Industry News



ASX 200 & Nikkei 225 Forecast: US-China Tensions Threaten Gains

Friday 29th May, 2020

ASX 200, NIKKEI 225, US-CHINA TENSIONS, COVID-19, HONG KONG

Tensions surrounding China are moving back into the fold, as the COVID-19 pandemic and China’s encroachment into Hong Kong turn the heat back up on relations between the United States and China. Still, investors have shrugged off the renewed headwinds, for now. The ASX 200 index is up nearly 30 percent since getting crushed to its lowest level since 2012 in March. Bulls, however, have slightly favored Japan’s Nikkei 225 index, bidding it 34 percent higher since its March lows.
While the market flashed warning signs in recent weeks - such as the risk-sensitive AUD/USD selling off at its March 9 resistance level on Wednesday. Bulls in both equity and forex markets have yet to capitulate to macro themes surrounding the increasing tensions between Hong Kong and China, an issue that may begin to dictate the more prominent US-China relationship.

AUD/USD Price Outlook: Australian Dollar Risk Reversals Slump

Friday 29th May, 2020

AUSTRALIAN DOLLAR OUTLOOK: AUD/USD PRICE ACTION FACES HEADWINDS AS RISK REVERSALS STALL AMID CHINA TENSION

Australian Dollar bulls have kept the Aussie bid since the sentiment-linked currency bottomed out roughly two months ago. Spot AUD/USD price action has surged nearly 20% off its March 28 swing low as trader appetite for risk continues to recover from the recent coronavirus panic. Relentless strength in the Australian Dollar over the last several trading sessions, which looks largely fueled by coronavirus vaccine hope, has essentially erased the 1,000-pip plunge against its US Dollar peer notched earlier this year.
A daunting confluence of technical resistance near the 0.6700 handle presents a notable obstacle for spot AUD/USD price action, however. This potential area of opposition is underpinned by the 200-day moving average and 76.4% Fibonacci retracement of its year-to-date trading range.

Dow Rallies as Nasdaq 100 Drops - Swapping Trends or Topping Out?

Thursday 28th May, 2020

DOW, DJIA, NASDAQ 100, NDX PRICE ANALYSIS

It’s been a fairly amazing past two months across US equity markets. After US equity indices lost more than a third of their value in a little over a month, an onslaught of government stimulus programs have helped to not only reverse the trend but to push US stocks right back towards those prior all-time-highs. And with low rates for the foreseeable future combined with a Central Bank that’s very willing to do what’s needed to keep financial markets running smoothly, such as Jerome Powell highlighting that there’s ‘no limit’ to what the Fed can do with the lending programs available – it appears that the fear that had driven into markets so aggressively just a couple of months ago has now faded away. And to be sure, there’s much to be optimistic about. In the, US a number of areas are beginning to reopen in anticipation of the summer. The recent Memorial Day weekend went through without any nasty headline surprises, as we’d become accustomed to over the past couple of months; and there’s even hope for a vaccine sooner rather than later, given investors and traders a number of reasons to continue driving stock prices higher.

US Dollar Eyes Rising China Tension as Jobless Claims Mount

Thursday 28th May, 2020

US DOLLAR FINDS SUPPORT, ESCALATING TENSION OVER HONG KONG AUTONOMY COULD CATALYZE BREAKDOWN IN CHINA TRADE DEAL

The US Dollar gained ground on Wednesday and showed strength against its pro-risk AUD peer in particular. US Dollar found support as tension with China escalated further after Secretary of State Mike Pompeo testified to congress that Hong Kong is no longer independent from Beijing. According to the latest statement from Pompeo, China’s security law looks to “fundamentally undermine Hong Kong’s autonomy and freedoms.” This also follows the recently-passed Senate oversight bill and increasingly hawkish rhetoric from the White House as Trump talks tariffs. Traders steered safe-haven currencies higher in response to the developments seeing that this could jeopardize Hong Kong’s special trade status with the United States and perhaps undermine the phase one US-China trade deal. China trade friction heating up with Australia – its largest trading partner as highlighted in this analysis by Dimitri Zabelin – likely contributed to the plunge in spot AUD/USD price action as well.

S&P 500 Forecast: Break Out or Fake Out?

Wednesday 27th May, 2020

S&P 500 FORECAST: BREAK OUT OR FAKE OUT?

The S&P 500 crossed the 3,000 mark on Tuesday, trading above the level for the first time since March 6. To be sure, the price-point possesses notable psychological significance and its failure to keep price beneath may suggest the index is headed higher still. That being said, risks to the rally remain and false breaks have occurred before. First and foremost is the growth-shattering effects of coronavirus. By this time, investors and economists have become well acquainted with the slowdown in economic activity, but the market is still recognizing new shocks almost daily as dominoes continue to fall.

AUD/USD Rate Faces Key Test as March High Sits on the Radar

Wednesday 27th May, 2020

AUD/USD RATE FACES KEY TEST AS MARCH HIGH SITS ON THE RADAR

The Australian Dollar has outperformed against all of its major counterparts so far in May, and AUD/USD may continue to exhibit a bullish behavior as governments across Australia continue to roll back the lowdown laws. In response, the Reserve Bank of Australia (RBA) may retain the current policy at the next meeting on June 2 as “members agreed that the Bank's policy package was working broadly as expected,” and the central bank appears to be on track to carry out a wait-and-see approach over the coming months as “members assessed that the best course of action was to maintain the current policy settings and monitor economic and financial outcomes closely.”

US Dollar May Rise as SGD Falls on US-China Woes, Indian Rupee at Risk

Tuesday 26th May, 2020

US DOLLAR ASEAN WEEKLY RECAP

The US Dollar experienced a broadly neutral week against its ASEAN counterparts such as the Singapore Dollar, Philippine Peso and Malaysian Ringgit. As anticipated, ASEAN currencies spent most of their time following investors’ risk appetite. Optimism for a coronavirus vaccine from Moderna earlier in the week was then overshadowed as China imposed more stringent control over Hong Kong, plunging the Hang Seng. A notable standout was the Indonesian Rupiah, which managed to gain about one percent against the US Dollar. The Bank of Indonesia unexpectedly left rates unchanged as it reiterated the need for market intervention to defend its currency. 

USD/CAD Rate to Face Record Decline in Canada GDP

Tuesday 26th May, 2020

USD/CAD RATE TO FACE RECORD DECLINE IN CANADA GDP

USD/CAD continues to track the April range even though Bank of Canada (BoC) Governor Stephen Poloz endorses a dovish forward guidance ahead of his departure, but Canada’s 1Q Gross Domestic Product (GDP) report may influence the exchange rate as the update is expected to show the biggest contraction since the data series began in 1961. USD/CAD appears to be stuck in a narrow range as Governor Poloz defends the response to COVID-19, with the central bank head insisting that “a well-functioning financial system is a necessary precondition for effective monetary policy.”

AUD May Fall on Australia-China Tensions, Euro Eyes €500b Proposal

Monday 25th May, 2020

AUD TENSES UP AS AUSTRALIA-CHINA RELATIONS DETERIORATE

The Australian Dollar may face higher-than-usual selling pressure in the week ahead as economic data continues to underline the impact of the coronavirus pandemic. As a major commodity exporter, shifts in sentiment frequently impact the cycle-sensitive AUD. In addition to an unfavorable global backdrop, the export-oriented country is now experiencing growing tension with China – its largest trading partner.

S&P 500 Struggling at Resistance, Volatility Risk Ahead Elevated

Monday 25th May, 2020

S&P 500, US DOLLAR, AUSTRALIAN DOLLAR, HONG KONG – ASIA PACIFIC MARKET OPEN

The S&P 500 and Dow Jones ended Friday +0.24% and -0.04% respectively in what was a rather mixed session for global equities. The haven-linked US Dollar and similarly-behaving Japanese Yen trimmed some of their gains during the North American trading session. This is also as the sentiment-linked Australian Dollar and New Zealand Dollar regained some lost ground from early on.

IBEX 35 Price Sluggish, Spain Stock Index Lags Euro Area Peers

Friday 22nd May, 2020

IBEX 35, DAX, EURO AREA, TECHNICAL FORECAST

The IBEX 35 index continues to lag its Euro Area counterparts since March, when the Spanish index recorded its lowest level since 2003, as the COVID-19 pandemic sent global markets into a tailspin earlier this year. Since that March low, the index has rallied 13.4%. However, Germany’s DAX index is nearly 40% higher from the index’s multi-year low set on March 19.

British Pound Price Outlook: GBP/USD Bounces - Will Sellers Respond?

Friday 22nd May, 2020

GBP, BRITISH POUND, STERLING PRICE ANALYSIS

It has so far been a brighter outlay this week for the British Pound as the currency has bounced against both the US Dollar and the Japanese Yen. Last week was marked by weakness in Sterling as sellers pushed each of those pairs down to fresh monthly lows; but at least a portion of that has been offset this week as both GBP/USD and GBP/JPY have thus far put in net gains, even as talk of negative interest rates from the BoE began to circulate through the headlines.

Australian Dollar Lower, Trump Tweets Against Xi Stoke Risk Aversion

Thursday 21st May, 2020

AUSTRALIAN DOLLAR, US-CHINA TENSIONS, RESERVE BANK OF AUSTRALIA GOVERNOR PHILIP LOWE SPEECH, TALKING POINTS:

The Australian Dollar drifted lower on Thursday as risk aversion grew in the Asia-Pacific session on what appeared to be a ramping up of tensions between China and the United States. US President Donald Trump directly criticized his Chinese counterpart, Xi Jinping, in a series of Tweets suggesting Xi’s direct responsibility for a “disinformation and propaganda attack on the United States and Europe.”

BTC/USD Analysis After Halving, Ethereum Technical Update

Thursday 21st May, 2020

BITCOIN PRICE CHART, ETHEREUM ANALYSIS, BTC/USD, ETH/USD – TALKING POINTS

BTC/USD recently experienced the highly-anticipated so-called “halvening” and is now trading above a compression zone marked by the multi-week uptrend and resistance at 9140.00. After bottoming out at a one-year low at 4857.84 , BTC/USD has since risen over 90 percent. The pair may now challenge a point of resistance at 10,540.49 where it had previously stalled in November 2019 and February of this year

CAD Outlook vs British Pound and New Zealand Dollar

Wednesday 20th May, 2020

CANADIAN DOLLAR OUTLOOK VS BRITISH POUND

GBP/CAD recently fell over 3.40 percent following a false breakout above descending resistance dating back to early-March. However, recent price action suggests the pair may be bottoming out at 1.7006 and could once again challenge the slope of depreciation. If the pair manages to clear it with follow-through, the next point of resistance could be a ceiling at 1.7276 (purple-dotted line).
On the other hand, if bold price action becomes more timid as the pair approaches descending resistance and capitulation ensues, it could cast a bearish shadow on the pair. This may in turn catalyze an aggressive selloff and cause GBP/CAD to shatter several layers of support. In this scenario, selling pressure could start abating at 1.6851.

New Zealand Dollar Stalls? Dow Jones Turns, Stat Flaks Moderna Vaccine

Wednesday 20th May, 2020

NEW ZEALAND DOLLAR, NZD/USD, BREXIT, MODERNA, VIRUS VACCINE – ASIA PACIFIC MARKET OPEN

The growth-linked New Zealand Dollar managed to hang on to most of its gains over the past 24 hours despite a downturn in sentiment during the final hours of the North American trading session. That sent the Dow Jones and S&P 500 -1.59% and -1.05% respectively as my Wall Street index rejected critical resistance from April. The anti-risk Japanese Yen trimmed losses as the haven-linked US Dollar ended relatively flat. Equities and the British Pound received a boost in late Asia Pacific trade when reports crossed the wires that the United Kingdom announced a new post-Brexit tariff regime. The plan would cut about GBP30 million in tariffs after the nation leaves the European Union following the 11-month transition period.

Silver May Still Lose Out To Gold Once Covid Effects Fade

Tuesday 19th May, 2020

SILVER PRICES, GOLD/SILVER RATIO, TALKING POINTS

The gold/silver ratio has risen sharply as Covid ravaged global markets and national economies but investors betting for any near-term reversal could be disappointed. The ratio itself simply represents the number of ounces of silver it takes to buy a single ounce of gold at current prices. It reached 112.82 on March 2. Now, it’s very difficult to talk of all-time highs when it comes to assets valued by humans before recorded history, but this is certainly as high as the ratio has been for more than a century.

S&P 500 Forecast: Crude Oil Price Rebound Sees Energy Gains Pace Tech

Tuesday 19th May, 2020

S&P 500 FORECAST: CRUDE OIL PRICE REBOUND SEES ENERGY GAINS PACE TECH

US equities rocketed higher to start the week as the S&P 500 reached its highest level since early March. Hopes of a coronavirus vaccine and commentary from Fed Chairman Jerome Powell were touted as drivers behind the surge and a similarly bullish move in crude oil and other growth-linked assets would suggest robust risk appetite. More specifically, the rebound in crude oil saw the commodity climb to its highest level since March 13 which has likely bolstered the performance of some S&P 500 stocks in the energy sector.

BoE Policy Decision - GBP Picks Up But Central Bank Warns of Slumping Q2 GDP

Thursday 07th May, 2020

BANK OF ENGLAND (BOE) UNCHANGED BUT Q2 GROWTH AND UNEMPLOYMENT LOOK DIRE

The latest Bank of England (BoE) policy meeting saw all policy measures left unchanged but the accompanying MPC warned of a potential slump in Q2 GDP and rising unemployment. Interest rates were left untouched at 0.1% while the bond buying program, QE, remained at GBP645 billion.Two MPC members, Michael Saunders and Jonathan Haskel, voted to increase QE by GBP 100 billion. Bank of England governor Andrew Bailey is scheduled to speak about today's decision at 10:00 UK.
‘While there are wide bands of uncertainty around any estimates of activity at the present time, UK GDP is expected to be close to 30% lower in 2020 Q2 than it was at the end of 2019 (Chart 1.2). UK GDP is expected to have fallen by around 3% in 2020 Q1 and then to fall by a further 25% in Q2’

GBP/USD May Fall as the Bank of England Strikes a Gloomy Tone

Thursday 07th May, 2020

BRITISH POUND, BANK OF ENGLAND – TALKING POINTS

A monetary policy announcement from the Bank of England (BOE) headlines the economic calendar on Thursday. In addition to the latest decision from the rate-setting MPC committee and the minutes of its meeting, the markets will get an updated quarterly Inflation Report (QIR) laying out the central bank’s latest economic forecasts and the latest guidance on what actions it may take in the months ahead.
UK economic data has echoed the sharp deterioration elsewhere amid the Covid-19 outbreak. News flow has dramatically deteriorated relative to baseline expectations and PMI surveys flag an ‘unprecedented’ downturn. Nevertheless, financial conditions have eased a bit since the Federal Reserve leaned in to arrest credit crisis risk last month, so the BOE may opt to hold back further action of its own for now.

S&P 500 Jumps, VIX Sinks Amid Volatility Squeeze; Will it Last?

Wednesday 06th May, 2020

S&P 500 PRICE OUTLOOK: STOCK MARKET BOLSTERED BY VOLATILITY COMPRESSION, BUT VIX INDEX FUTURES SIGNAL FEAR STILL LINGERS

The S&P 500 has rebounded more than 30% since the popular stock market index bottomed on March 23. Stocks recovered sharply following a series of unparalleled efforts from global governments and central banks – like unlimited QE from the Fed and $2.3 trillion coronavirus stimulus bill from US Congress. A retracement lower in measures of volatility, such as the S&P 500 VIX Index, likely encouraged the improvement in trader sentiment as well. Generally speaking, there is a strong inverse relationship observed among the direction of risk assets, like stocks, and level of market volatility. This is indicated by the negative correlation typically held between S&P 500 price action and the VIX Index.

Nasdaq 100 Forecast for the Week Ahead, Unemployment to Soar?

Wednesday 06th May, 2020

NASDAQ 100 FORECAST FOR THE WEEK AHEAD

The Nasdaq 100 continues to show strength in comparison to other stock markets, even its Dow Jones and S&P 500 counterparts. Still, the tech-heavy index is not out of the woods and although quarantine restrictions appear to be easing in some parts of the country, further gains will have to negotiate a looming non-farm payrolls report.
As it stands, many Federal Reserve officials – including Chairman Jerome Powell – have warned that the upcoming data release may reveal an unemployment rate well into the double digits. White House Economic Adviser Kevin Hassett issued a more specific projection, saying April unemployment will be “north of 16%.”

How to Trade the Impact of Politics on Global Financial Markets

Tuesday 05th May, 2020

ANALYZING GEOPOLITICAL RISKS

Against the backdrop of eroding fundamentals, markets become increasingly sensitive to political risks as their capacity for inducing market-wide volatility is amplified. When liberal-oriented ideologies – that is, those favoring free trade and integrated capital markets – are being assaulted on a global scale by nationalist and populist movements, the frequent results are violent volatility stemming from uncertainty.
What makes political risk so dangerous and elusive is the limited ability investors have for pricing it in. Traders may therefore find themselves hot under the collar as the global political landscape continues to unpredictably shift. Furthermore, much like the spread of the coronavirus in 2020, political pathogens can also have a similar contagion effect.

Stock Market Forecast: Should I Sell in May and Go Away?

Tuesday 05th May, 2020

STOCK MARKET FORECAST

The Dow Jones recorded an astonishing 34% climb from its March 23 low to April 30. Since investors flipped their calendars to the new month, however, US stocks and global equities have started to slide. This brings the sell in may and go away stock market anomaly into focus – a narrative explaining abnormally poor Dow Jones performance throughout May and summer months.
Sell in May and go away might look like a statistical phenomenon on the surface, and contradiction of the efficient market hypothesis, but taking a deeper dive into macroeconomic history, and drawing upon context of major financial crises, reveals fundamental catalysts often explain why the Dow Jones and broader stock market have experienced lackluster returns during May and summer months.

US Dollar and Yen Aim Higher as Stocks Drop, Trump Talks Tariffs

Monday 04th May, 2020

US DOLLAR, YEN, STOCKS, TRUMP, TRADE WAR – TALKING POINTS

Financial markets started the trading week in a downbeat mood. Futures tracking the bellwether S&P 500 stock index gapped lower, with sentiment-linked assets including the Australian and New Zealand Dollars down in tandem. The anti-risk US Dollar and Japanese Yen tracked higher.
The move seems to echo Friday’s dour tone on Wall Street, where shares faced the heaviest selling pressure in a month. It is difficult to ignore that the about-face in sentiment occurred at the April-to-May handoff. I am typically dubious of seasonal “patterns”, but a kind of monthly reset is perhaps not so outlandish.

Japanese Yen May Rise as CLO Market Faces Credit Downgrades

Monday 04th May, 2020

JAPANESE YEN MAY RISE ON CREDIT DOWNGRADES RISKS

The Japanese Yen may extend its gains versus its peers if stress in the market for collateralized loan obligations (CLOs) is amplified in the current environment. The almost $700 billion market is the biggest part of the broader $1.2 trillion market for so-called ‘leveraged loans’. These are debt obligations typically belonging to borrowers on the lower end of credit ratings but whose higher level of risk offers comparatively more generous returns.
The appeal of leveraged loans and the lower tranches of CLOs is the double digit returns they offer, which has been particularly magnified in an environment of falling interest rates. The negative-yielding bond market almost topped $17 trillion in 2019.

Euro Stoxx 50, IBEX Price Forecasts: Bulls Eye Trend Higher

Friday 01st May, 2020

Euro Stoxx 50 Price Analysis

European stocks closed out April on a sour note Thursday, with the Euro Stoxx 50 index declining over 3 percent. The downward price action follows grim economic data in the Eurozone along with new stimulus measures announced from the ECB. While the European index, representing the 50 largest companies in Europe, is down 24 percent year-to-date, April closed out a 4.35 percent gain in USD pricing, despite the weak finish Thursday.
Swinging from the March low, the index recently failed to clear its 50.0% retracement level. The trend higher remains intact, however. A move lower may find assistance from an earlier area of resistance, later turned support near the 38.2% retracement zone. Bulls will look to clear the psychological price level at 3000, and then the April high of 3050.19, set Thursday.

Apple and Amazon Earnings Highlight Detachment from Real Economy

Friday 01st May, 2020

Apple and Amazon Earnings Highlight Detachment from Real Economy

Two of the most important stocks on the S&P 500 and Nasdaq 100 reported earnings Thursday afternoon, delivering key insight for equity investors. The mega-cap corporations possess significant weighting in both indices and have notable influence over sentiment in the technology sector. Therefore, the strong financial results from both companies is an encouraging sign for further equity gains but a closer look reveals a detachment of corporate performance and economic activity.
Unlike much of the corporate world, Apple not only delivered a strong quarter with both revenue and earnings per share beating expectations, but also laid out plans to buyback another $50 billion in AAPL stock.

Japanese Yen May Rise as CLO Market Faces Credit Downgrades

Thursday 30th April, 2020

Japanese Yen May Rise on Credit Downgrades Risks

The Japanese Yen may extend its gains versus its peers if stress in the market for collateralized loan obligations (CLOs) is amplified in the current environment. The almost $700 billion market is the biggest part of the broader $1.2 trillion market for so-called ‘leveraged loans’. These are debt obligations typically belonging to borrowers on the lower end of credit ratings but whose higher level of risk offers comparatively more generous returns.
The appeal of leveraged loans and the lower tranches of CLOs is the double digit returns they offer, which has been particularly magnified in an environment of falling interest rates. The negative-yielding bond market almost topped $17 trillion in 2019. At the end of that same year, 51 percent of all new investment grade bonds were rated BBB. Put another way, a majority of comparatively safer debt issues wereright on the cusp of being designated “noninvestment grade” or “junk”.

Australian Dollar Slide Halts As China PMI Holds Above 50 But Misses Forecast

Thursday 30th April, 2020

Australian Dollar, Official China Purchasing Managers Index Talking Points

The Australian Dollar’s Thursday slide was slowed by news that China’s economy continues to recover well from the ravages of coronavirus, even if not quite as well as expected on all counts.
The official April Purchasing Managers Index for the manufacturing sectors came in at 50.8, which was below both the 52.0 seen in March and the 51.0 expected. However, it was above the important 50 point and that seems to have been enough for the market.
In the logic of PMI data, it takes a reading above 50 to signify expansion. The manufacturing series hit a low of 35.7 in February, as coronavirus shuttered the economy, but has bounced back into expansion territory with astonishing speed.

Dow Jones, FTSE 100, DAX 30 Outlook: Retail Investors Selling Again?

Wednesday 29th April, 2020

What Does Trader Positioning Say About Global Stock Market Trends?

Upside momentum in global equity indexes such as the Dow Jones, FTSE 100 and DAX 30 has been cautiously reinvigorated since I discussed them last week. Short exposure in these from retail traders has been slowing climbing since. Will this continue and what can that mean for global markets ahead?
According to IG Client Sentiment (IGCS), about 36.39% of traders are net long the Dow Jones at the time of this writing. This is down from about a 65% net long standpoint when prices bottomed last month. Yet those biased to the upside are up 6.03% from yesterday while down 4.91% over a weekly basis. The combination of current sentiment and recent changes gives a further mixed Wall Street trading bias.

Australian Dollar Ticks Up As Inflation Rises, Virus likely Blunts Impact

Wednesday 29th April, 2020

Australian Dollar, First Quarter Consumer Price Inflation Talking Points

The Australian Dollar rose a little on Wednesday as inflation in its home nation rose above expectations even though the prospect of higher interest rates remains a distant one at best thanks to the impact of coronavirus.
Official data showed the Consumer Price Index up by 0.3% on the quarter and 2.2% on the year. The annualized rise was well ahead of expectations, which had looked for a 1.9% rise, and also pushed price rises back into the Reserve Bank of Australia’s target band for the first time since the second quarter of 2018.

Copper Prices Could Offer Best Coronavirus-Recovery Steer

Tuesday 28th April, 2020

COPPER PRICES, GLOBAL CORONAVIRUS RECOVERY PATH, TALKING POINTS

As the world staggers out of induced economic coma forced on it by the coronavirus, crude oil prices may offer on overly gloomy prognosis of its chances. Copper could rather promise the better steer.
While no one thinks that contagion will be anything other than a hammer blow to the global economy, it probably isn’t as hard a one as you might pardonably think if you merely eyed crude oil’s collapse.
While an obvious global bellwether, the oil market has its own dynamics. And the actions of producers since March, when production cuts could not be agreed, to the present day, when they have been but too late to stop a petroleum glut sloshing round a locked-down world with no use for it, are playing a huge part in the daily oil market fire sale.

New Zealand Dollar Slips, Ardern's Virus Caution Adds To Risk-Off Tone

Tuesday 28th April, 2020

NEW ZEALAND DOLLAR TALKING POINTS

The New Zealand Dollar slipped markedly on Tuesday as the country’s Prime Minister Jacinda Ardern reportedly cautioned people to remain at home if possible, reminding investors that the struggle against coronavirus will be long even in countries where it has been most successful so far.
Further falls for crude oil, despite this month’s heavy production cuts, have also weighed on growth correlated assets like the Kiwi, Australian Dollar and equities.
NZD/USD nosedived after reported comments from Ardern, although they were in themselves hardly shattering, urging continued vigilance against the disease.

Japanese Yen Up, Nikkei 225 Down After BOJ Expands Policy Support

Monday 27th April, 2020

BANK OF JAPAN, YEN, NIKKEI 225, COVID-19, STIMULUS - TALKING POINTS:

Financial markets were seemingly underwhelmed as the Bank of Japan attempted to boost stimulus efforts in the face of headwinds from the global Covid-19 outbreak. The Japanese Yen rose against an average of its major counterparts (white candles on the chart below) while its local benchmark for stocks – the Nikkei 225 index (turquoise candles) – traded lower.
BOJ Governor Haruhiko Kuroda and company expanded its lending facilities to more banks, scrapped limits on purchases of government bonds while increasing the size of planned commercial paper and corporate debt uptake to ¥20 trillion. Policymakers said they will not hesitate to take additional steps to ease credit conditions, if that is judged to be necessary.

US Dollar, ASEAN Fundamental Outlook: SGD, IDR, MYR and PHP

Monday 27th April, 2020

US DOLLAR ASEAN WEEKLY RECAP

The US Dollar was on average a little lower versus ASEAN currencies such as the Indonesian Rupiah, Malaysian Ringgit and Philippine Peso last week – see chart below. Volatility was subdued as aggressive upside momentum on Wall Street ebbed. After a rough start to the week as crude oil prices temporarily turned negative, the Dow Jones declined -1.93% over the past 5 trading days. Equities trimmed losses on Friday.
As I mentioned in last week’s ASEAN fundamental outlook, the focus for pairs such as USD/SGD, USD/IDR, USD/MYR and USD/PHP by and large remain on development in global market sentiment. This may have been why the Singapore Dollar struggled to achieve notable gains after local industrial production surged 16.5% y/y in March versus -4.9% anticipated. That was the sharpest reinvigoration since January 2018.

USD/CAD Rate Breakout Flops Ahead of April High

Friday 24th April, 2020

CANADIAN DOLLAR TALKING POINTS

USD/CAD consolidates despite the break of the descending channel, and the exchange rate may trade within a more defined range amid the failed attempt to test the monthly high (1.4298).
USD/CAD continues to pullback from the weekly high (1.4265) amid the limited reaction to Canada’s Consumer Price Index (CPI), and the exchange rate appears to be on track to revisit the monthly low (1.3855) as it initiates a fresh series of lower highs and lows.
However, the update to Canada’s CPI warns of a more pronounced slowdown in economic activity as the headline reading for inflation narrows to 0.9% from 2.2% in February amid forecasts for a 1.1% print.

How Do Politics and Central Banks Impact FX Markets?

Friday 24th April, 2020

MARKETS HAVE PASSED THE POLITICAL EVENT HORIZON

For foreign exchange (“forex” or “FX”) traders, the constant background noise that politics represents is an inescapable blackhole. Traditional media drowns in punditry, while social media drowns in puns. It doesn’t matter what asset class you’re trading either.In recent years, even a single tweet from a politician has had the capacity to move not only currencies but also bonds,commodities, and equities.
In an increasingly fractious landscape, traders need a framework by which to interpret information and understand political developments as they happen. After all, politics can become policy after enough time and effort. To this end, FX traders need a way to interpret information and political developments in the context of how fiscal policy could change and how that might impact their portfolios.

Silver, Palladium Outlook Bearish as Prices Cross Key Threshold

Thursday 23rd April, 2020

PALLADIUM PRICES FORECAST

Palladium has struggled to recover from the over 40 percent drop after peaking at 2855.00, and may now be on the verge of suffering additional losses. XPD/USD bottomed out at the September 2019-low at 1596.00 and spiked over 20 percent. The fundamental catalyst behind the precious metal’s recovery may have had to do in large part from the prospect of virus-induced disruptions to key mining operations in South Africa.
This supply shock temporarily alleviated the downside pressure being exerted on the growth-anchored precious metal after the virus catalyzed a market-wide selloff in risk-oriented assets across the world. However, palladium recently suffered its biggest one-day loss on April 21 and is now trading below a key inflection point at 1950.50. If the breach is met with follow-through, XPD/USD may retest support at 1596.00.

Euro Fell, US Dollar May Rise if Asia Stocks Look Past Wall Street

Thursday 23rd April, 2020

EURO SINKS AS US DOLLAR GAINS, AUSTRALIAN DOLLAR BENEFITS FROM WALL STREET RISE

The Euro was one of the worst-performing G10 currencies on Wednesday. EUR/USD sold off ahead of today’s summit between European Union leaders where members will be discussing the next steps in handling the coronavirus pandemic. In particular, there may have been some pessimism over a US$2.2 trillion plan to support regional economic growth.
This window of opportunity allowed the haven-linked US Dollar to trim most of its losses during a relatively optimistic day in global equities. The S&P 500 and Dow Jones closed 2.29% and 1.99% to the upside respectively, bringing a halt to two days of consecutive losses. This upbeat mood benefited the growth-linked Australian Dollar while also boosting the similarly-behaving New Zealand Dollar.

Hong Kong Dollar Curbed By HKMA as Covid-19 Measures Weaken USD

Wednesday 22nd April, 2020

HONG KONG DOLLAR, HANG SENG, HONG KONG MONETARY AUTHORITY, FX INTERVENTION - TALKING POINTS:

Investors all over the world may have cheered the massive stimulus programs put in place to combat the economic drag of coronavirus, but they’ve caused some headaches for emerging markets, with Hong Kong a case in point.
Lower US interest rates have increased the charms of the Hong Kong Dollar, already a market darling thanks to Chinese investors’ fondness for the local stock market, the Hang Seng. Higher rates at the city’s banks have attracted inflows as US borrowing costs have fallen back to zero, pushing the Hong Kong Dollar to the top of its permitted trading range against the greenback.

How to Trade the Impact of Politics on Global Financial Markets

Wednesday 22nd April, 2020

ANALYZING GEOPOLITICAL RISKS

Against the backdrop of eroding fundamentals, markets become increasingly sensitive to political risks as their capacity for inducing market-wide volatility is amplified. When liberal-oriented ideologies – that is, those favoring free trade and integrated capital markets – are being assaulted on a global scale by nationalist and populist movements, the frequent results are violent volatility stemming from uncertainty.
What makes political risk so dangerous and elusive is the limited ability investors have for pricing it in. Traders may therefore find themselves hot under the collar as the global political landscape continues to unpredictably shift. Furthermore, much like the spread of the coronavirus in 2020, political pathogens can also have a similar contagion effect.

Euro Trembles Ahead of EU Leaders Summit as Regional Recession Looms

Tuesday 21st April, 2020

EURO MAY CRACK UNDER PRESSURE AS POLITICAL FISSURES GROW

The politically-sensitive Euro continues to be held hostage by intra-regional negotiations over how to combat the coronavirus. While covid-19 has affected the entire region, economies with pre-existing debt issues – most notably those bordering the Mediterranean like Italy and Spain – have been hit asymmetrically. Their economically-precarious situations have made them more vulnerable than their Northern neighbors.
Consequently, the approach on how to address the virus-induced slowdown is divided along similar lines, though it should be noted that this fissure always existed – the virus merely exacerbated it. Distressed member states in the South have pushed issuing so-called “coronabonds”, a frequently-broached debt mutualizing proposal that has failed to gain a wide-spread consensus.

Australian Dollar Steady As RBA Minutes Show Bank Content To Wait

Tuesday 21st April, 2020

AUSTRALIAN DOLLAR, RESERVE BANK OF AUSTRALIA MONETARY POLICY MINUTES, TALKING POINTS:

The Australian Dollar was steady on Tuesday following the release of minutes from the last Reserve Bank of Australia monetary policy meeting, on April 7.
The central bank left its key Official Cash Rate at 0.25% after it. declining the quarter-point reduction that markets narrowly expected. The OCR fell twice in March, however, to its current record low of 0.25%, with an extra cut added as part of measures to mitigate the economic effects of the coronavirus.
The minutes left the perhaps predictable impression that. considerable monetary and fiscal stimulus having been applied, the central bank was now content to wait and see what more was needed.

Bitcoin Price: How Will Halving, Coronavirus Affect BTC?

Monday 20th April, 2020

WHAT IS BITCOIN HALVING?

Bitcoin halving is the process in which so-called “miners” – covered in the section below – are rewarded 50% fewer BTC for verifying transactions in the blockchain network. This is scheduled to occur every 210,000 blocks and is designed to help preserve Bitcoin’s allure as a store of value. The cap for Bitcoin is set at 21 million, thereby keeping the supply finite. There is no Bitcoin central bank that can simply print more BTC. In fact, the guiding purpose of the cryptocurrency and the very thing underpinning its broad appeal is that it operates on a decentralized network that cannot be controlled by a single person or institution.

Oil Price Collapse Claims Scalp as Major Trader Files for Bankruptcy

Monday 20th April, 2020

MAJOR OIL TRADER’S COLLAPSE, RISK APPETITE. TALKING POINTS:

In every major crisis there comes a point at which weakening economic numbers translate into corporate scalps and the nodal Singapore energy market has reached that point. Its biggest oil trading firm Hin Leong Trading has filed for bankruptcy protection, seeking to restructure nearly $4 billion in debt.
If course, the energy sector has taken an unprecedent hit. The coronavirus has shredded energy-demand forecasts even as major producers saturate the market with cheap oil. Oil prices have collapsed to lows not seen since 2001, even after major production cuts which have so far done nothing to revive it.

US Dollar & VIX Index Climb, Stock Market Rally at Wits End?

Friday 17th April, 2020

STOCK MARKET FORECAST – US DOLLAR & VIX ‘FEAR-GAUGE’ ON THE RISE AS EQUITY RECOVERY LOSES MOMENTUM

US Dollar stretches higher as unemployment continues to mount, FX volatility snaps back and the recent wave of coronavirus optimism stalls. S&P 500 price outlook grows increasingly bearish along with the Dow Jones, Nasdaq and Russell 2000 owing to the latest coronavirus update. The VIX Index ‘fear-gauge’ pops on news the SBA Payroll Protection Program ran out of funding while stock market earnings season disappoints and crude oil remains under pressure.
The US Dollar is back in the driver seat as the DXY Index spikes higher following the return of currency volatility. US Dollar upside recorded so far this year has been driven largely by demand for safe-haven assets.

Australian Dollar Struggles As China GDP Falls More Than Expected

Friday 17th April, 2020

AUSTRALIAN DOLLAR, CHINA FIRST QUARTER GROSS DOMESTIC PRODUCT DATA, TALKING POINTS:

The Australian Dollar backtracked a little Friday on news that China’s economy shrank in the first quarter of this year, and by more than the markets had expected, as coronavirus exacted its toll.
Official Gross Domestic Product was down by 6.8% on the year, worse than the 6.5% expected and the 6% rate seen at the end of 2019. March industrial production was released at the same time. It slipped by a relatively modest 1.1%, much better than the 7.3% feared and hugely better than February’s 13.5$ collapse. Retail sales plunged, however, falling by 15.8% last month when a slide of only 10% had been expected.

Copper Prices May Bounce Back on China GDP After Virus-Induced Selloff

Thursday 16th April, 2020

COPPER PRICES, IMF GDP PROJECTION, CHINESE ECONOMIC RECOVERY - TALKING POINTS:

Copper prices continue to struggle as the keystone industrial metal collapses under the economic fallout from the COVID-19 pandemic. The price for the red metal is down nearly 18 percent year-to-date, and more than 50 percent from highs set in 2011.
However, a recent bounce may reflect growing confidence for the world to stage an economic comeback, particularly in China. As a staple industrial metal, copper is especially sensitive to secular trends to demand-side drivers in the economy such as construction, particularly in high-growth major economies, like China. Given that, the slowdown in Chinese economic activity, measured through GDP, helps to explain the downtrend from the 2011 highs in copper.

Mexican Peso Price Drops on Fitch Downgrade, Australian Dollar at Risk

Thursday 16th April, 2020

MEXICAN PESO SINKS AS FITCH DOWNGRADES CREDIT RATING, AUSTRALIAN DOLLAR WEAKENS

The Mexican Peso fell over one percent against the US Dollar after Fitch downgraded Mexico’s credit rating to ‘BBB-‘ from ‘BBB’. This is one notch above non-investment grade which places the nation on the precipice of junk status. The outlook remained stable however. Mexico’s economy, like most nations, is under pressure as growth, trade and output slow amid the coronavirus outbreak. It’s top trading partner, the US, is no exception.
USD/MXN - broadly speaking - was already aiming higher prior to this announcement due to the pessimistic shift in financial markets on Wednesday. The Dow Jones and S&P 500 closed -2.20% and -1.86% to the downside respectively.

Dow Jones, DAX 30, CAC 40 Outlook: Short Bets Hint Prices May Be Lifted

Wednesday 15th April, 2020

WHAT DOES TRADER POSITIONING SAY ABOUT GLOBAL STOCK MARKET TRENDS?

Global equities have extended their bounce off last month’s low as investors continued broadly selling into their uptrends. These indexes include the Dow Jones, DAX 30 and CAC 40. Now, overall net-short positioning seems to be sitting at levels prior to the outbreak of the coronavirus. What can this mean for the outlook ahead? I discuss it in this week’s session on IG Client Sentiment (IGCS) – see recording above. According to IGCS, about 27.67 percent of traders are net long the Dow Jones at the time of this writing. That is down from about a 65% upside bias when prices bottomed in March. Since then, the Dow climbed over 30 percent as traders attempted to pick the next top. From here,

Stock Markets Rise Even As Coronavirus Remains Unconquered. Why?

Wednesday 15th April, 2020

GLOBAL EQUITY GAINS DESPITE CORONAVIRUS, TALKING POINTS:

Since late March the world has been faced with the counter-intuitive site of rising global stock markets despite the continued spread of the coronavirus pandemic and the crippling economic blows it has dealt. Australia’s blue-chip ASX 200 benchmark can serve as a case in point. Battered by the virus down to lows not seen since 2012, the index has recovered by well over a thousand points since March 23. Gains of similar or even greater magnitude can be seen across major indexes. And yet, most national economies remain paralyzed, lockdowns prevent economic engagement while growth forecasts tank and joblessness soars. The coming corporate earnings season is viewed with trepidation.

Gold Price Rally to Persist If RSI Pushes Into Overbought Territory

Tuesday 14th April, 2020

GOLD PRICE TALKING POINTS

The price of gold clears the March high ($1704) as the Federal Reserve plans to provide $2.3T in loans to US households and businesses, and the precious metal may extend the advance from earlier this month if the Relative Strength Index (RSI) pushes into overbought territory.
The price of gold climbs to a fresh yearly high ($1724) as the Federal Reserve unveils the ‘Main Street Lending Program’ along with additional unconventional tools in order to “provide powerful support for the flow of credit in the economy.”

Australian Dollar Outlook Eyes Chart Setup, Crude Oil Looks Past OPEC

Tuesday 14th April, 2020

AUSTRALIAN DOLLAR GAINS, CRUDE OIL PRICES STRUGGLE AS WALL STREET EYES EARNINGS SEASON

The Australian Dollar gained on Monday and may continue to rise during Tuesday’s Asia Pacific trading session. Wall Street futures received a cautious bump during the White House daily press briefing after President Donald Trump said that they are “close to” a plan to open the country. This was followed by Treasury Secretary Steven Mnuchin saying that they are ahead of schedule in delivering direct deposit checks.
Market mood somewhat recovered during the North American trading session as local government bond yields climbed.

How Do Politics and Central Banks Impact FX Markets?

Monday 13th April, 2020

MARKETS HAVE PASSED THE POLITICAL EVENT HORIZON

For foreign exchange (“forex” or “FX”) traders, the constant background noise that politics represents is an inescapable blackhole. Traditional media drowns in punditry, while social media drowns in puns. It doesn’t matter what asset class you’re trading either.In recent years, even a single tweet from a politician has had the capacity to move not only currencies but also bonds,commodities, and equities.
In an increasingly fractious landscape, traders need a framework by which to interpret information and understand political developments as they happen. After all, politics can become policy after enough time and effort. To this end, FX traders need a way to interpret information and political developments in the context of how fiscal policy could change and how that might impact their portfolios.

US Dollar Outlook vs SGD, IDR, MYR Hinges on Foreign Exchange Reserves

Monday 13th April, 2020

USD/SGD, USD/IDR, USD/MYR CLOSELY EYEING FOREIGN EXCHANGE RESERVES

As the haven-linked US Dollar aggressively appreciated amid the coronavirus outbreak, ASEAN central banks stepped up FX intervention efforts to help stem selling pressure in their currencies. A great way to measure the vigor of their actions is by looking at foreign exchange reserves. Lately pairs such as USD/SGD, USD/IDR and USD/MYR have given back recent gains, perhaps suggesting that these efforts are working.
On the chart below, foreign exchange reserves have been declining in ASEAN nations such as Singapore, Malaysia and Indonesia. In fact those in Malaysia dipped to US$101.7 billion in March which was the lowest since the beginning of 2019. Indonesian FX reserves fell to US$120.97 billion last month which was the smallest since May 2019. Singapore levels have also turned cautiously lower.

Euro at Risk as North-South Political Rift Threatens Financial Stability

Friday 10th April, 2020

EURO AT RISK AS POLITICAL DIVIDE THREATENS REGIONAL GROWTH, COORDINATED POLICY

The Euro continues to suffer as typically fiscally-conservative officials from the North and their otherwise-inclined Southern counterparts bicker about a unified approach to address the economic impact of the coronavirus. A meeting on Thursday failed to yield meaningful results after a conference last week also ended with officials sticking to their positions. The debt-mutualizing “corona-bond” proposal continues to be the main point of contention. The friction is nothing new, but the urgency of the talks under the current economic conditions is unprecedented as the Eurozone faces the prospect of a deeper recession than it endured ten years ago. While Brussels has loosened the purse strings to allow more governments to deficit spend, the issue over additional aid and use of the crisis-era Emergency Stability Mechanism (ESM) is pressuring the Euro.

Dow Jones, Nasdaq 100, S&P 500 Forecast: An Earnings Season Like None Other

Friday 10th April, 2020

DOW JONES, NASDAQ 100, S&P 500 FORECAST: AN EARNINGS SEASON LIKE NONE OTHER

The Dow Jones, Nasdaq 100 and S&P 500 have recovered significantly from their March 19 lows as central banks and governments across the globe have acted to ward off a global recession in the wake of coronavirus. Despite remarkable central bank and government intervention, recent data has revealed a staggering increase in unemployment and growth forecasts appear similarly bleak. Until now, market participants have been largely reliant on broader economic metrics or forecasts which has made it difficult to ascertain the ramifications single stocks may be experiencing. Thankfully, the arrival of earnings season will look to inject information into the market – arguably the essence of investing. That being said, this earnings season is poised to be entirely unique and as a result, may be a stock-pickers dream.

USD/CAD Negates Pennant Formation Ahead of Canada Employment Report

Thursday 09th April, 2020

CANADIAN DOLLAR TALKING POINTS

USD/CAD consolidates ahead of Canada’s Employment report and the exchange rate may continue to face range bound conditions going into the Easter holiday as it fails to track the pennant formation carried over from the previous month. USD/CAD attempts to retrace the decline from earlier this week as the Bank of Canada’s (BoC) Business Outlook Survey reveals that “business sentiment had softened in most regions even before concerns around COVID‑19,” and the update to the employment report may produce headwinds for the Canadian Dollar as the economy is anticipated to shed 500K jobs in March.

Yen Falls as Wall Street and Crude Oil Prices Gain, AUD/USD May Rise

Thursday 09th April, 2020

JAPANESE YEN AND US DOLLAR SINK AS WALL STREET AND CRUDE OIL PRICES GAIN

The anti-risk Japanese Yen and similarly-behaving US Dollar were some of the worst-performing major currencies on Wednesday. Market sentiment broadly improved as the Dow Jones and S&P 500 closed 3.44% and 3.41% higher. The growth-linked Australian Dollar outperformed. This rosy session also contrasted starkly with Tuesday’s relatively dismal one, a reflection of elevated volatility levels around the coronavirus.

British Pound (GBP) Latest: Volatility Tumbles as GBP/USD Stabilizes

Wednesday 08th April, 2020

GBP VOLATILITY CONTINUING TO FALL

Directional trades in GBP/USD are becoming more difficult as Sterling volatility continues to fall. After trading close to the 1.24 level for most of last week, and its drop Friday, the pair has found a new level close to 1.23 and is relatively stable there despite the news that UK Prime Minister Boris Johnson is in a hospital intensive care unit suffering from coronavirus symptoms. While other currencies continue to be buffeted by risk-on/risk-off flows as optimism about the coronavirus pandemic ebbs and flows, GBP/USD volatility has dropped from a high above 25 on March 23 to its current level just above 14 according to the CBOE/CME Sterling volatility index.

US Dollar Up As EU Ministers Fail to Agree Corvid-19 Response

Wednesday 08th April, 2020

US DOLLAR, EURO, EUROPEAN UNION MINISTERS FAIL TO AGREE CORONAVIRUS RESPONSE TALKING POINTS:

The US Dollar rose sharply as Wednesday’s Asia Pacific session wound down on news that European Union finance ministers had failed to agree on a strategy to mitigate the economic impact of the coronavirus on the Eurozone. An emergency conference which ran for nearly sixteen hours saw no agreement on how to reconcile contrasting views. As usual France and the European south were up against Germany and its northern allies. The latter remain opposed to the issuance of joint debt, a long-time stumbling-block within the monetary union that many in the north are adamant will not be hastily removed by the exigencies of the virus.

AUD/USD Forecast: Wait-and-See RBA to Give Way to Bear Flag Formation

Tuesday 07th April, 2020

AUSTRALIAN DOLLAR TALKING POINTS

AUD/USD snaps a four day losing streak ahead of the Reserve Bank of Australia (RBA) meeting, but the interest rate decision may do little to alter the near-term outlook for the Australian Dollar as the central bank is expected to retain the current policy in April. AUD/USD attempts to retrace the decline from the previous week, with the exchange rate clearing the series of lower highs and lows, and the RBA meeting may help to prop up the Australian Dollar as the central bank appears to be on track to keep the official cash rate (OCR) at the record low of 0.25%.

Euro, Crude Oil May Suffer From OPEC & Eurozone Political Rifts

Tuesday 07th April, 2020

EURO MAY FALL ON EU FINANCE MINISTER MEETING AMID CORONAVIRUS PANDEMIC

The Euro will be closely scrutinizing another round of talks between Eurozone finance ministers this week after the prior meeting failed to achieve anything of substance. The ongoing deliberations reflect an internal conflict that has been a source of tension for over a decade. Specifically, between the Northern, fiscally conservative states – like Germany – and their more liberal counterparts – the Mediterranean members.

NZD/USD Rate Outlook Mired by Dovish RBNZ Forward Guidance

Monday 06th April, 2020

NEW ZEALAND DOLLAR TALKING POINTS

NZD/USD attempts to retrace the decline from the previous week following the limited reaction to the 701K contraction in US Non-Farm Payrolls (NFP), but the exchange rate may continue to give back the rebound from the yearly low (0.5469) as a bear flag formation unfolds. NZD/USD trades on a firmer footing as the Reserve Bank of New Zealand (RBNZ) tames speculation for a negative interest rate policy (NIRP), with Chief Economist Yuong Ha arguing that the central bank would need to “assess the effectiveness, efficiency and an impact on financial system soundness of doing so.” However, recent remarks from Governor Adrian Orr suggest the RBNZ stands ready to deploy more unconventional tools to support the economy as the central bank head pledges to “keep monetary support going for as long as necessary through QE and other tools.”

US Dollar Back on the Offensive? USD/SGD, USD/PHP, USD/MYR, USD/IDR

Monday 06th April, 2020

SINGAPORE DOLLAR, PHILIPPINE PESO, INDONESIAN RUPIAH, MALAYSIAN RINGGIT – TALKING POINTS

The US Dollar was generally back on the offensive against ASEAN currencies such as the Singapore Dollar, Indonesian Rupiah and Malaysian Ringgit last week. Meanwhile the Philippine Peso held its ground, cautiously rising – see chart below. Elsewhere in emerging markets, the Greenback also outperformed against the Indian Rupee as coronavirus cases picked up pace locally. Additional fiscal stimulus from Singapore as the MAS eased policy has thus far not bode well for SGD. Rather the focus for developing economy currencies remained on the flow of capital. The United States – the world’s largest economy – revealed worrying trends in the labor market last week as the nation lost the most jobs since 2009. This is as the country took the spot as the nation with the most confirmed cases of the coronavirus.

Indian Rupee May Fall as US Dollar, USD/INR Rise on Virus Cases

Friday 03rd April, 2020

INDIAN RUPEE DECLINES AS US DOLLAR GAINS, WHERE TO?

Indian Rupee selling pressure was reignited against the US Dollar in the aftermath of last week’s emergency rate cut from the RBI. In addition to cutting benchmark lending rates, the Reserve Bank of India dialed up long-term repurchasing operations in an effort to boost liquidity conditions amid the coronavirus outbreak. Earlier this week, the RBI also increased short-term funding limits by 30% across the country. These measures are certainly welcome. Moody’s – a credit ratings agency – downgraded the outlook for Indian banks to negative from stable. Prior to the virus pandemic, the country was attempting to overcome from a troubled banking sector. Meanwhile the latest Markit manufacturing PMI print showed local growth at its weakest since November after making a sharp U-turn following January – see chart below.

Bitcoin Price: How Will Halving, Coronavirus Affect BTC?

Friday 03rd April, 2020

WHAT IS BITCOIN HALVING?

Bitcoin halving is the process in which so-called “miners” – covered in the section below – are rewarded 50% fewer BTC for verifying transactions in the blockchain network. This is scheduled to occur every 210,000 blocks and is designed to help preserve Bitcoin’s allure as a store of value. The cap for Bitcoin is set at 21 million, thereby keeping the supply finite. There is no Bitcoin central bank that can simply print more BTC. In fact, the guiding purpose of the cryptocurrency and the very thing underpinning its broad appeal is that it operates on a decentralized network that cannot be controlled by a single person or institution. Halving is written into the Bitcoin algorithmic protocol, designed by the enigmatic person or group known only as Satoshi Nakamoto during the 2008 global financial crisis.

Palladium Decline May Be Offset by Virus-Induced Supply Shock

Thursday 02nd April, 2020

HOW HAS CORONAVIRUS IMPACT PALLADIUM PRICES?

As a cycle-sensitive commodity, palladium has been a victim of the market-wide liquidation in risk-oriented assets as the coronavirus undermines global growth prospects. In 2019, XPD was the best-performing precious metal; year-to-date it is up only 14% after recently recovering from seven-month lows. Having said that, the disruptive nature of Covid-19 may in fact be a hidden source of support for palladium prices. South Africa – the second-largest producer of the precious metal after Russia – recently announced a strictly-enforced 21-day lockdown and extended these measures to its mining operations. Following the government’s decree, XPD/USD registered its largest one-day increase since 1997 and rose almost 25 percent. This disruption to production amplified the precious metal’s structural undersupply and helped buoy prices. Palladium is typically extracted as a secondary product from mining operations targeted at other metals like nickel.

EUR/USD Levels to Watch as Rebound from 2020 Low Unravels

Thursday 02nd April, 2020

EUR/USD RATE TALKING POINTS

EUR/USD continues to give back the advance from the yearly low (1.0636) as there appears to be a rift within the European Central Bank (ECB), and the exchange rate may exhibit a more bearish behavior over the coming days as it extends the series of lower highs and lows from earlier this week. EUR/USD remains under pressure as ECB board member Yannis Stournaras insist that “now is the time for common action and solidarity,” with the official going onto say that “common issuance of debt is common action against the common enemy”during an interview with Bloomberg News. The comments suggest there’s a split within ECB as “there are proposals to use the European Stability Mechanism or the European Investment Bank,” and the Governing Council may merely buy time at its next meeting on April 30 as the central bank carries out the Pandemic Emergency Purchase Programme (PEPP).

Dow Jones, S&P 500, DAX 30 Outlook: Will the Bounce Last?

Wednesday 01st April, 2020

WHAT DOES TRADER POSITIONING SAY ABOUT GLOBAL STOCK MARKET TRENDS?

Global stocks have bounced after appearing to find a bottom towards the end of March. The Dow Jones, S&P 500 and DAX 30 are attempting to recover lost ground as they struggle to push above key resistance. Can upside momentum last? These topics are discussed in this week’s session on IG Client Sentiment (IGCS) where I discussed trader positioning, fundamental and technical analysis to uncover the prevailing trends.

AUD Steadies As China Caixin Manufacturing PMI Returns to Expansion

Wednesday 01st April, 2020

AUSTRALIAN DOLLAR, CHINA CAIXIN MANUFACTURING PURCHASING MANAGERS INDEX TALKING POINTS:

The Australian Dollar found only a brief respite in its trek lower Tuesday on news that China’s private manufacturing sector returned to expansion territory in March after a massive, coronavirus linked hit in February. The March Purchasing Managers Index from media company Caixin came in at 50.1, well ahead of both the 45.0 print expected and the previous month’s 40.3. In the logic of PMIs any reading above the 50 line signified expansion for the sector in question. The Caixin version covers smaller Chinese firms, usually those in private hands.

EUR/USD Rate Recovery Stalls as ECB Warns of Looming Recession

Tuesday 31th March, 2020

EUR/USD Rate Recovery Stalls as ECB Warns of Looming Recession

EUR/USD struggles to hold its ground as the ECB Vice President Luis de Guindos states that incoming data “indicate that a recession will take hold,” with the official going onto say that “each month will see a fall of approximately two percentage points in GDP” amid the lockdown in Europe. In turn, Mr. Guindos insists that the ECB “will do everything possible to keep the euro together and to provide the best funding possible,” and it seems as though the Governing Council will keep the door open to implement more non-standard measures as the central bank remains reluctant to remains reluctant to push the main refinance rate, the benchmark for borrowing costs, into negative territory.

Canadian Dollar Sank with Crude Oil as Health Care Steered Wall Street

Tuesday 31th March, 2020

Canadian Dollar, USD/CAD, Crude Oil, AUD/USD, Wall Street – Asia Pacific Market Open

The Canadian Dollar was one of the worst-performing major currencies to start the week, depreciating alongside crude oil prices. WTI declined -7.27% to an 18-year low amid ongoing bearish fundamental themes, the coronavirus outbreak and a global supply glut. The commodity is a key source of revenue in Canada, making the Loonie often sensitive to swings in oil depending on the latter’s impact on monetary policy bets. Sentiment-linked WTI was unable to capitalize on a “risk-on” tilt in equities towards the end of the day. The S&P 500 closed 3.35% to the upside, fueled by outperformance in health care securities. This is despite US President Donald Trump announcing an extension of virus guidelines until the end of April, backing down on hopes of starting to open the economy by the Easter holiday in about 2 weeks.

Gold Price Levels to Watch Following US Fiscal Stimulus Program

Monday 30th March, 2020

Gold Price Levels to Watch Following US Fiscal Stimulus Program

The price of gold appears to be stuck in a narrow range amid the wave of monetary and fiscal support, and it seems as though major central banks will continue to push monetary policy into uncharted territory as the Reserve Bank of New Zealand (RBNZ) unveils a new credit facility that “will provide liquidity in exchange for eligible Corporate and Asset-Backed securities.” At the same time, the Federal Reserve appears to be on track to implement more non-standard measures as the central bank prepares a“Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses,” and the Federal Open Market Committee (FOMC) along with its major counterparts may continue to push the limits of monetary policy as their benchmark interest rate sit near zero.

Euro May Rise on ESM, Crude Oil Selloff Deepens on OPEC Price War

Monday 30th March, 2020

Euro Eyes Eurozone Finance Minister Meeting: ESM in Focus

The Euro may rise following a meeting between Eurozone finance ministers on Monday where they are expected to discuss the possible use of the Emergency Stability Mechanism (ESM). The European-based agency was developed following the Eurozone debt crisis in 2012 as the shock from the 2008 financial meltdown asymmetrically hit the regional economy and pushed the Euro to the precipice of collapse. The fund has a little over 400 billion euros at its disposable and includes a number different levers policymakers can use to stabilize financial markets and restore confidence. Some of these include purchasing sovereign debt in order to help distressed member states get access to credit markets. However, seeing that interest rates remain low despite the considerably darker outlook, officials may advocate to use other policies.

Stock Market: now a days is Apple, Microsoft and Alphabet against everyone else.

Monday 20th January, 2020

The stock market travels on the currents of supply and demand.

That’s uncontroversial. Yet as the indexes have sped to new highs, plenty of observers have argued that a relative shortage of stocks combined with somewhat mechanical sources of demand explain everything from Dow 29,000 to the trio of trillion-dollar market-cap giants that tower above the rest of the market. The idea of an equity shortage usually hinges on the decline in the total number of U.S. public companies in recent decades, the relative dearth of initial public offerings and the consistent flow of share buybacks meant to reduce companies’ equity base. These are all features of this bull market, for sure. But it’s an oversimplification to focus on the absolute number of stocks or the background hum of stock buybacks as key drivers of the market’s historic run. There are plenty of stocks to go around and buybacks aren’t wagging the indexes – it’s just that everyone wants the same kind of stocks. What’s truly scarce are big, reliable cash flows that investors believe will endure economic wobbles and constant technological disruption.

US-China Deal is on the way

Monday 13th January, 2020

Final Preparations are being made from Both men US President Donald Trump and Chinese Vise - Premier Liu He

""Final Preparations are being made from Both men US President Donald Trump and Chinese Vise - Premier Liu He in order to sign the “stage 1 bilateral trade deal. Hence both countries warmly welcomed the agreement which it might be more than a brief respite in the US China tensions of Trump’s presidency. The reason the deal was finalised late last year, despite recent bilateral differences on a range of issues including Iran and Hong Kong, is that both sides decided even a truce, however temporary, is in their domestic interests. As Trump enters his re-election year, he is will claim — however far-fetched in reality — to have brought Beijing to heel. Meanwhile, the agreement provides a degree of stability in China’s most important economic bilateral relationship after some recent sub-par national economic data,

Johnson hails ‘new dawn’ after historic victory

Tuesday 17th December, 2019

Boris Johnson has promised to deliver Brexit and repay the trust of voters

"Boris Johnson has promised to deliver Brexit and repay the trust of voters after he led the Conservatives to an ""historic"" general election win. The PM, who has met the Queen to ask to form a new government, has a majority of 80 in the House of Commons - the party's largest since 1987. He said he would work ""flat out"" and lead a ""people's government"". Jeremy Corbyn said he would not fight another election as Labour leader, amid recriminations over the party's defeat.

Boris Johnson wins Tory contest to become UK prime minister

Thursday 25th July, 2019

Boris Johnson wins Tory contest to become UK prime minister

Boris Johnson was crowned leader of the Conservative party on Tuesday and is set to become prime minister, facing perhaps the most daunting challenge of any British politician in peacetime. Mr Johnson beat Jeremy Hunt in the race to succeed Theresa May as head of the Tory party, securing 92,153 votes to the foreign secretary’s 46,656.

No change to US dollar policy ‘as of now’, says Treasury chief

Thursday 25th July, 2019

Boris Johnson has promised to deliver Brexit and repay the trust of voters

US Treasury secretary Steven Mnuchin on Thursday said there was “no change” to Washington’s stance on the dollar “as of now”, amid mounting speculation over whether the Trump administration will act to weaken the dollar. Mr Mnuchin said the US “could consider” a change to its dollar policy “in the future” but there was no change at present.

Deutsche Bank to exit equities trading in radical overhaul

Thursday 25th July, 2019

Boris Johnson wins Tory contest to become UK prime minister

Deutsche Bank has unveiled one of the most radical banking overhauls since the financial crisis, closing swaths of its trading unit and hiving off €74bn of assets as the struggling German lender calls time on its 20-year attempt to break into the top ranks of Wall Street.
Thursday 25th July, 2019

Boris Johnson was crowned leader of the Conservative party on Tuesday and is set to become prime minister, facing perhaps the most daunting challenge of any British politician in peacetime. Mr Johnson beat Jeremy Hunt in the race to succeed Theresa May as head of the Tory party, securing 92,153 votes to the foreign secretary’s 46,656.
Thursday 25th July, 2019

US Treasury secretary Steven Mnuchin on Thursday said there was “no change” to Washington’s stance on the dollar “as of now”, amid mounting speculation over whether the Trump administration will act to weaken the dollar. Mr Mnuchin said the US “could consider” a change to its dollar policy “in the future” but there was no change at present.
Thursday 25th July, 2019

Deutsche Bank has unveiled one of the most radical banking overhauls since the financial crisis, closing swaths of its trading unit and hiving off €74bn of assets as the struggling German lender calls time on its 20-year attempt to break into the top ranks of Wall Street.
Monday 27th June, 2019

Clearing houses pose new perils for the global financial system. Grimstad, norway, is an unlikely setting for financial-market shenanigans. But the fishing town is home to Einar Aas, a trader who took huge bets on Scandinavian energy markets. His 15 minutes of infamy came in September 2018, when his bets went spectacularly wrong. Unable to cover his losses, he blew a €114m ($133m) hole in the capital buffers of Nasdaq Clearing, which handled his trades......

Monday 27th June, 2019

It is trying to manage expectations. “Most of america thinks the Federal Reserve is a national forest.” That reminder that the general public has little idea what a central banker does was offered by an incumbent governor of the Federal Reserve to Alan Blinder when he joined in 1994. He passed it on 25 years later, on June 4th, to a star-studded group of economists and policymakers gathered at the Federal Reserve Bank of Chicago to discuss the Fed’s first public review of its framework...

Monday 27th June, 2019

What will happen when interest rates eventually start to rise again? At the end of 1989, an American in London received a call from a friend back home. The caller had watched the fall of the Berlin Wall and the toppling of Nicolae Ceausescu in Romania with growing dismay. He was at the end of a four-year course in Russian Studies at an elite university with hefty tuition fees. He had learned all the Kremlinology a would-be cold...

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