Tin tức thì trường

The Federal Reserve Bank of Dallas reported its general business activity index for manufacturing in Texas rose to -6.1 in June from an unrevised -49.2 in May.

According to the report, the production index, a key measure of state manufacturing conditions, surged from -28.0 in May to 13.6 in June, indicating moderate expansion in output following three months of record or near-record declines. The new orders index climbed 34 points to 2.9 in June, recording its first positive reading in four months, with nearly a third of manufacturers noting an increase in orders. The capacity utilization and shipments indexes also returned to positive territory. Meanwhile, the employment index rose 10 points to -1.5, but remained negative. Elsewhere, perceptions of broader business conditions were mixed in June. The general business activity index surged 43 points but stayed negative at -6.1. The index measuring uncertainty regarding companies’ outlooks retreated notably again to 9.1, its lowest reading since January.

FXStreet notes that, on a one-month view, EUR/GBP has crept up by 1.8% and broken well above the psychologically important 0.90 level. Negative internal developments such as the prospect of a negative interest rate or  a current account deficit can lift the pair to 0.92, per Rabobank.

“The fact that the pound is the worst performing G10 currency on a one-month view highlights the extent of negative domestic pressures.  We expect EUR/GBP to head on towards 0.92 on a one-to-three month view”

“The combination of negative rates and a current account deficit could leave the pound particularly exposed to downside pressure. Although it is not our central view, this scenario could push EUR/GBP back to the 1.00 area.”

The National Association of Realtors (NAR) announced on Monday its seasonally adjusted pending home sales index (PHSI) surged 44.3 percent m-o-m to 99.6 in May, after an unrevised 21.8 percent m-o-m decline in April. This was the highest m-o-m gain in the index since NAR started this series in January 2001.

Economists had expected pending home sales to jump 18.9 percent m-o-m in May.

On y-o-y basis, the index sank 5.1 percent after a 33.8 percent decline in April.

According to the report, all regional indices recorded solid m-o-m gains in May after steep declines in April. The Northeast PHSI climbed 44.4 percent m-o-m to 61.5 in May, although it was still down 33.2 percent from a year ago. In the Midwest, the index surged 37.2 percent m-o-m to 98.8 last month, down 1.4 percent from May 2019. Pending home sales in the South jumped 43.3 percent m-o-m to an index of 125.5 in May, up 1.9 percent from May 2019. The index in the West grew 56.2 percent m-o-m in May to 89.2, down 2.5 percent from a year ago.

“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” noted Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

• Federal finance minister is convinced ECB Council ... has shown plausible proportionality with regard to PSPP
• German finance ministry has had numerous talks with Bundesbank, ECB over last weeks after German court ruling on bond purchasing programme
• Finance ministry examined confidential ECB documents
• Ministry is planning to send ECB documents to German constitutional court

FXStreet notes that gold trades around the $1770 region and, in the opinion of strategists at TD Securities, it could surpass the $1800 level as inflation-hedge assets increase its popularity.

“Gold is on the edge of a breakout. Price action continues to lend strength to our view that gold's role is shifting from a safe-haven asset to an inflation-hedge product.” 

“The entire maturity spectrum of inflation breakevens are still priced below policy objectives. In this context, declining real rates should imminently support gold prices into the $1800s.” 

“The world-war era fiscal and central bank stimulus, the change in the central bank template that will incorporate 'symmetric inflation targets' and unwinding globalization, suggest that inflation-hedge assets may grow in popularity.”

Germany's Federal Statistical Office (Destatis) reported on Monday the country’s consumer price index (CPI) is expected to increase 0.6 m-o-m in June after declining 0.1 percent m-o-m in the previous month.

On the y-o-y basis, Germany’s inflation rate is seen to rise 0.9 percent this month, following a 0.6 percent advance in May.

Economists had predicted inflation would increase 0.3 percent m-o-m and 0.6 percent y-o-y in June.

According to the report, food price growth decelerated to 4.4 percent y-o-y in June from 4.5 percent y-o-y in May, while energy prices fell 6.2 percent y-o-y after an 8.5 percent y-o-y drop in the previous month. Services costs rose 1.4 percent y-o-y in June, following a 1.3 percent y-o-y gain as in May.

Meanwhile, the harmonized index of consumer prices for Germany (HICP), which is calculated for European purposes, is expected to surge 0.7 percent m-o-m and 0.8 percent y-o-y.

GBP fell against most major currencies in the European session on Monday as investors weighed the UK government's infrastructure spending plans, coronavirus resurgence concerns and Brexit risks.

Reuters reported that British Prime Minister (PM) Boris Johnson said he planned to double down on his plans to increase public investment and a return to austerity would be a mistake as the country tries to recover from the coronavirus hit to the economy. Johnson also told Times Radio on Monday that he wanted a "Rooseveltian" approach to the economy, a reference to former U.S. President Franklin D. Roosevelt whose "New Deal" programme helped the United States recover from the Great Depression.

Meanwhile, coronavirus resurgence concerns and risks of a no-deal Brexit capped the gains.

Last week, the UK's PM Boris Johnson set out a significant easing of the lockdown in England, announcing that pubs, restaurants and hairdressers would be able to reopen from July 4. Market participants fear that the UK, like some other major economies, can face  a spike in coronavirus cases amid further relaxing of restrictions. 

Little progress has been made in the UK-EU talks on their post-Brexit trade relations. European Commission's spokesman said today that the EU's "overall message this week but also for the coming weeks and coming months is to intensify our negotiations in order to make progress in order to get a deal". He also stressed that "Our goal is to make progress and to reach a deal." On Saturday, the UK's PM Johnson told his Polish counterpart Mateusz Morawiecki that Britain would be ready to sever ties with the EU "on Australia terms" if no deal on its future relationship with the bloc is reached.

FXStreet notes that the S&P 500 has finally closed below the 3021 200-day average with OnBalanceVolume now also turning lower and close to completing a top. Next support is seen at the June low at 2966, then the 63-day average at 2917/14, per Credit Suisse.

“S&P 500 has finally closed below its 200-day average and on a weekly basis, currently seen placed at 3021, with OnBalanceVolume now also turning lower and on the cusp of completing a top. With a bearish ‘island top’ already in place, as well as daily MACD momentum, having turned lower we continue to look for a more concerted correction lower to emerge.” 

“Support is seen next at 2987 then more importantly at the June low at 2966. Beneath here can see a further price top complete to further reinforce the likelihood for further weakness with support seen next at the 63-day average and top of the price gap from mi-May at 2917/14. Whilst we would look for this to hold at first, our ‘ideal’ roadmap is for an eventual test of the 38.2% retracement of the entire rally from March at 2835.” 

“Near-term, resistance is seen at the 200-day average at 3020/24 and whilst below here the immediate risk is seen lower. Above can see resistance next at 3039/46, then 3082/86, which we look to now ideally cap.”

• Our goal is to make progress and to reach a deal

FXStreet reports that strategists at UOB Group’s Quarterly Global Outlook suggested that the Fed is seen keeping the accommodative stance around current levels of interest rates until 2022, while the door remains open to a probable implementation of ‘yield curve control’ (YCC).

“The Fed has demonstrated it will do whatever it takes, beyond interest rate cuts and asset-buying, to restore financial market stability, smooth out US dollar funding conditions and safeguard the economy. The Fed’s decisive actions are seen as effective to prevent the financial market from becoming a compounding factor to worsen the COVID-19 impact to the real economy and US households.”

“Going forward, as FOMC Chair Powell pledged, we expect the Fed will do more especially when the 'unprecedented' 2Q comes to pass. On 15 Jun, Fed’s Secondary Market Corporate Credit Facility (SMCCF) started to buy individual corporate bonds (instead of just ETFs) and it also launched its US$600bn Main Street Lending Program administered by Boston Fed. We expect the Fed to keep its near-zero percent policy rate until at least 2022. With the Fed now engaging in discussion on yield curve control (even as its effectiveness 'remains an open question'), we believe the next Fed move will be yield curve control (YCC) so as to make monetary policy even more accommodative, to be announced possibly by 15/16 Sep 2020 FOMC. That said, we still hold the view the Fed will not want to push rates beyond zero, into negative territory, a view affirmed by the dot plot.”

FXStreet notes that the US increased its oil production for the first time in 14 weeks and as the amount of oil stored is also high, and strategists at OCBC Bank expect oil prices to remain depressed in the next weeks. 

“Crude oil production in the US rose from 10.5mbpd in the week of 12 June to 11mbpd in the week of 19 June, in a sign that prices are now healthy enough to encourage the return of marginal producers. Data from Baker Hughes also showed that the crude oil rotary rig count in the US only decreased by one to 188 in the week of 26 June, suggesting that a bottom is high likely around the corner.” 

“The market appears to be balancing itself, with the high prices encouraging a supply comeback in the US. This is in addition to the high amount of oil stock around the world, notably in the US.” 

“We continue to maintain our view that oil may have reached its peak in the short-run and prices are likely to consolidate over the next few weeks.”

Reuters reports that credit rating agency S&P Global Ratings on Monday affirmed China's sovereign credit ratings at 'A+/A-1' with a stable outlook, amid the ongoing coronavirus outbreak.

S&P said China is likely to maintain above-average economic growth relative to other middle-income economies in the next few years.

However, it said that the growth is likely to come under pressure from the coronavirus outbreak, efforts to restructure the Chinese economy and U.S.-China tensions.

The agency noted that it does not expect U.S.-China relations to normalize in the foreseeable future.

"We expect per capita real GDP growth to average 5.5% annually in 2021-2023, as the economy recovers from the COVID-19 shock", S&P said on Monday.

According to the report from European Commission, in June 2020, the recovery of the Economic Sentiment Indicator (ESI), which had tentatively started in May, intensified. Registering the sharpest month on-month increase on record in the euro area (+8.2 points up to 75.7) and the EU (+8.1 points up to 74.8), the ESI in both regions has so far recovered some 30% of the combinedlosses of March and April. Also the Employment Expectations Indicator (EEI) improved sharply for the second month in a row (by 12.7 points to 82.8 in the euro area and by 11.9 points to 82.7 in the EU).

Industry confidence continued last month’s forceful recovery (+5.8), driven by another hefty improvement in production expectations, which are now almost back to their February level. After its record slide over the last three months, services confidence rebounded (+8.0), thanks to a second month of rallying demand expectations, which were, this time around, coupled with a comparatively small deterioration of past demand and assessments of the past business situation edging up.  The latter hints at the expected recovery starting to gain traction. Consumer confidence (+4.1) continued last month’s recovery on the back of households’ much improved expectations in respect of their financial situation, their intentions to make major purchases and, particularly, the general economic situation. Same as in May, households’ assessments of their past financial situation deteriorated, but on a much smaller scale. Retail trade confidence bounced back (+10.4) from rock bottom, thanks to managers’ drastically improved business expectations and views on the adequacy of the volume of stocks, as well as, to a lesser extent, more benign appraisals of the present business situation. Construction confidence rebounded (+4.9), as managers’ employment expectations recovered markedly and their assessments of the level of order

books improved moderately. Finally, financial services confidence (not included in the ESI) booked sharp increases, reverting some 40% of the confidence crunch experienced between February and April. The surge was driven by all components of the indicator, i.e. assessments of the past business situation and past demand, as well as managers' demand expectations

According to the report from Bank of England, UK households and businesses continued to increase their deposits in banks and building societies in May. Sterling money held by households, non-financial businesses, and financial businesses rose by £52.0 billion, following large increases in March and April.

Corporates borrowed an extra £7.4 billion from banks in May, as well as raising £3.5 billion from financial markets. The borrowing from banks was more than accounted for by a sharp increase in borrowing by SMEs of £18.2 billion, with large businesses repaying £12.9 billion of loans.

The cost of PNFC’s new borrowing fell in May, with effective rates falling by 1.2 percentage points to 1.05%. Within this, rates for SMEs fell by more, by 1.5 percentage points to 0.98%.

Households repaid more loans from banks than they took out. A £4.6 billion net repayment of consumer credit more than offset a small increase in mortgage borrowing. Approvals for mortgages for house purchase fell further in May to 9,300.

The interest rate paid by households on new secured borrowing was little changed in May, while the cost of new consumer credit fell to 5.10%, nearly 2 percentage points lower than at the start of 2020.

Reuters reports that British Prime Minister Boris Johnson said he planned to double down on his plans to increase public investment and a return to austerity would be a mistake as the country tries to recover from the coronavirus hit to the economy.

Johnson told Times Radio on Monday that he wanted a "Rooseveltian" approach to the economy, a reference to former U.S. President Franklin D. Roosevelt whose "New Deal" programme helped the United States recover from the Great Depression.

FXStreet reports that since the start of the year, the US dollar has appreciated by roughly 1%, continuing a near-decade long trend that was only briefly interrupted in 2017. As USD is influenced by two broad forces, the balance of payment flows and financial flows, economists at JP Morgan expect the greenback to weaken in the next years but due to current risk-environment, the downward is not to unfold yet.

“The US maintains a very large current account deficit and has done so with few interruptions since the late 1970s. The increased presence of globalization, coupled with enormous US demand for foreign products will likely continue this trend. This large deficit floods the global marketplace with US dollars, putting downward pressure on the currency as supply balloons.”

“The relative attractiveness of U.S. financial assets is starting to wane. Interest rate differentials are narrowing as a result of COVID-19, with the Federal Reserve (Fed) intent on keeping the Federal funds rate at its lower bound for at least two more years; and the cyclical composition of many international economies and equity markets should mean that relative economic growth and equity market performance will be stronger overseas during the global recovery. This combination should pull foreign capital out of US assets, putting additional downward pressure on the dollar.”

“Still, investors should remember that these are large-scale structural forces that typically take years to fully manifest. We continue to believe that over the next 10 to 15 years, the dollar will weaken; but the exact catalyst for this trajectory change is elusive.”

“In the short-term, it appears that a third force – sentiment – is mightier than other longer-term drivers. Periods of relative global calm, like in 2017, allow for greater risk tolerance, pushing money into riskier assets like those overseas. This year’s bout of dollar strength, particularly in the first quarter, was a reflection of deteriorating sentiment thanks to the rapid and uncertain spread of COVID-19. Unfortunately, with trade tensions between the US and China re-escalating, signs of increased strain in the Korean peninsula and, of course, the fundamental COVID-related uncertainty in a pre-vaccine world, this does not seem likely in the near-term.”

Reuters reports that a substantial part of the European Union’s package of measures to help the economy recover from the coronavirus pandemic must consist of grants rather than loans, the International Monetary Fund’s chief economist told Der Spiegel.

“Otherwise it will not promote economic recovery,” Gita Gopinath was quoted as saying by the German magazine on Monday.

EU leaders agreed in April to build an emergency fund to help the 27-nation bloc rebound from the pandemic, but the final details have yet to be agreed.

FXStreet reports that Terence Wu, an FX strategist at OCBC Bank, expects the pair to gain some ground today as the floor at 1.12 is held though the bias is skewed to the downside and a break below 1.1160 is set to accelerate the decline.  

“Near-term bias is still skewed to the downside for the EUR/USD, but the ability to hold the 1.1200 floor on Friday should keep the pair on a consolidative, sideways trajectory.” 

“Further downside momentum should only pick up if the pair can breach 1.1160.”

“Slight bias for the pair to lift off the 1.1200 floor for today.”

The US dollar fell against most of the world's major currencies. Experts, however, expect that the US currency will strengthen against the background of an increase in the incidence of COVID-19 in the US and other countries.

The number of confirmed cases of coronavirus infection in the world has exceeded 10 million, the number of deaths - 500 thousand, according to data from Johns Hopkins University.

American States that are experiencing an increase in the incidence of the disease are postponing the planned lifting of restrictions imposed earlier to curb the spread of the coronavirus. Some cities may be forced to restore restrictions that have already been lifted or introduce new lockdowns.

The more stringent and widespread the new restrictions, the slower the US economy will recover and the higher the demand for safe haven assets, which include the US dollar, analysts say.

Meanwhile, data from China shows an improvement in the country's economic situation. The profit of large industrial enterprises in China in May increased for the first time since November - by 6% - on the background of increasing business production and sales volumes with the gradual lifting of restrictions around the world.

The ICE index, which tracks the dynamics of the us dollar against six currencies (Euro, Swiss franc, yen, canadian dollar, pound sterling and Swedish Krona), fell by 0.25% in trading.

FXStreet reports that USD/CNH is seen keeping the ongoing side-lined mood, likely between 7.04 and 7.10, according to FX Strategists at UOB Group.

24-hour view: “In line with our expectation, USD traded sideways last Friday. That said, the registered range of 7.0760/7.0900 is narrower than our expected range of 7.0700/7.0900. Momentum indicators are still mostly neutral and USD could continue to consolidate for now. Expected range for today, 7.0710/7.0900.”

Next 1-3 weeks: “USD traded within relatively narrow range the last couple of days. For now, there is no change to our latest narrative from last Thursday (25 Jun, spot at 7.0760). As highlighted, USD is expected to trade sideways, likely within a broad 7.0400/7.1000 range for now.”

Reuters reports that the European Central Bank will need to keep monetary policy loose until its inflation target is clearly in sight, European Central Bank policymaker Francois Villeroy de Galhau said on Sunday in an interview with German newspaper Handelsblatt.

Inflation in Europe's single currency bloc is at its weakest in four years, standing at 0.1% in May and forecast to average 0.3% in 2020, far below the ECB's target of close to but less than 2%.

"We will need a very loose monetary policy until that objective is in plain sight," Villeroy said in the interview.

Villeroy, who is also the governor of France's central bank, said the coronavirus crisis was increasing the deflationary risks weighing on the euro zones' economies, mainly because demand was recovering more slowly than supply.

He said it was out of the question to "give in to fiscal domination" and distort monetary policy so as to lighten the burden of public debt.

But he said the inflation objective could be clarified during a strategic review on being symmetric, meaning an equal tolerance of undershooting the target as of overshooting it.

Villeroy said the review would bring more credibility to the target.

He also expressed optimism a solution would be found following a ruling by Germany's Constitutional Court over ECB bond purchases that sent shockwaves around Europe.

In its May ruling, the court gave the ECB three months to justify bond purchases under its stimulus programme or lose the Bundesbank as a participant.

"There is now hope that a solution to respond to Karlsruhe is close," Villeroy said, referring to the top court.

Asked if the ECB should buy junk debt as part of its bond purchases, Villeroy said: "I exclude that we buy bonds that were 'junk' before the crisis."

FXStreet reports that FX Strategists at UOB Group noted USD/JPY should remain side-lined between 106.40 and 107.80 for the time being.

24-hour view: “JPY dipped below the bottom of our expected 106.90/107.40 consolidation range but rebounded quickly after touching 106.78. While upward momentum has not improved by much, there is room for USD to edge higher towards 107.50. For today, the next resistance at 107.80 is unlikely to come into the picture. Support is at 107.00 followed by 106.80.”

Next 1-3 weeks: “The downward pressure in USD that started more than 2 weeks ago (see annotations in chart below) has ended when USD moved above the 107.20 ‘strong resistance’ level yesterday. From here, the outlook for USD is mixed and it could trade between 106.50 and 107.80 for a period.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.1317 (1999)

$1.1285 (1877)

$1.1265 (1174)

Price at time of writing this review: $1.1247

Support levels (open interest**, contracts):

$1.1182 (869)

$1.1143 (1442)

$1.1097 (2366)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 2 is 56683 contracts (according to data from June, 26) with the maximum number of contracts with strike price $1,1100 (2366);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2507 (519)

$1.2466 (695)

$1.2402 (846)

Price at time of writing this review: $1.2377

Support levels (open interest**, contracts):

$1.2296 (824)

$1.2268 (1010)

$1.2231 (1292)

Comments:

- Overall open interest on the CALL options with the expiration date July, 2 is 16050 contracts, with the maximum number of contracts with strike price $1,2800 (1689);

- Overall open interest on the PUT options with the expiration date July, 2 is 18790 contracts, with the maximum number of contracts with strike price $1,2550 (1484);

- The ratio of PUT/CALL was 1.17 versus 1.18 from the previous trading day according to data from June, 26

* - 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.