Originally published by Rivkin Securities
The US stock market was largely unchanged overnight with the Dow Jones closing down 0.1% and the S&P 500 up 0.18%. This continues the sideways trend for this week with both indices close to where they started the week. The main news out of the US overnight was the CPI and Industrial production, both of which came in as forecast. CPI was up 0.3% for the month while the core CPI was up 0.2%. The Bank of Canada met to decide interest rates and, as expected, left rates unchanged at 0.5%.
After several weeks of steady gains, gold was holding near its multi month high early in the session before dropping around $10 before the close. Silver has also had a strong run in recent weeks but followed gold lower late in the overnight session. The late move lower seems to be the result of a speech by Federal Reserve Chair Janet Yellen in San Francisco where she signalled that the Fed is ready to raise rates if the economy continues to strengthen as expected. As well as a sell-off in precious metals, this sparked an increase in treasury yields and a fall in the US dollar.
CL was volatile but ultimately ended lower as API reported crude and product inventory data. While there was a large draw in crude (-5 million barrels) there was a large increase in gasoline (+9 million barrels). Oil traders initially didn’t know how to react and pushed the price up before reversing and sending it lower. After reaching a low of just above $51 per barrel, oil rallied late in the session to close at $51.39.
Today the Australian Bureau of Statistics will release employment data for December. This will include the number of full-time and part-time jobs created (or lost) as well as the unemployment rate. This is a key piece of information that the Reserve Board of Australia looks at when deciding interest rate policy. Expectations are for the unemployment rate to remain unchanged at 5.7% and while jobs are expected to increase by approximately 10,000.
ASX 200 futures are down 5 points indicating a flat open for the local market.
Data releases:
· Australian Employment Change/Unemployment Rate 10:30am AEDT
· EU Interest Rate Decision 11:45pm AEDT
· ECB Press Conference 12:30am AEDT
· US Philly Fed Manufacturing Index 12:30am AEDT
· U.S. Housing Starts 12:30am AEDT