Press review - page 372

[Sergey Golubev]

Why Most Investors Hate Gold (based on the article)

• "We’ll be blunt: most financial asset investors really hate gold. This only happens when investors think central banks have lost their way, and that’s not good news.  Think of gold as a super-duty dive watch.  It can go places humans can’t actually even dive.  The watch will outlive the person wearing it.  Kind of cool, but you don’t necessarily want to test it yourself."
• "First, when the S&P 500 drops 5% or more in one day. Second, when the CBOE VIX Index tops 40. And third, when everything sells off for a few days and correlations for all equities approaches one."

[Sergey Golubev]

Forex Weekly Outlook February 15-19 (based on the article)

GDP data from Japan, Draghi speaks before the European Parliament, Inflation data from the UK and the US, Employment data in the UK and in Australia, US Building permits, PPI and Philly Fed Manufacturing Index. These are this week’s top forex events. Join us as we explore these market movers coming our way.

1. Japan GDP data: Sunday, 23:50. The preliminary GDP estimate for the third quarter of 2015 showed a 0.2% contraction, despite the ultra-easing policy adopted by the BOJ. Domestic demand plunged 0.3%, while the major contraction occurred in the private non-residential investment, falling 1.3%. The public investment contracted 0.3%. On a yearly base, GDP fell by 0.8% against the forecasts of a 0.2% fall. This was the second consecutive quarter with a contraction in the Japanese economy, indicating renewed recession trend. The initial estimate for the fourth quarter is expected to be -0.2%.
2. Mario Draghi speaks: Monday, 14:00. ECB President Mario Draghi will testify before the European Parliament’s Economic and Monetary Affairs Committee, in Brussels. He may refer to the downside risks to the Eurozone’s economy from the slowdown in China, the mild inflation and growing geopolitical uncertainties. Market volatility is expected.
3. UK inflation data: Tuesday, 9:30. UK inflation rate edged up 0.2% in December, rising for the first month since January. The main rise occurred in transport costs, particularly air fares, and to a lesser degree motor fuels. While alcohol, tobacco, food and non-alcoholic beverages prices declined. Furthermore, house price inflation which is not included in the CPI index, surged 7.7 in the year. However, despite this rise, CPI remains at historically low levels. Economists expect CPI to rise 0.3% this time.
4. Eurozone German ZEW Economic Sentiment: Tuesday, 10:00.  German analysts and investors’ confidence declined less than expected in January, as a slowdown in China and other emerging markets continued to weigh on the outlook for Europe’s largest economy.
5. UK Employment data: Wednesday, 9:30. UK unemployment rate fell to its lowest level in a decade during the last quarter of 2015. Unemployment rate posted 5.1% with 31.4 million people in work. Claims for jobless benefits decreased by 4,300 in December 2015 as the claimant remained unchanged at 2.3%. Meanwhile, wage growth excluding bonuses increased 1.9% on a yearly base, a slight decline from the 2% gain recorded in the previous quarter. Analysts expect wage growth to accelerate in the first half of 2016 triggering higher inflation. The number of jobless claims is expected to decline by 2,900 in January.
6. US Building Permits: Wednesday, 13:30. Building permits declined 3.9% in December to a 1.23 million-unit rate. The drop followed two months of sharp gains. Permits for the construction of single-family homes rose 1.8 percent in November. Multi-family building permits decreased 11.4%. Furthermore, U.S. housing starts also faltered, dropping 2.5% to a seasonally adjusted annual pace of 1.15 million units.  The number of Building permits is expected to decline further to 1.21 million units.
7. US PPI: Wednesday, 13:30. U.S. producer prices plunged in December by 0.3%, recording their biggest fall in more than three years. The continued decline in energy costs were the main force behind this decline. Economists expect inflation to slow in the coming weeks. However, the energy-driven weakness is believed to be transitory and predict the next rate hike would occur in June. Producer prices are estimated to decline 0.2% in January.
8. FOMC Meeting Minutes: Wednesday, 19:00. Federal Reserve policymakers decided to raise interest rates after the majority was convinced inflation would rise. However, some voters were concerned about inflation dynamics, fearing it will stay at low levels. Another downside risk was the turmoil in foreign financial markets signaling economic weakness in China, and emerging  countries.
9. Australian employment data: Thursday 0:30. The Australian employment market shed 1000 jobs in December. Full-time employment rose by 17,600 while 18,500 part-time jobs were lost. The reading was considerably better than the 11,000 job contraction estimated by analysts. Furthermore, the unemployment rate remained unchanged at 5.8% while expected to rise to 5.9%. But, the participation rate decreased from 65.3% to 65.1%, meaning there were less people in the labor market. Overall, there was a positive trend in the labor market compared to the same month a year ago. Australian job marlet is expected to gain 13,200 jobs while the unemployment rate is predicted to remain at 5.8%.
10. US Philly Fed Manufacturing Index: Thursday, 13:30.  Manufacturing activity in the Philadelphia-region contracted for the second consecutive month in January, declining to -3.5 from -5.9 in the previous month. Analysts expected a more negative reading of -5.8. Shipments increased, but new orders and employment declined mildly. The price indexes suggest continued downward pressure on manufacturing prices. Manufacturing activity in the Philadelphia-region  is expected to reach -3.1 points.
11. US Unemployment claims: Thursday, 13:30. The number of Americans filing new claims for unemployment benefits declined sharply last week, suggesting the labor market remains resilient despite tepid economic growth.   The number of jobless claims dropped 16,000 to a seasonally adjusted 269,000. Analysts expected 287,000 new claims this week. The four-week moving average of claims fell 3,500 to 281,250 last week. Analysts believe that a part of the lukewarm economic data is related to temporary factors does not reflect the real situation. The number if jobless claims is forecasted to reach 275,000 this week.
12. US inflation data: Friday, 13:30. Jan 20 U.S. consumer prices fell unexpectedly in December by 0.1% following a flat reading in November. Energy prices continued to decline while services rose moderately. Despite this fall, the CPI increased 0.7% in the 12 months through December, the biggest increase in a year. Meanwhile, core CPI, excluding food and energy costs, edged up 0.1% after rising 0.2% for three straight months. On a yearly base, the core CPI rose 2.1%, the largest gain since July 2012, after climbing 2.0 percent in November. CPI is estimated to decline by 0.1%, while core CPI is expected to gain 0.2%.

[Sergey Golubev]

Weekly Outlook for EUR/USD by Morgan Stanley (based on the article)

EUR/USD: Secondary correction to be started within the primary bullish market condition.

"Should the tactical rally we foresee occur, it would put pressure on EURUSD once again. This would likely ease Eurozone inflation expectations slightly but probably won’t prevent noise about potential ECB action in March. Remember, the correlation between EURUSD and equity markets remains strong and we expect the correlation to continue while there are outstanding FX hedged equity positions in the markets."

[Sergey Golubev]

Weekly Outlook for USD/JPY by Morgan Stanley (based on the article)

USD/JPY: Bearish trend to be continuing.

"We think the BoJ may try to use verbal intervention to stop the appreciation of the JPY. Domestic fund managers have seen their foreign holdings depreciate due to a combination of a stronger JPY and weaker global equity markets. This deterioration has occurred when holdings of foreign assets are at record highs, which could mean that stops are triggered and repatriation of holdings is forced. The BoJ attempted to push back against this by introducing negative rates, but failed. We believe the BoJ will act as a circuit breaker, stopping the JPY appreciating this week."

[Sergey Golubev]

Weekly Outlook for GBP/USD by Morgan Stanley (based on the article)

GBP/USD: Ranging bearish with symmetric triangle pattern to be broken to below with 1.4325 target.

"Any risk rally in equities or oil is likely to provide GBP with a boost. We don’t expect this to last long though, so continue to promote selling on rallies. The BoE remains dovish and the Brexit debate is in full swing in the press. The UK’s current account deficit makes the currency prone to weakness when inflows are reduced due to high market volatility. EURGBP this week broke previous highs, supporting the upside momentum in this pair."

[Sergey Golubev]

Technical Intra-day Targets for EUR/USD by United Overseas Bank (based on the article)

EUR/USD. Bullish. Take partial profit at 1.1376.

"The current rally is showing signs of slowing and a short-term top appears to be imminent. However, confirmation is only upon a break below the stoploss at 1.1180. A break below this level could lead to a pullback towards the 1.1085 support. Those who are long should continue to book some partial profit at 1.1376."

[Sergey Golubev]

USD/JPY Intra-Day Fundamentals: Japan Gross Domestic Product and 35 pips price movement

2016-02-09 00:30 GMT | [JPY - Gross Domestic Product]

• past data is 1.3%
• forecast data is -0.8%
• actual data is -1.4% according to the latest press release

if actual > forecast (or previous one) = good for currency (for JPY in our case)

[JPY - Gross Domestic Product] = Change in the inflation-adjusted value of all goods and services produced by the economy.

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USDJPY M5: 35 pips price movement by Japan Gross Domestic Product news event :

[Sergey Golubev]

EUR/USD Intra-Day Fundamentals: ECB President Draghi Speech and 17 pips price movement

2016-02-15 14:00 GMT | [EUR - ECB President Draghi Speech]

• past data is n/a
  
• forecast data is n/a
  
• actual data is n/a according to the latest press release

[EUR - ECB President Draghi Speech] = Hearing at the European Parliament’s Economic and Monetary Affairs Committee Introductory statement by Mario Draghi, President of the ECB, Brussels, 15 February 2016.

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"In order to make the euro area more resilient, contributions from all policy areas are needed. The ECB is ready to do its part. As we announced at the end of our last monetary policy meeting in January, the Governing Council will review and possibly reconsider the monetary policy stance in early March. The focus of our deliberations will be twofold. First, we will examine the strength of the pass-through of low imported inflation to domestic wage and price formation and to inflation expectations. This will depend on the size and the persistence of the fall in oil and commodity prices and the incidence of second-round effects on domestic wages and prices. Second, in the light of the recent financial turmoil, we will analyse the state of transmission of our monetary impulses by the financial system and in particular by banks. If either of these two factors entail downward risks to price stability, we will not hesitate to act."

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EURUSD M5: 17 pips price movement by ECB President Draghi Speech news event :

[Sergey Golubev]

Technical Intra-day Targets for EUR/USD by United Overseas Bank (based on the article)

EUR/USD. Correction.

"The current down-move from the high is likely part of a corrective pull-back which could extend lower to 1.1060. The major support is nearer to 1.0990 and a move below this level is not expected for now. Overall, this pair is expected to remain under pressure in the coming days unless it can reclaim the 1.1375 peak."

[Sergey Golubev]

EUR/USD Intra-Day Fundamentals: German ZEW Economic Sentiment and 15 pips price movement

2016-02-16 10:00 GMT | [EUR - German ZEW Economic Sentiment]

• past data is 10.2
• forecast data is 0.0
• actual data is 1.0 according to the latest press release

if actual > forecast (or previous one) = good for currency (for EUR in our case)

[EUR - German ZEW Economic Sentiment] = Level of a diffusion index based on surveyed German institutional investors and analysts.

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"The ZEW Indicator of Economic Sentiment for Germany has declined for the second consecutive time in February 2016. The index has decreased by 9.2 points compared to the previous month, now standing at 1.0 points (long-term average: 24.6 points)."

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EURUSD M5: 15 pips price movement by German ZEW Economic Sentiment news event :