Summary:

• European equities deepen their morning losses fuelled by weakish PMIs
• British pound stays muted after equivocal retail sales and ahead of the BoE
• Commodities get back some of appeal as the greenback takes a step back

Thursday trading is passing in the face of weaker PMIs coming from the European economy suggesting that growth could have topped out during the fourth quarter. Those misses fuelled losses across the major stock markets in the old continent pushing them toward a 1% decrease on the daily basis. Moreover, those trends seem to be unlikely to reverse as SP500 futures point to a red opening as well. At the time of preparing of this analysis the SP500 future is falling as much as 0.65% hovering in the vicinity of its daily lows while the European indices are giving back almost 1% each except for the FTSE100 (UK100 on xStation5) being down just 0.6%. Relative better performance of the British stock market could come from the retail sales data which proved to be quite rosy, however, the details were no so promising (we’re analysing the data together with the BoE decision later today).

On the currency front one may notice that a safe haven flow seems to prevail as both CHF and JPY attract markets’ attention. At the same time we have quite a mixed picture when it comes to commodity-related currencies which may stem from specific factors. For one, the Canadian dollar is gaining ground despite slightly falling oil prices while the Norwegian krone is falling almost 0.3%. The relative outperformance of the Loonie might be ascribed to NAFTA talks and the latest revelations suggesting that the ultimate agreement (being CAD positive) appears to be getting closer. On top of that, the NZ dollar is adding a modest 0.15% gain whereas the Australian dollar is going down 0.45% being the weakest currency in the G10 basket. The reason is quite simple – the domestic jobs report. On the surface, it disappointed at least to some extent, however, when we delve into the details it does not turn out as bad as it seems.

Commodities are bouncing back as well, however, without oil prices (do notice that they shot up yesterday benefiting from the stellar EIA report). Wheat prices are advancing over 1%, soybean is climbing 0.2% and corn is rising 0.5%. Moreover, increases are seen on coffee, copper, iron ore – those rises may have something to do with the greenback underperformance in the aftermath of the Federal Reserve decision.

Cryptocurrencies proved to be somewhat more resilient to the latest developments in the United States (both the Fed decision and the impending announcement concerning fresh tariffs against China). However, their appeal seems to be slowly petering out as well despite fairly promising remarks from Twitter CEO.

Wednesday was dominated by the Federal Reserve which chose to hike rates, now it’s the Bank of England turn. Even as it will not rise rates already today it could lay the groundwork for a rate hike in May and this is the point everybody is going to watch for.