Allan von Mehren
Danske Bank A/S
Market Movers
A lot of data to chew on today. Euro area kicks off with French and Spanish GDP data for Q4. France is expected to have grown 0.2% q/q, while Spain likely had stronger growth around 0.8% q/q. Later this morning we look for a rise in euro flash CPI to 0.5% y/y from 0.2% y/y and core inflation to move up to 1.1% y/y from 0.9% y/y. M3 and credit data are expected to continue to show solid gains.
In the US focus turns to Q4 GDP which we expect only increased by 0.2% q/q (consensus 0.8% y/y). Some of the weakness, however, reflects another quarter with a negative contribution from inventories. Also, falling oil investments due to the oil price collapse are likely to have weighed on total investments.
The US Employment Cost Index is also worth keeping an eye on as this will give an indication of how tight the US labour market is. Consensus is for an unchanged rate of 0.6% q/q pointing to a moderate rise in wage growth but not yet something to cause concern for the Fed. A bigger worry is the decline in the oil price and global uncertainty as highlighted in the statement this week.
In Scandi we get Swedish household lending, while Norway releases retail sales, credit indicator and unemployment. See Scandi Markets.
Selected Market News
The Bank of Japan joined the easing camp and surprised markets with the introduction of negative interest rates of -0.1% this morning. Governor Haruhiko Kuroda got the move through with a split 5-4 vote. The BoJ also continues its record-high asset purchase programme. The JPY weakened in response and Nikkei is up close to 2%.
BoJ’s move spurred a global risk rally with other Asian markets up as well and US stock futures moving higher. Chinese stocks are up around 3% this morning. The USD/CNY fixing fell slightly again and thus continues the grind lower.
The oil price spiked higher yesterday moving above USD35 per barrel briefly after indications from Russia that it is willing to meet with OPEC next month. The price fell back a bit during the evening but is still above USD34 per barrel. It is uncertain whether such talks are likely but it may be a sign that the pain threshold is being reached as the war of attrition is starting to cause severe stress in some countries.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.