Dagelijkse Markt Analyse 11 Januari 2019

DAGELIJKSE MARKT ANALYSE 28 MEI 2014

• Dollar Run Cools as Liquidity Fills Out…But it Doesn’t Turn
• Euro Struggling to Match Pace of Local Capital Markets
• British Pound Drops after Mixed Data, GBPUSD Faces 1.6800

Dollar Run Cools as Liquidity Fills Out…But it Doesn’t Turn
The dollar is doing well in the face of an ostentatious risk run. Against the backdrop of an S&P 500 drive to record highs and a fear gauge anchored to seven-year lows, the greenback’s hold this past session on the back of a two-week advance speaks to a certain level of stability. So long as this traditional safe haven currency is able to weather the headwinds of the current swell in speculative appetite, it is in a good position. That is because moving forward, an eventual change in market tack can amplify the dollar’s more favorable traits. On the risk front, a natural reversion in activity levels (volatility) is likely to revive volume which can quickly transition into a seeming ‘risk aversion’ assessment. In the meantime, rate expectations have progressed little despite a strong showing in consumer sentiment, service and composite PMI, and housing data this past session. Ahead, a 2-year floating rate Treasury auction may give us a better reflection of the market’s Fed expectations.

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DAGELIJKSE MARKT ANALYSLE 29 MEI 2014

• New Zealand Dollar Falls as RBNZ Rate Hike Bets Unravel
• Aussie Dollar Shrugs Off Soft Data, Gains on Risk Appetite
• US Dollar May Rise Despite Downgrade of 1Q GDP Figure

The US Dollar corrected broadly lower in overnight trade after hitting a two-month high in the preceding 24 hours. The New Zealand Dollar likewise came under pressure in a move that once again tracked a decline in the island nation’s benchmark 10-year bond yield, hinting recent weakness reflects eroding RBNZ interest rate hike expectations. We have entered short NZDUSD.

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DAGELIJKSE MARKT ANALYSE 30 MEI 2014

• Dollar Run Stalls Between Rate Hike Talk and Equity Rally
• Euro Traders Start Plotting Out Your ECB Scenarios
• Japanese Yen: Expectations and Hopes for More QE Dropping Fast

Dollar Run Stalls Between Rate Hike Talk and Equity Rally
The dollar’s ambitious rally Wednesday against the Euro, Pound and New Zealand dollar was checked by the market this past session. It is fitting that a move that conflicts with ‘risk’ bearings would struggle to develop a meaningful trend in a market that snuffs out momentum. Weighing the market’s readiness to turn a corner and truly back a thematic move for the greenback, we find expected (implied) volatility measures for the majors remain at extreme lows. Both EURUSD and GBPUSD 1-month activity forecasts are just off seven-year lows, while the equivalent readings for USDJPY and AUDUSD are forging fresh lows this morning. This plunge in activity works against the dollar. Though the ‘risk on’ mentality that is fueling the S&P 500 to record highs and driving volatility measures across asset classes lower may not be leading the currency to an comparable collapse, it prevents bulls from gaining a foothold.

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DAGELIJKSE MARKT ANALYSE 2 JUNI 2014


• Euro at Risk as German CPI, Regional PMI Data Guides ECB Policy Outlook
• Australian Dollar Sinks as Soft Building Approvals Data Weighs on RBA Bets
• Japanese Yen Lower as Chinese PMI Uptick Boosts Risk Appetite, Nikkei 225

The preliminary set of May’s German CPI figures headlines the economic calendar in European trading hours. The headline year-on-year inflation rate is expected to register at 1.1 percent, down from 1.3 percent recorded in the prior month. Final revisions of last month’s German, French and region-wide Manufacturing PMI readings are also on tap. On balance, news-flow from the Eurozone has proven increasingly disappointing relative to economists’ forecasts over recent months, opening the door for downside surprises. Such outcomes may amplify speculation about an expansion of ECB stimulus at this week’s policy meeting, weighing the Euro. We remain short EURUSD.


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DAGELIJKSE MARKT ANALYSE 3 JUNI 2014

• Euro May Face Added Selling Pressure on Soft Eurozone Inflation
• US Factory Orders Data May Surprise Higher, Boosting US Dollar
• Aussie Dollar Edges Upward on Chinese PMI as RBA Holds Rates

The preliminary set of May’s Eurozone CPI figures headlines the economic calendar in European trading hours. The headline year-on-year inflation rate is expected to register at 0.6 percent, down from 0.7 percent recorded in the prior month. News-flow from the currency bloc has proven increasingly disappointing relative to economists’ forecasts in recent months. Indeed, one such release was May’s German CPI print released yesterday. That seems to opening the door for downside surprise, an outcome that may amplify ECB stimulus speculation and weigh on the Euro. We remain short EURUSD.

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DAGELIJKSE MARKT ANALYSE 4 JUNI 2014

• Dollar Heading into Breakout Pattern Ahead of NFPs
• Euro Traders Enter Bear Trend Moratorium Ahead of ECB
• Australian Dollar Rallies after 1Q GDP Beats

Dollar Heading into Breakout Pattern Ahead of NFPs
It always helps the case for a breakout when there is both a capable fundamental trigger in the foreseeable future and an underlying technical pattern that essentially necessitates a drive from congestion. That is the situation the dollar currently finds itself in. From the more liquid majors (USD-based pairings), we find EURUSD in a 60-pip range below 1.3650, GBPUSD oscillating just below 1.6750 following a critical bearish shift last week, and anchored for a month-and-a-half to 0.9200. For the Dow Jones FXCM Dollar Index (ticker = USDollar), this translated into a modest 45-point range below 10,530 that is holding back a recent recovery effort. Even in these low volatility conditions – the FX-based VIX is just a few days removed from its 7-year low – it is difficult to maintain such a narrow trading corridor without at least tripping speculative stop and entry orders set just beyond the closely monitored boundaries.

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DAGELIJKSE MARKT ANALYSE 5 JUNI 2014

• Euro Selling May Fizzle if ECB Easing Stops at Negative Deposit Rate
• Pound Risks Tilted to the Downside on Status-Quo BOE Rate Decision
• NZ Dollar Corrected Higher as Yen Rose on Risk Aversion Overnight

A monetary policy announcement from the European Central Bank headlines the economic calendar. The ECB has presumably had enough of persisting disinflation and is finally prepared to check the slide in price growth. Consensus forecasts see the main policy rate cut to a record low of 0.10 percent while the rate ECB pays banks to keep money in its deposit facility is seen moving into negative territory (-0.10 percent). We remain short EURUSD.

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DAGELIJKSE MARKT ANALYSE 6 JUNI 2014

• All Eyes on US May’s US Employment Report into the Week-End
• US Dollar to Rise if Payrolls Increase Tops Consensus Forecasts
• High-Yield FX May Suffer Most if US Data Bolsters Fed Outlook

Currency markets are likely to look past a round of second-tier economic releases in European trading hours to focus on the much-anticipated US Employment data set. The report is expected to show nonfarm payrolls rose by 215,000 in May, marking a bit of a slowdown from April’s 288,000 increase. The unemployment rate is expected to tick higher to 6.4 percent after dropping to a four-year low of 6.3 percent in the prior months.

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DAGELIJKSE MARKT ANALYSE 10 JUNI 2014


• Dollar Stabilizes as S&P 500’s Risk Run Cools
• British Pound: Beware an Interest Rate Forecast Capsize
• Euro Tumbles as Eurozone Bonds Surge

Dollar Stabilizes as S&P 500’s Risk Run Cools
Risk appetite trends took a marked step back in their most recent drive to record exuberance, and the breather was welcome by the safe haven dollar. The Dow Jones FXCM Dollar Index (ticker = USDollar) put in for a modest gain on the day, and its performance against its major counterparts was generally mixed. Yet, the potential is certainly stacked in the benchmark’s favor. In the incredible reach for return that has driven the S&P 500 to record highs, amplified leverage to unseenlevels and has short-term traders taking the reins from value investors; the greenback has surprisingly withstood a heavy bear swing. If the growth and return start to curb the push the long-term investors’ appetite for a risk build up and the traders at least temporarily fold on the dip buying, the turn in the current stands to materially support the dollar.

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DAGELIJKSE MARKT ANALYSE 11 JUNI 2014

• British Pound at Risk if Jobs Data Disappoints, Denting BOE Bets
• Euro Vulnerable to Deeper Losses as ECB Rhetoric Stays Dovish
• New Zealand Dollar Gains as Markets Position for RBNZ Rate Hike

May’s UK Jobless Claims data headlines the economic calendar in European hours. Applications for benefits are expected to have declined by 25,000 to mark the smallest drawdown in a year. UK news-flow has increasingly deteriorated relative to consensus forecasts over recent weeks, hinting analysts are overestimating the health of the economy and opening the door for downside surprises. A disappointing print may weigh against supportive BOE policy expectations, punishing the British Pound. We are positioning for a GBPUSD short trade setup.

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DAGELIJKSE MARKT ANALYSE 12 JUNI 2014

• US Dollar Rally May Find New Fuel in May’s Retail Sales Report
• New Zealand Dollar Soars as RBNZ Signals More Rate Hikes Ahead
• Australian Dollar Edges Lower on First Jobs Loss in Five Months

A quiet economic calendar in European trading hours puts the spotlight on May’s US Retail Sales report. News-flow from the world’s largest economy has increasingly improved relative to expectations since April, hinting analysts are underestimating the recovery’s vigor and opening the door for upside surprises. That opens the door for a rosy outcome to help bolsters investors’ Fed policy outlook, driving the US Dollar higher. Our long-term fundamental outlook continues to call for a stronger greenback.

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DAGELIJKSE MARKT ANALYSE 13 JUNI 2014

• German CPI Revision Unlikely to Drive Significant Euro Volatility
• US Dollar Looking for Renewed Strength in PPI, UofM Releases
• New Zealand Dollar Corrects Lower After RBNZ-Inspired Advance

The final revision of May’s German CPI data set headlines a relatively quiet European economic calendar. The headline year-on-year inflation rate is expected to be confirmed at 0.9 percent, in line with flash estimates. While that puts price growth at the lowest pace in over four years, the release’s market-moving potential may be limited absent a meaningful deviation from forecasts considering deflation threats have already produced an expansion of ECB stimulus at last week’s policy meeting. It is worth noting that German inflation data has tended to disappoint relative to expectations in the last 11 months however, opening the door for a Euro-negative result.

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DAGELIJKSE MARKT ANALYSE 16 JUNI 2014

• Euro May Mount a Recovery if May’s Inflation Data is Revised Upward
• US Dollar Could Find a Reprieve in Upbeat Industrial Production Print
• Yen Rose on Haven Demand, NZ Dollar Gained on RBNZ Bets in Asia

The final revision of May’s Eurozone CPI data set headlines a relatively quiet European economic calendar. The headline year-on-year inflation rate is expected to be confirmed at 0.5 percent, in line with flash estimates. While that puts the pace of price growth at a five-year low, the release’s market-moving potential may be limited absent a meaningful deviation from forecasts considering deflation threats have already produced an expansion of ECB stimulus. It is worth noting that Eurozone inflation data has improved relative to expectations since the beginning of the year, opening the door for a Euro-positive result. In fact, EURJPY technical positioning hints a bounce may be ahead.

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DAGELIJKSE MARKT ANALYSE 17 JUNI 2014

• British Pound May Give Back Some Recent Gains if CPI Data Disappoints
• Upbeat US Inflation Data May Help US Dollar Correct Higher Pre-FOMC
• Aussie Dollar Fell as Minutes from June RBA Meeting Struck Dovish Tone

UK inflation data headlines the economic calendar in European hours. The headline year-on-year CPI growth rate is expected to tick lower to 1.7 percent in May. A print in line with expectations would fall in line with the three-month trend average, offering relatively little in terms of market-moving potential for the British Pound. However, it is noteworthy to mention that such UK price-growth data has tended to undershoot expectations over the past few months. If this trend continues, a soft result may encourage investors to dial back BOE tightening bets and send Sterling lower. Indeed, tentative signs of topping have emerged in GBPUSD.

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DAGELIJKSE MARKT ANALYSE 18 JUNI 2014

• Dollar Breakout Risk High on Fed, But a Trend?
• British Pound Undeterred in Rate Hike Hopes After CPI
• Euro Can Sink Further as Rates Drop – Especially if Fed Holds Course

Dollar Breakout Risk High on Fed, But a Trend?
Between narrow trading ranges for the dollar-backed majors and the impending FOMC rate decision, there is substantial breakout risk for the world’s most liquid currency pairings. A lack of room to move is certainly a consideration for volatility, but the true spark in this equation is the influence that the event risk carries. Heading into the Federal Reserve’s scheduled monetary policy decision, the market has already priced in the baseline change of a further $10 billion reduction in the monthly QE purchases to a $35 billion. If it is priced in, it is unlikely to be market moving unless there is a very unlikely hold or acceleration of the Tapering pace. If this were the only dimension to this event, there would be little to fuel speculation in either US rate forecasts (important to the dollar) or unsettle comfort in complacency and leverage (critical to ‘risk trends’). However, there is more to this event…

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DAGELIJKSE MARKT ANALYSE 19 JUNI 2014

• Dollar: Where to After the Fed?
• British Pound Shows Restraint after BoE Minutes Escalate Probability of 2014 Hike
• Swiss Franc Traders Should Take Note of the SNB’s Actions

Dollar: Where to After the Fed?
Though the dollar drifted lower and US equities advanced after the FOMC rate decision, the outcome of the event was more mixed than promising for the low-yield and yield-reach outlook. Had the Fed taken a serious dovish tack, the greenback’s tumble would have been more substantial than just the dribble below support and the appetite for exposure to ‘riskier’ assets would have been more broadly based and pronounced. So then, why did the EURUSD edge up to 1.3600 and the S&P 500 close at a record high? Heading into the policy meeting, there was a detectable preparation for a more substantial change – notably one that could have been interpreted as more ‘hawkish’. The dollar checked higher just before the news, Treasury yields recovered through June and volatility readings rose the previous week. The extent of the risk rally and dollar tumble therefore likely depends on how much unwinding there is to do.

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DAGELIJKSE MARKT ANALYSE 20 JUNI 2014

• Dollar Slides as Volatility Shrinks, Equities Rise and Yields Struggle
• British Pound Breaks Critical 1.7000 Level as Rate Hopes Bloom
• Swiss Franc: SNB Reaffirms 1.2000 Commitment, Offers Nothing More

Dollar Slides as Volatility Shrinks, Equities Rise and Yields Struggle
The Dow Jones FXCM Dollar Index attempted to recover from early losses this past session, but its effort wouldn’t prevent the currency from closing at six-week lows. There are a number of damning reasons for the world’s most liquid and interrogated currency to be caught in a bearish current. It is therefore somewhat surprising that its slide has not been more intense. When an asset does not retreat or suffers only modestly in the face of negative fundamental pressure, it is often a sign of an inherent strength. However, actual appreciation requires favorable conditions; and the greenback’s most prominent drivers are still working against it.

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DAGELIJKSE MARKT ANALYSE 23 JUNI 2014

• Crude oil and gold to receive a lift from ongoing unrest in Iraq
• WTI faces further gains on upside surprises to incoming US data
• Copper finds further fuel on positive Chinese Manufacturing data

Elevated geopolitical tensions could continue to act as a source of support for crude oil via fears of supply disruptions, and afford gold a recovery based on safe-haven demand. WTI may also find further strength on the back of a set of positive prints from a string of US leading indicators due over the remainder of the week. Finally, the copper bulls have found fresh fuel to continue their run from today’s Chinese PMI data, which revealed the first expansion since December 2013.

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DAGELIJKSE MARKT ANALYSE 24 JUNI 2014

• British Pound Awaits BOE Officials’ Testimony to Make its Next Move
• Euro to Look Through German IFO Data, Focus on ECB Commentary
• US Dollar Hoping for a Lifeline in Home Sales, Confidence Figures

Bank of England monetary policy expectations are in focus in European trading hours as Governor Mark Carney, Deputy Governor Charles Bean and MPC members David Miles and Ian McCafferty testify before Parliament’s Treasury Committee. The correlation between GBPUSD and the UK-US 2-year bond yield spread is 0.90 (on rolling 20-day studies), suggesting prices are highly sensitive to policy bets and hinting the sit-down may be a major driver of British Pound volatility.

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DAGELIJKSE MARKT ANALYSE 25 JUNI 2014

• Euro Still Looking to ECB Commentary for Stimulus Expansion Clues
• Currency Markets May Look Past Another Downgrade of 1Q US GDP
• US Dollar to Rise if Durables, PMI Data Top Economists’ Forecasts

A lackluster European economic calendar offers little to drive volatility in the major currencies. Another round of scheduled commentary from ECB officials is perhaps most notable, with Governing Council members Carlos Costa, Luis Maria Linde and Jens Weidmann all set to speak. Investors will be looking for clues about a forthcoming ECB asset purchase program, scanning officials’ remarks for any indications about the strategy approach likely to be implemented and timing of the effort’s commencement. It ought to be noted ample prior commentary from ECB policymakers has failed to drive the Euro, with EURUSD oscillating near the 1.36 figure.

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