Dagelijkse Markt Analyse 11 Januari 2019

DAGELIJKSE MARKT ANALYSE 25 SEPTEMBER 2013

• New Zealand Dollar Sinks as Trade Deficit Hits the Widest in 4 Years
• Australian Dollar Mildly Lower on RBA Financial Stability Review
• US Dollar Looks to Durable Goods, Home Sales Data for “Taper” Clues

The New Zealand Dollar underperformed against the major currencies in overnight trade after a disappointing Trade Balance report weighed on investors’ rosy RBNZ monetary policy expectations. The data showed a year-to-date trade deficit of -NZ$2.06 billion in August compared with a gap of –NZ1.68 billion in the prior month, marking the worst outcome in four years. Economists’ forecasts called for the shortfall to narrow to -NZ$1.55 billion ahead of the release. Traders are now pricing in 75 basis points in RBNZ interest rate hikes over the coming 12 months, down from a recent high of 97 basis points recorded mid-month. We suggested that NZD/USD could be topping last week.

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DAGELIJKSE MARKT ANALYSE 26 SEPTEMBER 2013

• Japanese Yen Sinks While the Nikkei 225 Soars on Corporate Tax Cut Chatter
• Pound Looks to 2Q UK GDP Revision to Guide BOE Guidance “Knockout” Bets
• QE “Taper” Speculation to Guide Dollar’s Response to “Fed-speak”, GDP Data

The Japanese Yen slumped overnight as the benchmark Nikkei 225 stock index staged a sharp recovery following initial losses early in the Asian trading session, weighing on the regional safe-haven unit. A flurry of news-wire reports attempting to explain the move cited a report from Kyodo News claiming the government will announce an intention to “promptly” study cutting the effective corporate tax rate along with its fiscal stimulus package on October 1. The New Zealand Dollar outperformed, rising against all of its G10 FX counterparts in a move that looked to be corrective following yesterday’s outsized selloff.

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DAGELIJKSE MARKT ANALYSE 27 SEPTEMBER 2013

• British Pound Soars as BOE’s Carney Sounds Off Against More QE
• German CPI Data Unlikely to Dislodge ECB Outlook, Drive the Euro
• Fed’s George Strikes Hawkish Tone; Evans to Offer Counter-Balance

The British Pound soared late into the overnight session after Bank of England Governor Mark Carney was quoted in the Yorkshire Post saying that he “[doesn’t] see the case for quantitative easing and has not supported it [because] the recovery has strengthened and broadened.” A supportive House Price report from the Nationwide Building Society likewise helped. The data showed home values rose 5.0 percent year-on-year in September, marking the largest increase since July 2010. The UK unit added as much as 0.6 percent on average against its leading counterparts. We remain long EURGBP.

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DAGELIJKSE MARKT ANALYSE 30 SEPTEMBER 2013

• Yen Rallies on Haven Demand as US, Italian Politics Drive Risk Aversion
• Soft CPI Data May Set Dovish Tone for ECB Bets, Compound Euro Selling
• Dollar Unclear About the Ups and Downs of a US Government Shutdown

The Japanese Yen outperformed to start the trading week as risk aversion struck financial markets, sending Asian stock exchanges lower and driving demand for the safe-haven currency. The MSCI Asia Pacific regional benchmark equity index plunged over 1 percent, with political jitters in the US and Italy unnerving investors. European and US stock index futures are trading sharply lower, arguing for continued blood-letting through the rest of the day.

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DAGELIJKSE MARKT ANALYSE 1 OKTOBER 2013

• Dollar Deceptively Quiet as US Government Passes Shutdown Deadline
• Japanese Yen, Nikkei 225 See Volatility Increase as Abe Confirms Tax Hike
• Australian Dollar Could Advances on RBA’s Avoidance of More Further Rate Cuts

Dollar Deceptively Quiet as US Government Passes Shutdown Deadline
Debate in Congress to reach a budget deal continued through the midnight deadline in Washington. Unable to reach a palatable agreement for both the House and Senate, the US government is partially shutting down federal agencies for the first time since 1997. Volatility surrounding this event risk was substantial in the early Asia session, but we have yet to see a meaningful trend develop either behind risk trends or the US Dollar. The implications this event carries for both the currency and capital markets are less severe than some have prepared for. The longer the shutdown lasts, the greater the impact will be on economic output – not a pleasant consideration given the uneven outlook for growth without this trouble. However, this event doesn’t immediately threaten financial market stability nor risk a return to recession.

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DAGELIJKSE MARKT ANALYSE 2 OKTOBER 2013

• Euro Unlikely to Find Lasting Volatility in Status-Quo ECB Announcement
• Yen Soared, Aussie and NZ Dollars Fell as Japanese Stocks Fell Over 2%
• Nikkei 225 Drop May Show Lack of Confidence in Stimulus / Tax Hike Math

An interest rate decision from the European Central Bank headlines the economic calendar in the hours ahead. Expectations call for no changes in the policy mix, with target rate due to remain at 0.50 percent along with the pledge to keep borrowing costs at the current setting or lower for an “extended period”. That shifts the spotlight to the post-announcement press conference from ECB President Mario Draghi. European economic data has been broadly stable relative to expectations since September’s ECB meeting, according to data compiled by Citigroup. Meanwhile, a Bloomberg gauge of regional financial conditions showed notable improvement over the same period. On balance, that hints the emergence of significant ECB policy innovations is unlikely for the time being.

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DAGELIJKSE MARKT ANALYSE 3 OKTOBER 2013

• The Euro’s Post-ECB Rally May Find Added Fuel in PMI Data
• Pound May Come Under Pressure if Services PMI Disappoints
• Yen, NZ Dollar Correct Lower After Outperforming Yesterday

The Euro continued to out push higher in overnight trade having rallied in the aftermath of a broadly-status ECB policy announcement, as expected. The New Zealand Dollar and Japanese Yen underperformed, falling as much as 0.4 and 0.5 percent respectively against their top counterparts. Given an absence of defined event-driven catalysts, the move likely reflected profit-taking after the two currencies led the way higher in the preceding 24 hours.

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DAGELIJKSE MARKT ANALYSE 4 OKTOBER 2013

• Dollar Saved or Doomed by Delayed NFPs?
• Japanese Yen Crosses Offered No Help from BoJ Hold
• British Pound Starting to Ease Back Before BoE

Dollar Saved or Doomed by Delayed NFPs?
It is a dangerous combination: the Dow Jones FXCM Dollar (ticker =USDollar) has slowly slipped to its lowest level in five months while its Thursday trading range was the smallest since the final day of March. An extreme for inactivity and the pressure to edge to new lows would suggests that a serious breakdown could be in the greenback’s future. Yet, a serious catalyst has been removed from the equation for both activity and direction: the September nonfarm payrolls (NFPs). A victim of the as-yet unresolved government shutdown that began on October 1, the Bureau of Labor Statistics is shut down due to the furlough and will neither release last month’s jobs data nor record October’s figures until the lights are turned back on.

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DAGELIJKSE MARKT ANALYSE 7 OKTOBER 2013

• Yen Gains, Commodity Dollars Fall Amid Lingering US Budget Impasse
• S&P 500 Futures Trading Lower, Hinting Risk Aversion Will Continue
• Markets Highly Sensitive to Headline Risk, Vulnerable to Sharp Reversals

The Japanese Yen outperformed on the back of haven-seeking capital inflows overnight, rising against all of its major counterparts as Asian stocks declined. The sentiment-sensitive Australian, Canadian and New Zealand Dollars traded weakest on the session. The MSCI Asia Pacific regional benchmark equity index fell 0.9 percent as the deadlock over US budget policy continued to drive worries about the implications of significant fiscal retrenchment in the world’s largest economy on global growthoverall.

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DAGELIJKSE MARKT ANALYSE 8 OKTOBER 2013

• US Dollar Recovers, Yen Declines as Markets Digest Yesterday’s Volatility
• Quiet European, US Economic Calendar Keeps All Eyes on Washington DC
• Fed-Speak in Focus to Gauge Impact of US Budget Impasse on QE “Taper”

Financial markets were in corrective mode in overnight trade. The US Dollar mounted a cautious recovery after posting the largest daily drop in nearly three weeks over the preceding 24 hours. Meanwhile, the Japanese Yen declined as the Nikkei 225 advanced, sapping demand for the safety-linked currency. Japan’s benchmark stock index plunged 1.2 percent yesterday to hit the lowest level in five weeks.

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DAGELIJKSE MARKT ANALYSE 9 OKTOBER 2013

• Dollar: Where Is the Redemption Rally with the S&P 500 Slump?
• Euro Finds Little More than Stability with IMF Growth Upgrade
• Japanese Yen Weigh their Risk Link Through Carry as Equities Dive

Dollar: Where Is the Redemption Rally with the S&P 500 Slump?
Is this the risk aversion move dollar traders have been waiting for? The S&P 500 suffered a 1.2 percent tumble Tuesday – the biggest in drop in six weeks and a clear break of 2013’s robust support. Furthermore, the VIX Volatility Index (considered a ‘fear’ gauge) climbed above 20 percent for only the second time this year. While the benchmark US equity index is a particularly effective measure of speculative appetite as the tradition portfolio’s ‘risk ‘ asset and its further backstop in stimulus support, it does not alone establish the investment habits of the entire market. And, given the headwinds to the greenback in its local debt ceiling risk; the dollar needs the kind of risk aversion that leverages liquidity.

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DAGELIJKSE MARKT ANALYSE 10 OKTOBER 2013

• Bank of England Rate Decision May be a Non-Event for British Pound
• US Dollar Recovers Amid Rumors of a Deal to Raise the Debt Ceiling
• Aussie, Kiwi, Yen Sold Having Outperformed Since US Gov’t Shutdown

A monetary policy announcement from the Bank of England headlines the economic calendar in European hours. Governor Mark Carney and company are expected to maintain the policy mix as-is, restating the forward guidance principles outlined in Augusts’ quarterly Inflation Report. The framework calls for the benchmark lending rate to remain at 0.5 percent while the stock of asset purchases is held at £375 billion whilst the unemployment rate is above 7 percent.

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DAGELIJKSE MARKT ANALYSE 11 OKTOBER 2013


• Dollar Advance but Risk Trends Surge on Hopes for Debt Deal
• British Pound Firms after Bank of England Holds Policy
• Canadian Dollar at Risk of Volatility Swell on Jobs Data

Dollar Advance but Risk Trends Surge on Hopes for Debt Deal
Is the US government close to defusing its debt ceiling disaster? The market’s think so. Confidence in a down-to-the-wire agreement between House Republicans and President Obama sent the S&P 500 to its biggest single day rally since January 2 (the last stick save on the budget) while the Dow Jones FXCM Dollar Index advanced for the a second day. A resolution – rather than disaster – has also been the most likely outcome for this event; and that leaves us with an inherent bias that we should account for. If the market has also maintained an expectation for a solution to the debt ceiling standoff, how strong would the recovery effort be for equities and the dollar? Would the alleviation of crisis necessarily trigger the confidence needed for a renewed climb to record highs? This is something to keep in mind, but first we have yet to find a definitively solution to the brinkmanship. A suggested six-week delay on the debt ceiling (to November 22) seemed amenable, but linking a lift on the government shutdown seemed to stall talks. An agreement is likely, but seeing it Friday morning versus night has a different impact.

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DAGELIJKSE MARKT ANALYSE 15 OKTOBER 2013

• Dollar Doesn’t Have Same US Debt Ceiling Optimism as S&P 500
• British Pound Rate Hawks Look to Inflation Data to Fortify BoE Fight
• Euro Steady, Bonds Gain as Eurogroup Discusses Future for Rescues

Dollar Doesn’t Have Same US Debt Ceiling Optimism as S&P 500
US politicians are proving more stubborn than optimists have accounted for. The dollar’s mild bounce and the biggest two-day S&P 500 rally since the beginning of the year into this past weekend was founded on confidence that a weekend deal would be struck to end the debt ceiling standoff. Yet, the faceoff lasted the weekend, and traders’ surprise was clear with a morning tumble from both the benchmark currency and broad equity market measure. Despite that early correction, though, confidence in a deal seems unflappable. Whether faith that officials wouldn’t jeopardize a full-scale crisis or simple opportunism to front-run a ‘relief’ rally; the market lean is clear.

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DAGELIJKSE MARKT ANALYSE 16 OKTOBER 2013

• Dollar Drops after Debt Talks Stall, Fitch Warns on US Rating
• British Pound Rallies Against Dollar, Euro on Mixed Inflation Data
• Euro Lower Across the Board Despite USD-Alternative Appeal

Dollar Drops after Debt Talks Stall, Fitch Warns on US Rating
The saga continues. Despite optimistic prognoses from politicians in both parties and arms of the Legislative branch at the start of the week, the US is still without a solution to its rapidly approach debt ceiling deadline. Yet, the fear that this ‘worst case scenario’ could inflict hasn’t spread through the market evenly. In fact, there is remarkable optimism in the form of ‘long risk’ speculation in equities, complacency with the directly afflicted US dollar and serious concern seen in the short-end of the Treasury curve. This inconsistency is partly confusion as to what exactly the implications of this impending event are; but there is also an element of gratuitous optimism that a happy resolution is around the corner.

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DAGELIJKSE MARKT ANALYSE 17 OKTOBER 2013

• Yen Rose After US Secured Budget Deal, Profit-Taking Likely at Work
• FX Market Price Action Will Probably be Muted Through the Week-End
• British Pound Unlikely to Find Lasting Volatility in UK Retail Sales Data

The US Dollar produced a muted response after both chambers of Congress successfully passed a bill lifting the so-called “debt ceiling” and ending the government shutdown that has dragged on since the beginning of the month. The Japanese Yen narrowly outperformed in otherwise quiet trade, rising 0.6 percent against the greenback. The move looks to be corrective after yesterday’s nearly-equivalent decline. That price action appeared to reflect speculation of a budget deal around the corner as the October 17 deadline loomed ahead, so it seems reasonable to see a period of profit-taking after expectations are validated.

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DAGELIJKSE MARKT ANALYSE 18 OKTOBER 2013

• Dollar Collapses, Equities at Record Highs - Normal Risk Appetite?
• British Pound Rallies after BoE Member Fuels Rate Hike Hopes
• Japanese Yen Crosses Don’t Show the Risk Appetite Stocks, USD Suggest

Dollar Collapses, Equities at Record Highs - Normal Risk Appetite?
The Dow Jones FXCM Dollar Index (ticker = USDollar) suffered its biggest bearish hit since the FOMC deferred a priced-in Taper call, while the S&P 500 advanced to record highs. As a response to the stand down from Washington brinkmanship, we could label this a strong risk appetite reaction. But that wouldn’t properly account for the market’s performance. Where US stocks notched record highs; global equities were broadly mixed and the carry trade forged little progress. From a fundamental perspective, averting a crisis is not the same situation as realizing a new element of growth or yield. Rather, it is an opportunity for a ‘relief rally’. US equities were on the rise in the lead up to the headline, so there wasn’t much pent up pressure. Alternatively, lifting credits concern for the US financial system wouldn’t save it from collapse. By way of comparison, this situation carries parallels to the reaction to the September 18 decisionto delay the Fed’s QE3 reduction plans – though that arguably had better fundamental traction. If speculative momentum doesn’t generate elsewhere, reversals may come quickly.

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DAGELIJKSE MARKT ANALYSE 22 OKTOBER 2013

• Dollar Ready for NFPs Volatility
• British Pound Prone to Reversal as BoE Minutes Closes In
• Australian Dollar Facing Expected Cooling in 3Q Inflation Figure

Dollar Ready for NFPs Volatility
Both the dollar and capital markets were stoic through Monday’s session as the speculative ranks await the release of a particularly important US employment report. Looking beyond the normal preoccupation with this series and the volatile reactions to ‘surprises’ (deviations from the consensus), this particular update will be uniquely market moving. Typically, this data prints on a Friday which both curbs trend development in the leads up and dampens follow through due to the weekend drain. This Tuesday report, suffers neither disadvantage. Where the September labor report really shines though is not in its shock value, but its implications for important monetary policy assumptions. Following the FOMC’s surprise decision to defer its Taper in September and the tone of uncertainty from Committee members since the US Government shutdown and shaved down growth amid delayed key data, we have seen economists’ forecasts for the first QE3 reduction pushed all the way out until March. The market is likely on the same page. That sets a very dovish, risk-on tone. Yet, that also establishes a heavy bias that can reverse.

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DAGELIJKSE MARKT ANALYSE 23 OKTOBER 2013

• Dollar Drops to 10 Month Low Versus Euro
• British Pound Looking to BoE Minutes as GBPUSD Faces 1.6250
• Australian Dollar Rally on 3Q CPI More Successful for AUDNZD

Dollar Drops to 10 Month Low Versus Euro
The dollar dropped to fresh 10-month lows against the euro and four-month lows versus the Aussie dollar the ‘miss’ in the September NFPs. For many, this data is confirmation that the Fed’s unpopular – for capital markets like US equities – decision to Taper its stimulus program would be pushed all the way until March 2014. Yet, it is interesting to note that the dollar reaction was more restrained than the debt resolution and the S&P 500’s exuberance was significantly weaker than the average bullish performance last week. What are we to derive from this? One element of this restrained is the level of speculation surrounding the looser monetary policy conditions. Assets like US equities in particularly seem like they never doubted an ongoing support system. And, in the absence of a ‘relief’ rally on risk, tepid jobs and stimulus don’t exactly spell out the beginning of a long-term bull trend. A more prolific problem that may develop traction moving forward is outright doubt that stimulus will be maintained that long or even be effective in its moral hazard gearing. What happens if the S&P 500 drops even with QE3 at full tilt…

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DAGELIJKSE MARKT ANALYSE 24 OKTOBER 2013

• Strong Chinese PMI Sends Australian, New Zealand Dollars Higher
• Euro Volatility Risk on the Downside Ahead of October’s PMI Data
• Japanese Yen May Fall as S&P 500 Futures Hint at Risk-On Mood

The Australian and New Zealand Dollars outperformed in overnight trade, correcting after yesterday’s aggressive selloff amid a flare-up in risk aversion. A pickup in Chinese factory-sector growth likewise helped. October’s flash HSBC Manufacturing PMI gauge rose to 50.9 from 50.2 in the prior month, topping economists’ expectations for a print at 50.4. The result marks the highest print in seven months.

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