Wall street was dragged lower by falling energy prices as we saw all the major indices, except for the Nasdaq, which was kept afloat by tech names, finish in the red. In Asia, initial lackluster trading was capped by fairly strong rallies which saw the ASX 200 gain 0.5%, the Nikkei 225 unchanged, while Chinas Shanghai Comp and Hang Seng gained 0.8% and 0.5% respectively.
In FX, commodity led currencies languished as falling crude prices also weighed them down, with exception of the NZD, which rallied thanks to a hawkish Reserve Bank of NZD which suggested an optimistic tone of growth. The USD gave back some of its gains as uncertainty grips the US again after some FED members stated that they were in favor of pausing rate hikes and as the ongoing saga regarding the replacement of the Obama Care bill continues, with Republicans being very cryptic about how and when this will take place.
In Commodities, gold jumped on the USD weakness to retake 1250 and we expected further upside to persist so long as uncertainty reigns supreme. Crude oil continues to get dumped as yesterday’s oversupply sentiment from the US crude oil inventories led to a retest of $42 per barrel. $40 looks well on the cards provided nothing changes regarding demand and supply of the black gold.
Looking ahead, we have key release from the USA and Canada. Out of the US, we are expecting unemployment Claims data and a speech by FOMC member Powell. Should the number come in better than expected, we are likely to see the USD regain some of yesterday loses, while worse than expected releases will see the USD fall into deeper water.
Out of Canada, we have the release of the Retail Sales figures, which will show whether Canadians are spending money or not. A better than expected print will see the CAD strengthen and vice versa should the figures disappoint.