Intraday Market Thoughts Archives
Displaying results for week of Aug 05, 2018Markets Hit by 10% Lira Plunge
In the first sign of the Turkish Lira downfall is entering crisis territory, the supervisory body of the ECB has reportedly (according to the FT) begun looking a various European banks' exposure to Turkey (BBVA, UniCredit and BNP Paribas). The lira lost as much as 10% earlier in the day to break the 6.00 territory vs USD. The yen is gaining all currencies, followed by USD, while gold struggles to rise off the $1205 support. Markets await US CPI and Canada jobs at 13:30 London. The short DAX trade was closed for 230-pt gain, while the EURUSD was stopped out. Yesterday's index short is in the green, and a new trade will be issued ahead of the US session.
Cable is falling for the 7th consecutive day amid escalating fears (and possibilities) of a no-Brexit-dea, while GBPJPY breaks below 142, now eyeing 139.00. The euro is now threatening a breakdown towards 1.1360 after damaging a crucial symmetrical triangle.
The Fed's Evans helped confirm the central bank's intention to hike twice more this year. He said the debate about continuing gradual hikes will intensify next year. Between the lines: the debate won't take place this year with hikes basically baked in.
USD re-emerged yesterday despite flat PPI compared to a 0.2% rise expected. That sets up today's CPI release, which is forecast to rise 2.9% y/y. The one-off items that Yellen lamented last year are beginning to roll off now and that should slow inflation.
سقوط البورصات وإرتداد الين
سقوط اليورو و البورصات العالمية بعد ما أعرب المركزي الأوروبي عن قلقه حول تأثير الليرة التركية عن بعض البنوك الأوروبية بينما يمتد هبوط الليرة إلى ١٠% (الفيديو الكامل)
الصلات المالية بين كندا والسعودية
مع تحول الخلاف الدبلوماسي بين كندا والمملكة العربية السعودية إلى عقوبات مالية ، نلقي نظرة على المصالح الاقتصادية والتجارية بين البلدين (التحليل الكامل)
أشرف العايدي على قناة العربية
حقاءق بركزيت تستولي على الاسترليني (المقابلة الكاملة)
Saudi-Canada Split Sours
The spat between Saudi Arabia and Canada turned into an economic battle with consequences for CAD. The yen was the top performer Wednesday but lost ground in Thursday Asia trade, while kiwi & euro are on the backfoot. A new Premium trade will be posted ahead of the start of the US session.
Saudi Arabian officials ordered the divestiture of all Canadian financial assets “at any cost” according to an FT report. That helps to explain Tuesday's unusual drop in CAD and Canadian markets. The selling continued after the report and USD/CAD rose to 1.3118.
It's not entirely clear that everything will be sold and the complete holdings of Saudi sovereign wealth funds and the central bank aren't clear. Considering Canada's usual weightings, we would expect something in the $10 billion to $15 billion range, including $2bn in Canadian equities. In terms of CAD, it's the kind of flow that can easily be absorbed at the right pace but would (or perhaps did) sting if it were rushed.
Saudi Arabia plans to remove 17,000 students from Canada including hundreds of medical residents. The nations also have an arms deal worth $15 billion that was the genesis of recent bilateral issues. It hasn't yet been cancelled but it likely will be. It's grown into an international incident at this point and the US has declined to publicly intervene while Canada has sought the help of Saudi's gulf allies. There are plenty of reasons for both sides to back down but no sign of any softening.
What's the impact for the Canadian dollar? Ultimately, it's a small dollar amount that will be forgotten before long. One key is the US unwillingness to come to Canada's side, reflecting the continued frosty relationship between the neighbouring countries.
Don't forget Friday's Canada jobs report, expected to show employment falling to 18K from 32K and the unemployment rate seen at 5.9% from 6.0%. Friday will also release UK Q2 GDP and US CPI.
GBP Damaged, Stocks Pause
GBP selling turns to a rout on Bloomberg reports that PM Theresa May is preparing for plan next month for a no-deal Brexit, damaging all GBP pairs and lifting EURGBP above 0.90. The DOW30 short was stopped out, while the remaining index short re-enters the green.
It's also the time of year when flows are especially important and that was the case of the Canadian dollar, which sank a full cent on no news that Saudi Arabia was selling Canadian equities on Otawa's criticism of the Kingdom's arrest of a female activist. CAD hopes turn to Friday's Canada jobs report.
Later Tuesday, the US finalized $16 billion in fresh tariffs against China. The main fundamental worry on everyone's mind is a continued escalation. Reports say Trump made a pitch to tech executives about the virtues of tariffs. That's a hint that he's determined to raise the stakes.
On the topic of escalation, US financial and trade sanctions hit Iran Tuesday with oil sanction set for November. Europe continues to try to find a way to keep the deal intact but companies are spooked by the threat of US action if they trade with Iran. A possible next shoe to drop could be some kind of escalation by Iran via blocking shipping routes or restarting nuclear development. Local unrest continues to grow.
Looking east, Japan is suddenly full of intrigue. Reuters reported Monday that BOJ officials had floated the idea of two rate hikes this year. Data on Tuesday also showed the biggest jump in wages since 1997. That was mainly driven by bonuses and overtime quirks but the underlying numbers were still strong.
Focus turns to Wednesday's US 10-year note sale. It's the first sale under the latest, higher auction sizes and it comes with 10-year yields just below 3%. Whether or not it sells above that psychological level is likely to drive the dollar.
خمسة أسئلة حول اليوان الصيني
ماذا فعل البنك المركزي تجاه اليوان الصيني ؟ هل شهدنا ذلك من قبل؟ كيف تختلف الأمور هذه المرة؟ هل ستنجح الخطة؟ ماذا يعني ذلك بالنسبة للدولار الأمريكي؟ التحليل الكامل
USD Pauses as CNY Bounces
All currencies are up against the US dollar as USDX comes off the 95.40/60 ceiling, which it failed to break repeatedly over the past 2 months. Aussie is the best performer mainly because the Chinese yuan is the day's biggest gainer among Asian currencies. Readers ought to grasp these intermarket flows, which Ashraf has referred to in his videos and interviews: CNY movements are paramount in influencing USD pairs, with AUD and gold the highest correlated w/ CNY. The Premium video highlights, which trades are most likely to be taken.
GBPUSD recovers its 1.2920 lows seen after Liam Fox said on the weekend that a Brexit no deal was more likely than an agreement. The international trade minister warned that stubbornness on the EU side was making a deal impossible.10 Downing St tried to counter that with a statement from May saying she still believes a deal is the most-likely outcome but that did little to inspire a bounce.
Meanwhile, EURGBP extends recovery past 0.8940, eyeing a recapture of the 0.90 level, last seen in November.
In the bigger picture, the US-China trade spat remains the dominant story. Along with roiling emerging markets, it helped to underpin the US dollar Monday across the board. China isn't showing any sign of wanting to negotiate and appears to be digging in.
AUD rallies alongside the gains in Chinese currency equities.We highlighted an extra-interest in the Australian dollar last week because it's become a choppy, sideways and boring chart but those are often followed by powerful moves. The RBA announcement contained no major changes in the outlook forecast and AUDUSD traders continue to monitor the 55-DMA at 0.7460 resistance.
USD: Data vs Trade
The US dollar continued to rally on trade tensions, shrugging somewhat disappointing US economic data. The Fed wants to see wage inflation but it wasn't as strong as hoped in Friday's jobs report and USD/JPY dipped. US core PCE, ISM and NFP have all disappointed but it so far appears as a softening in momentum rather than a worrying drop. CFTC positioning data showed that the US dollar remains the heavy favorite. The GBPUSD long trade was stopped out as sterling was damaged by renewed fears of a "no deal" Brexit outcome.
Non-farm payrolls were a shade disappointing and USD/JPY fell to 111.20 from 111.60 in the aftermath. The headline was 157K compared to 193K but an upward revision balanced out the miss. Meanwhile, average hourly earnings rose 0.3% to match the consensus but the prior was revised 0.1 pp lower.
The refrain that 'inflation is coming' is the 'sky is falling' warning of the past decade and policymakers finally think it's nearby yet not present in the data. The Fed may just keep pushing it further down the road as it hikes rates, but around year-end it may have to wrestle with the question: Why are we hiking when there is no inflation?
In other moves, Canadian trade data showed a jump in exports despite steel tariffs. The tariffs themselves hit steel exports by 37% but the overall trade balance was better than expected and USD/CAD fell below 1.30. Energy was part of the story but exports may have also been accelerated on tariff fears. Loonie traders get to see CAD jobs data this Friday.
CFTC Commitments of Traders
Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.EUR +23K vs +29K prior GBP -47K vs -47K prior JPY -68K vs -74K prior CHF -44K vs -46K prior CAD -32K vs -44K prior AUD -51K vs -45K prior
Australian dollar shorts are now at their most extreme since late 2015. We can scarcely remember a time when there was such worsening AUD enthusiasm, but it's held its ground in seven-weeks of sideways trading so maybe that's a sign that the sellers are exhausted. A thing we talk about often is watching the places where few people are paying attention and that's the case in AUD right now. The decline in the Chinese currency and the Shanghai Composite index is a good place to start explaining Aussie's sell-off.
إختبار حدود الدولار
مقاومات الدولار في الأزواج الرئيسية (الفيديو الكامل)
