Ekonomické zpravodajství

Daily analysis 10/10/2024

10. 10. 2024 - Josef Brynda

Latest news
  • The US Dollar Index extends its winning streak to eight sessions.
  • The Reserve Bank of New Zealand cut its official cash rate by 50 basis points to 4.75% in October 2024.
  • The Fed reduced the fed funds rate by 50bps to 4.75%-5%, the first cut since March 2020.
  • Japan's producer prices rose by 2.8% YoY in September, up from 2.6% in August.
  • Germany's exports rose by 1.3% to EUR 131.9 billion in August, beating expectations.
  • US CPI data for September is expected to show 0.1% MoM and 2.3% YoY inflation.
  • Treasury yields continue to rise ahead of today's CPI print.
  • US 10-year yields have risen by 22 basis points to 4.07% since last Friday's stronger jobs report.
  • The 2-year yield has climbed 31 basis points to 4.01%, flattening the curve.
  • Traders are adjusting to reduced expectations for Fed easing.
  • Gold prices fell for a sixth day after reduced rate cut expectations.
  • The dollar maintained its gains after the latest Federal Reserve meeting minutes.
  • The yen weakened toward the key 150 per USD level.
  • The New Zealand dollar was the worst performer, dropping to its lowest level since 19 August.
  • The Bloomberg Dollar Spot Index trades near a two-month high.
  • Activity currencies dependent on Chinese demand are among the hardest hit.
  • Scandinavian currencies are also significantly affected by dollar strength.
  • Volatility in Chinese equities continues at excessive levels.
  • A planned government briefing on fiscal measures in China is expected this weekend.
  • The US government is planning steps that will fundamentally change Google's grip on search.
  • The VIX dropped 2.61% to 20.86, signaling reduced near-term anxiety in markets.
  • Options pricing suggests a slightly elevated expected move for today's trading.
  • Expectations for the pace of Federal Reserve policy easing are fading.
  • A lackluster 10-year note auction influenced Treasury yields.
  • Crude traders' focus remains torn between geopolitical risks and sluggish demand outlook.
  • The EIA downgraded their global oil demand outlook for 2025.
  • Copper has stabilised following a two-day slump, with focus on potential Chinese stimulus.
  • Wheat prices jumped due to weather disruptions for major growers.
  • The dollar has seen gains against all major currencies, except the Mexican peso.
  • Traders are now looking ahead to today's US inflation report for further direction.
  • Italy Industrial Activity Rises Slightly Less than Expected.
  • UK 10-Year Gilt Yield at 3-Month High
News summary
  • The global forex market is experiencing significant shifts, driven by a combination of central bank decisions, economic indicators, and market expectations. The US Dollar Index has extended its winning streak to eight sessions, reflecting the greenback's strength across the board. This comes as Treasury yields continue to rise, with the 10-year yield reaching 4.07% and the 2-year yield climbing to 4.01%, flattening the yield curve. These factors are likely to put pressure on EUR/USD, potentially pushing the pair to test lower levels if the dollar's rally continues. Similarly, USD/CAD might see the Canadian dollar weakening against the USD, influenced by both dollar strength and fluctuations in crude oil prices, especially considering the EIA's downgraded global oil demand outlook.
  • Central bank actions are playing a crucial role in currency movements. The Reserve Bank of New Zealand cut its official cash rate by 50 basis points to 4.75%, while the Federal Reserve reduced its fed funds rate by 50bps to 4.75%-5%, marking the first cut since March 2020. However, expectations for the pace of further Fed easing are fading, contributing to dollar strength. This scenario is particularly impacting NZD/USD, with the New Zealand dollar already the worst performer, dropping to its lowest level since August 19. The pair is expected to remain weak following the RBNZ rate cut and overall USD strength. Meanwhile, GBP/USD may struggle against the dollar, with the UK 10-Year Gilt Yield reaching a 3-month high, although any positive surprises in UK economic data could provide some support.
  • Economic indicators are mixed across different regions. Japan's producer prices rose by 2.8% YoY in September, while Germany's exports increased by 1.3% in August. The US awaits crucial CPI data for September, expected to show 0.1% MoM and 2.3% YoY inflation. These figures, along with the upcoming US inflation report, are likely to significantly influence market direction. The yen's weakness, approaching the key 150 per USD level, suggests USD/JPY could see further upside, especially if US yields continue to rise. For EUR/GBP, increased volatility is expected as both currencies face challenges, with the outcome depending on relative economic performance and central bank policy expectations between the Eurozone and the UK.
  • The Australian dollar (AUD) is similarly pressured by the strong U.S. dollar and weakening global risk sentiment. The increase in oil prices, driven by Middle East tensions, adds to concerns about inflationary pressures globally, which could further weigh on the AUD, especially against the USD. The AUD and its performance will be highly dependent on developments in China, which has so far failed to meet expectations with its stimulus package. However, there is speculation about another package, and this will need to be closely monitored.
  • Chinese economic concerns continue to impact global markets, with excessive volatility in Chinese equities and a planned government briefing on fiscal measures expected this weekend. This uncertainty is affecting activity currencies dependent on Chinese demand. As a result, AUD/USD is likely to face challenges due to its sensitivity to Chinese economic news. The upcoming Chinese fiscal measures briefing could provide some support, but overall USD strength may dominate. In the AUD/NZD pair, the Australian dollar might outperform the New Zealand dollar, given the RBNZ's rate cut and potential positive impact from Chinese stimulus measures on the AUD.
  • These currency movements will be heavily influenced by the upcoming US inflation report and any developments in Chinese economic policy. Traders should also keep an eye on geopolitical risks and their potential impact on safe-haven currencies. The dollar has seen gains against all major currencies, except the Mexican peso, highlighting the broad-based strength of the USD. As market participants adjust to reduced expectations for Fed easing and await further economic data, volatility in forex pairs is likely to persist, with the dollar maintaining its dominant position against most major currencies in the near term.

Daily analysis 10/09/2024

9. 10. 2024 - Josef Brynda

Latest news
  • US equity futures are pointing to a lower open, potentially impacting risk sentiment in currency markets.
  • The dollar is holding near a seven-week high against major currencies.
  • Commodities are seeing broad losses on fading China stimulus hopes, which could affect commodity-linked currencies.
  • Markets are bracing for inflation data following Friday's strong US jobs report.
  • FOMC Minutes from the September 18 meeting are due today, potentially providing insight into future Fed policy.
  • Australia's NAB business confidence improved to -2 in September 2024 from -5 in August.
  • The Reserve Bank of Australia's minutes highlighted persistent inflation concerns.
  • China's NDRC introduced new support measures, including CNY 1 trillion in special sovereign bonds.
  • The US trade deficit narrowed by 10.8% in August to $70.4 billion.
  • Japan's September PPI YoY is estimated at 2.3% vs 2.5% previously.
  • PepsiCo lowered its fiscal year revenue guidance, potentially impacting USD.
  • US 10-year bond yields are trading at 4.02%, while 2-year yields are at 3.95%.
  • Japanese funds bought a record amount of U.S. sovereign bonds in August.
  • The lack of new measures in China saw crude oil slump by more than 4%, potentially affecting oil-linked currencies.
  • Gold traded lower for a fifth day as geopolitical risk premium deflated.
  • The Dollar index recorded its largest weekly gain in two years last week.
  • Strong U.S. jobs data lowered November rate cut expectations to 25 basis points.
  • The yen weakened further after Japan's top currency diplomat warned against speculative moves.
  • USDJPY rose back above 148 following the diplomat's comments.
  • NZDUSD fell to a seven-week low, dropping below 61 cents.
  • The RBNZ cut the official cash rate by 50 basis points to 4.75%.
  • Volatility eased, with the VIX dropping to 21.42 (-5.39%).
  • The 2s10s Treasury yield spread has tightened to around 6 basis points.
  • Investors are eyeing today's 10-year bond auction for potential impacts on yields and the dollar.
  • Taiwan Semiconductor reported a strong 40% YoY increase in September revenue.
  • Rio Tinto announced it would acquire Arcadium for $6.7bn, potentially affecting AUD.
  • The front end of the Treasuries curve led losses, extending Friday's post-payrolls decline.
  • Traders adjusted their expectations for Federal Reserve policy following recent data.
  • Geopolitical tensions added a bid to the dollar last week.
  • The combination of elevated VIX futures and market highs suggests caution in currency markets.
News summary
  • The forex market is currently navigating a complex landscape of economic data, central bank decisions, and geopolitical tensions. The US dollar continues to hold near seven-week highs, bolstered by last week's strong jobs report and reduced expectations for Federal Reserve rate cuts. This strength in the USD is putting pressure on other major currencies, particularly those of commodity-exporting nations.
  • In a surprising move, the Reserve Bank of New Zealand (RBNZ) cut its official cash rate by 50 basis points to 4.75%. This decision has sent the NZD/USD pair to a seven-week low, dropping below 61 cents. The aggressive rate cut is likely to keep the New Zealand dollar under pressure against major currencies, especially the USD and AUD, as the interest rate differential widens.
  • Meanwhile, the Australian dollar (AUD) is facing mixed signals. While Australia's NAB business confidence showed improvement, the Reserve Bank of Australia's minutes highlighted persistent inflation concerns.However, the RBNZ's rate cut might provide some support for AUD/NZD.
  • The Australian dollar (AUD) is similarly pressured by the strong U.S. dollar and weakening global risk sentiment. The increase in oil prices, driven by Middle East tensions, adds to concerns about inflationary pressures globally, which could further weigh on the AUD, especially against the USD. The AUD and its performance will be highly dependent on developments in China, which has so far failed to meet expectations with its stimulus package. However, there is speculation about another package, and this will need to be closely monitored.
  • The Japanese yen continues to weaken, with USD/JPY rising above 148 despite warnings from Japan's top currency diplomat against speculative moves. This trend could persist if the yield differential between US and Japanese bonds remains wide.
  • In Europe, the EUR and GBP are struggling against the strong dollar. The lack of significant economic data from the Eurozone and UK this week means these currencies are largely reacting to US data and global risk sentiment. The ongoing crisis in the Middle East is adding a layer of uncertainty, potentially supporting safe-haven flows to the USD and, to a lesser extent, the CHF.
  • The Canadian dollar (CAD) is facing headwinds due to the sharp decline in oil prices, which fell over 4% on fading hopes for Chinese stimulus. This could lead to weakness in CAD against the USD and potentially the EUR.
  • Looking ahead, forex traders will be closely watching the release of the FOMC minutes and upcoming US inflation data. These events could provide further direction for the dollar and, by extension, major currency pairs. Additionally, the ongoing geopolitical situation in the Middle East remains a wild card that could quickly shift currency dynamics, particularly if it leads to a flight to safety benefiting the USD, CHF, and potentially JPY.

Daily analysis 10/08/2024

8. 10. 2024 - Josef Brynda

Latest news
  • China stocks are poised to reopen with markets fixated on fiscal stimulus.
  • The S&P 500 closed lower as a spike in Treasury yields weighed on markets.
  • Oil prices extended gains on Middle East tensions.
  • Retail sales in the Euro Area rose by 0.2% in August 2024, meeting market expectations.
  • Halifax House Price Index in the UK rose by 4.7% year-on-year in September 2024, the highest increase since November 2022.
  • Germany's Factory Orders fell by 5.8% mom in August, exceeding the forecasted 2.0% decline.
  • The probability of a 0.50% rate cut in November has decreased, with an 84% chance of a smaller 0.25% cut.
  • Key inflation data and earnings reports from major banks are anticipated this week.
  • Goldman Sachs upgraded its outlook on Chinese stocks to overweight, predicting a 15%-20% rise if Beijing implements promised policy measures.
  • The front end of the Treasuries curve led losses, extending Friday's post-payrolls decline.
  • U.S. 10-year yields ended at 4.025%, up 5.5 basis points after briefly exceeding 4.03%.
  • Japanese funds bought a record amount of U.S. sovereign bonds in August.
  • WTI and Brent crude oil futures both surged by 3.7%, reaching a six-week high.
  • Concerns about a broader regional conflict are heightened as Israel continues its military actions in Gaza and Lebanon.
  • Gold prices dipped by 0.4% to $2,642, and silver prices fell by 1.6% to $31.69.
  • USD stalled near a seven-week high on Monday.
  • The September jobs report showed significant payroll growth, a lower unemployment rate, and solid wage increases.
  • Markets now expect a 25-basis point rate cut by the Federal Reserve in November instead of 50 bps.
  • Against the Japanese yen, the dollar weakened after Japan's top currency diplomat warned against speculative moves.
  • The dollar index recorded a weekly gain of over 2%, its largest in two years.
  • NZD/USD fell to around $0.615 ahead of the Reserve Bank of New Zealand's policy meeting.
  • Investors fully expect a 50bps reduction from the RBNZ.
  • The Kiwi remains under pressure due to the strong U.S. dollar.
  • China is expected to hold a media briefing Tuesday to discuss economic stimulus.
  • The curve flattened but ended above session lows, with significant activity in SOFR futures and options.
  • Gilts underperformed, with 10-year UK yields closing nearly 8 basis points higher.
  • Buyers preferred the six-month bill auction over the three-month offering.
  • Iran's oil production, currently near full capacity, faces potential risks.
  • Wheat futures rose to $5.9 per bushel due to adverse weather conditions in Russia.
  • The CME's FedWatch tool now indicates an 85% chance of a quarter-point cut, up from 47% a week ago.
News summary
  • In the U.S., Treasury yields rose, with the 10-year Treasury yield reaching 4.025%. This increase was driven by strong jobs data and speculation that the Federal Reserve will only cut interest rates by 25 basis points instead of 50. The stronger U.S. dollar, fueled by higher bond yields, continues to exert downward pressure on other currencies, particularly the NZD and AUD.
  • The New Zealand dollar (NZD) has been notably weak, falling to around $0.615, as markets fully anticipate a 50-basis point rate cut from the Reserve Bank of New Zealand (RBNZ). The kiwi is facing further pressure from the stronger U.S. dollar, which has recorded its largest weekly gain in two years. The Reserve Bank of New Zealand’s decision is likely to push the NZD lower, especially against the USD
  • In the United States, the focus is on the upcoming earnings reports from major companies like PepsiCo, JPMorgan Chase, and Wells Fargo, marking the beginning of the Q3 earnings season. Strong earnings reports could bolster the US dollar, potentially putting pressure on currency pairs like EUR/USD
  • The Australian dollar (AUD) is similarly pressured by the strong U.S. dollar and weakening global risk sentiment. The increase in oil prices, driven by Middle East tensions, adds to concerns about inflationary pressures globally, which could further weigh on the AUD, especially against the USD. The AUD and its performance will be highly dependent on developments in China, which has so far failed to meet expectations with its stimulus package. However, there is speculation about another package, and this will need to be closely monitored.
  • In Europe, retail sales in the Euro Area met expectations with a modest rise of 0.2% in August, but concerns over weaker factory orders in Germany, which fell by 5.8%, are adding pressure on the euro (EUR). The euro is likely to remain weak against the USD, with investors looking for signs of further economic weakness in the Eurozone.
  • In New Zealand, the Reserve Bank of New Zealand (RBNZ) is expected to cut rates by 50 basis points. This anticipated move could significantly weaken the New Zealand dollar, potentially leading to a sharp decline in the NZD/USD pair. This decision might also have spillover effects on the AUD/USD pair due to the close economic ties between Australia and New Zealand.
  • The British pound (GBP) is facing mixed signals. While house prices in the UK showed a significant increase of 4.7% year-on-year in September, the rising UK gilt yields and concerns over economic growth continue to weigh on the currency. The pound is expected to underperform against the USD as well, especially with the U.S. dollar remaining strong.
  • The Canadian dollar (CAD) remains linked to oil price movements, and with crude prices surging by 3.7%, the CAD could see some support. However, this support might be limited as the overall global economic outlook remains uncertain, particularly with tensions in the Middle East and the potential for broader regional conflict, which could lead to further volatility in oil markets.

Daily analysis 10/07/2024

7. 10. 2024 - Josef Brynda

Latest news
  • Focus on Chinese equity rally and earnings from PepsiCo, JPMorgan Chase, and Wells Fargo
  • US dollar in focus due to strong US labour market data
  • RBNZ expected to cut rates by 50 bps
  • Crude oil trades softer but upside risks remain
  • Markets bracing for inflation data following strong jobs report
  • FOMC Minutes, US CPI, and US consumer sentiment are key economic data points
  • September Nonfarm payrolls report exceeded expectations, adding 254,000 jobs
  • Private payrolls increased by 223,000, beating consensus
  • Wages rose 0.4% month-over-month and 4.0% year-over-year
  • Unemployment rate dropped to 4.1%
  • Market scaled back expectations from six to five rate cuts by June next year
  • Q3 earnings season kicks off with PepsiCo, JPMorgan Chase, and Wells Fargo
  • US obesity rate has fallen for the first time in many decades
  • PepsiCo expected to show only 1.5% YoY revenue growth
  • US equity market ended the week on a high note due to strong jobs report
  • Chinese equity rally of 30% from September lows in focus
  • US inflation report on Thursday important for market's pricing of future Fed policy rates
  • Potential reversal of recent moves in equities expected
  • US Treasury yields surged after strong jobs report
  • Attention on upcoming US inflation data (CPI) and producer prices
  • Central bank policy decisions from India, New Zealand, South Korea, and possibly Singapore in focus
  • Commodities sector traded higher for a fourth week
  • China to hold press conference on economic support measures
  • Crude oil market watching moves from Israel on Hamas attack anniversary
  • US dollar gained strength post-strong US jobs data
  • Japanese yen had one of its weakest weeks since 2009
  • New Zealand dollar may weaken due to expected RBNZ rate cut
  • VIX currently at 19.21 (-6.25%)
  • S&P 500 could swing around 85 points (~1.48%) over next five days
  • Core CPI (MoM) forecasted at 0.2% and CPI (YoY) at 2.3%
  • Q3 earnings season could influence market sentiment
  • Geopolitical tensions in the Middle East remain a background risk
News summary
  • The global financial markets are currently focused on several key developments, including a Chinese equity rally, upcoming earnings reports from major US companies, and significant economic data releases.
  • The Chinese equity market has seen a remarkable 30% rally from its September lows, which is drawing considerable attention. This resurgence in Chinese stocks could potentially boost the Australian dollar (AUD) and New Zealand dollar (NZD) due to their economies' close ties with China. A stronger Chinese economy typically increases demand for Australian and New Zealand exports
  • In the United States, the focus is on the upcoming earnings reports from major companies like PepsiCo, JPMorgan Chase, and Wells Fargo, marking the beginning of the Q3 earnings season. Strong earnings reports could bolster the US dollar, potentially putting pressure on currency pairs like EUR/USD
  • The recent US jobs report exceeded expectations, with 254,000 jobs added in September and the unemployment rate dropping to 4.1%. This strong labor market data has led to a surge in US Treasury yields and strengthened the US dollar.
  • Looking ahead, market participants are bracing for upcoming US inflation data, particularly the Consumer Price Index (CPI) report on Thursday. This data will be crucial in shaping expectations for future Federal Reserve policy rates. If inflation comes in higher than expected, it could further strengthen the US dollar
  • In New Zealand, the Reserve Bank of New Zealand (RBNZ) is expected to cut rates by 50 basis points. This anticipated move could significantly weaken the New Zealand dollar, potentially leading to a sharp decline in the NZD/USD pair. This decision might also have spillover effects on the AUD/USD pair due to the close economic ties between Australia and New Zealand.
  • The crude oil market is trading softer but remains subject to upside risks, particularly due to geopolitical tensions in the Middle East. Any significant movements in oil prices could impact the Canadian dollar, given Canada's status as a major oil exporter. 
  • Lastly, the volatility index (VIX) is currently at 19.21, suggesting moderate market uncertainty. The S&P 500 is expected to potentially swing around 85 points (approximately 1.48%) over the next five days. These factors, combined with the upcoming Q3 earnings season and ongoing geopolitical tensions, could lead to increased volatility across all major currency pairs.

Daily analysis 10/02/2024

2. 10. 2024 - Josef Brynda

Latest news
  • The US dollar gained strength as Fed Chair Powell dismissed expectations of imminent rate cuts.
  • Geopolitical tensions in the Middle East boosted the dollar’s safe-haven appeal.
  • The Canadian dollar rose, supported by higher oil prices following the Iran-Israel missile attack.
  • The euro weakened below 1.11 against the US dollar, pressured by slowing inflation in the Eurozone.
  • Expectations of an ECB rate cut in October also weighed on the euro’s performance.
  • Sterling dropped below 1.33 against the dollar due to rising geopolitical risks and a strong US dollar.
  • Safe-haven currencies like the Japanese yen and Swiss franc remained stable but did not see major gains.
  • The New Zealand dollar fell over 1%, driven by expectations of significant rate cuts from the Reserve Bank of New Zealand.
  • Market expectations of slower US rate cuts provided further support for the dollar.
  • A stronger-than-expected US JOLTS report further fueled the dollar’s rise.
  • Fluctuations in oil prices due to Middle East tensions affected commodity-linked currencies like the Canadian and Australian dollars.
  • A risk-off sentiment in global markets strengthened demand for the US dollar.
  • Weakening economic data from Europe continued to weigh on the euro.
  • Political instability in Europe contributed to downward pressure on the euro.
  • Inflation in the Eurozone dropping below the 2% target added to speculation of ECB monetary easing.
  • The Iranian missile attack on Israel spurred increased demand for safe-haven currencies.
  • The US dollar’s rise was bolstered by geopolitical concerns and higher US bond yields.
  • The Swiss franc remained resilient but did not gain significantly, despite market volatility.
  • Hawkish comments from Fed officials lifted the dollar against a basket of major currencies.
  • Concerns over a broader conflict in the Middle East increased demand for the US dollar.
  • The euro fell as markets priced in further rate cuts from the ECB.
  • Weak Eurozone inflation numbers reinforced the dollar’s dominance over the euro.
  • Sterling's decline was linked to market concerns over UK economic resilience and geopolitical tensions.
  • The Japanese yen remained under pressure despite growing global risks.
  • The US dollar remained firm amid speculation of slower global economic growth.
  • Investor uncertainty over global central bank policies supported the US dollar.
  • The Reserve Bank of New Zealand’s dovish stance contributed to a weaker New Zealand dollar.
  • Increased volatility in global markets kept the US dollar in demand.
  • US employment data bolstered the dollar as markets anticipated tighter Fed policies.
  • The euro struggled as weaker-than-expected economic data heightened fears of recession in Europe.
News summary
  • In light of the latest market developments, the US dollar (USD) is expected to maintain its upward momentum. Federal Reserve Chair Jerome Powell's recent remarks, which downplayed the likelihood of imminent rate cuts, provided solid support for the dollar, reinforcing its strength across global currencies. This hawkish stance has been further amplified by rising geopolitical tensions in the Middle East, specifically the missile exchanges between Iran and Israel. As these tensions escalate, investors have shifted towards safe-haven assets like the dollar, increasing its demand and boosting its value. The situation has had a notable impact on the EUR/USD pair, which continues to decline. The euro (EUR) is also under pressure due to slowing inflation within the Eurozone, which has sparked expectations of a rate cut by the European Central Bank (ECB) in October. With inflation falling below the 2% target, the euro has weakened below the key 1.11 level against the dollar, further driven by weaker-than-expected economic data from the region.
  • The Canadian dollar (CAD), however, has experienced strength due to rising oil prices, which surged following news of the missile attacks between Iran and Israel. Given Canada's significant role as a major oil exporter, any upward movement in crude oil prices tends to positively influence the CAD. This has brought the USD/CAD pair closer to a stronger Canadian dollar as the demand for oil rises amidst fears of supply disruptions in the Middle East. While the CAD benefits from this dynamic, other commodity-linked currencies such as the Australian dollar (AUD) and New Zealand dollar (NZD) are facing headwinds. The NZD has been particularly weak, dropping by more than 1%, as markets expect substantial rate cuts from the Reserve Bank of New Zealand. Weak economic data and a softening labor market in New Zealand have led to heightened expectations of further monetary policy easing, which has put downward pressure on the NZD/USD pair.
  • The British pound (GBP) has also weakened significantly, falling below 1.33 against the dollar. This decline is driven by two primary factors: the strength of the US dollar and growing geopolitical risks. The UK economy faces increasing uncertainty, with political instability and the global geopolitical landscape weighing heavily on investor sentiment. Concerns over the UK’s economic resilience, coupled with the broader geopolitical risks stemming from the Middle East conflict, have contributed to the decline in GBP/USD. Investors are wary that these risks, along with potential disruptions in global trade, could negatively impact the UK economy, leading to further downside pressure on the pound.
  • Looking ahead, the outlook for major currency pairs remains tied to the strength of the US dollar. The EUR/USD, GBP/USD, and AUD/USD pairs are expected to continue facing downward pressure as the dollar remains the preferred safe-haven currency amidst geopolitical uncertainties and hawkish monetary policy expectations. The Canadian dollar, in contrast, may see further gains if oil prices continue to rise, driven by fears of supply disruptions in the Middle East. However, the New Zealand dollar is likely to remain under strain due to the dovish stance of the Reserve Bank of New Zealand, which could result in further monetary easing in response to weakening economic indicators. In the short term, the FX market is likely to be dominated by these geopolitical tensions, central bank policies, and commodity price fluctuations, all of which will play a crucial role in shaping currency movements.
     

Daily analysis 10/01/2024

1. 10. 2024 - Josef Brynda

Latest news
  • Fed Chairman Powell's speech tilted hawkish as he stated that the Fed is not in a rush to cut rates quickly.
  • Powell implied a 25bp rate cut in September and December, leaning back against expectations for another 50bp rate cut.
  • Atlanta Fed President Bostic said that he is open to another 50bp rate cut if the labour market shows an unexpected weakness.
  • China's PMI numbers offered a mixed snapshot of the economy, with manufacturing PMI remaining in contraction at 49.8.
  • Germany inflation fell in September for a second straight month, supporting the case for an October rate cut.
  • Euro-area inflation print is due today and is likely to confirm the disinflation trends seen in France, Italy and Germany.
  • Bank of Japan's quarterly Tankan report showed sentiment among large Japanese manufacturers held steady.
  • The US dollar traded higher as Fed's Chair Powell offered a pushback on aggressive market expectations of rate cuts.
  • The US dollar ended September with a loss of over 3%.
  • The Japanese yen led the losses against the US dollar.
  • BOJ's summary of opinions highlighted a patient approach from the BOJ on raising rates further.
  • The euro remains in focus as ECB's easing expectations continue to be re-assessed.
  • Activity currencies Aussie dollar and kiwi dollar outperformed but seen losing momentum as China goes on Golden Week holiday.
  • U.S. Treasuries dropped yesterday following comments from Federal Reserve Chair Jerome Powell.
  • The market priced 70bp rate cuts by the end of the year versus 76bps by the end of last week.
  • ECB President Christine Lagarde voiced confidence in curbing inflation, which helped reverse an earlier decline in European sovereign bonds.
  • In Germany, inflation fell below 2% for the first time since 2021, raising expectations for a possible interest rate cut in October.
  • The spread between Italian BTPs and French OATs remains stable.
  • Gold traded lower on Monday after Powell reduced hopes for another bumper 50 bps rate cut in November.
  • Crude remains rangebound near recent lows as the geopolitical risk bid remains absent.
  • Focus now turns to JOLTs job openings today or the ISM manufacturing print to get a sense of labor market and economic activity.
  • Macro events include Italy, France, Germany and UK Manufacturing PMI, Eurozone CPI, US Manufacturing PMI, and US JOLTS Opening.
  • Israel decided to start land invasion in the southern parts of Lebanon yesterday, increasing geopolitical risks in the region.
  • With the U.S. elections on the horizon, October could bring renewed volatility to markets.
  • Euro Area Inflation Falls to 1.8%
News summary
  • Federal Reserve Chairman Jerome Powell's recent speech took a hawkish tone, indicating that the Fed is not rushing to cut interest rates quickly. Powell suggested the possibility of 25 basis point rate cuts in September and December, which is less aggressive than market expectations for another 50 basis point cut. This stance has led to a strengthening of the US dollar, as it traded higher following Powell's comments.
  • The dollar is likely to maintain its strength in the near term, especially against currencies of countries with more dovish central bank policies. However, the overall trend for 2024 might still be downward if the Fed does proceed with rate cuts, albeit at a slower pace than initially expected.
  • Recent economic data from Europe has been mixed but generally points towards disinflation. Germany's inflation fell in September for the second consecutive month, dropping below 2% for the first time since 2021. This trend is expected to be confirmed in the upcoming Euro-area inflation print, following similar patterns observed in France and Italy.
  • The euro remains in focus as markets reassess ECB easing expectations. The currency may face downward pressure in the short term due to the increasing likelihood of rate cuts. However, if inflation continues to moderate without significant economic deterioration, the EUR could find support.
  • These activity currencies have outperformed recently but are seen losing momentum as China enters its Golden Week holiday. China's mixed PMI numbers, with manufacturing remaining in contraction, could also impact these currencies.Impact on AUD and NZD: Both currencies may face headwinds due to concerns about Chinese economic growth and reduced trading activity during the holiday period.
  • While specific news about the UK was limited in the provided information, the global economic trends and central bank policies will likely influence the pound.Impact on GBP: The pound may find some support against the euro if the ECB moves towards rate cuts faster than the Bank of England, but could struggle against a stronger dollar.
  • The Canadian dollar wasn't specifically mentioned, but as an oil-linked currency, it could be affected by crude oil prices remaining rangebound near recent lows.Impact on CAD: The Canadian dollar may remain relatively stable, with potential for weakness if oil prices don't recover and if the US dollar continues to strengthen.
    In conclusion, the forex market is likely to be driven by central bank policies, inflation data, and global economic indicators in the coming months. The US dollar appears positioned for near-term strength, but longer-term trends will depend on how economic data evolves and how central banks adjust their policies in response.

Daily analysis 09/30/2024

30. 9. 2024 - Josef Brynda

Latest news
  • Chinese equities surged while Japanese stocks slumped, potentially impacting related currency pairs.
  • The Japanese yen jumped due to Shigeru Ishiba's nomination, surprising forex traders.
  • Crude oil prices edged higher on Middle East tensions, which could affect commodity-linked currencies.
  • Markets are anticipating key U.S. job data this week, likely to influence USD pairs.
  • UK house prices, German CPI, and Chicago PMI data are due, potentially moving GBP and EUR.
  • China plans to cut existing mortgage rates by the end of October, which may impact CNY.
  • European shares closed at a record high, boosted by luxury stocks rallying on China stimulus.
  • U.S. equity futures indicate a steady opening, potentially stabilizing USD.
  • The U.S. August PCE index showed mild inflation, raising expectations for a potential Fed rate cut.
  • U.S. Treasury yields dropped, with the 10-year yield around 3.75%, affecting interest rate differentials.
  • The Bloomberg Commodity Index reached a two-month high, supporting commodity currencies.
  • Copper's rally extended on Chinese property market optimism, potentially boosting AUD and NZD.
  • The U.S. dollar ended lower for the fourth consecutive week, impacting major currency pairs.
  • Risk-on sentiment prevailed due to Chinese stimulus measures, benefiting commodity currencies.
  • The euro ended flat as markets assess the ECB's rate cut path, with German flash inflation data due.
  • Market volatility is increasing, with the VIX up 10.34%, potentially affecting currency volatility.
  • Fed Chair Powell is set to speak, which could move USD pairs.
  • Options pricing suggests significant expected moves in major indices, indicating potential forex volatility.
  • U.S. Manufacturing PMI data is expected to provide economic direction, likely impacting USD.
  • The Hang Seng Index's continued surge may influence Asian currencies and risk sentiment.
  • UK 10-Year Gilt Yield Climbs to 4-Week High
  • Bonds Update: Australia 10Y Bond Yield Gains by 5 bps
  • UK Consumer Credit Growth at 3-Month High
  • FX Updates: Euro Increases by 0.38%
  • German 10-Year Bund Yield Moves Up Ahead Inflation Data
  • UK Stocks Edge Lower
  • Palestine GDP Shrinks 32% in Q2 2024
  • British Pound Holds at 2022-Highs
News summary
  • In Asia, Chinese equities surged on the back of planned mortgage rate cuts and stimulus measures, boosting risk appetite and potentially supporting commodity currencies like the Australian and New Zealand dollars. This optimism is further reinforced by copper's extended rally, which could provide additional support to the AUD and NZD. Conversely, Japanese stocks slumped, and the yen jumped following Shigeru Ishiba's nomination, surprising forex traders and potentially strengthening the JPY against major currencies
  • The U.S. dollar has been under pressure, ending lower for the fourth consecutive week. This weakness in the USD is likely to benefit the EUR/USD pair, it will depend on how the german data go. It could break the up trand, if the upcoming German CPI data shows signs of cooling inflation. The euro ended flat as markets assess the European Central Bank's rate cut path, but positive economic data from the Eurozone could provide support to the common currency.
  • Crude oil prices edged higher due to Middle East tensions, which could affect commodity-linked currencies such as the Canadian dollar. This, combined with the Bloomberg Commodity Index reaching a two-month high, may support the CAD against its major counterparts, potentially putting pressure on pairs like USD/CAD, AUD/CAD, and NZD/CAD.
  • The British pound is holding at 2022 highs, supported by rising UK 10-Year Gilt yields and stronger consumer credit growth. This strength in the GBP could lead to a decline in the EUR/GBP pair, especially if upcoming UK economic data, including house prices, continues to show resilience.
  • U.S. economic indicators are mixed, with the August PCE index showing mild inflation and raising expectations for a potential Fed rate cut. This, coupled with dropping U.S. Treasury yields, is likely to keep the USD under pressure across major pairs. However, the market is closely watching upcoming U.S. job data and Manufacturing PMI, which could provide direction for the greenback.
  • Risk sentiment remains generally positive, driven by Chinese stimulus measures and the surge in the Hang Seng Index. This environment is likely to benefit commodity currencies and emerging market currencies at the expense of safe-haven assets like the USD and JPY.
  • Increased market volatility, as indicated by the rise in the VIX index and options pricing suggesting significant expected moves in major indices, could lead to heightened currency volatility. Traders should be prepared for potential sharp moves in currency pairs, especially around key economic data releases and central bank communications.
    In summary, the current market conditions suggest potential weakness in the USD, strength in commodity currencies (AUD, NZD, CAD), and a mixed outlook for the EUR and GBP. The EUR/USD pair may see upside movement, while USD/CAD could face downward pressure. AUD/CAD and NZD/CAD might experience volatility as both commodity currencies and the CAD find support. The EUR/GBP pair could decline if the GBP continues to outperform. Traders should remain vigilant, as upcoming economic data and central bank speeches, particularly from Fed Chair Powell, have the potential to significantly impact these currency dynamics in the short term.

China’s Politburo Supercharges Stimulus With Housing, Rates Vows

26. 9. 2024 - Josef Brynda

China’s top leaders ramped up efforts to revive growth with pledges to support fiscal spending and stabilize the beleaguered property sector, giving new momentum to stimulus measures aimed at arresting a slowdown in the world’s second-largest economy.

President Xi Jinping’s huddle of the 24-man Politburo concluded with a promise to strive to achieve the country’s annual economic goals, the official Xinhua News Agency reported Thursday. Officials pledged action to make the real estate market “stop declining,” their strongest vow yet to stabilize the crucial sector after new-home prices fell in August at the fastest pace since 2014.

 

The government will also strictly limit the construction of new-home projects, the Politburo said, as part of efforts to ease residential oversupply — although such building has ground to a near-halt.