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International financial news

International financial news

[America's non-agricultural employment increased by 130,000 in August, less than expected] The number of non-agricultural employment in the United States increased by 130,000 in August, the lowest since May 2019. It is expected to increase by 158,000, with a previous value of 164,000. The US unemployment rate in August was 3.7%, the previous value was 3.7%, and the expected 3.7%.


[Powell reiterates that he takes appropriate action to dilute the risk of recession] Fed Chairman Powell affirmed the current state of the US economy and acknowledged that the prospects face "significant" risks, reaffirming that the Fed will continue to take "appropriate action" to help the US economy on the right track. Powell said that strong multilateral relations are very important and driven by consumers. In 2019, the US economy should grow between 2 and 2.5%.


[US oil drilling recorded a decline for the third consecutive week] Baker Hughes said that the number of US oil rigs decreased by 4 to 738 units, the third consecutive week of decline; the number of natural gas rigs decreased by 2 to 160 units; the total number of rigs decreased by 6 units To 898 units.


[Fitch: Due to political fluctuations in the UK, there is no risk of Brexit in the UK.] Fitch said in the report that due to the political turmoil in the UK, despite the British Parliament’s action to prevent non-agreement from Brexit, the UK’s non-agreement to Brexit remains a Significant risk.



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Summary of investment bank views


Bank of America Merrill Lynch: Next week's European Bank resolution may disappoint the market and is expected to support the euro in the short term



Bank of America Merrill Lynch released a research report that next week's ECB policy meeting is expected to bring short-term positive to the euro, and the long-term situation depends on the economic trend. In our view, the ECB's policy meeting next week is crucial. We expect the European Central Bank to cut the deposit rate by 20 basis points and launch a small-scale easing policy. Of course, the European Central Bank may also delay the loose time, which will disappoint the market.

In the past two weeks, many European Central Bank officials have spoken, increasing the market's expectations for restarting QE. However, in any case, we believe that a limited QE is not enough to affect low inflation expectations. In the foreign exchange market, the ECB policy meeting should be bullish for the euro, but we believe that as long as the economic data remains weak, the overall weakness of the euro will be difficult to change.


Société Générale: The dollar against the Canadian dollar may test the 1.30 mark, while the euro and the pound trend 




An analyst at Société Générale said that the dollar’s downside target against the Canadian dollar is looking at the 1.30 mark, while the euro and the pound are trending. The market trend may be faster than the Fed's rate cut, so the bond market correction may be necessary, but at this time next year, we should see lower interest rates and lower government bond yields. We believe that the US dollar will also weaken overall at that time, although it is still not certain whether the RMB will weaken simultaneously.


Canadian employment growth is expected to help the dollar further test the 1.30 mark against the Canadian dollar. The euro against the dollar and the pound against the dollar seem to continue to range volatility, I believe that volatility will soon return. Although the euro rebounded significantly against the yen this week, it is still clearly in the long-term downtrend channel, so the decline is still the current theme.


Mitsubishi UFJ Bank: Looking ahead to the trend of the two major currencies next week 




The research team of Tokyo Mitsubishi UFJ Bank discussed the recent bearish view on the US dollar against the yen and the euro against the US dollar. Regarding USD/JPY, it remains bearish in the 105.00-108.00 area; the bank said that the Japanese investor’s sell-off against the yen seems to support the USD/JPY when it touches the lower position of the region, the next key basic It will be the reorganization of US retail sales and the Japanese cabinet, but these events are still unlikely to have a big impact on the USD/JPY.


About the euro against the US dollar: Neutral in the 1.0900-1.1250 area; after the week, the sentiment about Brexit remains more favorable to the euro, while the upcoming ECB policy meeting will likely bring some upside risks to the euro For the European Bank, it is extremely difficult to cut interest rates more aggressively than market expectations.


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