DIGEST Dec 2015 No3 : The Super Weak EUR
Wall Street Ends Negative : Depressed Oil Prices
- Wall Street closed lower after crude oil prices fell below $ 40 per barrel and there is more evidence of a weak manufacturing sector in the Fed's Beige Book.
- The weakening of the index starts after Fed Chairman Janet Yellen reiterated for a rate hike will be held on December 16 Fed meeting but insists that the decision will hinge with supporting data.
- The Fed's Beige Book said economic activity grew at a low speed in most areas.
- The Fed said consumer spending increased in almost all districts while the manufacturing sector remains a mixture, under continued pressure from a strong dollar, low commodity prices and weak global demand.
- Traders also said the market was nervous because mass shooting in San Bernardino, California, during the afternoon trading session.
- Art Hogan of Wunderlich Securities said the market was nervous about shooting after coordinated terrorist attacks in Paris last month.
- There is no evidence of terrorist-related shootings California. Stocks turned lower and extended after oil prices fell below $ 40 per barrel and the Beige Book, raising concerns for some traders that economic growth remains sluggish.
- The S & P 500 closed down 1.1 percent with the energy sector fell 3.1 percent to lead all 10 sectors were lower. Energy SPDR (XLE) had its worst day since September 28 The Dow Jones Industrial Average ended almost 160 points lower, closed in negative territory for the year after ending higher for 2015 on Tuesday.
- The Nasdaq composite index closed 0.6 percent lower after earlier trying to hold a slight advantage.
- Treasury yields reach highest results earlier in the evening news, with results yiield 2 years at 0.94 percent and 10-year yield at 2:18 percent at closing.
- US crude fell 4.6 percent at $ 39.94 a barrel, below $ 40 for the first time in three months. Volatile oil trading as investors reacted to headlines in production ahead of an OPEC meeting this weekend.
- Weekly crude oil inventories showed an unexpected increase of 1.2 million barrels. Oil-related news, shares of Chevron and Exxon Mobil contributed the sharpest decline for the Dow Jones.
- The Dow Transports closed down 2.1 percent to below 50-day moving average index, with the highest decline in the stock Kansas City Southern.
- Previously, the main index average stock traded mixed, while the US dollar index rose to its highest level since April 2003 after Yellen said in his speech that the US economy has come a long way, but the Fed's decision related to rising interest rates could still be affected by the data before the meeting of the month December.
- The US dollar index fell below 100 after earlier touching a high position 100.51, higher than March 100.39 highs. The index closer to 100.00 in late trading, the euro recovered at a rate of $ 1.06, while the yen traded near ¥ 123.24 to the dollar.
- Gold fell $ 9.70 to $ 1,053.80 per ounce, from session lows $ 1,049.40 an ounce, the lowest level since October 2009.
- Federal Open Market Committee met December 15 to 16 and could raise short-term interest rates for the first time in almost a decade.
- Investors are also looking forward to the decision of the European Central Bank on monetary policy due ET Thursday morning. The market generally expects further easing from the ECB.
- The probability of a rate hike in December in the United States remained stable at above 70 percent, according to CME FedWatch tool.
- San Francisco Fed President John Williams said in a Reuters report Wednesday that will take several years to get a short-term US interest rates, now near zero, return to the normal new position of about 3.5 percent, Ahead of the November jobs report Friday, ADP data showed private payrolls in November exceeded expectations of 217,000.
- Revised third-quarter productivity rose 2.2 percent, while unit labor costs rose 1.8 percent. Stocks closed near session highs Tuesday, the first trading day of December, shaking off an intraday pressure from weak manufacturing data.
- Over the past 10 years, the S & P 500 rose 70 percent during the month of December with an average return of 1.27 percent, according to the analysis Kensho.
- In corporate news, Yahoo closed up 5.75 percent after the Wall Street Journal reported the company's board will discuss selling the superior internet business, how to maximize the value of its stake in Alibaba, and consider the future CEO Marissa Mayer at a meeting this week.
- Earlier, the Nasdaq composite index strives to maintain a slight rise due to stock Apple struggled to gain and Qualcomm traded higher.
- Nasdaq 100 closed lower after trading briefly above the high closing at 4,719.06. Qualcomm shares closed 5.2 percent higher after briefly jumped more than 8 percent in opening trade after news of chip makers entering licensing agreements 3G / 4G smartphone maker Xiaomi China.
- Amazon and Alphabet stocks closed lower after reaching all-time high in intraday trading Wednesday morning.
- Netflix shares surged 2.8 percent to set a new intraday high and close to the record. The Dow Jones Industrial Average closed down 158.67 points, or 0.89 percent, at 17,729.68, with shares of Exxon Mobil experienced the highest decrease, while UnitedHealth shares rose the most. S & P 500 index closed down 23.12 points, or 1.10 percent, at 2,079.51, with a decrease in all sectors, led by the energy sector.
- The Nasdaq composite index closed down 33.08 points, or 0.64 percent, at 5,123.22. Today will be released the data important US economic indicators.
- ISM Non-Manufacturing PMI in November, which is indicated by the results of the consensus is at position 58, down from the previous 59.1.
- Likewise, the data will be released Initial Jobless Claims, which is indicated by the results of a consensus in the position of 268K, down from the previous results on 260K.
- The data will also be released Challenger Job Cuts in November, which is expected to be in a position 47K, down from the previous results at 50.5K.
- Will also be released Factory Orders (MoM) in October, which is indicated by the results of a consensus in the position of 1.4%, an increase from the previous decline at -1.0%.
- Analyst ZATco Research Center estimates that Wall Street will be strengthened to respond to the results of limited economic indicators.
- But Wall Street movement can still be affected by the results of Thursday's ECB meeting and also the movement of crude oil prices.
The Super Weak EUR : Recent policy ahead of the ECB, Euro December 3
Euro exchange rate movements which continued to weaken since the beginning of trading continued the trend of the previous trading increasingly mired in mid European session today (03/12) by the negative sentiment ECB policy easing.
- Tonight the ECB will announce its latest monetary policy which is expected to further plunge deeper EURUSD pair, the article will be announced policy is a policy that is not a favorite for exchange rate movements of the region.
- In addition, some economic data released today was not encouraging and increasingly burdensome pair. These data such as performance data for the service sector PMI and the business performance of the retail sector of the Euro area.
- Euro exchange rate movements in the European session (10:00:35 GMT) moved down against the US dollar, having opened weaker at 1.0614 in early trading (0000 GMT), the exchange rate euro fell 53 pips or 0.5% and the value of the rolling is at 1.0561.
- For further trade until the close of trading American session ends tomorrow morning, analyst ZATco Research Center estimates that the EURUSD pair could fall to 1.0515 support range, but if the dollar down, the pair can rise back to 1.0651 resistance position.
Pound Drops European Session December 3 The good Ignore Data Services PMI
Sterling exchange rate movements continued to weaken since the beginning of trade remained in the same position in the middle of the European session today (02/12), but with less volume than the previous trading despite positive sentiment came from the UK services sector performance data.
The positive sentiment that seeks to lift the movement of GBPUSD pair of performance data for the UK service sector in November was not able to change the direction of movement. In a survey report Markit data showed higher gains in October and well above market expectations and economists, The development of the data is indicated by economic indicators Service PMI (m / m) climbed to 55.9 from the previous month at 55.1 index points position.
- Markit previously announced performance of the country's manufacturing and construction, which declined from the previous period. Pound exchange rate movements in the European session (10:00:35 GMT) moves the weak against the US dollar, having opened weaker at 1.4953 in early trading (0000 GMT), the GBPUSD pair fell by 15 pips or 0.1% and the value of the rolling is at 1, 4938.
- And for subsequent trading, analyst ZATco Research Center estimates pair GBPUSD will get down to support level 1.4870 and if that level breaks, then the pair can rise to the level of 1.4977.
Aussie European Session Successfully Fight Flow weakening Majors
Australian dollar exchange rate weakened since the beginning of the Asian trading session opened successfully changed direction since entering the European session this afternoon.
- This morning the Aussie weighed by the unfavorable movement of foreign trade data that showed Australia's November trade deficit ballooning.
- Australian Bureau of Statistics (ABS) announced the Australian foreign trade deficit more swollen and the largest since April as exports fell while imports for the month remained unchanged. A deficit of $ 3.30 billion in October, up 38 percent from $ 2.40 billion deficit in the previous month and below market expectations Strengthening the afternoon AUDUSD pair is still receiving positive sentiment from the third-quarter GDP data yesterday released the country and unable to raise the exchange rate.
- The market response on the GDP data yesterday took the momentum of the weak euro against the Aussie.
- Aussie exchange rate movements end of the European session (10:15:35 GMT) strong moves against the US dollar, having opened weaker at 0.7309 in early trading (0000 GMT), the pair AUDUSD up 17 pips or 0.1% and the value of the rolling is at 0.7326.
- But for the next trading, analyst ZATco Research Center estimates that the AUDUSD will continue to rise to levels above 0.7359 on bolinger 20 daily, but if there is a correction may be back down to 0.7276 position on the middle bolinger 5 daily.
Manufacturing Performance Indonesia Lowest In 6 Months
In addition to the data announced an increase in inflation, on the first day of December (1/9) by the Central Statistics Agency (BPS), the Nikkei daily and Markit Economics also announced the performance of activities of manufacturing companies homeland of the worst in the last 6 months.
- Contrary to the release of inflation showed improvement Indonesia consumption sector, the nation's manufacturing index fell from November to touch the lowest level within the last six months by the depreciation of the rupiah which has boosted production costs.
- Based on Nikkei PMI Manufacturing Indonesia Manufacturing PMI scores was noted that the country ended last month amounted to 46.9 from 47.8 recorded for the previous month, in October. Can be seen in the image below:
Indonesia Manufacturing PMI
- Poor performance of the manufacturing business is contributed by a further decline of output and new orders. The PMI data also describe the development of the manufacturing industry performance figures Nusantara below 50 indicates contraction.
- Meanwhile the purchasing activity decreased to its lowest level since the survey's history. Also there is an increase in input costs and output costs, but prices continue to rise beyond the level of the factory price increases, indicates that the company continues to squeezed margins.
The more pounds doldrums Follow UK Construction PMI data
Sterling exchange rate movements continued to weaken since the beginning of trade correcting previous trading increasingly fall in the middle of the European session today (12/02) by economic reports released this afternoon Markit.
Aggravating the negative sentiment GBPUSD pair movement is getting stronger when the performance data of the UK construction sector in November reported to show a lower data from the acquisition in October and also far below market expectations and economists, The development of the data is indicated by economic indicators Construction PMI (m / m) dropped to 55.3 from the previous month at 58.8 index points position.
- Markit yesterday also announced that the country's manufacturing performance declined from the previous period. This can be seen from the report Markit UK business conditions being experienced pressure. Pound exchange rate movements in the European session (10:00:35 GMT) moves the weak against the US dollar, having opened weaker at 1.5081 in early trading (0000 GMT), the GBPUSD pair fell 30 pips or 0.3% and the value of the rolling is at 1, 5051.
- And for subsequent trading, analyst ZATco Research Center estimates GBPUSD pair will fall to as low as 1.5022 on the bottom bolinger 7 Daily and if it does not penetrate that level, then the pair can rise to the level of 1.5085.
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Euro European Session December 2 Collapsing Again By Inflation Data Estimation
Euro exchange rate movements which continued to weaken since the beginning of the previous trading correcting trade increasingly mired in mid European session today (12/02) by the momentum of the dollar and the strengthening of economic reports released this afternoon Eurostat.
From the data released this afternoon, strong economic data most damning movement of EURUSD pair is data inflation expectations and core inflation Euro area in November that were below expectations despite inflation data were reported at the previous period. The development of these data is shown in the indicator CPI Flash Estimate y / y which remains in the same position with 0.1% the previous month, but the Core CPI Flash Estimate y / y dropped to 0.9% from 1.1% the previous position.
Euro exchange rate movements in the European session (10:00:35 GMT) moved down against the US dollar, having opened weaker at 1.0633 in early trading (0000 GMT), the exchange rate euro fell 48 pips or 0.4% and the value of the rolling is at 1.0585. For further trade until the close of trading American session ends tomorrow morning, analyst ZATco Research Center estimates that the EURUSD pair could go down to around 1.0555 but if the dollar down, the pair can rise back to 1.0653 position.
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Preview: ADP Employment Report US
US private sector employment increased more than expected in October, amounting to 182,000. This figure bolstered optimism on the health of the economy and the growing possibility of US interest rate hikes this year.
- The Federal Reserve may raise interest rates this month, but the desire to do this weakened slightly due to data update in November ISM manufacturing index yesterday.
- Benchmark is followed by many people fell more than expected, slipping below the neutral limit of 50 for the first time in three years.
- Will the central bank to tighten monetary policy when the US manufacturing possibilities were slipping into recession To be honest, the manufacturing sector PMI market to provide better news.
- Although the revised PMI for November was at humility in two years, the last figure in 52.8 reflects moderate growth.
- "While the pace of manufacturing growth in November seems to slow down," said Markit chief economist, "the manufacturing sector remains resilient and encouraging, and it would be more impressive if the storm disaster a stronger US dollar and markets abroad has taken into account."
- Nevertheless, the market will want to read tonight's ADP report on private sector payrolls for the month of November.
- This release will provide a clearer context for deciding whether the central bank will start to tighten monetary policy.
- The consensus estimate of econoday.com benchmark ADP will increase in November to match the rise in the last month amounted to 183,000.
- This is an increase decent if not exactly spectacular in line with the monthly rise of recent history.
- By contrast, the government estimates on private nonfarm payrolls rose in October. The labor department said that US companies adding 268,000 positions in the opening of the fourth quarter.
- This is the largest monthly increase this year - a rise convinced many analysts to predict that the interest rate rise this month at a meeting of the Fed policy is uncertain.
- But if the ADP report at night is in the low range far below 180,000, this news will inspire conversation that the rise in October from a possible government figures only anomaly. In other words, the ADP data tonight deserve careful attention to decide what will happen * with the official jobs report on Friday and its effect on the decision to increase the interest rate the Fed on 16 December.
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Speech Janet Yellen Back Save the Dollar
Once depressed throughout the Asian trading session to enter the US session yesterday (2/12), the US dollar managed to strengthen responded Janet Yellen's speech at a meeting of The Economic Club of Washington DC to discuss the nation's economic prospects.
- During the meeting, Janet Yellen said the rise in US interest rates will be done as soon as evidence of economic recovery from the recession.
- Moreover according to the head of the US central bank, the interest rate at a low position for too long can pose a risk to financial stability. After the speech, the market reacted immediately and pull the dollar more so that some of its main rivals stumble.
- And enter the Asian trading session this morning (03/12) the dollar still has the energy to continue strengthening despite the negative sentiment tried to whack exchange today. Tonight will be released ISM non-manufacturing PMI which showed feared bad data follow the data reported yesterday its manufacturing sector declined.
- In addition to the weekly jobless claims data released before the data from Markit showed the increase of data and is quite mmberatkan dollar.
- Against major currencies in the spot market this morning look ahead at some of the pair and the fundamental main rival the dollar today is expected to show mixed data.
- Monitor the strength of the US dollar exchange rate against other currencies on the US dollar index today (00:30:40 GMT) rolling in the range 100.02, up from 99.96 opening at 0000 GMT.
- Technically, Analyst ZATco Resarch Center see the movement of the US dollar index is based on the high price and low at 99.71 100.49 earlier today, the index is expected to have a resistance in the range of 100.84 and 100.41, while immediate support in the range of 99.63 and 99.28.
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Yellen Strong Signal To US rate hike in December
- US Federal Reserve chairman, Janet Yellen hinted ready to raise short-term interest rates this month, although Yellen saw a split in its ranks, which could complicate the move towards an end to seven years of near-zero interest rates.
- "I do not need unanimity. I think we have to tolerate some differences of opinion, "Yellen said on Wednesday (12/2), to answer questions after delivering a speech on the economic outlook.
- In addition to some regional Fed presidents, two Fed governors based in Washington have expressed doubts about the rise in interest rates, although the consensus seems to be moving against them.
- The Fed, which plays an important role in the next policy meeting on 15-16 December, has said it will raise its benchmark federal funds from near zero after seeing further improvement in the labor market and be fairly confident that inflation will rise towards the target of 2%.
- Yellen explained the economic background that gives a strong hint towards raising interest rates soon.
- Yellen also warned that delaying the rise in interest rates could depress the economy, for example by inducing risk taking among investors could destabilize the financial system.
- "With the receipt of economic and financial information since the October meeting, we have been consistent with expectations of continued improvement in the labor market," Ms. Yellen said in a speech.
- "Continuing improvement in the labor market helped reinforce the belief that inflation will return to 2% of our objectives in the medium term."
- On Wednesday, the Labor Department reported hourly compensation adjusted for inflation for workers in non-agricultural business sector rose 3.4% in the third quarter compared with the same quarter last year, the biggest jump since the third quarter of 2009.
- It was after compensation per hours grew 3.3% in the second quarter compared to the same quarter in 2014.
- The size of wages have also shown improvement. Hourly earnings average of private sector employees was 2.5% higher in October than a year earlier, the largest annual increase since July 2009, according to a Labor Department report that separately.
- However, inflation, which is the Fed's preferred measure, has been under the target for 42 consecutive months.
- The Labor Department on Friday will report on November job growth and unemployment, a key indicator data end of Fed officials who will see before making a decision regarding interest rates.
- Futures markets put the probability of 75% on a 0.25% rate hike in the Fed's meeting this month, according to the Chicago Mercantile Exchange.
- The Fed lowered short-term interest rates near zero in December 2008 during the financial crisis, and has held that level to support the economy through recession and recovery.
- After making sure a lot of the investment community that the rate increase will come this month, Fed officials are now trying to move gradually and cautiously after the first step. Ms Yellen pointed to the low level of interest rates "neutral".
- This is a theoretical level that would be appropriate in normal conditions with consistent to the US unemployment rate is low and stable inflation.
- Before the financial crisis, a neutral level is widely expected to near 4%.
- Adjusted for inflation to be close to 2%. Since the crisis, Yellen noted, neutral level adjusted for inflation has been below zero. In other words, the economy has not been able to bear the higher levels seen in normal conditions because it is too fragile.
- Yellen said she expects a neutral level to move slowly as the economy strengthened, but he was not sure whether it will rise or how much. This means that the Fed will move gradually and hesitant as a result, to find a new balance point of the economy.
- In front of this, Ms. Yellen seem to have in common with those who reject the increase. Fed Governor Lael Brainard, who has expressed reservations about rising interest rates, stated in a speech Tuesday to the low level of the neutral interest rate the Fed.
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