Short recap
Asia in green
Europe opening higher
New sanctions against North Korea (supported by
China/Russia as well)
UK ready to pay EUR 40 bln Brexit bill
S&P sees Fed on hold this year with 3 hikes
in 2018
OPEC/Non-OPEC meeting today/tomorrow
Iron ore up 5.5% on China continuous stock piling
Equities
Glencore stretching muscles and increasing offer
(USD 2.7 bln) for Rio Tinto’s assets
Deutsche Bank dropping from the list of world’s
top 15 private banks
Hit by heavy bill of USD 14 bln for MBS mis-selling
UBS staying at the top with more than USD 2 trln
of AUM
Weak USD to keep supporting global stocks further
Elliott disclosed 6% stake in NXP
Semiconductors
Likely to make NXP sale to Qualcomm more
expensive (USD 38 bln)
US stock options – stocks at highs, volatility at
lows…and some investors are already positioning for increased volatility
Bonds
10-yr Trys yield at 2.27% vs 2.23% on Friday
10-yr Bund yield at 0.47% vs 0.45% on Friday
Higher yields are looming but market complacent
Central banks likely to be very cautious not to disturb
the market
Funds stay long bonds, not looking to exit trades anytime
soon
Recalling 2013 – still far from 3% yields, so visible
action from funds yet
Vanguard and BlackRock not happy with bond
traders being too complacent link
Inflation in the U.S. bound to accelerate in matter of
months
Bond traders are too complacent and TIPS ‘incredibly
cheap’
COT report as of last Tue:
EUR longs at 83k vs 91k previously, cut by 8k
JPY shorts at 112k vs 121k previously, cut by 9k
GBP shorts at 29k vs 26k previously, increased by 3k
DXY
Jumped up from strong support zone (92.64 and 91.88)
NFPs may be seen as an excuse for correction in USD but
US yields crucial
Fed expectations pivotal for further USD direction as
well as policy direction of other central banks
As their more hawkish stance made their currencies to
strengthen a lot versus USD
They are likely to reassess “how aggressively” they want
to be hawkish
But it should support USD in a short term only unless
political, tax and fiscal mess in US disappears
Have we already seen the top at EURUSD 1.1910 and bottom
at USDJPY 109.84?
EURUSD
Shorts pared back some gains as US yields showed no
change on market expectations of Fed policy
Support 1.1776 (200 WMA, last week closing below), 1.1772
(10 DMA)
Followed by 1.1723 (23.6% Fibo)
But the critical is the yield spread between Trys/Bunds
Not expecting a deep correction, likely 1.1700/1650 at
this stage
USDJPY
Staying within a tight range
Bids placed from 110.00 up
Resistance 110.78 (10 DMA), 110.97 (61.8% Fibo) and
Ichimoku turning line at 111.02
110.14 (76.4% Fibo) and rising trendline as support
Data/events
Mon
Fed’s Bullard (1545
GMT)
Fed’s Kashkari
(1725 GMT)
Thu
Fed’s Duddley (1400
GMT)
Fri
Fed’s Kaplan (1340
GMT)
Fed’s Kashkari
(1530 GMT)
Aug 24-26 Jackson
Hole
Draghi’s show up
highly expected in the light of potential tapering
Any clues on EUR 60
bln monthly purchase being taken down o 40…or?
Sep 7 - ECB
Sep 19-20 FOMC
Should you have any questions feel free to contact me
anytime.
Good luck Champs!
Mr Hawk
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