Archives of “May 27, 2019” day

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Kuwait oil minister says it’s premature to say if output curbs will be extended in June

  
Analysis, Crude

Comments from Kuwait’s oil minister

  • OECD commercial oil inventories are falling towards last 5-year average but “we still have more work to do”
  • Believes oil market expected to be balanced during the second half of the year “more towards the end of the year”
It would be a shock to the oil market if OPEC didn’t extend the production cut.

Holidays in the UK and US will keep a lid on things but here are 5 things to watch

  
  Analysis

It’s Memorial Day

Not all holidays are created equally. Some are widely observed while others pull people into the office (or the market) anyway.
Memorial Day is one of the holidays where offices shut down. Moreover, nothing happened on the weekend that would have pulled anyone in. So it’s likely going to be a quiet one, especially with the UK on holiday as well.
However there are a few things I will be watching today:
  1. Fallout and analysis from the EU elections.
  2. Bitcoin is up 10% today to $8812
  3. Tomorrow’s European meetings will set the stage for a new ECB President
  4. Greek yields fall to record lows after Syriza struggled in EU elections
  5. Trump said in Japan (on China): “They would like to make a deal. We’re not ready to make a deal” and that tariffs “could go up very, very substantially, very easily.”

Euro dips on brewing EU-Italy budget battle

  
Analysis, Forex

Euro edges lower

Euro edges lower
If you’re wondering what the latest dip down in the euro is about, it’s because the EU is considering starting disciplinary procedures against Italy for its failure to meet budget rules, according to a Bloomberg report.
This goes back to the extended battle over the budget in 2018 and the inability of Italy to grow its way out of high spending.
The report cites unnamed officials and says the next steps could come on June 5 and start a process that could lead to a 3.5 billion euro fine. That would be an unprecedented move and would need to be approved by EU finance ministers after a months-long process.
In short, it’s not going to happen but the process could inflame tensions and stoke more populism in Italy.
What’s especially notable is that this moves comes after a resounding win for Salvini in EU elections. With that, coalition partner 5-Star has said it will support his push for tax cuts — something that could further undermine the budget.

An Update :Dollar Index ,INR ,EURO ,JPY ,AUD ,GBP ,CAD ,CRUDE ,SPX ,NASDAQ Composite ,Shanghai Composite -Anirudh Sethi

  
Analysis, Crude, Forex, US Market
After pushing higher in the first part of last week, the US dollar reversed lower and saw follow-through selling ahead of the weekend.  The reversal saw all the major currencies but the British pound gain on the greenback last week. Although the ineptitude of Prime Minister May has weighed on sterling, the immediate reaction to her departure saw the pound fall as the risk of a no-deal exit rose.
As we discuss below, the technical condition warns that the corrective forces could continue through the week ahead.  Looking ahead of the macro calendar, this could persist until the run-up to the ECB meeting on June 6 and US employment data the following day.  Of course, these things are subject to change and fine-tuning.  The dollar remains supported by wide interest rate differentials and an economy that still appears stronger than Japan and most of Europe.  It strikes us that this is a short-covering correction for the major currencies rather than a turn in the underlying trend.
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A EUR/USD end-2019 forecast of 1.15

  
Analysis, Forex

A real quick post on Standard Chartered revisions to forex projections to year end.

Expect some sort of deal (the bank describes it a ‘cold deal’ with wariness persisting on both sides) between the US and China in the third quarter. This will halt tariff escalations.
See USD weakness from late Q3 (were expecting it sooner)
  • EUR/USD end-2019 forecast of 1.15, the bank had been at 1.18.
  • USD/JPY 108 at end-2019 (from their prior forecast of 105)

China: Global Times reports recommendations PBOC adopts ‘moderately loose monetary policy’

  
Analysis, Economy

Why? Well … “China should adopt a moderately loose monetary policy to offset the negative impact of the prolonged trade war with the US and provide a cushion against non-performing loans (NPLs) in the domestic banking system”

GT citing recommendations from the 2019 Semi-Annual Report of China’s Systematic Financial Risk.
Report released by the Tsinghua University National Institute of Financial Research at the Tsinghua PBCSF Global Finance Forum 2019 over the weekend.
GT is normally forthright with reporting on political developments in China with regards to the trade war. This piece is fairly mild. Still ….
  • negative impact of the prolonged trade war with the US
  • non-performing loans (NPLs) in the domestic banking system
gives a heads up to concerns in China.
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