Discussing the latest Macro news impacting the World's major Commodities & FX crosses. Enjoy the blog... Empower yourself with belief & remember it only takes ONE person to CHANGE your life! Enjoy & Comment; for any other feedback, please email me : anish.lal@atom8.com
Thursday, 29 October 2015
Kuroda's Economic Armageddon
All market eyes will be focused on Japan tomorrow, as they release updated inflation forecasts. Essentially, this is an indicator of when, or if, the bank;s board members see Japan reaching their inflation target of 2% and markets are expecting the BOJ to become even more engaged in search of the 2%. The Markets over the past few weeks have priced in more stimulus, especially with the recent Nikkei gains.
Kuroda has done an excellent job in albeit trying circumstances, elevating inflation expectations in an economy that has had actually 0 inflation in the last 20 years.
Just cast your mind back to 2 years ago when the USDJPY was trading around 80 and now trading around 120 & Nikkei at 8,000 & now nearly 20,000 - really putting QE into Economic action - essentially reflating the risk/assets base. But still have a lot more positive inflation to go up to 2%. However, could we really see the BOJ wanting to weaken the Yen further? At the moment Japan is still very cheap & the major corporates have been rubbing their hands in Green for the past few years now - on the flip/side the small/medium companies have been feeling the pinch with greater import costs. In addition, policy markers are also adjusting for (and looking forward to) lower a base of lower oil prices, but again adding more stimulus could be more problematic in the longer term.
In my view, the decision tomorrow is more likely to be felt within the Equity Markets as Kuroda focuses on building a significant amount of more wealth into the Nikkei and their is a high conviction level from traders that something will happen - Especially as Japan owns more than half of the nations ETFs (An important Abenomics Battleground) - But really where does true Economic Theory come into play here? Central Banks buying up ETFs to promote more "risk-taking activity in the Economy"... Overall, Japan has a very important lesson that they have probably been mislearning and it's underlying issues could be 1 of 2 things... either Deflation or is it because they failed to act like the US did in the 90s.
As Buffet once said"We are all Market Vigilantes" So what is the end game for the BOJ? Does AbeNomics fail trying to approach a 2% target that they may not ever hit. We face an absolute Economic Armageddon. In my view, a lot of Japanese pride on the line.
Keep your eyes peeled & fingers on the right side of the trigger!
Best of luck
Anish @ Atom8.com
Wednesday, 28 October 2015
Could Monetary Policy Divergence cause EURUSD to hit parity by December?
Central Bank Rule on Settlement Day
Tuesday, 27 October 2015
The Vicious Cycle Of Oil
Oil once more trades at a near 2-month low and as vicious as it has been, the oil price collapsing cycle does not look to be over just yet. However, large institutions and Central Banks further seek a longer period of stability, especially in the eyes of the Bond Markets.
The US are still heavily over-supplied and refineries continue to close down, due to mounting costs from a alack of productivity. The big players are still looking at holding sub $50 and hedging their risk with the Futures Markets... These "players" may be the ones the Central Banks turn to in the near future to assist in the un-cuffing of this downward spiral.
OPEC have been heavily pressured by Venezuela (Country with the World's largest known Oil reserves) to do something about the Oil price and have been supported by one of Africa's biggest Oil producer, Algeria. Contrary to views from the Gulf who are welcoming the lower prices, seeing it as a chance to reform & these contrast of views continue to bear onto a larger Geo-Political issue. But how big is this issue?
Saudi Arabia, the world's largest Oil mover has been doing things recently, that in the last 30 years have been unimaginable ;
1. Withdrawing money from overseas;
2. Delaying contract payments; and
3. Taxing lands.
So how does the Market quantify these issues?.. Let's pause for a second and cast our mind backs to mid 2007 when the Oil price hit $145.00 per barrel and the Gulf generated more money that they knew what to do with & the fact remains that Saudi's Debt:GDP ratio is still less than 2% and in the next 10 years is estimated to stay below 7%... The main Gulf states could actually live comfortably for several years from these revenues built. So contrary to the "Geo-Politics" - Investors are more focused on the supply-side issues and may be more keen to ignore the political nature surrounding the MENA regions.
Storage is still reaching tank-tops and if this trend continues, we may see for the first time in 20 years - oil investments declining for two consecutive years and this may be an indication for future oil markets.. as they look to continue their downward spiral.
Optimists still seek a bottoming level - looking at Iran supplies for next year to help boost $60+ for 2017 (perhaps a fascinating new dynamic for the near future), however the fundamentalists outlook is further lower to find a strong re balance in the market.
Best of luck
Anish
Thursday, 22 October 2015
Urges to congress to act now!
Tuesday, 20 October 2015
Event Risk - ECB Meeting
This Thursday the European Central Bank meeting takes place on the Mediterranean island of Malta, there is strong belief that there will be hints at further fresh stimulus to ward off the threat of deflation in the press conference following the Governing Council congress at 14:30CET
Last month Eurozone inflation fell below 0% to -0.1% this is the first time since March. Presently the ECB is currently committed to buying €60bn of government and corporate bonds each month until September 2016. But as Ewald Nowotny, an ECB Policymaker, has been quoted as saying it is “quite obvious” that additional instruments would be needed, as the ECB is “clearly missing” its inflation target. It is not if, but when.
What tools are available to the ECB? The obvious answer is it could boost QE to €80bn a month and/or further extended the programme beyond next September 2016.
Will they announce further ECB Stimulus? We believe there will be hints but no action.
One of the consequences of the Fed delaying ‘lift off’ has been a strengthening €, this is an unwelcome development adding deflationary pressure.
We believe the tone to this meeting will be dovish a weakening currency is the other unquantifiable tool that can help the Eurozone
Good Luck
Anish Lal
Atom8 Financial Services LLP www.atom8.com
Friday, 16 October 2015
"Hold your Oil Shorts" Calls from the Floor
As our eyes turn to the weekend - the volatile weekly Oil market draws to a close after a neat 10% slide on the back of further global supply gluts.
From my post labelled "Crude Oil - A Bargain Hunt" the larger oil producing nations are looking at the $50 mark as the benchmark heading into 2016. However, the institutions & techies are looking at $50 as a perfect opportunity to remain short.
So how are the Traders actually clicking? Well.. the more short-term clickers are looking at more downside targets, however some trading puritans would argue about the risk:retun. Although, as i Look at the chart & price action this morning, you can see that the market is heavily gripped by short covers.
Hence the phrase "if I can scoop a small profit I will take my money and run" in my original post.
Will the USA run out of cash by November?
Thursday, 15 October 2015
Gold : A Mastermind of the "Break-Out" - $1300 by 2016?
The precious yellow metal is back in the spot light after forming a pretty dull range so far this year between $1200.00 / $1100.00 and the outlook has remained bearish. However, this has all changed in the past few days as the October Bull awakens to the more uncertain Economic landscape, especially breathing from the US & from increased Geo-political action (The Ruski's in particular)!
Gold (XAUUSD.v) is showing strength above 1170 (formed yesterday) and all my indicators are pointing towards a further bull offensive. The commodity must continue to trade & hold above it's broker resistance (turned support) at 1170 to really create more scope for strength heading into the final months of 2016. On the other click, if you remain a bear in this market - support comes in more at the 1165 level, where a break down to 1150.00 will really slam the brakes again on the metal. Me personally, I am hoping for a break of 1200 as I really do miss the days of huge Gold daily volume.
fig: Atom8 MT4 Terminal
How high could we go? After breaking a "key resistance" level, the investor sentiment is more positive and will probably attempt to push it to a high for year-end. Gold is now trading above it's 200-day MA for the first time since May & prices could be further buoyed by (what is now expected to be) weaker US data & that the FED are now looking to raise rates next year.
A call for above 1200.00 could be realistic by December and I would not be surprised if we even saw a move to the $1,300 mark - as volume for Metals expect to be double by next year (source : mining.com).
Best of luck Traders,
Anish @ Atom8.com
Wednesday, 14 October 2015
Why is the SAB Miller Merger so important?
All aboard the GBP/USD Roller-Coaster
In the last 24 hours we have witnessed one of the most wildest days for Cable, with a near 200 pip swing - behaving more like a "spoiled kid" trading FX for the first time. We moved to 1.5390 when the AB InBEV / SAB Miller deal (now the world's biggest brewery) was announced before a sharp move to 1.5210.
UK employment data this morning has kept calmer the beast that could form this month in Sterling as it is held below 1.53... For now at least! The UK ILO Jobless rate was posted at 5.4%, actually the lowest since mid-2008... giving a further insight into an all important component for the UK employment sector, as people get their butts into work before Christmas.
So what are the important intra-day levels to watch? Well the initial hurdle of 1.53 is clear and above that to really prove bullish power would be 1.5345, where the 200-Day SMA marks. However, a breakdown in Cable this week could fast see an exposure of 1.5107 - the low from October 1st and then a bearish eye towards the 1.50 levels once more (lows of May & also key psychological support).
What is the Future for Cable? - Again the long-term dynamics of £/$ are likely to be determined by the continued debate around rate hikes and as we all know the global economy is slowing slightly and this slow-down could backlash on the UK as well as the USA. The near-term bias could still be on the down-side.
Wishing you the best of Luck
Anish 8FX
Tuesday, 13 October 2015
Crude Oil - A Bargain Hunt?
With Russia now heavily involved in Syria and also stamping its foothold around the Middle-East's perimeter, the geo-political dynamics of the Oil Markets have a new found tension from the prospect of a potential stand-off between the US & Russia, as Russia looks at prioritizing it's hand in the Middle-Eastern Crude supply.
Overall, it is important to note that there is still an oversupply (surplus of around 1 million barrels per day). However, the "rebalance" force should help calm this supply over the next 12 months, where a turn upwards of $70-75 would really indicate a rebalanced market.
Atom8 are now proud to announce the launch of USOIL as a new CFD on their leading MT4 terminal. Spreads start from 1 pip and if you would like to test the core pricing, please email info@atom8.com