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Dagelijkse Markt Analyse 11 Januari 2019
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- EUR/USD fell in early European business Monday after the violent independence poll in Catalonia.
- Spanish stocks dropped and Spanish sovereign bond yields jumped.
The Euro fell back in early European trading Monday in the wake of the secession vote in Catalonia. Spanish riot police used batons and rubber bullets against voters and Catalan officials said more than 800 people were injured in clashes. Some 90% of those able to vote chose independence from Spain, according to Catalan officials.
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- GBP/USD fell and EUR/GBP rose Tuesday as the UK construction PMI pointed to contraction in the sector.
- The EU warned again that not enough progress has been made in the Brexit talks to move on to discussing the future relationship between the UK and the EU.
The British Pound fell again Tuesday after a disappointing purchasing managers’ index for the UK construction sector in September and more negative comments from the EU suggesting that not enough progress has been made in its Brexit negotiations with the UK.
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- ISM Non-Manufacturing Survey to Increase for Second Straight Month.
- Will Chair Janet Yellen Endorse a December Rate-Hike?
Trading the News: ISM Non-Manufacturing
Another uptick in the ISM Non-Manufacturing survey may trigger a bullish reaction in the greenback, with EUR/USD at risk of extending the decline from the previous month as it initiates a series of lower highs & lows.
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- Catalonia will likely declare independence from Spain shortly, putting Spanish stocks and bonds under further pressure.
- However, there is likely to be little lasting damage to the Euro from the dispute.
Market action over the last few says suggests that the Euro is unlikely to be hit hard by the independence movement in the Catalonia region of Spain but that Spanish stocks and bonds could continue to suffer.
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- U.S. Non-Farm Payrolls (NFP) to Increase 80K- Slowest Pace of Growth Since March.
- Average Hourly Earnings to Hold Steady at 2.5% for Sixth Consecutive Month.
Even though U.S. Non-Farm Payrolls (NFP) are anticipated to increase another 80K in September, the lack of wage growth may curb the recent weakness in EUR/USD as it undermines the Federal Reserve’s ability to implement higher borrowing-costs.
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- Economic momentum continues to hit new multi-year highs in the Euro-Zone.
- EUR/USD turns positive, just, as worries over the German Election are put aside.
The latest Euro-Zone Sentix Investor Confidence Indicator hit a new decade high in October, trumping expectations. The indicator rose to 29.7 from a prior 28.2 and expectations of 28.5, as investors brushed off any concerns over the recent German Elections and focussed on the strengthening economy.
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- UK manufacturing and construction data point to a more buoyant UK economy.
- That’s helped lift the Pound and made an interest rate increase more likely.
UK industrial production, construction output and manufacturing were all buoyant in August, suggesting that the Bank of England remains on course to increase interest rates later this year, helping boost the Pound for a second day in a row after its recent sharp selloff.
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• Silver is trading at confluence of resistance in form of price and 200-day
• Gold has solid resistance in the area of 1296/1300, a turn lower brings t-line/200-day into view
• FOMC minutes later today not expected to rock markets, but traders need to be prepared nevertheless
When we last looked at precious metals the conclusion was lower before higher; and while that was true on an intra-day basis, it wasn’t exactly what we had in mind. It’s been a nice bounce in the sector the past few days with the help of dollar weakness, but are we on the verge of seeing another dive lower towards substantial support levels?
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- Bitcoin blows through the $5,000 ceiling as the Bitcoin Gold fork nears.
- Korean Won buyers continue to push the market ever higher.
Bitcoin (BTC) Sets Yet Another All-Time High
The digital market heavyweight continues to climb ever higher as investors look ahead to the Bitcoin Gold hard fork near the end of October. Recall that the last Bitcoin hard fork produced a new coin, Bitcoin Cash, which quickly traded up around the $900 level before falling steadily back to its current level around $300.
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• US Dollar may rise as CPI data revives Fed interest rate hike speculation
• Aussie, NZ Dollars outperform courtesy of on their US cousin’s pullback
A lackluster offering of European economic data is likely to see financial markets looking ahead to the day’s stock of US releases. September’s CPI report seems most significant. The headline inflation rate is expected to hit a six-month high at 2.3 percent. An upside surprise echoing steady improvement in US news-flow since mid-June might revive Fed rate hike speculation, boosting the US Dollar.
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- The Euro finished in the middle of the pack last week again, with EUR/USD rising by +0.76% and EUR/GBP losing -0.90%.
- According to the CFTC’s COT report, net non-commercial Euro longs rose back to their highest level of the year during the week ending October 10, 2017, and the highest since May 2011.
The Euro had another middling week, finishing dead in the middle among the major currencies covered by DailyFX Research. Whereas EUR/USD was the worst performing EUR-cross and EUR/GBP was the best performing EUR-cross in the first week of October, the opposite was true this past week: EUR/GBP lost -0.90% and EUR/USD gained +0.76%.
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- UK inflation hits 3% in September on higher food and fuel prices.
- UK Central Bank under pressure to raise interest rates at the November meeting.
UK headline inflation hit 3% in September, the highest level since April 2012, while core inflation held steady at a five-year high of 2.7%. While the rise in the headline figure was widely expected, the latest figure will increase pressure on the central bank to hike rates at its next MPC meeting in November.
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• Euro may rise if ECB’s Draghi speaks to monetary stimulus limitations
• US Dollar looking to Fed Beige Book survey to fuel continued recovery
• Canadian Dollar gains on NAFTA talks extension, NZ Dollar weakens
A speech form ECB President Mario Draghi headlines an otherwise lackluster offering on the European economic calendar. The central bank chief is due to speak about “structural reforms in the Euro area” but markets will look for comments hinting at the fate of QE asset purchases ahead of next week’s policy meeting. Emphasis on the limitations of monetary stimulus may boost the Euro.
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- UK retail sales fall in September, while the previous month’s numbers are all revised lower.
- GBP/USD falls to a one-week low as traders now wait to see the outcome of this week’s EU Summit meeting.
A poor set of UK retail sales figures for September sent GBP/USD tumbling to a one-week low astraders question whether the Bank of England will raise rates by 0.25% in November, as had widely been expected. On a month-on-month basis, sales fell by 0.7% ex-fuel and by 0.8% inc-fuel, while on an annual basis, sales ex-fuel fell to 1.6% from 2.6% in September, while sales inc-fuel fell to 1.2% from a prior 2.3%.
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- Canada Consumer Price Index (CPI) to Increase for Third Consecutive Month.
- Core Rate of Inflation Climbed Annualized 1.5% in August.
Another 0.4% rise in Canada Retail Sales paired with marked pickup in the Consumer Price Index (CPI) may derail the near-term rebound in USD/CAD as it encourages the Bank of Canada (BoC) to further normalize monetary policy over the coming months.
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• Japanese Yen drops after Abe triumphs in weekend snap election
• Euro down with German yields before ECB decision on QE pace
• Ardern inverview sends NZ Dollar briefly lower but losses fizzle
The Japanese Yen offered the most convincing move in Asia Pacific trade, trading broadly lower as local markets cheered a win for Prime Minister Shinzo Abe in a snap election over the weekend. The ruling coalition sustained its two-thirds majority in the Diet, making it seem all-but-certain that ultra-loose monetary policy in the mold of current BOJ Governor Kuroda will remain a fixture for the foreseeable future.
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- Euro-Zone economic growth eased in October but remained strong, according to the latest purchasing managers’ indexes.
- That means the European Central Bank is still likely to announce a tightening of monetary policy Thursday.
- The Euro was stable after the data and will likely remain little changed until Thursday’s announcement.
The Euro-Zone’s manufacturing and service sectors continued to grow strongly in October, although the latest composite purchasing managers’ index for the region missed expectations, according to the latest data from IHS Markit.
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- Bank of Canada (BoC) to Keep Rates on Hold Following Two Consecutive Hikes.
- Will Governor Poloz & Co. Implement Higher Borrowing-Costs in 2018?
The Bank of Canada (BoC) interest rate decision may spark a limited market reaction as Governor Stephen Poloz and Co. are widely anticipated to keep the benchmark interest rate at 1.00%, but the accompanying policy statement may ultimately alter the near-term outlook for USD/CAD should the central bank tame expectations for higher borrowing-costs.
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• Euro bias favors weakness as ECB unveils QE program upgrade
• US Dollar down with Treasury yields as Fed rate hike bets cool
• Yen up as Nikkei backtracks after upside gap, NZ Dollar lower
All eyes are on the ECB monetary policy announcement in European hours. President Mario Draghi and company are widely expected to “taper” the size of monthly QE asset purchases while extending the program beyond 2017. Baseline expectations envision halving the current pace of uptake from €60 to €30 billion and pushing the expiration date out by nine months.
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- U.S. Gross Domestic Product (GDP) to Slow to Annualized 2.6% in 3Q 2017.
- Core Personal Consumption Expenditure (PCE) to Rebound From Lowest Level Since 1Q 2015.
The advance 3Q U.S. Gross Domestic Product (GDP) report may generate a mixed market reaction as the growth rate is expected to narrow to an annualized 2.6%, while the core Personal Consumption Expenditure (PCE), the Fed’s preferred gauge for inflation, is anticipated to pick up during the same period.
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