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  1. #191

    Yuan On Fire As USD/CNY Falls To 6.87, USD Weakens Amid FOMC Minutes

    News and Events:

    Yuan rally further amid capital control measures
    The Chinese yuan initiated a strong rally yesterday after China decided to put more effort to support the yuan. Policy makers undertook a set measures aiming at slowing down the pace of its currency depreciation, which has caused massive capital outflow and forced the PBoC to increase the selling of its massive pile of US bonds. Indeed, over course of last year the yuan fell as much as 7.65%, while China’s foreign exchange reserves fell to $3,052 billion last November compared to $3,330 billion at the beginning of the year. Similarly, the total amount of US debt owned by China shrank by $130 billion between January and October, down to $1,116 billion. However, it seems that is not sufficient enough as it barely slowed down the yuan’s free-fall. Therefore, since January 1st - and in addition to the annual cap of $50,000 per person willing to sell yuan - the new rules has made the US dollar less accessible to individuals as they are required to justify their buying of foreign currencies and are limited from using it in foreign investments.
    For now, it seems to work relatively well as USD/CNY returned below 6.90, down 1.20%. However, the pause may be short-lived as the previous control measures undertook only had a limited effect in slowing the yuan depreciation. Nevertheless, we expect China to continue tightening gradually capital controls as if the PBoC keeps dissipating its FX reserves, it may enhance downside pressure on the yuan. This morning, the renminbi fell another 0.70% against the dollar on the onshore market, while offshore the CNH slid 0.50%, down to 0.50%. The rally may be done for now, we believe China is not done yet and will likely reiterate its determination in stabilizing the yuan, which would limit downside pressure. The question is how long will the market stand idle.
    Dollar weakens on Fed minutes release
    According to the released fed meeting minutes, the central bank decided to raise rates in December amid market anticipation on fiscal stimulus. In brief, the minutes also indicates that the path should be more aggressive this year. Markets are still betting on the likelihood of two to three hikes for 2017.
    There is significant concern surrounding the kind of fiscal policy program the Trump government will deliver and whether it will open the door to further tightening of the current monetary policy. Fed policymakers are concerned about the effect of fiscal stimulus on tax cuts and infrastructure spending as it could push policymakers to raise interest rates even more aggressively.
    Finally, the big unknown is still Trump’s presidency, which starts on the 20th of this month. The President-elect’s threats to General Motors on foreign production has lead Ford to cancel production in Mexico and announce the building of a factory in Michigan. There is surely something to be said about this, Trump’s fiscal policy plan will certainly produce a bombshell effect.
    Currency-wise, the dollar has weakened and is trading above $1.05 against the single currency for the first time since the start of the year.

    [Only registered and activated users can see links. ]Important Forex News Daily.

    The Risk Today:

    EUR/USD has surged yesterday. The pair now lies above 1.0500. Hourly support lies at 1.0341 (03/01/2017 low). Stronger resistance is given at 1.0670 (14/12/2016 high). Expected to see continued sideways price action in the short-term. In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.
    GBP/USD has exited downtrend channel. Hourly support lies at 1.2200 (03/01/2017 low) while resistance lies at 1.2388 (30/12/2016 high). The technical structure suggests further consolidation. Yet, a break of resistance area around 1.2400 is needed to confirm the end of the short-term bearish trend. The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.
    USD/JPY has weakened and is moving away from hourly resistance given at 118.66 (15/12/2016 high). Hourly support at 116.05 (30/12/2016 low) has been broken. Stronger support lies at 114.74 (12/12/2016 low). Expected to see further downside moves. We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).
    USD/CHF is moving sideways. Hourly resistance is given at 1.0344 (15/12/2016 high). Key support is given at the parity. Expected to further consolidate above 1.0200. In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.



    EURUSD GBPUSD USDCHF USDJPY
    1.1300 1.3121 1.1731 135.15
    1.0954 1.2775 1.0652 125.86
    1.0874 1.2388 1.0344 121.69
    1.0507 1.2297 1.0191 116.59
    1.0367 1.2201 1.0021 114.74
    1.0000 1.2083 0.9632 112.88
    0.9613 1.1841 0.9522 111.36

  2. #192
    European Session: Orders and Options Watch

    EUR: The single currency retreated after rising to 1.0575 earlier today, offers are noted at 1.0575-85, 1.0600 and 1.0620, sell orders are reported at 1.0650 and 1.0680, selling interest is tipped at 1.0700, 1.0730 and 1.0750. On the downside, bids are seen at 1.0520, 1.0500 and 1.0480, buy orders are reported at 1.0450, 1.0420 and 1.0400, buying interest should emerge around 1.0380-85, 1.0360-65 and 1.0345-50.
    GBP: Cable ran into strong resistance at 1.2363 and has retreated sharply in London morning, bids at 1.2300 and 1.2280 were filled but buy orders are still noted at 1.2265-70, 1.2250 and 1.2220, buying interest is tipped at 1.2200, 1.2185 and 1.2150, mixture of bids and stops is located at 1.2100. On the upside, offers are seen at 1.2325-30, 1.2350-55 and 1.2365, sell orders are expected at 1.2380-85 and 1.2400, selling interest should emerge around 1.2450-60 and 1.2500.
    CHF: Dollar found support at 1.0151 and has rebounded, however, offers are still noted at 1.0210, 1.0240-50 (stops above) and 1.0270, sell orders are reported at 1.0290-00 and further out at 1.0335-45, selling interest is tipped at 1.0365, 1.0380 and 1.0400. On the downside, bids are seen at 1.0140-50 (stops below) and 1.0120, buy orders are expected at 1.0100, 1.0080 and 1.0050-60.
    JPY: The greenback slipped to 115.58 before rebounding in European morning, offers at 116.30 and 116.50-60 were filled but sell orders are reported at 116.80, 117.00 and 117.20-30, selling interest is tipped at 117.50, 117.80 and 118.00. On the downside, bids are seen at 115.50-55, 115.20 and 115.00, buy orders are expected at 114.80 and 114.50, buying interest should emerge around 114.30 and 114.00.

  3. #193

    FOMC Minutes Dent Dollar; DXY Still in Range

    The December FOMC minutes yesterday revealed only cautious optimism among policymakers that they would be able to hike rates more than two times this year, weighing down the otherwise strong US Dollar (in line with our expecations). Putting the policy statement in context of the composition of 2017 FOMC voters - who, on average, are seen as more dovish than the 2016 voters - and there may be signs that the notion of three rate hikes this year is far from a sure thing.

    Certainly one way to resolve the dilemma over whether or not the Fed warrants a faster pace of rate normalization is to see how the US economy is performing: if the data is 'there,' the Fed won't hesitate about hiking rates faster. This was made clear in the FOMC minutes, whereby "almost all" policymakers voiced concern that the unemployment rate would likely undershoot over the coming year, pushing up wage and inflation pressures.

    Fortunately for markets, the next few days should reveal plenty of insight as to the state of the US economy. The ADP Employment report, in conjunction with the ISM Services/Non-Manufacturing index, should help clarify expectations for Friday's December US Nonfarm Payrolls report. As it stands, markets are pricing in a +178K print, which if , could reinvigorate US Dollar bulls.

    For now, the key levels to watch in DXY Index remain the topside and bottom side of the range that's defined price since December 15: 102.05 to 103.64. Both levels have been reached this week, although no daily close outside of this range has transpired. Until then, it's best to be patient to see if the US Dollar is: a) consolidating before another move higher (bull flag); or b) carving out a near-term top.

  4. #194

    Yen Posts Gain on Fed Uncertainty

    USD/JPY has posted gains for a second straight day. In the Thursday session, the pair is trading at 116.60. On the economic front, the sole Japanese release is Average Cash Earnings, which is expected to edge up to 0.2%. In the US, ADP Nonfarm Employment Change is expected to drop to 171 thousand. The estimate for ISM Non-Manufacturing PMI is 56.6 points. The release of the Fed minutes sent USD/JPY as low as 115.55, the pair's lowest level since December 14.
    All eyes were on the Federal Reserve on Wednesday, which released the minutes of its December meeting. At the meeting, the Fed raised rates by a quarter point for the only time in 2016. The minutes indicated that FOMC members are concerned about higher inflation levels, given the "prospects for more expansionary fiscal policies in the coming years". This is a clear reference to president-elect Trump's plans to increase fiscal spending and cut taxes, which would likely result in higher inflation, something the US hasn't had to deal with for years. Still, policymakers appear unchanged in their view that gradual rate hikes remains an appropriate monetary policy. The Fed members acknowledged that there is "considerable uncertainty" regarding future fiscal and economic programs. Many analysts are predicting another rate hike in June, but this could of course change, depending on how the effect that Trump's economic platform has on the US economy. The Fed will need at least a few months to digest the economic stance of the incoming administration, and the uncertainty mentioned in the Fed minutes could lead to volatility in the markets in what promises to be an interesting first quarter of 2017.

  5. #195

    Dollar Bleeds on Fed Uncertainty

    Dollar Bleeds on Fed Uncertainty


    Thursday January 5: Five things the markets are talking about
    Fed minutes released yesterday revealed that apart from a unanimous agreement to raise interest rates for the first time in a decade last month, the committee expressed concerns as to the results of future Trump policies, with a view to maintain a "wait-and-see approach."
    Almost all Fed members agreed that the U.S economy 'could' grow faster if policies are implemented correctly. The Fed also raised its concerns for a rise in inflation under any Trump fiscal boost, with many considering a faster pace for interest rate increases through 2017, while other not.
    Net result, U.S short-term rates have come in on perception the latest Fed minutes were somewhat less "hawkish" then anticipated. This has caused the dollar to fall by the most in two-months overnight, the Chinese yuan to surge (aided by speculative buying) to its biggest two-day rally in six-years outright and gold to extend its gains, while equities show mixed results.
    1. Stocks take a breather
    Global equities are showing some mixed results overnight as investors digest the latest minutes from last months FOMC meeting.
    In Asia, the Hang Seng Index was the standout performer, notching a gain of +1.4% after positive business surveys out of China and Hong Kong. The Singapore's Straits Times Index climbed +1.2%, the most since Nov. 10.
    Elsewhere in the region, Japan's Nikkei Stock Average fell -0.4% after closing up +2.5% in the previous session, as the yen gathered momentum against the dollar (¥116.52).
    In Europe, indices are trading mixed. Financial are leading the gains on the Eurostoxx, which is on track for its second consecutive day of losses after entering a bull market territory on Tuesday, while homebuilder stocks are trading notably higher once again in the FTSE 100.
    U.S futures are set to open flat.
    Indices: Stoxx50 +0.3% at 3,322, FTSE +0.1% at 7,193, DAX +0.1% at 11,596, CAC-40 +0.1% at 4,901, IBEX-35 +0.4% at 9,497, FTSE MIB +0.4% at 19,703, SMI +0.2% at 8,371, S&P 500 Futures flat
    2. Oil steady on U.S. data, doubts over output cuts
    Oil prices have steadied overnight as a fall in U.S. crude inventories yesterday seems to be balancing investor doubts that OPEC would cut output as promised to reduce global oversupply.
    Note: On Nov 30th OPEC Ministers confirmed cutting output to +32.5M bpd, a six-month agreement that started on Jan 1.
    Brent crude futures are down -15c a barrel at +$56.31, while U.S. light crude oil (WTI) is down -10c a barrel at +$53.16 ahead of the U.S open. Both contracts rose +2% yesterday after weekly API Oil Inventories recorded a drawdown of -7.4M vs. +4.2M prior – largest draw since Oct 4th.
    Crude prices may be capped to its recent range, as there remains a question mark over whether OPEC, with a long history of non-compliance, would actually follow through with the production cuts.
    Dealers will look to today's weekly EIA report (11:00 am EST) for directional clues.
    Gold continues to find support as investors pare back their expectations of a more aggressive Fed rate rising cycle. Ahead of the U.S open, prices are up +1.1% at +$1,178 an ounce and are on course for their highest close since late November.
    3. Treasury yields fall on "uncertain" Trump Yields
    Investors betting the Fed would raise interest rates at a faster clip than previously expected had helped push the dollar index to a 14-year high this week and send U.S treasury yields sharply higher over the past two-months.
    However, a less than anticipated "hawkish" Fed has some dealers willing to take recent bookable profit off the table.
    The yield on the U.S 10-year Treasury note is currently trading down -4bps at +2.414% ahead of the U.S open.
    Elsewhere, the 10-year German bund inflation-related woes should subside after yesterday's release of the provisional Eurozone inflation number for December. Higher-than-expected German inflation prints have reversed a large part of their end-2016 rally. The bund bid yield now stands at +0.25%.
    4. Forex sees seesaw action
    With mixed views on whether the Fed was less "hawkish" or not has led to some volatile dollar moves in the overnight session.
    There seemed to be a consensus that since the "big" dollars pace of gains have started to slow, it must be followed by a quick and sizable correction.
    In Asia, USD/JPY fell to test below ¥115.60, the EUR above €1.0550 and sterling north of £1.2350. Nevertheless, the USD has since regained some of its composure during the E.U session and made back a good portion of its earlier losses (€1.0489, ¥116.67 and £1.2310).
    Note: GBP/USD rebounded after its Dec PMI Services registered its fifth month of expansion and highest level in 17-months.
    China was in the spotlight again Thursday as the Chinese yuan rose sharply outright. Chinese Yuan was up over +1% in offshore market overnight after press reports that authorities plan to order State-owned-Enterprises SOE's to sell USD. Today's "official" yuan fix by the PBoC was a new three-week high (¥6.9307).
    Note: The 'offshore' yuan-borrowing costs have surged amid rumblings about China cracking down on capital outflows.
    Some of the emerging market currencies did not participant in the USD selloff. Both TRY and MXN hit fresh record lows against the greenback (TRY3.6218 and MXN21.53).
    5. U.K Service Sector PMI grows at the fastest pace in 18-months
    U.K data this morning showed that the British services sector grew last month at the fastest pace in 18-months, supported by healthy domestic demand and a boost to exports from a weak pound (£1.2300).
    The PMI index for the services sector rose to 56.2 from 55.2 in November.
    The headline print would suggest that the U.K. economy ended 2016 on a strong footing, further defying expectations of a post-Brexit slowdown.
    Yet, future growth is expected to ease this year as accelerating inflation squeezes consumers' wallets and uncertainty over the U.K.'s future ties to the E.U should impede future business investment.

  6. #196

    London Session Forex Recap – Jan. 5, 2017

    Swiss CPI m/m: -0.1% as expected vs. -0.2% previous
    Swiss CPI y/y: 0.0% as expected vs. -0.3% previous
    U.K. services PMI: 56.2 vs. 54.7 expected, 55.2 previous
    Euro Zone PPI m/m: 0.3% as expected vs. 0.8% previous
    Euro Zone PPI y/y: 0.1% vs. -0.1% expected, -0.4% previous

    Risk aversion was apparently the dominant sentiment during today’s morning London session, so the higher-yielding Kiwi got slapped lower. The Greenback and the pound, meanwhile, were in recovery mode after getting pummeled by sellers earlier.
    Major Events/Reports:

    U.K. services PMI improves (again) – Markit’s services PMI report revealed that the U.K.’s services PMI reading for December rose sharply from 55.2 to 56.2 instead of deteriorating to 54.7. The U.K.’s services PMI reading has been improving for three straight months running, with December’s reading being a 17-month high to boot.

    According to the PMI report, the higher reading was “fuelled by stronger growth in new work,” with new business growth increasing “at [the] fastest rate since July 2015.”

    Additional commentary from Chris Williamson, Markit’s Chief Business Economist, noted that “the PMI surveys point to the economy growing by 0.5% in the fourth quarter.” Williamson also commented that:

    “At face value, this improvement suggests that the next move by the Bank of England is more likely to be a rate hike than a cut, but policymakers are clearly concerned about the extent to which Brexit related uncertainty could slow growth this year.”

    Commodities still in rally mode (Part 2) – Commodities staged another broad-based rally earlier, and said rally was extended during the morning London session.

    Precious metals were in the green.

    Gold was up by 0.67% to $1,173.10 per troy ounce
    Silver was up by 0.39% to $16.617 per troy ounce

    Base metals, meanwhile, were a bit more mixed, but most were printing gains.

    Aluminum was up by 0.50% to $1,697.75 per kilogram
    Nickel was up by 0.44% to $10,247.50 per dry metric ton

    As for oil benchmarks, they were clearly in positive territory.

    U.S. crude oil was up by 0.94% to $53.76 per barrel
    Brent crude oil was up by 0.97% to $57.01 per barrel

    The broad-based commodities rally was likely fueled by another round of Greenback weakness, with the U.S. dollar index down by 0.15% to 102.34 for the day.

    However, market analysts also point to earlier reports that China plans to build a $115 billion railway system as one of the major drivers for the commodities rally, particularly that of base metals.

    Risk appetite returns and then promptly leaves – Risk appetite apparently made a comeback in Europe, since most of the major European equity indices were in the green when the session rolled around. However, as the session progressed, it became clear that risk appetite left, as the major European equity indices began leaking red one after another.

    The pan-European FTSEurofirst 300 was still up by 0.08% to 1,444.91, but off its session high of 1,446,08
    The blue-chip Euro Stoxx 50 was already down by 0.02% to 3,312.50
    Germany’s DAX was up down 0.27% to 11,553.00
    The U.K.’s FTSE 100 was down by 0.13% to 7,180.70

    U.S. equity futures also felt the risk-off mood.

    S&P 500 futures were down by 0.19% to 2,260.00
    Nasdaq futures were down by 0.22% to 4,922.62

    According to market analysts, the sour mood during the session was due to bearish pressure on insurance companies after JP Morgan downgraded its ratings for several insurance providers. The risk-off mood was partially offset by demand for mining shares, thanks to rising commodity prices.
    Major Market Movers:

    NZD – The higher-yielding Kiwi lost across the board. The Kiwi therefore apparently got the worst of the risk-off vibes. Its fellow higher-yielding comdoll, the Aussie, was under pressure as well, but had a more mixed performance, probably because of the 1.8% rise in iron ore prices today.

    NZD/USD was down by 40 pips (-0.58%) to 0.6959, NZD/CHF was down by 26 pips (-0.38%) to 0.7089, NZD/CAD was down by 49 pips (-0.53%) to 0.9248

    USD – The Greenback is still down for the day, thanks to the yuan surge from earlier, market analysts say. However, the Greenback staged a broad-based recovery during the course of the session. And this recovery allowed the Greenback to emerge as the best performing currency (of the morning London session at least).

    EUR/USD was down by 59 pips (-0.56%) to 1.04997, AUD/USD was down by 13 pips (-0.18%) to 0.7289, GBP/USD was down by 18 pips (-0.15%) to 1.2296

    GBP – The pound was the second strongest currency of the session, thanks to the better-than-expected reading for the U.K.’s services PMI. Like the Greenback, however, the pound is still broadly in the red for the day. Market analysts blame the pound’s earlier slide partly on Brexit-related jitters after Ivan Rogers, the U.K.’s deputy Brexit negotiator, called it quits earlier while lambasting British PM Theresa May’s Brexit plan.

    GBP/JPY was up by 53 pips (+0.37%) to 143.32, GBP/CHF was up by 10 pips (+0.08%) to 1.2532, GBP/NZD was up by 77 pips (+0.44%) to 1.7671
    Watch Out For:

    1:15 pm GMT: ADP’s U.S. employment survey (174K expected, 216K previous)
    1:30 pm GMT: U.S. initial jobless claims (262K expected, 265K previous)
    1:30 pm GMT: Canada’s RMPI (-1.8% expected, 3.3% previous)
    1:30 pm GMT: Canada’s IPPI (0.5% expected, 0.7% previous)
    2:45 pm GMT: Markit’s final U.S. services PMI (no revision from 53.4 expected)
    3:00 pm GMT: ISM’s U.S. non-manufacturing PMI (56.8 expected, 57.2 previous)
    4:00 pm GMT: U.S. crude oil inventories (-1.8M expected, 0.6M previous)

  7. #197

    Gold Prices Move Up $50 from the Lows:

    Gold Technical Strategy: Intermediate-term (past 3 months) bearish, short-term (past month) bullish
    After dropping by more than $200 in the six weeks after the election, Gold prices are up over $50 in the past three weeks.

    As we warned, price action in Gold was looking considerably oversold, and given a fresh ‘higher low,’ traders looking to take part in the bearish move would likely want to wait before chasing the setup. Since that article, Gold prices have moved up by more than $50, breaking multiple points of resistance along the way; and now on a short-term chart Gold prices are looking downright bullish.

    [Only registered and activated users can see links. ]Important Forex News Daily.

    To traders watching only short-term charts, this could be attractive for bullish trend-strategies. However, by scrolling out a bit, we’ll notice that, at least at this point, this move has been but a drop in the bucket of the bigger picture bearish move. On the daily chart shown below, we can see how this recent run has only retraced 23.6% of the post-election bearish move.

    Given the context of the two above observations, traders would likely want to continue to classify Gold as bearish but in a current state of consolidation or retracement. After Gold prices had become so incredibly oversold in the month of December, a 23.6% retracement of that move could easily be classified as short-covering that’s squeezing other shorts as prices move-higher.

    [Only registered and activated users can see links. ]Important Forex News Daily.

    As we had written in our last article, traders can use the level at $1,188.10 to invalidate the bearish move in order to begin investigating bullish strategies; with secondary invalidation at the vaulted psychological figure at $1,200. Traders looking to trade with the bearish move will likely want to wait for short-term support to give way to provide the indication that sellers may be able to re-take control. The price action swing at $1,160.50 could be used for such a purpose, followed by the Fibonacci level at $1150.72.

  8. #198

    Asian Market Update: China Downplays CNY Depreciation Pressure

    Asian Market Update: China Downplays CNY Depreciation Pressure



    China downplays CNY depreciation pressure
    Asia Mid-Session Market Update: Australia returns to trade surplus; China downplays CNY depreciation pressure, threatens closer scrutiny of US companies
    US Session Highlights
    (US) DEC CHALLENGER JOB CUTS: 33.6K V 26.9K PRIOR; Y/Y: +42.4% V -13.0% PRIOR
    (US) DEC ADP EMPLOYMENT CHANGE: +153K V +175KE; Goods-producing:-16,000 (resource, construction, manufacturing all negative)
    (US) INITIAL JOBLESS CLAIMS: 235K (matches lowest reading since 1973) V 260KE; CONTINUING CLAIMS: 2.11M V 2.05ME
    (US) DEC FINAL MARKIT SERVICES PMI: 53.9 V 53.4E (lowest since Sept 2016, 10th consecutive month of expansion)
    (US) DEC ISM NON-MANUFACTURING COMPOSITE: 57.2 V 56.8E; New Orders Index: 61.6 v 57.0 prior (highest since Aug 2015)
    US markets on close: Dow -0.2%, S&P500 -0.1%, Nasdaq +0.2%
    Best Sector in S&P500: Healthcare/Materials
    Worst Sector in S&P500: Financials
    Biggest gainers: ALXN +9.5%, MAT +5.7%, NEM +4.6%, DVN +3.2%, AMZN +3.1%
    Biggest losers: KSS -19.0%, M -13.9%, SIG -8.0%, LB -7.9%, FOSL -7.6%
    At the close: VIX 11.7 (-0.2pts); Treasuries: 2-yr 1.18% (-3bps), 10-yr 2.37% (-8bps), 30-yr 2.96% (-9bps)
    US movers afterhours
    STML: Announces positive FDA meeting and agreement on expedited pathway to full approval of SL-401 in First-Line BPDCN; +27.8% afterhours
    GPS: GPS Reports Holiday SSS +2% y/y; guides FY16 EPS modestly above the high end of our previous adjusted guidance range of ~$1.92 v $1.94e; +8.6% afterhours
    MNTA: Momenta and CSL announce collaboration and license agreement to develop Fc Multimer programs, including M230, a selective immunomodulator of Fc receptors; +5.8% afterhours
    HELE: Reports Q3 $2.07 v $1.91e, R$444M v $449Me; +4.2% afterhours
    AMGN: Amgen reportedly wins ban on Sanofi's sales of Praluent - press; +3.9% afterhours; SNY -3.6% afterhours; REGN -1.1% afterhours
    GIII: Cuts FY17 $1.41-1.51* v $1.62e, R$2.41B v $2.42Be, EBITDA $148-155M (prior $1.86-1.96, R$2.43B, Adj EBITDA $163-171M); -8.7% afterhours
    RT: Reports Q2 -$0.18 v -$0.04 y/y, R$214.7M v $260.2M y/y; -15.3% afterhours
    Asia Key economic data:
    (AU) AUSTRALIA NOV TRADE BALANCE (A$): +1.2B V -550ME; 1st trade surplus since Mar 2014
    (JP) JAPAN NOV LABOR CASH EARNINGS Y/Y: 0.2% (2nd straight increase) V 0.2%E ; REAL EARNINGS (EX-INFLATION) Y/Y: -0.2% (first decline in 11 months) V 0.0%E
    Asia Session Notable Observations, Speakers and Press
    Asia equity markets are mixed following a session of Trump-trade profit-taking on Wall St, where FANG stocks were back in favor as financials, industrials, and apparel names sold off. US treasuries were also bid sharply higher and yields came in going into Friday's non-farm payrolls, particularly in light of softer than expected ADP.
    USD traded lower in the US session, but has since pared some of its losses in Asia. USD/JPY is the biggest gainer in relative terms with a 0.5% rise. Yuan is also off its best levels after 2 straight days of outsized gains, falling from 6.80 to 6.84 after the latest PBoC fix. Despite the setting being the strongest since early December, it was still weaker than offshore levels seen overnight, prompting a reversal. China authorities have taken note of the recent volatility in FX, as PBoC is moving to consider increasing Yuan rate expectation management. Separately, PBoC advisor Huang remarked there is little depreciation pressure on CNY from fundamental data, adding short-term events and expectations have triggered depreciation.
    Trump's Twitter habit has once again caused a ripple in auto-making industry as President-elect took aim at Toyota and its previously-planned intentions to build a new plant in Baja, Mexico. Toyota ADRs were down over 1% in US and lost 2% in Tokyo, while also prompting defense from Japan Fin Min Aso who said the issue is not related to company but rather to NAFTA. In a related note, a press report suggested China authorities could retaliate to Trump's trade war by increasing scrutiny (antitrust and tax probes) of US companies with major China operations.
    In notable economic data, Australia terms of trade yielded a surprise surplus - the first since Mar 2014. Exports spiked 8% y/y, while imports remained flat. Rising materials prices helped the exports spike, as value of iron ore shipped rose to highest since Aug 2014 and that of coal to highest since Jan 2012. In Japan, the battle against deflation saw a setback, as inflation-adjusted wages fell for the first time in 11 months.
    China:
    (CN) China PBoC advisor Huang Yiping: There is little depreciation pressure on CNY from fundamental data, including FX reserves - financial press
    (CN) China may consider scrutiny of US companies if Trump starts trade war - financial press
    (CN) China must curb capital flows in certain "hot" cities to control property prices - Chinese press
    (CN) PBoC said to consider increasing Yuan rate expectation management - Chinese press
    Japan:
    (JP) Japan Chief Cabinet Sec Suga: Japan halts FX swap agreement with South Korea over 'comfort women' issue
    (JP) Japan Fin Min Aso: US president-elect Trump tweets on Toyota is a NAFTA issue, not directly related to the company
    Australia:
    (AU) NAB economist: Australia trade surplus should ease recession fears - press
    Asian Equity Indices/Futures (00:00ET)
    Nikkei -0.7%, Hang Seng +0.4%, Shanghai Composite -0.1%, ASX200 flat, Kospi +0.3%
    Equity Futures: S&P500 flat; Nasdaq flat, Dax -0.1%, FTSE100 flat
    FX ranges/Commodities/Fixed Income (00:00ET)
    EUR 1.0575-1.0615; JPY 115.10-116.10; AUD 0.7320-0.7350; NZD 0.7005-0.7045
    Feb Gold -0.2% at 1,178/oz; Feb Crude Oil -0.1% at $53.72/brl; Mar Copper flat at $2.54/lb
    (HK) Overnight yuan HIBOR 61.333% v 38.335% prior, 3-month yuan HIBOR 10.663% (record) v 9.695% prior
    USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8668 V 6.9307 PRIOR; biggest margin of strength since 2005; strongest Yuan setting since Dec 6th
    USD/CNY: Goldman Sachs sees USD/CNY at 7.30 by 2017-end - press
    (CN) PBOC to inject combined CNY80B in 7-day and 28-day reverse repos, For the week, drains CNY595B v CNY245B drain in prior week
    (JP) BOJ offers to buy ¥70B in JGBs with maturity less than 1-yr and ¥410B in 5-10yr JGBs
    (JP) Japan investors sold net ¥501B in foreign bonds v sold ¥217B in prior week; Foreign investors bought net ¥58.5B in Japan stocks v bought ¥114B bought in Japan stocks in prior week
    Asia equities/Notables/movers by sector
    Consumer discretionary: Dongfeng Motor 489.HK -1.3% (Dec result); Fast Retailing Co 9983.JP -6.2% (Dec Uniqlo SSS), Adastria Holdings Co 2685.JP +1.4% (Dec result), ABC-MART 2670.JP +2.8% (Dec result); DeNA Co. 2432.JP +4.4%; Ardent Leisure AAD.AU -0.9% (Theme Park revenue declined); Lawson Inc 2651.JP -0.5% (9-month speculation)
    Financials: Vanke 2202.HK -1.0% (Dec result), Evergrande 3333.HK -0.4% (Dec result), Country Garden Holdings Co 2007.HK -1.0% (Dec result)
    Industrials: Hyundai Engineering and Construction 000720.KR -1.4% (regulators to review unclaimed bills); Toyota Motor Corp 7203.JP -2.0% (Trump tweets); Korean Air Lines Co 003490.KR -3.1% (KTB cuts)
    Technology: Samsung Electronics 005930.KR +1.9% (Q4 prelim result); Toshiba Corporation 6502.JP -1.6% (SMBC cuts to equal weight)
    Materials: Teranga TGZ.AU +4.8% (2016 gold production); Saracen SAR.AU +3.0%, St Barbara SBM.AU +2.5% (Gold rises)

  9. #199

    Daily Forex Fundamentals | Jan 06 17

    Daily Forex Fundamentals | Jan 06 17

    Global Markets:

    Asian stock markets: Nikkei down 0.40 %, Shanghai Composite lost 0.15 %, Hang Seng rose 0.35 %, ASX 200 gained 0.02 %
    Commodities: Gold at $1177 (-0.35 %), Silver at $16.40 (-1.40 %), WTI Oil at $53.75 (-0.05 %), Brent Oil at $56.90 (-0.05 %)
    Rates: US 10-year yield at 2.36, UK 10-year yield at 1.31, German 10-year yield at 0.25


    News & Data:

    Japan Real Cash Earnings (Nov): -0.20% (est 0.00%, prev 0.00%)
    Japan Labour Cash Earnings (YoY) (Nov): 0.20% (est 0.20%, prev 0.10%)
    Australia Trade Balance (A$) (Nov): +1.243bn (est -0.550bn, prev rev to -1.119bn from -1.541bn)
    Australia Exports (MoM) (Nov): 8.0% (prev 1.00%)
    Australia Imports (MoM) (Nov): 0.0% (prev 2.00%)
    Goldman Sachs forecasts USDCNY will rise to 7.3 by end-2017
    PBOC sets USD/CNY central rate at 6.8668 (vs. yesterday at 6.9307)


    Markets Update:
    The Dollar regained some strength overnight. USD/JPY rallied back above 116 following a strong bounce off 115.05 support. Meanwhile, resistance above 1.06 proved to be too strong in EUR/USD, and it fell back to 1.0575. AUD/USD declined from 0.7350 to 0.7315, while NZD/USD retraced from 0.7045 to 0.7005.
    FX traders remain focused on the Chinese Yuan, which saw some sharp moves in the past few trading days amid a short squeeze. USD/CNH fell from 6.9870 to 6.78 in only two days, but was able to recover slightly overnight. It rose from 6.7860 to 6.84.
    Upcoming Events:

    07:00 GMT – German Retail Sales
    07:45 GMT – French Trade Balance
    10:00 GMT – Euro Zone Retail Sales
    10:00 GMT – Euro Zone Consumer Confidence
    10:00 GMT – Euro Zone Business Climate
    13:30 GMT – US Nonfarm Payrolls
    13:30 GMT – US Unemployment Rate
    13:30 GMT – US Trade Balance
    13:30 GMT – US Average Hourly Earnings
    13:30 GMT – Canadian Unemployment Rate
    13:30 GMT – Canadian Employment Change
    13:30 GMT – Canadian Trade Balance
    15:00 GMT – US Factory Orders
    15:00 GMT – Canadian Ivey PMI
    20:30 GMT – US CFTC Positioning Data

  10. #200

    NFP Preview: Last Jobs Report Before Trump Inauguration

    NFP Preview: Last Jobs Report Before Trump Inauguration



    With December's 25-basis-point rate hike by the Federal Reserve in the rearview mirror, US market attention in the new year has shifted full focus both to Donald Trump's inauguration as US President on January 20 and the pace of Fed rate hikes in 2017. As usual, Friday's jobs reports will play a role in helping to determine the latter. In turn, the Fed's near-future pace of tightening and Trump's economic policies going forward will likely continue to make a major impact across a broad array of financial markets, including US equities, the dollar, and gold.
    Inflation
    As for the Fed's positioning, its dual mandate consists of maximizing employment and stabilizing prices. The latter function utilizes monetary policy (i.e., interest rates) to control rising inflation, which has not been a significant concern for quite some time – until, that is, Trump became the new president-elect.
    Widespread speculation over Trump's aggressive spending plans has sparked intense anticipation of a rise in inflation. When this Trump-driven anticipation was coupled with surges in energy prices due to the recent deal among major oil producers to cut output, inflation expectations have become even stronger. In turn, higher inflation expectations have fueled higher interest rate anticipation, boosting the US dollar while weighing on gold prices. Up to the first trading day of the new year, the US dollar had been on an epic rally and gold had been heavily pressured.
    Jobs
    When it comes to jobs, Donald Trump has repeatedly stressed his strong focus on job retention and creation in the US. This promise follows on the heels of solid monthly employment increases throughout most of 2016, which highlights a healthy US employment landscape that potentially supports a more robust pace of interest rate increases by the Fed in 2017.
    Last month's strong showing of 178,000 jobs added for November was, along with consideration of Trump's fiscal spending plans, a key component in the Fed's widely-expected decision to raise interest rates for the second time in over ten years.
    As noted, this Friday's US jobs report will be the last such report before inauguration of the new Trump Administration on January 20. While the past several months of non-farm payrolls (NFP) data have sometimes disappointed expectations, they have still shown a solid and stable US employment picture overall. After the Fed not only raised interest rates in December but also indicated that officials now expect three further rate hikes in 2017 instead of two, focus has turned to the pace of Fed tightening this year. Certainly, better-than-expected jobs data could help accelerate the process while worse data could impede it.
    NFP Expectations
    Consensus expectations for this Friday's NFP, which will be accompanied by key related data on the unemployment rate and average hourly earnings, are currently around 175,000 jobs added for the month of December. The December unemployment rate is expected to come in at 4.7%, while average hourly earnings are expected to have increased by 0.3% after last month's surprise -0.1% decrease.
    Thursday's ADP private sector employment report, which sometimes serves as a limited indicator for NFP Fridays, came in significantly worse than expected at 153,000 jobs added in December against prior forecasts of around 170,000.
    As for other key employment-related data releases for December: the ISM manufacturing PMI employment component expanded at a faster pace in December than the previous month - 53.1 versus 52.3 in November. In contrast, the even more critical ISM non-manufacturing (services) PMI showed a marked slowing of growth in December at 53.8 versus November's 58.2.
    Finally, December's weekly jobless claims data has been relatively consistent, but generally a mixed bag. The most recent release on Thursday covering the last full week of December showed a significantly better-than-expected (lower) number of claims at 235,000 vs 262,000 expected.
    Forecast and Potential Market Reaction
    Overall, the trend of solid employment numbers is likely to have continued from previous months into December. With that said, the number could skew lower if the worse-than-expected ADP and ISM non-manufacturing employment data are to serve as any guide. With consensus expectations of around 175,000 jobs added in December, our target range is around 160,000-180,000. If the actual data falls above this range, the report should increase expectations of a faster pace of Fed rate hikes, thereby boosting the dollar further while potentially extending gold's decline. An outcome that is substantially lower than this range, however, could make a significantly negative impact on the strong dollar, and lead to a further relief rebound for depressed gold prices.
    NFP Jobs Created and Potential USD Reaction:
    > 200,000
    Strongly Bullish
    181,000-200,000
    Moderately Bullish
    160,000-180,000
    Neutral
    140,000-159,000
    Moderately Bearish
    < 140,000
    Strongly Bearish

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