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 8 by Graham
Good morning
Overnight
# The positive equity market run continues unabated, the EuroStoxx600 rising to within a whisker of 5 year highs, up +0.26% by session end. Meanwhile the Dow closed above 15,000 for the first time ever whilst the S&P500 rose 0.52 % to 1,625.96, reaching a record for a fourth straight day.
# German Factory Orders surprised to the topside for the 2nd month in a row rising 2.2% against expectations of +0.5%.
# French Industrial Production data undershot analyst expectations in March falling -2.5%y/y vs. -1.4% expected.
#Portugal saw off a successful bond auction with Portuguese FinMin Gaspar saying the bond sale was a big success, 2013 financing needs covered, will be ready to exit bailout program in mid-2014.
# U.S. Consumer Credit rose $7.97 bln in March, the smallest gain since July 2012. The consensus expectation had been for a $16.00 bln increase.
# On no particular news GBP was hit hard falling more than a cent against the USD from above 1.5550 to below 1.5450.
# U.S Crude dropped for the first time in 4 days dropping 0.6% ahead of the next stockpile data which is expected to show reserves further increasing from 82 year highs. Mirroring my view, one (smart, ha!) analyst said “High inventories and weak demand do not make a bull market”.
Ahead
# UK BRC Retail sales
# ChinaTrade Balance
# German Industrial production
# U.S Crude Oil Inventories
# U.S.10 Year Bond Auction
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 2 by Graham
Good morning
Overnight
# European shares gave back early gains to end up only 0.07% whilst U.S shares were down from the get go, tried to rally on the FED, but were ultimately undone by a large miss in the ADP private payrolls figure. The S&P500 ended near its lows, down 0.93%.
# The ADP Payrolls figure for April was disappointingly weak coming in at +119k versus expectations of a 150k gain. The gain was the smallest in 7 months and provided more evidence that theU.S.economy is reacting to the recent tightening in fiscal policy and higher taxation. Further, the March figure of +158k was subject to a large negative revision down to +131k.
# The Fed pledged to continue its bond buying program at the $85 bio a month pace, made no mention regarding the previous ‘tapering’ talk and left policy options open saying it is “ready to raise or lower that level as economic conditions evolve”.
# Fonterra’s latest GDT milk auction showed dairy prices fell 7.3% on average from the previous event. This is a correction following the strong 60% surge from December last year to April this year. Despite the drop prices still sit 77% higher than a year ago.
# Commodity currencies took a hit with the NZD amongst the weakest. The NZD/GBP and NZD/EUR now sit toward the lower-end of ranges maintained in recent months.
# The pound (GBP/USD) was well supported by a rare piece of better than expectedUKdata. Whilst still signalling contraction by the narrowest of margins, the UK Manufacturing PMI reading was much better than analysts had expected. The gauge came in at 49.8, up from March’s upwardly revised 48.6, and well higher than the 48.5 expected.
# U.S. Crude tumbled as U.S. oil inventories reached an 82-year high amid signs of economic slowdown in the U.S. and China. Crude retreated $2.43, or 2.6 %, to settle at US$91.03 a barrel, falling the most in 2 weeks.
# Likewise Gold fell the most in 2 weeks. Gold holdings in exchange-traded products plunged 174 metric tons last month, the biggest drop ever, as prices entered a bear market and wiped $17.9 billion from the value of the funds.
Ahead
# JapanMonetary Policy Meeting Minutes
# ANZ NZ Commodity Price Index
# AustralianBuildingApprovals
# HSBCChinaFinal Manufacturing PMI
# Eurozone Final Manufacturing PMI
# ECB Interest Rate Decision
# U.S. Trade Balance
# U.S. Unemployment Claims
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 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