Jens Nærvig Pedersen
Danske Bank A/S
Market Movers
The main event for financial markets today will be Federal Reserve chair Janet Yellen’s appearance before the Financial Services Committee to deliver the semiannual report on monetary policy. Although the all important US jobs report Friday supported the notion that the US labour market continues to show progress, the recent significant tightening of global financial conditions and deterioration in other US key figures mean that Yellen, in our view, will aim not to strike a too hawkish tone on monetary policy.
In the UK, industrial and manufacturing production figures are due for publication. In the calculations of the first estimate of GDP growth for Q4 (which was 0.5% q/q), the Office for National Statistics assumed that industrial production declined 0.2% m/m, manufacturing production was flat.
In Scandi markets, focus will be on new CPI figures in Denmark and Norway.
Selected Market News
US NFIB small business optimism declined to 93.9 in January from 95.2 in December. Although it remains at a fairly high level, it has been trending down over the past year. In particular, small businesses have become much more worried about the outlook for the next six months. Although this is not one of the most important US key figures, it is another sign that the recovery in the US economy might have lost steam. Consequently, sentiment in financial markets remained weak yesterday, as investors took a cautious stance ahead of Yellen’s speech on monetary policy today. Stock prices and commodity prices declined yesterday and the trend has continued overnight with the Japanese Nikkei index falling 4%.
The International Energy Agency (IEA) has just published the February version of the Oil Market Report. Among the few revisions to the outlook for supply and demand there were downward revisions to US and Chinese oil demand in Q4 15. Demand in both economies was revised down by 0.1mb/d. Hence, for China, the drop in oil demand in Q4 15 turned out to be larger than previously thought. On the outlook for the oil market, IEA is, among other things, concerned about the impact on oil demand from the risk of lower global economic growth and the strong dollar. The US Energy Information Administration revised lower its forecast for US crude production in 2016. It now forecasts US crude production to fall to 8.7mb/d this year and to 8.5mb/d next year from 9.4mb/d in 2015.
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 holds above 1.0750 to start the week
EUR/USD trades in positive territory above 1.0750 in the European session on Monday. The US Dollar struggles to find demand following Friday's disappointing labor market data and helps the pair hold its ground.
GBP/USD edges higher toward 1.2600
Following Friday's volatile action, GBP/USD pushes higher toward 1.2600 on Monday. Soft April jobs report from the US and the modest improvement seen in risk mood make it difficult for the US Dollar to gather strength.
Gold rebounds above $2,310 after downbeat NFP data, eyes on Fedspeak
Gold price trades in positive territory above $2,310 after closing the previous week in the red. The weaker-than-expected US employment data have boosted the odds of a September Fed rate cut, hurting the USD and helping XAU/USD find support.
Addressing the crypto investor dilemma: To invest or not? Premium
Bitcoin price trades around $63,000 with no directional bias. The consolidation has pushed crypto investors into a state of uncertainty. Investors can expect a bullish directional bias above $70,000 and a bearish one below $50,000.
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.