Tuesday, March 8: five things the markets speak of
Global challenges remain up to emerging markets and to continue to weigh on risk appetite of market.
regional actions are on the back foot, and eventually the US stock index this morning, while the prices of raw materials and other fall as reports overnight revealed that Chinese economy and Japanese exports are shrinking. safe havens, including the yen, gold and US Treasuries remain better offer.
1. China trade disappoints
The trade balance of China reached a ten-month low in terms Yuan Trade Balance February - ¥ 209.5b vs. ¥ 341b; Exports y / y: -20.6% against -11.3% e (the biggest drop since May 09); Imports y / y. -8.0% Against -11.7% e
In dollar terms, both missed the consensus. Exports fell for the eighth consecutive month by -17.8% against -14.5% e and imports for the 16th consecutive month by -16.7% against -12.0% e.
Shipments to the US, EU, and Japan were all down about -20% y / y.
With such disappointing data like this, its no wonder that Premier Li of China has decided to skip 2016 projections for the trade component of the economy on the weekend (Peoples Congress from China). The export data, in particular, suggest that recent market hopes of a global recovery needs might be somewhat tempered again.
The People's Bank of China (PBoC) continues to keep forex traders guessing. The new authorities overnight set the yuan midpoint ¥ 6.5041 vs ¥ 6.5113 before (the highest setting on January 4 and the strongest fourth setting).
2. Q4 GDP of Japan confirmed again in the contraction
contractionJapans economy confirmed for the second time in three quarters.
The decline of GDP in the final prints were revised to be smaller components with mixed trends. Capex (capital expenditure) was stronger than expected at + 1.5% against + 1.2% e and against + 1.4% Preliminary, while consumption was slightly lower at -0.9% against -0.8% against -0.8% e preliminary.
Trade figures were unrevised with a decline of 0.9% in exports and 1.4% decline in imports q / q. The words of Ishihara economic minister after release, argued that there is no change in the view of Japan's fundamentals. They remain strong, noting the weakness of consumption, but also showing the recovery in corporate profits and income.
With Japanese data points showing no real signs of improvement could persuade Prime Minister Abe Cabinet to consider putting the time the second round of the increase in the sales tax. At present, they are scheduled for April 2017.
3. Bank of England (BoE) Chief Testifies to members on joining the EU
BoE Governor Carney testified Treasury Select Committee of the UK it would not provide a complete analysis of the "pros and cons" of the EU economic membership. Membership involves risks and the benefits of the U.K.
He reiterated that it was in the interest of the U.K. that the European Monetary Union has been under more solid footing. Remaining in the EU poses risks related to the development of the euro area, most recently during the debt crisis of the euro area.
He added that the BoE has not made a comprehensive assessment of the economic impact on the U.K. to leave the EU. However, the governor said the new agreement the U.K. should help it achieve its twin objectives of maintaining low and stable inflation and maintaining financial stability.
Note: Sterling (£ 1.4220) rallied hard Monday after the BoE said it would provide additional liquidity in the days surrounding the June 23 referendum.
EUR 4. Bears feel the effects
Currently, 'bulls USD wonder what happened. One of these years go to preferred trades do not go as planned - the euro (€ 1.1007) is on the outright year.
The Fed is back in the game after U.S. data a month. It seems that traders got the theme of "political differences" correct, but the result of wrong FX. The USD is far from its recent highs despite a new scale "in U.S spreads against Europe and Japan. What will be the most interesting on the market is how EUR / USD will trade after the ECB should cut Thursday.
The ECB meeting should lead to new stimulus measures that could include another drop in interest rates and / or new spending on the purchase of bonds. Despite the threat, the EUR / USD continues to drift more participants to hedge against any potential disappointment ECB. The market is wary of a repeat December Draghi - under deliver.
With crude oil prices + 40% from its January low could temper some of the voices "pacifists" the board is certainly a factor threatening to the bear.
5. Australian dollar raises a warning flag
With the AUD (A $ 0.7481) capacity at a high level in eight months raises concerns with officials of the RBA. Deputy Governor Lowe intervened overnight to discuss the currency down ($ 0.7423 A).
He noted that "monetary easing abroad is a complication for us, as it tends to be downward pressure on currencies were easing is underway and thus the pressure the rise of the AUD. "
with Lowe and company expecting further easing abroad will be the Reserve Bank of Australia (RBA) needs to be proactive in handling the value their currency? Year to date, the Aussie rallied 7% outright.
other voting members of the RBA indicated that they prefer to the AUD trading near a $ 0.6500. a strong dollar will only continue to dent the economy of the Aussie. It is difficult to see a vocal central bank posing idle threats when strong AUD poses threats and economic expectations of the inflation.
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