Stocks and Aussie dollar higher as US dollar rally looks over for now

Quick Recap

Stocks were higher across the board overnight but the US dollar lost some of it strength toward the close leaving the Euro and Aussie dollar well off their lows for the past 24hours.

US data was a little weaker again. But the markets shrugged it off once again. US industrial production for March printed (-0.6%) while there was a sharp fall in the Empire (New York State) manufacturing survey (-1.19 from 6.90 previously). The Dow, Nasdaq and S&P are all above 18,000, 5,000 and 2,100 respectively. Perhaps the fact the beige book suggests only moderate growth in the US or that Wall Street’s top bankers are telling clients the Fed won’t raise rates in June which is keeping stocks elevated again. In Europe Mario Draghi’s stout defence of ECB QE, even when assailed by a protestor who jumped on his desk and dropped confetti on his head, likely helped European stocks head higher overnight.

In Asia yesterday it was a wild ride for traders in Shanghai after the weaker than expected GDP and associated data. The print of 7% year on year while right on expectations was a seven year low. The quaterly rate of growth of just 1.3% suggests that China is going to struggle over the next 3 quarters to hit the official target of “around” 7%. The growth disquiet wasn’t lost on traders with the Shnaghai composite down 1.1% before the luncheon interval after which it rallied back into the green before closing weaker down 1.26%. That’s a big round trip and the fact that Hong Kong stocks were higher at the close suggests that the move higher in H shares is set to coninue.

Crude broke out, see chart below, but otherwise there was little remarkable news.

On the day

On the data front Australia’s employment report is out today. The market is expecting a rise of 15,000 and an unemployment rate of 6.3%. NAB’s chief markets economist Ivan Colhoun says we should be focussed on the record levels of employment not the unemployment rate. In the US tonight housing starts, building permits and the Philly Fed are the highlights.

Here’s the overnight scoreboard (8.49 am AET):

• Dow Jones up up 0.42% to 18,112
• Nasdaq up 0.68% to 5,011
• S&P 500 up 0.51% to 2,106
• London (FTSE 100) up 0.3% to 7,096
• Frankfurt (DAX) flatish at 12,231
• Paris (CAC) up 0.7% to 5,254
• Tokyo (Nikkei) down at 19,869
• Shanghai (composite) down 1.26% to 4,083
• Hong Kong (Hang Seng) up 0.21% to to 27,618
• ASX Futures (SPI June) +38 to 5935
• AUDUSD: 0.7676
• EURUSD: 1.0675
• USDJPY: 119.15
• GBPUSD: 1.4824
• USDCAD: 1.2303
• Crude: $56.03
• Gold: $1,202

CHART OF THE DAY:

Nymex Crude: Yesterday we said “Trying to break out – this could be a big and decisve move.”

It did and it is – here’s the chart. $65 beckons