Posts
26 June 2015, 13:33
TARGET 2 is large value payment system which is an interbank payment system
for the real time processing of cross border transfers throughout European
Union. TARGET 2 is a real time gross settlement system.
Target 2 imbalance remains at the heart of Greek crisis.
For example if a Greek importer buys from German exporter the payments will Channel via national central banks and European Central Bank. So Bundesbank will have a credit at European Central Bank (ECB) and Bank of Greece will have net debit at ECB.
Since as of now there is no limit on TARGET 2 balance, at the peak of the crisis in 2011/12 Greek imbalance rose above € 100 billion.
However imbalance had fallen since then to less that € 35 billion by 2014 end, after which the imbalance again rose back towards € 100 billion.
The crisis in Greece has given the critiques chance to call for reforms in the system which might see tougher collateral rules in Future.
European assets including the Euro remains flat as Greek drama continues. Euro is currently trading at 1.12 against dollar.
Target 2 imbalance remains at the heart of Greek crisis.
For example if a Greek importer buys from German exporter the payments will Channel via national central banks and European Central Bank. So Bundesbank will have a credit at European Central Bank (ECB) and Bank of Greece will have net debit at ECB.
Since as of now there is no limit on TARGET 2 balance, at the peak of the crisis in 2011/12 Greek imbalance rose above € 100 billion.
However imbalance had fallen since then to less that € 35 billion by 2014 end, after which the imbalance again rose back towards € 100 billion.
The crisis in Greece has given the critiques chance to call for reforms in the system which might see tougher collateral rules in Future.
European assets including the Euro remains flat as Greek drama continues. Euro is currently trading at 1.12 against dollar.
26 June 2015, 13:21
BRUSSELS - BRITISH PM CAMERON SPOKE TO PRESIDENT HOLLANDE TO CONVEY
SYMPATHIES OVER WHAT APPEARS TO BE AN APPALLING INCIDENT IN FRANCE - UK
GOVERNMENT SOURCE
26 June 2015, 14:42
- GBP/USD has taken support around 1.5675 and recovered from that level. Overall trend is still bearish as long as resistance 1.5803 holds.
- GBP/USD has seen renewed selling interest at 1.5803 and overall trend remains weak for the decline till 1.5615 (61.8% retracement of 1.5422 and 1.5930).
- It has formed temporary top around 1.5930 and any further bullishness can be seen only above that level.
- The minor resistance is around 1.5767. Short term major resistance is around 1.5803.
26 June 2015, 14:38
As ongoing Greece's debt defaults mounting Grexit pressures, the below
strategy on hedging grounds is most suitable at prevailing Euro zone conditions,
the pair is likely to sense little bearish downside risks as long legged doji
formed on intraday charts at 138.2540 levels.
This doji pattern indicating a market in complete balance between supply and demand but little bearish bias which was substantiated with volume confirmations, it also represents euro markets at a juncture of indecision and it can be an early warning that the preceding rally is losing stream.
So in order to arrest these bearish risks, we continue to recommend diagonal spreads execution using In-The-Money and Out-Of-The-Money put options.
Currency Option Insights: EUR/JPYHence, buy 1M (+1%) In-The-Money 0.61 delta put and simultaneously (-1%) 7D Out-Of-The-Money put with positive theta of EUR/JPY.
This has been the perfect circumstance to deploy the diagonal bear put spread, because we expect EUR/JPY remains unchanged in short run and only goes down below the strike price of the put sold when the long term put expires.
This doji pattern indicating a market in complete balance between supply and demand but little bearish bias which was substantiated with volume confirmations, it also represents euro markets at a juncture of indecision and it can be an early warning that the preceding rally is losing stream.
So in order to arrest these bearish risks, we continue to recommend diagonal spreads execution using In-The-Money and Out-Of-The-Money put options.
Currency Option Insights: EUR/JPYHence, buy 1M (+1%) In-The-Money 0.61 delta put and simultaneously (-1%) 7D Out-Of-The-Money put with positive theta of EUR/JPY.
This has been the perfect circumstance to deploy the diagonal bear put spread, because we expect EUR/JPY remains unchanged in short run and only goes down below the strike price of the put sold when the long term put expires.
26 June 2015, 14:34
Below are the key aspects of latest offerings from European creditors to
Greek government.
- Greek government need to take up reforms to ensure budget surplus of 1% in 2015, 2% in 2016, 3% in 2017 and 3.5% in 2018.
- Though originally lenders were asking for two tier VAT systems, it has accepted Athens proposals. There would be three tier VAT systems - a general 23% rate on restaurants, hotels, Catering, 13% on basic food. Energy and water including sewerage and super reduced 6% on medicines, books and theatres.
- Pension reforms remain a sticking point between lenders and Greek government. Lenders have kept their demand that early retirement schemes be curtailed and increase of retirement age quickly. Lenders want that change to take effect by 2022 whereas Greek government originally wanted 2036 and agreed to 2015 in latest offerings.
- EKAS, a pension top up program. Remains at heart of the debate. Lenders were looking to scrap the program by 2017 however in latest document they have provided concession by raising the time line to December 2019. Greece was looking for 2020.
- Lenders have accepted Greek demand that pensioners contribute more from 6% to current 4% towards health care. This got accepted by lenders.
- Taxes has remained another area of heavy debate - Creditors maintained their demand that Greece islands need to pay same taxes as mainland which Tsipras on behalf of his coalition partners Independent Greeks, fought heavily for. Creditors have kept the corporate Tax rise limited to 28% rather than 29% demanded by Greeks. Greeks wanted to pose one-time tax of 12% on corporate profits above € 500,000, Creditors have scrapped the idea but has kept the idea to raise luxury tax on Yachts from 10% to 13%.
26 June 2015, 14:32
CHINA'S PREMIER LI SAYS ECONOMIC FUNDAMENTALS ARE GOOD, NEED TO STRENGTHEN
TARGETED CONTROLS - STATE TV
26 June 2015, 14:31
Below are the key aspects of latest offerings from European creditors to
Greek government.
Recommendation: We prefer short above 0.9310 with targets 0.9360 & 0.9400, SL 0.9250
Resistance Levels
R1: 0.9333
R2:0.9351
R3:0.9372
Support Levels
S1: 0.9312 (38.2% Retracement level)
S2: 0.9300
S3: 0.9280
- Greek government need to take up reforms to ensure budget surplus of 1% in 2015, 2% in 2016, 3% in 2017 and 3.5% in 2018.
- Though originally lenders were asking for two tier VAT systems, it has accepted Athens proposals. There would be three tier VAT systems - a general 23% rate on restaurants, hotels, Catering, 13% on basic food. Energy and water including sewerage and super reduced 6% on medicines, books and theatres.
- Pension reforms remain a sticking point between lenders and Greek government. Lenders have kept their demand that early retirement schemes be curtailed and increase of retirement age quickly. Lenders want that change to take effect by 2022 whereas Greek government originally wanted 2036 and agreed to 2015 in latest offerings.
- EKAS, a pension top up program. Remains at heart of the debate. Lenders were looking to scrap the program by 2017 however in latest document they have provided concession by raising the time line to December 2019. Greece was looking for 2020.
- Lenders have accepted Greek demand that pensioners contribute more from 6% to current 4% towards health care. This got accepted by lenders.
- Taxes has remained another area of heavy debate - Creditors maintained their demand that Greece islands need to pay same taxes as mainland which Tsipras on behalf of his coalition partners Independent Greeks, fought heavily for. Creditors have kept the corporate Tax rise limited to 28% rather than 29% demanded by Greeks. Greeks wanted to pose one-time tax of 12% on corporate profits above € 500,000, Creditors have scrapped the idea but has kept the idea to raise luxury tax on Yachts from 10% to 13%.
26 June 2015, 14:30
- USD/CHF pair is set continue its bullish bias in the short run. The pair is moving upwards to test resistance level at 0.9333.
- The pair is currently is trading at 1.2329, It is expected to advance futher towards 1.2350 and later 1.2400 handle Swiss Franc is broadly weaker against the dollar in the short term due to due to Greece crisis.
- Greece failed to reach a deal with its creditors on thursday. The meeting of European finance ministers also broke up without any progress in third Euro group meeeting.
- Ultimatley Greece will faces default if they fails to make a Euro 1.6bn IMF debt payment by the course of the meeting the market came to standstill, As no consensus come out from the Eurogroup meeting.
- Major resistance is seen at 0.9350,a break above at this level will open the door to 0.9400 level.To the downside, immediate support can be seen at 0.9300
Recommendation: We prefer short above 0.9310 with targets 0.9360 & 0.9400, SL 0.9250
Resistance Levels
R1: 0.9333
R2:0.9351
R3:0.9372
Support Levels
S1: 0.9312 (38.2% Retracement level)
S2: 0.9300
S3: 0.9280
26 June 2015, 14:30
INDIA CBANK SETS CUT-OFF FOR 7.88 PCT 2030 BONDS AT 8.1295 PCT-DEALERS
26 June 2015, 14:22
GERMANY'S SCHAEUBLE SAYS OUTCOME OF TALKS WITH GREECE IS 50 TO 50
26 June 2015, 14:21
GERMANY'S SCHAEUBLE SAYS MY CONCERN IS THAT LOSING THE REMAINING CREDIBILITY
OF THE MONETARY UNION AND RISKING CONTINGENCIES IS BY FAR THE GREATER RISK
26 June 2015, 14:18
GERMANY'S SCHAEUBLE SAYS WE WILL HAVE TO WORK TO STRENGTHEN THE GOVERNANCE OF
THE MONETARY UNION
26 June 2015, 14:15
GERMANY'S SCHAEUBLE SAYS IF WE LOSE CONFIDENCE OF THE MARKETS AND DESTROY THE
STABILITY OF THE EURO, WE ARE RISKING A LOT MORE
26 June 2015, 14:17
GERMANY'S SCHAEUBLE SAYS WE WANT THE UNITED KINGDOM TO STAY IN THE EUROPEAN
UNION
26 June 2015, 14:15
GERMANY'S SCHAEUBLE SAYS IF WE LOSE CONFIDENCE OF THE MARKETS AND DESTROY THE
STABILITY OF THE EURO, WE ARE RISKING A LOT MORE
26 June 2015, 14:11
GERMANY'S SCHAEUBLE SAYS IN COMMENTS ON GREECE IF WE ONLY KICK THE CAN DOWN
THE ROAD, THE SITUATION WILL BE WORSE LATER
26 June 2015, 14:10
GERMANY'S SCHAEUBLE SAYS GREEK PROPOSALS ARE ONLY INCREASING TAXES, ONLY
INCREASING CONTRIBUTIONS, NO CUTS
26 June 2015, 14:09
GERMANY'S SCHAEUBLE SAYS ECONOMY CANNOT GROW WITHOUT SUSTAINABLE PUBLIC
FINANCES
26 June 2015, 14:09
GERMANY'S SCHAEUBLE SAYS GREECE KNOWS QUITE WELL THE ADVANTAGES OF STAYING IN
THE EURO
On the downside minor support is around 1.1150 and any break below will drag the pair further down till 1.1100/1.1070 level.
It is good to sell on rallies around 1.1250-60 with SL around 1.1320 for the TP of 1.1100.
26 June 2015, 14:08
- RES 3: 1.13855 (Jun 10th high)
- RES 3: 1.1320 (61.8% retracement of 1.1435 and 1.11339)
- RES 2: 1.1280 (200 day H EMA)
- RES 1: 1.12350 (Jun 24th high)
- SUP 1: 1.1200 (Jun 17th low)
- SUP: 2.11780 (Jun 15th low)
- SUP 3: 1.1100
- SUP 4: 1.1042 (Jun 5th low) Commentary:
On the downside minor support is around 1.1150 and any break below will drag the pair further down till 1.1100/1.1070 level.
It is good to sell on rallies around 1.1250-60 with SL around 1.1320 for the TP of 1.1100.
26 June 2015, 14:05
GERMANY'S SCHAEUBLE SAYS YOU CANNOT ALLOW MEMBER STATES IN A MONETARY UNION
TO SPEND ON THE LIABILITY OF OTHER MEMBER STATES
26 June 2015, 14:02
On daily charts of AUD/USD, RSI (14) evidences a falling price convergence at
43.8394; downward momentum has been observed from last a week or
so.
Hanging man pattern candlestick occurred two days ago followed by long real body bear candle.
Selling pressure is mounting as the %D line crossover at 43.8260 on slow stochastic curve.
Overbought pressure seen as crossover of the MACD line below slower line on MACD.
The pair has declined to the lows of 0.7683 and is currently trading at 0.7692. As a whole the weaker trend is intact so far.
On upside any breach above 0.7720 will target 0.7810 or even 0.7825 levels.
Currency Option Roundup: AUD/USD
Buying binary puts of this pair may fetch around 25-30 pips with ease and instantly.
On short to medium term hedging grounds, we advocate bear put spreads with combined -0.45 delta and theta should be close to zero.
Buy (1%) In-The-Money -0.72 delta puts, simultaneously short (-1%) Out-Of-The-Money put with positive theta values.
Hanging man pattern candlestick occurred two days ago followed by long real body bear candle.
Selling pressure is mounting as the %D line crossover at 43.8260 on slow stochastic curve.
Overbought pressure seen as crossover of the MACD line below slower line on MACD.
The pair has declined to the lows of 0.7683 and is currently trading at 0.7692. As a whole the weaker trend is intact so far.
On upside any breach above 0.7720 will target 0.7810 or even 0.7825 levels.
Currency Option Roundup: AUD/USD
Buying binary puts of this pair may fetch around 25-30 pips with ease and instantly.
On short to medium term hedging grounds, we advocate bear put spreads with combined -0.45 delta and theta should be close to zero.
Buy (1%) In-The-Money -0.72 delta puts, simultaneously short (-1%) Out-Of-The-Money put with positive theta values.
26 June 2015, 14:02
Market Roundup
EUR/USD is supported below 1.1200 levels and currently trading at 1.1193 levels. It has made intraday high at 1.1218 and low at 1.1177 levels. The European currency is now trading almost unchanged vs. the US dollar, with pair hovering over the 1.1200 mark. Market is now focusing about a meeting between Tsipas, Hollande and Merkel in Brussels and the ECB leaving unchanged its ELA ceiling for Greek banks. Today Euro zone M3 Money Supply expanded 5.0% on a year to May and Private Loans grew 0.5% on a yearly basis during last month. The euro dropped against the safe haven yen and Swiss franc on Friday, as investors reduced exposure to the single currency amid worries over whether a deal between Greece and its creditors can be struck to avert a debt default. Ahead in the session, the final figures of the Michigan index for the month of May are also due, expected at 94.6. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels. Option expiries are at 1.1150 (315M), 1.1200 (490M), 1.1250-55 (550M).
USD/JPY is supported below 124.00 levels and posted a high of 123.65 levels. It has made intraday low at 123.21 and currently trading at 123.44 levels. The Japanese currency witnessed sharp gains in Asia mainly driven by Greece concerns while upbeat Japan's CPI print also supported the upside, pushing USD/JPY closer towards 123 handle. Near term resistance is seen at 124.57 and support is seen at 122.10 levels. Option expiries are at 122.25 (560M), 123.50 (215M), 124.00 (835M), 124.50 (369M).
GBP/USD is supported above $1.5700 levels. It made an intraday high at 1.5766 and low at 1.5718 levels. Pair is currently trading at 1.5740 levels. In the absence of a first tier economic data releases out of the US, the focus is entirely on the Greek issue and the market's overall appetite for the US dollars. The US Michigan consumer sentiment and BOE governor Carney speech scheduled at 15.15 GMT could inject volatility in the pair. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported below 0.9400 levels and trading at 0.9324 levels and made intraday low at 0.9317 and high at 0.9372 levels. The dollar was slowly falling against the Swiss franc on Friday, although losses are capped by the $0.93 buying area. During US trading hours, the University of Michigan confidence gauge for June is due and is expected to remain at May's level of 94.6. Consumer confidence remains near multi-year highs, mainly due to lower oil prices and record high stock markets. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels. Option expiry is at 0.9410 (320M).
AUD/USD is supported below 0.7700 levels and trading at 0.7687 levels. It has made intraday high at 0.7738 levels and low at 0.7683 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery. While, the Greek story is set to continue, with Euro group officials meeting failed to reach a Greek solution after yet again ending yesterday's meeting in a no deal. A euro zone finance ministers' meeting scheduled for Saturday will be decisive for Greece and its ongoing debt crisis, German Chancellor Angela Merkel said on Friday morning, following a day and night of frantic negotiations between Athens and its international lenders. Initial support is seen at 0.7568 and resistance at 0.7838 levels. Option expiries are at 0.7700 (307M), 0.7730 (260M), 0.7750 (268M), 0.7800 (1BLN).
- Euro weaker against Yen, CHF as weekend Greek talks eyed.
- EUR/USD range bound, plays in between 1.1179/1.1220 levels.
- EUR/JPY to 137.80 from 138.58 then recovery to 138.42, EUR/CHF fell to
1.0447 from 1.0495.
- Greek PM told FR/DE leaders that could not understand insistence on tough
measures.
- Euro zone Finance minister to met at 1500 GMT on Saturday in Brussels to
discuss Greece.
- ECB keeps ELA funding limit for Greece unchanged.
- Slovak Finance minister- Either an agreement or, if no deal, must deal with
tech details for bankruptcy.
- Varoufakis- Will not accept any debt solution he considers to be
"unviable".
- Varoufakis- Greece still facing demands from creditors that it cannot agree
to.
- European Union Oettinger gives Athens five days to avoid a
'Grexit'.
- Euro zone May Money M3 Annual growth 5.0% vs previous 5.3%. 5.4% expected.
- Euro zone May Money-private loans 0.5% vs previous 0.0%. 0.4% expected.
- N/A BLS Strike Report (June).
- (1000 ET/1400 GMT)US University of Michigan Consumer Sentiment Index (final
June) (consensus 94.5, previous 94.6).
- (1000 ET/1400 GMT) US University of Michigan Current Conditions Index (final
June) (previous 106.8).
- (1000 ET/1400 GMT) US University of Michigan Expectations Index (final June) (previous 86.8).
- (0945 ET/1345 GMT) Fed Trade operation 30-year Fannie Mae/Freddie Mac (max
$2.225 bn).
- (1245 ET/1645 GMT) FRB Kansas City's George at "The Puzzle of Payments Security" conference.
EUR/USD is supported below 1.1200 levels and currently trading at 1.1193 levels. It has made intraday high at 1.1218 and low at 1.1177 levels. The European currency is now trading almost unchanged vs. the US dollar, with pair hovering over the 1.1200 mark. Market is now focusing about a meeting between Tsipas, Hollande and Merkel in Brussels and the ECB leaving unchanged its ELA ceiling for Greek banks. Today Euro zone M3 Money Supply expanded 5.0% on a year to May and Private Loans grew 0.5% on a yearly basis during last month. The euro dropped against the safe haven yen and Swiss franc on Friday, as investors reduced exposure to the single currency amid worries over whether a deal between Greece and its creditors can be struck to avert a debt default. Ahead in the session, the final figures of the Michigan index for the month of May are also due, expected at 94.6. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels. Option expiries are at 1.1150 (315M), 1.1200 (490M), 1.1250-55 (550M).
USD/JPY is supported below 124.00 levels and posted a high of 123.65 levels. It has made intraday low at 123.21 and currently trading at 123.44 levels. The Japanese currency witnessed sharp gains in Asia mainly driven by Greece concerns while upbeat Japan's CPI print also supported the upside, pushing USD/JPY closer towards 123 handle. Near term resistance is seen at 124.57 and support is seen at 122.10 levels. Option expiries are at 122.25 (560M), 123.50 (215M), 124.00 (835M), 124.50 (369M).
GBP/USD is supported above $1.5700 levels. It made an intraday high at 1.5766 and low at 1.5718 levels. Pair is currently trading at 1.5740 levels. In the absence of a first tier economic data releases out of the US, the focus is entirely on the Greek issue and the market's overall appetite for the US dollars. The US Michigan consumer sentiment and BOE governor Carney speech scheduled at 15.15 GMT could inject volatility in the pair. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported below 0.9400 levels and trading at 0.9324 levels and made intraday low at 0.9317 and high at 0.9372 levels. The dollar was slowly falling against the Swiss franc on Friday, although losses are capped by the $0.93 buying area. During US trading hours, the University of Michigan confidence gauge for June is due and is expected to remain at May's level of 94.6. Consumer confidence remains near multi-year highs, mainly due to lower oil prices and record high stock markets. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels. Option expiry is at 0.9410 (320M).
AUD/USD is supported below 0.7700 levels and trading at 0.7687 levels. It has made intraday high at 0.7738 levels and low at 0.7683 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery. While, the Greek story is set to continue, with Euro group officials meeting failed to reach a Greek solution after yet again ending yesterday's meeting in a no deal. A euro zone finance ministers' meeting scheduled for Saturday will be decisive for Greece and its ongoing debt crisis, German Chancellor Angela Merkel said on Friday morning, following a day and night of frantic negotiations between Athens and its international lenders. Initial support is seen at 0.7568 and resistance at 0.7838 levels. Option expiries are at 0.7700 (307M), 0.7730 (260M), 0.7750 (268M), 0.7800 (1BLN).
26 June 2015, 14:00
GERMANY'S SCHAEUBLE SAYS HAVE VERY DIFFERENT OPINIONS IN DISCUSSIONS WITH
GREEK COLLEAGUES
26 June 2015, 13:59
Market Roundup
EUR/USD is supported below 1.1200 levels and currently trading at 1.1193 levels. It has made intraday high at 1.1218 and low at 1.1177 levels. The European currency is now trading almost unchanged vs. the US dollar, with pair hovering over the 1.1200 mark. Market is now focusing about a meeting between Tsipas, Hollande and Merkel in Brussels and the ECB leaving unchanged its ELA ceiling for Greek banks. Today Euro zone M3 Money Supply expanded 5.0% on a year to May and Private Loans grew 0.5% on a yearly basis during last month. The euro dropped against the safe haven yen and Swiss franc on Friday, as investors reduced exposure to the single currency amid worries over whether a deal between Greece and its creditors can be struck to avert a debt default. Ahead in the session, the final figures of the Michigan index for the month of May are also due, expected at 94.6. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels. Option expiries are at 1.1150 (315M), 1.1200 (490M), 1.1250-55 (550M).
USD/JPY is supported below 124.00 levels and posted a high of 123.65 levels. It has made intraday low at 123.21 and currently trading at 123.44 levels. The Japanese currency witnessed sharp gains in Asia mainly driven by Greece concerns while upbeat Japan's CPI print also supported the upside, pushing USD/JPY closer towards 123 handle. Near term resistance is seen at 124.57 and support is seen at 122.10 levels. Option expiries are at 122.25 (560M), 123.50 (215M), 124.00 (835M), 124.50 (369M).
GBP/USD is supported above $1.5700 levels. It made an intraday high at 1.5766 and low at 1.5718 levels. Pair is currently trading at 1.5740 levels. In the absence of a first tier economic data releases out of the US, the focus is entirely on the Greek issue and the market's overall appetite for the US dollars. The US Michigan consumer sentiment and BOE governor Carney speech scheduled at 15.15 GMT could inject volatility in the pair. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported below 0.9400 levels and trading at 0.9324 levels and made intraday low at 0.9317 and high at 0.9372 levels. The dollar was slowly falling against the Swiss franc on Friday, although losses are capped by the $0.93 buying area. During US trading hours, the University of Michigan confidence gauge for June is due and is expected to remain at May's level of 94.6. Consumer confidence remains near multi-year highs, mainly due to lower oil prices and record high stock markets. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels. Option expiry is at 0.9410 (320M).
AUD/USD is supported below 0.7700 levels and trading at 0.7687 levels. It has made intraday high at 0.7738 levels and low at 0.7683 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery. While, the Greek story is set to continue, with Euro group officials meeting failed to reach a Greek solution after yet again ending yesterday's meeting in a no deal. A euro zone finance ministers' meeting scheduled for Saturday will be decisive for Greece and its ongoing debt crisis, German Chancellor Angela Merkel said on Friday morning, following a day and night of frantic negotiations between Athens and its international lenders. Initial support is seen at 0.7568 and resistance at 0.7838 levels. Option expiries are at 0.7700 (307M), 0.7730 (260M), 0.7750 (268M), 0.7800 (1BLN).
- Euro weaker against Yen, CHF as weekend Greek talks eyed.
- EUR/USD rang bound, plays in between 1.1179/1.1220 levels.
- EUR/JPY to 137.80 from 138.58 then recovery to 138.42, EUR/CHF fell to
1.0447 from 1.0495.
- Greek PM told FR/DE leaders that could not understand insistence on tough
measures.
- Euro zone Finance minister to met at 1500 GMT on Saturday in Brussels to
discuss Greece.
- ECB keeps ELA funding limit for Greece unchanged.
- Slovak Finance minister- Either an agreement or, if no deal, must deal with
tech details for bankruptcy.
- Varoufakis- Will not accept any debt solution he considers to be
"unviable".
- Varoufakis- Greece still facing demands from creditors that it cannot agree
to.
- European Union Oettinger gives Athens five days to avoid a
'Grexit'.
- Euro zone May Money M3 Annual growth 5.0% vs previous 5.3%. 5.4% expected.
- Euro zone May Money-private loans 0.5% vs previous 0.0%. 0.4% expected.
- N/A BLS Strike Report (June).
- (1000 ET/1400 GMT)US University of Michigan Consumer Sentiment Index (final
June) (consensus 94.5, previous 94.6).
- (1000 ET/1400 GMT) US University of Michigan Current Conditions Index (final
June) (previous 106.8).
- (1000 ET/1400 GMT) US University of Michigan Expectations Index (final June) (previous 86.8).
- (0945 ET/1345 GMT) Fed Trade operation 30-year Fannie Mae/Freddie Mac (max
$2.225 bn).
- (1245 ET/1645 GMT) FRB Kansas City's George at "The Puzzle of Payments Security" conference.
EUR/USD is supported below 1.1200 levels and currently trading at 1.1193 levels. It has made intraday high at 1.1218 and low at 1.1177 levels. The European currency is now trading almost unchanged vs. the US dollar, with pair hovering over the 1.1200 mark. Market is now focusing about a meeting between Tsipas, Hollande and Merkel in Brussels and the ECB leaving unchanged its ELA ceiling for Greek banks. Today Euro zone M3 Money Supply expanded 5.0% on a year to May and Private Loans grew 0.5% on a yearly basis during last month. The euro dropped against the safe haven yen and Swiss franc on Friday, as investors reduced exposure to the single currency amid worries over whether a deal between Greece and its creditors can be struck to avert a debt default. Ahead in the session, the final figures of the Michigan index for the month of May are also due, expected at 94.6. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels. Option expiries are at 1.1150 (315M), 1.1200 (490M), 1.1250-55 (550M).
USD/JPY is supported below 124.00 levels and posted a high of 123.65 levels. It has made intraday low at 123.21 and currently trading at 123.44 levels. The Japanese currency witnessed sharp gains in Asia mainly driven by Greece concerns while upbeat Japan's CPI print also supported the upside, pushing USD/JPY closer towards 123 handle. Near term resistance is seen at 124.57 and support is seen at 122.10 levels. Option expiries are at 122.25 (560M), 123.50 (215M), 124.00 (835M), 124.50 (369M).
GBP/USD is supported above $1.5700 levels. It made an intraday high at 1.5766 and low at 1.5718 levels. Pair is currently trading at 1.5740 levels. In the absence of a first tier economic data releases out of the US, the focus is entirely on the Greek issue and the market's overall appetite for the US dollars. The US Michigan consumer sentiment and BOE governor Carney speech scheduled at 15.15 GMT could inject volatility in the pair. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported below 0.9400 levels and trading at 0.9324 levels and made intraday low at 0.9317 and high at 0.9372 levels. The dollar was slowly falling against the Swiss franc on Friday, although losses are capped by the $0.93 buying area. During US trading hours, the University of Michigan confidence gauge for June is due and is expected to remain at May's level of 94.6. Consumer confidence remains near multi-year highs, mainly due to lower oil prices and record high stock markets. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels. Option expiry is at 0.9410 (320M).
AUD/USD is supported below 0.7700 levels and trading at 0.7687 levels. It has made intraday high at 0.7738 levels and low at 0.7683 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery. While, the Greek story is set to continue, with Euro group officials meeting failed to reach a Greek solution after yet again ending yesterday's meeting in a no deal. A euro zone finance ministers' meeting scheduled for Saturday will be decisive for Greece and its ongoing debt crisis, German Chancellor Angela Merkel said on Friday morning, following a day and night of frantic negotiations between Athens and its international lenders. Initial support is seen at 0.7568 and resistance at 0.7838 levels. Option expiries are at 0.7700 (307M), 0.7730 (260M), 0.7750 (268M), 0.7800 (1BLN).
26 June 2015, 13:55
GERMAN FIN MIN - SHOULD RETURN TO MONETARY POLICY TO WHERE MONEY IS
ADEQUATELY PRICED
26 June 2015, 13:51
IMF COULD COMPLEMENT EURO ZONE FINANCING WITH 3.5 BLN EUROS IN OCTOBER - NOTE
26 June 2015, 13:50
GREECE COULD GET 1.5 BLN EUROS IN OCTOBER ON COMPLETION OF FURTHER REFORMS,
STRAIGHT TO DEBT SERVICING ACCOUNT - -NOTE
26 June 2015, 13:50
ANOTHER 4.7 BLN EUROS COULD BE DISBURSED TO GREECE IN EARLY AUGUST ON
COMPLETIONS OF MORE CONDITIONS BY LATE JULY, ALL OF IT TO DEBT SERVICING ACCOUNT
- NOTE
26 June 2015, 13:50
SECOND TRANCHE OF 4 BLN EUROS WOULD BE PAID OUT IN MID-JULY AFTER GREECE
COMPLETES PRIOR ACTIONS IN EARLY JULY, 3.5 BLN OF THAT WOULD GO TO DEBT
SERVICING ACCOUNT - NOTE
26 June 2015, 13:50
Thailand will release June CPI inflation data on 1 July.
A less negative rate of 0.99% y/y, versus a negative 1.27% y/y in Mayis expected, said Standard Chartered in a report on Friday. The slow recovery in domestic demand likely kept inflation in negative territory. Several factors are likely to pose upside risks to inflation in H2-2015, including higher global oil prices, a weaker local currency, and severe drought in many agricultural regions of the country, adds Standard Chartered.
Thailand is a net oil importer, and these factors could raise production costs in the manufacturing sector.
A less negative rate of 0.99% y/y, versus a negative 1.27% y/y in Mayis expected, said Standard Chartered in a report on Friday. The slow recovery in domestic demand likely kept inflation in negative territory. Several factors are likely to pose upside risks to inflation in H2-2015, including higher global oil prices, a weaker local currency, and severe drought in many agricultural regions of the country, adds Standard Chartered.
Thailand is a net oil importer, and these factors could raise production costs in the manufacturing sector.
26 June 2015, 13:50
THIS FIRST TRANCHE WOULD BE PAID INTO A SPECIAL ACCOUNT IN GREECE RESERVED
FOR DEBT SERVICING -NOTE
Resistance Levels
R1: 1.2361 (23.6% Retracement Level )
R2: 1.2394
R3: 1.2420
Support Levels
S1: 1.2335
S2: 1.2308 (38.2% Retracement level of 1.2125 to 1.2422)
S3: 1.2273
26 June 2015, 13:50
- USD/CAD bounced back from 1.2308 (June 25th lows), to break the resistance level at 1.2350 (23.6% Retracement Level ).Currently the pair is trading at 1.2351 level, the pair is set to reach 1.2400 psychological level in the short term, As the US dollar is broadly stronger against CAD in the short term.
- The currency is trading at 1.2333 level, the immediate support can be seen at 1.2335. A break below this level will expose the pair to next support level at 1.2308.
- Major resistance can be found at 1.2394 a break above this level will exposes it to the 1.2440 handle.
Resistance Levels
R1: 1.2361 (23.6% Retracement Level )
R2: 1.2394
R3: 1.2420
Support Levels
S1: 1.2335
S2: 1.2308 (38.2% Retracement level of 1.2125 to 1.2422)
S3: 1.2273
26 June 2015, 13:50
FIRST TRANCHE OF 1.8 BLN EUROS WOULD BE DISBURSED AS SOON AS GREEK PARLIAMENT
APPROVES DEAL WITH CREDITORS AND FIRST SET OF LAWS - NOTE
26 June 2015, 13:49
MONEY FOR GREECE UNDER THE EXTENSION WOULD BE DISBURSED IN 4 TRANCHES,
DEPENDING ON THE COMPLETION OF CONDITIONS BY ATHENS - NOTE
26 June 2015, 13:49
EXISTING GREEK BAILOUT COULD BE EXTENDED BY 5 MONTHS TO NOV 2015 TO ALLOW
DISBURSEMENT, WOULD ALLOW GREECE TO COVER DEBT REDEMPTION OF 14.3 BLN -NOTE
26 June 2015, 13:49
MONEY AVAILABLE FOR GREECE FROM EURO ZONE WOULD BE MADE UP OF EXISTING 10.9
BLN EUROS FOR BANK RECAPITALISARTION, 1.8 BLN REMAINING BAILOUT TRANCE AND 3.6
BLN OF ECB PROFITS MADE ON GREEK BONDS IN 2014 AND 2015 - NOTE
26 June 2015, 13:48
EURO ZONE CAN PUT TOGETHER 16.3 BLN EUROS FOR GREEK FIANCING UNDER CURRENT
BAILOUT - CREDITORS' FINANCING NOTE
26 June 2015, 13:48
THIRD, IMF BASE LINE SCENARIO, REQUIRES SIGNIFICANT REPROFILING OF DEBT AND
IMPORVED LENDING TERMS, BUT NO HAIRCUT, OR BUDGET COSTS FOR LENDERS-DSA
26 June 2015, 13:48
GREEK DEBT TO FALL TO 142.2 PCT/GDP IN 2022 FROM 176.7 PCT/GDP IN 2015 UNDER
WORST CASE SCENARIO, WHICH IS IMF BASELINE - -DSA
26 June 2015, 13:47
GREEK DEBT TO FALL TO 135 PCT/GDP IN 2022 FROM 174.3 PCT IN 2015 UNDER SECOND
SCENARIO OF PARTIAL REFORM IMPLEMENTATION - DSA
26 June 2015, 13:47
POLICY SLIPPAGES, UNCERTAINTIES OF LAST MONTHS, HAVE MADE REACHING 2012 GREEK
DEBT TARGETS IMPOSSIBLE UNDER ANY SCENARIO - CREDITORS' DEBT SUSTAINABILITY
ANALYSIS
26 June 2015, 13:45
Thailand is scheduled to release May current account data on 30
June.
The current account is likely to have remained in surplus, despite the seasonal effect of dividend repatriation by global corporates based in Thailand. According to Standard Chartered, a surplus of c.USD 1,200mn is expected, and a modest improvement from USD 1,113mn in April.
he current account has been in surplus since October 2014, mainly due to a strong recovery in the tourism sector and lower oil prices. The surplus is likely to soften on a likely increase in oil in H2-2015, adds Standard Chartered.
The current account is likely to have remained in surplus, despite the seasonal effect of dividend repatriation by global corporates based in Thailand. According to Standard Chartered, a surplus of c.USD 1,200mn is expected, and a modest improvement from USD 1,113mn in April.
he current account has been in surplus since October 2014, mainly due to a strong recovery in the tourism sector and lower oil prices. The surplus is likely to soften on a likely increase in oil in H2-2015, adds Standard Chartered.
26 June 2015, 13:43
BOFA MERRILL LYNCH: WE ARE STILL BULLISH ON HUF GIVEN IMPROVING GROWTH
PROSPECTS AND THINK THE BEST WAY TO POSITION IS VIA RELATIVE VALUE AGAINST PLN
AND RON
BOFA MERRILL LYNCH: WE LIKE FADING THE BRL’S JUNE RALLY AND RECOMMEND BUYING USD/BRL
BOFA MERRILL LYNCH: WE LIKE FADING THE BRL’S JUNE RALLY AND RECOMMEND BUYING USD/BRL
26 June 2015, 13:40
BOFA MERRILL LYNCH: SHORT SGD POSITIONS ARE GOOD PROXIES FOR LONG USD AN
SHOULD BENEFIT IF THE SINGAPORE PROPERTY DOWNTURN
26 June 2015, 13:39
South Korea will release June trade data on 1 July. Standard Chartered
estimates, exports is likely to have fallen 1.2% y/y (versus a 10.9% fall in
May) and imports to have dropped 8.7% (versus a 15.3% drop). More working days
this June than last year likely prevented a further deterioration in
data.
The information and communications technology sector is likely continued to perform strongly, whereas, automobile and auto-part exports to recover on new model releases in H2-2015, said Standard Chartered.
"However, slow global economic growth is expeced, particularly in China, to curb any pick-up in export growth. Slightly recovered, albeit still lower, oil prices likely pushed down unit prices of petrochemical exports. We expect the sharp drop in imports to have slowed as oil prices rose, and a larger trade surplus of USD 8.3bn for June", added Standard Chartered.
The information and communications technology sector is likely continued to perform strongly, whereas, automobile and auto-part exports to recover on new model releases in H2-2015, said Standard Chartered.
"However, slow global economic growth is expeced, particularly in China, to curb any pick-up in export growth. Slightly recovered, albeit still lower, oil prices likely pushed down unit prices of petrochemical exports. We expect the sharp drop in imports to have slowed as oil prices rose, and a larger trade surplus of USD 8.3bn for June", added Standard Chartered.
26 June 2015, 13:39
TARGET 2 is large value payment system which is an interbank payment system
for the real time processing of cross border transfers throughout European
Union. TARGET 2 is a real time gross settlement system.
Target 2 imbalance remains at the heart of Greek crisis.
For example if a Greek importer buys from German exporter the payments will Channel via national central banks and European Central Bank. So Bundesbank will have a credit at European Central Bank (ECB) and Bank of Greece will have net debit at ECB.
Since as of now there is no limit on TARGET 2 balance, at the peak of the crisis in 2011/12 Greek imbalance rose above € 100 billion.
However imbalance had fallen since then to less that € 35 billion by 2014 end, after which the imbalance again rose back towards € 100 billion.
The crisis in Greece has given the critiques chance to call for reforms in the system which might see tougher collateral rules in Future.
European assets including the Euro remains flat as Greek drama continues. Euro is currently trading at 1.12 against dollar.
Target 2 imbalance remains at the heart of Greek crisis.
For example if a Greek importer buys from German exporter the payments will Channel via national central banks and European Central Bank. So Bundesbank will have a credit at European Central Bank (ECB) and Bank of Greece will have net debit at ECB.
Since as of now there is no limit on TARGET 2 balance, at the peak of the crisis in 2011/12 Greek imbalance rose above € 100 billion.
However imbalance had fallen since then to less that € 35 billion by 2014 end, after which the imbalance again rose back towards € 100 billion.
The crisis in Greece has given the critiques chance to call for reforms in the system which might see tougher collateral rules in Future.
European assets including the Euro remains flat as Greek drama continues. Euro is currently trading at 1.12 against dollar.
26 June 2015, 13:33
GERMAN FIN MIN SPOKESMAN SAYS AN EXTENSION OF GREEK BAILOUT NOT AN ISSUE AT
ALL AT THE MOMENT
26 June 2015, 13:21
BRUSSELS - BRITISH PM CAMERON SPOKE TO PRESIDENT HOLLANDE TO CONVEY
SYMPATHIES OVER WHAT APPEARS TO BE AN APPALLING INCIDENT IN FRANCE - UK
GOVERNMENT SOURCE
26 June 2015, 13:21
1M vol swap vs. 1M1M FVA packages are currently well priced in BRL and
MXN.
Not only is the net vol carry on offer meaningful, but also risk-reward looks highly asymmetric in the desired direction.
Internally, FVA plays an essential role in providing monetary incentive for trading desks to use less funding. This can be accomplished by charging a high rate for borrowing from treasury desk and paying for posting money back to the funding desk. This is also why FVA can be interpreted by the sum of FCA (Funding cost) and FBA (Funding benefit).
For instance, the second chart compares the (vol swap - FVA) strike spread for USD/MXN (the net vol quantity being sold) with the (1M realized vol - 1M ATM vol) differential (the net quantity which the trade settles into).
The bar for losses from current levels looks high, and would need a shock on the scale of taper or worse to end up meaningfully in the red.
We do not pull the trigger on any of these this week, but they will remain on our radar as decent trades to pursue once Greek risks are out of the way.
Not only is the net vol carry on offer meaningful, but also risk-reward looks highly asymmetric in the desired direction.
Internally, FVA plays an essential role in providing monetary incentive for trading desks to use less funding. This can be accomplished by charging a high rate for borrowing from treasury desk and paying for posting money back to the funding desk. This is also why FVA can be interpreted by the sum of FCA (Funding cost) and FBA (Funding benefit).
For instance, the second chart compares the (vol swap - FVA) strike spread for USD/MXN (the net vol quantity being sold) with the (1M realized vol - 1M ATM vol) differential (the net quantity which the trade settles into).
The bar for losses from current levels looks high, and would need a shock on the scale of taper or worse to end up meaningfully in the red.
We do not pull the trigger on any of these this week, but they will remain on our radar as decent trades to pursue once Greek risks are out of the way.
26 June 2015, 13:18
GREEK HOUSEHOLD, BUSINESS BANK DEPOSITS AT 129.9 BLN EUROS END-MAY FROM 133.6
BLN EUROS END-APRIL- BANK OF GREECE
26 June 2015, 13:16
Datawise, the calendar remains exceptionally light today with euro zone money
supply data and the final read of US consumer sentiment for June from the
University of Michigan.
Euro zone money growth is likely to have accelerated in May, reflecting both the ongoing impact of the ECB's QE programme and a recovery in bank lending to households and corporates. While Greece has been quite routine issue by default now a days.
Technical and Currency Derivatives Insights: (EURUSD):
Bearish signals have been traced out from EOD as well as intraday charts. Formation of long legged southern doji seen on EUR/USD daily charts.
No significant buying pressure is observed as the slow stochastic evidences %D crossover (%D line at 32.0361 & %K line at 23.4315).
Overall, no positive triggers that prop up Euro both on fundamental and technical standpoint.
We reckon markets for Euro would be bearish bias today as a result of both fundamental and technical reasoning, Therefore we recommend arresting these downside risks through deploying below option strategy.
If you expect the underlying currency (EURUSD) to make the downside moves, then buy 2 lots of 15D (1.5%) Out-Of-The-Money puts and sell simultaneously an (1%) In-The-Money put of the same maturity.
The combined delta should have 0.38, while positive theta is preferred.
The higher strike short puts finances the purchase of the greater number of long puts and the position is entered for no cost or a net credit.
Euro zone money growth is likely to have accelerated in May, reflecting both the ongoing impact of the ECB's QE programme and a recovery in bank lending to households and corporates. While Greece has been quite routine issue by default now a days.
Technical and Currency Derivatives Insights: (EURUSD):
Bearish signals have been traced out from EOD as well as intraday charts. Formation of long legged southern doji seen on EUR/USD daily charts.
No significant buying pressure is observed as the slow stochastic evidences %D crossover (%D line at 32.0361 & %K line at 23.4315).
Overall, no positive triggers that prop up Euro both on fundamental and technical standpoint.
We reckon markets for Euro would be bearish bias today as a result of both fundamental and technical reasoning, Therefore we recommend arresting these downside risks through deploying below option strategy.
If you expect the underlying currency (EURUSD) to make the downside moves, then buy 2 lots of 15D (1.5%) Out-Of-The-Money puts and sell simultaneously an (1%) In-The-Money put of the same maturity.
The combined delta should have 0.38, while positive theta is preferred.
The higher strike short puts finances the purchase of the greater number of long puts and the position is entered for no cost or a net credit.
26 June 2015, 13:15
GERMAN FIN MIN SPOKESMAN SAYS NO NEED FOR EURO ZONE LEADERS TO MEET AGAIN IF
FINANCE MINISTERS AGREE GREECE DEAL
26 June 2015, 13:12
GERMAN GOVT SPOKESWOMAN SAYS MERKEL HAS MADE CLEAR THAT TIME IS PRESSING ON
GREECE
26 June 2015, 13:06
South Korea will release June CPI inflation data on 1 July.
Standard Chartered estimates, inflation is likely to have eased to 0.1% m/m from 0.3% in May, but to have picked up to 0.8% y/y from 0.5% on the gradual increase in oil prices and the c.2.8% weakening of the Korean won.
Drought in the eastern half of the country has led to price hikes in agricultural products. Retail sales have been increasing steadily rise since February. New hires in May totalled 379,000, the most in five months.
"Wages picked up in February (+16.4% y/y) and March (+3.9%), and the increase in spending is expected to have been on track before the Middle East espiratory Syndrome (MERS) outbreak on 20 May. We believe the drop in consumption limited inflation in June", said Standard Chartered.
Standard Chartered estimates, inflation is likely to have eased to 0.1% m/m from 0.3% in May, but to have picked up to 0.8% y/y from 0.5% on the gradual increase in oil prices and the c.2.8% weakening of the Korean won.
Drought in the eastern half of the country has led to price hikes in agricultural products. Retail sales have been increasing steadily rise since February. New hires in May totalled 379,000, the most in five months.
"Wages picked up in February (+16.4% y/y) and March (+3.9%), and the increase in spending is expected to have been on track before the Middle East espiratory Syndrome (MERS) outbreak on 20 May. We believe the drop in consumption limited inflation in June", said Standard Chartered.
26 June 2015, 13:05
S.AFRICA'S 3-MONTH T-BILL AVERAGE YIELD AT 6.15 PCT VS 5.8 PCT LAST WEEK
26
26
26 June 2015, 13:03
The National Statistics Agency (BPS) will release June CPI data on 1
July.
A weaker Indonesian rupiah also likely contributed as it increased production costs for companies dependent on imported industrial inputs and capital goods.
"Headline inflation is expected to have picked up to 0.6% m/m (7.3% y/y) from 0.5% (7.2%) in May, while core inflation remained unchanged at 5.0% y/y", says Standard Chartered.
The pick-up was likely driven by increasing food prices due to stronger demand during this Ramadan season.
"Headline inflation of 3.7% y/y is expected at end-2015, versus 8.4% at end-2014", added Standard Chartered.
A weaker Indonesian rupiah also likely contributed as it increased production costs for companies dependent on imported industrial inputs and capital goods.
"Headline inflation is expected to have picked up to 0.6% m/m (7.3% y/y) from 0.5% (7.2%) in May, while core inflation remained unchanged at 5.0% y/y", says Standard Chartered.
The pick-up was likely driven by increasing food prices due to stronger demand during this Ramadan season.
"Headline inflation of 3.7% y/y is expected at end-2015, versus 8.4% at end-2014", added Standard Chartered.
26 June 2015, 12:59
South Korea is scheduled to release May industrial production (IP) data on 30
June.
According to Standard Chartered, South Korea's IP is expected to have increased 0.9% m/m on a seasonally adjusted basis, and to have contracted 2.5% y/y due to fewer working days this May than last year and sluggish export performance because of the global economic slowdown.
Unit prices of petroleum products have dropped due to lower global oil prices, as has the quantity produced. Automobile production dropped 2.1% y/y in May. Manufacturing inventory has been increasing in the past three months and likely contributed to weak IP. The information and communications technology sector's launch of new products in Q2 is likely to contribute 0.9ppt to growth m/m in May, says Standard Chartered.
According to Standard Chartered, South Korea's IP is expected to have increased 0.9% m/m on a seasonally adjusted basis, and to have contracted 2.5% y/y due to fewer working days this May than last year and sluggish export performance because of the global economic slowdown.
Unit prices of petroleum products have dropped due to lower global oil prices, as has the quantity produced. Automobile production dropped 2.1% y/y in May. Manufacturing inventory has been increasing in the past three months and likely contributed to weak IP. The information and communications technology sector's launch of new products in Q2 is likely to contribute 0.9ppt to growth m/m in May, says Standard Chartered.
26 June 2015, 12:51
China is due to release the official manufacturing PMI for June on 1
July.
The Markit flash manufacturing PMI released earlier showed that the output and new orders components rose strongly in June, and that the new export orders sub-component picked up on improving external demand.
"The PMI index is expected to have continued to inch up to 50.3 from 50.2 in May, led by a rise in new orders and output", says Standard Chartered.
However, the employment component likely remained weak, and our gauge of the inventory cycle has yet to show clear signs of restocking. The data is expected to indicate that China has started to find a footing, despite still-weak underlying momentum.
External demand may have helped at the margin. Meanwhile, domestic demand likely improved modestly on policy support. further policy support is expected from themonetary and fiscal front to boost GDP growth in H2.
The Markit flash manufacturing PMI released earlier showed that the output and new orders components rose strongly in June, and that the new export orders sub-component picked up on improving external demand.
"The PMI index is expected to have continued to inch up to 50.3 from 50.2 in May, led by a rise in new orders and output", says Standard Chartered.
However, the employment component likely remained weak, and our gauge of the inventory cycle has yet to show clear signs of restocking. The data is expected to indicate that China has started to find a footing, despite still-weak underlying momentum.
External demand may have helped at the margin. Meanwhile, domestic demand likely improved modestly on policy support. further policy support is expected from themonetary and fiscal front to boost GDP growth in H2.
26 June 2015, 12:50
RPT-GREEK GOVT OFFICIAL SAYS TALKS WILL CONTINUE AFTER EU SUMMIT ON FRIDAY
26 June 2015, 12:50
CORRECTED-GREEK GOVT OFFICIAL SAYS GREEK PM TSIPRAS TOLD FRENCH, GERMAN
LEADERS THAT GREECE COULD NOT UNDERSTAND LENDERS' INSISTENCE ON TOUGH MEASURES
(ADDS DROPPED WORD "NOT")
26 June 2015, 12:49
The Department of Statistics of Malaysia will announce May trade data on 3
July.
Standard Chartered expects exports to have continued to contract by 9.2% y/y, versus an 8.8% contraction in April, whereas, commodity exports is likely to continue to lead the fall, having dropped 24% y/y in the first four months of the year.
Liquefied natural gas (LNG) export prices likely continued to try to catch up with global prices; LNG export values fell 31% y/y in April. Non-commodity exports have also been weak, rising just 5% y/y in 4M-2015.
"We expect imports to have fallen by 7.6% y/y. Intermediate-goods imports have been weak, in line with weak export demand, while consumer goods imports have remained resilient. We forecast a smaller trade surplus of MYR 4.2bn in May", says Standard Charter
Standard Chartered expects exports to have continued to contract by 9.2% y/y, versus an 8.8% contraction in April, whereas, commodity exports is likely to continue to lead the fall, having dropped 24% y/y in the first four months of the year.
Liquefied natural gas (LNG) export prices likely continued to try to catch up with global prices; LNG export values fell 31% y/y in April. Non-commodity exports have also been weak, rising just 5% y/y in 4M-2015.
"We expect imports to have fallen by 7.6% y/y. Intermediate-goods imports have been weak, in line with weak export demand, while consumer goods imports have remained resilient. We forecast a smaller trade surplus of MYR 4.2bn in May", says Standard Charter
26 June 2015, 12:47
GREEK GOVT OFFICIAL SAYS GREEK PM TSIPRAS TOLD FRENCH, GERMAN LEADERS THAT
GREECE COULD UNDERSTAND LENDERS' INSISTENCE ON TOUGH MEASURES
26 June 2015, 12:46
EURO ZONE FINANCE MINISTERS TO MEET AT 1500 GMT ON SATURDAY IN BRUSSELS TO
DISCUSS GREECE -OFFICIAL STATEMENT
26 June 2015, 12:45
DANSKE BANK: LONG USDCAD, ENTRY 1.2285, STOP LOSS 1.2275, TARGET 1.2473
26 June 2015, 12:42
The Bank of Japan (BoJ) will release Q2 Tankan Survey results on 1 July and
inflation survey results on 2 July. Standard Charterd estimates, the diffusion
index and the outlook for large manufacturers is expected to have improved to 13
and 14 from 12 and 10 in Q1, respectively. Still-low energy prices and improving
operational profits likely boosted large corporates' sentiment.
A recovery in non-manufacturing sectors is expected due to booming tourism sector, which bodes well for the local services sector, according to Standard Chartered. The inflation survey tracks corporates' inflation expectations, which are important for the BoJ to adjust its monetary policy. The Bank expects inflation expectations to weaken in the coming months on a waning sales-tax effect.
A recovery in non-manufacturing sectors is expected due to booming tourism sector, which bodes well for the local services sector, according to Standard Chartered. The inflation survey tracks corporates' inflation expectations, which are important for the BoJ to adjust its monetary policy. The Bank expects inflation expectations to weaken in the coming months on a waning sales-tax effect.
26 June 2015, 12:41
The Australian Bureau of Statistics scheduled to release May external trade
data on 2 July and retail trade data on 3 July.
Iron ore export volumes from Port Hedland rose to a historical high in May, combined with the price rebound in the month, this should have propped up exports. Iron ore is Australia's biggest export, making up almost a fifth of total exports.
Retail sales is expected to have mildly increased by 0.4% m/m in May after the mild drop in April. The central bank's 25bps rate cut in May boosted business and household sentiment and likely fed through.
External trade is expected to remain in deficit until the end of 2015, while retail sales will likely show a patchy improvement but remain subdued overall.
"The trade deficit is expected to have narrowed to AUD 900mn in May on higher iron exports, both in volume and value terms", says Standard Chartered.
AUD/USD has made a low of 0.7695 and is currently trading at 0.7705. Overall trend is weak as long as resistance 0.7765 holds
On the higher side any break above 0.7765 will target 0.7800/0.7820 in short term.
It is good to sell on rallies around 0.7725 with SL around 0.7765 for the TP of 0.764/0.7595.
Iron ore export volumes from Port Hedland rose to a historical high in May, combined with the price rebound in the month, this should have propped up exports. Iron ore is Australia's biggest export, making up almost a fifth of total exports.
Retail sales is expected to have mildly increased by 0.4% m/m in May after the mild drop in April. The central bank's 25bps rate cut in May boosted business and household sentiment and likely fed through.
External trade is expected to remain in deficit until the end of 2015, while retail sales will likely show a patchy improvement but remain subdued overall.
"The trade deficit is expected to have narrowed to AUD 900mn in May on higher iron exports, both in volume and value terms", says Standard Chartered.
26 June 2015, 12:36
- RES 4: 0.7860
- RES 3 : 0.7820 (Jun 3rd high)
- RES 2: 0.7788 (200 day 4HMA)
- RES 1 : 0.7725 (20 day 4HMA)
- SUP 1 :0.7670 (Jun 12th low)
- SUP 3 : 0.7640 (Jun 17th low)
- SUP 4: 0.7590 (Jun 6th low)
- SUP 4: 0.7530 (Apr 2nd low)
AUD/USD has made a low of 0.7695 and is currently trading at 0.7705. Overall trend is weak as long as resistance 0.7765 holds
On the higher side any break above 0.7765 will target 0.7800/0.7820 in short term.
It is good to sell on rallies around 0.7725 with SL around 0.7765 for the TP of 0.764/0.7595.
26 June 2015, 12:36
Japan will release May retail sales and industrial production (IP) data on 29
June. Standard Chartered expect retail sales to have increased 1.2% m/m on a
seasonally adjusted (SA) basis, versus 0.3% in April. Increasing tourism likely
continued to support retail sales. IP likely increased 0.5% m/m SA, versus 1.0%
in April, estimates Standard Chartered.
Recent export volatility may have slowed the pace of IP growth somewhat, but business investment and production are likely to strengthen in H2-2015 on improving domestic and external demand, adds Standard Chartered.
Recent export volatility may have slowed the pace of IP growth somewhat, but business investment and production are likely to strengthen in H2-2015 on improving domestic and external demand, adds Standard Chartered.
26 June 2015, 12:35
FRANCE TO SELL 7-8 BILLION EUROS OF FIXED-RATE, LONG-TERM BONDS AT REGULAR
AUCTION NEXT WEEK -AFT
26 June 2015, 12:32
As of now it seems like that the Greek drama will continue till the very end
which as of now stands as June 30th, when Greece needs to pay back
IMF around € 1.6 billion. On that very same day extension of the bailout by EFSF
expires.
Latest updates on Greek situation -
Greece needs to secure a deal before Monday so that it can be approved through Euro zone parliaments.
Euro trading flat around 1.12 against dollar awaiting outcome.
Resistance Levels
R1: 1.5778
R2: 1.5811(61.8% Retracement level)
R3: 1.5856
Support Levels
S1: 1.5717
S2: 1.5677 (June 25th lows)
S3: 1.5625
Latest updates on Greek situation -
- Greek government and creditors have failed to reach a deal prior to the
summit. Bailout monitors, European Central Bank (ECB), European Commission (EC)
and International Monetary Fund (IMF) will continue to work over the weekend to
reach an agreement.
- As of now, IMF remains opposed to the idea that Greek's latest
proposals are relying just on higher tax collection to meet the primary surplus
target.
- Euro zone creditors as of now remains opposed to the idea of debt
write offs or reliefs.
- Greek government remains opposed to the idea of pension reforms and higher retirement age.
Greece needs to secure a deal before Monday so that it can be approved through Euro zone parliaments.
Euro trading flat around 1.12 against dollar awaiting outcome.
26 June 2015, 12:23
- GBP/USD broke resistance Level at 1.5740 and is bouncing above to reach the next resistance level at 1.5811.
- Markets are choppy as negotiations between Greece and its creditors failed with no solution in sight as if now, Time is running out for cash strapped Greek to reach a deal by Tuesday, By paying Euro 1.5billion debt to IMF. Or else it runs into risk of going default which gradually may force Greece out of Eurozone.
- Later in the day Investors are looking forward to speech by BoE Governor Marke Carney to know Bank of England's next monitory policy actions.
- Major resistance is seen at 1.5811, a break above at this level will open the door to 1.5856 level. To the downside,immediate support can be seen at 0.9277.
Resistance Levels
R1: 1.5778
R2: 1.5811(61.8% Retracement level)
R3: 1.5856
Support Levels
S1: 1.5717
S2: 1.5677 (June 25th lows)
S3: 1.5625
26 June 2015, 12:22
The IGC was still anticipating a balanced wheat market at the end of May, it
is now forecasting a slight 2 million ton deficit for the year 2015/16, notes
Commerzbank.
The reappraisal was prompted by weaker wheat production. Although the ICG expects global demand to be 2 million tons lower than previously estimated, this is not sufficient to offset a 4 million ton fall in production. The IGC attributes the lower production to unfavourable weather and harvesting conditions in India, Australia and the EU. Both corn and wheat were able to gain just short of 3% during the course of trading yesterday to close at 383 US cents and 538 US cents per bushel respectively, adds Commerzbank.
Resistance Levels
R1: 1.5778
R2: 1.5811(61.8% Retracement level)
R3: 1.5856
Support Levels
S1: 1.5717
S2: 1.5677 (June 25th lows)
S3: 1.5625
The reappraisal was prompted by weaker wheat production. Although the ICG expects global demand to be 2 million tons lower than previously estimated, this is not sufficient to offset a 4 million ton fall in production. The IGC attributes the lower production to unfavourable weather and harvesting conditions in India, Australia and the EU. Both corn and wheat were able to gain just short of 3% during the course of trading yesterday to close at 383 US cents and 538 US cents per bushel respectively, adds Commerzbank.
26 June 2015, 12:18
- GBP/USD broke resistance Level at 1.5740 and is bouncing above to reach the next resistance level at 1.5811.
- Markets are choppy as negotiations between Greece and its creditors failed with no solution in sight as if now, Time is running out for cash strapped Greek to reach a deal by Tuesday, By paying 1.5billion Euro to IMF. Or else it runs into risk of going default which gradually may force Greece out of Eurozone.
- Later in the day Investors are looking forward to speech by BoE Governor Marke Carney to know Bank of England's next monitory policy actions.
- Major resistance is seen at 1.5811, a break above at this level will open the door to 1.5856 level. To the downside,immediate support can be seen at 0.9277.
Resistance Levels
R1: 1.5778
R2: 1.5811(61.8% Retracement level)
R3: 1.5856
Support Levels
S1: 1.5717
S2: 1.5677 (June 25th lows)
S3: 1.5625
26 June 2015, 12:14
There is still no telling whether the Riksbank will announce further measures
at the monetary policy meeting scheduled for July 1st (announcement on Thursday
July 2nd) or whether it will do so later on. According to Nordea Bank, it is a
close call but the most likely outcome at this juncture is that the Riksbank
stays sidelined at the July meeting. The main reason is that inflation has
picked up.
CPIF-inflation stood at 1.0% in May, 0.1% point above the Riksbank's forecast, notes Nordea bank.
CPIF-inflation stood at 1.0% in May, 0.1% point above the Riksbank's forecast, notes Nordea bank.
26 June 2015, 12:13
UKRAINE DEBT ENVOY LISOVENKO SAYS STILL EXPECTS TO ULTIMATELY REACH AGREEMENT
WITH CREDITORS
26 June 2015, 12:13
UKRAINE DEBT ENVOY LISOVENKO SAYS CREDITORS HAVE VIEW ON UKRAINE'S ECONOMIC
FUTURE WHICH IS NOT SO REALISTIC
26 June 2015, 12:11
Just like the market, however, the EIA is convinced that the oversupply is
being gradually reduced, partly on the back of increased demand.
The EIA points to a shrinking contango as one indication of a tightening market, whereas the front-month Brent contract at the end of March was still priced almost $8 lower than the contract due in a year's time, the price gap at present is "only" $4.5.
Whether the market will be increasingly able to "see past" the current glut will also depend on how US production develops, if the predicted decrease in production fails to materialize partly because of the higher prices the "market optimism" could prove to have been premature.
The US oil rig count due to be published later today will give an indication of which way US production is headed.
The EIA points to a shrinking contango as one indication of a tightening market, whereas the front-month Brent contract at the end of March was still priced almost $8 lower than the contract due in a year's time, the price gap at present is "only" $4.5.
Whether the market will be increasingly able to "see past" the current glut will also depend on how US production develops, if the predicted decrease in production fails to materialize partly because of the higher prices the "market optimism" could prove to have been premature.
The US oil rig count due to be published later today will give an indication of which way US production is headed.
26 June 2015, 12:08
Stagnating prices on the oil market this morning sees Brent trading at just
shy of $63.5 per barrel, which is almost exactly the same price as yesterday
morning.
The report on the availability of petroleum in countries other than Iran published yesterday by the US Energy Information Administration (EIA) was hardly likely to prompt the market to reassess the fundamental situation.
Once again, the EIA confirmed a high oversupply on the market at present, stating that OPEC production totalled 30.7 million barrels per day in June, which is only marginally below the May level, whereas the so-called "unplanned" non-OPEC production outages were somewhat lower in June than in the previous month.
Due to the oversupply of recent months, OECD stock levels were a good 10% higher in June than the average figure for the past three years.
The minor resistance is around 123.90 (20 day HMA) and break above would take the pair till 124.36/124.50.
Break below 123.40 confirms extreme weakness and takes to next target at 122.45.
It is good to sell around 123.60 with SL around 123.91 for the TP of 122.55.
The report on the availability of petroleum in countries other than Iran published yesterday by the US Energy Information Administration (EIA) was hardly likely to prompt the market to reassess the fundamental situation.
Once again, the EIA confirmed a high oversupply on the market at present, stating that OPEC production totalled 30.7 million barrels per day in June, which is only marginally below the May level, whereas the so-called "unplanned" non-OPEC production outages were somewhat lower in June than in the previous month.
Due to the oversupply of recent months, OECD stock levels were a good 10% higher in June than the average figure for the past three years.
26 June 2015, 12:05
- res 4 :124.50 (61.8% retarcement of 125.84 and 122.47)
- RES 3: 124.15 (Jun 11th high)
- RES 2: 123.65 (61.8 % retracement of 124.43 and 122.47)
- RES 1:123.42 (200 day HMA)
- Sup 1 : 123.17 (61.8% retracement of )
- SUP 1 : 122.40 (Jun 10th low)
- SUP 2: 122
- SUP 1 : 121.50 (61.8% retracement of 125.84 and 118.87)
The minor resistance is around 123.90 (20 day HMA) and break above would take the pair till 124.36/124.50.
Break below 123.40 confirms extreme weakness and takes to next target at 122.45.
It is good to sell around 123.60 with SL around 123.91 for the TP of 122.55.
26 June 2015, 11:47
Norges Bank surprised at the June meeting. Not by cutting rates to 1%, but by
stating that another cut in September was likely. According to the rate path a
cut at the September meeting has a 2/3 chance. a cut late this year was earlier
expected but moved the cut forward to September due to Norges Bank's
signals.
Norges Bank repeated its usual optimistic view that growth will pick up in the longer term and that capacity utilization and inflation will be close to targets at the end of the forecast horizon.
But its short term forecast is note especially optimistic. It forecast Mainland GDP growth at only 0.1%q/q in Q2 down from 0.5% in in oil related industries and the fact that inventories pulled up the Q1 figure argues for weak growth.
On the other hand consumption of goods increased strongly in April. Even with a sharp correction down in May/June consumption growth will most likely be strong in Q2. The GDP forecast is realistic, but there is room for upside surprises.
Norges Bank view on the short term development in the labour market is also not overly optimistic. Norges Bank favorite measure for labour market tightness, registered unemployment, should increase by 1000-1500 persons a month the coming months, says Nordea.
That is a clear break with the trend which is an increase by about 500 persons. But the sharp rise in LFS unemployment and the current weakness in the economy argues that registered unemployment will rise faster.
Norges Bank repeated its usual optimistic view that growth will pick up in the longer term and that capacity utilization and inflation will be close to targets at the end of the forecast horizon.
But its short term forecast is note especially optimistic. It forecast Mainland GDP growth at only 0.1%q/q in Q2 down from 0.5% in in oil related industries and the fact that inventories pulled up the Q1 figure argues for weak growth.
On the other hand consumption of goods increased strongly in April. Even with a sharp correction down in May/June consumption growth will most likely be strong in Q2. The GDP forecast is realistic, but there is room for upside surprises.
Norges Bank view on the short term development in the labour market is also not overly optimistic. Norges Bank favorite measure for labour market tightness, registered unemployment, should increase by 1000-1500 persons a month the coming months, says Nordea.
That is a clear break with the trend which is an increase by about 500 persons. But the sharp rise in LFS unemployment and the current weakness in the economy argues that registered unemployment will rise faster.
26 June 2015, 11:45
DEPOSITS AT GREEK BANKS FALL IN MAY BY 3.6 BLN EUROS TO 135.7 BLN EUROS - ECB
26 June 2015, 11:41
Sweden Riksbank's QE program has so far been almost twice as large as the net
issuance of the Debt Office.
Also, even though issuance has been more concentrated in the long end, QE has been substantially larger in terms of interest rate risk (SEK/bps). So government bonds are trading with a premium, which can be seen in wide swap spreads etc.
Moreover, 1 week government bond repo rates have started to decrease which can be an indication of a growing shortage, even though government bonds have traded even richer at many occasions.
QE has probably also been an important reason why the 10 year spread vs Germany has been unchanged despite rising global yields. Normally Swedish bonds underperform in bear markets.
But the Riksbank has signaled that QE will pause over the summer holiday period.
Also, even though issuance has been more concentrated in the long end, QE has been substantially larger in terms of interest rate risk (SEK/bps). So government bonds are trading with a premium, which can be seen in wide swap spreads etc.
Moreover, 1 week government bond repo rates have started to decrease which can be an indication of a growing shortage, even though government bonds have traded even richer at many occasions.
QE has probably also been an important reason why the 10 year spread vs Germany has been unchanged despite rising global yields. Normally Swedish bonds underperform in bear markets.
But the Riksbank has signaled that QE will pause over the summer holiday period.
26 June 2015, 11:36
There is still no telling whether the Riksbank will announce further measures
at the monetary policy meeting scheduled for July 1st or whether it will do so
later on.
It is a close call but the most likely outcome at this juncture is that the Riksbank stays sidelined at the July meeting.
The main reason is that inflation has picked up. CPIF-inflation stood at 1.0% in May, 0.1% point above the Riksbank's forecast, says Nordea.
It is a close call but the most likely outcome at this juncture is that the Riksbank stays sidelined at the July meeting.
The main reason is that inflation has picked up. CPIF-inflation stood at 1.0% in May, 0.1% point above the Riksbank's forecast, says Nordea.
26 June 2015, 11:35
The reaction in the interest rate market proves that Norges Bank was quite
dovish in their comments, but EURNOK never managed to climb above the high from
the previous week at 8.87 (now an important level). Implied volatilities fell
during the day; this combination should imply that the market isn't very long
NOK. There is no panic to observe like the one seen in December last year.
Looking at the flows this also looks quite familiar, speculative accounts have
not been heavy buyers of NOK.
Expectations of lower money market rates and a dovish central bank limits the downside in EURNOK. However, the high levels, low positioning, ECB's QE and Norway's NOK-purchases should argue for a limited upside as well, says Nordea Bank.
According to Nordea Bank, "ECB doing QE for 7% of European GDP while Norway is buying NOK for 6% of its GDP should be NOK-positive. The government could also increase spending if it sees the weak economy as critical (not yet the case). Some would probably also see the levels in EURNOK as attractive for a short position".
Long term these conditions should also be consistent with some downside in EURNOK, which is also our forecast. Short term however there is reason to believe that the potential is limited. First of all the liquidity in the money market is increasing and with it we will see lower Nibor fixings, quite often also consistent with weaker NOK. A fast appreciating NOK would also motivate Norges Bank to cut more and faster. Their own forecast for NOK is for a slow appreciation.
"So range bound should be the new trend in EURNOK, perhaps with a small tilt for the downside. Implied volatilities still reflects high uncertainty so there should be value in being short vol. As an illustration one could sell 6m strangles with strikes at 8.45 and 9.10 for 22bf (spot 8.75). In other words losses will start to appear if EURNOK goes higher than 9.32 or lower than 8.23", suggests Nordea bank.
Expectations of lower money market rates and a dovish central bank limits the downside in EURNOK. However, the high levels, low positioning, ECB's QE and Norway's NOK-purchases should argue for a limited upside as well, says Nordea Bank.
According to Nordea Bank, "ECB doing QE for 7% of European GDP while Norway is buying NOK for 6% of its GDP should be NOK-positive. The government could also increase spending if it sees the weak economy as critical (not yet the case). Some would probably also see the levels in EURNOK as attractive for a short position".
Long term these conditions should also be consistent with some downside in EURNOK, which is also our forecast. Short term however there is reason to believe that the potential is limited. First of all the liquidity in the money market is increasing and with it we will see lower Nibor fixings, quite often also consistent with weaker NOK. A fast appreciating NOK would also motivate Norges Bank to cut more and faster. Their own forecast for NOK is for a slow appreciation.
"So range bound should be the new trend in EURNOK, perhaps with a small tilt for the downside. Implied volatilities still reflects high uncertainty so there should be value in being short vol. As an illustration one could sell 6m strangles with strikes at 8.45 and 9.10 for 22bf (spot 8.75). In other words losses will start to appear if EURNOK goes higher than 9.32 or lower than 8.23", suggests Nordea bank.
26 June 2015, 11:31
CHINA STOCK REGULATOR SAYS RECENT MARKET FALL IS A CORRECTION OF EARLIER
EXCESSIVE GAINS
26 June 2015, 11:31
ITALY'S CONFINDUSTRIA SAYS NEGATIVE OUTCOME OF GREEK DEBT NEGOTIATIONS WOULD
DERAIL EURO ZONE ECONOMY
26 June 2015, 11:30
CONFINDUSTRIA WARNS ITALY RECOVERY DUE TO EXTERNAL FACTORS, GDP SET TO RETURN
TO 2007 LEVEL ONLY IN 2023
26 June 2015, 11:30
EMPLOYERS LOBBY CONFINDUSTRIA HIKES ITALY 2015 GDP FORECAST TO 0.8 PCT VS 0.5
PCT, HIKES 2016 TO 1.4 PCT VS 1.1 PCT
26 June 2015, 11:28
As the threat of Grexit has risen, the ECB and Euro-area countries are found
to have sufficient tools to prevent severe contagion and another sovereign debt
crisis.
Widening between German and Italian 10-year spreads is seen to be limited to around 100bp, such widening would be considered a buying opportunity. The curve would probably see a renewed flattening following a Grexit, driven by rallying German bonds.
It has been mostly about Greece lately, and the topic has caused sizable nervousness also in a broader sense and intra-Euro-area spreads have seen sizable moves. The recent deadlock in the negotiations has made the prospect of Grexit look even more real, so it makes sense to estimate the consequences of such a scenario.
Short-term volatility and market concerns during the following few weeks would be unavoidable.
The extent of those moves would very much depend on the rapidity of the political response. This time all sides should have prepared for a collapse in the talks, implying the response could be swift. What the Euro-area governments would lack in response rapidity could easily be compensated by the ECB.
Widening between German and Italian 10-year spreads is seen to be limited to around 100bp, such widening would be considered a buying opportunity. The curve would probably see a renewed flattening following a Grexit, driven by rallying German bonds.
It has been mostly about Greece lately, and the topic has caused sizable nervousness also in a broader sense and intra-Euro-area spreads have seen sizable moves. The recent deadlock in the negotiations has made the prospect of Grexit look even more real, so it makes sense to estimate the consequences of such a scenario.
Short-term volatility and market concerns during the following few weeks would be unavoidable.
The extent of those moves would very much depend on the rapidity of the political response. This time all sides should have prepared for a collapse in the talks, implying the response could be swift. What the Euro-area governments would lack in response rapidity could easily be compensated by the ECB.
26 June 2015, 11:25
UKRAINE DEBT ENVOY LISOVENKO - MEETING WITH CREDITORS NEXT WEEK WILL BE THE
FIRST TEST OF SERIOUSNESS OF OUR PARTNERS
26 June 2015, 11:24
Chinese stock market is retreating faster than expected.
China's benchmark stock index is currently trading at 4192, down from 5174 made this month. Today Shanghai composite dropped about 7.4% in closing at one point market was down almost 9% for the day.
The sell offs were broad based.
In Chinese stock market, individual stocks cut drop more than 10%, due to limit. Today could have been worse without such. About 70% of the stocks have hit down limit. Shanghai composite has about 1105 stock listed among which 770 stocks have hit the circuit.
This week Chinese state authority have reduced loan to deposit ratio (LDR) by 10% from 75% to 65%. However this action has so far failed to boost the market.
At its peak Chinese stock market was up more than 150% in last 1 year, however in just nine trading days it has erased 1/3rd of the gain currently up around 100% for last 12 months.
Sharp drop and rise in volatility suggests that further drop might be on the card. 5 day average of realized volatility has hit more than 5%.
China's benchmark stock index is currently trading at 4192, down from 5174 made this month. Today Shanghai composite dropped about 7.4% in closing at one point market was down almost 9% for the day.
The sell offs were broad based.
In Chinese stock market, individual stocks cut drop more than 10%, due to limit. Today could have been worse without such. About 70% of the stocks have hit down limit. Shanghai composite has about 1105 stock listed among which 770 stocks have hit the circuit.
This week Chinese state authority have reduced loan to deposit ratio (LDR) by 10% from 75% to 65%. However this action has so far failed to boost the market.
At its peak Chinese stock market was up more than 150% in last 1 year, however in just nine trading days it has erased 1/3rd of the gain currently up around 100% for last 12 months.
Sharp drop and rise in volatility suggests that further drop might be on the card. 5 day average of realized volatility has hit more than 5%.
26 June 2015, 11:16
- Monday 123.25 NY 6.5, Monday 122.60 NY 8.0, Wednesday 124.10 NY 7.35
- Overnight 123.60 vs Wed 123.50 NY 6.25/7.0, 3week 123.00 NY 8.25-8.2 (400)
- 9 July 124 vs 20 July 122 NY 7.7/7.775 on 250 a date. 31 July 123 Tok 7.9
- 9 July 122.60 vs 16 July 123 NY 8.0/7.8 on 300mln a date
- 1month atm 7.6-7.7-7.65, 1month 10D fly 0.55, 1month 120.95 Tok 7.95
- 3month 25D RR 0.1 YP, 4month 117.00 at 8.75 paid , 5month 25D RR 0.25 YP
26 June 2015, 11:15
EUROPEAN BANKING AUTHORITY RECOMMENDS CUTTING CAPITAL CHARGES ON "HIGH
QUALITY" SECURITISED DEBT BY A QUARTER IN BID TO REVIVE MARKET
26 June 2015, 11:15
TURKISH C.BANK SAYS INJECTS 24 BLN LIRA IN ONE-WEEK REPO, BIDS 47.11 BLN LIRA
26 June 2015, 11:07
CHINA VICE FOREIGN MIN SAYS CONFIDENT ABOUT OUTCOME OF GREECE DEBT TALKS
26 June 2015, 11:04
HANG SENG INDEX DOWN 0.4 PCT FOR THE WEEK
26 June 2015, 11:04
Unemployment rate may be modest in May after max out in July 2014, the
unemployment rate declined to 3.76% in December as labour force growth slowed in
line with employment growth, and it then fluctuated between 4.51% in January and
3.86% in March.
The more stable seasonally-adjusted rate has hovered between 4.24% and 4.41% over the past few months. The unemployment rate and its seasonally adjusted variants rose to 4.31% and 4.32%, respectively, in April as the economy struggled in Q1.
With growth prospects for Q2 improving, we expect these two rates to moderate to 4.21% and 4.25%, respectively. Both these indicators have declined between 0.5% and 1.0% over past 12 months and are nearly at levels last seen in 2008.
The reason that the unemployment rate did not rise in Q1 despite near stagnation in growth can probably be explained by low employment growth in H2 14 (when labour force growth also slowed) and strong productivity growth last year.
The economy appears set to grow near trend in 2015 and above trend in 2016. This will help tighten the labour market further and should keep the downside risk to inflation in check even though the economy's growth potential could continue to rise over the next few years.
The more stable seasonally-adjusted rate has hovered between 4.24% and 4.41% over the past few months. The unemployment rate and its seasonally adjusted variants rose to 4.31% and 4.32%, respectively, in April as the economy struggled in Q1.
With growth prospects for Q2 improving, we expect these two rates to moderate to 4.21% and 4.25%, respectively. Both these indicators have declined between 0.5% and 1.0% over past 12 months and are nearly at levels last seen in 2008.
The reason that the unemployment rate did not rise in Q1 despite near stagnation in growth can probably be explained by low employment growth in H2 14 (when labour force growth also slowed) and strong productivity growth last year.
The economy appears set to grow near trend in 2015 and above trend in 2016. This will help tighten the labour market further and should keep the downside risk to inflation in check even though the economy's growth potential could continue to rise over the next few years.
26 June 2015, 11:03
Singapore's May IP recovered at a pace close to expectations, with the
contraction easing to -2.3% y/y from -9.1% in April (consensus: -2.6%). On a
seasonally-adjusted basis, output grew 2.4% m/m, only partly reversing April's
6.6% decline. As expected, the main driver was a rebound in the volatile
pharmaceuticals category following April's sharp drop; this offset weakness in
chemicals and only a modest recovery in electronics, according to
Barclays.
Indeed, the recent IP outturns mirror the pattern seen in exports, which has seen a structural emergence of non-electronics as the new key export and manufacturing growth drivers for Singapore - rig-building, pharmaceuticals, aerospace and engineering - with the importance of the electronics sector waning. With that said, the electronics sector is likely to benefit from a cyclical rebound, with a recovering Europe augmenting already strong demand from the US, and this should provide further support to manufacturing in the second half, says Barclays in a report on Friday.
Indeed, the recent IP outturns mirror the pattern seen in exports, which has seen a structural emergence of non-electronics as the new key export and manufacturing growth drivers for Singapore - rig-building, pharmaceuticals, aerospace and engineering - with the importance of the electronics sector waning. With that said, the electronics sector is likely to benefit from a cyclical rebound, with a recovering Europe augmenting already strong demand from the US, and this should provide further support to manufacturing in the second half, says Barclays in a report on Friday.
26 June 2015, 11:01
HK’S HANG SENG INDEX CLOSES DOWN 1.8 PCT AT 26,663.87 POINTS
26 June 2015, 11:00
EUROZONE MAY MONEY-PRIVATE LOANS* INCREASE TO 0.5 % (FCAST 0.4 %) VS PREV 0.0
%
26 June 2015, 11:00
ITALY OVERALL BUSINESS CONFIDENCE INDEX RISES TO 104.3 IN JUNE VS REVISED
101.8 IN MAY
26 June 2015, 11:00
ITALY JUN BUSINESS CONFIDENCE INCREASE TO 103.9 (FCAST 103.8 ) VS PREV 103.5
26 June 2015, 10:54
The Swedish economy performs well. The domestic economy continues to expand
at a healthy clip, whereas the recovery in exports is slow. Employment remains
on an upward path and bottlenecks have started to occur on the labour
market.
"Hence, economic activity in Sweden is not a source of concern for the Riksbank. Instead, the focal point is the too low inflation rate", says Nordea Bank.
"Hence, economic activity in Sweden is not a source of concern for the Riksbank. Instead, the focal point is the too low inflation rate", says Nordea Bank.
26 June 2015, 10:53
- Last ditched Greek talks at weekend keep Monday volumes bid around 13.0
- Equates to 23.0 for a normal day (minus weekend). Premium is 105 pips
- NFP out next Thursday to prop 1 week volume above 14.0 for now
- 1month trades 11.65 and now around 11.6 from 11.3 setback low Thursday
- Expect Greek/NFP gamma demand to limit front end volume setbacks
26 June 2015, 10:53
SAFRICA GOVT MAKES U-TURN, SAYS WILL GIVE 7 PCT INCREASE AS INITIALLY AGREED
WITH PUBLIC SECTOR UNIONS -UNION
26 June 2015, 10:51
- EUR/AUD has recovered after making a low of 1.4400 and any further weakness can be seen only below this level.
- On the higher side major resistance is around 1.4560 and break above would extend gains till 1.4610/1.4640 level.
- The minor support is around 1.4480 and below will target 1.4450/1.4400.
26 June 2015, 10:49
SLOVAK FINMIN KAZIMIR SAYS EXPECTS TALKS WITH GREECE TO DRAG INTO SUNDAY;
WILL BE LAST MEETING ON THIS
26 June 2015, 10:45
- Steady decline for AUD curve this week - 1month lows since March at 10.7
- China stocks/weaker spot aid volume support now
- 1month volume currently 10.8, but deeper spot decline needed to fuel demand
- Curve well below realized, so further downside could now be limited
26 June 2015, 10:40
- The EUR/USD fell back from 1.1221 level (June 25 high) and moving below to test Support level at 1.1168 level. The pair is currently trading at 1.1196, it is expected decline further towards 1.1150
- Greece failed to reach a deal with its creditors on Thursday. The meeting of European finance ministers also broke up without any progress in third Euro group meeting.
- Ultimately Greece will face default, if it fails to make a Euro 1.6bn debt payment to IMF by Tuesday.
- During the course of the meeting the market came to standstill, as no consensus came out from the Eurogroup meeting. Uncertainly regarding Greece consensus applies bearish pressure on Euro, So it is good to sell Euro in the near term.
- The immediate support can be seen at 1.1168. A break below this level will expose the pair to next support level at 1.1148 (June 25 Low)
- Major resistance can be found at 1.1260(61.8 Retracement Level) a break above this level will exposes it to the 1.1290 handle.
Recommendation: Go short below 1.1240 with Targets at 1.1175, 1.1150 SL
1.1260.
Resistance Levels
R1: 1.1222
R2: 1.1240
R3: 1.1260( 61.8 Retracement Level)
Support Levels
S1: 1.1168
S2: 1.1148 (June 25 Low)
S3: 1.1135 (June 23rd Low)
Resistance Levels
R1: 1.1222
R2: 1.1240
R3: 1.1260( 61.8 Retracement Level)
Support Levels
S1: 1.1168
S2: 1.1148 (June 25 Low)
S3: 1.1135 (June 23rd Low)
26 June 2015, 10:36
Few economic dockets scheduled for today. Risk associated is low.
Data released so far -
Data released so far -
- Germany - German import price index dropped -0.2% in May on monthly basis and -0.8% y/y.
- France - Consumer confidence remained flat at 94.
- Euro zone - Euro group leaders to continue their crucial summit. Greece talks are likely to continue through the weekend. Euro zone money supply is scheduled for release at 8:00 GMT.
- Italy - Italian consumer and business confidence to be declared at 8:00 GMT.
- India - RBI will declare forex reserve around 11:30 GMT.
- US - Michigan consumer sentiment index is scheduled at 14:00 GMT.
- UK - Bank of England Governor Mark Carney is scheduled to speak around 14:15 GMT
-
26 June 2015, 10:36GREECE'S ATHEX SHARE INDEX FALLS 0.9 PERCENT IN EARLY DEALS
26 June 2015, 10:36- 1week in upper 8.0's on NFP inclusion, 1month around 7.6 vs 7.35 late Thursday'
- Spot setback provides support as risk reversals turn back for JPY calls
- However, with spot well contained, Volume offers should soon re-emerge
- 3month atm steady at 8.1 Thursday/Friday after matching midterm lows 7.9 mid week
- Interest light as market remains uninspired for now
26 June 2015, 10:32SLOVAK FINANCE MINISTRY SAYS RAISES 2016 TAX REVENUE OUTLOOK BY 0.4 PCT/GDP VS. FEBRUARY OUTLOOK, BY 0.5 PCT/GDP IN 2017, 2018
26 June 2015, 10:31SWEDISH EXPORTS +94.5 BLN SEK IN MAY FROM REVISED +99.3 BLN IN APRIL
26 June 2015, 10:30SWEDISH MAY RETAIL SALES -0.1 PCT MONTH/MONTH VS FORECAST +0.3 PCT IN REUTERS POLL
26 June 2015, 10:27THAI FORWARD BAHT COMMITMENTS $17.5 BLN ON JUNE 19 VS $18.0 BLN ON JUNE 12 - CENTRAL BANK
26 June 2015, 10:27THAI FOREIGN RESERVES $162.5 BLN ON JUNE 19 VS $160.9 BLN ON JUNE 12 - CENTRAL BANK
26 June 2015, 10:25The acceleration in growth, however, is partly the result of portfolio shifts and weakness in the euro (leading to higher net-external assets). More interesting will be the lending figures that come with this report.
"The 3m monthly average of M3 growth already reached 4.7% YoY in April and is expected to have accelerated to 5.1% in May", says Rabobank.
In the past several months there has been a visible pickup in household lending whereas corporate lending has remained behind. A catch-up by corporate lending is likely to be seen by the ECB as a sign that its QE policy is working.
26 June 2015, 10:24VAROUFAKIS SAYS GREECE IS STILL FACING DEMANDS FROM CREDITORS THAT IT CANNOT AGREE TO
26 June 2015, 10:23RBI TO CONDUCT 7 DAY VARIABLE RATE REVERSE REPO AUCTIONS FOR 150 BLN RUPEES
26 June 2015, 10:23Moody's Investors Service says that sales of new homes in China turned positive in the first five months of 2015, mainly due to the momentum gained through the supportive monetary and regulatory polices implemented by the Chinese government (Aa3 stable) since the second half of 2014.
"As for prices, monthly home prices recovered slightly in May 2015 for China's 70 major cities. In particular, the number of cities that registered home price declines of more than 5% year-on-year fell to 54 in May 2015 from 58 in April 2015," says Franco Leung, a Moody's Vice President and Senior Analyst.
The improvement in national home sales and home prices support Moody's revision of the property industry outlook for China to stable from negative on 1 June 2015.
"On Moody's rated developers, we expect that the sales performance recorded by such developers will outperform that of the broader industry in calendar 2015, because of the developers' strong execution records, reputable brands and financial strengths; against the backdrop of ongoing industry consolidation," adds Leung.
Moody's analysis is contained in its latest edition of China Property Focus, a monthly newsletter focused on credit trends within the Chinese residential property market.
Moody's newsletter explains that according to China's National Bureau of Statistics, year-to-date national contracted sales growth turned positive in May 2015, with cumulative contracted sales registering a year-on-year growth of 5.1% ( trillion) in the first five months of 2015, up from a year-on-year decline of 2.2% ( trillion) in the first four months of 2015.
Sales in May 2015 registered a 30.4% year-on-year growth, the second positive year-on-year monthly increase this year, after April's 16%. Sales volumes rose 16.4% year-on-year in May 2015 and average selling prices rose 12.0% in the same period.
As for the month-on-month price changes, Moody's newsletter says that the changes indicated easing pricing pressure; for example, 43 of the 70 major cities reported month-on-month price declines in May 2015, compared to 48 in April 2015.
Further supporting the trend of easing pricing pressure, for the first time since August 2014, a price growth of more than 5% was recorded in China, with Shenzhen recording an improvement of 7.7% in May 2015.
Moody's newsletter points out that while overall inventory levels have remained high, both tier one and tier two cities registered lower supplies of residential properties in May 2015 versus April 2015. Downward pressure on home prices will continue to see gradual easing through 2015 as developers manage down their inventory.
Meanwhile, the continued decline in new starts and total land transactions in terms of gross floor area should help slow housing supply and inventory growth.
Moody's newsletter further says that the favorable policies implemented by the Chinese government -- including the increased availability of mortgages, as well as lower down payments and funding costs to buyers financing their second homes with bank mortgages -- will support sales performance over the next 12 months.
26 June 2015, 10:20- Bids at 1.1210-20, bids 1.1150-60, tighter around 1.1200 now
- Support at 1.1153, resistance at 1.1235 and next 1.1275
- Another Greek deadline and potential for a volatile Monday, next meeting on Saturday
- Talk of plan B if Saturday deal not accepted, decision time again
26 June 2015, 10:17VAROUFAKIS SAYS GREECE'S COMMITMENT TO REMAIN IN EURO ZONE IS ABSOLUTE
26 June 2015, 10:16GREEK FINANCE MINISTER VAROUFAKIS TELLS IRISH RADIO GREEKS HAVE BENT OVER BACKWARD TO ACCOMMODATE "STRANGE DEMANDS" FROM CREDITORS
26 June 2015, 10:13The increase in rates since late April has hit the Danish fixed income market severely.
The negative convexity in the callable bond market combined with the increase in rates has once again shown that it can be dangerous. Spread on bonds have widened as risk has been growing.
Further rate increases from now on will however hit the market less severely, as much of the negative convexity is gone, and the drop in prices means that a scenario of borrower buyback is moving closer. Recent days spread compression is also seen, which is indicating that market sentiment is getting more positive, says Nordea.
26 June 2015, 10:10ECB SAYS 308 MLN EUROS BORROWED USING OVERNIGHT LOAN FACILITY, 85.527 BLN EUROS DEPOSITED
26 June 2015, 10:10ECB SAYS 308 MLN EUROS BORROWED USING OVERNIGHT LOAN FACILITY, 85.527 BLN EUROS DEPOSITED
26 June 2015, 10:08Finnish bonds saw modest underperformance following the message from Moody's, ECB's purchases convince that will set the course for markets in the coming months, especially in July and August, when trading volumes in general will be rather low.
Events surrounding Greece certainly have the potential to cause more volatility in the near term, but looking beyond such volatility Finnish bonds offer good value.
The parameters of the ECB's purchases should support Finnish bonds especially vs Dutch bonds, and best value is found in the 10-year part of the Finnish curve, where Finnish bonds are offering some yield pick-up over the Dutch curve.
26 June 2015, 10:08INDIA CBANK: ALLOTS 225 BLN RUPEES AT 14-DAY VARIABLE RATE REPO AUCTION; GETS BIDS WORTH 270.50 BLN RUPEES
26 June 2015, 10:08INDIA CBANK: WEIGHTED AVERAGE RATE AT 7.30 PCT AT 14-DAY VARIABLE RATE REPO AUCTION
26 June 2015, 10:07RUSSIAN C.BANK SAYS BOUGHT $200 MLN WORTH OF FOREIGN CURRENCY ON MARKET ON JUNE 24
26 June 2015, 10:07HUNGARY'S REMAINING FOREIGN CURRENCY LOANS COULD BE CONVERTED INTO FORINT AT DISCOUNT EXCHANGE RATE, LEGISLATION EXPECTED IN AUTUMN - ECONOMY MINISTRY STATE SEC ORBAN TELLS WEBSITE
26 June 2015, 10:06CHINA BANK REGULATOR SAYS WILL CONTROL RISKS, PACE OF ESTABLISHMENT OF NEW PRIVATE BANKS
26 June 2015, 10:06CHINA'S CSI300 INDEX DOWN 6.5 PCT FOR THE WEEK
26 June 2015, 10:05CHINA BANK REGULATOR SAYS WILL TREAT DOMESTIC PRIVATE, STATE-OWNED, OVERSEAS INVESTORS EQUALLY IN ESTABLISHING PRIVATE BANKS
26 June 2015, 10:05Standard & Poor's stripped Finland of its AAA rating last year, while Fitch changed the outlook on its AAA rating to negative in March. Moody's, the third major rating agency, followed suit earlier this month, when it changed its outlook to negative. Those moves are a clear illustration of the challenging Finnish situation and the increasing strains public finances are facing.
However, the timing of Moody's move was a bit odd, as it followed the revelation of a programme by the new Finnish government that we find credible, while there had not been major changes in the economic outlook. Naturally, there are notable risks involved in the implementation.
Moody's notes they would consider moving the outlook back to stable, if the planned economic reforms and fiscal measures will be implemented, and will be effective in significantly strengthening both Finland's growth and the government's balance sheet.
In other words, full implementation of the government programme should guard Finland against further downgrades, says Nordea.
26 June 2015, 10:04Standard & Poor's stripped Finland of its AAA rating last year, while Fitch changed the outlook on its AAA rating to negative in March. Moody's, the third major rating agency, followed suit earlier this month, when it changed its outlook to negative. Those moves are a clear illustration of the challenging Finnish situation and the increasing strains public finances are facing.
However, the timing of Moody's move was a bit odd, as it followed the revelation of a programme by the new Finnish government that we find credible, while there had not been major changes in the economic outlook. Naturally, there are notable risks involved in the implementation.
Moody's notes they would consider moving the outlook back to stable, if the planned economic reforms and fiscal measures will be implemented, and will be effective in significantly strengthening both Finland's growth and the government's balance sheet.
In other words, full implementation of the government programme should guard Finland against further downgrades, says Nordea.
26 June 2015, 10:04TURKISH C.BANK SAYS OPENS 24 BLN LIRA ONE-WEEK REPO AUCTION
26 June 2015, 10:04SPAIN'S IBEX DOWN 0.6 PCT
26 June 2015, 10:03Last week Norges Bank delivered the long awaited cut and also a clear easing bias for the September meeting. The latter came as a complete surprise to the market which sent the FRA-strip down by about 10bp. Nordea Bank have recommended selling FRAs for a while and still think there is more downside to the strip for two reasons:
- 1) lower money market spreads
- 2) further rate cuts.
Given Norges Banks clear easing bias expectations are likely to be tilted towards a cut. This could easily contribute to lower the fixing by at least 10-15bp and let the September contract expire at around 1.10%. As such, downside from today's level of 1.19% is noticed. The September FRA contract expires three days before the meeting and will settle on expectations rather than the actual outcome of the meeting, so a surprise on hold decision will not be an issue for this trade.
"We also think that further rate cuts are likely next year, particularly based on the prospects of falling inflation. This is not at all reflected in the FRA-strip which is close to flat from the December contract. We have for a long time argued for inversion trades a little out on the FRA-strip on the basis that the easing cycle would prove slow and long lived and continue to really like this theme. Currently we prefer the Dec15/Jun16 spread at -2.5bp", said Nordea Bank in a report on Friday.
"Taken together, the first contract and bias for further inversion of the strip argues for selling FRAs also a little out on the strip such as the June 16 contract at 1.08%. Just one cut should suffice to take us below that level and chances are that we get more", adds Nordea Bank.
26 June 2015, 10:03GERMANY'S DAX DOWN 0.6 PCT
26 June 2015, 10:03RUSSIAN ROUBLE OPENS 0.2 PCT WEAKER AT 54.85 VS DOLLAR
26 June 2015, 10:02VIETNAM'S H1 GDP GROWTH QUICKENS TO 6.28 PCT YR/YR VS 5.18 PCT IN H1 2014 - GOVT
26 June 2015, 10:02VIETNAM H1 CRUDE OIL EXPORTS +3.6 PCT YR/YR TO 4.74 MILLION TONNES - GOVT
26 June 2015, 10:02HUNGARY'S JOBLESS RATE FALLS TO 7.1 PCT IN MARCH-MAY FROM 7.6 PCT IN FEBRUARY-APRIL -STATS
26 June 2015, 10:01SHANGHAI COMPOSITE INDEX CLOSES DOWN 7.4 PCT AT 4,192.87 POINTS
26 June 2015, 10:01ITALY’S FTSE MIB DOWN 0.5 PERCENT AT 23,517.64 POINTS IN EARLY DEALS
26 June 2015, 10:01BRITAIN'S FTSE 100 DOWN 0.4 PCT, FRANCE'S CAC 40 DOWN 0.7 PCT
26 June 2015, 10:00SWISS SMI OPENS DOWN 0.61% AT 8990 POINTS
26 June 2015, 10:00EUROPE'S FTSEUROFIRST 300 DOWN 0.3 PCT TO 1,568.03 POINTS IN EARLY DEALS
26 June 2015, 10:00Currently the Danish Sep 2015 T-bill looks cheap relative to the German and French equivalent when accounting for FX-forwards even when sold at -0.75%.
Sold at these levels there it is likely that there could be activity on Monday's auction in the Sep2015 DGTB.
The Dec2015 T-bill should be sold at a discount relative to the Sep2015.
"This level to be around -0.65%. If National bank's strategy is to sell at -0.75%, then do not expect any action in the Dec2015 T-bill", says Nordea
26 June 2015, 10:00VIETNAM JUNE TRADE DEFICIT ESTIMATED AT $700 MLN VS MAY REVISED DEFICIT OF $1.24 BLN -GOVT
26 June 2015, 09:57- Volumes and EUR put skew hit Wednesday/Thursday but losses stall pre Greek outcome
- 1week gets NFP since Thursday and is 14.5 vs 11.8 Wednesday
- 1month hit 11.3 yesterday (now 11.65) vs 13.1 Monday' (3year high 14.35 last week)
- 3month based 10.95 mid week and now 11.25, 1year is 10.3 vs 10.1 lows
- 1month 25D RR hit 1.1 mid week vs 2.0 peak EUR puts Monday'. 1year 2.6 vs 3.4
- Talk of size DNT demand around 3month adding volume pressure this week
26 June 2015, 09:56If the crisis in Greece escalates, the immediate reaction will likely be a strengthening of the traditional safe-haven currencies including the Danish krone.
This would imply a repetition of the movements in the early summer of 2012 when the eruption of the sovereign debt crisis caused the Danish krone to appreciate sharply and the central bank sanctioned rate cuts of a total of 25 bp.
However, with the suspension of government bond issuance since January, liquidity in the Danish government bond market has declined significantly, one thing fundamentally different than in 2012.
This sharply reduces the likelihood of a major strengthening of the Danish krone in case of renewed unrest in the European financial markets, although it will very probably prolong the central bank's chances of further normalising Denmark's monetary policy, says Nordea.
26 June 2015, 09:56Norges Bank surprised at the June meeting. Not by cutting rates to 1%, but by stating that another cut in September was likely. According to the rate path a cut at the September meeting has a 2/3 chance. A rate cut was expected late this year but moved the cut forward to September due to Norges Bank's signals.
Norges Bank repeated its usual optimistic view that growth will pick up in the longer term and that capacity utilization and inflation will be close to targets at the end of the forecast horizon, says Nordea bank. But its short term forecast is note especially optimistic. It forecast Mainland GDP growth at only 0.1%q/q in Q2 down from 0.5% in Q1, notes Nordea Bank.
Weakness in oil related industries and the fact that inventories pulled up the Q1 figure argues for weak growth. On the other hand consumption of goods increased strongly in April. Even with a sharp correction down in May/June consumption growth will most likely be strong in Q2, therefore, Nordea Bank finds the GDP forecast realistic, but there is room for upside surprises.
Norges Bank view on the short term development in the labour market is also not overly optimistic. Norges Bank favorite measure for labour market tightness, registered unemployment, should increase by 1000-1500 persons a month the coming months. That is a clear break with the trend which is an increase by about 500 persons. But the sharp rise in LFS unemployment and the current weakness in the economy argues that registered unemployment will rise faster, adds Nordea Bank.
26 June 2015, 09:52HUNGARY COULD BE UPGRADED TO INVESTMENT CATEGORY AT LEAST BY ONE OF MAIN RATING AGENCIES BEFORE END OF THIS YEAR - ECONOMY MINISTRY STATE SEC ORBAN TELLS WEBSITE
26 June 2015, 09:51- USD/JPY: 122.25 (560M), 123.50 (215M), 124.00 (835M), 124.50 (369M)
- EUR/USD: 1.1150 (315M), 1.1200 (490M), 1.1250-55 (550M)
- USD/CHF: 0.9410 (320M). NZD/USD: 0.7000 (200M)
- AUD/USD: 0.7700 (307M), 0.7730 (260M), 0.7750 (268M), 0.7800 (1BLN)
- USD/CAD: 1.2300 (511M)
26 June 2015, 09:51OVER TO LONDON - AUD/USD -0.26%, EUR/USD -0.12%, AUD/JPY -0.47%, USD/KRW + 0.45%, NIKKEI -0.18%, SSEC -5.64%, MSCI AXJ -0.93%, UST 2.3979%, BRENT +0.59%
26 June 2015, 09:49- USD/JPY: 122.25 (560M), 123.50 (215M), 124.00 (835M), 124.50 (369M)
- EUR/USD: 1.1150 (315M), 1.1200 (490M), 1.1250-55 (550M)
- USD/CHF: 0.9410 (320M). NZD/USD: 0.7000 (200M)
- AUD/USD: 0.7700 (307M), 0.7730 (260M), 0.7750 (268M), 0.7800 (1BLN)
- USD/CAD: 1.2300 (511M)
26 June 2015, 09:45We've been advocating this call quite often on the verge of Greece debt issues. EUR gamma is still worth owning heading into a critical weekend of Greek negotiations that could see capital controls unveiled.
EUR/USD vols plunged sharply after the FOMC meeting.
1M ATM declined nearly 3 vols from its intra-week high at one point, rivaling some of the sharpest sell-offs seen in the aftermath of market crashes.
Obviously, a large event (FOMC) rolling off the expiry calendar deserves to take some risk premium out of the vol curve.
1M IVs are low compared to recent realized volatility and especially given risks of Greek capital controls at some point this month that have pushed risk-reversals out to 3-yr wides.
We buy the arguments around Greece being less toxic medium-term macro issue now than in the pre QE era, but do not trust the current liquidity environment to allow smooth sailing in EUR if capital controls are announced.
Owning gamma from current levels therefore strikes us as a very reasonable risk-management proposition; the optical risk reward of doing so on charts may not appear classically one-sided, but a couple of vols of potential downside.
On hedging front, buy 1M EUR/USD straddles. Owning short-dated FVAs has been a durable source of vol alpha this year; Euro-bloc currencies (EUR, Scandis) currently screen as good 1M1M FVA buys. We propose earning hedged EM vol carry later this summer via short 1M vol swap / long 1M1M FVA packages once Greece settles.
Hence, for those who still have their Euro exposures open, on hedging reasons EUR/USD 1M straddles are a buy before a weekend of emergency Greek negotiations and potential capital controls.
26 June 2015, 09:37Riksbank is expected to sound cautious and express its readiness to engage in further easing should the recent inflation recovery come to a stand-still.
Yet, Riksbank forecasts a modest uptrend in inflation in the coming months. In that sense, the Riksbank remains totally data-dependent and will likely continue to assess the inflation recovery towards more mandate-consistent levels.
A mild risk is seen that the Riksbank increases the size of its current asset purchase (QE) program but still expect the SEK to be stronger from an unchanged rate decision, says Barclays.
26 June 2015, 09:36The offshore Chinese yuan (CNH) issuance can be accommodated under the revised debt ceiling (on an NPV basis) of 58.3% of GDP for 2015. That said, the issuance, along with domestic debt issues and World Bank credit, largely exhausts the Mongolian sovereign's ability to issue further external debt in 2015, as public debt was already high at 54.7% of GDP as of end-2014, according to official estimates.
However, Mongolia may have headroom to issue a further c.USD 750mn-1bn of external debt from 2016 onwards, even though the debt ceiling will likely be lowered to 55% in 2016 and 50% in 2017, estimates Standard Chartered. This comes on the back of an expected pick-up in GDP growth due to the commencement of development of Oyu Tolgoi (OT) mine Phase II.
The weaker rating was due to rising debt, and the CNH issuance will likely add to these concerns. The government debt/GDP ratio rises to over 80% if use of the China swap line and the Trade and Development Bank of Mongolia's (TDBM's) government-guaranteed bond issuance are included; these are excluded from official calculations, says Standard Chartered.
26 June 2015, 09:28Indeed, the extent to which a Greek crisis could add upward pressure on the SEK vis-à-vis the EUR, should keep the Riksbank cautious in signaling that its easing cycle is over and that a sustained SEK rally would be more tolerated.
Although any policy action is not expected in this meeting, the possibility of an intra meeting rate cut cannot be excluded in the coming weeks, should the Greek crisis escalate further, weighing on the EUR against its G10 peers.
This is a key risk seen that the Riksbank is close to the end of its easing cycle, says Barclays.
26 June 2015, 09:28The Japanese price statistics which were published this morning do not look unfavorable. Even the slowest observer should have worked out by now that the effect of the VAT hike in 2014 is disappearing from the May statistics for Tokyo and almost disappearing from the national April data. Adjusted by this effect the national data looked promising. The underlying inflation trend is clearly pointing upwards.
Commerzbank calculates an exponentially weighted moving average with 9 month average lag length from the seasonally adjusted mom rates. Based on this approach the impressive figure of 0.7% (annualized) has been recorded.
However, the Tokyo data dampens the picture somewhat. The May data available for this area already depicts a fall of the inflation trend. Tokyo is not always a good indicator for national inflation developments. So therefore there is a vague hope that price developments will at least point upwards slightly.
"The 2% inflation target continues to seem out of reach - certainly within the space of time envisaged by the Bank of Japan (BoJ) - i.e. mid-2016. For the time being the BoJ will be able to use the data to celebrate its alleged success rather than having to consider additional monetary policy steps", said Commerzbank in a report on Friday.
However, without inflation and growth the Japanese Treasury will struggle to stabilize the budget long term.
Understandably Finance Minister Taro Aso stressed this morning that it may put pressure on Japanese government bonds if the medium term budget target was going to be missed. Unusual openness for a Minister of Finance.
However if the Japanese government really does want to eliminate the primary budget deficit it is facing a difficult task, added Commerzbank. The fact that Aso excludes a reduction in spending does not exactly seems optimistic.
26 June 2015, 09:26Indeed, the extent to which a Greek crisis could add upward pressure on the SEK vis-à-vis the EUR, should keep the Riksbank cautious in signaling that its easing cycle is over and that a sustained SEK rally would be more tolerated.
Although any policy action is not expected in this meeting, the possibility of an intra meeting rate cut cannot be excluded in the coming weeks, should the Greek crisis escalate further, weighing on the EUR against its G10 peers.
This is a key risk seen that the Riksbank is close to the end of its easing cycle, says Barclays.
26 June 2015, 09:26The Finance Ministry of South Korea said yesterday that it is planning a KRW15trn (USD13.5bn) stimulus package to boost the economy.
Acording to Commerzbank, the main motivations of the stimulus are
- 1) to offset the negative impact arising from MERS
- 2) counter the ongoing drought which is at its worst in nearly four decades
The Finance Ministry downgraded 2015's growth forecast to 3.1% from 3.8% previously from 3.3% in 2014, notes Commerzbank. 2015 inflation was also slashed to 0.7% from 2% previously, with inflation hovering around a near 15-year low of 0.5% in recent few months. For USD-KRW, it is holding at the upper end of the 1100-1120 range of the past month.
26 June 2015, 09:21FDI outflows are expected to continue to grow in coming years on looser regulations in the financial sector on foreign investments eg possible expansion of the QDII2 scheme and big-ticket infrastructure initiatives such as "One Road One Belt" and via the AIIB.
The US Treasury Department said yesterday that "China committed to increase exchange rate flexibility and move more rapidly toward a market-oriented exchange rate system. China pledged for the first time to intervene in foreign exchange markets only when necessitated by disorderly market conditions. China will consider more steps toward market-oriented FX rate and to increase FX flexibility."
This was at the conclusion of the Strategic and Economic Dialogue between the US and China. US Treasury Secretary Jack Lew added that China is committed to financial reforms "including taking the final steps in liberalizing interest rates, opening capital markets, and expanding access to foreign financial services firms and investors. The real test will be what China does when there's pressure on the yuan to strengthen."
China's Vice Finance Minister Zhu Guangyao said that China has made a large amount of progress on CNY liberalization and reforms are still moving forward. He added that CNY is at a reasonable and balanced level.
26 June 2015, 09:18The Japanese price statistics which were published this morning do not look unfavorable. Even the slowest observer should have worked out by now that the effect of the VAT hike in 2014 is disappearing from the May statistics for Tokyo and almost disappearing from the national April data. Adjusted by this effect the national data looked promising. The underlying inflation trend is clearly pointing upwards.
Commerzbank calculates an exponentially weighted moving average with 9 month average lag length from the seasonally adjusted mom rates. Based on this approach the impressive figure of 0.7% (annualized) has been recorded.
However, the Tokyo data dampens the picture somewhat. The May data available for this area already depicts a fall of the inflation trend. Tokyo is not always a good indicator for national inflation developments. So therefore there is a vague hope that price developments will at least point upwards slightly.
"The 2% inflation target continues to seem out of reach - certainly within the space of time envisaged by the Bank of Japan (BoJ) - i.e. mid-2016. For the time being the BoJ will be able to use the data to celebrate its alleged success rather than having to consider additional monetary policy steps", said Commerzbank in a report on Friday.
However, without inflation and growth the Japanese Treasury will struggle to stabilize the budget long term.
Understandably Finance Minister Taro Aso stressed this morning that it may put pressure on Japanese government bonds if the medium term budget target was going to be missed. Unusual openness for a Minister of Finance.
However if the Japanese government really does want to eliminate the primary budget deficit it is facing a difficult task, added Commerzbank. The fact that Aso excludes a reduction in spending does not exactly seems optimistic.
26 June 2015, 09:16Market Roundup
- Japan May household spending +2.4% m/m, +4.8% y/y, +2.2% and +3.4% eyed.
- Japan May nationwide core CPI +0.1% y/y, Tokyo June core +0.1%, unchanged and +0.1% eyed, overall CPI +0.5%, +0.3%, respectively.
- Japan May unemployment 3.3%, as eyed, jobs-applicants ratio 1.19, 1.17 eyed, April 3.3%, 1.17, jobs applicants' ratio highest since March.
- ING launches Y81.1 bln 3-trnache Pro-bonds via Barclays, MUFJ, Mizuho.
- Foreign CB US debt holdings +$487 mln to $3.366 trln June 24 week, Treasury holdings -$2.234 bln to $3.021 trln, agencies +$2.111 bln to $299.313 bln.
- Swaps with foreign CBs $115 mln June 24 week, all with ECB.
- US-based taxable bond funds attract $3.4 bln in latest week.
- RBNZ Statement of Intent- To explore macro-prudential policies, bank stress testing, central bank reiterates NZD still too high.
- New Zealand May trade surplus NZ$350 mln, to-day deficit NZ$2.57 bln, NZ$100 mln and NZ$2.9 bln eyed, May imports NZ$4.01 bln, exports NZ$4.36 bln.
- (0245 ET/0645 GMT) France June consumer confidence index, 93.0 eyed; last 93.0.
- (0330 ET/0730 GMT) Sweden May retail sales, +0.3% m/m, +4.4% y/y eyed; last -0.2%, +3.0%.
- (0330 ET/0730 GMT) Sweden May trade balance; last SEK5.7 bln surplus.
- (0330 ET/0730 GMT) Sweden May household lending; last +6.5% y/y.
- (0400 ET/0800 GMT) Euro Zone May money supply M3, +5.4% y/y eyed; last +5.3%, 3-month moving average +4.7%.
- (0400 ET/0800 GMT) Euro Zone May private loans, +0.4%; last unchanged.
- (0400 ET/0800 GMT) Euro Zone Italy June business confidence index, 103.8 eyed; last 103.5.
- (0400 ET/0800 GMT) Italy June consumer confidence index, 105.7 eyed; last 105.7.
- (1000 ET/1400 GMT) US June UOM sentiment index final, 94.6 eyed; prelim 94.6.
- N/A Riksbank executive board meeting.
- N/A BoE Gov Carney, ex-US Pres Clinton speeches at London conference.
- N/A IIF Europe Summit in Frankfurt, various speakers (final day).
- N/A Italy 6-month BOT, UK treasury bill auctions.
- (0500 ET/0900 GMT) Italy -1.75 bln 2017 CTZ auction.
- (0700 ET/1100 GMT) BoE Waldron speech at London business economist's conference.
- (1245 ET/1645 GMT) Kansas City Fed George speech at Kansas City conference.
- Saturday Euro Group Finance Ministers meeting on Greece in Brussels.
EUR/USD is supported below 1.1200 levels and currently trading at 1.1181 levels. It has made intraday high at 1.1206 and low at 1.1177 levels. The European currency came under renewed selling pressure as markets continue to weigh Greek impasse after another round of failed talks at Euro group on Thursday while USD strength dominates across the FX board. Moreover, a generalized strength seen in the greenback as traders digest a batch of US economic data released yesterday with the key PCE price index and weekly claims coming in line with market expectations, boosting the USD bulls. Looking ahead to the US session, traders will mostly focus on US consumer sentiment data amid a data-thin EUR calendar while Greece headline will remain in focus. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels.
USD/JPY is supported below 124.00 levels and posted a high of 123.65 levels. It has made intraday low at 123.21 and currently trading at 123.31 levels. The Japanese currency witnessed sharp gains in Asia mainly driven by Greece concerns while upbeat Japan's CPI print also supported the upside, pushing USD/JPY closer towards 123 handle. Near term resistance is seen at 124.57 and support is seen at 122.10 levels.
GBP/USD is supported above $1.5700 levels. It made an intraday high at 1.5751 and low at 1.5731 levels. Pair is currently trading at 1.5740 levels. The greenback slowly grabbed some momentum amid favourable US data released yesterday as sterling bulls took a nap after their previous strong rally. Today is data free session for UK. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported below 0.9400 levels and trading at 0.9362 levels and made intraday low at 0.9354 and high at 0.9366 levels. Yesterday CHF made high at 0.9418 levels and took reversal from that and currently supported below 0.94 levels. Today is data thin calendar; market will eye on Greece story and US data release due later in a day. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels.
AUD/USD is supported above 0.7700 levels and trading at 0.7715 levels. It has made intraday high at 0.7738 levels and low at 0.7708 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery. While, the Greek story is set to continue, with Euro group officials meeting failed to reach a Greek solution after yet again ending yesterday's meeting in a no deal. A euro zone finance ministers' meeting scheduled for Saturday will be decisive for Greece and its ongoing debt crisis, German Chancellor Angela Merkel said on Friday morning, following a day and night of frantic negotiations between Athens and its international lenders. Initial support is seen at 0.7568 and resistance at 0.7838 levels.
26 June 2015, 09:16The euro group meeting was once again postponed. This time round to Saturday, the last imaginable date if the legislative processes are going to somehow be maintained and an extension of the Greece aid package is to be passed on 30th June.
What matters for the financial markets is the ECB's reaction to the events as far as its ELA policy is concerned rather than an extension of the aid package or the IMF payment by themselves.
Predicting what the ECB will do is difficult, as what matters in the end is whether the European central bankers will stick to their rules or whether they are prepared to be used as the henchmen of the politicians.
26 June 2015, 09:07All eyes on Greece but the Euro group again failed to reach an agreement on Thursday. The concerns over the current deadlock in Greek debt negotiations weighed heavily on equity markets and as investors eyed fresh talks due to take place later in the day.
Greece has an obligation to repay €1.6 billion to IMF on or before June 30 or face debt defaults which is mounting Grexit pressure and we continue to recommend below strategy on hedging grounds, the pair is likely to sense little bearish downside risks, so let's stay cautious and in order to arrest these bearish risks diagonal spreads using In-The-Money and Out-Of-The-Money put options are advocated.
Currency Option Insights: EUR/JPYAdd long 1M (+1%) In-The-Money -0.61 delta put and simultaneously add one more long 1M (-1%) Out-Of-The-Money -0.37 delta put.
The option combination should have combined delta at -0.99 and slightly negative theta.
This has been the perfect circumstance to deploy the diagonal bear put spread, because we expect EUR/JPY remains unchanged in short run and only goes down below the strike price of the put sold when the long term put expires.
In this scenario, as soon as the near month put expires worthless, the options trader can write another put and repeat this process every month until expiration of the longer term put to reduce the cost of the trade.
26 June 2015, 09:01GERMAN BUND FUTURES OPEN 16 TICKS HIGHER AT 151.03
26 June 2015, 09:00EUROSTOXX 50 FUTURES DOWN 0.9 PCT, DAX FUTURES DOWN 0.7 PCT, CAC 40 FUTURES DOWN 0.9 PCT, FTSE FUTURES DOWN 0.4 PCT
26 June 2015, 04:49
SHANGHAI COMPOSITE INDEX DOWN OVER 4 PCT
26 June 2015, 04:34
CHINA'S YUAN OPENS TRADE AT 6.2093 PER DOLLAR VS LAST CLOSE AT 6.2094
26 June 2015, 04:26
CHINA'S CSI300 INDEX TO OPEN DOWN 2.8 PCT AT 4,573.87 POINTS
26 June 2015, 04:25
SHANGHAI COMPOSITE INDEX TO OPEN DOWN 2.8 PCT AT 4,399.93 POINTS
26 June 2015, 04:20
HK’S HANG SENG INDEX TO OPEN DOWN 0.5 PCT AT 27,016.09 POINTS
26 June 2015, 04:16
PBOC SETS YUAN MID-POINT AT 6.1137 / DLR VS LAST CLOSE 6.2094
26 June 2015, 04:13
United States personal spending rose 0.9% in May, beating the 0.7% consensus
estimate, while April was revised higher from 0.0% to 0.1%. Real spending was
0.6% (vs 0.5% expected) - the largest month rise in six years.
Personal income met expectations at 0.5% growth, but April was revised from 0.4% to 0.5%. The reports underscore much of Q1's weakness was temporary, and also that the labour market improvements are spilling over to consumption.
Personal income met expectations at 0.5% growth, but April was revised from 0.4% to 0.5%. The reports underscore much of Q1's weakness was temporary, and also that the labour market improvements are spilling over to consumption.
26 June 2015, 04:11
BOJ offers to buy Y 140 bln JGBs (Residual maturity is more than 25YR)
outright from 6/30
26 June 2015, 04:11
BOJ offers to buy Y 240 bln JGBs (Residual maturity of 10YR to 25YR) outright
from 6/30
26 June 2015, 04:11
BOJ offers to buy 400 bln yen JGBs (Residual maturity of 3YR to 5YR) outright
from 6/30
26 June 2015, 04:11
BOJ offers to buy 375 bln yen JGBs (Residual maturity of 1YR to 3YR) outright
from 6/30
26 June 2015, 04:10
BOJ offers to buy Y 1 trln Treasury Discount Bills outright from 6/30
26 June 2015, 04:08
MERKEL SAYS NOT POSSIBLE TO FIND NEW MONEY FOR GREECE BEYOND WHAT IS LEFT IN
BAILOUT PROGRAMME AT THIS STAGE
26 June 2015, 04:02
BRUSSELS-MERKEL SAYS SATURDAY'S EUROGROUP DECISIVE FOR SOLUTION FOR GREECE,
TIME IS SHORT
26 June 2015, 03:59
BRUSSELS - BRITISH PM CAMERON SAYS DELIGHTED THE BRITISH PROCESS OF EU
RENEGOTIATION IS PROPERLY UNDERWAY
26 June 2015, 03:58
MERKEL SAYS EU AGREES TO SHARE OUT 60,000 MIGRANTS ON VOLUNTARY BASIS OVER
NEXT TWO YEARS
26 June 2015, 03:25
Fund flow data for the week ended 24 June showed that both developed-market
(DM) and emerging-market (EM) bond funds continued to see outflows related to US
Treasury (UST) volatility.
However, outflows slowed as institutional investors started to add to their exposure to bond funds even as retail investors continued to pull money out.
EM bond funds saw a fifth consecutive week of outflows, as both EM local-currency (LC) and EM hard-currency (HC) bond funds witnessed outflows. These funds presented a contrasting picture, however, with outflows from EM HC funds slowing, while EM LC funds started to see outflows again this past week, after small inflows last week.
In DM bond funds, outflows from both HG and HY fund bonds funds slowed. US-dedicated HY funds saw small inflows, mainly institutionally driven
However, outflows slowed as institutional investors started to add to their exposure to bond funds even as retail investors continued to pull money out.
EM bond funds saw a fifth consecutive week of outflows, as both EM local-currency (LC) and EM hard-currency (HC) bond funds witnessed outflows. These funds presented a contrasting picture, however, with outflows from EM HC funds slowing, while EM LC funds started to see outflows again this past week, after small inflows last week.
In DM bond funds, outflows from both HG and HY fund bonds funds slowed. US-dedicated HY funds saw small inflows, mainly institutionally driven
26 June 2015, 03:16
JAPAN GOVT OFFICIAL: PRIVATE CONSUMPTION CONTINUES TO RECOVER MODERATELY AS A
TREND
26 June 2015, 03:14
The CMN today reduced the inflation target range for 2017, a change in the
monetary policy arrangement in Brazil aimed at increasing its effectiveness, in
a context in which the BCB is hiking the interest rates and is focused on
regaining credibility and anchoring inflation expectations.
The National Monetary Council (CMN) announced this evening the 2017 inflation target, which will have as a mid-point 4.5%, with a tolerance range of +/- 1.5pp. This is the first time that the inflation target has been changed since 2006, and this is another move of the economic team aiming at regaining credibility.
By reducing the tolerance range, the BCB is emphasizing its commitment to the inflation target regime and signaling that it will need to be continuously vigilant to assure that actual inflation by 2017 stays within the range. It is a welcome and positive step amid the current juncture of recession, high inflation, high interest rates and fiscal consolidation.
For 2016 the inflation target is reaffirmed at 4.5%, with a tolerance range of +/- 2.0pp. The necessary effort to anchor, with no change in the target for the next year and the strong commitment of the Copom to the 4.5% mid-point, the Selic rate is expected to be hiked 50bp in July and very likely 25bp in September, with the latter decision being fairly data dependent on inflation expectations, actual inflation and the BRL.
Finally, the TJLP rate was increased to 6.5% for next quarter, from 6.0%. This is the interest rate that benchmarks the subsidized credit operations by BNDES, and by continually increasing it, the economic team aims to improve the transmission power of monetary policy to inflation.
It is believed that the TJLP will continue to be hiked throughout the year, even after the Copom ends the tightening cycle, reducing the gap of it to the Selic rate, in order to increase the effectiveness of monetary policy and give further support to Copom's task of keeping inflation within the target range for the next three years.
The National Monetary Council (CMN) announced this evening the 2017 inflation target, which will have as a mid-point 4.5%, with a tolerance range of +/- 1.5pp. This is the first time that the inflation target has been changed since 2006, and this is another move of the economic team aiming at regaining credibility.
By reducing the tolerance range, the BCB is emphasizing its commitment to the inflation target regime and signaling that it will need to be continuously vigilant to assure that actual inflation by 2017 stays within the range. It is a welcome and positive step amid the current juncture of recession, high inflation, high interest rates and fiscal consolidation.
For 2016 the inflation target is reaffirmed at 4.5%, with a tolerance range of +/- 2.0pp. The necessary effort to anchor, with no change in the target for the next year and the strong commitment of the Copom to the 4.5% mid-point, the Selic rate is expected to be hiked 50bp in July and very likely 25bp in September, with the latter decision being fairly data dependent on inflation expectations, actual inflation and the BRL.
Finally, the TJLP rate was increased to 6.5% for next quarter, from 6.0%. This is the interest rate that benchmarks the subsidized credit operations by BNDES, and by continually increasing it, the economic team aims to improve the transmission power of monetary policy to inflation.
It is believed that the TJLP will continue to be hiked throughout the year, even after the Copom ends the tightening cycle, reducing the gap of it to the Selic rate, in order to increase the effectiveness of monetary policy and give further support to Copom's task of keeping inflation within the target range for the next three years.
26 June 2015, 03:09
AUSTRALIA'S S&P/ASX 200 INDEX DOWN 1.07 PCT AT 5,572.70 POINTS IN EARLY
TRADE
26 June 2015, 03:01
SEOUL SHARES OPEN DOWN 0.08 PCT
26 June 2015, 03:00
SOUTH KOREAN WON OPENS ONSHORE TRADE AT 1,111.0 PER DOLLAR VS 1,110.0 AT
PREVIOUS CLOSE
26 June 2015, 03:00
TOKYO'S NIKKEI SHARE AVERAGE OPENS DOWN 0.06 PCT AT 20,758.43
26 June 2015, 02:34
JAPAN MAY JOBS-APPLICANTS RATIO RISES TO HIGHEST LEVEL SINCE 1.19 IN MARCH
1992
26 June 2015, 02:32
JAPAN MAY HOUSEHOLD SPENDING POSTS FIRST YEAR-ON-YEAR RISE SINCE MARCH 2014
26 June 2015, 02:30
JAPAN MAY CORE-CORE CPI EXCLUDING FOOD, ENERGY PRICES +0.4 PCT YR/YR - GOVT
26 June 2015, 02:30
JAPAN MAY ALL HOUSEHOLD SPENDING MM* INCREASE TO +2.4 % (FCAST 2.2 %) VS PREV
-5.5 %
26 June 2015, 02:30
JAPAN MAY ALL HOUSEHOLD SPDING YY* INCREASE TO +4.8 % (FCAST 3.4 %) VS PREV
-1.3 %
26 June 2015, 02:30
JAPAN JUN CPI, OVERALL TOKYO* DECREASE TO 0.3 % VS PREV 0.5 %
26 June 2015, 02:30
JAPAN MAY UNEMPLOYMENT RATE STAYS FLAT AT 3.3 % (FCAST 3.3 %) VS PREV 3.3 %
26 June 2015, 02:30
JAPAN MAY CPI, CORE NATIONWIDE YY DECREASE TO +0.1 % (FCAST 0.0 %) VS PREV
0.3 %
26 June 2015, 02:30
JAPAN MAY CPI, OVERALL NATIONWIDE* DECREASE TO 0.5 % VS PREV 0.6 %
26 June 2015, 02:30
JAPAN MAY CPI, CORE NATIONWIDE YY DECREASE TO 0.1 % (FCAST 0.0 %) VS PREV 0.3
%
26 June 2015, 02:30
JAPAN JUN CPI CORE TOKYO YY* DECREASE TO 0.1 % (FCAST 0.1 %) VS PREV 0.2 %
26 June 2015, 02:30
JAPAN MAY JOBS/APPLICANTS RATIO INCREASE TO 1.19 (FCAST 1.17 ) VS PREV 1.17
26 June 2015, 02:06
US data was firm all around, with May income and spending both better than
anticipated, and weekly jobless claims remaining constructive . Spending rose
0.9% in May (est. 0.7%), with a small lift to the prior month as well (to 0.1%
from flat).
Real spending was better as well, and on a 3-mth annualized basis is now at 2.9%. That should see forecasters raisingQ2 consumption estimates. May income was in line with expectations (0.5%) but was revised higher for April (to 0.5% from 0.4%).
Real spending was better as well, and on a 3-mth annualized basis is now at 2.9%. That should see forecasters raisingQ2 consumption estimates. May income was in line with expectations (0.5%) but was revised higher for April (to 0.5% from 0.4%).
26 June 2015, 01:55
BOJ: banks' reserve balance at 173.4 trln at end of day
26 June 2015, 01:55
BOJ:current account balance at 228.5 trln at end of day
26 June 2015, 01:46
BRAZIL'S NATIONAL MONETARY COUNCIL KEEPS 2016 INFLATION TARGET AT 4.5 PCT
26 June 2015, 01:45
NZ MAY MONTH EXPORTS NZ$ 4.36 BILLION (REUTERS POLL NZ$4.27 BLN)
26 June 2015, 01:45
NZ MAY MONTH IMPORTS NZ$4.01 BILLION (REUTERS POLL NZ$4.29 BILLION)
26 June 2015, 01:45
NEW ZEALAND MAY ANNUAL TRADE BALANCE NZ$ -2.57 BILLION (REUTERS POLL DEFICIT
NZ$2.90 BLN)
26 June 2015, 01:45
NEW ZEALAND MAY MONTH TRADE BALANCE NZ$+350 MILLION (REUTERS POLL DEFICIT
NZ$100 MLN)
26 June 2015, 01:38
U.S. OFFICIAL SAYS THERE ARE 15 INCOMPLETE OR MISSING EMAILS FROM HILLARY
CLINTON'S PERSONAL SERVER, SUBSTANCE OF EMAILS NOT RELATED TO 2012 BENGHAZI
ATTACKS
26 June 2015, 01:36
BRAZIL'S NATIONAL MONETARY COUNCIL RAISES TJLP CORPORATE LENDING RATE TO 6.5
PCT FROM 6 PCT (REUTERS POLL 6.50 PCT)
26 June 2015, 01:36
BRAZIL'S NATIONAL MONETARY COUNCIL SETS INFLATION TARGET AT 4.5 PCT FOR 2017
26 June 2015, 01:36
BRAZIL'S NATIONAL MONETARY COUNCIL SETS TOLERANCE BAND AT 1.5 PERCENTAGE
POINTS UP OR DOWN FOR 2017 INFLATION TARGET
26 June 2015, 01:35
BRAZIL'S NATIONAL MONETARY COUNCIL SETS INFLATION TARGET AT 4.5 PCT FOR 2017
26 June 2015, 01:35
BRAZIL'S NATIONAL MONETARY COUNCIL SETS INFLATION TARGET AT 4.5 PCT FOR 2017
26 June 2015, 01:34
BRAZIL Q3 TJLP LENDING RATE* INCREASE TO 6.5 % (FCAST 6.50 %) VS PREV 6.00 %
26 June 2015, 01:18
Indonesia continued to receive inflows in early June, and the strong auction
result on 23 June pushed total foreign holdings of Indonesia government bonds to
a record-high IDR 527tn (YTD inflows: c.USD 5.2bn). This is likely driven by
reduced positioning risk after benchmark index investors scaled back their
overweight positions significantly in the previous two
months.
Meanwhile, the underperformance of other high-yielding countries such as South Africa and Turkey supports flows to Indonesia. For low-yielding countries, sentiment is weak; meanwhile investors continue to reduce their exposure to Thailand due to the weaker THB. Rising uncertainty surrounding Korea's supplementary budget also weakened foreign inflows.
Meanwhile, the underperformance of other high-yielding countries such as South Africa and Turkey supports flows to Indonesia. For low-yielding countries, sentiment is weak; meanwhile investors continue to reduce their exposure to Thailand due to the weaker THB. Rising uncertainty surrounding Korea's supplementary budget also weakened foreign inflows.
26 June 2015, 01:16
WHITE HOUSE SAYS OBAMA, PUTIN DISCUSSED "THE IMPORTANCE OF CONTINUED P5+1
UNITY" IN IRAN TALKS
26 June 2015, 01:15
OBAMA TOLD PUTIN RUSSIA NEEDS TO REMOVE ALL TROOPS AND EQUIPMENT FROM
UKRAINIAN TERRITORY - WHITE HOUSE
26 June 2015, 01:13
WHITE HOUSE SAYS OBAMA, PUTIN DISCUSSED NEED TO COUNTER ISLAMIC STATE,
DEVELOPMENTS IN THE MIDDLE EAST, AND SITUATION IN UKRAINE
26 June 2015, 01:11
WHITE HOUSE SAYS RUSSIA PRESIDENT PUTIN CALLED OBAMA ON THURSDAY
26 June 2015, 01:01
NZ's NZX 50 OPENS AT 5733.290 POINTS, UP 0 PCT
26 June 2015, 00:56
South Africa' National Energy Regulator of South Africa (NERSA) announces its
decision on electricity prices on 29 June. The troubled state-owned utility
Eskom has requested a further 12% tariff rise.
Eskom needs the increase to buy electricity from independent producers, run emergency turbines and pay a potential environmental levy. Severe power outages have weakened South Africa's growth.
The South African Reserve Bank (SARB) inflation forecasts do not include the larger Eskom tariff request, and already suggest a narrow inflation-target breach in 2016. If Eskom's request is granted, inflation may rise 0.5ppt more over 2016.
"We think the NERSA decision and the rand exchange rate will determine whether the SARB raises interest rates 25bps of 50bps at its July MPC meeting", says Standard Chartered.
Eskom needs the increase to buy electricity from independent producers, run emergency turbines and pay a potential environmental levy. Severe power outages have weakened South Africa's growth.
The South African Reserve Bank (SARB) inflation forecasts do not include the larger Eskom tariff request, and already suggest a narrow inflation-target breach in 2016. If Eskom's request is granted, inflation may rise 0.5ppt more over 2016.
"We think the NERSA decision and the rand exchange rate will determine whether the SARB raises interest rates 25bps of 50bps at its July MPC meeting", says Standard Chartered.
26 June 2015, 00:36
RBNZ: DEVELOPING STRESS TESTING FRAMEWORK FOR NZ BANKING SYSTEM
26 June 2015, 00:36
26 June 2015, 00:36
RBNZ STATEMENT OF INTENT SAYS BANK TO EXPLORE MACRO-PRUDENTIAL OPTIONS FOR
HOUSING
26 June 2015, 00:24
Japan will release May retail sales and industrial production (IP) data on 29
June. Retail sales are expected to have increased 1.2% m/m on a seasonally
adjusted (SA) basis, versus 0.3% in April.
Increasing tourism likely continued to support retail sales, while household spending likely picked up more slowly given slower-than-expected wage growth. IP likely increased 0.5% m/m (SA), versus 1.0% in April.
Recently export volatility may have slowed the pace of IP growth somewhat, but business investment and production are expected to strengthen in H2-2015 on improving domestic and external demand.
Increasing tourism likely continued to support retail sales, while household spending likely picked up more slowly given slower-than-expected wage growth. IP likely increased 0.5% m/m (SA), versus 1.0% in April.
Recently export volatility may have slowed the pace of IP growth somewhat, but business investment and production are expected to strengthen in H2-2015 on improving domestic and external demand.
26 June 2015, 00:13
The Eurogroup meeting on 25 June ended with no agreement on Greece; it looks
increasingly likely that the negotiations will go down to the wire, with further
talks likely over the weekend.
30 June is the final deadline for a concrete deal between Greece and the institutions when the current bailout programme ends. It is also the deadline for Greece to pay back EUR 1.5bn to the IMF without entering into arrears. By then, Greece's Prime Minister Tsipras and the euro-area/IMF creditors must have signed a deal, and the Greek parliament must have voted in favour.
Any agreement could extend the current bailout programme by six to nine months and would keep in play EUR 18bn of undisbursed funds. In the absence of a deal, the chance of capital controls being imposed as early as next week in Greece would rise sharply.
30 June is the final deadline for a concrete deal between Greece and the institutions when the current bailout programme ends. It is also the deadline for Greece to pay back EUR 1.5bn to the IMF without entering into arrears. By then, Greece's Prime Minister Tsipras and the euro-area/IMF creditors must have signed a deal, and the Greek parliament must have voted in favour.
Any agreement could extend the current bailout programme by six to nine months and would keep in play EUR 18bn of undisbursed funds. In the absence of a deal, the chance of capital controls being imposed as early as next week in Greece would rise sharply.
26 June 2015, 00:03
The US growth outlook is improving. While recent manufacturing surveys have
been mixed, the ISM manufacturing index is seen edging up to 53.5 from 52.8,
offering tentative signs that the sector is slowly turning a corner after a
difficult H1.
The coming week is also important for labour-market data. Non-farm payrolls (NFPs) are seen decelerating to 235,000 from 280,000 in May, but at this level they would still indicate a healthy labour market.
"We expect the unemployment rate to drop further to 5.3%",said Standard Chartered in a report on Friday.
The focus is likely to be on average earnings data after Chair Janet Yellen sounded unconvinced by the tentative signs of stronger wage growth and said at the last FOMC meeting that wage growth was still 'subdued'. This data will be key going into the 15 July semi-annual congressional testimony. Note that NFPs will be released on Thursday, not Friday.
The coming week is also important for labour-market data. Non-farm payrolls (NFPs) are seen decelerating to 235,000 from 280,000 in May, but at this level they would still indicate a healthy labour market.
"We expect the unemployment rate to drop further to 5.3%",said Standard Chartered in a report on Friday.
The focus is likely to be on average earnings data after Chair Janet Yellen sounded unconvinced by the tentative signs of stronger wage growth and said at the last FOMC meeting that wage growth was still 'subdued'. This data will be key going into the 15 July semi-annual congressional testimony. Note that NFPs will be released on Thursday, not Friday.
25 June 2015, 23:51
Westpac Research notes:
Australian 3yr government bond (futures) yields fell from 2.13% to 2.08%, while the 10yr fell from 3.15% to 3.09%.
Australian 3yr government bond (futures) yields fell from 2.13% to 2.08%, while the 10yr fell from 3.15% to 3.09%.
25 June 2015, 23:51
Westpac Research notes:
US 10yr treasury yields initially rose from 2.38% to 2.42%, US personal consumption data stronger than expected, but the Greek stalemate helped a retreat during the NY afternoon to 2.39% currently. A 7yr auction went well, awarded at 1bp below market yield.
US 10yr treasury yields initially rose from 2.38% to 2.42%, US personal consumption data stronger than expected, but the Greek stalemate helped a retreat during the NY afternoon to 2.39% currently. A 7yr auction went well, awarded at 1bp below market yield.
25 June 2015, 23:49
Westpac Research notes:
AUD/NZD 1 day: Expecting an 1.1150-1,1220 range today.
AUD/NZD 1-3 month: The RBA will probably remain on hold (albeit with easing risk), while the RBNZ is currently in easing mode. Expected RBA vs RBNZ direction thus favours AUD/NZD over the medium term. 1.1300 is now in sight, 1.1580 the next major target beyond that.
AUD/NZD 1 day: Expecting an 1.1150-1,1220 range today.
AUD/NZD 1-3 month: The RBA will probably remain on hold (albeit with easing risk), while the RBNZ is currently in easing mode. Expected RBA vs RBNZ direction thus favours AUD/NZD over the medium term. 1.1300 is now in sight, 1.1580 the next major target beyond that.
25 June 2015, 23:48
Westpac Research notes:
NZD/USD 1 day: This minor correction targets 0.6940 today. The trade report constitutes minor event risk.
NZD/USD 1-3 month: Our immediate target is 0.6795, being the major low formed in July 2010. Below that there's 0.6560 which was a major low in May 2010. The two main factors expected to contribute to NZD/USD weakness during the next few months are RBNZ easing (the OCR falling to 2.75% or lower) and Fed tightening (FF mid-point to rise by 25bp in September).
NZD/USD 1 day: This minor correction targets 0.6940 today. The trade report constitutes minor event risk.
NZD/USD 1-3 month: Our immediate target is 0.6795, being the major low formed in July 2010. Below that there's 0.6560 which was a major low in May 2010. The two main factors expected to contribute to NZD/USD weakness during the next few months are RBNZ easing (the OCR falling to 2.75% or lower) and Fed tightening (FF mid-point to rise by 25bp in September).
25 June 2015, 23:47
Westpac Research notes:
AUD/USD 1 day: Still stuck in a 0.7700-0.7800 range.
AUD/USD 1-3 month: Eventual resumption of the strong US dollar trend should weigh on the AUD during the next few months. The next major downside target is 0.7500.
AUD/USD 1 day: Still stuck in a 0.7700-0.7800 range.
AUD/USD 1-3 month: Eventual resumption of the strong US dollar trend should weigh on the AUD during the next few months. The next major downside target is 0.7500.
25 June 2015, 23:47
Westpac Research notes:
AU swap yields 1 day: The 2yr should open around 2.17% while the 10yr should open around 3.39%.
AU swap yields 1-3 month: The 2yr is eking a sideways range of 2.05%-2.30%, while the 10yr should continue to rise with US yields and targets above 3.50%.
AU swap yields 1 day: The 2yr should open around 2.17% while the 10yr should open around 3.39%.
AU swap yields 1-3 month: The 2yr is eking a sideways range of 2.05%-2.30%, while the 10yr should continue to rise with US yields and targets above 3.50%.
25 June 2015, 23:46
Westpac Research notes:
NZ swap yields 1 day: Given the modest movements in interest rates in key markets overnight, the NZ 2yr should open unchanged at 3.10% while the 10yr should open up 1bp at 3.97%.
NZ swap yields 1-3 month: Short maturity NZ interest rates should fall further during the next few months. The RBNZ has started a fresh easing phase, which should be worth 75bp in total, and possibly 100bp. We target a low in the 2yr of 2.90% (an OCR of 2.75% plus 15bp risk premium). The 10yr yield will continue to be hostage to expectations of Fed policy, but assuming normalisation starts in September, we target at least 4.30%.
NZ swap yields 1 day: Given the modest movements in interest rates in key markets overnight, the NZ 2yr should open unchanged at 3.10% while the 10yr should open up 1bp at 3.97%.
NZ swap yields 1-3 month: Short maturity NZ interest rates should fall further during the next few months. The RBNZ has started a fresh easing phase, which should be worth 75bp in total, and possibly 100bp. We target a low in the 2yr of 2.90% (an OCR of 2.75% plus 15bp risk premium). The 10yr yield will continue to be hostage to expectations of Fed policy, but assuming normalisation starts in September, we target at least 4.30%.
25 June 2015, 23:44
The data out of Japan should show improvement, with positive growth prints
for both industrial production and retail sales.
At the same time, the Q2 BoJ Tankan survey is likely to indicate growing optimism on the part of large manufacturers, driven by still-low energy prices and improving operational profits.
"We expect to see some recovery in non-manufacturing sectors thanks to booming tourism, which bodes well for local service sectors.",says Standard Chartered.
At the same time, the Q2 BoJ Tankan survey is likely to indicate growing optimism on the part of large manufacturers, driven by still-low energy prices and improving operational profits.
"We expect to see some recovery in non-manufacturing sectors thanks to booming tourism, which bodes well for local service sectors.",says Standard Chartered.
25 June 2015, 23:41
Over the coming weeks we should get more tangible signs of a global growth
pick-up as China begins to show signs of stabilisation and the US economy
accelerates.
Recent measures by China's authorities, such as scrapping the 75% loan-to-deposit ratio cap and resuming liquidity injections via the 7-day reverse repo rate, will likely support liquidity and encourage bank lending over the coming quarters. We are also beginning to see the impact of previous easing as growth indicators stabilise.
"We think the official manufacturing PMI due to be released on 1 July inched up to 50.3 in June from 50.2 in May",said Standard Chartered in a report on Friday.
Recent measures by China's authorities, such as scrapping the 75% loan-to-deposit ratio cap and resuming liquidity injections via the 7-day reverse repo rate, will likely support liquidity and encourage bank lending over the coming quarters. We are also beginning to see the impact of previous easing as growth indicators stabilise.
"We think the official manufacturing PMI due to be released on 1 July inched up to 50.3 in June from 50.2 in May",said Standard Chartered in a report on Friday.
25 June 2015, 23:31
FED HOLDINGS OF AGENCY MORTGAGE-BACKED SECURITIES $1.746 TRLN JUNE 24 VS
$1.741 TRLN PREVIOUS WEEK
25 June 2015, 23:31
FED HOLDINGS OF AGENCY DEBT TOTAL $35.895 BLN JUNE 24 VS $35.895 BLN IN
PREVIOUS WEEK
25 June 2015, 23:31
FED DISCOUNT PRIMARY BORROWING AVG $23 MLN/DAY IN JUNE 24 WEEK VS $14 MLN/DAY
IN PREVIOUS WEEK
25 June 2015, 23:31
FED HOLDINGS OF TREASURIES TOTAL $2.461 TRLN JUNE 24 VS $2.461 TRLN PREVIOUS
WEEK
25 June 2015, 23:31
U.S. FED BALANCE SHEET LIABILITIES $4.457 TRLN JUNE 24 VS $4.450 TRLN
PREVIOUS WEEK - FED
25 June 2015, 23:31
FOREIGN CENBANK HOLDINGS OF US AGENCY DEBT ROSE $2.111 BLN TO $299.313 BLN IN
JUNE 24 WEEK - FED
25 June 2015, 23:30
FOREIGN CENBANK HOLDINGS OF US TREASURIES FELL $2.234 BLN TO $3.021 TRLN IN
JUNE 24 WEEK - FED
25 June 2015, 23:30
FOREIGN CENTRAL BANK U.S. DEBT HOLDINGS ROSE $487 MLN TO $3.366 TRLN IN JUNE
24 WEEK - FED
25 June 2015, 23:27
EUROPEAN PARLIAMENT HEAD MARTIN SCHULZ TELLS GERMAN TV HE DOES NOT EXPECT
GREECE TO LEAVE EURO ZONE, SAYS ALL SHOULD DONE TO AVOID THAT
25 June 2015, 23:20
Market Roundup
USD/JPY: Positive US data, including a surprise rise in consumer spending and better-than-expected initial jobless claims failed to lift USD. Yen also lacked strength and USD/JPY was confined to a phase of consolidation. USD/JPY extended its pullback from yesterday's peak of 124.36 and bottomed out at 123.30, but overall remains steady within its daily range. Currently the pair is trading at 123.50, down 0.26% on the day. On the downside, immediate supports are seen at 123.30 (Jun 25 low), 123.00 (psychological level) and 122.55 (Jun 22 low). On the flipside resistances line up at 123.95 (Jun 25 high), 124.36 (Jun 23 high) and 124.44 (Jun 17 high). Option expiries for Friday 26 June: 122.25 (560M), 123.50 (215M), 124.00 (835M), 124.50 (369M)
EUR/USD treading water, unmotivated around the 1.1200 handle. Eurogroup meeting to resume Saturday after today's failure to clinch a deal between Greek authorities and the EU institutions. Currently the pair is losing 0.04% at 1.1201 with the next resistance at 1.1229 (high Jun 25) followed by 1.1288 (Tenkan Sen) and then 1.1292 (low Jun 19). Supports on the downside are at 1.1154 (low Jun 24), 1.1135 (low Jun 23) and finally 1.1087 (low Jun 8). Option expiries for Friday 26 June: 1.1100 (360M), 1.1200 (339M), 1.1250-55 (550M), 1.13 (705M)
AUD/USD has been better bid from the 0.7700 level of yesterday's business and continues with a bullish bias. Greece headlines are making less of a market impact and relieves the Aussie that could be otherwise subject to risk-off outflows. AUD/USD is currently trading at 0.7749 with high of 0.7753 and a low of 0.7695. Immedate resistances are at 0.7758 and then 0.7778, while on the downside supports are located at 0.7648, 0.7629 and 0.7610. Option expiries for Friday 26 June: 0.7700 (307M), 0.7730 (260M), 0.7750 (268M), 0.7800 (1BLN)
USD/MXN: The Mexican Peso fell to the lowest level in two weeks against the US dollar. USD/MXN today after rebounding at 15.445, rose above the 15.50 handle peaking at 15.515. Currently the pair is consolidating above the 15.450 zone that now is the immediate relevant support. The pair still holds a bullish tone in the long-term.
USD/CAD: US Dollar is posting its first daily lost in the last five days against the Canadian Dollar. The pair fell 60 pips in the last two hours, and is trading now at 1.2315. Since Wednesday's high of 1.2420, the USD/CAD has fallen around 200 pips to actual levels. On the downside USD/CAD will find supports at 1.2290, 1.2270 and 1.2240. To the upside, resistances are at 1.2360, 1.2400 and 1.2420. Option expiries for Friday 26 June: 1.2300 (331M)
GBP/CHF on track to end at the highest in three months, above 1.4700. At the time of writing the pair trades at 1.4720/25, more than 50 pips above the level it had yesterday. GBP/CHF climbed from 1.14650 to 1.4790 but then pulled back and dropped finding support at 1.4710/20. Immediate resistance lies at 1.4760/65 (June 23 high) and then 1.4800. On the opposite direction, support levels could be located at 1.4710 and then 1.4660 and 1.4630 (daily low).
- US Personal Spending Real MM May 0.6%, 0%-prev
- US Continued Jobless Claims w/e 2.247m, f/c 2.215m, 2.225m-prev
- US Markit Comp Flash PMI Jun 54.6, 56-prev
- BR Unemployment Rate May 6.7%, f/c 6.6%, 6.4%-prev, adds to Brazilian woes
- Greek creditor's top-level talk to resume on Saturday
- BUBA's Weidmann Eurosystem must not provide bridge financing to Greece even in anticipation of later disbursements
- Germany's Merkel says Greek deal needed before markets open Monday (sources)
- Spain's Rajoy says Spain willing to be flexible but Greece must respect its commitments
- IMF spokesman asked about Greece's Jun 30 pmt says does not extend deadlines as a matter of policy
- Germany's Roth says Germany willing to discuss UK proposals for EU reform constructively
- Hungary rates likely to be cut at next meeting if conditions allow, could cut interest rates one or two more times, by 15-30 basis points - board member
- (1845 ET/ 2245 GMT) NewZealand Trade - Imports May (consensus 4.29b, previous 4.04b)
- (1845 ET/ 2245 GMT) NewZealand Trade Balance May (consensus -100.0m, previous 123.0m)
- (1845 ET/ 2245 GMT) NewZealand Trade Balance YY May (consensus -2.90b, previous -2.62b)
- (1845 ET/ 2245 GMT) NewZealand Trade - Exports May (consensus 4.27b, previous 4.17b)
- (1930 ET/ 2330 GMT) Japan All Household Spding YY May (consensus 3.4%, previous -1.3%)
- (1930 ET/ 2330 GMT) Japan All Hhold Spending MM May (consensus 2.2%, previous -5.5%)
- (1930 ET/ 2330 GMT) Japan CPI, Core Nationwide YY May (consensus 0%, previous 0.3%)
- (1930 ET/ 2330 GMT) Japan CPI, Overall Nationwide May (previous 0.6%)
- (1930 ET/ 2330 GMT) Japan CPI Core Tokyo YY Jun (consensus 0.1%, previous 0.2%)
- (1930 ET/ 2330 GMT) Japan CPI, Overall Tokyo Jun (previous 0.5%)
- (1930 ET/ 2330 GMT) Japan Jobs/Applicants Ratio May (consensus 1.17, previous 1.17)
- (1930 ET/ 2330 GMT) Japan Unemployment Rate May (consensus 3.3%, previous 3.3%)
- No Significant Events
USD/JPY: Positive US data, including a surprise rise in consumer spending and better-than-expected initial jobless claims failed to lift USD. Yen also lacked strength and USD/JPY was confined to a phase of consolidation. USD/JPY extended its pullback from yesterday's peak of 124.36 and bottomed out at 123.30, but overall remains steady within its daily range. Currently the pair is trading at 123.50, down 0.26% on the day. On the downside, immediate supports are seen at 123.30 (Jun 25 low), 123.00 (psychological level) and 122.55 (Jun 22 low). On the flipside resistances line up at 123.95 (Jun 25 high), 124.36 (Jun 23 high) and 124.44 (Jun 17 high). Option expiries for Friday 26 June: 122.25 (560M), 123.50 (215M), 124.00 (835M), 124.50 (369M)
EUR/USD treading water, unmotivated around the 1.1200 handle. Eurogroup meeting to resume Saturday after today's failure to clinch a deal between Greek authorities and the EU institutions. Currently the pair is losing 0.04% at 1.1201 with the next resistance at 1.1229 (high Jun 25) followed by 1.1288 (Tenkan Sen) and then 1.1292 (low Jun 19). Supports on the downside are at 1.1154 (low Jun 24), 1.1135 (low Jun 23) and finally 1.1087 (low Jun 8). Option expiries for Friday 26 June: 1.1100 (360M), 1.1200 (339M), 1.1250-55 (550M), 1.13 (705M)
AUD/USD has been better bid from the 0.7700 level of yesterday's business and continues with a bullish bias. Greece headlines are making less of a market impact and relieves the Aussie that could be otherwise subject to risk-off outflows. AUD/USD is currently trading at 0.7749 with high of 0.7753 and a low of 0.7695. Immedate resistances are at 0.7758 and then 0.7778, while on the downside supports are located at 0.7648, 0.7629 and 0.7610. Option expiries for Friday 26 June: 0.7700 (307M), 0.7730 (260M), 0.7750 (268M), 0.7800 (1BLN)
USD/MXN: The Mexican Peso fell to the lowest level in two weeks against the US dollar. USD/MXN today after rebounding at 15.445, rose above the 15.50 handle peaking at 15.515. Currently the pair is consolidating above the 15.450 zone that now is the immediate relevant support. The pair still holds a bullish tone in the long-term.
USD/CAD: US Dollar is posting its first daily lost in the last five days against the Canadian Dollar. The pair fell 60 pips in the last two hours, and is trading now at 1.2315. Since Wednesday's high of 1.2420, the USD/CAD has fallen around 200 pips to actual levels. On the downside USD/CAD will find supports at 1.2290, 1.2270 and 1.2240. To the upside, resistances are at 1.2360, 1.2400 and 1.2420. Option expiries for Friday 26 June: 1.2300 (331M)
GBP/CHF on track to end at the highest in three months, above 1.4700. At the time of writing the pair trades at 1.4720/25, more than 50 pips above the level it had yesterday. GBP/CHF climbed from 1.14650 to 1.4790 but then pulled back and dropped finding support at 1.4710/20. Immediate resistance lies at 1.4760/65 (June 23 high) and then 1.4800. On the opposite direction, support levels could be located at 1.4710 and then 1.4660 and 1.4630 (daily low).
25 June 2015, 23:10
BRAZIL'S SAINTIVE SAYS GOV'T HAS NO EXPECTATIONS THAT STATE-CONTROLLED
PETROBRAS PAYS DIVIDEND IN 2015
25 June 2015, 23:03
BRAZIL'S BENCHMARK BOVESPA INDEX PROVISIONALLY CLOSES 1.00 PCT DOWN AT
53,302.54 POINTS
25 June 2015, 23:03
CANADA'S S&P/TSX COMP INDEX PROVISIONALLY CLOSES 0.50 PCT DOWN AT
14,872.42 POINTS
25 June 2015, 23:00
NY FEDERAL RESERVE SAYS FOREX SWAPS WITH THE ECB TOTALED $115 MLN IN LATEST
WEEK
25 June 2015, 23:00
NY FEDERAL RESERVE SAYS FOREX SWAPS WITH FOREIGN CENTRAL BANKS TOTALED $115
MLN IN LATEST WEEK
25 June 2015, 23:00
NASDAQ UNOFFICIALLY CLOSES DOWN 9.12 POINTS, OR 0.18 PERCENT, AT 5,113.29
25 June 2015, 23:00
S&P 500 UNOFFICIALLY CLOSES DOWN 5.91 POINTS, OR 0.28 PERCENT, AT
2,102.67
25 June 2015, 23:00
DOW JONES UNOFFICIALLY CLOSES DOWN 71.74 POINTS, OR 0.40 PERCENT, AT
17,894.33
25 June 2015, 22:10
ARGENTINA SAYS MAY INDUSTRIAL OUTPUT 0.2 PCT M/M
25 June 2015, 22:08
ARGENTINA MAY INDUSTRIAL OUTPUT NSA* INCREASE TO -0.9 % (FCAST -1.0 %) VS
PREV -1.5 %
25 June 2015, 21:50
BRENT CRUDE FUTURES SETTLE AT $63.20/BBL, DOWN 29 CENTS, 0.46 PCT
25 June 2015, 21:46
The recent recovery in oil prices, January's rate cut and a weaker exchange
rate have given the BoC some breathing room to evaluate the longer-term effects
of the 2014 oil price decline.
"We think the BoC will remain on the sidelines, and we welcome a weaker currency as a reflationary tool. We forecast the USDCAD to rise toward 1.31 by Q2 16, reflecting broad USD moves." estimates Barclays Capital
"We think the BoC will remain on the sidelines, and we welcome a weaker currency as a reflationary tool. We forecast the USDCAD to rise toward 1.31 by Q2 16, reflecting broad USD moves." estimates Barclays Capital
25 June 2015, 21:31
PERU CENBANK SELLS $10 MLN, SOL GAINS 0.09 PCT TO END BIDDING 3.169 PER
DOLLAR
25 June 2015, 21:21
The asset quality of Brazilian banks broadly deteriorated over the first
quarter of 2015, yet many of the country's banks, particularly the larger
private banks, demonstrated profit resilience, says Fitch Ratings. Asset quality
deterioration was in line with Fitch's expectations outlined in March. In
general, Brazil's small and midsize banks were outperformed by their larger
peers.
Across the 21 banks covered in Fitch's report published today, loan loss provisions rose 34%, while first-quarter annual loan growth slowed to 12.9%, down from 15.8% on a year-over-year basis. These growth rates exceeded the accumulated inflation rate of 8.1% in the 12-month period ending March 2015.
The pressures on Brazilian banks' net interest margins are partially offset by the yields on Brazilian government debt (Issuer Default Rating BBB/Rating Outlook Negative), which comprises an average of about 30% of these banks total earning assets. Brazil's SELIC rate stands at 13.75%, up 300 bps from the end of first-quarter 2014.
The diversified product base of Brazil's largest private banks Bradesco, Itau, Santander, Safra and BTG helped these firms remain resilient in the first quarter. These banks have been able to limit the impacts of asset quality pressures on returns through insurance and other fee-based services. Impaired loans for the large private group averaged 8.0% at the end of the first quarter, versus 7.9% at the end of 2014. Credit costs rose 22% year over year, almost twice their average annual credit growth of 10.1%, excluding BTG, whose credit costs were 2.6 times higher year over year due to the deterioration of a few corporate exposures. ROAA for the large private group was 1.5% in the first quarter, while average ROAE was 18.6%, about flat versus the same quarter one year ago.
Brazilian government-owned banks, which include Banco do Brasil (BB) and other state-owned banks (Banese, Banrisul, Banestes and BRB) posted the largest drop in first-quarter 2015 results. The results were in line with Fitch's expectation that their asset quality metrics would be more vulnerable to weakness due to their strong loan growth over the last two years. Average ROAA for this group of banks decreased to 0.9% at the end of the first quarter from 1.1% a year ago. ROAE for the group was 14.0%, down from 15.1% a year ago. Credit costs for public-owned banks were roughly 56% higher than observed in first-quarter 2014, reflecting pushes into more unsecured and riskier loans.
Small and midsize banks reported an average ROAA of 0.7%. Indusval and Pan reported net losses and Pine reported negative operating results mainly due to higher costs of credit. On the other hand, investment-grade rated banks, including ABC and Daycoval, continued to perform relatively better than their peers with below investment-grade viability ratings (VRs), including banks with national ratings equal or below 'AA-(bra)'.
Fitch's outlook on the Brazilian banking sector remains negative based on expectations for Brazil's economy to underperform due to high inflation, weak GDP growth, sovereign fiscal challenges and the weak real.
Across the 21 banks covered in Fitch's report published today, loan loss provisions rose 34%, while first-quarter annual loan growth slowed to 12.9%, down from 15.8% on a year-over-year basis. These growth rates exceeded the accumulated inflation rate of 8.1% in the 12-month period ending March 2015.
The pressures on Brazilian banks' net interest margins are partially offset by the yields on Brazilian government debt (Issuer Default Rating BBB/Rating Outlook Negative), which comprises an average of about 30% of these banks total earning assets. Brazil's SELIC rate stands at 13.75%, up 300 bps from the end of first-quarter 2014.
The diversified product base of Brazil's largest private banks Bradesco, Itau, Santander, Safra and BTG helped these firms remain resilient in the first quarter. These banks have been able to limit the impacts of asset quality pressures on returns through insurance and other fee-based services. Impaired loans for the large private group averaged 8.0% at the end of the first quarter, versus 7.9% at the end of 2014. Credit costs rose 22% year over year, almost twice their average annual credit growth of 10.1%, excluding BTG, whose credit costs were 2.6 times higher year over year due to the deterioration of a few corporate exposures. ROAA for the large private group was 1.5% in the first quarter, while average ROAE was 18.6%, about flat versus the same quarter one year ago.
Brazilian government-owned banks, which include Banco do Brasil (BB) and other state-owned banks (Banese, Banrisul, Banestes and BRB) posted the largest drop in first-quarter 2015 results. The results were in line with Fitch's expectation that their asset quality metrics would be more vulnerable to weakness due to their strong loan growth over the last two years. Average ROAA for this group of banks decreased to 0.9% at the end of the first quarter from 1.1% a year ago. ROAE for the group was 14.0%, down from 15.1% a year ago. Credit costs for public-owned banks were roughly 56% higher than observed in first-quarter 2014, reflecting pushes into more unsecured and riskier loans.
Small and midsize banks reported an average ROAA of 0.7%. Indusval and Pan reported net losses and Pine reported negative operating results mainly due to higher costs of credit. On the other hand, investment-grade rated banks, including ABC and Daycoval, continued to perform relatively better than their peers with below investment-grade viability ratings (VRs), including banks with national ratings equal or below 'AA-(bra)'.
Fitch's outlook on the Brazilian banking sector remains negative based on expectations for Brazil's economy to underperform due to high inflation, weak GDP growth, sovereign fiscal challenges and the weak real.
25 June 2015, 21:02
U.S. FED'S MORTGAGE-BACKED SECURITIES SALES WERE $0 BILLION FROM JUN. 18-JUN.
24-NY FED
25 June 2015, 21:02
U.S. FED’S GROSS MORTGAGE-BACKED SECURITIES PURCHASES TOTAL $8.418 BILLION
FROM JUN. 18-JUN. 24-NY FED
25 June 2015, 20:57
Standard Chartered notes:
Market still has to adjust to the coming H2-2015 tightening cycle: 2Y-5Y sector to be most sensitive.
10Y UST rate likely to be range-bound in coming months; our year-end 2015 forecast is 2.30%
Likely slow tightening, low rates plateau, subdued inflation to contain upside risks for long-term yields
Market still has to adjust to the coming H2-2015 tightening cycle: 2Y-5Y sector to be most sensitive.
10Y UST rate likely to be range-bound in coming months; our year-end 2015 forecast is 2.30%
Likely slow tightening, low rates plateau, subdued inflation to contain upside risks for long-term yields
25 June 2015, 20:44
EU LEADERS END ABOUT 2 HOURS OF DISCUSSION ON GREECE, STRESS NEGOTIATIONS
MUST BE RUN BY FINANCE MINISTERS -EU OFFICIAL
25 June 2015, 20:43
U.S. TREASURIES NARROW LOSSES, WITH 7-YEAR PRICES NEAR BREAK EVEN AFTER
7-YEAR AUCTION AND LAST YIELDING 2.1136 PERCENT
25 June 2015, 20:37
Whether liftoff is in September or December, the onset of the Fed's hiking
cycle is approaching. This has brought EM vulnerabilities into sharper
focus.
Countries' resilience to external risks has changed since the 2013 taper tantrum. BofA Merrill Lynch finds Brazil, Chile, and Colombia have become more vulnerable, while India, Hungary, and Poland have become less so.
BofA Merrill Lynch says vulnerability indices for the other members of the Fragile Five, Turkey, Indonesia and South Africa, have remained stable. However, Turkey and South Africa remain among the most vulnerable, while Indonesia appears more resilient to external risks.
"We see some signs of stabilization and maintain our 2015 EM GDP growth forecast at 4.2%, but revise Brazil lower. We see value in front-end receivers in Colombia, Mexico, Korea and Hungary. In FX, we like HUF and are short CNY, KRW and BRL." says BofA Merrill Lynch
Countries' resilience to external risks has changed since the 2013 taper tantrum. BofA Merrill Lynch finds Brazil, Chile, and Colombia have become more vulnerable, while India, Hungary, and Poland have become less so.
BofA Merrill Lynch says vulnerability indices for the other members of the Fragile Five, Turkey, Indonesia and South Africa, have remained stable. However, Turkey and South Africa remain among the most vulnerable, while Indonesia appears more resilient to external risks.
"We see some signs of stabilization and maintain our 2015 EM GDP growth forecast at 4.2%, but revise Brazil lower. We see value in front-end receivers in Colombia, Mexico, Korea and Hungary. In FX, we like HUF and are short CNY, KRW and BRL." says BofA Merrill Lynch
25 June 2015, 20:35
OBAMA CALLS TRADE BILLS A "WIN" FOR WORKERS, SAYS WILL ENCOURAGE CONGRESS TO
PASS "ROBUST" TRADE ENFORCEMENT LEGISLATION - WHITE HOUSE
UK GOVERNMENT SOURCE SAYS THERE WILL NEED TO BE AGREEMENT ON TREATY CHANGE BY
TIME OF REFERENDUM
25 June 2015, 20:09
UK GOVERNMENT SOURCE SAYS REFORMS THAT BRITAIN SEEKS FROM EU WILL REQUIRE
AGREEMENT ON TREATY CHANGE RATHER THAN COMPLETED TREATY CHANGE
25 June 2015, 20:09
UK GOVERNMENT SOURCE SAYS REFORMS THAT BRITAIN SEEKS FROM EU WILL REQUIRE
AGREEMENT ON TREATY CHANGE RATHER THAN COMPLETED TREATY CHANGE