GBP/USD and EUR/USD

#Business News

August 1, 2017 / 9:19 AM / 11 hours ago

U.S. dollar index hits 15-month low on Fed, political uncertainty

Sam Forgione



NEW YORK (Reuters) - The U.S. dollar briefly touched a 15-month low against a basket of major currencies on Tuesday on political turmoil in Washington and weak U.S. economic data that kept the Federal Reserve's policy outlook uncertain.

The dollar was last higher on the day as investors consolidated positions, but it was still not far from its lowest in more than a year against major rivals as political uncertainty was expected to continue weighing on the greenback following President Donald Trump's ouster of White House communications chief Anthony Scaramucci on Monday.

Market concerns also persisted about whether the Fed would raise interest rates again this year. Traders' bets last reflected a roughly 46 percent chance of a Fed rate hike in December, according to CME Group's FedWatch tool.

The dollar index .DXY, which measures the greenback against a basket of six major rivals, was last up 0.2 percent at 93.060 after touching 92.777, the lowest since early May 2016.

The dollar index fell in July, its fifth consecutive monthly decline, the longest such stretch since December 2010 through April 2011. On a monthly basis, it was the biggest drop since March 2016.

"Its all about negative dollar momentum," said Vassili Serebriakov, FX strategist at Credit Agricole in New York. "If youre short the dollar, the move has been playing out in your favor and there is little reason to change the view."

Weak U.S. construction spending and auto sales added to the dollar's troubles, Serebriakov added.

The U.S. Commerce Department said construction spending fell 1.3 percent in June to the lowest since September 2016. Economists polled by Reuters had expected construction spending to increase by 0.4 percent.

U.S. carmakers said on Tuesday they continued to pare back on sales to daily rental fleets in July.

The dollar was last up slightly against the Japanese currency JPY= at 110.32 yen. The greenback earlier fell below 110 yen for the first time in more than six weeks, touching 109.94 yen.

The euro was down 0.3 percent against the dollar at $1.1800 EUR=, but not far from a 2-1/2-year high of $1.1845 touched on Monday.

"Policy uncertainty in the U.S. I think has been the biggest driver of declines in the dollar recently," said Sireen Harajli, FX strategist at Mizuho in New York. "Any positive effect from the election of President Trump I think at this point has been priced out."



Source : Reuters

Confusion reigns for investors ahead of Bank of Englands Super Thursday

By Sara Sjolin
Published: Aug 2, 2017 3:29 a.m. ET

Expect more confusing narrative at the August BOE meeting than a Game of Thrones episode, analyst says



The Bank of Englands Quarterly Inflation Report is on deck on Thursday


Its been a roller-coaster ride of late for anyone trying to predict the next Bank of England policy move ahead of this weeks so-called Super Thursday policy meeting.

Just a month ago, markets were starting to price in a rate increase as soon as the August meeting, spurred on by three central bank members voting for an immediate rate increase in June, followed by surprisingly hawkish comments from Gov. Mark Carney and chief economist Andrew Haldane.

But much has changed since, making the meeting harder to predict, analysts say. Thursdays event include the banks latest rate decision, meeting minutes and quarterly inflation report.

First of all, the composition of the Monetary Policy Committee is different, with hawk Kristin Forbes being replaced with Silvana Tenreyro, who has a dovish record.
Secondly, inflation has eased to 2.6% from 2.9%, taking pressure off policy makers to tackle rapidly rising consumer prices. Adding to that, economic growth has slowed and consumer spending and retail sales are showing signs of weakness.

That means investors should expect a more confusing narrative at the August BOE meeting than a Game of Thrones episode, according to analysts at ING. They illustrate the various scenarios with this chart.




Viraj Patel, foreign exchange strategist at ING, said he expects the central bank to keep rates on hold for now. He predicts a 6-2 vote, with MPC members McCafferty and Saunders dissenting.

This should be a neutral to slightly negative outcome for [the British pound]; despite the OIS curve pricing in little chance of a rate hike this week, recent BOE talk means that markets are going into the August Super Thursday meeting with a slightly hawkish bias and a vote split of only two active dissenters could be seen as a disappointment, he said in a note.

The OIS curve refers to overnight index swaps and is used to derive the markets expectations of the next rate move.

However, after Haldane in June declared that U.K. interest rates may have to rise later this year, analysts see a slight chance the chief economist could join the hawks in this weeks vote.

A third dissenting votewould heighten the debate over a November rate hike. With markets currently seeing a 34% chance of this occurring, a 5-3 vote split would add upward pressure to short-term U.K. rates and GBP, INGs Patel said.

That could send sterling GBPUSD, -0.0227% to $1.3250, according to ING, while Hussein Sayed, chief market strategist at FXTM said the pound could jump to $1.33. The pound traded at $1.3224 at on Tuesday.



Source : Market Watch

Theresa May facing calls from her own ministers to sack 'anti-Brexit trade envoys'

Steven Swinford, Deputy Political Editor

1. Laura Hughes, Political Correspondent
2. Jack Maidment, Political Correspondent

2 August 2017 • 7:53pm


Theresa May is facing calls from her own ministers to sack Government trade envoys who have opposed her plans for Brexit amid accusations that they are "talking Britain down" as it leaves the EU.

Six trade Britain's 21 trade envoys have defied the Government in key votes over Brexit, including one who suggested that people who voted for Brexit are "little Englanders".

Eurosceptic ministers joined Iain Duncan Smith, Tory MP and former Conservative leader, in calling for them to be axed for "being opposed to Brexit".

One minister told The Daily Telegraph: "At a time when we are trying to build a global Britain having people who don't believe in the nation's future outside the European Union is not at all in the national interest.

"These people should be championing Britain abroad, not damaging its prospects by talking it down."

Mr Duncan Smith told the BrexitCentral website: “It is quite absurd...



Source : Telegraph

Labour to fight to keep UK in single market after Brexit

Jack Maidment, Political Correspondent
August 2017 12:58pm


Labour will try to keep the UK in the single market and customs union after Brexit, the partys shadow Brexit Secretary has announced.

Sir Keir Starmer has outlined his intention to try and derail the Governments EU Withdrawal Bill - dubbed the Repeal Bill - by proposing an amendment to keep existing trading arrangements with the bloc during any transitional period.

His plan further confuses Labours Brexit policy and appears to contradict Jeremy Corbyns statement that under his leadership the UK would leave the single market.

Sir Keirs plan will seek to take advantage of Theresa Mays failure to win an outright majority at the general election by setting out a way forward which could win over pro-European Tory MPs.

It comes as Anna Soubry, a Conservative MP and ardent Remain campaigner, told The Telegraph that if Labour changed tack and advocated staying in the single market it could prompt...



Source : Telegraph

..Good stuff Tsar, very good info, thanks....

Thank you for your Comment, Sir

Jobs report Friday: Hiring likely strong in July, but wage gains could be slight

1. The economy was expected to have added 183,000 jobs, and unemployment was expected to decline to 4.3 percent from 4.4 percent in July, according to Thomson Reuters.
2. Fed watchers and the markets will be most focused on the average hourly wage gains when the report is released at 8:30 a.m. ET Friday.
3. Economists expect raises rose 0.3 percent and a surprise either way could impact markets, as traders adjust their expectations for Fed interest-rate hikes.

Patti Domm | @pattidomm
6 Hours Ago

Hiring was expected to have been strong in July, but wages probably rose just modestly as inflation remains stubbornly low.
The July employment report, released at 8:30 a.m. ET Friday, is expected to show the creation of 183,000 jobs, down from June's surprisingly high 222,000. Unemployment is expected to tick slightly lower to 4.3 percent from 4.4 percent, and wages are expected to rise by 0.3 percent, according to Thomson Reuters.

The market and Fed watchers are most focused on the average hourly wages. Since peaking in December at a 2.9 percent annual pace, the gains have dwindled. With inflation weak by other measures, the lack of wage gains in a tight labor market has been a concern.

"A downside surprise on wages would probably further reduce market-implied probability of a rate hike by December — currently 42 percent — as it would increase concerns that not only is price growth weak but wage growth is also pulling back," noted Citigroup economists.

The Federal Reserve's dual mandate on employment and inflation has been met on one side, by the relatively tight labor market, but inflation has lagged. The PCE deflator, the Fed's preferred inflation measure, showed inflation rising at just 1.4 percent in June, well below the Fed's target of 2 percent.

"They wanted a warming trend, they're getting a cooling trend," said Diane Swonk, CEO of DS Economics.

Wages is one place markets have been looking for early signs of wage inflation, but there has been no pickup. The wage number could impact markets if there is a surprise, but the Fed is not expected to change course based on July data, she said.

The Fed is still expected to begin paring back its balance sheet in September and will look for several more months of inflation and jobs data ahead of its expected interest-rate increase in December.

Job gains should be fairly broad for July. The service sector is expected to be an area of strength.



Source : CNBC

Trump may be about to wallop global trade as we know it, but markets don't seem to understand

1. The Trump administration was originally expected to announce major trade actions against China on Friday, but that has since been postponed
2. Despite the potential for trade disruption globally, stock markets have been hitting record highs

Leslie Shaffer | @LeslieShaffer1
4 Hours Ago

President Donald Trump's administration may be poised to announce what could become a major effort to strike out at China for its trade practices, but the stock market rally this year hasn't even hiccuped.

The announcement was originally set for Friday, although sources said that's now been postponed. But if that does come down the pipeline, it may use part of the 1974 Trade Act, Section 301, which allows the U.S. Trade Representative and the president wide latitude in imposing punitive measures. Those may including tariffs and import quotas if an investigation finds violations of trade rules.

Deborah Elms, executive director of the Asian Trade Centre, told CNBC that the potential damage could be "huge."

She described Section 301 as a "powerful tool," retired in the mid-1990s because it "irritated" the international trade community as it was viewed as both unilateral and unfair.

"If we get to the end of [the Section 301] process 12 months from now, there can be a lot of damage caused," she said, adding there was a second risk that during the process, China would make business difficult for U.S. companies there.

Elms also pointed to a third risk: Using Section 301 could upset the global community, which over the past six months has already begun to turn away from policies viewed as favorable to or started by the U.S.

But while global trade is facing major upheaval, the S&P 500 index, despite its constituents getting nearly 50 percent of their overall sales from foreign markets, closed just shy of its record closing high on Wednesday.

The Dow Jones industrial average also closed over the 22,000 level for the first time on Wednesday.

Mark Matthews, head of research for Asia at Bank Julius Baer, told CNBC that markets just don't seem particularly interested in politics.


Source : CNBC

‎August‎ ‎3‎, ‎2017‎ ‎4‎:‎30‎ ‎PM‎ ‎+07

Trumps Counting on a General to Contain White House Chaos

1. If the president cant figure out how to work with Republicans, the global economy may be at stake.

ByJoshua Green
@JoshuaGreenMore stories by Joshua Green

Donald Trump has a habit of projecting his anxieties while trying to mask them. You can sometimes tell whats going on inside the White House by checking the presidents Twitter feedand assuming the opposite of whatever he claims.

Take the recent White House shakeup that abruptly remade his senior staff. On the morning of July 31, Trump fired off a tweet extolling the booming stock market and low unemployment rate and then added, a bit defensively, No WH chaos!

This was a sure sign that the chaos inside the White House had reached a fever pitch. Within an hour of Trumps tweet, the presidents new communications director, Anthony Scaramucci, whod been on the job for only 10 days, was sent marching. This followed the sudden firing of Chief of Staff Reince Priebus, which came only days after the resignation of Press Secretary Sean Spicer. Had Attorney General Jeff Sessions not been so determined to cling to his jobTrump called him beleaguered and publicly humiliated him for a weekhe, too, might have joined the exodus. When Trump tweeted No WH chaos! what he was really signaling was Total WH chaos!

And yet Republican sentiment toward Trumps shakeup was entirely positive, thanks to his appointment of John Kelly, the secretary of the Department of Homeland Security and retired Marine Corps general, to replace Priebus as chief of staff. He will do a spectacular job, I have no doubt, Trump vowed. What hes done in terms of Homeland Security is record-shattering. For once, Republicans agreed.

Trump loves generals and turns to them whenever hes in trouble. Last September, when the pressure to renounce his birther attack on President Barack Obama became untenable, Trump held a bizarre press conference at the Trump International Hotel in Washington, surrounding himself with generals. They offered glowing testimonials for 30 minutes, after which Trump renounced the birther charge in nine words (President Obama was born in the United States. Period.) and departed. As one White House official explained, Trump admires that generals have valor and are universally respected. He also understands, with the failure of the Senate health-care bill, that his legislative agenda is in real danger.

So turning to Kelly not only replaces a weak chief of staff with a strong one, but also imbues Trumps White House with a sheen of can-do military competence to carry out what most Republicans (and many Democrats) have been longing for throughout his tumultuous tenure: a reset.

That Kellys been in the White House [through his DHS job] is a real plus for him, says Thomas Mack McLarty, Bill Clintons first chief of staff, who was pushed out after 18 months for failing to impose discipline on a disordered White House. That familiarity gives him a standing. Trump clearly has respect for the military, and Kelly is a serious, experienced person of depth, which is what this White House badly needs. Youve got to get stability, but you also need to get resultsjust look outward at whats coming.



Source : Bloomberg

#Business News August 4, 2017 / 11:11 AM / 25 minutes ago

Strong U.S. jobs report seen in July; wages likely rose

Lucia Mutikani



WASHINGTON (Reuters) - U.S. employers likely maintained a strong pace of hiring in July while raising wages for workers, signs of labor market tightness that could clear the way for the Federal Reserve to announce next month a plan to start shrinking its massive bond portfolio.

According to a Reuters survey of economists, the Labor Department's closely watched employment report on Friday will probably show that non-farm payrolls increased by 183,000 jobs last month after surging 222,000 in June.

Average hourly earnings are forecast to have risen 0.3 percent after gaining 0.2 percent in June. That would be the biggest increase in five months. But the year-on-year increase in wages will probably slow to 2.4 percent as last year's sharp rise drops out of the calculation.

Average hourly earnings increased 2.5 percent in the 12 months to June and have been trending lower since surging 2.8 percent in February. Lack of strong wage growth is surprising given that the economy is near full employment.

"This will be another encouraging labor market report for the Fed in their anticipated plans for gradual monetary policy tightening into the second half of the year," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Economists expect the Fed will announce a plan to start reducing its $4.5 trillion portfolio of Treasury bonds and mortgage-backed securities in September.

Sluggish wage growth and the accompanying benign inflation, however, suggest the U.S. central bank will delay raising interest rates again until December. The Fed has raised rates twice this year, and its benchmark overnight lending rate now stands in a range of 1 to 1.25 percent.

Wage growth is crucial to sustaining the economic expansion after output increased at a 2.6 percent annual rate in the second quarter, an acceleration from the January-March period's pedestrian 1.2 percent pace.

The unemployment rate is forecast to have dropped one-tenth of a percentage point to 4.3 percent, a 16-year touched in May. It has dropped four-tenths of a percentage point this year and matches the most recent Fed median forecast for 2017.

Still, some slack remains in the labor market, which economists say is restraining wage growth.


Source : Reuters

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.....I think this have some to do with the dollar up Friday....we may see a gap on sunday open...

#Business News

August 7, 2017 / 5:04 AM / 2 hours ago

Infrastructure borrowing drops as U.S. states await Trump plan details

Robin Respaut and Hilary Russ



Work crews work to replace a bridge over the Massachusetts Turnpike, part of in MassDOT's (Massachusetts Department of Transportation) Commonwealth Avenue Bridge Replacement Project, in Boston, Massachusetts, U.S., August 4, 2017.


SAN FRANCISCO/NEW YORK (Reuters) - President Donald Trump arrived in office having promised a bold $1 trillion infrastructure investment plan over 10 years for roads, bridges, airports and transit systems crumbling by the day across the United States.

But nearly seven months later the administration has produced few details on the future of federal infrastructure funding, one reason why state and municipal governments have issued fewer bonds to improve roads, water systems and other projects so far in 2017.

An early budget by Republican Trump even proposed stripping popular transportation funding programs.

Through July, new municipal deals to fund transportation, utilities and power projects totaled $50.7 billion, down 19.4 percent from the same period last year, according to an analysis of Thomson Reuters data.

That decline outpaces a broader drop in the U.S. municipal bond market overall, with total issuance down 13.1 percent thus far in 2017 to $201.7 billion.

New deals have lagged since November's post-election selloff, when state and local governments quickly issued bonds fearing potential policy changes and rate increases by the Federal Reserve.

Since then, the lower issuance has been driven by plummeting refunding volumes. Such refinancings dominated last year's higher issuance levels, but the states and cities that sell such bonds were put off by the overall rise in rates.



Source : Reuters

7 signs the stock market is ready to run smack into a wall

By Mark DeCambre
Published: Aug 20, 2017 8:06 p.m. ET


Russell 2000 briefly turned negative for 2017, after falling below its 200-day moving average on Thursday


Trump’s policy agenda is at risk.


The stock market’s relentless rally to records may soon be facing a key test.

A number of indicators point to a steady, halting deterioration of some of the factors that have helped Wall Street equities score a steady stream of all-time highs.

Peek beneath the hood of the action, and market technicians point to some unsightly problems within the market’s machinery.


Here are a few:


1). Russell 2000 falls into downtrend



The small-cap oriented Russell 2000 index RUT, -0.08% on Thursday fell below its widely-watched 200-day moving average for the first time since June 29, 2016, or about 14 months. The 200-day moving average is viewed by many chart watchers as a dividing line between longer-term uptrends and downtrends. Moreover, small-caps are viewed as gauge of economic health, with a divergence suggesting that investors aren’t sufficiently bullish about the near-term outlook for equities or the economy. The index briefly turned negative for the year on Friday.


2). Correlation breakdowns



Jonathan Krinsky, chief market technician at MKM Partners, points out a recent breakdown in the relationship between the S&P 500 index SPX, -0.18% and Germany’s DAX DAX, -0.18% Krinsky, in a research note on Aug. 13, said when the indexes exhibit a negative correlation, meaning they move in the opposite direction at the same time, that tends to signal a pullback in the S&P 500.

Here’s how he explains it:

1. There have only been five other occurrences of this in the last twenty years: June ’98, Feb. ’00, October ’05, and August ’14, and April ‘15 2. Four of the five occurrences preceded medium to large market pullbacks (’98, ’00, ’14, ‘15), with ’00 preceding the end of the tech. bubble and ’15 preceding the August flash crash.


3). Wall Street’s volatility gauge, the VIX



A popular gauge of Wall Street volatility, the CBOE Volatility Index VIX, -0.28% has come off historic lows and slowly, but steadily moved above its 200-day moving average, which it breached on Aug. 10, and continues to hold above that long-term trend line. That is a bullish sign for the gauge but a negative for stocks because the so-called fear indicator tends to trade inversely with stocks. The gauge, also known as the VIX, measures options bets on the S&P 500 index. And because stocks fall faster than they rise, it’s often seen as a measure of expectations for near-term market drops. The VIX has only been around this level, 15, on two other occasions this year, back in May and in April, only to slip lower. It remains below its historic average of 20.


4). Gold rally



Gold futures GCZ7, +0.05% jumped above $1,300 an ounce, for the first time since the U.S. presidential election back in November. Gold has traded above both its short-term and long-term moving averages. There have been a number of factors influencing that move, including a weaker dollar DXY, +0.03% and diminished expectations that the Federal Reserve will raise interest rates again in 2017. But overall, haven demand amid worries about stock valuations and a number of risk events have been a big driver for the yellow metal and may signal that investors are hedging their bets for an equity slide.


5). Dow transports break down

Attached Image (click to enlarge)

The Dow Jones Transportation Average DJT, -0.62% which includes airline, railroad, and package-delivery companies, has been diverging from the Dow Jones Industrial Average. This is viewed as a sign of overall weakness in the market because so-called Dow theorists posit that the companies that move goods and services should be climbing in lockstep with the broader market. When they don’t, it is viewed as a bearish signal and one that may eventually see the broader market fall.


6). Bad breadth



A greater number of stocks are hitting 52-week lows than 52-week highs on the New York Stock Exchange—something the market hasn’t seen since July 2015, according to Jason Goepfert, president of Sundial Capital Research. MarketWatch’s Sue Chang explains that this is a bad omen for markets because it shows gains are based on a narrow selection of individual stocks. A healthy uptrend involves a greater swath of companies moving higher. That said, the pullback in individual stocks may make some sense given the trepidations around lofty valuations.


7). Trump agenda

Attached Image

President Donald Trump attends a meeting at the White House in Washington, U.S., March 31, 2017.


Perhaps the biggest signal that the market may face an extended period of weakness is President Donald Trump. Not solely because of his recent rhetoric that Wall Street business leaders have found unpalatable, but because his campaign promises, including tax cuts and a boost to spending on roads, bridges and tunnels, look to be in jeopardy. Such pledges had been credited as a driving force behind market gains, along with relatively better corporate earnings reports and a stable economy.

Doubts about the president’s ability to follow through because of his stumbles in working with leaders inside of Washington and in the business community makes that pro-growth idea less likely, at least in the near term.



Source : Market Watch

Watch These Top Headliners at the Fed's Jackson Hole Conference

ByJeanna Smialek @jeannasmialekMore stories by Jeanna Smialek
, Michael McKee @mckonomyMore stories by Michael McKee
, and Alessandro Speciale @aspecialeMore stories by Alessandro Speciale
‎
August‎ ‎25‎, ‎2017‎ ‎7‎:‎00‎ ‎AM‎ ‎+07

 

1. Yellen, Draghi and Kuroda all attend for first time since 2014
2. Top brass from the Fed, Europe, Asia and Latin America listed

Janet Yellen, Mario Draghi and Haruhiko Kuroda will be among the monetary policy superstars donning western wear and puzzling over the global economy this week at the Federal Reserve Bank of Kansas City’s annual summit in Jackson Hole, Wyoming.

The trio gather together at the remote mountain resort for the first time since 2014, headlining a high-ranking guest list at the world’s premier central banking event. It may also be Yellen’s final appearance at Jackson Hole as Fed chair, unless President Donald Trump nominates her for a second stint when her current term expires in February. Most observers expect him to pick someone else.

We’ve outlined the top attendees at this year’s shindig, along with when and if they’re expected to deliver remarks, and the major policy challenges that they currently confront.

(NOTE: All times New York, which is two hours ahead of local time in Wyoming.)


Janet Yellen

1. Federal Reserve chair
2. Speaking at 10 a.m., Friday, Aug. 25
3. U.S. inflation remains well below the Fed’s 2 percent goal despite strong job gains and the lowest unemployment in 16 years. Fed policy makers are also increasingly talking about asset prices and financial conditions, though they say there’s no reason to worry -- yet. The rate-setting Federal Open Market Committee next meets Sept. 19-20. Yellen’s future could also be a topic of conversation, because her term ends in February.

Mario Draghi

1. European Central Bank president
2. Speaking at 3 p.m., Friday, Aug. 25
3. The euro area’s recovery has gained strength since the start of the year, allowing officials to pledge to start talks this fall about an exit from unconventional policies, including large-scale asset purchases, in 2018. It was in Jackson Hole three years ago that Draghi laid the groundwork for its 2.3 trillion-euro ($2.7 trillion) bond-buying program. Still, inflation remains below-goal in Europe, and could be dragged down further by an appreciating euro. The ECB Governing Council meets next Sept. 7.

Haruhiko Kuroda

1. Bank of Japan governor
2. Not a listed speaker in program, though any conference attendee can make comments during the session discussions, which will be on the record
3. Kuroda’s BOJ appears years away from normalizing monetary policy, especially as inflation lingers below goal. Kuroda’s term as governor is scheduled to end in April.

Benjamin Broadbent

1. Bank of England deputy governor for monetary policy
2. Not a listed speaker in the program
3. The Bank of England kept the bank rate at a record low 0.25 percent on Aug. 3, and Governor Mark Carney said that Brexit is casting the biggest shadow over the U.K.’s economic outlook. Britain has until March 2019 to negotiate its divorce from the European Union, including a new trade deal. Inflation is above-target in the U.K., and the Bank said that a response to that will be needed eventually

Source : Bloomberg