A week that hasn’t lived up to expectations This week hasn’t quite lived up to expectations and investors are getting a little nervous as we head into the final few months of the year. The Fed is highly accommodative but not accommodative enough, Congress is desperate to agree a much needed relief package but no closer to doing so and virus numbers globally are rising, rapidly. What’s more, tech stocks – which were a driving force behind the outstanding stock market comeback – remain shaky and vulnerable to more downside. While the end of the year could look very different – a Covid vaccine, political clarity and fiscal support – the next few weeks could be challenging. Congress is running out of time and … [Read More...]
Yen rally continues, BoJ stays the course
The Japanese yen continues to flex its muscles, as USD/JPY has dropped for a fifth successive day. On Friday, the pair is trading at 104.43, down 0.29% on the day. USD/JPY is down 1.65% this week and touched a 7-week low earlier in the day. It has been an eventful week in Japan. Yoshihide Suga became the new prime minister, replacing Shinzo Abe, who resigned due to poor health. This marked the first leadership change in Japan in eight years, but the transition was a smooth one and the Japanese yen didn’t miss a beat, as it continued to head higher. BoJ will maintain easing The Bank of Japan held its policy meeting on Thursday, and the message was more of the same from the … [Read More...]
USD/CAD yawns as retail sales slides
This week has been a quiet one for the Canadian dollar, as the USD/CAD trades close to the 1.32 level. On Friday, USD/CAD is trading at 1.3186, up 0.16% on the day. Canadian retail sales drop off sharply Earlier in the week, US retail sales in August slowed significantly, and it was Canada’s turn on Friday, as the July data was released. Headline retail sales dropped to 0.6%, down sharply from 23.7% beforehand. The core reading was even weaker, with a decline of 0.4%, down from 15.7% a month earlier. Despite the softness in the retail sales numbers, investors were in a forgiving mood and did not punish the Canadian dollar. The Canadian economy appears headed in a V-shaped recovery and the Canadian currency has … [Read More...]
Market Insights Podcast (Episode 130)
Jazz FM Business Breakfast presenter Jonny Hart looks back on the week’s business and markets news with OANDA Senior Market Analyst Ed Moya. This week they discuss the Fed, BoE, OPEC and US election. [Read More...]
US Close – Stocks fail to snap 2-week slide, Tech-war sinks risk appetite, Saudi threat unable to keep oil firm, Gold higher on growing risks to…
Today was mostly a relatively quiet quadruple witching that was saw bears prevent US stocks from snapping its two-week losing streak. This morning’s Leading Index and Consumer Confidence data legitimizes the economic recovery up until now but does little to offer optimism over the mounting risks. The University of Michigan Confidence report had better-than-expected readings on sentiment and current conditions but did note that the data indicated that the election has begun to have an impact on expectations about future economic prospects. The leading index declined slightly, indicating the summer economic rebound has lost momentum. Mega-cap tech stocks are dragging everyone down right now. The outlook is foggy for big-tech as the latest TikTok developments continues to add further strain to US-… [Read More...]
Week Ahead – No ease up for Powell
Powell given a second chance It’s a fascinating time to be following financial markets. There are so many massive things happening at the same time that it can be difficult to judge what exactly is driving the markets at any one moment. This week, it’s the central banks that have dominated and with Powell making numerous appearances next week, days after disappointing the markets by only be extremely dovish, that’s unlikely to change. Powell back under the microscope Covid wreaking havoc on Indian economy Saudi Energy Minister delivers warning to oil short sellers Key Economic Events Sunday, Sept. 20 – Secretary of State Pompeo has noted said the US is preparing to reimpose practically all sanctions on Iran. – The UK’s opposition Labour Party holds … [Read More...]
EURUSD Poised For Correction?
OANDA Senior Market Analyst Craig Erlam talks about EURUSD ahead of the Federal Reserve monetary policy decision, which comes a week after the ECB opted against signaling more easing and appeared relaxed about the recent currency moves. [Read More...]
Fed Coverage: To keep rates at zero till 2023, Powell wants more fiscal support, Oil surges on EIA report/Fed, Gold struggles post-FOMC
US stocks erased gains after investors mostly viewed the FOMC statement as a dovish confirmation of outcome-based guidance and as Fed Chair Powell failed to deliver any surprises. The Fed kept rates near zero and their upgraded forecasts show that rates will remain low till at least 2023. Today’s policy decision was not unanimous as Kaplan (wanting more rate flexibility) and Kashkari (requiring inflation to reach 2% on a sustained basis before moving) dissented seeking more forward guidance. Expected change to the statement following Jackson Hole The Fed expects to maintain an accommodative stance of monetary policy until inflation moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%. Forecasts The June forecasts were … [Read More...]
Market Insights Podcast (Episode 129)
Jazz FM Business Breakfast presenter Jonny Hart looks back on the week’s business and markets news with OANDA Senior Market Analyst Craig Erlam. This week they discussed the latest political storm in the UK, no-deal Brexit risk delivering the worst week for the pound since March, UK-Japan trade deal, ECB meeting, another bad week for US tech stocks and the week ahead. [Read More...]
USD/CAD steady as US job numbers sparkle
USD/CAD is steady on Friday, shortly after key job releases on both sides of the border. Early in the North American session, the pair is trading at 1.3093, down 0.25% on the day. The focus is on job numbers, as both Canada and the US have just released key employment data for August. The most important of these readings, US Nonfarm Employment Change, came in at 1.371 million, very close to the forecast of 1.375 million. This was certainly a relief, as the ADP Nonfarm Payroll report came in at 428 thousand, well short of the estimate of 1.25 million. The US unemployment rate sparkled, dropping to 8.4%, down from 10.2% beforehand and well below the estimate of 9.8%. This marks the first unemployment rate in single digits since the March … [Read More...]
NFP Reaction: Unemployment Rate Shocker, Dollar Rally Remains, Commodities sink
US stocks are trying to muster up a rebound just like what has happened in past selloffs during the pandemic. Some buyers did emerge after the sharp pullback saw some of the high fliers, Apple, Tesla, Microsoft, Netflix, Zoom, and Peloton, all drop between 5-10%. Stay-at-home stock valuations were out of control and while many investors will likely buy every dip, with fading fiscal support, risks remain that we could see this unwind last a little longer. NFP A solid labor report will slightly complicate the Fed’s ultra-accommodative stance as the unemployment rate has already improved to 8.4%, much better than the end of year forecast set in June for 9.3%. The headline nonfarm number came a touch higher than forecast at 1.371 million, the … [Read More...]
Market Insights Podcast (Episode 128)
Jazz FM Business Breakfast presenter Jonny Hart looks back on the week’s business and markets news with OANDA Senior Market Analysts Craig Erlam and Ed Moya. This week they discuss the US jobs report, tech sell-off, BoE, ECB and the week ahead. [Read More...]
Week Ahead – Trump Closing the Gap
Far From Uneventful The upcoming week is a little light on the data front but don’t expect it to be uneventful. Donald Trump is closing the gap on Joe Biden two months before the election and the race is hotting up. Meanwhile, the tech sell-off has gripped the markets, putting sharp focus on the sector next week. If that doesn’t do it for you, the ECB meets on Thursday, as speculation mounts about more stimulus this year. Trump eating into Biden lead ECB to discuss more stimulus Oil correction in motion Key Economic Events Saturday, Sept. 5 -Italian think tank the European House continues its forum in Cernobbio. French Finance Minister Bruno Le Maire, EU Brexit negotiator Michel Barnier, and German Deputy Finance Minister Joerg … [Read More...]
Asia equities lower ahead of Powell speech
Markets eye Powell Speech at Jackson Hole Asian markets are trading quietly today, with regional investors ignoring Wall Street overnight. Local markets are mostly edging lower as investors reduce positioning ahead of Chairman Powell’s Jackson Hole address this evening. The Nikkei 225 is modestly lower by 0.40%, with South Korea’s Kospi 0.55% lower. China’s Shanghai Composite and CSI 300 have eased by 0.30%, with the Hang Seng dropping 1.05% as IPO fever abates ahead of Powell’s address. Regional markets are mixed with Bangkok edging higher, but Singapore, Kuala Lumpur and Jakarta all slightly lower as positioning is adjusted. Australian markets are following Wall Street though, the ASX 200 rising 0.30%, and the All Ordinaries increasing 0.40%. We expect the directionless trading to continue throughout the day … [Read More...]
Mid-range is the word on the street for currency markets
Currency market in consolidation ahead of Jackson Hole Despite there being plenty of noise over the past week for currency markets, most lie in the middle of their two-week ranges this morning. Notably, EUR/USD, USD/CHF, USD/JPY and AUD/USD amongst the major currencies, seem to be waiting for a Federal Reserve green light before resuming their rallies versus the greenback. One exception is Her Majesty’s British Pound, which is shrugging off zero Brexit progress and is lurking at 1.3210 this morning. A daily close above 1.3270 heralds further gains to 1.3500 in the near-term. Across regional currencies, the story is similar, although there are exceptions. An apparent temporary thawing in US/China trade relations has led to a series of stronger PBOC CNY fixes. … [Read More...]
Oil grinding, gold shows volatility
Oil grinds higher, but consumption fears persist Oil has ground higher over the past week, but Brent and WTI remain confined within their one-month trading ranges, albeit near the top ends. Hurricane related concerns in the US have shuttered production their, which has likely played the major part in oil’s recent rally. However, doubts over future consumption demand continue to cap oils rally. Those fears are well-founded, with Covid-19 returning in force to Europe and parts of Asia. A lack of follow-on US fiscal stimulus and Covid-19 has torpedoed US airlines plans for mass air travel to restart as well. Brent crude fell 0.50% to USD45.80 a barrel overnight. Its continued upward progress capped by its 200-day moving average (DMA), which today lies … [Read More...]
US Open – No Pressure, Jerome
It’s Showtime Stock markets are paring gains on Thursday as investors eagerly await the appearance of Fed Chairman Jerome Powell at this year’s vitual Jackson Hole event. The central bank’s monetary policy framework has been the hot topic this week, with everyone speculating about what changes the Fed will consider that will allow interest rates to remain lower for longer. Despite central banks offering unprecedented amounts of stimulus and stock markets hitting new highs on a regular basis, investors are craving another stimulus fix. With rates already at record lows, attention is turning to the timeframe, with investors effectively looking for guarantees that they won’t move for a considerable period of time. With negative rates seemingly off the table, yield curve control and … [Read More...]
Oil Steady as Laura Wreaks Havoc, Gold Eases
Oil steady as Laura hammers Gulf Coast Oil prices are steady around the range highs this week as Hurricane Laura causes havoc on the Gulf Coast. The storm, referred to as “unsurvivable” by the National Hurricane Centre, has already been raised to category 4 and isn’t far from category 5. The destruction is could cause is considerable. It may therefore be surprising that oil prices haven’t risen further given the forced closure of production and refining facilities. Perhaps traders are waiting to see what the damage is but the limited impact so far may also just be a reflection of the current oil market dynamics. Temporary disruptions are easily covered. Gold eases ahead of Powell comments Gold prices are easing off again as we await Jerome … [Read More...]
AUD/USD edges up despite Capex decline
The Australian dollar is in green territory for a third successive day. In Wednesday’s North American session, AUD/USD is trading at 0.7250, up 0.22% on the day. Today’s key release was second-estimate US GDP, which decreased at an annual rate of 31.7% in the second quarter. This was upwardly revised from the initial release of 32.9%. Aussie shrugs as Private Capital Expenditure slides Another day, another soft reading in Australia. New Private Capital Expenditure declined 5.9% in the second quarter, marking a sixth straight quarterly decline. Spending on manufacturing fell by 4.5%, while services slid by 8.4 percent. Although this figure beat the forecast of -8.2%, this still was the sharpest decline in Capex since 2015. The Q2 decline reflects the devastating effect on the economy … [Read More...]
USD/CAD dips to 7-month low
The Canadian dollar has posted small gains for a third straight day. In Thursday’s North American session, USD/CAD is trading at 1.3131, down 0.11% on the day. US GDP, jobless claims draws a yawn from USD/CAD In the US, GDP plunged by over 30% in the second quarter, but the sharp drop was expected, so investors and traders didn’t bat an eyelid. The second-estimate release showed the economy declined at an annual rate of 31.7%, which was a bit better than the initial estimate of 32.9% back in July. Still, the figure reflects the severe economic downturn caused by the Covid-19 virus, particularly the lockdowns in April and May which brought much of the US economy to a grinding halt. Unemployment claims were … [Read More...]
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