Indian Rupee Collapses To Record Low Against U.S. Dollar On Trade Tensions

Trading 03 sept 2018 Commentaire »

The Indian rupee nosedived against U.S. dollar on Monday, erasing its early gains, amid rising trade tensions as the U.S. prepares to impose further $200 billion of tariffs on Chinese imports as early as this week.

Sentiment further dampened as the United States and Canada put off resolving their trade dispute.

The Indian rupee opened on a positive note following robust Indian GDP data for the April-June quarter, showing a rise of 8.2 percent.

The early rise faded in late afternoon and the rupee fell to a historic low of 71.22 against the greenback. This marked a 0.7 percent drop from a 4-day high of 70.68 seen in previous deals. The pair was valued at 70.81 at last week's close.

The currency has thus shed almost 3.5 percent against the dollar during the month of August.

Indian markets finished lower, with the benchmark BSE Sensex falling 332.55 points or 0.86 percent to 38,312.52, while the broader Nifty index dropped 98.15 points or 0.84 percent to 11,582.35.

On the economic front, survey data from IHS Markit showed that India's manufacturing activity expanded at the weakest pace in three months in August.

The Nikkei manufacturing Purchasing Managers' Index, or PMI, fell to 51.7 in August from 52.3 in July. However, any reading above 50 indicates expansion in the sector.


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*Indian Rupee Falls To All-time Low Of 71.22 Against U.S. Dollar

Trading 03 sept 2018 Commentaire »

Indian Rupee Falls To All-time Low Of 71.22 Against U.S. Dollar


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UK Manufacturing Activity Growth Weakest In 25 Months

Trading 03 sept 2018 Commentaire »

The UK manufacturing sector expanded at the weakest pace in more than two years in August as foreign orders contracted for the first time since early 2016.

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose to 52.8 in August from a revised 53.8 in July, data showed Monday. The expected reading was 53.9.

The PMI has posted above the neutral 50.0 mark for 25 successive months, although the latest reading was the lowest registered during that sequence.

Based on its historical relationship with official ONS data, the latest PMI report is broadly consistent with zero growth in manufacturing production, meaning the sector will likely fail to provide any support to the wider UK economy in the third quarter, Rob Dobson, director at IHS Markit, said.

Despite the gloomy outlook presented in the latest survey, manufacturing should prove less of a drag to growth in the third quarter than it was in the second quarter, Andrew Wishart, an economist at Capital Economics, said.

Production expanded at the slowest pace in 17 months on weak new orders in August. Despite currency weakness, foreign demand declined for the first time since April 2016.

As a result, overall demand rose at the slowest rate in its current 25-month sequence of expansion.

The ongoing slowdown of output and new orders weighed on both the labor market and business confidence.

The pace of job creation eased to near-stagnation, as cuts at large enterprises offset further increases at small and middle enterprises.

Business optimism dipped to a 22-month low in August. Business confidence was attributed to new capacity, expected growth of new export orders, planned investment and new product launches.

In August, inflationary pressures remained relatively strong, with both output charges and input costs rising at above survey average rates.


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Swiss Retail Sales Decline For First Time In 4 Months

Trading 03 sept 2018 Commentaire »

Switzerland's retail sales declined for the first time in four months in July, the Federal Statistical Office reported Monday.

Retail turnover dropped 0.3 percent year-on-year in July, in contrast to a 0.2 percent rise in June. Sales decreased for the first time since March, when it slid 1.2 percent.

On a monthly basis, retail turnover fell 1 percent in July, in contrast to June's 0.3 percent increase. Excluding fuel, sales were down 0.8 percent.


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Turkey's Central Bank Pledges Action As Inflation Surges

Trading 03 sept 2018 Commentaire »

Turkey's central bank vowed to take necessary action to support price stability after inflation data revealed the sharpest rise in consumer prices in 15 years, largely due to the weaker currency.

Inflation surged to 17.9 percent year-on-year in August from 15.85 percent in July, the Turkish Statistical Institute reported Monday. The rate remained well above the central bank's target range of 5 percent.

Core inflation that excludes volatile items increased to 17.2 percent from 15.1 percent in July.

At the same time, producer prices accelerated sharply to 32.13 percent in August from 25 percent a month ago.

The Turkish lira weakened more than 40 percent against the US dollar since the start of the year amid political concerns and a trade war with the US. A weaker currency raised import prices and stoked inflation.

The central bank said on Monday the monetary stance will be adjusted at the Monetary Policy Committee Meeting, due on September 13, in view of the latest developments.

The bank also expressed its willingness to use all available instruments in pursuit of the price stability objective.

On a monthly basis, consumer prices climbed 2.3 percent compared to a 0.52 percent rise in the same period of last year. Similarly, producer prices advanced 6.6 percent versus 0.85 percent in the previous year.

Jason Tuvey, an economist at Capital Economics, said the central bank is likely to raise policy rates by 200 basis points.

Pressure from the government means that the 700-1000 basis point of rate hikes that are needed to bring real interest rates back to positive territory and reassure the markets that policymakers are willing and able to tackle high inflation are unlikely to be forthcoming, the economist noted.

Elsewhere, Finance Minister Berat Albayrak told Reuters that Turkey's central bank is an independent organization and will take necessary measures to contain inflation.

The Purchasing Managers' survey from Markit Economics, showed on Monday, that the manufacturing sector contracted further in August due to slowdowns in both output and new orders. The Purchasing Managers' Index fell to 46.4 in August from 49.0 in July.

The survey revealed that the lira weakness was central to challenging business conditions, and contributed to strengthening inflationary pressures. Input and output prices increased to the greatest extents since the survey began in June 2005.


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Czech Manufacturing Growth At 1-Year Low

Trading 03 sept 2018 Commentaire »

Czech manufacturing activity expanded at the weakest pace in twelve months in August, survey data from IHS Markit showed Monday.

The Purchasing Managers' Index, or PMI, dropped to 54.9 in August from 55.4 in July. However, any reading above 50 indicates expansion in the sector.

Among components, both output and new orders increased at slower rates in August.

On a positive note, firms were able to fill vacancies despite reports of a long-term worker shortage.

On the price front, input price inflation remained marked in August, led by higher raw material costs and exchange rate movements.

Output prices increased at a strong rate, albeit one that was the weakest for three months.


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Latvia Industrial Production Climbs For Second Month

Trading 03 sept 2018 Commentaire »

Latvia's industrial production increased for the second straight month in July, data from the Central Statistical Bureau showed Monday.

Industrial production rose a calendar-adjusted 3.6 percent year-over-year in in July, well above the 0.4 percent rise in June.

Among main groups, mining and quarrying output grew the most by 11.4 percent annually in July, followed by electricity and supply with 10.1 percent spike. Meanwhile, manufacturing production registered a moderate increase of 1.2 percent.

On a monthly basis, industrial production grew a seasonally adjusted 1.7 percent from June, when it gained 0.6 percent.


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*UK Govt: Mark Carney Still Expected To Leave Bank Of England In 2019: Reports

Trading 03 sept 2018 Commentaire »

UK Govt: Mark Carney Still Expected To Leave Bank Of England In 2019: Reports


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Poland Manufacturing Growth At 22-Month Low

Trading 03 sept 2018 Commentaire »

Poland's manufacturing activity expanded at the weakest pace in nearly two years in August, survey data from IHS Markit showed Monday.

The manufacturing Purchasing Managers' Index, or PMI, dropped to 51.4 in August from 52.9 in July. However, any reading above 50 indicates expansion in the sector.

Among components, output, new orders and employment all increased at slower rates in August. Meanwhile, new export orders declined at the fastest rate since July 2014.

"This slowdown relieved pressure on capacity, with backlogs of work declining slightly and inventories of finished goods increasing for the first time since January 2017," Trevor Balchin, Director at IHS Markit, which compiles the Poland Manufacturing PMI survey, said.

On the price front, costs pressures remained strong in August.


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AUD / USD pair rate: 0.70

Trading 03 sept 2018 Commentaire »

Today, the Australian dollar collapsed to almost two-year lows. The last time the pair tested the 71st figure was in November-December 2016. In general, the AUD/USD pair is in the framework of a pronounced southern trend, which begins in February this year. The monthly timeframe clearly demonstrates a descending movement, starting from the height of the 80th figure. Within six months the pair lost their positions on a monthly basis, losing almost a thousand points as a result. Having renewed the annual minimum, the pair has stalled its decline, but tomorrow, the southern trend can get a new impetus.

Let me remind you that in the beginning of August, the "next neighbor" of the Australian - the New Zealand Dollar, reacting to the rhetoric of the Reserve Bank of New Zealand. The regulator has shifted the timeframe for a possible rate hike for 2020, while permitting a softening of monetary policy conditions. Now, traders fear that the Central Bank of Australia will follow the example of its colleagues and will also take a "dovish" position in this matter.

However, the rhetoric of the RBA in recent years was not "hawkish" nature, although the regulator members admitted that the rate will be increased rather than vice versa. Only the question - when. By the general market expectation, the Australian Central Bank will consider this issue in the second half of next year, but recent events of a fundamental nature allow doubting this. Therefore, if tomorrow the RBA at its September meeting allows a variant of deviation from this scenario, the Australian dollar will continue to drive down the entire market.

If we talk about the immediate causes of the weakening of the "Aussie" at the beginning of the trading week, then it is all about the macroeconomic statistics. Data on the volume of retail sales is worse than forecasted, although experts predicted growth to 0.3%. This indicator fell on many months' lows, disappointing traders, especially on the eve of the RBA meeting. In addition, the volume of the operating profit of Australian companies also declined to 2% after growth to 6.5%. This indicator, in general, is very minor, but also contributed to the atmosphere of nervousness.

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In other words, the Australian statistics released today served as a catalyst for the decline of the AUD/USD pair. The main reason is the fears of traders regarding the softening of RBA rhetoric at the September meeting. After all, apart from weak retail sales, there are other bigger large-scale problems, which the regulator can pay attention to. It is about reducing the commodity market and the development of the US-China trade conflict.

Actually, these problems are directly connected with each other. As soon as there was information that Donald Trump could introduce new duties on Chinese imports (now worth $ 200 billion), the commodity market tipped down. In particular, the cost of copper for the first time this year fell below six thousand dollars per ton (to date - $ 5,886). The cost of zinc, lead and aluminum are also reduced. The most important raw material for the Australian economy, iron ore, follows the general trend and fell to $65 per ton.

Here it is worth noting that the reason for the weakening of the commodity. There were no official statements of the White House on this matter. Although Beijing reacted to unconfirmed information quite harshly. According to a representative of the Middle Kingdom, a new package of trade-related duties will be equal to an aggressive act against China. Such rhetoric of Beijing surprised traders, as Trump's intentions were voiced only in the American press, with who allegedly became aware of this information. It can not be said that the commodity market has been reacted to, not even to the insider from the White House, but to the reaction of official China.

In any case, the events of recent days show that before the "truce" between the US and China is still far away and even if non-public talks on resolving the conflict are ongoing. Their results leave much to be desired. By the way, according to some analysts, China will not take any practical steps to rapprochement with Washington before the elections to the US Congress. which will be held on November 6, after which the political configuration in the United States can significantly change. It is likely that Trump is precisely for this reason trying to force events, putting pressure on the Chinese.

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However, for members of the Reserve Bank of Australia, the subtext of current events is not so important as the degree of their negative impact. Given a rather pessimistic fundamental background, the Australian regulator can indeed soften his rhetoric. In this case, the Australian dollar will finally consolidate within the 71st figure, with the subsequent intention to test the basic level of support for the pair at 0.70.

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