Market Insights & Analysis

Read our analysts' daily briefings, together with our Market Snapshot reports.

06 Jan 2016 08:15
The onshore yuan exchange rate dropped to a fresh multiyear low against the USD as the PBOC cut its daily fixing for the currency, a surprise move that caught many investors off guard. Yen strength continued on the Chinese central bank’s intervention, gaining on the dollar for the third straight session as moves overnight saw the currency trade towards 118.36 against the dollar, a fresh two and a half month low. A busy day for economic data particularly for US markets with the release of ADP employment change data for December and November trade data later on today. The dollar continues to strengthen against a basket of major currencies with the dollar index building on Monday’s gains, adding 0.5% against its major peers with gains compounding early on this morning as the greenback finds firm support around yesterday’s close, trading above 99.500 early on.
18 Dec 2015 08:25
Mexico’s central bank followed the Fed yesterday and increased a key rate for the first time since 2008 as officials expressed their desire to keep in step with the US central bank in order to prevent and limit any currency distortions between the US dollar and Mexican peso. The Japanese yen strengthened substantially overnight after briefly trading above 123.50 against the dollar as the Bank of Japan offered additional support to the economy. Spot gold prices managed to find some stability around $1,050/oz during overnight trading as immediate support around this level managed to hold firm at the close yesterday.
17 Dec 2015 08:40
Finally, investors welcomed the long awaited first hike in US interest rates yesterday as the FOMC increased rates by 0.25%, marking the first rate rise since 2006 and putting an end to the historically low rates that have persisted over the past six years. However, after overshooting yesterday we’ve seen demand for the greenback push the dollar index to an open just below 98.650 and target 99.000 early on this morning as investors digested Janet Yellen’s comments. Asian equity markets reacted positively to the US rate rise as the positive sentiment from the US session spilled into overnight trading.
11 Dec 2015 08:24
Iron ore prices slipped to fresh year-to-date lows with the benchmark TSI 62% Fe CFR Tianjin index settling at $37.50/tonne yesterday. The dollar index managed to build on near term support around 97.400 yesterday as the greenback strengthened against a basket of major currencies, trading back above the 50 day MA and targeting 98.000. Investors will be eagerly awaiting the release of the Bank of England’s inflation outlook for the next twelve months, which could offer some hints of when policymakers may start considering an increase in UK rates.
10 Dec 2015 09:20
Front month crude prices failed to halt the bear run yesterday as both Brent and WTI prices slipped for the fourth straight session after a late stage rally failed to take root. The dollar faced further headwinds ahead of next week’s FOMC rate decision as it experienced substantial selling pressure against a basket of major currencies yesterday. UK investors will be eagerly anticipating the Bank of England interest rate decision today and while the consensus expectation is for rates to remain unchanged at 0.5%, market participants will be on the lookout for any phrasing or terminology that could offer any additional insight.
09 Dec 2015 08:48
Some slightly better data coming out of China overnight as we start to see the emerging impact of stimulus measures. The yuan failed to halt its recent bearish run against the USD as investors focused on weaker factory gate prices and continued to digest yesterday’s weaker than expected trade data. Both front month Brent and WTI futures seem to have stemmed the recent outflows as they find support around yesterday’s opening levels.
07 Dec 2015 08:22
An eventful week last week as investors were offered plenty of cues from central bankers with the US Fed offering further strong hints that it would look to raise rates at next week’s FOMC meeting. After a bumper week for economic data last week we’ll be getting off to a slow start this week with UK Halifax house prices and Japanese third quarter GDP data the only data points of note to look forward to today.
04 Dec 2015 08:20
Investors were left somewhat underwhelmed by Mario Draghi’s reaffirmed commitment to extend monetary easing until March 2017 “or beyond” with no clearer sign of this than yesterday’s sharp recovery in the euro. While the ECB failed to offer as much support as investors were expecting, the decision to hold monthly bond purchases unchanged could be as a strategic move, saving further stimulus for a rainy day. Janet Yellen continues to prime markets for December interest rate rise as comments during yesterday’s Joint Economic Committee hearing.
03 Dec 2015 08:48
Front month Brent futures slid close to levels last seen during the financial crisis as investors took a bearish stance ahead of tomorrow’s OPEC meeting. Expectations for a Fed interest rate rise this month increased after Janet Yellen gave her strongest hints yet. A very busy session for economic data today, with global PMI data expected throughout the session as well as eurozone retail sales and US employment data.
01 Dec 2015 08:02
Chinese equity markets pushed tentatively higher overnight as encouraging economic news and data supported risk appetite across the region. The inclusion indicates just how extensive the reforms have been in China with offshore spot yuan trading 0.3% weaker against the USD as market participants anticipated that the PBOC would hold off from further stimulus, allowing a freer movement of the currency. After finally managing to close above 100.00 on Friday, the dollar index held firmly onto recent gains on Monday, trading tentatively higher towards 100.310 as investors geared up for this week’s economic data releases ahead of the FOMC meeting later this month.
30 Nov 2015 08:32
Iron ore prices slipped below $40/tonne on Monday after facing considerable headwinds last week. Three month LME copper prices look to be heading lower today as the red metal trades under pressure early on, failing to capitalise on last week’s late gains. The euro is set for its worst monthly performance since March as a growing number of economists expect the ECB to announce additional stimulus efforts at this week’s meeting.
27 Nov 2015 08:39
Gold prices are on track to close lower for the sixth straight week as an increasing number of investors expects the Fed to increase interest rates at next month’s FOMC meeting. Japanese economic data released late last night was less than impressive to say the least, prompting some modest weakness across Asian equity indices as the quiet optimism seen in Europe failed to spill over to the overnight session. Three month copper prices are finding it tough to hold onto yesterday’s gains early on this morning, with prices traded on the LME hovering around yesterday’s close, towards $4,620/tonne.
25 Nov 2015 08:40
George Osborne is set to deliver his Autumn Statement today and is largely expected to present fresh plans on how public sector debt will be curtailed, with an aim to balance the books by 2020. Front month Brent futures managed to gain for a third straight session, a feat last achieved in early October, as mounting geopolitical tensions in the Middle East prompted some buying. The fresh bout of risk aversion has also offered some support to gold prices which look set to rally for a second day after gaining 0.6% yesterday.
24 Nov 2015 08:03
Three month LME nickel prices slumped to their lowest level since 2003 as prices extended declines for a sixth straight session. With the last OPEC meeting of the year looming, due to be held on December 4th in Vienna, investors are wondering what the members will make of the year where we have seen crude prices trade around multi-year lows and what the coming year will bring for the group. The dollar index flirted with 100.00 yesterday as intraday moves briefly touched this level before paring back slightly as investors maintained their positioning ahead of an expected US rates rise next month.
23 Nov 2015 08:06
Gold investors were hopeful that last week’s choppy trading potentially signalled that a floor was developing. San Francisco Fed President John Williams proffered strong hints on Friday, stating that there was a “strong case” for the Fed to increase rates in December. The commodity rout continues with industrial metals, oil and gas leading the way lower, largely driven by a stronger dollar and a growing fundamental imbalance. The stronger dollar, which has gained over 3.5% so far this month, and weaker demand outlook has seen the base metals complex take a battering as investors look to limit risk taking.
20 Nov 2015 08:58
Crude oil prices remain under pressure as ongoing concerns regarding global supply glut dominate the market and weigh heavily on market sentiment. This morning, WTI futures came under renewed pressure in early trade and extended declines towards $40 per barrel while the strong USD adds additional pressure to the market. Please note that both WTI and Brent front month futures have declined over $8/barrel within 3 weeks in November.
19 Nov 2015 08:58
Following a statement after October’s Fed meeting, Fed members made it clear that an interest rate increase would be considered at their “next meeting”, which is scheduled for 15-16th December 2015. The clear message spread optimistic signs across most global markets and increased risk appetite. Most Fed members agreed that US economic conditions are improving, while others agreed that conditions had already been met, in order to trigger a rate increase.
18 Nov 2015 09:00
The US Federal Reserve publishes minutes from its latest FOMC meeting this evening. At the last meeting, the US Fed reported that the current 0% to 0.25% interest rate target “remains appropriate”. The US dollar index hit a high yesterday at 99.745 despite the recent disappointing US economic data. However, this morning the USD index slid slightly lower in early trade and hovered around 99.50 against a basket of currencies.
17 Nov 2015 09:01
The strong USD rally continues to dominate the global equity and commodity markets, as the USD index rallied for third consecutive session and extended gains above 99.50 against a basket of currencies. Gold has been hovering around $1,080/ounce. Copper extended declines towards $4,600 this morning, as the strong USD and bearish copper fundamentals weigh on market sentiment.
13 Nov 2015 08:57
European equities continue to remain under pressure extending losses in early trade on Friday, following the tepid GDP data. The German economy grew by 0.3% in Q3 2015, in line with expectations, while its y/y figure was reported at 1.7%, missing estimates of 1.8%. The French economy grew by 0.3% in Q3 2015, in line with estimates. The EUR continues to remain in choppy consolidation mode after hovering around 1.0750 against the USD. Today’s release of European GDP data has failed so far to provide any direction to the currency.
12 Nov 2015 08:57
Today, the main focus will switch to the release of the weekly jobless claims as well as the monthly Fed Budget Statement, which will set the tone for the trading session. Fed Chair Janet Yellen will deliver a speech at a Fed conference at 14:30 GMT, providing an insight regarding the current US economic conditions and prospects. The USD index extended gains this morning, breaking above the 99.0 area against a basket of currencies.
10 Nov 2015 08:46
Further signs of weakness in China prompted investors to selloff. The Hang Seng index plunged over 300 points (-1.43%) towards 22,400 while the Shanghai Composite Index slid lower by 0.20% towards 3,640. China’s CPI rose 1.3% y/y in October compared to 1.6% in September, missing analysts’ expectations of a 1.5% rise, showing the lowest level since May 2015.
09 Nov 2015 08:42
Chinese exports declined by 6.9% y/y in October, versus analysts’ expectations of a 3.2% drop. Imports dropped sharply by 18.8% y/y in October (vs exp. of -15.2%) compared to a 20.4% strong decline in September. The fairly disappointing Chinese economic data weighed to some extent on market sentiment, while Asian equity markets were mixed overnight. The Hang Seng index retreated by 0.6% towards 22,700.
06 Nov 2015 08:30
Encouraging comments from Fed officials in recent days has improved the prospect of a December rate rise among market participants. All eyes will be firmly fixed on today’s non-farm payrolls and unemployment data with the latest Bloomberg poll indicating commentators expect 185K, a substantial improvement from the previous months figure of 142K. The Bank of England struck a surprisingly dovish tone yesterday after holding rates unchanged and offering additional insight in its Inflation Report.
05 Nov 2015 08:26
US bond yields continued to rise while benchmark stock indices pared recent gains yesterday on the growing expectation that the US Fed would raise interest rates in December. Yesterday’s release of encouraging ADP employment change data for October strengthened the case for an incoming rates rise after 182K jobs were added, two thousand more than the median estimate compiled by Bloomberg. The yen extended declines against the dollar for a fourth straight session during overnight trading, edging towards the 100 day MA as it traded around 121.70.
03 Nov 2015 08:15
US manufacturing data released yesterday offered little in the way of encouragement to investors as the consensus outlook among manufacturers was one of sluggish overseas demand and a lack of domestic restocking. The dollar struggled to regain territory above Friday’s close on Monday as investors weighed up the manufacturing and construction data in the light of a potential interest rate rise this year. The Australian dollar extended gains against the USD for the third straight session after the RBA left the interest rate unchanged at 2.0%, keeping them at a record low for a sixth straight month.
30 Oct 2015 08:46
Treasury yields climbed higher on the US Fed’s hawkish outlook as increasing speculation of a December rates rise saw risk appetite for equities improve. While monetary policy in the US and the UK gears up for an eventual tightening, as expected the Bank of Japan held the annual rise in the monetary base at 80tn yen. The yen traded within a wide range against the dollar overnight, weakening towards 121.50 before swinging towards 120.30 towards the European open. Base metals prices as well as mining stocks came under renewed pressure yesterday as the Fed’s outlook for a potential December interest rate rise prompted a sell-off across a sector already beset by oversupply and lacklustre demand concerns.
29 Oct 2015 08:30
As expected the US Fed kept interest rates unchanged as the FOMC concluded its two day meeting yesterday, but hints of a December rates rise saw equity benchmarks in the US rally strongly towards the close. The dollar benefited from renewed Fed hawkishness with the dollar index rallying firmly towards 97.800 yesterday after consolidating around below 97.000 the previous day. Spot iron ore prices headed back below $50/tonne yesterday as demand for the steelmaking raw material from Chinese steel mills continued to decline.
22 Oct 2015 09:15
The main focus will turn to the ECB meeting as investors remain cautious awaiting the speech of ECB’s President Mario Draghi regarding market expectations. We do not expect any big surprises coming out of the meeting as it seems unlikely the ECB to introduce further QE into the European economies, partially due to inflation concerns and increasing worries regarding the Eurozone’s economic growth.
16 Oct 2015 08:42
The dollar index managed to pare recent losses yesterday as the greenback recovered some ground against a basket of major currencies after five day bear run. It has been a tumultuous few quarters for the USD and after rallying robustly throughout the end of 2014 and beginning of 2015 investors were hoping the bull run would continue as a rate rise in the US looked imminent amid a flurry of rosy manufacturing and labour market data. Despite the jittery outlook investors were encouraged back into risk assets after yesterday’s initial weekly jobless claims came in below expectations.