USD/JPY: bullish on BoJ – Scotiabank

FXStreet (Guatemala) - Analysts at Scotiabank noted that JPY is flat, consolidating around its 200 day MA, constrained by pressure from fundamentals and relative central bank policy, offset by support from the broader tone of risk aversion.

Key Quotes:

"We note the lack of a specific response to the release of PMI’s (both domestic and China’s official/Caixin private sector measure).

Fundamentals are bearish for JPY, as we consider the renewed divergence in relative central bank policy following Friday’s surprise BoJ shift to negative rates.

With regards to sentiment, we note that JPY is vulnerable to positioning with Friday’s CFTC data detailing a net long JPY position of $5.3bn (as of January 26—pre-BoJ), its most bullish since early 2012."

Analysts at Scotiabank noted that JPY is flat, consolidating around its 200 day MA, constrained by pressure from fundamentals and relative central bank policy, offset by support from the broader tone of risk aversion.

(Market News Provided by FXstreet) [...]

US: Personal income remained strong in December – Wells Fargo

FXStreet (Córdoba) - Analysts from Wells Fargo, noted that today’s report showed a strong 0.3% increase in personal income was not followed by strong consumption in December as personal spending was flat.

Key Quotes:


“An increase of 0.3 percent in personal income ended a very strong year for income, overall. March 2015 was the weakest month for personal income last year with a print of 0.0 percent.”

Although personal income continued to show strength, personal spending showed just the opposite. Personal spending was flat in December. However, the original 0.3 percent increase recorded in November was revised up to a 0.5 percent increase, which made a big difference for the quarter as a whole as we saw last Friday when the BEA released the GDP figures for the last quarter of the year, with personal consumption expenditures (PCE) increasing 2.2 percent during the quarter.”

“Higher income and weak consumption means that the saving rate rose from 5.3 percent of disposable personal income in November to 5.5 percent in December. Although having a higher saving rate is good for the economy, as consumers pay down debt.

“Today, the relatively strong increase in personal income seems to not be helping the consumption side of the economy. On the positive side, some lending numbers are showing that, although consumers continue to pay down debt on average, at least some consumers have started to borrow again, especially in the all-important credit card segment of credit.”


Analysts from Wells Fargo, noted that today’s report showed a strong 0.3% increase in personal income was not followed by strong consumption in December as personal spending was flat.

(Market News Provided by FXstreet) [...]

AUD/USD bulls back into the trenches

FXStreet (Guatemala) - AUD/USD is caught in a half a figure range on the 0.70 handle after losing the territory of recent highs at the midpoint of the 0.71 handle while the greenback has come back into vogue in the absence of anything concrete domestically after Australia's surprise inflation numbers and outside of commodity and global stock performances, despite the yuan stabilizing again in the middle to the end of January.

Overnight, the Chinese PMI's, on balance, were again a disappointment with only the Caixan surprising to the upside and somewhat confirms a continuation of an economy in contraction. Today was the US manufacturing ISM for January that was a little weaker than expected, but the key part of the data came in the degree of weakness within in the employment component, which fell to 45.9 from 48.0 – the worst outcome since June 2009, as noted by James Knightley, analyst at ING Bank who explained that this suggests that the sector will be a drag on overall employment growth in Friday's payrolls at the end of the week.

All eyes on RBA, well, Stevens actually

But, before, then, eyes will be on the RBA. While there are zero expectations of any action from the Central Bank, but markets will be tuned in to understand where Stevens has his outlooks on the price of the Aussie given its recent appreciation and falling commodity prices, downside risks to inflation in the economy and recent turbulence in the global economy.

AUD/USD levels

Technically, Karen Jones, chief analyst at Commerzbank noted that AUD/USD last week tested the 55 day ma at 0.7145 which capped and should price rally, she targets a return to 0.7221, the 78.6% retracement. "Our favoured scenario is that the market will fail around its 55 day ma. Longer term the risks are on the downside and we target the 0.6774 2004 low. Nearby support at 0.6920 guards the .6828/29 recent lows."

AUD/USD is caught in a half a figure range on the 0.70 handle after losing the territory of recent highs at the midpoint of the 0.71 handle while the greenback has come back into vogue in the absence of anything concrete domestically after Australia's surprise inflation numbers and outside of commodity and global stock performances, despite the yuan stabilizing again in the middle to the end of January.

(Market News Provided by FXstreet) [...]

ISM PMI shows continued contraction in the manufacturing sector

FXStreet (Mumbai) - The ISM PMI released today showed a contraction in the manufacturing sector for the third straight month in January. The index measuring the national factory activity increased to 48.2 from 48.0 seen in December. However, the good news is that both production and new orders has managed to move past the 50 mark threshold. The new orders index rose to 51.5, the highest since last August, from 48.8. The prices paid index however remained unchanged at 33.5.

Employment in the sector dropped to a six-and-a-half year low raising the fear that overall employment rate has probably dropped in the month of January ahead of the jobs report due this Friday. The index mesuring employment fell to 45.9 from 48.0,marking the lowest reading since June 2009. Economists had expected the readng to come in at 48. It is being feared that the overall payrolls might not have increased 190k in January as is being broadly estimated.

All indicators assessing manufacturing growth in the US released in in the previous months have revealed a slowdown in this sector. The manufacturing sector in has suffered in the recent times on account of slowing global growth as well as the strong US dollar which has led to lower demand from overseas. Low oil price has also been an important factor that has checked increase in manufacturing activity.

U.S. economic growth slowed down sharply in the fourth quarter with economy growing 0.7 per cent hit by rising inventory which resulted in a loss of appetite among manufacturers to restock. This impacted overall factory activity. Strong dollar and weak global economic outlook hurt exporters.

Moreover, lower oil prices can be expected to have hurt profit margins of energy firms that over the last few months have been compelled to reduce their capital spending budget. Oil prices have fallen 70 per cent from their peak in June 2014 and have hit multi year lows in the recent past. This affected investment in the energy sector.

Higher savings boost expectation for increase in spending

Separately, a report by the Commerce Department showed U.S. consumer spending remained unchanged in December after registering a 0.5 per cent rise in November. Spending on long-lasting manufactured goods fell 0.9 percent. Purchases of non-durable goods also dropped 0.9 percent.

Consumer spending moved up 0.1 percent in December when adjusted for inflation. It had gained 0.4 percent in November. Annual calculations show consumer spending increased 3.4 percent in 2015, lower than the 4.2 per cent increase seen in 2014.

Savings however increased considerably in December rising to a three year high. It fueled expectations that consumption will eventually rebound in the coming months.

Wages and salaries rose 0.2 percent after having increased 0.5 percent in November. Income rose 0.3 percent in December. Income in 2015 increased 4.5 per cent in December, marking the largest increase since 2012. Also, households’ disposable income in 2015 after accounting for inflation recorded its biggest rise since 2006. Savings surged to $753.3 billion, the highest level since December 2012 as income outpaced spending. The increase in savings can be expected to drive spending in the early months of 2016.

The ISM PMI released today showed a contraction in the manufacturing sector for the third straight month in January. The index measuring the national factory activity increased to 48.2 from 48.0 seen in December. However, the good news is that both production and new orders has managed to move past the 50 mark threshold. The new orders index rose to 51.5, the highest since last August, from 48.8. The prices paid index however remained unchanged at 33.5.

(Market News Provided by FXstreet) [...]