Archives of “October 15, 2019” day

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Cable breaks the 200-day moving average for the first time since May

  
Analysis, Forex

Cable climbs to the highs of the day

A report suggesting the UK and EU are on the cusp of a Brexit deal has sent the pound to the best levels of the day.
Cable is up 135 pips to 1.2743. The break above 1.2714 is the first rise above the 200-day moving average since May. With the break, the next level to watch is the June high of 1.2784 and the figure at 1.2800.
Cable climbs to the highs of the day
The rise in the pound has also lifted EUR/USD and yen crosses.
Update: Fresh highs in GBP/USD to 1.2797, breaking the June high and touching the best level since May 16.

EUR/USD falls below 1.10 on broad US dollar strength

  
Analysis, Forex

US dollar strong today

The odds of a Fed cut at the end of the month are at 70% and risks are high with a heavy dose of Fedspeak on the agenda this week but the market wants to own US dollars at the moment.
EUR/USD is at the lows of the day, down 35 pips to 1.0992. The decline started after sellers stepped in a 1.1047. It’s the second day of declines after a three-day rally late last week.
US dollar strong today
Elsewhere, the dollar is also at the best levels of the day against the AUD, NZD and JPY.

IMF lowers global growth forecast to 3.0% from 3.2% in July

  
Analysis, Economy
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The latest growth estimates

The latest growth estimates
The prior estimates were in July and at that time they were downgraded from April.
  • Prior was 3.2%
  • 2020 growth to 3.4% from 3.5%
  • US growth to 2.4% from 2.6%
  • US 2020 to 2.1% from 1.9%
  • Cuts 2019 China forecast to 6.1% from 6.2%
  • Cuts 2020 China to 5.8% from 6.0%
  • US-China trade tensions will cumulatively reduce global growth by 0.8% by 2020
  • Risks skewed to the downside due to uncertainty over trade tensions, Brexit, declines in risk appetite and manufacturing weakness
  • Eurozone 2019 1.2% vs 1.3%
  • Eurozone 2020 1.4% vs 1.6%
  • Germany 2019 1.2% vs 1.7%
  • India 2019 6.1% vs 7.0%
  • LatAm 2019 0.2% vs 0.6%
  • LatAm 2020 1.8% vs 2.3%
  • World trade volume 1.1% vs 2.5%
The IMF warned last week that it was going to cut global growth so this isn’t a surprise but we might have expected to see 3.1%.
They estimate that the trade war could cause China’s GDP to fall by 2.0% in the short term and cut 0.6% from US GDP.
If anything, the 2020 numbers look optimistic.

Stock market: The earnings of JPM, Netflix, Coca-Cola and more

  
Analysis, US Market
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A look at earnings season in the US this week

FBS 1
The new earnings season is starting this week in the United States. This means that stocks of the largest American companies will likely make big moves. Below we have gathered some important information for those who want to trade on these releases.

Tuesday, October 15

Citigroup
EPS forecast: $1.95
Revenue forecast: $18.52B

Citigroup is the forth fourth biggest of the four “too big to fail” American banks. It has a long history of reporting better-than-expected earnings: that happened during the past 18 quarters. This time, analysts expect the bank to once again deliver good results.

Apart from earnings per share and revenue, investors will look at Citigroup’s margins (the bigger, the better for the stock) and the buyback program (the bigger, the better for the stock).

Technically, this year the stock of Citigroup has performed rather well after having a bad 2018. The price has firstly recovered 50% of the last year’s decline and then consolidated in a broad range between $61 on the downside and $73 on the upside.

However, Citigroup still didn’t manage to regain the highs of 2018 as bank stocks, in general, are pressured by the falling interest rates. Now it’s closer to the upper border of this sideways range, in the $70.00 area: the stock got support from the 50- and 100-week MAs at $65 and $68.25. Notice, however, that both weekly and daily MAs are horizontal.

This means that the price lacks overall momentum. The movement after the earnings report should be tied to the mentioned technical levels.

(more…)

Fed’s Bullard: Zero rates, forward guidance, QE still in the play book for “ordinary recession”

  
  Analysis
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Bullard Q&A session after his earlier speech

Suddenly, he’s back to a bit of a more dovish stance following his earlier comments about possible rate hikes if the economy improves again. That said, he’s hardly pushing the issue for a 25 bps rate cut this month and I think that’s the key takeaway in all of this.

OPEC’s Barkindo: Demand is what drives the oil market, not supply

  
Analysis, Crude

Comments by OPEC secretary general, Mohammed Barkindo

  • Volatility, geopolitical tensions hurt oil market
  • Cautious in projecting demand for 2019, 2020
  • Says that producers are committed to maintain stability beyond 2020
Yeah, I don’t think that’s how it works. In an efficient market, the dynamics of supply and demand are what drives prices to where they are.
So, it is either he is saying that the market is manipulated or he doesn’t understand the proper dynamics of a functioning market.
Questionable

Eurostoxx futures +0.4% in early European trading

  
Analysis, Global Indices
  Tags

Relatively mild gains observed in early trades

  • German DAX futures +0.3%
  • French CAC 40 futures +0.3%
  • UK FTSE futures +0.2%
This is largely reflective of the mood seen in US futures, which are slightly higher as well to start the European morning.
That said, the overall risk mood remains more measured with Treasury yields on the weaker side playing catch up to price action yesterday.
So far, there’s still the feeling that traders and investors are still quite indecisive about risk trades following the US-China trade truce. As such, the next set of headlines is likely the spot to watch to push risk towards a certain direction.

Nikkei 225 closes higher by 1.87% at 22,207.21

  
Analysis, Global Indices

Japanese stocks play catch up after the long weekend

Nikkei 15-10

The gains are in part to do with the US-China trade truce but also some talk of reconstruction demand after the hit from Typhoon Hagibis.

The overall risk mood in the region remains more mixed with the Hang Seng and Shanghai Composite both sitting lower.

Markets are still very much lacking direction at the moment as traders and investors are awaiting the next push in risk sentiment. The trade truce looks to be old news at this point so let’s see if we’ll get any other headlines to move things along.
US futures are up by 0.3% currently and that should lend to mild gains in European futures as well but there isn’t anything in that to really shift the dial for now.

China Sept. CPI: 3.0% y/y (expected 2.9%) & PPI -1.2% y/y (expected -1.2%)

  
Analysis, Economy

Inflation data out of China, pork prices a big factor in the CPI

CPI expected 2.9% y/y, prior 2.8%

  • fastest rise since October of 2013

PPI expected -1.2% y/y, prior -0.8%

  • fastest rate of decline since July 2016
more to come
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Background to the rising price of pork ( swine flu outbreak ):
  • supply issues worsened over the summer
  • pig inventories fell at a sharp rate
  • live pig prices hit a record high last month
  • the Chinese government to announced price caps, quotas, subsidies to pig farmers
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