Friday, January 24, 2020 4:02:24 AM
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BOE won't be deterred to cut rates next week by PMI data - Credit Agricole
Fri 24 Jan 2020 08:57:15 GMT
Author: Justin Low
The firm expects the BOE to cut its bank rate by 25 bps on 30 January
In a client note, strategists Valentin Marinov and Manuel Oliveri, says that while the expectation is for a marginal improvement in business sentiment, "we doubt that the prints will sway the MPC's collective hand and expect the BOE to cut rates next week".
Adding that "to be sure, there is scope for positive PMI surprises today (based on the Deloitte CFO survey and CBI business optimism); but correlation between these gauges and the PMIs has been tenuous at best in recent years".
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ECB's Knot: Technically speaking, we haven't hit effective lower bound on rates
Fri 24 Jan 2020 08:47:10 GMT
Author: Justin Low | Category: Central Banks
Comments by ECB governing council member, Klaas Knot, in Davos
But there are decreasing returns to further rate cuts
Strategy review an opportunity to close perception gap on inflation
ECB has underestimated communication with citizens previously
The headline remark isn't what you'd expect from a hawk like him but it needs to be paired with the fact that he does mention that there downside risks to cutting further - a view that he has advocated for the longest of time now.
The euro is struggling to keep afloat despite the better data from Germany earlier, and that is a bit worrisome in my view. If the 1.1040 level firmly gives way, we could see a run towards 1.0990-00 next as sellers continue to keep near-term control.
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Gold in Demand Amidst Coronavirus Fears, $1568 Key
Matt Weller, CFA, CMT January 23, 2020 2:36 PM
Share:
Given global developments so far this year, traders have already gotten crash courses in diverse fields from climate science to Middle East relations to US constitutional law. This week has forced traders to get up to speed quickly in epidemiology.
The rapid spread (and equally rapid international response) to the coronavirus from its epicenter in China has left markets on edge, leading to general risk off sentiment. Market participants are drawing parallels to the 2003 SARS outbreak, which infected nearly 8,100 people worldwide and killed nearly 800. Economists estimate the SARS outbreak ultimately knocked 1-2% off China’s GDP and 2-3% off Hong Kong’s economic activity.
In my (completely unqualified) opinion, authorities are responding aggressively to limit the spread of coronavirus, and hopefully that will be enough to avoid a repeat of the SARS epidemic (or worse!). That said, traders are understandably selling risk assets first and asking questions later as today’s headlines point to another major Chinese city getting quarantined. The big wave of risk aversion has boosted the appeal of safe haven assets such as US treasury bonds (10-year yields down to a 1-month low at 1.74%), the Japanese yen (the day’s strongest major currency) and of course, gold, the planet’s ultimate safe haven.
While the spread of coronavirus (or lack thereof) will drive gold prices in the short term, the longer-term technical outlook for the yellow metal is increasingly constructive. Gold prices have spent the last two weeks consolidating in the mid-$1500s following the early January spike on the US-Iran military skirmishes:
It's Your World. Trade It !
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Happy Friday
BOE won't be deterred to cut rates next week by PMI data - Credit Agricole
Fri 24 Jan 2020 08:57:15 GMT
Author: Justin Low
The firm expects the BOE to cut its bank rate by 25 bps on 30 January
In a client note, strategists Valentin Marinov and Manuel Oliveri, says that while the expectation is for a marginal improvement in business sentiment, "we doubt that the prints will sway the MPC's collective hand and expect the BOE to cut rates next week".
Adding that "to be sure, there is scope for positive PMI surprises today (based on the Deloitte CFO survey and CBI business optimism); but correlation between these gauges and the PMIs has been tenuous at best in recent years".
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
ECB's Knot: Technically speaking, we haven't hit effective lower bound on rates
Fri 24 Jan 2020 08:47:10 GMT
Author: Justin Low | Category: Central Banks
Comments by ECB governing council member, Klaas Knot, in Davos
But there are decreasing returns to further rate cuts
Strategy review an opportunity to close perception gap on inflation
ECB has underestimated communication with citizens previously
The headline remark isn't what you'd expect from a hawk like him but it needs to be paired with the fact that he does mention that there downside risks to cutting further - a view that he has advocated for the longest of time now.
The euro is struggling to keep afloat despite the better data from Germany earlier, and that is a bit worrisome in my view. If the 1.1040 level firmly gives way, we could see a run towards 1.0990-00 next as sellers continue to keep near-term control.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Gold in Demand Amidst Coronavirus Fears, $1568 Key
Matt Weller, CFA, CMT January 23, 2020 2:36 PM
Share:
Given global developments so far this year, traders have already gotten crash courses in diverse fields from climate science to Middle East relations to US constitutional law. This week has forced traders to get up to speed quickly in epidemiology.
The rapid spread (and equally rapid international response) to the coronavirus from its epicenter in China has left markets on edge, leading to general risk off sentiment. Market participants are drawing parallels to the 2003 SARS outbreak, which infected nearly 8,100 people worldwide and killed nearly 800. Economists estimate the SARS outbreak ultimately knocked 1-2% off China’s GDP and 2-3% off Hong Kong’s economic activity.
In my (completely unqualified) opinion, authorities are responding aggressively to limit the spread of coronavirus, and hopefully that will be enough to avoid a repeat of the SARS epidemic (or worse!). That said, traders are understandably selling risk assets first and asking questions later as today’s headlines point to another major Chinese city getting quarantined. The big wave of risk aversion has boosted the appeal of safe haven assets such as US treasury bonds (10-year yields down to a 1-month low at 1.74%), the Japanese yen (the day’s strongest major currency) and of course, gold, the planet’s ultimate safe haven.
While the spread of coronavirus (or lack thereof) will drive gold prices in the short term, the longer-term technical outlook for the yellow metal is increasingly constructive. Gold prices have spent the last two weeks consolidating in the mid-$1500s following the early January spike on the US-Iran military skirmishes:
It's Your World. Trade It !
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