Posts
25 June 2015, 08:12
Market Roundup
EUR/USD is supported above 1.1200 levels and currently trading at 1.1215 levels. It has made intraday high at 1.1218 and low at 1.1194 levels. The euro traded with a minor gain, ignoring the latest news that the Euro group meeting has ended without a deal and has been postponed. Meanwhile, investors shifted attention to the ongoing Euro group meeting, which started later in the afternoon. The US GDP revision had little to offer, as it came out as expected at -0.2%, confirming the US economy contracted at the beginning of the year. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels.
USD/JPY is supported below 124.00 levels and posted a high of 123.94 levels. It has made intraday low at 123.55 and currently trading at 123.57 levels. The US dollar retreated after surging to a two-week high on Wednesday following the release of the latest American GDP estimates for Q1. The pair fell in red as the US dollar ran through fresh offers amid on profit-taking amid a data-empty Asian calendar. Wednesday's Euro group meeting ended without a deal and has been postponed until today which may boost the safe-haven bids in yen. Near term resistance is seen at 124.57 and support is seen at 122.10 levels.
GBP/USD is supported around $1.5700 levels. It made an intraday high at 1.5711 and low at 1.5686 levels. Pair is currently trading at 1.5691 levels. The greenback slowly grabbed some momentum amid favourable US GDP data as sterling bulls took a nap after their previous strong rally. Today UK will release CBI realised sales data. The major now awaits fresh incentives from the US session later today in absence of significant economic data until US hours. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported above 0.9300 levels and trading at 0.9334 levels and made intraday low at 0.9330 and high at 0.9346 levels. Market is trading flat after Switzerland released UBS consumption indicator data to 1.73 m/m and favourable US final GDP data. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels.
AUD/USD is supported above 0.7700 levels and trading at 0.7740 levels. It has made intraday high at 0.7747 levels and low at 0.7695 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery after a drop to fresh 2-week lows on Wednesday. While, the Greek story is set to continue, with Euro group officials meeting up for the third time this week to reach a Greek solution after yet again ending yesterday's meeting in a no deal. The Aussie bulls took over complete control as markets view the recent decline as excessive ahead of a slew of US macro releases later today. Initial support is seen at 0.7568 and resistance at 0.7838 levels.
- Greek debt talks stumble before EU leaders gather.
- Japan MoF flow data week-ended June 30 - Japanese buy net Y348.4 bln foreign
stocks, Y7.8 bln bills, sell Y892.8 bln bonds; foreign investors sell net Y253.9
bln Japanese stocks, buy Y107.8 bln bonds, Y718.5 bln bills.
- New Zealand dairy farmers flock to Fonterra's guaranteed milk price scheme, may opt to lock in farm gate prices at same price as forecast for '15/16.
- (0200ET/0600 GMT) Germany June GKF consumer sentiment index, 10.2 eyed; last
10.2.
- (0330 ET/0730 GMT) Sweden May PPI; last -0.3% m/m, +2.4% y/y.
- (0600 ET/1000 GMT) UK June CBI distributive trades sales index, 35 eyed;
last 51.
- (0830 ET/1230 GMT) US May personal income, +0.5% m/m eyed; last
+0.4%.
- (0830 ET/1230 GMT) US May personal consumption, +0.7% m/m eyed; last unchanged.
- (0830 ET/1230 GMT) US May core PCE price index, +0.1% m/m eyed; last +0.1%
m/m, +1.2% y/y.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 272k eyed; last
267k.
- (0945 ET/1345 GMT) US June Markit PMI composite index flash; last 56.0.
- (0945 ET/1345 GMT) June Markit PMI services index flash, 56.7 eyed; last
56.2.
- (1100 ET/1500 GMT) US June KC Fed manufacturing, composite indices; last
-13.0, -13.0.
- (1300 ET/1700 GMT) US May Dallas Fed PCE; last +1.9%.
- N/A EU Summit in Brussels (till tomorrow).
- N/A IIF Europe Summit in Frankfurt, various speakers (till
tomorrow).
- N/A Ireland CB Gov Honohan parliamentary testimony.
- (0330 ET/0730 GMT) ECB Nouy at Brussels public parliamentary
hearing.
- (0400 ET/0800 GMT) SNB Chair Jordan speech in Lausanne.
- (0500 ET/0900 GMT) Italy E0.5-1.0 bln 2.35/2.55% 2024/2041 index-linked BTP
auctions.
- (0530 ET/0930 GMT) BoE Rule speech at Lisbon conference.
- (0700 ET/1100 GMT) Belgium CB Gov Smets presents '15 FSR, press conference
to follow.
- N/A US SecCom Pritzker, USTR Froman speeches at Washington, DC
event.
- (0800 ET/1200 GMT) Fed Gov Tarullo in CFR roundtable discussion in
Washington, DC.
- (0945 ET/1345 GMT) Fed Gov Powell speech in Kansas City.
- (1210 ET/1610 GMT) BoC DepGov Schembri speech in Windsor.
EUR/USD is supported above 1.1200 levels and currently trading at 1.1215 levels. It has made intraday high at 1.1218 and low at 1.1194 levels. The euro traded with a minor gain, ignoring the latest news that the Euro group meeting has ended without a deal and has been postponed. Meanwhile, investors shifted attention to the ongoing Euro group meeting, which started later in the afternoon. The US GDP revision had little to offer, as it came out as expected at -0.2%, confirming the US economy contracted at the beginning of the year. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels.
USD/JPY is supported below 124.00 levels and posted a high of 123.94 levels. It has made intraday low at 123.55 and currently trading at 123.57 levels. The US dollar retreated after surging to a two-week high on Wednesday following the release of the latest American GDP estimates for Q1. The pair fell in red as the US dollar ran through fresh offers amid on profit-taking amid a data-empty Asian calendar. Wednesday's Euro group meeting ended without a deal and has been postponed until today which may boost the safe-haven bids in yen. Near term resistance is seen at 124.57 and support is seen at 122.10 levels.
GBP/USD is supported around $1.5700 levels. It made an intraday high at 1.5711 and low at 1.5686 levels. Pair is currently trading at 1.5691 levels. The greenback slowly grabbed some momentum amid favourable US GDP data as sterling bulls took a nap after their previous strong rally. Today UK will release CBI realised sales data. The major now awaits fresh incentives from the US session later today in absence of significant economic data until US hours. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported above 0.9300 levels and trading at 0.9334 levels and made intraday low at 0.9330 and high at 0.9346 levels. Market is trading flat after Switzerland released UBS consumption indicator data to 1.73 m/m and favourable US final GDP data. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels.
AUD/USD is supported above 0.7700 levels and trading at 0.7740 levels. It has made intraday high at 0.7747 levels and low at 0.7695 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery after a drop to fresh 2-week lows on Wednesday. While, the Greek story is set to continue, with Euro group officials meeting up for the third time this week to reach a Greek solution after yet again ending yesterday's meeting in a no deal. The Aussie bulls took over complete control as markets view the recent decline as excessive ahead of a slew of US macro releases later today. Initial support is seen at 0.7568 and resistance at 0.7838 levels.
25 June 2015, 08:22
The CBI Distributive Trades survey will give the first information on retail
sales in (early) June.
The survey makes comparisons with the same month a year earlier and so the balances are heavily influenced by the variable timing of Easter.
With the survey being held early in the month, the y/y comparison in the April 2015 survey should have captured the strength of the 2015 weekend but not the 2014 one so boosting the reported yearly sales increase.
However, the balance actually weakened from 18 to 12 in April and then, even more surprising, it surged to 51 in May. We can only assume that for some reason surveyrespondents were making rather loose timing comparisons.
Whatever the explanation, the reading of 51 is far above the long term average and looks unsustainable. Thus, despite the very strong consumer fundamentals (high consumer confidence, rising real income) we expect the balance to fall sharply in June.
The survey makes comparisons with the same month a year earlier and so the balances are heavily influenced by the variable timing of Easter.
With the survey being held early in the month, the y/y comparison in the April 2015 survey should have captured the strength of the 2015 weekend but not the 2014 one so boosting the reported yearly sales increase.
However, the balance actually weakened from 18 to 12 in April and then, even more surprising, it surged to 51 in May. We can only assume that for some reason surveyrespondents were making rather loose timing comparisons.
Whatever the explanation, the reading of 51 is far above the long term average and looks unsustainable. Thus, despite the very strong consumer fundamentals (high consumer confidence, rising real income) we expect the balance to fall sharply in June.
25 June 2015, 08:21
Japan's nationwide CPI (excluding fresh food) probably remained flat in May
from a year ago (0.0% yoy), marking a significant slowdown from the +0.3% yoy
observed in April. Following the introduction of the consumption tax (CT) hike
in April 2014, there was a lag on certain price changes made by public utilities
etc. which had a direct impact of 0.3pp on CPI in May 2014. This effect will
drop out of the annual rate in May 2015 (most of the effect of the CT hike was
felt in April 2014 when it pushed CPI up by 1.7pp), expects Societe
Generale.
The inflationary trend in May is basically unchanged from April, because excluding the direct effects of the CT hike, CPI (ex fresh food and ex CT hike effects) in April was already at 0.0% yoy. Factors such as a pickup in oil prices, the passing-on of price increases to products as a result of cost-push inflation caused by yen depreciation, and the recovery in domestic demand are pushing up inflation.
In addition, downward pressure on prices due to the fall in oil prices will fade out after Q3. As a result, prices will pick up on a yoy basis. However, CPI is only expected to reach around +0.5% yoy by year-end.
"A modest inflation rate and a firm wage increase should enable real wages to increase, which in turn should increase consumption. Domestic demand expansion resulting from wage increases and further yen depreciation should push up inflation to around +1.5% in 2016", adds SocGen.
However, this will still not be enough to reach the 2% price stability target on a sustained basis.
"Meanwhile, Tokyo CPI (ex fresh food) is expected to remain unchanged at +0.2% yoy in June. The modest inflation is due to a rebound in oil prices and also upward pressure on food prices", estimates SocGen.
The inflationary trend in May is basically unchanged from April, because excluding the direct effects of the CT hike, CPI (ex fresh food and ex CT hike effects) in April was already at 0.0% yoy. Factors such as a pickup in oil prices, the passing-on of price increases to products as a result of cost-push inflation caused by yen depreciation, and the recovery in domestic demand are pushing up inflation.
In addition, downward pressure on prices due to the fall in oil prices will fade out after Q3. As a result, prices will pick up on a yoy basis. However, CPI is only expected to reach around +0.5% yoy by year-end.
"A modest inflation rate and a firm wage increase should enable real wages to increase, which in turn should increase consumption. Domestic demand expansion resulting from wage increases and further yen depreciation should push up inflation to around +1.5% in 2016", adds SocGen.
However, this will still not be enough to reach the 2% price stability target on a sustained basis.
"Meanwhile, Tokyo CPI (ex fresh food) is expected to remain unchanged at +0.2% yoy in June. The modest inflation is due to a rebound in oil prices and also upward pressure on food prices", estimates SocGen.
25 June 2015, 08:21
BARCLAYS: FED LIFT-OFF IS AN OBVIOUS CANDIDATE TO KICK-START THE DOLLAR
UPTREND AND ARE SHIFTING OUR TACTICAL ALLOCATION BACK TO AN OVERWEIGHT IN THE US
DOLLAR AND UNDERWEIGHT IN THE EURO
25 June 2015, 08:19
BARCLAYS: DOLLAR WOULD BE EXPECTED TO BE STRONG RELATIVE TO HISTORIC NORMS
25 June 2015, 08:18
BARCLAYS: WE ARE LESS BULLISH ON THE DOLLAR VERSUS THE YEN, ESPECIALLY AS THE
MONETARY AUTHORITIES IN JAPAN SEEM MUCH LESS DETERMINED TO WEAKEN THE CURRENCY
THAN THOSE IN THE EURO AREA
25 June 2015, 08:16
BARCLAYS: AS THE US-EZ POLICY DIVERGENCE DEVELOPS, THE EURO TO RESUME
FALLING, EVENTUALLY BREAKING PARITY
25 June 2015, 08:12
Market Roundup
EUR/USD is supported above 1.1200 levels and currently trading at 1.1215 levels. It has made intraday high at 1.1218 and low at 1.1194 levels. The euro traded with a minor gain, ignoring the latest news that the Euro group meeting has ended without a deal and has been postponed. Meanwhile, investors shifted attention to the ongoing Euro group meeting, which started later in the afternoon. The US GDP revision had little to offer, as it came out as expected at -0.2%, confirming the US economy contracted at the beginning of the year. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels.
USD/JPY is supported below 124.00 levels and posted a high of 123.94 levels. It has made intraday low at 123.55 and currently trading at 123.57 levels. The US dollar retreated after surging to a two-week high on Wednesday following the release of the latest American GDP estimates for Q1. The pair fell in red as the US dollar ran through fresh offers amid on profit-taking amid a data-empty Asian calendar. Wednesday's Euro group meeting ended without a deal and has been postponed until today which may boost the safe-haven bids in yen. Near term resistance is seen at 124.57 and support is seen at 122.10 levels.
GBP/USD is supported around $1.5700 levels. It made an intraday high at 1.5711 and low at 1.5686 levels. Pair is currently trading at 1.5691 levels. The greenback slowly grabbed some momentum amid favourable US GDP data as sterling bulls took a nap after their previous strong rally. Today UK will release CBI realised sales data. The major now awaits fresh incentives from the US session later today in absence of significant economic data until US hours. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported above 0.9300 levels and trading at 0.9334 levels and made intraday low at 0.9330 and high at 0.9346 levels. Market is trading flat after Switzerland released UBS consumption indicator data to 1.73 m/m and favourable US final GDP data. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels.
AUD/USD is supported above 0.7700 levels and trading at 0.7740 levels. It has made intraday high at 0.7747 levels and low at 0.7695 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery after a drop to fresh 2-week lows on Wednesday. While, the Greek story is set to continue, with Euro group officials meeting up for the third time this week to reach a Greek solution after yet again ending yesterday's meeting in a no deal. The Aussie bulls took over complete control as markets view the recent decline as excessive ahead of a slew of US macro releases later today. Initial support is seen at 0.7568 and resistance at 0.7838 levels.
- Greek debt talks stumble before EU leaders gather.
- Japan MoF flow data week-ended June 30 - Japanese buy net Y348.4 bln foreign
stocks, Y7.8 bln bills, sell Y892.8 bln bonds; foreign investors sell net Y253.9
bln Japanese stocks, buy Y107.8 bln bonds, Y718.5 bln bills.
- New Zealand dairy farmers flock to Fonterra's guaranteed milk price scheme, may opt to lock in farm gate prices at same price as forecast for '15/16.
- (0200ET/0600 GMT) Germany June GKF consumer sentiment index, 10.2 eyed; last
10.2.
- (0330 ET/0730 GMT) Sweden May PPI; last -0.3% m/m, +2.4% y/y.
- (0600 ET/1000 GMT) UK June CBI distributive trades sales index, 35 eyed;
last 51.
- (0830 ET/1230 GMT) US May personal income, +0.5% m/m eyed; last
+0.4%.
- (0830 ET/1230 GMT) US May personal consumption, +0.7% m/m eyed; last unchanged.
- (0830 ET/1230 GMT) US May core PCE price index, +0.1% m/m eyed; last +0.1%
m/m, +1.2% y/y.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 272k eyed; last
267k.
- (0945 ET/1345 GMT) US June Markit PMI composite index flash; last 56.0.
- (0945 ET/1345 GMT) June Markit PMI services index flash, 56.7 eyed; last
56.2.
- (1100 ET/1500 GMT) US June KC Fed manufacturing, composite indices; last
-13.0, -13.0.
- (1300 ET/1700 GMT) US May Dallas Fed PCE; last +1.9%.
- N/A EU Summit in Brussels (till tomorrow).
- N/A IIF Europe Summit in Frankfurt, various speakers (till
tomorrow).
- N/A Ireland CB Gov Honohan parliamentary testimony.
- (0330 ET/0730 GMT) ECB Nouy at Brussels public parliamentary
hearing.
- (0400 ET/0800 GMT) SNB Chair Jordan speech in Lausanne.
- (0500 ET/0900 GMT) Italy E0.5-1.0 bln 2.35/2.55% 2024/2041 index-linked BTP
auctions.
- (0530 ET/0930 GMT) BoE Rule speech at Lisbon conference.
- (0700 ET/1100 GMT) Belgium CB Gov Smets presents '15 FSR, press conference
to follow.
- N/A US SecCom Pritzker, USTR Froman speeches at Washington, DC
event.
- (0800 ET/1200 GMT) Fed Gov Tarullo in CFR roundtable discussion in
Washington, DC.
- (0945 ET/1345 GMT) Fed Gov Powell speech in Kansas City.
- (1210 ET/1610 GMT) BoC DepGov Schembri speech in Windsor.
EUR/USD is supported above 1.1200 levels and currently trading at 1.1215 levels. It has made intraday high at 1.1218 and low at 1.1194 levels. The euro traded with a minor gain, ignoring the latest news that the Euro group meeting has ended without a deal and has been postponed. Meanwhile, investors shifted attention to the ongoing Euro group meeting, which started later in the afternoon. The US GDP revision had little to offer, as it came out as expected at -0.2%, confirming the US economy contracted at the beginning of the year. Initial support is seen around 1.1050 and resistance is seen around 1.1375 levels.
USD/JPY is supported below 124.00 levels and posted a high of 123.94 levels. It has made intraday low at 123.55 and currently trading at 123.57 levels. The US dollar retreated after surging to a two-week high on Wednesday following the release of the latest American GDP estimates for Q1. The pair fell in red as the US dollar ran through fresh offers amid on profit-taking amid a data-empty Asian calendar. Wednesday's Euro group meeting ended without a deal and has been postponed until today which may boost the safe-haven bids in yen. Near term resistance is seen at 124.57 and support is seen at 122.10 levels.
GBP/USD is supported around $1.5700 levels. It made an intraday high at 1.5711 and low at 1.5686 levels. Pair is currently trading at 1.5691 levels. The greenback slowly grabbed some momentum amid favourable US GDP data as sterling bulls took a nap after their previous strong rally. Today UK will release CBI realised sales data. The major now awaits fresh incentives from the US session later today in absence of significant economic data until US hours. Initial support is seen at 1.5624 and resistance is seen around 1.5835 levels.
USD/CHF is supported above 0.9300 levels and trading at 0.9334 levels and made intraday low at 0.9330 and high at 0.9346 levels. Market is trading flat after Switzerland released UBS consumption indicator data to 1.73 m/m and favourable US final GDP data. Near term support is seen at 0.9113 levels and resistance is seen at 0.9383 levels.
AUD/USD is supported above 0.7700 levels and trading at 0.7740 levels. It has made intraday high at 0.7747 levels and low at 0.7695 levels. The Aussie also received fresh momentum from higher commodity prices with gold posing a solid recovery after a drop to fresh 2-week lows on Wednesday. While, the Greek story is set to continue, with Euro group officials meeting up for the third time this week to reach a Greek solution after yet again ending yesterday's meeting in a no deal. The Aussie bulls took over complete control as markets view the recent decline as excessive ahead of a slew of US macro releases later today. Initial support is seen at 0.7568 and resistance at 0.7838 levels.
25 June 2015, 08:11
The key topic for the June Council at the EU summit is the move towards
further euro area integration and to improve governance. The report from the
Four Presidents (EU, Commission, ECB, and Council) will be presented. This
report is expected to include measures to further steps towards budgetary and
economic cooperation.
A discussion is also likely on further labour, pension and product market reforms in order to harmonise the social security system in particular.
The creation of common (but limited) shock absorption mechanism (I.e. an insurance-type system), seems no longer on the cards (at least not at this Summit). Finally, a more politically integrated EMU should also be discussed. However, this would implicitly lead to a two-speed EU.
The report is unlikely to lead to dramatic changes in the euro area governance and integration process as France and Germany in particular want to keep away from any measures that would require Treaty changes before their general elections in 2017.
A discussion is also likely on further labour, pension and product market reforms in order to harmonise the social security system in particular.
The creation of common (but limited) shock absorption mechanism (I.e. an insurance-type system), seems no longer on the cards (at least not at this Summit). Finally, a more politically integrated EMU should also be discussed. However, this would implicitly lead to a two-speed EU.
The report is unlikely to lead to dramatic changes in the euro area governance and integration process as France and Germany in particular want to keep away from any measures that would require Treaty changes before their general elections in 2017.
25 June 2015, 08:10
STANDARD CHARTERED: WE FORECAST Q2 US GDP GROWTH OF 1.8% Q/Q SAAR, FROM -0.2%
IN Q1
25 June 2015, 08:09
STANDARD CHARTERED: STRONGER US PERSONAL CONSUMPTION SHOULD BOOST THE FED’S
CONFIDENCE IN THE NEED TO START HIKING RATES
25 June 2015, 08:09
STANDARD CHARTERED: STRONGER US PERSONAL CONSUMPTION SHOULD BOOST THE FED’S
CONFIDENCE IN THE NEED TO START HIKING RATES
25 June 2015, 08:09
The key topic for the June Council at the EU summit is the move towards
further euro area integration and to improve governance. The report from the
Four Presidents (EU, Commission, ECB, and Council) will be presented. This
report is expected to include measures to further steps towards budgetary and
economic cooperation.
A discussion is also likely on further labour, pension and product market reforms in order to harmonise the social security system in particular.
The creation of common (but limited) shock absorption mechanism (I.e. an insurance-type system), seems no longer on the cards (at least not at this Summit). Finally, a more politically integrated EMU should also be discussed. However, this would implicitly lead to a two-speed EU.
The report is unlikely to lead to dramatic changes in the euro area governance and integration process as France and Germany in particular want to keep away from any measures that would require Treaty changes before their general elections in 2017.
A discussion is also likely on further labour, pension and product market reforms in order to harmonise the social security system in particular.
The creation of common (but limited) shock absorption mechanism (I.e. an insurance-type system), seems no longer on the cards (at least not at this Summit). Finally, a more politically integrated EMU should also be discussed. However, this would implicitly lead to a two-speed EU.
The report is unlikely to lead to dramatic changes in the euro area governance and integration process as France and Germany in particular want to keep away from any measures that would require Treaty changes before their general elections in 2017.
25 June 2015, 08:07
STANDARD CHARTERED: SINGAPORE’S INDUSTRIAL PRODUCTION IN MAY TO HAVE
STABILIZED, CONTRACTING JUST 2.1% Y/Y, VERSUS THE 8.7% Y/Y FALL IN APRIL
25 June 2015, 08:06
STANDARD CHARTERED: TAIWAN’S CBC WILL KEEP POLICY RATES UNCHANGED FOR THE
REST OF 2015, UNLESS THE ECONOMIC RECOVERY GAINS MOMENTUM AND THERE ARE SIGNS OF
IMMINENT UPSIDE RISK TO INFLATION
25 June 2015, 08:06
The official economic agenda at EU summit includes the Digital Single Market
strategy, the European Semester, the TTIP and the report from the four
Presidents on euro area integration, while Greece is no doubt going to be
discussed.
The main objective of the Digital Single Market, on the first topic, is to find ways to allow better cross-border access to digital services.
This will entail harmonisation of internet regulation and copyright laws, a reliable and uniform high-speed broadband, but also a common personal data protection system.
According to a Commission study, the Digital Single Market would boost EU growth by up to €250bn, mainly via lower costs for consumers and broader competition
The main objective of the Digital Single Market, on the first topic, is to find ways to allow better cross-border access to digital services.
This will entail harmonisation of internet regulation and copyright laws, a reliable and uniform high-speed broadband, but also a common personal data protection system.
According to a Commission study, the Digital Single Market would boost EU growth by up to €250bn, mainly via lower costs for consumers and broader competition
25 June 2015, 08:06
Taiwan's Q1 GDP growth dipped slightly to 3.4 yoy in Q1 from 3.5 yoy in Q4
2014. That said, the composition of growth shows external demand weakened
further and the recovery in domestic demand was weaker than anticipated.
Activity data in Q2 continued to disappoint: real trade, industrial production
and more worryingly real retail sales all decelerated.
The expected recovery in the external demand in the second half, led by the US, is likely to raise Taiwan's growth again. Therefore, Societe Generale expects the weakness in economic momentum to be temporary.
CPI inflation remained negative at -0.7% yoy in May, largely unchanged from -0.8% yoy in April. Core inflation also weakened further to 0.6% yoy in May from 0.7% yoy in April. However, both measures are poised to bottom out in one or two months. In Q4, headline CPI inflation is expected to turn positive while core CPI inflation is likely to re-strengthen, estimates Societe Generale.
The expected recovery in the external demand in the second half, led by the US, is likely to raise Taiwan's growth again. Therefore, Societe Generale expects the weakness in economic momentum to be temporary.
CPI inflation remained negative at -0.7% yoy in May, largely unchanged from -0.8% yoy in April. Core inflation also weakened further to 0.6% yoy in May from 0.7% yoy in April. However, both measures are poised to bottom out in one or two months. In Q4, headline CPI inflation is expected to turn positive while core CPI inflation is likely to re-strengthen, estimates Societe Generale.
25 June 2015, 08:05
STANDARD CHARTERED: TAIWAN’S POLICY MAKERS TO KEEP THE POLICY RE-DISCOUNT
RATE UNCHANGED AT 1.875% FOR A 17TH CONSECUTIVE
25 June 2015, 08:05
STANDARD CHARTERED: JAPAN’S UNEMPLOYMENT RATE TO HAVE STABILIZED AT 3.3% IN
MAY, HAVING HIT A HISTORICAL LOW IN APRIL
25 June 2015, 08:00
The reported May increase in US auto sales combined with a solid increase in
retail sales suggest that consumer spending finally rebounded after a winter
pause that extended into the early spring.
Societe Generale forecasts Q2 GDP to grow at 3.3% and expects real consumer expenditures to grow at 2.6%, moreover, this will be correct if the May projections for PCE come to fruition.
Societe Generale estimates that personal spending rose by 0.8% m/m in May, after a flat reading in April. This would mark the largest sequential gain in spending since March 2014. Admittedly, inflation will "eat up" about half of this increase given thier forecast for a 0.4% rise in the PCE deflator. The remaining 0.4% gain in real personal consumption would put the May level 2.2% above the Q1 average, significantly improving the momentum relative to the start of the quarter.
Societe Generale forecasts Q2 GDP to grow at 3.3% and expects real consumer expenditures to grow at 2.6%, moreover, this will be correct if the May projections for PCE come to fruition.
Societe Generale estimates that personal spending rose by 0.8% m/m in May, after a flat reading in April. This would mark the largest sequential gain in spending since March 2014. Admittedly, inflation will "eat up" about half of this increase given thier forecast for a 0.4% rise in the PCE deflator. The remaining 0.4% gain in real personal consumption would put the May level 2.2% above the Q1 average, significantly improving the momentum relative to the start of the quarter.
25 June 2015, 07:52
Reforms are also important to drive further growth in Japan.
The government aims to increase services-sector productivity growth to 2% by 2020, riding the wave of the 2020 Tokyo Olympics. It also targets doubling the number of foreign IT workers to 60,000 by 2020.
Fiscal consolidation is also part of the latest draft. The government reaffirms its target of a primary balance by FY20 (ends in March 2021). It also targets a primary budgetdeficit of 1% of GDP by FY18, versus a projected deficit of 3.3% of GDP for FY15.
The next three fiscal years are considered a period of intensive fiscal reform, according to the draft. The government plans to cap the total increase in social security spending for the next three fiscal years at JPY 1.5tn, the same as the past three years.
The government aims to increase services-sector productivity growth to 2% by 2020, riding the wave of the 2020 Tokyo Olympics. It also targets doubling the number of foreign IT workers to 60,000 by 2020.
Fiscal consolidation is also part of the latest draft. The government reaffirms its target of a primary balance by FY20 (ends in March 2021). It also targets a primary budgetdeficit of 1% of GDP by FY18, versus a projected deficit of 3.3% of GDP for FY15.
The next three fiscal years are considered a period of intensive fiscal reform, according to the draft. The government plans to cap the total increase in social security spending for the next three fiscal years at JPY 1.5tn, the same as the past three years.
25 June 2015, 07:41
- USD/JPY has once again retreated after making a high of 124.36. The pair has
formed a temporary top around 124.50 and any further upside can be seen only
above this level.
- The minor resistance is around 123.90 (20 day HMA) and break above would
take the pair till 124.36/124.50.
- Break below 123.40 confirms extreme weakness and takes to next target at 122.45.
25 June 2015, 07:41
US Personal Consumption Expenditure inflation for May is scheduled to release
today.
Standard Chartered estimates, core PCE inflation (Thursday, 08:30 ET) to be up 0.1% m/m, (in line with the consensus view) from 0.1% in April, which would translate in a 1.2% y/y print, unchanged from April. San Francisco Fed President Williams recently said he would like to see underlying inflation - meaning core PCE inflation - bottom out before hiking rates, which probably reflects many FOMC members' views as well, notes Standard Chartered.
"Core PCE inflation may creep up over the summer (mostly on the back of health-care costs and still-high rent inflation). Stronger personal consumption should also boost the Fed's confidence in the need to start hiking rates. We see May personal spending data up 0.6% m/m (consensus: 0.7%) from 0.0% in April. We forecast Q2 GDP growth of 1.8% q/q SAAR, from -0.2% in Q1", said Standard Chartered in a report on Thursday.
Standard Chartered estimates, core PCE inflation (Thursday, 08:30 ET) to be up 0.1% m/m, (in line with the consensus view) from 0.1% in April, which would translate in a 1.2% y/y print, unchanged from April. San Francisco Fed President Williams recently said he would like to see underlying inflation - meaning core PCE inflation - bottom out before hiking rates, which probably reflects many FOMC members' views as well, notes Standard Chartered.
"Core PCE inflation may creep up over the summer (mostly on the back of health-care costs and still-high rent inflation). Stronger personal consumption should also boost the Fed's confidence in the need to start hiking rates. We see May personal spending data up 0.6% m/m (consensus: 0.7%) from 0.0% in April. We forecast Q2 GDP growth of 1.8% q/q SAAR, from -0.2% in Q1", said Standard Chartered in a report on Thursday.
25 June 2015, 07:39
Low unemployment in Japan has not yet fuelled a stronger consumer sector.
Household spending in May likely continued to contract y/y on
lower-than-expected wage growth and consumers still adapting slowly to
inflation.
"The unemployment rate is expected to have stabilised at 3.3% in May, having hit a historical low in April", says Standard Chartered.
Weaker inflation momentum in the coming months may lift purchasing power slightly, but more substantial and continued pay hikes are needed to revive private spending
"The unemployment rate is expected to have stabilised at 3.3% in May, having hit a historical low in April", says Standard Chartered.
Weaker inflation momentum in the coming months may lift purchasing power slightly, but more substantial and continued pay hikes are needed to revive private spending
25 June 2015, 07:35
US Personal Consumption Expenditure inflation for May is scheduled to release
today.
Standard Chartered estimates, core PCE inflation (Thursday, 08:30 ET) to be up 0.1% m/m, (in line with the consensus view) from 0.1% in April, which would translate in a 1.2% y/y print, unchanged from April. San Francisco Fed President Williams recently said he would like to see underlying inflation - meaning core PCE inflation - bottom out before hiking rates, which probably reflects many FOMC members' views as well, notes Standard Chartered.
"Core PCE inflation may creep up over the summer (mostly on the back of health-care costs and still-high rent inflation). Stronger personal consumption should also boost the Fed's confidence in the need to start hiking rates. We see May personal spending data up 0.6% m/m (consensus: 0.7%) from 0.0% in April. We forecast Q2 GDP growth of 1.8% q/q SAAR, from -0.2% in Q1", said Standard Chartered in a report on Thursday.
Standard Chartered estimates, core PCE inflation (Thursday, 08:30 ET) to be up 0.1% m/m, (in line with the consensus view) from 0.1% in April, which would translate in a 1.2% y/y print, unchanged from April. San Francisco Fed President Williams recently said he would like to see underlying inflation - meaning core PCE inflation - bottom out before hiking rates, which probably reflects many FOMC members' views as well, notes Standard Chartered.
"Core PCE inflation may creep up over the summer (mostly on the back of health-care costs and still-high rent inflation). Stronger personal consumption should also boost the Fed's confidence in the need to start hiking rates. We see May personal spending data up 0.6% m/m (consensus: 0.7%) from 0.0% in April. We forecast Q2 GDP growth of 1.8% q/q SAAR, from -0.2% in Q1", said Standard Chartered in a report on Thursday.
25 June 2015, 07:34
Japan releases May inflation, employment and household spending data on 26
June.
National core inflation is expected to have followed a similar downtrend, reflecting rising concerns about inflation among BoJ board members. Also, it likely indicates that the BoJ will need to step up its easing efforts later this year.
May core inflation (excluding fresh food) is expected to have slowed further to 0% y/y, the same level as in May 2013, shortly after the Bank of Japan (BoJ) launched its current monetary easing programme (QQE), says Standard Chartered
National core inflation is expected to have followed a similar downtrend, reflecting rising concerns about inflation among BoJ board members. Also, it likely indicates that the BoJ will need to step up its easing efforts later this year.
May core inflation (excluding fresh food) is expected to have slowed further to 0% y/y, the same level as in May 2013, shortly after the Bank of Japan (BoJ) launched its current monetary easing programme (QQE), says Standard Chartered
25 June 2015, 07:29
Singapore is scheduled to release May industrial production data on 26 June.
According to Standard Chartered, industrial production is likely to have
stabilised, contracting just 2.1% y/y, versus the 8.7% y/y fall in
April.
Singapore's PMI returned to a mild positive for the first time in six months in May, increasing to 50.2 from 49.4 in April. This likely suggests stabilisation in global external demand in the coming months. However, non-oil domestic export (NODX) data released in May still hints at downside risks to industrial production. NODX fell 0.2% y/y in May, below consensus estimates of a 2.3% expansion, notes Standard Chartered.
Singapore's PMI returned to a mild positive for the first time in six months in May, increasing to 50.2 from 49.4 in April. This likely suggests stabilisation in global external demand in the coming months. However, non-oil domestic export (NODX) data released in May still hints at downside risks to industrial production. NODX fell 0.2% y/y in May, below consensus estimates of a 2.3% expansion, notes Standard Chartered.
25 June 2015, 07:21
Singapore is schedule to release May industrial production data on 26 June.
According to Standard Chartered, industrial production is likely to have
stabilised, contracting just 2.1% y/y, versus the 8.7% y/y fall in
April.
Singapore's PMI returned to a mild positive for the first time in six months in May, increasing to 50.2 from 49.4 in April. This likely suggests stabilisation in global external demand in the coming months. However, non-oil domestic export (NODX) data released in May still hints at downside risks to industrial production. NODX fell 0.2% y/y in May, below consensus estimates of a 2.3% expansion, notes Standard Chartered.
Singapore's PMI returned to a mild positive for the first time in six months in May, increasing to 50.2 from 49.4 in April. This likely suggests stabilisation in global external demand in the coming months. However, non-oil domestic export (NODX) data released in May still hints at downside risks to industrial production. NODX fell 0.2% y/y in May, below consensus estimates of a 2.3% expansion, notes Standard Chartered.
25 June 2015, 07:17
The Taiwan central bank (CBC) is scheduled to hold its next quarterly
Monetary Policy Committee (MPC) meeting on 25 June.
Weaker-than-expected Q1 GDP growth +3.37% y/y and the lack of upside risk to headline inflation justify maintaining a pro-growth stance. , unless the economic recovery gains momentum and there are signs of imminent upside risk to inflation.
"The CBC is expected to keep the policy re-discount rate unchanged at 1.875% for a 17th consecutive quarter", says Standard Chartered.
The current downtrend in headline inflation is likely temporary, and due mainly to weak global oil and commodity prices, the reduction in the electricity bill since April, and the delay in taxi-fare hikes
Weaker-than-expected Q1 GDP growth +3.37% y/y and the lack of upside risk to headline inflation justify maintaining a pro-growth stance. , unless the economic recovery gains momentum and there are signs of imminent upside risk to inflation.
"The CBC is expected to keep the policy re-discount rate unchanged at 1.875% for a 17th consecutive quarter", says Standard Chartered.
The current downtrend in headline inflation is likely temporary, and due mainly to weak global oil and commodity prices, the reduction in the electricity bill since April, and the delay in taxi-fare hikes
25 June 2015, 07:15
Given yesterday's upward revision to US Q1 GDP growth from -0.7% q/q (saar)
to -0.2%, which largely reflected stronger household consumption, today's
personal income and spending figures for May will be scrutinised for further
evidence of a solid recovery in Q2 GDP. The strong May payrolls and retail sales
prints suggest a strengthening of both income and spending growth which is
expected to rise by 0.5% m/m and 0.8% respectively, says Lloyds Bank.
The Fed's preferred inflation measure, the core PCE deflator, is also released for May. This unexpectedly fell to 1.2% y/y in April and this pace is expected to be maintained before picking up over the next few months, adds Lloyds Bank. However, last week's weaker-than-anticipated core-CPI print for May means that there is a downside risk to our call.
The CBI Distributive Trades survey for June will provide some further guidance on UK Q2 activity. Last month's 39 point pickup to a net balance of 51 probably overestimated the underlying rise in retail sales. Although the market is expecting a partial retracement to 35 in June, this would still leave the Q2 average well above its Q1 counterpart and point to a pickup in Q2 activity from the 0.3% q/q reported in Q1, states Lloyds Bank.
The Fed's preferred inflation measure, the core PCE deflator, is also released for May. This unexpectedly fell to 1.2% y/y in April and this pace is expected to be maintained before picking up over the next few months, adds Lloyds Bank. However, last week's weaker-than-anticipated core-CPI print for May means that there is a downside risk to our call.
The CBI Distributive Trades survey for June will provide some further guidance on UK Q2 activity. Last month's 39 point pickup to a net balance of 51 probably overestimated the underlying rise in retail sales. Although the market is expecting a partial retracement to 35 in June, this would still leave the Q2 average well above its Q1 counterpart and point to a pickup in Q2 activity from the 0.3% q/q reported in Q1, states Lloyds Bank.
25 June 2015, 07:02
- Pair knocked off 1.3452 high, may touch 1.3530 level
- Pair traded 1.3428-1.3452 range so far, last at 1.3429-35
- Trading bias up above 1.3400, hurdle at 1.3465 overnight high
25 June 2015, 06:47
An important mover could be a change in the inflation target. Tomorrow, the
National Monetary Council (CMN) will meet to reaffirm the 2016 target and
announce the 2017 target.
It will be decided on 26 June to define what to expect in terms of monetary policy. If there is no change at all, we think the Copom will hike the Selic by another 75bp (50bp in July and 25bp in September), but the subsequent easing could come by the end of Q1 16, given that inflation expectations are already close to the mid-point of the target for 2017 onward, and, therefore, would allow an earlier easing of the Selic rate at 14.50%.
"The CMN could either increase the inflation target to 4.5% for 2016, and simultaneously announce a lower one for 2017, or reduce the tolerance range for the 2017 inflation target, but keeping the mid-point at 4.5%, or bring no change to the current setup prevailing since 2004 of the mid-point of 4.5% and target range of +/- 2.0pp", says Barclays.
The board will likely want to be sure there is no shock to the inflation outlook that could move the IPCA beyond the new tolerance range.
Finally, if the council decides to increase the 2016 inflation target and define a lower target for 2017, we believe the Copom will likely hike by 25bp in July and, depending on the behavior of inflation expectations for 2017, it would hold interest rates for a period even longer than Q2 16.
It will be decided on 26 June to define what to expect in terms of monetary policy. If there is no change at all, we think the Copom will hike the Selic by another 75bp (50bp in July and 25bp in September), but the subsequent easing could come by the end of Q1 16, given that inflation expectations are already close to the mid-point of the target for 2017 onward, and, therefore, would allow an earlier easing of the Selic rate at 14.50%.
"The CMN could either increase the inflation target to 4.5% for 2016, and simultaneously announce a lower one for 2017, or reduce the tolerance range for the 2017 inflation target, but keeping the mid-point at 4.5%, or bring no change to the current setup prevailing since 2004 of the mid-point of 4.5% and target range of +/- 2.0pp", says Barclays.
The board will likely want to be sure there is no shock to the inflation outlook that could move the IPCA beyond the new tolerance range.
Finally, if the council decides to increase the 2016 inflation target and define a lower target for 2017, we believe the Copom will likely hike by 25bp in July and, depending on the behavior of inflation expectations for 2017, it would hold interest rates for a period even longer than Q2 16.
25 June 2015, 06:45
JAPAN 2-YEAR JGB AUCTION BID-TO-COVER RATIO 3.71
25 June 2015, 06:45
JAPAN 2-YEAR JGB AUCTION LOWEST PRICE 100.1950, AVERAGE PRICE 100.1970, BIDS
ACCEPTED AT LOWEST PRICE 70.2250 PCT
25 June 2015, 06:37
An important mover could be a change in the Brazil's inflation target.
Tomorrow, the National Monetary Council (CMN) will meet to reaffirm the 2016
target and announce the 2017 target.
"The CMN could either increase the inflation target to 4.5% for 2016, and simultaneously announce a lower one for 2017, or reduce the tolerance range for the 2017 inflation target, but keeping the mid-point at 4.5%, or bring no change to the current setup prevailing since 2004 of the mid-point of 4.5% and target range of +/- 2.0pp", says Barclays.
It will be decided on 26 June to define what to expect in terms of monetary policy. If there is no change at all, we think the Copom will hike the Selic by another 75bp (50bp in July and 25bp in September), but the subsequent easing could come by the end of Q1 16, given that inflation expectations are already close to the mid-point of the target for 2017 onward, and, therefore, would allow an earlier easing of the Selic rate at 14.50%.
The board will likely want to be sure there is no shock to the inflation outlook that could move the IPCA beyond the new tolerance range.
Finally, if the council decides to increase the 2016 inflation target and define a lower target for 2017, we believe the Copom will likely hike by 25bp in July and, depending on the behavior of inflation expectations for 2017, it would hold interest rates for a period even longer than Q2 16.
"The CMN could either increase the inflation target to 4.5% for 2016, and simultaneously announce a lower one for 2017, or reduce the tolerance range for the 2017 inflation target, but keeping the mid-point at 4.5%, or bring no change to the current setup prevailing since 2004 of the mid-point of 4.5% and target range of +/- 2.0pp", says Barclays.
It will be decided on 26 June to define what to expect in terms of monetary policy. If there is no change at all, we think the Copom will hike the Selic by another 75bp (50bp in July and 25bp in September), but the subsequent easing could come by the end of Q1 16, given that inflation expectations are already close to the mid-point of the target for 2017 onward, and, therefore, would allow an earlier easing of the Selic rate at 14.50%.
The board will likely want to be sure there is no shock to the inflation outlook that could move the IPCA beyond the new tolerance range.
Finally, if the council decides to increase the 2016 inflation target and define a lower target for 2017, we believe the Copom will likely hike by 25bp in July and, depending on the behavior of inflation expectations for 2017, it would hold interest rates for a period even longer than Q2 16.
25 June 2015, 06:35
JAPAN 03-MONTH TREASURY DISCOUNT BILL AUCTION LOWEST PRICE 100.0000, AVERAGE
PRICE 100.0003, BIDS ACCEPTED AT LOWEST PRICE 62.7037 PCT
25 June 2015, 06:31
INDIAN BANKS DID NOT BORROW VIA MARGINAL STANDING FACILITY ON JUNE 24 - RBI
25 June 2015, 06:26
Wages are seeing downtrend, but not necessarily affecting inflation. The
Copom acknowledges the deterioration of the labor market and despite stating
that wage adjustments are now closer to its estimate of productivity gains
(i.e., contraction).
The Copom is still not confident that lower wages will necessarily transmit to lower inflation in the medium term. Wage negotiations in Brazil tend to consider past inflation rather than inflation expectations, which suggests that the Copom thinks that salaries should continue contributing to inflationary pressures.
Still, there are effects on growth from the softer labor market. The Copom has revised its real GDP growth forecast to -1.1% in 2015, from -0.5%, on the back of a 0.5% contraction of household consumption this year, reflecting lower employment and still-depressed confidence.
On the other hand, a stronger global growth (although uneven among countries) and a weaker multilateral exchange rate means that net exports should positively contribute to growth this year (1.5pp in its estimates). Taking that into consideration, the Copom expects that the output gap will continue to be negative for the foreseeable future, helping to reduce inflationary pressures
The Copom is still not confident that lower wages will necessarily transmit to lower inflation in the medium term. Wage negotiations in Brazil tend to consider past inflation rather than inflation expectations, which suggests that the Copom thinks that salaries should continue contributing to inflationary pressures.
Still, there are effects on growth from the softer labor market. The Copom has revised its real GDP growth forecast to -1.1% in 2015, from -0.5%, on the back of a 0.5% contraction of household consumption this year, reflecting lower employment and still-depressed confidence.
On the other hand, a stronger global growth (although uneven among countries) and a weaker multilateral exchange rate means that net exports should positively contribute to growth this year (1.5pp in its estimates). Taking that into consideration, the Copom expects that the output gap will continue to be negative for the foreseeable future, helping to reduce inflationary pressures
25 June 2015, 06:20
The regulated price adjustments broadly influenced Brazil's Inflation
forecasts . The Copom has affirmed that between Q2 15 and Q1 16, inflation
forecasts will be higher, partially because of this and the upside surprise in
recent prints.
The Copom now expects regulated price adjustments to be 13.7%, and kept it at 5.3% for the next year.
Inflation forecasts for 2016 are not anchored yet. In the reference scenario, the Selic rate moved to 13.75% and the exchange rate to .
For Q4 15, inflation is now at 9.0%, moving down to 4.8% in Q4 16, and reaching the mid-point of the target 4.5% by Q2 17.
In the market scenario, with higher interest rates forecasts and weaker exchange rate expectations, the inflation forecasts moved to 9.1% in Q4 15, will be stable at 5.1% in Q4 16 and will reach 4.8% by Q2 17.
The Copom now expects regulated price adjustments to be 13.7%, and kept it at 5.3% for the next year.
Inflation forecasts for 2016 are not anchored yet. In the reference scenario, the Selic rate moved to 13.75% and the exchange rate to .
For Q4 15, inflation is now at 9.0%, moving down to 4.8% in Q4 16, and reaching the mid-point of the target 4.5% by Q2 17.
In the market scenario, with higher interest rates forecasts and weaker exchange rate expectations, the inflation forecasts moved to 9.1% in Q4 15, will be stable at 5.1% in Q4 16 and will reach 4.8% by Q2 17.
25 June 2015, 06:16
Brazil Quarterly Inflation Report (QIR), published today, brings another
hawkish message that the Selic rate will continue to be hiked until the
forecasts for 2016 are at the mid-point of the targets.
Risks are that negative wages will not decrease inflation. Meanwhile, market expectations are still above the mid-point of the target, suggesting a vigilant position from the Copom.
"It would take another 150bp of hikes in the Selic to decompress inflation by 450bp next year, despite a lower inertia and wider negative output gap expected by the Copom, which is very aggressive for such a fragile growth environment", says Barclays
As such, if there is no change in the inflation target, in our view, the Copom will likely hike the Selic rate by 50bp in July and potentially by 25bp in September.
Risks are that negative wages will not decrease inflation. Meanwhile, market expectations are still above the mid-point of the target, suggesting a vigilant position from the Copom.
"It would take another 150bp of hikes in the Selic to decompress inflation by 450bp next year, despite a lower inertia and wider negative output gap expected by the Copom, which is very aggressive for such a fragile growth environment", says Barclays
As such, if there is no change in the inflation target, in our view, the Copom will likely hike the Selic rate by 50bp in July and potentially by 25bp in September.
25 June 2015, 06:01
- It is back to Wednesday's opening level on decent buying flows in thin
market
- USD slightly lower in Asia vs most currencies led by AUD and
NZD
- Initial resistance at 61.8% Fibonacci retracement of yesterday's 0.7683/0.7770 move at 0.7737
25 June 2015, 05:54
S.KOREA FINANCE MINISTER: SUPPLEMENTARY BUDGET COULD TEMPORARILY HURT FISCAL
SOUNDNESS
25 June 2015, 05:50
BOJ offers to lend Y578.3 bln of JGBs on spot basis through 6/26 as a
secondary source of JGBs (Offer in the morning)
25 June 2015, 05:46
S.KOREA FINANCE MINISTER:TOO EARLY TO CONFIRM SIZE OF SUPPLEMENTARY BUDGET
25 June 2015, 05:35
FITCH: RECOVERY CONTINUES IN CHINA HOUSING MARKET
25 June 2015, 05:34
S.KOREA FINANCE MINISTER SAYS CONCERNED QUARTERLY GROWTH BELOW 1 PCT IN Q2,
MORE LOW GROWTH EXPECTED
25 June 2015, 05:32
S.KOREA TO 'REINFORCE FINANCES' BY MORE THAN 15 TRLN WON, INCLUDING
SUPPLEMENTARY BUDGET -FINANCE MINISTRY
25 June 2015, 05:31
S.KOREA SAYS ECONOMY MAY LAG BELOW FORECAST GROWTH PATH DUE TO SLUGGISH
EXPORTS, MERS
25 June 2015, 05:31
S.KOREA SAYS LOCAL ECONOMY WILL IMPROVE GRADUALLY, CENTERED ON DOMESTIC
CONSUMPTION
25 June 2015, 05:30
S.KOREA SAYS LOCAL ECONOMY WILL IMPROVE GRADUALLY, CENTERED ON DOMESTIC
CONSUMPTION
25 June 2015, 05:30
S.KOREA REVISES 2015 CPI FORECAST TO 0.7 PCT VS 2.0 PCT ESTIMATED EARLIER,
2016 CPI FORECAST AT 1.3 PCT
25 June 2015, 05:07
JAPAN ECONMIN AMARI: HOPES TO REACH TPP MINISTERIAL-LEVEL AGREEMENT WITH JULY
AS DEADLINE
ooooooo
25 June 2015, 05:07
JAPAN ECONMIN AMARI: HOPES TO REACH TPP MINISTERIAL-LEVEL AGREEMENT WITH JULY
AS DEADLINE
BOJ offers to buy 400 bln yen in commercial paper (CP) from 6/30
CHINA'S CSI300 BANK INDEX UP OVER 2.5 PERCENT AFTER CHINA SCRAPS LENDERS'
LOAN-TO-DEPOSIT RATIO
CHINA'S YUAN OPENS TRADE AT 6.2074 PER DOLLAR VS LAST CLOSE AT 6.2071
JAPAN OFFERS 2.5 TRLN YEN IN 2-YEAR JGBS WITH 0.10 PCT COUPON
CHINA'S CSI300 INDEX TO OPEN UP 0.5 PCT AT 4,906.24 POINTS
SHANGHAI COMPOSITE INDEX TO OPEN UP 0.5 PCT AT 4,711.76 POINTS
CHINA C.BANK CONDUCTS OPEN MARKET OPERATIONS FOR FIRST TIME SINCE APRIL 16
JAPAN OFFERS 5.42 TRLN YEN IN TREASURY DISCOUNT BILLS
CHINA C.BANK INJECTS 35 BLN YUAN FOR WEEK, VERSUS NO DRAIN OR INJECTION
PREVIOUS WEEK
PHILIPPINES SAYS APRIL TRADE BALANCE -300.9 MLN DLRS
25 June 2015, 03:08
25 June 2015, 03:47
Reforms are also important to driving further growth. The cabinet office
released an update of the third arrow of Abenomics; i.e., reforms, early this
week. Its last update was in June 2014.
The latest draft calls for a "productivity revolution" among small companies and enhanced investment in technology and human resources.
The government aims to increase services-sector productivity growth to 2% by 2020 from 0.8% in 2013, riding the wave of the 2020 Tokyo Olympics. It also targets doubling the number of foreign IT workers to 60,000 by 2020. The government expects these measures to help lift economic growth, with the aim of reducing the fiscal deficit.
Fiscal consolidation is also part of the latest draft. The government reaffirms its target of a primary balance by FY20 (ends in March 2021). It also targets a primary budget deficit of 1% of GDP by FY18, versus a projected deficit of 3.3% of GDP for FY15.
The next three fiscal years are considered a period of intensive fiscal reform, according to the draft. The government plans to cap the total increase in social security spending for the next three fiscal years at JPY 1.5tn, the same as the past three years.
"We think the latest draft reforms are a step in the right direction, but in the absence of concrete, near-term targets their impact may fall well short of expectations", said Standard Chartered in a report on Thursday
The latest draft calls for a "productivity revolution" among small companies and enhanced investment in technology and human resources.
The government aims to increase services-sector productivity growth to 2% by 2020 from 0.8% in 2013, riding the wave of the 2020 Tokyo Olympics. It also targets doubling the number of foreign IT workers to 60,000 by 2020. The government expects these measures to help lift economic growth, with the aim of reducing the fiscal deficit.
Fiscal consolidation is also part of the latest draft. The government reaffirms its target of a primary balance by FY20 (ends in March 2021). It also targets a primary budget deficit of 1% of GDP by FY18, versus a projected deficit of 3.3% of GDP for FY15.
The next three fiscal years are considered a period of intensive fiscal reform, according to the draft. The government plans to cap the total increase in social security spending for the next three fiscal years at JPY 1.5tn, the same as the past three years.
"We think the latest draft reforms are a step in the right direction, but in the absence of concrete, near-term targets their impact may fall well short of expectations", said Standard Chartered in a report on Thursday
25 June 2015, 03:09
AUSTRALIA'S S&P/ASX 200 INDEX DOWN 0.36 PCT AT 5,666.50 POINTS IN EARLY
TRADE
SOUTH KOREA REPORTS 2 MORE DEATHS IN MIDDLE EAST RESPIRATORY SYNDROME
OUTBREAK BRINGING TOTAL TO 29, 1 NEW CASE
25 June 2015, 03:01
SEOUL SHARES OPEN DOWN 0.37 PCT
25 June 2015, 02:50
JAPAN W/E FOREIGN BOND INVESTMENT INCREASE TO -892.8 BLN JPY VS PREV -1850.6
BLN JPY
25 June 2015, 02:25
Japan releases May inflation, employment and household spending data on 26
June. May core inflation (excluding fresh food) is expected to have slowed
further to 0% y/y, the same level as in May 2013, shortly after the Bank of
Japan (BoJ) launched its current monetary easing programme (QQE).
May core inflation for Tokyo, already released, slowed to 0.2% y/y from 0.4% in April on contracting energy, housing and durable-goods prices.
National core inflation is expected to have followed a similar downtrend, reflecting rising concerns about inflation among BoJ board members. It also likely indicates that the BoJ will need to step up its easing efforts later this year.
May core inflation for Tokyo, already released, slowed to 0.2% y/y from 0.4% in April on contracting energy, housing and durable-goods prices.
National core inflation is expected to have followed a similar downtrend, reflecting rising concerns about inflation among BoJ board members. It also likely indicates that the BoJ will need to step up its easing efforts later this year.
25 June 2015, 02:24
GREEK GOVERNMENT OFFICIAL SAYS GREEK GOVERNMENT REMAINS FIXED IN ITS POSITION
25 June 2015, 02:24
GREEK GOVERNMENT OFFICIAL SAYS TALKS TO RESUME THURSDAY MORNING AT 0900 LOCAL
TIME
25 June 2015, 02:19
TALKS BETWEEN GREECE AND CREDITORS EXPECTED TO CONTINUE ON THURSDAY MORNING
BEFORE EUROGROUP MEETING - SOURCE FAMILIAR WITH TALKS
25 June 2015, 02:12
TALKS BETWEEN GREECE AND CREDITORS IN BRUSSELS END
25 June 2015, 02:06
Wages are falling, but not necessarily affecting inflation. The Copom
acknowledges the deterioration of the labor market and despite stating that wage
adjustments are now closer to its estimate of productivity gains (i.e.,
contraction), the Copom is still not confident that lower wages will necessarily
transmit to lower inflation in the medium term.
Wage negotiations in Brazil tend to consider past inflation rather than inflation expectations, which suggests that the Copom thinks that salaries should continue contributing to inflationary pressures.
Still, there are effects on growth from the softer labor market. The Copom has revised its real GDP growth forecast to -1.1% in 2015, from -0.5%, on the back of a 0.5% contraction of household consumption this year, reflecting lower employment and still-depressed confidence.
On the other hand, a stronger global growth (although uneven among countries) and a weaker multilateral exchange rate means that net exports should positively contribute to growth this year (1.5pp in its estimates). Taking that into consideration, the Copom expects that the output gap will continue to be negative for the foreseeable future, helping to reduce inflationary pressures.
Wage negotiations in Brazil tend to consider past inflation rather than inflation expectations, which suggests that the Copom thinks that salaries should continue contributing to inflationary pressures.
Still, there are effects on growth from the softer labor market. The Copom has revised its real GDP growth forecast to -1.1% in 2015, from -0.5%, on the back of a 0.5% contraction of household consumption this year, reflecting lower employment and still-depressed confidence.
On the other hand, a stronger global growth (although uneven among countries) and a weaker multilateral exchange rate means that net exports should positively contribute to growth this year (1.5pp in its estimates). Taking that into consideration, the Copom expects that the output gap will continue to be negative for the foreseeable future, helping to reduce inflationary pressures.
25 June 2015, 01:55
BOJ: current account balance at 227.3 trln at end of day
25 June 2015, 01:55
BOJ: banks' reserve balance at 172 trln at end of day
25 June 2015, 01:52
5.6 MAGNITUDE EARTHQUAKE STRIKES ALASKA ABOUT 74 MILES (119 KM) NORTHWEST OF
ANCHORAGE -USGS
25 June 2015, 01:44
LEW, COMMENTING ON CHINA EXCHANGE RATE, SAYS U.S.-CHINA WILL KEEP WORKING
'FOR KIND OF UNDERSTANDING THAT GIVES EVEN MORE COMFORT'
25 June 2015, 01:42
Brazil's inflation forecasts were broadly influenced by the regulated price
adjustments. The Copom has affirmed that between Q2 15 and Q1 16, inflation
forecasts will be higher, partially because of the stronger regulated price
adjustments and the upside surprise in recent prints. The Copom now expects
regulated price adjustments to be 13.7% (from 11.0%), and kept it at 5.3% for
the next year.
Inflation forecasts for 2016 are not anchored yet. In the reference scenario, the Selic rate moved to 13.75% (from 12.75%) and the exchange rate to (from ).
For Q4 15, inflation is now at 9.0% (from 7.9%), moving down to 4.8% in Q4 16 (from 4.9%), and reaching the mid-point of the target (4.5%) by Q2 17.
In the market scenario, with higher interest rates forecasts and weaker exchange rate expectations, the inflation forecasts moved to 9.1% in Q4 15 (from 7.9%), will be stable at 5.1% in Q4 16 and will reach 4.8% by Q2 17.
Inflation forecasts for 2016 are not anchored yet. In the reference scenario, the Selic rate moved to 13.75% (from 12.75%) and the exchange rate to (from ).
For Q4 15, inflation is now at 9.0% (from 7.9%), moving down to 4.8% in Q4 16 (from 4.9%), and reaching the mid-point of the target (4.5%) by Q2 17.
In the market scenario, with higher interest rates forecasts and weaker exchange rate expectations, the inflation forecasts moved to 9.1% in Q4 15 (from 7.9%), will be stable at 5.1% in Q4 16 and will reach 4.8% by Q2 17.
25 June 2015, 01:40
KERRY SAYS SEES 'ASCENDING RELATIONSHIP' WITH CHINA, NO INDICATION OF A
'DOWNWARD SPIRAL'
25 June 2015, 01:35
LEW SAYS U.S. BELIEVES THERE IS AN URGENCY BY CHINA TO MOVE ON SOME ECONOMIC
REFORMS
25 June 2015, 01:33
U.S. TREASURY SECRETARY LEW SAYS REAL TEST OF CHINA'S COMMITMENT ON CURRENCY
WILL BE WHEN THERE IS REAL UPWARD PRESSURE ON YUAN
25 June 2015, 01:31
KERRY SAYS IF OUTSTANDING ISSUES ARE NOT ADDRESSED IN IRAN NUCLEAR TALKS
'THERE WILL NOT BE A DEAL'
25 June 2015, 01:30
KERRY SAYS NOT TARGETING FRENCH PRESIDENT WITH SURVEILLANCE, U.S. DOES NOT
CONDUCT ANY FOREIGN INTELLIGENCE SURVEILLANCE UNLESS THERE IS SPECIFIC SECURITY
PURPOSE
25 June 2015, 01:25
U.S. SECRETARY OF STATE KERRY SAYS THERE WAS HONEST DISCUSSION WITHOUT
ACCUSATIONS DURING TALKS WITH CHINA ON CYBER-THEFT
25 June 2015, 01:25
S.KOREA FIN MIN SAYS LOCAL ECONOMY WILL LAG GROWTH PATH FORECAST EARLIER
25 June 2015, 01:25
S.KOREA FIN MIN SAYS MERS HAS AFFECTED ECONOMY MUCH FASTER THAN SEWOL FERRY
SINKING
25 June 2015, 01:24
S.KOREA FIN MIN SAYS MERS WILL AFFECT ECONOMY FOR A CONSIDERABLE TIME EVEN
AFTER OUTBREAK SUBSIDES
25 June 2015, 01:00
NZ's NZX 50 OPENS AT 5775.480 POINTS, DOWN 0.010 PCT
25 June 2015, 00:56
London, 24 June 2015 -- Lebanon's (B2 negative) public finances benefit from
lower oil prices and higher revenues but remain vulnerable to domestic and
external shocks, says Moody's Investors Service in a report published
today.
The rating agency notes that consensus on economic reforms often remains elusive amid a challenging political environment, hampering the country's competitiveness. In this context, the country's twin deficits and debt burden are likely to widen in 2015-2016.
Moody's annual Lebanon Credit Analysis is available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release. The rating agency's report is an update to the markets and does not constitute a rating action.
"While Lebanon benefits from short-lived improvements stemming from the drop in oil prices, the release of telecom revenues and lower capital expenditures, policy action remains insufficient to curb the negative fiscal trend," says Mathias Angonin, an analyst at Moody's. "Slower economic conditions will continue to pose fiscal challenges and increase the country's vulnerability to political shocks."
Moody's expects that Lebanon's economic growth will remain subdued at 2.5% this year, similar to its 2013 level and up from 2.0% in 2014.
Economic growth will likely be supported by low oil prices, a slight recovery in tourism numbers and continued private sector credit growth benefiting from central bank stimulus. Construction activity continues to be slower than pre-2011.
According to the rating agency, Lebanon's general government debt is likely to trend upwards in 2015 and 2016, to 126% of GDP, after falling in 2014. However, it notes that the country has demonstrated a strong capacity to withstand even higher debt levels and Lebanese banks continue to be willing and able to provide financing to the government, supported by strong deposit inflows.
Lebanon's higher fiscal deficit will primarily result from spending pressures: albeit decreasing transfers to Electricité du Liban continue to form a significant portion of expenditure, spending on public wages will continue to rise due to additional security personnel.
Nevertheless, the fiscal deficit will likely remain below levels reached in 2012 and 2013, says Moody's. In addition, the central bank's foreign exchange reserves, which more than tripled to $33.8 billion by April 2015 from their 2007 level, bolster confidence in the exchange rate peg and the financial system. Large remittance and deposit inflows support banking sector stability.
However, the rating agency notes that disagreements among political factions remain a challenge, as reflected by the inability to designate a new president. Political polarization has considerably weakened policy effectiveness. The most pressing fiscal reforms have been on the drawing board for years and are unlikely to be addressed.
The rating agency notes that consensus on economic reforms often remains elusive amid a challenging political environment, hampering the country's competitiveness. In this context, the country's twin deficits and debt burden are likely to widen in 2015-2016.
Moody's annual Lebanon Credit Analysis is available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release. The rating agency's report is an update to the markets and does not constitute a rating action.
"While Lebanon benefits from short-lived improvements stemming from the drop in oil prices, the release of telecom revenues and lower capital expenditures, policy action remains insufficient to curb the negative fiscal trend," says Mathias Angonin, an analyst at Moody's. "Slower economic conditions will continue to pose fiscal challenges and increase the country's vulnerability to political shocks."
Moody's expects that Lebanon's economic growth will remain subdued at 2.5% this year, similar to its 2013 level and up from 2.0% in 2014.
Economic growth will likely be supported by low oil prices, a slight recovery in tourism numbers and continued private sector credit growth benefiting from central bank stimulus. Construction activity continues to be slower than pre-2011.
According to the rating agency, Lebanon's general government debt is likely to trend upwards in 2015 and 2016, to 126% of GDP, after falling in 2014. However, it notes that the country has demonstrated a strong capacity to withstand even higher debt levels and Lebanese banks continue to be willing and able to provide financing to the government, supported by strong deposit inflows.
Lebanon's higher fiscal deficit will primarily result from spending pressures: albeit decreasing transfers to Electricité du Liban continue to form a significant portion of expenditure, spending on public wages will continue to rise due to additional security personnel.
Nevertheless, the fiscal deficit will likely remain below levels reached in 2012 and 2013, says Moody's. In addition, the central bank's foreign exchange reserves, which more than tripled to $33.8 billion by April 2015 from their 2007 level, bolster confidence in the exchange rate peg and the financial system. Large remittance and deposit inflows support banking sector stability.
However, the rating agency notes that disagreements among political factions remain a challenge, as reflected by the inability to designate a new president. Political polarization has considerably weakened policy effectiveness. The most pressing fiscal reforms have been on the drawing board for years and are unlikely to be addressed.
25 June 2015, 00:53
Core PCE inflation (Thursday, 08:30 ET) is expected to be up 0.1% m/m, (in
line with the consensus view) from 0.1% in April, which would translate in a
1.2% y/y print, unchanged from April.
San Francisco Fed President Williams recently said he would like to see underlying inflation - meaning core PCE inflation - bottom out before hiking rates, which probably reflects many FOMC members' views as well.
Core PCE inflation may creep up over the summer (mostly on the back of health-care costs and still-high rent inflation). Stronger personal consumption should also boost the Fed's confidence in the need to start hiking rates.
"We see May personal spending data up 0.6% m/m (consensus: 0.7%) from 0.0% in April. We forecast Q2 GDP growth of 1.8% q/q SAAR, from -0.2% in Q1",says Standard Chartered.
San Francisco Fed President Williams recently said he would like to see underlying inflation - meaning core PCE inflation - bottom out before hiking rates, which probably reflects many FOMC members' views as well.
Core PCE inflation may creep up over the summer (mostly on the back of health-care costs and still-high rent inflation). Stronger personal consumption should also boost the Fed's confidence in the need to start hiking rates.
"We see May personal spending data up 0.6% m/m (consensus: 0.7%) from 0.0% in April. We forecast Q2 GDP growth of 1.8% q/q SAAR, from -0.2% in Q1",says Standard Chartered.
25 June 2015, 00:33
Singapore will release May industrial production data on 26 June. Industrial
production is expected to have stabilised, contracting just 2.1% y/y, versus the
8.7% y/y fall in April.
Singapore's PMI returned to a mild positive for the first time in six months in May, increasing to 50.2 from 49.4 in April. This likely suggests stabilisation in global external demand in the coming months.
However, non-oil domestic export (NODX) data released in May still hints at downside risks to industrial production. NODX fell 0.2% y/y in May, below consensus estimates of a 2.3% expansion.
Singapore's PMI returned to a mild positive for the first time in six months in May, increasing to 50.2 from 49.4 in April. This likely suggests stabilisation in global external demand in the coming months.
However, non-oil domestic export (NODX) data released in May still hints at downside risks to industrial production. NODX fell 0.2% y/y in May, below consensus estimates of a 2.3% expansion.
25 June 2015, 00:24
The Taiwan central bank (CBC) is scheduled to hold its next quarterly
Monetary Policy Committee (MPC) meeting on 25 June. Policy makers are expected
to keep the policy re-discount rate unchanged at 1.875% for a 17th consecutive
quarter.
Weaker-than-expected Q1 GDP growth (+3.37% y/y) and the lack of upside risk to headline inflation justify maintaining a pro-growth stance.
"We believe the CBC will keep policy rates unchanged for the rest of 2015, unless the economic recovery gains momentum and there are signs of imminent upside risk to inflation",says Standard Chartered.
The current downtrend in headline inflation is likely temporary, and due mainly to weak global oil and commodity prices, the reduction in the electricity bill since April, and the delay in taxi-fare hikes.
Weaker-than-expected Q1 GDP growth (+3.37% y/y) and the lack of upside risk to headline inflation justify maintaining a pro-growth stance.
"We believe the CBC will keep policy rates unchanged for the rest of 2015, unless the economic recovery gains momentum and there are signs of imminent upside risk to inflation",says Standard Chartered.
The current downtrend in headline inflation is likely temporary, and due mainly to weak global oil and commodity prices, the reduction in the electricity bill since April, and the delay in taxi-fare hikes.
25 June 2015, 00:18
U.S. TREASURY'S LEW - WE WELCOME CHINA AS PARTNER IN ADVANCING HIGH STANDARDS
IN MULTILATERAL INSTITUTIONS
25 June 2015, 00:17
U.S. TREASURY'S LEW - CHINA COMMITTED TO REFORMS INCLUDING TAKING FINAL STEPS
IN LIBERALIZING INTEREST RATES, EXPANDING ACCESS TO FOREIGN FINANCIAL FIRMS
25 June 2015, 00:16
U.S. TREASURY'S LEW - BOTH CHINA AND U.S. COMMITTED TO EXCHANGE IMPROVED
NEGATIVE LIST OFFERS IN SEPTEMBER
25 June 2015, 00:16
U.S. TREASURY'S LEW - CHINA COMMITTED TO INTERVENE IN FX MARKET ONLY WHEN
NECESSITATED BY DISORDERLY MARKET CONDITIONS
25 June 2015, 00:16
U.S. TREASURY'S LEW - U.S.-CHINA TALKS INCLUDED CANDID CONVERSATIONS ON
BEHAVIOR IN CYBERSPACE
25 June 2015, 00:16
U.S. TREASURY'S LEW - CRITICAL CHINA REMAIN ON PATH TOWARD MARKET DETERMINED
EXCHANGE RATE
25 June 2015, 00:11
WHITE HOUSE SAYS OBAMA, CHINESE DELEGATION AGREED IRAN SHOULD SEIZE
OPPORTUNITY TO ADDRESS CONCERNS ABOUT NUCLEAR PROGRAM
25 June 2015, 00:10
WHITE HOUSE SAYS OBAMA URGED CHINA TO ADDRESS CURRENCY, TECHNOLOGY,
INVESTMENT POLICIES WHILE EXPRESSING SUPPORT FOR REFORMS
25 June 2015, 00:06
WHITE HOUSE SAYS OBAMA RAISED U.S. CONCERNS ABOUT CHINA'S CYBER AND MARITIME
BEHAVIOR IN MEETING WITH CHINESE DELEGATION
25 June 2015, 00:03
Moody's Investors Service is maintaining its stable outlook for Peru's
banking system, on the expectation that the country's banks will maintain sound
fundamentals amid moderate economic growth in 2015 and 2016, according to
"Banking System Outlook: Peru," published on 24 June 2015.
"The Peruvian banks continue to generate healthy earnings, owing to strong loan demand, stable low-cost core funding and effective control of asset quality and operating costs," says Jeanne Del Casino, a Moody's Vice President and Senior Credit Officer, adding that, "liquidity and capital buffers also remain strong."
Moody's expects Peru's economic growth to recover from a slowdown in 2014 and, given the country's expansionary fiscal and monetary policies, is forecasting growth of 3% to 4% in 2015 and 4.5% in 2016. At the same time, private consumption continues to grow, while a large pipeline of government-promoted mining and public infrastructure projects will boost confidence and growth in the second half of 2015 and into 2016, which will compensate somewhat for a decline in investment in other sectors.
The main risk to the banks' asset quality is a rise in credit delinquencies by consumers and small and medium-sized enterprises, the two sectors that are the most vulnerable to economic downturns. However, strict origination standards and a shift towards higher-quality loans will mitigate these pressures and dampen the rise in non-performing loans.
In addition, financial dollarization -- which remains significant at around 50% of deposits and 40% of loans -- continues to decline as a result of regulations designed to curb banks' use of foreign currency. A sharp cut in local currency reserve requirements has also stimulated local-currency lending, which will support profitability while limiting credit risk from currency mismatches.
Still, given the widespread use of the dollar, the central bank's capacity to act as a lender of last resort remains limited. Hence, Moody's assumes that only the country's systemically important banks are likely to receive government support in the event of stress.
"The Peruvian banks continue to generate healthy earnings, owing to strong loan demand, stable low-cost core funding and effective control of asset quality and operating costs," says Jeanne Del Casino, a Moody's Vice President and Senior Credit Officer, adding that, "liquidity and capital buffers also remain strong."
Moody's expects Peru's economic growth to recover from a slowdown in 2014 and, given the country's expansionary fiscal and monetary policies, is forecasting growth of 3% to 4% in 2015 and 4.5% in 2016. At the same time, private consumption continues to grow, while a large pipeline of government-promoted mining and public infrastructure projects will boost confidence and growth in the second half of 2015 and into 2016, which will compensate somewhat for a decline in investment in other sectors.
The main risk to the banks' asset quality is a rise in credit delinquencies by consumers and small and medium-sized enterprises, the two sectors that are the most vulnerable to economic downturns. However, strict origination standards and a shift towards higher-quality loans will mitigate these pressures and dampen the rise in non-performing loans.
In addition, financial dollarization -- which remains significant at around 50% of deposits and 40% of loans -- continues to decline as a result of regulations designed to curb banks' use of foreign currency. A sharp cut in local currency reserve requirements has also stimulated local-currency lending, which will support profitability while limiting credit risk from currency mismatches.
Still, given the widespread use of the dollar, the central bank's capacity to act as a lender of last resort remains limited. Hence, Moody's assumes that only the country's systemically important banks are likely to receive government support in the event of stress.
25 June 2015, 00:01
NEW ZEALAND DOLLAR TRADES AT $0.6885 IN EARLY ASIA-PACIFIC TRADE
25 June 2015, 00:00
AUSTRALIAN DOLLAR TRADES AT $0.7699 IN EARLY ASIA-PACIFIC TRADE
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Thx for supporting this... to all of you