Intraday Market Thoughts Archives
Displaying results for week of Nov 18, 2018الزوج الآخر في الإسترليني
هل تستطيع تيريزا ماي إنهاء التفاصيل الأخيرة لمسودة البريكست قبل عرضها على الاتحاد الأوربي؟ وكيف سيكون ردة فعل البرلمان إتجاه هذة المسودة؟تفاصيل أزواج الاسترليني في الفيديو التالي
A Hint of What’s to Come
Commodity currencies remain the rise after Wednesday's upswing in risk trades but a reading on US business investment was cause for concern.GBP is the top performer in Thursday trade, regaining the $1.29 after as the UK and UK said they have reached an agreement on a free trade area. More GBP volatility remains ahead as PM Theresa May will return to London later on for a speech to Parliament at 14:30 GMT (GMT is now equal to London Time). The US is on holiday Thursday and that could lead to some choppy moves. Happy Thanksgiving to our US readers.
تنويع نحو الشراء (فيديو المشتركين)
A small relief rally was the story ahead of the US holiday with equities and oil bouncing but the moves were very modest. In FX, the rebounds were more substantial with commodity currencies up more than 0.5% against the US dollar.
Fed doves accumulated a bit of ammunition with US durable goods orders down 4.4% compared to -2.6% expected. The prior was also revised lower. Capital goods orders non-defense ex-air, which is a proxy for business investment was flat and the October was also revised lower.
The promise of US corporate tax cuts and accelerated depreciation helped a pickup in investment, but core orders have been lower or flat for three months. They're up just 0.3% on average for the past 12 months compared to +0.7% in the previous 12 months. Looking ahead, the 30% drop in oil prices will undoubtedly curb business spending in the months ahead, and the trade war remains a headwind.
Consumers may have hinted at a small retrenchment with the final November U Mich consumer sentiment reading at 97.5 compared to 98.3 previously. We will be watching further November data closely.
In the week ahead, Powell, Williams and Clarida are all set to speak and that will be a golden opportunity to tee up a pause. The question then is: What will that do to the dollar?
It could be a quick fall with Treasury yields skidding below 3.0%. Most vulnerable may be something like USD/CAD where the yield differential could quickly erode but the BOC is also at risk of a dovish turn. USD/JPY and USD/CHF would benefit from the risk trade on a dovish Fed so the spot to turn may be AUD, which performed well Wednesday.
Act | Exp | Prev | GMT |
---|---|---|---|
Prime Minister May Speaks | |||
Nov 22 14:30 | |||
MPC Member Saunders Speaks | |||
Nov 22 20:55 |
Oil Upends Inflation Outlook
That thing about indices is found below. Eyes are shifting back to central bankers as the rout in oil and equity markets continues. The US dollar was the top performer Tuesday while the Australian dollar lagged. Wednesday's US durable goods report will be a welcome dose of hard data. A new Index Premium long was entered in the final hours of NY trade. The Premium video is found here below with OPEN ACCESS to everyone this time.
A further 7% fall in oil prices brings the decline to 31% since October and crude prices are now lower year-over-year. The U-turn in oil may prove to be more important than the rout in equities when it comes to central banking.
The drop will put negative pressure on headline inflation in the months ahead and that could give central bankers an excuse to shift to a less-hawkish stance. Even though most central bankers watch core inflation, the drop in headline feeds into inflation expectations, which are likely to slide. So far that paradigm hasn't entered into the central bank discourse aside from doves like Kashkari repeating long-held calls for a pause.
A broader shift may still be premature but it's worth pondering. The two central banks to watch are the BOC and Fed. In comments this week top officials (Wilkins and Williams) gave no indication of any shift. For the BOC, the blackout now looms for the December 5 meeting. The odds of a hike there have dwindled to just 10% and the BOC has already given itself considerable latitude to wait-and-see at any point.
Something about US Indices
Ashraf emailed me last night to remind me that the Dow Jones Industrials index and S&P500 have not fallen by more than 2% in three consecutive sessions since that fateful August day in 2015. Both indices have shown back-to-back declines of 2% or more in mid October, March and February, but not three days in a row. What about declines of 1% or more? The last time the Dow30 fell by more than 1% in three straight sessions was in late February. Since then, every time the index had back-to-back declines of 1% or more went on to rise 1.5% or 2.0%. Yesterday, the Dow30 fell 2.20% (-551 pts) and on Tuesday it fell 1.56% (-396 pts). If the pattern holds, then this could mean a rally of 1.5% or 2.0% today or Friday is highly plausible, i.e. DOW30 could close up more than 350 pts to near 24800s. Bear in mind US markets will be closed on Thursday for Thanksgiving and shall reopen on Friday.With the US holiday looming, the Fed schedule is quiet for the remainder of the week but Powell speaks next Wednesday in what will be a closely-watched event. The next Fed decision is Dec 19 and hike odds are at 71% from 83% a month ago.
In the interim, expect an escalating focus on economic data. This week's home builder sentiment report was the first sign of a sudden slowdown. On Wednesday, the October durable goods report is due out. It's another forward-looking indicator but it has a spotty record as an economic forecaster because it's volatile. Capital goods orders non-defense ex-air are forecast to rise 0.2%.
آخر التطورات عن الحرب التجارية
ما هي آخر تطورات الحرب التجارية بين الصين والولايات المتحدة؟ وكيف أصبح تأثيرها على المتداولون في هذه الفترة؟ اقرأ المزيد هنا
Gold's 6th Day
Gold is posting its 6th consecutive daily gain, the longest winning run since December as it broadens strength against bond yields and stock indices. Metals' ascending momentum is partly helped by USD weakness and indices' accelerating sell-off, leaving precious metals as the sole survivors at a time when the 4 leading crypto currencies are down between 70% and 85% year-to-date and oil is renewing its selloff. For gold bulls, 1234/6 is considered as the assumed go-to point, but as long as 1263/5 is not printed, the current move should be treated with optimism and caution. USDJPY breaking below the 55-DMA of 112.70 is worthy of note, but pair is not considered in danger until a daily close of 112 is seen. Meanwhile, the Premium short DAX trade hit its final 11050 target from 11420 entry. Although many of you have seen my analysis on the DAX mentioning the 10100 target, shorting at current level ought to be done with extreme care (pay attention to leverage and size). The Premium video is now posted more info on indices entries as well as existing USD trades.
Political Calculus and Calamity
Theresa May's government hangs by a thread and a leadership challenge could come as soon as Tuesday. The reports of plots and discord put the pound at risk in the new week. Early moves put AUD lower on renewed US-China tensions. The new GBP trade is on.
We often wonder whether the UK Conservatives are a political party or a group of individuals battling each other to bring down the Prime Minister. The party splintered once again this week after May unveiled an exit deal. The most-damaging blow came from Dominick Raab who quit after she unveiled the deal that he largely negotiated as Brexit minister. Raab then immediately pivoted to serenading the UK press with interviews and angling himself as a more-diplomatic Brexiteer than Boris Johnson.
He clearly believes a leadership challenge is coming. May likely believes that she can survive or avoid a challenge. All sides are counting votes with all outcomes dependent on roughly a dozen voters in the UK's 650-seat parliament.
The first question to answer is whether 48 Conservatives will write letters demanding a leadership challenge. If so, that would set off an automatic leadership challenge. So far, 26 letters have been made public. Raab has said he shall not write such a letter, and that may be a hint that he's unsure the threshold will be met. If it is, the UK press reports that Tuesday could be the day and that would immediately weigh on the pound. If the deadline passes, look for GBP shorts to cover.
The next question is if the 48 letters are produced, would Theresa May survive the vote of confidence? And if she loses it, would she resign or fight for her leadership in what may be a two-month contest that would whittle down the contenders to two names before the party membership is given a vote. At least a half-dozen Conservatives would have a chance to win, but do they have what it takes? It is one thing to criticize the lack of progress in Brexit negotiations, it is quite another thing to associate it with Theresa May's abilities as PM. And this fact is increasingly known.
What might motivate May to battle on is that if she survives a challenge she would have a full year before a fresh challenge could be mounted. Whether she wins or someone else takes her place, parliament will soon have a say in the deal and margins for a win are extremely narrow. A loss would raise a separate set of questions including an election, another referendum and a no-deal Brexit.
All those options add to the uncertainty discount in GBP but that final possibility is what would truly lead to another deep leg down in the pound.
Ultimately, that's still a remote possibility because it's such a needless self-inflicted wound that would likely doom the leader and the party in charge of it but the Conservatives are in a civil war and that could be the colateral damage.
In other weekend news, the APEC summit ended without a statement for the first time ever. Pence ramped up tension with China saying the US was prepared to more than double tariffs. Risk trades aren't like to respond positively to that with the Trump-Xi summit less than two weeks away.