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Dagelijkse Markt Analyse 11 Januari 2019
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- U.S. Non-Farm Payrolls to Increase 200K for Second Straight Month..
- Unemployment Rate to Narrow to Annualized 4.7%, Average Hourly Earnings to Rebound.
The U.S. Non-Farm Payrolls (NFP) report may boost the appeal of the greenback and fuel speculation for a Fed rate-hike as the economy is expected to add another 200K jobs in February.
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• FTSE 100 ends decline off record highs
• Clear support levels in focus, resistance mostly top-side trend-lines
• FOMC on Wednesday, BoE Thursday
Last week, the FTSE 100 started off edging lower from record highs, but then a rush of a selling came in on Thursday and pushed the index down below the first area of support in the 7330/00 vicinity, almost nearing lower parallel support before seeing a solid turnaround on the day. We made note of similar price action in the S&P 500 (mini short-term capitulation-like bottom).
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• US Dollar gains as FOMC meeting approaches, Yen may follow
• British Pound sinks as UK readies Brexit trigger, Scotland balks
• Risk aversion bodes ill for Australian and New Zealand Dollars
The US Dollar continued to edge higher as prices retrace losses suffered after last week’s jobs data release. Traders appeared to read that report as just supportive enough to sustain the now status-quo call for a rate hike at this week’s FOMC meeting. It did not advance the case for a steeper tightening path thereafter however, which perhaps accounted for an unwinding of short-term long USD exposure and handed the greenback its largest drawdown in five weeks.
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• US Dollar may fall as hawks find nothing new in FOMC rate decision
• Euro vulnerable as pro-, anti-EU forces clash in Netherlands election
• Yen falls, Aussie and Kiwi Dollars rise as risk trends improve in Asia
The sentiment-linked Australian and New Zealand Dollars traded modestly higher while the anti-risk Japanese Yen edged downward in otherwise quiet Asian trade. Regional bourses played catch-up to losses on Wall Street but benchmark US (S&P 500) and European (FTSE 100) index futures traded higher, pointing to a rebalancing of risk trends back toward neutral ahead of the upcoming Fed policy announcement.
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• Crude oil prices muted despite supportive news flow
• Gold prices rise as FOMC keeps rates outlook as-is
• Trump 2018 budget request unlikely to make waves
Crude oil prices edged up but gains seemed restrained given the day’s news-flow. The IEA said markets are still working through oversupply built up before an OPEC output cut deal took effect this year, hinting they may yet see a larger boost from the cartel’s efforts. Meanwhile, DOE inventory flow data showed stockpiles fell for the first time since December last week. Also, the US Dollar weakened after the FOMC rate decision, which might have been expected to be de-facto supportive.
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- U. of Michigan Confidence to Rebound to 97.0 in March.
- 12-Month Inflation Expectations Have Increased for Last Two Consecutive Months.
A rebound in the U. of Michigan Confidence survey may curb the recent weakness in the U.S. dollar as it encourages the Federal Open Market Committee (FOMC) to further normalize monetary policy over the coming months.
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Fundamental Forecast for EUR/USD: Bullish
- The rise of protectionism in Europe has hit a speedbump after Geert Wilders was defeated in the Netherlands; if Marine Le Pen loses the French presidential elections, the Euro will have weathered two significant risks.
- Between the ECB’s ‘dovish decision with a hawkish twist’ and the Fed’s ‘dovish rate hike,’ it seems that a run towards parity in EUR/USD spurred by central banks is a distant possibility.
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• Euro leads regional FX higher after Macron debate triumph
• British Pond may not find lasting follow-through in UK CPI
• US Dollar remains at the mercy of Fed officials’ commentary
The Euro led a broad-based rally in European currencies after a poll showed that Emmanuel Macron won the first French presidential debate. An Elabe survey showed 29 percent thought the centrist was most convincing. Left-wing candidate Jean-Luc Melenchon scored 20 percent while the center-right Republicans’ Francois Fillon and eurosceptic Marine Le Pen tied for third place with 19 percent.
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• Yen gains, Aussie falls as Asian stocks follow Wall Street downward
• NZ Dollar holds up despite risk-off mood as RBNZ rate decision nears
• Index futures hint risk aversion set to continue in European, US trade
The Japanese Yen outperformed in overnight trade as stocks slumped across Asian bourses, offering a lift to the standby anti-risk currency. The Australian Dollar proved weakest on the session as investors’ sour mood weighed on the sentiment-sensitive unit. The Kiwi Dollar managed to hold up a bit better, with traders probably unwilling to take strong directional bets ahead of the upcoming RBNZ rate decision.
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• Aussie Dollar falls as bond yield drop hints RBA outlook eroding
• Yen edges lower as Asian stocks recover after blistering selloff
• US Dollar may extend decline on Yellen, Kashkari commentary
The Australian Dollar underperformed in overnight trade, falling alongside local front-end bond yields. That speaks to a dovish shift in RBA monetary policy bets, though a standalone catalyst triggering it is not immediately apparent.
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• Crude oil prices wait on rig count, positioning data at key support
• Gold prices snap six-day win streak before US House AHCA vote
• Fate of healthcare reform may alter Fed interest rate hike outlook
Crude oil prices drifted to the bottom of their near-term range but the absence of top-tier news flow meant the absence of momentum needed for a conclusive breakdown or a spirited rebound. Fresh insight into supply dynamics may help break the stalemate as Baker Hughes rig count data comes across the wires.
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• AHCA healthcare bill failure throws the “Trump trade” into reverse
• Fed rate hike speculation fizzles against a backdrop of risk aversion
• Yen up, US Dollar down, stock futures hinting at more of the same
The US Dollar slumped against its major counterparts to start the trading week. Fed rate hike speculation cooled, undermining yield-based support for the benchmark currency, after last week’s failure of the AHCA healthcare reform bill.
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- U.S. Consumer Confidence to Narrow for Second Time in 2017.
- Sentiment Survey to Pullback From Highest Reading Since 2001.
The Conference Board’s U.S. Consumer Confidence survey is expected to pullback from the highest reading since 2001, but the data print may generate a limited reaction as attention turns to the slew of speeches coming out of the Federal Reserve.
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- GBPUSD has steadied in Europe Wednesday after falling the previous day and again in early Asian trade.
- Sell the rumor, buy the fact could be the market theme in the hours ahead.
- Short-dated Sterling volatility is picking up, but nothing like it did both in January and last year.
GBPUSD has stabilized in Europe Wednesday after its recent sharp falls, suggesting that a bounce is possible once the UK’s Permanent Representative to the EU, Sir Tim Barrow, has handed the letter to the President of the European Council, Donald Tusk, beginning the formal process of the UK leaving the EU.
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• British Pound recovers as losses triggered by Brexit trigger fizzle
• Euro may look past first decline in German inflation in 11 months
• US Dollar volatility unlikely on 4Q GDP revision, Fed comments
The British Pound corrected gently higher in Asian trade following yesterday’s losses. The currency fell as the UK government invoked Article 50 of the Treaty of Lisbon, formally launching the Brexit process. Follow-through proved limited however, as expected. Sterling spiked to a two-month low against its major counterparts but promptly recovered, erasing the lion’s share of intraday losses.
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- EURUSD slipped lower after Euro-Zone inflation missed expectations.
- Release will strengthen ECB President Mario Draghi’s resolve to continue with his ultra-loose monetary policy.
Euro-Zone inflation in March fell to 1.5% y-o-y from 2.0% in February and missed expectations of a 1.8% increase. On a monthly basis, CPI rose 0.7% against a prior month’s reading of 0.9% as energy and food prices moderated. While this decrease was partially priced into the market after Thursday’s inflation figures out of Germany, the single currency edged lower as the y-o-y fall eased the pressure on ECB President Mario Draghi.
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• British Pound may overlook pickup in manufacturing PMI survey
• US Dollar may end win streak as soft ISM cools Fed rate hike bets
• Aussie Dollar slumps on retail sales miss, Kiwi Dollar also lower
The UK manufacturing PMI survey headlines the economic calendar in European trading hours. A pickup in the pace of factory-sector activity growth is projected. The outcome seems unlikely to have a lasting impact on the British Pound however considering its limited implications for near-term BOE policy trends. The central bank seems locked in wait-and-see mode as Brexit negotiations begin in earnest.
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• Japanese Yen gains amid risk aversion in Asian trade
• US Dollar seemingly reasserting safe-haven credentials
• ECB President Draghi, Fed Governor Tarullo to speak
The Japanese Yen soared in Asian trade as regional share prices declined, offering a familiar lift to the standby anti-risk currency. The US Dollar also traded higher, with the baseline unit appeared enjoy a degree of haven demand. Indeed, prices tracked Treasury bond futures upward, with both moving inversely of contracts tracking the S&P 500.
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• Soft UK PMI surveys may weigh on the British Pound
• US Dollar may rise on March FOMC meeting minutes
• Yen gains in quiet Asian trade as Japanese stocks fall
A quiet European economic data docket is headlined by a pair of UK PMI surveys. News-flow has increasingly softened relative to forecasts since mid-February, opening the door for disappointment that may weigh on the British Pound. Indeed, soft manufacturing PMI data did just that earlier in the week.
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