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JPY: Nikkei reports stimulus package likely before G7 summit – Nomura

Tomo Kinoshita, Research Analyst at Nomura, suggests that the Nikkei article says stimulus package is forthcoming before G7 summit in late May.

Key Quotes

“On 27 March, the Nikkei reported that the Abe government plans to put together an economic stimulus package to boost Japan’s slumping economy prior to the G7 summit to be held in Ise-Shima on 26–27 May. The article said that members of the government and ruling parties are considering a ¥5trn-plus package or a package of around ¥10trn.

The article echoed the Sankei Shimbun’s 17 March report that the government would likely present a large FY16 supplementary budget to the extraordinary Diet session to be held before this autumn.

At the G20 meeting of finance ministers and central bank heads in Shanghai at end-February, the world’s financial leaders pledged to use fiscal policies flexibly. With Jan–Mar 2016 increasingly looking to be the Japanese economy’s second-straight quarter of negative growth, the government’s plan to introduce an economic stimulus package of course is pointed at the upcoming House of Councillors election this summer.

However, the Abe government also apparently hopes to incorporate contributions to international society into the package and demonstrate Japan’s ability to exert international leadership at the G7 summit.”

Tomo Kinoshita, Research Analyst at Nomura, suggests that the Nikkei article says stimulus package is forthcoming before G7 summit in late May.

(Market News Provided by FXstreet)

Expect NZD/USD to be lower by mid-2016 – Westpac

Imre Speizer, Senior Market Strategist at Westpac, notes that the last week NZD/USD tested, but was repelled by, the top of a contracting range which has formed since Sep 2015.

Key Quotes

“The boundaries are currently at 0.64 and 0.69, and until we get a break, NZD/USD will be uninteresting from a medium-term technical point of view. Fundamentally, the NZ-US interest rate outlook argues for lower, but there’s an absence of major NZ data catalysts until 18 April (CPI) so that US developments will probably provide the lead during the next few weeks. We are thus neutral around 0.6700 for this week.

The NZ calendar remains light this week. ANZ business confidence (Thu) does occasionally get a market response, and on this occasion its inflation expectations related components will be noteworthy given the recent commentary from the RBNZ. Building permits are also out (Wed).

3 months: We expect NZD/USD to be lower by mid-2016, due to a combination of a lower OCR and a higher US interest rates. In addition, NZ commodity prices are expected to remain soft. However, there is a risk that the recent surge in global risk sentiment, manifested by higher equity and commodity prices could persist and offset the negative NZ interest rate argument. We target the Jan low of 0.64.

1 year: Our macro-economic based forecast for one-year ahead is 0.62, based mainly on a lower OCR and a higher US Fed rate.”

Imre Speizer, Senior Market Strategist at Westpac, notes that the last week NZD/USD tested, but was repelled by, the top of a contracting range which has formed since Sep 2015.

(Market News Provided by FXstreet)

GBP shorts rise again, EUR shorts cut – Nomura

David Wagner, Research Analyst at Nomura, notes that according to the IMM data for the week ended March 22, non-commercial accounts sold USD to the tune of -$0.6bn, bringing positioning in USD to $8.9bn.

Key Quotes

“However, our real-time estimate suggests that net longs increased significantly since then by $2.7bn, bringing net longs back to around $11.6bn.

• GBP net shorts grew by -$2.1bn on the week, with net shorts at -$3.4bn as of Tuesday.

• JPY net long positions grew again ($0.9bn), bringing net longs back to $5.9bn, which is 83% of the maximum in the last year.

• EUR net shorts were cut by $1.5bn on the week, with net shorts now at -$9.3bn as of Tuesday; however, our real-time estimator suggests that shorts increased since then by -$1.3bn since then, which would bring the total net short position to -$10.6bn.

• Non-commercial accounts added to AUD longs to the tune of $0.4bn, bringing net longs back to $1.4bn, which is 63% of the maximum net long position in the last year.”

David Wagner, Research Analyst at Nomura, notes that according to the IMM data for the week ended March 22, non-commercial accounts sold USD to the tune of -$0.6bn, bringing positioning in USD to $8.9bn.

(Market News Provided by FXstreet)

EM preview for the week ahead – BBH

Research Team at BBH, suggests that the EM is benefitting from a supportive global liquidity outlook and they believe that this bounce in risk sentiment remains fragile, and that the eventual re-pricing of Fed tightening risks will be a big hurdle for EM.

Key Quotes

“As usual, specific EM country risk remains in play. Brazil’s political outlook may become clearer after the PMDB meeting, though we caution investors not to get too bullish with regards to impeachment. China offers its first glance at March with the PMI readings. Korea and Brazil report the first March trade readings, and little relief is seen.

China reports official and Caixin March manufacturing PMI readings Friday. The official manufacturing PMI is seen at 49.3 vs. 49.0 in February, while the Caixin measure is expected at 48.3 vs. 48.0 in February. For now, markets seem comfortable with China’s macro outlook, especially since policymakers have signaled that further easing is likely this year.”

Research Team at BBH, suggests that the EM is benefitting from a supportive global liquidity outlook and they believe that this bounce in risk sentiment remains fragile, and that the eventual re-pricing of Fed tightening risks will be a big hurdle for EM.

(Market News Provided by FXstreet)

Japan’s Abe to hold a press conference shortly – Bloomberg

As reported by Bloomberg, a notice has been issued by the Japanese PM’s office, noting that PM Shinzo Abe will hold a press conference tentative around 06.20 GMT, and could announce the stimulus measures.

As reported by Bloomberg, a notice has been issued by the Japanese PM’s office, noting that PM Shinzo Abe will hold a press conference tentative around 06.20 GMT, and could announce the stimulus measures.

(Market News Provided by FXstreet)