Forex-novosti i prognoze od 28-11-2019

The European Commission (EC) said on Thursday its flash estimate showed the consumer confidence indicator for the Eurozone increased by 0.4 points to -7.2 in November from the previous month.

Economists had expected the index to improve to -7.2.

Considering the European Union (EU) as a whole, consumer sentiment rose by 0.6 points to -6.7.

Given these gains, both indicators remain on a broadly horizontal trajectory well above their respective long-term averages of -10.6 (Eurozone) and -9.9 (EU), the report said.

The European Commission (EC) reported on Thursday the Eurozone’s Business Climate Indicator (BCI) edged down 0.03 points to -0.23 in November from a revised -0.20 in October (originally -0.19). Economists had forecast the indicator to increase to -0.14.

While managers’ assessments of overall order books and, in particular, past production deteriorated, their production expectations and assessments of the stocks of finished products improved, the report said. At the same time, managers’ assessment of their export order books remained broadly stable.

The European Commission (EC) announced on Thursday the Eurozone’s Economic Sentiment Indicator (ESI) rose by 0.5 points to 101.3 in November from 100.8 in October. Economists had forecast the measure would increase to 101.

The improvement in euro area sentiment resulted from increased confidence among consumers (+0.4 to -7.2 in November) and retail trade managers (+0.7 to -0.2), while confidence remained broadly unchanged in industry (+0.3 to -9.2 in November vs. economists’ forecast of -9.1) and services (+0.3 to 9.3). Only confidence in construction worsened sharply (-1.3 to 3.1 in November).

Amongst the largest euro-area economies, the ESI increased in Spain (+0.7), France and Germany (both by +0.4), while it remained virtually unchanged in Italy (-0.1) and worsened in the Netherlands (−1.0).

The report also revealed that employment plans worsened somewhat in construction and industry while remaining broadly unchanged in services and retail trade. Meanwhile, consumers’ unemployment expectations improved a little. Selling price expectations declined marginally in industry and services while remaining broadly stable in retail trade and edging up in construction. Consumer price expectations dropped in November.

Sean Callow, the Senior Currency Strategist at Westpac, offered his view on the upcoming RBA monetary policy meeting, scheduled next Tuesday.

• “RBA Governor Lowe’s speech on unconventional monetary did not disappoint. He reiterated this month’s broadly upbeat outlook for the Australian economy but clarified how the RBA would approach unconventional monetary policy, should it be needed.
• We have already heard on multiple occasions that “negative interest rates in Australia are extraordinarily unlikely.” But there was plenty new in the discussion of QE. First was clarification that “QE becomes an option to be considered at a cash rate of 0.25 percent, but not before that.” Westpac’s estimate of the effective lower bound had been 0.5%, so we take this on board.
• The composition of any RBA QE program was also very notable – the Bank has “no appetite to undertake outright purchases of private sector assets.” The RBA has a philosophical problem with such public involvement in private markets which e.g. the BoJ, ECB, BoE and SNB do not. So now we know.
• In response to the speech, markets priced in greater risk of further RBA easing, albeit not for next week. Governor Lowe trod the line between keeping an easing bias to help prevent A$ appreciation and their growth forecasts which mean that QE is “not on our agenda at this point in time.
• Westpac remains more pessimistic than the RBA about the prospects for Australian growth and unemployment and now expects an additional cash rate cut, to 0.25% in June 2020 and commencement of QE in H2 2020.
• Governor Lowe’s balanced outlook fits the modest response on AUD/USD, which is barely lower over the week. As the chart shows, markets imply the quietest year ahead for the Aussie since mid-2007. It’s fair to say that that wager did not pan out.”

Karen Jones, the Team Head FICC Technical Analysis Research at Commerzbank, thinks that GBP/USD keeps the positive view between 1.2768 and 1.3013.

• “GBP/USD charted an outside day to the topside, Elliot wave counts have turned positive and it is bid in its range between its October high at 1.3013 and the current November low at 1.2768.
• Directly above 1.3013, we have the 200-week ma at 1.3109, the 50% retracement of the move down from 2018 at 1.3167, the 5-year downtrend at 1.3170 and the 1.3187 May high and this is tough resistance and we look for the market to fail here.
• Failure at 1.2768 would probably see a slide to the 200-day ma at 1.2701. This guards the 1.2582 September high. Below 1.2582 lies the 1.2511 uptrend line. It guards 1.2196/94."

The ECB’s report on the monetary developments in the euro area revealed that the annual growth rate of broad monetary aggregate M3 accelerated to 5.6 percent in October from unrevised 5.5 percent in September. Economists had forecast the M3 annual growth rate to stay at 5.5 percent in October.

Among the components of M3, the annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, climbed to 8.4 percent in October from 7.9 percent in the previous month. In the meantime, the annual growth rate of short-term deposits other than overnight deposits (M2-M1) dropped to 0.6 percent in October from 1.2 percent in the previous month, and the annual growth rate of marketable instruments (M3-M2) was -2.4 percent, down from -1.1 percent in September.

The report also revealed that the annual growth rate of adjusted loans to households increased to 3.5 percent in October from 3.4 percent September, matching economists’ forecast, while the annual growth rate of adjusted loans to non-financial corporations accelerated to 3.8 percent from 3.6 percent in the previous month.

FX Strategists at UOB Group believe that EUR/USD could still head towards the 1.0965 level in the next weeks.

• "24-hour view: Instead of ‘trading sideways’, EUR dipped to an overnight 1.0990 before recovering slightly. Downward momentum has picked up, albeit not by much. From here, EUR could dip below 1.0990 but the strong support at 1.0965 is likely out of reach for today. Resistance is at 1.1025 but only a move above 1.1040 would indicate the current mild downward pressure has eased.
• Next 1-3 weeks: There is not much to add to the update from Tuesday (26 Nov, spot at 1.1015) as EUR dipped to 1.1090 yesterday (27 Nov) before recovering slightly. The price action is in line with our view that EUR is ‘expected to trade with a downward bias towards 1.0965’. As highlighted, the month-to-date low at 1.10987 is expected to provide decent support. Downward momentum has improved modestly and 1.0965 could come into the picture within the next few days. On the upside, a breach of 1.1055 (‘strong resistance’ level previously at 1.1065) would indicate the current downward pressure has eased."

• Says Hong Kong bill to be met with strong countermeasures
• No one should underestimate China's determination

• Says there is no additional information on the unreliable list
• Declines to comment on the Hong Kong bill

CIBC Research discusses USD/CAD outlook and expects a move towards 1.31 into year-end before rallying through 1.38 next year. 

"We expect USDCAD to remain rangebound in the near-term. Looking into Q1 2020, however, we expect there to be sufficient evidence of waning domestic fundamentals on the back of the global deceleration to warrant a 25 bp ease by the Bank. As that’s not currently being priced in by markets, the move should see the C$ weaken modestly, with USDCAD hovering around 1.33 and 1.34 in Q1 and Q2 of next year, respectively. From a longer-term perspective, a weaker loonie is needed to support Canada’s current account and trade balances. A depreciation in the C$ versus the US$ will help Canadian export competitiveness versus other major players, especially within the US, where it’s lost ground in recent years. Moreover, boosting exports will be increasingly important as household spending remains sluggish. This should see the currency pair hover around 1.38 in Q4 2020, and approach 1.40 into 2021," CIBC adds. 

Chinese President Xi Jinping has had a “horrible couple weeks” politically — and he’s not likely to sign a “phase one” trade deal with U.S. President Donald Trump without any roll back in existing tariffs, one expert said.

“China has politics the same as U.S. has politics. Trump has to play to his base, Xi has to worry about his internal politics, he has to worry about his standing within the party,” Steve Okun, senior advisor at consultancy McLarty Associates, told CNBC.

Any trade deal between the two countries “needs to be a win-win,” Okun said, and delaying new tariffs may not work.

In light of political challenges facing Xi such as Hong Kong, Okun said he can’t see the Chinese leader signing an agreement “in which he gets nothing other than the postponement of new tariffs.”

In addition to the stalemate in the U.S.-China trade negotiations, the protests in Hong Kong could be another major challenge to Xi’s authoritative rule, according to political commentators and media reports.

Credit Suisse discusses EUR/CHF technical outlook and maintains a slightly lower bias against a close above 1.1011/17.

"With the downtrend from April still just capping our bias stays slightly lower with support seen at 1.0980 initially, then 1.0967/62, below which can see a test of what we view as more important support at 1.0955/47 – the 38.2% retracement of the November raly and price support. A break below here is needed to suggest a more important top is indeed in place. A close above the recent high and 78.6% retracement of the October/November fall at 1.1011/17 can see a conclusive break of the downtrend to clear the way for strength back to 1.1035/40, ahead of a fresh test of the upper end of its trading range at 1.1060/70 – the late July and October highs and 38.2% retracement of the April/September fall," CS adds.

European countries with fiscal space, such as Germany, should use it quickly to help underpin growth in the region, French central bank Governor Francois Villeroy de Galhau said on Thursday.

Countries with high public debt should make their public finances more growth-friendly, Villeroy, who also sits on the European Central Bank's rate-setting Governing Council, told.

"We are witnessing a significant slowdown in global trade due to the escalation in trade disputes," he said. "The effects of the slowdown are very acute in the euro area's biggest economy, Germany, which is very much exposed to global trade."

Analysts at Danske Bank offered their take on the latest poll, which indicated a big win for the UK Prime Minister Boris Johnson's Conservative Party at the upcoming general election on December 12.

“Late last night the long-awaited results from YouGov's so-called MRP model for the upcoming UK general election were published. We were looking forward to the results, as the model was the only one correctly predicting that Theresa May would lose her absolute majority in 2017. The model is different from traditional opinion polls/seat projections, as it makes its predictions based on a bottom-up approach rather than top-down. YouGov's MRP model predicts the Conservatives will win 359 seats (versus 211 for Labour, 13 for LibDems and 43 for SNP), which would mean a big majority (326 needed for a majority and in practice the number is actually smaller). As we do not have much else to rely on, a Conservative majority is now our base case (we did not have a base case until now). If it turns out to be right, PM Boris Johnson will be able to pass his Brexit deal before Christmas without too many problems, which is why the GBP has rallied. PM Boris Johnson pledged again earlier this week that he will not extend the transition period, which is set to end by 31 December 2020 (may be extended by 1-2 years if agreed before 1 July). This means there is a clear risk of a no-deal Brexit by this date if the UK and EU27 are unable to strike a permanent agreement.”

According to the report from Federal Statistical Office, Switzerland’s GDP rose by 0.4% in the 3rd quarter of 2019, after increasing by 0.3% in the previous quarter. Economists had expected a 0.2% increase.

Exports of chemical and pharmaceutical products and energy were key contributing factors. In other areas, the impact of the subdued international environment was felt more strongly. The economic slowdown is being borne out on the whole.

In manufacturing (+1.2%), the growth from the previous quarters continued thanks to the dynamic development of the chemical and pharmaceutical segment, which saw a significant increase in value added and exports.

Domestic demand saw moderate growth in the 3rd quarter. Private consumption (+0.2%) lost a little momentum compared to previous quarters, while government consumption (+0.5%) gained impetus following a weak quarter. 

Momentum in the service industry was also slowed down by the cautious environment in general. Most service sectors recorded either modest increases or slight drops in value added.

According to figures released by the Society of Motor Manufacturers and Traders (SMMT), UK car manufacturing output fell -4.0% in October, with 134,752 units rolling off production lines. This was 5,622 fewer models than in October last year. British car production has now fallen in 16 of the last 17 months, with August the outlier due to ‘no deal’ Brexit contingency shutdowns earlier in the year artificially boosting output that month.

In October 2019, production for the home market declined -10.7% as consumer and business confidence continued to wane, while overseas orders were down -2.6%, a result of soft demand in some key markets. Model changeovers also played a part in the downturn, while in the year to date car production is down -14.4% to 1,123,926 units, with the majority, 80.5%, heading abroad to destinations around the world. These include the EU, US, China and Japan.

Mike Hawes, SMMT Chief Executive, said, "Yet another month of falling car production makes these extremely worrying times for the sector."

"This sector is export led, already shipping cars to more than 160 countries, and in a period of unprecedented change a close trading relationship with the EU and preferential trading with all these other markets will be essential to keep automotive in Britain," Hawes added.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1152 (4911)

$1.1104 (3382)

$1.1062 (2392)

Price at time of writing this review: $1.1007

Support levels (open interest**, contracts):

$1.0984 (4094)

$1.0945 (3038)

$1.0898 (2456)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date December, 6 is 104672 contracts (according to data from November, 27) with the maximum number of contracts with strike price $1,1200 (5600);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3070 (1426)

$1.3033 (5638)

$1.3002 (1565)

Price at time of writing this review: $1.2942

Support levels (open interest**, contracts):

$1.2845 (1247)

$1.2779 (2131)

$1.2739 (985)

Comments:

- Overall open interest on the CALL options with the expiration date December, 6 is 32307 contracts, with the maximum number of contracts with strike price $1,3000 (5638);

- Overall open interest on the PUT options with the expiration date December, 6 is 33593 contracts, with the maximum number of contracts with strike price $1,2200 (2280);

- The ratio of PUT/CALL was 1.04 versus 1.03 from the previous trading day according to data from November, 27

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.