Friday 23rd February 2018
February 23rd 2018: John Hardy, head of FX Strategy at Saxo Bank says in today’s client note that: “The latest European Central Bank minutes showed a debate on leaving the door open to QE resumption if conditions warranted, ultimately leading to the dropping of this language in the forward guidance. The headlines have seized on the discussion of the volatility of the euro in the minutes and the phrase that this provided “a source of uncertainty that required monitoring". ECB president Draghi offered a stern rebuttal at the most recent ECB meeting to a (likely offhand) statement by US Treasury Secretary Mnuchin that a weak dollar is a benefit to the US economy. The expectations for ECB policy unwinding have gone into neutral over the last couple of weeks, even with the recent recovery in risk appetite, and this kind of language from the ECB, heavy EUR long speculative positioning, and a rather sharp deceleration in the most recent PMIs are making it tough sailing for EUR bulls. Speaking of positioning, the JPY short is shrinking but still very large. Often, when the JPY is on the move, it is directly traceable to something else afloat in the markets, whether from direct signals from the central bank, or large swings in risk appetite or bond yields. But this recent move feels qualitatively different and rather significant, as if the market is changing its mind about its underlying assumptions (that the BoJ will forever be the policy laggard and as long as we aren’t seeing a market meltdown, carry trades versus the JPY are a no-brainer) and this could lead to a broad-based repricing of the G10’s cheapest currency” -

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Industrial

French private equity maven Activa Capital has appointed Xavier Govare, former President of Labeyrie Fine Foods, to succeed Philippe du Mesnil, former President of Ceva Santé Animale, as Chairman of the Industrial Committee. Philippe du Mesnil will remain fully active on the Industrial Committee.

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Industrial production rose 0.8% in December after falling 0.7% in November. For the fourth quarter, the index slipped 0.6% at an annual rate. In December, manufacturing output moved up 0.2% and mining output was unchanged.

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Monday, 17 October 2016

US output rises 0.1% in September

Industrial production rises at 1.8% annual rate, first quarterly increase since Q3 2015

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According to Lindsey Bell, senior analyst at S&P Global Market Intelligence, the industrials sector is leading second quarter (Q2) growth at a clip of 13%; something of a surprise she suggests given the weak macro operating environment. Elsewhere, the ISM manufacturing index disappointed (though is still in expansionary territory) and construction spending declined for the third consecutive quarter. Meanwhile, oil prices have moved into bear market territory and the first read on second quarter GDP looks to be “partly weighed down by a reduction in business spending on equipment (the third consecutive quarter of decline). Yet, the industrials sector has the largest beat rate for Q2 earnings and along with other cyclical sectors leads stock performance for the year after, of course, an outsized performance recorded by the high yielding telecommunications and utilities sectors,” she notes.

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According to figures released by the US Federal Reserve today industrial production increased 0.7% in April after decreasing in the previous two months. Manufacturing output rose 0.3% after declining the same amount in March. The index for utilities jumped 5.8 percent in April, as the demand for electricity and natural gas returned to a more normal level after being suppressed by warmer-than-usual weather in March. Mining production fell 2.3%in April, and it has decreased more than 1 1/2 percent per month, on average, over the past eight months. At 104.1 percent of its 2012 average, total industrial production in April was 1.1% below its year-earlier level. Capacity utilization for the industrial sector increased 0.5 percentage point in April to 75.4%, a rate that is 4.6 percentage points below its long-run (1972–2015) average.

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According to the UK’s Office for National Statistics, the Consumer Prices Index (CPI) was unchanged in the year to February 2015, that is, a 12- month rate of 0.0%, down from 0.3% in January. The main contributions to the slowdown in the rate came from price movements for a range of recreational goods (particularly data processing equipment, books and games, toys & hobbies), food and furniture & furnishings. 

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French carmaker Renault Group expects higher sales this year after a 3.2% increase in 2014, when recovering demand in Europe helped to offset slowing emerging markets.  The group says it sold 2.7m passenger cars and light trucks last year, driven by demand for small and cheap vehicles in its core European market, which is emerging from a six-year slump. 

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TriOptima, a provider of OTC derivative post trade risk management services, announces today that 17 financial institutions eliminated $213bn in the first USD/TRY (Turkish Lira) cross currency swap triReduce compression cycle. Cross currency swaps are subject to both interest rate and foreign exchange rate fluctuations and are not currently cleared. They increase an institution’s credit and capital costs as well as its settlement risk. 

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