US stocks set for weekly decline; Coffee surges higher

Summary:

• Wall St. set to end weekly winning streak

• GBP dips as flash PMIs disappoint

• CAD falls back after initial gains on data

• Coffee gains 19% in the past month

• Crypto newsletter: Bitcoin hovers around $7000

It’s been a fairly steady week for US stocks but unless there’s a decent move higher this afternoon the major benchmarks are on track to end their recent winning streak. The Dow Jones Industrial Average has posted green closes in each of the past 4 weeks, but this run is under threat with the market trading around 200 points lower than where it ended last Friday as European traders head off for their weekend break. 

The pound has fallen lower following the release of the first ever flash PMI readings for the UK which showed a contracting level of activity for both the manufacturing and services sector. These readings are intended to give an early look into the performance of these sectors in the current month and are in addition to the final readings which will be released at the start of December.

The data for November was as follows:  

• UK Flash Manufacturing PMI: 48.3 vs 48.8 forecast. 49.6 prior

• UK Flash Services PMI: 48.6 vs 50.1 forecast. 50.0 prior 

Both these readings are clear disappointments and in coming in firmly below the 50 mark indicate both of these are in contractionary territory.

Earlier this afternoon there was some market moving data from Canada with the latest look at consumer spending delivering some pleasing signs. For the month of September the figures were as follows:

• Retail sales M/M: -0.1% vs -0.3% exp. +0.1% prior, revised higher by 20 bps

• Core retail sales M/M: +0.2% vs -0.1% exp. -0.1% prior, revised higher by 10 bps  

While these are better than expected, and look even more favourable once the prior revisions are taken into account it is worth noting that the decline is the first in 3 months. Initially USDCAD fell lower, extending the declines which began with Poloz’s speech yesterday, but the market has since reversed and trades at its highest level of the day at the time of writing. 

Coffee prices were depressed for a long time but have been rallying very strongly recently. The price has just broke $116 and is up 19% over the past month! This stunning rally is taking place despite weakness of the Brazilian real and one may wonder what happens if the BRL recovers. Technically one may notice a large reverse head-and-shoulders formation. Despite recent rally coffee price remains well below the decade average of $152.

Our latest Crypto newsletter covers the latest developments in the space with it being a bad week for these assets with market leader Bitcoin falling back to the $7000 mark. Read the article in full here.