Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

EM Events Dominate Heavy News Cycle

Published 05/13/2016, 08:00 AM
Updated 03/07/2022, 05:10 AM

Market Brief

Risk appetite disappeared in the Asian session as traders moved into safe haven positioning. Regional Asian equity indices were red across the board. The Nikkei lead the decliners, falling -1.34% as the JPY was stronger in the G10. The yen rallied, despite BoJ Governor Kuroda's reiteration that the central bank will not hesitate to ease more if needed and that economic risks were tilted to the downside. US short-end yields shifted higher providing the USD with an interest-rate advantage. Gold found solid demand rising $10 to $1274. Asian FX was weaker with the USD/CNY fixing rising to 6.5219, while the KRW fell despite the BoK holding monetary policy steady at 1.50%.

G10 Advancers & Global Indexes

We advise to avoid chasing the CNY lower as fixing has become steadily unpredictable. In the Philippines, following the historic presidential elections, Bangko Sentral ng Pilipinas held its policy rate unchanged at 4.00% as the bank remains comfortable with growth momentum and unlikely risk, unsettling the market during the tentative political cycle. India’s macro data disappointed as CPI surged to 5.4% in April from 4.83%, key factor coming from food inflation. India’s industrial production collapsed to 0.1% in March from 2.0%. Elsewhere in EM, Brazil’s senate voted 55-22 to start impeachment procedures against President Dilma Rousseff. BRL was slightly weaker on the news, with USD/BRL rallying 1.00% to 3.4830. Overall, there is limited evidence that the current pullback in risk taking is anything more than short-term volatility caused by the broad spectrum of events over the last 24hrs.

Today's Calendar

Yesterday's BoE trifecta provided plenty of information to digest. BoE outlook was decidedly less dovish then the market had anticipated. However, that did not translate into GBP buying as incoming economic data has been weak and political uncertainty looms large. There were no votes for additional policy easing and inflation forecast were not revised lower. Carney could slightly move anti-Brexit than we initially thought, keeping the central assumption that the UK stays within the EU and not bothering with axillary forecasts. Across the water, Germany’s Schaeuble stated that should the UK vote to leave the EU there would be no renegotiation, adding that there was a future for the EU without the UK. We remain bearish on the GBP, expecting any positive short term developments to run quickly into supply. GBP/USD short-term target remains 100d MA at 1.4355.

On Thursday, Boston Fed President Rosengren, generally viewed as dovish, stated that the probability of a rate hike this year is greater than markets expect. We agree with his outlook and expect a single rate hike in November or December. Markets will be focused on retail sales as a barometer for how the consumer is holding up as other economic indications have disappointed and have implications for GDP. San Francisco Fed President Williams is scheduled to speak later and the University of Michigan index of consumer sentiment will be released to close the week.

In the European session traders will be focused on EU GDP.

Currency Tech
EUR/USD
R 2: 1.1714
R 1: 1.1465
CURRENT: 1.1396
S 1: 1.1217
S 2: 1.1144

GBP/USD
R 2: 1.4959
R 1: 1.4668
CURRENT: 1.4643
S 1: 1.4300
S 2: 1.4132

USD/JPY
R 2: 112.68
R 1: 111.91
CURRENT: 106.94
S 1: 105.23
S 2: 100.78

USD/CHF
R 2: 1.0093
R 1: 0.9913
CURRENT: 0.9621
S 1: 0.9476
S 2: 0.9259

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.