Axi | Sep 07, 2018 08:30
Originally published by AxiTrader h2 Market Summary (7.51am Friday September 7)/h2
There are growing calls across the Twitterverse and analyst community that now is the time to catch the knife that is falling emerging market stocks, which in turn implies currencies too. Indeed a Reuters poll overnight reflects some heady expectations for recovery in EM currencies from these levels.
But the price action overnight again warned against rushing in. Utter collapses don’t often happen from a point of strength but often after a period of weakness. That is, the news this morning is that both the MSCI EM stocks gauge and currency gauge made fresh lows overnight. Certainly USD/ARS has fallen 2.4% after the IMF said its rushing to sort things out for Argentina, and the real gained 0.9%. But the rouble lost 1.5% on the prospect of more sanctions.
On developed markets there was more selling in Europe after China and most of Asia had another bad day yesterday. The Hang Seng and CSI 300 lost about 1% while the Shanghai Composite was down half a percent. In London the FTSE lost 0.9%, the DAX lost 0.7% and the CAC was 0.3% lower.
In the US the tech selling continued with the Nasdaq 100 off 0.9% to 7458 – it broke the recent trendline but is back above it now. The Dow is again doing its own thing with a gain of 0.18% to 26,021 while the S&P 500 has dipped 0.36%, 10 points, to 2,878 this morning. But, as with the previous day’s move the S&P’s distance from the lows of the day (11 points) is greater or equal to the overall daily loss.So the bulls haven’t given up by any stretch of the imagination.
And of course the ASX reversal continued again yesterday and overnight. The 200 index lost 70 points, 1.12%, yesterday to close at 6,160 and SPI 200 traders have found another 23 points of loses to lop of prices overnight. So it looks like another tough day for the local market.
To forex then and I’m wondering if currency traders aren’t betting on a benign non-farm payrolls tonight. At least in the G10 anyway. I say that because despite Ism manufacturing shooting the lights out earlier this week, despite ISM non-manufacturing last night hitting 58.5 (55.7 last, 56.8 exp), and despite jobless claims falling to another post 1969 low, the US dollar is strangely impotent. That’s important price action to consider of course. But it’s interesting nonetheless.
Anyway, EUR/USD is flat at 1.1622, GBP/USD is up 0.2% on faint Brexit hopes at 1.2928 while USD/JPY, which recovered as stocks in the US did is now lower – yes lower – on news President Trump may have Japan next in his sights for a trade battle. USD/JPY is now at 110.70, down 0.74% and off the low around 110.50 as the article in the WSJ reads as conjecture on the authors part.
The Aussie has had an interesting 24 hours, not a massive range but buffeted by events and it sits up 0.15% at 72 cents. The Kiwi is flat at 0.6589 while the Canadian dollar is a little stronger by 0.2% at 1.3147 as the parties inch toward new NAFTA and as BoC’s Wilkins hints the Canadian central bank might be keen to raise rates sooner rather than later – USD/CAD is at 1.3144.
On commodity markets oil is lower again despite a much bigger draw in inventories. That’s another strong message on price action folks. Put perhaps it was US Secretary of State Mike Pompeo’s concession to try to bring India back into the fold around the Iran sanctions did the damage as much as the build in Cushing inventories that the data also sold. Either way Brent has fallen 0.74% to $76.70 after retesting the break earlier. WTI is down 1.14% to $67.94 after also being higher earlier.
Gold is back at $1200, copper is up 1% to $2.6175 in HGc1 terms amid what was a better night for base metals. (Bitcoin) is at $6,432 for a 7.5% since this time yesterday and US 2’s are at 2.64% while the 10’s are at 2.88% for the rounded curve to sit at 24 point’s.
And just quickly on Fed watch. John Williams, NY Fed president, said QE may have and be distorting the curve so it alone is not a reason to stop, while Charles Evans, the Chicago Fed boss, said the FOMC should raise rates to neutral and “likely a bit beyond”. Take that Kashkari and Bullard, you doves!
On the day then, we get AIGroup construction PMI in Australia today, the coincident and leading economic indexes out of Japan and then trade data for France and Germany before the EU Q2 GDP 3rd estimate. We also get Chinese reserves data this evening and of course US and Canadian employment data. The Reuters survey says in the US expectations are for jobs to print 191,000, unemployment to print 3.8%, and average earnings to print 0.2% for a 2.7% yoy rate.
China trade is out tomorrow. AND, AND, AND, watch out for the possible announcement of the next tranche of tariffs on China which could come as early as tonight or the weekend
h2 Macro Stuff that affects everyone and everything - either today or eventually/h2 h2 International/h2
Have a great day's trading.
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