US Markets Set to Reopen

Daily Analysis - 27/11/2015

Financial Markets Will Open Following Yesterday’s Holiday Marked by Low Volume Trading

Ahead of the US trading session, the UK’s second estimate of third quarter GDP is due with expectations of an unchanged print. Sweden and Norway’s retail sales numbers are also expected for release today during the European trading session, including Norway’s unemployment rate which is forecast to remain at 2.90%.

Gold Prices Remain Weak

Gold prices traded mostly flat during yesterday's session, closing at $1071.93 an ounce and looking to have formed a short-term base near the $1070 - $1065 region. However, the emerging consolidation seen here has formed into a potential triangle pattern which could see a breakout accompanied by strong momentum and volume over the near-term. A break below $1065 lows could see gold prices quickly drop to the $1050 psychological level while a break to the upside could see a retest of $1080 at the very least. The commodity markets on the whole remain weak as the US Federal Reserve is expected to hike rates this December after keeping monetary policy at near zero interest rates for over 5 years. WTI crude oil futures were also weak despite thin trading yesterday as the commodity closed yesterday’s session at $42.46 following three consecutive days of gains.

Canadian Corporate Profits Fall

Canada's third quarter corporate profits declined -5.40%, down from a surprisingly strong second quarter rise of 12.90%. On an annualized basis, quarterly profits have fallen -10.00% from over a year ago. The financial sector was the main drag on corporate profitbility, losing -9.00% on a quarterly basis with the non-financial services posting a modestly better performance in comparison, down -3.70%. The declines in corporate profits were attributed to the commodity markets slump including the slump in Crude oil prices although Canada is attempting to diversify away from the heavily reliance on the energy and mining sector. USDCAD tested the highs near 1.3324 yesterday, but gave back the gains to close almost flat at 1.3290. With prices thusfar failing to breach the major resistance levels at 1.3338 and 1.3420, USDCAD could see a short-term decline towards the next main support at 1.3050.

Yen Gains in Early Asian Trading

The Japanese Yen is trading stronger in today's early Asian trading session, rising 0.17% against the US Dollar. Consumer inflation data from Japan, released earlier today showed the National Consumer price index rise 0.30% on a year-on-year basis, above the median estimates of 0.20% and up from last month's flat reading. On the core CPI, prices rose a modest 0.70% for the month, down from 0.90% price rise from a month ago and coming out below estimates of 0.80%. The Japanese unemployment rate data also released today showed a strong improvement from 3.40% rate of unemployment to 3.10%. With the ongoing weakness in consumer prices, Japanese Premier Shinzo Abe called for an increase in social spending and for the minimum wage to be increased in a bid to stoke inflation.

Second Estimate of UK GDP Expected Unchanged

The second estimate for the UK's third quarter GDP is due for release later today during the European trading session. The median estimates point to unchanged third quarter GDP expansion at 0.50% as reported during the initial release. The second estimate for the GDP figure is expected to include consumer expenditure data which is anticipated to be mildly positive for the second revision based off strong retail sales numbers in September. Services remain the main economic driver followed by manufacturing and construction. The 0.50% expansion during the third quarter would mark a drop from the 0.70% growth seen during the prior quarter, although economists expect that this would only be a temporary blip with expectations that the fourth quarter is likely to come out modestly better at 0.60%. The British Pound closed yesterday's session at 1.5101, falling back lower after posting some gains earlier in the week.