With the US closed
trading was thin overnight but there was a risk off tone to proceedings as
concerns over the delay on the Spanish bank recapitalization and the US payrolls
loom Friday.
· USDMYR opened
back up higher ar 3.1570-3.1630 as the 3.1400 level for support still holds for
now and we expect thin trading today with BNM meeting ahead tonight.
· The BNM MPC
meeting later in the evening should show no new directions and remain neutral as
we believe BNM will hold on to the current levels, we await the post MPC meeting
statement for fresh directions
· Equity markets
across Europe were down, the FTSE fell 0.06%, the CAC -0.1% and the DAX
fell0.2%.
· Spanish and Italian
equities fell0.7% and 0.78% respectively, with 10 yr bond yields up 16.5 and
13.8bps in those countries. Bund yields fell 8bps and gilts lost4bps in yield.
· Sterling fell a
big figure ahead ofthe BOE meeting tonight, last trade 1.5595 as market expects
the BOE to have a potential rate cut to boost the current weak outlook
· Commentators
suggesting tonight’s decisions by the ECB and BOE will have a big impact on
markets might be disappointed. A 25bp cut to the main lending rates form the
ECB and an additional 50bn pounds of assets purchases are already priced in I
reckon, the big hold out being whether the ECB will announce any extraordinary
measures on the back of last week’s political agreement.
· The bigger
concern for me is the state of the wobbling US economy and we will have ADP
jobs and ISM non manufacturing PMI there tonight, two big numbers preceding the
payrolls number on Friday.
· ECB council
member Kla as Knot was reported as saying the bond purchase program will remain
“fast asleep”, a recurring sentiment, “If someone has to help southern Europe, then
it has to be other governments, not the ECB,”
· Services PMI’s
in Europe were mostly stronger than expected but Germany was weaker and retail
sales rose, but a revision to last month’s figure darkened the picture, see
below.
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