Thursday, October 19, 2017

Risks for USD/JPY are growing, Societe Generale says

Risks for USD/JPY are growing, Societe Generale says, given that Japanese economy is improving steadily and "the U.S. dollar is on a secular downtrend." Japan would rather have a weaker currency to improve its economy and drive inflation up, but since the economy is getting slightly better, SocGen sees potential for the yen. Prime Minister Shinzo Abe is likely to win the Sunday elections, but "Abenomics [which targets a weak yen] is losing its impact on the yen." USD/JPY is down 0.4% at 112.50. "USD/JPY has become a hostage to U.S. bond yields and Fed expectations," SocGen adds.

Tuesday, October 10, 2017

EUR/CHF rises 0.1% to a two-week high

EUR/CHF rises 0.1% to a two-week high of 1.1526 on Tuesday, according to Factset, as investors shrug off risks relating to the possibility of Catalan independence while concerns about the German election result diminish, Morgan Stanley says. It notes that German Chancellor Angela Merkel's CDU and CSU sister party have agreed on immigration policies and talks on forming a coalition with the FDP and the Greens are due to start next week. Morgan Stanley adds that EUR/CHF "should break higher with Spanish-Catalan tension de-escalating." Catalan President Carles Puigdemont is due to speak later on Tuesday and is expected to reveal his position on Catalonia's independence. EUR/CHF last up 0.1% at 1.1517

Thursday, October 5, 2017

The Labor Department

The number of claims drawn by workers longer than a week rose 2,000 to 1.938 million in the week ended Sept. 23. Data on continuing claims are released with a one-week lag.
The Labor Department on Friday will release its September jobs report, which could also show hurricane-related distortions. Economists have predicted a modest 80,000 new nonfarm jobs and an unemployment rate steady at 4.4%. Puerto Rico and the Virgin Islands aren't counted in national employment data, though the storm-battered territories were included in Thursday's jobless-claims figures.

Wednesday, October 4, 2017

EUR/USD to rise to 1.1820

EUR/USD to rise to 1.1820 in the next 24 hours, potentially boosted by the European Central Bank minutes, which are due for release on Thursday. "ECB-watchers will be waiting for the minutes of the ECB Sep 7th meeting ... for signs as to what the ECB tapering plans may be on October 26th," it says, adding: "We slightly favour EUR/USD climbing back to the 1.1820 area over the next 24 hours." The ECB is expected to reduce the EUR60billion monthly total of bond purchases, but the question is by how much and when. The market is also looking at whether the central bank will set a deadline for its quantitative easing program. EUR/USD last up 0.2% at 1.1766.

Tuesday, October 3, 2017

Federal Reserve governor

Federal Reserve governor Jerome Powell and Commodity Futures Trading Commission Chairman J. Christopher Giancarlo, say they are confident regulators can come to an agreement on changing the Volcker rule ban on certain types of bank trading in the coming months. "We are going to be able to get to a five-agency rule on Volcker that is significantly less burdensome, that is faithful to the intent of Congress," Powell says. "But I'm not going to tell you that its going to be quick or easy."

Monday, October 2, 2017

The British pound has recorded considerable losses

The British pound has recorded considerable losses in the Monday session. In North American trade, GBP/USD is trading at 1.3267, down 0.97% on the day. On the release front, British Manufacturing PMI slowed to 55.9, but still fell short of the forecast of 56.3 points. There was better news in the US, as ISM Manufacturing PMI accelerated to 60.8, beating the forecast of 57.9. This was the indicator’s highest level since April 2011. On Tuesday, the UK releases Construction PMI, which is expected at 51.2 points. As well, the BoE will release the minutes of the quarterly Financial Policy Committee meeting.
With investors keeping a nervous glance on the slow pace of the Brexit negotiations, any key British indicators which fall short of expectations could send the pound sharply lower. This was the case on Monday, as British Manufacturing PMI softened and missed the forecast. Although the reading of 55.9 indicates respectable expansion in the manufacturing sector, perception is key in the markets, and negative sentiment about the British economy could spell trouble for the pound.

Thursday, September 28, 2017

Societe Generale says

Societe Generale says at times when the U.S. dollar was falling this year, it is likely that the Chinese authorities were buying U.S. treasuries while buying EUR/USD at the same time to rebalance reserves. "That allowed USD/CNY to fall without the value of the yuan overall going up." SocGen therefore recommends buying EUR/USD, as well as emerging market currencies, if USD/CNY starts falling again. USD/CNY reached a one-month high of 6.6759 on Thursday. But since the beginning of the year, USD/CNY was on a downward path, falling to 6.44 in early September 8 from around 6.96 on Jan. 3