Parick Ogagbor, Global private traders.

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07/12/2024

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21/12/2021

Forex Today: Risk flips positive in US session, NZD takes top spot
21 December 2021, 22:28

Here is what you need to know for Wednesday, 21 Dec:

The high beta forex space was bid on the day following strong gains in the European equities space that followed through into the US eventually. The antipodeans (AUD+0.61%, NZD +0.84%) and GBP (+0.45%) were performing well throughout early trade and continued to recover from the prior days of supply. The yen and CHF were the worst performers but still managed to end higher vs the greenback.

As for the US dollar, this was only modestly lower against its major trading partners as markets awaited a deluge of US data Wednesday and Thursday before the Friday holiday. The DXY index ended down 0.02% despite the US 10-year yields ending 3.7% higher.

Late in the day, US President Joseph Biden addressed the nation at 2:30 pm ET and detailed further efforts to combat the rise of COVID-19 cases. There were no surprises in the speech as the White House had already suggested that lockdown measures are not being considered at this point. Biden confirmed this and encouraged everyone to get vaccinated as soon as possible.

The relatively light data schedule for Tuesday included the current account deficit for Q3, the Philadelphia Fed's nonmanufacturing index for December and weekly Redbook retail sales.

A decline in the Philadelphia Fed's Mon-Manufacturing index to 28.3 in December from 46.1 in November highlighted the light data schedule. The other services data already released for December have shown solid growth despite rising COVID-19 cases. The ISM's national reading will be released on Jan. 5.

Meanwhile, the current account deficit widened to $214.77 billion in the third quarter from $198.32 billion in the previous quarter. Redbook reported that US same-store Retail Sales were up 16.4% year-over-year in the week ended Dec. 18, larger than a 16% gain in the prior week.

The data schedule will get busier on Wednesday and Thursday before the holiday on Friday. Looking ahead, Gross Domestic Product growth, Consumer Confidence and Existing Home Sales reports will be released on Wednesday. Personal income and spending, Initial Jobless Claims and New Home Sales releases are scheduled for Thursday.

In US equities, at 20.00GMT, the Dow Jones Industrial Average rose 1.5% to 35,505, the S&P 500 increased 1.67% to 4,645, and the Nasdaq Composite was up 2.22% to 15,975.

In the crypto space, upbeat risk drove investors to seek riskier assets whereby the bonds were sold-off. Subsequently, Bitcoin climbed above the 10-DMA, piercing the trend line of the November peak and adding 3.7% on the day to a high of $49,353.49.

However, the monthly chart leans bearish and the RSI drop implies that there is still downside momentum. With that being said, bulls will target a break above $53,000/$54,000 where the 100-DMA is located that will give longs greater control.

Commodities were bid with the CRB index higher by over 2% with US oil, the largest component of the index and as measured by WTI spot ended around 3.2% higher. Copper was 1% higher

20/12/2021

US Treasury yields remain pressured, S&P 500 Futures drop half a percent on sour sentiment
20 December 2021, 04:25

•US 10-year Treasury yields seesaw around fortnight low.
•S&P 500 Futures drop 0.60%, Asia-Pacific shares trade mixed.
•PBOC announced rate cut, Omicron fears escalate ahead of holiday season.
•Fed’s Waller renewed rate-hike calls, US Senator Manchin poured cold water on the face of BBB hopes.
Having witnessed a roller-coaster week filled with the central bankers’ actions, global markets stay depressed during early Monday.

While portraying the mood, US 10-year Treasury yields dropped 1.5 basis points (bps) to 1.38%, down for the third consecutive day while S&P 500 Futures drop 0.60% at the latest. Further, Australia’s ASX 200 dropped 0.30% by the press time even as stocks in China traded mixed.

The reason could be linked to the escalating concerns over the covid variant linked to South Africa, namely Omicron, as well as fresh fears of a Fed rate hike in early 2022. Adding to the bearish catalysts is the latest disappointment for the US Democratic Party members after Joe Manchin rejected the push to vote for President Joe Biden’s Build Back Better (BBB) stimulus.

A 52% jump in the UK’s covid cases and fears of fresh covid-linked restrictions during the Christmas celebrations join chatters over a virus-led death of a New Zealand resident who took Pfizer vaccine. Additionally, New York Times said, “Dr. Anthony S. Fauci, the nation’s top infectious disease expert, warned on Sunday that the extraordinarily contagious Omicron variant of the coronavirus was raging worldwide and that it was likely to cause another major surge in the United States, especially among the unvaccinated.”

Elsewhere, US Senator Manchin’s step back rejects odds for any fruitful discussion on the much-awaited US stimulus during 2021 as Democrats needed all the party votes to progress on the BBB. “West Virginia's Joe Manchin appeared to deal a fatal blow to President Joe Biden's signature domestic policy bill, known as Build Back Better, which also aims to expand the social safety net and tackle climate change,” said Reuters.

On the same line were fresh talks over the Fed rate hike in early 2022, triggered on Friday by Fed Board of Governors member Christopher Waller. The policymaker said, per Reuters, “The ‘whole point’ of the Fed's decision to accelerate the pace of its QE taper was to make the March Fed meeting ‘live’ for a first rate-hike.”

Against this backdrop, the US Dollar Index (DXY) struggles around 96.65, after posting the highest daily close in 2021 the previous day. The risk-aversion wave favors gold prices but weighs on the oil at the latest.

It’s worth noting that a light calendar and holiday mood may restrict market moves looking forward.

20/12/2021

GBP/USD Price Analysis: Bears moving in for test of weekly support
20 December 2021, 04:39

•GBP/USD bearish outlook in the process of being confirmed on the daily chart.
•The bears will be seeking a break of 1.3200 and 1.3100 in the weekly support structure.
GBP/USD is still reeling from Friday's sharp drop and tests the bull's commitments are a critical area of support on the weekly chart.

The following is a top-down analysis that arrives at a bearish bias on a break below 1.32 the figure which opens the significant risk of plenty of downside to come in the final stages o the year and start of the new year.

GBP/USD weekly chart

As illustrated, below 1.3200 and 1.3100, there is an imbalance in price towards 1.2850 where the market could fall into should the support structure give out.

GBP/USD daily chart

Should the bearish engulfing candle be followed by a confirming subsequent bearish candle, or two, then the bias will most certainly mount into the bear's hands for the following days ahead.

06/12/2021

Monday – 06 December 2021

German Factory Orders (EUR, GMT 07:00) – German factory orders have been extremely volatile recently 3.4% in September, -7.7% (revised lower to -8.8%) in October and +1.3% rebound in November. As new restrictions loom for the unvaccinated, German factory orders are likely to have rebounded again and turned negative.

Tuesday – 07 December 2021

RBA Rate Statement & Interest Rate Decision (AUD, GMT 03:30) – The Bank’s forecast remains “for inflation to pick-up gradually as the economy strengthens” and an eventual rate hike (RBA is cautiously optimistic on growth, inflation). However, markets see them on hold through mid-year, with no change possible for the full year depending on the growth and inflation data and the path of Omicron.
ZEW Economic Sentiment & EZ Employment & Revised GDP (EUR, GMT 10:00) – Key set of data for EZ – ZEW is likely to show a gradual rebound from the October low at 21.0 and November reading at 25.9, however well below the early summer highs of 84.0 in May. The Quarterly Employment is likely to remain steady at 0.9% from September’s 0.7% and the decline of -0.3% in June. Finally the revised GDP could rise to 2.2% from 2.0% with the y/y number rising to 13.6% from 3.7% in 2020.

Wednesday – 08 December 2021

BOC Rate Statement & Press Conference – (CAD, GMT 15:00 & 15:30) – Last time the BOC ended quantitative easing and moved to the reinvestment phase, “during which it will purchase Government of Canada bonds solely to replace maturing bonds.” in a move to address rising inflation. The bank held the overnight rate at 0.25% and maintained its “extraordinary forward guidance” for the path of the overnight rate. No change is expected today.
JOLTS Job Openings (USD, GMT 15:00) – This Janet Yellen invention continues to receive more prominence as the US job market continues to show signs of significant tightening, with many workers not returning to jobs, retiring early on the back of buoyant stock markets and record house prices and many not returning even after the Government cheques stopped and the schools re-opened. A hefty 10.93 million reading in September has only declined slightly since, with the number expected to be 10.45 million today.

Thursday – 09 December 2021

Consumer Price Inflation (CNY, GMT 01:30)– China has not been immune to rising prices and uncertainty. With the continuing clouds over many real estate developers (Evergrande & Kaisa the two highest profile) and the tech crack down by the authorities also continuing (Didi announcing it will delist from the NYSE and move to the Hang Seng) Inflation is set to tick higher; CPI up to 1.6% from 1.5% and PPI 14.0% from 13.5%.
Weekly Claims (USD, GMT 13:30) Following last weeks 52-year low reading at only 222k and the previous week being revised lower again to 194K this weeks number is eagerly awaited. Seasonality factors apart, the evidence of the tight US jobs market continues, a more normal economic cycle average is 250-260K.

Friday – 10 December 2021

German Final CPI (EUR, GMT 07:00) – Expectations are for HICP to remain steady y/y at 6%. with the m/m number turning up to 0.0% from -0.2% in November.
Industrial Production, Manufacturing Production and GDP (GBP, GMT 07:00) – A plethora of data from the UK should show a continued stuttering recovery. IP is expected to turn up from -0.4% last time but remain in decline, MP should be more robust at 3.1% y/y from 2.8% last time. And m/m GDP is expected to have risen to 0.7% from 0.6% in November.
US Core CPI (USD, GMT 15:30) – This key data point is expected at 0.7% from 0.6% last month and the headline number 1.1% from 0.9% last time. The FED’s preferred measure of inflation remains the PCE Price Index, but with “transitory” now not part of their mantra the depth and extent of higher prices remains of key interest.

03/12/2021

United States Nonfarm Payrolls below expectations (550K) in November: Actual (210K)
United States Average Hourly Earnings (MoM) came in at 0.3% below forecasts (0.4%) in November 2021.12.03 15:32:00

03/12/2021

Canadian Jobs Preview: Forecasts from five major banks, labour market to keep pressuring the BoC
3 December 2021, 10:05

Statistics Canada will publish the Canadian November labour market data at 13:30 GMT and as we get closer to the release time, here are forecasts from economists and researchers at five major banks regarding the upcoming employment data. The Unemployment Rate in Canada is expected to remain drop to 6.6% from 6.7% at 6.9% with the Net Change in Employment coming in at 35K.

TDS
“We look for another modest (30K) performance, pulling the UE rate lower to 6.6%, but expect a more substantial pickup in wage growth.”

RBC Economics
“We expect a 40K increase in Canadian employment in October, lowering the unemployment rate to 6.6%. The improvement was likely supported by the ongoing recovery of close-contact service sector industries, where employment is still weaker than pre-pandemic but demand continues to resume.”

NBF
“Hiring should have continued at a strong pace in the month, as the epidemiological situation allowed the economic re-opening to continue. Our call is for a 30K increase in employment, a gain that would keep the unemployment rate unchanged, assuming the participation rate gained a tick at 65.4%.”

CIBC
“We are only penciling in an addition of 10K jobs for the month, which would likely see the unemployment rate rise at least a tick to 6.8%.”

Citibank
“Canada Net Change in Employment – Citi: 85K, median: 40K, prior: 31.2K; Unemployment Rate – Citi: 6.4%, median: 6.6%, prior: 6.7%; Hourly Wage Rate Permanent Employees – Citi: 3.0%, median: NA, prior: 2.1% – We expect a return of stronger job growth in Canada though with downside risks if anecdotes of labor shortages materialize. In particular, a pick-up in wage growth, likely over the next 4-5 months of data, would be a convincing sign of a tighter labor market that supports a hike by the BoC in April.”

02/12/2021

Forex Today: Dollar aims higher ahead of NFP report
2 December 2021, 21:46

What you need to know on Friday, December 3:

The dollar gathered some momentum in the last trading session of the day on Thursday, helped by upbeat local data and higher US government bond yields, as concerns were put temporarily aside. Wall Street posted substantial gains, although major indexes are still in the red on a weekly basis.

As for government bond yields, that on the 10-year Treasury note peaked at 1.466%, holding nearby at the session ends. US indexes posted substantial gains, with the Dow Jones Industrial Average up nearly 700 points and the S&P500 adding roughly 2% at the time being.

Different US Federal Reserve officials backed chief Jerome Powell’s recent words. Federal Reserve Bank of San Francisco President Mary Daly said the Fed might need to taper asset purchases faster than anticipated, while Richmond President Thomas Barkin said inflation has gone up faster than he expected due to the virus, vaccines and fiscal support.

European Central Bank policymaker Fabio Panetta said that inflation and the new pandemic wave is endangering the Union’s recovery at an early stage, although earlier this week, he noted that there’s no need to tighten monetary policy to control inflation, driven by temporary factors.

The EUR/USD pair briefly pierced the 1.1300 level, hovering around it heading into the Asian opening. The British Pound remained weak, with GBP/USD stuck around 1.1330. Commodity-linked currencies edged lower, with the AUD/USD pair trading below 0.7100 and the USD/CAD above 1.2800.

Gold fell to a fresh one-month low of 1,761.87, having bounced modestly ahead of the close. Crude oil prices fell to fresh multi-month lows but bounced back, with WTI currently trading at $66.10 a barrel.

The US will publish the Nonfarm Payrolls report on Friday. The country is expected to have added 550K new jobs in November, while the unemployment rate is seen contracting to 4.5% from 4.6%. The country added 531K positions in October, which brought the total number of jobs to 148.3 million, leaving a shortfall of 4.2 million compared to pre-pandemic levels.

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