Thursday, November 19, 2015

Switzerland trade balance Oct +CHF 4.16bln vs +3.52bln prev

Latest data now out

  • prev revised up from +CHF 3.05bln
  • exports mm +5.4% vs +2.3% prev revised up from +0.2%
  • imports mm +3.5% vs +2.6% prev
  • watch exports fall 13.2% yy real terms to CHF 2bln
Not a price changer but welcome news for the Swiss as CHF weakens over the period
SNB will still be on high alert but any smoothing they've been doing, and which I've often mentioned, is having some impact
Fall in watch exports reflects more on global economic weakness
USDCHF currently 1.0165 and EURCHF 1.0867 both looking underpinned still

Japan's Abe says GDP decline is due to a drop in inventory investment

Japanese PM's spokesman Kawamura speaking at the APEC meeting

  • Abe told the meeting he sees downside risk to global growth
  • stressed need for quality growth
  • TPP creates a new economic order
  • Abe says Japan close to ending deflation
A mix of caution and optimism sees USDJPY unfazed at 123.28 still
Abe- the future's not that bright but he's still wearing shades

BOJ's Kuroda says economy continues to improve moderately

BOJ boss with his usual post-announcement presser just underway

  • inflation expectations appear to be rising on the whole
  • will check risks and adjust policy as needed
  • BOJ easing is having intended effects
  • expect CPI to reach 2% target H2 2016
  • GDP data showed final demand is rising
  • Q3 contraction largely due to decline in inventory investment
  • new wording on price expectations reflects weak data
  • no need to change view that price expectations are rising
  • effect of Paris attack on global economy is limited
The snoozefest begins. One day he'll prove me wrong and say something worthwhile
We can but hope
Meanwhile USDJPY is nudging back above 123.30 again on general USD demand but tempered by cross pair supply.

Wednesday, November 18, 2015

IS found security loopholes to bring down Russian plane

Reuters reporting comments from IS

  • Smuggled bomb onto plane after finding loophole at Sharm Al-Sheikh airport
  • It first planned to take down a Western plane but chose Russia after it started strikes in Syria
Also popping up is a headline that the Eurostar check in in Paris's Gare Du Nord has been suspended. No further details
On another note I was at the England vs France game at Wembley last night and I've got to say that the run up to kick off was very emotional and the French fans and players did their country proud

There's danger in looking at market yield curves for rate hike date says Broadbent

BOE's Broadbent into some Q&A

  • There's particular danger in looking at lift off date implied by market yield curves
  • Some coverage of the inflation report was misplaced in saying rates would not rise until a certain time
  • Picture of global growth is nuanced
  • The US recovery isn't that strong and underlying productivity growth is weak
  • Productivity growth may have started to happen in the UK
  • Last Fed comments were a slight corrective to Sep comments
  • Fall in commod prices has bought the BOE some time
  • BOE didn't see an emerging market crisis
  • BOE sees solid recovery in domestic demand
  • No single rate path is perfect
I'm in full agreement with him on implied market indicators. Just because we have something in black and white as to what the market thinks doesn't mean that they will be right. Why they are important for trading is that generally lead the market sentiment and that brings opportunity if you believe that they are wrong.

EURUSD looking to break the break

EURUSD broke 1.0700 but is back to test the level. Is that the break over?

Yesterday I noted the break in the euro and what we could possibly make of it.
Right now we're at the point where the break is in danger of being snuffed out
EURUSD 15m chart
We're into the area where the most danger lies, between 1.0690 and 1.0700 and this is big defence line for shorts who went with the break
The price has shown us where intraday support is, down at 1.0630. So we have our intraday range at 1.0630-1.0690/700 and the same break rules apply to either end

Tuesday, November 17, 2015

UK inflation rate remains negative in October

 Sources: http://www.bbc.com/news/business-34841952?SThisFB
  • o
Bank of England Governor Mark Carney makes a speech at The Sheldonian Theatre in the University of Oxford on October 21, 2015Image copyrightGetty Images
Image captionBank of England governor Mark Carney has said it could be two years before inflation returns to its 2% target
The UK's inflation rate as measured by the Consumer Prices Index remained at -0.1% in October, the Office for National Statistics has said.
The news will further dampen expectations of a rise in interest rates any time soon.
The Bank of England said earlier this month that the global economy was weakening, depressing inflation risks.
Following this report, many economists forecast that rates would not rise until well into next year.
The ONS added that the Retail Prices Index, a separate measure that includes housing costs, fell to 0.7% in October from 0.8% in September. This is the lowest RPI rate since November 2009.
October marked the first time the Consumer Prices Index has fallen on an annual basis for two months in a row since the index was created in 1997. The price of clothing rose last month, but this was offset by a fall in food, alcohol and tobacco.
The ONS said fuel prices fell by 14% on an annual basis, while food and drink prices fell by 2.7% in October and energy costs were 4.1% lower.
"This is now the ninth month running that CPI has been at or very close to zero," ONS statistician Richard Campbell said.
In its latest quarterly Inflation Report, released earlier this month, the Bank said that inflation was unlikely to rise to 1% until the second half of next year, while it would be two years before it reached its 2% target.
An ONS measure of core consumer price inflation, which strips out changes in the price of energy, food, alcohol and tobacco, rose to 1.1%, compared with economists' expectations for it to hold at 1%.
inflation graphic
Economists said negative inflation would give a short-term boost to the economy.
Chris Williamson, chief economist at Markit, said: "The benefit of ongoing low inflation is not only that interest rates will stay lower for longer but that real wage growth remains robust, which will in turn continue to boost consumer spending power and help sustain the economic upturn.
"The deflationary picture supports the Bank of England's dovish outlook, which envisages interest rates staying on hold until 2017. However, this outlook is dependent on oil prices and wage pressures remaining low, both of which remain something of an unknown."
Andrew Sentance, senior economic adviser at consultants PwC, said the latest ONS data did not point to "a more generalised deflation". As fuel price falls drop out of the annual calculation over the next few months, he expected the inflation rate to move up to "about 1% or higher".
He added: "Meanwhile, consumers continue to benefit from the combination of stronger wage increases and very slightly falling prices. The resulting increase in real wages and household disposable incomes should continue to be supportive of consumer spending and economic growth over the year ahead."
The ONS also released figures for house price inflation, which showed an 6.1% annual rise across the UK as a whole in September, compared with 5.5% in August.

Analysis: Anthony Reuben, BBC business reporter

The ONS says: "Upward price pressures for clothing and footwear and a range of recreational goods were offset by downward price pressures for university tuition fees, food, alcohol and tobacco, resulting in no change to the overall rate of inflation."
Students may be surprised to hear that tuition fees pushed inflation down. It turns out that it's because of the comparison with 2014 and the effect of the higher fees introduced for new students in England in 2012.
So, two years ago, third year students were still paying the capped rates. Last year, third year students will have started paying higher rates, which will have raised inflation more than the change this year, when the only group of students paying more than their counterparts last year will be fourth year undergraduates, and there are not as many of those.
So, when they say "downward pressure", they don't mean dropping prices, they mean prices rising at a slower rate than last year.