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Risk-on flows remain whilst CAD surges on GDP beat

Summary:

  • Risk sentiment continues to recover with stocks and oil both rising
  • Better than expected Canadian GDP release sends the Loonie soaring
  • Bitcoin hits new all-time high on US middle-class appeal
  • Eurozone inflation rises; ECB attempt to jawbone Euro lower

Stock markets are adding to their recent gains today with the US500 moving within striking distance of its all-time high. The jitters seen earlier this week on the North Korean missile launch now seem to be fading to the back of investors minds and the market is now approximately only 1% from a record peak.

There’s been a strong move higher seen in the oil price today, with Oil.WTI rising back above the $47 handle and engulfing the prior two days trading range. Yesterday’s DOE release was arguably supportive of the market, but price failed to rally. An attempted move higher around the European close was met by a wave of selling but crucially the weekly low at 45.77 remained in tact. 

The recent string of economic data from Canada has been impressive, with today’s GDP beat further supporting the notion that the economy is performing well. The month on month rise in GDP of 0.3% was better than the 0.1% expected and whilst it is below the prior reading of 0.6% it means that the annualised reading is now at its highest level since 2011. 

In spite of the fact that most of cryptocurrencies have been quite intact of late, there are fresh signs that the most famous one - Bitcoin - is solidifying its position in the US. According to a recent report from NBC, middle-class Americans are growing quite fond of Bitcoin and cryptocurrency investment. 

The euro area inflation increased more than anticipated in August which could act in favor of the ECB when it meets in September 7. CPI rose 1.5% yoy against the forecast at 1.3% yoy. On the flip side, the core measure which strips out volatile components like food and energy stayed unchanged at 1.2% yoy being in line with the estimation. The reaction on the euro has been contained though as investors could be feeling mounting pressures from the ECB at its next week meeting. The euro has been in a larger retreat so far on the back of the Reuters story. It pointed that rapid gains by the euro against the dollar are worrying a growing number of policymakers at the ECB

Looking ahead there’s more Chinese manufacturing data due out overnight before tomorrow sees one of the highlights of the month in terms of economic releases, with the US non-farm payrolls due out at 1:30 pm (BST). 3 markets to watch over the release are the EURUSD, USDJPY and USDCAD

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