Intraday Market Thoughts Archives
Displaying results for week of Aug 19, 2018Housing Headaches
The world's largest asset market isn't the bond market, it's housing and how it evolves is a critical wildcard in nearly every country in the world. As the Australian dollar lagged once again on Thursday, we take a closer look at the recent signs of retreat in US housing ahead of the Jackson Hole conference, where Fed chair Powell will give introductutory remarks at 15:00 London Time. US durable goods orders are up next.
The US economy is strong. In Tuesday's FOMC minutes, most participants saw growth running above 3% this year despite an expected H2 slowdown. We find it tough to disagree with the strength of the consumer underscored by retail giant Target who reported its best same-store sales in 13 years along with a comment from the CEO that it was the best consumer environment he'd ever seen.
Yet Tuesday's existing home sales report was weak at a pace of 5.34m compared to 5.40m expected. That was the fourth straight monthly decline and sales are down 1.5% year-over-year as well. It's not an isolated report.
On Thursday it was more of the same with the FHFA house price index at the lowest since the crisis on a four-month annualized basis. New home sales fell to the lowest since October at 627K compared to 645K expected.
Most housing indicators have struggled this year. The likely issue is a mixture of higher interest rates, land-use policy and lumber tariffs but if consumers are as strong as touted, the numbers should still be better; especially with US house prices far below developed-market counterparts.
Another potential trouble spot is Australia. There are increasing reports of stress near Sydney and Melbourne, especially in less-desirable suburbs. There are waves of interest-only mortgages coming due in the months ahead and that could spell trouble with prices slumping to put some borrowers underwater.
Scott Morrison, Australia's Treasurer became the nation's sixth prime minister in 11 years after a vote by the governing Liberal Party, in which he defeated Peter Dutton, a former home affairs minister, and foreign minister Julie Bishop.
| Act | Exp | Prev | GMT |
|---|---|---|---|
| Core Durable Goods Orders (m/m) | |||
| 0.5% | 0.2% | Aug 24 12:30 | |
كيفية تداول الأسترالي إثر الإنفكاك السياسي؟
فقد الدولار الأسترالي 7٪ مقابل الدولار الأمريكي منذ بداية العام، مما يجعله أسوأ عملة من ناحية الأداء في السنة من أصل 10 عملات رئيسية. أحد الأسباب معروف للجميع: الانخفاض بنسبة 8٪ في العملة الصينية الناتجة عن الحرب التجارية بين الولايات المتحدة والصين والانخفاض المتتالي بنسبة 16٪ في أسعار النحاس كان لهما تأثيراً سلبياً واضحاً على الدولار الأسترالي. لكن الانهيار الأخير في الحكومة الحالية يعني المزيد من التحديات للعملة (التحليل الكامل)
الفرنك السويسري او الين الياباني؟
ايهما أصبح الملاذ الأمن في ظروف الحرب التجارية , الفرنك السويسري أم الين الياباني ؟ الإجابة في هذا الفيديو
US Stocks Hit Record but Turmoil Swirls
The S&P 500 topped the January record briefly on Tuesday but trade and political headwinds stalled the rally with more signs of trouble to come. The pound was the top performer while the yen lagged. Australia is in focus later with construction work and a speech from Debelle to come. The Dow30 short was stopped out while the USDJPY short was closed at a gain. This week's Premium video below focuses on whether EURUSD will hit $1.12 or the road to $1.20 remains intact.
Risk assets climbed early in the day on a likely delay in US auto tariffs revealed by Commerce Sec Ross. The market interpreted that as a sign they could be shelved altogether as the US focuses on China instead of Europe and Mexico.
In addition, Brexit negotiators Raab and Barnier held a joint press conference where they spoke about non-stop talks in hopes of a deal in October. That helped to spur GBP and EUR buying with both climbing near a full cent against the US dollar.
Beneath the surface there are worries. The S&P 500 pared most of its gains late as did yen crosses. On China, Trump downplayed this week's lower level meetings with Beijing, saying he doesn't expect anything to come of it. Separate WSJ and Axios reports highlighted Trump's zest for a fight with China and the support of his cabinet in that battle.
"He's resolved to be the guy that changes the world trading system. ... He's willing to take some pain to do it,” an unnamed member of congress said.
US markets have yet to reflect that possible pain while Chinese markets remain 20% below recent highs. US futures did slide late on some major legal drama as former Trump campaign director Manafort was found guilty of 8 crimes while in a separate courtroom Trump lawyer Cohen pleaded guilty to tax fraud and campaign finance violations that he said were directed by Trump.
The double-dose of legal jeopardy raises a major risk that the President could launch into a new tirade in the day ahead or do something else to destabilize US politics. In the past, note that all his meltdowns have proven to be buying opportunities or risk assets. That said, if he takes his wrath out on China via a trade war, that's a different scenario.
Trump will be speaking at a rally in Virginia in Asia-Pacific trading. Also during that session, New Zealand reports on Q2 retail sales while Australian reports on Q2 construction work. Both a likely to be market movers and so is a speech from Debelle at 0310 GMT.
| Act | Exp | Prev | GMT |
|---|---|---|---|
| RBA Assist Gov Debelle Speaks | |||
| Aug 22 3:10 | |||
| Retail Sales (q/q) | |||
| 1.1% | 0.4% | 0.3% | Aug 21 22:45 |
USD Eases on Trump Comments
The US dollar was broadly lower on a slow Monday session following Trump comments on Friday indicating he expected Jerome Powell to be a "cheap-money" Fed chairman. The comments were made at a fund-raiser for wealthy Republican donors at the Hamptons. There were no specific USD comments but the greenabck dropped off on the interest rate side of it.CFTC positioning showed a net euro short for the first time in 15 months.The Premium short in USDJPY was closed at 110.00 for 120 pt gain as the remarkable divergence between USDJPY and USDX continued. The chart below indicates that the USD/CNH has fallen below the USD/CNY for the 3rd straight session, meaning a lower USD exchange rate against the offshore yuan than the USD rate vs onshore yuan (more managed). This may indicate that the PBOC is more successful at swaying speculating selling against the CNY in the hard-to-control offshore market. More on this in tomorrow's Premium video.
The first steps toward ending the China-US trade fight boosted risk assets on Friday but that hope could quickly unravel.The week ahead ends with the Jackson Hole symposium in what's traditionally a major event for markets but instead it may be a lower-level US-China meeting that will determine sentiment in the week ahead.
On Tuesday and Wednesday a delegation led by Chinese Vice Minister of Commerce Wang Shouwen will meet U.S. representatives led by Treasury Under Secretary for International Affairs David Malpass in Washington.
On Friday, the WSJ reported that this is part of a roadmap towards a November summit and trade deal between Trump and Xi. That sparked speculation that a true trade war can be avoided. Other reports suggested that the US is currently focused on the yuan but a rise in 12-month forward rates and a reversal in the yuan Friday could be China showing some flexibility.
Or it could be nothing. The market is clinging to some dim signs of hope here when all actions point to a fraying relationship. On August 1, Trump announced hearings on tariffs of 25% on more than $200 billion Chinese imports.
Hearings and consultations on those tariffs start Monday and continue until the public comment period ends September 5. That's the key day on the calendar and could mark a watershed moment in markets this year. If this week's summit ends badly, markets may jump to conclusions about what's coming.
CFTC Commitments of Traders
Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.EUR -2K vs +11K prior GBP -61K vs -59K prior JPY -58K vs -63K prior CHF -46K vs -46K prior CAD -26K vs -25K prior AUD -51K vs -54K prior NZD -27K vs -25K prior
The euro has dropped to 1.14 from 1.26 in the past 5 months in a painful move for euro longs. They packed it in last week and are now net short for the first time since May 2017. Other moves were relatively minor.
