One of the reasons why central banks around the globe have flooded the financial system with trillions in excess reserves is to make sure that banks no longer have to rely on potentially fleeting short term deposits (and is also why negative interest rates have become the norm in so many part of the world, that $10 trillion in bills and bonds now trade with a negative yield). As a result of years of such central bank policy, banks – mostly in Europe – no longer need to compete with each other for deposits: after all why offer tempting deposit rates in an age of NIRP when banks can get all the liquidity they need straight from the ...
By Gavekal Capital Blog Developed market consumer staple stocks are up a health 5.5% in 2016 compared to an 80 bps decline for developed market equities in general. Looking at consumer staples, across a variety of regions, it seems that this group is probably overbought in the short-term. However, the overall trend remains very positive as consumer staples is the only sector that is breaking out to new highs. 84% of DM consumer staple stocks are trading above the 200-day moving average. This is in contrast to just 61% of DM stocks in general that are trading above the 200-day moving average. And in certain weaker sectors of the equity mark...
Fundamental Forecast for GBP: Neutral GBP/AUD: Beware of Near-term Exhaustion- Resistance 1.9854/86 GBP/USD Bearish Sub-1.4588 Ahead of Upcoming Event Risk Mixed data prints coming out of the U.S. & U.K. may foster range-bound prices in GBP/USD especially as the Federal Reserve and the Bank of England (BoE) retain a wait-and-see approach for monetary policy. Even though U.K. Retail Sales are anticipated to rebound 0.7% in April, another uptick in Jobless Claims accompanied by a slowdown in the core Consumer Price Index (CPI) may dampen the appeal of the sterling as the data prints drag on interest-rate expectations. It seems as though...
This week’s employment news was mixed. Initial unemployment claims increased for the third consecutive week, this time to 294,000. While some commentators argued that the Verizon strike caused this week’s increase, the DOL release did not specifically mention a primary cause. This gain combined with last week’s lower than expected employment report is cause for modest concern. In contrast, the JOLTs report was positive, with more openings than hires. This relationship is positive for wages; it indicates not only that employees should have additional leverage in negotiating pay but also that employers will be more willing to increase sal...
The US dollar staged an impressive reversal against many of the major foreign currencies on May 3. In the following week, speculators in the currency futures market made significant adjustment in their holdings. We identified a change in the gross position in the currency futures of 10k contracts or more to be significant. In the week ending May 3, there were two such adjustments. In the CFTC reporting period ending May 10, there six of the 16 gross position we track surpassed the 10k contract threshold. Let’s begin by look at the three currency futures in which speculators carry a net short position: the euro, sterling, and the ...
EUR/USD: With EUR/USD following through lower on the back of its previous week losses on Friday, it faces further downside pressure in the days ahead. Support lies at the 1.1250 level. Further down, support comes in at the 1.1200 level where a violation will aim at the 1.1150 level. A break of here will target the 1.1100 level. Its weekly RSI is bearish and pointing lower suggesting further weakness. Conversely, on the upside, resistance comes in at the 1.1350 level with a cut through here opening the door for more upside towards the 1.1400 level. Further up, resistance lies at the 1.1450 level where a break will expose the 1.1500 level. All ...
Silver Wheaton (SLW) has had a rough go of things over the last few years as the recovering economy has put a squeeze on gold and silver prices. While the company’s streaming-focused business isn’t quite as directly correlated with precious metals prices as, say, a mining company like Goldcorp (GG), the market still has a major impact on the company’s well-being. With the company’s earnings announcement, it proclaimed the quarter a “solid start to 2016,” stating that the company “realized the second best quarter ever in terms of production and sales volumes in the first quarter of 2016.” But what investors and analysts ...
This week can be expected to be more important than the previous week, with Central Bank input due concerning the U.S. Dollar on Wednesday as well as the Australian Dollar on Tuesday. There will also be G7 meetings on Friday and Saturday. There is a smattering of other data due concerning mainly the Commodity Currencies and the British Pound. It looks as if the major activity and volatility are going to be centered on the latter half of Wednesday and also Thursday. U.S. Dollar It should be an important week for the Greenback, with the highlight coming with Wednesday’s releases of the FOMC Meeting Minutes and Crude Oil Inventories. Earlier, ...
The New Zealand dollar felt the pressure initially but recovered quite quickly. Inflation expectations and milk prices are eyed now. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD. The RBNZ is not in a rush to follow the RBA and cut rates, and this allowed the kiwi to recover. In the US, the greenback enjoyed strong retail sales and that stood out against the not-so-convincing sales in New Zealand. Updates: NZD/USD daily graph with support and resistance lines on it. Click to enlarge: Inflation Expectations: Tuesday, 3:00. With inflation figures published only once a quarter, this additional quarte...
This week’s economic calendar includes some key data on the housing market and few other major reports. The debate about the strength of the U.S. economy continues. The housing market is an important contributor to the economy. As we enter the key season for real estate many will be asking: Is it Springtime for housing? Prior Theme Recap In my last WTWA, I predicted that there would be special attention to the mixed message of economic reports, contrasting the relative strength of employment with other data. That was a major theme. Some insisted that the employment was overstated. Others said it was a lagging indicator. A few mentioned th...