arrow
logo

Alvexo - Giving Back To The Community

Learn More

Japanese Economic Momentum Cools

Trade Deficit Beats Estimates but Highlights Weak Global Backdrop

shutterstock_212330437

Japan’s import and export figures released overnight showed the pullback in economic activity is currently underway in-line with global developments. The nation’s imports continued to contract as export expansion waned in light of the circumstances.

Japanese Trade Deficit Persists

Even as the Bank of Japan’s Kuroda flip flops on the relative strength or weakness of exchange rates, the real economy, the situation is deteriorating quickly as the stimulus from a less expensive Yen quickly vanishes. A look at the overnight trade balance figures highlights this point after export growth slowed from an 8.00% annualized pace to just 2.40%, missing expectations of 3.50% expansion. Imports faced an even steeper drop as the relative expensiveness grew on the back of a weaker local currency, sliding -8.70% after contracting at a -4.20% annualized pace during the last reading. This release is largely in-line with developments in other export focused economies like China and Australia as global trade continues to falter and shrink.   The USDJPY currency pair continues to trend sideways as the Bank of Japan is forced to reconsider its policy tools for meeting the inflation target.

popup_close
usdjpy06172015

Oil Slips on Smaller Draw

The initial kneejerk reaction following yesterday’s American Petroleum crude inventory stocks number was a quick momentum ignited rally before traders began selling again, with the entire move retraced within an hour as the smaller than anticipated draw shows that American production might once again be overwhelming demand. Inventories fell by 2.900 million barrels which was substantially less than the prior week’s 6.700 million barrel drawdown. Price competition has forced shale producers to become more efficient and this is evident as output grows despite half the number of operating drill rigs versus a year ago. Prices will have to drop precipitously from this point to really harm the most cost-effective operations in the space. More importantly is the upcoming conclusion of the Iranian nuclear talks which are set to close in two weeks barring another extension to negotiations.

popup_close
cl-aug1506172015

Housing Starts Skid

The American housing sector continues to show some very curious indications that the recovery is very uneven as evidenced by the sharp rise in building permits as housing starts contracted sharply. Building permits rose to an 8-year high of 1.275 million, a gain of 11.80% month over month. A closer look at the numbers showed that many regions actually saw permit level out with the exception of the sharp rise in the American Northeast which saw permits rise at an unprecedented 165.8% annualized pace. As a reminder, the last time the Northeast saw gains of this magnitude was in the year leading up to the last financial crisis. Many of the permits are also for multi-family units as builders accommodate plans for landlords capitalizing on the shift from home-ownership to home-rental. Stocks experienced a sharp late-session rally and have continued to trend higher, filling in the gap from the weekend reopening in a strongly bullish sign.

popup_close
sp-sep1506172015

GBPCHF Equidistant Channel Technical Pattern

The stunning bidding in the Swiss Franc this morning has pushed GBPCHF towards the lower bound of the equidistant channel pattern setting up in the currency pair. The technical setup which has been in formation for approximately a week exhibits a strongly bullish bias helped along by the negative interest rate policies of the Swiss National Bank while the Bank of England maintains rates at 0.50%. The Bank of England’s Monetary Policy Committee Meeting Minutes will likely confirm the unanimity of the voting members in maintaining rates in a further boost for the pair, adding to upward momentum. The chief strategy for the equidistant channel pattern is to follow the trend higher by initiating positions at the lower channel line targeting the upper channel line. A move below the lower channel line might be indicative of a channel-based breakout to the downside.

popup_close
gbpchf06172015

Upcoming Events

  • Time
  • Currency
  • Event
  • Forecast
  • Previous
  • 09:30 GMT
  • GBP
  • Average Hourly Earnings Index Plus Bonus (April)
  • 2.10%
  • 1.90%
  • 09:30 GMT
  • GBP
  • Claimant Count Change (May)
  • -12.3K
  • -12.6K
  • 09:30 GMT
  • GBP
  • Bank of England MPC Meeting Minutes
  • 10:00 GMT
  • EUR
  • Core CPI (YoY)
  • 0.90%
  • 0.90%
  • 10:00 GMT
  • EUR
  • CPI (YoY)
  • 0.30%
  • 0.30%
  • 15:30 GMT
  • USD
  • Crude Oil Inventories
  • -1.657M
  • -6.812M
  • 19:00 GMT
  • USD
  • Federal Reserve Interest Rate Decision
  • 0.25%
  • 0.25%
  • 19:00 GMT
  • USD
  • FOMC Statement
  • 19:30 GMT
  • USD
  • Federal Reserve Chair Janet Yellen Speaks
  • 23:45 GMT
  • NZD
  • GDP (QoQ)
  • 0.60%
  • 0.80%