Sterling Hurt by Dovish BoE
Inflation Report. Sterling
slouched towards recent 14-month lows against the dollar as investors pushed
back rate-hike expectations to the fourth quarter of 2015 after the Bank of
England's inflation report on Wednesday. The BoE said inflation was likely to
fall below 1% and monetary tightening would happen at a slower pace. Governor
Mark Carney said it was appropriate that markets expected somewhat easier
monetary conditions than they did three months ago and highlighted economic
risks from a struggling euro zone. "Dovish inflation data has effectively
overshadowed a generally positive UK jobs report and pushed back expectations
of a rate hike," said Omer Esiner, chief market analyst at Commonwealth
Foreign Exchange in Washington.
Yen Gains on Reduced
Speculation for Early Elections. The
yen advanced for the first time in three days versus the dollar as Japanese
officials downplayed speculation on an early election that may boost Prime
Minister Shinzo Abe’s mandate for unprecedented stimulus. Japan’s Chief Cabinet
Secretary Yoshihide Suga told reporters in Tokyo he isn’t preparing for an
early election, and there was no change to the government’s stance to make a
decision by the end of this year on raising the country’s sales tax. “If an
election is called, dollar-yen “will gap higher as people will presume that he
will have an even stronger mandate,” said Sebastien Galy, a senior currency
strategist at Societe Generale SA in New York.
Swissie Overshadowed by
Intervention Risks. Investors
are keeping a wary eye on the Swiss franc, which raced to a 2-year high of
1.2016 francs per euro on Wednesday. Markets appear to be testing the Swiss
National Bank's resolve to defend the 1.20 per euro ceiling ahead of the
country's Nov. 30 referendum on whether the central bank should boost its gold
reserves. A 'yes' vote would force the SNB to buy around 70 billion Swiss
francs ($73 billion) worth of gold and could limit the bank's capability to maintain
the stability of its currency, the central bank chief warned.
Ukraine Army Prepares for
Possible Rebel Offensive. Ukrainian government forces are redeploying in preparation
for a possible new offensive by pro-Russian separatists in eastern regions,
Defense Minister Stepan Poltorak said. He told a government meeting the rebels
had received reinforcements despite a ceasefire that was agreed on Sept. 5 but
has been repeatedly violated. "We are repositioning our armed forces to
respond to the actions of the (rebel) fighters," Poltorak said. A military
spokesman said the rebels were beefing up their forces, including around the
port city of Mariupol in the southeast, control of which would open up roads to
territory in southern Ukraine.
Japanese Shares Rally Make
the Rest of Asia Shade. Japanese stocks scaled seven-year highs on Wednesday, putting
the rest of Asia in the shade. Nikkei success to gained with closed up 0.43
percent as investors gave the thumbs-up to a media report that Prime Minister
Shinzo Abe will delay a second sales tax hike to avoiding damaging Japan's
economic recovery, and call a snap election to cement his position. South
Korean equities finished 0.22 percent higher as investors still buying the
shares as they optimistic following news of a free-trade deal with China on last
Monday after more than two years of negotiations. Meanwhile Hong Kong shares end
rose 0.55 percent on Wednesday, lifted by Chinese financial after the city's
central bank scrapped the daily yuan conversion limit for local residents ahead
of the launch of a landmark scheme linking Hong Kong's stock market with
Shanghai's.
Banks Dragged Europe Shares
Lower. European
shares closed lower with investors shunning banking stocks after
regulators announced penalties for the alleged manipulation of foreign exchange
markets. U.S., Swiss, and British regulators fined lenders including HSBC
Holdings Plc, Royal Bank of Scotland Group Plc and UBS AG to settle a probe
into foreign-exchange manipulation. In earnings news, U.K. supermarket
group J Sainsbury dropped 4% after it reported a 6.3% drop in
underlying pre-tax profit for the first half of the year. Burberry shares
fell 1.2% after the luxury brand highlighted a tough environment despite seeing
a revenue rise in the first half of the year and upping its interim dividend by
10 percent. Germany’s DAX and France’s CAC fell 1.69% and 1.51% respectively
while FTSE slide 0.25%.
Europe's Slowdown Weigh on Wall Street. Wall Street wavered as
investors mulled the slowdown in Europe's economy.Concerns that European
struggles may weigh on the U.S. economy were stoked today after Bank of England
Governor Mark Carney unveiled lower U.K. growth and inflation forecasts as
officials adjusted to account for “moribund” global expansion and stagnation in
Europe.Investors are also watching developments in Ukraine, where the
country’s defense minister said the military should prepare for clashes, as
growing tensions in the nation’s eastern combat zone threatened to boil over
into open conflict. Dow Jones and S&P500 fell 0.02% and 0.07%
respectively while Nasdaq gained 0.31%.
Strengthening US Dollar
Erode Gold’s Appeals. Gold prices edge lower as strengthening US Dollar erode
gold’s appeal as alternative investments. Overall sentiment stayed with the
bears as outflows from bullion funds showed no sign of slowing. Assets in the
SPDR Gold Trust, the world’s biggest exchange-traded product backed by the
metal, dropped for six straight sessions, the longest slump since Nov. 25,
2013. Holdings have dropped to the lowest since September 2008. While Societe
Generale SA’s Michael Haigh sees
the chances of gold dropping to $1,000 increasing, Standard Chartered Plc has
said purchases in Asia will
help buoy prices.
Oil Still Worry About Supply.
U.S. WTI
crude closed at a three-year low with prices under pressure from the growing
oil glut created by the U.S. shale boom and the restart of Libya's largest
operational oilfield. Saudi Arabia, the world's largest exporter, said
it was doing its best with other producers to ensure price stability.
But, many oil traders and analysts doubt OPEC members will take a decisive
stance as they compete to hold onto market share. Adding to supply, Libya
restarted production at its large El Sharara oilfield, though exports remained
blocked from the 120,000-bpd Hariga port by protesters involved in a wage
dispute.
Regulators Fine Global Banks
in Forex Probe. Regulators fined five major banks $3.4 billion for failing to
stop traders from trying to manipulate the foreign exchange market, the first
settlement in a year-long global investigation. UBS, HSBC,
Citigroup, Royal Bank of Scotland, and JP Morgan all face penalties
resulting from the probe that has also put the largely unregulated $5
trillion-a-day market on a tighter leash. In the latest scandal to hit the
financial services industry, dealers shared confidential information about
client orders and coordinated trades to make money from a foreign exchange
benchmark used by asset managers and corporate treasurers to value their
holdings. Dozens of traders have been fired or suspended. Dealers used code
names to identify clients without naming them and created online chatrooms with
pseudonyms.
Yahoo to Buy Video-Ad
Service BrightRoll. Yahoo! Inc. agreed to acquire video-advertising service
BrightRoll Inc. for about $640 million in cash, adding marketing tools to drive
Chief Executive Officer Marissa Mayer’s turnaround effort. BrightRoll
serves many of the largest brands and agencies, including 87 of the AdAge Top
100 U.S. advertisers, according to the statement. It specializes in what’s
called programmatic advertising, which helps automate the buying of ads. The
acquisition would help bolster Yahoo’s position in a growing part of the
digital-advertising market. Yahoo will have just 2.4 percent of the worldwide
market for all digital ads this year, lagging behind Google Inc. and Facebook
Inc. “Video, along with mobile, social, and native, is driving a surge in
digital advertising,” Mayer said in the statement. “BrightRoll is a terrific,
strategic and financially compelling fit for our video advertising business.”
Technical Outlook
EUR/USD. The bias is bearish in nearest term especially if price able
to make a clear break back below 1.2400 area to trigger further bearish
momentum aiming 1.2340 region. On the upside, only a clear break back above
1.2490 area would trigger further bullish correction scenario retesting 1.2530
region.
GBP/USD. The bias is bearish in nearest term but we need a clear break
back below 1.5750 area to trigger further bearish pressure targeting 1.5715
support area. On the upside, only a consistent break above 1.5845 area would
trigger further bullish correction scenario perhaps retesting 1.5910 area as
price getting oversold.
USD/JPY. The bias is neutral in nearest term with potential trading
range seen between 114.50 – 115.70 area. Another consistent breakdown below
114.50 area would trigger further bearish correction scenario retesting 114.10
region or even lower. On the upside, only a clear break back above 115.70 area
would continue major bullish trend aiming 116.30 resistance area.
USD/CHF. The bias is bullish in nearest term especially if price able to make a
clear break above 0.9680 area to trigger further bullish momentum aiming 0.9730
area. Immediate support is seen around 0.9620 area, another consistent break
below that area would bring the price to neutral zone as direction would become
unclear in nearest term perhaps retesting 0.9580 region.
AUD/USD. The bias is bearish in nearest term but we need a clear break
below 0.8670 area to trigger further bearish momentum aiming 0.8620 area.
Immediate resistance is seen around 0.8765 area, another consistent break above
that area would bring the price to neutral zone as direction would become
unclear in nearest term perhaps retesting 0.8810 region.
XAU/USD. Rising Stochastic on daily
chart could give short-term upward bias. But, gold still trade below MA
50-100-200 days with falling MACD that could signal the bearish pressures is still
exist. Sentiment quite mixed where gold may trade sideways with trading range
1130 - 1180. Strategy: sell-on-rally with stop-loss 1171 and profit-taking
1146. Nevertheless, a clear break above 1170 could trigger upward movement to
test area 1177.
Hang Seng
Futures. Falling
Stochastic on daily chart could give short-term downward bias. But, Hang Seng
now trade inside bullish channel that may provide upward movement. Hang Seng
may just move sideways for a while as it is still trapped between MA 100 and MA
200-days. Strategy: buy-on-dips with stop-loss
23710 and profit-taking 24000. Nevertheless, a clear break below 23720 could
trigger downward movement to test area 23600.
Nikkei Futures. The bias is bullish as Nikkei trade above MA 50-100-200 days
with a raising MACD. But, Nikkei need to create daily close above resistance
17455 to give more power for rally. A failure to break resistance 17455 could
trigger profit-taking as daily Stochastic in overbought area. Strategy:
buy-on-dip with stop-loss 17020 and profit-taking 17450. Nevertheless, a clear
break below 17040 could trigger downward movement to test area 16855.
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