Posts
NEWS
29 June 2015, 17:04
CHINA'S LI SAYS CHINA, EU HAVE EXPRESSED GREAT WILL TO TACKLE CLIMATE CHANGE,
WILL SOON MAKE JOINT ANNOUNCEMENT, WILL STEP UP COOPERATION
29 June 2015, 17:04
U.S. FED AWARDS $100 BLN 2-DAY REVERSE REPOS AT INTEREST RATE OF 0.07 PCT TO
72 BIDDERS - N.Y. FED
29 June 2015, 17:03
BOE'S HALDANE - STERLING STRENGTH SINCE MAY LIKELY TO CUT GROWTH AND
INFLATION RATES BY 0.2 PERCENTAGE POINTS OVER TWO YEARS
29 June 2015, 17:02
BOE'S HALDANE - CONFIDENT UK WAGES "ARE NOT ABOUT TO EMBARK ON A
ROCKET-PROPELLED ASCENT"
29 June 2015, 17:03
BOE'S HALDANE - STERLING STRENGTH SINCE MAY LIKELY TO CUT GROWTH AND
INFLATION RATES BY 0.2 PERCENTAGE POINTS OVER TWO YEARS
29 June 2015, 17:02
BOE'S HALDANE - CONFIDENT UK WAGES "ARE NOT ABOUT TO EMBARK ON A
ROCKET-PROPELLED ASCENT"
29 June 2015, 17:01
BOE'S HALDANE - ODDS ARE AGAINST BOE HAVING ENOUGH ROOM TO CUT RATES WHEN
NEXT RECESSION COMES, BASED ON MARKET RATE EXPECTATIONS
29 June 2015, 17:01
BOE'S HALDANE - PSYCHOLOGICAL SCARS OF GREAT RECESSION PROVING "LASTING AND
DURABLE
29 June 2015, 17:01
BOE'S HALDANE - UK RATE RISE, HOWEVER MODEST, WOULD BE SEEN AS "BAD NEWS" BY
UK HOUSEHOLDS AND FIRMS
29 June 2015, 17:00
BOE'S HALDANE - CURRENT UK RATES APPROPRIATE, I HAVE NO BIAS ON WHETHER RATES
WILL RISE OR FALL NEXT
29 June 2015, 17:00
BANK OF ENGLAND'S HALDANE - "EARLY LIFT-OFF" FOR BOE RATES COULD BE
SELF-DEFEATING
29 June 2015, 17:00
UNITED STATES MAY PENDING SALES CHANGE MM DECREASE TO +0.9 % (FCAST 1.2 %) VS
PREV 3.4 %
29 June 2015, 17:00
UNITED STATES MAY PENDING HOMES INDEX INCREASE TO 112.6 VS PREV 112.4
29 June 2015, 16:59
CHINA'S LI SAYS HOPES CHINA-EU TRADE CAN REACH 1 TRILLION US DOLLARS IN 2020
29 June 2015, 16:58
CHINA'S LI SAYS CHINA HAS AMPLE FOREIGN EXCHANGE RESERVES, WILLING TO
INCREASE PURCHASE OF EIB BONDS, SET UP JOINT-INFRASTRUCTURE PLAN WITH EU
29 June 2015, 16:56
CHINA'S LI SAYS WILL DISCUSS TODAY HOW CHINA CAN PARTICIPATE IN THE EU
INFRASTRUCTURE FUND
29 June 2015, 16:55
CHINA'S LI SAYS IS WILLING TO MAKE A INVESTMENTS IN EU'S JUNCKER FUND
29 June 2015, 16:47
ECB SAYS SECOND COVERED BOND PURCHASE PROGRAMME TOTAL NOW 10.786 BLN EUROS
29 June 2015, 16:46
ECB SAYS FIRST COVERED BOND PURCHASE PROGRAMME TOTAL NOW 23.245 BLN EUROS
29 June 2015, 16:46
CHINA'S LI SAYS SAYS WANTS TO SEE GREECE STAYING IN THE EURO ZONE, URGES
CREDITORS TO REACH A DEAL WITH ATHENS
29 June 2015, 16:46
ECB SAYS FIRST COVERED BOND PURCHASE PROGRAMME TOTAL NOW 23.245 BLN EUROS
29 June 2015, 16:45
ECB BOUGHT 309 MLN EUROS OF ASSETS IN ASSET-BACKED SECURITIES PURCHASE
PROGRAMME IN WEEK TO JUNE 26 VS 137 MLN EUROS WEEK EARLIER
29 June 2015, 16:42
ECB CALLS FOR BIDS IN 7-DAY OPERATION FIXED RATE OF 0.05 PCT
29 June 2015, 16:41
ECB CALLS FOR BIDS IN 7-DAY OPERATION FIXED RATE OF 0.05 PCT
29 June 2015, 16:40
ECB CALLS FOR BIDS IN 7-DAY OPERATION FIXED RATE OF 0.05 PCTECB16
29 June 2015, 16:39
GERMANY'S MERKEL SAYS NO LEGAL BASIS FOR INTERIM FINANCING OF GREECE AFTER
BAILOUT PROGRAMME RUNS OUT
29 June 2015, 16:37
GERMANY'S MERKEL SAYS SCHAEUBLE HAS MADE CLEAR THERE IS NO REASON TO WORRY
ABOUT FINANCIAL IMPACT OF GREEK DEFAULT
29 June 2015, 16:36
DOW JONES DOWN 86.08 POINTS, OR 0.48 PERCENT, AT 17,860.60 AFTER MARKET OPEN
29 June 2015, 16:35
U.S. STOCKS EXTEND FALL, NASDAQ DOWN 1.17 PCT
29 June 2015, 16:33
U.S. TREASURIES PRICES FALL TO SESSION LOWS AFTER WALL STREET OPENS, 10-YEAR
YIELD LAST 2.387 PCT
29 June 2015, 16:32
GERMANY'S MERKEL SAYS NO PRESSING NEED TO HOLD ANOTHER SUMMIT ON GREECE, IF
SITUATION CHANGES AFTER REFERENDUM CAN CONSIDER IT
29 June 2015, 16:32
GERMANY'S MERKEL SAYS NO ONE SHOULD TRY TO INFLUENCE OUTCOME OF GREEK
REFERENDUM
29 June 2015, 16:32
U.S. STOCKS EXTEND FALL, NASDAQ DOWN 1..SPX
29 June 2015, 16:31
DOW JONES DOWN 86.08 POINTS, OR 0.48 PERCENT, AT 17,860.60 AFTER
MARKET.IXIC.SPX
29 June 2015, 16:31
S&P 500 DOWN 13.81 POINTS, OR 0.66 PERCENT, AT 2,087.68 AFTER MARKET OPEN
29 June 2015, 16:30
NASDAQ DOWN 61.14 POINTS, OR 1.20 PERCENT, AT 5,019.36 AFTER MARKET.IXIC.SPX
29 June 2015, 16:28
REMAINING EMERGENCY LIQUIDITY ASSISTANCE OF ROUGHLY 89 BLN EUROS FOR GREEK
BANKS SEEN REMAINING IN PLACE UNTIL REFERENDUM - SOURCES
29 June 2015, 16:28
ECB REJECTED GREEK REQUEST FOR 6 BILLION EUROS OF ADDITIONAL EMERGENCY
FUNDING FOR BANKS ON SUNDAY - SOURCE
29 June 2015, 16:28
Euro has gone up today, against expectation of many that today could be
another black Monday for stocks and devastating for Euro.
Euro opened sharply lower, almost 150 points down from Friday's close at 1.10 area and dropped further towards 1.095, however up sharply from there currently trading at 1.113, up almost 180 points from low.
So what might be driving Euro higher?
Several factors might be working behind Euro's move.
Key resistance to watch 1.123-1.125 and support lies around 1.08-1.085.
Euro opened sharply lower, almost 150 points down from Friday's close at 1.10 area and dropped further towards 1.095, however up sharply from there currently trading at 1.113, up almost 180 points from low.
So what might be driving Euro higher?
Several factors might be working behind Euro's move.
- Cash is king - European stocks are down heavily as investors run for safety and in turmoil like this cash is king. European investors are hoarding more cash ahead of the referendum, taking profits on positions. However this move unlikely to fuel Euro beyond a day or two.
- Demand from Greece - Greek government and especially Greek banks should be heavy buyers of liquidity as bank's are heavily short on cash as European Central Bank (ECB) froze liquidity assistance to max $99 billion, which is simply not enough.
- Demand for liquidity - Banks, investment funds are likely to keep additional buffers till the referendum next Sunday.
- Contrarian buyers - Buyers who are betting on that Greek crisis will end happily in spite of the referendum got the Euro cheap today.
- Greece is too small to tumble Euro - Many would like to buy
Euro at cheaper levels since Greece is too small an economy with smaller debt
compared to total Euro zone. So it is unlikely that jitters will last since
European Monetary Union (EMU) is better prepared now in handling the crisis
today compared to 2011/12.
- Euro, 19 nations currency bloc - European economy is
broadly improving and one Greece is not enough to stumble the return of growth
and demand for Euro.
- SNB intervention - SNB intervened in the market today in
EUR/CHF pair around 1.03 area, which is beneficial to
Euro.
- Positive comments - Positive comments from EU officials
such as Mr. Moscovici and European Union president Jean Claude Juncker has
helped Euro to gain. They both are hopeful of positive
outcomes.
- Technical gap closing - Technically speaking a gap/window generally gets closed, which has occurred so far in almost all Euro based pairs.
Key resistance to watch 1.123-1.125 and support lies around 1.08-1.085.
29 June 2015, 16:27
GERMANY'S GABRIEL SAYS IF GREEKS VOTE "NO" IN REFERENDUM, THIS IS CLEAR VOTE
AGAINST STAYING IN EURO
29 June 2015, 16:27
RPT-GREEK GOVERNMENT OFFICIAL SAYS 850 BANK BRANCHES WILL OPEN FOR THE
PAYMENT OF PENSIONS
29 June 2015, 16:27
RPT-GREEK GOVERNMENT OFFICIAL SAYS IF BANKS ARE SUPPORTED BY ELA THE DAILY
LIMIT WILL BE INCREASED
29 June 2015, 16:26
CORRECTED-GREEK GOVERNMENT OFFICIAL SAYS GREEK BANKS MAY (NOT "TO") REOPEN ON
THURSDAY, EARLIER THAN PLANNED
29 June 2015, 16:25
GERMANY'S GABRIEL SAYS EURO ZONE WOULD BE UNSTABLE IF BLOC BOWED TO GREEK
DEMANDS THAT RULES BE BENT
29 June 2015, 16:24
GERMANY'S GABRIEL SAYS GREEK GOVERNMENT WANTS TO UNILATERALLY CHANGE THE
CONDITIONS OF BEING MEMBER OF EURO ZONE
29 June 2015, 16:24
GERMAN ECONOMY MINISTER GABRIEL SAYS GREECE WANTED AID BUT WAS NOT WILLING TO
ACCEPT REFORMS NEEDED TO RECEIVE IT
29 June 2015, 16:22
GREEK GOVERNMENT OFFICIAL SAYS 850 BANK BRANCHES WILL OPEN FOR THE PAYMENT OF
PENSIONS
29 June 2015, 16:16
GERMANY'S MERKEL SAYS EUROPE IS MORE ROBUST THAN IT WAS A FEW YEARS AGO
29 June 2015, 16:15
GERMANY'S MERKEL SAYS GREECE HAS RECEIVED GENEROUS OFFER
29 June 2015, 16:04
MACEDONIA C.BANK GOVERNOR SAYS NO SERIOUS WITHDRAWALS OF DEPOSITS FROM BANKS
TODAY
29 June 2015, 16:01
SCHAEUBLE IN LETTER TO GERMAN LAWMAKERS: GREECE REMAINS IMPORTANT PARTY OF
EUROPEAN FAMILY
29 June 2015, 16:01
MACEDONIA CENTRAL BANK SAYS ITS BANKING RESTRICTION MEASURES "HAVE COMPLETELY
CLOSED DOORS TO ANY CAPITAL OUTFLOW" TO GREECE
29 June 2015, 15:58
SCHAEUBLE IN LETTER TO GERMAN LAWMAKERS: END OF GREEK AID PROGRAMME WILL HAVE
LIMITED EFFECT ON OTHER COUNTRIES
29 June 2015, 15:56
GERMAN FINANCE MINISTER SCHAEUBLE IN LETTER TO GERMAN LAWMAKERS: EVEN IF ALL
GREEK DEBT WAS WRITTEN OFF ATHENS WOULD STILL HAVE TO COME UP WITH STRATEGY FOR
BECOMING MORE COMPETITIVE
29 June 2015, 15:55
FRANCE SELLS 1.325 BLN EUROS 51-WEEK T-BILLS, MARGINAL RATE -0.165 PCT
29 June 2015, 15:55
FRANCE SELLS 1.094 BLN EUROS 21-WEEK T-BILLS, MARGINAL RATE -0.180 PCT
29 June 2015, 15:55
INDIA TO SELL BONDS VIA MULTIPLE PRICE METHOD - CBANK
29 June 2015, 15:53
USD/RUB is approximately remained stagnant or a little higher in June
following CBR rate cuts and flattish crude prices in a $63-65/bbl range. The CBR
cut its key rate 100bp to 11.5% as expected, but the more interesting comments
for the currency related to FX reserves.
New comments on FX reserves suggest that a target of $500bn may be reached at a slower pace than originally expressed (5-7years now instead of 3-5 years), which means less pressure on the currency over the long-run.
However, USD purchases have remained in the $100-200 mn range this month, which should keep the negative pressure on the RUB over the summer without a material rebound in crude oil prices.
We suggest holding our last recommendation, 3M USD call/RUB put 1x1 call spreads (55, 61) to express a modestly bearish short-term view on the ruble.
New comments on FX reserves suggest that a target of $500bn may be reached at a slower pace than originally expressed (5-7years now instead of 3-5 years), which means less pressure on the currency over the long-run.
However, USD purchases have remained in the $100-200 mn range this month, which should keep the negative pressure on the RUB over the summer without a material rebound in crude oil prices.
We suggest holding our last recommendation, 3M USD call/RUB put 1x1 call spreads (55, 61) to express a modestly bearish short-term view on the ruble.
29 June 2015, 15:31
INDIA TO SELL 30 BLN RUPEES OF 8.13 PCT 2045 BONDS -CBANK
29 June 2015, 15:30
INDIA TO SELL 30 BLN RUPEES OF 8.24 PCT 2033 BONDS -CBANK
29 June 2015, 15:30
INDIA TO SELL 30 BLN RUPEES OF 7.68 PCT 2023 BONDS -CBANK
29 June 2015, 15:30
CANADA MAY PRODUCER PRICES MM INCREASE TO 0.5 % (FCAST 0.5 %) VS PREV -0.9 %
(REVISED FROM -0.9 %)
29 June 2015, 15:30
CANADA MAY RAW MATERIALS PRICES MM INCREASE TO +4.4 % (FCAST 4.0 %) VS PREV
3.8 %
29 June 2015, 15:30
CANADA MAY RAW MATERIALS PRICES YY INCREASE TO -17.0 % VS PREV -20.9 %
29 June 2015, 15:30
CANADA MAY PRODUCER PRICES YY INCREASE TO -1.3 % (FCAST -1.8 %) VS PREV -2.4
%
29 June 2015, 15:30
CANADA MAY PRODUCER PRICES MM INCREASE TO +0.5 % (FCAST 0.5 %) VS PREV -0.9 %
29 June 2015, 15:29
INDIA TO SELL 150 BLN RUPEES OF BONDS ON JULY 3-CBANK
29 June 2015, 15:27
RBI SAYS 182-DAY TREASURY BILLS AUCTION OF 60 BLN RUPEES UNDER REGULAR
AUCTION
29 June 2015, 15:27
RBI SAYS 91-DAY TREASURY BILLS AUCTION OF 80 BLN RUPEES UNDER REGULAR AUCTION
29 June 2015, 15:16
U.S. TREASURIES YIELDS HOVER NEAR 1-WEEK LOWS ON GREECE DEBT TALKS BREAKDOWN;
10-YEAR YIELD LAST 2.364 PCT
PRICE: 1.1161 @ 11:45 GMT
On the downside minor support is around 1.1080 and any break below will drag the pair further down till 1.1050/1.100 level.
It is good to stay away from markets
29 June 2015, 15:15
- RES 4: 1.1293 (Cloud bottom)
- RES 3: 1.12350 (Jun 24th high)
- RES 2: 1.1200
- RES1 : 1.1166 (20 day 4 HMA)
PRICE: 1.1161 @ 11:45 GMT
- SUP 1: 1.1086(Kijun -Sen)
- SUP: 2.1.1780 (Jun 15th low)
- SUP 3: 1.1100
- SUP 4: 1.1042 (Jun 5th low) Commentary:
On the downside minor support is around 1.1080 and any break below will drag the pair further down till 1.1050/1.100 level.
It is good to stay away from markets
29 June 2015, 15:15
The JGB market has been relatively calm compared with the volatility in
overseas rates markets, as well as the big advances in the Nikkei (to a 15y
high) and USDJPY (to a 13y high) - the so-called Japan macro trades. This marks
a sharp contrast with Q1, when the JGB market was volatile amid stability in
other markets.
During this period, the Japan macro trades overall have broken free from policy surprises linked to Abenomics. It has been a difficult three months for the Abe administration. The PM has focused on security and diplomacy rather than economic policy. The administration's approval ratings have fallen, and expectations for further BoJ easing have been dampened amid criticism of JPY depreciation. Even so, Japanese share prices and the USDJPY have continued to rise.
Barclays states, rather than policy surprises, the market has moved in response to:
During this period, the Japan macro trades overall have broken free from policy surprises linked to Abenomics. It has been a difficult three months for the Abe administration. The PM has focused on security and diplomacy rather than economic policy. The administration's approval ratings have fallen, and expectations for further BoJ easing have been dampened amid criticism of JPY depreciation. Even so, Japanese share prices and the USDJPY have continued to rise.
Barclays states, rather than policy surprises, the market has moved in response to:
- 1) the start of an upturn in wages following the "shunto" spring wage negotiations and the firm tone of consumption based on the UTokyo/Hitotsubashi price indices
- 2) domestic investment trust flows, life insurer flows, and fund flows evident in corporate M&A activity
29 June 2015, 15:14
GREEK GOVERNMENT OFFICIAL SAYS GREEK PM ASKED JUNCKER FOR HELP IN SECURING AN
EXTENSION OF AID PROGRAMME
29 June 2015, 15:14
GREEK GOVERNMENT OFFICIAL SAYS GREEK PM SAID SHUTTING BANKS GOES AGAINST
DEMOCRACY
29 June 2015, 15:13
GREEK GOVERNMENT OFFICIAL SAYS GREEK PM HAD CALL WITH EU'S JUNCKER
29 June 2015, 15:13
TSIPRAS WAS TOLD EUROPEAN PARLIAMENT GROUPS WILL MEET TO CONSIDER GREEK
REQUEST - GOVERNMENT OFFICIAL
29 June 2015, 15:11
TSIPRAS WAS TOLD EUROPEAN PARLIAMENT GROUPS WILL MEET TO CONSIDER GREEK
REQUEST - GOVERNMENT OFFICIAL
29 June 2015, 15:11
This is a crucial week for Turkish politics, which adds to the risk off
sentiment already imposed by developments in Greece: the new parliament speaker
is set to be elected by middle of the week, and this will be followed by
President Erdogan formally asking AKP leader Davutoglu to form a coalition
government, which in turn, will kick off official coalition
negotiations.
Meanwhile latest CBT data explain constant decline in FX reserves, driven by:
Less proceeds from exporters
Constant sizeable FX auctions by CBT to fight lira volatility
In May, CBT sold $830mln via FX auctions and this amount is likely to have increased in June as the CB had to sell more FX in the aftermath of the elections.
On the export front, we also have guidance from the government that performance was dismal in June (partly because of auto strikes).
In summary, even during a good year when the current-account deficit narrowed significantly, the CB has been steadily losing reserves trying to cover for external imbalances. The developments support our view that CBT will have to tighten rates by 150bps later this year when the Fed begins to tighten.
We look ahead to increased volatility in TRY in coming months, but a calmer picture once rates have been raised - we see USD-TRY at 2.75 by end-2015.
As we pointed out last week, most EM currencies have shrugged off the Greek impasse, but escalating US rate hike fears will pose a more serious threat to high-beta EM currencies such as the ZAR, TRY, TWD & BRL.
Option Strategy Roundups:Buy 1M USD/TRY 2.6650 - 2.6909 call spreads; longs on 5M USD/TWD 30.80 - 31.40 call spread; Buy 2M USD/BRL 3.10 - 3.25 call spread; Buy 30-Sep GBP/NOK 12.7-13.2.
Meanwhile latest CBT data explain constant decline in FX reserves, driven by:
Less proceeds from exporters
Constant sizeable FX auctions by CBT to fight lira volatility
In May, CBT sold $830mln via FX auctions and this amount is likely to have increased in June as the CB had to sell more FX in the aftermath of the elections.
On the export front, we also have guidance from the government that performance was dismal in June (partly because of auto strikes).
In summary, even during a good year when the current-account deficit narrowed significantly, the CB has been steadily losing reserves trying to cover for external imbalances. The developments support our view that CBT will have to tighten rates by 150bps later this year when the Fed begins to tighten.
We look ahead to increased volatility in TRY in coming months, but a calmer picture once rates have been raised - we see USD-TRY at 2.75 by end-2015.
As we pointed out last week, most EM currencies have shrugged off the Greek impasse, but escalating US rate hike fears will pose a more serious threat to high-beta EM currencies such as the ZAR, TRY, TWD & BRL.
Option Strategy Roundups:Buy 1M USD/TRY 2.6650 - 2.6909 call spreads; longs on 5M USD/TWD 30.80 - 31.40 call spread; Buy 2M USD/BRL 3.10 - 3.25 call spread; Buy 30-Sep GBP/NOK 12.7-13.2.
29 June 2015, 15:10
GREEK PM TSIPRAS HAD CALL WITH EUROPEAN PARLIAMENT PRESIDENT TO SEEK SUPPORT
FOR GREECE'S REQUEST FOR AN EXTENSION OF BAILOUT
29 June 2015, 15:05
The silver commodity has been flowing in the downtrend since mid
May.
What could propel the prices of this precious metal is that in the event of unsteadiness in equities and fixed income instruments buying interest could be seen or even in case of weakening in the dollar.
There have been chances that the increase in the interest rates by Fed can feed fuel to rising price momentum; however, until then the price of the silver will continue to crash.
On EOD charts, RSI (14) shows divergence on falling prices, currently RSI trending at 37.2236. And in addition to that volumes don't confirm the falling prices are reasonable.
Even though %K line crossover occurred above 25 levels, oversold pressure scene can't be isolated with stochastic curve alone. We think enough confirmation for price recovery is required at these levels.
But on hedging perspectives, if traders expect further slumps in this pair we advise staying away from naked put options and deploy debit spreads instead.
More importantly, Put instruments have been trading extremely costlier when you've to compare option prices with NPVs.
Therefore, buying 7D slightly In-The-Money 0.62 delta puts with negative theta value and parallely short 7D (1%) Out-Of-The-Money put with positive theta is recommended.
The combined execution should have 0.25 delta and for net debit.
What could propel the prices of this precious metal is that in the event of unsteadiness in equities and fixed income instruments buying interest could be seen or even in case of weakening in the dollar.
There have been chances that the increase in the interest rates by Fed can feed fuel to rising price momentum; however, until then the price of the silver will continue to crash.
On EOD charts, RSI (14) shows divergence on falling prices, currently RSI trending at 37.2236. And in addition to that volumes don't confirm the falling prices are reasonable.
Even though %K line crossover occurred above 25 levels, oversold pressure scene can't be isolated with stochastic curve alone. We think enough confirmation for price recovery is required at these levels.
But on hedging perspectives, if traders expect further slumps in this pair we advise staying away from naked put options and deploy debit spreads instead.
More importantly, Put instruments have been trading extremely costlier when you've to compare option prices with NPVs.
Therefore, buying 7D slightly In-The-Money 0.62 delta puts with negative theta value and parallely short 7D (1%) Out-Of-The-Money put with positive theta is recommended.
The combined execution should have 0.25 delta and for net debit.
29 June 2015, 15:03
Since the beginning of 2015 the economic outlook in the euro area has been
improving gradually.
According to Barclays, there has not been a significant sustainable shift to qualify the recent sell-off as fundamental.
Indeed, the breakeven inflation expectations for 2016 and 2017 are far below the ECB's projections, and GDP expectations for the next two years have changed little.
Barclays observes the following factors to be prevailed in the market.
According to Barclays, there has not been a significant sustainable shift to qualify the recent sell-off as fundamental.
Indeed, the breakeven inflation expectations for 2016 and 2017 are far below the ECB's projections, and GDP expectations for the next two years have changed little.
Barclays observes the following factors to be prevailed in the market.
- 1) term premium should remain in negative territory over the coming months, helped by large bond purchases by global DM central banks (ECB, BoJ)
- 2) inflation risk remains low
- 3) Greece is unlikely to be resolved sustainable in the near term, and this issue is likely to remain a background noise
29 June 2015, 15:02
Today's North American session becomes extremely vital not only for stock
markets but especially for Euro based pairs as they have closed the gap made at
opening in Asia.
Euro-Pound -
Euro-Pound -
- Euro-pound has taken out crucial support at 0.70 mark, however hasn't moved much below. Euro found heavy bids from around 0.698 area and has closed the gap down completely. Euro-pound closed Friday at 0.7082 and today it has recovered an currently trading at 0.7079
- Bids on Yen has failed to materialize amid risk aversion. In the Asian trade Yen dropped to new recent low of 122.1 against dollar, however bids failed to materialize since then pushing yen to 122.9 against dollar. Euro is yet to close the gap against yen but recovered sharply enough. Euro-yen closed Friday at 138.3 and currently it is trading at 136.6, recovered from 133.7.
- Euro had similar move against dollar. Traded as low as 1.095 in Asian trade, however recovered sharply from there to as high as 1.114 closing the gap. Currently trading at 1.11.
29 June 2015, 15:01
SPAIN'S TREASURY SAYS TO ISSUE UP TO 4.25 BLN EUROS IN BONDS ON THURSDAY
29 June 2015, 15:00
GERMANY JUN CPI PRELIM YY DECREASE TO 0.3 % (FCAST 0.5 %) VS PREV 0.7 %
29 June 2015, 15:00
GERMANY JUN HICP PRELIM YY DECREASE TO 0.1 % (FCAST 0.4 %) VS PREV 0.7 %
29 June 2015, 15:00
GERMANY JUN HICP PRELIM MM DECREASE TO -0.2 % (FCAST 0.2 %) VS PREV 0.1 %
29 June 2015, 15:00
GERMANY JUN CPI PRELIM MM DECREASE TO -0.1 % (FCAST 0.1 %) VS PREV 0.1 %
29 June 2015, 14:58
INDEX PROVIDER MSCI SAYS ANALYSING IMPACT OF GREECE STOCK MARKET CLOSURE AND
CAPITAL CONTROLS, COULD LEAD TO RELEGATION OF GREECE TO "STANDALONE" MARKET FROM
EMERGING MARKET
29 June 2015, 14:54
NUMBER OF BRITONS CONFIRMED KILLED IN ISLAMIST GUN ATTACK IN TUNISIA LAST
WEEK HAS RISEN TO 18 AND IS EXPECTED TO INCREASE TO AROUND 30 - PM CAMERON'S
SPOKESWOMAN
29 June 2015, 14:53
BRITISH GOVERNMENT MEETING OVER GREECE TO LOOK AT IMPACT OF CRISIS ON GREEK
BANK BRANCHES AND SUBSIDIARIES IN UK, CONSULAR ISSUES - PM SPOKESWOMAN
29 June 2015, 14:53
BRITAIN'S CAMERON TO HOLD CONTINGENCY PLANNING MEETING OVER GREEK CRISIS WITH
FINANCE MINISTER AND BANK OF ENGLAND GOVERNOR - PM SPOKESWOMAN
Resistance
R1- 1.2360
R2-1.2400
R3- 1.2425
Support
S1-1.2270
S2-1.2200
S3-1.2160
29 June 2015, 14:53
- USD/CAD has recovered after making a low of 1.23032. Overall trend is bullish as long as support 1.2270 is intact.
- Break below 1.2270 will drag the pair further down till 1.2200/1.2160 in short term.
- On the higher side resistance is around 1.2360 and any indicative break above would extend gains till 1.2400/1.2420.
Resistance
R1- 1.2360
R2-1.2400
R3- 1.2425
Support
S1-1.2270
S2-1.2200
S3-1.2160
29 June 2015, 14:48
U.S. STOCK INDEX FUTURES TRIM LOSSES
29 June 2015, 14:45
INDIA TO BORROW 1.19 TRLN RUPEES VIA 91-DAY TBILLS, 390 BLN RUPEES VIA
182-DAY AND 380 BLN RUPEES VIA 364-DAY TBILLS
29 June 2015, 14:44
INDIA TO BORROW 1960 BLN RUPEES VIA T-BILLS FROM JULY 2-SEPT 30 - CENBANK
The pair's minor support is around 0.7050 and break below will drag the pair further down till 0.7000/0.6930.
It is good to sell on rallies around 0.7140 with stop around 0.7195 for the target of 0.7050/0.7000.
29 June 2015, 14:40
- RES 3: 0.7210 (Jun 22nd high)
- RES 3: 0.7191 (200 day HMA)
- RES 2 : 0.7134 (55 4H EMA)
- RES 1: 0.7100 (7 day 4H EMA)
- SUP 1: 0.7080 (Jun 23rd low)
- SUP 2: 0.7050 (May 26th low)
- SUP 3: 0.700
- SUP4 : 0.6926 (138.2 % retracement of 0.7054 and 0.73879)
The pair's minor support is around 0.7050 and break below will drag the pair further down till 0.7000/0.6930.
It is good to sell on rallies around 0.7140 with stop around 0.7195 for the target of 0.7050/0.7000.
29 June 2015, 14:37
The increasingly large budget gap in Zambia may prove costly to finance,
Fitch Ratings says. Domestic financing conditions are constrained, and new
external financing could push government debt toward 40% of GDP by end-2015.
The fiscal deficit could now jump to 7.7% (on a cash basis), according to IMF projections released earlier this month. The government expects the outturn to be lower, but has indicated that it expects the fiscal deficit to come in significantly above the 4.6% target announced in the 2015 budget. Mining revenue has come under pressure from lower copper prices and changes to the mining tax regime. The government has proposed trimming expenditure to offset the impact of lower revenue, although a rising interest burden and the re-emergence of fuel subsidies, among other factors, may make spending control challenging. The full budgetary impact of the government's commitment to pay VAT refunds built up between 2013 and 2014, which totalled 3% of GDP at end-2014, is not yet clear.
Increased domestic borrowing in the 2015 budget and a shortage of liquidity have pushed up financing costs, while demand for domestic government securities has fallen short of supply so far this year. The National Assembly on Thursday approved a Treasury request to raise the external debt limit to ZMW60bn (USD8bn), from ZMW35bn.
Tapping external sources of financing can expand an emerging market sovereign's investor base. But we have previously highlighted the risks of greater reliance on more expensive non-concessionary external financing to fund large budget deficits, particularly current expenditure. These include refinancing risk (although the Zambian authorities' announcement of a sinking fund to repay the sovereign's two outstanding Eurobonds may mitigate this), and the risk that debt servicing costs rise due to currency depreciation (the kwacha has fallen by 14% since January 2015).
Zambia has a historical track record of fiscal prudence, and government debt is well below the 'B' category median (30.5% of GDP, versus 49.1%). Nevertheless, the build-up in arrears as well as higher-than-budgeted fiscal deficits will push government debt-to-GDP higher, beyond Fitch's previous forecast peak of 34.2% of GDP in 2017. A rising debt burden will see interest costs rise sharply (these are expected to take up 17% of government revenue in 2015, up from 8% in 2012). This reduces fiscal flexibility and will complicate consolidation efforts.
Zambia's external position has worsened since the start of the year. Falls in reserves have been more pronounced this year than in early 2014, reflecting falling export revenues due to lower copper prices. Reserves have fallen by USD400m since December to USD2.6bn, from a peak of USD3.7bn in April 2014, following the last Eurobond issue.
A sustained deterioration in fiscal discipline would be negative for Zambia's sovereign credit profile. Concerns about policy coherence and credibility, highlighted by ongoing challenges for the mining tax regime, contributed towards Fitch's decision to revise the Outlook on the rating to Stable from Positive in March. The next scheduled rating review is on 21 August.
The fiscal deficit could now jump to 7.7% (on a cash basis), according to IMF projections released earlier this month. The government expects the outturn to be lower, but has indicated that it expects the fiscal deficit to come in significantly above the 4.6% target announced in the 2015 budget. Mining revenue has come under pressure from lower copper prices and changes to the mining tax regime. The government has proposed trimming expenditure to offset the impact of lower revenue, although a rising interest burden and the re-emergence of fuel subsidies, among other factors, may make spending control challenging. The full budgetary impact of the government's commitment to pay VAT refunds built up between 2013 and 2014, which totalled 3% of GDP at end-2014, is not yet clear.
Increased domestic borrowing in the 2015 budget and a shortage of liquidity have pushed up financing costs, while demand for domestic government securities has fallen short of supply so far this year. The National Assembly on Thursday approved a Treasury request to raise the external debt limit to ZMW60bn (USD8bn), from ZMW35bn.
Tapping external sources of financing can expand an emerging market sovereign's investor base. But we have previously highlighted the risks of greater reliance on more expensive non-concessionary external financing to fund large budget deficits, particularly current expenditure. These include refinancing risk (although the Zambian authorities' announcement of a sinking fund to repay the sovereign's two outstanding Eurobonds may mitigate this), and the risk that debt servicing costs rise due to currency depreciation (the kwacha has fallen by 14% since January 2015).
Zambia has a historical track record of fiscal prudence, and government debt is well below the 'B' category median (30.5% of GDP, versus 49.1%). Nevertheless, the build-up in arrears as well as higher-than-budgeted fiscal deficits will push government debt-to-GDP higher, beyond Fitch's previous forecast peak of 34.2% of GDP in 2017. A rising debt burden will see interest costs rise sharply (these are expected to take up 17% of government revenue in 2015, up from 8% in 2012). This reduces fiscal flexibility and will complicate consolidation efforts.
Zambia's external position has worsened since the start of the year. Falls in reserves have been more pronounced this year than in early 2014, reflecting falling export revenues due to lower copper prices. Reserves have fallen by USD400m since December to USD2.6bn, from a peak of USD3.7bn in April 2014, following the last Eurobond issue.
A sustained deterioration in fiscal discipline would be negative for Zambia's sovereign credit profile. Concerns about policy coherence and credibility, highlighted by ongoing challenges for the mining tax regime, contributed towards Fitch's decision to revise the Outlook on the rating to Stable from Positive in March. The next scheduled rating review is on 21 August.
29 June 2015, 14:34
GREECE'S PUBLIC POWER CORPORATION SAYS CAN MEET ALL ITS FINANCIAL OBLIGATION
29 June 2015, 14:32
GREECE'S PUBLIC POWER CORPORATION SAYS THE COUNTRY'S ELECTRICITY SUPPLY IS
SECURED
29 June 2015, 14:30
INDIA CENTRAL BANK SETS CUT-OFF RATE OF 7.24 PCT AT 4-DAY VARIABLE RATE
REVERSE REPO AUCTION
29 June 2015, 14:26
JUNCKER REPLYING TO QUESTION: WHOLE PLANET WILL SEE A GREEK 'NO' AS MEANING
GREECE WANTS OUT OF EURO ZONE, EU
29 June 2015, 14:25
BRAZIL'S 2015 INFLATION FORECAST 9.00 PCT VS 8.97 PCT PREVIOUS WEEK - WEEKLY
CENTRAL BANK SURVEY
29 June 2015, 14:23
NIGERIA'S SOVEREIGN BOND YIELDS RISE MORE THAN 10 BASIS POINT ON CURRENCY,
GOVT BORROWING RISKS - TRADERS
29 June 2015, 14:20
EU'S JUNCKER SAYS IF GREEKS VOTE YES, THE MESSAGE FOR EU AND WIDER WORLD WILL
BE THAT GREECE WANTS TO STAY IN EURO AND EU
29 June 2015, 14:18
EU'S JUNCKER SAYS IN MOMENT OF TRUTH TIME FOR GREEKS TO SPEAK UP, GOVT TO
TAKE ITS RESPONSIBILITIES
29 June 2015, 14:15
EU'S JUNCKER SAYS I DON'T HAVE TO MAKE NEW PROPOSALS TO GREECE, PROPOSAL
ALREADY ON TABLE
29 June 2015, 14:14
Market Roundup
EUR/USD is supported around 1.1100 levels and currently trading at 1.1095 levels. It has made intraday high at 1.1123 and low at 1.0952 levels. The investors await more definite news on Greece after a number of officials across the Euro zone calmed market nerves by stating a possibility of the Greece deal before the July 5 referendum in Greece. The verbal assurances helped the pair recover from the low of 1.09533 and clock a high at 1.1123. As the Greek negotiations with the Euro group failed to bring any positive results, the Greek government imposed capital controls including a €60 per day maximum ATM machine withdrawal to limit the chaos and panic, while banks and the stock market in Athens will be closed for the whole week. Initial support is seen around 1.0914 and resistance is seen around 1.1218 levels. Option expiries are at 1.0945-50 (420M), 1.1100 (666M).
USD/JPY is supported below 123.00 levels and posted a high of 123.18 levels. It has made intraday low at 122.09 and currently trading at 122.84 levels. The Japanese yen was one of the strongest performing currencies at the start of the new week, with investors bidding up the safe-haven currency as fears that Greece may leave the EU eroded investor sentiment Monday, sending stocks sharply lower with the euro. Greece will hold a referendum on July 5 on whether or not to meet its creditors' austerity demands, but until then the debt-ridden nation has been advised to keep banks closed to avoid a bank run, following large withdrawals on Friday and over the weekend. A vote against accepting austerity measures would likely lead to an exit from the European Union, causing financial instability across Europe and possibly beyond. There was also some positive data out of Japan on Monday, with retail sales growing 3% year-on-year last month, the second-consecutive increase in sales. However, this positive news was offset by preliminary industrial production, which reportedly fell 2.2% over the same period. Near term resistance is seen at 124.57 and support is seen at 122.10 levels. Option expiries are at 122.00 (2BLN), 122.45-50 (370M), 123.25 (255M), 123.50 (280M).
GBP/USD is supported around $1.5700 levels. It made an intraday high at 1.5742 and low at 1.5661 levels. Pair is currently trading at 1.5691 levels. Sterling hit a 7 1/2-year high against the euro on Monday as people looked for safe havens after Greece's debt crisis worsened and Athens imposed capital controls. The euro fell to 69.885 pence in early Asian trade, its lowest since late 2008, before recovering to trade at 70.60 pence, still down 0.4 percent. Sterling was down 0.2 percent at $1.5704. The USD bulls took charge earlier this session and pushed GBP/USD lower as the greenback strengthened on tumbling EUR/USD on Greek concerns. Later in the day, the pair will track US dollar moves amid lack of UK fundamentals while US pending home sales and fresh Greek updates will be closely watched. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels. Option expiry is at 1.5800 (183M).
USD/CHF is supported below 0.9400 levels and trading at 0.9338 levels and made intraday low at 0.9335 and high at 0.9426 levels. The Swiss National Bank Chief Jordan confirmed that the bank intervened in the FX markets on Monday as the Swiss Franc faced the risk of appreciation due to safe haven appeal. He said the bank is prepared for Grexit, while adding that the default would be extremely difficult situation for the Greek banks. The intervention today was mainly to stem the rise in the CHF due to the Greece led risk aversion across the globe. Near term support is seen at 0.9279 levels and resistance is seen at 0.9428 levels.
AUD/USD is supported below 0.7700 levels and trading at 0.7656 levels. It has made intraday high at 0.7692 levels and low at 0.7585 levels. The pair erased early losses and climbed higher as traders continued to cheer Saturday's Chinese rate cut announcement. China is New Zealand's and Australia's largest export market. Moreover, higher gold prices on increased safe-haven bids on Greece crisis are also supports the resource-linked Aussie. However, the upside remains capped on underlying Greek concerns continues to dampen investors' sentiments, weighing on risk-sensitive currencies lower. Initial support is seen at 0.7568 and resistance at 0.7838 levels. Option expiry is at 0.7670-75 (240M).
- Euro off Greece-driven lows after SNB intervention.
- SNB Jordan- SNB has intervened in currency market.
- EUR/CHF down to 1.0315, recovered to 1.040, easier into NY.
- EUR/USD down to 1.0955, Recovered to 1.1125 before lower again.
- EUR/GBP makes new low under 0.7000 at 0.68895, first time since 2007.
- Bank stocks smash European bourses to significant lows, DAX of 5.0% vs Friday high.
- ECB Nowotny- ELA will be discussed at ECB governing council meeting on Wednesday.
- Spain Econ min- I'm convinced that Greece will continue to be part of the euro.
- France Fin min- Exit of Greece from EZ is still a possibility.
- Germany Ottinger- If Greece doesn't stay in the EZ it won't be end of the world.
- Moscovici urges Greek PM to call for 'Yes' vote in referendum.
- BOE May Consumer credit +1.001bln vs previous +1.176bln revised 1.100bln expected.
- UK May Mortgage lending +2.098bln vs previous 1.695bln revised. 2.050 expected.
- Euro Zone June Business climate 0.14 vs previous 0.28. 0.27 expected.
- Euro Zone June Consumer confidence final -5.6 vs previous -5.6. -5.6 expected.
- Japan Aso- Doesn't see more falls in JP stocks, yen gains on Greece turmoil.
- (1000 ET/1400 GMT) US Pending Home Sales Index (May) consensus 113.7, previous 112.4.
- (1030 ET/1430 GMT) US Dallas Fed Texas Manufacturing Outlook Survey (Jun) previous -20.8.
- (1145 ET/1545 GMT) Fed Trade operation 30-yr Ginnie Mae (max $925 mn).
- (1430 ET/1830 GMT) Fed Trade operation 15-yr Fannie Mae/Freddie Mac (max $600 mn).
EUR/USD is supported around 1.1100 levels and currently trading at 1.1095 levels. It has made intraday high at 1.1123 and low at 1.0952 levels. The investors await more definite news on Greece after a number of officials across the Euro zone calmed market nerves by stating a possibility of the Greece deal before the July 5 referendum in Greece. The verbal assurances helped the pair recover from the low of 1.09533 and clock a high at 1.1123. As the Greek negotiations with the Euro group failed to bring any positive results, the Greek government imposed capital controls including a €60 per day maximum ATM machine withdrawal to limit the chaos and panic, while banks and the stock market in Athens will be closed for the whole week. Initial support is seen around 1.0914 and resistance is seen around 1.1218 levels. Option expiries are at 1.0945-50 (420M), 1.1100 (666M).
USD/JPY is supported below 123.00 levels and posted a high of 123.18 levels. It has made intraday low at 122.09 and currently trading at 122.84 levels. The Japanese yen was one of the strongest performing currencies at the start of the new week, with investors bidding up the safe-haven currency as fears that Greece may leave the EU eroded investor sentiment Monday, sending stocks sharply lower with the euro. Greece will hold a referendum on July 5 on whether or not to meet its creditors' austerity demands, but until then the debt-ridden nation has been advised to keep banks closed to avoid a bank run, following large withdrawals on Friday and over the weekend. A vote against accepting austerity measures would likely lead to an exit from the European Union, causing financial instability across Europe and possibly beyond. There was also some positive data out of Japan on Monday, with retail sales growing 3% year-on-year last month, the second-consecutive increase in sales. However, this positive news was offset by preliminary industrial production, which reportedly fell 2.2% over the same period. Near term resistance is seen at 124.57 and support is seen at 122.10 levels. Option expiries are at 122.00 (2BLN), 122.45-50 (370M), 123.25 (255M), 123.50 (280M).
GBP/USD is supported around $1.5700 levels. It made an intraday high at 1.5742 and low at 1.5661 levels. Pair is currently trading at 1.5691 levels. Sterling hit a 7 1/2-year high against the euro on Monday as people looked for safe havens after Greece's debt crisis worsened and Athens imposed capital controls. The euro fell to 69.885 pence in early Asian trade, its lowest since late 2008, before recovering to trade at 70.60 pence, still down 0.4 percent. Sterling was down 0.2 percent at $1.5704. The USD bulls took charge earlier this session and pushed GBP/USD lower as the greenback strengthened on tumbling EUR/USD on Greek concerns. Later in the day, the pair will track US dollar moves amid lack of UK fundamentals while US pending home sales and fresh Greek updates will be closely watched. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels. Option expiry is at 1.5800 (183M).
USD/CHF is supported below 0.9400 levels and trading at 0.9338 levels and made intraday low at 0.9335 and high at 0.9426 levels. The Swiss National Bank Chief Jordan confirmed that the bank intervened in the FX markets on Monday as the Swiss Franc faced the risk of appreciation due to safe haven appeal. He said the bank is prepared for Grexit, while adding that the default would be extremely difficult situation for the Greek banks. The intervention today was mainly to stem the rise in the CHF due to the Greece led risk aversion across the globe. Near term support is seen at 0.9279 levels and resistance is seen at 0.9428 levels.
AUD/USD is supported below 0.7700 levels and trading at 0.7656 levels. It has made intraday high at 0.7692 levels and low at 0.7585 levels. The pair erased early losses and climbed higher as traders continued to cheer Saturday's Chinese rate cut announcement. China is New Zealand's and Australia's largest export market. Moreover, higher gold prices on increased safe-haven bids on Greece crisis are also supports the resource-linked Aussie. However, the upside remains capped on underlying Greek concerns continues to dampen investors' sentiments, weighing on risk-sensitive currencies lower. Initial support is seen at 0.7568 and resistance at 0.7838 levels. Option expiry is at 0.7670-75 (240M).
29 June 2015, 14:10
Finally, further easing is unlikely on rising financial stability concerns
related to a prolonged period of low (or even negative) interest rates. Swedish
household debt exceeds 85% of GDP and equates to more than 160% of household
disposable income.
As such, measures to reduce vulnerabilities and risks in the household sector will likely be rather time consuming, implying an increasingly cautious monetary policy stance in the meantime and likely benefiting the SEK.
As such, measures to reduce vulnerabilities and risks in the household sector will likely be rather time consuming, implying an increasingly cautious monetary policy stance in the meantime and likely benefiting the SEK.
29 June 2015, 14:07
Greek government has called referendum on July 5th, which is next
Sunday for the people of the country to decide whether or not to accept the
latest proposal on austerity by Euro zone creditors.
European assets are likely to have tense moments of consolidation until then since a no vote would mean further uncertain scenarios one of which might lead to a Greek exit from Euro zone.
European leaders are all having their closed door meeting today to discuss strategies on Greece.
What to focus on till the referendum?
European assets are likely to have tense moments of consolidation until then since a no vote would mean further uncertain scenarios one of which might lead to a Greek exit from Euro zone.
European leaders are all having their closed door meeting today to discuss strategies on Greece.
What to focus on till the referendum?
- German Chancellor, Angela Merkel is the most prominent leaders whose words on Greece should be closely watched to understand what might be Germany's stance if a no vote is delivered.
- Greek Prime Minister Mr. Tsipras is another key figure who might point out what could be Greece's strategy if the public delivers a no verdict.
- IMF's stance becomes equally crucial since IMF is one of the largest lender in Greek bailout. IMF might withhold € 3.6 billion of the remaining € 7.2 billion, if Greece defaults tomorrow.
- ECB's comments are of high significance, since Greece is due to pay € 3.5 billion on July 20 and Greek banks are basically living on Emergency lending assistance (ELA) which was frozen at current level of $99 billion.
29 June 2015, 14:03
EU'S JUNCKER SAYS LATEST OFFER TO GREECE HAS NO WAGE CUTS, NO PENSION CUTS,
IT CREATES MORE SOCIAL FAIRNESS
AUD/USD has made a low of 0.7585 and is currently trading at 0.7650. Overall trend is weak as long as resistance 0.7700 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
29 June 2015, 13:58
- RES 4 : 0.7820 (Jun 3rd high)
- RES 3: 0.7788 (200 day 4HMA)
- RES 2 : 0.7725 (55 day 4H EMA)
- RES 1: 0.7660 (7 day 4H EMA)
- SUP 1 : 0.7640 (Jun 17th low)
- SUP 2: 0.7590 (Jun 6th low)
- SUP 3: 0.7530 (Apr 2nd low)
- SUP 4: 0.7500
AUD/USD has made a low of 0.7585 and is currently trading at 0.7650. Overall trend is weak as long as resistance 0.7700 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
29 June 2015, 13:58
EU'S JUNCKER SAYS GREECE'S EXIT FROM EURO ZONE WILL NEVER BE AN OPTION FOR ME
BUT I CANNOT DEFEND AGAINST ALL OTHERS
29 June 2015, 13:56
The JPY appears to be caught between two powerful and opposing forces. On one
side, the BoJ's QQE program and portfolio outflows by Japanese investors; on the
other, JPY'sextraordinary cheapness, which is attracting substantial foreign
investment.
Between these forces, we expect USD/JPY to continue to range trade around 123, with risks on both sides.
While across-the-board USD rally into the Fed liftoff and potential further BoJ easing may exert upward pressure, deterioration in risk sentiment poses downside risk for the pair.
Between these forces, we expect USD/JPY to continue to range trade around 123, with risks on both sides.
While across-the-board USD rally into the Fed liftoff and potential further BoJ easing may exert upward pressure, deterioration in risk sentiment poses downside risk for the pair.
29 June 2015, 13:55
EU'S JUNCKER SAYS AT STAKE IS EUROPEAN SOLIDARITY
29 June 2015, 13:54
EU'S JUNCKER SAYS PLAYING ONE DEMOCRACY AGAINST 18 OTHERS IS NOT FITTING FOR
GREECE
29 June 2015, 13:50
U.S. STOCK INDEX FUTURES TRADE DOWN MORE THAN 1 PCT AS GREEK CRISIS WORSENS
29 June 2015, 13:49
CHINA PREMIER SAYS HOPES GREEK DEBT CRISIS CAN BE PROPERLY RESOLVED - STATE
RADIO
29 June 2015, 13:49
CHINA PREMIER SAYS WILL CONTINUE TO BE A RESPONSIBLE, LONG-TERM HOLDER OF
EURO DEBT - STATE RADIO
29 June 2015, 13:49
CHINA PREMIER SAYS GREEK DEBT CRISIS IS AT A CRUCIAL STAGE - STATE RADIO
29 June 2015, 13:42
Activity in the gold market has continued to ebb and prices have become
becalmed in an increasingly stagnant market.
The $50 trading range of $1170-1220 in which gold has been stuck for the whole of Q2 is the least volatile period for the yellow metal since before the financial crisis, and this might not be the calm before the storm, as there is little sign of any pick-up in investor interest.
ETP flows for the year to date have fallen below 10 tonnes and there have been net outflows over the past two months, despite all the Greece rhetoric.
US monetary policy still holds the key for gold and prices are unlikely to move out of their recent trading range until the Fed's path becomes clearer. Q3 could be the weakest quarter for gold, given rate hike expectations and weak price floor,says Barclays.
But thereafter, gold is expected to stage a mild recovery on better physical demand.
The $50 trading range of $1170-1220 in which gold has been stuck for the whole of Q2 is the least volatile period for the yellow metal since before the financial crisis, and this might not be the calm before the storm, as there is little sign of any pick-up in investor interest.
ETP flows for the year to date have fallen below 10 tonnes and there have been net outflows over the past two months, despite all the Greece rhetoric.
US monetary policy still holds the key for gold and prices are unlikely to move out of their recent trading range until the Fed's path becomes clearer. Q3 could be the weakest quarter for gold, given rate hike expectations and weak price floor,says Barclays.
But thereafter, gold is expected to stage a mild recovery on better physical demand.
29 June 2015, 13:39
- USD/CAD has recovered after making a low of 1.23032. Overall trend is bullish as long as support 1.2270 is intact.
- Break below 1.2270 will drag the pair further down till 1.2200/1.2160 in short term.
- On the higher side resistance is around 1.2360 and any indicative break above would extend gains till 1.2400/1.2420.
29 June 2015, 13:35
GERMAN CHANCELLOR MERKEL SAYS EUROPE CAN DEAL WITH CRISES LIKE IN GREECE MUCH
BETTER NOW THAN IN THE PAST
29 June 2015, 13:35
CHINA, BELGIUM SIGN DEALS WORTH MORE THAN 18 BLN EUROS - XINHUA'
29 June 2015, 13:27
GERMAN GOVERNMENT SPOKESMAN SAYS HARD TO SEE HOW THERE COULD BE "DRAMATIC
TURN" IN TALKS WITH GREECE BEFORE EXPIRY OF 2ND BAILOUT PROGRAMME ON JUNE 30
29 June 2015, 13:23
After January's sudden move to remove 1.20 floor, it is difficult to rely on
SNB to protect any Euro-Franc level.
However SNB intervened in the market today, as Euro was expected to tumble, which would have invariably pushed Euro-Franc towards parity.
Talks suggest that SNB has intervened around 1.03 area, though details of the intervention wasn't declared by the bank. SNB intervention pushed Euro from around 1.03 area, after which it traded as high as 1.044 against Franc. Currently Euro is trading at 1.039 against Franc and 1.11 against dollar.
After months of sitting tight on Euro-Franc level, today's intervention seems SNB is likely to Keep Euro above parity.
Further intervention from SNB is expected as Greek uncertainty persists in the market.
However SNB intervened in the market today, as Euro was expected to tumble, which would have invariably pushed Euro-Franc towards parity.
Talks suggest that SNB has intervened around 1.03 area, though details of the intervention wasn't declared by the bank. SNB intervention pushed Euro from around 1.03 area, after which it traded as high as 1.044 against Franc. Currently Euro is trading at 1.039 against Franc and 1.11 against dollar.
After months of sitting tight on Euro-Franc level, today's intervention seems SNB is likely to Keep Euro above parity.
Further intervention from SNB is expected as Greek uncertainty persists in the market.
29 June 2015, 13:20
KREMLIN SAYS RUSSIA CONCERNED ABOUT POSSIBLE NEGATIVE CONSEQUENCES FOR EU
FROM GREECE CRISIS
29 June 2015, 13:18
This is synthesized recommendation of both fundamental and technical
aspects.
We had advocated this trade call earlier also; we now continue to recommend holding a USD/KRW put funded by selling a JPY/KRW call.
Japanese industrial production fell by 2.2% in May as a publication of the Ministry of Trade and Industry this morning illustrates. How lucky for the yen that it currently benefits from Greece. However, imported strength of this nature is usually not sustainable. Industrial production on the other hand will remain weak.
KRW made a gap up opening with doji and shooting star candlestick patterns. These bearish candles suggest indecision of sustainability in recent bull rallies of this pair. Volumes also did not confirm the recent rallies of this pair.
We see sensing overbought pressures on USDKRW, if you think any probable dips should not trouble dollar portfolio then add longs on USD/KRW 6M ITM or ATM puts at current juncture and simultaneously short ATM JPYKRW call.
The above position should enhance profitability by deriving returns upto 0.87% on JPY/KRW side and 0.90% on dollar trade.
This is going to be legacy trades from before the global bond sell-off albeit one which serves a partial hedge to the pro-dollar exposure elsewhere in EM.
The mark-to-market has consequently benefitted from the setback to the dollar this week.
We had advocated this trade call earlier also; we now continue to recommend holding a USD/KRW put funded by selling a JPY/KRW call.
Japanese industrial production fell by 2.2% in May as a publication of the Ministry of Trade and Industry this morning illustrates. How lucky for the yen that it currently benefits from Greece. However, imported strength of this nature is usually not sustainable. Industrial production on the other hand will remain weak.
KRW made a gap up opening with doji and shooting star candlestick patterns. These bearish candles suggest indecision of sustainability in recent bull rallies of this pair. Volumes also did not confirm the recent rallies of this pair.
We see sensing overbought pressures on USDKRW, if you think any probable dips should not trouble dollar portfolio then add longs on USD/KRW 6M ITM or ATM puts at current juncture and simultaneously short ATM JPYKRW call.
The above position should enhance profitability by deriving returns upto 0.87% on JPY/KRW side and 0.90% on dollar trade.
This is going to be legacy trades from before the global bond sell-off albeit one which serves a partial hedge to the pro-dollar exposure elsewhere in EM.
The mark-to-market has consequently benefitted from the setback to the dollar this week.
29 June 2015, 13:18
Euro zone and Greece face biggest challenge over the next two months as
existence of the Euro zone in its original form is in doubt.
Over the weekend, possibility of Greece exiting the Euro zone has increased substantially.
What might trigger Grexit?
Two biggest challenges faced by Greece immediately are IMF payment of € 1.5 billion due on Tuesday and referendum on lenders' proposal on next Sunday, July 5th.
Over the weekend, possibility of Greece exiting the Euro zone has increased substantially.
What might trigger Grexit?
Two biggest challenges faced by Greece immediately are IMF payment of € 1.5 billion due on Tuesday and referendum on lenders' proposal on next Sunday, July 5th.
- Missing the payments to IMF, though may prove critical, it has not much of significance when considering Grexit. Missing IMF payment won't be considered as default, which if not paid goes as arrears. Greece can even repay back if a deal gets done within a month.
- Second one has larger significance. If Greeks vote yes to lenders' proposals, then everything is likely to fall in place. But if the people rejects the bailout then Pandora's Box would open up with various scenario, one of which is Grexit.
29 June 2015, 13:18
Euro zone and Greece face biggest challenge over the next two months as
existence of the Euro zone in its original form is in doubt.
Over the weekend, possibility of Greece exiting the Euro zone has increased substantially.
What might trigger Grexit?
Two biggest challenges faced by Greece immediately are IMF payment of € 1.5 billion due on Tuesday and referendum on lenders' proposal on next Sunday, July 5th.
Over the weekend, possibility of Greece exiting the Euro zone has increased substantially.
What might trigger Grexit?
Two biggest challenges faced by Greece immediately are IMF payment of € 1.5 billion due on Tuesday and referendum on lenders' proposal on next Sunday, July 5th.
- Missing the payments to IMF, though may prove critical, it has not much of significance when considering Grexit. Missing IMF payment won't be considered as default, which if not paid goes as arrears. Greece can even repay back if a deal gets done within a month.
- Second one has larger significance. If Greeks vote yes to lenders' proposals, then everything is likely to fall in place. But if the people rejects the bailout then Pandora's Box would open up with various scenario, one of which is Grexit.
29 June 2015, 13:06
GERMAN FINANCE MINISTRY SPOKESMAN SAYS BOND SPREADS SUGGEST CONTAGION RISK
FROM GREECE IS LIMITED
29 June 2015, 13:06
PORTUGAL MAY UNEMPLOYMENT 13.2 PCT VS 12.8 PCT IN APRIL - INE
29 June 2015, 13:06
IRISH PROVISIONAL MAY RETAIL SALES VOLUME -2.5 PERCENT MONTH-ON-MONTH
29 June 2015, 12:59
It seems unlikely that Greece can escape capital controls. Once in place,
these will take time to lift; in the case of Cyprus, it took two
years.
Even under what currently seems the more likely outcome of a vote to "accept" the bailout terms. A vote to "accept" the bailout programme would be a vote against the position recommended by the Greek government.
In light of the comments from the Eurogroup President (cf. above) it seems likely that finding agreement with a government that recommended a negative vote in the referendum will be politically challenging, to say the least.
The Eurogroup would require very strong reassurances to proceed with an agreement in such a scenario. An attempt to agree a new third economic adjustment programme for Greece would not be made.
It will not be an overnight process, however. Moreover, it would be politically very challenging for Germany to accept a package that does not involve the IMF. Given the timelines involved, it seems likely that Greece will not only default on the IMF end-June, but also on the ECB on 20 July.
Even under what currently seems the more likely outcome of a vote to "accept" the bailout terms. A vote to "accept" the bailout programme would be a vote against the position recommended by the Greek government.
In light of the comments from the Eurogroup President (cf. above) it seems likely that finding agreement with a government that recommended a negative vote in the referendum will be politically challenging, to say the least.
The Eurogroup would require very strong reassurances to proceed with an agreement in such a scenario. An attempt to agree a new third economic adjustment programme for Greece would not be made.
It will not be an overnight process, however. Moreover, it would be politically very challenging for Germany to accept a package that does not involve the IMF. Given the timelines involved, it seems likely that Greece will not only default on the IMF end-June, but also on the ECB on 20 July.
29 June 2015, 12:58
EUROPEAN INVESTMENT BANK TO EXTEND EUR 500 MLN LOAN TO HUNGARY, ECONOMY
MINISTRY SAYS
29 June 2015, 12:55
EUROPEAN INVESTMENT BANK TO EXTEND EUR 500 MLN LOAN TO HUNGARY, ECONOMY
MINISTRY SAYS
29 June 2015, 12:54
BELGIAN JUNE CPI 0.15 PCT MTH/MTH 0.63 PCT YR/YR - ECONOMY
29 June 2015, 12:54
A plan to remove the 75% statutory limit on the loans/deposits ratio (LDR)
for China's commercial banks should contribute to enhancing financial system
transparency around credit exposures, reduce the incentive to retain risk
off-balance sheet and ease deposit competition, says Fitch Ratings. This signals
the authorities' commitment to financial reform, together with other recent
measures, while responding to challenges from a slowing economy. Yet constraints
will still remain for banks to bring assets back on balance sheet.
The 25 June announcement from the State Council that the LDR limit would be removed as a statutory requirement is part of a broader effort to deregulate China's banking system and free up liquidity to boost lending. The short-term implications from the removal of the LDR limit are likely to be limited. But any improved transparency from reducing banks' incentives to shift risk off balance sheet will eventually improve the accuracy of risk-weightings and reliability of credit quality metrics. This could in turn have positive rating implications for banks' Viability Ratings (VRs).
Fear of breaching prudential ratios, including the LDR limit, has contributed to banks' expanding off-balance sheet exposures in the last few years, in part through the shadow banking system. This means that the effective LDR of some banks is already likely to be higher than 75% versus the reported system-wide LDR of 65% at end-1Q15, according to the China Bank Regulatory Commission. Off-balance sheet exposures can affect the credit profiles of Chinese banks owing to their rapid growth and limited transparency and disclosure around these risks, including uncertainty over where ultimate default liability lies.
Restrictions still exist in terms of banks' lending to certain sectors, but allowing for more credit to be brought back on the balance sheet will give greater insight as to the sufficiency of bank capital. To the extent that problematic assets are brought back on balance sheet, it could increase pressure on reported asset-quality metrics, but will also make asset quality and provisioning data more meaningful for analysts.
It may also reduce the need for wealth management product (WMP) funding for banks over the longer term, when coupled with deposit-rate liberalisation. More broadly, this should help to ease deposit competition within the system and enhance net interest margins (NIM). However, NIMs for the sector are still likely to remain under pressure this year owing to interest-rate cuts. Friday's announcement to lower the one-year benchmark lending rate by another 25bp - to 4.85% - brings the total reduction in rates to 115bp since November 2014.
Lifting the LDR cap will not entirely eliminate the constraints which incentivise banks to maintain risk off-balance sheet including via the shadow banking sector. Banks will still be reluctant to re-classify exposures immediately if it leads to much higher risk-weighted assets and pressuring capital ratios. Furthermore, the benchmark reserve requirement ratio (RRR) remains high at 18.5% (though this is lower for some banks with larger exposures to agriculture and micro and small enterprises) despite the recent reductions.
Removing the LDR cap has the potential to lead banks to expand credit, especially to potentially higher-risk small- and medium-sized enterprises and micro-enterprises - sectors being specifically targeted for increased credit by policymakers. The targeted RRR cut on Friday further emphasised the authorities' efforts to make further room for banks to increase credit to these sectors. Fitch has consistently highlighted the potential that easing measures could result in another lending boom, raising the risk profile of banks' loan books and putting further pressure on capital.
That said, the potential for a sudden increase in lending is likely to be limited in the short term - especially as credit demand remains weak relative to the last few years. It is also important to note that according to the plan, the LDR will remain as a guideline for measuring liquidity risk, indicating that Chinese banks will still be subject to regulatory guidance regarding their LDRs.
Data suggests that excessive lending has not emerged as a result of decisions this year to ease monetary conditions. Credit continues to grow in excess of GDP, but the composition has changed. Notably, the increase in total social financing (TSF) is down 20% year-on-year over the first five months of 2015 while shadow financing now comprises a far smaller proportion of the increase in TSF. Bank loans made up 76% of the increase in TSF during January-May 2015, up from 59% over the same period in 2014.
The 25 June announcement from the State Council that the LDR limit would be removed as a statutory requirement is part of a broader effort to deregulate China's banking system and free up liquidity to boost lending. The short-term implications from the removal of the LDR limit are likely to be limited. But any improved transparency from reducing banks' incentives to shift risk off balance sheet will eventually improve the accuracy of risk-weightings and reliability of credit quality metrics. This could in turn have positive rating implications for banks' Viability Ratings (VRs).
Fear of breaching prudential ratios, including the LDR limit, has contributed to banks' expanding off-balance sheet exposures in the last few years, in part through the shadow banking system. This means that the effective LDR of some banks is already likely to be higher than 75% versus the reported system-wide LDR of 65% at end-1Q15, according to the China Bank Regulatory Commission. Off-balance sheet exposures can affect the credit profiles of Chinese banks owing to their rapid growth and limited transparency and disclosure around these risks, including uncertainty over where ultimate default liability lies.
Restrictions still exist in terms of banks' lending to certain sectors, but allowing for more credit to be brought back on the balance sheet will give greater insight as to the sufficiency of bank capital. To the extent that problematic assets are brought back on balance sheet, it could increase pressure on reported asset-quality metrics, but will also make asset quality and provisioning data more meaningful for analysts.
It may also reduce the need for wealth management product (WMP) funding for banks over the longer term, when coupled with deposit-rate liberalisation. More broadly, this should help to ease deposit competition within the system and enhance net interest margins (NIM). However, NIMs for the sector are still likely to remain under pressure this year owing to interest-rate cuts. Friday's announcement to lower the one-year benchmark lending rate by another 25bp - to 4.85% - brings the total reduction in rates to 115bp since November 2014.
Lifting the LDR cap will not entirely eliminate the constraints which incentivise banks to maintain risk off-balance sheet including via the shadow banking sector. Banks will still be reluctant to re-classify exposures immediately if it leads to much higher risk-weighted assets and pressuring capital ratios. Furthermore, the benchmark reserve requirement ratio (RRR) remains high at 18.5% (though this is lower for some banks with larger exposures to agriculture and micro and small enterprises) despite the recent reductions.
Removing the LDR cap has the potential to lead banks to expand credit, especially to potentially higher-risk small- and medium-sized enterprises and micro-enterprises - sectors being specifically targeted for increased credit by policymakers. The targeted RRR cut on Friday further emphasised the authorities' efforts to make further room for banks to increase credit to these sectors. Fitch has consistently highlighted the potential that easing measures could result in another lending boom, raising the risk profile of banks' loan books and putting further pressure on capital.
That said, the potential for a sudden increase in lending is likely to be limited in the short term - especially as credit demand remains weak relative to the last few years. It is also important to note that according to the plan, the LDR will remain as a guideline for measuring liquidity risk, indicating that Chinese banks will still be subject to regulatory guidance regarding their LDRs.
Data suggests that excessive lending has not emerged as a result of decisions this year to ease monetary conditions. Credit continues to grow in excess of GDP, but the composition has changed. Notably, the increase in total social financing (TSF) is down 20% year-on-year over the first five months of 2015 while shadow financing now comprises a far smaller proportion of the increase in TSF. Bank loans made up 76% of the increase in TSF during January-May 2015, up from 59% over the same period in 2014.
29 June 2015, 12:52
- NFP Thursday, 1month gets FOMC, but Greece woes saw volumes spike Asia open
- 1week paid 21.0 vs 14.5 Friday', 1month paid 15.25 vs 11.6 Friday - new multi year high
- 2month paid 13.75, 3month 13.25 from 11.4 Friday (12.4 was recent/3year high)
- 1year up to 11.5 vs 10.3 Friday'. 1month 25D RR paid 2.25 vs 1.1 EUR puts
- Gamma to remain underpinned, volume setbacks will be mild as default looms
- Overnight 1.11 trades 26.0-24.0, Wednesday 1.11 at 22.0, Friday 1.11 at 22.0 early London
29 June 2015, 12:51
Oil prices are down as the new week of trading begins. Brent has fallen below
$62 per barrel, while WTI is priced at less than $58.5 per barrel.
The escalation of the debt crisis in Greece (see Precious metals below) has generated increased risk aversion and is thus putting pressure on risky assets - which include crude oil as well as equities. The significant appreciation of the US dollar due to the threat of Greek national bankruptcy is likewise having an impact on oil prices, states Commerzbank. Given all these adverse factors, money managers could decide to sell off their oil investments.
According to the CFTC, the week to 23 June saw speculative net long positions slightly reduced by 3,200 contracts. They still find themselves at the relatively high level of just shy of 236,000 contracts, however, meaning that there is further correction potential here.
The ICE will be publishing the corresponding data for Brent at lunchtime today. Speculative net long positions in Brent have recently fallen for six straight weeks. There are increasing signs that drilling activity in the US is bottoming out. The fall in the oil rig count continued last week, albeit at a slower pace.
According to Baker Hughes, three further oil rigs were shut down, making for the 29th weekly reduction in a row. By contrast, the gas rig count increased by five, meaning that the overall oil and gas rig count saw a weekly rise for the first time in more than half a year. This could also weigh on oil prices, says Commerzbank.
The escalation of the debt crisis in Greece (see Precious metals below) has generated increased risk aversion and is thus putting pressure on risky assets - which include crude oil as well as equities. The significant appreciation of the US dollar due to the threat of Greek national bankruptcy is likewise having an impact on oil prices, states Commerzbank. Given all these adverse factors, money managers could decide to sell off their oil investments.
According to the CFTC, the week to 23 June saw speculative net long positions slightly reduced by 3,200 contracts. They still find themselves at the relatively high level of just shy of 236,000 contracts, however, meaning that there is further correction potential here.
The ICE will be publishing the corresponding data for Brent at lunchtime today. Speculative net long positions in Brent have recently fallen for six straight weeks. There are increasing signs that drilling activity in the US is bottoming out. The fall in the oil rig count continued last week, albeit at a slower pace.
According to Baker Hughes, three further oil rigs were shut down, making for the 29th weekly reduction in a row. By contrast, the gas rig count increased by five, meaning that the overall oil and gas rig count saw a weekly rise for the first time in more than half a year. This could also weigh on oil prices, says Commerzbank.
29 June 2015, 12:44
SOCIETE GENERALE: WE EXPECT EURO AREA CORE HICP METRIC TO REMAIN STABLE AT
0.9% IN 2015 AND 1.1% IN 2016
29 June 2015, 12:42
SPAIN'S ECONOMY MINISTER SAYS HAIRCUT ON GREEK DEBT HAS NEVER BEEN CONSIDERED
29 June 2015, 12:41
SPAIN'S ECONOMY MINISTER SAYS THE CLOSURE OF BANKS IN GREECE WILL HAVE A
RECESSIONARY EFFECT ON THE GREEK POPULATION
29 June 2015, 12:40
SOCIETE GENERALE: WE EXPECT THE ONGOING RECOVERY IN EURO AREA CONSUMER PRICES
TO CONTINUE UNABATED IN JUNE
29 June 2015, 12:40
SPAIN'S ECONOMY MINISTER SAYS ANY RESPONSIBLE GOVERNMENT WOULD CONSIDER
PROPOSAL BEFORE GREEK LIFELINE ENDS
29 June 2015, 12:39
- China rate cut, Greek woes pressured AUD to mid April low 0.7587 Asia
- Volumes lifted - 1month got to 12.7 today vs 10.7 Thursday (lows since March)
- 1month now 12.4 as spot recovers and related volumes ease. 1month gets FOMC
- 3month reached 11.6 in Asia vs 11.0 last week, 1year 11.5 from 11.15
- 1month RR 1.3 from 0.95 last week, 3month paid 1.75 AUD puts today
- Barriers reside 0.7500. 0.7534 is multi year low from early April
- NZD/USD 1month holds 1.5 premium to AUD on its RBNZ inclusion
29 June 2015, 12:33
SPAIN'S ECONOMY MINISTER SAYS TEMPORARY CLOSURE OF GREEK BANKS IS VERY
NEGATIVE
29 June 2015, 12:33
GERMANY'S MERKEL STANDS READY FOR FURTHER TALKS WITH GREEK PM IF HE WISHES -
GERMAN GOVT SPOKESMAN
29 June 2015, 12:33
BANK OF ENGLAND'S WEALE SUGGESTS SYSTEM OF VOTING REFORM TO MPC MEETINGS
29 June 2015, 12:32
BANK OF ENGLAND'S WEALE SAYS BENEFITS OF RELEASING PARTIAL TRANSCRIPTS OF MPC
MEETINGS EXCEED COSTS
29 June 2015, 12:32
BANK OF ENGLAND'S WEALE SAYS DECISION TO PUBLISH PARTIAL TRANSCRIPTS OF MPC
MEETINGS HAS MADE HIS COMMENTS "MORE STILTED"
29 June 2015, 12:31
GERMANY SELLS 12-MTH BUBILLS AT 100.265 AND ABOVE, BID/COVER 1.5 (PVS 2.0) -
BUBA
29 June 2015, 12:31
GERMANY SELLS 1.35 BLN EUROS OF NEW 12-MTH BUBILLS, AVG YIELD -0.263 PCT (PVS
-0.254 PCT) - BUBA
29 June 2015, 12:30
SOCIETE GENERALE: WE EXPECT THE IMPROVEMENT IN EURO AREA CONSUMPTION GROWTH
TO START EASING IN H2
29 June 2015, 12:30
SOCIETE GENERALE: WE EXPECT EURO AREA INDUSTRIAL CONFIDENCE TO REBOUND FROM
-3.0 TO -2.2 IN JUNE, REACHING A THREE-YEAR HIGH
29 June 2015, 12:29
SPAIN'S ECONOMY MINISTER SAYS IT WILL BE MUCH MORE COMPLICATED TO REACH
AGREEMENT AFTER GREEK LIFELINE ENDS ON TUESDAY
29 June 2015, 12:28
SOCIETE GENERALE: WE EXPECT EURO AREA FINAL ESTIMATE FOR JUNE CONSUMER
CONFIDENCE TO CONFIRM THE FLASH AT -5.6
29 June 2015, 12:25
The International Grains Council's decision on Thursday to reduce the
expected figure for the global crop in 2015/16 is likely to have driven up the
price of wheat, as no doubt have the unfavourable weather forecasts for the
current week.
Many key regions in the US are set to remain too wet, while dry and hot weather is predicted for the EU and Canada. This will exacerbate the problems that are already manifesting themselves there as a result of the prolonged dry spell.
Canada is reporting delays in grain development, while the proportion of wheat plants in good or excellent condition fell by 4 percentage points in the last reporting week in France, the biggest EU wheat producer, after having already decreased by 2 points in the week before.
The European grain traders' association Coceral now expects the EU soft wheat crop to total just 140.6 million tons, after 148.3 million tons in 2014, says Commerzbank.
At the same time, estimates from Australia indicate that the Australian crop in 2015/16 could drop to an eight-year low because of the El Niño weather phenomenon.
Many key regions in the US are set to remain too wet, while dry and hot weather is predicted for the EU and Canada. This will exacerbate the problems that are already manifesting themselves there as a result of the prolonged dry spell.
Canada is reporting delays in grain development, while the proportion of wheat plants in good or excellent condition fell by 4 percentage points in the last reporting week in France, the biggest EU wheat producer, after having already decreased by 2 points in the week before.
The European grain traders' association Coceral now expects the EU soft wheat crop to total just 140.6 million tons, after 148.3 million tons in 2014, says Commerzbank.
At the same time, estimates from Australia indicate that the Australian crop in 2015/16 could drop to an eight-year low because of the El Niño weather phenomenon.
29 June 2015, 12:24
SPAIN'S ECONOMY MINISTER SAYS SPAIN'S ECONOMY IS MUCH BETTER PREPARED TO DEAL
WITH GREEK CRISIS THAN DURING 2012
29 June 2015, 12:20
MERKEL TOLD CDU LEADERSHIP MEETING CAN ONLY MAKE DECISIONS IN GREEK CRISIS ON
A DAY-TO-DAY-BASIS - SOURCES
29 June 2015, 12:20
The debt crisis in Greece, which escalated dramatically over the weekend, is
driving up gold prices as the new week gets underway.
The markets seem to be calming down again after this first hefty reaction, however: the euro is recouping some of its losses again while gold has shed some of its gains accordingly. The Greek government has introduced capital controls, and banks in the country are to remain closed this week amid fears that the run on banks could worsen it had started at the weekend following the failure of talks with the Eurogroup on further financial aid.
Although the ECB has kept the emergency loans to Greek banks in place, it has frozen them at their current level. The Greek parliament has decided to hold a referendum next weekend on the terms of the aid programme that has not yet come about.
Depending on the outcome of this referendum, the beginning of a "Grexit" could therefore have been set in motion at the weekend. What is more, a repayment to the IMF of €1.5 billion is due tomorrow, which Greece is hardly likely to be able to make.
The uncertainty about what will happen next in and to Greece should contribute to solid demand for gold and lend support to its price.
The markets seem to be calming down again after this first hefty reaction, however: the euro is recouping some of its losses again while gold has shed some of its gains accordingly. The Greek government has introduced capital controls, and banks in the country are to remain closed this week amid fears that the run on banks could worsen it had started at the weekend following the failure of talks with the Eurogroup on further financial aid.
Although the ECB has kept the emergency loans to Greek banks in place, it has frozen them at their current level. The Greek parliament has decided to hold a referendum next weekend on the terms of the aid programme that has not yet come about.
Depending on the outcome of this referendum, the beginning of a "Grexit" could therefore have been set in motion at the weekend. What is more, a repayment to the IMF of €1.5 billion is due tomorrow, which Greece is hardly likely to be able to make.
The uncertainty about what will happen next in and to Greece should contribute to solid demand for gold and lend support to its price.
29 June 2015, 12:19
GERMAN CHANCELLOR MERKEL TOLD CDU LEADERSHIP MEETING THAT IT'S UP TO GREECE
TO FIND WAY OUT OF CRISIS -SOURCES
29 June 2015, 12:16
POLAND'S DEPUTY FINANCE MINISTER SAYS DOES NOT EXPECT TO WITHHOLD DEBT ISSUES
IN THE COMING MONTHS IN THE FACE OF GREEK WORRIES
29 June 2015, 12:16
SWEDISH FIN MIN ANDERSSON SAYS SWEDISH BANK SYSTEM HAS SMALL EXPOSURE AGAINST
GREECE
29 June 2015, 12:15
HUNGARY ECON MINISTER SAYS GOVT MONITORING MARKETS, WILL BE READY TO ACT IF
EXTENT OF MOVES JUSTIFIES
29 June 2015, 12:14
POLAND'S DEPUTY FINANCE MINISTER SAYS DOES NOT SEE GREAT MARKET REACTION IN
POLAND TO GREEK WORRIES
29 June 2015, 12:13
HUNGARY ECON MINISTER SAYS SOME INCREASE IN BOND YIELDS LIKELY, BUT DOES NOT
EXPECT ANY "DRASTIC" MOVES
29 June 2015, 12:12
POLAND'S DEPUTY FINANCE MINISTER SAYS THERE IS ALMOST NO IMPACT OF POTENTIAL
GREXIT ON POLAND'S ECONOMY
29 June 2015, 12:11
HUNGARY ECON MINISTER SAYS MARKETS HAVE LARGELY PRICED IN GREEK DEVELOPMENTS
OVER PAST WEEKS, IMPACT ON HUNGARY MUTED SO FAR
29 June 2015, 12:05
NORWAY C.BANK NST 31 BILL AUCTION YIELDS 0.95 PCT; BID-TO-COVER RATIO 1.76
29 June 2015, 12:00
EUROZONE JUN CONSUMER CONFID. FINAL DECREASE TO -5.6 (FCAST -5.6 ) VS PREV
-5.5
29 June 2015, 12:00
EUROZONE JUN CONS INFL EXPEC INCREASE TO 4.8 VS PREV 3.6
29 June 2015, 12:00
EUROZONE JUN SELLING PRICE EXPEC INCREASE TO 0.0 VS PREV -0.5
29 June 2015, 12:00
EUROZONE JUN ECONOMIC SENTIMENT DECREASE TO 103.5 (FCAST 103.8 ) VS PREV
103.8
29 June 2015, 12:00
EUROZONE JUN BUSINESS CLIMATE DECREASE TO 0.14 (FCAST 0.27 ) VS PREV 0.28
29 June 2015, 12:00
EUROZONE JUN INDUSTRIAL SENTIMENT DECREASE TO -3.4 (FCAST -3.0 ) VS PREV -3.0
29 June 2015, 12:00
EUROZONE JUN SERVICES SENTIMENT INCREASE TO 7.9 (FCAST 8.0 ) VS PREV 7.8
29 June 2015, 11:59
GREECE ETF DOWN AROUND 14 PCT IN PRE-MARKET, NATIONAL BANK OF GREECE ADR'S
DOWN AROUND 27 PCT
29 June 2015, 11:57
Norwegian retail sales fell sharply in May with 3,4% m/m.
The sharp downturn in May retail sales must be seen in relation to the strong April figure at +2,0%, notes Nordea Bank. However that move is more than reversed with today's figure and what looked like solid growth in private consumption now looks mode moderate.
Retail sales have been fairly strong since the beginning of the year and indicated that private consumption is keeping up well despite the downturn in the oil sector. The figure today brings retail sales down to levels seen through 2014 and signals more moderate growth in private consumption.
It is hard to put too much weight on these figures as they clearly are volatile. However, it is a signal that recent strength in retail sales was exaggerated and that private consumption is growing slower. Thus is supports the case for a 25bp rate cut in September, says Nordea Bank.
The sharp downturn in May retail sales must be seen in relation to the strong April figure at +2,0%, notes Nordea Bank. However that move is more than reversed with today's figure and what looked like solid growth in private consumption now looks mode moderate.
Retail sales have been fairly strong since the beginning of the year and indicated that private consumption is keeping up well despite the downturn in the oil sector. The figure today brings retail sales down to levels seen through 2014 and signals more moderate growth in private consumption.
It is hard to put too much weight on these figures as they clearly are volatile. However, it is a signal that recent strength in retail sales was exaggerated and that private consumption is growing slower. Thus is supports the case for a 25bp rate cut in September, says Nordea Bank.
29 June 2015, 11:50
MOODY'S - NORWAY'S GROWTH EXPECTED TO RISE TO 1.6% IN 2016, 2.1% IN 2017-19
29 June 2015, 11:50
ECB'S NOWOTNY SAYS WHEN ASKED WHETHER HE CAN IMAGINE ELA EXTENSION THIS WEEK;
SAYS WILL BE DISCUSSED AT ECB GOVERNING COUNCIL MEETING ON WEDNESDAY
29 June 2015, 11:50
ECB'S NOWOTNY SAYS DID NOT INCREASE ELA EMERGENCY FUNDING TO GREEK BANKS
BECAUSE CONDITIONS FOR RAISING IT NOT THERE ANYMORE
29 June 2015, 11:49
ECB'S NOWOTNY SAYS ASSUMES MAJORITY OF GREEKS IN FAVOUR OF STAYING IN EURO IN
REFERENDUM, CAN IMAGINE THIS AS BASIS FOR FURTHER NEGOTIATIONS
29 June 2015, 11:49
MOODY'S-STABLE OUTLOOK ON NORWAY'S AAA GOVERNMENT BOND RATING IS DUE TO
EXPECTATION THAT SOUND GOVERNANCE OF COUNTRY'S RESOURCES WILL REMAIN IN PLACE
29 June 2015, 11:44
The Norwegian government's dependence on the oil and gas industry presents
long-term challenges related to the volatility of oil prices and structural
shifts in the sector, but the country's strong institutional framework will
likely mitigate any difficulties, says Moody's Investors Service in a report
published today.
The rating agency's report is an update to the markets and does not constitute a rating action.
Moody's expects Norway's mainland GDP to grow by 1.0% in real terms this year owing to slowdowns in the oil and housing sectors. Growth will predominantly be driven by relatively robust non-oil exports and moderate levels of business investment and consumption, and is expected to increase to 1.6% in 2016 and 2.1% in 2017-19.
Despite the government's effort to segregate its income from the hydrocarbon sector from both the budget and the domestic economy, the main risk to the Norwegian economy stems from its vulnerability to the sector. The hydrocarbon sector, which accounts for approximately 20% of national GDP, has been undergoing structural changes, including reduced investment and lower oil prices, that are weighing on the Norwegian economy and the government's fiscal position. Although these developments do not have immediate implications for Norway's creditworthiness, the structural shifts in the sector raise some long-term concerns regarding the viability of the reliance on the hydrocarbon sector, and necessitate adjustments in the economy and government budget.
That said, Moody's notes that Norway has one of the strongest institutional frameworks among rated sovereigns, which is reflected in a fiscal rule that cushions the budget from volatility in oil markets and preserves the growing value of the Global Pension Fund- Global (GPF-G, the world's largest sovereign wealth fund). Specifically, over time only the real return on the fund, estimated at 4%, is allowed to be incorporated into the annual government budget; although the increasing size of the GPF-G (it has surpassed NOK 7 trillion, or 223% of GDP) has reduced incentives for fiscal restraint. Norway's sensible planning, robust and forward-looking institutional structure, and high levels of wealth -- GDP per-capita on a PPP basis ($66,937) surpassed most countries in 2014 -- support the government's creditworthiness.
The stable outlook on Norway's Aaa government bond rating is informed by Moody's expectation that sound governance of the country's resources will remain in place, and that the government will continue to build financial assets.
The rating agency's report is an update to the markets and does not constitute a rating action.
Moody's expects Norway's mainland GDP to grow by 1.0% in real terms this year owing to slowdowns in the oil and housing sectors. Growth will predominantly be driven by relatively robust non-oil exports and moderate levels of business investment and consumption, and is expected to increase to 1.6% in 2016 and 2.1% in 2017-19.
Despite the government's effort to segregate its income from the hydrocarbon sector from both the budget and the domestic economy, the main risk to the Norwegian economy stems from its vulnerability to the sector. The hydrocarbon sector, which accounts for approximately 20% of national GDP, has been undergoing structural changes, including reduced investment and lower oil prices, that are weighing on the Norwegian economy and the government's fiscal position. Although these developments do not have immediate implications for Norway's creditworthiness, the structural shifts in the sector raise some long-term concerns regarding the viability of the reliance on the hydrocarbon sector, and necessitate adjustments in the economy and government budget.
That said, Moody's notes that Norway has one of the strongest institutional frameworks among rated sovereigns, which is reflected in a fiscal rule that cushions the budget from volatility in oil markets and preserves the growing value of the Global Pension Fund- Global (GPF-G, the world's largest sovereign wealth fund). Specifically, over time only the real return on the fund, estimated at 4%, is allowed to be incorporated into the annual government budget; although the increasing size of the GPF-G (it has surpassed NOK 7 trillion, or 223% of GDP) has reduced incentives for fiscal restraint. Norway's sensible planning, robust and forward-looking institutional structure, and high levels of wealth -- GDP per-capita on a PPP basis ($66,937) surpassed most countries in 2014 -- support the government's creditworthiness.
The stable outlook on Norway's Aaa government bond rating is informed by Moody's expectation that sound governance of the country's resources will remain in place, and that the government will continue to build financial assets.
29 June 2015, 11:32
FRANCE'S HOLLANDE SAYS FRENCH ECONOMY IS MUCH MORE ROBUST THAN IT WAS FOUR
YEARS AGO, HAS NOTHING TO FEAR
29 June 2015, 11:31
UK MAY M4 EXCLUDING INTERMEDIATE OTHER FINANCIAL COMPANIES +0.3 PCT MM, +4.4
PCT YY
29 June 2015, 11:30
UNITED KINGDOM MAY BOE CONSUMER CREDIT DECREASE TO +1.001 BLN GBP (FCAST
1.100 BLN GBP) VS PREV 1.173 BLN GBP
29 June 2015, 11:30
UNITED KINGDOM MAY MORTGAGE APPROVALS DECREASE TO 64.434 K (FCAST 68.700 K)
VS PREV 68.076 K
29 June 2015, 08:52
MOSCOVICI SAYS CREDITORS, GREECE "ONLY A FEW CENTIMETRES" A WAY FROM A DEAL
29 June 2015, 08:51
MOSCOVICI URGES GREEK PM TSIPRAS TO CALL FOR "YES" VOTE IN REFERENDUM
29 June 2015, 08:50
EU'S MOSCOVICI ON FRENCH RADIO SAYS DEAL STILL POSSIBLE WITH GREECE
29 June 2015, 08:49
GREEK-OWNED BANKS IN BULGARIA HAVE CAPITAL ADEQUACY AND LIQUIDITY LEVELS
ABOVE THE AVERAGE FOR THE BULGARIAN BANKING SYSTEM
29 June 2015, 08:49
BULGARIAN BANKS INCLUDING ONES WITH GREEK OWNERS DO NOT HAVE CLAIMS FROM
GREEK CREDIT INSTITUTIONS AND HAVE NO EXPOSURE TO GREEK GOVT BONDS-CBANK
29 June 2015, 08:48
BULGARIAN CEN BANK SAYS GREEK MEASURES ON ITS FINANCIAL SYSTEM CANNOT AFFECT
STABILITY OF BULGARIAN BANKING SYSTEM
29 June 2015, 05:42
- Widespread stock losses in Asia, JKSE -0.78%, further weigh on IDR
- PBOC's rate cut adds to concerns over China's growth worries
- USD/IDR last at 13350-13355, traded 13345-13365 range
- NDFs last index at 13425-43455
29 June 2015, 05:40
PUERTO RICO REPORT SAYS PROBLEM IS URGENT; GOVERNMENT'S CASH BALANCES CAN
EVAPORATE WITH DELAYS; INTENSIFYING CRISIS
29 June 2015, 05:35
PUERTO RICO REPORT SAYS PROBLEM IS URGENT; GOVERNMENT'S CASH BALANCES CAN
EVAPORATE WITH DELAYS; INTENSIFYING CRISIS
29 June 2015, 05:34
PUERTO RICO REPORT SAYS COMPETITIVENESS SHOULD BE RESTORED WITH LOWER LABOR
COSTS, CUTTING ELECTRICITY, TRANSPORT COSTS
29 June 2015, 05:32
PUERTO RICO REPORT SAYS COMPETITIVENESS SHOULD BE RESTORED WITH LOWER LABOR
COSTS, CUTTING ELECTRICITY, TRANSPORT COSTS
29 June 2015, 05:30
PUERTO RICO REPORT SAYS LEGACY OF WEAK BUDGET EXECUTION AND OPAQUE DATA MUST
BE OVERCOME
29 June 2015, 05:28
PUERTO RICO REPORT SAYS RESTRUCTURING COULD SEE VOLUNTARY EXCHANGE OF
EXISTING BONDS FOR NEW BONDS WITH LONGER/LOWER DEBT SERVICE PROFILE
29 June 2015, 05:27
PUERTO RICO STABILITY REPORT SAYS FINANCING GAPS IN COMING YEARS CAN BE
BRIDGED BY DEBT RESTRUCTURING
29 June 2015, 05:23
PUERTO RICO FINANCIAL STABILITY REPORT BY FORMER IMF ECONOMISTS SAYS ISLAND'S
TRUE FISCAL DEFICIT MUCH LARGER THAN ASSUMED - COPY OF REPORT POSTED ON LOCAL
MEDIA WEBSITES
29 June 2015, 05:15
In a seemingly emergency move, the PBoC announced 25bp benchmark rate cut on
Saturday, combined with targeted RRR cuts, effective 28 June. The timing - after
Friday's 7.4% plunge in SHCOMP, and magnitude - the first such combined move
from the central bank since late 2008 the global financial crisis, highlight the
government's concern about a stock market crash and rising systemic financial
risks. While many had expected a government rescue after the market plummeted,
the combined move has exceeded expectations. The move will help to stablise
market sentiment and lend support to property sales and economic growth in H2
2015.
"We maintain our view of one more benchmark rate cut of 25bp in Q3, accompanied by a removal of the deposit rate ceiling, and look for 1-2 50bp RRR cut in H2 2015, depending on liquidity conditions",says Barclays
"We maintain our view of one more benchmark rate cut of 25bp in Q3, accompanied by a removal of the deposit rate ceiling, and look for 1-2 50bp RRR cut in H2 2015, depending on liquidity conditions",says Barclays
29 June 2015, 05:13
IF GREECE TRIGGERS SEVERE MARKET TURMOIL, DISRUPTS TOKYO MARKETS, BOJ’S FIRST
RESPONSE WOULD BE TO OFFER EMERGENCY LIQUIDITY INJECTIONS-SOURCES
29 June 2015, 05:12
BOJ NOT CONSIDERING EMERGENCY LIQUIDITY INJECTIONS OVER GREECE YET–SOURCES
29 June 2015, 05:09
JAPAN'S SUGA: GOVT, BOJ IN CLOSE COOPERATION OVER GREECE SITUATION
29 June 2015, 05:09
JAPAN CHIEF CABINET SECY SUGA: VERY REGRETTABLE GREECE UNABLE TO REACH DEAL
WITH IMF, EUROPE OVER THE WEEKEND
29 June 2015, 05:07
JAPAN FINMIN ASO: GREECE FACES TUESDAY DEADLINE, AFTER WHICH IT WOULD DEFAULT
29 June 2015, 05:05
JAPAN FINMIN ASO: FINANCIAL MARKET IMPACT COULD BE LIMITED IF GREECE
DEFAULTED BUT REMAINED IN EURO ZONE
29 June 2015, 05:04
JAPAN FINMIN ASO: WELCOMES ECB'S EFFORTS TO KEEP EUROPEAN MARKETS STABLE
29 June 2015, 05:03
JAPAN FINMIN ASO: DON'T SEE SIGNS OF FURTHER DECLINES IN JAPAN STOCKS OR
GAINS IN YEN DUE TO GREEK DEBT CRISIS
29 June 2015, 04:55
The second estimate of Q1 GDP surprised in that it was not revised up from
the original estimate of 0.3% qoq; services growth was actually revised down,
offsetting upward revisions to IP and construction. Since then, fresh data for
construction have been released which include major upward revisions to the
historical data, including Q1 2015.
The ONS estimates that this will add 0.06pp to Q1 GDP. In addition, the GDP data significantly understate the true pace of growth. So Q1 GDP growth is expected to be revised up from 0.3% qoq to 0.4%.
The ONS estimates that this will add 0.06pp to Q1 GDP. In addition, the GDP data significantly understate the true pace of growth. So Q1 GDP growth is expected to be revised up from 0.3% qoq to 0.4%.
29 June 2015, 04:42
CHINA'S MAIN STOCK INDEXES REVERSE EARLY GAINS, BOTH DOWN OVER 1 PCT
29 June 2015, 04:42
The current strength of consumer demand has been fuelled by rising real
incomes but also by strong consumer credit growth. In contrast, whilst consumer
confidence is at very high levels, it is striking that mortgage activity has
only responded in a relatively muted fashion.
Contrast is expected to have continued in the May data. Net consumer credit should repeat the April gain of £1.2bn but mortgage approvals should only manage a very modest increase from 68.1k to 69.0k.
Broad money growth on the M4 ex IOFC measure should remain strong at around 4% 3mth pa, consistent with strong growth in underlying economic activity.
Contrast is expected to have continued in the May data. Net consumer credit should repeat the April gain of £1.2bn but mortgage approvals should only manage a very modest increase from 68.1k to 69.0k.
Broad money growth on the M4 ex IOFC measure should remain strong at around 4% 3mth pa, consistent with strong growth in underlying economic activity.
29 June 2015, 04:31
CHINA'S YUAN OPENS TRADE AT 6.2085 PER DOLLAR VS LAST CLOSE AT 6.2090
29 June 2015, 04:30
S.KOREA C.BANK SAYS SELLS 91-DAY MONETARY STABILISATION BONDS AT YIELD OF
1.61 PCT
29 June 2015, 04:27
CHINA'S CSI300 FINANCIAL SUBINDEX OPENS 2.7 PCT HIGHER AFTER PBOC RATE CUT
29 June 2015, 04:26
CHINA'S CSI300 INDEX TO OPEN UP 2.6 PCT AT 4,446.84 POINTS
29 June 2015, 04:21
HK’S HANG SENG INDEX TO OPEN DOWN 0.4 PCT AT 26,560.13 POINTS
29 June 2015, 04:16
PBOC SETS YUAN MID-POINT AT 6.1168 / DLR VS LAST CLOSE 6.2090
29 June 2015, 04:13
CHINA FINANCE MINISTER SAYS CONFIDENT ASIAN INFRASTRUCTURE INVESTMENT BANK
CAN START FUNCTIONING BEFORE YEAR END
29 June 2015, 04:11
BOJ offers to buy Y 140 bln JGB (Floating-rate bonds) outright from 7/1
29 June 2015, 04:11
BOJ offers to buy 400 bln yen JGBs (Residual maturity of 5YR to 10YR)
outright from 7/1
29 June 2015, 04:05
Moody's Investors Service says that banks in the Association of Southeast
Asian Nations (ASEAN) region -- namely those in Indonesia, Malaysia, Singapore,
Thailand, Vietnam and the Philippines -- are well placed to comply with stricter
capital and liquidity requirements under Basel III.
"Moody's-rated banks in the ASEAN region are well capitalized and can meet the higher minimum capital requirements under Basel III," says Alka Anbarasu, a Moody's Vice President and Senior Analyst. "As for the 60% minimum liquidity coverage ratio under Basel III, in many cases, the banks are already 100% compliant, though national differences make it difficult to compare the reported ratios across different banking systems."
"On the issue of additional banking regulations, we note that regulators in the region appear hesitant to embrace the wider bail-in and total loss absorbing capital (TLAC) guidelines as they await more clarity from the Financial Stability Board (FSB)," adds Anbarasu.
Anbarasu also expects selective issuance of Basel III securities by banks across ASEAN; in particular, to replace legacy old-style securities which will be callable over 2015-2017.
Moody's analysis is contained in its just-released presentation titled "ASEAN Banks Well Placed for Basel III Capital and Liquidity Ratio Compliance," and is authored by Anbarasu.
Moody's points out that liquidity coverage ratios (LCRs) have already been implemented in Singapore and Malaysia. Given the predominance of retail funding as well as government bonds in the investment portfolio, Moody's expects most rated banks in the region will be able to comply with the 60% minimum requirement by end-2015; in many cases banks are already 100% compliant. However, national differences on the definition of high quality liquid assets and outflows, whether or not LCRs should be assessed based on a consolidated or standalone basis, and LCR requirements in different currencies could make it difficult to compare the reported ratios across different banking systems.
Moody's adds that it expects regulators in the region will announce by the end of 2015, the list of domestic systemically important banks (D-SIB) in their respective banking systems. Moody's points out that seven banks in Singapore -- three local and four foreign -- have already been identified as systemically important.
"Moody's-rated banks in the ASEAN region are well capitalized and can meet the higher minimum capital requirements under Basel III," says Alka Anbarasu, a Moody's Vice President and Senior Analyst. "As for the 60% minimum liquidity coverage ratio under Basel III, in many cases, the banks are already 100% compliant, though national differences make it difficult to compare the reported ratios across different banking systems."
"On the issue of additional banking regulations, we note that regulators in the region appear hesitant to embrace the wider bail-in and total loss absorbing capital (TLAC) guidelines as they await more clarity from the Financial Stability Board (FSB)," adds Anbarasu.
Anbarasu also expects selective issuance of Basel III securities by banks across ASEAN; in particular, to replace legacy old-style securities which will be callable over 2015-2017.
Moody's analysis is contained in its just-released presentation titled "ASEAN Banks Well Placed for Basel III Capital and Liquidity Ratio Compliance," and is authored by Anbarasu.
Moody's points out that liquidity coverage ratios (LCRs) have already been implemented in Singapore and Malaysia. Given the predominance of retail funding as well as government bonds in the investment portfolio, Moody's expects most rated banks in the region will be able to comply with the 60% minimum requirement by end-2015; in many cases banks are already 100% compliant. However, national differences on the definition of high quality liquid assets and outflows, whether or not LCRs should be assessed based on a consolidated or standalone basis, and LCR requirements in different currencies could make it difficult to compare the reported ratios across different banking systems.
Moody's adds that it expects regulators in the region will announce by the end of 2015, the list of domestic systemically important banks (D-SIB) in their respective banking systems. Moody's points out that seven banks in Singapore -- three local and four foreign -- have already been identified as systemically important.
29 June 2015, 04:00
TAIWAN STOCKS OPEN DOWN 1.1 PCT AT 9,358.96 POINTS
29 June 2015, 03:58
June Flash German CPI is expected to print a tick lower than in May at 0.6%
yoy. On the details, more of the same is expected with the energy component
again providing the biggest pull for the headline number as gasoline prices
continued to rise (1.1% mom) according to the European Commission weekly oil
price bulletin data.
In May, the energy component explained half of the quickening in headline inflation. Energy prices inflation rose from -5.9% yoy to 5.0% yoy, adding 10 bp to headline inflation.
The food component rose from 1.1% yoy to 1.4% yoy in May, adding 3 bp. On the core components, non-energy non-food goods price inflation was unchanged at 0.9% yoy while services prices quickened from 1.4% yoy to 1.5% yoy, adding 6bp to the headline figure.
"We expect the prices paid for services to fall back a bit in June after their big jump in May which should also keep a lid on the headline figure. Looking ahead, we expect German HICP inflation to average 0.5% in 2015 and 1.7% in 2016, while the core metric should remain stable at 1.2% in 2015 and 1.4% in 2016",says Societe Generale.
In May, the energy component explained half of the quickening in headline inflation. Energy prices inflation rose from -5.9% yoy to 5.0% yoy, adding 10 bp to headline inflation.
The food component rose from 1.1% yoy to 1.4% yoy in May, adding 3 bp. On the core components, non-energy non-food goods price inflation was unchanged at 0.9% yoy while services prices quickened from 1.4% yoy to 1.5% yoy, adding 6bp to the headline figure.
"We expect the prices paid for services to fall back a bit in June after their big jump in May which should also keep a lid on the headline figure. Looking ahead, we expect German HICP inflation to average 0.5% in 2015 and 1.7% in 2016, while the core metric should remain stable at 1.2% in 2015 and 1.4% in 2016",says Societe Generale.
29 June 2015, 03:25
Factory activity appears to have stabilized after slowing sharply at the
start of the year. The manufacturing ISM reached a low point in March/April and
began to reverse the earlier weakness in May. The rebound is expected to
continue, with a 0.4 increase to 53.2 in June.
The three factors that held back manufacturing activity during the winter months: weakness in consumer demand, a sharp contraction in oil-related investments, and dollar strength. Recent data suggests that consumer weakness is beginning to reverse.
The pace of rig count declines has subsided and is expected to level off soon, which should bring the capex cuts in the oil & gas sector to an end. The effects of stronger dollar will be more persistent, but on the whole, manufacturing activity is expected to continue to improve further over the coming months.
"Based on a historical correlation between the ISM and GDP, our 53.2 forecast for June would be in line with GDP growth of 2.8%. Incorporating the latest value for the nonmanufacturing ISM puts the compsite at 55.40, consistent with GDP growth of 3%",says Societe Generale.
The three factors that held back manufacturing activity during the winter months: weakness in consumer demand, a sharp contraction in oil-related investments, and dollar strength. Recent data suggests that consumer weakness is beginning to reverse.
The pace of rig count declines has subsided and is expected to level off soon, which should bring the capex cuts in the oil & gas sector to an end. The effects of stronger dollar will be more persistent, but on the whole, manufacturing activity is expected to continue to improve further over the coming months.
"Based on a historical correlation between the ISM and GDP, our 53.2 forecast for June would be in line with GDP growth of 2.8%. Incorporating the latest value for the nonmanufacturing ISM puts the compsite at 55.40, consistent with GDP growth of 3%",says Societe Generale.
29 June 2015, 03:11
GREEK GOVT OFFICIAL ONLINE BANKING TRANSACTIONS WITHIN GREECE ALLOWED BUT
FOREIGN TRANSFERS PROHIBITED
29 June 2015, 03:10
BOJ KURODA: BOJ EXPECTS INFLATION TO BE "IN THE NEIGHBORHOOD" OF 2 PCT AROUND
APRIL-SEPTEMBER PERIOD OF 2016, BUT RISKS TO THAT SCENARIO CANNOT BE IGNORED
WITH GLOBAL ECONOMY FULL OF UNCERTAINTY
29 June 2015, 03:09
AUSTRALIA'S S&P/ASX 200 INDEX DOWN 1.62 PCT AT 5,456.20 POINTS IN EARLY
TRADE
29 June 2015, 03:08
BOJ KURODA: AM CONFIDENT BOJ CAN ACHIEVE ITS INFLATION TARGET WITH
"UNWAVERING DETERMINATION"
29 June 2015, 03:08
BOJ KURODA: BOJ'S COMMITMENT TO ACHIEVING THE 2 PERCENT INFLATION TARGET WILL
NEVER BE COMPROMISED
29 June 2015, 03:07
BOJ KURODA: CENTRAL BANK'S STRONG COMMITMENT TO POLICY OBJECTIVES, CLEAR AND
CONSISTENT COMMUNICATION, AND DECISIVE ACTION TO FULFIL THE COMMITMENT WOULD
COLLECTIVELY BE POWERFUL ENOUGH TO HAVE SIGNIFICANT IMPACT ON INFLATIO
29 June 2015, 03:06
BOJ GOV KURODA: MONETISING GOVT DEBT IS WIDELY UNDERSTOOD TO RUN THE RISK OF
ERODING THE CREDIBILITY OF THE CENTRAL BANK AND THEREBY POTENTIALLY INCREASING
RISK PREMIUMS RATHER THAN REDUCING THEM
29 June 2015, 03:05
BOJ GOV KURODA: INFLATION IS WIDELY PERCEIVED TO BE ULTIMATELY A MONETARY
PHENOMENON, SO CREATION OF A MASSIVE QUANTITY OF MONEY WOULD BE A STRONG SIGNAL
OF A CENTRAL BANK'S COMMITMENT TO FIGHTING DEFLATION
29 June 2015, 03:04
BOJ GOV KURODA: IT HAS BECOME A COMMON UNDERSTANDING AMONG CENTRAL BANKS THAT
UNCONVENTIONAL MONETARY POLICY, DESPITE SOME LINGERING SKEPTICISM FROM ACADEMIC
FRONT, HAS PROVEN TO BE EFFECTIVE
29 June 2015, 03:04
BOJ GOV KURODA: CENTRAL BANKS CAN OVERCOME THE ZERO LOWER BOUND, AS LONG AS
THE POLICY MAKER COMMITS DECISIVELY TO FULFILLING ITS MANDATE WITH WELL-DESIGNED
UNCONVENTIONAL POLICY MEASURES
29 June 2015, 03:04
GREEK GOVT OFFICIAL SAYS PENSION PAYMENTS WILL BE EXEMPTED FROM DAILY
WITHDRAWAL LIMITS
29 June 2015, 03:03
TOKYO'S NIKKEI SHARE AVERAGE EXTENDS FALL, DOWN 2.49 PCT
29 June 2015, 03:01
GREEK GOVT OFFICIAL CONFIRMS BANKS TO BE CLOSED UNTIL JULY 6, ATMS TO REOPEN
LATE MONDAY AFTERNOON, DAILY WITHDRAWAL LIMIT SET AT 60 EUROS
29 June 2015, 03:01
SEOUL SHARES OPEN DOWN 1.62 PCT
29 June 2015, 03:00
TOKYO'S NIKKEI SHARE AVERAGE OPENS DOWN 1.93 PCT AT 20,305.97
29 June 2015, 02:52
JAPAN GOVT SAYS INDUSTRIAL PRODUCTION IS STAGNATING
29 June 2015, 02:52
JAPAN GOVT CUTS ASSESSMENT OF INDUSTRIAL PRODUCTION
29 June 2015, 02:52
LEW SAID UNITED STATES IS MONITORING GREEK SITUATION CLOSELY
29 June 2015, 02:51
TREASURY SPOKESPERSON SAYS LEW STRESSED NEED FOR GREECE TO TAKE STEPS TO
MAINTAIN FINANCIAL STABILITY AHEAD OF JULY 5 REFERENDUM,
29 June 2015, 02:51
LEW NOTED IN CALL THE IMPORTANCE OF COMMITMENT TO REFORMS BY GREECE AND
DISCUSSION OF POTENTIAL DEBT RELIEF
29 June 2015, 02:51
U.S. TREASURY'S LEW TELLS GREEK PRIME MINISTER TSIPRAS IN PHONE CALL THAT IT
IS IN INTEREST OF GREECE, EUROPE AND GLOBAL ECONOMY TO FIND SOLUTION THAT PUTS
GREECE ON PATH TOWARD REFORM, RECOVERY -U.S. TREASURY SPOKESPERSO
29 June 2015, 02:50
10-YEAR U.S. TREASURY YIELD DROPS 17 BASIS POINTS TO 2.306 PERCENT
29 June 2015, 02:50
JAPAN MAY IP FORECAST 2 MTH AHEAD* INCREASE TO +0.6 % VS PREV -0.5 %
29 June 2015, 02:50
JAPAN MAY IP FORECAST 1 MTH AHEAD* INCREASE TO +1.5 % VS PREV 0.5 %
29 June 2015, 02:50
JAPAN MAY INDUSTRIAL OUTPUT PRELIM MM DECREASE TO -2.2 % (FCAST -0.8 %) VS
PREV 1.2 %
29 June 2015, 02:50
JAPAN MAY RETAIL SALES YY DECREASE TO +3.0 % (FCAST 2.3 %) VS PREV 5.0 %
29 June 2015, 02:14
The week to come will be marked by a war of nerves over the referendum in
Greece, scheduled for next Sunday. The left-wing Greek government is building up
pressure by suggesting to the Greek voters to reject the creditors'
demands.
The other euro members react by also applying pressure. The ECB today decided to freeze Emergency Liquidity Assistance (ELA) for Greek banks. Thus, the ECB is forcing capital controls and limits on withdrawals.
Only the result of the referendum will finally decide on Greece's EMU membership. Should the electorate vote in favor of a compromise, the Eurozone members will not be able to ignore that and will resume negotiations.
The other euro members react by also applying pressure. The ECB today decided to freeze Emergency Liquidity Assistance (ELA) for Greek banks. Thus, the ECB is forcing capital controls and limits on withdrawals.
Only the result of the referendum will finally decide on Greece's EMU membership. Should the electorate vote in favor of a compromise, the Eurozone members will not be able to ignore that and will resume negotiations.
29 June 2015, 01:55
BOJ: banks' reserve balance at 173 trln at end of day
29 June 2015, 01:55
BOJ: current account balance at 228.4 trln at end of day
29 June 2015, 01:50
Greek PM Tsipras surprised everyone by calling for a referendum to be held on
5 July. The referendum will ask the Greeks whether or not they accept the latest
proposal presented by the Institutions. The Greek government supports a "no"
vote. This surprising decision comes after meaningful progress had been achieved
over the past two weeks on reform measures that would unlock the remaining funds
of the second bailout (EUR7.2bn). Most policymakers and markets expected that a
deal on a programme extension was within reach before the current one expires on
30 June.
Markets have been complacent about Greek risk: a majority of investors believe that a Greek exit will be a small negative for markets and only 23% expect a Greek exit to happen within the next three months (Global Macro Survey, 22 June). While there is still a slight chance that the referendum is called off if it is found unconstitutional, but this is unlikely.
High volatility in the run-up to the referendum. As the prospects of a deal before 30 June vanish, the Eurosystem has decided today not to increase the Emergency Liquidity Assistance (ELA) beyond Friday's 26 June level. The Greek government was left with no choice but to declare a bank holiday until 5 July and although it was not formally announced at the time of writing, it should also enact capital controls to avoid a meltdown of the entire Greek banking system (the experience of Cyprus in 2013 is a reference for such controls).
The EA institutions have stated that they stand ready to mitigate contagion. The ECB has indicated that it is determined to use all the instruments available within its mandate to preserve stability. This could include further front-loading of the ECB's QE if periphery sovereign spreads were to increase significantly.
A victory for a "yes" vote may trigger a national-unity government. In the event of a "yes" vote, it is highly likely that Greek PM Tsipras and possibly the entire government would step down, even if other options are also possible, such as PM Tsipras staying in power and accepting the deal with the Institutions. After PM Tsipras steps down, moderate Syriza MPs could join other moderate parties (PASOK, Potami and ND) into a national unity coalition. The new government would re-engage with the Institutions to sign an agreement as per the mandate given by the referendum. Snap elections would remain a possibility in this scenario, but probably not until after the summer. Market reaction would likely be positive immediately after the referendum. However volatility is likely to remain elevated until a new and stable government is put in place and a programme is approved.
A "no" vote makes exit the most likely outcome. Without the support of a programme, a potential exit scenario would resemble Argentina's 2001-02 crisis, which also started with deposit controls but - in the absence of an internationally supported plan - rapidly deteriorated into tighter controls and a forced currency conversion. It is believed that European institutions would need to respond to this scenario with a strong institutional-reform agenda, otherwise redenomination risk could re-emerge. The ambitious agenda proposed in the recently published Five Presidents Report may need to be fast-tracked.
Markets have been complacent about Greek risk: a majority of investors believe that a Greek exit will be a small negative for markets and only 23% expect a Greek exit to happen within the next three months (Global Macro Survey, 22 June). While there is still a slight chance that the referendum is called off if it is found unconstitutional, but this is unlikely.
High volatility in the run-up to the referendum. As the prospects of a deal before 30 June vanish, the Eurosystem has decided today not to increase the Emergency Liquidity Assistance (ELA) beyond Friday's 26 June level. The Greek government was left with no choice but to declare a bank holiday until 5 July and although it was not formally announced at the time of writing, it should also enact capital controls to avoid a meltdown of the entire Greek banking system (the experience of Cyprus in 2013 is a reference for such controls).
The EA institutions have stated that they stand ready to mitigate contagion. The ECB has indicated that it is determined to use all the instruments available within its mandate to preserve stability. This could include further front-loading of the ECB's QE if periphery sovereign spreads were to increase significantly.
A victory for a "yes" vote may trigger a national-unity government. In the event of a "yes" vote, it is highly likely that Greek PM Tsipras and possibly the entire government would step down, even if other options are also possible, such as PM Tsipras staying in power and accepting the deal with the Institutions. After PM Tsipras steps down, moderate Syriza MPs could join other moderate parties (PASOK, Potami and ND) into a national unity coalition. The new government would re-engage with the Institutions to sign an agreement as per the mandate given by the referendum. Snap elections would remain a possibility in this scenario, but probably not until after the summer. Market reaction would likely be positive immediately after the referendum. However volatility is likely to remain elevated until a new and stable government is put in place and a programme is approved.
A "no" vote makes exit the most likely outcome. Without the support of a programme, a potential exit scenario would resemble Argentina's 2001-02 crisis, which also started with deposit controls but - in the absence of an internationally supported plan - rapidly deteriorated into tighter controls and a forced currency conversion. It is believed that European institutions would need to respond to this scenario with a strong institutional-reform agenda, otherwise redenomination risk could re-emerge. The ambitious agenda proposed in the recently published Five Presidents Report may need to be fast-tracked.
29 June 2015, 01:48
OHIO GOVERNOR JOHN KASICH TO ANNOUNCE ON JULY 21 HE WILL SEEK REPUBLICAN
PRESIDENTIAL NOMINATION -POLITICO
29 June 2015, 01:29
June headline euro-area CPI inflation, due on Tuesday, is expected to remain
0.3% y/y. Core CPI inflation likely eased slightly to 0.8% y/y from 0.9% prior.
Headline CPI inflation moved out of negative territory in April after four
months.
Although European Central Bank easing policies might already have had a limited effect, the two factors likely contributing to this inflation pick-up are the recent sharp oil-price rise, and euro depreciation in the past year. The oil price in euro terms has risen about 50% since the trough in January.
"Medium-term, we expect significant inflation divergences between countries to emerge; for example, Germany has much less spare capacity than weaker countries such as France, Italy, and Spain, and therefore it may face inflationary pressures sooner",says Standard Chartered.
Although European Central Bank easing policies might already have had a limited effect, the two factors likely contributing to this inflation pick-up are the recent sharp oil-price rise, and euro depreciation in the past year. The oil price in euro terms has risen about 50% since the trough in January.
"Medium-term, we expect significant inflation divergences between countries to emerge; for example, Germany has much less spare capacity than weaker countries such as France, Italy, and Spain, and therefore it may face inflationary pressures sooner",says Standard Chartered.
29 June 2015, 01:24
South Korea will release June CPI inflation data on 1 July. Inflation is
expected 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 Respiratory Syndrome (MERS) outbreak on 20 May. It is believed that the drop in consumption limited inflation in June.
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 Respiratory Syndrome (MERS) outbreak on 20 May. It is believed that the drop in consumption limited inflation in June.
29 June 2015, 01:13
US TREASURY FUTURES SURGE, RISE 1 27/32 IN ACTIVE TRADING AS INVESTORS SEEK
SAFE HAVENS AS GREEK DEFAULT CHANCES RISE
29 June 2015, 01:07
U.S. CRUDE FALLS BY $1 IN EARLY ASIAN TRADE
29 June 2015, 01:02
U.S. STOCK INDEX FUTURES OPEN DOWN 34 POINTS, OR 1.6 PCT, AS CHANCES OF GREEK
DEFAULT, EXIT FROM EURO ZONE INCREASE
29 June 2015, 01:00
NEW ZEALAND EMPLOYEE CONFIDENCE 102.8 IN Q2 FROM 108.5 IN PVS QUARTER -
WESTPAC SURVEY
29 June 2015, 01:00
NZ's NZX 50 OPENS AT 5755.450 POINTS, UP 0.010 PCT
29 June 2015, 00:49
Thailand will release May current account data on 30 June. The current
account is expected to have remained in surplus, despite the seasonal effect of
dividend repatriation by global corporates based in Thailand. A surplus of c.USD
1,200mn is expected, a modest improvement from USD 1,113mn in April.
The current account has been in surplus since October 2014, mainly due to a strong recovery in the tourism sector and lower oil prices.
"We expect the surplus to soften on a likely increase in oil in H2-2015", said Standard Chartered in a report on Monday.
The current account has been in surplus since October 2014, mainly due to a strong recovery in the tourism sector and lower oil prices.
"We expect the surplus to soften on a likely increase in oil in H2-2015", said Standard Chartered in a report on Monday.
29 June 2015, 00:18
Westpac Research notes:
Australian 3yr government bond (futures) yields rose from 2.11% to 2.15%, while the 10yr rose from 3.10% to 3.20%.
Australian 3yr government bond (futures) yields rose from 2.11% to 2.15%, while the 10yr rose from 3.10% to 3.20%.
29 June 2015, 00:17
Westpac Research notes:
US 10yr treasury yields rose from 2.39% to 2.49%, the positive surprise from the consumer confidence report (Michigan Univ.) contributing to the latter part of the rise.
US 10yr treasury yields rose from 2.39% to 2.49%, the positive surprise from the consumer confidence report (Michigan Univ.) contributing to the latter part of the rise.
29 June 2015, 00:15
Westpac Research notes:
AUD/NZD 1 day: The 1.1165 minor support level is vulnerable 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: The 1.1165 minor support level is vulnerable 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.
29 June 2015, 00:15
Westpac Research notes:
NZD/USD 1 day: The multi-year low for 0.6815 is now in sight. The Greel events will weigh.
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: The multi-year low for 0.6815 is now in sight. The Greel events will weigh.
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).
29 June 2015, 00:13
Westpac Research notes:
AUD/USD 1 day: Looking increasing bearish, and getting dangerously close to breaking a head-and-shoulders neckline at 0.7615 which would signal a further multi-cent fall. The Greel events will weigh.
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: Looking increasing bearish, and getting dangerously close to breaking a head-and-shoulders neckline at 0.7615 which would signal a further multi-cent fall. The Greel events will weigh.
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.
29 June 2015, 00:12
Westpac Research notes:
AU swap yields 1 day: The 2yr should open around 2.24% while the 10yr should open around 3.47%.
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 2.24% while the 10yr should open around 3.47%.
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%.
29 June 2015, 00:11
Westpac Research notes:
NZ swap yields 1 day: Given the Greek events during the weekend, NZ swap rates should open lower and the curve should flatten.
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 Greek events during the weekend, NZ swap rates should open lower and the curve should flatten.
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%.
29 June 2015, 00:05
Barclays notes:
- Data this week is likely to be mixed. We expect a further correction in May building approvals on Wednesday (Barclays -1% m/m. cf. 1.4% m/m) given approvals look to us to have run ahead of other partial indicators.
- In contrast, we look for retail sales (Friday) to resume growing at a modest rate (Barclays 0.6% m/m, consensus 0.4% m/m) given private-sector measures of sales remain buoyant.
- The news on the trade deficit (Thursday) should also be better and we look for a sharp improvement in May (Barclays AUD -2.5bn, cf. AUD -2.2bn) mainly due to lower imports.
- RBA Governor Stevens is speaking on Tuesday at a central bank think-tank in London, although we suspect the main focus will not be on the Australian economy.
- We doubt data and Stevens will provide support for the AUD, with the currency likely to move lower over the coming days and months
29 June 2015, 00:00
The yen depreciation in May was driven by global and technical factors, and
not by Japanese fundamentals. Japan's Q1 real GDP growth surprised to the
upside, current account is recording continuous surplus, and wages are showing
signs of improvement.
Furthermore, expectations for additional BoJ easing have declined. This week, Bank of Japan (BoJ) Tankan report (Wednesday) and May Monthly Labor Survey (Tuesday) will provide the latest picture on state of the Japanese economy.
In terms of Tankan report, the Large Manufacturer DI is expected to remain unchanged at +12 (consensus: +12), likely due to sluggish exports, while looking for some improvement in Large Non-Manufacturer DI to +20 (consensus: +22) from +19 in April survey. Besides these headline numbers, FY2015 capex plans, inventory conditions DI, and inflation outlook of enterprises would be the key focus. Inflation outlook of enterprises (released on Thursday) will be relevant in gauging monetary policy outlook (in March, one-year forecast inflation was at +1.4%, unchanged from December survey).
With regards to May Monthly Labor Survey, wages per worker is expected to further accelerate to +0.8% y/y (consensus: +0.7%) from +0.7% in April. Wages have gotten off to a fairly steady start in FY2015 as scheduled wages (i.e., base salary) should begin to reflect the effect of the base wage hikes by around July. These data should support the view of ongoing recovery, which fundamentally do not support further JPY depreciation.
The global factors should continue to drive USDJPY, including changes in Fed hike expectations with important US data releases this week and fluctuations in risk sentiment with Greek headlines.
Furthermore, expectations for additional BoJ easing have declined. This week, Bank of Japan (BoJ) Tankan report (Wednesday) and May Monthly Labor Survey (Tuesday) will provide the latest picture on state of the Japanese economy.
In terms of Tankan report, the Large Manufacturer DI is expected to remain unchanged at +12 (consensus: +12), likely due to sluggish exports, while looking for some improvement in Large Non-Manufacturer DI to +20 (consensus: +22) from +19 in April survey. Besides these headline numbers, FY2015 capex plans, inventory conditions DI, and inflation outlook of enterprises would be the key focus. Inflation outlook of enterprises (released on Thursday) will be relevant in gauging monetary policy outlook (in March, one-year forecast inflation was at +1.4%, unchanged from December survey).
With regards to May Monthly Labor Survey, wages per worker is expected to further accelerate to +0.8% y/y (consensus: +0.7%) from +0.7% in April. Wages have gotten off to a fairly steady start in FY2015 as scheduled wages (i.e., base salary) should begin to reflect the effect of the base wage hikes by around July. These data should support the view of ongoing recovery, which fundamentally do not support further JPY depreciation.
The global factors should continue to drive USDJPY, including changes in Fed hike expectations with important US data releases this week and fluctuations in risk sentiment with Greek headlines.
28 June 2015, 23:48
After rallying about 4% in the first three weeks of June, helped by public
communication by the more hawkish members of the BoE MPC, GBPUSD fell about 1%
last week and UK data should drive further depreciation this week.
The UK rates market has significantly re-priced expectations of BoE tightening in the past two weeks to now imply about an 80% chance of a March 2016 25bp rate hike, from less than 50% chance in early June. This has reflected speeches by BoE MPC members Ian McCafferty (12 June) and Kristin Forbes (17 June) as well as an FT interview by Martin Weale (23 June), all of which sit at the most hawkish end of the BoE MPC.
The re-pricing has also reflected the unexpectedly large pickup in April average weekly earnings to 2.7% y/y from a revised 2.3% in March. However, it is unlikely that this recent BoE communication reflects the views of the wider committee or Governor Carney. As such, only gradual GBP appreciation against the EUR and further GBPUSD depreciation as tighter fiscal policy and institutional risks weigh on UK economic growth and keep the BoE cautious.
Barclays notes:
The UK rates market has significantly re-priced expectations of BoE tightening in the past two weeks to now imply about an 80% chance of a March 2016 25bp rate hike, from less than 50% chance in early June. This has reflected speeches by BoE MPC members Ian McCafferty (12 June) and Kristin Forbes (17 June) as well as an FT interview by Martin Weale (23 June), all of which sit at the most hawkish end of the BoE MPC.
The re-pricing has also reflected the unexpectedly large pickup in April average weekly earnings to 2.7% y/y from a revised 2.3% in March. However, it is unlikely that this recent BoE communication reflects the views of the wider committee or Governor Carney. As such, only gradual GBP appreciation against the EUR and further GBPUSD depreciation as tighter fiscal policy and institutional risks weigh on UK economic growth and keep the BoE cautious.
Barclays notes:
- Our forecasts for major UK data are all below the consensus forecast. We expect the final reading of Q1 GDP (Tuesday) to be revised lower to 2.4% y/y (consensus: 2.5%) along with a larger-than-expected Q1 current account deficit (Tuesday; Barclays: GBP29.4bn; consensus: GBP24bn).
- Manufacturing PMI (Wednesday) is likely to pick up slightly in June (Barclays: 52.2; consensus: 52.5) while services PMI (Friday) should remain at 56.5 (consensus: 57.4).
28 June 2015, 23:39
The EUR will become increasingly vulnerable to developments from the Greek
political uncertainty in the coming week following the surprise decision by the
Greek government to unilaterally end the negotiation process with its
international creditors and call a referendum on 5 July regarding the country's
bailout program.
The escalation of political uncertainty in Greece will likely imply a cautious stance from investors, who are instead expected to demonstrate a broad-based flight to quality. Under a risk-off environment, the EUR is expected to come under downward pressure. Beyond the Greek political uncertainty markets are expected to be content to short the EUR based on fundamentals, which strongly support further EURUSD depreciation as respective monetary policy stances diverge.
Other than Greek political developments, which are likely to dominate the price action in the coming week, euro area data and events this week include June EA flash headline and core HICP inflation, final EA manufacturing and services PMIs.
The ECB June meeting minutes will also be released on Thursday and is likely to reiterate the need for full implementation of the current monetary policy measures. The minutes will also likely reveal the Governing Council's unanimous view that it is appropriate to look through the recent volatility in European fixed income assets and maintain steady monetary policy. The minutes may also reveal whether President Draghi's press-conference view that the market should get used to higher asset price volatility is also held by other members of the Governing Council.
The escalation of political uncertainty in Greece will likely imply a cautious stance from investors, who are instead expected to demonstrate a broad-based flight to quality. Under a risk-off environment, the EUR is expected to come under downward pressure. Beyond the Greek political uncertainty markets are expected to be content to short the EUR based on fundamentals, which strongly support further EURUSD depreciation as respective monetary policy stances diverge.
Other than Greek political developments, which are likely to dominate the price action in the coming week, euro area data and events this week include June EA flash headline and core HICP inflation, final EA manufacturing and services PMIs.
The ECB June meeting minutes will also be released on Thursday and is likely to reiterate the need for full implementation of the current monetary policy measures. The minutes will also likely reveal the Governing Council's unanimous view that it is appropriate to look through the recent volatility in European fixed income assets and maintain steady monetary policy. The minutes may also reveal whether President Draghi's press-conference view that the market should get used to higher asset price volatility is also held by other members of the Governing Council.
28 June 2015, 23:31
Barclays notes:
Even if the Fed seems to be hesitant about committing to start normalizing monetary policy in the near future, we think recent data supports our view that the likelihood of a September rate hike is higher than market pricing (less than half of a hike). We have high conviction in the resumption of a EURUSD downtrend and recommend staying short EURUSD.
Data-wise, this week we will get non-farm payrolls for June, for which we are more constructive than the market. We are forecasting a creation of 250k jobs, compared to the market consensus of 227k. This would push down the unemployment rate from 5.5% to 5.4% assuming the participation rate does not change materially. As in recent employment reports, the market will closely follow wage developments as a measure of labor slack and upcoming inflationary pressures.
We and the market expect a y/y increase of 2.3% in the average hourly earnings. In this regard, we believe the USD will continue to be supported especially versus the EUR, for which we get preliminary inflation data that should confirm that although the recent pick-up in inflation is welcome by the ECB, the pace at which prices are moderating is not enough to affect ECB's reaction function.
Last but not least, the June manufacturing ISM is going to be released on Wednesday; we expect a 53 reading in line with market consensus (53.1), which would be a marginal increase from May (52.8).
Even if the Fed seems to be hesitant about committing to start normalizing monetary policy in the near future, we think recent data supports our view that the likelihood of a September rate hike is higher than market pricing (less than half of a hike). We have high conviction in the resumption of a EURUSD downtrend and recommend staying short EURUSD.
Data-wise, this week we will get non-farm payrolls for June, for which we are more constructive than the market. We are forecasting a creation of 250k jobs, compared to the market consensus of 227k. This would push down the unemployment rate from 5.5% to 5.4% assuming the participation rate does not change materially. As in recent employment reports, the market will closely follow wage developments as a measure of labor slack and upcoming inflationary pressures.
We and the market expect a y/y increase of 2.3% in the average hourly earnings. In this regard, we believe the USD will continue to be supported especially versus the EUR, for which we get preliminary inflation data that should confirm that although the recent pick-up in inflation is welcome by the ECB, the pace at which prices are moderating is not enough to affect ECB's reaction function.
Last but not least, the June manufacturing ISM is going to be released on Wednesday; we expect a 53 reading in line with market consensus (53.1), which would be a marginal increase from May (52.8).
28 June 2015, 23:16
FOR CAPITAL CONTROL MEASURES TO TAKE EFFECT GREEK CABINET MUST APPROVE
COUNCIL RECOMMENDATIONS, PRESIDENTIAL DECREE NEEDED
28 June 2015, 23:15
FOREIGN BANK CARD HOLDERS WILL BE ALLOWED TO WITHDRAW MAXIMUM LIMIT SET BY
THEIR BANKS- REUTERS' SOURCE
28 June 2015, 23:14
MACEDONIAN CENTRAL BANK SAYS ORDERS BANKS TO WITHDRAW ALL DEPOSITS AND LOANS
FROM BANKS SITUATED IN GREECE AND IN BRANCHES OF THOSE BANKS AROUND THE WORLD
28 June 2015, 23:06
MACEDONIAN CENTRAL BANK - MEASURES LIMIT CAPITAL OUTFLOWS FROM MACEDONIA TO
GREEK SUBJECTS UNDER FUTURE TRANSACTIONS, NOT THOSE ALREADY IN PLACE
28 June 2015, 22:54
GREEK FINANCIAL STABILITY COUNCIL RECOMMENDED DAILY CASH WITHDRAWAL LIMIT OF
60 EUROS AS OF TUESDAY, ATMS CLOSED MONDAY- REUTERS' SOURCE
28 June 2015, 22:14
GREEK FINANCIAL STABILITY COUNCIL RECOMMENDED KEEPING BANKS CLOSED FOR NEXT
SIX WORKING DAYS- REUTERS SOURCE
28 June 2015, 22:03
NZD DROPS TO $0.6795, LOWEST SINCE MID-2010
28 June 2015, 21:41
EURO FALLS MORE THAN 1 U.S. CENT TO $1.0996, HITS 2-MTH LOW VS CHF OF 1.0256
AFTER GREECE FAILS TO SECURE CREDIT DEAL WITH EURO LENDERS
28 June 2015, 21:07
Black Monday melting down for global financial markets as Greece goes
bankrupt now that talks to prevent a catastrophic default by Greece next week
have completely broken down.
Euro zone finance ministers have dissented a call for a grace period before a shock snap referendum after talks between IMF, Greece PM Psipras and Eurozone finance ministers and the money runs out on Tuesday. The European Central Bank's emergency lifeline funding is almost certain to be cut off as soon as today.
This is not what complacent, oversold financial markets have been expecting. They thought a last minute deal would always be done and have stayed calm until now, even rising further in anticipation.
FX markets are going to tumble heavily on Monday. The instant beneficiaries will be the US dollar and bullion and silver.
Euro zone finance ministers have dissented a call for a grace period before a shock snap referendum after talks between IMF, Greece PM Psipras and Eurozone finance ministers and the money runs out on Tuesday. The European Central Bank's emergency lifeline funding is almost certain to be cut off as soon as today.
This is not what complacent, oversold financial markets have been expecting. They thought a last minute deal would always be done and have stayed calm until now, even rising further in anticipation.
FX markets are going to tumble heavily on Monday. The instant beneficiaries will be the US dollar and bullion and silver.
28 June 2015, 21:01
GREEK PM TSIPRAS SAYS DEPOSITS OF GREEK DEPOSITORS ARE SECURE, SAYS ECB'S
ACTIONS FORCED THE CBANK TO RECOMMEND A BANK HOLIDAY AND CAPITAL CONTROLS
28 June 2015, 20:59
GREEK BANKS AND STOCK EXCHANGE WILL NOT OPEN ON MONDAY - GREEK FINANCIAL
SOURCE
28 June 2015, 15:24
ECB SAYS ELA TO GREEK BANKS MAINTAINED AT ITS CURRENT LEVEL
28 June 2015, 15:18
GREECE'S VAROUFAKIS SAYS INTERNATIONAL CREDITORS DID NOT MEET HIS COUNTRY'S
REQUESTS 'EVEN QUARTER WAY'
28 June 2015, 15:18
GREECE'S VAROUFAKIS SAYS DOESN'T SEE WHY HIS COUNTRY SHOULD CONSIDER QUITTING
THE EURO DESPITE TURMOIL
28 June 2015, 14:40
GREEK GOVERNMENT TO CONSIDER IMPOSING CAPITAL CONTROLS AND CLOSING BANKS ON
MONDAY - FINANCE MINISTER VAROUFAKIS TO BBC
28 June 2015, 14:32
GREEK FINANCIAL STABILITY COUNCIL TO CONVENE AT 1600 LOCAL TIME TO DISCUSS
BANKING SITUATION-STATEMENT
28 June 2015, 13:48
Austria's finance minister said a Greek exit from the euro - or Grexit -
would only be possible if Athens first asked to leave the European Union and
other countries agreed to its request.
"The consequences for the euro countries are not nearly as bad as for Greece. It's clear that one country can under no circumstances blackmail the European Commission and the euro countries," said Austrian fin min during an interview with Die Presse published this morning
Meanwhile, also out this morning, is a call from EU council president Donald Tusk urging that Greece must stay in the Eurozone.
Greece is and should remain euro area member," he tweeted after euro zone finance ministers refused to extend bailout loans ahead of a looming Greek debt default on Tuesday.
"I'm in contact with leaders to ensure integrity of euro area of 19 countries,
"The consequences for the euro countries are not nearly as bad as for Greece. It's clear that one country can under no circumstances blackmail the European Commission and the euro countries," said Austrian fin min during an interview with Die Presse published this morning
Meanwhile, also out this morning, is a call from EU council president Donald Tusk urging that Greece must stay in the Eurozone.
Greece is and should remain euro area member," he tweeted after euro zone finance ministers refused to extend bailout loans ahead of a looming Greek debt default on Tuesday.
"I'm in contact with leaders to ensure integrity of euro area of 19 countries,
27 June 2015, 15:28
The sudden drop in low oil prices whacked energy sector earnings and resulted
in a pullback in many of the marginal shale oil projects. While the bad news had
an immediate economic impact, the benefits of low oil have taken a while to work
through the system.
The good news is beginning to be seen in the latest consumer data. Retail sales and auto sales have really picked up in the last few months and today's consumer sentiment reading rose to a final June reading of 96.1, a five-month high and much higher than the 86.9 average reading in the year leading up to the recession.
The positive economic trend will help corporate earnings which in turn will help propel equity markets forward in the second half of the year.
The good news is beginning to be seen in the latest consumer data. Retail sales and auto sales have really picked up in the last few months and today's consumer sentiment reading rose to a final June reading of 96.1, a five-month high and much higher than the 86.9 average reading in the year leading up to the recession.
The positive economic trend will help corporate earnings which in turn will help propel equity markets forward in the second half of the year.
27 June 2015, 15:09
The FOMC continued to guide at its most recent meeting that it anticipates
interest rate lift-off to occur in 2015, although the timing and extent of that
lift off will depend on economic growth. The key domestic question seems to be
whether or not economic momentum is adequate to sustain the current pace of
labor gains.
- The US economy stalled in early 2015, with a steep pullback in oil & gas drilling and exploration activity in response to low global oil prices compounded by weather, transportation, and production disruptions.
- Activity is showing signs of rebounding through the spring as the impact of these transitory factors fades, though the latest reports continue to point to moderate growth momentum of around 2½% y/y during the second quarter.
- Consumer confidence and spending remain well supported by strengthening job and income gains, cheaper gasoline prices, low borrowing costs, and rising stock market pricing and home values.
- Continued strong job growth has pushed the unemployment rate to a seven-year low of 5½%, and alternative measures of labor market under-utilization continue to improve.
- Auto sales in May reached their highest level in a decade, and major purchase plans are trending higher.
- US housing activity also has gained traction in recent months, with both home sales and construction touching multi-year highs. A gradual easing in lending conditions alongside still good affordability, strengthening household formation and improving job markets should help sustain the recovery in the face of moderately higher borrowing costs.
- The overall momentum in industrial activity, business spending, and capital goods orders remains soft amid the retrenchment in oil & gas drilling and sluggish export sales.
- While US dollar strength and moderate global growth are weighing on export activity, solid domestic sales should maintain expanding manufacturing production.
- At the same time, the US economy is getting a lift from a pickup in local and state government spending, and a reduced pace of federal fiscal restraint.
- Core inflation is holding steady at just under 2% y/y, with lower import costs and still restrained wage gains tempered by firmer services price trends.
- Headline US inflation appears to have bottomed alongside firmer oil prices, and is expected to converge back toward core inflation by early 2016.
27 June 2015, 14:51
Greek Prime Minister Alexis Tsipras announced a surprise referendum on the
Greek bailout negotiations, late on Friday night. In a speech that was broadcast
live on Greek television, he announced that the referendum would be held on 5
July. Press reports indicate that the Prime Minister promised to abide by the
results of the referendum, even as he argued against the terms demanded by
Greece's creditors, and asked Greek citizens to say no to more austerity. He
also said that he would ask for the Institutions to extend the bail-out program
by a week. Other press reports suggest that the Institutions were not informed
of the Greek Prime Minister's plan, and presumably had no chance to weigh in or
consent. In other words, the ECB, which is keeping the Greek banking system
afloat through the Emergency Liquidity Assistance (ELA) as long as negotiations
are continuing, had no idea this was coming.
As we digest this news, it is obvious that there are more questions than answers, with many questions in the sphere of Greek politics, not our core area of expertise. For now, find below a short list of the main questions that investors are likely to ask themselves, and answers to some (but not all) of them according to Barclays notes to it clients, based on the current available information.
1) Will there be a deal this weekend?
It seems very unlikely that there will be a deal this weekend, given that the Institutions were unaware that a referendum was coming and were preparing for more negotiations. The only scenario would be if the Institutions were to agree completely to the Greek government's final proposal, which could conceivably allow the Greek government to walk away from the referendum announcement. However, such a public climb-down on the part of the Institutions seems extremely unlikely.
2) Will the Greek government be able to make the June 30 payment to the IMF?
Almost certainly not. It is hard to see how there will be any agreement or aid disbursed in time for the 30 June deadline. We believe the Greek government will miss the deadline.
3) Will the ECB continue to support the Greek banking system next week? In other words, will Greece be forced to declare a bank holiday and capital controls on Monday?
This is a more difficult question to answer. We believe that there is a strong chance of capital controls being imposed in Greece through the ECB increasing haircuts on the ELA it provides the Greek banking system (even though Greek officials expressed confidence on Friday night that Greek banks would open on Monday). The ECB is now supposed to hold a call on Sunday to discuss the ELA but it seems probable that they were not informed, or on board, with this decision by the Greek government. The ECB had continued supporting the Greek banking system over the past few months of deposit flight because of: a) the hope that an agreement would be reached; and b) the assumption that the Greek government will not default on payments. It is unclear if the first argument still holds (since the Institutions were not part of the decision to call for a referendum) and the second clearly doesn't. Several people on the ECB (including the Bundesbank's Weidmann) were already uncomfortable about the ELA increases to Greece; it is very possible that majority opinion on the ECB now shifts to increasing ELA haircuts, though we admit it's a close call.
4) What will be the question asked in the referendum?
The Prime Minister seemed to suggest that the question would be a simple yes/no on whether Greek citizens wanted to accept the creditors' proposals. It seems unlikely that the question will include any discussion of the consequences if Greece votes no.
5) What happens if Greece votes no?
Government officials are currently emphasizing that this is simply a vote on the negotiations and not on the Greek position within the EMU and EU. In reality, the two questions are related. We believe that the odds of a Greek exit increase substantially if Greece votes no. And if capital controls have not been imposed by then, they would almost certainly be after 5 July.
6) What happens if Greece votes yes?
Every indication is that the existing Greek government is opposed to the creditors' current terms. Consequently, it is very possible that in the event of a yes vote, Greece would face a political crisis, with a new government having to be formed in order to finalize the negotiations and implement the agreed-upon reforms.
7) How will financial markets react on Monday?
We have emphasized in the past that the systemic implications of capital controls being imposed in Greece are limited, given the ring-fencing measures put in place by the ECB and Eurozone governments. Regardless, this announcement should be viewed by markets as an escalation. Unless something else changes the dynamic significantly over the weekend, the initial reaction by markets on Mondaywould likely be a flight to quality.
As we digest this news, it is obvious that there are more questions than answers, with many questions in the sphere of Greek politics, not our core area of expertise. For now, find below a short list of the main questions that investors are likely to ask themselves, and answers to some (but not all) of them according to Barclays notes to it clients, based on the current available information.
1) Will there be a deal this weekend?
It seems very unlikely that there will be a deal this weekend, given that the Institutions were unaware that a referendum was coming and were preparing for more negotiations. The only scenario would be if the Institutions were to agree completely to the Greek government's final proposal, which could conceivably allow the Greek government to walk away from the referendum announcement. However, such a public climb-down on the part of the Institutions seems extremely unlikely.
2) Will the Greek government be able to make the June 30 payment to the IMF?
Almost certainly not. It is hard to see how there will be any agreement or aid disbursed in time for the 30 June deadline. We believe the Greek government will miss the deadline.
3) Will the ECB continue to support the Greek banking system next week? In other words, will Greece be forced to declare a bank holiday and capital controls on Monday?
This is a more difficult question to answer. We believe that there is a strong chance of capital controls being imposed in Greece through the ECB increasing haircuts on the ELA it provides the Greek banking system (even though Greek officials expressed confidence on Friday night that Greek banks would open on Monday). The ECB is now supposed to hold a call on Sunday to discuss the ELA but it seems probable that they were not informed, or on board, with this decision by the Greek government. The ECB had continued supporting the Greek banking system over the past few months of deposit flight because of: a) the hope that an agreement would be reached; and b) the assumption that the Greek government will not default on payments. It is unclear if the first argument still holds (since the Institutions were not part of the decision to call for a referendum) and the second clearly doesn't. Several people on the ECB (including the Bundesbank's Weidmann) were already uncomfortable about the ELA increases to Greece; it is very possible that majority opinion on the ECB now shifts to increasing ELA haircuts, though we admit it's a close call.
4) What will be the question asked in the referendum?
The Prime Minister seemed to suggest that the question would be a simple yes/no on whether Greek citizens wanted to accept the creditors' proposals. It seems unlikely that the question will include any discussion of the consequences if Greece votes no.
5) What happens if Greece votes no?
Government officials are currently emphasizing that this is simply a vote on the negotiations and not on the Greek position within the EMU and EU. In reality, the two questions are related. We believe that the odds of a Greek exit increase substantially if Greece votes no. And if capital controls have not been imposed by then, they would almost certainly be after 5 July.
6) What happens if Greece votes yes?
Every indication is that the existing Greek government is opposed to the creditors' current terms. Consequently, it is very possible that in the event of a yes vote, Greece would face a political crisis, with a new government having to be formed in order to finalize the negotiations and implement the agreed-upon reforms.
7) How will financial markets react on Monday?
We have emphasized in the past that the systemic implications of capital controls being imposed in Greece are limited, given the ring-fencing measures put in place by the ECB and Eurozone governments. Regardless, this announcement should be viewed by markets as an escalation. Unless something else changes the dynamic significantly over the weekend, the initial reaction by markets on Mondaywould likely be a flight to quality.
26 June 2015, 23:13
Market Roundup
EUR/USD is returning to the mid-1.1100s after testing the 1.1430 region just days ago. The single currency is snapping a positive 3-week streak this week. EUR/USD hit fresh 3-week lows and broke below the 1.1140 support area during the New York session as investors continue to monitor Greek developments. Greece remained the exclusive driver of global sentiment during recent weeks and markets will have to wait until tomorrow night for a continuation (or not) of the Greek saga. At time of writing, the pair is trading at 1.1165, with next supports now seen at 1.1100 (psychological level), 1.1083 (Jun 8 low) and 1.1054 (100-day SMA). On the flip side, resistances are seen at 1.1219 (Jun 26 high), 1.1234/37 (Jun 24 high/20-day SMA) and 1.1263 (10-day SMA). Option expiries for Monday 29 June: 1.1100 (455M)
USD/JPY: US dollar strengthened across the board and pushed USD/JPY toward 124.00 as US bond yields soar. The pair reached a fresh daily high at 123.99 and currently trades at 123.77. Next weeks' calendar holds the US nonfarm payrolls, a key event, while much attention will be paid to the outcome to these extended discussions in respect of Greece over the weekend. 125.00 level is likely to act as a pretty stiff resistance, while downside support looks quite solid around 122.00. Option expiries for Monday 29 June: 122.00 (2BLN), 123.50 (280M), 125.00 (484M)
GBP/USD: The British pound continues to trade sideways range-bound between 1.5715 and 1.5760. Cable is on track to close first negative week in June. Currently, GBP/USD is trading at 1.5737, down 0.07% on the day, having posted a daily high at 1.5770 and low at 1.5709. To the upside, it will find resistances at 1.5750, 1.5775 and 1.5800. On the downside, supports are at 1.5725, 1.5705 and 1.5690. Option expiries for Monday 29 June: 1.5800 (183M)
USD/CAD: The loonie has been the top performer on Friday. USD/CAD retreated sharply during the American session and erased all gains. The pair peaked at 1.2395 but lost strength and pulled back. The downside accelerated during the second half of the American session. Non-Farm Payroll report on Thursday (and also employment data on Wednesday) could impact on the US dollar significantly. While in Canada growth data will be publish on Tuesday. The pair is currently trading at 1.2316, with immediate support at 1.2274, then 1.2244 and 1.2213. Resistance on the upside is seen at 1.2425. Option expiries for Monday 29 June: 1.2430 (220M)
USD/MXN: The Mexican peso extended losses on Friday and is among the worst performers of the week. USD/MXN peaked during the American session at 15.585, the highest level since June 10, later pulled back modestly but remained near the 15.60 handle and closer to record highs that reached three weeks ago at 15.77. USD/MXN on track to post the second highest weekly close on record as MXN lost 1.5% during the week against the US dollar.
- US U Mich Sentiment Final Jun 96.1, (forecast 94.6, previous 94.6)
- US U Mich Conditions Final Jun 108.9, (forecast 106.7, previous 106.8)
- US U Mich Exp Final Jun 87.8, (forecast 86.9, previous 86.8)
- BR FGV Consumer Confidence Jun 83.9, (previous 85.1), Brazil data continues to disappoint
- MX Trade Balance SA May -1.803b, -1.224b-prev, factory exports plunge may hint at US weakness
- Markets focus on Eurogroup meeting Saturday
- Greek PM Tsipras calls cabinet meeting Friday evening to discuss bailout deal
- Greek government calls five-month extension offer "inadequate", creditors decline Govt offer of having ESM take over ECB debt
- Germany's Schaeuble (on Greece) if we only kick the can down the road the situation will be worse later
- Germany's Merkel says she & Hollande urged Tsipras to accept generous offer from institutions
- BOE's Carney markets should be aware of risk fixed income market liquidity drying up
- (1950 ET/ 2350 GMT) Japan Industrial output prelim mm May (consensus -0.8%, previous 1.2%)
- (1950 ET/ 2350 GMT) Japan IP Forecast 1 Mth Ahead May (previous 0.5%)
- (1950 ET/ 2350 GMT) Japan IP Forecast 2 Mth Ahead May (previous -0.5%)
- (1950 ET/ 2350 GMT) Japan Retail Sales YY May (consensus 2.3%, previous 5%)
- No Significant Events
EUR/USD is returning to the mid-1.1100s after testing the 1.1430 region just days ago. The single currency is snapping a positive 3-week streak this week. EUR/USD hit fresh 3-week lows and broke below the 1.1140 support area during the New York session as investors continue to monitor Greek developments. Greece remained the exclusive driver of global sentiment during recent weeks and markets will have to wait until tomorrow night for a continuation (or not) of the Greek saga. At time of writing, the pair is trading at 1.1165, with next supports now seen at 1.1100 (psychological level), 1.1083 (Jun 8 low) and 1.1054 (100-day SMA). On the flip side, resistances are seen at 1.1219 (Jun 26 high), 1.1234/37 (Jun 24 high/20-day SMA) and 1.1263 (10-day SMA). Option expiries for Monday 29 June: 1.1100 (455M)
USD/JPY: US dollar strengthened across the board and pushed USD/JPY toward 124.00 as US bond yields soar. The pair reached a fresh daily high at 123.99 and currently trades at 123.77. Next weeks' calendar holds the US nonfarm payrolls, a key event, while much attention will be paid to the outcome to these extended discussions in respect of Greece over the weekend. 125.00 level is likely to act as a pretty stiff resistance, while downside support looks quite solid around 122.00. Option expiries for Monday 29 June: 122.00 (2BLN), 123.50 (280M), 125.00 (484M)
GBP/USD: The British pound continues to trade sideways range-bound between 1.5715 and 1.5760. Cable is on track to close first negative week in June. Currently, GBP/USD is trading at 1.5737, down 0.07% on the day, having posted a daily high at 1.5770 and low at 1.5709. To the upside, it will find resistances at 1.5750, 1.5775 and 1.5800. On the downside, supports are at 1.5725, 1.5705 and 1.5690. Option expiries for Monday 29 June: 1.5800 (183M)
USD/CAD: The loonie has been the top performer on Friday. USD/CAD retreated sharply during the American session and erased all gains. The pair peaked at 1.2395 but lost strength and pulled back. The downside accelerated during the second half of the American session. Non-Farm Payroll report on Thursday (and also employment data on Wednesday) could impact on the US dollar significantly. While in Canada growth data will be publish on Tuesday. The pair is currently trading at 1.2316, with immediate support at 1.2274, then 1.2244 and 1.2213. Resistance on the upside is seen at 1.2425. Option expiries for Monday 29 June: 1.2430 (220M)
USD/MXN: The Mexican peso extended losses on Friday and is among the worst performers of the week. USD/MXN peaked during the American session at 15.585, the highest level since June 10, later pulled back modestly but remained near the 15.60 handle and closer to record highs that reached three weeks ago at 15.77. USD/MXN on track to post the second highest weekly close on record as MXN lost 1.5% during the week against the US dollar.
26 June 2015, 23:02
BRAZIL'S BENCHMARK BOVESPA INDEX PROVISIONALLY CLOSES 1.42 PCT UP AT
53,928.72 POINTS
26 June 2015, 23:01
CANADA'S S&P/TSX COMP INDEX PROVISIONALLY CLOSES 0.65 PCT DOWN AT
14,800.84 POINTS
26 June 2015, 23:01
FOR THE WEEK, DOW DOWN 0.4 PCT, S&P 500 DOWN 0.4 PCT, NASDAQ DOWN 0.7 PCT
26 June 2015, 23:00
NASDAQ UNOFFICIALLY CLOSES DOWN 30.36 POINTS, OR 0.59 PERCENT, AT 5,081.83
26 June 2015, 23:00
S&P 500 UNOFFICIALLY CLOSES DOWN 0.19 POINTS, OR 0.01 PERCENT, AT
2,102.12
26 June 2015, 23:00
DOW JONES UNOFFICIALLY CLOSES UP 59.33 POINTS, OR 0.33 PERCENT, AT 17,949.69
26 June 2015, 22:40
MEXICO SAYS NO LANGUAGE ON CURRENCY MANIPULATION HAS SO FAR BEEN PROPOSED AS
PART OF TPP NEGOTIATIONS - DEPUTY TRADE MINISTER
26 June 2015, 22:40
MEXICO EXPECTS A FINALIZED 12-NATION PACIFIC TRADE DEAL (TPP) TO BE REACHED
IN 'NEXT FEW WEEKS' - DEPUTY TRADE MINISTER
26 June 2015, 22:40
MEXICO EXPECTS A FINALIZED 12-NATION PACIFIC TRADE DEAL (TPP) TO DOUBLE ITS
AGRICULTURAL EXPORTS TO JAPAN - DEPUTY TRADE MINISTER
26 June 2015, 22:37
SPECULATORS BOOST NET U.S. DOLLAR LONGS IN LATEST WEEK - CFTC AND REUTERS
26 June 2015, 22:37
SPECULATORS BOOST NET U.S. DOLLAR LONGS IN LATEST WEEK - CFTC AND REUTERS