

Sterling-Euro split widens, US focus on Fed speakers, big day for Canada and Twitter earnings


Morning finds that once again, the main trading action has played out in currencies rather than stock markets, with a particularly strong focus on Europe.

Sterling continues to climb this morning boosted by the news that the House of Commons has passed the Brexit bill by a huge 494-122 margin without amendments. It's now off to the House of Lords. The upper chamber has been warned that its future could be in question if it interferes with the will of the people but let's stick to one change at a time.

Meanwhile the Euro continues to retreat as internal divisions and splits continue to grow. Greece is back in the news today with the IMF and Germany having a public debate over debt relief. The IMF favours debt relief ‎while Germany claims it impossible under EU rules unless Greece leaves the Eurozone. Schaeuble should be careful what he wishes for, Greece isn't the only country suffering under the single currency empire and there are a number of countries where a big chunk of the population wants out.

‎The US dollar is flat to up slightly against gold, JPY, CAD and AUD. NZD took a tumble after yesterday's RBNZ statement actively talked down the dollar. The greenback could be active today with more Fed speakers as traders look for hints on whether the Fed is considering a March interest rate hike. 

A move in March would put the Fed on course for four hikes this year which the street has priced into USD, a pass in March would suggest three (the Fed's party line) or even two. Unlike Tuesday which saw a split between hawkish Harker and dovish Kashkari, today's speakers (Evans and Bullard) have both been firmly in the dovish faction for some time. It would be a surprise to hear hawkish talk out of them while dovish comments could also have an impact, potentially tipping the balance of sentiment.

Stock markets have been steady this morning. US index futures and the FTSE are up 0.1% while the Dax is up 0.4%. WTI and Brent crude oil continue to rebound, rising ‎1.0% as they shrug off yesterday's huge increase in US crude oil inventories and focus on the surprise decline in gasoline stockpiles.

There are a ton of potentially market moving earnings reports in Canada today. Manulife Financial leads the charge posting huge numbers and raising its dividend by over 10%. Thomson Reuters also beat the street and raised its dividend. 

Precision Drilling beat the street on revenues and posted a smaller than expected loss. This news, along with Suncor Energy’s 10% dividend increase is a sign activity in the oilpatch may finally be starting to recover. Telus fell short of expectations on both earnings and guidance.  ‎
In the US, Twitter earnings are out today. Despite the company’s services getting a lot of attention and publicity through the election campaign and President Trump continuing to use Twitter‎ to make pronouncements, sales came in short of expectations although adjusted earnings managed to beat the street. Twitter shares have been trading down over 10% in premarket trading. . 

Corporate News

Twitter                $0.16 vs street $0.12, sales $717M short of street $740M

Suncor Energy            $0.38, 10.3% dividend increase

Manulife Financial        $0.63 vs street $0.51, 10.8% dividend increase

Precision Drilling        ($0.10) vs street ($0.15), revenue $284M vs street $265M

Thomson Reuters        $0.60 vs street $0.57, small dividend increase

Telus    $0.53 vs street $0.57, guides 2017 EPS to $2.49-$2.64 below street $2.78

Economic News

Japan machine orders        street 4.5%
Australia new home sales    previous 6.1%

Norway GDP            street 0.7% vs previous (0.5%)
Germany trade balance        street €20.5B
Greece unemployment rate    previous 23.0%


Upcoming significant economic announcements include:

8:30 am EST        Canada new house prices    previous 3.0%

8:30 am EST        US jobless claims        street 249K

9:10 am EST        FOMC Bullard speaking
1:10 pm EST        FOMC Evans speaking

10:30 am EST        US natural gas            street (159 BCF)
