, precious metals also came under pressure. Gold prices remained below $1,500 per troy ounce for most of the day, while the recovery move towards that level was quickly followed by a retracement. By Wednesday morning however a consolidation was noticeable in the market with especially platinum prices pushing higher from Tuesday’s low below $930.

After again a mixed picture in the equity markets on Tuesday, by Wednesday European indices were mostly trading higher, while US indices overall remained mostly unchanged. In the past days a diverging performance between top tech stocks (US Tech 100), which overall traded lower and rising stocks in small-cap companies (US 2000) was seen.

Relatively little in terms of fundamental data can be expected from Europe on Wednesday, ahead of the all-important ECB meeting set for Thursday. From the US data on the mortgage market, producer price index (PPI) and crude oil inventories can be expected.

EUR/USD

The euro traded almost unchanged against the dollar in a trading session with relatively low volatility especially compared to the sizable moves over the past two weeks. Not much market moving data releases can be expected on Wednesday. However, on Thursday not only the European Central Bank (ECB) is due to decide on its monetary policy, but some key economies including France, Germany and the United States publish their consumer prices index (CPI) statistics for August.

For Wednesday Redbook store sales, wholesale trade and producer price index (PPI) data will be released in the United States.

The EUR/USD chart

Germany 30

While US stock indices barely moved over the past days, the same cannot be said about their European counterparts. The Germany 30 index future was by Wednesday morning up for the sixth trading day in a row. With many indicators, including the last quarterly GDP statistic pointing towards that Germany might be facing a recession, some reports indicate that the government could consider programs to stimulate the economy. Among others the German DIW institute demanded that given the current bad state of the economy the government should consider making new debts to finance public investments in the coming years.

One of the best performing stocks in the index was the car parts supplier Continental. The company recently indicated that it needs to reduce its operations and could closed down some of its factories and lay off people as last resort.

Car manufacturer Volkswagen was also trading on the upside, just as most of its German competitors. At the international automotive fair (IAA) in Frankfurt the company publicly unveiled its first completely electric model, the ID.3. Only last week Porsche, which in its ownership structure is strongly connected to Volkswagen unveiled its all-electric Taycan Turbo.

The Germany 30 chart

WTI Oil

After a volatile trading day, crude oil prices settled slightly lower after briefly reaching a new five-weeks high. Prices fell noticeably with a spike lower in the late afternoon, when it was revealed that the US President Trump fired his national security advisor John Bolton. Bolton, who oftentimes took a hard stance against enemies of the US, especially Iran, was strongly supporting the “maximum pressure” tactic and with him now gone some speculate that Trump might gain more room for negotiations in that region.

However prices managed to start again moving higher some hours after this news hit the market, with a noticeable movement when the American Petroleum Institute (API) published data showing that cruder oil inventories fell by 7.2 million barrels over the past week.

For Wednesday weekly crude oil, gasoline and distillate inventory data from the Energy Information Administration (EIA) is expected. Last week a sizable drop in the inventories of all three of these energy commodities was recorded with crude oil stockpiles 4.8 million barrels lighter. Also on Wednesday the two-day OPEC meeting is due to commence.

The WTI Oil chart

US 500

While major large-cap indices like the US 500 closed again almost unchanged, a sizable difference was seen in the performance of different sectors. Bank stocks (US Banks ETF +1.69%) strongly recovered, while real estate sector stocks (US Real Estate ETF -1.07%) closed lower. This comes as bond yields are noticeably recovering, with the 10-Year US Treasury Note yield reaching almost 1.75% on Tuesday.

Apple (+0.94%) stocks traded only with a marginal upside during regular trading hours and very little change seen in the after-hours session while the company unveiled its iPhone 11 series. Given the competitive marketspace Apple surprised by releasing the starting price for its basic iPhone 11 at $699 in the domestic market. Also the company unveiled its price policy for its new Apple TV+ offering, which at $4.99 wants to compete with established streaming providers like Netflix.

Stocks of the information security company Zscaler fell by more than a fifth of their value in after-hours trading despite revenue and earnings surpassing analysts’ expectations. Investors were however disappointed to hear that the company set a range for the earnings-per-share (EPS) in the upcoming fiscal year to only $0.12 – $0.15, short of the expected $0.19.

Only few companies are yet to publish their quarterly results, including among others Aurora Cannabis on Wednesday and Broadcom and Oracle on Thursday.

The US 500 chart

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