Intraday Market Thoughts Archives
Displaying results for week of Dec 10, 2017Draghi & Poloz Spin it again
ECB president Draghi and BoC governor Poloz showdd their usual rhetorcial creativity on Thursday, prompting the euro to lose some ground and the loonie to regain momentum following last week's rate announcement. Yen pushes higher after the Tankan manufacturing survey hit 11-year high. USD is down cross the board after on fresh roadblocks to US tax reform, this time from Senator Rubio. Up next is US industrial production and further chatter on the tax bills.
Draghi left the ECB's forward guidance unchanged along with interest rates at this month's rate decision. The staff boosted growth up to 2.3% next year from 1.8% while bumping 2019 to 1.9% from 1.7%. In spite of that, inflation forecasts were only nudged up to 1.4% next year from 1.2% and unchanged at 1.5% in 2019.
One of the major risks Draghi cited was the FX rate, keeping a lid on the currency. In the aftermath of the press conference, EURUSD remarkably slid to 1.1780 from 1.1850 in the face of rising sentiment and improving data.
On the flipside is BOC Governor Stephen Poloz continued to confound markets. 8 days after the CAD began a sharp descent following the central bank's keeping of the term "caution" in its policy statement, Poloz entered into a discussion on what caution means, indicating it does not mean they will not hike again. He also added that the 50-bp rate hikes of the last 6 months were not expected to have a large effect on the ecomomy.
USD/CAD fell by 1205 pips to 1.2850 only to rebound to 1.2800 around the US close. It is now trading at 1.2750, sending the USDCAD short of the Premium Insights back into the green. Markets are now pricing a 62% chance of a hike in March but we struggle to see how either side could have any confidence at this point. Also note that Canadian oil is now trading at a $28 discount to WTI in a story that is underappreciated.
ECB Preview & Fed Review
The main reasons to the US dollar's post-Fed decline and a look ahead of the ECB press conference. Full article.
لا تتداول الذهب قبل مشاهدة هذا الفيديو
الذهب, الملاذ الأمن الى أين يتجه و ما هي المواسم المفضلة لشراء الذهب و أهم المستويات الفنية المستهدفة ؟ الفيديو الكامل
Trading Gold Video
You've read my piece on Gold Seasonality. Here is the video on how to trade it.
نحو قرار الاحتياطي الفدرالي
من الممكن للدولار الأمريكي أن يرتفع هذا المساء لكن الاستمرارية لا تزال غير واضحة. رأينا في نفس الوقت من العام الماضي التحليل الكامل
Onto Yellen's 5th Hike
As Fed chair Yellen delivers her 5th and final rate hike, here are the key factors to watch in determining the reaction in FX and metals. Full analysis.
Dollar Solid Ahead of FOMC
The US dollar climbed ahead of the Wednesday's FOMC decision on signs of rising inflation. The Australian dollar was the top performer on Tuesday while the euro lagged. Japanese machine orders and the RBA's Kent are up before Yellen. A new Premium video has been issued and sent to subscribers on the rationale behind the 2 EURUSD trades and rest of 8 trades ahead of the Fed and ECB decisions, in light of the underlining technical developments shaping the EUR and USDX.
The US PPI report doesn't always foreshadow headline inflation but is often a clue. The November report showed pipeline pressures at the highest since February 2012, up 3.1% y/y compared to 2.9% expected. The US dollar got a lift from the report and continued higher for much of the day.
The USD also benefited from Congressional talk that passing the unified tax was imminent. That presents two-sided risks but early details show a 21% corporate tax rate, which is a touch higher than the 20% in the initial bill. What will matter more is how deductions and R&D are credited.
USD/JPY rose as high as 113.75, which was the best since Nov 14. The pair is slowly approaching the tough zone of resistance in the 114-115 range. It's a zone that's been tested four times in the past year and held.
The day ahead could be a big one on that front. If the FOMC hikes rates (an almost sure bet) and delivers some hawkish hints, along with a stimulative tax package, it could clear the way for a dollar rally into year end. However if the Fed decides to stay coy before Powell takes the reigns and the tax plan disappoints, the dollar could just as easily head in the other direction. Ashraf will post a full Fed preview in English and Arabic in Wednesday's early edition of this section.
Before then, some Asia-Pacific data could move markets. The RBA's Kent is due up at 0000 GMT. The market is increasingly expecting the RBA to stay on the sidelines for the first half of 2017 or longer. Yesterday's soft Q3 house price data underscored the challenges.
Another report to note is the October Japanese machine orders report. The consensus is for a 2.9% rise after the 8.1% drop in September.
| Act | Exp | Prev | GMT |
|---|---|---|---|
| Core Machinery Orders (m/m) | |||
| 3.1% | -8.1% | Dec 12 23:50 | |
| FOMC Press Conference | |||
| Dec 13 19:30 | |||
Gold December Seasonals
I will let the chart do the talking for this one. Details ahead & after the Fed decision in the complete article.
أهم النقاط في قرار يوم الاربعاء
هذان هما أهم النقاط في قرار الاحتياطي الاتحادي يوم الاربعاء. التحليل الكامل
Analog Versus Digital Gold
Before we start, Litecoin has just hit a new record at $220, up more than 4000% this year. Gold has a virtually unblemished track record as a store of value over 6000 years but that didn't matter in 2017 as Bitcoin dug into its market. Will it be the same in 2018? The New Zealand dollar was the top performer Monday while the pound lagged for the second day. Australian house price data is up next. There are 10 open trades ahead of this week's busy set of central bank meetings & key US data.
The week started off with all eyes on Bitcoin as CBOE had a successful launch. Volume was at 7000 contracts, which is only $119m notional but it certainly can't be called a failure. More importantly, Bitcoin prices climbed above $17000 and were relatively stable (at least by BTC standards). Ultimately, those are all good signs for the near term.
Bad signs, meanwhile, continue to mount in gold. We have no doubt that many gold investors or would-be investors have turned to crypto. At the margins, that means less excitement and buying in precious metals. Anything could change in crypto at a moment's notice but for now, the outflows from gold are considerable and speculative net longs are at 4-month lows.
Technically, the trend is increasingly weak. Last week, gold broke below the October low of $1260 and slid another $12 to $1240 on Monday. The July low of $1200 is a major support level that needs to hold if gold is going to rebound in the months ahead. If not, it could get ugly for the old-fashioned analog store of value.
Looking to the short-term, housing investments have been better than gold for the past five years of the QE era. That's expected to continue in 2018, even as regulators find creative ways to curb speculation. One spot to always watch is Australia where Q3 house prices are due at 0030 GMT. Through Q2, prices were up 10.2% y/y and 1.9% q/q. That's expected to cool to 8.8% y/y and +0.5% q/q. Look for a small reaction in AUD.
القلق من فقاعة بيتكوين مبالغة
مقابلتي مع العربية على بنك الاحتياطي الفيدرالي وبيتكوين المقابلة الكاملة
