Overnight Points of Interest
2013 May 21 by Graham
Good morning
Overnight
# In generally muted trade European stocks pushed to fresh 5 year highs howeverU.S.stocks could not hold the early rally to new intraday all-time highs, ending marginally down on the day. The EuroStoxx600 ended up 0.34% whilst the S&P500 ended down 0.07%
# No surprise here with the movements in JPY over the last 9 months, the Reuters JP Tankan Index for Japan Manufacturers climbed 11 points to 7.0 as the JPY slide bolsters exporters’ confidence
# Regarding the ‘tapering’ debate the Fed’s Evans said he has “ tried to resist talking about tapering” but the economy should reach “escape velocity” in 2014.
# The precious metals have had an outrageous 24 hours. Silver, in a rather suspicious move, melted down 10% on the Monday morning open only to rebound to end up this morning 3% from Fridays closing price. Somewhat similarly, but with less volatility, Gold fell from Friday’s NY close of US$1,360 to $1,339.00 only to stage a sharp reversal to end this morning at $1,395.00. Both metals have in the process traced out significant ‘key day reversals’.
# The NZD was the strongest of the G-10 currencies overnight buoyed in part by the strong Performance of Services Index released yesterday. From Fridays low of 0.8060 the kiwi reached 0.8180 where it now sits.
Ahead
# Australian CB Leading Index
# RBA Monetary Policy Meeting Minutes
# N.Z. Inflation Expectations
# N.Z. Credit Card Spending
#UKInflation
Cheers G.
BBY (NZ) 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 April 29 by Graham
Good morning
Overnight
# Equity markets were predominantly in the red for the most part of offshore trade before late rallies improved the tone. The EuroStoxx600 ended down 0.33% however for the week the gains were an impressive 3.74%. Stateside it was a similar story with the S&P500 ending the day down 0.18% but up 1.7% for the week.
# The U.S. Q1 GDP outcome confirmed the poor tone of recentU.S.data, missing the 3.0% expectation coming in at 2.5%.
# TheUniversityofMichigan Consumer Sentimentsurvey came in better than expected but none the less weaker than a month ago. The reading of 76.4 beat the expected 72.3 but was down from 78.6 in March.
# After a 2 month stalemateItalyhas finally formed a 3 party coalition government. The alliance is one of previous bitter rivals with former premier Berlusconi integral in the mix.
#Spainrevised down its 2013 growth forecast to -1.3% from -0.5%, and optimistically forecast +0.5% growth in 2014.
# The USD/JPY pair bore the brunt of the weaker U.S GDP data falling from 99.50 to 97.50 in the process confirming that the approach to 100.00 has formidable resistance.
Best to worst performing currencies last week
CCY Apr19 Apr26 % change
GBP 1.5230 1.5480 1.64%
JPY 99.50 98.05 1.46%
CAD 1.0270 1.0173 0.94%
NZD 0.8421 0.8475 0.65%
AUD 1.0275 1.0279 0.04%
EUR 1.3111 1.3026 -0.65%
CHF 0.9332 0.9422 -0.96%
# You would have to conclude that a lot of last week’s net/net FX movement was the result of position adjustments rather than fundamental analysis. The IMM data released on Friday showed the speculative community was extremely short the JPY, GBP and CAD heading into last week and they ended up being the best performing currencies by far. The specs were very long the AUD and it ended up underperforming even though equity and commodity markets performed very well in the past week. The EUR lost ground against every currency except the CHF as the run of very poor EZ data has raised expectations the ECB will ease in the coming week.
# Key commodities gave some of the large gains made on Thursday. Copper fell 1.62% and U.S. Crude ended a six-day winning streak to close 0.68% lower. Iron Ore had a bad close to a bad week falling 2.1% to 132.84. Gold was very choppy on Friday and fell sharply after twice failing to break above the 1,480/1,485 level. Gold fell as low as 1,448 after the US GDP data before recovering to close at 1,462 down slightly from 1,466 late Thursday. For the week Copper gained 0.78%, Crude rose 5.42% while Iron Ore ran its own race falling 4.4% on the week. Gold posted its biggest weekly gain in three months, as bargain hunting investors and central banks bought from the extreme lows hit following a capitulation in Gold ETFs. Gold gained 4.18% for the week and is up close to 7% from the April 16 low at 1,321.35.
The week ahead (quite busy!)
Overnight Points of Interest
2013 April 22 by Graham
Good morning
Overnight
# Equity market action Friday appeared to have all the hallmarks of position squaring into the weekend after a week of rather heavy falls. The EuroStoxx600 rose 0.52% to be down 2.46% on the week. The S&P500 rose 0.88% to end the week down 2.1%. The modest gains apparently came on very light volume which is a negative for bulls.
# Ratings agency Fitch cut the UK’s sovereign debt rating to AA+ from AAA, citing a weaker economic and fiscal outlook. But it returned the outlook to “stable”, removing the threat of any further rating action, at least in the near term. This aligns the rating with Moody’s downgrade earlier this year so does not come as a huge surprise.
# The G20 didn’t single out Japan for overseeing a huge fall in the JPY since mid-November when it first became apparent that Abe would be the next Japan PM. If there was criticism of Japan’s policies – the G20 members kept it on the hush-hush. As a result USD/JPY is probing towards 100.00 this morning with the market sensing a ‘green light’ for further JPY weakness. It appears the G20 is less concerned about currency wars and sovereign debt blow-outs and instead want to encourage economic growth initiatives. This is the main reason Japan escaped criticism for at least indirectly pushing the value of the Yen significantly lower.
# Australian Treasurer Swan said the Australian budget has taken a 7.5 BLN AUD “sledgehammer hit” saying the high Australian dollar and falling terms of trade are to blame.
# Italian Parliament elected Napolitano to second term as President with overwhelming majority.
# Best to worst performing currencies last week
CCY Apr5 Apr 12 % change
EUR 1.3111 1.3051 -0.46%
CHF 0.9270 0.9332 -0.67%
GBP 1.5348 1.5230 -0.77%
JPY 98.38 99.50 -1.14%
CAD 1.0137 1.0270 -1.31%
NZD 0.8414 0.8421 -1.91%
AUD 1.0503 1.0275 -2.17%
# Comment – The mood last week was decidedly “risk-off” as equities and commodities sold off in some of the biggest moves since the start of 2013. The USD was the main beneficiary of the move out of risk – as the JPY no longer holds a safe-haven status. Not surprisingly – the “risk/commodity” currencies, the AUD, NZD and CAD were the worst performing.
# Commodities were mixed with gold stabilizing and closing above 1,400 for a 0.95% gain; U.S. Crude rose 0.32% while Copper continued to underperform – falling 1.38% and closing below 7,000 – the first time it had a weekly close below 7,000 in almost three years. Iron Ore fell slightly to 138.43 from Thursday’s close at 138.85. For the week gold fell 5.04%; Brent Crude fell 3.36%; U.S. Crude fell 3.59%; Copper fell 5.82% and Iron Ore fell 2.58%.
# Italian and Spanish bond yields continued to edge lower as yield seeking investors are happy to ignore political and economic negatives for the time being. The 10-year Italian bond yield eased to 4.22% from 4.25% while the 10-year Spanish debt yield closed at 4.63% down from Thursday’s close at 4.66%. Clearly participants here see a much increased chance of a forthcoming rate cut out of the Eurozone.
Ahead
Key data in the week ahead The key US data in the week ahead will be Q1 advanced GDP on Friday, which is expected to come in at a healthy 3.0%. Other US data includes Existing Home Sales; New Home Sales; Durable Goods and Univ of Mich Sentiment Index. Key EZ data includes advances MFG PMI data on Tuesday and German IFO on Wednesday. HSBC Flash China MFG PMI is out on Tuesday and will be a key event in Asia. The BoJ meets again Thursday/Friday and the RBNZ announces on Wednesday.
Cheers G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 April 16 by Graham
Overnight
# The weaker than expected Chinese growth data released yesterday set the tone for global equity markets with stiff losses seen. The EuroStoxx600 managed to contain losses to -0.67% however stateside bourses did not fare so well with the S&P500 ending down a hefty 2.3%.
# The U.S. Empire Manufacturing Index retreated from February’s strong reading but still remained in positive territory at 3.1 from 9.0 previously and 7.8 expected. The slowing data does seemingly confirm that the U.S. economy is hitting a soft patch. The decline is highly likely tied to the recent implementation of the sequester (read – drop in govt. spending).
# Commodities have been the big story in my absence with the CRB Index dropping to its lowest level since July 2012 . Gold continued to hog the limelight. Already under pressure in recent months, the precious metal saw a spectacular fall in high volume trading, plunging the most in 33 years (March 1890). Gold has now fallen 13% in 2 sessions, more than US$200 per ounce with the weak Chinese data a clear tipping point. It is quite likely another round of liquidation may take place when the inevitable margin increase comes through from the exchange in response to the massive volatility. After that cleanout the metal may possibly become a reasonable buy.
# U.S. Crude fell to its lowest level of the year as yesterday’s data pointed to an increased chance that demand from the world’s 2nd biggest economy will slow. Crude fell 2.8% to US$88.71 a barrel.
# The NZD was the weakest of the G-10 group with suggestions a number of local bond market events are weighing on the unit on and above the obvious ‘risk aversion’ event seen overnight. The JPY meanwhile was the strongest benefitting from safe haven demand as well as garnering some strength from U.S criticism of Japan’s “competitive devaluation”. As a result the NZD/JPY cross has fallen from 86.20 to 80.50 in 2 days.
Ahead
# RBA Monetary Policy Meeting Minutes
# RBA Assistant Gov. Debelle speaks.
# UK CPI
# German ZEW Economic Sentiment
# Eurozone CPI
# U.S. Building Permits
# U.S. CPI
# U.S. Housing Starts
Cheers G.
Overnight Points of Interest
2013 April 11 by Graham
Good morning
Overnight
# The exuberance is back but is it irrational? European stocks roared higher gaining the most in a month and posting the longest winning streak since January. Positive China news in recent days and an agreement on a U.S budget compromise fuelled gains. The S&P500 also ended sharply higher up 1.22% at close of play, a new all-time high to complement the recent new highs in the Dow and Dow Transports .
#The NZD has been the strongest of the G-10 currencies driven by talk that the infamous ‘carry trade’ is back on in full force. With the Japanese authorities clearly happy to see the JPY devalue, the market is borrowing JPY at next to no cost, selling it and buying higher yielders. With leverage plumping up the returns combined with an expectation that the borrowed currency will depreciate, the strategy is highly compelling. The NZD/USD sits at 18 month highs at 0.8572 whilst NZD/JPY has risen nearly 10% to 85.60 since the BOJ announcement on Thursday. USD/JPY is within spitting distance of the magical 100.00 mark, residing on its highs at 99.75 presently.
# The divide between the core and periphery of Europe was starkly documented on the release of European Industrial Production data. French Industrial Production bounced back in February, gaining 0.7% the previous month as manufacturing activity provided the main driver of growth. The market had looked for a rise of 0.2%. However Italian and Spanish IP showed sharp falls, suggesting that the bloc’s third and fourth largest economies are still mired in recession. On an monthly basis, Spanish Industrial Production fell by 1.2% to be down 6.5% annualized. Italian IP fell 0.8% on the month for a 3.8% annualized loss.
# An accidental release of the FED Minutes some 5 hours early by a long term, career FED employee provided an interesting sideshow on the day. The minutes revealed the lively debate at the Fed about when exactly to begin winding down asset purchases. A growing consensus appear to favour ‘tapering’ purchases from sometime later this year despite the unemployment target expressed in recent minutes. Interestingly, the early release gave the market half an hour to digest the news (and reducing volatility) before equity markets opened, leading some to question why the Fed doesn’t embrace the earlier time slot going forward. The minutes were formulated before last Friday’s U.S. employment report which may stunt the ‘tapering’ talk for now.
# Prices for government bonds dropped further after President Barack Obama released his budget proposal, which calls for more than $700 billion in new taxes over 10 years. The plan would also increase spending 6% from 2013 levels and allow the debt, as a share of the economy, to grow to 73% by 2023–much higher than the 54.8% level that the House Republicans had called for. U.S 10 year bond yields rose to 1.80% from 1.70% 2 days ago.
# Gold fell the most in 5 months on the FED ‘tapering’ talk (stimulus removal) and news that Cyprus plans to sell “the excess amount of gold” owned by the state, yielding an estimated 400 million euros. Gold fell US$28 or 1.8%
# Japan’s Kuroda will explain latest easing measures at G-20 if needed, BOJ easing not aimed at weakening yen, no plans to adjust policy for now, will scrutinize policies monthly
# IMF’s Lagarde Doesn’t expect higher growth in 2013 than 2012, EZ banks need higher capital buffers, too big to fail more dangerous than ever, CB easing needed, may create new financial risks, EZ should recapitalize troubled banks
Ahead
# NZ Business Manufacturing Index
# Australian MI Inflation Expectations
# Australian Employment Change (last month they had the unbelievable +71k result – today’s release will be very interesting)
# U.S Unemployment Claims
Cheers till Tuesday
G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 April 10 by Graham
Good morning
Overnight
# The much softer than expected Chinese inflation data yesterday spurred global stock markets to record mild gains on the basis of less requirement for monetary tightening policies in the world’s 2nd biggest economy. The EuroStoxx600 rose 0.15% and the S&P500 ended up 0.35% The Dow Jones Index rose to a new record high closing price. The Q1 earnings season is upon us now and the street appears to have downbeat expectations that are being topped to date.
# Commodities were up against the board. Gold built nicely on the reversal signal of last week (when gold sentiment had fallen to complete ‘disdain’) and crude jumped the most in 2 months sending the CRB index 0.6% higher as a result.
# The JPY slowed its dramatic decline after depreciating nearly 7% against the dollar since the Bank of Japan unveiled a massive stimulus program last week. The JPY has lost over 24% of its value against the USD in the last 4 months. From yesterday’s high of 99.67 the USD/JPY fell as low as 98.60 before stabilising at 99.00 this morning.
# Confidence among U.S. small businesses fell in March for the first time in four months as job creation plans soured. The National Federation of Independent Business optimism index dropped to 89.5 last month from 90.8 in February. Six of the measures 10 components contributed to the decline. The share of business owners planning to create jobs dropped 4 points to zero in March at the same time sales expectations deteriorated. “Virtually no owners think the current period is a good time to expand”, William Dunkelberg, the group’s chief economist said.
# UK Manufacturing Production bounced back in February with output growing by 0.8%, more than double the consensus forecast for 0.4%
# UK Industrial Production also easily beat expectations rising 1.0%m/m against 0.4% expected
# Ratings agency Fitch downgraded China’s long-term local currency rating from AA- to A+, citing a number of “underlying structural weaknesses”. The cut in China’s sovereign credit rating was the first by a major international agency for the first time since 1999 with Fitch raising concerns that the country’s rising debt problems will require a government bailout. The ‘underlying structural weakness’ was said to be ‘low average incomes, lagging standards of governance, and a rapid expansion of credit’. The agency also warned of the growing risks from the rise of shadow banking, and said that total credit in China may have reached 198% of gross domestic product by the end of last year, up from 125% in 2008.
Ahead
# Westpac Australian Consumer Sentiment
# China Trade Balance
# U.S Federal Reserve FOMC Meeting Minutes
Cheers 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
Chart of interest – EUR/JPY
2013 March 27 by Graham
Hi
After a mammoth rally from 94.00 to nearly 128 since mid-2012 the EURJPY cross is showing signs of fatigue.
Breaking down the component legs, the JPY has weakened massively (USD/JPY 78 to 97) over the same period, firstly on expectations that new PM Abe would gain power and bring with him super easy monetary policy ideas and then a secondary rally on expectations that Abe would install the like-minded Kuroda as his BOJ Governor. Since the inception of Kuroda the same sounds bites regarding easy policy have been forthcoming but the JPY has actually strengthened. Is this the biggest ever example of the old adage ‘buy the rumour, sell the fact’?
Looking at the EUR leg, the EUR simply looks awful. The Cyprus ‘precedent’ hangs heavily, manufacturing indexes remain mired in heavily negative territory and constant growth downgrades have been forthcoming. Indeed ratings agency S&P today lowered the Eurozone growth forecast to -0.5%, increasing the recessionary outlook.
Moving to the charts, the brief rally on the Cyprus resolution Monday was quickly reversed, the price action tracing out the bearish engulfing day which augurs strongly for more losses ahead. Supporting the bearish stance the 10/20 day moving average are crossing over to a negative alignment. On the shorter timeframes my ‘model’ has done a stellar job of capping gains and is currently pushing down suggesting strong resistance lies at 122.70/123.20 and falling.
EURJPY – click here to view chart
Cheers G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Market Insight Newsletter – Vol. 2, Issue 37 Futures, FX, CFDs, Equities
2013 March 25 by Company
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Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities