Dagelijkse Markt Analyse 11 Januari 2019

DAGELIJKSE MARKT ANALYSE 25 SEPTEMBER 2014

• Dollar’s 11th Week Advance Looking Troubled as Fed Commentary Mixed
• Euro Tumbles after ECB President Draghi Reiterates Easing Commitment
• British Pound: Traders Await BoE Gov Carney’s First Post-Referendum Speech

Dollar’s 11th Week Advance Looking Troubled as Fed Commentary Mixed
Eleven straight weeks. That is the bullish run that the US Dollar is trying to secure with a positive close through Friday. The 10th consecutive advance won this past week was already a record move for the US Dollar. Looking at it from a statistical perspective alone, this is an exceptional occurrence that insinuates that we are stretched. However, the difference between an enduring trend and an ‘extreme’ position is the quality and consistency of its fundamental support. On that front, a combination of favorable winds combined to keep the greenback moving higher. That said, the cumulative support looks to be losing its pace. The nascent swell in volatility and retreat in global equity indexes was cut off this past session as speculative bears failed to tip the scales and contented bulls refused to capitulate on the market’s long-held complacency. Ultimately, the day of reckoning on risk exposure will come from mass deleveraging, but there is little interest in being the first to throw in the towel when one’s neighbor keeps picking up pennies…even if the steamroller is dangerously close.

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DAGELIJKSE MARKT ANALYSE 26 SEPTEMBER 2014

• Gold and Silver Find Bids On Safe-Haven Buying As Geopolitical Tensions Flare
• Crude Oil Supply Glut May Overshadow Russian Production Disruption Fears
• WTI At A Critical Juncture As Prices Compress Between Key Technical Levels

Gold and silver are edging cautiously higher during the Asian session. This may reflect some repositioning from traders following a period of steep declines for the precious metals over recent weeks. Newswires have also cited that flare-ups in geopolitical tensions may have sparked some safe-haven buying. Such fear-driven flows may hold the potential to yield a corrective bounce. However, as proven in the past they seldom deliver a sustained recovery for the alternative assets.

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DAGELIJKSE MARKT ANALYSE 30 SEPTEMBER 2014

• Euro to be More Sensitive to Positive vs. Negative Eurozone CPI Outcome
• Aussie, NZ Dollars Rise Alongside S&P 500 Futures as Risk Aversion Fades

The preliminary set of September’s Eurozone CPI figures headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to register at 0.3 percent, matching the five-year low recorded in the prior month.

While leading survey suggested that both selling prices and input costs weakened further in September, it ought to be noted that realized inflation-tracking data outcomes have notably improved relative to consensus forecasts since the beginning of the year (according to data from Citigroup). Though readings have tended to fall short of expectations, the margin of disappointment has steadily narrowed since January.

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DAGELIJKSE MARKT ANALYSE 1 OKTOBER 2014

• Dollar’s Current Bull Leg Strongest since Rally Through Crisis
• Euro Stumbles as Inflation Data Raises the Stakes for ECB Thursday
• Japanese Yen: Japan Inc Says Concerned Over Low Currency

Dollar’s Current Bull Leg Strongest since Rally Through Crisis
With Tuesday’s close, the Dow Jones FXCM Dollar Index (ticker = USDollar) matched its run two weeks ago. If we close the upcoming session green, it will be the longest string of gains for the benchmark currency since September 2008 – the height of the financial crisis. The comparison doesn’t just stop with this particular leg of its incredible climb. Over the past three months, the greenback has surged on a 700 pip run that now finds us at four-year highs. Is demand for the currency now truly as strong as it was during the height of the worst global economic and financial crunch in modern history? Unlikely.

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DAGELIJKSE MARKT ANALYSE 2 OKTOBER 2014

• Dollar Breaks Pace on the Same Day Risk Slumps
• Euro Can Reverse Course, Rally if ECB Comes Up Short
• Japanese Yen: USDJPY Biggest Drop in 6 Months a Signal?

Dollar Breaks Pace on the Same Day Risk Slumps
It is unusual that on a day where risk aversion is prominent enough that it drives global equities lower and leverages volatility across asset classes that the safe haven Dollar would end the day lower. Yet, the greenback has pushed its run so far that a breather is necessary. That is especially true when there is key event risk ahead. Taking stock of the situation, the currency has already pressed its position. Following its best quarter in six years, matching its longest series of daily gains (7) in the same period and still projecting its longest string of weekly gains (11) on record; the Dollar move is mature. Concerns over its persistence leads to indecision as major event risk approaches. The ECB’s rate decision calls a critical contrast to the Fed’s hawkish shift and Friday ‘s NFPs will further shape rate forecasts. In fact, through Wednesday, the USD was up against most counterparts as traders braced themselves for what lies ahead. Yet, the broader downshift in speculative positioning generated more heat for Yen crosses and thereby USDJPY. This outsized move overshadowed the indecision elsewhere.

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DAGELIJKSE MARKT ANALYSE 3 OKTOBER 2014

• Dollar and S&P 500 Have a Stake in September NFPs
• Euro Traders Receive Little Relief from ECB
• Yen Crosses Look to Nikkei 225, S&P 500 for Guidance

Dollar and S&P 500 Have a Stake in September NFPs
The US Dollar slipped for a second consecutive day this past session as capital markets stabilized and traders prepared for Friday’s NFPs. We haven’t seen a three-day Dow Jones FXCM Dollar (ticker = USDollar) decline since July 9 – the last stage of congestion before the currency began its current, three-month climb. Yet, if there were a specific piece of event risk that could be expected to knock the air out of such a robust move, it would be the labor data suite. While a recent slide in speculative confidence these past few weeks has contributed to the greenback’s buoyancy, its primary motivator has been interest rate speculation. Though the Federal Reserve’s first rate hike is not likely due until the second half of 2015, the steady march towards tightening draws marked contrast to its major counterparts (ECB, BoJ, PBoC). Yet how much progress does a distant tightening policy afford? What if that time frame is pushed back?

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DAGELIJKSE MARKT ANALYSE 6 OKTOBER 2014

• Euro Unlikely to Find Lasing Catalyst in German Factory Orders Report
• Canadian, NZ Dollars May Follow Aussie Higher on Firm Risk Appetite

Currency markets saw a quiet open to the trading week. The Japanese Yen edged higher in a move that seemed mostly corrective after Friday’s post-NFP selloff rather than owing to a specific concurrent catalyst. The Australian Dollar likewise advanced, moving alongside Asian shares in a move that probably reflected the currency’s sensitivity to risk sentiment trends. Gains were modest at best in both cases, with Yen and Aussie adding as much as 0.2 percent each on average against the majors.

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DAGELIJKSE MARKT ANALYSE 7 OKTOBER 2014

• Dollar Reverses NFP-Inspired Rally
• British Pound Faces Wave of Event Risk, But Volatility…
• Euro Climbs Despite Troubling Fundamental Data

Dollar Reverses NFP-Inspired Rally
That didn’t last long. The most recent leg of the greenback rally – inspired by Friday’s NFPs – was largely washed out by Monday’s close. Yet, a similar move to moderate was cued for the S&P 500. Last week’s labor market report was encouraging. Companies added a net 248,000 new employees to their payrolls in September and the jobless rate dropped to a seven-year low 5.9 percent. Rationally, that offers up further support to the notion that the Fed will pursue rate hikes earlier rather than later. Practically, however, it hasn’t materially upgraded the existing probabilities or time frame for that tightening move. Financial products used to hedge rate forecasts (Fed Funds futures, credit swaps, volatility measures more indirectly) showed little additional concern to what was already being priced in. Yet, where rate speculation seems to be cooling a more pervasive element may be slowly stepping up to take its place. A stalled S&P 500 is an eventful development for a market that has been conditioned by habit and complacency such that a recognizable pattern of buying a pullback and fading a volatility spurt has led to repeated iterations since the beginning of 2013. Should this hesitation prove more caustic to sentiment; the environment of slowly rising volatility, downgraded growth forecasts and de-escalation of leverage offers fertile ground for true risk aversion.

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DAGELIJKSE MARKT ANALYSE 8 OKTOBER 2014

• US Dollar Needs Strongly Hawkish FOMC Minutes to Regain Momentum
• Australian Dollar Sinks as ABS Hints Recent Jobs Data Vastly Overstated

The US Dollar launched a broad-based recovery against its leading counterparts in overnight trade, rising as much as 0.3 percent on average. The move appeared to be corrective, following on from the greenback’s broad selloff in the preceding 24 hours, as markets shifted closer toward “neutral” ahead of today’s release of minutes from September’s FOMC meeting.

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DAGELIJKSE MARKT ANALYSE 9 OKTOBER 2014

• Dollar Drops after FOMC Weighs in on Currency, But is this a Trend?
• British Pound: Rate Forecasts Drop Before BoE Decision
• Euro Traders Ready for ECB President Draghi Commentary

Dollar Drops after FOMC Weighs in on Currency, But is this a Trend?
Given the S&P 500’s impressive rally and the Dollar’s tumble this past session, it would seem that we have experienced a strong sentiment push. Yet, that doesn’t exactly match the quality of the fundamentals on the day. Top event risk this past session for both US and international markets were the FOMC minutes. Heading into the release, the speculative ranks were adrift having overlooked a disturbing assessment of financial stability released by the IMF – building on the concern in their economic forecasts from the previous day. After the 18:00 GMT FOMC minutes release, the situation changed dramatically. The benchmark S&P 500 equity index rallied 1.8 percent – the biggest rally since the opening day of 2013 – and the VIX volatility index dropped 12 percent to 15.1. On the FX side, the Dow Jones FXCM Dollar Index (ticker = USDollar) slipped a modest 0.3 percent but notched a third consecutive drop – the longest series since the bull wave began in July.

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DAGELIJKSE MARKT ANALYSE 10 OKTOBER 2014

• Dollar Trading Rate Forecasts for Haven Demand to Maintain Climb
• Yen Crosses Position For Correction Should Markets Crack
• British Pound: BoE Decision Doesn’t Stem Retreat in Yield Forecasts

Dollar Trading Rate Forecasts for Haven Demand to Maintain Climb
Market participants are growing nervous. Their faith in complacency and the market’s seemingly undying appetite for yield is crumbling. And, should this previously uncontested conviction give way, investors know they have a lot of risky exposure to tend to in a likely disorderly unwind. For the US Dollar, there are few scenarios more encouraging. The more pervasive and disruptive a flight from risk is, the more essential liquidity becomes. The greenback represents the most heavily used reserve currency as well as a key funding instrument for riskier investments (such as European periphery bonds and Chinese real estate assets) and commodities alike. A mild aversion to riskier assets can turn the tides on these relationships and produce a bid for the Dollar. However, it’s the panicked clamor for safety of funds that can truly flip the switch for the currency.

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DAGELIJKSE MARKT ANALYSE 13 OKTOBER 2014

• US Dollar Under Fire as Fed Officials Downplay Interest Rate Hike Outlook
• Aussie and NZ Dollars, S&P 500 Futures Send Mixed Signals on Risk Trends

The US Dollar underperformed in overnight trade, falling as much as 0.4 percent on average against its leading counterparts. The selloff followed over-the-weekend comments from a roundup of Fed officials that poured cold water on expectations of a swift transition to interest rate hikes after QE3 asset purchases are wound down this month.

Fed Governor Daniel Tarullo said the central sees downside risks for global growth, which policymakers will have to consider when setting monetary policy. Chicago Fed President Charles Evans – a perennial dove – said inflation is trending below the Fed’s 2 percent target at around 1.5 percent and cited the stronger US Dollar as a “headwind”. Vice Chair Stanley Fischer proved most blunt, saying: “If foreign growth is weaker than anticipated, the consequences for the US economy could lead the Fed to remove accommodation more slowly than otherwise.”

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DAGELIJKSE MARKT ANALYSE 14 OKTOBER 2014

• British Pound May Fall as Soft Inflation Data Weighs on BOE Rate Hike Bets
• Aussie, NZ Dollars Outperform on Ebbing HK-Linked China Instability Fears

September’s UK CPI figures headline the economic calendar in European trading hours. The headline year-on-year inflation rate is expected to slow to 1.4 percent, marking a five-year low. UK price-growth readings have tended to underperform relative to consensus forecasts over recent months (according to data from Citigroup), hinting the realized result may prove softer still. Such an outcome is likely to weigh on the British Pound amid ebbing BOE rate hike bets.

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DAGELIJKSE MARKT ANALYSE 15 OKTOBER 2014

• Dollar Weighs Volatility Versus Rate Outlook
• British Pound Tumbles as Rate Forecasts Hit a 2014 Low
• Euro: Region Starting to Show Signs of Capital Outflow

Dollar Weighs Volatility Versus Rate Outlook
The Dollar regained its composure this past session, but its fundamental backdrop was doing it few favors. Data, rate forecasts and volatility measures would all technically fall out of favor for the greenback this past session; but the greenback nevertheless posted a hefty gain Tuesday. In fact, it advanced against all of its major counterparts: between 0.2 percent versus the Japanese Yen and 1.1 percent against the British Pound. This is certainly not evidence that the currency is fundamentally infallible, rather it suggests that uncertainty elicits a preference for the Dollar. While panic and a system-wide need for liquidity are the most effective conditions for it to flourish, the fear of an impending wave of volatility and deleveraging seems to be significant enough to keep the Dollar buoyed.

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DAGELIJKSE MARKT ANALYSE 16 OKTOBER 2014


• US Dollar Corrects Higher Overnight, Looks for Next Lead in Fed Commentary
• Aussie Dollar Underperforms as 2-year Yields Drop to Weakest in Two Months

The US Dollar outperformed in overnight, rising as much as 0.3 percent on average against its leading counterparts. The move appeared corrective after the greenback’s dismal performance in the preceding 24 hours. The benchmark currency slid 0.9 percent, marking the largest daily drawdown in a year.

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DAGELIJKSE MARKT ANALYSE 17 OKTOBER 2014

• ECB Commentary in Focus as Investors Search for Stimulus Expansion Clues
• Yen Gains on Nikkei Selloff, New Zealand Dollar Spikes Lower on RBNZ Error

A hefty dose of scheduled commentary from ECB officials headlines the economic calendar in European trading hours. Of the major engines of global economic growth, the Eurozone is expected to be the largest drag on overall performance. Indeed, a survey of economists polled by Bloomberg predicts GDP growth in the region will underperform the world average by a whopping 1.73 percent. This puts the currency bloc at the heart of the latest bout of risk aversion amid broad-based slowdown fears.

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DAGELIJKSE MARKT ANALYSE 20 OKTOBER 2014

• Yen Drops, Aussie and NZ Dollars Rise on GPIF Asset Allocation Change
• S&P 500 and FTSE 100 Futures Suggest Risk-On Mood Likely to Continue

A swell in risk appetite at the start of the trading week put pressure on the safety-linked Japanese Yen while pushing the sentiment-geared Australian and New Zealand Dollars higher. The MSCI Asia Pacific regional benchmark stock index rose 2 percent, with Japanese shares leading the way after a Nikkei News report cited unnamed sources revealing the new asset allocation for Government Pension Investment Fund (GPIF).

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DAGELIJKSE MARKT ANALYSE 21 OKTOBER 2014

• Aussie Dollar Edges Higher on Modestly Better Than Expected Chinese GDP
• US Dollar, Yen May Rise if Upbeat Home Sales Data Fuels Fed Rates Outlook

The Australian Dollar narrowly outperformed in overnight trade, rising as much as 0.3 percent on average against its leading counterparts, following a narrowly better-than-expected Chinese GDP report. Output grew at a year-on-year rate of 7.3 percent compared with economists’ expectations of 7.2 percent. The outcome still amounted to the lowest reading since the post-crisis trough in the first quarter of 2009, painting a picture that is hardly encouraging as markets fret about slowing global performance.


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DAGELIJKSE MARKT ANALYSE 22 OKTOBER 2014

• British Pound May Drop on Status-Quo Bank of England Meeting Minutes
• US Dollar to Rise if September’s CPI Tops Forecasts, Boosting Fed Outlook

Minutes from October’s Bank of England policy meeting headline the economic calendar in European hours. The voting pattern on the rate-setting MPC committee will be in focus, with traders keen to see if the hawks were able to inch closer to securing enough voices in favor of a rate hike. The tally was 7-2 in support of the status quo in September.

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DAGELIJKSE MARKT ANALYSE 23 OKTOBER 2014

• Dollar Advances Across the Board as Sentiment Breaks, CPI Steady
• Euro Worst Performing Major Braces for Growth Update
• British Pound Mixed as Tone of BoE Minutes Softens

Dollar Advances Across the Board as Sentiment Breaks, CPI Steady
A fever of risk appetite in the equities market broke this past session and September inflation statistics for the US printed a steady – if below target – pace. How did the Dollar respond? It climbed further. The Dow Jones FXCM Dollar Index (ticker = USDollar) rose a second consecutive day, but it was its breadth rather than pace that impressed. Looking across the ‘majors’, the Greenback rose against all of its most liquid pairings. Once again, the fundamental motivations were of questionable provenance. The first slip for the S&P 500 in five trading days – especially after the biggest single day rally in 12 months – was a high profile development for those trading the safe haven currency. However, the Dollar experienced limited connection to the initial sentiment swell; so it is fitting that it would be little motivated by the moderation. Through the equities rally, the appetite for risk never hit a cadence to buoy all markets (suggesting it wasn’t a definitive move), so its correction inherently fall short on the needed intensity of risk aversion to truly leverage the extreme version of safe haven the currency represents.

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