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Dagelijkse Markt Analyse 11 Januari 2019
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• Yen falls, Aussie and NZ Dollars rise markets’ mood improves in Asia
• US employment now in focus, with leading surveys looking optimistic
• Firm payrolls data may boost post-June Fed rate hike bets, US Dollar
The anti-risk Japanese Yen fell while the sentiment-sensitive Australian and New Zealand Dollars traded higher alongside stocks in Asian trade. The MSCI Asia Pacificregional equity benchmark added nearly a full percentage point, echoing a surge on Wall Street triggered by a round of supportive US economic data.
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- The purchasing managers’ index for the UK services sector fell to 53.8 in May, below the 55.0 predicted.
- However, trading in Sterling and the FTSE 100 will be dominated this week by Thursday’s UK General Election and the opinion polls heading up to it.
Trading in the British Pound is set to be volatile this week ahead of Thursday’s UK General Election and the opinion polls in the days heading up to it. The ruling Conservative Party is seen as more market-friendly than the opposition Labour Party so polls suggesting a large Conservative victory will likely be positive for Sterling while predictions of a hung Parliament or an outright Labour win will likely weaken it.
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• Gold prices rise as bond yields drop amid risk aversion
• Crude oil prices testing familiar support at $47/bbl level
• API inventory data, DOE energy outlook on tap ahead
Gold prices are building on gains scored following Friday’s release of May’s deeply disappointing US jobs statistics. That outcome weighed on Treasury bond yields and the US Dollar, boosting the appeal of non-interest-bearing assets.
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• Aussie Dollar gains on GDP data in otherwise quiet Asian trade
• NZ Dollar lower, US Dollar higher as markets digest latest moves
• Standstill may prevail near-term as explosive event risk nears
The Australian Dollar outperformed in otherwise quiet Asian trade after first-quarter GDP data registered in line with expectations. The figures showed the on-year growth rate slowing to 1.7 percent, the lowest since the post-crisis trough of 1.2 percent recorded in the third quarter of 2009.
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• Currency markets marking time before critical event risk
• ECB rate decision precedes UK election, Comey testimony
• Dovish stance may disappoint markets, send Euro lower
Currency markets marked time in Asian trade as investors prepared for a busy 24 hours of event risk on the horizon. Most critically, the UK general election will decide who leads on-coming Brexit negotiations and ousted FBI director James Comey will testify in Congress, which may stoke renewed US political instability worries if senior White House officials appear to be implicated in some sort of wrongdoing.
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- Canada Employment to Increase for Sixth Consecutive Month.
- Jobless Rate to Pick Up From 6.5%- Lowest Since 2008.
Another 15.0K rise in Canada Employment may undermine the recent rebound in USD/CAD as the ongoing improvement in the labor market puts pressure on the Bank of Canada (BoC) to lift the benchmark interest rate off of the record-low.
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- The weak showing by UK PM Theresa May is causing senior party officials to mull a change at the top of her ruling Conservative party.
- A raft of important economic data and the latest central bank monetary policy meeting may weigh heavily on an already unsteady Pound.
The British Pound has opened the week on the back foot after UK PM Theresa May’s weak election campaign was torn apart in the weekend press, sparking talk of a fresh Conservative leadership battle. With Brexit talks fast approaching, the need for the ruling party to show a united front is vital.
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• Crude oil price bounce fizzles as EIA predicts record US output
• Gold prices consolidate ahead of FOMC policy announcement
• API inventory data, OPEC report, Sessions testimony in focus
Crude oil prices attempted to launch a recovery – rising to a three-day high – but the advance was aborted as the EIA projected that US shale output will rise to a record 5.48 million barrels per day in July. That continued to undermine confidence in the ability of an OPEC-led supply cut effort to offer lasting support.
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• US Dollar to rise if the Fed rate hike outlook stays unchanged
• Canadian Dollar continues to gain on hawkish BOC tone shift
• British Pound corrects higher after yesterday’s broad selloff
Most major currencies marked time in Asian trade as markets looked ahead to the Fed monetary policy announcement. The Canadian Dollar continued to edge higher as traders priced in recently hawkish BOC rhetoric while the British Pound corrected lower having outperformed on the prior day.
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• Crude oil prices sink as EIA inventory data points to weak demand
• Gold prices suffer sharp reversal on hawkish FOMC rate decision
• US political jitters sour market mood anew, may offer gold a lifeline
Crude oil prices swooned as EIA inventory data stoked oversupply fears. Raw material stockpiles shed 1.66 million barrels, a smaller draw than the 2.3 million expected, while gasoline stores unexpectedly added 2.1 million barrels. That marks the second consecutive weekly gain and hints at weak demand even against the backdrop of the summer US “driving season”.
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• Yen declines as risk appetite firms in Asian trading hours
• Pound gains ground as Tories, DUP find common ground
• S&P 500 futures hint at risk-on end to the trading week
The Japanese Yen underperformed as sentiment brightened in Asian trade, sapping demand for the perennially anti-risk currency. No single driver appeared to account for investors’ chipper mood. Rather, regional shares tiptoed higher in what looked like a correction after yesterday’s heavy selling. That took the MSCI Asia Pacific equity benchmark down 1.25 percent, the most in three months.
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- GBP/USD closes in on the 200-day moving average. A potential ceiling or a new level of support?
- Retail traders up their short GBP positions over the last week; will they be proved correct?
And so it finally begins. European Chief Negotiator for Brexit Michel Barnier today welcomes UK Brexit Secretary David Davis to Brussels for day one of negotiations as the UK readies itself to leave the European Union (EU). The UK will cease to be a member of the EU at midnight on March 29, 2019 – two years after Article 50 was triggered – and it is very likely that no formal long-term withdrawal agreement will have been reached by then, with interim trade agreements expected to be put in place to help smooth the process.
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• British Pound may fall as BOE’s Carney maintains dovish posture
• Anti-risk Yen down as Japan’s Nikkei 225 stock index trades higher
• NZ Dollar rebounds as markets rebalance before RBNZ meeting
All eyes will be on Bank of England Governor Mark Carney in European trading hours as he delivers a much-anticipated speech at the Mansion House in London. The appearance will give the BOE chief an opportunity to opine after minutes from last week’s policy meeting revealed that 3 out of 5 voters on the rate-setting MPC committee now favor a hike.
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• Yen gains, commodity FX weakens as sentiment sounds in Asia
• S&P 500 futures suggest risk-off trade aims to carry forward
• New UK legislative agenda may stoke British Pound volatility
The Japanese Yen outperformed as stocks declined in Asian trade, boosting the standby anti-risk currency. The sentiment-linked Australian and New Zealand Dollars duly tracked lower. Energy names appeared to lead the selloff, which the news-wires linked to yesterday’s sharp drop in crude oil prices.
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-GBP/USD Snaps Back Amid Growing Rift at BoE; Bearish Sequence Remains Intact.
- AUD/USD Fails to Benefit From RBA Minutes; RSI Pulls Back Ahead of Overbought Territory.
The British Pound snapped back from a fresh monthly low of 1.2589 as Bank of England (BoE) Chief Economist Andrew Haldane argued the central bank should normalize monetary policy ‘well ahead of current market expectations,’ but the near-term outlook for GBP/USD remains tilted to the downside as it extends the bearish sequence from earlier this week.
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- Canada Consumer Price Index (CPI) to Narrow to Annualized 1.5%- Lowest Reading Since December.
- Core Rate of Inflation to Pick Up for First Time in 2017.
A slowdown in Canada’s Consumer Price Index (CPI) may undermine the recent strength in the loonie, but a pickup in the core rate of inflation may fuel further losses in USD/CAD as it puts pressure on the Bank of Canada (BoC) to lift the benchmark interest rate off of the record-low.
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- A supersaturated economic calendar has the chance to breath life into the dejected US Dollar.
- Retail traders continue to fade greenback strength, according to the IG Client Sentiment index.
With a light economic docket and a lineup of hawkish Fed speakers, the US Dollar was buoyed last week only modestly. The greenback’s search for a base remains elusive, particularly in the wake of the June FOMC meeting which produced a 25-bps rate hike for a third consecutive quarter. The feedback loop for US Dollar gains is simple: better economic data will provoke a faster Fed tightening cycle.
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- U.S. Consumer Confidence to Narrow for Third Consecutive Month.
- Will Chair Janet Yellen Still Endorse Three Rate-Hikes for 2017?
Another downtick in the Conference Board’s U.S. Consumer Confidence survey may open up the topside targets for EUR/USD as the recent wave of dismal data prints drags on interest-rate expectations.Waning household sentiment may further dampen the Fed’s scope to implement higher borrowing-costs as officials warn ‘market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.’
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• Commodity currencies rise as energy, material shares boost ASX 200
• Yen higher as Japanese shares decline, driving anti-risk capital flows
• European, US stock index futures hint at further risk aversion ahead
The Australian, Canadian and New Zealand Dollars traded higher in Asian trade. The move tracked gains in Australia’s S&P/ASX 200 stock index. Materials and energy names led the way higher, which may explain strength in commodity-linked currencies. The Yen likewise advanced asJapan’s Nikkei 225 index suffered, sending capital flowing into local investors’ standby anti-risk play.
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• Gold prices may break from consolidation on US GDP revision
• Soft data might weigh on Fed rate hike bets, push gold upward
• Crude oil prices lack obvious catalyst after EIA-inspired gains
Gold prices continued to mark time, waiting for a fresh catalyst after briefly spiking to a six-week low earlier in the week. The spotlight now turns to a revised set of US GDP figures, which are expected to confirm prior estimates showing the economy expanded at an annualized rate of 1.2 percent in the first quarter.
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