Archives of “August 30, 2019” day

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European shares end trading for the day with modest gains

  
Analysis, Global Indices

The shares are higher on him the week too

European shares are ending the day with gains.  A lower will EUR may be helping the tone (which is Pres. Trumps thesis).
The provisional closes are showing:
  • German DAX, +0.8%. For the month it was down 2% which is the worst monthly decline since May
  • France’s CAC, up 0.6% on the day. The index also had its best weekly gain since June
  • UK’s FTSE, up 0.05%, but down -5.3% in August. That is the worst fall since August 2015.
  • Spains Ibex, rose 0.2%. The weekly gain was the largest cents June
  • Italy’s FTSE MIB, fell -0.35%

For the week:

  • German DAX, +2.8%
  • France’s CAC, +2.7%
  • UK’s FTSE, +0.8%
  • Spains Ibex, +1.8%
  • Italy’s FTSE MIB, +3.8%
for the month of August,
  • German DAX, -2.0%
  • France’s CAC, -0.86%
  • UK’s FTSE, -5.3%
  • Spains Ibex, -1.8%
  • Italy’s FTSE MIB, -0.6%

Trump says euro ‘dropping like crazy’ as he laments dollar

  
Analysis, Forex
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Trump with his usual rant against the dollar and the Fed

The latest tweet:
The Euro is dropping against the Dollar “like crazy,” giving them a big export and manufacturing advantage…and the Fed does NOTHING! Our Dollar is now the strongest in history. Sounds good, doesn’t it? Except to those (manufacturers) that make product for sale outside the U.S. We don’t have a Tariff problem (we are reigning in bad and/or unfair players), we have a Fed problem. They don’t have a clue!
Here’s what ‘like crazy’ looks like:
Trump with his usual rant against the dollar and the Fed
The euro is down 0.75% against the US dollar in the past three months. The euro is higher today than it was on the day Trump was elected… ‘like crazy’ indeed.
EURUSD in Trump's term
Trump is continuing and says:
If the Fed would cut, we would have one of the biggest Stock Market increases in a long time. Badly run and weak companies are smartly blaming these small Tariffs instead of themselves for bad management…and who can really blame them for doing that? Excuses!
There are rumors that he was going to delay the tariffs that kick in on Sunday but this doesn’t sound like a guy who is about to backtrack.

August forex seasonal scorecard

  
Analysis, Forex
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You can’t predict anything from Donald Trump but the August seasonal patterns did a great job of predicting how the month would go.
1. Weakest month of the year for NZD/USD
This one delivered in a big way. Month-to-date the kiwi is down 3.7%. It’s fallen every which way and is the worst performing major currency this month.
2. 2nd weakest month for CAD
The loonie has been bolstered by some upbeat economic data including today’s GDP report but even with all that, the Canadian dollar fell 0.7% on the month against the US dollar.
3. 2nd weakest month of the year for AUD
It was the second-weakest month and AUD was the 2nd weakest performing major. AUD/USD fell 1.6% in the month.
4. 2nd weakest month for cable
This one bucked the trend but only modestly. Cable is up 0.4% on the month with more than half the gain coming today. Maybe it’s a good sign that the pound has been able to buck seasonal weakness?
5. 2nd strongest month for gold
Few traders need a recap on this one. Gold was a rocket ship in August posting one of its best months in years as it gained nearly 7%.
6. Poorest month over the past decade for the S&P 500
Stock markets have shown some impressive resilience over the tail end of this week but all that has done is narrowed a loss that was as much as 6.2% at one point down to -2.7%.
Verdict:
That’s a solid 5 out of 6 wins with a few homeruns in there. Ready for the September seasonal playbook?

Treasury yields continue to climb in early European morning trade

  
  Analysis

US 10-year yields are up by more than 4 bps on the day now

USGG10YR

10-year yields are up by 4.4 bps to 1.538% currently as yields are higher across the curve. Notably, 30-year yields are back above the 2.00% threshold once again currently.
This is a continuation of the move seen yesterday and it’s tough to chalk this up purely to month-end flows. There is no doubt that markets are starting to feel more hopeful and optimistic about the US-China trade rhetoric.
However, the recent remarks aren’t anything overly dramatic in my view and that poses a risk that markets may be caught on the wrong side of the fence when reality sinks in.
As mentioned earlier, month-end rebalancing flows will make trading today a bit more tricky so if you’re not able to make sense of the moves, it’s best to wait it out until next week for more clarity about the situation.
The resilience in Treasury yields here is helping to push USD/JPY a little higher towards 106.50 currently, moving off lows of 108.30 earlier in the session.

Japan Industrial production for July (preliminary) 0.7% y/y (expected -0.6%)

  
Analysis, Economy

Japan preliminary Industrial production data for July 2019

0.7% y/y
  • expected -0.6%, prior was -3.8%
1.3% m/m
  • expected 0.3%, prior was -3.3%
Manufacturers forecast ibdustrial output for August at +1.3% m/m
  •  September forecast is for -1.6% m/m
y/y and m/m beats for this data in July is a positive result. Earlier we got CPI data which was stull shoing indications of being well below the BOJ target.

China clamps down on capital flight risk as yuan weakens

  
Analysis, Economy
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As China allows the yuan to depreciate to a level not seen in 11 years, financial authorities have rolled out measures to stem capital outflows from the mainland.

The new rules include stricter oversight of banks in times of capital flight and restrictions on real estate developers’ access to foreign currency bonds. If the financial system is judged to be on the brink on instability, the State Administration of Foreign Exchange, or SAFE, will declare the situation “abnormal.”

Under that assessment level, banks will be evaluated on the amount of yuan wired offshore and the volume of foreign currency sold. If the levels stray too far from the national average, the bank’s grade will diminish. Such lenders will then face limits on banking activities.

China is tolerating the softer yuan to ease the impact on domestic exporters during the prolonged U.S. trade war. But the government looks to avoid a repeat of 2015, when currency traders dumped the yuan after authorities lowered the reference rate.

In the wake of that currency shock, the foreign exchange regulator took steps in 2016 and 2017 to slow the outflow of funds. At the time, foreign nationals encountered hurdles when trying to transfer sums as small as a few thousand dollars. (more…)

US Indices closed higher for the 3rd time in 4 sessions

  
Analysis, US Market

Nasdaq leads the way at up 1.48% but NASDAQ and S&P also rise by about 1.25%

The major stock indices are closing higher for the 3rd time in 4 sessions.  The gains were led by NASDAQ stocks which rose by 1.48%.
The final numbers are showing:
  • The S&P index +36.64 points or 1.27% 2924.58
  • The NASDAQ index rose by 116.51 points or 1.48% at 7973.39
  • The Dow rose by 326.15 points or 1.25% at 26362.25.
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