FX Weekly Market Letter

Transcription

1 FX Weekly Market Letter FI/FX Research - Monday, December 22, 2014 Forecasts Last 1 mth 3 mths 6 mths 12 mths Currencies EUR/USD EUR/GBP EUR/CHF EUR/NOK EUR/PLN EUR/RUB EUR/SEK USD/RUB USD/JPY GBP/USD Historical Performance Source: Swedbank CHANGES (%) Last 1 w eek 3 mths YTD Currencies EUR/USD EUR/GBP EUR/CHF EUR/NOK EUR/SEK EUR/PLN EUR/RUB USD/RUB USD/JPY GBP/USD RUBBASK Commodities (USD) CRB Commodity Index WTI Crude Brent Crude Gasoil Natural Gas Gold Silver Nickel Tin Copper Milling Wheat (EUR) Equity Indices S&P 500 (USD) STOXX Europe 600 (EUR) MICEX Index (RUB) OMX Baltic Benchm. GI (EUR) NOMINAL VALUES Last 3m ago 12m ago EUR Interest Rates 10-year Interest Rate Sw ap year Interest Rate Sw ap month Euribor Source: Bloomberg The next FX Weekly Market Letter will be released on 12 January 2015 Risky assets are recovering after the Fed meeting The Eurozone PMI figures surprised on the positive side Relatively quiet weeks ahead with low liquidity due to holidays Recent Developments In the US, the main event last week was the FOMC meeting. The Fed indicated that they are preparing for the first interest rate hike but it will not take place before May. Yellen stated that the Fed will not hike for at least the next couple of meetings. The Fed dropped the considerable time phrase, as expected, but added that it will still be patient when it comes to rate hikes. All in all Yellen indicated rate hikes, but still supported risk. Thus risky assets rose after Fed s comments and the positive risk sentiment continued in Asian markets afterwards. From the macro data front, US CPI inflation decelerated to 1.3% y/y in November from October s 1.7% y/y, mainly due to lower energy prices (1.4% y/y expected). December PMI manufacturing surprisingly dropped to 53.7 from November s 54.8 (55.2 expected) and services PMI fell to 53.6 from November s 56.2 (56.3 expected). In the Eurozone, preliminary PMI figures for December surprised on the positive side. PMI manufacturing increased to 50.8 from November s 50.1 (50.5 expected). PMI services increased to 51.9 from November s 51.1 (51.5 expected). The headline reading bottomed in November, but one or two months of improvement are insufficient to be definitive. The final reading for Eurozone aggregate CPI was confirmed at 0.3% y/y and core CPI at 0.7% y/y. The ZEW Eurozone expectation of economic growth index increased for the second month in a row to 31.8 from November s In the UK, inflation decelerated to the least since 2002 in November due to tumbling oil prices. The inflation rate dropped to 1.0% y/y from 1.3% y/y in October (1.2% y/y expected). The lowest inflation in more than a decade gives the Bank of England plenty of room to leave its monetary policy ultraloose. The ILO unemployment rate remained unchanged at 6.0% for October (5.9% expected). Retail sales increased 6.4% y/y in November (4.6% y/y in October), as the purchasing power of households increases with the drop in gasoline and food prices. Looking Ahead This week, market-moving event will include several macro data releases and Greece Presidential election second round, due on December 23. Our one-month EUR/USD target remains unchanged at The USD is strengthening again after a correction last week. The Fed made it clear that they are preparing for the first interest rate hike and that it will probably take place in June next year. We maintain our USD long stance as the US rate curve is still quite modestly priced. The CFTC statistics indicate that the EUR/USD short positions have shown decreasing trend for the fourth consecutive week (see chart on page 2). However, shorts are still at a high level and therefore a sharp correction in the EUR/USD could force investors to square their positions. FX Weekly Market Letter 22.Dec.2014 page 1/6

2 Government Bond Yields Germany 10Y France 10Y Spain 10Y Italy 10Y United States 10Y 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% EUR/USD Speculative Positions EUR net long spec. positions, contracts (lhs) EUR/USD (rhs) Oil Price vs Russian Ruble Brent Crude Oil, USD (lhs) EUR/RUB Inverted (rhs) Our one-month EUR/SEK target remains unchanged at The Riksbank postponed the first interest rate hike at its meeting last week, as expected. The central bank indicated that it will probably remain at zero for longer than previously forecasted. Now the first interest rate hike is expected in the second half of 2016, when CPIF inflation should return to its 2% target. From the macro front, the economic tendency indicator unexpectedly jumped to for December from November s 103.8, although a decline to was expected. After this month s stronger-than-expected result, the NIER survey now stands at the highest level since March. In addition, Swedish retail sales surprised with a 4.5% y/y gain in November (3.0% y/y expected). Looking ahead, we ll receive the PPI data on December 23 and then the Swedish market is moving into holiday mode trading with lack of liquidity. On 2 January, PMI manufacturing for December will be published and is expected to decline to 52.6 from November s In the United States, although the following weeks will be shorter due to holidays, there will be a plenty of macro data releases. The PCE core inflation numbers are on due on December 23 and the y/y figure is expected to decrease to 1.5% for November from October s 1.6% y/y. The ISM manufacturing index for December will be published on 2 January and is expected to decline to 57.5 from November s On January 7, the Fed will release its Minutes from the December FOMC meeting. The employment report for December will be published on January 9. After the surprisingly strong nonfarm payrolls figure of 321,000 for November, market expects the number to decrease to 240,000. The unemployment rate is expected to decline to 5.7% from November s 5.8%. In Europe, the period between Christmas and New Year s Eve will be relatively quiet. On January 7, the Eurozone aggregate CPI estimate for January will be published, expectedly arriving at 0.0% y/y. Core CPI is expected to come in at 0.7% y/y. The unemployment rate for November, reported on the same day as CPI, will likely remain unchanged at 11.5%. The Eurozone aggregate retail sales figures for November will be announced on January 8 and will expectedly increase 0.2% m/m (0.4% m/m in October). In the United Kingdom, the Nationwide house price index for December will be reported on December 30, expectedly increasing 7.2% y/y (8.5% y/y in November). UK PMI manufacturing is expected to decline to 59.0 for December from November s 59.4, announced on January 5. Services PMI is on due on January 6 and is expected to decline to 58.5 from November s The Bank of England will hold its monetary policy meeting on January 8 and will probably keep its main policy rate unchanged at 0.50%. In Russia, the central bank surprised with an overnight interest rate hike to 17% from 10.50%. It was an effort to stop the ruble from weakening, but it did not have the effect officials had hoped for. In addition, the central bank announced measures to support financial sector stability and allowed the commercial banks more flexibility in recognizing negative valuation changes. Moreover, the CBR promised to start providing loans to banks against nonmarket collateral, and also, bank recapitalization is planned for All in all, even if the central bank has managed to somewhat stabilize the RUB for now, it will continue to drift lower as long as oil prices continue to fall (see chart on the left). The economic situation in Russia is very severe and may lead to bank runs and more capital outflows. Interest rate hikes tighten the economy even more, leading to higher borrowing rates. Russia s real sector indicators have deteriorated as well. Industrial production declined 0.4% y/y in November (+2.9% y/y in October), marking the first fall since January. The unemployment rate increased to 5.2% in November from October s 5.1%. Russia s gold and forex reserve stands at USD 414.6bn as of December 12. In Poland, the CPI surprised to the downside, as the country is in -0.6% y/y deflation for the second consecutive month. The deflation is mainly caused by a big drop in fuel price, but also due to lower clothing-, food- and household equipment prices. On December 23, retail sales figures for November will be published, expectedly increasing 2.0% y/y (2.3% y/y in October). The unemployment rate for November will be reported on the same day and is expected to increase to 11.4% from October s 11.3%. FX Weekly Market Letter 22.Dec.2014 page 2/6

3 Key Events Ahead Week 52, 2014 Country CET JN DEC 22, 06:00 Bank of Japan's Monthly Economic Report DEC Mkt Prev. Our Forecast SW DEC 22, 09:30 Retail Sales (MoM)/(NSA YoY) NOV 0.1%/3.3% 1.0%/4.5% 1.2%/5.6% US DEC 22, 14:30 Chicago Fed Nat Activity Index NOV US DEC 22, 16:00 Existing Home Sales/(MoM) NOV 5.20M/-1.1% 5.26M/1.5% EMU DEC 22, 16:00 Consumer Confidence DEC A FR DEC 23, 08:45 GDP (QoQ)/(YoY) 3Q F 0.3%/0.4% 0.3%/0.4% FR DEC 23, 08:45 Consumer Spending (MoM)/(YoY) NOV -0.9%/-0.2% SW DEC 23, 09:30 PPI (MoM)/(YoY) NOV 0.2%/2.1% NO DEC 23, 10:00 Unemployment Rate AKU OCT 3.7% 3.7% NO DEC 23, 10:00 Housing Starts/(MoM) NOV 29K/-7% 27K/-9% UK DEC 23, 10:30 GDP (QoQ)/(YoY) 3Q F 0.7%/3.0%/ 0.7%/3.0% CA DEC 23, 14:30 GDP (MoM)/(YoY) 3Q 0.4%/2.3% US DEC 23, 14:30 Durable Goods Orders/Ex Transportation NOV 2.9%/1.0% 0.3%/-1.1% US DEC 23, 14:30 GDP Annualized (QoQ) 3Q T 4.3% 3.9% US DEC 23, 14:30 Cap Goods Orders Nondef Ex Air NOV 0.7% -1.6% US DEC 23, 14:30 Cap Goods Ship Nondef Ex Air NOV 1.0% -0.7% US DEC 23, 14:30 Personal Consumption 3Q T 2.2% US DEC 23, 15:00 FHFA House Price Index MoM OCT 0.3% 0.0% US DEC 23, 15:55 Univ. of Michigan Confidence DEC F US DEC 23, 16:00 Richmond Fed Manufact. Index DEC 7 4 US DEC 23, 16:00 New Home Sales/(MoM) NOV 460K/0.4% 458K/0.7% US DEC 23, 16:00 Personal Income/Personal Spending NOV 0.5%/0.5% 0.2%/0.2% US DEC 23, 16:00 PCE Core (MoM)/(YoY) NOV 0.1%/1.5% 0.2%/1.6% TU DEC 24, 13:00 Central Bank Policy Rate Meeting 11.25% 11.25% JN DEC 25, 00:50 Bank of Japan Nov meeting minutes RU DEC 25, 13:00 Gold and Forex Reserve w/e JN DEC 26, 00:30 Natl CPI (YoY)/ Ex Food, Energy (YoY) NOV 2.5%/2.1% 2.9%/2.2% JN DEC 26, 00:50 Industrial Production (MoM)/(YoY) NOV P 0.9%/-2.4% 0.4%/-0.8% CH DEC 27, 02:30 Industrial Profits (YoY) NOV -2.1% GE DEC 27-JAN 3 Retail Sales (MoM)/(YoY) NOV -0.4%/0.7% 1.6%/1.7% FX Weekly Market Letter 22.Dec.2014 page 3/6

4 Week 1, 2015 Country CET RU DEC 29-DEC 30 GDP (YoY) 3Q F 0.7% RU DEC 29, 07:00 HSBC Manufacturing PMI DEC 51.7 Mkt Prev. BZ DEC 29, 11:00 FGV Inflation IGPM (YoY) DEC 3.66% RU DEC 30, 07:00 HSBC Services PMI DEC 44.5 UK DEC 30, 08:00 Nationwide House PX (MoM)/(NSA YoY) DEC 0.3%/7.6% 0.3%/8.5% SP DEC 30, 09:00 CPI EU Harmonised (YoY) DEC P -0.7% -0.5% SW DEC 30, 09:00 Trade Balance NOV -0.2B 2.9B SW DEC 30, 09:30 Household Lending NOV 5.9% 6.0% US DEC 30, 15:00 S&P/CS 20 City (SA MoM)/ Composite-20 (YoY) OCT 0.30%/4.18% 0.34%/4.90% US DEC 30, 16:00 Consumer Confidence Index DEC US DEC 31, 15:45 Chicago Purchasing Manager DEC US DEC 31, 16:00 Pending Home Sales (MoM)/(NSA YoY) NOV -1.1%/2.2% CH JAN 1, 02:00 Manufacturing PMI DEC CH JAN 2, 02:45 HSBC Manufacturing PMI DEC F 49.5 SW JAN 2, 08:30 Manufacturing PMI DEC SW JAN 2, 09:30 New Car Registrations (YoY) DEC 2.9% NO JAN 2, 09:00 Manufacturing PMI DEC 51.3 SP JAN 2, 09:15 Markit Manufacturing PMI DEC 54.7 IT JAN 2, 09:45 Markit/ADACI Manufacturing PMI DEC 49.0 FR JAN 2, 09:50 Markit Manufacturing PMI DEC F GE JAN 2, 09:55 PMI DEC F EMU JAN 2, 10:00 Markit Manufacturing PMI DEC F UK JAN 2, 10:30 Mortgage Approvals NOV 59.0K 59.4K UK JAN 2, 10:30 Markit PMI Manufacturing SA DEC BZ JAN 2, 15:00 HSBC Manufacturing PMI DEC 48.7 US JAN 2, 15:45 Markit Manufacturing PMI DEC F US JAN 2, 16:00 Construction Spending (MoM) NOV 0.4% 1.1% US JAN 2, 16:00 ISM Manufacturing DEC CH JAN 3, 02:00 Non-manufacturing PMI DEC 53.9 Our Forecast Week 2, 2015 Country CET Mkt Prev. UK JAN 5-JAN 9 Halifax House Prices (MoM)/(3Mths/Year) DEC 0.4%/8.2% JN JAN 5, 02:35 Markit/JMMA Manufacturing PMI DEC F 52.1 TU JAN 5, 09:00 CPI (MoM)/(YoY) DEC 0.23%/8.95% 0.18%/9.15% EMU JAN 5, 10:30 Sentix Investor Confidence JAN GE JAN 5, 14:00 CPI EU Harmonized (MoM)/(YoY) DEC P 0.3%/0.3% 0.0%/0.5% CH JAN 6, 02:45 HSBC Services PMI DEC 53.0 FR JAN 6, 08:45 Consumer Confidence DEC SP JAN 6, 09:15 Markit Services PMI DEC 52.7 IT JAN 6, 09:45 Markit/ADACI Services PMI DEC 51.8 FR JAN 6, 09:50 Markit Services PMI DEC F GE JAN 6, 09:55 Markit Services PMI DEC F EMU JAN 6, 10:00 Markit Services PMI DEC F UK JAN 6, 10:30 Markit/CIPS Services PMI DEC BZ JAN 6, 13:00 HSBC Services PMI DEC 48.5 US JAN 6, 15:45 Markit Services PMI DEC F 53.6 Our Forecast FX Weekly Market Letter 22.Dec.2014 page 4/6

5 US JAN 6, 16:00 Factory Orders NOV 1.8% -0.7% US JAN 6, 16:00 ISM Non-Manf. Composite DEC SW JAN 7, 08:30 Services PMI DEC 56.9 GE JAN 7, 09:55 Unemployment Rate DEC 6.6% 6.6% EMU JAN 7, 11:00 Unemployment Rate NOV 11.5% 11.5% EMU JAN 7, 11:00 CPI Estimate (YoY) DEC 0.0% EMU JAN 7, 11:00 CPI Core (YoY) DEC A 0.7% 0.7% US JAN 7, 14:15 ADP Employment Change DEC 213K 208K US JAN 7, 14:30 Trade Balance NOV -$41.0B -$43.4B US JAN 7, 20:00 Fed Minutes from Dec FOMC Meeting RU JAN 8 Reserve Fund DEC $88.9B CH JAN 8-JAN 12 Exports/Imports (YoY) DEC 4.7%/-6.7% GE JAN 8, 08:00 Factory Orders (MoM)/(WDA YoY) NOV 2.5%/2.4% SW JAN 8, 09:30 Riksbank minutes from meeting 15 December NO JAN 8, 10:00 Credit Indicator Growth (YoY) NOV 5.4% NO JAN 8, 10:00 Ind Prod Manufacturing (MoM)/(WDA YoY) NOV 1.6%/4.6% BZ JAN 8, 11:00 FGV Inflation IGP-DI (YoY) DEC 4.10% EMU JAN 8, 11:00 PPI (MoM)/(YoY) NOV -0.2%/-1.4% -0.4%/-1.3% EMU JAN 8, 11:00 Retail Sales (MoM)/(YoY) NOV 0.3%/n.a. 0.4%/1.4% EMU JAN 8, 11:00 Business Climate Indicator DEC 0.18 EMU JAN 8, 11:00 Confidence Services/Industrial/Economic/Consumer DEC n.a./-4.0/ 101.1/n.a. 4.4/-4.3/ 100.8/n.a. UK JAN 8, 13:00 Central Bank Policy Rate Meeting 0.50% 0.50% RU JAN 8, 13:00 Gold and Forex Reserve w/e US JAN 8, 21:00 Consumer Credit NOV $13.226B CH JAN 9-JAN 15 New Yuan Loans DEC $852.7B CH JAN 9-JAN 15 Money Supply M2 (YoY) DEC 12.3% CH JAN 9-JAN 13 PPI (YoY) DEC -2.7% CH JAN 9-JAN 13 CPI (MoM DEC 1.4% GE JAN 9, 08:00 Industrial Production (SA MoM)/(WDA YoY) NOV 0.2%/-0.6% 0.2%/0.8% GE JAN 9, 08:00 Current Account Balance NOV 23.1 GE JAN 9, 08:00 Exports/Imports (SA MoM) NOV -0.5%/-3.1% FR JAN 9, 08:45 Industrial Production (MoM)/(YoY) NOV -0.8%-1.0% CZ JAN 9, 09:00 CPI (MoM)/(YoY) DEC -0.2%/0.6% SW JAN 9, 09:30 Industrial Production (MoM)/(NSA YoY) NOV 0.2%/0.1% 5.4%/0.4% SW JAN 9, 09:30 Industrial Orders (MoM)/(NSA YoY) NOV 3.7%/1.6% SW JAN 9, 09:30 Service Production (SA MoM)/(WDA YoY) NOV -0.8%/2.1% 0.5%/2.6% NO JAN 9, 10:00 CPI (MoM)/(YoY) DEC 0.1%/1.9% NO JAN 9, 10:00 CPI Underlying (MoM)/(YoY) DEC 0.1%/2.4% NO JAN 9, 10:00 PPI including Oil (MoM)/(YoY) DEC -2.8%/-6.6% NO JAN 9, 10:00 Retail Sales W/Auto Fuel (MoM) NOV 0.6% UK JAN 9, 10:30 Trade Balance Non EU GBP/Mn NOV UK JAN 9, 10:30 Industrial Production (MoM)/(YoY) NOV 0.2%/1.6% -0.1%/1.1% BZ JAN 9, 12:00 IBGE Inflation IPCA (YoY) DEC 6.56% US JAN 9, 14:30 Change in Nonfarm Payrolls DEC 232K 321K US JAN 9, 14:30 Unemployment Rate DEC 5.7% 5.8% US JAN 9, 16:00 Wholesale Inventories (MoM) NOV 0.4% US JAN 9, 16:00 Wholesale Trade Sales (MoM) NOV 0.2% UK JAN 9, 16:00 NIESR GDP Estimate DEC 0.7% FX Weekly Market Letter 22.Dec.2014 page 5/6

6 Contacts LC&I Markets Estonia LC&I Markets Latvia LC&I Markets Lithuania Marek Berkman 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 22.Dec.2014 page 6/6