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TradeFred Daily Briefing
Thu 19-09-2019 12:00

In Brief:

  • Greenback stands tall as Fed delivers Interest Rates cut
  • Gold loses its shine
  • Australia’s jobless figure unexpectedly climbs
  • Mixed fortunes for cryptocurrencies as Bitcoin falls & Ethereum rises

The US Dollar stood tall on Thursday after the US Federal Reserve cut rates by 25 basis points. The Greenback touched a seven-week high of 108.47 against the Japanese Yen and stood just below that in Asian morning trade. It also rose on the Swiss Franc, hitting a three-month high, and climbed against other major currencies. Elsewhere, the New Zealand Dollar briefly jumped 0.2% after June-quarter gross domestic product landed higher than expectations, before being swamped by a rising Greenback.

Oil prices edged higher in early Asian trade on Thursday after days of turbulence, with markets soothed by Saudi Arabia's pledge to restore full production by end-September at facilities knocked out in drone and missile attacks last weekend. Brent Crude futures rose 8 cents to $63.68 a barrel by 01:39 GMT while US West Texas Intermediate Crude was up 12 cents to $58.23 a barrel. The steadying of nerves, after a 2% drop on Wednesday and a 14% plunge on Monday, came after Saudi Arabia set out the timeline to full operation and also said it had managed to restore supplies to customers at levels prior to the attacks by drawing from its oil inventories.

Gold futures slipped Wednesday after the Federal Reserve executed a widely anticipated rate cut that boosted the US Dollar and left longs in the yellow metal clueless on immediate direction. US Gold futures for December delivery settled up $2.40, or 0.2%, at $1,515.80 per ounce on the Comex division of the New York Mercantile Exchange, before the Fed announcement. At 3:15 PM ET (19:15 GMT), the contract traded at $1,497.15 an ounce, down $16.25, or 1.1%. Spot Gold, reflective of trades in bullion, shed $12.30, or 0.8%, to stand at $1,489.09. Gold’s weakening after the rate-cut announcement correlated with the strength of the US Dollar index, which was up 0.4% at 98.21.

The trade war is taking its toll on Apple Inc, a new survey of Chinese consumer attitudes shows. The company tumbled to No. 24 in an annual report on China’s top brands, falling from No. 11 a year ago. In 2017, before the trade war started, Apple was fifth in this ranking. Meanwhile, Apple’s biggest local rival, Huawei Technologies Co, climbed two spots and came in second, behind only Chinese payment service Alipay.

Asian shares turned lower on Thursday after the US Federal Reserve cut interest rates as expected but signalled a higher bar to further policy easings. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.36%. Hong Kong shares shed 0.96%, but Japan's Nikkei rose 1.01%. Meanwhile, Treasury yields rose broadly and the curve flattened as Fed Chairman Jerome Powell took a cautious approach to any further reductions in borrowing costs, while division among central bankers has increased uncertainty over how much further rates might fall.

Australia’s jobless rate unexpectedly climbed in August as the labour force swelled to a fresh record, signalling additional labour-market slack that sets the scene for further easing by the central bank. Unemployment climbed to 5.3%, the highest level in a year, and above the 5.2% forecast by economists, data from the statistics bureau showed in Sydney Thursday. The 34,700 increase in jobs for the month was swamped by the seemingly inexorable rise in the participation rate to 66.2%.

The result is the wrong direction for a Reserve Bank trying to push down unemployment and revive inflation that’s lain dormant for almost half a decade. Governor Philip Lowe has lowered the cash rate to 1% to support economic growth and is urging the government to add stimulus, an effort frustrated by a focus on returning the books to the black.

Argentina's Senate unanimously approved a law on Wednesday that will increase state funds dedicated to fighting hunger and improving nutrition as the country grapples with stifling inflation and increased poverty. The measure establishes a "food emergency" and allocates a 50% boost in the current budget for national public food and nutrition policies, according to the government. The lower house had voted overwhelmingly in favour of the measure on September 12. It was proposed by opposition lawmakers, including those from the party of Alberto Fernandez, the Peronist opposition candidate and front-runner in the October 27 presidential election.

The top US consumer watchdog will keep consumer complaints against financial firms public despite pressure from the companies, but the agency said on Wednesday it will make changes to the way those complaints are filed. The decision to retain the Consumer Financial Protection Bureau's public complaints database follows a review initiated in 2018 when Mick Mulvaney, who is now President Donald Trump's acting chief of staff, was the agency's interim director.

Japanese Economy Minister Yasutoshi Nishimura said on Thursday that the government was prepared to help small businesses and farms depending on the outcome of trade talks with the United States, expected to be finalised and signed next week. "We're working on the negotiations now," Nishimura told reporters in a briefing. "If necessary, we will make sure to support mid-size and small companies and farms," depending on what is agreed with the United States, he added.

The Bank of Japan left its monetary stimulus unchanged and called for a re-examination of prices and the economy at its October meeting, choosing to sit tight for now just hours after the Federal Reserve cut interest rates again. The BOJ kept its interest rates and asset purchases at existing levels, it said in a statement Thursday, a result forecast by about three quarters of economists surveyed by Bloomberg. The BOJ will review the economy and inflation at the next gathering starting Oct. 30, it said. A previous comprehensive assessment in 2016 led to the creation of the current policy framework, yield curve control. The central bank said Thursday that it needed to pay closer attention to the risk of losing momentum toward its 2% inflation target.

Bitcoin was last at $10,173.9 on the Investing.com Index, down 0.16% on the day. Ethereum was trading at $213.63 on the Investing.com Index, a gain of 5.93%. Meanwhile, Germany delivered a blow against Facebook’s planned cryptocurrency, expanding Europe’s opposition to the social network’s financial ambitions. While the development of blockchain technology holds great potential, it should not be used to develop private forms of money, the government in Berlin said after the cabinet approved its new blockchain strategy. “A core element of state sovereignty is the issuance of a currency, we will not allow private companies to do it,” Finance Minister Olaf Scholz said in an emailed statement following the decision. The criticism from Germany, Europe’s biggest economy, echoes France’s view and scepticism from Washington. Facebook has launched a public-relations offensive that has sought to put policy makers at ease.

Latest Daily Reviews

TradeFred Daily Briefing

In Brief:

  • Sterling near 6-week high vs USD ahead of Fed Interest Rates decision
  • Brent Crude & WTI extend losses
  • German economic confidence rises
  • Wells Fargo announces new internal cryptocurrency

The US Dollar traded near a seven-week high versus the Yen as oil markets recovered from a supply shock, but the focus is firmly on a US Federal Reserve meeting later on Wednesday that is widely expected to deliver an interest rate cut.

TradeFred Daily Briefing

TradeFred Daily Briefing

In Brief:

  • Greenback stands tall as Fed delivers Interest Rates cut
  • Gold loses its shine
  • Australia’s jobless figure unexpectedly climbs
  • Mixed fortunes for cryptocurrencies as Bitcoin falls & Ethereum rises

The US Dollar stood tall on Thursday after the US Federal Reserve cut rates by 25 basis points. The Greenback touched a seven-week high of 108.47 against the Japanese Yen and stood just below that in Asian morning trade. It also rose on the Swiss Franc, hitting a three-month high, and climbed against other major currencies. Elsewhere, the New Zealand Dollar briefly jumped 0.2% after June-quarter gross domestic product landed higher than expectations, before being swamped by a rising Greenback.

Oil prices edged higher in early Asian trade on Thursday after days of turbulence, with markets soothed by Saudi Arabia's pledge to restore full production by end-September at facilities knocked out in drone and missile attacks last weekend. Brent Crude futures rose 8 cents to $63.68 a barrel by 01:39 GMT while US West Texas Intermediate Crude was up 12 cents to $58.23 a barrel. The steadying of nerves, after a 2% drop on Wednesday and a 14% plunge on Monday, came after Saudi Arabia set out the timeline to full operation and also said it had managed to restore supplies to customers at levels prior to the attacks by drawing from its oil inventories.

Gold futures slipped Wednesday after the Federal Reserve executed a widely anticipated rate cut that boosted the US Dollar and left longs in the yellow metal clueless on immediate direction. US Gold futures for December delivery settled up $2.40, or 0.2%, at $1,515.80 per ounce on the Comex division of the New York Mercantile Exchange, before the Fed announcement. At 3:15 PM ET (19:15 GMT), the contract traded at $1,497.15 an ounce, down $16.25, or 1.1%. Spot Gold, reflective of trades in bullion, shed $12.30, or 0.8%, to stand at $1,489.09. Gold’s weakening after the rate-cut announcement correlated with the strength of the US Dollar index, which was up 0.4% at 98.21.

The trade war is taking its toll on Apple Inc, a new survey of Chinese consumer attitudes shows. The company tumbled to No. 24 in an annual report on China’s top brands, falling from No. 11 a year ago. In 2017, before the trade war started, Apple was fifth in this ranking. Meanwhile, Apple’s biggest local rival, Huawei Technologies Co, climbed two spots and came in second, behind only Chinese payment service Alipay.

Asian shares turned lower on Thursday after the US Federal Reserve cut interest rates as expected but signalled a higher bar to further policy easings. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.36%. Hong Kong shares shed 0.96%, but Japan's Nikkei rose 1.01%. Meanwhile, Treasury yields rose broadly and the curve flattened as Fed Chairman Jerome Powell took a cautious approach to any further reductions in borrowing costs, while division among central bankers has increased uncertainty over how much further rates might fall.

Australia’s jobless rate unexpectedly climbed in August as the labour force swelled to a fresh record, signalling additional labour-market slack that sets the scene for further easing by the central bank. Unemployment climbed to 5.3%, the highest level in a year, and above the 5.2% forecast by economists, data from the statistics bureau showed in Sydney Thursday. The 34,700 increase in jobs for the month was swamped by the seemingly inexorable rise in the participation rate to 66.2%.

The result is the wrong direction for a Reserve Bank trying to push down unemployment and revive inflation that’s lain dormant for almost half a decade. Governor Philip Lowe has lowered the cash rate to 1% to support economic growth and is urging the government to add stimulus, an effort frustrated by a focus on returning the books to the black.

Argentina's Senate unanimously approved a law on Wednesday that will increase state funds dedicated to fighting hunger and improving nutrition as the country grapples with stifling inflation and increased poverty. The measure establishes a "food emergency" and allocates a 50% boost in the current budget for national public food and nutrition policies, according to the government. The lower house had voted overwhelmingly in favour of the measure on September 12. It was proposed by opposition lawmakers, including those from the party of Alberto Fernandez, the Peronist opposition candidate and front-runner in the October 27 presidential election.

The top US consumer watchdog will keep consumer complaints against financial firms public despite pressure from the companies, but the agency said on Wednesday it will make changes to the way those complaints are filed. The decision to retain the Consumer Financial Protection Bureau's public complaints database follows a review initiated in 2018 when Mick Mulvaney, who is now President Donald Trump's acting chief of staff, was the agency's interim director.

Japanese Economy Minister Yasutoshi Nishimura said on Thursday that the government was prepared to help small businesses and farms depending on the outcome of trade talks with the United States, expected to be finalised and signed next week. "We're working on the negotiations now," Nishimura told reporters in a briefing. "If necessary, we will make sure to support mid-size and small companies and farms," depending on what is agreed with the United States, he added.

The Bank of Japan left its monetary stimulus unchanged and called for a re-examination of prices and the economy at its October meeting, choosing to sit tight for now just hours after the Federal Reserve cut interest rates again. The BOJ kept its interest rates and asset purchases at existing levels, it said in a statement Thursday, a result forecast by about three quarters of economists surveyed by Bloomberg. The BOJ will review the economy and inflation at the next gathering starting Oct. 30, it said. A previous comprehensive assessment in 2016 led to the creation of the current policy framework, yield curve control. The central bank said Thursday that it needed to pay closer attention to the risk of losing momentum toward its 2% inflation target.

Bitcoin was last at $10,173.9 on the Investing.com Index, down 0.16% on the day. Ethereum was trading at $213.63 on the Investing.com Index, a gain of 5.93%. Meanwhile, Germany delivered a blow against Facebook’s planned cryptocurrency, expanding Europe’s opposition to the social network’s financial ambitions. While the development of blockchain technology holds great potential, it should not be used to develop private forms of money, the government in Berlin said after the cabinet approved its new blockchain strategy. “A core element of state sovereignty is the issuance of a currency, we will not allow private companies to do it,” Finance Minister Olaf Scholz said in an emailed statement following the decision. The criticism from Germany, Europe’s biggest economy, echoes France’s view and scepticism from Washington. Facebook has launched a public-relations offensive that has sought to put policy makers at ease.

TradeFred Daily Briefing

In Brief:

  • Sterling near 6-week high vs USD ahead of Fed Interest Rates decision
  • Brent Crude & WTI extend losses
  • German economic confidence rises
  • Wells Fargo announces new internal cryptocurrency

The US Dollar traded near a seven-week high versus the Yen as oil markets recovered from a supply shock, but the focus is firmly on a US Federal Reserve meeting later on Wednesday that is widely expected to deliver an interest rate cut.

Sterling traded near a six-week high versus the Greenback as some speculators reduced excessive bets on a decline in the Pound, but sentiment remained weak due to uncertainty over how the UK will exit the European Union. Major currencies are likely to trade in narrow ranges before the Fed's meeting. Fed Reserve Chairman Jerome Powell has clearly broadcast his intention to cut rates, so some analysts warn that the USD could actually bounce if the Fed eases policy as expected.

Gold prices stayed stuck in tight ranges on Tuesday as the market settled down to await the outcome of the Federal Reserve’s two-day policy meeting, which kicked off earlier. By 10:55 AM ET (14:55 GMT) Gold Futures for delivery on the Comex exchange were down 0.1% from late Thursday at $1,509.75 a troy ounce. Spot Gold was up 0.3% at $1,502.01 an ounce. The yellow metal has failed to make noticeable gains since the weekend attacks on Saudi Arabian oil installations, with the latest US economic data chipping away at confidence that the Fed will deliver a 25 basis point cut. While the implied chance of a cut was at over 90% last week, it’s fallen to less than 65% currently, according to Investing.com’s Fed rate monitor tool.

Oil prices slipped on Wednesday, extending losses from the previous session after Saudi Arabia's energy minister said the kingdom will restore lost oil production by the end of the month. But investors remained cautious about Middle East tension after the United States said it believes the attacks that crippled Saudi Arabian oil facilities last weekend originated in southwestern Iran. Iran has denied involvement in the strikes. Brent Crude Oil futures (LCOc1) fell 15 cents, or 0.2%, to $64.40 a barrel by 02:53 GMT, after tumbling 6.5% the previous session.

US President Donald Trump said on Tuesday his administration could seal a deal on trade with China before the US presidential election, or an agreement could be reached the day after US voters go to the polls. Speaking to reporters aboard Air Force One as he travelled from New Mexico to California, Trump claimed that Beijing thinks he is going to win re-election, but that Chinese officials would prefer to deal with someone else. He said he had told China that if the deal comes after the November 3rd 2020 election, it would be on terms "far worse" for Beijing than it could achieve right now.

Confidence among companies in Asia lifted slightly in the September quarter from 10-year lows, but most firms do not plan on hiring or expect business to pick up as they see a risk of a global recession looming, a Thomson Reuters/INSEAD survey found. The Thomson Reuters/INSEAD Asian Business Sentiment Index tracking firms' six-month outlook rose five points to 58 in the survey. A reading above 50 means optimistic respondents outnumbered pessimists. The latest showing, though, means the index has not risen above the mid-60s for a year and is one of the seven weakest readings since the 2008-2009 global financial crisis.

On the share market, MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.13 % while Japan's Nikkei was flat. China’s Shanghai Composite and the Shenzhen Component rose 0.3% and 0.1% respectively by 10:34 PM ET (02:34 GMT). Hong Kong’s Hang Seng Index was little changed at 26,794.0. Wall Street shares ticked up a tad on Tuesday with the S&P 500 gaining 0.26%.

Foreigners bought US Treasuries in July after selling them for two straight months, according to US Treasury department data released on Tuesday, a precursor to the sector's steep rally in August. The month of July culminated in the Federal Reserve cutting interest rates on July 31. The following month, trade tensions ramped up between the United States and China as they threatened to impose tariffs on one another, fuelling a dramatic surge in US Treasury prices. Foreign flows into US Treasuries showed an inflow of $10.95 billion in July, from outflows of $7.71 billion and $32.79 billion in June and May. Offshore private investors purchased Treasuries totalling $42.39 billion during the month, offsetting selling of $31.12 billion by foreign official accounts.

US manufacturing output increased solidly in August, boosted by a surge in the production of machinery and other goods, but the outlook for factories remains weak amid rising headwinds from trade tensions and slowing global economies. The fairly upbeat report from the Federal Reserve on Tuesday came as officials from the US central bank gathered for a two-day policy meeting. Economists said it was too early to conclude that the trade-driven manufacturing recession was over.

Germany's ZEW economic sentiment index, the first major confidence indicator of the month in Europe, rose to -22.5 in September from a seven-year low of -44.1 in August, amid signs of progress in the US-China trade dispute and the European Central Bank's monetary policy easing package last week. The reading is stronger than the -38.1 forecast by economists. It is important because the ZEW index is usually seen as a better indicator of turning points in the German economy than of its overall performance.

Australia’s government is making its second attempt to pass legislation that could force energy companies to break up if they engage in anti-competitive conduct. Prime Minister Scott Morrison has labelled the proposed law a “big stick” against firms that use market concentration to hike up electricity prices. Under the proposal, the Federal Court could order power companies to sell off assets on the recommendation of the competition watchdog. “The government has long warned that energy companies must put their customers first,” Treasurer Josh Frydenberg said in a statement earlier this week. “That is why the government is committed to passing our ‘big stick’ legislation.”

Japan's exports slipped for a ninth straight month in August as international trade tensions ramped up risks for the world's third-largest economy, although the decline was slightly smaller than expected. The negative reading adds some pressure on the Bank of Japan to expand stimulus at its policy meeting on Thursday to prop up business sentiment and manufacturing activity, which have been hit by global economic weakness. Exports in August slumped 8.2% from a year earlier, Ministry of Finance data showed on Wednesday, dragged down by autos, car parts and semiconductor production equipment. The fall was smaller than a 10.9% drop expected by economists but marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.

Wells Fargo & Co said on Tuesday it will pilot its own digital currency powered by blockchain to help move cash across borders and between branches in real time. The currency, called Wells Fargo Digital Cash, will be linked to the US Dollar and transferred using the bank's distributed ledger technology to keep track of payments within its internal network. The system will allow the bank to bypass third parties in the asset transfer process saving costs and time, said Lisa Frazier, head of the Innovation Group at Wells Fargo. "We are eliminating the intermediaries which can often extend the timeline to be able to do cross border money transfers," she said.