Daily Market Update 8th September 2016
ECONOMIC DATA OF THE DAY
| Time | CY | Indicator | Forecast | Actual | Previous |
|---|---|---|---|---|---|
| 07:50 | JN | GDP SA QoQ | 0.00% | 0.20% | 0.00% |
| 19:45 | EC | ECB Main Refinancing Rate | 0.00% | n/a | 0.00% |
| 20:30 | US | Initial Jobless Claims | 265k | n/a | 263k |
| 20:30 | US | Continuing Claims | 2151k | n/a | 2159k |
SPEECHES
- 12:30 – JPY – BOJ Nakaso makes a speech at ACCJ in Tokyo
- 20:30 – EUR – ECB president Draghi holds a press conference
OVERNIGHT NEWS
- US:
- US Jolts report showed robust labour market growth which should please the Fed. The much watched quits rate remained stable at 2.1% for the month.
- US beige book overnight, showed modest economic growth and slight inflation pressures and tight labour markets, a carbon copy of the month before.
- CANADA:
- Bank of Canada surprised with a dovish statement today, noting that risk to inflation have tilted to the downside since July and that financial vulnerabilities associated with the household imbalances remain elevated. The did suggest growth was expected to pick up, however the market took the statement as dovish and CAD sold off.
- EUROPE:
- German Industrial production unexpectedly declined at -1.2% y/y versus an expected +0.2%.
- UK:
- UK industrial production beat expectations, 2.1% vs 1.9%, however Manufacturing production missed at 0.8% vs 1.7% expected y/y.
- Mark Carney spoke in front of the treasury select committee yesterday, with the only highlight being his comment that the BOE could cut rates further if need as well as expand term funding scheme if needed.
FOREIGN EXCHANGE (INDICATIVE RATES)
| Currency | Last | % Change | Overnight Range |
|---|---|---|---|
| DXY | 94.96 | 0.14% | 94.69 – 95.06 |
| EURUSD | 1.1239 | -0.14% | 1.1229 – 1.1271 |
| USDJPY | 101.74 | -0.27% | 101.21 - 102.13 |
| AUDUSD | 0.7673 | -0.18% | 0.7651 – 0.7698 |
| GBPUSD | 1.3341 | -0.74% | 1.3319 - 1.3441 |
COMMODITIES (INDICATIVE RATES)
| Currency | Price USD | % Change | Overnight Range |
|---|---|---|---|
| Gold | 1345.18 | -0.36% | 1342.80 - 1352.74 |
| Silver | 19.80 | -1.28% | 19.73 - 20.14 |
| Oil (BRENT) | 47.98 | 1.52% | 46.97 - 48.56 |
| Oil (WTI) | 45.50 | 1.49% | 44.55 - 46.17 |
COMMODITIES
Precious Metals: Gold inched down a bit on close overnight, still hovering around 1350 level, ahead of ECB meeting tonight looking to announce further easing, and we start seeing big flow into Gold ETF since the slow move in the whole month of Aug. Gold Dec is believed to be well supported at 1340 level, where the 50MA is.
Oil: Oil rose on reduced inventory data coming from EIA and Iran might join the queue on production control to bring up oil prices. However, we can see that rumors on output freeze is losing its power on supporting oil market, price not picking up much thins time being the evidence. With Iran being determined to bring its production to 4m barrels/day and Nigeria looking to recover the 1m barrels/day from last pipeline attack, the market is still well supplied.
FOREX NEWS
- USD found firmer footing after the Asian trading session. $CAD rallied from 1.2823 to a high 1.2914 post the dovish BoC statement. GBP sold off post Carney’s meeting with the treasury select committee.
- Emerging Markets traded on firm footing throughout the Asian session with KRW trading to its strongest level since May 2015. However, as the USD stabilised the weaker of the EM complex began to sell off (ZAR, TRY, MYR).
Draghi Has Decision on QE Program Coming, If Not Now Then Soon
Mario Draghi might have no choice but to extend his bond-buying plan. How he’ll achieve it is anything but clear.
The European Central Bank president will hold a press conference on Thursday after his Governing Council sets monetary policy for a euro-area economy that’s looking in need of heightened stimulus for a while to come. If no definitive action is taken immediately, Draghi is likely to be quizzed on what he’ll do -- and when -- to keep growth on track.
With just six more months of asset purchases scheduled, and recent data highlighting the fragility of the recovery, most economists surveyed by Bloomberg predict the ECB will need to prolong quantitative easing. But policy makers first need to decide whether that requires a redesign of a 1.7 trillion-euro ($1.9 trillion) program that is fast chewing up the region’s supply of debt.
“The question is not whether the ECB will ease, it’s more about getting the sequence right to maximize the impact of the additional measures,” said Frederik Ducrozet, an economist at Pictet & Cie in Geneva, who expects fresh stimulus to be announced in December. “More time is needed to acknowledge and address the scarcity issue facing asset purchases.”
To set a reminder to watch Draghi’s press conference live, click here.
The central bank will announce its decision at 1:45 p.m. Frankfurt time, and Draghi will speak to reporters 45 minutes later. While few economists surveyed by Bloomberg predict any change in interest rates, just under half expect to see some form of action.
Read More at bloomberg.com
