Friday 8 September 2017

Sep 8, 2017 - Market Update (North Korea/Irma - unhedged over the weekend?, Dovish Draghi but no indications, 10-yr Trys yield dipping below may bring more declines, EURUSD - 1.2000 a fair value, 1.2100 to hurt sentiment and DAX, Platina to catch up Gold rally, WTI at USD 55 unsustainable, BMW taking e-cars seriously, Amazon in a need of 2nd US HQ)

Short recap

Asia in red
Europe opening lower


ECB kept its policy unchanged
Draghi stayed dovish, has not offered any clear indication on what’s next
Despite strong EUR pushing inflation lower and economy doing well
Ifo head warning of next EZ crisis
Market keeps testing upside in EURUSD
North Korea (important public holiday 9.9. may be topped by another missile test) and Irma risks present – going unhedged to the weekend?

Equities

Eicher Motors interested in Ducati (USD 2 bln)
BMW firing on all cylinders to start mass production of e-cars
To compete with Tesla with 12 models by 2025
EURUSD at 1.2100 will be noticed by EZ stocks
Likely to change the sentiment, hitting DAX
An opportunity from Harvey/Irma as insurance (-12%), leisure stocks were hit yesterday
Insurance down 12%, while during Katarina declined 5% only
Hedging by S&P 500 makes sense
Amazon kicking out competition among cities in US
By announcing plans to build 2nd HQ (USD 5 bln)
Apple likely to face supply shortage and delays in new iPhone production
Eli Lilly to cut off 8% of workforce
JPMorgan making consumer, retail and internet divisions to work closer
Best (Alibaba behind) launching IPO in US (USD 930 mln)

Bonds

10-yr Trys yield at 2.04% - dipped lower in Asia trading
The dip below 2% may see more declines
10-yr Bund yield at 0.29%
Investors unloading property bonds linked to Texas (hit by hurricane Harvey)

DXY

Below 2016 low at 91.88, closing there today?
If it does, more USD weakness is likely with target around 89.00 area
Close above may confirm the lows in USD
Lower capital demand, thus growing USD supply has negative effect on USD
Trump needs to deliver (tax reform for companies to increase investments) and Fed to hike to support dollar

EURUSD

Dovish Draghi but EUR higher…
As effects of higher EUR are offset by lower yields
1.2000 is the fair value based on models
Resistance at 1.2071
Market pricing first hike in June 2019
Area between 1.1850/1.2050 may be a new playground until FOMC and next ECB

USDJPY

Breaks 2017 low at 108.12
Heading to 105/106.00
Below 108.00 level looks attractive to Japanese investors

Gold/Platina

Resistance in sight at 1375/80 (Fibo 38.2%/2016 high)
Well supported by mix of low US yields, weak USDJPY, increasing amount of bonds trading at negative yield
Raising speculative positions and option hedging
Platina can catch up the gold rally soon, as it trades at discount

Oil

Harvey hit the oil biz in US and what about Irma that is stronger?
Decline in inventories offset by decline in production and refinery demand keep the oil rally in check
But getting to unsustainable levels with WTI getting closer to USD 55
Risk of correcting to USD 50

Data/events

ECB’s Weidmann (0900 GMT)
Fed’s Harker (1245 GMT)
Fed’s Dudley

Sep 19-20 FOMC

Sep 21 – Brexita major speech from May expected
Is UK sort of reshuffling priorities or looking at a reset of talks?

Sep 29 – US debt ceiling deadline

Oct 18 – China National Congress


Oct 26 ECB


Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk



DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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