Dagelijkse Markt Analyse 11 Januari 2019

DAGELIJKSE MARKT ANALYSE 21 NOVEMBER 2014

• Dollar Draws Limited Reassurance from CPI Uptick, Fed Surveys
• Euro Slips after Weak PMIs But is ECB QE Any Nearer?
• Yen Jumps after Japan’s Finance Minister Says Drop ‘Too Fast’

Dollar Draws Limited Reassurance from CPI Uptick, Fed Surveys
The outlook for monetary policy normalization is one of the Dollar’s primary fundamental drivers. It is also a theme that the market has vigorously priced in – motivated by counterparts moving more aggressively in the opposite direction (easing). Given this focus, the past session’s consumer inflation data would certainly be considered a high level event risk. For the headline measure (including energy and food), there was no growth over the month but the year-over-year reading policy officials prefer unexpectedly held its 1.7 percent pace through October. Meanwhile, the ‘core’ measure through the same period would unexpectedly tick up to 1.8 percent. That is still below the Fed’s 2-percent target, but keeps the argument for a return of price pressures firmly in place for hawks. Meanwhile, the New York Fed released the survey of Primary Dealers policy expectations. Countering a market that has pushed its first hike projection to September according Eurodollar futures, those banks that must bid on Treasuries believe the first move will still be June. Furthermore, their projected pace is materially faster.

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DAGELIJKSE MARKT ANALYSE 24 NOVEMBER 2014

• Aussie and Kiwi Dollars Rise, Yen Drops as China Expands Stimulus Effort
• Euro Unlikely to Find a Lasting Catalyst in German IFO Survey Outcome

The Australian and New Zealand Dollars outperformed in overnight trade after China expanded monetary stimulus efforts, cutting its one-year lending rate by 40 basis points to 5.6 percent. The East Asian giant is Australia and New Zealand’s largest export market so a more aggressive pro-growth effort there bodes well for the two Oceanic countries’ cross-border sales prospects, which is in turn supportive for overall growth and monetary policy bets.

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DAGELIJKSE MARKT ANALYSE 25 NOVEMBER 2014

• Dollar Reaches Fresh Five-Year High with Little Enthusiasm
• Euro Rebounds as ECB Ranks Break on Push Towards Open Stimulus
• Yen Crosses Heading for Breakout as Currency Warning Weighs

Dollar Reaches Fresh Five-Year High with Little Enthusiasm
Another day and another five-and-a-half year high for the Dow Jones FXCM Dollar Index (ticker = USDollar). Yet, Monday’s advance hardly reflects the level of gusto we would normally expect of a market hitting a multi-year peak or trough. Volume across the majors tapered and performance was unbalanced. The Dollar managed to gain versus the Japanese Yen and commodity bloc, but it would lose ground against the European currencies. For a currency that is drawing much of its strength indirectly from the relative depreciation of its most liquid counterparts, inconsistency can indicate serious trouble for this nearly five-month bull trend.

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DAGELIJKSE MARKT ANALYSE 26 NOVEMBER 2014

• Japanese Yen May See Recovery as Year-End Capital Flows Start to Emerge
• British Pound Looks to 3Q GDP Revision to Inform BOE Rate Hike Outlook
• US Dollar May Rise on Fed Tightening Bets if News-Flow Proves Supportive

Seasonal factors may increasingly factor into price action as the on-coming Thanksgiving holiday in the US unofficially marks the beginning of the market-wide liquidity drain leading into the turn of the calendar year. This may herald a period of profit-taking on some of the stand-out trends of 2014 as investors move to secure year-end performance numbers. That may bode ill for sentiment-geared assets, with the Japanese Yen rising amid carry trade liquidation while high-yielding FX (such as the Australian and New Zealand Dollars) faces selling pressure.

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DAGELIJKSE MARKT ANALYSE 27 NOVEMBER 2014

• Dollar: US Capital Markets are Closed, But Not the Currency
• Euro Heading Into Turbulent Fundamental Seas
• Yen Crosses Far More Sensitive to Policy Comments with Risk Sidelined

Dollar: US Capital Markets are Closed, But Not the Currency
With the US heading into its Thanksgiving holiday, liquidity was seen draining from the system. Given that a sentiment benchmark like the S&P 500 has traded to a fresh record high this week, a measure of book balancing and volume would be expected as investors remove some risk during the downtime. Yet, it seems complacency is has overridden standard trade practices. Through Wednesday’s session, volume from US capital markets was generally restrained and the high-risk group showed little settlement. The Dollar, on the other hand, would experience a slip through the close. The Dow Jones FXCM Dollar Index (ticker = USDollar) dropped back from its five-year high framed by a weak showing in data and the lights going out in US banks. Which factor carried more sway will tell us how far this pullback extends.

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DAGELIJKSE MARKT ANALYSE 28 NOVEMBER 2014

• WTI Suffers Largest Decline In 3 Years As OPEC Restrains From Cuts
• Precious Metals May Consolidate Amid Void Of Major US Economic Data
• Quarterly Forecast: Gold RemainsVulnerable To USD Strength

Crude oil has stolen media headlines following a dramatic plunge of over 6 percent on Thursday. The collapse in prices took place on the back of inaction from OPEC producers at their latest gathering. This leaves the supply glut story to endure, which in turn stands to keep pressure on the commodity in the near-term.

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DAGELIJKSE MARKT ANALYSE 1 DECEMBER 2014

• WTI Extends Declines As Negative Supply Side Cues Linger
• Gold And Silver Slump As USD Bulls Return In Asian Trading
• Quarterly Forecast: Gold RemainsVulnerable To USD Strength


Crude oil continues to make headlines in Asian trading today as the commodity extends its recent losses. Thus far during the session WTI is off by 2.4 percent, lagging declines for its sibling Brent (-2.6 percent). The sharp drop at the outset the week appears to be simply a continuation of investor concerns over the lingering supply glut story. This follows the recent gathering of OPEC producers who failed to deliver meaningful action aimed at cutting production to bolster prices.

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DAGELIJKSE MARKT ANALYSE 2 DECEMBER 2014

• Australian Dollar Gains as RBA Talks Down Interest Rate Cut Speculation
• British Pound May Rise as If Upbeat PMI Print Fuels BOE Rate Hike Bets

The Australian Dollar outperformed in overnight trade, rising as much as 0.4 percent on average against its leading counterparts. The move followed the RBA monetary policy announcement, where Governor Glenn Stevens and company re-stated the now-familiar call for a “period of stability in interest rates” once again.

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DAGELIJKSE MARKT ANALYSE 3 DECEMBER 2014

• Dollar Advances as Commodity Recovery Stalls, ADP and Beige Book Ahead
• British Pound Could Lose Further Rate Ground if Autumn Statement Soft
• Euro Traders Should Look Beyond the ECB’s Stimulus Plans

Dollar Advances as Commodity Recovery Stalls, ADP and Beige Book Ahead
As the primary pricing currency for commodities, the Dollar suffered at the hands of Monday’s gold and oil surge. Yet, that relative value lever works both ways. This past session, the precious metal and energy market both corrected. While the subsequent commodity move was milder than the week’s opening fireworks, the Greenback gained more traction on the correction rather than the initial move. In part, this likely reflects the tepid conviction of the physical goods’ recovery, but it also speaks to the currency’s position when it comes to relative strength/value. Though, how long this tacit appeal holds out without further improvement in its own circumstances remains to be seen. Headline fundamentals this past session did little to hearten rate forecasts. Fed speeches from Chairwoman Yellen, Vice Chair Fischer, Dudley and Brainard either avoided weighing in on rate timing fodder or took a neutral view.

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DAGELIJKSE MARKT ANALYSE 4 DECEMBER 2014

• BOE Policy Announcement Likely to be a Non-Event for the British Pound
• Euro May Fall if Draghi Confirms 1Q Timeline for Sovereign QE Decision

Monetary policy announcements from the Bank of England and the European Central Bank are in focus. In the UK, economic news-flow has cautiously improved over recent weeks, meaning a dovish shift on the MPC committee is unlikely. On the other hand, the outlook is not so robust as to expect the hawks to build a voting majority. The BOE does not typically publish a statement when policy is left unchanged, so today’s announcement will probably amount to a non-event for the British Pound.

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DAGELIJKSE MARKT ANALYSE 5 DECEMBER 2014

• US Dollar Needs Outsized Beat on Payrolls Print to Refuel Upward Drive
• Yen May Rise After Overnight Drop on Year-End Flows After NFP Report
• German Factory Orders, Eurozone GDP Revision Unlikely to Stir the Euro

A relatively muted economic calendar in European trading hours puts the spotlight on US Employment figures. The report is set to show nonfarm payrolls rose 230,000 in November, marking a modest pickup from October’s 214,000 increase. Leading survey reports indicate manufacturing employment grew at the second-fastest rate since January 2013 last month. Meanwhile, service-sector job creation advanced at the strongest pace since June. Such rosy readings may be foreshadowing an upside surprise, a result that may boost the US Dollar amid firming Fed policy bets.

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DAGELIJKSE MARKT ANALYSE 8 DECEMBER 2014

• Euro May Fall if Timid ABS Purchase Effort Fuels “Sovereign QE” Outlook
• NZ Dollar Falls Before RBNZ Rate Decision, Aussie Down on Chinese Data

The European Central Bank will be in the spotlight in European trading hours as it announces the size of last week’s covered bond and ABS purchases. The central bank has purchased €17.8 billion in covered bonds since the effort began in late October at a pace of about €2.7 billion per week, an effort that has been unable to significantly ramp up balance sheet expansion.

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DAGELIJKSE MARKT ANALYSE 9 DECEMBER 2014

• Aussie and NZ Dollars Fall, Yen Gains as Risk Aversion Grips Asian Markets
• Currencies to Look Past German, UK Data with Sentiment Trends in Focus

The Australian Dollar underperformed in overnight trade, falling as much as 0.8 percent on average against its leading counterparts. The move tracked a drop in futures on Australia’s benchmark S&P/ASX 200 stock index, pointing to risk aversion as the catalyst behind the impetus to sell the sentiment-linked currency.

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DAGELIJKSE MARKT ANALYSE 10 DECEMBER 2014

• Yen Outperformed on Safe-Haven Flows Amid Risk Aversion in Asian Trade
• Quiet European, US Data Docket May Keep Seasonal Forces in the Spotlight

The Japanese Yen outperformed in overnight trade, rising as much as 0.8 percent on average against its leading counterparts, as risk aversion swept Asian bourses and drove demand for the safety-linked currency. The MSCI Asia Pacific regional benchmark stock index fell 0.6 percent, sliding for a second consecutive day. We detailed in our weekly forecast that the Yen may be due for a significant recovery on the back of year-end liquidation of “risk-on” exposure.

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DAGELIJKSE MARKT ANALYSE 11 DECEMBER 2014

• Yen Rally May Resume as Russian Crisis Fears Fuel Renewed Risk Aversion
• Tepid Uptake on Second ECB TLTRO May Further Sour Market Sentiment
• SNB Policy Announcement May Not Spark a Strong Swiss Franc Reaction

The Japanese Yen underperformed overnight, sliding as much as 0.5 percent against its top counterparts. The move appeared corrective following yesterday’s aggressive advance. The currency rose the most in 18 months against the US Dollar and scored considerable gains against the Euro and the British Pound. As we detailed in our weekly forecast, Yen gains look likely on the back profit-taking on“risk-on” exposure ahead of the calendar year turn.

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DAGELIJKSE MARKT ANALYSE 12 DECEMBER 2014

• Russian Trade Balance Data May Rekindle Risk Aversion into the Week-End
• Yen Sold as Asian Stocks Rise on Upbeat US Data, NZ Dollar Corrects Lower

Emerging-market jitters may renew pressure on risky assets in the final hours of the trading week. Russian Trade Balance figures are expected to show the smallest surplus in over two years at $11.6 billion. The announcement threatens to shine the spotlight on an increasingly precarious situation that looks dangerously likely to result in either an acute budget crisis or the introduction of capital controls.

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DAGELIJKSE MARKT ANALYSE 15 DECEMBER 2014

• Yen May Fall While Aussie Dollar Bounces Amid Recovery in Risk Appetite
• NZ Dollar Down as Asian Markets Chase Wall St. Lower, Data Disappoints
• Canadian Dollar Rebounds After Last Week’s Crude Oil-Related Weakness

The New Zealand Dollar underperformed in overnight trade, falling as much as 0.5 percent on average against its leading counterparts. Risk aversion and soft economic data appeared to be the catalysts behind selling pressure. The MSCI Asia Pacific regional benchmark stock index slid 0.6 percent, playing catch-up to Friday’s aggressive decline on Wall Street and putting pressure on the sentiment-geared currency. On the data front, the Performance of Services Index dropped to 54.8 November, reflecting the slowest pace of sector activity growth in six months.

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DAGELIJKSE MARKT ANALYSE 16 DECEMBER 2014

• CBR Unexpectedly Hiked Interest Rates 650bps to 17% to Fight Ruble Drop
• Crisis Looking Increasingly Like the 1998 Russian Default and Devaluation
• US Dollar, Yen to Rise if Russia-Linked Panic Sparks Broader Risk Aversion

The Russian Ruble jumped over than 7 percent higher against the US Dollar after the Central Bank of Russia (CBR) raised interest rates by a hefty 650 basis points to 17 percent. The move follows a cumulative 250 basis points in hikes over the past two months, with the latest 100bps increase ahead of today’s announcement delivered just last week. The CBR said the move was designed to “stem devaluation and inflation risks”.

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DAGELIJKSE MARKT ANALSYE 17 DECEMBER 2014

• Hawkish Shift in FOMC Rhetoric May Boost US Dollar, Sink Risk Appetite
• Status-Quo BOE Meeting Minutes Unlikely to Spark British Pound Volatility

All eyes are on the Federal Reserve monetary policy announcement in the hours ahead. This time around, the statement from the FOMC rate-setting committee will be accompanied by an updated set of policymakers’ forecasts for key economic indicators and the trajectory of interest rates. Fed Chair Janet Yellen will also hold a press conference.

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DAGELIJKSE MARKT ANALYSE 18 DECEMBER 2014

• Swiss Franc Sank After SNB Unexpectedly Unveiled Negative Interest Rates
• US Dollar May Turn Lower as Markets Rethink FOMC Outcome Implications

The Swiss Franc slumped after the Swiss National Bank unexpectedly dropped interest rates into negative territory at -0.25 percent. The central bank warned it is ready to take further measures if needed and reaffirmed its commitment to the EURCHF floor at 1.20. The Australian and New Zealand Dollars edged higher as Asian stocks followed Wall Street higher, boosting demand for the sentiment-geared currencies. The Kiwi slightly outpaced its Oceanic counterpart, finding added support in an upbeat set of third-quarter New Zealand GDP figures. Output expanded 1 percent in the three months through September, topping consensus forecasts for a 0.7 percent increase.

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