Dagelijkse Markt Analyse 11 Januari 2019

DAGELIJKSE MARKT ANALYSE 27 JANUARY 2015

• British Pound May Rise as Firm 4Q GDP Figures Boost BOE Rate Hike Bets
• Australian Dollar Edges Higher on Swelling Risk Appetite in Overnight Trade

The preliminary set of fourth-quarter UK GDP figures headlines the economic calendar in European trading hours. The year-on-year economic growth rate is expected to rise to 2.8 percent, the highest since 2007. The quarter-on-quarter increase is seen registering at 0.6 percent, a print squarely in line with the near-term trend average.

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DAGELIJKSE MARKT ANALYSE 28 JANUARI 2015

• Dollar Suffers First Two-Day Drop In 7 Weeks Before Fed
• Euro Traders Should Be Cautious as Currency Extends Rebound After Greek Election
• British Pound Climbs after UK GDP Posts Strongest Growth Pace Since 2007

Dollar Suffers First Two-Day Drop In 7 Weeks Before Fed
The Dow Jones FXCM Dollar Index (ticker = USDollar) notched its first two-day decline in seven weeks with Tuesday’s close. However, that shouldn’t be taken as a particularly ominous sign. The fact that the benchmark currency has managed to charge such a persistent advance over such an extended period is impressive. Furthermore, a modest pullback is more than reasonable given the position of the currency and the event risk that lies ahead. For the Greenback, we are only a few days away from closing out a seventh consecutive monthly advance – that would be the first in the USDollar’s and ICE Dollar Index’s histories. Given that singular drive, a modest breather is warranted heading into a critical Federal Open Market Committee (FOMC) meeting.

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DAGELIJKSE MARKT ANALYSE 29 JANUARY 2015

• Euro Unlikely to Find Potent Catalyst in Weak German Inflation Figures
• Swiss Franc Pressured, NZ Dollar and Yen in Corrective Mode Overnight

January’s preliminary set of German CPI figures headlines the economic calendar in European trading hours. The benchmark year-on-year inflation rate is expected to slip into negative territory for the first time since September 2009, when price growth was crafting a bottom in the aftermath of the Great Recession. While the outcome will serve to support the case for aggressive monetary stimulus, its impact on the Euro may prove limited. Mario Draghi and company have just unveiled a sizable QE program and have surely moved to wait-and-see mode, at least for now. That means another soft CPI print will mean relatively little for forward-looking policy bets, offering little impetus for FX volatility.

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DAGELIJKSE MARKT ANALYSE 30 JANUARi 2015

• Soft 4Q US GDP Data May Punish US Dollar, Drive Japanese Yen Gains
• Euro Unlikely to Find Potent Catalyst in Soft Eurozone Inflation Figures

January’s flash Eurozone CPI data headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to slip deeper into negative territory, registering a 0.5 percent decline to come within a hair of the all-time low (-0.6% y/y) recorded in July 2009.

While a soft outcome will support the case for aggressive monetary stimulus, its impact on the Euro may prove limited. The ECB unveiled a large QE effort just last week, meaning another soft CPI print will imply relatively little for the near-term outlook andthereby offer no impetus for outsized volatility.

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DAGELIJKSE MARKT ANALYSE 2 FEBRUARI 2015

• Swiss Franc Drops on Rumors of SNB Targeting 1.05-1.10 EURCHF Band
• Aussie Dollar Gains on Signs of Ebbing Rate Cut Bets Before RBA Meeting
• Soft ISM Manufacturing Data Hurt US Dollar Lower, Boost Japanese Yen

The Swiss Franc underperformed in overnight trade, falling as much as 0.8 percent on average against its top counterparts. The move followed reports in Schweiz am Sonntag citing unidentified officials at the SNB as saying the central bank is working to keep EURCHF in a 1.05-1.10 corridor. The nameless interviewee said the policy may come at a cost of as much as CHF10 billion for the monetary authority.

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DAGELIJKSE MARKT ANALYSE 3 FEBRUARI 2015

• Yen Gains on Nikkei Drop, Aussie and Kiwi Dollars Fall After RBA
• Pound, US Dollar Unlikely to Find Lasting Fuel in Upcoming Data

The Japanese Yen outperformed in overnight trade, rising as much as 0.8 percent against its leading counterparts. The move tracked a sharp decline Japan’s benchmark Nikkei 225 stock index, pointing to risk aversion as the catalyst behind a swell in demand for the safety-linked currency.

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DAGELIJKSE MARKT ANALYSE 4 FEBRUARI 2015

• Kiwi Dollar Rallies as RBNZ’s Wheeler Pours Cold Water on Rate Cut Bets
• Yen Drops as Nikkei Advances, Aussie Dollar Follows NZ Namesake Higher
• Pound May Rise on PMIs, US Dollar at Risk as Data Dents Policy Outlook

The New Zealand Dollar outperformed against its leading counterparts in overnight trade, rising as much as 1.1 percent on average. The move followed comments from RBNZ Governor Graeme Wheeler, who said the central bank expects to keep interest rates on hold for some time.

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DAGELIJKSE MARKT ANALYSE 5 FEBRUARI 2015

• Franc Gains as ECB Says Greek Bonds Unacceptable as Collateral
• Australian, New Zealand Dollars Rise After China’s 50bps RRR Cut
• Bank of England Rate Decision Likely a Non-Event for the Pound

The Swiss Franc outperformed in overnight trade, rising as much as 0.3 percent on average against its top counterparts. The move appears to have reflected regional safe-haven flows after the ECB announced that it will no longer accept Greek government bonds as collateral for lending.

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DAGELIJKSE MARKT ANALYSE 6 FEBRUARI 2015

• US Dollar May Fall as Japanese Yen Gains on Soft US Employment Report
• Aussie, NZ Dollars Rise as RBA and RBNZ Rate Cut Speculation Moderates

A relatively quiet European economic calendar is likely to see investors focused on January’s US Employment report. Expectations call for a 230,000 increase in nonfarm payrolls, marking a slight deceleration in job creation compared with the 252,000 added in the prior month.

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DAGELIJKSE MARKT ANALYSE 9 FEBRUARI 2015

• Aussie Dollar Drops, Yen Gains as Chinese & Greek News Sour Sentiment
• S&P 500 Futures Point Lower, Hinting at Continued Risk Aversion Ahead

The Australian Dollar underperformed in overnight trade, falling as much as 0.6 percent on average against its leading currency counterparts. The move followed a disappointing set of Chinese Trade Balance figures released over the weekend.

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DAGELIJKSE MARKT ANALYSE 10 FEBRUARI 2015

• Often, seemingly low probability and 'outlandish' events become reasonable over a long enough horizon
• The US losing its reserve status or gold hitting $2,000 is very likely to happen over decades
• Accounting for time and our trading profile, we discuss different popular investor concerns/questions


A not uncommon question amongst investors is: 'what happens when the Dollar loses its top reserve status'? Many times, the response is to dispel the topic as outlandish. It may be exceptionally unlikely in the coming months and even years. However, over decades, the probability is actually very high. Extraordinary events can become far more probable trading opportunities or investment risks given the appropriate combination of time and progress. Whether we should consider these types of events in our decision making depends on our time frame and exposure.

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DAGELIJKSE MARKT ANALYSE 11 FEBRUARI 2015

• Greece Impasse in Focus as Eurozone FinMins Convene Emergency Meeting
• Accord Seems Likely But Failure Threat Remains, Clouding Euro Outlook

Greece remains at the forefront as Eurozone finance ministers gather to discuss the festering impasse between the anti-austerity government in Athens and its EU counterparts. The situation appears increasingly intractable: the Syriza-led administration of Greek Prime Minister Alexis Tsipras won a key confidence vote earlier n the day, confirming its mandate to upend the existing EU/IMF bailout program.

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DAGELIJKSE MARKT ANALYSE 12 FEBRUARI 2015

• British Pound May Rise as BOE Inflation Report Renews Tightening Outlook
• Aussie Dollar Sinks as Jobs Data Fuels RBA Cut Bets, Yen Corrects Upward

The publication of the Bank of England Quarterly Inflation Report headlines is in focus in European trading hours. Officials have used the document and its accompanying press conference as the primary vehicle for announcing policy and outlook changes over recent years.

As we discussed in our first-quarter forecast, sinking Eurozone economic growth expectations have weighed heavily on BOE interest rate hike expectations since mid-2014. The currency bloc is the UK’s largest trading partner, accounting for nearly half of exports, making the UK economic recovery from the 2008-09 crisis vulnerable to spillover from malaise on the Continent.

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DAGELIJKSE MARKT ANALYSE 13 FEBRUARI 2015

• Better-Than-Expected 4Q Eurozone GDP Print May Trigger Euro Recovery
• US Dollar May Decline if UofM Confidence Data Falls Short of Expectations

The preliminary set of fourth-quarter Eurozone GDP figures headlines the economic calendar in European trading hours. Output is expected to expand by 0.2 percent, matching the increase recorded in the three months through September and keeping the year-on-year growth rate steady at 0.8 percent.

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DAGELIJKSE MARKT ANALYSE 16 FEBRUARI 2015

• Greece Debt Woes in Focus as Eurozone FinMins Gather Anew in Brussels
• New Zealand Dollar Gains as News-Flow Underpins RBNZ Policy Outlook

All eyes are on Brussels to start the trading week as nervous markets prepare for another round of negotiations between Greek and EU officials over the country’s debt woes. A similar sit-down produced no results last week and the situation looks increasingly intractable: Greece’s government won a key confidence vote, confirming its mandate to scrap the existing EU/IMF bailout program. Meanwhile, German Finance Minister Wolfgang Schaeuble bluntly dismissed rumors of a 6-month extension on Greek debt repayments as “wrong”.

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DAGELIJKSE MARKT ANALYSE 17 FEBRUARI 2015


• British Pound to Overlook Headline UK CPI, Take Cues from Core Figures
• Greece Woes Remain in Focus as EU Finance Ministers Convene in Brussels

January’s UK CPI figures are in focus in European trading hours. The headline year-on-year inflation rate is expected to drop to 0.4 percent, the lowest since at least 1989, but the BOE’s sanguine posture on this front will likely dilute the figures’ potency. Speaking in the context of the quarterly Inflation Report released last week, Governor Mark Carney said the central bank intends to look past near-term downside inflation shocks from falling food and oil prices.

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DAGELIJKSE MARKT ANALYSE 18 FEBRUARI 2015

• Dollar Consolidation Mirrors Yield Forecast
• Euro Pressure Builds as Another Greek Deadline Comes Into View
• British Pound Steady Despite Record Low Inflation Reading

Dollar Consolidation Mirrors Yield Forecast
Though the Dollar’s larger trend is still bullish – both fundamentally and technically – the speculative ranks have clearly paused in driving the currency higher. The Dow Jones FXCM Dollar Index (ticker = USDollar) has consolidated for the past three weeks marking the longest break from the record, seven-month climb since the October slump. From a fundamental perspective, the equilibrium looks very much like the leveled out interest rate expectations. After retreating in January, we have seen Fed Fund and Eurodollar futures rebound following the strong wage and labor figures nearly two weeks ago. Though the products still show the market is not fully pricing in the first hike until September or October (whereas economists and Primary Dealer consensus hold to the June or July time frame), an additional 50-55 basis points worth of hikes is priced through the end of the year. Reinforcing the front end time frame or leveraging the expected pace of hikes after the first move requires more tangible evidence – either through economic data or an increasingly unified FOMC view.

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DAGELIJKSE MARKT ANALYSE 19 FEBRUARI 2015

• Euro Looks to First ECB Meeting Minutes Release for QE Dynamics Clues
• US Dollar Down as Markets Trim Fed Rate Hike Bets After FOMC Minutes

The US Dollar underperformed in overnight trade, falling as much as 0.2 percent on average against its leading counterparts. The greenback’s descent tracked a drop in front-end Treasury yields, pointing to a deteriorating Fed policy outlook as the catalyst behind the move.

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DAGELIJKSE MARKT ANALYSE 20 FEBRUARI 2015

• Another effort to push forward the Greece-Eurozone austerity negotiations fell apart this past session
• Friday, a special Eurogroup meeting will mark another critical mark-or-break meeting to avert crisis
• The Euro will feel the direct impact - positive or negative - but the fallout can reach much further

Another key milestone in the saga of the Greece-Eurozone austerity conflict comes due Friday. After a week of many headlines and charged comments, we are heading for another special Eurogroup meeting for officials to negotiate the extension of Greece's bailout program. Clearly, the Euro crosses are in the direct blast radius of the event risk - whether a favorable or unfavorable outcome.

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DAGELIJKSE MARKT ANALYSE 23 FEBRUARI 2015

• German IFO Data Unlikely to Fuel Euro Volatility on Limited ECB Impact
• Greece Still in the Spotlight as Athens Presents Reforms to Unlock Funding
• Swiss Franc Corrects Lower, Canadian Dollar Continues Friday’s Selloff

Germany’s IFO Survey of business confidence headlines the data docket in European trading hours. The forward-looking Expectations component of the report is expected to show sentiment firmed for a fourth consecutive month in February, reaching the highest level since July 2014. News-flow from the currency bloc has outperformed relative to expectations over recent weeks, hinting an upside surprise may be in the cards. A meaningful positive response from the Euro seems unlikely however considering the release’s limited implications for the trajectory of ECB monetary policy as the central bank prepares to launch QE next month.

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