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21 сентября, 16:20

Not so rosy long-term consequences for USD from the Fed policy

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The Fed announced the beginning of a reduction in their massive holding of bonds and mortgage-backed securities starting in October, citing the impact of the recent hurricanes on the economy as temporary and not detrimental to overall economic growth. The scale of reductions will gradually increase, starting from 10 billion USD a month and reaching 50 billion USD within a year. Under existing conditions, the Fed’s balance sheet will decrease by $300 billion to $4.2 trillion. If the program remains as is, allowing the balance sheet to decrease by $50 billion a month, it is predicted that it will take 6.5 years to reach pre-crisis balance levels of approximately $900 billion. However, it is unlikely that the committee intends to reduce the balance to pre-crisis levels. The target may well be around $2.0-$2.5 trillion, which will take 46-56 months to achieve. Much is assumed that the decline in the balance will occur along with uninterrupted economic growth. US economic growth has continued since 2009, it therefore requires as much as 15 years of persistent growth to get the FOMC’s balance sheet to pre-crisis level. Such a long period of uninterrupted growth has not been experienced in modern history. This situation, with almost impracticable plans to reduce the balance during one cycle of economic growth, has two conclusions: Firstly, the Fed could have plans for further increases in the scale of the program. Secondly, the Fed does not want to return its balance sheet to $2-2.5 trillion but is, instead, targeting far higher levels. News about the beginning of the reduction of the balance sheet, together with forecasts of a rate increase this year and three hikes in 2018, helped USD to strengthen sharply yesterday. It is very likely that the USD will continue to strengthen in the next few days/weeks as the market will look to interest rates futures mirroring the hawkish Fed tone. Prior to the Fed’s announcement, market expectations suggested the next rate hike in March 2018, followed by one in the second half of 2018. However, the USD appears to be facing long-term problems, as the Fed continues to reduce its target rate forecasts. These have now been revised down to 2.8% from 3.0% in June, also down from the 4.2% of April 2012, when such forecasts were initially published. In summary, despite the visible current hawkish position of the Fed, which helped USD yesterday, and may continue to do so in the near future, the long-term outlook for the U.S. currency for the next 3-6 years is clearly worse than that of its competitors due to the understanding that the Central Bank is unlikely to raise interest rates as much as in previous cycles of monetary tightening. Moreover, the Fed would probably do its tightening more gradually than its competitors such as the ECB, the Bank of Canada or the Bank of England.

15 сентября, 09:21

A Stronger Picture for the UK?

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North Korea fired another missile over Japan into the Pacific Ocean on Friday. The regimes defiance towards recent UN sanctions has had a mooted effect on the markets as many are growing accustomed to Pyongyang’s actions. In an unsurprising move on Thursday, the Bank of England’s Monetary Policy Committee voted 7-2 to keep UK interest rates at 0.25%. The minutes of the meeting commented that there is a “slightly stronger picture” for the UK Economy with a strong labour market, continued housing demand and the recent improvement in retail sales. Such rhetoric has many believing that, if wage growth continues to rise, the possibility of a rate hike may occur earlier than expected. Following the meeting, GBPUSD rose over 1.4% to reach 1.34038 – a level last seen 12 months ago. On Thursday, data from the US Labour Department revealed a rise to 0.4% in August in the Consumer Price Index – bettering July’s insipid 0.1% increase. Core CPI is running at 1.7%, which is likely to provide some much-needed assistance to the Fed and its 2% inflation target. Following the data release, the likelihood of a US rate hike in December increased to 50.9% from 41.3%, per CME#’s FedWatch Tool. More data showed the US Labour market staying strong, as initial claims for unemployment benefits declined 14K. The seasonally adjusted rate of 284K (week ending September 9th) is below the 300K threshold for 132 weeks – the longest such run since 1970. The strong labour market appears to be helping, finally, push inflation higher. Market focus will now center around next week’s FOMC meeting for more clues on US economic policy and the timing of tightening in the months ahead. EURUSD climbed, after hitting a 2-week low on Thursday, to currently trade around 1.1920. USDJPY is little changed and currently trades around 110.40. GBPUSD hit a 1-year high on Thursday and has maintained upwards momentum overnight to currently trade around 1.3410. Gold was relatively flat and currently trades around $1,330. WTI slipped overnight, after gaining over 1% on Thursday. Currently, WTI is trading around $50.20. Major economic data releases for today: At 11:00, Eurostat will release Eurozone Trade Balance for July. Consensus is suggesting €21.4B from the previous release of €26.6B. With relatively good economic growth in the Eurozone the markets will likely only react if the data is significantly different than expected. At 13:30, the US Census Bureau will release the “much anticipated” Retails Sales (MoM) report for August. The previous strong reading of 0.6% is not expected to be beaten with the release today – consensus is suggesting a figure of 0.1%. As a good indicator of consumer spending, the markets will be hoping that the release stays in positive territory. A negative release will cause a weakening in USD and add volatility into the markets.

14 сентября, 09:17

UK Unemployment at 42 Year Low

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UK unemployment fell to its lowest level since 1975, data on Wednesday revealed. Unemployment fell by 75K, bringing the unemployment rate down to 4.3% (from 4.4%). Wage growth was unchanged from the previous release at 2.1%, but recent inflation data of 2.9% shows wage growth is clearly not keeping up. A strong labour force is helping UK growth but the specter of a rate hike, to keep inflation near to the Bank of England’s 2% target, has the markets concerned, although many do not see an increase until well into 2018. A plethora of data was released from China on Thursday, showing weaker than expected numbers. Year-on-Year data showed Chinese retail sales at 10.1% (forecast 10.5%), Industrial Production at 6% (forecast 6.6%) and fixed asset investment at 7.8% (forecast 6.6%). Whilst the released data missed forecasts they still indicate a strong economy that is helping global demand. In the US, Speaker of the House, Ryan, stated on Wednesday that a plan for tax reform would be released by the Republicans in the week of September 25th. An overhaul in the US Tax system is desperately needed by the Trump Administration as they have struggled to implement any of their planned initiatives. The markets will now be focusing on several interest rate decisions in Europe and inflation data from the US today. EURUSD moved lower, following a 0.7% drop on Wednesday. Currently, EURUSD is trading around 1.1875. USDJPY is little changed in early trading. Currently, USDJPY is trading around 110.45. GBPUSD suffered as sluggish wage growth data were blamed for a fall in value of GBP against USD. Currently, GBPUSD is trading around 1.3205. Gold was little changed overnight, currently trading around $1,322. WTI moved higher on Wednesday, following the EIA report that global oil demand is at its highest level since 2015. Currently, WTI is trading around $49.60. Major economic data releases for today: At 08:30, the Swiss National Bank will release their Interest Rate Decision. Rates are not expected to change form the existing 0.75%, but the markets will pay attention to the tone of the announcement for clues as to when policy may soften. At 12:00, the Bank of England will release their Interest Rate Decision. With recent increases in UK inflation, the markets will be looking for clues as to the timetable for future rate hikes in the minutes that will also be released. Consensus calls for there to be no change in rates today. At 13:30 BST, the US Bureau of Labor Statistics will release US CPI & CPI Exc. Food & Energy (YoY) for August. CPI exc. Food & Energy is forecast to come in at 1.6% (prev. 1.7%), whilst CPI is forecast to come in at 1.8% (prev. 1.7%). The impact of the recent Hurricanes & the resulting recent gasoline price hikes may result in a distorted release. Markets are likely to see USD volatility regardless of the data released.

13 сентября, 09:14

US Equities at Record Levels

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US equities closed at record levels on Wednesday, as improved risk-on sentiment returned to the markets and news that the US economy will benefit if the US tax reform is passed. US Treasury Secretary Mnuchin stated on Tuesday that “tax reform could be backdated to January 1st, 2017 as it would be a “big boon for the economy.” He also commented that the Trump administration was “super focused” on ensuring tax reform would be completed by the end of the year. Such comments helped the supported rise in US Treasury Yields. On Wednesday, Asian equity markets reached a 10-year high, although the markets remain cautious that geo-political tensions between North Korea and the US could escalate following President Trump’s comments that the recent UN sanctions against North Korea were a “very small step” and “nothing compared to what ultimately will have to happen” to deal with North Koreas’ nuclear program. Following the recent sanctions, North Korea has vowed to redouble its efforts to fight of the threat of a US invasion. With continued rhetoric, markets will remain on edge and will ultimately look to safe havens. UK Consumer Price Index was released on Tuesday, showing increasing UK inflation rising to 2.9% (YoY) in August. GBPUSD reached a 1 year high on the news. Inflation above the Bank of England’s target of 2% has been complicating why policy makers are not raising UK interest rates. With a Bank of England Policy meeting being held on Thursday, the markets are looking for clues as to the likely timing of rate hikes. EURUSD edged higher overnight to currently trade around 1.1980. USDJPY moved higher with improved risk-on sentiment. Currently, USDJPY is trading around 110.15. GBPUSD benefitted from, higher than expected, UK inflation data. Currently, GBPUSD is trading around 1.3300. Gold lost ground against USD and currently trades around $1,330. WTI was trading in a narrow range ahead of today’s EIA report. Currently, WTI is trading around $48.70. The major economic data releases for today will be: At 13:30 BST, the Bureau of Labor statistics, Department of Labor will release Producer Price Index (MoM) for August. As a clear indicator of commodity inflation, this release could potentially help the Federal Reserve in its plans for a further rate hike this year if the release comes in strongly. The previous release, of -0.1% is expected to be bettered with the consensus calling for an increase to 0.3%. If the release is wildly different from the consensus we can expect USD volatility. At 15:30, the Energy Information Administration will release Crude Oil Stocks change for September 4th. The impact of Hurricane Harvey is still being felt in the US, so markets will be eager to see if the consensus comes in at 2.285M (from the previous 4.580M). Expect Oil to see volatility if the released number is significantly different than the consensus.

12 сентября, 09:13

Market Concerns Abate: Risk-On Sentiment Improves

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A degree of risk-on sentiment returned to the markets on Monday and in early Tuesday trading. The economic impact of Hurricane Irma, now downgraded to a tropical storm, appears to be less than originally predicted. The hardest hit region, Florida, still has millions without power and, whilst the damage caused by Irma will take weeks to recover from, the region appears to have fared better than many had initially forecast. The markets were concerned that North Korea may celebrate their Founding Day public holiday with new missile or nuclear tests. With no such tests having occurred, concern turned to the reaction from North Korea in regards to the latest UN Security Council sanctions. The latest sanctions have imposed a ban on North Korea’s textile exports and capping imports of crude oil, which were less severe than Washington had proposed. North Korea has not responded to these latest sanctions against the country. These 2 factors helped USD to recover on Monday as the markets moved away from safe havens and adopted a more risk-on sentiment. EURUSD fell back from Friday’s 32 month high of 1.2092 to trade as low as 1.19455 in early Tuesday trading. Currently, EURUSD is trading around 1.1950. USDJPY gained from Friday’s 10 month low of 107.32 to currently trade around 109.44. GBPUSD is relatively flat overnight, currently trading around 1.3172. Gold, with risk-on appetite returning, gave up recent gains, falling back from Friday’s 12-month high of $1357.4 to currently trade around $1,323. WTI gained over 1% on Monday and is currently holding steady, trading around $48.45. At 09:30 BST, UK National Statistics will release Consumer Price Index (YoY) for August. Inflation has been steadily rising in the UK and the latest forecast suggests this trend is continuing. The previous release of 2.6% is expected to be beaten with this release, with a consensus of 2.8%. Such increases do leave the “door open” for the Bank of England to hike interest rates, but that is unlikely with the current sluggish growth in the UK.

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11 сентября, 09:12

USD Stabilizes

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Hurricane Irma has, reportedly, inflicted less damage on the US mainland than was originally predicted, thereby reducing the economic impact of the devastation it was expected to cause. The hurricane caused flooding and tidal surges that knocked out power to 4 million homes and businesses in Florida. Meteorologists are now predicting that Irma will weaken to a tropical storm as it travels into northern Florida and Southern Georgia. Markets had been concerned that another North Korean missile test would occur over the weekend, but such fears were allayed – such concern saw a flight to safe havens last week and a broad USD decline. There is still a concern, as the markets are now awaiting the UN Security Council’s vote later this week regarding further sanctions being imposed on the regime and how North Korea will respond. North Korea’s state run news agency stated on Monday that “North Korea is closely following the moves of the US with vigilance”. Markets are also awaiting next week’s Federal Reserve policy meeting, which will likely focus on economic growth following Harvey and Irma. In an interview with CNBC last week, NY Fed President Dudley commented that he had “marked down” his Q3 growth estimate “a touch” and further commented that US interest rates “are going to move gradually higher over time”. The markets will now focus on US inflation data later this week. EURUSD is unchanged from Friday’s close – currently trading around 1.2015. USDJPY is 0.2% higher in early trading, to currently trade around 108.38. GBPUSD is little changed over the weekend and currently trades around 1.3180. Gold is virtually unchanged and currently trade around $1,338. WTI edged higher, by 0.6%, in early Monday trading, following reports that the Saudi Oil Minister has discussed extending a pact to cut global oil supplies beyond March 2018 with Venezuela & Kazakhstan. WTI is currently trading around $48.35pb. At 13:15 BST, the Canadian Mortgage and Housing Corporation will release Canadian Housing Starts (YoY) for August. A robust Canadian economy led to the recent hike in rates by the Bank of Canada, so markets will be looking to see if the housing market is keeping up with demand by improving on the previous release of 222.3K.

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08 сентября, 09:08

Hurricane Harvey Impacts US Unemployment

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The US Department of Labor released Initial Jobless Claims (Sep 1) on Thursday that showed the impact Hurricane Harvey has had on US unemployment. Initial claims for state unemployment benefits increased 62,000 to a seasonally adjusted 298,000 for the week ended Sept. 2, the biggest jump in more than 2 years. With Harvey causing heavy flooding, which disrupted Oil & Natural Gas production, resulting in the temporary closure of Gulf Coast Refineries, Texas saw an increase in Americans seeking unemployment benefits. With Hurricane Irma expected to make landfall in the US on Saturday, markets are concerned what devastation Irma may cause in a region only now starting to get back on its feet. The ECB Rates decision was no surprise to the markets, keeping rates unchanged, on Thursday. However, ECB President Draghi commented that the ECB was looking at how to wind down its €60 billion a month buying program, indicating the decision will be made in October. With no foreseeable end to Eurozone stimulus, Eurozone Bonds were bought, along with EURUSD which surged higher, reaching a high on the day of 1.20593. The US Energy Information Administration released data on Thursday that showed US Crude Inventories increased by 4.58M last week – the most since March. With a large number of refineries inoperable, because of Hurricane Harvey, the markets were expecting a buildup in inventories. These inventories should reduce as Gulf Coast refineries are coming back online, but the impending arrival of Hurricane Irma could slow, or potentially stop, this progress. Federal Reserve Bank of New York President Dudley is the latest US central banker to present his views, ahead of a policy-setting meeting later this month. Dudley reiterated the need to continue raising rates while conceding that the Fed may have to rethink its inflation model. EURUSD continued strengthening overnight following ECB President Draghi’s comments. Currently, EURUSD is 0.5% higher trading around 1.2085 – levels not seen since late 2014. USDJPY has weakened 0.6% overnight to currently trade around 107.70 – last seen in October 2016. GBPUSD continues to improve on overall USD weakness. Currently, GBPUSD is trading around 1.3140. Gold reached levels not seen for over a year, on concerns that there may be another North Korean missile launch over the weekend. Currently, Gold is trading around $1,356. WTI initially slipped on the back of the inventories report, but has recovered 0.3% overnight to currently trade around $49.55pb. At 9:30 BST, the Bank of England will release Consumer Inflation Expectations. A somewhat subjective release, as it is based on consumer’s expectation as to how much price of goods and services are likely to change during the next 12 months. Previously the release was 2.8%. At 9:30 BST, Reserve Bank of Australia Governor Lowe is scheduled to make a speech. Markets will be looking for any clues as to changes in Australian economic policy. At 13:30, Statistics Canada will release the Canadian Unemployment rate for August. With the recent surprise rate hike by the Bank of Canada, the …

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07 сентября, 09:11

Bank of Canada Surprises Markets

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In a surprising move on Wednesday, the Bank of Canada raised interest rates by 25 basis points to 1%. The Bank of Canada said the hike “was warranted given unexpectedly strong economic growth in Q2 but future moves are not predetermined and would be guided by data and market developments”. Such a comment could result in further rate hikes before the end of the year. Following the hike, USDCAD fell by over 2%, to trade at 1.21272, a level not seen since June 2015. Now the markets will be closely watching future economic data ahead of a speech by Bank of Canada Governor Stephen Poloz, scheduled for September 27, when he is expected to provide an economic update. The US Commerce Department released data on Wednesday that showed the US trade gap rising 0.3% to $43.7 billion. The June trade deficit was revised down slightly to $43.5 billion from the previously reported $43.6 billion. The trade deficit increased less than expected in July, as both exports and imports fell, suggesting trade could contribute to economic growth in Q3. However, the effects from Hurricane Harvey, and the impending effects resulting from Hurricane Irma, could significantly impact commodity prices and therefore push up the trade deficit in September. The market will now focus on today’s ECB Interest rate decision and the statement that follows from ECB President Draghi. The markets are hoping that Draghi may give more clarity on paring the European Central Bank’s bond-buying program, although some market participants are weary that Draghi may warn against the strength of EUR, which has risen 13% this year to date, the strongest performing G10 currency. EURUSD Gained 0.2% to trade as high as 1.19499 on Wednesday. Currently, EURUSD is trading around 1.1925. USDJPY made back recent losses to currently trade at 109.00. GBPUSD continued to hold firm reaching a high of 1.30818 on Wednesday. Currently, GBPUSD is trading around 1.3050. Gold increased 0.5 percent to $1,342.39, its highest level in a year. Currently, Gold is trading around $1,335. WTI continued strengthening, reaching a high on Wednesday of $49.66pb, an increase of over 1.5% on the day. Currently, WTI is trading around $49.35pb. At 10:00 BST, Eurostat will release Eurozone Gross Domestic Product (QoQ) & (YoY) for Q2. Consensus is calling for both data sets to be unchanged: 0.6% for QoQ and 2.2% YoY. As a broad measure of Eurozone economic activity and health the markets will be looking to see an unchanged or better release. A higher than expected number will see EUR move higher, similarly a lower than expected number will see EUR decline. At 12:45 BST, the European Central Bank (ECB) will announce its Interest Rate decision. The market is not expecting any rate hike. At 13:30 BST, The ECB holds a press conference and releases their Monetary Policy Statement. The markets will be listening acutely as to the tone of the comments the ECB makes. At 16:00 BST, the US Energy Information Administration will release the EIA Crude Oil Stocks …

06 сентября, 09:38

Cautious Tone from Central Bankers as Risk Off Sentiment Returns

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The US Commerce Department released Factory Order (MoM) for July that came at -3.3%, their biggest drop since August 2014. However, capital goods were stronger than the previous release, coming in at 1.2%, indicating an accelerated pace of business spending as we enter Q3. Many Central Bankers were scheduled to speak on Tuesday. One such Central Banker was Fed Governor Brainard who expressed concern that US inflation is “well short” of the Fed’s target (currently 2%) and that the Federal Reserve should be “cautious about tightening policy further until we are confident inflation is on track to achieve our target”. Markets are skeptical of a rate hike anytime soon, with the probability of a December rate hike at approximately 30%. More US Central Bankers are scheduled to speak but the markets are expecting a similar tone. The markets are now anticipating that ECB President Draghi will echo similar cautiousness when the ECB meets on Thursday for a rates decision and to discuss economic policy. To add to risk off sentiment comes reports that North Korea could develop missiles that can reach Europe sooner than expected, per French Defense Minister Parly. Her comments came after Russian leader Vladimir Putin said any new sanctions against North Korea, because of its nuclear program, would be “useless” and “ineffective”. More rhetoric followed with President Trump commenting on Twitter that he is allowing Japan and South Korea to buy “a substantially increased amount of highly sophisticated military equipment from the United States”. Such comments resulted in Risk off sentiment as the market moved away from holding USD and moved into traditional safe-havens. EURUSD climbed higher on Tuesday and currently trades around 1.1910. USDJPY benefitted from its safe-haven status, losing 1% on Tuesday to trade as low as 108.63. The trend has continued overnight with USDJPY trading down to 108.50 in early trading. USDJPY is currently trading around 108.70. GBPUSD saw its largest gain in 4 weeks, climbing to 1.30321 on Tuesday. The upward move continued overnight with GBPUSD currently trading around 1.3040. Gold benefitted from safe-haven buying, trading up 0.3% to $1,338.88 on Tuesday, its highest since October 2016. Currently, Gold is trading around $1,338. WTI rose over 2.5% on Tuesday, as many US Gulf Coast refineries are back online. WTI traded as high as $49.22pb on the day, before retracing to currently trade around $48.90. There are more concerns for the Gulf Coast as category 5 storm Hurricane Irma hits Caribbean islands and is likely to impact the south east US. At 13:30 BST, the Bureau of Economic Analysis and the U.S. Census Bureau will release US Trade Balance for July. Consensus calls for a figure of -$44.6B, compared to the previous release of -$43.6B. The markets will be wary of volatility in USD if the release is wildly different from the forecast. At 14:45 BST, Markit Economics will release US PMI & Composite PMI. PMI is forecast at 56.8, a slight reduction on the previous release of 56.9. Whilst any number above 50 …

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05 сентября, 09:10

Markets on Edge

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With the markets risk appetite dampened after North Korea’s most powerful nuclear test to date, USD and Global equities fell whilst Gold, Yen and Sovereign Bonds all rose. President Trump is supposedly weighing economic sanctions that could target China as a result of Pyongyang’s recent nuclear test on Sunday. Asia Business Daily reported on Tuesday that there is a high chance North Korea will fire an ICBM missile before the Sept. 9 foundation day after the Pyongyang regime started moving such a weapon. The US is calling for further sanctions against the regime whilst the US Ambassador to the UN says Pyongyang is ‘begging for war’. The markets expect more rhetoric to follow. With the US Labor Day Holiday markets were somewhat lethargic, as expectations grew for hints of economic growth following a plethora of Central Bankers speaking this week. The ECB is scheduled to meet on Thursday, but the markets are not expecting the ECB to tighten economic policy any time soon. They are, however, expecting to hear ECB President Draghi raise concerns over EUR recent strengthening. Several FOMC members are speaking today and, again, the markets will be listening acutely to determine when the US may hike rates. EURUSD remains little changed overnight, currently trading around 1.1905. USDJPY has gained based on risk aversion due to Japan being the world’s largest creditor nation. Currently, USDJPY is trading around 109.30. GBPUSD is also little changed overnight, currently trading around 1.2930. Gold is trading close to an 11-month high, as markets move to the traditional safe-haven. Currently, Gold is trading around $1,336.50. WTI has gained slightly overnight to currently trade around $47.75pb. Markit Economics will be releasing several European Country’s PMI for August: At 08:15 BST, Spain Services PMI expected 56.8 from the previous 57.6. At 08:45 BST, Italy Services PMI expected 55.7from the previous 56.3. At 08:50 BST, France Services PMI expected 55.5 from the previous 55.5. At 08:55 BST, Germany Services PMI expected 53.4 from the previous 53.4. At 09:00 BST, Eurozone Services PMI expected 54.9 from the previous 54.9. At 09:30 BST, United Kingdom Services PMI expected 53.5 from the previous 53.8. Central Bankers are scheduled to speak: At 10:10 BST, Phillip Lowe, Governor of the Reserve Bank of Australia is scheduled to speak. At 13:00 BST, FOMC Member Brainard is scheduled to speak. At 15:00, the US Census Bureau will release Factory Orders (MoM) for July. The previous strong reading of 3% is not expected to be met with the consensus for this release expected around -3.2%. At 18:10 BST, FOMC Member Kashkari is scheduled to speak. At 23:05 BST, FOMC Member Kaplan is scheduled to speak.

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04 сентября, 09:24

North Korean Hydrogen Bomb Test Rattles Markets

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On Sunday, North Korea claimed that it had conducted a test of a hydrogen bomb meant to be carried by a long-range missile. The test of a 100-kiloton bomb was 10 times larger than anything previously tested and is 7 times more powerful than the bomb that destroyed Hiroshima to end the second world war. Chinese President Jinping warned “a dark shadow is looming over the world” and, in a joint statement with Russia said its ally North Korea would be “appropriately dealt with”. With this latest test, geopolitical tensions have risen and the markets have reacted with a risk off sentiment turning to Yen and Gold to hold. In economic news, the NFP release on Friday was a big surprise to the markets coming in at 156K against the consensus of 180K. The markets were hoping the recent strong ADP release (237K against the forecast 185K), whilst there is not a direct correlation between the two, would result in a strong NFP. With Average Hourly Earnings also decreasing (to 0.1% from the previous 0.3%), it is evident that the lack of upward inflationary pressure will likely delay the Fed in hiking rates this year. As a result, USD was sold against its peers, as the market has determined there is little value in holding the greenback. ECB President Draghi is expected to express concern over EUR strength when the ECB meets on Thursday. A number of Federal Reserve officials are scheduled to speak this week, including member of the Board of Governors Lael Brainard, Minneapolis Fed President Neel Kashkari, Dallas Fed President Robert Kaplan and New York Fed President Bill Dudley, all of who have expressed doubt about the need for another rate hike this year. US markets are closed on Monday for the Labour Day Bank Holiday. EURUSD is trading near early highs set on Monday, currently trading around 1.1899. USDJPY was sold following the North Korea bomb test and is currently trading around 109.55. GBPUSD is little changed from Friday, currently trading around 1.2955. Gold is living up to its safe-haven status, climbing up to $1,337.98 in early Tuesday trading. Currently, Gold is trading around $1,337. WTI is down 0.25% in early trading to currently trade around $47.60pb. At 09:30 BST, the UK Chartered Institute of Purchasing & Supply and Markit Economics will release PMI Construction for August. Markets are expecting a slightly better release of 52, from the previous release of 51.9. Unless the release is significantly different from the consensus the markets do not expect to see any impact on GBP. At 10:00 BST, Eurostat will release Eurozone Producer Price Index (YoY) for July. The consensus is calling for a lower number of 2.2% compared to the previous release of 2.5%. Whilst a lower number is traditionally seen as bearish for EUR, the markets do not expect any major impact to the value of EUR as they await further clarity of monetary policy from the ECB at their meeting on September 7th.