Overnight Points of Interest
2013 May 20 by Graham
Good morning
Overnight
# Equity markets continued the magnificent bull run, this time buoyed by a strong U.S consumer confidence reading. The EuroStoxx600 ended Friday up 0.24% to round out a 1.22% gain for the week. Within the Eurozone the German DAX posted a fresh all-time intraday high, daily and weekly closing highs. Stateside, the S&P500 rose 1.03% to end the week up 2.07%.
# The University of Michigan Consumer Confidence Survey rocketed to a 6-year high of 83.7 versus 77.9 expected as rising real estate values and record stock prices boosted household wealth. The gains appear to show that Americans are overcoming the effects of higher taxes and a package of federal spending cuts, known as sequestration.
# The amazingly robust reading drove U.S. 10 year bond yields back towards the highs of the week, ending up at 1.95% from 1.87% earlier.
# In a unwelcome development for a slowing economy, China April home prices jumped 4.9% on year, the fastest gains since April 2011. 67 out of 70 cities showed new home prices rising. This leaves China authorities face a deepening dilemma in trying to curb property prices while at the same time supporting an economic recovery.
#Best to worst performing currencies last week
CCY May10 May 17 % changes
EUR 1.2992 1.2838 -1.19%
GBP 1.5363 1.5172 -1.24%
JPY 101.58 103.18 -1.58%
CHF 0.9566 0.9723 -1.64%
CAD 1.0100 1.0285 -1.83%
AUD 1.0017 0.9730 -2.87%
NZD 0.8307 0.8060 -2.97%
# The USD strengthened across the board last week breaking key resistance and rising to a 3 year high – but it was a terrible week for the commodity/risk currencies. Commodity prices remained sluggish andChinagrowth concerns resulted in macro-funds targeting the AUD and NZD. Expectations the Fed is softening the ground for scaling back QE efforts broadly supported the USD – while expectations the RBA has further to go in its easing cycle made the AUD particularly vulnerable.
# Friday most commodities moved higher with Copper and U.S. Crude gaining a bit less than 1.0% despite the rise in the US dollar. Both commodities lifted on the much betterUSsentiment data, while Copper was also underpinned by inventory stats indicating greater draw-downs fromChina. The hawkish shift in Fed expectations and stronger USD kept Gold under pressured and the ETF’s kept selling. Gold fell close to 2.0% to close at 1,358 – the lowest weekly close since Feb 2011. IronOrecontinued to tumble closing 2.35% lower at 123.23 from Thursday’s close at 126.19.IronOrehas fallen 23.35% from the Feb 20 high at 160.78. For the week Copper fell 1.04%, Crude ended the week flat. Gold had a terrible week falling 6.15% andIronOredidn’t do much better – putting in a weekly loss of 5.86%.
Ahead
BBY (NZ) Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 May 17 by Graham
Good morning
Overnight
# A second consecutive night of weaker than expected U.S data finally took its toll on equity markets. That said, the EuroStoxx600 hung in there, ending essentially flat at -0.03% however stateside bourses succumbed to the weight of the data misses, the S&P500 ending down 0.5%.
# The Philadelphia Fed survey showed manufacturing in the region unexpectedly contracted in May as new orders retreated and factories cut back on employment and hours. The decline was the first in 3 months corroborating other figures this week showing manufacturing in the New York Fed region also unexpectedly contracting.
# U.S. Housing Starts fell more than forecast in April to a five-month low. Housing starts slumped 16.5 %, the most since February 2011, to an 853,000 annualized rate after a revised 1.02 million pace in March. However Building Permits are running at a higher pace suggesting that this is just a pause after a strong recent run and momentum will resume in due course.
# U.S. Inflation numbers showed prices fell 0.4% in April. Excluding food and energy, inflation rose only 0.1%m/m v 0.2% expected.
# U.S. Jobless Claims, gave back some of the sharp gains that saw 5 year lows recorded last week. The data showed 360k of claims, well up from last week’s 328k result.
# As a result the U.S. 10 year bond yield continued the correction to the recent strong run, dropping back to 1.87% from a high of 1.98% earlier in the week.
# European Industry Commissioner Tajani commented that “ Euro is too strong, ECB should manage the currency to help exports” The comment took EUR off its highs sending the single currency half a cent lower.
# The NZD was the weakest of the G-10 pairs as the previous ‘carry trade’ favourites continue to underperform. The kiwi lost ground against all comers but most notably against the USD, falling from 0.8260 to test 0.8160 and against GBP from 0.5425 to 0.5335. In the process the bird traced out ‘bearish engulfing days’ against both suggesting further immediate falls ahead. What’s the old adage for the kiwi…..’up the stairs and down the elevator’?
# Heavy fund selling saw Gold slump again, creating the largest slump in 16 months. Gold fell 0.7% to US$1385.00 and has fallen 17% this year.
# U.S Crude rose 0.9% as the weak jobless claims and deflationary aspect to the U.S CPI number suggested the FED won’t be earlier to ‘taper’.
# The IMF said that global central banks and their extraordinary policies have saved the world but that they could face severe losses when time came to withdraw the stimulus.
Ahead
# NZ Producer Prices
# JapanMachinery Orders
# Universityof Michigan Consumer Sentiment
Have a good weekend and go the Canes and the Blues
G.
BBY (NZ) Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 May 16 by Graham
Good morning
Overnight
# The rally in European andU.S.shares equities continues unabated with the EuroStoxx600 rising to fresh 5 year highs whilst the S&P500 closes at new all-time highs. The bourses closed up 0.79% and 0.51% respectively despite a poor Eurozone GDP read and a set of underwhelmingU.S.data.
#U.S. Industrial Production fell a larger than forecast 0.5%, the most in 8 months.
# The U.S. Empire Manufacturing Index unexpectedly contracted in May, falling into negative territory at -1.43 when +4.0 was expected. The reading was the lowest level in 4 months as employment intentions pulled back and new orders fell.
# To complete the trifecta, U.S. Producer Prices recorded their largest drop in three years as gasoline and food costs tumbled, pointing to weak inflation pressures.
# The one bright light was that confidence amongU.S.homebuilders improved in May for the first time in five months as buyers rush to take advantage of near record-low mortgage rates. The National Association of Home Builders/Wells Fargo index of builder confidence rose to 44 from a revised 41 in April.
# The data bought the run higher in US bond yields to a halt with the benchmark 10 year bond retreating from 2 month highs of 1.98% to 1.93%.
# Advance European Q1 GDP figures were disappointing. The 6th consecutive contraction in Eurozone GDP was slightly larger than expected at -0.2% vs. -0.1% expected with a meagre +0.1%q/q increase in German GDP growth particularly worrying ( +0.3% expected) .
# Under PM Abe’s ‘all in’ program to kick start the Japanese economy, the BOJ announced it will pump ¥2.8t into the money market to “address the rapid increase in longer-term interest rates”. This afterJapan’s 5-year borrowing costs rose aboveGermany’s for the first time in 20 years.
# Gold futures tumbled below $1,400 an ounce, extending the longest slump in almost three months, as the dollar’s rally eroded demand for the metal as an alternative investment. Silver fell to a three-week low. The greenback climbed to a nine-month high against a basket of major currencies. The euro fell to the lowest in almost six weeks against the dollar as the euro-area’s recession extended to a record sixth straight quarter. Gold has declined 17 % this year as some investors lost faith in the metal as a store of value.
Ahead
# Business N.Z. Manufacturing Index
# JapanPrelim GDP
# N.Z. Annual Budget
# JapanIndustrial Production
# Eurozone CPI Data
# U.S.Building Permits
# U.S.CPI
# U.S.Housing Starts
# U.S Philadelphia Fed Survey
Cheers G.
BBY (NZ) Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 May 9 by Graham
Good morning
I will be on annual leave from tomorrow until Thursday, as such the OPI output will take a break until then.
Overnight
# European stocks were buoyed by the 2nd consecutive day of positive German data surprise, the Eurostoxx600 rising 0.64%. Meanwhile, the S&P500 advanced for the 5th straight day once again setting new all-time highs. The S&P500 rose 0.41%v ending on its intraday high.
# German Industrial Production helped underpin the EUR and European stocks. March IP rose 1.2%m/m, well above the 0.1% decline expected. Coming just a day after the similarly upbeat German factory orders figures, the data has buoyed hopesGermanymay yet avoid recession.
# One of the market trends that has occurred recently, and largely without fanfare, is the decline in borrowing cost for the European ‘periphery’. From 350bps in early April, Italian-German 10-year bond spreads have fallen to almost 250bps. Spanish equivalents have plunged from 375bps to 280bps over the same period. As various commentators have noted, these declines are doing far more to ease European financial conditions than the ECB’s 25bps refi rate cut.
# Legendary investor Stanley Druckenmiller, ex Soros Fund, hit the wires saying the commodity swoon is not just a correction, the party is over due to oversupply and the AUD is going to come down hard. http://au.businessinsider.com/druckenmiller-pessimistic-on-commodities-2013-5
# The U.S. Treasury’s sale of $24 billion in 10-year notes got a lukewarm reception from investors, drawing $2.70 in bids for every $1 worth of notes on sale, below the average.
$2.89 from the past eight auctions, according to CRT Capital Group. As a result, theU.S.government is paying a higher interest rate of 1.810% for the new notes, more than the 1.800% for similar notes already in circulation before the auction.
# Commodities were well bid, Gold futures posted the biggest gain in almost two weeks as demand for bars and jewellery increased in India and China, the world’s largest consumers of the metal. Gold futures for June delivery advanced 1.7 % to settle at $1,473.70 an ounce. U.S. Crude rose to a one-month high after supplies fell at Cushing, Oklahoma, the delivery point for the contract. Brent oil’s premium to WTI shrank below $8 for the first time since January 2011. U.S. Crude for June delivery increased $1 to $96.62. Dr Copper also rose, climbing 2.0% on the back of the strong China trade data yesterday and the German IP data overnight.
Ahead (big day in this neck of the woods)
# NZ Employment Change
# Australian Employment Change
# China CPI
# Japan Leading Indicators
# UK Manufacturing and Industrial Production
Cheers G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 May 7 by Graham
Good RBA Tuesday morning
Overnight
# The EuroStoxx600 spent the entire day in the red, but rallied late on supportive comments from ECB President Draghi, to end effectively unchanged at -0.02%. Stateside, stocks were mixed with the S&P500 rising +0.19 but the Dow ending a fraction down at -0.03%.
# Eurozone Retail Sales dropped for the 2nd month in a row with the volume of sales falling -0.1% on the month, after a 0.2% drop in February. The year-on-year reading showed a worse-than-expected 2.4% drop, underlining fears about the Eurozone’s economic growth in recent months.
# Eurozone services and manufacturing output shrank for a 15th straight month in April. A composite index based on a survey of purchasing managers in the manufacturing and services industries increased to 46.9 from 46.5 in March but remained well below the expand/contract mark of 50.0.
# Later ECB President Draghi said ; “We will be looking at all the data that arrives from the euro-area in the coming weeks and if necessary, we are ready to act again”. He once again discussed the idea of reducing the bank deposit rate to less than zero. The EUR/USD gapped lower after the comments, from 1.3110, to find support just below 1.3060. It sits around 1.3080 this morning.
# A survey on lending from the U.S. Federal Reserve released Monday indicated that banks saw stronger demand for loans over the past three months, and reported easing their lending standards.
# U.S. benchmark 10 year bond yields rose again, building on Friday’s positive jobs data surprise and the ensuing key weekly reversal of last week. The yield lifted to 1.77% from 1.73% yesterday and the low of 1.61% last week (Higher U.S. interest rates going forward v cuts/easing bias’s elsewhere to lift the USD?).
Ahead
# NZ Labour Cost Index
# AIG Australian Construction Index
# Australian Trade Balance
# Australian House Price Index
# RBA Cash Rate decision (futures market is 50:50 so there will be a decent reaction either way)
# German Factory Orders
#U.S.Consumer Credit
Cheers G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Chart of Interest – USD/JPY
2013 May 6 by Graham
All
The USD/JPY has been consolidating its mammoth gains of recent months tracing out a ‘bull pennant’ between 96.00/100.00 over the last 4 weeks.
USDJPY – Click here to view chart
Friday’s jump higher on the U.S. payrolls data occurred perfectly out of my model.
USDJPY Model – Click here to view chart
The reason I believe USD/JPY is set to resume its uptrend after the month of sideways is, apart from Japan’s incredible monetary policy program, is that USD/JPY moves are highly correlated to U.S interest rate yields and as in my earlier chart of interest documenting the U.S. 10 year bond those yields look likely to go higher in coming weeks. Thus I believe we have a more fundamental support for USD/JPY again now.
Market talk has it that massive stop loss buy orders have accumulated above 100.00 so any move through there may well see an acceleration of the uptrend.
Regards G
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 May 6 by Graham
Good morning
Overnight
# Equity markets were buoyed by a better than expected U.S employment report, rising solidly to end the week. The EuroStoxx600 ended up 1.06% for a 1.74% gain on the week. Similarly the S&P500 rose 1.05% to end the week up 2.03%, closing at new record highs.
# The U.S. Non-Farm Payrolls figures came out stronger than expected with close inspection showing strength in all facets of the report. The headline jobs growth for April came in at +165k against expected +145k, March’s +88k figure was revised up to +138k, average hourly earnings rose +0.2% and the unemployment rate fell from 7.6% to 7.5% (a Goldilocks number as far as FED action is concerned? – no too hot to inspire ‘tapering talk, not too cold to worry markets…..just right?)
# The data on U.S Factory Orders for March was largely overlooked with the -4% decline not a factor in price action over the evening. The 4 % drop in bookings was the biggest since August and followed a revised 1.9 % gain the prior month that was smaller than previously estimated. Companies appear to be feeling the effects of slowing growth in Europe, Asia and the U.S., where higher taxes and across-the- board federal budget cuts, known as sequestration, have restrained consumer spending.
# U.S. ISM Non-Manufacturing (services) PMI also declined, dropping to 53.1 in April against forecast 54.0 and a previous 54.4. Whilst slowing the report remains in expansionary territory.
# EUR/USD embarked on a wild ride. The pair was grinding higher after an ECB speaker suggested the zone wasn’t ready for negative rates reaching 1.3140 before the payrolls figure saw a plunge to 1.3030 where apparent central bank buying lay in wait which provided the basis for a wicked rebound to as high as 1.3160. the pair eased into the close to end at 1.3125
# Copper produced a stunning rally after weeks of constant selling. The prime industrial metal rose nearly 7%, the biggest 1 day gain since Oct 2011. Besides the mammoth rise in copper – U.S. Crude gained 1.72% on Friday while Gold only gained $4 to US$1,471 due to the betterUSpayroll data washing away expectations the Fed will consider increasing QE efforts. Iron ore eased from 130.40 to 130.22.
# U.S 10 Year Treasury Bond yields surged from 1.63% to 1.74% whilst a similar move was seen in German Bunds with the 10 year yield rising from 1.15% to 1.24%.
Ahead
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 May 3 by Graham
Good morning
Overnight
# Equity markets benefitted from more monetary policy stimulus, this time form the ECB who cut their benchmark rate by 0.25%. The after a topsy turvy session the EuroStoxx600 rallied late to end up 0.32%. The S&P500 forged to new all-time highs, rising 0.94%.
# As was widely expected, in light of the recent stream of poor European data, the ECB cut 0.25% to take its target interest rate to 0.50%. President Draghi did not rule out further action saying the ECB is “technically ready” for negative deposit rates. He also said the ECB was consulting with other parties on ways to stimulate lending, particularly to SMEs. Finally the ECB’s statement emphasised that the risks surrounding the economic outlook for the Eurozone continue to be to the downside.
# The EUR was hit hard on the decision. After initially trying the topside, rallying to 1.3220, the EUR then slumped to sit at 1.3050 this morning.
# After last night’s ECB announcement German 10-year yields dropped to within a whisker of last year’s all-time lows, at 1.16%. Peripheral spreads to German bonds inched lower. Spanish-Italian 10-year bonds spreads narrowed to 290bps, their lowest level since October 2011.
# U.S Jobless Claims unexpectedly fell to a 5 year low with 18,000 less applying for job insurance. The headline drop to 324k contradicts yesterday’s ADP report and sets up an interesting end to the week with the official Non-Farm Payrolls number due tonight where the unemployment rate is expected to stay at 7.6%. (One evolving story is the suspicion that there is an ever growing ‘black/grey’ labour market in the U.S. This line of thinking is built upon the huge drop in the participation rate in recent years (normal participation would suggest unemployment over 10%) but data like retail sales remaining relatively stronger than would be expected).
# Commodities were generally well bid on the double whammy of more global stimulus and better than expected U.S. labour data. U.S. Crude was the standout, tracing out the biggest 1 day gain in 6 months.
Ahead
# AIG Australian Services Index
#ChinaNon-Manufacturing PMI
# Australian PPI
#UKServices PMI
# Eurozone Economic Forecasts
#U.S.Non- Farm Payrolls
#U.S.ISM Non-Manufacturing PMI
# U.S Factory Orders
Cheers and good weekend
G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnights Points of Interest
2013 April 8 by Graham
Good morning
Overnight
# The Non-Farm Payrolls data out of the U.S sent stocks sharply lower Friday however by the end of stateside trading U.S. bourses had recovered reasonably strongly. The EuroStoxx600 fell a hefty 1.57% and the S&P500, after being down well over 1.0% closed down only 0.43%.
# The U.S payroll data was a mixed bag but the bones of the data were undeniably weak. A rather anaemic 88,000 new jobs were created against an expectation of near 200k. There were two positive data points: jobs gains for February were revised upward to 268,000 from an initial 236,000, and in January to 149,000 from an initial 119,000. However, the real kicker was the participation rate which fell to a 40-year low of 63.3 % last month, from 63.5 % the month before. The unemployment rate fell to 7.6 % from 7.7 %, but only because 496,000 Americans stopped looking for work. Total unemployment remains at about 3 million fewer jobs than at the pre-recession peak. The worry here is that if all the people that could work, returned to looking for work, the unemployment rate would be massively higher.
# The USD was a very mixed bag in the wake of the numbers, hit hard against GBP and EUR, but improving strongly against JPY whilst against the NZD and AUD it was largely unchanged. The AUD weakness, that I’ve been suspecting to arrive, was evident as NZD/AUD rose strongly over the week from 0.8020 to 0.8120 whilst against the EUR the AUD was smashed over the course of the week from 0.8180 to 0.7960.
# The JPY continued to be a major story with USD/JPY now up an incredible 600 points from Thursdays BOJ ‘shock and awe’ announcement. The JPY weakness promoted NZD/JPY to 5 year highs above 82.50.
# Best to worst performing currencies last week
CCY Mar29 Apr5 %Change
CHF 0.9494 0.9355 1.46%
EUR 1.2819 1.2994 1.37%
GBP 1.5191 1.5340 0.98%
NZD 0.8366 0.8432 0.79%
CAD 1.0173 1.0175 -0.02%
AUD 1.0416 1.0378 -0.36%
JPY 94.28 97.56 -3.48%
# Key commodities continued to perform poorly due to global growth concerns – with copper falling 0.46%. U.S. Crude fell 0.60% while Brent Crude fell 2.09% to 104.12 – its lowest daily close since July 24 last year. Gold managed to claw back almost all of the hefty losses incurred earlier in the week, as the promise of on-going Fed QE and the extremely aggressive BOJ QE brought Gold buyers back into the market. Gold stormed 1.85% higher to close at 1,581. Iron Ore was steady – rising 0.22% to 135.90.
# Peripheral debt yields in the Eurozone continued to calm and move lower, as the Cyprus contagion fears continued to fade and investor faith in the ECB to do what is needed encouraged buying of Italian and Spanish bonds. Analysts also noted that the very cheap money on offer from Japan and the US encouraged riskier bond buying. The 10-year Italian bond yield plunged to 4.38% from 4.56% at Thursday’s close – while the Spanish 10-year bond yield fell to 4.76% from 4.93% at Thursday’s close.
# S&P affirms UK AAA rating, outlook remains negative due to outlook for weaker economic
Ahead
http://www.forexfactory.com/calendar.php
Cheers G
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 March 28 by Graham
Good morning
Overnight
# Europe was to the fore again with Cyprus revealing more on how it will combat the current turmoil. The EuroStoxx600 was less than enthused falling 0.45%. U.S bourses were mixed however, the S&P500 flat, the Dow down 0.22% but the Nasdaq up 0.13%.
# Cyprus announced capital controls will be in place for 4 days after the banks reopen to limit a rapid outflow of cash form the country. Cyprus will limit the use of cheques to businesses, cap cash withdrawals to 300 euros per day and scrutinize all commercial transactions over 5,000 euros when banks reopen on Thursday. Meanwhile Cyprus State TV reported tonight that the European Central Bank had sent convoys of trucks with container loads of euros to the Cyprus central bank.
# News from Italy also served to unnerve the market. Attempts by Bersani to form an Italian government came to nothing (quote: only an “insane person” would want to govern), and an Italian government bond auction went very badly with the lowest bid-cover ratio in over a decade. The poor auction pushed the 10-year yield to the highest relative to German bunds this year. The benchmark bond yield climbed 21 basis points to 4.78 %, up from 4.50% at the end of last year.
# The EUR once again bore the brunt of the market uneasiness, falling to fresh 4 month lows near 1.2750. In response NZD/EUR pushed to 7 month highs (0.6550) as the recent run of good data, including yesterday’s Fonterra payout upgrade, gave the kiwi a degree of safe haven appeal. The NZD/TWI, the measure of overall kiwi strength, is now within spitting distance of post float (1985) highs.
# Final UK GDP figures revealed the UK economy contracted by 0.3% in Q4, in line with earlier estimates as industrial production posted its biggest quarterly decline in almost four years. The figures confirm that the UK economy finished last year on a very weak footing and worryingly keeps alive the risk of a triple-dip recession.
# Moody’s says the EU’s awkward handling of Cyprus’s bailout has put extra pressure on European sovereign ratings.
# U.S Pending Homes Sales fell to 104.8 from 105.20 last month however analysts suggest the drop can be attributed to a lack of supply rather than weakening demand.
# The U.S 10 year bond is flashing warning signs with the yield now down to 1.83% from 2.09% only a fortnight ago.
# Corn supplies in the U.S., the biggest grower, are shrinking at the fastest pace in almost four decades as improving demand from ethanol refiners drains reserves already diminished by drought. Stockpiles probably fell 38 % in three months to 4.995 billion bushels (126.9 million metric tons) by March 1, the biggest drop since 1975.
Ahead - Today
# NZ Building Consents
# Australian MI Inflation Expectations
# Japan Retail Sales
# Australian Private Sector Credit
Friday
# U.S. Unemployment Claims
# U.S Final GDP
# Chicago PMI
# Japan Manufacturing PMI, CPI and Industrial Production
# University of Michigan Consumer Sentiment
Regards and good Easter break to all
G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities