Market Review - 23/11/2015 22:58GMT
Dollar gains broadly following weekend's hawkish comments by San Francico Fed Preident Williams' hawkish comments
The greenback remained higher versus the other major currencies on Monday, despite the release of downbeat U.S. preliminary manufacturing activity survey and housing sector data, as expectations for a December rate hike by the Federal Reserve continued to support the greenback.
Versus the Japanese yen, the greenback found support at 122.73 in New Zealand and then rose to 123.26 in Asia. Later, despite edging lower in Europe and briefly dropping to 122.80 in New York morning after release of a slew of disappointing U.S. economic data, price managed to climb back to 123.00 and then moved sideways.
Markit showed on Monday in a preliminary report that U.S. manufacturing activity in November slowed to a 25-month low as Markit's flash US manufacturing PMI came in at 52.6, also worse than market's expectation of 53.9. Separately, the National Association of Realtors said that existing home sales in U.S. decreased 3.4% to a seasonally adjusted 5.36 million units last month from 5.55 million in September. Market had expected existing home sales to fall 2.3% to 5.40 million units in October.
In other news, Federal Reserve Governor Daniel Tarullo said during an interview with Bloomberg TV on Monday, 'Fed has done everything it should do to regulate regional and community banks; incumbent on Fed that vulnerabilities that lead to financial distress are addressed; on pe firms and hedge funds, Fed focus is on transactions and systems; probably too much attention to particular months, rather than path of rate rises; when Fed does raise rates, important to watch carefully for effect on inflation; when regulations become final, will not require dramatic shifts as banks already making changes; stress tests the most important supervisory innovation for Fed since crisis; on stress tests, need to enhance macroprudential element; pretty good chance that there will be some increase is post-stress capital income requirements; global economy has not deteriorated as some thought at September Fed meeting; U.S. economy is 'chugging along', but still a mixed picture; still a lot of uncertainty on inflation, not near to Fed target; hard to overlook the fact that market and survey-based measures of expectations are near historic lows; Fed monitoring carefully assets and leverage of assets.'
The single currency turned lower again in New York session on Monday. During the day, although euro rebounded after an initial selloff to a fresh 7-month trough at 1.0601 in Asia due to option defense at 1.0600 and rebounded to 1.0657 in New York morning, renewed broad-based demand for the greenback knocked price lower to a fresh session low of 1.0593 before recovering.
Earlier in Europe, Markit showed the preliminary German manufacturing PMI rose to a seasonally adjusted 52.6 this month from a final reading of 52.1 in October, better than market expectation of 52.0. Meanwhile, In addition, Makit said The preliminary euro zone manufacturing PMI rose to a seasonally adjusted 52.8 in Nov, a 14-month high and up from a final reading of 52.3 in October, whilst, the flash services PMI in the bloc also improved to 54.6 this month from 54.1 in October, a 54-month high and above expectations for a reading of 54.1.
ECB Executive Board Member Sabine Lautenschlaeger said on Monday, 'recent monetary policy instruments are not without risks; expansive monetary policy has its limits; I currently see no reason for further monetary pol measures; sees no reason especially for increasing app; Euro zone not in situation where there is no alternative to loosening monetary policy; we should give massive monetary policy efforts time to take full effect; extreme caution should be exercised with unconventional monetary policy measures; fears future expansion would require ever greater use of instruments; extension of monetary policy stimulus would overshoot the target; we are far removed from any risk of deflation.'
Elsewhere, the British pound also weakened against the greenback on Monday. Cable dropped below last Friday's low at 1.5183 at New Zealand open and then ratcheted lower to 1.5125 in European midday. Later, cable recovered to 1.5190 in tandem with euro but only to fall to a fresh session low of 1.5120 in New York session.
Data to be released on Tuesday:
Germany GDP, Ifo business climate, Ifo current conditions, Ifo expectation, France business climate, Swiss non-farm payroll, U.K. CBI distributive trades, Italy wage inflation, trade balance, U.S. PCE prices, GDP, Redbook, goods trade balance, consumer confidence, Canada Bank of Canada review.
Dollar gains broadly following weekend's hawkish comments by San Francico Fed Preident Williams' hawkish comments
The greenback remained higher versus the other major currencies on Monday, despite the release of downbeat U.S. preliminary manufacturing activity survey and housing sector data, as expectations for a December rate hike by the Federal Reserve continued to support the greenback.
Versus the Japanese yen, the greenback found support at 122.73 in New Zealand and then rose to 123.26 in Asia. Later, despite edging lower in Europe and briefly dropping to 122.80 in New York morning after release of a slew of disappointing U.S. economic data, price managed to climb back to 123.00 and then moved sideways.
Markit showed on Monday in a preliminary report that U.S. manufacturing activity in November slowed to a 25-month low as Markit's flash US manufacturing PMI came in at 52.6, also worse than market's expectation of 53.9. Separately, the National Association of Realtors said that existing home sales in U.S. decreased 3.4% to a seasonally adjusted 5.36 million units last month from 5.55 million in September. Market had expected existing home sales to fall 2.3% to 5.40 million units in October.
In other news, Federal Reserve Governor Daniel Tarullo said during an interview with Bloomberg TV on Monday, 'Fed has done everything it should do to regulate regional and community banks; incumbent on Fed that vulnerabilities that lead to financial distress are addressed; on pe firms and hedge funds, Fed focus is on transactions and systems; probably too much attention to particular months, rather than path of rate rises; when Fed does raise rates, important to watch carefully for effect on inflation; when regulations become final, will not require dramatic shifts as banks already making changes; stress tests the most important supervisory innovation for Fed since crisis; on stress tests, need to enhance macroprudential element; pretty good chance that there will be some increase is post-stress capital income requirements; global economy has not deteriorated as some thought at September Fed meeting; U.S. economy is 'chugging along', but still a mixed picture; still a lot of uncertainty on inflation, not near to Fed target; hard to overlook the fact that market and survey-based measures of expectations are near historic lows; Fed monitoring carefully assets and leverage of assets.'
The single currency turned lower again in New York session on Monday. During the day, although euro rebounded after an initial selloff to a fresh 7-month trough at 1.0601 in Asia due to option defense at 1.0600 and rebounded to 1.0657 in New York morning, renewed broad-based demand for the greenback knocked price lower to a fresh session low of 1.0593 before recovering.
Earlier in Europe, Markit showed the preliminary German manufacturing PMI rose to a seasonally adjusted 52.6 this month from a final reading of 52.1 in October, better than market expectation of 52.0. Meanwhile, In addition, Makit said The preliminary euro zone manufacturing PMI rose to a seasonally adjusted 52.8 in Nov, a 14-month high and up from a final reading of 52.3 in October, whilst, the flash services PMI in the bloc also improved to 54.6 this month from 54.1 in October, a 54-month high and above expectations for a reading of 54.1.
ECB Executive Board Member Sabine Lautenschlaeger said on Monday, 'recent monetary policy instruments are not without risks; expansive monetary policy has its limits; I currently see no reason for further monetary pol measures; sees no reason especially for increasing app; Euro zone not in situation where there is no alternative to loosening monetary policy; we should give massive monetary policy efforts time to take full effect; extreme caution should be exercised with unconventional monetary policy measures; fears future expansion would require ever greater use of instruments; extension of monetary policy stimulus would overshoot the target; we are far removed from any risk of deflation.'
Elsewhere, the British pound also weakened against the greenback on Monday. Cable dropped below last Friday's low at 1.5183 at New Zealand open and then ratcheted lower to 1.5125 in European midday. Later, cable recovered to 1.5190 in tandem with euro but only to fall to a fresh session low of 1.5120 in New York session.
Data to be released on Tuesday:
Germany GDP, Ifo business climate, Ifo current conditions, Ifo expectation, France business climate, Swiss non-farm payroll, U.K. CBI distributive trades, Italy wage inflation, trade balance, U.S. PCE prices, GDP, Redbook, goods trade balance, consumer confidence, Canada Bank of Canada review.
Trendsetter does not warrant or guarantee the accuracy, timeliness or completeness to its service or information contained therein. Trendsetter does not give, whatsoever, warranties, expressed or implied, to the results to be obtained by using its services or information it provided. Users are trading on their own risk and Trendsetter shall not be responsible under any circumstances for the consequences of such activities. Trendsetter and its affiliates, in no event, be liable to users or any third parties for any consequential damages, however arising, including but not limited to damages caused by negligence whether such damages were foreseen or unforeseen.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.