Equities gain ahead of Trump; CLP collapses

Summary:

• US stocks make record highs ahead of key Trump speech

• US500 hits 3100; DE30 tags 13300

• Chilean peso collapses

• UK employment falls and wage growth slows

It has been a fairly sanguine start to the week for stock markets in the US, with some early weakness yesterday showing that there’s still plenty willing to buy the dip. S&P500 futures came within just a few points of their record highs earlier on this morning, but then slid a little ahead of the cash open. The price action was similar to that seen on Friday when a move lower in price proved short-lived and they have subsequently gained with the S&P500 and Nasdaq 100 both printing new record highs in the past hour while the Dow Jones INdustrial Average is just a whisker off joining them in uncharted territory.

Even though the economic calendar is fairly sparse in terms of big events, there is one that stands out with a speech from US president Trump at the Economic Club of New York eagerly awaited. There’s speculation doing the rounds that Trump may use this opportunity to unveil some good news on the trade front with some sources suggesting a “constructive statement on China” whilst others believe Trump may delay tariffs on German cars. The speech is due to start at 5pm (GMT) and could have an impact on both the US500 and DE30 that have tagged the round figures of 3100 and 13300 in recent trade. 

USDCLP currency pair was under an upward pressure last week as protests in Chile intensified over government policies to change constitution and increase prices of certain products. However, the pressure has just gone much bigger as national strike has been proposed for 21 November. USDCLP has soared more than 4% today, a massive move for a currency pair, only to be reversed by a round 800 psychological level. The question is – given the political instability, could this level hold?

Even though the unemployment rate ticked back down to its lowest level in several decades the latest employment report from the UK has delivered bad news on the whole for workers. One concerning aspect is the fall in wages with average weekly earnings coming in worse than expected and the prior month’s number also revised down to boot. Employment also fell with the drop in this area over the last 3 months the biggest fall since May 2015. For the second day running we’ve had disappointing figures from the UK and while the adverse reaction in the markets has been minimal, it does look worryingly like the possible start of a downwards trend. 

The GBPNZD rate is looking to push higher again with the prior resistance around 2.0020 and the 21 EMA (yellow line) attracting buyers on recent dips. With the New Zealand central bank set to announce the outcome of their latest policy overnight and there being a fair chance that they cut rates there is likely to be heightened volatility in this pair over the next 24 hours.