Trading News and Articles

Purpose of this thread is to collate trading news and data in one place so that it can be accessible easily.

You are welcome to post important stuff.

Please always mention the symbol of trading instrument that particular article relates to, and the link to the original source.

Please avoid discussions.

NZD
https://westpaciq.westpac.com.au/Article/45185

First Impressions: RBNZ leaves monetary policy unchanged for now, hints at FLP this year
Dominick Stephens
September 23, 2020
First impressions of the RBNZ's September 2020 Monetary Policy Review.
The Reserve Bank left monetary policy unchanged, as anticipated. The LSAP cap remains at $100bn, and the OCR remains at 0.25%.
However, the RBNZ strongly hinted that it will loosen monetary policy further by introducing a Funding for Lending Programme (FLP – basically low-interest loans to banks) by the end of this year.
The RBNZ remains extremely pessimistic on the economy. There was very little acknowledgement of recent stronger data. In particular, the Committee was divided on the housing market upturn, with some members arguing that it would soon fizzle out due to rising unemployment.
Consistent with its pessimistic stance on the economy, the RBNZ concluded that “further monetary stimulus may be needed” – as strong a hint as the Monetary Policy Committee could possibly give. The Committee directed the Bank to prepare to have an FLP ready to deploy before the end of the calendar year. Design details of the programme would be agreed and published ahead of deployment.
What all of this suggests to us is that the Committee currently expects that it will introduce an FLP this year, perhaps as soon as the November Monetary Policy Statement.
More details to follow in our bulletin later today.
Dominick Stephens, Chief Economist, (09) 336 5671
RBNZ statement:
Prolonged Monetary Support Necessary
Release date 23 September 2020
Tēnā koutou katoa, welcome all.
The Monetary Policy Committee agreed to continue with the Large Scale Asset Purchase (LSAP) Programme up to $100 billion. This action is necessary to further lower household and business borrowing rates in order to achieve the Committee’s inflation and employment remit. The Official Cash Rate (OCR) is being held at 0.25 percent in accordance with the guidance issued on 16 March.
Reflecting the possible need for further monetary stimulus, the Committee noted the progress being made on the Bank’s ability to deploy additional monetary instruments. The instruments include a Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets. The Committee agreed that these instruments can be mutually supportive in bolstering economic activity. Members also agreed that the alternative instruments can be deployed independently, and noted that the FLP would be ready before the end of this calendar year.
Economic information available since the August Monetary Policy Statement, both international and domestic, has confirmed the level of economic activity remains significantly below that experienced prior to the COVID-19 economic disruption. The ongoing virus-led activity restrictions – most notably in Auckland – had also continued to dampen economic activity, and business and consumer confidence.
Any significant change in the global and domestic economic outlook remain dependent on the containment of the virus, which is highly uncertain. International border restrictions will continue to significantly curtail migration and tourism, and lead to the activity outlook being uneven across industries and regions. Commodity prices for New Zealand’s exports remain robust, but this has been partly offset by the New Zealand dollar exchange rate moderating the return to local export producers.
Ongoing support for domestic economic activity is being provided through significant government spending on business assistance and household income support. This will be accompanied by a rising level of government investment. However, the removal of temporary support policies has commenced. For example, the Wage Subsidy scheme is now closed to new entrants.
In line with the weak underlying international and domestic economic conditions, the Committee expects a rise in unemployment and an increase in firm closures, as resource reallocation continues. Members agreed that monetary policy will need to provide significant economic support for a long time to come to meet the inflation and employment remit, and promote financial stability. They also agreed they are prepared to provide additional stimulus.

AUD
https://westpaciq.westpac.com.au/Article/45182

RBA to cut rates on October 6
Bill Evans
September 23, 2020
Following the Deputy Governor’s speech we now expect the RBA to cut the key cash; 3 year bond and TFF rates to 10 basis points on October 6 – this will be a Team Australia event preceding the Federal Budget announcement later that day.
Read full report 'RBA to cut rates' (PDF 111kb)
IIn a speech yesterday the Deputy Governor of the Reserve Bank gave a fairly clear hint that the Board is set to cut the cash rate and other key policy rates at its October Board meeting.
The Bank is also likely to extend its objectives for bond purchases to include general support for the Australian and semi government yield curves in the five to ten year maturity range. It is likely to leave this commitment open ended at this stage.
We have discussed these issues in previous notes but did not expect the action as soon as the next Board meeting as now seems to be the case.
The theme is likely to be, as we saw in March, a Team Australia moment where the Reserve Bank is directly supporting a bold Federal Budget.
The prospect of the RBA “sitting back” to assess the Budget, which has been seen as the “norm” in previous years is not appropriate for these unique times.
We now expect the RBA to cut the overnight cash rate to 10 basis points; to adopt a 10 basis point three year bond target; and to adjust the rate on any new drawdowns of the Term Funding Facility to 10 basis points. All these rates are currently set at 25 basis points , which the Governor has generally described as the effective lower bound for the cash rate.
The Bank is also likely to reduce the rate which the Bank pays on Exchange Settlement Account balances from 10 basis points to 1 basis point.
If the banks are only earning 1 basis point on their ESA balances there will be significant incentive to purchase bonds, even if the bond is only yielding 10 basis points, or lend to the private sector.
Click on above link for full report
I am primarily responsible for the content of this research report and I certify that:

1. to the best of my knowledge, I am not in receipt of inside information and the research does not contain inside information; and
2. no other part of the licensee has made any attempt to influence the research.

AUD

ALL

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AUD

Aussie dollar sinks to a 2 month low
Sean Callow
September 25, 2020
The Australian dollar took a pounding this week as the US dollar made a big comeback, key commodity prices fell and RBA rate cut talk picked up.

NZD

Next cab off the rank from Westpac IQ on Vimeo.

Podcast from GS

https://www.goldmansachs.com/insight...ifer-roth.html

Look for EM bonds

NZD

AUD

Cable

https://uk.reuters.com/article/uk-br...-idUKKBN26J0N1

USD CFTC COT
https://think.ing.com/articles/fx-po...-wagon-092020/

For the first time since 2013, all but one of the G10 currencies reported by the CFTC show net long positioning vs the USD. CAD is the outlier as it stays oversold despite its peers (AUD, in particular, this week) experiencing fierce short-squeezing. Meanwhile, GBP shorts are building, but the positioning is still over-complacent to no-deal Brexit risk

USD bearish sentiment keeps spreading
CFTC positioning data – updated as of 15 September - keeps adding evidence to the widespread USD bearish narrative. As shown in the figure below: the two biggest moves in the week 9-15 September were recorded in GBP and AUD positioning, while all other currencies were broadly unchanged.


EUR/USD positioning faced only a minor setback (-1.3% of open interest) in the week and held on to the role of most overbought currency in G10 (+27% of open interest).
While this would normally highlight a disproportionate risk of a short-squeeze-triggered downward correction in EUR, the current extraordinary combination of bearish USD factors (the Fed’s recent reiteration of lower-for-longer rates being a case in point) makes us believe USD weakness is still set to keep a floor below EUR/USD and the chances of a large short-squeeze are limited. We discussed last week how the USD shorts appear to have become a structural character of G10 positioning.
For the first time since early 2013 (when the yen was the only outlier), all but one G10 currencies (CAD being the outlier) reported by CFTC have a net-long positioning vs the USD. This is further evidence that investors are continuing to unload their long-dollar positions vs almost all G10 currencies, with the idiosyncratic risk-sensitiveness of each of those currency being a secondary factor to the prevailing dollar bearish sentiment.
AUD’s big jump to a more realistic positioning

The Aussie dollar’s net longs jumped dramatically by nearly 14% of open interest as its net positioning moved from the neutral/ short area to overbought territory.
Such a large swing does not necessarily appear warranted by any event or key change in AUD fundamentals: good employment data out last Thursday are not covered by the CFTC report. Still, the current AUD positioning (+12% of o.i.) appears more realistic than the previous net-short positioning, considering AUD has been at the forefront of the G10 rally vs USD in the summer months. The alignment with NZD positioning is also a testament of this.
The third G10 commodity currency – CAD – remains the odd one out, now being the only G10 currency with a net short positioning with the USD. There are some reasons that may explain the higher stickiness of CAD shorts compared to its peers: the high exposure to the concerning Covid-19 situation in the US, a significant increase in the BoC balance sheet, signs of instability in the Trudeau administration after another political scandal, a slower recovery in Canada compared to other countries (although data are not fully endorsing this last concern yet).

While we continue to see positioning as a factor that in the short-term can help CAD reduce its downside risks, we also highlight how CFTC data may not be mirroring the true market sentiment on CAD as it did for AUD and NZD for most of the past few months.
GBP: Brexit shorts still have a long way to go

The second most sizeable move in G10 positioning last week was the erosion of GBP net long positioning with a drop from 7% of open interest to 2%.
This dynamic has tight links with the developments in Brexit saga, and the resurgence of shorts coincided with mounting speculations that the UK government may back out from the Withdrawal Agreement amid stalling trade negotiations with the EU. This is generating a higher perceived risk of no-deal which has already taken a toll on GBP.

Still, GBP net shorts are nothing but a fraction of what we witnessed in other period where a no-deal outcome appeared as tangible as it is now. The risk premium built into GBP (according to our short-term fair value model) is also quite limited. All this suggests that GBP remains quite complacent to the hard-Brexit risk and the balance of risks seems skewed to the downside for sterling in the short-term.

It's one week old, this is the link to the article with the new data

https://think.ing.com/articles/fx-po...short-squeeze/