USD/CAD – Canadian dollar dips, U.S GDP looms

The Canadian dollar has posted gains on Thursday, continuing the upward movement which marked the Wednesday session. Currently, USD/CAD is trading at 1.3060, up 0.31% on the day. In economic news, the U.S releases Final GDP, with an estimate of 4.2%. In the U.S, there a host of key indicators. Core durable goods orders and durable goods orders are expected to improve in August, with forecasts of 0.4% and 1.9% percent, respectively. Final GDP is expected to post a strong gain of 4.2% and unemployment claims are forecast to climb to 209 thousand. There are no data releases in Canada. On Friday, Canada releases monthly GDP and inflation indicators. The U.S releases Personal Spending and UoM Consumer Sentiment.

As widely expected, the Federal Reserve pressed that rate trigger for the third time this year, raising the benchmark rate by a quarter-point, to a range of 2 percent to 2.25 percent. The Fed intends to continue gradually raising rates, with another rate hike expected in December and three hikes in 2019. What was of more interest to investors was the rate statement, in which the Fed removed the word ‘accommodative’ in the statement, which means that the Fed now considers monetary policy to be neutral. Fed Chair Jerome Powell, in a bid to keep markets calm, stated in a follow-up press conference that removing accommodative language in the statement did not reflect a change in policy. Still, the markets were upbeat after the Fed meeting and the U.S dollar has responded with gains against the Canadian dollar on Thursday.

Euro tumbles on talk Italy to delay budget meeting

Gold rises after limited impact from Fed hike

 

USD/CAD Fundamentals

Thursday (September 27)

  • 8:30 US Core Durable Goods Orders. Estimate 0.4%
  • 8:30 US Final GDP. Estimate 4.2%
  • 8:30 US Durable Goods Orders. Estimate 1.9%
  • 8:30 US Final GDP Price Index. Estimate 3.0%
  • 8:30 US Goods Trade Balance. Estimate -70.6B
  • 8:30 US Preliminary Wholesale Inventories. Estimate 0.3%
  • 8:30 US Unemployment Claims. Estimate 208K
  • 9:30 ECB President Draghi Speaks
  • 10:00 US Pending Home Sales. Estimate -0.2%
  • 10:30 US Natural Gas Storage. Estimate 64B
  • 16:30 US Fed Chair Powell Speaks
  • 17:45 BoC Governor Poloz Speaks

Friday (September 28)

  • 8:30 Canadian GDP. Estimate 0.1%
  • 8:30 Canadian RMPI. Estimate 0.8%
  • 8:30 US Personal Spending. Estimate 0.3%
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 100.5

*All release times are DST

*Key events are in bold

USD/CAD for Thursday, September 27, 2018

USD/CAD, September 27 at 8:05 DST

Open: 1.3020 High: 1.3065 Low: 1.3015 Close: 1.3060

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2733 12831 1.2970 1.3067 1.3160 1.3292

USD/CAD has posted slight gains in the Asian and European sessions

  • 1.2970 is a support level
  • 1.3067 is under pressure in resistance
  • Current range: 1.2970 to 1.3067

Further levels in both directions:

  • Below: 1.2970, 1.2831 and 1.2733
  • Above: 1.3067, 1.3160, 1.3292 and 1.3436

DAX dips as Italy delays budget, investors eye German CPI

The DAX index has posted slight losses in the Thursday session. Currently, the index is at 12,359, down 0.23% on the day. Today’s key release is Germany Preliminary CPI, which is expected to post a small gain of 0.1%. Later in the day, ECB President Mario Draghi will speak at a conference in Frankfurt. On Friday, Germany releases unemployment change and the eurozone publishes CPI Flash Estimate.

In its monthly economic bulletin, the ECB said that it expected global growth to slow in the near term and warned about the effects of the escalating global trade war. The report highlighted “further tariff increases and uncertainties about future trading relations” as factors which could dampen global growth. Still, with the eurozone economy performing fairly well, the ECB is on track to halve its monthly asset purchases to EUR 15 billion, and wind up the stimulus program in December. Earlier in the week, the ECB released a study which indicated that if the U.S-China trade spat continued, the U.S would be the big loser, as a result of a decrease in trade and weaker investor and consumer confidence.

European stock markets are under pressure on Thursday, after the Italian government announced a delay of the country’s budget. Investors have long been nervous about the populist government’s financial plans, as senior officials have previously declared that Italy could breach EU budget restraint rules, which could put Italy on a collision course with Brussels. Political uncertainty in Italy remains high, as there are fears that the coalition government could collapse when the budget bill comes up for a vote.

Euro tumbles on talk Italy to delay budget meeting

Gold rises after limited impact from Fed hike

Economic Calendar

Thursday (September 27)

  • 2:00 German GfK Consumer Climate. Estimate 10.6. Actual 10.6
  • All Day – German Preliminary CPI. Estimate 0.1%
  • 4:00 Eurozone M3 Money Supply. Estimate 3.8%. Actual 3.5%
  • 4:00 ECB Economic Bulletin
  • 4:00 Eurozone Private Loans. Estimate 3.1%. Actual 3.1%
  • 9:30 ECB President Draghi Speaks

Friday (September 28)

  • 3:55 German Unemployment Change. Estimate -9K
  • 5:00 Eurozone CPI Flash Estimate. Estimate 2.1%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%

*All release times are DST

*Key events are in bold

DAX, Thursday, September 27 at 7:30 DST

Previous Close: 12,385 Open: 12,329 Low: 12,272 High: 12,379 Close: 12,376

Euro dips as Fed raises rates, German CPI next

EUR/USD has posted slight losses in the Thursday session, following the trend seen on Wednesday. Currently, the pair is trading at 1.1710, down 0.26% on the day. It’s a busy day on the release front. Germany releases Preliminary CPI, which is expected to post a small gain of 0.1%. Later in the day, ECB President Mario Draghi will speak at a conference in Frankfurt. Over in the U.S, there a host of key indicators. Core durable goods orders and durable goods orders are expected to improve in August, with forecasts of 0.4% and 1.9% percent, respectively. Final GDP is expected to post a strong gain of 4.2% and unemployment claims are forecast to climb to 209 thousand. On Friday, Germany releases unemployment change and the eurozone publishes CPI Flash Estimate, while the U.S releases Personal Spending and UoM Consumer Sentiment.

As widely expected, the Federal Reserve pressed that rate trigger for the third time this year, raising the benchmark rate by a quarter-point, to a range of 2 percent to 2.25 percent. The Fed intends to continue gradually raising rates, with another rate hike expected in December and three hikes in 2019. What was of more interest to investors was the rate statement, in which the Fed removed the word ‘accommodative’ in the statement, which means that the Fed now considers monetary policy to be neutral. Fed Chair Jerome Powell, in a bid to keep markets calm, stated in a follow-up press conference that removing accommodative language in the statement did not reflect a change in policy. Still, the markets were upbeat after the Fed meeting and the U.S dollar has responded with slight gains against the euro on Thursday.

The ECB was not as cheery as the Federal Reserve on Thursday, as the Bank’s economic bulletin said it expected global growth to slow in the near term and warned about the effects of the escalating global trade war. The report highlighted “further tariff increases and uncertainties about future trading relations” as factors which could dampen global growth. Still, with the eurozone economy performing fairly well, the ECB is on track to halve its monthly asset purchases to EUR 15 billion, and wind up the stimulus program in December. Earlier in the week, the ECB released a study which indicated that if the U.S-China trade spat continued, the U.S would be the big loser, as a result of a decrease in trade and weaker investor and consumer confidence.

Euro tumbles on talk Italy to delay budget meeting

Gold rises after limited impact from Fed hike

EUR/USD Fundamentals

Thursday (September 27)

  • 2:00 German GfK Consumer Climate. Estimate 10.6. Actual 10.6
  • All Day – German Preliminary CPI. Estimate 0.1%
  • 4:00 Eurozone M3 Money Supply. Estimate 3.8%. Actual 3.5%
  • 4:00 ECB Economic Bulletin
  • 4:00 Eurozone Private Loans. Estimate 3.1%. Actual 3.1%
  • Tentative – Italian 10-year Bond Auction
  • 8:30 US Core Durable Goods Orders. Estimate 0.4%
  • 8:30 US Final GDP. Estimate 4.2%
  • 8:30 US Durable Goods Orders. Estimate 1.9%
  • 8:30 US Final GDP Price Index. Estimate 3.0%
  • 8:30 US Goods Trade Balance. Estimate -70.6B
  • 8:30 US Preliminary Wholesale Inventories. Estimate 0.3%
  • 8:30 US Unemployment Claims. Estimate 208K
  • 9:30 ECB President Draghi Speaks
  • 10:00 US Pending Home Sales. Estimate -0.2%
  • 10:30 US Natural Gas Storage. Estimate 64B
  • 16:30 US Fed Chair Powell Speaks

Friday (September 28)

  • 3:55 German Unemployment Change. Estimate -9K
  • 5:00 Eurozone CPI Flash Estimate. Estimate 2.1%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%
  • 8:30 US Personal Spending. Estimate 0.3%
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 100.5

*All release times are DST

*Key events are in bold

EUR/USD for Thursday, September 27, 2018

EUR/USD for September 27 at 5:50 DST

Open: 1.1740 High: 1.1757 Low: 1.1685 Close: 1.1710

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1434 1.1553 1.1637 1.1718 1.1840 1.1961

EUR/USD ticked higher in the Asian session and has edged lower in European trade

  • 1.1637 is providing support
  • 1.1718 has switched to a resistance role after losses in the Thursday session

Further levels in both directions:

  • Below: 1.1637, 1.1553 and 1.1434
  • Above: 1.1718, 1.1840, 1.1961 and 1.2055
  • Current range: 1.1637 to 1.1718

OANDA Trading Asia market wrap :: dazed and confused

Dazed and confused 

It was a hectic day in Asia as virtually everyone had a different read or take of yesterday’s FOMC. I guess we can assume that the extremely mixed trading session was a result of the markets extremely mixed view of yesterday FOMC

OANDA Trading Post FOMC podcast 938Now

Asia Oil

There was a complete unwinding of bearish oil sentiment after the market digested Energy Secretary Rick Perry comments suggesting there is little chance the Whitehouse will tap into SPR for the sole purpose of price intervention.

EURO
Just when you thought it was safe to buy the post FOMC EURO dip, Italian risk rears its ugly head making it difficult to hold an absolute bullish view at current levels and completely catching the market napping on this one!

The reason why Italy warrant a considerable amount of attention is that it’s big and as simple as that view is we could just as easily see a leak lower to the significant EURUSD 1.1660 support levels. But these politically inspired moves tend to have little legs so I would expect solid support on this dip.

However, the local German inflation data releases do warrant a bit of attention as this regional uptick supports the ECB view of rising inflation expectations.

Euro tumbles on talk Italy to delay budget meeting

Asia Markets

Asia market took the Fed hike in stride with equities mixed on China weakness, but Asian currencies were in demand despite the firmer G-10 backdrop

INR

The RBI remains in to defend the Rupee at all cost mode increase in SLR available to banks by 2% to 15% to ease funding pressures in the short term money market along with introducing tariffs on 19 non-essential imports to help stem the currency weakness.

KRW

$KRW dropped 6 won early in the session to 1110.00 as there was a holiday catch up in play as he Kospi reacted very favourably to the revised US-South Korea bilateral trade agreement signed Monday

Hong Kong Rate Hike

HKMA raised it’s benchmark rates by 25bp taking its lead from the Fed while local lender raised prime by 12.5 %. Keeping in mind that the Pboc announced they would tap into HK money market for funding, so this is not helping matter much. Until that point, the HSI was trading fluidly but took it on the chin after the rate hike announcement. Rising interest rate create a wall of worry for local property investors

Euro tumbles on talk Italy to delay budget meeting

EUR/USD drops below 1.17

News that Italy may delay its 2019 budget discussion meeting sent shivers through the Euro, with EUR/USD falling as much as 0.43% to sub-1.17 levels for the first time in five days. The pair is now drifting lower after the initial drop, and is heading toward the 100-day moving average, which is sitting at 1.1657. EUR/USD is currently at 1.1698.

 

EUR/USD Daily Chart

Source: Oanda fxTrade

NOTE: EUR1.28 billion of EUR/USD put options expire today at strike 1.1750

Dollar pushes higher as Fed stays the course

After a bit of a delay, Asian traders latched on to the hawkish implications of the Fed statement after they hiked rates at the FOMC meeting.  The value of the dollar, as measured against a basket of six currencies, rose 0.39% in Asia trading following a slight dip toward the NY close.

As it always does, the Hong Kong Monetary Authority also hiked rates by 25bps, while the Reserve Bank of New Zealand, perhaps the most dovish central bank globally, left rates unchanged. NZD/USD traded steady after the meeting but succumbed to the dollar’s rise later on. The pair is currently sitting at 0.6642, just above the 200-hour moving average at 0.6636.

 

NZD/USD Hourly Chart

Source: Oanda fxTrade

 

Mixed results on trade negotiations

Early in the Asian session there was some positive news on the trade war front, though the reaction proved to be fleeting US President Trump had said that he intended to call Chinese President Xi sometime today to talk about tariffs. The initial reaction was positive, though this was swallowed up by the US dollar developments. Meanwhile, Trump tweeted yesterday that the China tariffs were having no impact on the US economy.

Still in Asia, the US and Japan are to sit down for trade talks following Trump’s meeting with Abe.  The good news for Japanese auto makers was that the US agreed to hold off on further auto tariffs while the talks continue.

In other trade negotiations, NAFTA discussions appear to be going nowhere. Trump said he rejected a one-on-one meeting with PM Trudeau while informing Congress that moving NAFTA forward without Canada was part of a broader trade initiative. He added that he “disliked” talking to Canada’s negotiators and threatened to tax Canadian autos if no deal was struck. USD/CAD has risen 1.15% over the past five days as talks stalled, and is currently testing the 100- and 55-day moving averages in the 1.3053-1.3059 window, respectively.

 

USD/CAD Daily Chart

Source: Oanda fxTrade

 

Higher German CPI could support the Euro

Consumer prices in Germany for September are expected to maintain the same pace of increase as August, according to the latest survey of economists. CPI seen rising 0.1% m/m and 2% y/y and a figure higher than this could confirm Draghi’s comments earlier this week about price pressures in the economy and force a revision of the ECB rate outlook, which in turn could help the Euro.

The US data slate includes the final reading for Q2 GDP (no revision expected from the +4.2% y/y previously recorded) along with the goods trade balance for August. This is expected to show the first narrowing of the deficit in three months, and no doubt would be music to Donald Trump’s ears. The rest of the calendar is populated with Q2 PCE prices and August durable goods orders.

 

The full MarketPulse data calendar is available at https://www.marketpulse.com/economic-events/

SPR release , Energy Secretary Rick Perry says not a chance !

Bloomberg) — Oil surged on prospects of a supply crunch after the U.S. ruled out the release of emergency crude reserves, adding to concerns over potential losses in Iranian supplies.

Futures in New York climbed as much as 1.4 percent. Prices on Wednesday pared declines after U.S. Energy Secretary Rick Perry said releasing oil from the nation’s Strategic Petroleum Reserve to prevent a price spike would have “a fairly minor and short-term impact.” That helped the market shrug off a surprise gain in American crude inventories, which rose for the first time in six weeks.

The U.S. benchmark is nearing four-year highs after the Organization of Petroleum Exporting Countries signaled they are in no rush to boost output to counter output losses in Iran and elsewhere, drawing repeated criticism from President Donald Trump. The outlook for tightening supplies prompted top trading houses to predict the return of higher oil prices last seen in 2014, and banks including Bank of America Corp. and JPMorgan Chase & Co. lifted their forecasts.

“The U.S. using the strategic reserves as an emergency-response tool to control oil prices was a bit of a stretch, given the history of how it was released in the past for war or hurricanes,” said Stephen Innes, Singapore-based head of trading for Asia Pacific at Oanda Corp. “While the U.S. oil inventory data counts, the fact that the markets could still be underestimating the supply crunch from Iran sanctions has many oil investors running with the bulls.”

Bloomberg

Gold rises after limited impact from Fed hike

As expected the U.S. Federal Reserve raised interest rates for the third time this year on Wednesday and left intact its plans to steadily tighten monetary policy, as it forecast that the U.S. economy would enjoy at least three more years of growth.

“The fact that the Fed didn’t come out as overly hawkish meant there was some positivity felt through emerging market currencies. This may be playing in gold being gingerly bought,” said Stephen Innes, APAC trading head at OANDA in Singapore.

“Investors remain sellers towards $1,200 an ounce and buyers towards $1,190 … Bargain hunting is definitely coming to the equation at the lower end of the scale.”

 

Reuters

Philippine currency and equities in focus as rate hike looms

Sept 27 (Reuters) – Most Southeast Asian equities fared well
on Thursday after an anticipated U.S. Federal Reserve rate
increase shored up regional sentiment ahead of expected rate
hikes in Indonesia and the Philippines later in the day.

Bank stocks assisted Singapore shares advance as much
as 0.7 percent, for a seventh straight session in the black.
Lender Oversea-Chinese Banking was the biggest
contributor to gains in the benchmark.
“After yesterday’s late afternoon unwind, there’s some
bargain-hunting going on after that dip,” said Stephen Innes,
Head of Trading, APAC at OANDA.
The Philippine index, however, declined for its third
session and lost up to 0.6 percent.
Telecom and utilities accounted for most of the fall with
top drag telecom service provider PLDT Inc falling as
much as 5.1 percent to its weakest level in over two months.
Innes blamed the fall on a number of factors including twin
deficits, the prospect of rising inflation and an expected
hawkish rate hike.
“The BSP is going to come out with interest rates, guns
blazing, but they have to tame inflation but also tame the
currency a little bit,” said Innes.
Inflationary pressures in the Philippines have been steadily
rising since January due to higher taxes, a weak peso, and
rising food and fuel costs.

Reuters

Oil rally sparking huge interest in Malaysia Oil and Gas

The rise in the price of crude oil to a four-year high of US$80 (RM331.20) a barrel has lifted over 20 oil and gas (O&G)-related stocks on Bursa Malaysia.

Bloomberg data shows five stocks have risen over 12% since Monday to the close of market yesterday as crude oil prices extended gains on prospects of tighter global supply availability, while 15 others rose between 1% and 10%.

The stock that has increased the most over the span of three trading days was Deleum Bhd which closed at RM1.14 yesterday, 16.92% higher than its close last Friday of 98 sen a share.

The company had recently secured three new contracts from Petronas Carigali Sdn Bhd, Sarawak Shell Bhd and Sabah Shell Petroleum Co Ltd for provision of integrated corrosion solution and oilfield services.

Deleum has a market value of RM461.29 million and its stock had returned 27% year-to-date, trading at 14 times its estimated earnings per share for the coming year.

Upstream player Hibiscus Petroleum Bhd closed 17 sen, or 15.89% higher, at RM1.24 as the counter was the most actively traded on the market yesterday with 90.4 million shares exchanging hands.

Reach Energy Bhd was another upstream player that attracted investor interest as it rose 13.92% since the oil price hiked, and 75% in the past month. It returned 8.5% so far this year and recorded a gain of 6% in the past 52 weeks.

Four out of the seven most active counters on the local bourse yesterday were O&G-related.

Hong Leong Investment Bank Bhd’s (HLIB) traders brief yesterday noted the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) may see extended profit-taking activities over the near term and trading interest will be seen within O&G stocks as the Brent crude oil contract price is hovering steadily above the US$80-abarrel level.

Oanda Corp head of Asia-Pacific trading Stephen Innes said if OPEC does not ramp up production, oil prices have the legs to run further as this will be viewed as an extremely bullish signal for near-term prices.

“Oil markets remain well-supported in Asia, despite the unexpected 2.9 million barrels build in the American Petroleum Institute report.

“While US inventory data counts oil, prices stay in the bulls domain amid concern US sanctions on Iranian crude oil exports will result in much tighter physical market conditions once they take effect in November,” he said.

Innes added that markets could still be underestimating the supply crunch from US sanctions.

The Malaysian Reserve