Etikett: Bank of Canada

Currency gains continue for oil exporters

ETF Securities Currency gains continue for oil exportersCurrency gains continue for oil exporters

Market Insight – Foreign Exchange – Currency gains continue for oil exporters

Oil strength buoys CAD and NOK

The CAD and NOK have risen 9.4%* on average against the US Dollar in 2016, closely tracking the recent unrelenting rise in oil prices from their trough in February (see Figure 1). The rally comes despite both the Bank of Canada (BoC) and the Norges Bank outlining concerns over the health of their respective domestic petroleum industries and the impact of weaker global environment on national exports. While in the longer term these issues could pose risks, in the very near term it is likely that oil prices will continue to display strength and boost the CAD and NOK further.

Figure 1: Crude rally lifts oil currencies

(click to enlarge)

Latest oil move justified

Unlike previous rallies which have been purely speculative, the latest leg up in oil prices appears more sustainable, having being driven, at least in part, by improving fundamentals. In its latest report, the International Energy Agency (IEA) suggests that its long held belief that the global oil market will balance by the third quarter of this year is starting to take shape. US oil supply cuts appear to be gathering momentum, global demand remains robust and further production increases from the OPEC oil cartel look increasingly unlikely (see Figure 2, ETFS Commodities Research: Oil rally has legs).

Downward trend looks strong

From a technical perspective the current downward trend in the USD/CAD and USD/NOK appears well established, with the 50 daily moving average (DMA) crossing below the 100 DMA last month* for both pairs, a typically bearish indicator. For the CAD the current trend has also been reaffirmed by net speculative positioning, which has turned positive for the first time in over three years as an increasing number of investors start to acquire long exposure.

Figure 2: Global oil market to balance

(click to enlarge)

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

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Risk aversion sees oil and gold prices diverge

Risk aversion sees oil and gold prices diverge

Commodity ETP Weekly – Risk aversion sees oil and gold prices diverge

Brent trades at its biggest discount to WTI.
Gold safe haven status reignited.
Coffee ETPs receive their highest inflows since July 2015.

  • Bargain hunters continue to drive flows into energy ETPs, extending last year’s trend for a second week in 2016 despite the oil price slide.
  • Gold ETPs flows hit 9-week high at the start of 2016 as uncertainty over global markets looms.
  • Coffee ETPs flows garner momentum after International Coffee Organisation raised estimates for global production shortfall.

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Brent trades at its biggest discount to WTI. WTI and Brent crude oil prices have fallen to fresh 12-year lows below US$29/bbl this week. Brent, the North Sea crude used as an international benchmark, has fallen faster than WTI and is trading at its biggest discount to the US benchmark since 2010. The lifting of oil sanctions against Iran this weekend mounted pressure on Brent prices as investors contemplated the effects of rising Iranian exports in an already over supplied oil market. Despite the precipitous oil slide, bargain hunters remained undeterred, driving inflows of US $26.9mn into long Brent ETPs – the highest level since February last year and inflows US $45.6mn in long WTI crude ETPs are at the highest level in 8 weeks.

Gold safe haven status reignited. Gold ETPs recorded their highest inflows in 9 weeks , amounting to US $17.6mn. We believe the simplest explanation for this has been the global stock market rout, exacerbated by Friday’s oil price declines, which renewed gold’s appeal as a safe haven asset. Another key point to highlight is the ripple effect that a lower sticky inflation outlook could have on the Fed’s ability to raise rates in the US this year. Persistently low oil prices could lower the future rate profile compared to the current FOMC dot plot, encouraging a weaker dollar and thereby making gold priced in dollars cheaper to buy. By virtue of oil being a vital part of inflation forces, and given the recent oil price slide subsequent lower inflation would also reduce the need for gold as a hedge against inflation. However, in the current environment, gold’s defensive properties are driving price performance. Gold has posted gains of 1.43% last week highlighting gold’s resilience at a time when market uncertainty is at the highest levels since the global equity correction in September 2015.

Coffee ETPs receive their highest inflows since July 2015. ETFS Coffee (COFF) recorded flows of US$3.5mn after the International Coffee Organisation (ICO) hiked estimates for the global production shortfall this season held back by a weaker harvest in Brazil. In its forecast for the output for 2015-16, the ICO expects the first growth in production in three years. Nonetheless, the ICO forecast a deficit for a third successive season.

Key events to watch this week. After a torrid week in financial markets all eyes will be glued on China’s GDP report due to be released on Tuesday for any signs of respite from the ongoing sell off. Friday sees the release of the US inflation data, a key ingredient to the FOMC’s rate policy formulation and the USD, a key driver of commodity prices. The European Central Bank meets on Thursday and consensus remains for rates to be left unchanged. The Canadian Dollar’s decline to a 12-year low coupled with sliding oil prices may force the Bank of Canada to take further action when they meet on Wednesday.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

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Bad news signals good news – leaving room for further stimulus

Bad news signals good news – leaving room for further stimulus

ETFS Multi-Asset Weekly – Bad news signals good news – leaving room for further stimulus

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Highlights

•  Commodities: Stronger US inflation data takes the shine off gold.
•  Equities: Tightening margins dominate US Q3 earnings season.
•  Currencies: Stronger core inflation data boosts the greenback versus major peers.
•  As part of our “Energy Wars” webinar series we welcome Richard Mallinson, a leading geopolitical analyst at Energy Aspects to join us, to discuss where next for the oil price. Register here to attend

Asian stocks have opened the week on a mixed footing after a raft of economic data released from Beijing this morning. China managed to beat their third quarter GDP estimate by a fraction 0.1% although they lagged behind industrial production estimates by -0.3% while retail sales remained a bright spot. European futures are indicating a lower open as they digest the pivotal data from China. This week central banks in Europe and Canada will decide on their interest rate policy with hopes pinned on further stimulus by Europe.

Commodities

Stronger US inflation data takes the shine off gold. Softer economic data from US and China helped gold rise above its 200d moving average $1176. However Thursday’s release of higher-than-expected US core inflation of 1.9%, came in just shy of Fed’s inflation target, pushed gold lower as investors revisited the prospect of a 2015 rate hike. Overblown fears caused by the VW emissions scandal are showing signs of abating as we see platinum attain its highest level in 7 weeks while palladium’s price reaction remain muted despite a 9.8% rise in new car registrations in Europe, marking the 25th consecutive month of growth. Oil prices failed to show a clear price trend declining in part due to profit taking from last week’s highs and a 7.6mn barrel increase in US crude oil reported by the US department of energy added to the supply glut.

Equities

Tightening margins dominate US Q3 earnings season. China’s benchmark Shanghai composite index posted its best week in four months rising 6.54% on renewed optimism of state reforms after the raft of weak economic data. Over in Europe stimulus bets are on the rise after a sharp deterioration in the German ZEW survey and Europe’s inflation data dipping into negative territory. The US earnings season have been disappointing, with 27% of companies that have reported showing negative QoQ earnings particularly in the energy, financials and materials sectors. Quarterly profit margins have fallen below 10% for the first time since 2012 as a combination of rising corporate revenues, the strength of the US dollar and demand for wage increases. US jobless claims are now at their lowest point since 1973 and it is likely that tightening margins will be a theme for this upcoming earnings season.

Currencies

Stronger core inflation data boosts the greenback versus major peers. In contrast to the negative inflation scenario in Europe, consumer prices excluding food and fuel climbed the most in 3 months aiding the US dollar’s rise to a seven week high versus the euro. The lowest UK unemployment reading 5.4% in 7 years helped the sterling gain support after the negative monthly CPI data sparked an initial sell off. The European central bank will announce its policy decision this week and investors are relying on the expansion of the quantitative easing program after the recent weakness in economic data. The Australian central bank this week highlighted concerns of a slowdown in the overheated housing market sending the Aussie dollar sharply lower. The loonie remained resilient ahead of the Bank of Canada rate decision on Thursday. The minutes of the Bank of Japan meeting showed no signs of further quantitative easing keeping the Yen strong over the week.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

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General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

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Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

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Mixed Jobs Report Keep Investors Guessing

Mixed Jobs Report Keep Investors Guessing

ETFS Multi-Asset Weekly – Mixed Jobs Report Keep Investors Guessing

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Highlights

•    Commodities: Persistent surplus weighs on oil prices.
•    Equities: Global equity market sell off continues amid weaker PMI and US payrolls data.
•    Currencies: Dollar stages a comeback after August jobs report

The European Central Bank revised downwards its growth and inflation forecasts, paving the way for further policy stimulus. The Chinese authorities followed suit, revising their growth expectations down to 7.3% this year from 7.4% earlier. The US Federal Reserve is likely to maintain caution in this environment and hold off raising rates in September despite falling unemployment. A number of central banks meetings this week (Bank of England, Bank of Canada, Reserve Bank of Canada), will shed light on how other policy makers have interpreted the recent volatility.

Commodities

Persistent surplus weighs on oil prices. Oil capped its biggest three day rally in 25 years after the weekly build up in US crude oil stocks rose by 4.7mn barrels. Saudi Arabia reasserted its stance to maintain market share by lowering its official selling prices for October. President Obama clinched sufficient votes in the US Senate to secure the Iranian nuclear deal reinstating the oversupply in oil market. Gold lost its lustre on the back of a strengthening US dollar. Sugar prices were positively impacted by fears of heavy rainfall impacting the Brazilian sugar cane harvest and a sharp rise in Thai sugar exports to China. The negative impact of the stronger US dollar on US exports coupled with ample EU wheat supply extended wheat’s downward trajectory. China’s downward revision of GDP forecasts is likely to can the cap the industrial metal price rally seen last week.

Equities

Global equity market sell off continues amid weaker PMI and US payrolls data. France’s purchasing manufacturers index (PMI) data shrank more than expected while stronger German PMI data helped drive a rebound in the DAX in the second half of the week. UK Services grew at the weakest pace in more than two years in August, weighing on the FTSE 100. A mixed labour market report, showing below-expectations payrolls but a surprising fall in unemployment, helped maintain equity market volatility. Implied S&P volatility (VIX) rose to 27.1 (up 4%), while small-cap equities (Russell 2000) fell 0.7%. Chinese equities responded positively to the interest rate cuts from the prior week, but continued intervention from the government casts doubts as to whether the gains are sustainable.

Currencies

US Dollar stages a comeback after August jobs report. Currencies from commodity exporting nations bore the brunt of the dollar’s gains. While the gain in US jobs were weaker-than-expected, the highest average hourly earnings since March and the lowest jobless rate since April 2008 (considered to be full employment by the Federal Reserve) raised the appeal of dollar denominated holdings. The euro retreated on the back of an increasing likelihood of further easing after the ECB meeting. Sweden’s krona climbed to a six week high versus the euro after the Riksbank kept its repo rate unchanged at 0.35 percent confirming the current stimulus is helping steer the economy out of a deflationary trap. Disappointing second quarter GDP growth and an unexpected decline in retail sales caused the Australian dollar to hit six year lows this week.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

Other than as set out above, investors may contact ETFS UK at +44 (0)20 7448 4330 or at retail@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.

Third Parties

Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.