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International financial news

4 news you don’t miss out on Tuesday

International financial news

[Drakey said the European Central Bank must be vigilant about the side effects of easing policy] European Central Bank President Draghi said that the European Central Bank may need to maintain a policy easing stance to support economic growth for a long time, and must be wary of it. The side effects of monetary policy. The management committee should be open to ideas such as modern monetary theory (MMT) and point out that they are closer to fiscal policy and should be guided by the government.

[Fed Brad: may need to cut interest rates further to offset the risk] Brad said that the Fed may need to further loosen monetary policy to offset the downside risks of trade conflicts and low inflation. Negative interest rates are not a sign of economic health, and the lack of safe assets (which may be related to banking regulations) is one reason why the $15 trillion bond market yields have fallen negative.

[Fed Daley supports the interest rate cuts already implemented to offset the negative factors facing the US] San Francisco Federal Reserve Chairman Daley said she supports the central bank's two interest rate cuts this month and July to cope with the global economic slowdown, trade policy Unfavorable factors caused by uncertainty and geopolitical risks.

[Raymond James, Wall Street investment bank: Saudi Arabia is expected to recover at least until the end of the year] Although Saudi Aramco has achieved initial success in restoring capacity, it may take at least the end of the year to recover full capacity; Saudi production is expected to be in the next 100 days ( At the end of the year, it will gradually reach the level before the attack. During this period, the crude oil output will face a shortage of 150 million barrels. It is expected that Saudi Arabia will face high pressure on the normal export process; the situation in Saudi Arabia and Iran is expected to deteriorate. The probability is higher than current market expectations, and oil prices have not been included in this part of the forecast.\



News and Data



German Ifo Business Climate



CBI Industrial Order Expectations



CB Consumer Confidence



Richmond Manufacturing Index

Summary of investment bank views

Société Générale: Investors are advised to buy EUR/GBP and continue to short EUR/JPY

Societe Generale (SocGen) released a research report on Monday that advised investors to consider buying EUR/GBP at current prices, rather than selling. At the same time, shorting the euro against the yen is still the preferred operation of the bank. In the past weekend, the uncertainty of Brexit has not decreased, so the pound has not been substantially supported.

Although there are two-way risks to the euro against the pound in this case, we still recommend buying rather than selling. In contrast, the Eurozone’s economic performance has been weaker, especially as German manufacturing continues to deteriorate. The economic slowdown is very dangerous and the demand is weak. At the same time, given that the effectiveness of monetary policy is insufficient, we believe that the euro will be relatively fragile. Therefore, it continues to favor short EUR/JPY, while the EUR/USD is also in the downtrend channel.

Goldman Sachs: The market underestimated the possibility of the UK reaching a Brexit agreement; the Australian dollar is under pressure

Regarding the pound, Zach Pandl, chief currency strategist at Goldman Sachs, said the market may underestimate the risk of the UK reaching a Brexit agreement in October, but it is a big risk for the UK Supreme Court to rule whether the parliamentary recess is legal. Regarding the Australian dollar, he believes that the chances of the Reserve Bank of Australia's interest rate cut may rise, and trade frictions may continue to put pressure on the Australian dollar long position, especially against the yen. Regarding the yen, he said that doing more yen is the "best opportunity", especially before the release of the US Richmond Fed manufacturing index and the Consultant Consumer Confidence Index data this week. If the UN General Assembly has any news about geopolitical issues, it may also benefit the yen.

UOB Bank: USD/JPY topping risk increased, key at 107.50

The UOB Research Department discussed the technical outlook for the USD/JPY on Monday and believes that the risk of roofing will rise in the short term. A significant drop of 0.41% last Friday has raised the risk of short-term topping. A clear break of 107.50 will mean that the rebound phase that began more than two weeks ago ends here. In other words, a break below 107.50 means that the 108.47 high that arrived last Wednesday (September 18) became the short-term top.

Since then, unless the USD/JPY can stay above 108.00 during the New York session, it is not surprising even if it falls below 107.50. In the longer term, a clear break of 107.50 marks the beginning of the consolidation phase, and the USD/JPY may then fluctuate slightly at low levels for a period of time.

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