Pound suffers on Brexit stalemate

 

Pound pressured at start of the week

Weekend news that the latest Brexit negotiations had hit yet another stalemate pressured the pound at this week’s open. UK’s Financial Times reported that PM May is said to call the current draft Brexit deal a “non-starter” and as a result EU leaders may cancel plans for a special summit in November due to the lack of progress in negotiations. EU leaders are supposed to convene for a Brexit summit this Wednesday, and hopes were that a deal could be announced.

GBP/USD hit its lowest level in six days and tested the 100-day moving average support at 1.3099 again. The FX pair had climbed to a three-week high of 1.3259 on Friday on deal hopes, but closed lower on the day. Should the 100-day moving average support be breached convincingly, then the 55-day average at 1.2990 would come in to focus.

 

GBP/USD Daily Chart

Source” Oanda fxTrade

 

Asia Market Update: Echoes of October past

RBA’s Harper reiterates current stance

RBA board member Ian Harper has reiterated the RBA view that interest rates are more likely to rise than fall, however added that a near-term rate increase would “spook” consumers. He commented that a cloud remains over the consumer outlook though some stimulus is coming from a lower Australian dollar, which is helping to support confidence.

Monthly retail sales growth has been either zero or positive over the past eight months, though not setting the economy alight, with a maximum reading of +0.6% in February and the August reading at +0.3%. Meanwhile, Westpac’s consumer confidence index rose above zero for the first time in three months this month.

Aussie has been on the defensive versus the US dollar this morning, looking set to post a decline for the second straight day. AUD/USD is currently at 0.7107 with this month’s previous lows above the 0.7040 level acting as support.

 

AUD/USD Daily Chart

Source: Oanda fxTrade

 

US retail sales expected to show a rebound in September

The Asian data calendar is not yet complete, with Japan’s industrial production and capacity utilization data still pending. The European calendar is barren of tier-1 data, and the highlight of the North American calendar will be US retail sales for September. Sales are expected to rise 0.5% m/m, more than the 0.1% posted for August, and would be back at the June/July levels. The Empire State manufacturing index and business inventories are also due. The Bank of Canada’s business outlook survey is the only release from north of the border.

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

 

Market Podcast October 15

Source: MarketPulse – Market Podcast October 15

Gold gains most in more than two years

Gold is back in favor

The safe haven of gold, very much unloved over the past few months as it stood in the dollar’s shadow, saw its fortunes reverse yesterday to record the biggest one-day gain in almost 2-1/2 years. A weaker US dollar amid easing US yields and a below-forecast CPI print, reduced demand for the greenback, leaving gold to take up the slack, for a change.

Gold jumped more than 2.5%, its biggest one-day gain since June 2016, to reach the highest level since July 31. The commodity is now testing the 100-day moving average at 1,228.99, which has capped prices since April 30.

 

Gold Daily Chart

Source: Oanda fxTrade

 

China’s trade surplus with US hits record high

The September trade numbers will likely not be music to Mr Trump’s ears. Exports rose 14.5% y/y, beating economists’ estimates of a mere 8.9% increase. That’s the biggest monthly gain since February. The overall trade surplus widened to $31.7 billion, the highest in three months.

China Customs also reported that exports to the US were up 16.6% y/y while imports from the US rose just 1.6% y/y, pushing the trade surplus with the US to a record high $34.1 billion. The agency commented that the impact from the US trade frictions was “controllable” and that Chinese exporters were diversifying their markets.

The reaction in FX markets was marginal. AUD/USD slid to 0.7118 from 0.7124 while USD/CNH rebound from intra-day lows to 6.9026. AUD/USD currently appears to be struggling to overcome previous highs in the 0.7130-31 window.

 

AUD/USD Hourly Chart

Source: Oanda fxTrade

 

Singapore tightens policy marginally as Q3 growth beats estimate

In its semi-annual policy review, Singapore’s de-facto central bank tightened policy by a minimal amount. Rather than fix a benchmark interest rates, Singapore manages monetary policy by guiding the value of the local dollar against a basket of currencies of its major trading partners. The MAS raised “slightly” the slope of appreciation of the net effective exchange rate (NEER) trading band of the Singapore dollar, keeping the width and center of the band unchanged. This was tantamount to a mild tightening of monetary conditions as latest surveys had suggested it was a 50/50 chance.

Looking ahead, the MAS sees 2018 growth in the upper half of a 2.5% to 3.5% range then moderating “slightly” in 2019. Core inflation is seen in a 1.5% to 2.0% range and averaging 1.5% to 2.5% in 2019.

The Singapore dollar rose marginally after the announcement, with USD/SGD poised to record its second consecutive daily loss. USD/SGD is now at 1.3739 with the 100-day moving average below at 1.3637.

 

USD/SGD Daily Chart

Source: Oanda fxTrade

 

One of the first nations to report Q3 GDP numbers, Singapore’s economy grew 2.6% y/y, faster than the than the 2.5% growth anticipated by economists, but slower than the 3.9% pace in Q2. On a quarterly basis, growth was below expectations of a 4.9% increase, but faster than the 0.6% posted in Q2.

China will release its Q3 GDP data next Friday and is also expected to show slower annualized growth from Q2. The latest survey suggests 1.6% q/q and 6.6% y/y from 1.8% and 6.7% respectively.

 

 

Will German CPI echo the US miss?

After yesterday’s release of below-forecast CPI data from the US, today it’s the turn of Germany. Estimates for September suggest consumer prices rose at the same pace as August, up 0.4% m/m and 2.3% y/y. August industrial production data for the Euro-zone follow the CPI numbers and then the calendar thins out with only second-tier US data scheduled. Export and import prices and Michigan sentiment index are the highlights, with speeches from Fed’s Evans and Bostic completing the week.

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

 

Have a great weekend from Asia.

Dollar Lower on Weak Inflation OANDA Market Beat Podcast

Source: MarketPulse

AUD/USD & GBP/USD – Poised for a rally? (video)

Nick Batsford, CEO of Core London is joined via Globelynx by Craig Erlam, Senior Market Analyst at OANDA to look at AUDUSD and GBPUSD chart. Both have been trending lower for some time and Craig discusses why he thinks a move higher may not be too far away.

 

Aussie struggles near lows even as retail sales beat estimate

AUD/USD fails to advance

AUD/USD was only given a temporary respite from the four-day selling pressure after a better-than-expected print for retail sales. Sales rose 0.3% m/m, a faster pace than the 0.2% economists had expected and represented the eighth straight month that the number has not been negative. So, spending appears to be steady, all the RBA would like to see know is a pickup in wages and a reduction in household debt before it might contemplate thinking about its current policy stance.

AUD/USD was at 0.7064 prior to the data, the lowest since February 2016, and managed a mild recovery to 0.7082 after the release. That rally proved to be only fleeting and the FX pair fell to 0.7062, a new low in more than 2-1/2 years, and is currently sitting at 0.7067.

 

AUD/USD Hourly Chart

Source: Oanda fxTrade

 

China’s spies, election meddling and NFP to keep traders busy

 

US nonfarm payrolls is the headliner

The markets focus will be squarely on the September release of the US September nonfarm payroll report, with all other data points likely to be a mere sideshow.

 

US Jobs Report to Guide Markets

 

The latest survey suggests the US added 185,000 jobs in September, below the 201,000 recorded in August and also below the 6-month moving average of 192,000, which has been trending lower over the past two months. Nevertheless, such a print would still confirm the robust state of the economy and keep US yields supported. Average hourly earnings surged higher in August and that trend is expected to continue into September with a 2.8% y/y gain. Unemployment is expected to again hit an 18-year low of 3.8%.

Prior to the payrolls fun and games, Germany reports producer prices and factory orders for August along with UK’s Halifax house prices for September. The same time as the US release, we also see Canada’s jobs data for September and trade numbers for August. Lost in all the other releases will be the US trade balance for August, which is expected to show a widening of the deficit to $53.5 billion from $50.1 billion.

 

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

 

Have a great weekend from Asia

AUD/USD breaches 0.71 despite positive trade data

AUD/USD through 0.71

Despite an expansion in Australia’s trade surplus and a better than expected print, the Aussie could not gain any benefit as the US dollar continues its upward trek. The trade surplus grew to A$1.6 billion in August, up from A$1.55 billion the previous month and higher than economists’ forecasts of a decline to A$1.4 billion. The improvement came from a rebound in exports which rose 1% after a 1% slump in July. Imports were flat.

Despite the improvement, AUD/USD fell through 0.71 for the first time in three weeks as the US dollar extended yesterday’s surge. The dollar, as measured against a basket of six major currencies, climbed to its highest level since August 17 as US 10-year yields held steady near seven-year highs. The FX pair is currently at 0.7095 and may find some support near the September 11 low of 0.7084.

 

AUD/USD Daily Chart

Source: Oanda fxTrade

 

EUR/USD at 6-1/2 week low

As the US dollar soars, so the Euro suffers with yesterday’s news that Italy was adjusting its longer-term deficit-to-GDP ratios lower, quickly forgotten. The FX pair traded down to 1.14625 yesterday, the lowest since August 20 and today has seen the pair extend its current losing streak to a seventh straight day. The pair is currently sitting at 1.1468 with Fibonacci support at 1.1403.

NOTE: The are EUR1.5 billion worth of EUR/USD puts expiring tomorrow at strike of 1.1450

 

EUR/USD Daily Chart

Source: Oanda fxTrade

 

World Bank maintains China 2018 GDP growth forecast

The World Bank announced that it was keeping its 2018 GDP growth forecast unchanged at 6.5%. The latest Bloomberg survey of economists shows forecasts of a median estimate of 6.6% growth in 2018, slowing to 6.3% in 2018.

Within the release, the World Bank upped its forecasts for Thailand and Vietnam while trimming those for Indonesia, Malaysia and the Philippines.

 

No stopping the US dollar runaway train at the moment

 

Factory orders to affirm strong economy

After the bazooka of the ISM non-manufacturing PMI and the ADP employment report yesterday, the US data calendar calms down a bit today with September Challenger job cuts and August factory orders on tap. Orders are seen rebounding strongly by 2.1% m/m from July’s 0.8% decline, further emphasizing the robust state of the economy. Note that back in August, the new orders index in the ISM manufacturing PMI jumped to 65.1 from 60.2 but fell to 61.8 in September. This could be a sign of what might happen to factory orders next month.

Other items on the data calendar include speeches from Fed’s Quarles (neutral, voter) and ECB’s Coeure while Canada’s Ivey PMI for September completes the deck.

 

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

Euro jumps as Italy revises budget plans

Euro jumps on Italy budget headline

Italy is trying hard to convince the rest of Europe that its move to increase the deficit-to-GDP ratio to 2.4% in 2019 is only a temporary move. Today, the Italian press reported that the government aims to get it back down to 2% by 2021. This is contrary to earlier reports that the Italian government had agreed a 2.4% ratio for the full 2019-2021 period. Italy’s debt-to-GDP ratio is currently estimated at a whopping 131% and the government sees is being trimmed to 127% by 2021.

EUR/USD had a 30 pip move higher to 1.1595 on the news, though stopped short of the 55-day moving average at 1.1614. The 100-hour moving average currently sits at 1.1612 as well. The pair is now at 1.1585. The news also helped the broader risk appetite with USD/JPY up 0.04% to 113.73 and the US dollar weakening 0.22% against a basket of six major currencies.

 

EUR/USD Hourly Chart

Source: Oanda fxTrade

 

Aussie falls as building permits slump

AUD/USD fell further from the 0.72 handle in Asian trading in a knee-jerk reaction to news that building permits slumped a hefty 13.6% year-on-year in July, much worse than economists’ estimates of a 2.5% decline. July’s drop was the worst in 12 months and comes despite the RBA holding rates at record lows. Even the big Australian banks didn’t start to increase rates on flexible rate mortgages due to higher funding costs until late-August, so there’s a chance that next month’s numbers could be equally disappointing.

AUD/USD fell as much as 0.34% to 0.71654 though failed to break below yesterday’s two-week low of 0.71632 and has since rebounded to 0.7182 on the shift in risk appetite

 

AUD/USD Daily Chart

Source: Oanda fxTrade

 

Trend of softer PMIs continues

The global tale of weaker PMIs was extended to Singapore today, as the Nikkei full economy PMI fell to 49.6 in September, the first dip below the contraction/expansion threshold in about 2-1/2 years. Declines were noted in both the output index and the new orders index, which is perhaps more of a concern going forward. USD/SGD showed little reaction, following more the broader trend of a weaker US dollar on the day as the pair rose 0.02% to 1.3734.

 

US markets rescue global risk sentiment yet again

 

PM May to speak at party conference

Perhaps the biggest event to grad the headlines today will be PM Theresa May’s speech at the Conservative party conference later today. Yesterday, Boris Johnson received cheers after he attacked her Brexit policies, so let’s see how she responds. Watch out for those Brexit headlines.

Other data releases include Market services PMIs for both Germany and the Eurozone along with EU retail sales for August. In the US we get to see the ADP employment report, the customary forerunner to Friday’s nonfarm payrolls, and the ISM non-manufacturing PMI. There’s a host of Fed speakers with Barkin, Brainard, Mester and Powell all on tap.

 

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

 

OANDA Trading podcast: Asia Market Update @938 Now(3 Oct 2018)

Source: MarketPulse

Live FX Analysis – 25 September 2018 (Video)

In this week’s FX webinar, Senior Market Analyst Craig Erlam discusses the upcoming Federal Reserve meeting and provides and update on Brexit and trade wars.

Craig also gives his live analysis on EURUSD (12:04), GBPUSD (17:23), EURGBP (22:05), AUDUSD (24:38), USDCAD (27:24), GBPCAD (28:30), NZDUSD (29:54), USDJPY (30:47), GBPJPY (32:31) and EURJPY (34:25).

Dollar firmer amid trade talk trouble

Dollar rises as China cancels trade talks

The US dollar was marginally higher on a holiday-thinned Asia Monday morning, reacting to weekend news that China had cancelled plans to visit Washington this week for trade talks. Remember the next set of US tariffs on $200 billion of China goods has just kicked in at 12am Washington time with $110 billion worth of US goods being hit by China tariffs at the same time. There is speculation that nothing further will happen with trade negotiations before the US mid-term elections in November.

 

 

Of the equity market that were open (China, Japan, South Korea and Taiwan were all closed), Hong Kong stocks reacted negatively to developments, dropping 1.59% while Australia gained 0.2%. The SPX500USD CFD declined 0.22% to 2,921.1. On Friday it hit a record high. The Aussie currency reacted more, falling 0.46% versus the dollar to 0.7255 as the US dollar, measured against a basket of six currencies, rose 0.11%.

 

UK Sunday press awash with rumors

The UK’s Sunday Times reported that aides to PM May had started contingency planning for a snap November election in order to rally public support for an updated and improved Brexit plan. The pound suffered heavily on Friday, falling the most in one day since June 2017, after May was heavily criticized at the EU summit in Salzburg and said that talks were at an impasse. The rally from the August 15 low stalled near the 50% retracement level of the drop from April 17.

 

GBP/USD Daily Chart

Source: Oanda fxTrade

 

 

Oil prices advance as OPEC ignores Trump’s demands

US President Trump called on OPEC to reduce oil prices which provoked the response from the group that it would boost output only if customers asked for it. This pushed oil prices higher with West Texas Intermediate pushing further ahead from the $70 mark, rising as high as $72.40 per barrel, the highest in 2-1/2 months. Brent continues to straddle the key $80 per barrel level, currently at $80.306.

 

WTI Daily Chart

Source: Oanda fxTrade

 

Another improvement in German IFO surveys may help the Euro

It’s a slow start to this week’s busy data schedule with German IFO surveys and the UK’s CBI orders survey the only items to set the pulse racing in Europe. The IFO survey last month saw the expectations index bouncing higher and another improvement in sentiment in September could help EUR/USD stave off some of the dollar’s strength today. The current assessment index has been rising for the past two months and was at 106.4 last month. However, economists expect the business climate to deteriorate to 103.0 from 103.8, the latest poll shows.

The North American session features August’s Chicago Fed activity survey, the Dallas Fed business index for September and Canada’s wholesale sales for July.

 

The full MarketPulse data calendar can be viewed here: https://www.marketpulse.com/economic-events/

 

OANDA Trading Podcast : BFM 89.9 Kuala Lumpur

Source: MarketPulse

Yen at two-month low versus dollar on Wall Street surge

USD/JPY at highest since July

USD/JPY rallied to its highest level since July 19 as the positive sentiment that lifted Wall Street to record highs continued in the currency markets during the Asian session. The response in Asian equities was not quite so dramatic with the Japan 225 index gaining 0.25% by lunchtime, the Hong Kong 33 CFD rising 0.25% and the China A50 index surging 1.32%%.

Japan shares shrugged off an uptick in longer-term yen yields after the Bank of Japan trimmed its daily purchases of Japanese Government Bonds with a tenor of 25 years and upwards. The 30-year yield hit its highest since October 2017 and the 40-year tenor saw rates at 1.02%, the highest since November 2017.

 

USD/JPY Weekly Chart

Source: Oanda fxTrade

 

USD/JPY is poised for its second weekly gain in a row and is heading toward the 200-week moving average at 113.26 while the July high sits at 113.18.

 

Japan CPI heads in the right direction

A welcome headline for the Bank of Japan saw Japanese consumer prices rise 1.3% year-on-year in August, the fastest pace since February. The headline topped expectations of a 1.1% increase and was a steep acceleration from the 0.9% seen in July. Core CPI was a more benign +0.4% y/y, in line with expectations and higher than July’s 0.3%.

In other Japanese news, Shinzo Abe was elected for his third term as leader of the LDP yesterday and is set to become the country’s longest-serving leader. He wasted no time in getting back down to business as Chief Cabinet Secretary Suga announced that PM Abe will hold a summit with US President Trump on September 26. There is no doubt that the tariff question will be the major topic under discussion.

US-China trade war, yesterday’s news?

S&P Raises Australia outlook to stable

Ratings agency S&P affirmed Australia’s sovereign rating at AAA and raised the outlook from negative to stable. The agency cited an improved fiscal outlook amid government expenditure restraint, with steady revenues supported by the strong labor market and relatively robust commodity prices. The top three ratings agencies now have Australia with a AAA rating and a stable outlook.

There was a muted response to the news from the Aussie as AUD/USD marked time ahead of the 55-day moving average resistance at 0.7315. The pair is currently almost flat on the day having risen for the past four sessions and is facing its strongest up-week in over a year. AUD/USD is now at 0.72935.

 

AUD/USD Daily Chart

Source: Oanda fxTrade

 

More PMI readings complete a slow data week

The slow data week concludes with September Markit PMI readings for both Germany and the Euro-zone, with both expected to show a lower reading than last month. The North American calendar is focused on Canada’s CPI readings for August followed by the Markit PMI data for the US. In contrast to the European readings, those are expected to rise and confirm the robust state of the US economy and could help fuel further gains on Wall Street.

 

You can view the full MarketPulse data calendar at: https://www.marketpulse.com/economic-events/

 

Have a great weekend.

Live FX analysis – 18 September 2018 (Video)

Senior Market Analyst Craig Erlam discusses the key market themes from the summer – most notably US tariffs and Brexit – and the events to watch out for this week.

Craig also gives his live analysis on EURUSD (17:48), GBPUSD (21:36), EURGBP (24:42), AUDUSD (25:44), USDCAD (28:33), GBPCAD (31:02), NZDUSD (32:41), USDJPY (34:16), GBPJPY (35:25) and EURJPY (36:31).