gbp/usd journal

Global Forex and Fixed Income Roundup: Market Talk
12 min ago

Thu Oct 11 06:00:00 2018


The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

1000 GMT - China has tightened the pricing on its $3 billion sovereign-bond offering by 15-20 basis points across the deal's 3 tranches. The 5-year bonds will now price in the range of 0.3-0.35 percentage point above comparable Treasurys, with the premium for 10s at 0.45-0.50 point and 30s at 0.7-0.75 point. The securities were offered for sale earlier in the day at yields 0.5-0.9 percentage point above comparable Treasurys. The offering, which has so far received orders topping $17 billion, will price later today. ([email protected]; @manjudalalsg)

0952 GMT - Investor concerns about Italian debt may be overdone, says David Zahn, head of European fixed income at Franklin Templeton. While Italy's debt level of EUR2.3 trillion is the largest of any eurozone country, the average life of Italian debt has traditionally been very long. "Therefore, even with a rise in yields, interest costs should not increase dramatically," he says. Franklin Templeton says it's unlikely rising bond yields will affect the country's finances for some time. If yields were to continue to rise it could pose more of a problem for Italy in the longer term. However, some investors may feel they are compensated for the risks at current yield levels, he says. ([email protected]; @emeseBartha)

0948 GMT - As Italy's government prepares to unveil its spending plans, Italy is at an inflection point with potential implications for the rest of Europe, says David Zahn, head of European fixed income at Franklin Templeton. Italy's government has already released the headline budget deficit targets for the next three years, originally aiming for a deficit of 2.4% of GDP for 2019, 2020 and 2021, but showing willingness for lower deficits in 2020 and 2021 after poor reception by markets. Mr. Zahn says Italy's economic well-being is central for the future of the eurozone, given the fact that it's the area's third largest country but with the largest debt. "But the prospect of its EUR2.3 trillion debt level growing higher is a concern not just for investors but for the EU," Mr. Zahn says. ([email protected]; @emeseBartha)

0931 GMT - A U.S. dollar shortfall amid higher levels of dollar-denominated debt could trigger a rise in defaults and hinder global economic growth, says Jasper Lawler at London Capital Group. Overseas investors have already found it harder and costlier to get hold of U.S. dollars this year thanks to the U.S. Federal Reserve quantitative tightening and the large new issuance of Treasury bills. This coincides with a higher share of dollar-denominated debt than pre-2008 crisis levels as a proportion of total global debt. "The IMF's global growth warning this week has clearly hit a few nerves," he says.([email protected]; @lorena_rbal)

0915 GMT - One notable area of calm on Thursday amid the steep declines in equity markets: emerging-market currencies. The Turkish lira is up over 1.5% against the dollar, the South African rand rises 0.6% and the Mexican peso gains 0.4%. That comes after hefty losses this year for emerging-market currencies, which have suffered amid higher U.S. interest rates and global trade tensions. ([email protected])

0857 GMT - Turkey's current account position improved further in August, adding to evidence that a weaker lira is helping the economy to rebalance, says Capital Economics. However, this adjustment almost entirely reflects "a slump in imports, a sign that domestic demand has been hit hard," it says. Turkey recorded a current account surplus in August of $2.6 billion, compared with a deficit of $1.8 billion. "We expect the current account deficit to narrow further over the coming months," Capital Economics says. ([email protected])

0850 GMT - The bull market is resetting, not ending, says Mark Haefele, global chief investment officer at UBS Global Wealth Management. "Periods of rising volatility and market pullbacks are likely to be more common as the cycle matures," he says. With the economic outlook still robust, UBS continues to recommend an overweight position to risk assets, including in global equities and emerging market hard currency sovereign bonds. "We view the past week's market action as fairly "normal" for this stage of a bull market that's likely to extend for a while longer," Mr. Haefele says.([email protected])

0839 GMT - With equities in the U.S., Asia and Europe selling off, the euro rises against the dollar and is last up 0.2% at 1.1542, having reached an eight-day high of 1.1574 overnight. But ING says a U.S. equity selloff "isn't great news for the pro-cyclical euro" and says the euro could stall at 1.1580 or 1.1620. An equity selloff revives worries that a maturing economic cycle may have reached its peak. The eurozone, with its open economy, may be hurt by any downturn. Still,eurozone's current account surplus at near 4% of GDP "does provide some insulation." ([email protected])

0830 GMT - Capital Economics sees looming national elections in India helping brighten the country's GDP-growth outlook. Government moves to increase farm prices, some states waiving agricultural loans and increases in other development spending are intended to keep voters happy but will help boost the economy, the firm notes. Post-election belt-tightening later in 2019, though, will make the sledding tougher. CapEcon adds recent central-bank rate increases should also start to show an effect by then. ([email protected])

0821 GMT - U.S. inflation data due at 1230 GMT will be a key test for markets as investors assess what's next for U.S. monetary policy. The consensus forecast is for a 0.2% monthly rise in core prices. A larger increase could push the Federal Reserve to raise interest rates faster, which could add further pressure on stock markets. "Given the recent risk sell-off, you'd have to say that there is scope for a decent relief rally on a softer number," Jim Reid at Deutsche Bank says in a note to clients. He adds, however: "Medium-term ... signs of higher inflation would be much worse for risk than softer inflation would be positive." ([email protected])

0811 GMT - Though easing from fresh 2018 highs, the US/Singapore dollar pair is a "good tactical sell" going into tomorrow morning's central-bank policy statement, says Saxo. There was "an upbeat tone" in a Tuesday interview of MAS chief Ravi Menon despite the prevailing trade tensions, notes Saxo sales trader Mahesh Sethuraman. He is expecting further tightening, in part from the past day's rebound in global bond prices. The greenback "is a good risk-reward sell" at S$1.3820, Sethuraman adds, advocating a stop at S$1.3880 and targeting S$1.3620. However, the US CPI report in just over 4 hours is a minor risk to the call, he admits. The greenback is down 0.1% at S$1.3818. ([email protected]; @journosaurabh) -0-

0809 GMT The December Bund future contract, currently trading at 158.52, has broken above a declining trend line and stands above its 50-period moving average at 157.92 on a 30-minute chart. Moreover, the intraday RSI stands within its buying area, between 50 and 70, and confirms the bullish bias. As a consequence, as long as 157.92 behaves as a support, further advance is expected with horizontal resistance at 158.75 as a first target and strong horizontal resistance at 159.25 in extension. A third target is set at Oct. 2 top at 159.78. Alternatively, a downside breakout of 157.92 would trigger a bearish acceleration toward horizontal support at 157.74 and even toward Oct. 5 bottom at 157.33. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] ([email protected])

(END) Dow Jones Newswires

October 11, 2018 06:00 ET (10:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
 
U.S. Inflation Data Key to Global Markets' Next Moves -- Heard on the Street
14 min ago

Thu Oct 11 06:01:00 2018

By Nathaniel Taplin

Don't expect the Fed to save U.S. stocks--or emerging-market economies--even if the sound of crumbling markets gets much louder.

Following Wednesday's big U.S. selloff, the American grizzly moved decisively into Asia and Europe on Thursday. Shares in Shanghai closed down 5.2%, their worst single day since early 2016, while Japan's Topix dropped 3.5% and Korea's Kospi fell 4.4%. The Stoxx Europe 600 slid by 1.8% in early trading.

Voices from President Trump down are already calling for the Federal Reserve to moderate its rate-hiking course--as it has often done before when panic hit stocks. But with U.S. unemployment at its lowest since the 1960s, oil prices above $80 a barrel, and leading inflation indicators such as wages moving higher, it will take something worse than a stock-market hiccup and presidential grumbling to move the Fed.

Nor will pressure from overseas derail the U.S. central bank: Mr. Trump isn't the only policy maker following an "America first" line. In 2015, the Fed was willing to hold fire to let China fight off large-scale capital outflows and a debt-deflation trap. Three years on, Chinese markets are tumbling again and its currency is under pressure. But money has yet to start flooding out of China and official data so far show growth holding up. With the trade conflict heating up, there seems little spirit of generosity toward China in the U.S. right now.

If even China's concerns can't move the Fed, policy makers in lesser emerging markets look out of luck. The finance minister of Indonesia--where the central bank has been raising rates rapidly to defend its currency--this week openly pressed the Fed to take emerging markets' problems into account. But while China accounts for roughly 15% of global gross domestic product, Indonesia's share is just 1%.

Several emerging markets have already been hammered this year. The bad news is that they nearly always come off even worse during periods when U.S. stocks are declining sharply. That makes Thursday's U.S. inflation data key. A soft reading might induce investors to quickly forget this week's kerfuffle. But if it surprises on the upside, expect more carnage in U.S. markets--with few places to hide at home or abroad.

Write to Nathaniel Taplin at [email protected]


(END) Dow Jones Newswires

October 11, 2018 06:01 ET (10:01 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
 
I closed at 1.3212
trading central/dow jones pointed to 1.3220
ok we will wait, we will test
 
Last edited:
Global Forex and Fixed Income Roundup: Market Talk


Thu Oct 11 09:26:00 2018


The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0926 ET - Analysts say a number of metrics suggest US stocks may not be far off from a rebound. "Wednesday's selling had some characteristics of a climactic flush," writes Chris Verrone, head of technical strategy at Strategas. For one, the share of stocks trading at a 20-day low jumped above 50%. About half of the S&P 500 fell more than two standard deviations. And for every stock that advanced in the NYSE, 11 fell. It's still early, but Verrone says there's reason to bet that the selling pressure may ease up. ([email protected])

0916 ET - The market's bounce higher following Thursday's weaker-than-expected CPI print lends more credence to the idea that bad news has increasingly become good news to investors, says Ian Lyngen, rates strategist at BMO Capital Markets. Analysts have been puzzled why inflation has on the whole remained muted even with the unemployment rate at multi-decade lows and consumer spending humming along. Yet "the Treasury market seems content to ignore it for the time being," Lyngen writes in an email. The reason why: soft inflation readings give the Federal Reserve less reason to pick up its pace of interest rate increases. As long as "the lowflation story" remains in play, investors can feel a bit more reassured that Fed tightening isn't going to topple the stock rally. ([email protected])

0913 ET - U.S. tax cuts have prompted companies to repatriate $1 trillion dollars, which benefited the stock market as corporates used the money for share buy backs. As stocks outperformed, pension funds which were overweight equities then sold equities and deployed the money into long-dated U.S. bonds. The tax reform "resulted in an unprecedented risk transfer of short-term dollar liquidity to equities and ultimately long-dated bonds this year," says George Saravelos, global co-head of forex research at Deutsche Bank. "This buying has been price-insensitive and is thus very similar to central bank quantitative easing," he says. As a result, U.S. financial conditions have been kept "extremely easy" and "encouraged the Fed to sound hawkish." ([email protected])

0913 ET - The US dollar fell broadly after the Labor Department said the pace of inflation slowed in September, cooling speculation that the economy could overheat, forcing the Federal Reserve to speed up its plans to raise interest rates. WSJ Dollar Index, which tracks the US currency against a basket of 16 others, fell 0.4% following the report. The greenback's slide included declines against the euro, the Canadian dollar and the Australian dollar. The consumer-price index rose 0.1% in September after rising a seasonally adjusted 0.2% in August. That inflation has yet to heat up, even as unemployment has fallen to the lowest rate since 1969, undermines speculation that the Fed will need to revise its rate forecasts, analysts said. Policy makers penciled in one more rate increase this year and three in 2019 at their September meeting. ([email protected])

0910 ET - President Trump's renewed and more strident criticism of the Fed stands at odds with his past take on monetary policy. While the president now reacts to the central bank's rate rises and plans for more increases by saying the Fed "is making a mistake," and "has gone crazy," Trump once blasted easy money policies. In a 2011 tweet, Trump said "the Fed's reckless policies of low interest and flooding the market with dollars needs to be stopped or we will face record inflation." Trump appears to have undergone a complete swing from hawk to dove, while having offered a warning on inflation that didn't come to pass. ([email protected])

0908 ET - A "repetition of this year's exceptional combination of rising short-end rates and booming asset prices may be hard to repeat going forward," says George Saravelos, global co-head of forex research at Deutsche Bank. Hence he advises: "be cautious on the dollar and stay long yen." The U.S. dollar rose this year partly because of the rise in U.S. stocks, which was fuelled by corporate buy backs and money repatriation on the back of tax cuts. The increase in U.S. Treasury yields also resulted in a stronger dollar. But "U.S. profit repatriation was a one-off event." Next year things are likely to be different. USD/JPY is last flat at 112.33. ([email protected])

0900 ET - Investors scaled back their bets that the Federal Reserve will take an aggressive approach to raising interest rates in the coming year after the Labor Department reported that inflation cooled in September from the month before. Fed funds futures, which investors use to bet on the path of central bank interest-rate policy, showed that the odds that policy makers will raise rates three times by June 2019 declined after the inflation report to 33% from 41% Wednesday. Should the Fed raise rates at that pace, it would represent a continuation of its policy of boosting its target rate once each quarter. The odds to two rate increases by the end of March fell to 50% from 58% Wednesday. The odds of an increase in December dipped to 78% from 83% Wednesday. ([email protected])

0850 ET - US government bond prices rise, pushing yields lower after the Labor Department said inflation was slower than many had anticipated in September. The consumer-price index rose 0.1% in September after rising a seasonally adjusted 0.2% in August. The slowdown signaled that inflation has yet to heat up even as unemployment has fallen to the lowest rate since 1969 and growth has heated up. That may allow the Fed to stay on a gradual path of interest rate increases, analysts said. Policy makers penciled in one more rate increase at their meeting in September, and three increases for 2019. Investors piled into Treasury debt at yields near the highest in seven years. The yield on the benchmark 10-year Treasury note fell to a recent 3.157% from 3.221% Wednesday. The yield had been about 3.19% before the report. ([email protected])

0840 ET - Hurricane Florence caused an elevated level of jobless claims to be filed in North and South Carolina for the week ended Oct 6, a Labor Department analyst said. That suggests a prolonged, but modest, impact on the labor market from the hurricane that made landfall in the middle of last month. Workers are not required to seek benefits the week they lose their jobs. On a nonseasonally adjusted basis, claims filed in North Carolina nearly doubled last week from the week before, while claims in South Carolina fell. The storm's effect on national figures was limited. Overall jobless claims are trending near a 49-year low. ([email protected]; @ericmorath)

0835 ET - US consumer prices rose 2.3% in September from a year earlier, the smallest year-over-year gain since February, the Labor Department says. The annual inflation rate was 2.9% as recently as July. An easing of energy costs--down three of the past four months--is the primary driver. More stable core prices, which exclude food and energy costs, rose 2.2% from a year earlier in September, the same annual pace as the prior month. ([email protected]; @ericmorath)

0833 ET - Italy didn't have any problems finding buyers for its government bonds at its mid-month auction Thursday but it had to pay a high price to sell them. The recent budget-triggered selloffs in Italian bonds met with a major global equity sell-off, turning the time of the auction into an uncomfortable one. The 2.51% allotment yield on the new October 2021-dated BTP is a five-year high, as is the 3.28% yield on the November 2025-dated seven-year BTP. Italy also sold 2033- and 2037-dated bonds, with the overall sale of EUR6.5 billion in line with the Treasury's maximum offer volume. The auction has been supported by some EUR12 billion cashflows back to investors. ([email protected]; @emeseBartha)

0757 ET - The recent correction in equities "has been triggered by the increase in US real rates, rather than inflation concerns," says Fabrizio Quirighetti, co-head of multi-asset at SYZ Asset Management. US Federal Reserve Chairman Jerome Powell's comments point to continued rate increases by the Fed in 2019. As the Fed is draining liquidity from markets, the few sectors which were quite resilient so far, such as US small caps or US technology stocks, have suffered the most since the beginning of the month, he says, adding that SYZ AM find this is a "healthy" rebalancing correction but says if this liquidity squeeze continues, it may severely affect credit, with ripple effects on the real economy and more negative impacts on broad financial markets. ([email protected]; @emeseBartha)

(END) Dow Jones Newswires

October 11, 2018 09:26 ET (13:26 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
 
U.S. Dollar Weighed Down by Lower-Than-Expected Inflation -- Asia Daily Forex Outlook

TRADING CENTRAL /DOW JONES
5 h ago

Thu Oct 11 21:52:00 2018


By Trading Central


Following are expected trading ranges and outlooks for nine major currency pairs in Asia today:

Immediate Range Larger Range

USD/JPY 111.80-112.55 111.55-112.85
EUR/USD 1.1565-1.1600 1.1540-1.1625
AUD/USD 0.7095-0.7130 0.7075-0.7160
NZD/USD 0.6505-0.6540 0.6480-0.6560
GBP/USD 1.3185-1.3245 1.3130-1.3300
USD/CHF 0.9880-0.9920 0.9850-0.9935
USD/CAD 1.3010-1.3050 1.2970-1.3070
EUR/JPY 129.55-130.15 129.20-130.50
EUR/GBP 0.8750-0.8775 0.8735-0.8790


(Ranges are calculated using recent high and lows, information on the placement of option strikes, and technical analysis - Fibonacci levels, trendlines and moving averages.)


On Thursday, U.S. stocks accelerated to the downside despite retreating Treasury yields. A two-day sell-off has shaven 1376 points off the Dow Jones Industrial Average (+545 points or 2.1% to 25052). The S&P 500 (-57 points or 2.1% to 2728) closed below its 200-day moving average and its lowest level since July 3. The technology-heavy Nasdaq Composite index lost 93 points (-1.3%) to 7329, sliding into correction territory.

Shares in the Insurance (-3.69%), Pharmaceuticals, Biotechnology & Life Sciences (-3.1%) and Energy (-3.09%) sectors dragged the market lower. Energy stocks tumbled after a bigger-than-expected rise in U.S. crude inventories, with Chevron skidding 3.2% and Exxon Mobil sliding 2.5%.

On the economic data front, U.S. consumer-price index rose 0.1% on month in September, lower than +0.2% expected.

European stocks slid further, with the STOXX Europe 600 dropping 2.0%. Germany's DAX fell 1.5%, both France's CAC and the U.K.'s FTSE 100 were down 1.9%.

U.S. government bonds prices strengthened after official data showed that inflation slowed in September. The benchmark 10-year Treasury yield fell to 3.131% from 3.221% Wednesday, its biggest one-day decline in more than four months.

Oil prices fell by the most in two months after the U.S. Energy Information Administration reported that crude stockpiles rose by 6 million barrels last week, the third consecutive weekly advance and more than two times a 2.6-million-barrel build expected. Nymex crude oil futures settled 3.0% lower at $70.97 a barrel and Brent was down 3.4% to $80.26 a barrel.

Spot gold surged 2.5% to $1,224 an ounce, its biggest gain since June 2016, as a slump in global equity markets boosted demand for safe-haven assets.

The U.S. dollar declined for the third day as inflation was lower than expected. And the currency was also impacted by U.S. President Trump's fresh criticism against the Federal Reserve. He said: "The Fed is out of control. I think what they are doing is wrong." The ICE dollar index dropped 0.5% on day to 95.04.

The euro challenged the 1.1600 level, rising 0.6% to US$1.1590. Later today, the eurozone's August industrial production will be released (vs. +0.5 on month expected).

USD/JPY marked a day-low of 111.84 before bouncing back to close at 112.09, still down 0.2% on day.

The British pound gained 0.3% to US$1.3234.

Commodity-linked currencies rebounded strongly. AUD/USD surged 0.9% to 0.7124, NZD/USD jumped 1.2% to 0.6526, while USD/CAD fell 0.3% to 1.3032.


USD/JPY Intraday: Key resistance at 112.55. The pair, as shown on a 30-minute chart, is off a high of 112.53 after failing to post a sustainable rebound. Currently it remains capped by the descending 50-period moving average. The relative strength index is yet to recover the neutrality level of 50, suggesting a lack of strong upward momentum for the pair. Unless the key resistance at 112.55 is surpassed, a pull-back to 111.80 (around the low seen overnight) and 111.55 on the downside is likely. However, above 112.55, look for a bounce toward 112.85 on the upside.


EUR/USD Intraday: Aim at 1.1625. The pair is challenging the key level (first upside target) at 1.1600 while being supported by the ascending 20-period moving average. In fact, it has established a bullish channel drawn from October 9. Major technical indicator (20-period, 50-period moving averages, relative strength index) are so well directed that strong intraday bullishness is maintained. Above 1.1600, an advance toward 1.1625 is expected. Only a break below the key support at 1.1565 would bring about a bearish reversal.


AUD/USD Intraday: Target 0.7160. The pair is striking against the overhead resistance at 0.7130 while riding on a rising trend line drawn from the low of October 10. It keeps trading at levels above the ascending 20-period moving average, which stands far above the 50-period one. Therefore, intraday bullishness persists, and a break above 0.7130 would call for a further advance toward 0.7160 on the upside. Key support is located at 0.7095.


NZD/USD Intraday: Further advance. The pair has accelerated to the upside crossing above a bullish channel, showing that strong bullishness is in force. Currently, it is supported by a rising 20-period moving average, which stays above the 50-period one, indicating a bullish bias. Above the key support at 0.6505, the pair should target 0.6540 and 0.6560 on the upside. Alternatively, a break below 0.6505 would bring a pull-back toward 0.6480 on the downside.


GBP/USD Intraday: Upside prevails. The pair is challenging the upper boundary of a recent trading range while maintaining a bullish bias. Currently, it is trading at levels above both the 20-period and 50-period moving averages, while the relative strength stands firmly above the neutrality level of 50. As long as the key resistance at 1.3185 holds, the pair should proceed toward 1.3245 and 1.3300 on the upside. Alternatively, below 1.3185, expect a decline toward 1.3130 on the downside.


USD/CHF Intraday: Choppy. The pair has broken above a bearish trend line drawn from October 9. Currently, the 20-period moving average has crossed above the 50-period one, indicating a bullish bias. Unless the key support at 0.9880 is violated, expect a revisit to 0.9920 and 0.9935 on the upside. Alternatively, a break below 0.9880 would turn the outlook to negative and trigger a return toward 0.9850 on the downside.


USD/CAD Intraday: Limited upside. The pair remains on the upside, at levels above 1.3010. Currently, it is consolidating recent gains made through a high of 1.3070 seen on October 10-11. It is trading around the 20-period moving average. In case the pair emerges to the upside upon completing the consolidation phase, it is expected to target 1.3050 on the upside, and even 1.3070 in extension. Only a break below the key support at 1.3010 would bring about a bearish reversal and open a path toward 1.2970 on the downside.


EUR/JPY Intraday: Upside prevails. The pair keeps trading on the upside after locating a key support at 129.55. Currently, it is around the 20-period moving average while being supported by the ascending 50-period moving average. The relative strength index stays above the neutrality level of 50, indicating a lack of downward momentum for the pair. With a bullish intraday outlook, the pair is expected to proceed toward the first upside target at 130.15 (around the high seen yesterday) before moving higher to 130.50. Alternatively, a break below 129.55 would open a path toward 129.20 on the downside.


EUR/GBP Intraday: Bullish bias above 0.8750. The pair continues to ride on a rising trend line drawn from October 10. Currently, it remains at levels above the key support at 0.8750 while trading around the 20-period moving average, which has stayed at the levels above the 50-period one. And the relative strength index is above the neutrality level of 50. Above 0.8750, the intraday outlook is still bullish, and a rise toward 0.8775 & 0.8790 on the upside is expected. Alternatively, breaking below 0.8750 would call for a bearish reversal and a further decline toward 0.8735.


Any opinion offered herein reflects Trading Central's current judgment and may change without notice. This content is provided in general terms and does not take account of or address any individual user's position. Nothing contained in this publication constitutes personalized investment advice. To the extent that this article includes suggestions as to various possible investment strategies which users might consider, it does so in only general terms without reference to the personal factors which should determine any user's investment decisions; any investment decisions and associated risks are the sole responsibility of the user. The content doesn't reflect the opinion or judgment of Dow Jones, which does not warrant the accuracy, completeness or timeliness of the information in this article, and any errors shall not be made the basis for any claim against Dow Jones. This article does not constitute or form part of any invitation or inducement to buy or sell any security. The author has pledged not to invest in the instruments or markets cited in this article.


(END) Dow Jones Newswires

October 11, 2018 21:52 ET (01:52 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
 
Global Forex and Fixed Income Roundup: Market Talk

TRADING CENTRAL/DOWJONES 4 HOUR AGO


Thu Oct 11 22:32:00 2018


The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0232 GMT - The health of Hong Kong's residential-property market, called into a bit of question with some recent price cuts, could become clearer as Kowloon Development launches the initial 162-unit batch at its One East Coast project. Located in the eastern part of the city's peninsula, the average selling price of HK$19,900/square foot is the most-expensive among nearby neighborhoods. Meanwhile, Centaline is offering a HK$10,000 high-speed-rail travel package as a buyer incentive. Kowloon Development shares has hit levels last seen in March 2017 this morning and are off 0.9%, matching the drop in some larger peers. ([email protected])

0158 GMT - The volatility in emerging markets hasn't spared India. But the country's economy is domestically driven, rather than fueled by trade, and has a low level of foreign-debt ownership--both of which differentiate India from its peers. That according to Vijay Chandok, executive director of India's ICICI Bank, who was speaking at the Institute of International Finance's annual membership meeting in Bali, Indonesia. While he conceded that high oil prices and fiscal concerns are relevant for sure, high-frequency data have been positive and India's medium-term prospects remain strong. ([email protected]; @saumvaish)

0138 GMT - There is heavy positioning in offshore dollar-yuan in Asia today after a "cascade" of stop-losses triggered a move lower overnight, says Stephen Innes, Oanda's head of trading for Asia Pacific. Meanwhile, the weaker dollar "should offer a glint of relief for Asian capital markets" as it takes pressure off local currencies, he says. The pair hit a low of 6.870 yuan in late-afternoon trade in the U.S. on news that an internal report to Treasury Secretary Steven Mnuchin suggested Beijing shouldn't be labeled a currency manipulator, says Innes. But there is no guarantee Washington will follow suit, Goldman Sachs says. The USD/CNH has recovered some ground, rising 0.3% to 6.901 yuan. That should help some traders avoid stop-losses on the pair. ([email protected])

0138 GMT - China's deputy housing minister seeks to downplay worries about a government program which gives cash subsidies to rural families to relocate into urban housing units. Anxiety has been rising because state financing has helped inflate home prices in many 3rd-tier cities, so there's been worries that withdrawal of support would crash local markets. The subsidies "have had little effect on home prices," contended Ni Hong yesterday at a press briefing. But a government handout had a different message: Cities facing soaring prices and low supply should stop, as quickly as possible, giving out cash subsidies for the program. ([email protected]; @Dominiquefong)

0120 GMT - The Chinese yuan continues to get set slightly lower by the PBOC, though it remains stronger in the daily fixes than where market trading has been. The midpoint for the dollar in today's trading is CNY6.9120, versus CNY6.9098 yesterday. The greenback finished onshore trading Thursday at CNY6.9268. ([email protected]; @kevinkingsbury)

0109 GMT - China's $3 billion sovereign bond sale drew $13.2 billion of orders, according to a bank on the deal. The figure had topped $17 billion late Thursday before some investors withdrew after pricing on the deal tightened by 0.2 percentage point. The $1.5 billion 5-year tranche attracted $6.3 billion of orders, mostly from banks and Asia-based investors. Orders for the $1 billion 10-year portion were $4.9 billion while the 30s attracted $2 billion of orders. Investors in Asia bought most of the 10s and 30s. The offering pays yields of 3.33-4.055%. ([email protected]; @manjudalalsg)

0106 GMT - Malaysia's industrial-output growth may improve ahead despite the metric easing to 2.2% in August from July's 2.6% increase. With PMI in expansion territory the past 2 months, TA Securities says manufacturing production may pick up in the months ahead. August and September also saw the 1st back-to-back increases in new business in the goods-producing sector in nearly 4 years. Nevertheless, TA still maintains a cautious stance as global manufacturing PMI has been weak, suggesting that global growth could slow down ahead. ([email protected]; @Yantoultra)

0054 GMT - Last quarter's 7% rise in oil prices and increased production means strong results from Aussie energy companies, though Macquarie says currency moves will dampen the expected earnings growth somewhat. The investment bank retains its preference for Oil Search, which is trading at an implied US$64/barrel--well below current prices--while noting that Woodside should notch its strongest quarterly output since 2016 as volumes from the Wheatstone venture ramp up. Macquarie adds that while Beach Energy's shares are likely to track spot oil and it's a candidate for inclusion in the big-cap ASX 100 in December, Macquarie remains cautious on the stock. ([email protected]; @RobbMStewart)

0046 GMT - Despite slight moderation in Singapore's economic growth predicted for next year by its central bank, Continuum Economics sees "a slight hawkish tone" in today's policy statement. The "MAS expects positive output gap while seeing higher inflationary pressures next year. This hints at possibility for further tightening in 2019," notes the firm, which is "more bearish" than authorities on growth prospects. Continuum also expects a weaker Singapore dollar to add to imported inflation while US/China trade tensions boost prices of goods and services. Then there are prospects of higher energy, food and wage inflation. ([email protected]; @journosaurabh) -0-

0045 GMT - Longer-end Treasury prices have pulled back from session lows set at the 3 p.m. "close" in US trading, reversing some of the fresh declines seen Thursday amid the global equities slump. The 10-year yield breached 3.16% in early Asian trading, versus 3.13% in the US, while the 30-year has also risen 3 basis points to 3.33%. Both on Thursday saw their biggest yield declines since May 29. But as the long-end has pulled back this morning in Asia, 2-year yields remain at 2.86%, causing fresh narrowing of the curve's spread. ([email protected]; @kevinkingsbury)

0025 GMT - Though Singapore's central bank tightened as expected, its policy statement also gives dovish hints--an indication the MAS will tread a steady path on currency. The agency expects core inflation to "edge up" to around 2% in coming months, though remain within the forecast range. Core inflation, which strips out private-road transport and accommodation costs, accelerated to average 1.9% in July-August, versus 1.5% in 1H. The MAS expects its "measured adjustment" will ensure medium-term price stability. That as the preliminary reading on 3Q GDP, also out this morning, slowed as expected. ([email protected])

0017 GMT - Singapore central bank's move to again tighten currency policy hasn't moved the dollar versus the greenback in initial reactions as the MAS' move was widely expected. Ahead of the announcement, Scotiabank advised investors to sell the pair, predicting the US dollar will ultimately pull back to S$1.36. It's currently fractionally lower in Asian trading at S$1.3760. ([email protected]; @journosaurabh)

(END) Dow Jones Newswires

October 11, 2018 22:32 ET (02:32 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
 
Global Forex and Fixed Income Roundup: Market Talk

TRADING CENTRAL / DOW JONES 3 MIN AGO


Fri Oct 12 03:32:00 2018


The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0732 GMT - Chinese stocks could rebound by year-end if positives from stimulus efforts start to show up in economic data, says JPMorgan. But it adds that US-China frictions continue to make it difficult to become structurally optimistic. The investment bank thinks US tariffs on all Chinese exports is now the base case investment-wise. As such, the more-important question isn't "how much damage" will be done through tariffs but "what sort of policy response" China comes up with. ([email protected])

0729 GMT - The December Gilt future contract, currently trading at 120.05, has broken above a declining trend line and remains on the upside as it stands above its 50-period moving average on a 30-min chart, at 119.76. From a technical point of view, the intraday RSI stands within its buying area between 50 and 70 and is not overbought. As a consequence, above horizontal support at 119.65, further advance is expected toward horizontal resistance at 120.47 and toward 120.66 in extension. A third target is set at 120.96. Alternatively, a downside breakout of 119.65 would call for a weakness toward Oct. bottom at 119.36 and even toward horizontal support at 119.20. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] ([email protected])

0727 GMT - Currently trading at JPY 148.88, the British pound is on the upside, standing above its 50-period moving average at JPY 148.35 on a 30-minute chart, which is turning up. Moreover, the intraday RSI stands within its buying area between 50 and 70 and confirms the bullish bias. As a consequence, a first target to the upside is set at horizontal resistance at JPY 149.00. A break below this threshold would trigger a bullish acceleration toward Oct. 10 top at JPY 149.30 and Oct. 8 high at JPY 149.50 in extension. Only a break below horizontal support at JPY 148.25 would turn the outlook to bearish with a first alternative target set at horizontal support at 148.00 and a second one set at strong horizontal support at 147.75 in extension. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] ([email protected])

0721 GMT - After jumping to an 11-day high of 1.1611 overnight, the dollar has stabilized and EUR/USD trades slightly higher, last by 0.1% at 1.1599. "Seesawing has apparently become the name of the game on currency majors at the moment, suggesting that volatility rather than trends will probably also prevail today, given another light agenda," UniCredit says. "EUR/USD may take a breather and consolidate gains comfortably above the 1.15 threshold," the bank adds. However, Italian fiscal risks and the direction of U.S. yields will continue to be driving EUR/USD, says UniCredit. ([email protected])

0708 GMT - Natixis has switched back to neutral on U.S. Treasuries as the recent shift in interest rates has been "very pronounced" and the current pricing is relatively aggressive, its strategists say. Natixis is also tactically neutral on eurozone government bonds. Meanwhile, the investment bank reckons it's too early to be switching back to long on emerging-market assets and moving out of U.S. equities. "After the selloff at the end of the summer, emerging assets staged a rebound, once idiosyncratic risks subsided," Natixis says. It says uncertainties, nevertheless, remain "too menacing" in the short term to turn tactically positive on EM assets. ([email protected]; @emeseBartha)

0702 GMT - The return of volatility is proving "uncomfortable" for many market participants, says Oliver Blackbourn, portfolio manager within the UK-based multi-asset team of Janus Henderson Investors. "There are a greater number of risks around than in recent years but we have yet to see signs of the end of the economic cycle, the biggest risk to equity markets," he says. The asset manager continues to watch US inflation figures and the US Federal Reserve for signs that the pace of interest-rate rises may ease, and says the accompanying fall in bond yields and the US dollar are likely to help the stock market reach new highs and ease the pressure on other asset classes. ([email protected]; @emeseBartha)

0701 GMT - Emerging markets face 2 big risks. One is higher-than-expected US inflation, and important evidence on that will emerge from the average-hourly-earnings data in the next jobs report in 3 weeks, says IIF chief economist Robin Brooks at the group's annual membership meeting in Bali. The other is another bout of significant yuan depreciation, similar to what happened over the summer. JPMorgan, for example, expects the yuan to depreciate 8%, research head Joyce Chang said in Bali. But Brooks says a devaluation of that scale would send investors scrambling for safe assets--a dynamic which would hit both emerging markets and developed peers, including the S&P 500. ([email protected]; @saumvaish)

0647 GMT - As stock markets are set to start Friday in recovery after selloffs in the previous days, investor appetite for safe-haven assets such as German Bunds may decline, at least temporarily. "An improved sentiment on global markets will probably put some pressure on the German Bunds as well," say analysts at KBC Bank. There is no government-bond supply in the eurozone on Friday, but France and Spain will announce the details of their upcoming bond auctions next Thursday. The 10-year Bund yield is trading 2.6 basis points higher at 0.54%, according to Tradeweb. Government-bond yields move inversely to prices. ([email protected]; @emeseBartha)

0637 GMT - Eurozone government bond markets show signs of relief as equity markets are set to rebound after the previous day's losses. The 10-year Bund yield is trading 2.3 basis points higher at 0.54%, according to Tradeweb, pulling the yields of other core and semi-core issuers higher. Eurozone periphery government bond yields trade lower, indicating a lower level of concern, at least for the day. Italy's 10-year BTP yield is trading 4.5 basis points lower at 3.53%. Bond yields move inversely to prices. Commerzbank's rates strategists say that as Bunds struggle at the 0.50% level, they recommend selling into strength ahead of the weekend. ([email protected]; @emeseBartha)

0619 GMT - Price increases in energy and food propelled Germany's inflation rate above 2% in September. The annual inflation rate--measured by harmonized European Union standards--rose to 2.2% from 1.9% in August, the statistics body says, confirming a preliminary estimate. Excluding volatile energy and food prices, the rate stood at 1.5%. Prices for light-heating oil jumped 35.6% from September 2017, while vegetable prices rose 12.3%. ([email protected]; @nina_Adam_)

0615 GMT - Lagging most of the day, Japan stocks powered to session highs in the last hour of trading to finish up and trim a bit of the week's slide. The Nikkei finished up 0.5% to 22694.66 while just 16 of the 33 Topix subindexes rose. It rose 0.03%. Noted gainers include machinery and equipment sectors while insurers fell the most; Sompo dropped 3.6%. Meanwhile, Tokyo Electron rose 4.3% and pneumatic-control equipment maker SMC gained 5%. For the week, the Nikkei slid 4.6%, the most since late March. In other asset classes, the yen eased some today, with the dollar at Y112.38 versus Y112.17 late Thursday in New York. Ten-year JGB yields have risen a half-basis point to 0.145%. ([email protected])

0604 GMT - Rising prices for food and steady levels on services is predicted by ANZ to have resulted in China's CPI rising 2.8% from a year earlier in September, versus August's 2.3%. Boosting food-related prices were impacts related to Typhoon Mangkhut, which hit the country's south. Meanwhile, the investment bank says overall price level appears to have moved toward the upside of comfort areas, "limiting the central bank's appetite to stimulate growth via broad-based monetary easing." The inflation data are due Tuesday. ([email protected]; @chester_yung)


(END) Dow Jones Newswires

October 12, 2018 03:32 ET (07:32 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
 
Global Forex and Fixed Income Roundup: Market Talk


Fri Oct 12 07:09:00 2018


The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

1109 GMT - The Turkish lira has strengthened over the past few days on reports that U.S. Pastor Andrew Brunson, who has been at the center of the row between Turkey and the U.S., will be released on Friday, says Capital Economics. "If the reports turn out to be true, the rally will gather pace as the risk of further US sanctions fades," it says. USD/TRY last trades 0.4% lower at 5.9015, having earlier reached an eight week low around 5.8495, according to FactSet. ([email protected])

1050 GMT - Investors should hedge against Italy-related risk but stand ready to go long again if the newsflow improves, Societe Generale says. Turning to the 10-year Italian BTP-German Bund spread--that's been hovering at 280 basis points recently before rewidening--SocGen says this isn't a stable level. It expects that either the Italian government's problems will accumulate--making bond auctions difficult--or that investors will eventually yield to the large cost of shorting BTPs, leading to renewed buying and sharp spread narrowing. The spread is at around 303 bps, according to Tradeweb. ([email protected]; @emeseBartha)

1032 GMT - Societe Generale continues to forecast 10-year German Bund yields at around 1.20% in 2019, with the European Central Bank's gradual monetary-policy normalization being the main driver of the upward trend in yields. The ECB's rate normalization, which should begin after the summer of 2019, is insufficiently priced, say rate strategists Adam Kurpiel and Ciaran O'Hagan. They say the termination of the European Central Bank's net asset purchases in December will hit Bunds more than other eurozone government bonds. The 10-year Bund yield is currently trading at 0.52%, according to Tradeweb. ([email protected]; @emeseBartha)

0954 GMT - Morgan Stanley is currently neutral on global equities and government bonds, underweight credit and overweight cash. It sees a "plausible" year-end rally, although it's not positioning for this yet. "There is certainly a path to a year-end recovery, but we worry that there is more to get through before we're there," Morgan Stanley says. In terms of positioning, it remains long on value versus growth, believing that it benefits from valuation, positioning and the third-quarter EPS story. ([email protected]; @emeseBartha)

0952 GMT - This year hasn't been too good for fixed income investors. "Fixed income investing has been tragic this year," says Chris Iggo, chief investment officer for fixed income at AXA InvestmentManagers. There have been debates about whether inflation will pick up and its impact on the U.S. Federal Reserve's tightening and on the European Central Bank's exit strategy. But the reality is that investors have already suffered from inflation being higher than the nominal returns on their bond portfolios, Mr. Iggo says. He calculates that in the 12 months to September, the real, inflation-adjusted return on a US Treasury bond index was -4.5%, and it was -2.0% for UK gilts and European government bonds, and even inflation-linked bonds had negative returns. ([email protected]; @emeseBartha)

0932 GMT - European investment grade corporate credit is unlikely to benefit from "backflows"--redemptions and coupon payments from government bonds--and may be caught in a more vulnerable position should the bond selloff extend or Italy produce new negative headlines, says Commerzbank's Cem Keltek. "Flows are unlikely to revert to credit in the current environment," he notes. European investment-grade credit spreads widened on Thursday on the back of negative sentiment prompted by a less pronounced equity selloff in Europe, it says. ([email protected]; @lorena_rbal)

0852 GMT - Sterling edges lower on Friday, as optimism about progress being made towards a Brexit deal dims. Reuters cites a report that Prime Minister Theresa May will make a public statement on Friday saying the U.K. "will not agree to be trapped permanently in a customs union in any circumstances," but said a spokesman for the Prime Minister's office declined to comment. And Neil Wilson, analyst for www.markets.com notes that even if a deal is reached, challenges remain. "The question is now ... more about whether Theresa May will get any agreement that works with the EU through parliament," he says, adding that sterling will face resistance at 1.33 against the dollar. GBP/USD down 0.2% at 1.3211, EUR/GBP up 0.1% at 0.8765. ([email protected])

0820 GMT - With Singapore's central bank tightening again as many expected, what might drive the dollar near-term beyond the greenback's moves? FXTM analyst Lukman Otunuga points to Wednesday's trade data, seen as a gauge of export-dependent economy's health. Some have been anticipating a slowdown on that front and softening Singapore manufacturing in general near-term. Also today, the government estimated that 3Q GDP rose 2.6%, versus 2Q's 4.1% growth. The Singapore dollar has been holding on to tiny gains versus the greenback today.([email protected]; @journosaurabh) -0-

0810 GMT - Emerging-market currencies are having another good day after weathering the global equity selloff on Thursday surprisingly well. The South African rand is up 1.1% against the dollar, the Russian ruble rises 0.5% and the Mexican peso gained 0.4%. The Turkish lira falls on Friday but is still up 3% on the week. The moves come on the back of a difficult year for emerging-market currencies, which have declined sharply amid concerns over trade tensions and higher U.S. interest rates. ([email protected])

0756 GMT - One of the reasons why economists keep forecasting weaker exports from China month after month is softer new orders in China's PMI data. But export data keep telling a different story. Macquarie says one explanation is the nature of the PMI surveys themselves, which "may reflect more...the fears and uncertainties felt by exporters than the actual activities." The investment bank adds that it takes time for orders to impact shipments. It notes that in both 2011-2 and 2014-5, plunging new orders preceded a change in export trends. ([email protected])

0754 GMT - It was a sharp jump in Treasury yields - which rise as prices fall - that triggered the recent turmoil in stock markets. Bonds stabilized on Thursday as investors piled into the safety of Treasurys, but analysts at Societe Generale say the selloff is far from over. In the near-term, they expect the 10-year Treasury yield to stay between 3% and 3.25%. But they "do not see a flight-to-quality move meaningful enough to derail our view of higher global rates." A greater supply of bond issuance and the potential easing of some of the recent risk factors that have weighed on investor sentiment - such as Italy and Brexit - means in their view "the bond selloff is not over." ([email protected])

0749 GMT - The jump in China's exports in September suggests strong front-loading ahead of the implementation of additional U.S. tariffs on $200 billion worth of Chinese goods, ANZ says, citing last month's 14.5% on-year surge in exports, accelerating from August's 9.8%. It notes the better-than-expected export growth is unlikely to prevent China's 3Q current account balance from falling into negative territory and the bank will watch for downside risks for China's exports in 4Q. "Despite the dark clouds gathering over the export outlook, we are of the view that China will not prefer to use CNY depreciation as a retaliatory tool in the trade war," it adds.([email protected];@chester_yung)

(END) Dow Jones Newswires

October 12, 2018 07:09 ET (11:09 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
 
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