Intraday Market Thoughts Archives
Displaying results for week of Dec 17, 2017Canadian Climb
Aside from the 20-30% decline in the price of cryptocurrencies, which may be occuring due to falling spreads and eroding arbitrage opportunities, prospects for the year ahead are improving for the loonie as domestic data turns higher. The Canadian dollar was the top performer Thursday while the Swiss franc lagged. In a last minute decision, the Premium Insights issued a short on GBPUSD 15 minutes before yesterday's release of Canada retail sales and CPI. The pair fell 100 pips as both figures overshot expectations. Recall that CAD (not USD) was the highest performing currency of 2016.Canada GDP and US PCE report are both due at 8:30 EST (13:30 GMT/London).
The CAD gains on Thursday came after a rise in the CPI and a sizzling retail sales report. Prices rose 2.1% y/y compared to 2.0% expected and most core measures climbed. Retail sales rose 1.5% compared to 0.3% expected.
Poloz on the weekend said that the note about 'caution' in the BOC statement doesn't mean they won't hike so the market will be forced to stay on guard in the weeks ahead. Oil prices are also nearing the best levels of the year.
Additionally, China could help lift all commodity prices next year and on Friday the China Daily reported that the PBOC is not expected to raise interest rates in 2018.
The problems for the Canadian dollar include the huge gap in Canadian oil, which is still trading at a $26 discount and NAFTA worries.
The USD/CAD chart tells the story as the pair ranges between 1.2650 and 1.2915. A break on either side will be increasingly important. The risk is that it comes in low liquidity in the next week or so. In that case, it might be best to wait until the dust settles.
It's a similar story in AUD/USD as it rose above the 200-day moving average Thursday and is now threatening the November high. That's a greenlight but a whopping $3.5B in expirations at 0.7700 on Friday could pin it down and then it's into the year-end doldrums, when signals can be deceiving.
To close out the week, watch for the November US PCE report and Canadian GDP for October. In the US report, eye the personal spending metrics and for any signs of wage growth or inflation.
| Act | Exp | Prev | GMT |
|---|---|---|---|
| CPI (m/m) | |||
| 0.3% | 0.2% | 0.1% | Dec 21 13:30 |
| GDP (m/m) | |||
| 0.2% | 0.2% | Dec 22 13:30 | |
فيديو الأسواق: فارق العوائد يساند الكندي
الدولار الكندي هو أقوى عملة اليوم بينما الجنيه البريطاني هو من بين الأضعف - لماذا فتحنا صفقة بيع في الجنيه الإسترليني مقابل الدولار الكندي اليوم قبل البيانات القوية من كندا؟ الجواب في الفيديو المفتوح
بشأن قرار شركة إكس تي بي XTB
Winter Comes for Bond Bears
December 21 is the first day of winter in the northern hemisphere but cold season could last much longer in the bond market if the latest moves are an indication. The euro was the top performer Wednesday while the yen lagged. Kuroda speaks later. A EURUSD trade was allowed to be stopped out. The video for Premium subscribers below highlights our existing trades and strategy.
All the talk this week has been about the US tax bill and stock markets but the bond market is quietly wilting. German 10-year bund yields are up 10 bps to 0.40% in the past two days and US 10-year Treasuries are trading just below 2.50% -- the highest since March.
Part of the rise is supply – the US tax plan will mean more bond issuance. If it results in more growth it will also mean higher interest rates and better global growth. Ultimately, inflation will result and if it climbs up to 2-3% then it's going to be a painful year ahead.
Wednesday's trading could be a preview of what's ahead. The yen quietly slid across the board with EUR/JPY gaining more than 100 pips.
Japanese bonds are pinned to the floor because of the BOJ's yield curve control program. Despite improved prospects for growth, there are no signs of any change in course.
Even at these levels, USD/JPY is lower than it should be. If 10-year yields can get to 3% then the pair will almost surely rise above 120 and potentially significantly higher.
Of course, that all depends on what happens next in bonds. Congress passed the tax cut bill on Wednesday and Trump will sign it in the week ahead. The main risk now is 'selling the fact' or flows related to year end and the new year.
But first, BOJ Governor Kuroda speaks in a press conference at 0630 GMT.
China Goes Easy on Debt
Those who bet against China since the 2015 market correction have paid a heavy price. Now that Beijing will ease up on restricting debt growth, what will happen? Full article.
Video on Post-Fed Gold & USDCAD
We pick up where I left off last week's gold video following the metal's post-FOMC $20 gain. We also tackle the USD/CAD pair and the potential for further 2-way price action following the Bank of Canada's clarification of the term "caution". Full Video.
Housing Heats Up
The early boom and bust of the US housing market left it on the sidelines of the global home-price ramp but that may soon change. All currencies are up against the US dollar with the exception of GBP and JPY. NZD and EUR are the top perfomers since the start of Tuesday Asia trade. In the Premium Insights, the short FTSE trade was stopped out as the index joined the rest of indices higher. There are 8 trades in progress.
عودة إلى تداول النطاقات (للمشتركين فقط)
The effect of year-end flows was evident on Monday with the euro climbing 40 pips into the London fix only to give it all back in the hours afterwards. Expect to see more whippy trading until New Year's Day. Ashraf has a piece on cross currency swaps and how these happen to temporarily support USD.
On the US data front, the NAHB home builders sentiment survey ramped up to 74 from 70, breaking above the 2005 high to reach its best level since 1999. That's curiously high given that housing construction is half of what it was in the halcyon daysm, but an indication that the bubble could begin to reflate.
The commentary about the economy, stocks and housing is all begin to change. That's probably a sign that we're getting into the latter stages of the expansion but it will also mean that consumers are more likely to spend and that should keep housing as a tailwind for at least a year or two.
Trump, meanwhile, touched on what could be another theme of 2018: Trade. He will assuredly finish out 2017 by signing a tax bill, before moving to other priorities. He singled out China as a strategic competitor in a national security speech Monday. We're also nearing make-or-break time on NAFTA.
For the day ahead, the IFO report, US housing starts and Eurozone labour costs are on the agenda but first the minutes of the December RBA meeting are due at 0030 GMT. The market isn't expecting much in terms of a signal so we will be looking for clearer signs of a bias or for signals about what metrics Lowe is measuring.
Cross Currency Swaps in EURUSD
Recent bouts of USD buying against the euro & other currencies have been mainly attributed to end-of-year borrowing of US dollars by non-US financial institutions and banks. We look at these flows and what they mean. Full analysis.
ما هو “الأساس” في المقايضات عبر العملات ؟
اكيد الجميع سمع عن "السوابس" في العملات، لكن ما هو “الأساس” في المقايضات أو التبادلات عبر العملات و كيف أدى ذالك إلى إرتفاع الدولار في آخر ٣ ايام ؟
