Policy
The Week Ahead
Highlights
FX return analysis
Fundamental wrap: UK and Europe
Swiss GDP surprise could cause volatility in EURCHF
No change in rates expected from BOC
Fundamental focus: Japan
FX returns analysis
It was a wild week for the FX market with some very violent moves and sharp reversals of short term trends. FX followed moves in the stock and bond markets, particularly in Asia, which highlighted how the FX market does not move in isolation.
Figure 1: weekly FX returns
The dollar was the notable under performer last week, losing ground against 6 out of 10 of the majors. This is a sharp reversal of fortune from the week prior when it was higher against all G10 currencies. Risk aversion gripped the markets last week, and this was reflected in the FX space with the safe havens ...
This week was a busy one for the world`s leading economy with mixed crucial data regarding the housing and labor markets and the country`s durable goods while the country`s Federal Reserve published the minutes from its latest policy meeting showing on the need to maintain the current pace of purchases until more economic progress is shown.
Yet several members within the Fed Minutes released favored beginning a tapering of QE as early as June, but the committee as a whole decided more progress on the economy is needed first.
And most of the members agreed on need for FOMC to communicate clearly that pace/size of purchases would depend on outlook for labor market and jobs, as well as efficacy/costs of purchases and progress toward dual mandate.
Accordingly US shares fluctuate throughout ...
Investors shrugged an indulgence for economic recovery that only lasted so long when China released data showing the nascent growth has fallen behind, while Japan`s central bank board members stood pat on monetary policy amid speculations the bank would step up measures.
Last week, data from China showed the HSBC manufacturing PMI have fallen to 49.6 in May below the 50 mark that sparks concerns over the world`s second largest economy`s performance.
Though a preliminary reading, pessimism took over markets across the world; recently, the Chinese economy has witnessed several blows, starting from the first quarter growth data, which, despite positive, didn`t amount to the level required by policymakers, let alone investors both nationals and internationals.
Yes policymakers have exerted ...
European Central Bank (ECB) President Mario Draghi said that more involvement from the euro area was the solution to resolving the debt crisis, calling on governments to take steps to improve their own finances, according to his speech in london on Thursday.
In his speech at a gala dinner in London yesterday, the head of European Central Bank Mario Draghi, has urged governments to push on with reforms and banking union plans, while he added that the euro area is more stable than a year ago, yet challenges remain.
"The crisis that we are facing today is much more multi-faceted and that means that the policy response must also be much more multi-faceted and must involve a variety of institutions," Draghi said.
While regarding talks over a potential U.K. referendum on membership of the ...
New Zealand’s trade balance slowed in April to record less-than-estimated surplus, where the nation’s imports outpaced exports amid the recent global instability and sluggish economic performance especially in China, the main trade partner to New Zealand.
New Zealand’s economy released its trade balance reading concerning the month of April, where the reading recorded an actual fall of NZ$157 million, compared with a previous revised reading of NZ$732 million from NZ$718 million, while analysts’ expectations were NZ$480 million.
Meanwhile, New Zealand’s exports fall more than-estimated in April to record NZ$3.95 billion, compared with analysts’ expectations NZ$4.06 billion, while the previous reading recorded NZ$4.42 billion which revised to NZ$4.41 billion.
At the same time, Imports ...
Asian Market Update
Japan stocks rebound from overnight collapse as yen-sellers resurface
Economic Data
(NZ) NEW ZEALAND APR TRADE BALANCE (NZ$): 157M V 515ME (3-month low); EXPORTS: 3.95B V 4.06BE; IMPORTS: 3.80B V 3.60BE
(PH) PHILIPPINES MAR TRADE BALANCE: -$593M V -$967M PRIOR; TOTAL IMPORTS: $4.9B V $4.7B PRIOR; TOTAL IMPORTS: -8.4% V -5.8% Y/Y
Markets Snapshot (as of 02:30 GMT)
Nikkei225 +2.9%
S&P/ASX -1.3%
Kospi +0.1%
Shanghai Composite +0.3%
Hang Seng flat
Jun S&P500 +0.2% at 1,653
Jun gold +0.1% at $1,393/oz
Jul crude oil flat at $94.25/brl
Observations/Insights
Outsized losses in Tokyo equities are being corrected in the final session of the week as traders swooped in to put a floor under the free-fall in the yen pairs overnight. Yen selling has returned amid the ...
U.S. stocks opened and closed with heavy losses as fears over a sooner than expected tapering to the Federal Reserve’s bond-buying program and weak Chinese economic data overcame strong data on jobs market.
The S&P 500 index lost 0.29% to 1650.51 points. The NASDAQ composite index lost 0.11% to 3459.42 points. As of 16:15 New York Time
Losses for the Dow Jones Industrial Average were smaller, as the blue-chip index got a boost from a rally for Hewlett-Packard Co.`s shares after the company’s results beat expectations. HP shares rallied slightly above 11%.
The Dow Jones Industrial Average lost 0.08% or 12.67 points to 15294.50 points.
Benchmark stock indices dropped the most in three weeks on Wednesday, after minutes from the latest U.S. Fed monetary policy meeting showed some members ...
Major pairs are currently narrow trading throughout the US session as a result of present technical movements taking place within the currencies market despite of earlier sentiments of pessimism spread.
If truth be told pessimism remain spread since yesterday after that the minutes from the latest U.S. Fed monetary policy meeting showed some members open to an early tapering to the unprecedented bond-buying program.
The minutes came in the wake of comments earlier in the session by Fed Chairman Ben Bernanke, who said the Fed could scale back the pace of its bond purchases at one of the "next few meetings" if the economic recovery looked set to maintain forward momentum.
Accordingly the euro is presently narrow trading on the four and one-hour charts as a result of the current technical ...
We watched today the black gold plunge slightly in New York as fears are spread within the energy market after that manufacturing in China shrank and U.S. gasoline stockpiles increased to watch crude so far trade around $93.55 a barrel recording a high of $94.08 a barrel and a low of $92.20 a barrel
In fact China’s Purchasing Managers Index dropped to 49.6 for May, the least since October and below estimates, keeping in mind that this is second top oil consumer country while that gasoline inventories rose 3 million barrels last week.
Plus pessimism remain spread since yesterday after that the minutes from the latest U.S. Fed monetary policy meeting showed some members open to an early tapering to the unprecedented bond-buying program.
The minutes came in the wake of comments earlier in ...