Trading Floor
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Asian Focus: Growth, inflation and SGD key factors in MAS easing
In this video Yvette Roper of TradingFloor.com interviewsAndrew Robinson, Market ...
In this video Yvette Roper of TradingFloor.com interviewsAndrew Robinson, Market Analyst of Saxo Capital Markets in Singapore about the likelihood of the Monetary Authority of Singapore easing soon. He gives a rundown on the state of growth, inflation and the Singapore dollar - all of which are key issues for the MAS authorities to consider.For Andrew's written commentary about the likelihood of the MAS easing soon see: http://www.tradingfloor.com/posts/asia-macro-will-singapore-join-the-easing-frenzy-730072468See more of Andrew's Asian market commentary on TradingFloor.com
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Asian Focus: More BoJ easing already in October?
In this video, Yvette Roper of TradingFloor.com interviews Andrew Robinson, ...
In this video, Yvette Roper of TradingFloor.com interviews Andrew Robinson, Market Analyst for Saxo Capital Markets in Singapore aboutthe state of the Japanese economy ahead of a slew of data and amid speculation about another round of easing by the Bank of Japan already in October. Andrew comments on the continued strengthening of the Japanese yen of late against the euro and more so the dollar and the impact of the ongoing island dispute between Japan and China. Data out of Japan at the end of this week includes: PMI, Unemployment, CPI, Industrial Production, household spending and retail trade. The reports of most interest are PMI and CPI. The question according to Andrew concerning PMI is: how low can it go? The PMI figure has been in negative territory since May. And in terms of CPI everyone is wondering if the Bank of Japan’s 1 percent inflation target is a pipedream or feasible, he says. In terms of other data from Japan this week any surprises to the upside, particularly in industrial production or retail trade will be seen as a positive, while numbers that are worse than expected won’t create that many waves due to the overall slowing economic backdrop, says Andrew. With two BoJ meetings in October the market is speculating that we might see another round of easing towards the second half of next month. Regarding physical intervention by the Bank of Japan though it’s unlikely, says Andrew. The last time this happened was in November last year when dollar-yen was in the low 75s. Andrew believes that more talk rather than action by the BoJ is most likely. I think we will see a step-up in the rhetoric that we are hearing from the Bank of Japan because obviously words are lot cheaper than actual cash. Furthermore, in terms of levels he does not see markets getting too worried until USDJPY drifts below the 77 mark or even until it hits the 76 level. Meanwhile, Japanese companies continue to suffer from the China-Japan dispute over the islands known as Senkaku in Japan and Diaoyu in China. Carmakers are halting production or scaling it back in China and the big question is who will come off worse from protracted tensions and trade relations turning sour, says Andrew. Andrew guesses that the Japanese will suffer the most. Regardless, diplomatic processes are being escalated to try and prevent the issue getting out of hand but it in the normal Asian manner it is difficult to see how they can reach a favourable solution for both parties without either side losing face. I do feel we will see a diplomatic solution before the trade war escalates into something disastrous though, adds Andrew. See more of Andrew's Asian market commentary on TradingFloor.com
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Asian Focus: Time is right for more BOJ easing
All eyes are on the Bank of Japan with expectations ...
All eyes are on the Bank of Japan with expectations mounting that it will follow the lead of the US Federal Reserve and introduce new monetary policy initiatives. In this video, Yvette Roper of TradingFloor.com interviews Andrew Robinson, Market Analyst for Saxo Capital Markets in Singapore about BOJ deliberations and the impact on the yen. Andrew believes that the time is right for the BOJ to implement its next phase of quantitative easing, though the market remains evenly divided as to whether this will come now. He believes that measures could either concern one or both of the following: removing the 0.1 percent limit for buying Japanese government bonds, thereby allowing longer term yields to drop, or an increase in the absolute total of the BOJ's asset purchase programme. The Japanese yen has weakened on this expectation plus the Federal Reserve’s recent easing measure, plus the ramifications of a political dispute between Japan and China over some islands. In this video, Andrew also looks briefly at China and the development of property prices there. August data saw a decline versus July in the number of cities reporting an increase in property prices. With housing affecting 40 other business sectors of the Chinese economy some relaxation in housing requirements could be on the cards which would give the economy a quick boost, says Andrew. Of focus the next few days in China will be HSBC PMI data on Thursday with a lower number likely to be seen from 47.6 last month. The market will accept a lower number however it will be surprised if the number reverts back to the mean 50 level. See more of Andrew's Asian market commentary on TradingFloor.com
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Asian Focus: Australia struggles; October RBA rate cut expected
In this video Yvette Roper of TradingFloor.com video interviews Andrew ...
In this video Yvette Roper of TradingFloor.com video interviews Andrew Robinson, Market Analyst for Saxo Capital Markets in Singapore about the Australian economy which is perhaps starting to suffer from the global slowdown. Australia’s Q2 GDP figures were quite solid. A fairly good contribution from household spending was a surprise, particularly considering that the rest of the economy, apart from the mining sector, is really struggling, says Andrew. Australia is however facing headwinds, mainly stemming from the China slowdown threat and its impact on the mining and resource sector. The third quarter could well be a struggle and as such it might be difficult for the Reserve Bank of Australia to achieve its 3.75 percent growth forecast for the year, says Andrew. At its latest policy meeting the Reserve Bank of Australia kept its benchmark rate unchanged at 3.5 percent for the third straight month. In light of the worsening China situation and the subsequent effect on the Australian economy expectations are increasing that the RBA will cuts its key rate at its next meeting on October 2. The market expects a 50 percent chance of a 25 basis point cut. “The chances are now more likely than they were at the beginning of this month,” says Andrew. The Australian dollar has also been struggling of late as pure fundamentals finally catch up with this otherwise strong commodity driven currency. In the last month alone it has fallen 4.2 percent against the USD, 4.6 percent against the JPY and a massive 6.7 percent against the EUR. It has fallen the most against the latter currency because the Euro has seen some recovery in anticipation of European Central Bank rescue measures for troubled European nations. “The few props that have supported the Aussie dollar over the last 18 months to 2 years are slowly being eroded away,” says Andrew. Andrew also commented on the latest employment figures from Australia which on a headline basis were poor with 8,800 jobs lost to the economy in August. Closer scrutiny of the data revealed that all the job losses were in the part-time category, with just a few jobs added in the full-time category. “That took a bit of the sting out of the negativity of the headline,” says Andrew. The unemployment rate improved to 5.1 percent but this can be largely explained by a fall in the participation rate to 65 percent from 65.2 percent, which is the lowest it has been since October 2007. See more of Andrew's Asian market commentary on TradingFloor.com
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ECB Focus: Mandate change plus German ESM and bill issues support
In this video, Steen Jakobsen, Chief Economist Saxo Bank, looks ...
In this video, Steen Jakobsen, Chief Economist Saxo Bank, looks at the next steps of the European Central Bank in the coming weeks. Of particular focus is its policy meeting on September 6, though not much is expected to be revealed. How Germany's Constitutional Court rules on the European Stability Mechanism (the Eurozone's permanent rescue fund) just six days later is an important milestone. Nevertheless, it is clear that the ECB wants to be a part of the solution for solving the Eurozone crisis once the ESM is in place and one possible supportive mechanism could be the issuance of bills to help troubled countries finance their short-term funding needs. ECB focus: Getting Germans on board The ECB will need a mandate change to issue bills and will have to get German support. If it does not get this support then it is crucial that the Germans at least don't oppose this. "The Germans might abstain but if they negatively impact bill issuances then this will be seen as a showstopper," says Steen. The next focus will be getting the Germans to move away from the idea of requiring ESM fund disbursement decisions moved from a budget approval committee to the entire German parliament (Bundestag). "The ECB may win on the ESM but lose on the budgetary committee which is more significant long term but there could be a rally in between the two events," says Steen.For more comments by Steen Jakobsen see his blog Steen's Chronicle on TradingFloor.com
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Asian Focus: USDJPY direction in big Japanese data week
Japanese numbers are particularly in focus this week in Asia ...
Japanese numbers are particularly in focus this week in Asia after the Japanese Government revised down its assessment of Japan’s economy earlier this week due largely to the global economic slowdown’s effects on the country’s exports and industrial production. In this Asian Focus Video, Yvette Roper of TradingFloor.com interviews Andrew Robinson, Market Analyst for Saxo Capital Markets in Singapore, about important data from Japan. He gives his insight into the state of the economy in Japan and outlook for its currency. The slew of data releases this week out of Japan includes retail sales, PMI manufacturing, unemployment, inflation and industrial production. None however are really seen impacting USDJPY though unless there are major deviations from expectations. Most focus is on Jackson Hole and what Federal Reserve Chairman Ben Bernanke will say, says Andrew. Dollar-yen is seen staying where it is up to the release of data (has been in 40 point range for about a week), which doesn’t normally have a big impact on this exchange rate, says Andrew. The USDJPY cross is mostly sensitive to US interest rate differentials and any Japanese data impacts take a lot longer to trickle through to the exchange rate, he says. “If there’s disappointment over Jackson Hole and no mention of more quantitative easing then we might see yields backing up again,” says Andrew. “For dollar-yen this would mean regaining the 79 mark but overall I can’t see enough momentum to get past the 80 big figure. For next week the range is 77-80 and narrowing it down further I see 77.5 to 79.5.”. Retail sales data for July, due Thursday, is seen showing the first decline in data in eight months as Japanese consumers continue to tighten their purse strings as a result of global and domestic economic concerns. Large retailers are particularly seen suffering. Meanwhile, PMI Manufacturing data is also expected to confirm that Japan’s export markets are struggling and forcing its manufacturing sector onto its knees. Friday is the big day though with PMI data the main focus as it preludes many of the global PMI releases at the beginning of next month. The indicator is expected to be a weak number again this time. Concerning inflation, or rather deflation which Japan has been struggling with for 15 years, the number this time is also expected to be negative at -0-3 percent yoy and when stripped of food and energy prices the decline will be even greater, probably around -0.6 percent. This means the pressure on the Bank of Japan to introduce more easing measures is increasing. “It seems far away from its 1 percent inflation target, even though the bank stresses it’s a medium to long-term target,” says Andrew. “The next Bank of Japan meeting on September 19 is way off, so it will be a long and nervous wait.” See more of Andrew's Asian market commentary on TradingFloor.com
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Jackson Hole preview: No QE3 now but low fed funds rate into 2015
Federal Reserve Chairman Ben Bernanke is highly unlikely to announce ...
Federal Reserve Chairman Ben Bernanke is highly unlikely to announce a third round of quantitative easing (QE3) at the 2012 Jackson Hole Economic Policy Symposium, says Steen Jakobsen, Chief Economist, Saxo Bank. He will however probably extend talk of lower federal funds rates into 2015. Full blown QE would be a big ask as interest rates are already very low but a normal is highly likely, says Steen. "Talk about an extension will give the market something to go for and indicate the Fed is willing to do more," says Steen. He estimates there is a 60-70 percent chance the Fed will do something and it is 90 percent certain it will be a change in language to 2015. Expecting anything more before there is clarity on the European situation (ahead of constitutional court decision in Germany and Dutch election) plus a US election later this year would be asking too much. In terms of other Fed measures like rate caps or buying mortgage securities there's close to zero possibility of the Fed announcing this, says Steen. Shift in Fed focus during election year Officially the Fed normally has a dual mandate to keep inflation in check and secure unemployment is not too high. During election year the focus is heavily on unemployment. If however over focused on this then Fed might be more forceful in its wording at Jackson Hole an willing to do something. Nevertheless, changes in unemployment don’t happen overnight and certainly not because of changes in monetary policy alone and the biggest barrier right now is the fiscal cliff. Stock market correction unlikely There's unlikely to be a stock maret correction if there's no more QE mentioned at this point, he says, adding that the market has pre-empted some of the possible moves by the Fed. As always is the case, pre-announcment of policy changes normally has the biggest impact ahead of actual implementation. For more comments by Steen Jakobsen see his blog Steen's Chronicle on TradingFloor.com
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Asian Focus: In China's shadow Southeast Asia struggles
In this Asian Focus Video Andrew Robinson, FX Analyst for ...
In this Asian Focus Video Andrew Robinson, FX Analyst for Saxo Capital Markets in Singapore looks at the state of economic growth generally in Asia and how Southeast Asia is particularly struggling in the region, as shown by recent Singaporean data. Singapore retail sales data for June was disappointing considering that it covers a period when shops traditionally have sales. Normally these numbers are quite buoyant, says Andrew, adding that sentiment in Singapore is looking increasingly more cautious. There’s no “free-spending” like last year, he says. Expectations for export data in Singapore due at the end of this week point to a slowing in July. The volatile pharmaceutical sector however could as is often the case give a positive skew to the data. Andrew expects the deterioration in the pace of exports to continue in the coming months as the global economy and particularly China slows down. If China can’t export to the rest of the world then what hope does Southeast Asia have, questions Andrew. Singapore’s Finance Ministry is increasing its watch on inflation. Even though private property prices are coming down other components like transportation costs (bidding for permits to buy a car) plus food prices remain a concern says Andrew. On growth, the Japanese economy did relatively better in the second quarter when compared to Germany and the Eurozone. Asia in general continues to see a dramatic slowdown though with China’s performance in the second quarter particularly slow by Chinese standards, says Andrew. But if China’s economy is slowing that dramatically why haven’t we heard about fresh easing from its central bank? Andrew believes that authorities are concerned inflation could blip up at any moment, given the current trend in food prices. The People’s Bank of China is keeping some powder dry for more drastic deterioration in data, he says. See more of Andrew's Asian market commentary on TradingFloor.com
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Q3 FX Options Outlook: Buying oportunity?
- Holding options might provide a very attractive return, due ...
- Holding options might provide a very attractive return, due to return of volatility in Q3
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Q3 Commodity Outlook: Weather, geo-politics and growth battle
- Rising oil prices in Q3 (105 $), due to ...
- Rising oil prices in Q3 (105 $), due to world growth at 3 percent and Iranian worries on the supply side. - Gold good buying opportunity in Q3 (1800 $).
