This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

Personal Meeting?

Morning Briefing 15th August 2019

Europe’s big events on Thursday are the announcement of the Norges Bank’s monetary policy decision at 0900BST and the release of UK retail sales at 0930BST. It is a busy Thursday in the US, with the publication of retail sales at 1330BST and industrial production at 1415BST being the highlights of the day.

UK’s monthly retail sales rebounded to 1.0% in June after recording negative rates for two consecutive months. According the MNI median, monthly sales are forecast to fall by 0.2% in July. June’s increase was mainly led by “other store” sales which includes charity shops and auctions. Moreover, except for non-specialised stores, every other retail sector saw monthly gains in June.

Retail sales are forecast to rise by 0.3% in July after a 0.4% increase in June. Not seasonally adjusted industry motor vehicle sales were unchanged in July, while AAA reported that gasoline prices ticked up slightly in mid-June after a May dip. Retail sales are expected to rise 0.4% excluding motor vehicles, the same as the June increase.

Industrial production is expected to rise by 0.1% in July after a flat reading in June. Manufacturing production is likely to be modest, based on the employment data. Factory payrolls rose by 16,000 in July, while auto production jobs rose by 10,000, but the factory workweek was narrowed to 40.4 hours from 40.7 hours in June. Utilities production is expected to partially rebound in the month after a sharp 3.6% decrease in the previous month, while mining production is forecast to hold steady after a 0.2% gain in the previous month, with the impact from Hurricane Barry the wild card. Capacity utilization is forecast to hold steady at 77.9% after falling to that point in June.

There are no speeches or events scheduled apart from the Norges Bank’s policy decision at 0900BST.

Global Economic Trading Calendar

Markets

BOND SUMMARY: Core FI registered modest gains in Asia-Pac trade, extended yesterday’s moves. U.S. Pres Trump took to Twitter, praising recent talks with China and stating that Chinese Pres Xi could fix the Hong Kong crisis “quickly and humanely,” concluding with an enigmatic question – “Personal meeting?”. T-Notes last trade +0-04+ at 130-21. Cash yield curve further bull flattened, yields sit 1.6-5.2bp lower. 30-Year yield dipped sub-2.0% for the first time. Eurodollars up to +2.5 ticks thru reds.- JGB futures last trade at 154.95, 22 ticks better off after touching a record high of 154.97. Cash yields seen 0.8-5.3bp lower, bull flattening apparent. 5-year JGBs were offered at an auction, low price met BBG estimates. S. Korea Pres Moon called for dialogue with Japan re: their bilateral trade row.- Domestic labour mkt report sent Aussie bond futures to session lows on the back of a strong beat in employment, accompanied by an uptick in participation rate. The moves were largely retraced; YM last unch., XM +5.5 ticks. Yield curve runs flatter, with yields -9.3bp to +0.7bp. Bills are -3 to +2 ticks thru reds.- Bunds +0.26, Bobls +0.06, Schatz +0.015.

FOREX: Markets calmed down after yesterday’s sell-off. Aussie labour mkt data positively surprised, underpinning a rally in AUD. A surge in employment coupled with an uptick in participation rate to a record high of 66.1% kept unemployment rate unch. at 5.2%. There was a fly in the ointment; spare capacity remains as underemployment inched higher, while prior employment figures were rev. lower. AUD/USD halved gains promptly after the reaction spike before climbing again.- Safe haven FX came under pressure as regional benchmark equity indices trimmed losses, while U.S. equity futures posted modest gains.- A speech from RBA Dep Gov Debelle was pretty uneventful. He mentioned that he is unsure if U.S. yield curve inversion is a reliable signal of recession.- In EMFX, Brazilian central bank said they will draw upon USD reserves for the first time in a decade in the wake of a sharp real depreciation; reverse currency swaps will be offered alongside spot. – On today’s docket: U.S. industrial output & Empire m’fing survey, U.S. & UK retail sales, and a policy decision from Norges Bank. South Korea & India are off for national holidays..

Technical Analysis

BUND TECHS: (U9) BULLS STILL FIRMLY IN CHARGE

U9 Bund uptrend extended higher once again yesterday following poor German economic data with gains following through overnight too. The price sequence of higher highs and higher lows, that defines an uptrend remains intact and while this holds, further upside is anticipated. Price action also continues to hold above trendline support, today at 177.22. The trendline is  drawn off the Jul 12 low and is an important support. The focus is now on 179.00.

EUROSTOXX50: BEAR TREND RESUMES

EUROSTOXX50 sold off sharply yesterday and traded below the Aug 7 low of 3283.13, confirming a resumption of the downtrend that has been in place since Jul 25. The index has also moved back below the 200-DMA which had contained the sell-off recently. The break lower paves the way for weakness towards 3248.54, the Jun 3 low and 3241.14, the 50% Fibonacci retracement of the Dec 2018-Jul 2019 rally. Key resistance has been defined at 3380.81.

Eurex Futures Market Close

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Eurex Exchange and is being posted with permission from Eurex Exchange . The views expressed in this material are solely those of the author and/or Eurex Exchange and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

trading top