Trading with point and figure

carry trade

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- Berlin atrocity casts long shadow; thin day for data and events to
focus on digesting BoJ press conference, awaiting CBI Retailing
survey and expected Turkey rate hike

- BoJ: few surprises, but keen to emphasize Yen weakness not a concern,
no near term changes to 10-yr yield target or QQE purchases

- Turkey rates: expected rate hike unlikely to prop up TRY, interest
rates not a tool for combatting political risk

..........................................................................

********************
** EVENTS PREVIEW **
********************

Markets' ability to be largely impervious to senseless acts of brutal and murderous barbarity as occurred in Berlin is once again all too evident, as it has been for some time. The Bank of Japan completed this month's round of G7 central bank meetings with a very unsurprising no change rates and policy decision, and an understandable upgrade to its exports outlook (in the context of the firm exports volumes data reported yesterday), Kuroda's comments are worth noting. He was particularly keen to emphasize that the current Yen weakness was more a function of US dollar strength, and that the Yen was no lower than it was at the start of the year. as well as underlining that CPI remains very far away from the BoJ's 2.0% target, and therefore talk of adjusting the 10-yr yield target or slowing ETF purchases was wholly inappropriate. The remainder of the day's schedule is suitably sparse for the season, but does include and expected further 25 bps hike to Turkey's Overnight Lending rate, as the TCMB attempts to lean against protracted TRY weakness (see chart), despite the Q3 GDP collapse to -1.8% y/y (vs. Q2 +4.5%). But without some stabilization in the political situation, which borders on the highly improbable, interest rates are a blunt weapon with no force, the more so given the breadth of USD strength, and indeed the toxic combination for the Turkish economy of higher oil prices. Statistically there is precious little that will move markets, though there will be some academic interest in German PPI, the often erratic CBI Distributive Trades survey and Brazilian Current Account and FDI.


from Marc Ostwald
 
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