Showing posts with label gbp. Show all posts
Showing posts with label gbp. Show all posts

Friday, 3 February 2017

Feb 3, 2017 - Market Update + US NFPs view

Short recap

China is back from holidays
POBC raised short term rates to reduce leverage and help CNY
JP stocks found support in BoJ buying bonds, thus weakening JPY
After 10-yr JP bonds yields touched 0.115%, the BoJ was active in buying 5-10yr bonds and targets 0% yield for 10-yr bonds


EU stocks started mixed waiting for NFPs clues
To watch DAX 11 500 and S&P 2245 levels on the downside
ChemChina close to getting antitrust approval from EU to acquire Syngenta for USD 43 bln
Bundesbank Chief Economist said there is no reason to reduce monetary stimulus
As the core inflation is still below target
Praet (ECB) – no sustained adjustment toward 2% inflation
Continued monetary stimulus necessary
Underlying inflation dynamics to remain subdue
Saw rebound in Italian bonds
Core bonds higher, yields lower after ECB rhetoric on QE
USDRUB was a big mover yesterday as US Treasury is looking to easy sanctions in the light of Trump wishing better relations with Russia
DXY steady as 10-yr US Trys yields float around 2.48%
Gold didn’t manage to hold gains above 1220; USD and rates the key
Needs a weekly close above to keep the momentum

Data

EZ: Markit PMI (Jan)
EZ: Retail Sales (Dec)
US: Charles Evans (Fed) speaking (1415 GMT)
US: Markit PMI (Jan)
US: Factory orders (Dec)
US: ISM Non-manufacturing

US NFPs

All in all after better ADP figures that are more or less in line with NFPs (statistically over the last year) expecting better numbers
Especially the hourly earnings will be closely watched as it will have direct inflation implications
Much better numbers may mean that Fed is late with its actions

Headline: exp. +210k vs 175k market expectation vs 156k previous
Participation rate: exp. 62.9% vs 62.7% previous
Average hourly earnings: exp. +0.2% or higher vs +0.3% market expectation vs +0.4% preious
Unemployment rate: exp. 4.7% vs 4.7% market expectation vs 4.7% previous

EURUSD – bearish signal?
Didn’t hold above 100 DMA at 1.0788
Didn’t break through 50% Fibo at 1.0820

DXY
Stayed above 100 DMA at 99.59
And above 61.8% Fibo at 99.26

GBP
For those who like to trade volatily after trigerring Art. 50
In the short term may look at selling GBP against EU currencies

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

Thursday, 26 January 2017

Jan 26, 2017 - Market Update - FX themes

USD

  • Seeing disconnect – stocks, bond yields higher but no reaction in USD
  • USD seems to be Trump sensitive
  • Market should realize the underlying strength of USD vs uncertainty around Trump policies
  • At the moment investors prefer US equities over Treasuries what was also seen in the weak auction demand
  • Very unlikely the divergence between USD and US yields to stay for very long. The 10-year yield is currently around 2.54% (monthly high), so watch closely today’s US data and next week FOMC and NFPs
  • As US economy is closing output gap (companies will have more and more capital needs going on) while savings ratio is declining, we may experience new pressure to push yields higher, thus USD higher too
  • It will adversely impact JPY, as lower yielding Japanese assets will be more and more out of favor of investors, who will be subsequently swapping back to USD

CNH

  • PBoC making sure banks strictly control lending in Q1
  • What is in a bit of contrast of recent info about relaxing margin trading rules
  • USD and CNH – Trump, FX manipulation, free global trade, tensions…a lot is boiling around
GBP

  • Theresa May to make official a Brexit parliament bill
  • Brexit Secretary to speak out
  • Weak retail sales went out almost unnoted
  • May meeting Trump on Friday
EUR


  • Vows around Italian Constitutional Court ruling not impacting EUR 
  • 1.0700 seems to be a history for the time being

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

Saturday, 15 October 2016

Oct 15, 2016 - GBP crash - Have you finally learnt the lesson?

Hi all,

First of all, I would like to tell you that this article is for everyone ( I believe  ). It doesn’t matter if You are new to FX market, average Joe or very experienced trader.

Maybe you are like me - I jumped into the FX world back in 2002 and before that I have been trading futures on a small stock exchange. 
Well, back then I felt very confident that I know the rules of the game. As my trading results showed me - NO, I did not! After seeing my loosing trades I started looking around for books related to currency markets. I found few of them where *gurus* were trying to confirm my thinking that 2% to 5% exposure in FX market is just fine. NO, it’s not fine! It’s very far from being fine!

Very often you are going to be on the wrong side of the market. 
Frankly, it is nothing wrong for retail trader as long as you understand the risk you are taking.

What I’m talking about?

Let’s start with everyday risk events:
1.            Data announcements
2.            Central banks speakers
3.            Not expected comments, announcements..etc.

Most probably you were trapped by this kind of events likely not only once. As you can see you may have a very good understanding of the market direction but sometimes big players ( market makers / smart money ) will shake the weakest retail positions before they follow in right direction. How many times have you been a victim of that?

Now, it should be easier to understand: this kind of action is very common and if you are risking 2% to 5% per trade your account could be down by 10 to 25% very quickly – just 5 losing trades in a row.

Has it ever happened to you? Do you remember how sick you were after such a trade? Did you blame the whole damn world?

Come on, it is fine you. Just 10% to 25% down… LOL

Of course the above is only a joke…

But now imagine that you are over-exposed, over-leveraged and GBP is going down … and you are adding to the position…and it keeps going down… you are still fine for next 150/300 pips… you are adding again…. First thing you can see it is a Margin Call but only if we are falling slowly enough, otherwise it is a full blown STOP OUT without any discussion. 

And you are lucky enough if it all ends up with you not being forced to top-up your account because of negative cash balance as a result you your adventure.

Am I kidding you?

Oh NO, I’m far from that.

Wasn’t the GBP crash enough for you? What about SNB’s CHF un-peg? Or maybe a flash crash in stocks in 2010? No, not yet? Let’s recall the events like Lehman Brothers in2008 or so...
I’m pretty sure You understand what I mean by that. It is just a very simple thing that is called „A proper risk management”. You do not really need to “Risk Big to Earn Big”. Try to earn more while risking less. 



Join our Educational Live Trading Room here – Free till the end of 2016


Let's have some good trades together......


Please let us know should you have any additional questions or you would like to discuss other crosses as well. We are here to help you, just contact us at: landoftradingATgmailDOTcom.

Happy Trading
Mr Price Action



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: landoftradingATgmail.com

Tuesday, 4 October 2016

Oct 4, 2016 - (Weekly Tech Overview) GBP: Is short squeeze coming ?

Hi,
as mentioned on Twitter yesterday, we are watching GBP, especially EURGBP and GBPAUD.
Please check our video below: Weekly Tech overview and follow Us on Twitter for real time updates.


We do believe that just a little bit of support from UK data should be enough to push GBP higher ( don't get Us wrong - we are NOT saying medium term trend will change, at least not now ):




Please let us know should you have any additional questions or you would like to discuss other crosses as well. We are here to help you, just contact us at: landoftradingATgmailDOTcom.

Happy Trading
Mr Price Action


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: landoftradingATgmail.com

Sunday, 4 September 2016

Sep 4, 2016 - Weekly Macro - 36W

Previous Week Summary

Last week was all about waiting and positioning ahead of Friday’s US NFPs. Stocks ended the week more or less flat, most FX crosses traded within the ranges and despite the EURUSD 30 pip spike higher after NFPs release, which was corrected below 1.1200 later during US session, markets didn’t do much. One and only exception was crude oil, which fell down 7% pushed lower as the markets are oversupplied and the risk of no agreement outcome at Sep 26-28 OPEC is high. The tensions among OPEC members are being felt in the market, despite Russian President Putin calling for agreement on production freeze.




Monday – JP – Jobless rate reaching multi-decade low levels at 3% but is it really helping the BoJ’s hunt for inflation? US Personal income and spending for July rose and were in line with expectations, while Core PCE was higher too and in line on monthly basis. The yearly one saw a slight uptick higher versus expectations.

Tuesday – EZ – Business climate was worse and Consume confidence dived (in line with expectations) in Aug while in US it hit the highest level over the last year.

Wednesday – CN – PMI data were back to expansionary territory again. EZ unemployment and CPI not boding well for ECB. US – ADP data showed a nice rise to 177k vs 175k expected and Chicago PMI was worse. Meanwhile, Pending Home sales rose in Aug. Brazil – President Rousseff was sent back home but on the other side as expected, the BCB kept the rate unchanged at 14.25%.

Thursday – a bit of surprise for the market was PMI Manufacturing figure from UK that jumped back to expansionary territory (to 53.3 vs 49.0 exp.). Very likely manufacturers got pleased my weaker GBP. The Final US – Nonfarm productivity felt in line with expectations while ISM Manufacturing PMI was the lowest over the last 3 months.
 
Friday – well, a big day in terms of expectations but not reflected in the market…US NFPs rose 151k vs 180k exp., Unemployment rate was slightly up to 4.9% vs 4.8% exp. as more people entered the job market but Average hourly and weekly earnings slightly dropped. Maybe a summer kind of vacation fever effect?
Despite seasonality, the increase of 150k + revisions after two months of very huge gains are a good case for Fed to raise the rate in Sep. More on nearing full time employment and its effect on  link . Lacker (a Fed hawk but non-voter) was out later after NFPs saying that the Fed funds rate should be considerably higher. Bill Gross of Janus as well as Goldman Sachs see the hike likely in Sep while Pimco and Mohamed El-Erian from Allianz SE are not that much open to such a move in Sep.

From corporate world – speculations about SolarCity and its ability to avoid bankruptcy were circulating in the market. The EUR 13 bln back tax request for Apple that was imposed by European Commission after it started to look closer at Irish tax system is here and irritating Apple, Ireland and US. Are we just ping-ponging the ball after the BNP USD 9 bln payout over US Sanction list or US government just gave an idea to European Commission some time ago when they started to complain about US multinationals trying to avoid paying taxes by moving operations abroad?


Upcoming Week Outlook:

We have this week 3 rate decisions (Australia, Euro Area and Canada) and the key event is the ECB meeting. We also expect diary price index from New Zealand as the indicator of one of the key sectors of the economy and GDP from Australia and Japan. We will end the week with inflation figures from China and employment data from Canada. Here are the details:

Monday (AUD, JPY, GBP):

We will start the week with the quarterly rate of change in operating profits from Australian companies, which was declining in the recent months. Traders will look for signs of recovery especially ahead of the rate decision scheduled for Tuesday. Kuroda will speak in the middle of the Asian session and the speech will be watched in respect to expected helicopter money and possible hints regarding cooperation with government on the fiscal stimulus side. At the beginning of the European session the UK Service sector PMI, which could bring better than expected results due to a positive surprise in Manufacturing PMI last week, will be watched. On Monday, we have bank holiday in US & CA, so expect subdued liquidity.


Tuesday (AUD, USD, CHF, NZD):

The first major central bank meeting of the month will take place on Tuesday. Watch the RBA statement for insights how the policy makers see the Australian economy after the August rate hike. At the beginning of the US session, the ISM Services PMI will show whether the mood in the sector is following the manufacturers. The Polish National Bank will meet also and there is an increasing probability of a rate cut in the biggest V4 country. SNB’s governor Jordan can bring some volatility to CHF crosses too but also kiwi traders should follow the diary price index.

Wednesday (AUD, CHF, GBP, CAD, USD, JPY):

Despite plenty of news ahead on Wednesday, don’t forget that traders will be waiting for the ECB on Thursday, hence the liquidity will be dried up. We are starting the day with Aussie GDP, which posted a surprise jump in growth, but the Q2 GDP growth is usually much weaker than the previous figure. At the beginning of European session change in UK home prices and manufacturing production will be released, and both declined last months, while further decline is expected mostly due to the Brexit vote. At the G20 meeting on Sunday, Theresa May had to face quite serious Brexit warnings from US and Japan. The Canadian rate decision is scheduled at the beginning of the US Session. The country’s GDP declined last Q and the trade balance is in falling trend. The dependence on oil with the depressed crude prices and the inflated housing market are the key problems the nation’s facing. There is no change expected in the overnight rate but the statement can cause some volatility. The same time US job openings will be released with lower figures expected due to the job market close to maximum employment. At the beginning of the Asian session Japanese final GDP and Current account may give a boost to volatility. In case of GDP decline the possibility of “helicopter money” topic will get back in focus.

Thursday (CNY, EUR, USD, CAD):

The Chinese Trade Balance (rising since May) can create some volatility in the early trading but all eyes will be on the ECB rate decision and press conference later that day. The analysts are divided whether the ECB will act now or will stay on hold as the PMI figures are close to pre-Brexit vote levels. The same time with the press conference the Canadian housing market data will be released and also Crude oil inventories can move the CAD crosses. 
Providing the ECB will act, the following options could be considered:
Extension of asset purchase (currently EUR 80 bln monthly until spring 2017
Change in the rules which corporate bonds could ECB purchase
Rate cut, the least likely option for the policy makers

Friday (CNY, GBP, USD, CAD):

Chinese inflation will start the data flow where both CPI and PPI will be released by the National Bureau of Statistics . The consumer inflation is slowing down for the 4th consecutive month and another decline is expected. On the other hand producers prices are falling and even the pace of decline is slowing, analysts expect another negative number. The deficit of the UK Goods Trade Balance is expected to come out a little narrower. Midday FOMC voting member Rosenberg speaks at South Shore Chamber breakfast in Boston about the economic outlook that could cause some moves in USD crosses. The Canadian Employment figures are out later and as the last month’s data were not encouraging (both the Employment change and the Unemployment rate came out worse than expected) the key is, if this was a temporary weakness or a beginning of a negative trend for the nation.

Please check below the Event Risk Calendar for better overview and times. We prepared also a Central bank meeting schedule for september.

Don't forget to watch your risk and be consistent in trading.

Good luck Champs!


Mr Hawk & Mr Tech Man




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

Monday, 25 July 2016

Weekly Tech Overview - GBPAUD - No man's land

GBPAUD weekly chart: No Man's Land:



Possible demand on weekly chart: twds 1,67/1,63 and then twds 2012 low around 1,47/4350

Possible supply on weekly chart: twds 2,05

GBPAUD:  Patience will pay out if you are long term chart trader





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 www.landoftrading.com Contact: landoftradingATgmail.com

Sunday, 17 July 2016

Weekly Macro Overview - Week 29

Previous Week Summary

The whole week we saw risk on flows on the back of few positive news as Theresa May becoming UK’s PM, BoE and BoJ getting ready for more stimulus, Fed officials expressing patience about rate hikes, pretty good start of earnings season…all of that pushing stocks strongly higher. For stocks to keep the momentum we would need to have decent earnings coming in. Meanwhile, bond yields moved higher and USD got some strength on the back of better US macro data that renewed Fed rate high thinking.

Monday – BoE looking at curbing the cash withdrawals from real-estate funds, UK to strengthen ties with North America invest in infrastructure. Spain & Portugal may not eventually face the fines in EU budget procedure.

Tuesday – Japan to end deflation, stimulus by month end, no seize/sources of financing. BoE – will do all what is needed to secure financial stability after Brexit. Spain & Portugal under official deficit procedure. EU pushing on UK to trigger Article 50. Philippines-China court ruling on South China Sea – no historic title to it, would likely negotiate before G20 meeting in Philippines. Bullard (Fed) – one rate hike in a foreseeable future possible, economy stuck with low growth, inflation and unemployment, sees 2% inflation and unemployment rate at 4.7% in 2.5 years, monetary policy can’t change productivity, housing market to improve. US JOLTS job openings at 5.5 mln in June vs 5.85 prior, slight correction of preferred measure of Fed’s Yellen. UK Parliament may debate as early as on Sep 5 the possibility of holding a 2nd Brexit referendum because of 4.1 mln petition.

Wednesday – EZ May Industrial production worse, previous revised higher. Japan should expand fiscal/monetary stimulus, should buy bonds not go for negative rates. Scotland reiterated its intentions to stay in EU. US Mortgage applications lower than expected, BoC – no change in rates, Q2 GDP – negatives: volatile trade flows, uneven consumer spending, wildfires. Financial conditions remain accommodative, lower CAD helps exporters but may not drive growth. Theresa May officially becoming a new UK PM, Boris Johnson new Foreign Affairs Secretary what may be joke towards EU but he will not lead the Brexit talks with EU.

Thursday – Japan discussed perpetual bonds with Bernanke that would be bought by BoJ, thus underwriting government debt (illegal according to Japanese constitution), JPY weakened, rumoured JPY 10/20/35 trillion fiscal/monetary stimulus by month end. Japan Rating Agency JCR cut outlook to negative from stable & affirmed AAA rating. Schauble-Lew expressed mutual support on Brexit, G20 meeting; Weidmann (ECB) – EU must have solid foundation. BoE - surprising no change in rates, getting ready for August. Job offerings lower after Brexit, businesses cutting investments. US June Final PPI better, Initial Jobless Claims better, previous revised lower.
 
Friday – Italian banking crisis – solution to be found, US funds looking at some buying opportunities in Italian banks. Japanese banks don’t like idea of borrowing from BoJ at negative rates. ECB – non-performing loans in Italian banks a problem but manageable. Weaker JPY an obstacle for helicopter money, UK May Construction output worse, EZ June CPI in line M/Y, BoE to make a 40 bps cut in Aug, launch GBP 50 bln QE in Nov (according to Morgan Stanley), US June CPI lower M/Y, Core CPI higher, June Advanced Retail sales higher, July Empire Manufacturing better but new orders bad, June Industrial Production better, July Preliminary Univ of Michigan Consumer Confidence lower than expected, May Business inventories better. German government to safeguard small investors in Italian banks, creditors to take losses.

Nintendo shares are up 70% on new application high interest. These levels are very difficult to justify versus its peers like King Digital or Zynga. Patience needed before shorting.





Upcoming Week Outlook

Monday – BoE MPC member Weale is out, may provide additional insights on potential rate cut or QE in August. German Bundesbank to release Monthly report, a nice piece providing hints on what risks they see.

Tuesday – RBA releasing Minutes that may shed additional light on what RBA thinks about current situation and possible further easing. UK CPI/PPI – will be watched by markets as BoE is readying for QE; GE ZEW Economic Sentiment for July will show us what temperature German economy has. From overseas we will get Building permits, Housing starts showing us what is the situation in housing market. Expecting June Housing starts at around 1.17 mln vs 1.16 in May. June permits show move to approx. 1.16 mln, higher than in May. Also expecting Home sales to decline to 5.48 mln in June.
Wednesday – CN Leading index (m/m), UK labor market data will be out, where Claimant count should rise to 4.1k from -0.4k previously, Unemployment rate should stay unchanged at 5.0% and Earnings should rise. We should also learn what how consumers are confident in Europe (Brexit).

Thursday – JP – Industry activity, UK Retail Sales for June (expecting decline), ECB Meeting (live) but no rates change or additional QE expected. The rates should stay at -0.40% (Deposit), 0.00% (Main refinancing) and +0.25% (Marginal lending facility). Definitely closely watched by the market to get the clue on after Brexit vote actions from ECB, situation in EZ economy, QE bond buying and what’s next for Italian banks. Later will have Philly Fed Manufacturing index (expecting rise) and US Jobless claims to rise to 271k from previous week 254k. Later will have CB Leading Index (to return to positive territory).

Friday – will be about July Flash PMI data from all around the world, JP (to rise), FR & GE (both Manufacturing & Services slightly worse), EZ (both slightly worse), UK Manufacturing PMI (worse), US Flash Manufacturing PMI (better). Will also have CPI/Core CPI data and Retail sales from CA (both lower), making the BoC decision makers think whether the last week inaction was right.

The earnings will be monitored by market participants as equity markets are making new historic highs and if they are solid, we may have another shift higher. All those investors sitting on sidelines and hoarding cash before/after Brexit referendum are now moving to stocks. The bond yields started to rise again (risk on outflows) but the likelihood of Fed rate hike, especially due to stronger US data, may inevitable shake the confidence of stock investors. On the other hand, what other options than stocks (dividends) do you have in your hunt for yield?

Event Risk Calendar - Week 29



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 www.landoftrading.com Contact: landoftradingATgmail.com



Thursday, 14 July 2016

Bank of England on Hold - Carney just hurt risk on... ( UPDATED )

Risk on - the bears just got a good reason to try to stop risk on rally, the question is whether it's going to be enough. Now, we have to keep in mind the Tier-A US data tomorrow and if they are strong that could bring FED hike discussion om the table again. Well, it could be another good opportunity for bears and we may see at least a pullback.

Waiting for US open today for any sign that bulls may be in trouble:
SP 500 FUT, AUD, JPY, CHF and CAD on the list.






DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 

Tuesday, 12 July 2016

BoE after Brexit


BoE after Brexit


Politics

-          As the petition of 4.1 mln people for a new referendum was rejected by UK government, we are moving to a warming up phase for exit talks and negotiating of best agreements with EU possible
-          Theresa May made it to become a new Margaret Thatcher
-          UK is working and lobbying hard during preparation phase to secure good starting position for official exit talks
-          Article 50 likely to be triggered next year, but any surprise is still guaranteed
-          Highly unlikely, the UK would use Article 50 before they feel and are ready for the talks, as they would have only 2 years to complete them. If not, they will be a third party country to EU.


Economy

-          The principal two industries the UK economy is based on are Finances and Real-estate. I believe there is no need to comment on current developments there.

-          Not only GBP suffers but recent UK data are turning sour as well. A good example was the June Construction PMI that showed first contraction in 40 months with lowest reading since June 2009. The Housing activity dropped in June as well, to lowest level since Dec 2012.

-          Due to Brexit the S&P sees:

UK GDP to decline 1.2% in 2017 and 1.0% in 2018
BoE lowering rates to 0.0% before the end of the year
They also cut the country rating by two notches to AA with negative outlook.

-          Government is looking at lowering the corporate tax to 15% from 20%, to support the business and keep the employment steady

-          EU is pushing UK to start negotiations with immediate effect to reduce uncertainty. The message from Brussels was clear, no cherry picking will happen. On the other hand, in order the UK keeps the access to free market, they would need to accept Four Freedoms of EU: Free movement of goods, capital and workers, and Right to establish and freedom to provide services.

-          Trade agreements – re-focussing on non-EU trading partners

-          Hedge funds and sovereign funds have already started to look around for possible opportunities in UK.






Bank of England (BoE)

Stability Report (released after Brexit referendum) - Brexit risks materializing, outlook challenging, BoE cut countercyclical capital buffer, expecting economic volatility, commercial real-estate risks present, investment decisions being delayed.


Carney (BoE) – BoE to provide substantial FX liquidity, to support jobs and growth, ready for Article 50 trigger and to ban banks from using extra capital on dividends. The Current account risks related to GBP moves and capital flows, weak GBP to support exporters, actions to be focussed on domestic economy.

The Current and Capital account as well as the chronic Budget deficits are huge problem for UK.
Let’s have a look at an interesting formula for UK Current account:

Sum of FDI + portfolio investments + current account = 12.8% of GDP. Portfolio investments and FDI inflows more than offset the Current account deficit of 5.1% GDP, but what if the inflows reverse? UK is still able to finance its current account with foreign money, but likely would need to decrease the consumption at certain point as the inflows reverse also on lower yields.

The market may still be underpricing the upcoming easing despite the GBPUSD printing the 85 week low below 1.2800. We may be looking at 25 bps rate cut in July, one more in August. Definitely, BoE will come up with rather decent QE (maybe additional GBP 100 bln including buying corporate bonds).

Next policy meeting is on Thursday July 14, where we will see whether Governor Carney will keep his word and BoE cuts the rates. The market is assigning the 74% probability of such a step, but other measures, comments and Minutes will be equally important.


GBP – what’s next?

Macro view – lower rates, QE with declining FDIs will be putting pressure on GBP. What about George Soros being right about BoE again and seeing cable below 1.1500 level?

Mohamed El-Erian was out last week saying the GBP can fall to parity to USD, if there is no good Brexit plan that would secure sufficient free trade deal with EU.


Good luck Champs!

Mr Hawk



DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from action where despite this disclaimer someone would consider this material as an investment advice.

Monday, 11 July 2016

Cameron resigning... ( Updated )

Likely that David Cameron will offer his resignation already this Wednesday ( previously Thursday ) and Theresa May will replace him as a new Prime Minister.


Weekly Macro Overview - Week 28

Previous Week Summary

Bits and pieces of Brexit referendum were still present in the market with not surprising suspension of redemptions from real-estate UK funds, making GBP 15 bln out of GBP 24 bln locked. The GBP is firmly sitting below 1.3000 handle, USDJPY very close to critical level (please bear in mind, that BoJ may show its teeth soon). The Italian banking crisis is keeping Rome, Brussels and Frankfurt busy, as the banks cope with EUR 360 bln of non-performing loans (1/5 of country’s GDP), but the highlight of the week were US NFPs. US stocks flirting with all times highs at the same time as bond yields are printing new lows. No comment on that… Meanwhile, Yuan is weakening fifth week in a row and PBoC doesn’t seem to care as FX monthly report showed big one month rise in foreign FX reserves. Likely, PBoC has stopped its interventions, so the CNY is left to weaken to support the growth. As the situation in Chinese economy deteriorates, another round of RRR cuts may also be on the table in the weeks to come.

Monday – Australia’s elections didn’t resolve the deadlock and S&P lowered the outlook to Negative due to strong budget deficit risks that may not be properly addressed. S&P also commented on UK’s GDP and see it declining 1.2% and 1.0% (2017/18) on Brexit, BoE lowering rates 50 bps before yearend. EZ Sentiment Index was lowest since Jan 2015, UK June Constructions PMI was horrible and corporate tax rate can do to 15% from 20%. All in all more UK is slowing down, more QE we can see. After Boris Johnson, Nigel Farage was the second key Brexit figure leaving the mess he had created to be cleaned up by someone else. I love politicians…

Tuesday – after RBA market sees further easing already in Aug (55% probability); ECB – no need for rate cuts at the moment & bank sector needs consolidation; EZ June Services PMI better, UK’s worse; BoE report – Brexit risks crystallizing, to provide substantial FX liquidity and to support jobs and growth. US Durables and Factory orders lower than expected and Dudley (Fed) pointing to patience with hikes due to low inflation and global uncertainty. Fed stays data dependent and US economy doing OK on average according to him.

Wednesday – Ireland, Spain the highest growth in EU; Greece may return to bond market next year; CH government proposed automatic tax exchange; GE FinMin Schauble on Deutsche Borse/LSE merger – must follow the rules, location of HQ key to approval; US Trade Balance worse, Final Markit Services PMI better, ISM Non-Manufacturing PMI better – proving growing confidence in US economy, will reflect good in Q2 GDP number.

Thursday – UK Industrial & Manufacturing production declined less than expected, ECB Minutes – Brexit risks, inflation conditions weak, not important which assets are purchased under QE, recovery proceeding as expected, drive by domestic demand. US ADP Employment Change and Initial Jobless Claims better, EU – Spain/Portugal failed in reducing budget deficits, may face sanctions.
 
Friday – US NFPs – headline 287k vs 180k exp, Unempl. rate 4.9% vs 4.8% exp, Average hourly earnings 0.1% vs 0.2% exp M/M, 2.6% vs 2.7% exp Y/Y, Participation rate 62.7% vs 62.6% exp. Overall very strong report that put the September rate hike again on the table but recall the above comments from Dudley (Tuesday). The negative was the 11k revision down of previous number from 38k to 27k, what brings the May/June reports at 157k each, thus Q2 average moves to 147k vs 196k in Q1.

Goldman Sachs see markets underpricing the likelihood of Fed hiking the rate at this point and we should see the 2/3 probability or rate hike by yearend.


Upcoming Week Outlook

Sunday were held General elections in Japan where Abe`s Liberal Democratic Party have won a simple majority and will probably able to form a super majority coalition. As the Japanese ultra-easy monetary policy didn`t bring the desired boost to the economy, the government is expected to introduce a stimulus package after the election that could exceed 10 trillion yen. Despite this seems to be partially in-line with the recommendations of the world` s central banks to activate fiscal policies the success is not granted. If the government goes for big infrastructural projects only the positive effects will be short-lived without the tough structural reforms so needed for the economy. The Chinese inflation data released on Sunday were in-line with the expectations.

US earnings season will bring some interesting names during too including some big banks. These earnings can serve as leading indicators on US economy as banks are the centre of the economies financial bloodstream.

Monday –EuroGroup meetings can bring some volatility if info regarding Brexit released. Ester George, (hawkish voting member of FOMC in 2016) will speak about the US economy at the Mid-America Labor Market Conference in Missouri, key Q if there will be any hike this year… The boring start to the week however may offer some healthy short term trends, in the aftermath of the Japanese elections, most likely positive effects on the stock market. For CAD traders the key Q is if there is a housing bubble or not. Housing starts will be released at GMT 12:15 PM may give a hint.

Tuesday – Pound traders should be on the guard during the second day of the week as Inflation hearings will take place in London. Carney and some MPC members will testify before Parliament's Treasury Committee on economy and inflation outlook and while there is no timeline, comments on BOE planned easing can create market volatility. Later on Tuesday BOE Quarterly Bulletin will be released at GMT 11:00 AM and US JOLTS at GMT 02:00 PM. The later will be watched due to the surge in NFP numbers last Friday. Traders will be likely looking for what`s behind the improvement.
Wednesday – We will start the day with the Chinese Trade Balance before European session, no exact time yet. Bank of Canada will announce overnight rate at GMT 02:00 PM, news conference is held at GMT 03:15 PM. Between them the US crude inventories may create volatility in CAD crosses due to high dependence of the country from oil industry. No rate change is expected but one shouldn`t forget  

Thursday – Malcolm Turnbull`s narrow win in the long Australian elections raises the question how stable will be the new government. Some rating agencies already declared that strong government is needed to keep AAA rating for the country as only this will allow to proceed with the necessary structural reforms which will be painful for the nation. Therefore, the Employment data at GMT 01:30 AM will be watched closely by traders and analysts. The trend in Unemployment rate is to the downside and even there is expected an uptick, this will not change the overall trend. Turnbull promised in his campaign he will seek change in the country`s dependence on mining industry but didn`t specify how he want to do that.
The event of the day will be however the BOE rate decision and Monetary Policy Statement GMT 11:00 AM, where the expectations are mixed from 25 bps cut to no change. But we can agree on that if there is a cut it shouldn`t be more than 25 bps. We thing it would be too soon for the BoE to cut the rates. The pound is weak this itself will boost the economy and MPC may wait with any major stimulus until the implications of the Brexit vote on the UK economy will be clearer. Later the day there will be producer`s inflation and unemployment claims from US, both are expected to worse compared to the last release.

Friday – China GDP will be in focus and it`s expected that the slowing trend of growth will materialize in 6.6% growth rate. As China is the second biggest economy in the world if the slowing pace of growth is confirmed, this will have broad implications on the global economy also to the decisions of central banks (especially Fed) in the coming months. 
Later the day Carney will have a speech in Toronto regarding climate change and economy, we expect some more hints on how they will deal with the Brexit case. Later a bunch of US data is expected, foremost the US inflation and retail sales data may bring some the volatility, no changes are expected except Core Retail Sales. The trend in total vehicle sales turned down this year. As this could be taken for a leading indicator to US consumer confidence than there are more clouds on the horizon as Fed is considering another rate hike this year. The University of Michigan consumer sentiment index at GMT 02:00 PM will be important for the same reason – are the consumers confident enough the spend more money and boost the inflation…?


Event Risk Calendar





 DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading       teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed   as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from       action where despite this disclaimer someone would consider this  material  as an investment advice. 




Tuesday, 5 July 2016

Theresa May the winner of 1st round of vote to replace Cameron

Theresa May the winner of 1st round of vote to replace Cameron as a Conservative Party leader,
and ...looks like a neutral candidate who doesn't want to trigger Article 50 until next year will be in.



Thursday, 30 June 2016

Boris Johnson is off the race for Conservative party leadership ( UPDATED 2 )



UPDATE 2 ( 04.07.2016 ):

The UK politics meltdown continues with resignation of Nigel Farage who was a very strong advocate of Leave camp.

11:19 GMT
UPDATE:

Theresa May and Michael Gove being two candidates to replace David Cameron.

Boris Johnson promised a lot during the Leave campaign and likely wouldn't be able to deliver on his promises as a Prime Minister.

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Boris Johnson is off the race for Conservative party leadership.
Leaving Theresa May a chance as she is more neutral candidate.
Makes sense...


Boris was very strong supporter of Leave camp and now pulled out.

GBP is trying up across the board...