FX View Dean: Tuesday, September 8, 2015
M & A news led to sterling short positions being squeezed. pound rallied for a second day, pulling away four month low last Friday pure and simple (£ 1.5163), supported by improved risk sentiment on global markets and on news that Japanese insurer was the purchase of a British company (Mitsui Sumitomo Insurance said it had agreed to buy British insurer Amlin in a cash deal - £ 3.46b). GBP / JPY is up + 1.25% to the night session at £ 184.82.
Last week, a large number of disappointing UK data added to doubts over whether the Bank of England (BoE) would be able to raise interest rates in the near future especially given concerns about market volatility and global growth. Governor Carney said the slowdown in the Chinese economy has not, for the moment, to change the bank's position on when and how it could raise rates (MPC rate announcement Thursday, September 10). Money markets are currently anticipating a rate hike by the BoE in early Q2 2016. Expect the pound remains vulnerable as investors seek positive signs governor of schedule.
investors continue to digest the report of the payroll of the United States on Friday in terms of Fed rate takeoff. overall, the report was disappointing (+ 173k and + 5.1%), but the monthly backward revisions have kept 1 September Fed rate hike a distinct possibility. The question to one million dollars is how much weight Yellen and society place on the financial market stability and growth abroad.
The U.S. dollar gained nearly 10% in Q1 as investors prepared for a Fed "lift-off" of interest rates. But money choice Reserve fought since April on market fears about Greece and China. Global growth concerns have reduced investors' expectations that the Fed will start their standardization policy next week (September 16-17).
global growth fears of a euro remains best starting bid of the week (€ 1.170) . the overnight data showed that Chinese imports fell again last month, the tenth consecutive decline, adding to concerns about the health of the world's second largest economy and the implications for other emerging markets and the rest of the world.
China's trade surplus has again exceeded the consensus ( $ 60.5b), but the internal components remain on the low side. The decrease in exports of 5.5% was worse than the expected 5%, while the decline of the components of imports was more than double than expected. Trade data certainly provides a negative signal not only for China but also for the image of the broader world trade - another excuse for the Fed to stand pat
Despite growth problems World euro shares opened. in black on a renewed optimism for the state support in China. DAX is also supported by record trade surplus of Germany (+ € 22.8b) and Q2 preliminary GDP threshing euros expectations (+ 0.4% against + 0.3% em / m or + 1 5% against + 1.2% ey / y). Small risk Bund yields temporarily support.
The central bank monetary policy and rate differentials continue to dominate the positioning of the currency market. The outright yen is opening under pressure this morning in this week's shortened trading, trading above the psychological $ 0 handle ($ 0.15), as more and more downside risks growth and inflation prospects of Japan gathers some momentum. Perhaps the market is looking for the measurement of additional easing by the central bank? The Bank of Japan (BoJ) meets next week, September 15 just before the FOMC announcement.
commodity and interest rate sensitive currencies as the CAD ($ 1.3270) and NOK ($ 8.2765), remain hyper sensitive to crude oil prices (45, $ 15 WTI). The chief economist of the IEA noted that oil prices are to remain low for now, unless new geopolitical events.
CAD is strong , up 0.4% to $ 1.3226 with gains driven by a broader improvement in market sentiment. The highlight of this week for the Canadian dollar is BoC policy decision tomorrow and the press statement (not MPR or press conference). CAD bulls will point to the material improvement in Canada's non-energy export performance from June and July. short-term market expectations are likely to be favorable CAD, given the ongoing easing of expectations for BoC easing over the next 12 months. Money markets are now pricing a chance of falling -25bp rate + 39%, halving of + 78% to the end of August.
From the fundamental point of view, it is a week of light stateside. Tomorrow see JOLTS report where employment possibilities, like most other readings of employment on employment, were mild. The highlight of Thursday will import prices and export, which, because of oil prices and raw materials, are expected to show deepening rate of contraction.
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