Sat, May 08, 2021 @ 23:01 GMT
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Sunset Market Commentary

Markets: Global core bond markets held a positive bias as rising equity volatility supported a bid for safe havens. End of month extension buying probably remained mildly positive as well. Bunds and Treasuries extended yesterday’s rebound early in European trading. The fall-out from the sell-off in tech equities eased (at...

Germany rumored to be willing to offer concessions to US on trade, European Commission rules that out

Bloomberg reported the European Commission urged the region's governments today to stand united in trade talks with the US, and be ready to "think out of the box fast". EU is seeking to follow South Korea to get indefinite exemption on the steel and aluminum tariffs by May 1. But,...

Euro Looks To German Inflation Data For Direction

Germany’s preliminary inflation data for March are due for release on Thursday, at 1200 GMT. Forecasts point to an acceleration in price pressures for Eurozone’s largest economy, which would undoubtedly be pleasant news for the European Central Bank (ECB) as it prepares the ground for an unwinding of stimulus...

GER 30 Recovers from 7-Week Low to Exceed 12,000 Mark; Bullish Signal by Stochastics in Very Short-Term

The Germany 30 index has rebounded after hitting a seven-week low of 11,703.80 during Monday’s trading. The index ended up gaining 1.0% during yesterday’s trading, while on Tuesday – at the time of writing – it is up by around 0.8%. The Tenkan-sen line remains below the Kijun-sen line in...

Yen Steals the Show on Trade War Worries, Sterling Reversed after Brief BoE Spike

Sterling attempts to rally after BoE rate decisions but failed to sustain gain. On the other hand, Yen is quietly stealing the show on risk aversion. Investors are worried that the world is finally entering into the phase of trade war with US President Donald Trump's scheduled announce of...

Euro Shrugs Off Soft Manufacturing PMIs

EUR/USD has paused on Thursday, after gains on the Wednesday session. Currently, the pair is trading at 1.2327, down 0.10% on the day. On the release front, eurozone and Germany Manufacturing PMIs missed their estimates. Eurozone Manufacturing PMI dropped to 56.6, down from 58.1 points. The German release slowed...

German Ifo business climate dropped to 114.7 as threat of protectionism dampended mood in the economy

German Ifo business climate dropped to 114.7 in March, down from 115.4, slightly above expectation of 114.6. Ifo expectation dropped to 104.4, down from 105.4, met consensus. Ifo current assesment dropped to 125.9, down from 126.3, above expectation of 125.6. Ifo economist Klaus Wohlrabe "the protectionism debate is leaving its mark." And...

German PMI, BOE Rate Decision And US Jobless Claims

At 08:30 GMT, German Markit Manufacturing PMI (Mar) is expected to come in at 59.8 from 60.6 previously. Markit Services PMI (Mar) is expected at 55.0 v 55.3 previously. Markit PMI Composite (Mar) is expected to be 57.0 from 57.6 prior. The expectation is for a slip in these...

Germany PMI: Private sector pulled back sharply, but Q1 still robust

German PMI manufacturing dropped to 58.4 in March, down from 60.6, below expectaiton of 59.8. That's an 8-month low. German PMI services dropped to 54.2 in March, down from 55.3 and missed expectation of 55.0. That's a 7-month low. Here is the full release: Germany PMI drops to eight-month low in...

Merkel pledges unambiguous counter measures against Trump’s unlawful tariffs

German Chancellor Angela Merkel talked to lawmakers in Bundestag today covering a number of topics. Regarding Brexit, Merkel said the EU-UK relationship cannot not be as close as it is now after Brexit. However, she still emphasized that EU wants "friendly relationship" with UK. Also, she was "deep, detailed" free...

USD and NZD Weak ahead of FOMC and RBNZ, Sterling lifted by Job Data

Sterling is staying in the spotlight today as the set of job and wage data boosts the chance of a May BoE hike. The central bank's announce tomorrow is now rather important as some hawks could come back flexing their muscles. Similar strong for today is Canadian Dollar, riding...

Forex Analysis: NAFTA Progress As US Drops Auto Content Proposal

Note: Wednesday is a Bank Holiday in Japan, banks will be closed, and there will be no trading activity due to the Vernal Equinox Day Bank Holiday. Progress has been made on NAFTA, as the US has backed down and dropped the demand that all vehicles made in Canada and...

German ifo forecasts 2.6% growth in 2018, 2.1% in 2019

ifo Institute forecasts German economy to grow 2.6% in 2018, then slow to 2.1% in 2019. It's head of f Economic Forecasting Timo Wollmershaeuser noted that the calculations "confirm figures from our December forecast.: However, "underlying forces have shifted somewhat." In particular, forecast for household consumption expenditure was scaled by by...

Sunset Market Commentary

Markets Core bonds lost some ground today with US Treasuries again underperforming German Bunds ahead of tomorrow's FOMC meeting. Last minute positioning suggests that (US) investors don't want to be wrong-footed by a potentially more hawkish Fed. Rising oil prices weighed as well. Stock markets stabilize after yesterday's heavy sell-off,...

Euro dips as German ZEW indicates “Economic Outlook Worsens Considerably”

Euro dips after much weaker than expected sentiment data. German ZEW economic sentiment dropped to 5.1 in March, down from 17.8, below expectation of 13.0. Current situation gauge dropped to 90.7, down from 92.3, above expectation of 90.0. Eurozone ZEW economic sentiment also dropped sharply to 13.4, down from...

Sterling Shines as UK and EU Agreed on Brexit Transition Deal

Sterling soars today on news that EU and UK has finally agreed on the Brexit transition deal. The pound is now set to take on 1.4144 resistance against dollar and 0.8686 against Euro. While notable weakness is seen in Euro against Sterling, it's actually performing quite well elsewhere. The...

Forex Analysis: AUDJPY And GER 30

The AUDJPY pair has fallen to critical support this morning, at 81.472, which was the low from the 16th of April 2017. This level was tested two weeks ago and led to a bounce back up to resistance at 84.515 and trend line resistance. The resistances above this level...

Trade War a Major Theme in Busy Week of Central Banks, Data and Politics

The week open relatively quietly again with Swiss Franc leading the way down, followed by Aussie and Kiwi. Dollar strengthens broadly but it's again out shone by Japanese Yen. Asian markets are mixed with Nikkei trading down -0.8% at the time of writing. But HK HSI, China SSE are...

German Economy Minister Altmaier: Americans are “still” our allies

German Economy Minister Peter Altmaier will meet with US Commerce Secretary Wilbur Ross this week, and "anyone in Washington who is willing to talk." US steel and aluminum tariffs is the main focus on the trip for Altmaier. He warned that "what's dangerous about the current situation is that...

Merkel criticized Trump’s tariffs as against the WTO principles

German Chancellor Angela Merkel criticized that US President Donald Trump's steel and aluminum tariffs are against the principles of the WTO. And "we want to change or solve these problems via discussions if possible." At the same occasion, Swiedish Prims Minsiter Stefan Lofven said the tariffs are worrying and regrettable.

US Earnings And Jobs Data Hit A Sweet Spot For Markets

The US Nonfarm Payrolls data released on Friday showed a strong increase in job creation and, combined with the lower than expected increase in Hourly Earnings, sent the markets into risk-on mode. This was a complete reversal of the previous month’s reaction to this data series when positive sentiment...

Forex Analysis: USDJPY And GER 30

The USDJPY pair has broken higher overnight, with the easing of tensions with North Korea. The regime has softened its approach and reached out with a suspension of nuclear weapon and missile tests. The BOJ has left rates on hold and continues its yield targets for JGBs. This has...

UK Industrial production 1.3%, 1.6% yoy; Manufacturing production 0.1% mom, 2.7% yoy

European session data update: UK visible trade balance (GBP) Jan: -12.3b vs exp -12.0b vs prior -13.6b UK trade release UK industrial production Jan: 1.3% mom vs exp 1.5% mom vs prior -1.3% mom UK industrial production Jan: 1.6% yoy vs exp 1.8% yoy vs prior 0.0% yoy UK manufacturing production Jan: 0.1%...

In Europe, Industrial Production Is Due In Both Germany And The UK

Market movers today The key event today will be the US employment report, where all focus will be on the wage growth component . The increase in hourly earnings jumped to 2.9% y/y in January from 2.7% y/y in December, stirring inflation fears and causing a jump in US yields....

German factory orders -3.9% mom, Swiss unemployment rate at 2.9%

German factory orders Feb: -3.9% mom vs exp -1.6% mom vs prior 3.0% mom Swiss unemployment rate Feb: 2.9% vs exp 2.9% vs prior 3.0% Little reaction to the data as markets await ECB later today. Recent rebound in EUR/CHF suggests pull back from 1.1832 has completed at 1.1445 already. But...

Markets Stay Defensive as Trump Steps Up His Words on Trade Wars

The forex markets are pretty steady in Asian session as an extremely busy week starts. Reactions to Italy election and Germany SPD vote on grand coalition were muted. Euro remains steady so far, staying as the second strongest major currency for the month after Yen. Canadian Dollar and Australian...

German Retail Sales Surprisingly Dipped In January

For the 24 hours to 23:00 GMT, the EUR rose 0.43% against the USD and closed at 1.2329 on Friday. In economic news, data showed that the Euro-zone’s producer price index (PPI) climbed less-than-anticipated by 1.5% on an annual basis in January, compared to an advance of 2.2% in the...

German Coalition Decision Among Events that May Shake the Euro

The upcoming weekend promises to be an eventful one for European assets. On Sunday, while Italians head to the polls to elect their new leader, Germans will find out whether they have a new government, as the SPD party will announce if its members have approved another "grand coalition" with Merkel's conservatives. The party's decision could have wide-ranging effects for Germany's political stability and by extent, for the common European currency.

Forex: EUR Gains On Hopes Of German Coalition

The political instability in Germany improved over the weekend, as the leader of Bavaria’s conservative party endorsed an alliance with Germany’s Social Democratic Party (SPD). With voter pressure and the need to avoid new elections, the SPD has agreed to talk with Chancellor Angela Merkel, which raises the prospect of a new 'Grand Coalition' German Government. Many European leaders have underlined the importance of getting a stable German government in place quickly so that the Eurozone can discuss its future, including Brexit and proposals by French President Emmanuel Macron on Eurozone reforms. Chancellor Merkel stated over the weekend that she would pursue a grand coalition and an Enid poll showed on Sunday that 52% of Germans backed a grand coalition. Support for Merkel’s Christian Democratic Union was up 2 points at 33% from a week ago and the SPD was up 1 point at 22%. The markets have reacted favorably to the news pushing EURUSD to 2-month highs in early Monday trading.

In Germany, Political Uncertainty Sets In

The German economy is presently booming, but political uncertainty is introducing new risks to this trajectory. Following the German general election on September 24, Chancellor Merkel and her Christian Democratic Union (CDU) entered into negotiations with the Free Democrats (FDP) and the Green Party on forming the next government. The collapse of the coalition negotiations on November 19 is not a huge surprise given the ideological differences among the center-right CDU, the economically liberal FDP and the environmentally-conscious Greens. Not only could political uncertainty have a knock on-effect on the German economy, but it also makes it harder to pursue further integration in Europe.