Tag Archive: eur

G10 FX to NFP surprise reactions – Nomura

FXStreet (Delhi) – Research Team at Nomura, notes that during the pervasive risk-off sentiment in the first two weeks of 2016, it was no surprise that FX reactions to January’s NFP at first glance were less clear than reactions in the latter half of 2015, especially considering the USD sold off after a +92K NFP headline surprise for January (+292K vs +200K consensus).

Key Quotes

“This is not the full story, January had some mixed surprises

While the January NFP release was a positive +92K surprise, average hourly earnings wages were on the weak side (y-o-y +2.5% versus +2.7% expected), and the USD therefore finished the day lower as a result.

Keep your eye on wage developments for determining the USD reaction

The markets’ focus therefore looks to be more on the developments in wages rather than the headline NFP change. One could argue that the reaction to January’s NFP was a “one-off”, but this looks to have been reflected quite well in the sensitivity analysis between FX to NFP headline and FX to average Hourly wages.

It appears that wages are the dominant driver of USD reactions over NFP, with EUR the market’s NFP proxy currency of choice, followed by JPY and commodity currencies not far behind.

A divergence worth noting: GBP and CAD reactions (or the lack of) stand out

The lack of a reaction in GBP and CAD stands out in our analysis. The small response in CAD can be partly explained by the fact that the Canadian employment report tends to come out at the same time as the US NFP and that the countries’ economies are well linked. The low Beta in GBP can be explained by the view that the BoE would closely follow the Fed in terms of hiking. However, now that market pricing for BoE hiking this year is non-existent, perhaps the GBP may react more to NFP numbers than it has done in the past year.

Nevertheless, the analysis shows NFP surprises remain highly important for G10 FX reactions, where the devil is in the details of wage surprises versus the headline number to determine where the USD ends up.”

Research Team at Nomura, notes that during the pervasive risk-off sentiment in the first two weeks of 2016, it was no surprise that FX reactions to January’s NFP at first glance were less clear than reactions in the latter half of 2015, especially considering the USD sold off after a +92K NFP headline surprise for January (+292K vs +200K consensus).

(Market News Provided by FXstreet)

G10 FX to NFP surprise reactions – Nomura

FXStreet (Delhi) – Research Team at Nomura, notes that during the pervasive risk-off sentiment in the first two weeks of 2016, it was no surprise that FX reactions to January’s NFP at first glance were less clear than reactions in the latter half of 2015, especially considering the USD sold off after a +92K NFP headline surprise for January (+292K vs +200K consensus).

Key Quotes

“This is not the full story, January had some mixed surprises

While the January NFP release was a positive +92K surprise, average hourly earnings wages were on the weak side (y-o-y +2.5% versus +2.7% expected), and the USD therefore finished the day lower as a result.

Keep your eye on wage developments for determining the USD reaction

The markets’ focus therefore looks to be more on the developments in wages rather than the headline NFP change. One could argue that the reaction to January’s NFP was a “one-off”, but this looks to have been reflected quite well in the sensitivity analysis between FX to NFP headline and FX to average Hourly wages.

It appears that wages are the dominant driver of USD reactions over NFP, with EUR the market’s NFP proxy currency of choice, followed by JPY and commodity currencies not far behind.

A divergence worth noting: GBP and CAD reactions (or the lack of) stand out

The lack of a reaction in GBP and CAD stands out in our analysis. The small response in CAD can be partly explained by the fact that the Canadian employment report tends to come out at the same time as the US NFP and that the countries’ economies are well linked. The low Beta in GBP can be explained by the view that the BoE would closely follow the Fed in terms of hiking. However, now that market pricing for BoE hiking this year is non-existent, perhaps the GBP may react more to NFP numbers than it has done in the past year.

Nevertheless, the analysis shows NFP surprises remain highly important for G10 FX reactions, where the devil is in the details of wage surprises versus the headline number to determine where the USD ends up.”

Research Team at Nomura, notes that during the pervasive risk-off sentiment in the first two weeks of 2016, it was no surprise that FX reactions to January’s NFP at first glance were less clear than reactions in the latter half of 2015, especially considering the USD sold off after a +92K NFP headline surprise for January (+292K vs +200K consensus).

(Market News Provided by FXstreet)

EUR/GBP finds support around 0.7540, UK PMI on sight

FXStreet (Edinburgh) – The bid tone of the sterling has prompted EUR/GBP to retrace part of yesterday’s rally overnight and test lows around the 0.7540 area.

EUR/GBP attention to UK PMI

The cross is finding some decent support around the uptrend from December 2015 in the mid-0.7500s, in a context where the risk-on trade seems to be favoured ahead of the opening bell in London.

A light calendar in the euro area will only see December’s Unemployment rate, while Construction PMI is due across the Channel.

EUR/GBP key levels

The European cross is now up 0.42% at 0.7575 with the next hurdle at 0.7756 (high Jan.20) followed by 0.8007 (high Dec.16 2014) and then 0.8041 (high Nov.27 2014). On the other hand, a breach of 0.7481 (61.8% Fibo of 0.7310-0.7758) would expose 0.7310 (low Jan.5) and finally 0.7247 (200-day sma).

The bid tone of the sterling has prompted EUR/GBP to retrace part of yesterday’s rally overnight and test lows around the 0.7540 area…

(Market News Provided by FXstreet)

EUR/GBP finds support around 0.7540, UK PMI on sight

FXStreet (Edinburgh) – The bid tone of the sterling has prompted EUR/GBP to retrace part of yesterday’s rally overnight and test lows around the 0.7540 area.

EUR/GBP attention to UK PMI

The cross is finding some decent support around the uptrend from December 2015 in the mid-0.7500s, in a context where the risk-on trade seems to be favoured ahead of the opening bell in London.

A light calendar in the euro area will only see December’s Unemployment rate, while Construction PMI is due across the Channel.

EUR/GBP key levels

The European cross is now up 0.42% at 0.7575 with the next hurdle at 0.7756 (high Jan.20) followed by 0.8007 (high Dec.16 2014) and then 0.8041 (high Nov.27 2014). On the other hand, a breach of 0.7481 (61.8% Fibo of 0.7310-0.7758) would expose 0.7310 (low Jan.5) and finally 0.7247 (200-day sma).

The bid tone of the sterling has prompted EUR/GBP to retrace part of yesterday’s rally overnight and test lows around the 0.7540 area…

(Market News Provided by FXstreet)

Metals: Supported by demand improvement – ANZ

FXStreet (Delhi) – Research Team at ANZ, suggests that base metals appear to have found some support, with better-than-expected Chinese trade data raising hopes that demand is improving.

Key Quotes

“China’s imports of base metals rose sharply in December, with nickel (554% y/y), zinc (271% y/y) and copper (30% y/y) volumes particularly strong. Overall, the impact of weak prices in late November appears to have sparked some opportunistic buying by Chinese consumers. But with inventories remaining relatively unchanged, there also appears to be some strong underlying demand behind this improvement.

However, a sell-off late in the last week does suggest that there are still some lingering concerns. News that the commissioning of the Las Bambas copper mine in Peru (400ktpy) is ahead of schedule, raised fears that recent supply cuts will be overwhelmed by growth elsewhere.”

Research Team at ANZ, suggests that base metals appear to have found some support, with better-than-expected Chinese trade data raising hopes that demand is improving.

(Market News Provided by FXstreet)

Metals: Supported by demand improvement – ANZ

FXStreet (Delhi) – Research Team at ANZ, suggests that base metals appear to have found some support, with better-than-expected Chinese trade data raising hopes that demand is improving.

Key Quotes

“China’s imports of base metals rose sharply in December, with nickel (554% y/y), zinc (271% y/y) and copper (30% y/y) volumes particularly strong. Overall, the impact of weak prices in late November appears to have sparked some opportunistic buying by Chinese consumers. But with inventories remaining relatively unchanged, there also appears to be some strong underlying demand behind this improvement.

However, a sell-off late in the last week does suggest that there are still some lingering concerns. News that the commissioning of the Las Bambas copper mine in Peru (400ktpy) is ahead of schedule, raised fears that recent supply cuts will be overwhelmed by growth elsewhere.”

Research Team at ANZ, suggests that base metals appear to have found some support, with better-than-expected Chinese trade data raising hopes that demand is improving.

(Market News Provided by FXstreet)

UK: Growth momentum driven by services sector – ING

FXStreet (Delhi) – James Smith, Economist at ING, notes that the first estimate of UK fourth quarter 2015 GDP came in at 0.5% QoQ, in line with the consensus forecast and is a touch above the final third quarter reading of 0.4%.

Key Quotes

“Although we will have to wait for the next release for a full component breakdown, the split by industry reveals that the services sector continues to do the heavy lifting. On a quarterly basis, the service sector grew 0.7%, whilst manufacturing remained flat (sterling strength and weak external demand likely to blame). This release completes the set for 2015, and shows that the economy grew at a respectable 2.2% last year, albeit below the 2.9% reading in 2014.

Looking ahead, strong employment growth and resilient confidence indicators suggest that the UK economy has made an encouraging start to 2016. However, the referendum on the UK’s EU membership looks increasingly likely to occur this year (with a vote in late 2Q/early 3Q possible depending on the outcome of February’s European Council meeting). The uncertainty surrounding the vote may prompt a slowdown in the pace of hiring and investment, and as such we may see some weaker growth figures around the time of the referendum.

With inflation pressures looking benign (given the recent plunge in oil prices and the fact that wage growth remains subdued), the Bank of England has greater scope to keep rates low for longer to wait for uncertainty surrounding Brexit to decline. With this in mind, we retain the view that Bank of England will not hike rates until November at the earliest.”

James Smith, Economist at ING, notes that the first estimate of UK fourth quarter 2015 GDP came in at 0.5% QoQ, in line with the consensus forecast and is a touch above the final third quarter reading of 0.4%.

(Market News Provided by FXstreet)

UK: Growth momentum driven by services sector – ING

FXStreet (Delhi) – James Smith, Economist at ING, notes that the first estimate of UK fourth quarter 2015 GDP came in at 0.5% QoQ, in line with the consensus forecast and is a touch above the final third quarter reading of 0.4%.

Key Quotes

“Although we will have to wait for the next release for a full component breakdown, the split by industry reveals that the services sector continues to do the heavy lifting. On a quarterly basis, the service sector grew 0.7%, whilst manufacturing remained flat (sterling strength and weak external demand likely to blame). This release completes the set for 2015, and shows that the economy grew at a respectable 2.2% last year, albeit below the 2.9% reading in 2014.

Looking ahead, strong employment growth and resilient confidence indicators suggest that the UK economy has made an encouraging start to 2016. However, the referendum on the UK’s EU membership looks increasingly likely to occur this year (with a vote in late 2Q/early 3Q possible depending on the outcome of February’s European Council meeting). The uncertainty surrounding the vote may prompt a slowdown in the pace of hiring and investment, and as such we may see some weaker growth figures around the time of the referendum.

With inflation pressures looking benign (given the recent plunge in oil prices and the fact that wage growth remains subdued), the Bank of England has greater scope to keep rates low for longer to wait for uncertainty surrounding Brexit to decline. With this in mind, we retain the view that Bank of England will not hike rates until November at the earliest.”

James Smith, Economist at ING, notes that the first estimate of UK fourth quarter 2015 GDP came in at 0.5% QoQ, in line with the consensus forecast and is a touch above the final third quarter reading of 0.4%.

(Market News Provided by FXstreet)