BoJ Tankan Survey On Tap For Friday

Trading 13 déc 2018 Commentaire »

The Bank of Japan will on Friday release the results of its quarterly Tankan Survey of business sentiment, highlighting a busy day for Asia-Pacific economic activity.

The large manufacturing index is called at +18, down from +19 in Q3. The outlook is pegged at +17, also down from +19. Large all industry capex is seen to have risen 12.8 percent after having been called higher by 13.4 percent in the three months prior.

Japan also will see preliminary December results for the manufacturing PMI from Nikkei and final October numbers for industrial production.

The manufacturing PMI had a score of 52.2 in November, while preliminary readings for industrial production suggested an increase of 2.9 percent on month and 4.2 percent on year.

China will release November numbers for retail sales, industrial production, fixed asset investment, property investment and unemployment.

Retail sales are expected to rise 8.8 percent on year, up from 8.6 percent in October. Industrial output is called steady at 5.9 percent, while FAI is tipped to rise to 5.9 percent from 5.7 percent a month earlier.

Property investment was up an annual 9.7 percent in October, while the jobless rate came in at 4.9 percent.

New Zealand will see November results for the Manufacturing PMI from BusinessNZ; in October, the index score was 53.5.

Hong Kong will provide Q3 data for industrial production; in the three months prior, industrial production was up 1.6 percent on quarter and 3.8 percent on year.

Malaysia will release October data for unemployment; in September, the jobless rate was 3.3 percent and the participation rate was 58.5 percent.


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*New Zealand Manufacturing PMI 53.5 In November – BusinessNZ

Trading 13 déc 2018 Commentaire »

New Zealand Manufacturing PMI 53.5 In November - BusinessNZ


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Treasuries Show A Lack Of Direction Before Closing Roughly Flat

Trading 13 déc 2018 Commentaire »

After moving lower over the two previous sessions, treasuries showed a lack of direction throughout the trading day on Thursday.

Bond prices spent the day bouncing back and forth across the unchanged line before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.911 percent.

While the ten-year yield crept only slightly higher, it still climbed further off the three-month closing low set last Friday.

The choppy trading on the day came as traders continued to express uncertainty about a potential long-term trade deal between the U.S. and China.

Traders seemed unfazed by a report from Reuters indicating some Chinese state-owned companies purchased U.S. soybeans for the first time in more than six months, which was seen as evidence China is making good on its pledges to the U.S.

Reuters also said China appears to be easing its high-tech industrial push, dubbed "Made in China 2025," which has long irked Washington.

Traders also shrugged off the results of the Treasury Department's auction of $16 billion worth of thirty-year bonds, which attracted average demand.

The thirty-year bond auction drew a high yield of 3.165 percent and a bid-to-cover ratio of 2.31, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.30.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Today's thirty-year bond auction came after the Treasury sold $38 billion worth of three-year notes on Tuesday and $24 billion worth of ten-year notes on Wednesday.

On the U.S. economic front, the Labor Department released a report showing a much steeper than expected drop in initial jobless claims in the week ended December 8th.

The report said initial jobless claims fell to 206,000, a decrease of 27,000 from the previous week's revised level of 233,000. Economists had expected jobless claims to slip to 225,000.

Jobless claims pulled back further off the nearly eight-month high reached two weeks ago to hit their lowest level in almost three months.

A separate report from the Labor Department showed import prices plunged by much more than expected in the month of November amid a steep drop in fuel prices.

The report said import prices plummeted by 1.6 percent in November after climbing by 0.5 percent in October. Economists had expected import prices to slump by 0.9 percent.

Additionally, the Labor Department said export prices tumbled by 0.9 percent in November following an upwardly revised 0.5 percent advance in October.

Export prices had been expected to edge down by 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.

Economic data may attract attention on Friday, with traders likely to keep an eye on reports on retail sales and industrial production.


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Oil Futures Settle Sharply Higher As Saudi Plans To Reduce Shipments

Trading 13 déc 2018 Commentaire »

Crude oil prices rebounded after early weakness on Thursday, lifted by reports that Saudi Arabia is likely to slash shipments to U.S. refiners.

According to Bloomberg reports, Saudi Aramco, the state-controlled oil giant of Saudi Arabia, has warned U.S. refiners to prepare for a sharp reduction in cargoes in the coming month.

Meanwhile, a report from the International Energy Agency said said that total global oil supply in November fell by 360,000 barrels a day on month, as a result of outages in the North Sea and Canada, as well as a decline in Russian output.

And, the agency kept its oil demand growth forecasts for this year and next unchanged, at 1.3 million barrels a day and 1.4 million barrels a day, respectively.

However, the agency expects a supply deficit in the second quarter of 2019, as against its forecast in November that predicted a surplus for the entire year.

Crude oil futures for January ended up $1.43, or 2.8%, at $52.58 a barrel on the New York Mercantile Exchange.

On Wednesday, crude oil futures ended down $0.50, or 1%, at 51.15 a barrel, well off the session's high of 52.84 a barrel.

Last week, the OPEC and non-OPEC members agreed to cut production by 1.2 million barrels a day starting in January.

With regard to crude inventories in the U.S., the latest data from the Energy Information Administration showed crude oil stockpiles in the U.S. dropped by about 1.21 million barrels in the week ended December 7th, falling for the second successive week after ten successive weeks of increases. The decline, however, was almost three times lower than the expected level.


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Gold Futures Settle Lower As Dollar Remains Steady

Trading 13 déc 2018 Commentaire »

Gold prices edged down to one-week low on Thursday as the dollar stayed steady against most major currencies after the European Central Bank lowered eurozone growth projections for the coming year.

The ECB President's warning that the "balance of risks is moving to the downside," and the lowering of GDP and inflation forecasts for the eurozone resulted in the euro losing ground against the greenback.

Gold's losses, however, were limited due to rising expectations that the Federal Reserve will pause monetary tightening in the coming year. The Fed, which is likely to raise interest rate by 25 basis points after its policy meeting next Wednesday, is also expected to cut its forecast of 2019 rate increases.

Meanwhile, U.S. President Donald Trump said that he hopes the Fed "won't be raising interest rates anymore."

Gold futures for February ended down $2.60, or 0.2%, at $1,247.40 an ounce.

On Wednesday, gold futures ended up $2.80, or 0.2%, at $1,250.00 an ounce.

Silver futures for March settled at $14.855 an ounce, down slightly from Wednesday's close of $14.851 an ounce.

Copper futures for March ended at $2.767 per pound. On Wednesday, copper futures settled at $2.770 per poiund.

The dollar index was up by about 0.07% at 97.08, after rising above 97.25 earlier in the day.

The ECB, which left interest rates unchanged on Thursday, officially ended asset purchase program but promised to keep feeding stimulus into an economy struggling with an unexpected slowdown and political turmoil.

In U.S. economic news, a report from the Labor Department showed a much steeper than expected drop in initial jobless claims in the week ended December 8th. The report said initial jobless claims fell to 206,000, a decrease of 27,000 from the previous week's revised level of 233,000. Economists had expected jobless claims to slip to 225,000.

Jobless claims pulled back further off the nearly eight-month high reached two weeks ago to hit their lowest level in almost three months.

Another report from the Labor Department said import prices plunged by much more than expected in the month of November amid a steep drop in fuel prices. According to the report, import prices plummeted by 1.6% in November after climbing by 0.5%%. in October. Economists had expected import prices to slump by 0.9%. The report said export prices tumbled by 0.9% in November following an upwardly revised 0.5% advance in October.


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Dollar Little Changed Despite Eventful Day In Europe

Trading 13 déc 2018 Commentaire »

The dollar is turning in a mixed performance against its major rivals Thursday afternoon, but remains little changed overall. Traders are digesting some major developments from across the pond, as well as a pair of U.S. economic reports.

A report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits fell by much more than anticipated in the week ended December 8th. The report said initial jobless claims dropped to 206,000, a decrease of 27,000 from the previous week's revised level of 233,000.

Economists had expected jobless claims to slip to 225,000 from the 231,000 originally reported for the previous week.

Import prices in the U.S. plunged by much more than expected in the month of November amid a steep drop in fuel prices, according to a report released by the Labor Department on Thursday. The report said import prices plummeted by 1.6 percent in November after climbing by 0.5 percent in October. Economists had expected import prices to slump by 0.9 percent.

Additionally, the Labor Department said export prices tumbled by 0.9 percent in November following an upwardly revised 0.5 percent advance in October. Export prices had been expected to import prices to edge down by 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.

The European Central Bank left its interest rates unchanged on Thursday and confirmed that it will its four-year long massive EUR 2.6 trillion Asset Purchase Programme in December, even the as the 19-nation euro area economy shows signs of a sustained slowdown.

The bank also said it is "enhancing its forward guidance on reinvestment."

"Accordingly, the Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation," the ECB said in a statement.

ECB President Mario Draghi unveiled the latest set of ECB Staff macroeconomic projections for Eurozone on Thursday, which revealed a further downgrade to the growth projection for next year.

The euro area growth forecast for next year was trimmed to 1.7 percent from 1.8 percent. The outlook for this year was cut to 1.9 percent from 2 percent. The dollar climbed to a high of $1.1330 against the Euro Thursday, but has since retreated to around $1.1365.

British Prime Minister Theresa May survived the confidence vote last night. After yesterday's vote, May has vowed to deliver the Brexit "people voted for" and also assured that she would seek legal and political assurances from EU leaders on the Irish backstop.

The buck has slipped to around $1.2650 against the pound sterling Thursday afternoon, from a high of $1.2609.

The greenback has climbed to around Y113.575 against the Japanese Yen this afternoon, from an early low of Y113.284.


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Thirty-Year Bond Auction Attracts Average Demand

Trading 13 déc 2018 Commentaire »

Following three-year and ten-year note auctions earlier this week, the Treasury Department finished off this week's series of long-term securities auctions with the sale of $16 billion worth of thirty-year bonds on Thursday, attracting average demand.

The thirty-year bond auction drew a high yield of 3.165 percent and a bid-to-cover ratio of 2.31.

Last month, the Treasury sold $19 billion worth of thirty-year bonds, drawing a high yield of 3.418 percent and a bid-to-cover ratio of 2.06.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.30.

Today's thirty-year bond auction came after the Treasury sold $38 billion worth of three-year notes on Tuesday and $24 billion worth of ten-year notes on Wednesday.


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Euro Slips After Draghi Signals Risks To Eurozone Economy, Cuts Growth Forecast

Trading 13 déc 2018 Commentaire »

The euro was defensive against its key counterparts in the European session on Thursday, after the European Central Bank President Mario Draghi struck a dovish tone on region's economy, suggesting slower growth momentum in coming months, and downgraded growth forecast for next year.

In his customary press conference in Frankfurt, Draghi acknowledged that latest data had been weaker than expected, reflected by softer external demand.

Underlying inflation remained muted, although domestic cost pressures had continued to strengthen amid high levels of capacity utilization and tightening labor markets, Draghi said.

"The risks surrounding the euro area growth outlook can still be assessed as broadly balanced."

"However, the balance of risks is moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility," he added.

The euro area growth forecast for next year was trimmed to 1.7 percent from 1.8 percent. The outlook for this year was cut to 1.9 percent from 2 percent.

The inflation forecast for next year was lowered to 1.6 percent from 1.7 percent. The projection for this year was cut to 1.8 percent from 1.7 percent.

The European Central Bank has left its key rates unchanged, keeping its main refi rate at a record low of zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate is 0.25 percent.

The bank also said it is "enhancing its forward guidance on reinvestment."

"Accordingly, the Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation," the ECB said in a statement.

The currency showed mixed trading against its major counterparts in the Asian session. While it held steady against the greenback and the franc, it rose against the yen and the pound.

The euro depreciated to 1.1339 against the greenback, losing 0.5 percent from a 2-day high of 1.1393 touched at 3:15 am ET. The pair was valued at 1.1368 when it ended deals on Wednesday. Continuation of the euro's downtrend may lead it to a support around the 1.12 region.

Data from the Labor Department showed that first-time claims for U.S. unemployment benefits fell more than anticipated in the week ended December 8.

The report said initial jobless claims dropped to 206,000, a decrease of 27,000 from the previous week's revised level of 233,000.

The euro was down 0.4 percent at 128.71 against the yen, pulling away from near a 2-week high of 129.25 seen at 3:25 am ET. At Wednesday's close, the pair was quoted at 128.78. Next likely support for the euro is seen around the 127.00 level.

After advancing to a 3-day high of 1.1302 against the Swiss franc at 2:30 am ET, the euro reversed direction and moved down to 1.1269. The euro-franc pair finished Wednesday's trading at 1.1293. The euro is likely to meet support around the 1.10 region.

The Swiss National Bank maintained its expansionary monetary policy and said it will remain active in the foreign exchange market as necessary.

The SNB left its interest on sight deposits unchanged at -0.75 percent and the target range for the three-month Libor between -1.25 percent and -0.25 percent. The decision was in line with economists' expectations.

The single currency lost 0.7 percent to hit a 6-day low of 0.8952 against the pound, after rising to 0.9015 at 1:45 am ET. The pair had ended Wednesday's trading at 0.9000. The euro may test support around the 0.88 mark, if it falls again.

The euro retraced gains to 1.5162 against the loonie, from a 2-day high of 1.5221 hit at 8:30 am ET. The euro is poised to find support around the 1.49 level.

The euro dropped to 1.6511 against the kiwi, following an advance to 1.6613 at 7:00 pm ET. The euro is seen finding support around the 1.64 level.

Having advanced to a 2-day high of 1.5765 against the aussie at 7:00 pm ET, the euro gave up its gains with the pair trading at 1.5698. Further downtrend may see the euro challenging support around the 1.55 mark.

The U.S. monthly budget statement for November is scheduled for release at 2:00 pm ET.


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talian authorities agreed to reduce the budget deficit in 2019

Trading 13 déc 2018 Commentaire »

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The Italian authorities finally agreed to revise the draft federal budget for 2019 and reduce the budget deficit from the previously announced 2.4% to 2.04% of the country's GDP. This was announced by Prime Minister Giuseppe Conte at a meeting with the head of the European Commission Jean-Claude Juncker in Brussels. The Italian government explained its decision by obtaining some financial resources, which will reduce the future budget deficit.

The updated draft budget will remain plans for the introduction of benefits for the poor and unemployed, as well as the introduction of the so-called pension quota 100, according to which Italian citizens can retire as soon as the sum of years of work experience and age reaches 100.

J. Conte noted that the Italian authorities are doing everything possible to avoid the introduction of European sanctions while taking into account the interests of citizens.

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ECB's Draghi Warns Balance Of Risks To Growth Outlook Moving To Downside

Trading 13 déc 2018 Commentaire »

Eurozone's growth outlook is likely to face downside risks due to the persistence of uncertainties linked mainly to politics, trade wars and protectionism, European Central Bank President Mario Draghi warned on Thursday, as the bank confirmed that it is ending its massive asset purchase programme this month and trimmed the growth and inflation projections for next year. "The risks surrounding the euro area growth outlook can still be assessed as broadly balanced," Draghi said.

"However, the balance of risks is moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility."

The latest set of ECB Staff macroeconomic projections, which Draghi unveiled during his post-decision press conference in Frankfurt, showed that the euro area growth forecast for next year was trimmed to 1.7 percent from 1.8 percent. The outlook for this year was cut to 1.9 percent from 2 percent. The growth projection for 2020 was left unchanged at 1.7 percent and the bank forecast 1.5 percent expansion for 2021. The inflation forecast for next year was lowered to 1.6 percent from 1.7 percent. The projection for this year was cut to 1.8 percent from 1.7 percent. The inflation outlook for 2020 was left unchanged at 1.7 percent and the bank projected 1.8 percent price growth for 2021.

Earlier on Thursday, the Governing Council confirmed that it will be ending its four-year long EUR 2.6 trillion Asset Purchase Programme in December and left the key interest rates unchanged. The main refi rate is currently at a record low zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate is at 0.25 percent.

The ECB continues to guide that the key interest rates are set "to remain at their present levels at least through the summer of 2019."

The bank also said it is "enhancing its forward guidance on reinvestment" by stating that it will reinvest bond sale proceeds "for an extended period of time past the date when it starts raising the key ECB interest rates."

Markets expect the first interest rate hike to occur only in 2020 and the reinvestment to continue until late 2020.

Eurozone interest rates were raised last in July 2011 by 25 basis points. Citing the underlying strength of domestic demand, Draghi expressed confidence that the growth momentum will continue and inflationary pressures would gradually rise. "This supports our confidence that the sustained convergence of inflation to our aim will proceed and will be maintained even after the end of our net asset purchases," he said. The bank's forward guidance on interest rates and reinvestments provide the necessary degree of monetary accommodation for the sustained convergence of inflation to aim of "below, but close to 2 percent", Draghi added.

"In any event, the Governing Council stands ready to adjust all of its instruments, as appropriate," the ECB chief said. Responding to questions from reporters, Draghi said the latest policy decision was unanimous and policymakers did not discuss other tools of monetary policy. "The general intention is to keep liquidity as available as it needs to be," Draghi said. "We think we have instruments to address contingencies in this climate of great uncertainty, the monetary policy formulation wants to keep optionality as a dominant feature," he said. Referring to quantitative easing, or QE, Draghi said it is part of the ECB's toolbox and considered useful in contingencies.

"At some points, QE has been the only driver of this [economic] recovery," he added.


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