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27 июня, 09:31

Markets look to Central Bankers

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Asian Equities traded higher on Tuesday approaching near two-year highs on Tuesday as USD strength helped exporters and traders are expecting Federal Reserve Chair Janet Yellen to make positive comments to support the Fed’s projection for one more interest rate rise this year. Yellen is due to take part in a discussion on global economic issues at London’s Royal Academy today. In addition, several of her Fed colleagues are due to speak later in the day. U.S. durable goods data, released yesterday, was -1.1% which was worse than expected. As a result, this further adds to concerns about the strength of US economic growth after the recent rout in the oil market and indicators that inflation is not strengthening. Many traders are concerned that the Fed has an overly optimistic view of the economy as it sets its strategy for further interest-rate increases. Overnight treasury yields dipped lower but USD remained relatively strong with USDJPY trading at 111.65 and briefly rose to a 1 month high of 112.071. Following ECB President Draghi’s defense of the easing in European Central Bank monetary policy EURUSD remained steady at 1.1200 close to an 11-day high set overnight of 1.12036 GBPUSD moved less than 0.1% higher to currently trade at 1.2735. If the current trend continues then GBPUSD will attain a fifth straight daily gain, which would be the longest winning streak since early December. Oil appears to be on track for a fourth consecutive daily rise even with continued concerns around a persistent global over supply. WTI was trading at $43.65 a 0.2% gain from yesterday but is still likely to suffer a 10% loss for the month. Brent was holding steady trading around $46.25pb. And finally, Gold – which saw an unprecedented spike in volume at around 9:00 BST yesterday which saw Gold fall 1.6% to $1,236.50 an ounce on Comex. It is strongly believed this was an “erroneous” trade or “fat finger” event where trading jumped to 1.8 million ounces of gold in just a minute! This equates to more than the gold reserves of Finland! Following the short lived dip Gold subsequently recovered trading at $1,251 this morning. Markets will be paying attention to speeches from ECB President Draghi at 9:00 BST, BoE Governor Carney at 11:00 BST and Fed Chair Yellen at 18:00 BST all of which are likely to cause a certain degree of “knee jerk” reaction in the markets.

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26 июня, 11:20

Global Economic Optimism Continues

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Global equities moved higher on Monday as optimism continued to improve on global economic growth. However, USD remained somewhat subdued in early trading as the outlook for US inflation remains tenuous as restrictive bond yields continue to raise concerns about the Federal Reserve’s strategy to tighten their economic policy. In general, markets think the pace of its tightening will be much slower than policymakers want. The EUR had little impact following the news over the weekend that Italy began winding up 2 failed Venetian banks on Sunday in a deal that is likely to cost the country nearly €17 Billion. Earlier the German IFO posted a reading of 106.8 better than the consensus of 106.4 and the previous reading of 106.5, showing a continued optimistic view of Eurozone Business confidence. EURUSD traded around 1.1200 after the release and the 7-month high, set earlier this month at 1.1296, could be tested if EUR buying momentum, and typical end of month USD selling gather momentum. Oil prices moved higher after having fallen for five weeks in a row over concerns OPEC-led production cuts have failed to ease a global crude glut stemming in part from increased U.S. oil production. The Baker Hughes report, issued last week, showed US energy firms added 11 new Oil Rigs in the week to June 23rd. This takes the total rig count to 785 which is the most since April 2014. WTI was trading around $43.60pb and Brent at $46.25pb. Markets believe that $40 will provide some support as US shale production will likely abate if it breeches this level. USDJPY fell 0.2% to trade around 111.55. GBPUSD added to its 1% four-day gain as sterling moved higher trading around 1.2750. After 3 successive days of gains Gold fell back 0.3% trading around $1,247 in early trading. US Durable goods will be released today at 13:30 BST and are expected to shoe a 0.6% decline which is likely to indicate that US consumers are only slightly rebounding and inflation is not likely to rise further which, in turn, adds more credence to the Federal Reserve holding off on any near-term rise in US interest rates.

23 июня, 11:27

Markets look ahead to US data next week

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Trading in USD was relatively flat on Friday ahead of economic indicators released next week in the US, which will provide further insight into the US economy – specifically inflation. Following last week’s FOMC decision to raise interest rates, the USD Index hit a 1 month high on Tuesday of 98.871. Since then trading has been in a narrow range as the markets await new US data to “analyse”. With US inflation data released next week the markets will be keen to see if the recent slump in crude oil has impacted the US inflation outlook. US data releases next week will include; June consumer confidence indicator, pending home sales, crude oil inventories, revised first quarter GDP and the PCE price index. However, USD will likely react to wages & inflation data and moreso the July Non-Farm Payroll report in 2 weeks’ time. USD is set to post weekly gains of 0.4% against both USDJPY & EURUSD. USDJPY is trading around 111.25 below the 1 month high it set on Tuesday of 111.79. EURUSD is holding relatively steady around 1.1181. Oil made small recoveries yesterday from 10 month lows, with WTI trading around $42.95 and Brent trading around $45.55 in early trading this morning. Therefore Commodity Currencies have benefited with USDCAD rallying 0.75% on Thursday and currently trading around 1.3220. CAD also benefitted from strong domestic retail sales which added to the markets expectations for an interest rate hike in July from the Bank of Canada. GBPUSD was higher trading around 1.2735 as Kristin Forbes, Bank of England Policy Maker, stated “a “lift off” of UK interest rates should not be delayed any longer”. Such a statement is contrarian to comment made by Bank of England Governor Carney. This week GBPUSD experienced a sell off from Monday’s high of 1.2814 to a 2-month low set on Wednesday of 1.2589. Markets will be keen to hear the tone of speeches from FOMC members; Bullard, Mester and Powell today at 16:15 BST, 17:40 BST and 19:15 BST respectively.

22 июня, 11:42

Bear Territory for Oil?

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Oil continued to trade lower on Thursday as traders look ready to test new lows for crude prices with worries persisting over a global glut. Since peaking in late February, crude has dropped approximately 20%, with only brief rallies, completely erasing the gains it made at the end of the year following the initial OPEC-led production cut. OPEC and other major producers agreed to cut output by 1.8 million barrels per day from January for six months which was recently extended for an additional nine months. Whilst this was a major shift in policy for OPEC the hope it gave to markets was short lived. With increased production from the US, Nigeria, Libya and other producers the extra supply outstripped demand and forced prices lower. US Crude inventories fell 2.5 million barrels in the week to June 16, surpassing analyst expectations for a decrease of 2.1 million barrels. Even comments from Iran’s oil minister that OPEC members are considering further output cuts has made little impact to prices. Brent crude was trading at $44.95 a barrel at 09:05 GMT, after spending much of the Asian trading day in positive territory. Brent had fallen 2.6% in the previous session to its lowest level since November of last year. WTI was trading at $42.50 a barrel at 9:10 after spending much of the day trading higher this after touching its lowest intraday level since August 2016. GBPUSD is trading around $1.2670 after making some gains on Wednesday after Bank of England’s chief economist, Andy Haldane, suggested that “he was likely to vote for an interest rate hike this year”. Haldane was largely supportive of keeping rates low, contrasting sharply with the tone set by the bank’s Governor Mark Carney just the day before. NZD gained nearly 0.5% against USD following the expected RBNZ decision to keep interest rates unchanged at a record low 1.75%. RBNZ Governor Wheeler stated “Global economic growth has increased and become more broad-based. However, major challenges remain with on-going surplus capacity and extensive political uncertainty”. NZDUSD was trading at 0.7260 at 9:30 BST. Markets will be looking at US Initial Jobless claims, that are released at 13:30 BST today and a scheduled speech from FOMC member Powell at 15:00 BST for further evidence of the US economy strengthening.

21 июня, 11:38

Oil & GBP slide lower

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Oil continues to be under “over supply” pressure resulting in prices dipping to 7 month lows. Yesterday Oil suffered a 2% drop as the increased supply from several key producers undermined OPEC producers deal to reinforce a cut in global output. For those traders following technicals the recent fall in Oil equates to a 20% fall from recent highs signaling official “bearish” territory. In early trading WTI was trading around $43.35pb and Brent was trading just below $46pb. GBP dropped on Tuesday, and continued to be soft, after Bank of England Governor Mark Carney stated “that there would be no immediate adjustment of monetary policy by the central bank” in a speech he delivered at Mansion House in London. He also stated that “this stimulus is working, and that credit is widely available, the cost of borrowing is near record lows, the economy has outperformed expectations and unemployment has reached a 40-year low”. Because of his comments the market has reacted that an interest rate rise is highly unlikely. GBPUSD dropped from 1.2753 at 8:00 BST to 1.2631 just before 15:00 BST in response to Carney’s comments yesterday. Overnight GBPUSD has traded in a range of 1.25885 to 1.26345 currently trading near the lows at 1.2590. Today sees the State Opening of Parliament in the UK. An event normally full of pomp but, due to the snap election, will be somewhat muted. Whilst the Conservative Party is the largest party in Government there are still concerns that they may not gain the support of the DUP in Northern Ireland and gain the slim majority they need to govern without complications from other parties. Regardless, Prime Minister May will have a greatly trimmed down manifesto with the focus being Brexit and the state of the UK economy. We can expect GBP to continue to be under some pressure because of these uncertainties. EURUSD recovered slightly, after hitting a 3 week low, currently trading around 1.1130. USD also eased against JPY currently trading around 111.19. At 15:30 GMT the EIA Crude Oil Stocks change (June 16) are released. The consensus is -2.106M with the previous release at -1.661M. Regardless of the figure that is released we are expecting volatility in Crude Oil.

20 июня, 11:53

USD Rises as Investor Concerns Abated

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Investor concerns, that low US inflation could deter the Federal Reserve from raising interest rates further this year, were somewhat abated last night after New York Fed President William Dudley stated “that the tightening in the labour market should help drive up inflation”. Dudley’s comments reinforced last weeks Fed message and helped to give a boost to USD. In early Asian trading USDJPY rose to 111.783 reaching its strongest level since May 26th which is nearly 2.8% above the 2 month low set on June 14th of 108.81. Currently USDJPY is trading at 111.60. Technical Analysis indicates key resistance levels just above 112.10 which may tempt market bulls to test. Additional gains for USD against JPY may also arise following the comments made last week by the Bank of Japan Governor Kuroda; “the BOJ would be in no hurry to dial back its massive stimulus program” USD strength saw the Dollar Index September Future trading as high as 97.29 in early trading – it’s highest level since May 30th – currently trading at 97.25 for the September Future. Domestic politics and the UK’s economic future (the Brexit negotiations began yesterday) have caused downward pressure on GBP. After reaching a high on Monday of 1.2814 GBPUSD is trading below 1.2690 this morning. There may be some hope for GBPUSD to recover with speeches expected today form Bank of England Governor Mark Carney and British finance minister Philip Hammond. Oil continues to be under selling pressure as there is clear evidence that crude oil production is rising in the US, Nigeria & Libya. These increases are undermining the efforts of OPEC to curb production. Add to that a 22nd consecutive month of increases in new US Oil rigs and it becomes less of a surprise to see WTI trading below $44.70 and Brent trading below $47.35 a barrel in early trading this morning – both close to 5 month lows. As global risk sentiment has improved Gold has lost some of its shine hitting a 1 month low of $1,242.75 before retracing higher to currently trade close to $1,247.

19 июня, 11:32

Brexit Negotiations to be Triggered

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The Brexit negotiations between the UK and the EU is set to start today, June 19th. Although Theresa May has stated before “no deal is better than a bad deal”, Chancellor said on Sunday that “no deal would be a very, very bad outcome for Britain”. A Hung Parliament will likely cause both a positive and a negative impact on the Brexit process, as the Tories now have less dominance in the Parliament, the UK will likely be at a weaker position, resulting in a softer Brexit. However, different opinions and stances between different political parties will likely cause conflicts on some Brexit associated issues. The focuses on the Brexit issues include whether the UK will be able to stay in the custom union, trade agreements, financial services, the rights of EU citizens living in the UK and British nationals living in the EU etc. In the short term, the GBP prospects will likely subject to the progression and situation of the Brexit process. GBP has seen a rebound post the general election. GBP/USD has rebounded around 1.15% since June 12th. This morning, in early European session, the bulls are attempting to breach the psychological level at 1.2800. GBP/JPY has rebounded 2.3% since June 12th. This morning, in early European session, the bulls broke the resistance level at 142.00. EUR/GBP has retraced 1.3% since June 12th. After the release of the UK general election outcome, markets’ risk-off sentiment has waned. The VIX (volatility) index fell to a low of 9.37, last seen in 1993, after the election. It was followed by a moderate rebound, trading around 10.38. It appears to be that markets’ risk-on sentiment will likely last an extended period. Gold has retreated around 1.27% since the Fed addressed a hawkish statement last Wednesday. This morning in early European session, spot gold fell to a low of 1250.06, last seen on May 24th.. There is stronger support at the zone between 1245 – 1250, if the zone is broken, we will likely see an extended downtrend. In the short term, gold prices likely remain bearish unless some unexpected market events happen to push it up. The economic data is relatively thin this week. The Reserve Bank of Australia (RBA) meeting minutes will be released at 02:30 BST on Tuesday morning, it will likely affect AUD crosses.

16 июня, 12:27

BOJ Monetary Policy Remains Steady

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The Bank of Japan maintained their monetary policy on Friday whilst upgrading their assessment of private consumption and overseas growth; signaling its confidence that an export focused economic recovery was broadening and gaining momentum. Short term interest rates will remain at -0.1% and 10-year Government Bond yields close to zero. Unlike the US Federal Reserve, who have reduced their massive stimulus program, the BOJ is unlikely to adopt the same approach whilst Japanese inflation is nowhere near BOJ’s 2% target. Following the Policy Decision, a statement from the BOJ stated; “Private consumption has shown increased resilience against a background of steady improvement in the employment and income situation” In early trading USDJPY touched a high around 111.37 and is currently trading around 111.15. Japan’s Nikkei 225 advanced 0.7%, narrowing its loss for the week to 0.3%. GBP moved higher on news that Prime Minister Theresa May has reached a “broad agreement on a governing agenda prioritizing Brexit and UK unity with Northern Ireland’s Democratic Unionist Party”. The markets take this as a positive with “stability” returning to the UK Government. GBP has also been bolstered with signs that there is a likely shift in the Bank of England’s policy on keeping UK interest rates at record lows. GBPUSD is currently holding above 1.2750 & EURGBP remains close to the early Friday high of 0.8741. The Dollar Index rose to 97.539 extending the 0.5% gain it had on Thursday. With USD strengthening gold has seen muted trading currently trading at $1254.50. If gold fails to recover from current levels it will mark a weekly loss of 1% and a second weekly decline. WTI also remains “depressed” trading close to a 6 week low due to continued concerns over rising US inventories adding to an already heavy supply of Oil in the global market. Friday is relatively “light” on economic data releases with the University of Michigan Consumer Sentiment Index at 15:00 BST and Dallas FOMC Member Kaplan speaking at 17:45 BST.

15 июня, 11:31

Dollar Reverses on Fed’s Hawkish Tone

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Two more central banks are set to announce rate decisions this week following the FOMC announcement yesterday; they are the Bank of England (BoE) and the Bank of Japan (BoJ). UK retail sales and core retail sales figures for May will be released at 09:30 BST today followed by the Bank of England’s rate decision and monetary policy statement at 12:00 BST. The BoE stated in May that the rates will likely remain unchanged until the end of 2019. Be aware that the data release and the BoE’s announcement will likely cause volatility for GBP crosses. The Bank of Japan (BoJ) will announce its rate decision and monetary policy statement at 03:00 BST on Friday June 16th. Markets are keeping a close eye on when the BoJ will begin to gradually remove its QE programme. Although the economy has seen a moderate recovery (as inflation hasn’t seen a stable upswing) the BoJ will likely keep rates in negative territory and continue the QE until it sees a sustainable pickup in inflation. The FOMC announced a rate hike of 25 basis points on Wednesday evening, from 1.0% to 1.25%, which was In line with market expectations. The FOMC maintained its March forecast as economic growth has continued making progress predicting moderate expansion over the next few years. Notably, the Fed sees one more rate hike by end of the year and three more rate hikes in 2018 to reflect economic growth, it expects to start shrinking its balance sheet this year. Per CME’s FedWatch tool; the probabilities for a rate hike in September and December are 18% and 39.7% respectively. It indicates that markets see the next rate hike more likely to happen in December. The Fed sees the job market strengthening further with the unemployment rate in 2018 revised downward from the March estimate of 4.7% to 4.6%. The Fed sees near term Inflation staying below 2%, however it is expected to move up and stabilise around 2% over the next few years as the Fed hasn’t seen broad undermining of inflation expectations. The dollar index hit a low of 96.28, last seen on November 9th ahead of the FOMC press conference because of the disappointing retail sales and inflation data. Nevertheless, USD saw a dramatic and substantial reversal as Yellen’s overall statement was relatively hawkish, lifting the dollar with a 0.85% rebound. On Thursday, in early European session, the dollar index bulls broke the resistance level at 97.00. On Wednesday evening USD/JPY rebounded 0.96% from a 7-and-a-half week low of 108.80, recovering the psychological level at 109.00. Spot gold fell by 1.8% from a 3-day high of $1280.56, hitting a 2-and-a-half-week low of $1257.02. GBP/USD fell around 0.68%, from a 3-day high of 1.2817. EUR/USD fell around 0.9%, from a 7-month high of 1.1295, on Thursday in early European session, the psychological support level at 1.1200 was broken again.

14 июня, 11:31

How will US Data and FOMC Affect USD ?

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The crucial US retail sales and inflation figures for May will be released at 13:30 BST today, June 14th, it will be followed by the long-awaited FOMC June rate decision at 19:00 BST and the press conference at 19:30 BST. US CPI and core CPI has reached, and held above, the Fed’s 2% target since December 2016 and November 2015 respectively, however, both saw a decline since February 2017 partially caused by falling energy prices. Consensus for CPI and core CPI for May (YoY) are 2.0% and 1.9% respectively. If the figures released are better than the consensus it will likely provide USD support. US retail sales (MoM) has seen a downtrend since 2016 December mainly caused by the decline in auto and petroleum sales. The April figure saw a 0.4% rebound. Retail sales excluding autos (MoM) also saw a downtrend since January 2017 with the April figure showing a 0.3% rebound. Per the CME’s FedWatch tool the probability for a June rate hike has climbed to 99.6%. Regardless of the incoming retail sales and inflation data performance it appears to be a certainty that the Fed will announce a rate hike today. At present a September rate hike appears to be less likely as economic data over the past few months showing a slowdown. Besides, recent political turmoil also likely result in the Fed’s actions being less active. Per the CME’s FedWatch tool the current probability for a September rate hike is only 23.4%. The Fed will continue monitoring economic data performance, labour market conditions and inflation pressure over the following months to adjust the future rate hike pace. If the US economy continues to show a slowdown with ongoing political turmoil then the next rate hike will likely happen after December. US data performance, and the tone of the Fed’s statement, will be the major drivers of USD and gold strength this week. USD prospects currently remain moderately bearish. The dollar index has seen a 0.4% fall over the past three sessions. This morning, in early European session, it hit a 4-day low of 96.82, trading below the resistance level at 97.00. Gold rebounded 0.85% since Tuesday after testing the significant support line at 1260, hitting a 3-day high of 1269.93 this morning. USD/JPY recovered the significant level at 110.00 on Tuesday. EUR/USD consolidates above the psychological level at 1.1200. GBP/USD has rebounded 1% since Tuesday, hitting a 3-day high of 1.2795 this morning.

13 июня, 11:19

How will the Tone of the FOMC Affect USD?

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The long-awaited FOMC June meeting will be held on Wednesday June 14th, at 19:00 BST. Per CME’s FedWatch tool, the probability for a June rate hike has climbed to 99.6%. It indicates that markets regard a June rate hike almost certain to happen. Originally the markets assumed the Fed would raise rates twice more by end of the year; in June and in September respectively. Currently, some traders speculate that the Fed will address a more dovish economic outlook after announcing a June rate hike decision implying a less likely September rate hike. The tone of the Fed’s statement on Wednesday will be the key to affect USD and gold strength this week. The dollar index has seen a substantial 3.78% retracement since April 10th, hitting a low of 96.44 on June 7th, last seen on November 9th. The bears are currently testing the psychological support level at 97.00. USD prospects remain moderately bearish, if the Fed address a more hawkish outlook it will likely provide USD support. However, as the investigations on Trump’s Russia leak scandal is still ongoing, USD is still under pressure due to political turmoil until more evidence is released showing Trump’s innocence. Spot gold has seen a substantial 2.2% retracement since June 7th, due to profit-taking and the release of the UK general election outcome which has eased markets’ risk-off sentiment. The price has been consolidating since Friday evening, holding above the significant support line at 1260. The UK inflation data (CPI and PPI) for May will be released at 09:30 BST today. it will likely affect GBP crosses.