Friday, November 27, 2020

Capital Markets: "Dollar Offered Ahead of the Weekend"

Dollar Index futures are still trading sub-92 despite a small bounce off 91.86.

 From Marc to Market:

Overview: Equities are finishing the week on a firm tone, while the US dollar remains heavy. In the Asia Pacific, only Australia and India did not end the week on a firm note. The MSCI Asia Pacific completed its fourth consecutive weekly gain, for around a 13% gain. Europe's Dow Jones Stoxx 600 is edging higher today, and it too is completing its fourth weekly advance for a cumulative gain of around 14%. US stocks are trading firmer as well. So far this month, both the S&P 500 and NASDAQ are up about 11%, while the Russell 2000 is up nearly 20%. Bond yields are a little changed, and the US 10-year yield is a couple basis points lows near 0.86%. Peripheral European bonds are making record lows, and Portugal's 10-year yield is hovering just above zero. The dollar is softer against nearly all the majors today, and for the week, only the yen has been unable to rise against the offered greenback. Emerging market currencies are more mixed, with the Russian, Indian, and Chinese currencies softer. An increase in Turkey's required reserve ratios for both lira and fx deposits and checking accounts appears to be offering the lira some support today. JP Morgan's Emerging Market Currency Index is closing out its fourth consecutive weekly advance. Gold is bouncing along its trough, holding above $1800 but unable to move above $1820. WTI is trimming this week's gains amid concerns that the recovery in prices (January WTI + 25% this month) will weaken OPEC+ resolve to postpone the planned increase in output at the start of next year.

Asia Pacific
The MOF report showed Japanese investors sold JPY1.43 trillion (~$13.7 bln) of foreign stocks last week, the most in four months.
For their part, foreign investors sold almost JPY1.2 trillion (~$11.5 bln) in Japanese equities. It is the most in a couple of months. Foreign investors could not keep pace in the fixed income space. Japanese investors bought JPY1.96 trillion (~$18.9 bln) of foreign bonds, while foreign investors about JPY461 bln Japanese bonds. It is the fourth consecutive week that Japanese investors were buyers of foreign bonds, and over the run, they bought roughly JPY4.42 trillion, the most in a four-week period since March.

After being under consideration for several weeks, China formally announced that Australian wine imports will be slapped with more than 100% anti-dumping levy starting tomorrow.
This is the latest incident of Beijing punishing Canberra through trade, one of its few levers of power to express its disapproval over Australia's political positions that have been critical of China and supportive of US efforts to check the rising power. Reports suggest that there are more than 50 ships carrying coal that are stranded off Chinese ports. Meanwhile, China reached a new agreement with Indonesia. Indonesia will supply China with $1.5 bln of coal over the next three years. Indonesia is the world's largest exporter of thermal coal and is the main commercial rival of Australia's coal....