The GBP/USD pair held on its modest daily gains and seems to have entered a brief bullish consolidation phase above the 1.3200 handle.
Growing market conviction for an imminent BoE rate hike action this Thursday underpinned the British Pound and helped the pair to preserve overnight strong gains back above the 1.3200 handle.
However, resurgent US Dollar demand, led by a modest rebound in the US Treasury bond yields partly offset the positive sentiment. Adding to this, the US Employment Cost Index came in to show a rise of 0.7% q-o-q during the third quarter, up from previous quarter's 0.5% and broadly in-line with consensus estimates, and further collaborated towards keeping a lid on any further up-move for the major.
Today’s US economic docket also features the release of Chicago PMI and CB consumer confidence but is unlikely to be major game changer ahead of the key events lined up through the course of this week.
Tuesday, October 31, 2017
Canada: GDP is forecasted to rise by 0.1%
Analysts at TDS suggest that Canada’s industry-level GDP is forecasted to rise by 0.1% in August, led by a rebound in the manufacturing industry and they see upside risks for a 0.2% print.
“Retooling shutdowns at motor vehicle assembly plants single-handedly shaved nearly 0.1% from GDP in July and a partial rebound will provide a tailwind to growth in August. Outside of the manufacturing industry, growth conditions are far more mixed. Energy output may see a modest gain but utilities are likely to be a drag due to weaker demand caused by unseasonably cool weather.”
“The services sector will be weighed down by a pullback in retail sales though broadening job growth suggests activity continues to increase. Our forecast for a 0.1% increase is consistent with Q3 growth in the low-to-mid 2% range, which presents upside risks to the Bank of Canada's 1.8% projection from the October MPR. However, with the Bank focused on the supply side of the economy, we do not expect a modest upside surprise on GDP to change their bias and look for the next rate hike to come in January.”
“Retooling shutdowns at motor vehicle assembly plants single-handedly shaved nearly 0.1% from GDP in July and a partial rebound will provide a tailwind to growth in August. Outside of the manufacturing industry, growth conditions are far more mixed. Energy output may see a modest gain but utilities are likely to be a drag due to weaker demand caused by unseasonably cool weather.”
“The services sector will be weighed down by a pullback in retail sales though broadening job growth suggests activity continues to increase. Our forecast for a 0.1% increase is consistent with Q3 growth in the low-to-mid 2% range, which presents upside risks to the Bank of Canada's 1.8% projection from the October MPR. However, with the Bank focused on the supply side of the economy, we do not expect a modest upside surprise on GDP to change their bias and look for the next rate hike to come in January.”
Eurozone - Better growth, but less inflation
Analysts at BBH note that Eurozone reported better growth, but less inflation, than expected as the first look at Q3 GDP showed a 0.6% increase, and Q2 was revised to 0.7% from 0.6%.
“Growth is not the immediate challenge in the eurozone. Unemployment also continues to fall. At 8.9% in September, it is a new cyclical low. That the August figure was revised to 9.0% from 9.1% underscores the trend improvement.”
“On the other hand, price pressures eased. The headline pace slipped to 1.4%, but the real challenge to the ECB comes from the core rate, even though it does not directly target it. The core rate slipped to 0.9% from 1.1%. This indicates that it is not just energy prices, which Draghi had warned would likely drag inflation lower in the near-term. The key issue is what the ECB will do next September, as its course until then has been largely mapped out, with all the due caveats of its flexibility.”
“Growth is not the immediate challenge in the eurozone. Unemployment also continues to fall. At 8.9% in September, it is a new cyclical low. That the August figure was revised to 9.0% from 9.1% underscores the trend improvement.”
“On the other hand, price pressures eased. The headline pace slipped to 1.4%, but the real challenge to the ECB comes from the core rate, even though it does not directly target it. The core rate slipped to 0.9% from 1.1%. This indicates that it is not just energy prices, which Draghi had warned would likely drag inflation lower in the near-term. The key issue is what the ECB will do next September, as its course until then has been largely mapped out, with all the due caveats of its flexibility.”
Gold refreshes session lows
Gold finally moved out of its Asian session consolidation phase and touched a fresh session low level of $1272 in the past hour.
The metal stalled its recent recovery move and failed to build on its up-move back above 100-day SMA. A modest recovery in the US Treasury bond yields backed the US Dollar's goodish recovery move from lows and was eventually seen driving flows away from the non-yielding yellow metal.
Meanwhile, possibilities of some short-term stops being triggered, on a sustained retracement back below the $1275 region (100-day SMA), seems to have further aggravated the selling pressure and collaborated to the commodity's sharp slide over the past hour or so.
Even the prevalent cautious sentiment around equity markets failed to revive safe-haven demand, with the precious metal now eroding all of its previous session's modest recovery gains.
Traders now look forward to the US economic docket, which would influence the USD price-dynamics and provide some short-term impetus for dollar-denominated commodities - like gold.
The metal stalled its recent recovery move and failed to build on its up-move back above 100-day SMA. A modest recovery in the US Treasury bond yields backed the US Dollar's goodish recovery move from lows and was eventually seen driving flows away from the non-yielding yellow metal.
Meanwhile, possibilities of some short-term stops being triggered, on a sustained retracement back below the $1275 region (100-day SMA), seems to have further aggravated the selling pressure and collaborated to the commodity's sharp slide over the past hour or so.
Even the prevalent cautious sentiment around equity markets failed to revive safe-haven demand, with the precious metal now eroding all of its previous session's modest recovery gains.
Traders now look forward to the US economic docket, which would influence the USD price-dynamics and provide some short-term impetus for dollar-denominated commodities - like gold.
Friday, October 27, 2017
Thursday, October 26, 2017
CRUDE OIL MCX Maintain BUY
Crude oil ( MCX ) maintain BUY for TARGET 3468
Risk traders can wait for UPPER freeze CMP 3405
Risk traders can wait for UPPER freeze CMP 3405
Gold once again met with some fresh supply near the $1283 supply zone
The precious metal's initial up-move was being capped by a modest pickup in the greenback demand. In fact, the key US Dollar Index has managed to recover early losses and was seen weighing on dollar-denominated commodities - like gold.
Adding to this, buoyant trading sentiment around European equity markets, which tends to dent demand for traditional safe-haven assets, also did little to provide any boost to the yellow metal's recovery move from near three-week lows touched on Wednesday.
However, sliding US Treasury bond yields might now contribute towards limiting any sharp downslide for the non-yielding commodity, at least for the time being.
Next on tap would be the US economic docket, which would be looked upon for some short-term trading opportunities. Also in focus would be the ECB decision, which is expected to infuse some volatility in the FX market and might influence the metal's safe-haven demand.
Adding to this, buoyant trading sentiment around European equity markets, which tends to dent demand for traditional safe-haven assets, also did little to provide any boost to the yellow metal's recovery move from near three-week lows touched on Wednesday.
However, sliding US Treasury bond yields might now contribute towards limiting any sharp downslide for the non-yielding commodity, at least for the time being.
Next on tap would be the US economic docket, which would be looked upon for some short-term trading opportunities. Also in focus would be the ECB decision, which is expected to infuse some volatility in the FX market and might influence the metal's safe-haven demand.
Crude Oil regains $ 52 mark on Saudi Crown Prince comments
The black gold is seen back on the bids, as the bulls found fresh impetus from the comments delivered by the Saudi Crown Prince, backing the case for OPEC oil cut deal extension into 2018. His comments make it more certain that the cartel and its allies are set to extend the curbs, when they meet next month.
However, it remains to be seen if the commodity manages to hold the recovery amid broad-based US dollar rebound and bearish EIA crude inventory report released a day before. The EIA data showed that the US crude inventories rose by 856,000 barrels last week.
Meanwhile, markets also play close attention to the much-awaited ECB meeting for fresh impetus across the fx space, which will eventually have some bearing on the USD-sensitive oil.
At the time of writing, WTI rises +0.15% to $ 52.25, while Brent trades flat at $ 58.42.
WTI Technical Levels
Higher-side levels: 52.57 (4-week high), $53.21 (Apr 16 high), $ 54 (round number)
Lower-side levels: 51.94 (10-DMA), 51.50 (psychological levels), 51.23 (20-DMA)
However, it remains to be seen if the commodity manages to hold the recovery amid broad-based US dollar rebound and bearish EIA crude inventory report released a day before. The EIA data showed that the US crude inventories rose by 856,000 barrels last week.
Meanwhile, markets also play close attention to the much-awaited ECB meeting for fresh impetus across the fx space, which will eventually have some bearing on the USD-sensitive oil.
At the time of writing, WTI rises +0.15% to $ 52.25, while Brent trades flat at $ 58.42.
WTI Technical Levels
Higher-side levels: 52.57 (4-week high), $53.21 (Apr 16 high), $ 54 (round number)
Lower-side levels: 51.94 (10-DMA), 51.50 (psychological levels), 51.23 (20-DMA)
EUR/GBP rallies hard to test 0.8950
After a brief phase of consolidation just ahead of 0.89 handle, the cross in EUR/GBP picked-up solid pace and rallied hard to recover more than 75% of yesterday’s slide.
The latest upsurge in the spot can be mainly attributed to broad-based selling in the pound, as investors resorted to profit-taking after yesterday’s strong UK GDP induced rebound, while a recovery in the US dollar across the board also added to the GBP’s downside.
On the EUR-side of the equation, the EUR/USD pair shaved-off gains and reverted to 1.18 handle amid increased nervousness ahead of the ECB QE tapering announcement, which appears to keep further upside limited in EUR/GBP.
Meanwhile, the cross ignored the German consumer climate and Spanish employment numbers, as all eyes remain on the ECB decision for fresh direction.
The latest upsurge in the spot can be mainly attributed to broad-based selling in the pound, as investors resorted to profit-taking after yesterday’s strong UK GDP induced rebound, while a recovery in the US dollar across the board also added to the GBP’s downside.
On the EUR-side of the equation, the EUR/USD pair shaved-off gains and reverted to 1.18 handle amid increased nervousness ahead of the ECB QE tapering announcement, which appears to keep further upside limited in EUR/GBP.
Meanwhile, the cross ignored the German consumer climate and Spanish employment numbers, as all eyes remain on the ECB decision for fresh direction.
EUR/USD rangebound ahead of ECB event
Yesterday’s strong advance and close beyond the 1.1800 handle has been accompanied by a marginal drop in open interest while volume rebounded sharply. The recent activity in open interest coupled with choppy price action in EUR/USD leaves the door open for further rangebound ahead of the ECB gathering. However, the increase in volume might add to the view that traders could be positioned for a bull run.
Saudi Prince backs extending OPEC output cuts
Bloomberg reports comments from Mohammad bin Salman, the Crown Prince of Saudi Arabia, advocating the case for OPEC oil output cut deal extension.
His comments make it more certain that the cartel and its allies are set to extend the curbs when they meet next month.
Oil market is absorbing excess shale oil, we are regaining things again
Backs extending OPEC output cuts into 2018
His comments make it more certain that the cartel and its allies are set to extend the curbs when they meet next month.
Oil market is absorbing excess shale oil, we are regaining things again
Backs extending OPEC output cuts into 2018
Wednesday, October 25, 2017
US GDP: Big and beautiful
“There was a wave of financial market optimism surrounding President Trump's election given what his proposals might mean for economic activity. Tax reform, infrastructure spending and the cutting of red tape led many, Trump included, to predict the US economy was about to enter a new period of more vibrant growth. 3% would be the new norm rather than the anaemic 2% that Americans had become used to in the wake of the global financial crisis.”
“However, as Trump has subsequently found, getting promises through is not always as easy as it first seems - even if the party you represent has a majority in both Congress and the House of Representatives. Consequently, those growth expectations have since been paired back and have not been helped by the economic loss and disruption caused by hurricanes Harvey and Irma in August and September.”
“The subsequent data has actually been better than expected so after a decent 1Q GDP outcome and a strong 3.1% reading for 2Q we are hopeful of another healthy figure for 3Q on Friday. Business surveys are strong with the ISM manufacturing and non manufacturing headline figures at 13- and 12-year highs respectively, unemployment at a 16-year low, wages picking up and confidence high. Consequently we are looking for 2.9% growth.”
“This is a touch above the 2.5% consensus forecast and is also a little above the 2.7% "now cast" calculated by the Atlanta Federal Reserve, which mirrors key data releases used by the Bureau of Economic Analysis to calculate the official data. While we acknowledge the potential for hurricane effects to have perhaps depressed activity in Texas and Florida more than we have estimated, we think there is the potential for upside from inventories. Inventories were aggressively run down in 1H17, meaning that they subtracted from growth. We expect to see a rebound with companies keen to replenish stocks in 3Q, which should boost growth.”
“As for 4Q, well it looks as though the economy has started the quarter strongly. We are currently forecasting growth of around 2.8% with post hurricane rebuilding and people replacing lost items due to the storms helping to add to growth for what is economy that already looks in good shape. This strong growth story should mean that spare capacity in the economy continues to shrink, which should see inflation pressures build.”
“Wages are also rising and imported inflation is being pushed up by the dollar's decline since the start of the year while rising oil prices will also contribute to higher inflation readings. With growth looking firm, inflation likely to rise and Federal Reserve officials broadening out the reasons for why higher interest rates much be required (financial stability risks, asset valuations and loose financial conditions) we think next week's FOMC statement will underline the strong case for a December interest rate rise.”
“However, as Trump has subsequently found, getting promises through is not always as easy as it first seems - even if the party you represent has a majority in both Congress and the House of Representatives. Consequently, those growth expectations have since been paired back and have not been helped by the economic loss and disruption caused by hurricanes Harvey and Irma in August and September.”
“The subsequent data has actually been better than expected so after a decent 1Q GDP outcome and a strong 3.1% reading for 2Q we are hopeful of another healthy figure for 3Q on Friday. Business surveys are strong with the ISM manufacturing and non manufacturing headline figures at 13- and 12-year highs respectively, unemployment at a 16-year low, wages picking up and confidence high. Consequently we are looking for 2.9% growth.”
“This is a touch above the 2.5% consensus forecast and is also a little above the 2.7% "now cast" calculated by the Atlanta Federal Reserve, which mirrors key data releases used by the Bureau of Economic Analysis to calculate the official data. While we acknowledge the potential for hurricane effects to have perhaps depressed activity in Texas and Florida more than we have estimated, we think there is the potential for upside from inventories. Inventories were aggressively run down in 1H17, meaning that they subtracted from growth. We expect to see a rebound with companies keen to replenish stocks in 3Q, which should boost growth.”
“As for 4Q, well it looks as though the economy has started the quarter strongly. We are currently forecasting growth of around 2.8% with post hurricane rebuilding and people replacing lost items due to the storms helping to add to growth for what is economy that already looks in good shape. This strong growth story should mean that spare capacity in the economy continues to shrink, which should see inflation pressures build.”
“Wages are also rising and imported inflation is being pushed up by the dollar's decline since the start of the year while rising oil prices will also contribute to higher inflation readings. With growth looking firm, inflation likely to rise and Federal Reserve officials broadening out the reasons for why higher interest rates much be required (financial stability risks, asset valuations and loose financial conditions) we think next week's FOMC statement will underline the strong case for a December interest rate rise.”
BoE: Change in expectations
“As recently as this summer, many forecasters were anticipating that interest rates would be on hold until 2019. Currently the market is around 80% priced for a 25bps rate hike on November 2 and the latest Bloomberg survey suggests that more than three quarters of analysts now expect the BoE to raise rates at its November meeting, up from around one in five in September. This sharp swing in expectations is almost entirely the result of the step up in hawkish rhetoric proffered by the MPC rather than a response to UK economic data. Indeed, while UK CPI inflation has edged up to 3%, activity series are showing signs of weakening.”
“The implication is that for many forecasters, the expectations of a rate rise on November 2 is not necessarily consistent with what they think the Bank should do, but rather what the MPC now looks likely to do. To protect its credibility, we do now expect that the Bank will hike rates in November. However, due to weakness in recent economic data, we anticipate that the Bank will not be able to follow on with another move for some time. The dovish hike scenario suggests that upside potential for the pound on a policy move in November is likely to be limited.”
“The implication is that for many forecasters, the expectations of a rate rise on November 2 is not necessarily consistent with what they think the Bank should do, but rather what the MPC now looks likely to do. To protect its credibility, we do now expect that the Bank will hike rates in November. However, due to weakness in recent economic data, we anticipate that the Bank will not be able to follow on with another move for some time. The dovish hike scenario suggests that upside potential for the pound on a policy move in November is likely to be limited.”
STOCK MARKET SAFE TRADING: Today NIFTY and BANKNIFTY
STOCK MARKET SAFE TRADING: Today NIFTY and BANKNIFTY: NIFTY intraday BUY at CMP 10275 SL 10247 TGT 10305 NIFTY 10100 PE NOV Buy at CMP 71 SL 39 TGT 180 ( positional )
NIFTY TGT HITS at 10305
NIFTY TGT HITS at 10305
EUR/USD Return above the 1.1848-1.1858
“The weak daily volatility should indeed prevent the cross from rallying too much and we rather see a decline to important supports at 1.1693-1.1705 (weekly Bollinger moving average).”
“Caution will be in order as a break below these thresholds would affect the upside parallels still in place on the weekly chart, providing fresh bearish momentum to 1.1619-1.1630 (May 16 high), to 1.1480-1.15 and even to 1.1350 (9-month moving average). The resistances are at 1.1788-1.1805, at 1.1848-1.1858, at 1.1882-1.1896, at 1.1956 and at 1.2070.”
“Caution will be in order as a break below these thresholds would affect the upside parallels still in place on the weekly chart, providing fresh bearish momentum to 1.1619-1.1630 (May 16 high), to 1.1480-1.15 and even to 1.1350 (9-month moving average). The resistances are at 1.1788-1.1805, at 1.1848-1.1858, at 1.1882-1.1896, at 1.1956 and at 1.2070.”
INDIAN Economy is expected to gain traction
“The demonetisation program and the recently-implemented GST legislation were disruptive factors. They, nevertheless, do not account for the slowdown in its entirety. The Indian economy enjoyed windfall gains through lower oil prices, the effect of which has largely been eroded. Looking ahead, the economy is expected to gain traction as the impact of disruptive factors fades away. A focus on supply-side reforms will likely yield better results than pursing aggressive policies to lift demand.”
- An improvement in activity is expected over the coming quarters.
- With the temporary factors such as demonetisation and GST implementation challenges expected to recede, the Indian economy should gain momentum. Econometric modelling by NAB Economics using a leading indicator approach suggests that industrial production activity is expected to expand by 6.2% yoy in the March quarter, 2018. In that regard, the recently released August 2017 results are encouraging. NAB Economics is forecasting a 6.8% outcome for real GDP in 2017, rising to 7.4% in 2018.
- To ensure a durable recovery, supply side factors should be the primary focus. Speeding up project clearances, simplifying the taxation (including GST) regime, improving the ease of doing business – including cutting red tape, and continued progress in addressing banking sector stress will help bolster the country’s growth potential. A focus on demandboosting policies could ignite inflationary pressures, which might have to be curbed through interest rate rises, rendering them less effective.”
Tuesday, October 24, 2017
UK economy clearly slowed
Analysts at UOB explained that the Bank of England Deputy Governor Jon Cunliffe again raised doubts whether he will support a BOE rate hike next week.
"He described the exact timing of BOE rate rise “is a more open question” in an interview published by a Welsh newspaper on Monday (23 Oct). He said that he does not want to anticipate Nov rate decision, but “for me the economy has clearly slowed this year”. He also noted that if the BOE forecast of higher domestic inflation comes to pass, then rates will need to go up and that rates will need to rise over next three years."
"He described the exact timing of BOE rate rise “is a more open question” in an interview published by a Welsh newspaper on Monday (23 Oct). He said that he does not want to anticipate Nov rate decision, but “for me the economy has clearly slowed this year”. He also noted that if the BOE forecast of higher domestic inflation comes to pass, then rates will need to go up and that rates will need to rise over next three years."
GBP/USD accelerates decline below 1.3150
The greenback remains strong supported by US bond yields. The 10-year yield rose above 2.40% to the highest since March. Economic data added support to the US dollar with the PMI. The composite flash rose above exportations to monthly highs. Regarding data, the next key report will come from the UK with the Q3 GDP reading tomorrow.
GBP/USD tested yesterday’s highs near the 1.3220 area in Asian hours and then turned to the downside. It has been moving with a bearish bias and accelerated below 1.3156 (Oct 23 low). It bottomed recently at 1.3111. Cable still appears under pressure and is likely to remain that way as long as it holds below 1.3160.
The pound continues to be affected by Brexit uncertainties overall and today also from a rally in EUR/GBP that is rising 70 pips. The euro is among the top performers in the market ahead of Thursday’s European Central Bank meeting.
GBP/USD tested yesterday’s highs near the 1.3220 area in Asian hours and then turned to the downside. It has been moving with a bearish bias and accelerated below 1.3156 (Oct 23 low). It bottomed recently at 1.3111. Cable still appears under pressure and is likely to remain that way as long as it holds below 1.3160.
The pound continues to be affected by Brexit uncertainties overall and today also from a rally in EUR/GBP that is rising 70 pips. The euro is among the top performers in the market ahead of Thursday’s European Central Bank meeting.
US Dollar Index attempting to retake 94.00
The greenback, tracked by the US Dollar Index (DXY), has managed to bounce off daily lows in the 93.70/65 band and is now hovering over the 94.00 handle.
The index is now extending the recovery to the 94.00 neighbourhood backed by another up tick in yields of the US 10-year benchmark, which are trading in the upper end of the range around 2.41%.In the meantime, the upbeat tone remains intact around USD following another record high in US stocks.
Additionally, investors stay vigilant on the imminent announcement by President Trump of Yellen’s successor at the helm of the Federal Reserve, with (hawkish) candidate J.Taylor still being the front-runner ahead of FOMC’s (dovish) J.Powell and former FOMC Governor K.Warsh (centrist/hawkish). In the US data space, Markit’s advanced manufacturing PMI is expected at 54.5 for the current month, while services PMI is seen at 55.9, both print surpassing initial estimates. Later in the session, the American Petroleum Institute (API) will publish its weekly report on US crude oil supplies.
The index is now extending the recovery to the 94.00 neighbourhood backed by another up tick in yields of the US 10-year benchmark, which are trading in the upper end of the range around 2.41%.In the meantime, the upbeat tone remains intact around USD following another record high in US stocks.
Additionally, investors stay vigilant on the imminent announcement by President Trump of Yellen’s successor at the helm of the Federal Reserve, with (hawkish) candidate J.Taylor still being the front-runner ahead of FOMC’s (dovish) J.Powell and former FOMC Governor K.Warsh (centrist/hawkish). In the US data space, Markit’s advanced manufacturing PMI is expected at 54.5 for the current month, while services PMI is seen at 55.9, both print surpassing initial estimates. Later in the session, the American Petroleum Institute (API) will publish its weekly report on US crude oil supplies.
DOW fresh record highs on strong earnings
Major US equity indices witnessed a mixed opening on Tuesday, with the Dow Jones Industrial Average (DJIA) outperforming the broader indices and notched fresh record highs.
During the opening hour of trade, DJIA surged over 150-points to 23,435 on the back of strong earnings from Caterpillar and 3M. Strong earnings-driven rally was partly negated by a drop in shares of Whirlpool Corp. and kept a lid on any meaningful up-move for the S&P 500 Index, which added nearly 3-points to 2,567. Meanwhile, tech-heavy Nasdaq Composite Index treaded water near yesterday's closing level of 6,586.
Third-quarter earnings continue to come in largely positive, with around 75% of the S&P 500 companies that reported results till Monday have surpassed profit estimates, which coupled optimism over the US President Donald Trump's tax plans now seems to suggest that another round of records could be in store for the main benchmark indices.
Moving ahead, investors' attention would remain glued to Thursday's ECB monetary policy decision and the release of Q3 US GDP number on Friday. Also in focus would be the announcement of a new Federal Reserve Chair, which would influence market expectations about the central bank's monetary policy outlook and impact investors' appetite for riskier assets - like equities.
During the opening hour of trade, DJIA surged over 150-points to 23,435 on the back of strong earnings from Caterpillar and 3M. Strong earnings-driven rally was partly negated by a drop in shares of Whirlpool Corp. and kept a lid on any meaningful up-move for the S&P 500 Index, which added nearly 3-points to 2,567. Meanwhile, tech-heavy Nasdaq Composite Index treaded water near yesterday's closing level of 6,586.
Third-quarter earnings continue to come in largely positive, with around 75% of the S&P 500 companies that reported results till Monday have surpassed profit estimates, which coupled optimism over the US President Donald Trump's tax plans now seems to suggest that another round of records could be in store for the main benchmark indices.
Moving ahead, investors' attention would remain glued to Thursday's ECB monetary policy decision and the release of Q3 US GDP number on Friday. Also in focus would be the announcement of a new Federal Reserve Chair, which would influence market expectations about the central bank's monetary policy outlook and impact investors' appetite for riskier assets - like equities.
Tomorrow Results/Board Meeting
| Symbol | Company | Industry | Purpose | BoardMeetingDate |
| PNBHOUSING | PNB Housing Finance Limited | - | Results | 25-Oct-17 |
| HCLTECH | HCL Technologies Limited | - | Results/Dividend | 25-Oct-17 |
| CIGNITITEC | Cigniti Technologies Limited | - | Results/Others | 25-Oct-17 |
| PIIND | PI Industries Limited | - | Results | 25-Oct-17 |
| RBLBANK | RBL Bank Limited | - | Results | 25-Oct-17 |
| ASTEC | Astec LifeSciences Limited | - | Results/Others | 25-Oct-17 |
| EVERESTIND | Everest Industries Limited | - | Results | 25-Oct-17 |
| M&MFIN | Mahindra & Mahindra Financial Services Limited | - | Results | 25-Oct-17 |
| PNBHOUSING | PNB Housing Finance Limited | - | Results/Others | 25-Oct-17 |
| QUESS | Quess Corp Limited | - | Results | 25-Oct-17 |
| TATACOMM | Tata Communications Limited | - | Results | 25-Oct-17 |
| NET4 | Net 4 India Limited | - | Board meeting Rescheduled | 25-Oct-17 |
| PIIND | PI Industries Limited | - | Results/Dividend | 25-Oct-17 |
| TFL | Transwarranty Finance Limited | - | Results | 25-Oct-17 |
| GEOJITFSL | Geojit Financial Services Limited | - | Results | 25-Oct-17 |
| ENGINERSIN | Engineers India Limited | - | Results | 25-Oct-17 |
| IDFCBANK | IDFC Bank Limited | - | Results/Others | 25-Oct-17 |
| TEJASNET | Tejas Networks Limited | - | Results | 25-Oct-17 |
| DCMFINSERV | DCM Financial Services Limited | - | Results/Others | 25-Oct-17 |
| HCL-INSYS | HCL Infosystems Limited | - | Results | 25-Oct-17 |
| VGUARD | V-Guard Industries Limited | - | Results | 25-Oct-17 |
| TATAELXSI | Tata Elxsi Limited | - | Results | 25-Oct-17 |
| ATFL | Agro Tech Foods Limited | - | Results | 25-Oct-17 |
| SYNGENE | Syngene International Limited | - | Results | 25-Oct-17 |
| EMAMILTD | Emami Limited | - | Results | 25-Oct-17 |
| VGUARD | V-Guard Industries Limited | - | Results | 25-Oct-17 |
| EXIDEIND | Exide Industries Limited | - | Results/Dividend | 25-Oct-17 |
| SKFINDIA | SKF India Limited | - | Results | 25-Oct-17 |
| NIITLTD | NIIT Limited | - | Results | 25-Oct-17 |
| HINDUNILVR | Hindustan Unilever Limited | - | Results/Dividend | 25-Oct-17 |
| SUTLEJTEX | Sutlej Textiles and Industries Limited | - | Results | 25-Oct-17 |
| COROMANDEL | Coromandel International Limited | - | Results | 25-Oct-17 |
| GLAXO | GlaxoSmithKline Pharmaceuticals Limited | - | Results | 25-Oct-17 |
| MINDTREE | MindTree Limited | - | Results/Dividend | 25-Oct-17 |
| KOTAKBANK | Kotak Mahindra Bank Limited | - | Results | 25-Oct-17 |
| MPHASIS | MphasiS Limited | - | Results | 25-Oct-17 |
Monday, October 23, 2017
PM May is confident on UK getting a good deal with EU
The UK's PM May is hitting the wires, speaking at Parliament, saying that she wants a transition period with ‘as little change as possible, but she doesn’t answer questions on whether transition deal will come 1st.
- Last week's talks made important progress on new relationship with EU.
- Confident on UK getting a good deal, says its in the interests of both sides.
- Wants transition period with ‘as little change as possible’.
- Expects vote on Brexit deal in Parliament, before EU countries vote on any agreement.
- Ambitious and positive about Britain's future after the negotiations.
- No physical infrastructure in n Ireland after Brexit.
- United on key principles of any deal about rights of EU citizens, in touching distance of any deal.
- UK must agree on divorce bill before trade talks.
- Dinner with UK PM May was positive.
WTI Crude oil significant levels
At the moment the barrel of WTI is up 0.69% at $52.20 and a break above $52.37 (high Oct.16) would open the door to $52.86 (high Sep.28) and finally $53.76 (high Apr.12). On the flip side, the immediate support lines up at $51.15 (10-day sma) seconded by $50.70 (low Oct.20) and then $50.08 (38.2% Fibo of $45.58-$52.86).
West Texas Intermediate above the $52.00 mark
WTI up on geopolitical jitters
Prices for the black gold remain underpinned by ongoing disruptions in crude oil supply in the Middle East, all amidst unabated concerns around Iraq and Kurdistan.
Adding to the upbeat mood around WTI, driller Baker Hughes reported on Friday the third consecutive drop in US oil rig count, this time by 6 to 736 US active oil rigs, while US oil production dropped to 8.4 million barrels during the week ended on October 13 according to the latest report by the EIA (Wednesday).
Further out, traders remain optimistic following last week’s comments by OPEC officials, noting the effectiveness of the current output cut deal in rebalancing the oil market.
News from the positioning space noted oil speculative net longs dropped to 3-week lows during the week ended on October 17, as shown by the latest CFTC report.
Prices for the black gold remain underpinned by ongoing disruptions in crude oil supply in the Middle East, all amidst unabated concerns around Iraq and Kurdistan.
Adding to the upbeat mood around WTI, driller Baker Hughes reported on Friday the third consecutive drop in US oil rig count, this time by 6 to 736 US active oil rigs, while US oil production dropped to 8.4 million barrels during the week ended on October 13 according to the latest report by the EIA (Wednesday).
Further out, traders remain optimistic following last week’s comments by OPEC officials, noting the effectiveness of the current output cut deal in rebalancing the oil market.
News from the positioning space noted oil speculative net longs dropped to 3-week lows during the week ended on October 17, as shown by the latest CFTC report.
EM’s central banks this week
“COPOM meets Wednesday and is expected to cut rates 75 bp to 7.5%. IPCA inflation was 2.5% y/y in September, right at the bottom of the 2.5-6.5% target range. Price pressures are picking up, and so we see one last 50 bp cut at the December 6 meeting for a terminal SELIC rate of 7%. Brazil then reports September current account, FDI, and central government budget data Thursday”.
“Central Bank of Turkey meets Thursday and is expected to keep rates steady. Inflation was 11.2% y/y in September, well above the 3-7% target range. Yet the bank will be under great pressure not to tighten any further. We expect further erosion of confidence in the nation’s institutions as a result”.
“Central Bank of Russia meets Friday and is expected to cut rates 25 bp to 8.25%. A small handful of analysts look for a 50 bp cut. Inflation was 3% y/y in September well below the 4% target. While a bigger move is possible, we think the bank will play it safe with a 25 bp cut and follow up with another cut at its next meeting December 15”.
“Colombia central bank meets Friday and is expected to keep rates steady at 5.25%. The bank remained on hold in September as inflation ticked higher to 4% y/y. However, official comments suggest this is just a pause in the cycle. The next meeting after this one is November 24. Timing of the next cut will be very data dependent”.
“Central Bank of Turkey meets Thursday and is expected to keep rates steady. Inflation was 11.2% y/y in September, well above the 3-7% target range. Yet the bank will be under great pressure not to tighten any further. We expect further erosion of confidence in the nation’s institutions as a result”.
“Central Bank of Russia meets Friday and is expected to cut rates 25 bp to 8.25%. A small handful of analysts look for a 50 bp cut. Inflation was 3% y/y in September well below the 4% target. While a bigger move is possible, we think the bank will play it safe with a 25 bp cut and follow up with another cut at its next meeting December 15”.
“Colombia central bank meets Friday and is expected to keep rates steady at 5.25%. The bank remained on hold in September as inflation ticked higher to 4% y/y. However, official comments suggest this is just a pause in the cycle. The next meeting after this one is November 24. Timing of the next cut will be very data dependent”.
US stocks hit fresh all-time highs and retreat
Major US equity indices kicked off a new trading week on a slightly positive note and touched fresh record highs as traders continued to cheer the prospects for a major tax overhaul.
Monday's modest gains came after all the three major indices scored all-time record closing highs on Friday and were being supported by growing optimism over the US President Donald Trump's proposed tax reforms. The Senate last week passed a budget blueprint for the next fiscal year and lifted hopes that congressional Republicans will be able to push on with tax cuts.
The already buoyant investors’ sentiment got an additional boost from the Japanese PM Shinzo Abe's ruling party's big win in Sunday's snap election and a stronger-than-expected earnings season. Corporate earnings have got off to a strong start, with nearly 75% of the S&P 500 companies, which reported third-quarter earnings, beating profit expectations.
With the third-quarter earnings season continuing at full steam this week, investors would also be keen to know who will take over as the next Fed Chair after Janet Yellen's term expires in February.
During the opening hour of trade, the Dow Jones Industrial Average was up nearly 30-points to 23,356, while the broader S&P 500 Index added around 2-points to 2,577. Meanwhile, tech-heavy Nasdaq Composite Index underperformed the broader indices and treaded water near Friday's closing level of 6,628.
Monday's modest gains came after all the three major indices scored all-time record closing highs on Friday and were being supported by growing optimism over the US President Donald Trump's proposed tax reforms. The Senate last week passed a budget blueprint for the next fiscal year and lifted hopes that congressional Republicans will be able to push on with tax cuts.
The already buoyant investors’ sentiment got an additional boost from the Japanese PM Shinzo Abe's ruling party's big win in Sunday's snap election and a stronger-than-expected earnings season. Corporate earnings have got off to a strong start, with nearly 75% of the S&P 500 companies, which reported third-quarter earnings, beating profit expectations.
With the third-quarter earnings season continuing at full steam this week, investors would also be keen to know who will take over as the next Fed Chair after Janet Yellen's term expires in February.
During the opening hour of trade, the Dow Jones Industrial Average was up nearly 30-points to 23,356, while the broader S&P 500 Index added around 2-points to 2,577. Meanwhile, tech-heavy Nasdaq Composite Index underperformed the broader indices and treaded water near Friday's closing level of 6,628.
Saturday, October 21, 2017
Bitcoin preserves gains near $6000 on yesterday
Following last week's record-setting rally, the BTC/USD pair made a technical correction during the first half of the week before gaining traction on Thursday and surging to a new all-time high on Friday. At the moment, the pair is trading slightly below its record high of $6030 at $6000, up $300, or 5.3% on the day.
Yesterday's surge seems to be fueled by an increasing trading volume in cryptocurrencies. "In the last 24 hours and really the last few hours there has been a massive inflow of capital into bitcoin, significantly outweighing the amount of new money flowing into other cryptocurrencies," Alex Sunnarborg, founding partner of cryptocurrency fund Tetras Capital, told CNBC.
Analyzing Yesterday's price action, coindesk.com in a recent article pointed out that the data from Google Trends revealed that bitcoin search volume advanced to near all-time highs.
Since the start of the month, the pair gained nearly 40%, lifting the total yearly earnings above 500%.
Yesterday's surge seems to be fueled by an increasing trading volume in cryptocurrencies. "In the last 24 hours and really the last few hours there has been a massive inflow of capital into bitcoin, significantly outweighing the amount of new money flowing into other cryptocurrencies," Alex Sunnarborg, founding partner of cryptocurrency fund Tetras Capital, told CNBC.
Analyzing Yesterday's price action, coindesk.com in a recent article pointed out that the data from Google Trends revealed that bitcoin search volume advanced to near all-time highs.
Since the start of the month, the pair gained nearly 40%, lifting the total yearly earnings above 500%.
Heightened expectations of tax overhaul
Following a positive start to the day, major equity indexes in the U.S. extended their upside as investors cheered the US Senate's approval of the 2018 fiscal year budget plan, which would open the door for the Republicans to go through with their tax reform without the support of the Democrats.
“It clearly is a positive and has added to the sentiment. Any legislative action that promotes economic growth, clearly will be additive to not only sentiment but presumably earnings,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, told Reuters.
Boosted by a 3% gain witnessed in the US 10-year T-bond yields, the S&P 500 Financials Sector (SPSY) added more than 1% to become the best performing sector of the day.
In the meantime, after dropping to a weekly low at $50.70, the barrel of West Texas Intermediate staged a late recovery and turned positive on the week, allowing the S&P 500 Energy Sector (SPNY) to erase yesterday's losses.
Next week, 183 S&P 500 companies will be releasing their third-quarter earnings results. According to the latest data available on Reuters, more than 70% of the 88 S&P 500 companies, which have already released their reports, have surpassed profit expectations.
The Dow Jones Industrial Average gained 162.86 points, or 0.7%, to 23,325.91, the S&P 500 added 12.87 points, or 0.5%, to 2,574.97 and the Nasdaq Composite rose 23 points, or 0.35%, to 6,628.06.
“It clearly is a positive and has added to the sentiment. Any legislative action that promotes economic growth, clearly will be additive to not only sentiment but presumably earnings,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, told Reuters.
Boosted by a 3% gain witnessed in the US 10-year T-bond yields, the S&P 500 Financials Sector (SPSY) added more than 1% to become the best performing sector of the day.
In the meantime, after dropping to a weekly low at $50.70, the barrel of West Texas Intermediate staged a late recovery and turned positive on the week, allowing the S&P 500 Energy Sector (SPNY) to erase yesterday's losses.
Next week, 183 S&P 500 companies will be releasing their third-quarter earnings results. According to the latest data available on Reuters, more than 70% of the 88 S&P 500 companies, which have already released their reports, have surpassed profit expectations.
The Dow Jones Industrial Average gained 162.86 points, or 0.7%, to 23,325.91, the S&P 500 added 12.87 points, or 0.5%, to 2,574.97 and the Nasdaq Composite rose 23 points, or 0.35%, to 6,628.06.
Removal of monetary policy : Fed's Yellen
Speaking at the Herbert Stein Memorial Lecture in Washington DC, Federal Reserve's chairwoman Janet Yellen stated that economy doing well but future downturns likely to require renewed use of unconventional policy
In a speech titled "Monetary Policy Since the Financial Crisis", Yellen stressed that downward pressure on yield from Fed asset holdings will dissipate only gradually
In a speech titled "Monetary Policy Since the Financial Crisis", Yellen stressed that downward pressure on yield from Fed asset holdings will dissipate only gradually
- Fed more likely to hit "zero lower bound" in future rate cut cycles
- Unconventional policy tools must be "Ready" if needed
- Evidence suggests economy did better because of asset purchases, other Fed actions during crisis
- Removal of monetary policy accommodation working well so far
Trump on next Fed chair
In an interview with Fox Business, US President Donald Trump said that he was considering having both the Fed governor Powell and Stanford University economist Taylor to fill spots at the Fed.
- Idea of Taylor, Powell serving together at Fed is in his "thinking," adds "I have a couple of others things in my thinking"
- Taylor, Powell both very talented, says it is a hard decision
- Fox Business says Powell and Taylor could potentially serve as either fed chair or vice chair, unclear which role either might get
Friday, October 20, 2017
US Existing Home sales rebound
Analysts from Wells Fargo, explained the reasons why existing home sales rose 0.7% in September after three consecutive declines and they warned that existing sales fell on a year-to-year basis, marking the first drop since mid-2016.
“After declining three straight months, existing home sales rose 0.7 percent in September. Despite this past month’s gain, sales fell on a year-to-year basis, which captures the cumulative effect of the prior three months of declines.”
“Hurricane Harvey and Hurricane Irma likely weighed on September’s sales. Existing home sales fell 0.9 percent the South, which was the only region seeing a decline.
“While sales are down 1.5 percent year to year, the inventory is off even more, down 6.4 percent on the year. The sharper drop in inventories really drives home the point that home sales are being held back primarily due to the lack of homes for sale.
“For the 67th consecutive month, prices increased year to year, rising 4.2 percent. Gains have moderated significantly, however, and are rising at their slowest year-to-year pace since June 2014.”
“After declining three straight months, existing home sales rose 0.7 percent in September. Despite this past month’s gain, sales fell on a year-to-year basis, which captures the cumulative effect of the prior three months of declines.”
“Hurricane Harvey and Hurricane Irma likely weighed on September’s sales. Existing home sales fell 0.9 percent the South, which was the only region seeing a decline.
“While sales are down 1.5 percent year to year, the inventory is off even more, down 6.4 percent on the year. The sharper drop in inventories really drives home the point that home sales are being held back primarily due to the lack of homes for sale.
“For the 67th consecutive month, prices increased year to year, rising 4.2 percent. Gains have moderated significantly, however, and are rising at their slowest year-to-year pace since June 2014.”
Pyongyang to consider UN sanctions as attempt to 'declare war'
According to Interfax, a Russian news agency, an official for the North Korea's foreign ministry said that all attempts to strangle the country via UN sanctions would be taken as attempts to 'declare war.'
Crude Oil breaks below $51.00
Crude oil prices are extending the correction lower on Friday, now dragging the barrel of the American reference for the sweet light crude oil to daily lows in sub-$51.00 levels.
Prices for the West Texas Intermediate are down for the second session in a row, testing fresh multi-day lows in the $50.70 area after climbing as high as the $52.30 region earlier in the week.
Crude oil retreated on Thursday following comments from Chinese official noting that markets may be over-optimistic over the Chinese economic growth.
Earlier in the week, prices for the black gold remained underpinned by positive prospects of the rebalancing of the oil markets, according to comments by OPEC officials.
In addition, another draw in US supplies reported by the DoE added to the (previous) upbeat momentum in prices.
Ahead in the session, driller Baker Hughes will publish its US oil rig count (prev. -5 to 743 US active oil rigs).
Prices for the West Texas Intermediate are down for the second session in a row, testing fresh multi-day lows in the $50.70 area after climbing as high as the $52.30 region earlier in the week.
Crude oil retreated on Thursday following comments from Chinese official noting that markets may be over-optimistic over the Chinese economic growth.
Earlier in the week, prices for the black gold remained underpinned by positive prospects of the rebalancing of the oil markets, according to comments by OPEC officials.
In addition, another draw in US supplies reported by the DoE added to the (previous) upbeat momentum in prices.
Ahead in the session, driller Baker Hughes will publish its US oil rig count (prev. -5 to 743 US active oil rigs).
Final Brexit agreement
Theresa May, British Prime Minister, continues to speak, delivering a UK national briefing at the EU council meeting.
UK PM May: full and final financial settlement will come as final Brexit agreement
UK PM May: it would be irresponsible not to look at every eventuality
UK PM May: I have been clear that I am optimistic about winning a good Brexit deal
UK PM May: we will be going line by line through those financial commitments
UK PM May: full and final financial settlement will come as final Brexit agreement
UK PM May: it would be irresponsible not to look at every eventuality
UK PM May: I have been clear that I am optimistic about winning a good Brexit deal
UK PM May: we will be going line by line through those financial commitments
Ambitious and positive about Brexit negotiations
Theresa May, British Prime Minister, is delivering a UK national briefing at the EU council meeting.
UK May: Made clear to EU that they do not need to be concerned over the current budget plan, we will honour commitments made to EU
UK May: If we are going to take a step forward we must work together on Brexit
UK May: Agreed with EU northern Ireland needs specific solutions post-Brexit
UK May: I am ambitious and positive about the Brexit negotiations
UK May: Made clear to EU that they do not need to be concerned over the current budget plan, we will honour commitments made to EU
UK May: If we are going to take a step forward we must work together on Brexit
UK May: Agreed with EU northern Ireland needs specific solutions post-Brexit
UK May: I am ambitious and positive about the Brexit negotiations
Thursday, October 19, 2017
Gold consolidates gains near $1290
Gold extended gains during the American session and is up for the day after falling during the previous three days. The value of the ounce is hovering slightly below $1,290. Earlier today bottomed at $1,276.40, the lowest since October 9.
The yellow metal pulled back modestly after the release of US economic data that showed better-than-expected numbers. Initial jobless claims dropped to the lowest since 1973 while the Philly Fed rose unexpectedly. The greenback rose in the market, but the recovery was short-lived.
Philly Fed: Manufacturing firms reported continued growth in October
US: Weekly initial claims was 222,000, a decrease of 22,000 from previous week
After falling to $1,283.50 gold rose back toward $1,290. At the moment of writing it was holding near the highs, holding a bullish tone.
The US Dollar Index dropped below 93.00, to the lowest since Monday and is back to the level it had at the beginning of the week. In Wall Street, the Dow Jones is falling 0.21% after moving off daily lows, but still shows a downside bias. US bonds are up today adding some support to gold.
The yellow metal pulled back modestly after the release of US economic data that showed better-than-expected numbers. Initial jobless claims dropped to the lowest since 1973 while the Philly Fed rose unexpectedly. The greenback rose in the market, but the recovery was short-lived.
Philly Fed: Manufacturing firms reported continued growth in October
US: Weekly initial claims was 222,000, a decrease of 22,000 from previous week
After falling to $1,283.50 gold rose back toward $1,290. At the moment of writing it was holding near the highs, holding a bullish tone.
The US Dollar Index dropped below 93.00, to the lowest since Monday and is back to the level it had at the beginning of the week. In Wall Street, the Dow Jones is falling 0.21% after moving off daily lows, but still shows a downside bias. US bonds are up today adding some support to gold.
May's Spokesman: London will remain world's leading financial centre
A spokesman for the British Prime Minister Theresa May recently crossed the wires, via LiveSquawk, saying that London is the world's leading financial centre and would remain that way. The spokesman didn't comment Goldman Sach CEO Lloyd Blankfein's tweet about Frankfurt.
Earlier in the day, Blankfein, "just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time here," tweeted out.
Earlier in the day, Blankfein, "just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time here," tweeted out.
If article 155 is invoked
“Article 155 has never been invoked before, so we are in uncharted territory. Although it is ambiguous in its formulation, effectively it enables the central government to take over control of certain functions of the regional government. Mr Rajoy would be expected to lay out to the upper house which specific measures he intends to take”.
“The Spanish press has suggested that Mr Puigdemont could be replaced by a delegate of the central government, and that the central government would "prioritise control of the regional armed forces and the budget”.
“The Spanish press has suggested that Mr Puigdemont could be replaced by a delegate of the central government, and that the central government would "prioritise control of the regional armed forces and the budget”.
Brent Oil - Some technique view
Since the daily stochastic for Brent is close to the overbought territory, they cannot rule out a decline to 56.95 (daily Bollinger moving average) even to 55.20-55.35 (daily parabolic).
“These dips would enable the contract to gather momentum ahead of initiating a new leg higher to 58.50-58.70 (Fibonacci extensions) last obstacles ahead of 59.80-60 (monthly Bollinger upper band). Only a break of these last resistances would unleash strong upside potential, confirming a lasting rise to 62.60-62.80 (Fibonacci extensions) ahead of 65.70 (38.2% Fibonacci retracement of the 128.40-27.10 bearish wave / March 12 – Jan 16) and 66.90 (9 month moving average).”
“The supports are at 56.95, at 56, at 55.20-55.35 and at 53.70.”
“These dips would enable the contract to gather momentum ahead of initiating a new leg higher to 58.50-58.70 (Fibonacci extensions) last obstacles ahead of 59.80-60 (monthly Bollinger upper band). Only a break of these last resistances would unleash strong upside potential, confirming a lasting rise to 62.60-62.80 (Fibonacci extensions) ahead of 65.70 (38.2% Fibonacci retracement of the 128.40-27.10 bearish wave / March 12 – Jan 16) and 66.90 (9 month moving average).”
“The supports are at 56.95, at 56, at 55.20-55.35 and at 53.70.”
Crude oil prices are extending the downside today
Prices for the WTI are trading on the defensive after Chinese GDP figures failed to surprise markets to the upside today. In fact, the Chinese economy is expected to expand at an annualized 6.8% during the July-September period, in line with prior surveys.
Today’s price action around crude oil seems to ignore another weekly draw in US crude oil supplies, as per yesterday’s EIA report.
Furthermore, WTI stayed apathetic after OPEC’s Secretary Barkindo said earlier in the session that the rebalance of the oil market remains on track.
Looking ahead, US oil rig count by driller Baker Hughes is due tomorrow.
Today’s price action around crude oil seems to ignore another weekly draw in US crude oil supplies, as per yesterday’s EIA report.
Furthermore, WTI stayed apathetic after OPEC’s Secretary Barkindo said earlier in the session that the rebalance of the oil market remains on track.
Looking ahead, US oil rig count by driller Baker Hughes is due tomorrow.
Brexit Summit in focus
The GBP/USD pair is seen making minor-recovery attempts, although faces stiff resistances near 1.3170 region on its way to 1.32 handle.
GBP/USD:
The spot held onto the major support located near 1.3125/40 area, and from there attempted a tepid-recovery, as the dust settled after the poor UK retail sales aftermath. The recovery seen in Cable is on the back of ongoing weakness seen in the US dollar across the board, fuelled by a rally in EUR/USD above 1.1800 levels, as the Spanish government seems to have regained their grip on Catalonia.
Spanish Spokesman confirms implementation of Article 155
Catalan Leader threatens Spanish PM to declare formal independence if no dialogue
Meanwhile, with the EU/ Brexit Summit underway, the recovery may remain in check, as the pound could continue to feel the heat from the EU-UK deadlock on the Brexit negotiations, while increased nervousness ahead of the UK PM May’s speech at the Summit could also keep the bulls at bay.
Also, of note for the major remains the US jobless claims and Philly Fed manufacturing index due later in the NA session for further momentum.
GBP/USD:
The spot held onto the major support located near 1.3125/40 area, and from there attempted a tepid-recovery, as the dust settled after the poor UK retail sales aftermath. The recovery seen in Cable is on the back of ongoing weakness seen in the US dollar across the board, fuelled by a rally in EUR/USD above 1.1800 levels, as the Spanish government seems to have regained their grip on Catalonia.
Spanish Spokesman confirms implementation of Article 155
Catalan Leader threatens Spanish PM to declare formal independence if no dialogue
Meanwhile, with the EU/ Brexit Summit underway, the recovery may remain in check, as the pound could continue to feel the heat from the EU-UK deadlock on the Brexit negotiations, while increased nervousness ahead of the UK PM May’s speech at the Summit could also keep the bulls at bay.
Also, of note for the major remains the US jobless claims and Philly Fed manufacturing index due later in the NA session for further momentum.
Conflict between Catalonia and Spanish government
The reply by the Catalan government on the question whether they had declared independence was not clear enough for the Spanish government and the central government will now continue to enact Article 155, explains Steven Trypsteen, Economist at ING.
“Catalan leader Puigdemont refused to retract his ambiguous declaration of independence and hinted at a possible vote at the Catalan parliament. The standoff between Catalonia and the central government is not good news for the economy in both Spain and the Catalan region. Many companies with their corporate address in Catalonia have already reacted by moving it out of Catalonia. Spain also downgraded its GDP growth forecast for 2018 from 2.6% to 2.3%.”
“This Saturday there is likely to be a cabinet meeting that could ask the Senate to approve specific measures for Catalonia, Article 155, allowing take over of control in Catalonia.”
“Many outcomes are still possible, such as the announcement of snap elections in Catalonia before Article 155 comes into force. In any case, we still seem to be far from a cooperative solution to the problem, which might put moderate upward pressure on Spanish spreads.”
“Catalan leader Puigdemont refused to retract his ambiguous declaration of independence and hinted at a possible vote at the Catalan parliament. The standoff between Catalonia and the central government is not good news for the economy in both Spain and the Catalan region. Many companies with their corporate address in Catalonia have already reacted by moving it out of Catalonia. Spain also downgraded its GDP growth forecast for 2018 from 2.6% to 2.3%.”
“This Saturday there is likely to be a cabinet meeting that could ask the Senate to approve specific measures for Catalonia, Article 155, allowing take over of control in Catalonia.”
“Many outcomes are still possible, such as the announcement of snap elections in Catalonia before Article 155 comes into force. In any case, we still seem to be far from a cooperative solution to the problem, which might put moderate upward pressure on Spanish spreads.”
ECB announcement about its QE
The ECB appears to be working hard to prepare markets for an announcement about its QE plans for 2018, next Thursday, suggests Kit Juckes, Research Analyst at Societe Generale.
“An extension of QE is widely anticipated, but with some Council members canvassing for the programme t to end in 2018 and for the absolute size of the balance sheet being limited, the choice is between a faster pace or a shorter period of time, and slower bond-buying for longer. Buying less for longer without an explicit commitment to stop the programme on a given date is a likely compromise, which is hoped by some to push expectations of the first rate increase well into 2019 and thereby avoid putting upward pressure on the euro. Anatoli thinks we end up with none month extension at EUR 25bn per month, possibly also buying debt with longer maturities.”
“The FX implications are modest, though at the margin a slower pace of buying puts a floor under yields. The idea that pushng the first rate hike further away will hold the euro down doesn’t really make sense to me in the current environment. If markets conclude that QE IS going to end in 2018, they will also conclude that the ECB remains firmly on a path back to normal policies. I don’t see how a clear path to policy normalisation, combined with solid growth and a sizeable current account surplus, are consistent with a EUR/USD rate that is 7-10% below ‘PPP’ and 9% below the average of the last decade. EUR/USD is stuck in its 1.1660-1.1890 range and doesn’t look set to break out, but we still expect 1.27 by the end of 2018, and we expect EUR/JPY to go on rising steadily towards 140.”
“An extension of QE is widely anticipated, but with some Council members canvassing for the programme t to end in 2018 and for the absolute size of the balance sheet being limited, the choice is between a faster pace or a shorter period of time, and slower bond-buying for longer. Buying less for longer without an explicit commitment to stop the programme on a given date is a likely compromise, which is hoped by some to push expectations of the first rate increase well into 2019 and thereby avoid putting upward pressure on the euro. Anatoli thinks we end up with none month extension at EUR 25bn per month, possibly also buying debt with longer maturities.”
“The FX implications are modest, though at the margin a slower pace of buying puts a floor under yields. The idea that pushng the first rate hike further away will hold the euro down doesn’t really make sense to me in the current environment. If markets conclude that QE IS going to end in 2018, they will also conclude that the ECB remains firmly on a path back to normal policies. I don’t see how a clear path to policy normalisation, combined with solid growth and a sizeable current account surplus, are consistent with a EUR/USD rate that is 7-10% below ‘PPP’ and 9% below the average of the last decade. EUR/USD is stuck in its 1.1660-1.1890 range and doesn’t look set to break out, but we still expect 1.27 by the end of 2018, and we expect EUR/JPY to go on rising steadily towards 140.”
Brent Crude oil
Brent prices are down 1.17% in Europe following Wednesday's 'indecision candle' (Doji).
At the time of writing, the front month contract was trading 70 cents lower at $57.45/barrel. Prices clocked a high of $58.30 earlier today.
The drop in oil prices in the European session goes well with the risk-off action in the broader market (European equities are down, safe havens - Gold, Treasury prices and Yen are up).
Oil specific factors favor upside in the prices. To start with, analysts and traders see OPEC, Russia and other major producers extend the global output deal beyond its expiry date at the end of March 2018.
Meanwhile, in the US inventories continue to fall. The US Energy Information Administration (EIA) reported on Wednesday that US crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels.
Yesterday's Doji candle, if followed by an end of the day close below $57.28 (Oct 6 high) today, would signal bearish doji reversal.
At the time of writing, the front month contract was trading 70 cents lower at $57.45/barrel. Prices clocked a high of $58.30 earlier today.
The drop in oil prices in the European session goes well with the risk-off action in the broader market (European equities are down, safe havens - Gold, Treasury prices and Yen are up).
Oil specific factors favor upside in the prices. To start with, analysts and traders see OPEC, Russia and other major producers extend the global output deal beyond its expiry date at the end of March 2018.
Meanwhile, in the US inventories continue to fall. The US Energy Information Administration (EIA) reported on Wednesday that US crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels.
Yesterday's Doji candle, if followed by an end of the day close below $57.28 (Oct 6 high) today, would signal bearish doji reversal.
Australia: stronger labour report
Australia’s strong jobs growth will need to translate into consumption, which hasn’t been the case so far in support for an early RBA rate hike.
“Australia’s September labor report was another upside surprise, with 19.8k jobs growth and a further fall in the unemployment rate to 5.5% from 5.6% in August (consensus: 15k and 5.6%). Part-time jobs rose by 13.7k, almost same rise as in August, while there was a sharp slowdown in the full-time jobs to 6.1k from 39.5k. The participation rate was steady at 65.2%.”
“Steady part-time jobs growth and participation rate indicate that that even new entrants to the labor force are finding it easy to obtain work. However, strong jobs growth needs to translate into private consumption, which hasn’t been the case so far. A dismal retail sales growth in August reduced the likelihood of an early RBA rate hike.”
“Australia’s September labor report was another upside surprise, with 19.8k jobs growth and a further fall in the unemployment rate to 5.5% from 5.6% in August (consensus: 15k and 5.6%). Part-time jobs rose by 13.7k, almost same rise as in August, while there was a sharp slowdown in the full-time jobs to 6.1k from 39.5k. The participation rate was steady at 65.2%.”
“Steady part-time jobs growth and participation rate indicate that that even new entrants to the labor force are finding it easy to obtain work. However, strong jobs growth needs to translate into private consumption, which hasn’t been the case so far. A dismal retail sales growth in August reduced the likelihood of an early RBA rate hike.”
Wednesday, October 18, 2017
Fed's Beige Book
The Federal Reserve recently released its Beige Book, with key headlines, found below:
- Economic activity expanded at modest to moderate pace in Sept through early Oct
- Richmond, Atlanta, and Dallas districts reported 'major disruptions' from hurricanes Harvey and Irma in some areas and sectors, including transportation, energy, and agriculture
- Manufacturing activity expanded modestly to moderately in most districts
- Employment growth was modest on balance
- Many districts had difficulty finding qualified workers, restraining business growth
- Despite tight labor market majority of districts saw only modest to moderate wage pressures
- Price pressures remained modest
European Central Bank meeting
The next European Central Bank meeting will be on October 26. Analysts from Danske Bank, expect the central bank to announce an extension of the massive purchase program by nine months at a pace of EUR30bn.
“In line with recent ECB communication which points to a preference for a ‘lower for longer’ scenario, we change our call and now expect the ECB to announce a QE extension by nine months at a pace of EUR30bn at the meeting on 26 October. After that, we expect the ECB to end its QE purchases in Q4 18. In our view, a larger scaling down of purchases would ease future QE implementation and higher reinvestment volumes of maturing bonds will also add to the monthly QE flows in 2018. The appreciation pace of the effective euro has slowed since September and is hence less of a headache for the ECB now.”
“According to our projection, inflation will stay below the ECB’s target in 2018. However, we do look for core inflation to remain above 1.0% for the rest of 2017 and 2018, which would be an important argument in the ECB’s QE recalibration decision.
“We expect the QE extension to be implemented with continuing capital key deviations, while we also consider it likely that the ECB will buy a higher share of corporate bonds, as these purchases will have a more direct economic impact and the ECB’s holdings are not close to the 70% ISIN limit.
“Apart from a scaling down of QE purchases, we expect the ECB to make no changes to its forward guidance at the upcoming meeting. We also believe it will retain the option to extend the QE horizon or scale up purchases again if the inflation outlook deteriorates. Markets currently expect the first hike only in mid-2019, which we think is fair.”
“In line with recent ECB communication which points to a preference for a ‘lower for longer’ scenario, we change our call and now expect the ECB to announce a QE extension by nine months at a pace of EUR30bn at the meeting on 26 October. After that, we expect the ECB to end its QE purchases in Q4 18. In our view, a larger scaling down of purchases would ease future QE implementation and higher reinvestment volumes of maturing bonds will also add to the monthly QE flows in 2018. The appreciation pace of the effective euro has slowed since September and is hence less of a headache for the ECB now.”
“According to our projection, inflation will stay below the ECB’s target in 2018. However, we do look for core inflation to remain above 1.0% for the rest of 2017 and 2018, which would be an important argument in the ECB’s QE recalibration decision.
“We expect the QE extension to be implemented with continuing capital key deviations, while we also consider it likely that the ECB will buy a higher share of corporate bonds, as these purchases will have a more direct economic impact and the ECB’s holdings are not close to the 70% ISIN limit.
“Apart from a scaling down of QE purchases, we expect the ECB to make no changes to its forward guidance at the upcoming meeting. We also believe it will retain the option to extend the QE horizon or scale up purchases again if the inflation outlook deteriorates. Markets currently expect the first hike only in mid-2019, which we think is fair.”
Tomorrow’s Brexit talks
European Council President Donald Tusk recently crossed the wires, with key quotes, via LiveSquawk, found below:
Key quotes:
Key quotes:
- Not expecting a breakthrough in tomorrow’s Brexit talks.
- Concrete proposals needed from UK.
- Still possible to advance Brexit talks in December.
- Promising progress in Brexit talks.
- To recommend start of internal preparations for next phase of Brexit talks
EIA reported another draw in crude oil inventories
Prices of the barrel of the American benchmark for the sweet light crude oil have left the area above the $52.00 handle despite the EIA reported another draw in crude oil inventories during the week ended on October 13, this time by 5.731 million barrels, more than initially forecasted.
Additional data saw weekly distillates stocks up by 0.528 million barrels and gasoline inventories increasing by 0.908 million barrels, coming in below expectations.
Further out, supplies at Cushing rose by 0.202 million barrels.
In the meantime, the barrel of WTI is up for the third consecutive session and flirting with 3-week tops, with the next target now being September’s top at $52.86
Additional data saw weekly distillates stocks up by 0.528 million barrels and gasoline inventories increasing by 0.908 million barrels, coming in below expectations.
Further out, supplies at Cushing rose by 0.202 million barrels.
In the meantime, the barrel of WTI is up for the third consecutive session and flirting with 3-week tops, with the next target now being September’s top at $52.86
Monday, October 16, 2017
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