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Dagelijkse Markt Analyse 11 Januari 2019
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• Gold prices rise on cooling Fed interest rate hike speculation
• Crude oil prices rise as DOE inventory gain trails API estimate
• Fed-speak in the spotlight as “Trump trade” continues to fizzle
Gold prices rose as US rate hike bets cooled. The priced-in projection for the year-end level of the benchmark Fed Funds rate fell to the lowest in two months, pulling Treasury bond yields and the US Dollar down in tandem. This bolstered the appeal of non-interest-bearing and anti-fiat assets including the yellow metal.
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• US Dollar may extend recovery as “Trump trade” returns
• Yen most vulnerable as US tax cut hopes boost risk appetite
• NZ Dollar lagging commodity FX peers after dovish RBNZ
The Japanese Yen underperformed in overnight trade, sliding against all of its top currency counterparts as stocks roared higher across Asian bourses and undercut demand for the standby anti-risk currency. Investors’ mood turned rosy after the White House hinted at a big-splash tax reform plan in the works.
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• Japanese Yen falls as Asian markets follow Wall Street higher
• US Dollar reluctant to build on gains before Yellen testimony
• British Pound gains with UK Gilt yields at trading week open
The Japanese Yen underperformed in otherwise muted Asian trade, dropping as most regional stock exchanges followed Friday’s Wall Street lead upward. That undermined the appeal of the standby anti-risk currency. The British Pound edged higher as UK Gilt rates jumped higher at the weekly trading open, boosting the yield appeal of GBP-denominated assets.
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• Aussie Dollar buoyed by upbeat data, Yen corrects upward
• US Dollar rally may resume after Fed Chair Yellen speaks
• Eurozone GDP, UK CPI figures may pass without fanfare
The Australian Dollar outperformed in overnight trade, buoyed by supportive economic data. The Japanese Yen likewise traded higher in a move that looked corrective after yesterday’s slump against the spectrum of G10 FX majors.
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- U.S. Consumer Price Index to Rise Annualized 2.4%- Highest Reading Since March 2012.
- Core Rate of Inflation to Slow for First Time Since October.
A pickup in the U.S. Consumer Price Index (CPI) may heighten the appeal of the dollar as the Federal Open Market Committee (FOMC) appears to be on course to further normalize monetary policy in 2017, but a marked slowdown in the core rate of inflation may drag on interest rate expectations as the central bank persistently warns ‘market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance.’
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• Yen gains, Aussie Dollar falls as markets-wide risk appetite sours
• US Dollar, Treasury bond yields drop despite supportive news-flow
• S&P 500 futures hint risk-off mood to remain as Wall St. awakens
Risk aversion emerged across financial markets as Asian trade wound down and European bourses came online. Shares put in a mixed performance overnight and investors’ outlook seems to have deteriorated into the subsequent session, with most European equity benchmarks deeply under water.
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• British Pound may overlook UK retail sales figures
• US Dollar may rebound as G20 meeting winds down
• Yen corrects lower, NZ Dollar falls on soft data flow
UK retail sales data headlines an otherwise quiet European data docket. Core receipts growth is expected to slow to 3.9 percent on-year in January, the weakest in seven months. UK news-flow has increasingly outperformed relative to forecasts in recent weeks however, opening the door for an upside surprise.
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• Gold prices turn lower as Fed rate hike speculation heats up anew
• Crude oil prices remain locked in a narrow consolidation range
• US Presidents Day holiday may mark pause in trend development
Gold prices turned lower on Friday when it became clear that a G20 foreign ministers’ meeting passed without major incident (as expected). The move played out inversely of a rise in the US Dollar and Treasury bond yields as well as a steepening of the priced-in rate hike path implied in Fed Funds futures.
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• US Dollar gains as markets look ahead to hawkish Fed-speak
• New Zealand Dollar sinks on ebbing demand for local assets
• Euro may ignore PMIs, Pound may fall on Carney comments
The US Dollar outperformed in overnight trade as markets looked on to a busy week of Fed commentary that may boost near-term rate hike speculation. Recent remarks from central bank officials including Chair Yellen have struck a hawkish tone. Neel Kashkari, Patrick Harker and John Williams – Presidents of the central bank’s Minneapolis, Philadelphia and San Francisco branches – are due to speak today.
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• US Dollar corrects lower versus yield-geared currencies
• Euro and British Pound drop alongside local bond yields
• Canadian Dollar falls as crude oil prices turn downward
Currency markets have put in a mixed performance heading into Wednesday morning in European trade. The US Dollar is trading lower against particularly rates-sensitive alternatives at both ends of the policy spectrum, with the perennially low-yielding Yen as well as the high-beta Australian and New Zealand Dollars scoring outsized gains.
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• Cautious February FOMC minutes boosts the appeal of the NZ Dollar
• US Dollar may rebound as fresh Fed-speak keeps March hike in play
• Crude oil bounce boosts Canadian Dollar, Aussie falls on capex data
The New Zealand Dollar outperformed in overnight trade, with gains tracing the inverse path of the benchmark 10-year US Treasury bond yield. This hints that the Kiwi as able to capitalize on its relatively rosy monetary policy outlook as Fed tightening bets eased following the release of minutes from February’s FOMC meeting. The RBNZ is the only G10 central bank expected to raise rates over the coming 12 month besides the US monetary authority.
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• British Pound drops as UK bond yields plunge at Friday trading open
• Yen may extend Asia session gains as risk aversion sweeps the markets
• US Dollar at risk after Treasury’s Mnuchin undercuts “Trump trade”
A lull in top-tier event risk left most major currencies rudderless in Asian trade. The British Pound declined as UK bond yields dropped at Friday’s trading open. A singular catalyst is not readily apparent but prepositioning for a bill sale later in the day may be at least a part of the story. The Treasury will auction off 28-, 92- and 180-day paper.
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• Pound falls on rumors government expects another Scottish independence vote
• Aussie Dollar gains on corporate profits data, NZ Dollar falls with local yields
• US Dollar may not find lasting cues in data, Fed-speak as Trump speech looms
The British Pound underperformed in an otherwise quiet start to the trading week, sliding against all of its G10 FX counterparts. According to the newswires, the move was triggered by a story in the Times of London alleging that UK Prime Minister Theresa May is preparing for a another referendum on Scottish independence following Brexit.
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• Aussie Dollar, Yen hint at conflicted markets before key Trump speech
• Quiet European calendar unlikely to take spotlight off Washington DC
• Fed-speak, US GDP data may be overlooked with fiscal policy in focus
The Australian Dollar traded higher in overnight trade, with prices tracking S&P 500 futures upward. The move may reflect pre-positioning ahead of a much-anticipated speech from Donald Trump. The US President is due to address a joint session of Congress tomorrow, with markets hoping at last to hear some concrete details about the administration’s economic program.
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• US Dollar, Asian stocks rise in tandem as “Trump trade” finds new life
• Yen falls as risk appetite firms, NZ Dollar drops as yield spread narrows
• Comments from Fed’s Brainard may boost March rate hike speculation
Currency markets were left a bit bewildered after US President Trump gave a much-anticipated speech to a joint session of Congress. The US Dollar edged fractionally lower from intraday highs as Trump spoke only to find a floor and erase much of the drawdown in the minutes after the address concluded.
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• Gold prices rebound on PCE data but upside momentum meek
• Crude oil prices drop as EIA inventory data points to oversupply
• Lull in top-tier news may see consolidation before Yellen speech
Gold prices rebounded from session lows put in amid the return of the “Trump trade” as the PCE gauge of US inflation – the Fed’s favored price growth measure – undershot expectations. The on-year rate registered at 1.9 percent, falling short of the 2 percent result expected by economists. US Treasury bond yields established a top and the US Dollar corrected lower after the data crossed the wires, boosting the relative appeal of non-interest-bearing and anti-fiat assets including the yellow metal.
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- U.S. ISM Non-Manufacturing Survey to Hold Steady at 56.5.
- Employment Component Climbed to a Four-Month High of 54.7 in January..
The ISM Non-Manufacturing survey may spark a lackluster market reaction as the index is anticipated to hold steady at 56.5 in February, but a positive development may heighten the bullish sentiment surrounding the U.S. dollar as it fuels bets for a Fed rate-hike.
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• EURUSD holds 10500 area again
• Big picture bottoming formation still a possibility
• ECB on Thursday
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The Euro lifted over 1% on Friday from an important zone of support which runs back the low created two years ago to the month. EURUSD found support at 10460 in March 2015, but has since turned higher from near there on a couple of occasions since – Dec 2015 (10517) and Dec/Jan 2016 (10504) before briefly dropping down to into the 10300s. Despite the drop to those lows a few months back, the area around 10500 is still in play as a big picture inflection point; Friday’s sharp rally is a testament to the importance of this level.
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• Gold Prices Stable On North Korean Weapons Testing,
• Aggressive Pricing In Of Fed Rate Hikes May Favor Eventual Gold Upside
• Oil’s Market Structure Shows Limited Downside, Charts Appear Bullish
Crude oil prices remain trapped in the consolidation of 2017 that followed the dramatic rise over the majority of 2016 after falling as low as $26/bbl in February. On Monday, the fundamentals of the Oil market received a favorable surprise when Iraq noted that OPEC would most likely need to extend output cuts, which have recently seen a 90%+ compliance rate.
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- Any hawkish outtake at Thursday’s ECB meeting will be seized upon by recently upbeat EURGBP traders.
- The central bank is expected to leave all policy measures unchanged but language will be key.
Thursday’s European Central Bank meeting is widely expected to reveal no change to the current ultra-accommodative monetary policy stance but the accompanying statement is worth parsing to see if the central bank hawks are gaining more leverage. And while the EUR is under pressure from the USD, the single currency may still push ahead against a weak GBP, as Brexit worries still weigh on the UK currency.
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