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XTB TRADEBEAT

Stocks looking fragile heading into the weekend; CAD falls on GDP miss

Summary:

  • Stocks under pressure despite US consumer confidence beating forecasts
  • Trade war concerns weighing on global indices
  • Canadian GDP misses forecasts and CAD moving lower
  • UK construction PMI ticks higher
  • CFTC allows employees to trade crypto; Bitcoin respects resistance

The revised University of Michigan consumer sentiment index for February came in at 99.7, slightly lower than the prior reading of 99.9 but still above the 99.4 forecast. Despite the downwards revision the print is still the second highest in 14 years and suggests that US consumers remain in a buoyant mood. 

Despite the positive data its looking like another day of declines for US stocks with indices around the globe experiencing fairly major selling this week. The US500 has shed 140 point from its high of the week at 2791 and the price action has been pretty ugly with a rally at the start of the week subsiding and the sellers taking control of the tape.

 Announcing fresh tariffs on steel and aluminium imports US President Donald Trump has probably commenced a new chapter in global trade war, a move which sent Wall Street and the US dollar lower. He announced 25% tariff on imported steel and 10% on aluminium for "a long period of time" adding on Twitter "our steel and aluminium industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world". The move sparked immediate concerns of retaliation from the biggest trade players in the world.

The most recent growth figures from Canada have come in worse than expected and the trend appears to be one of a slowdown. In annualised terms the Q/Q GDP for the final quarter of 2017 came in at 1.7%, well below the 2.0% expected. The Canadian dollar has come under pressure following the release and the Loonie was already lower on the day on the latest talk of the US pursuing a trade war.

After a tiny decrease seen in manufacturing PMI the gauge measuring confidence among UK builders improved last month quite easily beating economists’ forecasts. However, the details do not look so encouragingly as the industry faced shrinking new orders for the second month in a row. The pound barely responded as construction does not seem to be so crucial for the UK economy.

Cryptocurrencies’ prices have not changed too much recently as they have remained within their consolidation ranges. Bitcoin has respected prior resistance around 11,000 today as the markets have turned slightly lower. The US Commodity Futures Trading Commission (CFTC), which has formally allowed their employees to trade digital currencies keeping an exception on Bitcoin futures though.

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