Archives of “July 2019” month

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USD moves higher after better US GDP

  
Analysis, Forex

USDJPY moves higher on the first move

The US GDP came in better than expected at 2.1% vs 1.8%. The price index was higher at 2.4% vs 2.0%. The Core PCE was lower than expected at 1.8% vs 2.0% estimate.
The dollare has moved higher in the initial reaction.
The USDJPY moved to the highest level since July 10, and to new week highs (taking out the high from yesterday at 108.75. The high reached 108.823 so far. The price moved up from 108.66.
The EURUSD moved from 1.11385 to a new low for the day at 1.11274. We trade at 1.11316. The pair remains in a narrow 23 pip range for the day
The GBPUSD took out the lows for the week at 1.24174.  The low price moved to 1.24127.  We currently trade at 1.2414 near the lows.

US Q2 advance GDP +2.1% vs +1.8% expected

  
Analysis, Economy

Highlights of the second quarter GDP report

  • Q1 GDP was 3.1% q/q annualized
  • Q4 was 2.2% (revised to 1.1%)
  • GDP y/y +2.3% vs +2.7% prior
  • 2018 GDP unrevised at +2.9%
Details:
  • Personal consumption 4.3% vs 4.0% exp (fastest since Q2 2017)
  • Prior personal consumption +0.9% (revised to +1.1%)
  • Consumer spending on durables +12.9% vs +0.3% prior
  • Business investment -0.6% vs +4.4% prior (first contraction since 2016)
  • Home investment -1.5% (6th consecutive contraction)
  • Exports -5.2%
  • Imports +0.1%

Erdogan: Interest rate cut is not enough, will continue until year-end

  
Analysis, Economy
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Turkish president Erdogan says they need to continue cutting rates gradually

  • Says that inflation will come down when interest rate is lower
  • Says that he has been defending that 24% interest rate is very high for Turkey
Who needs a central bank when you can get first-hand direction of where (and by how much) rates are going from the president himself? So much for central bank independence, they might as well just officially make him the new governor at this point.
Trump is probably green with envy though, wishing he could do the same with the Fed. 😉

Germany fires warning to Boris Johnson on Brexit talk

  
  Analysis

Norbert Röttgen, the head of the Foreign Affairs Committee in the German parliament, tweets out a message to Boris Johnson

“Dear @BorisJohnson: Neither boastful speeches nor bullying will succeed in making us give up #EU principles and unity. Will stay cool instead. Sadly, both in words and deeds – has appointed a cabinet of #Brexiteers – #Johnson fails to reach out to country and continent. #Brexit”

The first part of his tweet is something similarly reiterated by Juncker overnight and by French officials today i.e. they won’t renegotiate the withdrawal agreement and the need for a backstop. The second part doesn’t seem too pleasant and makes you wonder what sort of relationship will be formed with Boris Johnson in the coming weeks.

Coca Cola have a call on the US dollar – near the end of its strengthening cycle

  
  Analysis

Coca-Cola’s CFO on the USD – his outlook given via the company’s earning call.

  • “We think the dollar is at the – towards the end of a strong cycle, and hence, we think that we’re in for a benign environment over the next year, 1.5 years,”
Coke’s global sales means its exposed to around 70 currencies. Its Q2 earnings were impacted by the higher USD and heightened volatility across many EM currencies. .
Coca-Cola's CFO on the USD - his outlook given via the company's earning call. 

Disappointment from the ECB ahead would be euro supportive

  
Analysis, Forex
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The headline is the in a nutshell view from Macquarie following the European Central Bank overnight.

  • The banks notes expectations building for more from the ECB
  • But the ECB have a limited range of policy options available
  • The bank also faces political headwinds to further aggressive action
And thus eventual action could be disappointing to markets.
For the euro ahead:
  • market is pricing around 18bps of policy rate cuts over the next 12 months
  • Eurozone bond market rally is an indication market is also expecting the ECB to restart QE
And thus is if the ECB fail to deliver on either of these, euro rates would go higher supporting the euro
The headline is the in a nutshell view from Macquarie following the European Central Bank overnight.Secret message?

US Sec of State Pompeo trying to deal with Iran and North Korea crises simultaneously

  
Analysis, Politics

Comments from Pompeo

  • US still wants North Korean talks despite missile launches
  • He would go to Tehran (Iran) to deliver messages
The background to this is deteriorating relations with Iran as tensions in the Gulf and simmer and accelerate. On North Korea, despite all the good feels being projected by the US Admin NK fired off two ballistic missile tests yesterday.
And, more:
  • China needs to do the right thing on Hong Kong
  • Turkey sanction possible, prefer S-400 not activated
Comments from Pompeo in iran and north korea
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