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TradeFred Daily Briefing
ср 21-08-2019 12:00

In Brief:

  • Dollar on the defensive ahead of Fed meeting
  • Brent Oil rises above $60
  • Asian shares fall
  • Bitcoin Ethereum & XRP drop as Asian regulators probe Facebook’s Libra

While Thailand’s surging currency is squeezing exporters, the nation’s largest consumer-electronics retail chain is benefiting as the strong Baht attracts customers by making iPhones and Samsung smartphones cheaper.

Com7 PCL’s 72% total return this year through Monday on its stock ranks as the world’s best performance among electronics sellers with a market value of at least $500 million, according to data compiled by Bloomberg. Earnings growth will enjoy “strong momentum” for the rest of this year, partly helped by the baht, after a record profit in the second quarter, according to the company.

In Forex news, the US Dollar was on the defensive on Wednesday, elbowed off a three-week peak by a reversal in US yields as they headed south again ahead of a meeting of central bankers, at which the Federal Reserve is expected to give clues on further rate cuts. Central bankers will gather at Jackson Hole, Wyoming, on Friday with markets focused on a scheduled speech by Fed Chair Jerome Powell. His comments will take centre stage especially after last week's inversion of the US yield curve -widely regarded as a recession signal- boosted expectations for the Fed to lower interest rates at its September policy meeting. Faced with rising risks to the US economy, the central bank in July cut rates for the first time since the financial crisis.

Walmart Inc sued Tesla Inc, claiming it failed to live up to industry standards in the installation of solar panels on top of hundreds of stores, resulting in multiple fires across the US. The retailer said it had leased or licensed roof space on top of more than 240 stores to Tesla’s energy operations unit, formerly known as SolarCity, for the installation and operation of solar systems. But as of November, fires had broken out at no fewer than seven of the stores, forcing the disconnection of all the solar panel systems for the safety of the public.

Prices for Brent Oil rose above $60 a barrel for the first time in over a week on Wednesday amid data that showed a larger-than-expected drawdown in US crude inventories, but ongoing worries about a global economic recession capped gains. Brent Crude (LCOc1) had risen 13 cents, or 0.2%, to $60.16 a barrel by 01:36 GMT, after settling 0.5% higher on Tuesday. US crude (CLc1) was up 12 cents, or 0.2%, at $56.25 a barrel. US crude oil stocks fell by 3.5 million barrels to 439.8 million in the week to August 16, data from industry group the American Petroleum Institute (API) showed on Tuesday. Analysts polled by Reuters had expected a decrease of 1.9 million barrels.

President Donald Trump on Tuesday said he had to confront China over trade even if it caused short-term harm to the US economy because Beijing had been cheating Washington for decades. Trump's strongly worded comments came hours before his government announced approval of an $8 billion sale of Lockheed Martin F-16 fighter jets to Taiwan, a move sure to draw Beijing's ire and further dim prospects for a quick trade deal.

Asian stocks fell in morning trade on Wednesday. China’s Shanghai Composite and the Shenzhen Component were down 0.2% and 0.3% respectively by 10:30 PM ET (02:30 GMT). Hong Kong’s Hang Seng Index slipped 0.1%. Japan’s Nikkei traded 0.4% lower, while South Korea’s KOSPI climbed 0.2%. Down under, Australia’s ASX 200 dropped 1.0%.

The downturn in British manufacturing eased off a little in August, although the slowdown in the global economy and the Brexit crisis mean a recovery still looks a way off, a survey showed on Tuesday. The Confederation of British Industry's (CBI) monthly order book balance rose to -13 from -34 in July. A Reuters poll of economists had pointed to a weaker reading of -23 in August. Domestic and export orders were below normal, and the CBI's gauge of expected selling prices fell to its lowest level since February 2016.

Japan’s negative-yielding bonds were a surprise beneficiary of the collapse in global rates in July. Foreign investors more than doubled purchases of the nation’s debt last month to 2.88 trillion Yen ($27.1 billion) from 1.28 trillion Yen in June, according to data from Japan Securities Dealers Association. The bulk of purchases were in the two-to-five-year bracket, where the extra yield that can be gained over Treasuries using currency forwards swelled to the highest in a decade.

Global funds also bought more super-long bonds - those due in 20 years or more - amid speculation the worsening outlook for global growth will spur the Bank of Japan to ease policy, a move that would disproportionately favour longer maturities. Downward-spiralling bond yields and other potential signs of global recession have strung a tightrope for the Bank of Japan: it must keep pumping money aggressively to spur growth, but also prevent borrowing costs from sliding too far below the target.

If yields keep falling, they could force the BOJ to take a deeper look at the feasibility of yield curve control (YCC), some analysts say. The policy, aimed at preventing long-term interest rates from sliding too much, is a centrepiece of the bank's efforts to stabilize the Japanese economy. "The BOJ is powerless in stopping yield falls. It's a key flaw of YCC, which becomes dysfunctional when markets are too volatile," said Takahide Kiuchi, a former BOJ board member and an executive economist at Nomura Research Institute.

Cryptocurrency prices fell on Wednesday in Asia as regulators probe Facebooks’ project to launch its own digital coin, Libra. Bitcoin fell 4.3% to $10,340.2 by 11:49 PM ET (03:49 GMT). Ethereum was down 3.8%, while XRP and Litecoin dropped 3.9% and 2.2% respectively. The fall came after Bloomberg cited a document titled “investigating potential anti-competitive behaviour” and reported that antitrust regulators are probing Facebook’s Libra project. Regulators are looking into “possible competition restrictions” on information that will be exchanged and the use of customer data under the two-month old Facebook project, according to Bloomberg.

See Also

In Brief:

  • Dollar on the defensive ahead of Fed meeting
  • Brent Oil rises above $60
  • Asian shares fall
  • Bitcoin Ethereum & XRP drop as Asian regulators probe Facebook’s Libra

While Thailand’s surging currency is squeezing exporters, the nation’s largest consumer-electronics retail chain is benefiting as the strong Baht attracts customers by making iPhones and Samsung smartphones cheaper.

TradeFred Daily Briefing

In Brief:

  • Yen’s dominance attracts Hedge Fund attention
  • Brent Crude & WTI slip up
  • Australia’s central bank reportedly ready to cut interest rates
  • Bitcoin continues its revival

The US Dollar was unchanged on Tuesday in Asia, while the Chinese Yuan fell as the country’s central bank debuted a new loan prime rates announced on the weekend. The US Dollar index was largely unchanged at 98.210 by 11:20 PM ET (03:20 GMT). The index hovers around three-week highs as the 10-year US Treasury yield pulled further away from a three-year trough of 1.47% marked last week, which sparked concerns of a potential recession.

TradeFred Daily Briefing