Risk appetite improves as markets digest FOMC – TDS

FXStreet (Barcelona) – Annette Beacher, Head of Asia-Pacific Research at TD Securities, notes that the risk appetite improved over as markets digested FOMC’s motives, with NZD outperforming in the Asia-Pac FX Space.

Key Quotes

“The appetite for risk improved overnight with a bit more digestion of the FOMC’s motives, boosting equities and longer-dated Treasury yields in particular.”

“In Asia-Pac, local tier 1 data flow was absent, but there was chatter about the sharp moves in CNY and short market rates. The spread between CNY spot and daily fix (.106) surpassed the April blowout, while SHIBOR jumped from 3.13% to 3.606% and the 7d repo y/day jumped from 3.78% to 4.4% and again today to 5.94% (back to January levels).”

“We have to note that this year-end cash demand was also seen last year (as banks meet reserve requirements by year end). The NBS released revised Chinese GDP figures, increasing the level of 2013 GDP by 3.4% as hinted a few days ago, but as only 2013 has been released there is limited information in this announcement.”

“After the strong U.S. lead, Asia-Pac equities are up at least 1% if not 2% by lunchtime trade (Shanghai –0.5% with chatter that perhaps the PBoC won’t be cutting RRRs in the near term).”

US dollar rally set to extend further – BTMU

FXStreet (Guatemala) – A collective of analysts at The Bank of Tokyo-Mitsubishi UFJ, Ltd. explained that the US dollar is set to record its’ strongest performance in a calendar year since 1997

Key Quotes:

“…the US dollar is set to record its’ strongest performance in a calendar year since 1997 according to the Federal Reserve’s trade-weighted index against a basket of major currencies which has increased by around 10% so far in 2014″.

“The case for a stronger US dollar is built on firm fundamental foundations. The divergence in economic performance and monetary policy between the US and the rest of the world is expected to widen further in the year ahead”.

“The sharp drop in the price of crude oil will help to strengthen US consumer spending, which will also benefit from strong employment growth, a pick-up in earnings growth as the labour market tightens, and improving consumer confidence which has returned to prefinancial crisis levels”.

“We expect the Fed to begin raising rates from the middle of 2015 increasing the relative appeal of the US dollar”.

New Zealand GDP implications? – TDS

FXStreet (Guatemala) – Analysts at TD Securities explained that there are no monetary implications over New Zealand’s recent GDP release.

Key Quotes:

“Q3 GDP jumped +1.0%/qtr, beyond the already optimistic RBNZ f/c of +0.9%/qtr”.

“However, historical revisions saw 2013 GDP growth revised down from 2.8% to 2.2%”.

“There is some downside to our 2014 forecast of 3.5% and upside to 2.7% for 2015 due to these revisions. No monetary policy implications”.
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