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NOVOX International Financial Information

[A OPEC representative said that OPEC and non-OPEC oil-producing countries and Iraq have reached an intent agreement on better quotas. If the intent agreement with Iraq is confirmed, OPEC and non-OPEC oil-producing countries may hold meetings on the weekend]

 

[European Central Bank keeps three key interest rates unchanged, exceeding expectations to expand the scale of epidemic debt purchase projects]

The European Central Bank announced that it will maintain the three major benchmark interest rates unchanged, and the central bank will also expand the emergency anti-epidemic debt purchase plan (PEPP) scale to 600 billion euros , Exceeding the market expectation of 500 billion euros, and this plan will be extended at least until June 2021.

 

[Summary of the main points of the press conference of the European Central Bank President Lagarde]

Seeing an unprecedented contraction of the economy, the contraction in the second quarter will be unprecedented. The serious employment situation and the loss of income will lead to a decline in consumption;

The European Central Bank decided to ensure the necessary level of stimulus, and the economy is expected to rebound in the third quarter. The European Central Bank is ready to adjust all tools as needed. The economy is expected to recover, but the speed and scale of recovery are still uncertain;

The overall inflation rate will further decline in the coming months, long-term inflation expectations are at a low level, and the favorable third-stage targeted long-term refinancing operation (TLTRO) will encourage borrowing and urge governments to take further strong measures. Fiscal measures should be It is targeted and temporary.

 

[The European Central Bank maintains the three key interest rates unchanged, exceeding the expected expansion of the scale of the epidemic debt purchase project]

Bilol, Director of the International Energy Agency: When the oil price is at 40-45 US dollars / barrel, the shale oil industry may see a recovery, It is far from time to "write obituaries" for the shale oil industry.

 

[The end of June is approaching, and the negotiations between the UK and the EU are still not broken] 

The negotiators of the UK and the EU have made little progress this week, and the negotiations between the two parties on the future trade agreement are still stalled. According to people familiar with the matter, as the final round of negotiations before the critical deadline in June, the two sides are still far apart on key issues, and the tension has not improved significantly. This round of negotiations will be formally concluded on Friday. If the two sides fail to narrow their differences, it will increase the pressure of British Prime Minister Johnson and European Commission President Von Drain, forcing them to intervene directly to break the deadlock when they meet later this month.

 

[The total size of the Fed’s balance sheet rose to 7.21 trillion, compared with 7.15 trillion a week ago]

 

Domestic news

 

[Institutions predict that the CPI will continue to fall in May or return to the "2 era"] 

The National Bureau of Statistics will release May CPI data in the near future. Many institutions predict that due to the continued decline in pork prices and the lagging effect of oil prices, the CPI continued to decline in May, with a year-on-year increase of less than 3%, and officially returned to the "2 era". The year-on-year CPI has a year-on-year probability of dropping quarterly. Lu Zheng, chief economist of Industrial Bank, said that as temperatures rose, fresh vegetables went on the market in large quantities, and vegetable prices continued to fall in May. While the supply of live pigs is improving, catering consumption continues to be under pressure, affecting meat consumption demand and leading to a decline in pork prices. Therefore, the May CPI may fall to 2.6% year-on-year. (Economic Reference News)

 

[Northbound capital inflow for 9 consecutive days Institution: A-share market style switching or speeding up

On June 4, A-shares were sorted in a narrow range and market sentiment was cautious. The net inflow of northbound funds was nearly 3 billion yuan, and the net inflow for 9 consecutive trading days. The spread of the concept of the market economy has spread, textile and apparel, beer, trucks and other sectors have exploded, and dozens of stocks have reached daily limits. Industry insiders reminded that as the “land-economy economy” receives more and more attention, investors need to guard against the risk of concept hype. In the short term, market adjustment pressure may gradually increase. From the perspective of recent capital flows and institutional research directions, the market's style switching may accelerate. In terms of investment targets, short-term opportunities for strong marginal varieties can be tapped, and waiting patiently for market rotation is the current rational strategy. (China Securities Journal)

 

 

GMT(time)

Currency

News and Data

16:00

EUR

 

German Factory Orders (MoM) (Apr)

 

17:30

GBP

 

Halifax House Price Index (MoM) (May)

 

22:30

USD

 

Unemployment Rate (May)

 

22:30

CAD

 

Employment Change (May)

 

 

 

 

 

Summary of Institutional Perspectives

Nordic Union Bank: European Central Bank takes further stimulus to drive euro up 


NOVOX

 

The European Central Bank expanded the emergency anti-epidemic debt purchase plan (PEPP) by 600 billion euros and extended its scope to at least the end of June 2021. The Nordic Union Bank said this news lowered bond yields and pushed up the euro; The scale of PEPP has increased by 600 billion euros to 1.35 billion euros, slightly higher than most people’s expectations; according to the PEPP plan, the period of net purchases will be extended to at least the end of June 2021, and in any case to the new coronavirus crisis stage At the end, the principal payment due to PEPP will be reinvested at least until the end of 2022; the financial market's response to the bailout plan is basically positive. This news has lowered bond yields, narrowed intra-euro spreads, and driven The euro rose.

 

Wall Street rally spreads worldwide, weak dollar boosts all risky assets

 

The dollar hit a three-month low, adding a pillar to the rise in global risk assets this week. The fall of the US dollar indicates that risk appetite is rising, which also adds to the market rally. The depreciation of the US dollar means that U.S. merchandise exports are more price-competitive, which helps the company's profits increase.

 

In the past month, the US dollar has weakened against all but two major currencies. The Bloomberg Dollar Spot Index fell 0.2% on Thursday, down nearly 7% from the recent highs reached on March 23. The MSCI Emerging Markets Index rose 30% over the same period, and copper prices rose 19%.

 

Geopolitics and domestic environmental uncertainty have failed to boost the dollar, which bodes well for the economy. Mark Nash, head of fixed income at Merian Global Investors, said the decline in the dollar has a great impact because it can alleviate financial conditions, fiscal stimulus, bank balance sheet growth and the Fed have largely solved the problems we encountered before.

 

The dollar's decline indicates that the global liquidity tightening in March when the market was at its craziest is over. This is a risk signal that Wall Street Bank relies on to recommend overseas assets such as global high-yield bonds and emerging market bonds to customers. The risk premium for 10-year Italian government bonds relative to German government bonds has fallen by 88 points from the peak in the year reached in March.

 

Arbitrage transactions that use the US dollar as a financing currency to buy high-yield emerging market currencies have also been hot. Bloomberg's index measuring the spread of eight emerging market currency spread transactions showed the first positive monthly growth in May for the year.

 

Citi: AUD/USD may be revised down in the near term, but overall it remains bullish



 

Citibank said on Thursday (June 4) that it still adopts a structurally bullish tendency towards the Australian dollar, but expects it to be revised in the near future. The Australian dollar has won a lot of attention in large fluctuations. On Wednesday, the Australian dollar approached 0.7000 against the US dollar, but then fell back. Our traders in Sydney warned that liquidity and patience should be maintained, “Yesterday’s price dynamics seemed detailed, and the final retracement was a product of short-selling risks and low allocations to Australian dollar positions. The previous rise was in the market’s sell-off against the US dollar China is impressive. The recent unrest in the United States has highlighted the risk of a second wave of outbreaks, which may lead to further blockades and hinder the economic recovery process.

 

In terms of economic data, Australia's retail sales in April were slightly better than expected, with a monthly rate of -17.7%, higher than the expected -17.9%, and the previous value was 8.4%. The apparent contraction was not unexpected, because it was at the height of the epidemic. We expect to see a partial retracement of the Australian dollar, but remain generally bullish, believing that it will rise after the release of retail sales data in May, as the economy may show a faster recovery than expected.


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