Thread: OcaFX.Com - Financial News and Analysis

EM performances: BRL, RUB and ZAR the worst - BBH








FXStreet (Córdoba) - The research team at Brown Brothers Harriman noted the relevance of events in emerging markets that took place during the week.


Key Quotes


“In the EM equity space, Colombia (+1.7), China (+0.7%), and Qatar (+0.6%) have outperformed over the last week, while India (-4.5%), Hong Kong (-3.6%), and Peru (-3.1%) have underperformed. To put this in better context, MSCI EM fell -3.7% over the past week while MSCI DM fell -3.5%.”


“In the EM FX space, PEN (+0.7% vs. USD), CNY (+0.5% vs. USD), and CLP (+0.2% vs. USD) have outperformed over the last week, while BRL (-5.5% vs. USD), RUB (-3.5% vs. USD), and ZAR (-3.0% vs. USD) have underperformed.”


“Brazil’s government will submit budget proposal for 2016 that projects a primary deficit instead of the previously expected surplus (…) Brazil’s COPOM kept rates steady at 14.25% this month, as expected. It was the first time that rates were kept steady since last October.”













Sep 04,2015
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EUR/USD wobbles around 1.1100








FXStreet (Edinburgh) - The offered tone remains intact around the single currency on Friday, with EUR/USD now hovering over the 1.1100 neighbourhood.


EUR/USD capped by 1.1200


The pair has quickly faded the ephemeral test of the boundaries of 1.1200 the figure in the wake of the US labour market data, although the bullish attempt lost momentum and reverted to test sub-1.1100 levels.


US labour market continues to outperform, as seen by the lower jobless rate despite the miss in Payrolls, although it remains to be seen whether today’s results are enough for the Fed to announce the normalization of its monetary policy at this month’s meeting.


EUR/USD key levels


At the moment the pair is losing 0.14% at 1.1107 with the immediate support at 1.1057 (low Aug.12) ahead of 1.1017 (low Aug.20) and finally 1.1000 (psychological level). On the upside, a breakout of 1.1294 (high Sep.2) would target 1.1320 (high Sep.2) en route to 1.1333 (high Sep.1).













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EUR shorts keep scaling back – Rabobank








FXStreet (Edinburgh) - Jane Foley, Senior FX Strategist at Rabobank, reviewed the last report on net speculators’ positioning.


Key Quotes


“Having dropped sharply the previous week net EUR shorts increased modestly suggesting that the recent aggressive unwind of EUR short positions may be running out of steam”.


“Net USD longs have edged lower having dropped more sharply the previous week. Expectations of a September Fed rate hike have been pared significantly over the past month although a robust set of August Labour data may lend the USD support this week”.











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GBP/USD consolidates near daily highs








FXStreet (Córdoba) - GBP/USD steadied near daily highs and entered a consolidation phase, following a rally that lead the pair to near 1.5300 during the European session.


GBP/USD found buyers and climbed to a daily peak of 1.5277, without a clear catalyst, in quiet trading conditions. Cable pulled back slightly from highs and it was last trading at 1.5250, recording a 0.53% gain on the day, and having recovered from a post-NFP low of 1.5164.


Trading will likely remain subdued during the American session, give the US Labour Day holiday.


GBP/USD levels to watch


In terms of technical levels, a break above 1.5277 would pave the way towards 1.5300 (psychological level) and 1.5355 (200-day SMA). On the other hand, supports are seen at 1.5164 (Sep 4 low) and 1.5088 (May 5 low).











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Australia: Aug business confidence deteriorates, conditions edge up








FXStreet (Bali) - Business conditions in Australia improves during the August period, to 11 from 6 in July, while business confidence receded further, coming at 1 vs 4 in July.


James Glenn, Senior Economist at NAB


"Business conditions point to a further improvement in the non-mining economy, even as jitters in financial markets weigh on confidence. The conditions index jumped 5 points to +11 in August, after losing a little ground last month, lifting the trend index to its highest level since late 2009. By component, both trading conditions and profitability recorded a notable improvement, but the employment index remains at very subdued levels.


"This outcome adds to the mounting evidence that AUD depreciation and record low interest rates are having the desired effect and helping to offset the weakness in mining. Even so, outcomes vary significantly by industry. Services sectors continue to outperform, while retail has improved considerably. The ‘bellwether’ wholesale industry remains weak, but probably reflects margin squeeze due to AUD depreciation as other leading indicators (aggregate forward orders and capacity utilisation) have improved."


"Confidence pared back further in August (from +4 to +1), unwinding the post budget gains and hitting its lowest level since mid-2013. While confidence tends to track conditions quite closely, recent financial market ructions and China growth concerns appear to have had an unnerving effect on business – albeit not enough to send confidence into negative territory (a good outcome given the degree of market volatility). Confidence eased in most industries, although mining and construction recovered some of last month’s sharp declines."





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AUD/USD rallies and breaks away from hourly 50 SMA








FXStreet (Guatemala) - AUD/USD had been pressuring the hourly 50 SMA to the upside on the Glencore news, but it is breaking even higher on the 10-minute sticks after a mixed NAB's business confidence.


The business conditions in Australia have improved during August to 11 from 6 in July, while business confidence dropped back coming at 1 vs 4 in July. AUD/USD was making a low of 0.6933, but has rallied to 0.6965 and away from the 50 SMA. The next set of data with come from China's trade data while Chinese stock markets were indicated to be opening negative 0.8% in the Shanghai Composite.


AUD/USD levels


To the upside, this break of the 50 SMA on the hourly chart brings in last week's high of 0.7062 as a target. To the downside, 0.6500 may have psychological importance, looking back on the longer-term charts, there are very little technicals until 0.6000. 0.6850 guards 0.6774 June 2004 low then 0.6280 2009 March lows and also 0.6122/.6010, the 2008 lows.




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Westpac cuts AUD/USD year-end forecast to 0.66 from 0.70








FXStreet (Bali) - Westpac cuts AUD/USD year-end forecast to 0.66 from 0.70, with Westpac chief economist Bill Evans noting that "doesn't expect confidence "vibe" around AUD to improve for remainder of this year."


Additional headlines - Bloomberg


Negative market perceptions around China and Australia's trade exposure to China are likely to persist


Sees EM woes continuing


Financial markets remaining volatile






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NZD/USD testing highs near 0.6280 post China data








FXStreet (Mumbai) - The New Zealand dollar stages a minor pullback versus its American rival in the mid-Asian session, with NZD/USD moving away from fresh six and a half year lows struck at 0.7241 on Monday.


NZD/USD lifted on China trade data


Currently, the NZD/USD pair trades 0.31% higher at fresh session highs near 0.6280. The Kiwi extends its recovery from multi-year trough as the NZD bulls were offered some respite following an upward revision to the NZ CPI while upbeat Chinese trade figures also lent a helping hand.


Statistics New Zealand found a processing error in its March quarter CPI data, which saw the first quarter CPI change revised up from -0.3% to -0.2%. While China’s trade surplus expanded in August with exports falling less than expectations. China is New Zealand’s top export destination.


Meanwhile, markets now await the US labour markets conditions data with the US traders returning after a long weekend. Besides, Thursday’s RBNZ cash rate statement will be also closely watched as markets widely anticipate a rate cut in order to counter the effects of the recent China fears.


NZD/USD Levels to consider


To the upside, the next resistance is located at 0.6306 (Sept 7 High) levels and above which it could extend gains 0.6373 (Sept 2 High) levels. To the downside immediate support might be located at 0.6241 (Sept 7 Low) below that at 0.6200 (early 2009 levels).




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China trade data spooks Asia, German trade balance, EZ GDP – Up next






FXStreet (Mumbai) - The safe haven assets such as yen, euro, gold, Swiss franc etc. were caught by fresh bid waves as the latest Chinese trade figures added to the persisting negative sentiment surrounding China’s economy, dampening investors’ sentiment.


Key headlines in Asia


Australia: Aug business confidence deteriorates, conditions edge up

China Aug trade surplus up, imports collapse


China: Yuan likely to strengthen, no sizable devaluation on cards – Macquarie


Dominating themes in Asia - centered on JPY, AUD, NZD


A volatile Asian session with Chinese equities extending their sell-off from Monday as a renewed wave of risk-aversion caught the markets following the release of weak Chinese trade figures.


The Japanese yen erased losses and swung higher versus the US dollar as risk-off sentiment gained momentum amid falling Chinese stocks post the dismal Chinese economic news which revealed that although the country’s surplus widened, the exports and imports remained weak. USD/JPY dropped sharply lower below 119 handle.


While the Antipodeans seem to be unaffected by the ongoing risk-off trades as the Australian dollar remains lifted on the back of improved business conditions. National Australia Bank's (NAB) Business Conditions Index surged from 6 in July to 11 last month, the strongest reading since October, where a reading above zero signals an improvement in conditions.


While the Kiwi also tracks the Aussie higher and rebounds from fresh six and a half year lows, still keeping range below 0.63 handle as markets remain cautious ahead of Chinese CPI and RBNZ cash rate statement due later this week for further direction. While an upward revision to the NZ CPI data also supports the NZD/USD pair.


Meanwhile, the sell-off in the Asian indices extends as Chinese equities led other Asian markets lower post China data with the Japan’s benchmark index, the Nikkei dropping -1.72% at 17550. While the Hong Kong's benchmark Hang Seng index trades -0.25% down at 20,546 and the Shanghai Composite keeps falling and now trades -1.38% lower at 3038. While Korea's benchmark Kospi index trades -0.70% at 1,870 points in Seoul. However, the benchmark Australian S&P/ASX 200 bucked the trend and rallies over 1% to 5,089.


Heading into Europe - centered on EUR, GBP


The coming week will be occupied by waiting for these events, as the glimpse on the macro calendar reveals only some low-profile prints.


In the session ahead, Germany will reveal its July current account figures and the headline gauge is projected to decrease to €21.5 billion, down from the €24.4 billion seen previously. Both exports and imports are projected to show stronger figures - 1.4% and 0.5% growth month-on-month respectively, up from the 1.0% and 0.5% dip seen in June.


Later in the day, Eurostat will show its final Q2 GDP data. The preliminary figures missed estimates, as they said that the 19-country euro area grew by 0.3% quarter-on-quarter in the April-June period for a 1.2% growth year-on-year.


Looking ahead, the US calendar also remains data-light with the 2nd tier release in the labor market conditions index to be reported.


All of these prints, however, are of lesser significance and most likely won't cause any major reaction on the markets.




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Germany Current Account n.s.a. down to €23.4B in July from previous €24.4B






FXStreet.com (Barcelona) For more information, read our latest forex news.




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