Análisis de mercado diario

The $40/bbl floor has given out below Brent Oil, which is now trading around its lowest levels since February 2016, after Saudi Arabia slashed its official prices by the most in some 20 years. The OPEC+ alliance appears to be crumbling, after major Oil producers failed to reach consensus over further supply cuts. That, in turn, has paved the way for a price-war, as nations shift their focus towards defending market share instead.

The apparent abandonment of the concerted effort to shore up prices is set to push global Oil markets into oversupplied conditions. As worldwide demand continues being eroded by the coronavirus outbreak, the risk of sub-$30/bbl Brent is looming large.

With Oil prices languishing at such levels, this is likely to erode support for Oil-linked currencies, such as the Norwegian Krone, the Russian Ruble, the Mexican Peso, and the Malaysian Ringgit over the near-term. The ability of Oil-dependent nations to fund their respective fiscal programmes this year are likely to be thrown into further doubt, should Oil prices fail to recover meaningfully in the coming months.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Emerging market currencies are ending the week with a brutal sea of red across the board, with consistent losses throughout Asia, while the South African Rand and Turkish Lira are leading the way with losses within the EMEA. The Rand dived more than 1.10% on a lack of risk appetite, whereas the Turkish Lira is the talk of the town after plunging an astonishing 10%.  

For a brief moment the Russian Ruble looked like it would be an exception to the rule of currency market weakness, with the currency trying to regain its initial losses in the aftermath of new US sanctions on Russia a few days back, but I would expect the Ruble to remain under pressure as “risk off” limits attraction to emerging assets.

Obviously the talk across the global markets and investors around the world will be the freefall of the Turkish Lira. The last time I can remember a currency exploding into a similar acceleration of weakness to what we have seen in the past 24 hours is the Russian Ruble crisis that transpired late in 2014.

The Turkish Lira is in a state of crisis, as a result of investor confidence in Turkish assets remaining at alarmingly low levels. It is astonishing that no matter how punished the Lira looks, traders are showing absolutely no indication that they are finished with pricing in “bad news” into the market. 

The issue that global investors now need to take into consideration is that the recipe for a currency crisis in Turkey is now presenting a risk of a contagion knock-on effect across other markets. This is just another threat that traders need to factor in, when you consider that the markets are already overwhelmed with prolonged tension around the global trade war narrative, and the unpredictable nature of the Trump Administration that has seen a threat of sanctions on Turkey, new sanctions imposed on Russia and re-imposed sanctions on Iran in just over one week.

Simply put, there are a lot of different risks that investors are needing to monitor on a constant basis right now.

A limited volume of these headline risks stem from macro-fundamentals, but an overwhelming majority of them are encouraged by a mixture of both geopolitical tensions and political risk. Due to the uncertain nature of both geopolitical and political risks, which are remaining rampant themes across global headlines, it is difficult to foresee when the current investor mindset towards taking on “risk” will actually change.

This means that we can expect a prolonged mixed sentiment towards global stocks, low attraction towards emerging market currencies but a stronger Dollar and Japanese Yen.

Both the Euro and British Pound have suffered from fears of a contagion knock-on effect from the Turkish Lira crisis. There are fears that European markets are more exposed to Turkey shocks than has been priced in, while traders are jumping on any opportunity to sell the Pound at present.

The Pound has itself tumbled from 1.30 to marginally above 1.27 within a matter of days. The British Sterling desperately requires some positive news around Brexit negotiations, otherwise the negative investor sentiment presents a risk that Pound selling could accelerate further down than the 1.20 ladder within a matter of weeks.  

For currency traders, the one trend that seems to be consistent and supported from investors is that they remain positive on the Greenback. The US Dollar surged to new 2018 highs in the early hours of Friday morning on a mixture of concerns over the currency situation in Turkey, consistent expectations on the performance of the US economy and the outlook that the United States should be better prepared to handle the negative headwinds from a trade war, in comparison to those economies that it targets.   

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Investors in Asia largely brushed off the ongoing trade fight between China and the U.S., with Shanghai’s blue-chip stocks climbing 2.4%, a move supported by the tech and financial sectors. Solid economic data and possible government intervention through monetary & fiscal policies encouraged investors to take some risk on Thursday. Data on Wednesday showed that China’s exports have not yet been impacted by U.S. tariffs rising 12.2% in July from last year. The Producer Price Index cooled slightly in July, coming at 4.6% from 4.7% in June and suggesting that policymakers may still have further room to loosen monetary policy. However, if President Trump goes ahead with his proposed tariffs of 25% on $200 billion worth of Chinese imports, these gains will be rapidly wiped off.

RBNZ pressures the New Zealand dollar

Currency markets were in focus during early morning trade with the New Zealand Dollar tumbling more than 1% against the U.S. Dollar. NZDUSD fell to its lowest level since March 2016 after the Reserve Bank of New Zealand surprised traders by announcing that it is committed to keeping interest rates at record lows through 2020. The central bank also downgraded its 2019 GDP forecast to 2.6% from 3.1%. Given the slowdown in economic activity and the ongoing global trade dispute, the RBNZ is sending a message that further easing may be possible in the months ahead. This is likely to keep the NZD under pressure and test new lows below 0.65 by year-end.

Ruble falls on sanctions

The period of sideways trading which lasted for four months seems to be over for the Ruble.  The Russian currency fell more than 3.3% on Wednesday as Trump’s administration proposed fresh sanctions following the poisoning of a former Russian agent in the U.K.  The decline in oil prices also helped to intensify the fall in the Ruble and with such uncertainty, investors will need to price in further risk premium on Russian assets. Investors will likely ignore the Russian economic fundamentals in the weeks ahead and focus on political developments. The Ruble may find some support around the 67 level, but a break above will lead to further selling pressure. 

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Persistent fears that President Trump will pull out of the Iran nuclear deal later this week have played a pivotal role behind the price of US Oil rising above $70 for the first time since November 2014 during early morning trading. Recent price action suggests that investors have not yet concluded pricing in further risk premium as we edge closer to the May 12th deadline Trump has set himself to decide whether the US will remain in the 2015 Iran nuclear deal, and any comments Trump makes in the lead up to the event have the potential to encourage fireworks in the oil markets.

With Trump having referred to the Iran agreement in the past as “the worst deal ever” it is not difficult to understand why investors seem to be expecting the worst on May 12th. The only problem with pricing in the current worst-case scenario is that investors are going to be at risk of being on the complete wrong side of the trade, if any headlines come out in the meantime that Trump could delay his decision on whether to pull out of the Iran deal.

It does also need to be remembered that despite much of the risk premium heading into May 12th being focused on how the price of oil might react, there is going to be a threat of wider implications than oil supplies, if Trump does abandon the 2015 nuclear deal. Iranian President Hassan Rouhani has already warned that the US would regret its decision to exit the nuclear deal, and concerns over how Iran might react to the United States pulling out do not appear to have been factored into other asset classes.

One of the most difficult questions to answer is what impact the United States pulling out of the deal might mean for politics in the Middle East. There have been underlying concerns for some time that Iran is having a growing influence on the region. We are not just talking about a return to strained relations between the US and Iran if Trump pulls out of the deal, but we also need to look at the risk of what impact this could have on regional markets within the Middle East.

Uncertainty could also play a role in investor sentiment for wider risk appetite, meaning a period of uncertainty could expose emerging market assets and currencies to downside risks in an environment where investors are already maintaining a cautious stance ahead of geopolitical tensions elsewhere. We are in a trading period where emerging market currencies are already in the midst of sudden weakness, due to the unexpected turnaround in the fortunes of the US Dollar and there is a risk of buying momentum for emerging market currencies taking additional punishment if tensions around Iran surge. 

There is a threat that the uncertainty will play a role in how global stocks perform over the coming days, while it should also not be understated that higher-yielding currencies like the South African Rand, Russian Ruble and Turkish Lira, to name just a few, are highly reliant on investors being attracted towards taking on risk. 

I am concerned heading that all of the market focus heading into May 12th seems to have been dictated on how the price of oil might react, without looking at the connotations that the United States pulling out might have on other asset classes.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

The Dollar is under threat to losses once again, with the Greenback at time of writing currently trending lower against all of its G10 counterparts, with the exception of the Canadian Dollar. The Dollar is also weaker against many emerging market currencies, as investors take some Dollar exposure away from the table ahead of Fed Chair Jerome Powell’s Congress testimony later in the week. The new Fed Chair is expected to be heavily quizzed on policy, with congress likely to be particularly interested in Powell’s US interest rate outlook. If Powell suggests that the Federal Reserve could raise US interest rates four times in 2018, it could be seen as a positive sign for the US Dollar.

Away from the highly anticipated testimony of the new Fed Chair, one of the major stories making the rounds are reports that President Xi Jinping is set to tighten his grip on leadership in China by scrapping the two-term presidency rule. Premier Xi remaining in power past his set term is likely to lead to an opportunity to drive through his policy agenda, and appears to have been warmly received by investors. The Shanghai Composite Index advanced by 1.2% on Monday, while the Chinese Renminbi climbed around 0.5% against the USD. Centralizing power under Premier Xi should also lead to China making further reforms and progress towards liberalizing its financial markets, which should provide another reason to expect a stronger Chinese Yuan.

Another currency to have started the week positively against the USD is the Russian Ruble, with the USDRUB down by 0.35% at time of writing and 1% since Friday. S&P Global Ratings raising Russia’s credit rating to investment grade BBB-/A-3 on Friday has increased momentum for the Russian Ruble. The Russian economy has withstood a variety of different obstacles over the past couple of years, including international sanctions following the Crimea conflict and declining commodity prices. The economy does, however, appear to have weathered the storm with the outlook for the economy now being more stable. The upgrade should continue to lift sentiment towards the Ruble, as investors receive encouragement to hold capital in Russia.

A hawkish shift in tone from Bank of England (BoE) Deputy Governor Dave Ramsden towards higher UK interest rates has encouraged the Sterling to climb against the Dollar. Ramsden has previously voted against raising UK interest rates, but his comments over the weekend signal that another member of the Monetary Policy Committee (MPC) is becoming upbeat on the UK interest rate outlook. This has also encouraged the market to be more optimistic over a potential UK interest rate rise before the second half of 2018. The expectations that UK Labour leader, Jeremy Corbyn, will support staying in a customs union with the EU after Brexit will also help investor sentiment, as it complements the view that the United Kingdom is heading for a ‘softer’ Brexit.

The GBPUSD is currently trading 0.4% higher against the Dollar for the day and, as long as the GBPUSD manages to remain above the psychological 1.40 level, the outlook will be that the Pound can trade higher as the week continues. 

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.