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Dagelijkse Markt Analyse 11 Januari 2019
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- U.S. Consumer Price Index (CPI) to Narrow for Fourth Time in 2016.
- Core Rate of Inflation to Hold Steady at Annualized 2.3%- Fastest Pace of Growth Since 2012.
Despite forecasts for a downtick in the U.S. Consumer Price Index (CPI), stickiness in the core rate of inflation may boost the appeal of the greenback and spark a near-term pullback in EUR/USD as it puts pressure on the Federal Reserve to raise the benchmark interest rate sooner rather than later.
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• US Dollar gains on pre-position for hawkish FOMC meeting minutes
• Yen drops as Asian stocks rise, Aussie and NZ Dollars under pressure
• British Pound may not see lasting response to UK jobless claims data
The US Dollar outperformed in overnight trade as the markets’ attention turned to the upcoming release of minutes from July’s Federal Reserve monetary policy meeting. The currency rose alongside benchmark 10-year Treasury bond yields, suggesting investors may have been positioning for a hawkish posture.
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- Retail Sales increased 5.9% year-on-year versus 4.2% expected
- All sectors showed growth with the main contribution coming from non-food stores
- GBP/USD surged higher immediately on the news
The British Pound spiked higher versus all other major currencies after today's UK Retail Sales report printed figures significantly higher than expected.
It’s important to note that the release covers a 4 week period from 3 July to 30 July 2016 and therefore included data following the Brexit vote.
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- Canada Consumer Price Index (CPI) to Slow for Fourth Time in 2016.
- Core Rate of Inflation to Hold Steady at for Third Consecutive Month 2.1%.
Despite forecasts for a downtick in Canada’s Consumer Price Index (CPI), stickiness in the core rate of inflation may boost the appeal of the loonie and trigger fresh monthly lows in USD/CAD as it encourages the Bank of Canada (BoC) to gradually move away from its easing cycle.
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- USD/JPY trading above the 100 level as participants brace for Yellen on Friday
- Japan Manufacturing PMI and Kuroda are ahead, but volatility is in question
- A number of fundamental and technical factors take center stage at the moment
The USD/JPY is trading above 100 at the time of writing, apparently finding some support against a backdrop of rising short term US treasury yields.
Indeed, a number of fundamental and technical factors are playing out for the pair at the moment, with further stimulus by the BOJ hinted for September, intervention risk and reduced market depth in focus, as the pair trades near the all-important 100 technical level.
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- Flash Eurozone Manufacturing PMI at 51.8 vs 52.0 prior and expected
- Flash Eurozone Composite PMI at 53.3, 7-month high
- Euro was little changed versus other major currencies, short term outlook here
The Euro was little changed versus other major currencies (at the time this report was written) after today’s Flash Markit Eurozone PMIs printed mixed readings.
The Eurozone PMI Composite Index came at 53.3, above the expected 53.1 and the prior 53.2, which marked a 7-month high.
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• US Dollar seesaws upward amid pre-positioning for Yellen speech
• NZ Dollar down as disappointing trade data weighs on RBNZ bets
• Euro may not find lasting momentum in 2Q German GDP revision
The US Dollar corrected higher in overnight trade having traded broadly lower in the prior session. Seesaw price action since the beginning of the week seems to reflect pre-positioning ahead of a much-anticipated speech from Fed Chair Janet Yellen at the Jackson Hole Symposium on Friday.
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- U.S. Durable Goods Orders to Increase for First Time Since April.
- Non-Defense Capital Goods Orders to Expand for Second Straight Month.
A 3.4% rebound in orders for U.S. Durable Goods may boost the appeal for the greenback and spur a larger pullback in EUR/USD as it puts increased pressure on the Federal Open Market Committee (FOMC) to raise the benchmark interest rate in 2016.
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- GBP/USD trading above 1.32 after seeing a corrective move lower yesterday
- A break above the 1.3250 area could prove explosive on extremely short positioned market
- Yellen is in focus looking ahead, as December rate hike probability rises
The GBP/USD is trading above 1.32 at the time of writing, as the pair continues to appear supported heading into the major event risk ahead.
The Janet Yellen speech at Jackson Hole is the main event risk on the docket, with the market craving clarity on the Fed’s rate path going forward.
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• Yen drops after Kuroda says BOJ will not hesitate to expand stimulus
• Dovish comments from ECB’s Coeure may put Euro under pressure
• US Dollar may correct lower as PCE data cools Fed rate speculation
The Yen underperformed in otherwise quiet overnight trade as Japan’s benchmark Nikkei 225 stock index advanced, sapping demand for the anti-risk currency. The move may reflect optimism after BOJ Governor Haruhiko Kuroda said the central bank will not hesitate to expand stimulus if needed at the Jackson Hole Symposium over the weekend. Kuroda added that officials are “still far away” from the lower bound limiting scope for easing.
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- EUR/USD forming a bearish technical pattern following the Yellen speech at Jackson Hole
- German CPI, Stanley Fischer interview and US Consumer Confidence are in focus ahead
- Euro-Zone CPI has been under the ECB target since January 2013
The EUR/USD is trading below the 1.12 handle at the time of writing, after the pair spiked lower and formed a bearish daily engulfing bar following the Yellen speech at Jackson Hole.
The Fed Chairwoman said that “the case for an increase in the federal funds rate has strengthened in recent months”, but the market’s hawkish tilt seemed to have came after the Stanley Fischer interview later that day.
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- USD/CAD won back losses from the 1.30 break on a stronger US Dollar
- Canada 2Q GDP and Crude Oil Inventories could be volatile for the pair
- SSI showing traders flipped net short around 1.31, potentially hinting at further gains
The USD/CAD is trading around the 1.31 handle after winning back losses following the Yellen speech at Jackson Hole.
Indeed, US Dollar strength on rising Fed rate hike expectations seem to be the major theme at the moment, potentially pressuring Crude Oil prices as well.
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- UK’s Markit PMI Manufacturing at 53.3 versus 49 expected
- “Manufacturers and their clients started to regain a sense of returning to business as usual” says Markit
- British Pound soared on the news versus all other majors, short term outlook here
The British Pound surged higher versus all other major currencies after today’s Markit/CIPS Manufacturing PMI increased by the joint greatest amount in the survey’s history.
The diffusion index, by Markit Economics, printed 52.3 from the prior reading of 48.3, smashing economist's expectations of a 49.0 figure. The numbers marked a 10-month high.
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- U.S. Non-Farm Payrolls to Print Below 200K for First Time Since May.
- Average Hourly Earnings to Slow for First Since March.
A 180K expansion in U.S. Non-Farm Payrolls (NFP) accompanied by a downtick in the jobless rate may trigger a near-term decline in EUR/USD as the ongoing improvement in the labor market puts increased pressure on the Federal Open Market Committee (FOMC) to raise the benchmark interest rate sooner rather than later.
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- UK’s Markit/CIPS Services PMI at 52.9, versus 50 expected and 47.4 prior
- UK’s Markit/CIPS Composite PMI at 53.6, versus 50.8 expected after last week’s manufacturing figures
- British Pound Soared on the news versus all other majors
The British Pound spiked higher versus all other major currencies after today’s Markit/CIPS PMIs crushed expectations.
The Services diffusion index, by Markit Economics, printed 52.9 from the prior reading of 47.4, beating economists’ expectations of a 50.0 figure. The rise by 5.5 points was the largest observed over the 20-year survey history.
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• Euro may be more response to Retail PMIs vs. 2Q GDP revision
• US Dollar looks to services ISM to shape Fed rate hike outlook
• Aussie Dollar little-changed after status-quo RBA rate decision
The final revision of second-quarter Eurozone GDP figures as well as Augusts’ Retail PMI roundup for the single currency area headline the economic calendar in European trading hours. The former reading may pass with little fanfare because the data mostly covers the period preceding the UK “Brexit” referendum. The latter set of figures may help show if uncertainty following the vote is cooling activity on the Continent.
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- Bank of Canada (BoC) to Hold Benchmark Interest Rate at 0.50%.
- Will Governor Stephen Poloz Continue to Endorse a Wait-and-See Approach?
The Canadian dollar may extend the advance from the previous week, with USD/CAD at risk of give back the rebound from the August low (1.2763) should the Bank of Canada (BoC) largely endorse a wait-and-see approach for monetary policy.
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- EUR/USD trading higher, approaching the 1.13 handle
- Move higher comes ahead of the ECB, potentially hinting that the market is expecting a neutral tone
- Buyers might get squeezed on a more dovish sounding Draghi
The EUR/USD is trading higher, currently approaching the 1.13 handle, as the market trades in anticipation of the main event risk on the docket; the ECB Rate Decision.
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- USD/JPY nudging lower after finding resistance around 102.50
- Fed-Speak is in focus ahead for the pair, as the market eagerly awaits September 21
- Watching JGBs proving extremely telling this past months
The USD/JPY is nudging lower after the pair found resistance around 102.50, implying that further momentum to the upside might require a fundamental catalyst for a push higher.
This makes the next round of Fed-Speak interesting to watch for potential shifts in interest rates expectations as the market eagerly awaits what might be an explosive day September 21 with both the Fed and BOJ policy decision.
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- AUD/USD sell-off continues after reversing at 0.77
- Bonds are plummeting worldwide (yields higher), alongside a sell-off in global equities, correlation highest since 2008
- Fed’s Brainard today could add fuel to fire if Fed hike speculation gets pushed forward
The Australian Dollar is tumbling versus other major currencies after Friday saw a global bond and stock sell-off, which carried through to start the trading week.
The AUD/USD reversed off the 0.77 handle last week as a sign of things to come, and it seems the sentiment sensitive currency has suffered most since.
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