FX Weekly Market Letter

Transcription

1 FX Weekly Market Letter FI/FX Research - Monday, April 15, 2013 s Currencies Last 1 mth 3 mths 6 mths 12 m ths EUR/USD 1,3097 1,28 1,27 1,26 1,20 EUR/GBP 0,8540 0,86 0,86 0,86 0,83 EUR/CHF 1,2149 1,22 1,23 1,25 1,25 EUR/NOK 7,5057 7,45 7,35 7,30 7,25 EUR/PLN 4,1100 4,20 4,18 4,15 4,05 EUR/RUB 40, ,96 40,64 39,69 36,60 EUR/SEK 8,3696 8,25 8,20 8,15 8,30 USD/RUB 31, ,00 32,00 31,50 30,50 USD/JPY 97, ,00 100,00 100,00 105,00 GBP/USD 1,5336 1,50 1,48 1,47 1,45 Source: Swedbank Historical Performance CHANGES (%) Last 1 week 3 mths YTD Currencies EUR/USD 1,3097 0,68-1,84-0,73 EUR/GBP 0,8540 0,15 3,24 5,19 EUR/CHF 1,2149-0,13-0,34 0,59 EUR/NOK 7,5057 0,50 1,71 2,23 EUR/SEK 8,3696 0,22-2,98-2,45 EUR/PLN 4,1100-0,30 0,01 0,76 EUR/RUB 40,9954 0,79 1,22 1,86 USD/RUB 31,2977 0,10 3,18 2,53 USD/JPY 97,9300-1,44 9,81 12,89 GBP/USD 1,5336 0,52-4,93-5,65 RUBBASK 35,6600 0,61 2,23 2,04 Commodities (USD) CRB Commodity Index 283,9-1,83-4,30-3,77 WTI Crude 89,74-3,88-4,08-2,27 Brent Crude 101,44-3,08-6,59-6,48 Gasoil 857-3,05-7,13-6,42 Natural Gas 4,199 2,87 22,60 21,60 Gold 1422,09-9,63-14,48-15,12 Silver 24,28-11,09-20,30-19,99 Nickel ,25-10,26-7,58 Tin ,08-11,83-6,16 Copper 7375,5-0,66-8,34-7,06 Milling Wheat (EUR) 213-1,73-2,07-5,54 Equity Indices S&P 500 (USD) 1588,9 1,65 7,93 11,41 STOXX Europe 600 (EUR) 290,3 0,92 1,12 3,80 MICEX Index (RUB) 1359,0-3,52-10,05-7,85 OMX Baltic Benchm. GI (EUR) 615,2-0,03 7,02 12,47 NOMINAL VALUES Last 3m ago 12m ago EUR Interest Rates 10-year Interest Rate Sw ap 1,573 1,784 2,202 5-year Interest Rate Sw ap 0,817 0,967 1,479 6-month Euribor 0,327 0,331 1,048 Source: Bloomberg Eurogroup approved the Cyprus deal US data kept disappointing; Obama s fifth budget proposal Chinese economy losing momentum Italian presidential election coming up Earning season shifting up a gear Last Week In Europe, Eurogroup approved the agreement between the Troika and Cyprus on the EUR 10bn bailout. The deal will now go to the relevant national procedures for formal approval of assistance. On the economic data front, eurozone industrial output expanded more than forecast in February, adding to signs that the economy could start emerging from a recession. Production rose 0.4% m/m in February (+0.2% expected, -0.6% in January). In the United States, the Fed minutes had a more hawkish* tone compared to its previous meeting and President Barack Obama proposed the fifth 2014 budget. On the data front, retail sales dropped in March by the most in nine months, falling 0.4% m/m (0% expected, 1.0% in February). China s inflation eased less than forecast in March, arriving at 2.1% y/y (2.5% expected, 3.2% in Feb) as gains in factory output and consumption weakened. Q1 GDP expanded by 7.7% y/y, below the consensus forecast of 8.0% y/y and 7.8% y/y in Q4. Also, industrial production came on the weak side, rising by 8.9% y/y YTD in March (10.0% expected; 9.9% y/y in Feb). Retail sales landed at 12.4% y/y YTD, almost in line with the consensus forecast of 12.5% y/y. The figures indicate that the Chinese economy is losing momentum, as the global growth outlook has weakened recently. In the United Kingdom, industrial production improved 1.0% m/m in February, higher than the expected 0.4% gain and January s 1.3% m/m drop. What s Next? This week will be relatively light in terms of economic data and events. Market-moving events will include the Bank of England minutes on April 17, Italian parliament voting on the next President on April 18 and the G20 meeting on April In the equity market, the reporting season will shift up a gear. Banks earnings will be followed closely, starting with Citigroup on Aril 15, Goldman Sachs on April 16, Bank of America on April 17 and Morgan Stanley on April 18. Overall, the Japanese monetary policy shock has been the main topic in the FX market. Investors are expected to continue gauging the implications of the Bank of Japan s recent announcement of aggressive asset purchases. Overall, we see more room for the JPY to weaken further. view is supported by domestic investors, who due to agressive Japanese government bond buying by the central bank are expected to shift their asset allocations abroad to get higher yields. In the United States, President Barack Obama presented the fifth 2014 budget proposal last week in an effort to kick start conversations between the White House and Congressional Republicans. The key elements of the proposal include USD 580bn of additional revenues, USD 610bn in spending cuts, and USD 620bn in entitlement reforms over the course of the next ten years. In total, this would equate to USD 1.8 trillion in deficit reduction over the next decade, which, if approved, would replace the currently enacted sequestration. Overall, US economic data have been showing signs of moderating growth recently, which will likely dampen the willingness of some Fed voting members to consider any near-term FX Weekly Market Letter 15.Apr.2013 page 1/5

2 Government Bond Yields France 10Y Germany 10Y Italy 10Y Spain 10Y 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% EUR/USD Speculative Positions 100, , , , , , , EUR net long spec. positions, contracts (lhs) EUR/USD (rhs) Brent Crude Oil & Gold Chart 4 unwinding of asset purchases. This week s releases may shed more light on the underlying strength of the economy. The consumer price index for March will be published on April 16 and is seen to arrive at 1.6% y/y (2.0% y/y in February). Housing starts and industrial production, published the same day, are expected to improve by 1.4% m/m in March (0.8% in February) and by 0.2% m/m (0.8% in February) respectively. In Europe, Italian parliament will vote on the next President on April 18, which is likely to attract investor attention. An agreement between the centre-left and centre-right for a specific candidate would probably be the first step toward forming a government. Overall, the market seems relaxed about the current Italian situation, at least for now. On April 15, the ECB s President, M. Draghi, will speak at Amsterdam University. Possible hints of upcoming monetary policy action seem unlikely, but we might get some comments from the speech. We are in a situation where the ECB could shift to rate-cutting mode, so the market will be very alert. On the economic data front, the consumer price index for March will be published on April 16 and is expected to remain at 1.7% y/y, in line with February s outcome. The release is worth attention given the ECB President Draghi s dovish** outlook and growing market expectations of a rate cut. one-month EUR/USD target has been kept at and three-month target at , as we believe EUR-related risks remain on the downside. EUR/USD speculative positions continued further into negative territory last week, but the amount of net short speculative positions actually decreased slightly after increasing for six consecutive weeks, according to the CFTC statistics. Uncertainties around Cyprus and fears of a more dovish ECB have been driving short positions higher in recent weeks. In the United Kingdom, the Bank of England minutes of the last meeting will take place on April 17, from which the market could get extra insights into the committee s thoughts on steering policy before the next Governor, Mark Carney, steps in in July On the economic data front, inflation is expected to arrive at 2.8% y/y in March, in line with February s release. The underlying trend in the retail sector remains weak, with no support seen from the poor weather seen in March. On April 18, the retail sales (excl. auto fuel) are seen to expand by 0.9% y/y in March (3.3% in February). In Russia, the ongoing global currency war, weaker economic releases and talks of expanding the central bank s mandate to promote economic growth is currently weighing on the RUB. As Russian policymakers are increasingly worried about growth, they will probably welcome a weaker RUB. Last week, Economic Ministry cut Russia's economic growth expectation from previous 3.6% to 2.4% for The Economy Minister Andrei Belousov also stated that Russia's economy will face a recession risk in the autumn unless it adopts stimulus measures. Russia s trade surplus arrived at USD 15.9bn in February, lower than the expected USD 16.5bn and January s USD 17.7bn. This week, industrial production, published on April 15-16, is expected to shrink by 1.0% y/y (-2.1% y/y in February) for a third month in March as Europe s debt crisis hurt exports and investment. Real wages, retail sales and unemployment rate are all published on April and expected to arrive at 5.3% y/y in March (5.0% in February), 2.6% y/y in March (2.6% in February) and 5.8% in March (in line with February s outcome). In Poland, the Polish Central Bank kept its policy rate unchanged at 3.25%, matching consensus. Furthermore, keen to keep its budget deficit below a threshold of 55% of GDP, Poland is considering cancelling private pension funds' treasury bond holdings or even nationalizing their assets. Prime Minister Donald Tusk has said details of the reform are due before the end of June. The government has not decided on details of the pension reform, but some market participants expect it will involve shifting at least some of the USD 85bn in assets held by private pension funds into a state vehicle. On April 15, Finance Minister Jacek Rostowski said that Poland is not planning to eliminate privately managed pension funds. Reportedly, discussed proposals include diverting contributions from privately managed funds to state system gradually over last 10 years before retirement to reduce risk of market fluctuations. Overall, this week s low expected inflation of 1.1% y/y in March (1.3% in February) will increase expectations of another rate cut, which means downward pressure on the zloty. The CPI will be published on April 15. We remain neutral regarding the PLN. * Hawkish favouring an increase in interest rates; ** Dovish favouring a decrease in interest rates FX Weekly Market Letter 15.Apr.2013 page 2/5

3 Key Events Ahead Monday April 15, 2013 CHI apr New Yuan Loans MAR 620.0B CHI apr Money Supply - M2 (YoY) MAR 15.20% RUS apr Industrial Production (YoY) MAR -0.90% -2.10% CHI 04:00 Industrial Production (YoY) MAR 10.0% CHI 04:00 Retail Sales (YoY) MAR 12.60% CHI 04:00 Real GDP (YoY) 1Q 8.0% 7.90% SWE 08:00 Government present the Budget SWE 09:30 Business Production (MoM)/ ( YoY) FEB -1.0%/-1.5% NO 10:00 Trade Balance (Krone) MAR 33.7B EMU 11:00 Trade Balance sa/trade Balance FEB 10.0B/5.0B 9.0B/-3.9B PD 14:00 CPI (YoY) MAR 1.30% US 14:30 Empire Manufacturing APR 9.24 US 16:00 NAHB Housing Market Index APR Tuesday April 16, 2013 ITA 10:00 Trade Balance (Total) (Euros) FEB -1619M NO 10:00 Existing Homes QoQ 1Q -0.7% UK 10:30 PPI Output n.s.a. (MoM)/ PPI Output n.s.a. (YoY) MAR 0.8%/2.3% 0.8%/2.3% UK 10:30 PPI Output Core NSA (MoM)/ PPI Output Core NSA (YoY) MAR 0.3%1.3% 0.3%/1.3% UK 10:30 CPI (MoM)/ CPI (YoY) MAR 0.3%/2.8% 0.7%/2.8% UK 10:30 Core CPI YOY MAR 2.3% 2.3% UK 10:30 Retail Price Index MAR UK 10:30 RPI (MoM)/ RPI (YoY) MAR 0.4%3.3% 0.7%/3.2% EMU 11:00 CPI (MoM)/ CPI (YoY) MAR 1.2%/1.7% 0.4%/1.7% EMU 11:00 CPI - Core (YoY) MAR --/1.4% 1.3% EMU 11:00 ZEW Survey (Econ. Sentiment) APR GER 11:00 Zew Survey (Current Situation)/ ZEW Survey (Econ. Sentiment) APR /48.5 PD 14:00 Core Inflation YoY MAR 1.0% 1.10% US 14:30 Consumer Price Index (MoM)/(YoY) MAR 0.0%/1.6% 0.7%/2.0% US 14:30 CPI Ex Food & Energy (MoM)/ (YoY) MAR 0.2%/2.0% 0.2%/2.0% US 14:30 CPI Core Index SA MAR US 14:30 Consumer Price Index NSA MAR US 14:30 Housing Starts/ Housing Starts MOM% MAR 930K/1.4% 917K/0.8% US 15:15 Industrial Production MAR 0.2% 0.7% US 15:15 Capacity Utilization MAR 78.4% 79.6% Wednesday, April 17, 2013 RUS apr Disposable Income MAR 5.40% 5.70% RUS apr Real Wages (YoY) MAR 5.30% 5.00% RUS apr Retail Sales (Real) (YoY) MAR 2.50% 2.50% RUS apr Unemployment Rate (%) MAR 5.80% 5.80% RUS apr Investment In Productive Capac MAR 0.50% 0.30% EMU 08:00 EU27 New Car Registrations MAR -10.5% SWE Prospera, Inflation Money Market,1Y, 2Y, 5Y MAR 1.0%,1,6%,2,0% SWE 09:30 Riksbank Interest Rate 1.00% 1.00% 1.00% UK 10:30 Bank of England Releases Monetary Policy Committee Minutes FX Weekly Market Letter 15.Apr.2013 page 3/5

4 UK 10:30 Jobless Claims Change MAR 0.0K -1.5K UK 10:30 Average Weekly Earnings 3M/YoY FEB 1.3% 1.2% UK 10:30 ILO Unemployment Rate (3mths) FEB 7.8% 7.8% UK 10:30 Employment Change (3M/3M) FEB 60K 131K EMU 11:00 Construction Output SA MoM/ WDA YoY FEB -1.4%/-7.3% US 13:00 MBA Mortgage Applications W/E 4.5% SWE 17:00 Riksbank s Per Jansson speaks at SEB US 18:00 Fed's Rosengren Speaks in New York US 20:00 U.S. Federal Reserve Releases Beige Book BZ SELIC Target - Central Bank W/E 7.25% 7.25% Thursday April 18, 2013 CHI 03:30 China March Property Prices UK 10:30 Retail Sales Ex Auto Fuel(MoM)/(YoY) MAR -0.6%/0.9% 1.9%/3.3% PD 11:00 Central/Eastern European ZEW Indicator APR ITA 11:00 Current Account (mlns euro) FEB -4607M SWE 11:15 Riksbank s Per Jansson speaks at Kommuninvest W/E PD 14:00 Sold Industrial Output (YoY) MAR -2.40% -2.10% US 14:30 Initial Jobless Claims W/E 347K 385K US 16:00 Philadelphia Fed. APR US 16:00 Leading Indicators MAR 0.1% 0.5% Friday April 19, 2013 GER 08:00 Producer Prices (MoM)/(YoY) MAR 0.1%/0.7% -0.1%/1.2% ITA 10:00 Industrial Orders s.a. (MoM)/n.s.a. (YoY) FEB -1.4%/-3.3% ITA 10:00 Industrial Sales s.a. (MoM)/ n.s.a. (YoY) FEB -1.3%/-3.4% EMU 10:00 Current Account SA/ nsa FEB 14.8B/-4.5B EMU 12:00 ECB Announces 3-Year LTRO Repayment SPA Trade Balance (Mln Euros) FEB M SWE Riksbank s Stefan Ingves & Barbro Wickman-Parak at IMF/World Bank Meeting 19-21/4 W/E FX Weekly Market Letter 15.Apr.2013 page 4/5

5 Contacts FX/FI Sales Estonia FX/FI Sales Latvia FX/FI Sales Lithuania Märt Kroodo Analyst Information to the customer This research report has been compiled by Swedbank Large Corporates & Institutions business area within Swedbank AB (publ) (Swedbank), registered address Stockholm, regulated by Swedish Financial Supervisory Authority (Finansinspektionen). This research report is not and should not be construed as an investment advice or investment recommendation. It is not an offer or a solicitation of an offer to buy or sell any currencies or financial instruments and shall not be construed as an investment, tax, financial or legal advice. The information in this document has been compiled in good faith from sources believed to be reliable, but for the correctness or completeness of which we assume no liability. It is recommended that recipients of this document supplement the basis for their decision-making with any material that might be considered necessary. Views expressed in this document represent our present opinions but may change. We reserve the right to modify the views expressed herein at any time without notice, as well as the right not to update this information or discontinue it s publication without notice. Swedbank accepts no liability whatsoever for any direct or consequential loss or damages of any kind arising from the use of this document. Investments in financial products are subject to market risk. Changes in rates of exchange, interest rates and market prices may have adverse effect on the value of the investments There is a risk that there will be a loss on the investment. Prices rise and fall and past performance is no assurance of future performance. Analysis and presentations in this research report are based on standard valuation methodology as well as publicly available information. Recipients should be aware that Swedbank, its subsidiaries and/or employees from time to time may have positions or holdings or otherwise have financial interests in the investments directly or indirectly referred to herein. Swedbank have implemented internal instructions and measures mainly by keeping departments and units with conflicting interests separated - in order to prevent conflicts of interest to damage the interests of Swedbank s clients. This document must not be published or distributed in the United States or to other countries or persons to which publication or distribution is prohibited. The material may not be reproduced without the consent of Swedbank. In Latvia this research report is disseminated by Swedbank AS, registered address Balasta dambis 1a, Riga, LV-1048, regulated by the Financial and Capital Markets Commission of the Republic of Latvia. In Estonia this research report is disseminated by Swedbank AS, Liivalaia 8, Tallinn, Estonia, regulated by the Financial Supervision Authority of Estonia. In Lithuania this research report is disseminated by Swedbank AB, Konstitucijos av. 20A, LT Vilnius, Lithuania, regulated by the Bank of Lithuania. FX Weekly Market Letter 15.Apr.2013 page 5/5