17 May 2017. Daily Market Updates

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Markets in Detail
FX:
Overnight USD is lower vs all of its G-10 peers, with the steepest drops vs the Norwegian krone, the Swiss franc and the shared currency. The decline amounts to 0.5% as measured by the Bloomberg dollar index, the biggest drop since April 24
EUR is higher vs most of its G-10 peers, gaining most vs the greenback and the New Zealand dollar as economic data in the euro area continue to improve.
EUR/USD rose to 1.1089 before offers ahead of 1.1100 capped gains, after supply was absorbed earlier around 1.1050
USD/JPY extended its losses below 113.00 as UST yields fell to their lows of the session and as U.S. stocks reversed early gains.
USD/CAD fell to a fresh low at 1.3590, the lowest since April 27, as the Canadian dollar continued to be underpinned by strength in oil; WTI crude rose as high as $49.38 before paring gains
GBP/USD initially rose after U.K. CPI data m/m beat estimates, however it snapped back to trade below 1.2900
AUD/USD was little changed at 0.7428, remains near week’s highs ahead of 1Q wage data
NZD/USD climbs 0.1% to 0.6890, trading back at levels seen after GlobalDairyTrade auction index rose 3.2%
RATES:
New Zealand 10-year bond yield -2bps to 2.91%
Yield on Aussie’s 3-year government note slips ~2bps to 1.76% while 10-year declines 3bps to 2.56%; curve flattens
US Treasuries saw small gains across the curve, yields ending 1bp-2bp lower
EQUITES:
U.S. stocks were little changed, with the S&P 500 Index at a record as defensive shares advanced. S&P 500 was down 0.1% to 2,401 and Dow Jones adds less than 0.1% to 20,999
COMMODITIES:
WTI crude rose as high as $49.38/bbl before retracing gains to decline 0.3% to ~$48.69/bbl
Gold was up 0.5% to $1,237/oz (range $1,230-$1,240)
Regards All.
Posted in Fx Market

GBP/USD Hits 1.28 as USD Stumbles

Good Morning;
Euro-dollar rallied yesterday, breaking US election highs to trade at its highest levels in a year, since the UK’s referendum, above 1.1370. Dollar weakness saw sterling-dollar hit 1.2800 in overnight trading. Sterling-euro fell below 1.1300 to test 2017 lows.
Previous Day’s Market Highlights
Euro-dollar rallied yesterday, breaking US election highs to trade at its highest levels in a year, since the UK’s referendum, above 1.1370. Dollar weakness saw sterling-dollar hit 1.2800 in overnight trading. Sterling-euro fell below 1.1300 to test 2017 lows.

The euro strengthened following comments from ECB President Draghi, who said that deflationary pressures had been replaced by inflationary ones and that factors weighing on inflation may be temporary, although with the caveat that accommodative policy remains necessary.

Markets focused on the hawkish comments and speculated that later this year the ECB may signal a further tapering of QE.

The dollar came under pressure on a delayed senate healthcare legislation vote and as Fed Member Harker took a cautious tone on inflation, which has recently softened.  Fed Chair Yellen reiterated that the Fed would raise rates only gradually.

Regards All.
Posted in Fx Market

27 June 2017. Investment Weekly

Continued oil price weakness weighed on investor sentiment
> In the US, the S&P 500 Index reached a new record high on Monday, but edged back thereafter on tumbling oil prices, before finishingslightly higher (+0.2%). Unsurprisingly, the steepest losses occurred in energy stocks. Meanwhile, healthcare stocks gained strongly after Senate Republicans revealed draft legislation to replace the Affordable Care Act. Technology stocks also rose, but are still trading below their peak reached earlier this month.
> Similarly, European stocks rose early in the week, supported by the market-friendly outcome of the French parliamentary elections, although gains unwound on the back of the oil price slump. Most major bourses declined, with the regional EURO STOXX 50 Index closing little changed.
> Asian stock markets rose last week, led by technology shares. The decision of MSCI to include certain onshore Chinese stocks (A-shares) into its indices underpinned a strong rally in China, with the Shanghai Stock Exchange Composite Index closing up 1.1%. The tech rally benefited Taiwanese equities, with the tech-heavy TAIEX index up 2.2%, and to a lesser degree Japanese stocks, with the Nikkei 225 Index up 0.9%.
US Treasuries and UK gilts little changed amid hawkish central bank rhetoric; other European bonds rose
> US Treasuries were little changed last week. Downward pressure came from New York Fed President William Dudley’s warning that pausing the policy-tightening cycle could raise inflation risks. However, losses were pared back on a sharp decline in crude oil prices and comments by Chicago Fed President Charles Evans, who emphasised the gradual approach to policy normalisation, stating that the Fed “can go until December and make a judgement.” Overall, the Treasury yield curve bear flattened, with two-year yields closing up 2 bps to 1.34%, while, at the longer end, 10-year yields were fell 1 bp to 2.14%.
> Most longer-dated European government bonds rose (yields fell) as subdued risk appetite and falling oil prices helped support demand for fixed income assets. Benchmark German 10-year bund yields ended 3 bps lower at 0.25% and equivalent-maturity Greek bonds led gains in the periphery, supported by the previous week’s deal to unlock a fresh tranche of bailout financing. Ten-year UK gilts underperformed (yields edged up 1 bp to 1.03%) following a hawkish turn by Bank of England (BoE) Chief Economist Andrew Haldane.
Oil prices slumped for another week amid continuing oversupply fears
> Crude oil prices fell for the fifth straight week, with WTI and Brent sliding 3.9% and 3.6% to USD43.0 per barrel and USD45.7 per barrel, respectively. Investors remain concerned that the market is oversupplied amid increasing output from Libya and the US. These moves came despite a decline in US crude inventories last week.
> Gold prices were little changed last week (+0.2% to USD1,257), with bearish sentiment mainly driven by expectations around further US rate hikes this year, and support coming from generally subdued risk appetite.
Regards All.
Posted in Fx Market

Us ‘n Eu Market Short Headlines

Global equities traded softly amid continued weakness in crude oil prices. Asian bourses eked out gains, led by technology shares
MSCI decided to include China A-shares in its Emerging Markets Index
As expected, the Mexican Central Bank raised the overnight rate by 25bps to 7.00% at its June meeting
The May release of US core PCE, the Fed’s preferred gauge of inflation, will be closely scrutinised
US
> The Fed’s preferred measure of inflation, the core PCE deflator, is expected to soften for a fourth consecutive month to 1.4% yoy in May, from 1.5% yoy in April, moving further below the Fed’s inflation target of 2%. If confirmed, this will be the lowest annual inflation rate since the end of 2015.
> Pending home sales, a measure of contracts that have been signed and are awaiting closing, are anticipated to advance 0.6% mom in May after a 1.4% drop in April. This would fit in nicely with other upbeat May housing market data, which showed a rebound in both existing and new home sales categories.
> The S&P CoreLogic Case-Shiller 20-City Composite Home Price NSA Index, which tracks home prices in 20 major cities, has remained within 5.0%-6.0% for the last two years. The April reading is not expected to deliver any significant deviation from trend, after printing 5.9% yoy in March and February. The US housing market remains supported by low interest rates and historically elevated levels of affordability.
> After the upbeat second estimate of US Q1 GDP, the final release is expected to remain unchanged at 1.2% qoq annualised, up from 0.7% in the first estimate and following from Q4’s rate of 2.1%. The boost to the second estimate came from a better than expected gain in personal consumption, which is now anticipated to remain unrevised. Focus will also be on whether there are further revisions to investment in non-residential structures and economy-wide corporate profits.
>The headline Conference Board Consumer Confidence Index is expected to print 116.0 in June (117.9 previously), marking the third consecutive month of decline from a decade high in March. The pullback in sentiment comes amid diminishing expectations around US President Donald Trump’s economic reform agenda.
Europe
> In Europe, the German Ifo Business Climate Index for Juneis expected to edge slightly lower from the previous month’s print (-0.1 pt to 114.5), although this is from the highest level since the index began in 1991. Recent elevated Ifo readings bode well for Germany’s Q2 GDP print.
> The final release of UK Q1 GDP is seen confirming the previous estimate of 0.2% qoq (+2.0% yoy). Of greater interest will be the services sector output data for April and the print for the Q1 savings ratio (which saw a dramatic decline in the second half of 2016).
> Following the downward surprise in May eurozone CPI inflation prints, the headline estimate for June is expected to decline further, by 0.1 ppts to 1.3% yoy, the lowest print since December 2016. Recent oil price weakness and euro strength have weighed on price pressures in the region. More positively for the European Central Bank, core inflation is seen edging up slightly (to +1.0% yoy), although remaining range-bound.
Regards.
Posted in Fx Market