Dagelijkse Markt Analyse 11 Januari 2019

DAGELIJKSE MARKT ANALYSE 25 OKTOBER 2013

• Yen Gains, Aussie and Kiwi Sink on Rising Chinese Borrowing Cost
• British Pound May Rise as 3Q GDP Print Drives BOE Expectations
• Euro Ought to be Worried About US Economic Data, Not an IFO Miss

The Japanese Yen rode haven-seeking capital flows higher while the sentiment-geared Australian and New Zealand Dollars faced selling pressure in overnight trade as Asian stock exchanges floundered. The MSCI Asia Pacific regional benchmark equity index fell 0.9 percent. Another jump in Chinese borrowing costs seemed to have been a particular sore spot for investors after the benchmark 7-day SHIBOR lending rate was fixed at 4.89 percent, the highest since July.

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DAGELIJKSE MARKT ANALYSE 28 OKTOBER 2013

• Yen Sold, Aussie and Kiwi Rally as Risk Appetite Swells in Overnight Trade
• S&P 500 Futures Hint Sentiment to Remain Well-Supported, US Data on Tap
• FOMC May Disappoint Dovish Outlook Later in the Week, Boosting USD

The Japanese Yen sank amid ebbing haven demand while the sentiment-geared Australian and New Zealand Dollars rallied as risk appetite swelled in overnight trade. The MSCI Asia Pacific benchmark stock index rose 1 percent as regional investors took their opportunity to react to Friday’s soft US consumer confidence reading from the University of Michigan. The measure unexpectedly sank to the lowest since December 2012, hinting the Federal Reserve is likely to delay “tapering” QE asset purchases as the economic struggles with fiscal drag courtesy of the US government shutdown earlier this month.

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DAGELIJKSE MARKT ANALYSE 29 OKTOBER 2013

• Yen Rallies, Aussie and Kiwi Sink as Risk Aversion Engulfs Asian Markets
• Seesawing Sentiment Trends Reflect Uncertainty Ahead of FOMC Meeting
• Dollar May Turn Lower Anew as Soft US Data Informs QE ”Taper” Bets

Risk appetite unraveled overnight, weighing on the sentiment-linked Australian and New Zealand Dollars while driving the Japanese Yen higher on the back of safe-haven demand. The MSCI Asia Pacific regional benchmark stock index fell 0.5 percent. The newswires chalked up the move disappointment about China’s ability to reign in borrowing costs, a recently prominent sore spot. The PBOC injected CNY13 billion into the market after a two-week pause in liquidity provision but the benchmark 7-day SHIBOR rate still advanced to a new there-month high of 4.497 percent.

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DAGELIJKSE MARKT ANALYSE 30 OKTOBER 2013

• Euro Unlikely to See Strong Response to German Jobs, Inflation Data
• All Eyes on FOMC Outcome as Markets Gauge QE “Taper” Timing
• US Dollar May Rise if Fed Officials Show No Clear Dovish Tone Shift


German Unemployment and CPI figures headline the economic calendar in European hours. The former data set is expected to show no change in headline labor market indicators in October, with the ranks of the jobless holding steady from the prior month while the unemployment rate remains at 6.9 percent. The latter report is forecast to see the baseline year-on-year inflation rate holding at 1.4 percent, matching September’s result.

On balance, such outcomes offer no meaningful impetus for markets to re-appraise status-quo ECB policy expectations, and as such seem unlikely to yield much of a reaction from the Euro. Overall Eurozone economic news-flow has deteriorated relative to expectations over the past two months according to data compiled by Citigroup. While this opens the door for downside surprises, the probability of an outsized reaction from the single currency (much less of seeing lasting follow-through) seems rather low before the markets can put today’s FOMC policy announcement behind them.

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DAGELIJKSE MARKT ANALYSE 31 OKTOBER 2013


• Japanese Yen Outperformed as Risk Appetite Floured on FOMC Outcome in Asia
• Euro May Decline if Flash CPI Print Disappoints, Driving ECB Easing Outlook
• US Dollar May Extend Gains as Jobless Claims Data Informs Fed “Taper” Bets


The Japanese Yen outperformed in overnight trade, rising as much as 0.4 percent on average against its top counterparts, as risk appetite soured and drove demand for the safe-haven currency. Asian stocks followed Wall Street lower after the Federal Reserve disappointed the markets’ hopes for a meaningful dovish shift in official rhetoric, as expected. The New Zealand Dollar underperformed after the RBNZ hinted that the elevated exchange rate may limit scope for interest rate hikes planned for next year.

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DAGELIJKSE MARKT ANALYSE 1 NOVEMBER 2013

• Yen Soars on Risk Aversion, Aussie Gains on Chinese PMI Data Overnight
• British Pound May Decline as Soft PMI Print Informs BOE Policy Outlook
• US Dollar May Decline if ISM Gauge Drop Revives QE Taper Delay Hopes


The Japanese Yen outperformed in overnight trade, rising as much as 0.6 percent on average against its top counterparts, as risk appetite soured and drove demand for the safe-haven currency. Asian stocks followed Wall Street lower for a second day as investors continued to digest Wednesday’s FOMC policy meeting. The central bank disappointed the markets’ hopes for a meaningful dovish shift in official rhetoric (as expected), weighing on sentiment across financial markets.

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DAGELIJKSE MARKT ANALYSE 5 NOVEMBER 2013

• Aussie Dollar Sold as Central Bank Steps Up Pro-Depreciation Rhetoric
• Markets Appear to Perceive a Hint of Intervention Risk in RBA Tone Shift
• US Dollar Looks to Service-Sector ISM Data to Guide Fed QE Taper Bets


The Australian Dollar underperformed in overnight trade, sliding as much as 0.5 percent on average against its leading counterparts, after the RBA stepped up its rhetoric against exchange rate appreciation following the central bank’s monthly policy meeting. Governor Glenn Stevens and company opted to keep the benchmark lending rate unchanged, repeating familiar rhetoric outlining the case for additional accommodation but arguing this will materialize as past rate cuts fully filter into the broad economy. Remarks about the Aussie were sharper however, with Stevens saying the currency is “uncomfortably high” and suggesting a lower level is needed to “achieve balanced growth in the economy.”

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DAGELIJKSE MARKT ANALYSE 6 NOVEMBER 2013

• Dollar Suffers First Two-Day Drop Since Debt Ceiling Standoff Ends
• Euro Drops after EU Downgrades Region’s Growth, Debt Outlook
• British Pound, Yield Forecast Rise on Upgraded Growth Forecast

Dollar Suffers First Two-Day Drop Since Debt Ceiling Standoff Ends
We are a day away from the release of the 3Q US GDP release and two from the October NFPs – event risk that can materially alter FOMC taper forecasts and thereby the US dollar’s bearings. In the lead up, however, a lack of conviction and lingering volatility can create unusual trading conditions. The 0.1 percent slip from the Dow Jones FXCM Dollar Index (ticker = USDollar) marked the first consecutive decline for the benchmark since the deficit standoff ended October 17 and ultimately marked the turning point for a bull wave. For event risk, the past session offered up the ISM’s service sector activity survey for October. A 55.4 reading from the benchmark bested expectations, but it was the jump in the employment component that perhaps generates a little more interest in the lead up to official labor stats due Friday. The next trend we see from the dollar, carry and broader financial markets is very likely to originate from risk trends that are touched off by stimulus expectations. That leverages the importance of Fed commentary as well. It seems there is concerted effort to prepare the market for the Taper.

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DAGELIJKSE MARKT ANALYSE 7 NOVEMBER 2013

• British Pound May Edge Lower as BOE Rate Decision Amounts to a Non-Event
• Euro Has Room to Rebound as ECB Falls Short of Markets’ Dovish Expectations
• Australian Dollar Sold After Soft Jobs Data Weighs on RBA Rate Hike Outlook


A monetary policy announcement from the Bank of England promises to be another non-event. Despite a handful of upside surprises on recent economic releases, the trend in overall news-flow has been disappointing relative to expectations since mid-August (according to data from Citigroup). This suggests the economy has evolved closer in line with the central bank’s outlook than that of the markets since the introduction of the current “forward guidance” policy framework.

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DAGELIJKSE MARKT ANALYSE 8 NOVEMBER 2013

• Dollar Well Positioned Should NFPs Spark Risk Aversion
• Euro Throttled by ECB Rate Cut, More Easing and Losses Likely
• Yen Crosses Shaken as Volatility Highlights ‘Expensive’ Carry

Dollar Well Positioned Should NFPs Spark Risk Aversion
The dollar was offered a taste this past session of what could be if the upcoming NFPs go its way. A measure of schadenfreude was enjoyed by the greenback at the expense of a Euro that saw its monetary policy backdrop offer up a sudden change of tack. Yet, the real drive would come through the shift in speculative equilibrium through the morning hours of New York trade. The blow to optimism was no doubt in part due to the interpretation of the 3Q US GDP release. On its surface, the 2.8 percent annualized performancewas an unexpected acceleration and encouraging sign for world’s largest economy. Of course, the market is looking more critically at important data nowadays; and this update adds weight to speculation that the FOMC Taper can come in December or January rather than the recently projected March meet.

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DAGELIJKSE MARKT ANALYSE 11 NOVEMBER 2013

• US Dollar Testing Pivotal Channel Top Resistance Threshold
• S&P 500 Still Struggling with Follow-Through on Topping Setup
• Gold Loses Grip on 1300 Figure, Crude Oil Poised to Bounce


US DOLLAR TECHNICAL ANALYSIS – Prices are testing resistance in the 10586-604 area, marked by the top of a falling channel established from early July and the 38.2% Fibonacci retracement.A break above that exposes the 50% Fib at 10682.Alternatively, a turn below support at 10509, the 23.6% Fib, initially targets a rising trend line set from early April (now at 10473).

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DAGELIJKSE MARKT ANALYSE 12 NOVEMBER 2013

• Dollar’s Smallest Range in 7 Months Warns of Volatility
• British Pound: CPI Data Round One for Breakout Risk
• Euro Bests All Majors after Greece Avoids No Confidence Problems

Dollar’s Smallest Range in 7 Months Warns of Volatility
The Dow Jones FXCM Dollar Index (ticker = USDollar) traded in an incredibly tight 18.8-point daily range Monday – the lowest level of activity in seven months and the second most restrained reading in six years. Extremes don’t last by their very nature and this is certainly a severe reading of inactivity. There is plenty of thematic, fundamental fodder for FX traders to use to put the currency back on pace; but a meaningful trend may be out of reach of anything short of a clear risk trend move or obvious shift in the timing of the Fed’s stimulus wind down. The opening session for the week was light on such high-level catalysts. Over the coming session, we have a few indicators and Fed speeches that will offer small sparks. The NFIB small business optimism report for October along with Kocherlakota’s and Lockhart’s talks is top event risk.

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DAGELIJKSE MARKT ANALYSE 13 NOVEMBER 2013


• Dollar Fully Retraces ‘No Taper’ September Plunge
• British Pound: CPI Setups Up Break, BoE May Drive it Through
• Euro Extends its Rebound but Yield Outlook Continues to Shrink

Dollar Fully Retraces ‘No Taper’ September Plunge
The Dow Jones FXCM Dollar Index (ticker = USDollar) closed above 10,600 for the first time since September 17 this past session. That means that the greenback has unwound all the losses it has suffered since the FOMC surprised the market two months ago by deferring a heavily-expected Taper. There are a number of ways to interpret this recovery. Is the market growing more certain of a December cut to the expansive QE3 program? Perhaps the recent dovish turn for the Fed’s global counterparts is setting the greenback in a better light? Or perhaps the slow turn in monetary policy by the world’s largest central bank is losing its influence over the currency?

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DAGELIJKSE MARKT ANALYSE 14 NOVEMBER 2013

• Dollar Drops after Leaked Yellen Comments Show QE Support
• Euro at Risk Should Weak GDP Data Spur ECB Stimulus Wars
• British Pound Rallies after BoE Report Opens Door to 2015 Hike

Dollar Drops after Leaked Yellen Comments Show QE Support
The markets were given a taste of how the likely next Fed Chair will guide the world’s largest stimulus program…and the dollar didn’t like it. In the lead up to Fed Vice Chair Janet Yellen’s confirmation testimony before the Senate Banking Committee today (15:00 GMT), the central bank released the contents of her prepared remarks. Traders have grown quite adept at deciphering central bank speak into practical trading application, and this particular account reinforced expectations of a persistent dovish tone. In the transcript, Yellen remarked that the housing sector had “turned a corner”, the auto industry has made a “comeback” and the economy generally “continues to improve”. Yet, the particular passage most jumped on was: “a strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases.”

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DAGELIJKSE MARKT ANALYSE 15 NOVEMBER 2013

• Dollar Strengthens Alongside Equities on Yellen Testimony
• Yen Crosses See USDJPY Above 100, GBPJPY at Four-Year Highs
• Euro Slips Versus Dollar, Pound after Tepid GDP Data

Dollar Strengthens Alongside Equities on Yellen Testimony
One of the implicit objectives of the major central banks is to dampen volatility in exchange rates and capital markets. Mission accomplished for the Fed this past session. In releasing the prepared remarks for Federal Reserve Vice Chair Janet Yellen’s confirmation hearing ahead of time, the market capably adjusted for her dovish tone with a S&P 500 nudge to record highs while the dollar slipped the most since it bottomed last month. In her testimony, Yellen maintained the accommodative language we have come to expect from the FOMC overall. The central banker’s insistence that support should not be removed too early – as it would threaten the economic recovery – does little to displace the market’s assumption of a March Taper. At the same time it does keep the door wide open to speculation.

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DAGELIJKSE MARKT ANALYSE 18 NOVEMBER 2013

• US Dollar Coiling Up for a Breakout, Upside Scenario Still Favored
• S&P 500 Aiming Above 1800 After Clearing Chart Resistance Level
• Gold, Crude Oil Technical Positioning Hints Gains Possible Ahead


US DOLLAR TECHNICAL ANALYSIS – Prices pulled back to retest resistance-turned-support in the 10556-65 area, marked by the top of a falling channel set from July and a horizontal barrier in play since late September. A break downward initially eyes the November 6 low at 10492. Near-term resistance is at 10653, the 23.6% Fibonacci expansion, with a push above that targeting the 38.2% level at 10839.

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DAGELIJKSE MARKT ANALYSE 19 NOVEMBER 2013

• Dollar Opens Weak Despite Risk Dip, Fed Warnings
• Yen Crosses Slide Prompting Government Stimulus Reminder
• Euro: How Long Can it Defy Fading Yields, Rate Forecasts

Dollar Opens Weak Despite Risk Dip, Fed Warnings
Risk trends were little changed on the day Monday and so too was the greenback. A record high for the Dow Jones Industrial Average was more symbolic than inciting. That is fortunate for the dollar which retains the title of a safe haven. Looking forward, we are six weeks until the end of the year – a period in which market conditions typically settle and prevailing trends slowly keep pace. So, while a turn in market-wide sentiment would be a rousing development for the greenback, it is not a high probability scenario to hold out for through 2013. There is a more active driver for us to focus on – one that carries risk implications: the Fed’s Taper. The assumption after the government shutdown and as the US courts Janet Yellen as its next Chairperson of the Fed was that the tightening move would simply be pushed out to the distant future. However, we are seeing regular, provocative commentary from Fed speakers like Plosser who said missing the September Taper undermined Fed credibility.

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DAGELIJKSE MARKT ANALYSE 20 NOVEMBER 2013

• Aussie, Kiwi Dollars Correct Lower After Yesterday’s China-Driven Rally
• British Pound Unlikely to Find Lasting Support from BOE Meeting Minutes
• US Dollar May Rise as FOMC Minutes Disappoint QE “Taper” Delay Bets


The Australian and New Zealand Dollars sank in otherwise quiet overnight trade. The move appeared to be corrective, reflecting profit-taking after the two currencies outperformed against their major counterparts yesterday after China announced an ambitious set of exchange rate policy reforms. The move downward dutifully waited to commence after the outcome of a speech by Fed Chairman Ben Bernanke to the Economists Club in Washington DC. The central chief offered nothing particularly new, retreading familiar territory on the need for continued accommodation via low interest rates being maintained for a while after the QE program is concluded.

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DAGELIJKSE MARKT ANALYSE 21 NOVEMBER 2013


• Bank of Japan Kept Monetary Policy Unchanged at November’s Monthly Meeting
• Central Bank Will Aim for ¥60-70 Trillion Annual Increase in the Monetary Base
• The Japanese Yen Narrowly Weakened vs. the US Dollar After the Announcement

USD/JP Yrose slightly after the Bank of Japan monetary policy announcement. The central bank announced it will retain its plan for a ¥60-70 trillion annual increase in the monetary base. The Yen was slightly weaker against US Dollar, with USDJPY rising from 100.35 to 100.49. Similar price action was observed elsewhere, with EURJPY advancing from 134.71 to 134.90 and AUDJPY inching higher from 93.36 to 93.49.

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DAGELIJKSE MARKT ANALYSE 22 NOVEMBER 2013

• Spotlight on German Data in Europe, Final 3Q GDP and IFO Survey Releases on Tap
• Eurozone News-Flow Has Underperformed, Warning of Downside Surprise Potential
• Euro Looks Vulnerable as Evidence Favoring an Expanded ECB Stimulus Effort Builds


German economic data headlines the calendar in European trading hours. The final revision of third-quarter GDP data is expected to confirm initial estimates showing a quarterly increase of 0.3 percent. Meanwhile, November’s IFO Survey of business confidence is forecast to show the headline Business Climate gauge rebounded to 107.7, erasing October’s downtick to match the print recorded in September.

Euro-area economic data has underperformed relative to expectations since late August according to data from Citigroup, opening the door for a downside surprise. Such an outcome may weigh on the Euro as traders consider the possibility of further easing from the ECB.

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