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Dagelijkse Markt Analyse 11 Januari 2019
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• Gold prices rise as ebbing trade war worries hurt US Dollar
• Crude oil prices unable to sustain sentiment-driven recovery
• Risk appetite trends, headline flow in focus to start the week
Gold prices turned higher Friday as improving risk appetite triggered a reversal of haven-seeking capital flows buoying the US Dollar, sending the currency lower and offering a lift to the perennially anti-fiat yellow metal. Investors’ rosier disposition reflected hopes for de-escalation in the trade war between the US and China.
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• US Dollar retreat amplified by comments from President Trump
• Pre-positioning for FOMC minutes might inspire USD recovery
• British Pound at risk as EU’s Barnier, UK’s Raab discuss Brexit
The US Dollar weakened in Asia Pacific trade following another verbal intervention from President Trump. He bemoaned the Fed’s interest rate hikes and said he will criticize the central bank if it continues to tighten. This follows reports that expressed disappointment with Jerome Powell at a meeting with donors Friday, saying he’d hoped for a “cheap-money Fed chairman”.
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• US Dollar may return to the offensive on hawkish FOMC minutes
• Yen down as APAC stocks rise, NZ Dollar up on retail sales data
• Australian Dollar lower as yields, demand drop at bond auction
An empty economic calendar in European trading hours is likely to see traders looking ahead to the release of minutes form Augusts’ FOMC meeting for direction cues. A hawkish tone echoing the policy statement released following the conclave may boost the US Dollar.
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• Australian Dollar sinks as Turnbull government continues to wobble
• US Dollar back on the offensive before Powell speech at Jackson Hole
• Euro unlikely to find lasting support from improving PMI survey data
The Australian Dollar underperformed in Asia Pacific trade, sinking against all of its G10 FX counterparts. Three cabinet members quit the government of embattled Prime Minister Malcolm Turnbull, setting the stage for another leadership challenge. Investors unnerved by the attendant uncertainty divested of AUD-denominated assets, sending the currency toward the biggest one-day drop in two weeks.
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• US Dollar may rise as Fed Chair Powell talks up rate hikes
• Aussie Dollar gains after Morrison replaces Turnbull as PM
• Yen down, NZ Dollar up as risk appetite firms in APAC trade
A dull offering of European economic data is likely to see traders singularly focused on a speech from Fed Chair Jerome Powell at the US central bank’s Economic Symposium in Jackson Hole, Wyoming. Such appearances have frequently marked the announcement of key forward guidance establishing the monetary policy trajectory for the months ahead.
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• The US budget deficit is set to balloon
• US politics are fractured and trade policy is hurting former allies
• But there’s still no alternative to the Dollar
The US Dollar retains the global currency crown it has worn unchallenged since the end of World War 2. That crown has only been burnished this year by rising interest rates and an economy that seems to have ditched the financial-crisis blues more convincingly than any other.
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• US Dollar rebounds as markets digest news of NAFTA breakthrough
• Risk appetite cools as Trump talks down China trade deal prospects
• US trade, consumer confidence figures may reveal trade war impact
The US Dollar rebounded in Asia Pacific trade, rising against all of its major counterparts. The move follows the prior day’s downswing after signs of a breakthrough in NAFTA renegotiation efforts stocked risk appetite, sapping some of the haven-linked support buoying the greenback through preceding uncertainty.
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• US Dollar may rise if Q2 GDP update puts Fed outlook back in focus
• Forecasts put growth at strongest in 4 years despite small downgrade
• Canadian Dollar higher as hopes for NAFTA deal continue to grow
The European economic calendar is conspicuously threadbare yet again, putting the spotlight on revised second-quarter US GDP figures. The annualized economic growth rate is expected to be adjusted a bit lower, from 4.1 to 4 percent.
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• Euro unlikely to be impressed by uptick in German inflation
• US Dollar may rise if PCE data puts Fed outlook into focus
• Aussie, NZ Dollars fall on cooling RBA, RBNZ rate hike bets
German CPI data headlines the economic calendar in European trading hours. The headline on-year inflation rate is expected to register at 2 percent in August, unchanged from the prior month. The Euro seems unlikely to react strongly to the outcome considering near-term ECB policy is effectively on auto-pilot.
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• Trade war, emerging market worries continue to weigh on sentiment
• Canadian Dollar leads commodity FX drop, Franc gains outpace Yen
• Euro may shrug off CPI report as ECB policy remains on autopilot
Residual risk aversion continued to plague currency markets in Asia Pacific trade. Most regional shares declined as markets continued to fret about trade war escalation between the US and China as well as renewed jitters in emerging market assets.
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• British Pound down on Brexit worries, may look past UK PMI to Carney speech
• US Dollar and Yen rise, NZ Dollar falls amid risk aversion in Asia Pacific trade
• Australian Dollar manages to hold up as spotlight turns to RBA policy decision
The British Pound plunged amid renewed Brexit-related jitters in Asia Pacific trade. UK Prime Minister Theresa May ruled out a second referendum on her country’s planned withdrawal from the EU while the regional bloc’s chief negotiator Michel Barnier voiced strict opposition to London’s blueprint for the two sides’ economic relationship following the separation.
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• British Pound vulnerable as BOE’s Carney talks down rate hike prospects
• US Dollar may retrace some recent gains on soft manufacturing ISM data
• Australian Dollar gains on RBA rhetoric but follow-through seems unlikely
The British Pound remains in focus following a rocky start to the trading week as BOE Governor Mark Carney and a contingent of central bank officials testify before Parliament’s Treasury Committee. Rhetoric echoing the latest Quarterly Inflation Report suggesting Brexit-related worries will mean a slow rate hike path despite improving economic fundamentals may pressure the UK unit further.
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• European PMI data may boost Pound but Euro likely to look elsewhere
• US Dollar aims extend advance as haven demand holds in risk-off trade
• Australian Dollar unable to sustain upswing after upbeat Q2 GDP data
The economic calendar in relatively muted in European trading hours. A steady stream of Euro Area PMI surveys seems unlikely to mean much for the Euro considering the ECB is essentially on autopilot through year-end. Higher UK services and composite PMIs might be somewhat supportive for British Pound however after BOE Governor Carney said rate hikes may happen even in a “no-deal” Brexit scenario.
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• Yen, Franc rise on Fed rate hike impact worries before ISM data
• Australian, New Zealand Dollar follow APAC stocks downward
• Trade war fears may return as White House readies China tariffs
The anti-risk Japanese Yen and Swiss Franc were on the offensive as risk appetite deteriorated in Asia Pacific trade. On the opposite side of the G10 FX sentiment spectrum, the pro-risk Australian and New Zealand Dollars suffered outsized losses.
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• US Dollar may rise as August jobs data reinforces Fed rate hike bets
• Anti-risk USD buying stalled before event risk may return thereafter
• Yen up, Aussie and NZ Dollars down amid trade war and EM jitters
US employment data takes top billing through the end of the trading week. The economy is expected to have added 191,000 nonfarm jobs last month, marking a pickup from the 157,000 increase in July. The unemployment rate is seen edging down to 3.8 percent, matching an 18-year low. Hourly earnings statistics may prove to be the most potent part of the release however.
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- The September FX impasse may finally find motivation for fresh trends this week as a busy economic calendar is ahead. The highlights for this week will likely be the European Central Bank rate decision on Thursday, with the accompanying press conference starting at the same 8:30 AM ET time slot as the release of US CPI numbers for the month of August.
It’s been somewhat of a slow open to September after an abnormally busy summer across FX; but with a fairly full economic docket for this week, the impasse may be soon giving way. The US Dollar has been in a state of flux since mid-August, with prior levels of relevance at 95.00 and 95.53 coming in to help to establish near-term support and resistance.
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• UK Jobs Report Suggests Tightening Labour Market
• The Focus is on Brexit
The Pound edged higher in the wake of the latest jobs report, in which the Bank of England focussed wage growth components had printed above expectations. Risks had been tilted to the upside for the wage components given that NHS workers (roughly 1.9mln) had received a 3% pay increase in July and thus supporting overall wage.
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• Hedge Funds Bullish Brent Again as Sanctions Loom
• Oil Backwardation Highest Since May
After months of liquidating long positions, hedge funds are now bullish again on Brent crude with long positions increasing after the past two weeks, according to CFTC data. This comes amid the Iranian oil sanctions which are set to be imposed on November 4th, while the US have also demanded nations to drop Iranian imports to zero.
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• Euro may decline as ECB downgrades official economic forecasts
• Pound might rise absent unanimous MPC vote to keep rates steady
• US Dollar to return on offense if CPI echoes wage inflation uptick
All eyes are on policy announcements from the European Central Bank and the Bank of England in European trading hours. No changes are expected from either monetary authority but volatility emerge all the same as markets digest the forward guidance on offer.
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• CAD Bulls Longing for NAFTA Deal
• Canadian Data Supports Case for Higher Rates
The largest risk to the outlook for the Canadian Dollar is the outcome regarding NAFTA. With a touted deadline of October 1st, the headline risk for USDCAD is high and will turn likely dictate near term price action for the pair. Recent rhetoric has been somewhat positive with source reports signalling that Canada were willing to provide key concessions in order to reach an agreement, consequently the Loonie has firmed in recent trading sessions.
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