Daily FX & Market Commentary Market Recap Nov 21, 2014

Please note and carefully read the
Important Disclosure on the last page
Daily FX & Market Commentary
Nov 21, 2014
Market Recap
Published from Tuesday to Friday
• U.S. stocks rose slightly: S&P 500 Index
Table: Daily Market Movement (Nov 20, 2014)
rose 0.2% to 2,053, led by energy and small- Equity Market Indices
Close Change
% Commodity Futures
cap shares, as Best Buy (BBY) jumped 7%
U.S.
Energy & Metals
2,052.75
+4.0 +0.2% WTI Crude Oil (USD/bbl)
after reporting better-than-expected earnings S&P 500 Index
Dow Jones Industrial Average 17,719.00
+33.3 +0.2% Brent Crude (USD/bbl)
results on strong sales for televisions and
NASDAQ Composite Index
4,701.87
+26.2 +0.6% Natural Gas (USD/MMBtu)
tablets.
COMEX Gold (USD/oz)
Europe
Stoxx Europe 600 Index
338.28
-0.9
-0.3% LME Copper (USD/MT)
• Oil prices rose : WTI and Brent Crude
DAX Index
9,483.97
+11.2 +0.1% Bond Yields & CNY
Futures rose 1.3% and 1.6% to $75.6 and
Japan
U.S. Treasuries - Yields
$79.3 respectively, as market weighs
TOPIX Index
1,397.64
+1.1 +0.1% 3-Month - Yield (%)
possibility of OPEC cutting crude production Nikkei 225 Stock Average
17,300.86
+12.1 +0.1% 5-Year - Yield (%)
10-Year - Yield (%)
China / Hong Kong
at the next meeting on Nov 27.
Hang Seng Index
23,349.64
-23.7
-0.1% 30-Year - Yield (%)
• Hong Kong/ China stocks fell
Hang Seng China Enterprises 10,379.43
-1.1
0.0% USD/CNY
slightly: Hang Seng Index fell 0.1% and CSI Shanghai SE Composite
2,452.66
+1.7 +0.1% China Renminbi Spot
300 Index closed flat as China’s November
Data Source: Bloomberg L.P.
HSBC flash manufacturing PMI edged down
to a six-month low of 50.0 (lower than market
expectation of 50.2).
Close
%
75.58
79.33
4.49
1,190.9
+1.3%
+1.6%
+2.7%
-0.3%
6,685.0
0.0%
Close Change
0.00
0.00
1.63
-0.01
-0.02
2.34
3.05
-0.02
Close
%
6.13 +0.1%
Hot News: New hotel supply may be next catalyst for Macau
gaming
Chart: Composition of China visitation Year-to-date
Source: Citi Research, as of November 14, 2014
Macau extends operating hours at two borders
• Macau government announced yesterday the
extension of the operating hours at both the Lotus
Bridge border and the Gongbei border, according to
media reports.
• Beginning on December 18, the Lotus Bridge will open
24 hours a day (currently 9am to 8pm) while the
Gongbei border will operate from 6am to 1am
(currently 7am to midnight).
Citi analysts’ view:
• The extension in operating hours may be positive in
bringing more Guangdong visitors to Macau as it
sources around 40% of visitors from China. (Chart)
• Moreover, the new operating hours could lead to
more rapid infrastructure development in Hengqin.
• On Macau gaming sector, October gross gambling
revenue (GGR) had fallen 23% year-on-year to
MOP28bn as VIP revenue fell 31% from last year.
• Citi analysts believe GGR growth in Macau may
remain sluggish for 2014 and for most of 1H 2015
due to contracting VIP business and hotel shortage.
• Mainland visitation growth this year had been
driven by the accelerating non-hotel guest growth
as many visitors could not find a room to stay.
• Indeed, Macau casino operator had confirmed that
there is still demand as reflected by the 98-100%
occupancies at major properties.
• The next catalyst for Macau stocks may come with
new hotel supply in April or May next year. Citi
analysts maintain their positive stance on the
Macau gaming sector.
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Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited
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Please note and carefully read the
Important Disclosure on the last page
Daily FX & Market Commentary
FX & Commodity Technical Corner
YESTERDAY PERFORMANCE
FX TREND
TECHNICAL
CCY
USD
EUR/USD
USD/JPY
GBP/USD
USD/CAD
AUD/USD
NZD/USD
USD/CHF
USD/SGD
GOLD
Close Price
Day High
Day Low
87.65
1.2539
118.21
1.5692
1.1305
0.8620
0.7869
0.9584
1.3003
1193.88
87.78
1.2575
118.98
1.5737
1.1369
0.8641
0.7882
0.9606
1.3099
1197.18
87.35
1.2504
117.74
1.5632
1.1293
0.8567
0.7807
0.9553
1.2992
1176.93
Short Term
Comment
Bullish
Bearish
Bullish
Neutral
Bullish
Neutral
Neutral
Neutral
Neutral
Neutral
Support
Resistance
84.75
1.2223
115.84
1.5590
1.1180
0.8541
0.7661
0.9156
1.2868
$1,032
88.70
1.2679
120.00
1.5858
1.1446
0.8911
0.8052
0.9839
1.3138
$1,200
Citi Foreign Exchange
Forecast:
0-3
Months
87.59
1.23
109.00
1.60
1.15
0.86
0.77
0.98
1.28
1200
6-12
Months
92.65
1.15
115.00
1.51
1.18
0.80
0.72
1.05
1.30
1240
FX Rate Source: Bloomberg L.P. (cut off time is NY Time 5:00pm)
• USD rose: U.S. CPI stayed flat in Oct and Core figure rose 0.2%, both topped market estimates.
• GBP climbed: U.K. Retail Sales rose strongly from -0.4% to +0.8% in Oct, topped market expectations.
• EUR weakened: Eurozone Manufacturing PMI fell from 50.6 to 50.4, trailed market estimates.
Daily FX Focus
EUR/USD may fall further to 1.2223:
1.2679
(55MA)
1.2223 (200month MA)
EUR Outlook:
• The flash composite PMI fell by 0.7pt to a 16-month
low of 51.4, below its long-term average. The flash
manufacturing PMI fell to 50.4 and services PMI fell
by 1.0pt to a 12-month low of 51.3.
• Economic activity expanded at a slower pace in
Nov. All estimates were below the consensus,
confirming that GDP growth is likely to have slowed
further in the fourth quarter, with the absence of
inflation.
• Likely lower fresh staff projections for inflation/GDP
at Dec 4 meeting is lowering the bar for further
easing and introducing greater potential for
renewed EUR downside.
Source: Bloomberg L.P., data as of Nov 21, 2014
Technical Analysis:
• The 200 month moving average has held all major corrections lower in EURUSD since 2005.
• For now we think there is the potential for one more low on EURUSD this year close to that moving average at
1.2223, with next support at 1.2043.
NOTE: The brackets are the exchange rates in terms of Hong Kong dollar, with HKD $7.75 exchange rate for reference, and 1,000 yen per unit for JPY/HKD.
© 2014 Citibank
Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited
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Please note and carefully read the
Important Disclosure on the last page
Daily FX & Market Commentary
GBP/USD may trade inside 1.5590-1.5858:
1.5858 (20MA)
1.5590 (Wed low)
Source: Bloomberg L.P., data as of Nov 21, 2014
Technical Analysis:
• 1)Stay below 20MA; 2)RSI: turning up from oversold region; 3)Stochastic
oscillator: oversold condition.
• Technical signals suggest GBP/USD may hold above Wed low at 1.5590
and trade inside the range 1.5590-1.5858.
Recap:
• GBP was supported yesterday as U.K.
retail sales in Oct came in at 0.8%
MoM and 4.3% YoY, much better than
-0.4% and 2.3% in Sep.
GBP Outlook:
• The data suggests the U.K. economy
remains robust despite the slowdown
in global economy.
• The recent falling commodity prices
may lower the price level in U.K.,
which may support the domestic
demand in U.K.
• The strong economic outlook may
raise the expectation of early rate hike
by the BoE.
• Citi analysts believe the BoE may
start rate hike in Q2 2015, which may
support the GBP.
EUR/GBP may hold below 0.8053 and drop to 0.7767 :
0.8053 (200MA)
0.7767 (Sep low)
Source: Bloomberg L.P., data as of Nov 21, 2014
Recap:
• EUR/GBP fell yesterday on weakness
PMIs from Eurozone.
EUR/GBP Outlook:
• GBP may outperform due to the
strong U.K. retail sales data and also
the balanced BoE minutes.
• The weak PMIs data, together with
the low inflation risk, may fuel
expectation that the ECB may need to
add further QE measures.
• Citi analysts expect the additional QE
by the ECB may be announced in Q1
2015, which may pressure the EUR
further lower.
Technical Analysis:
• 1) RSI: turning down from overbought region; 2) Being capped below 200 MA
• Technical signals show EUR/GBP may hold below 200MA at 0.8053 and the pair may drop toward Sep low at
0.7767.
NOTE: The brackets are the exchange rates in terms of Hong Kong dollar, with HKD $7.75 exchange rate for reference, and 1,000 yen per unit for JPY/HKD.
© 2014 Citibank
Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited
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Daily FX & Market Commentary
Important Economic Data (Nov 17, 2014 – Nov 21, 2014)
Time
Importance
Event
NZ
!!
Retail Sales Ex Inflation QoQ
11/17/2014 07:50
JN
!!!
11/17/2014 21:30
CA
!
11/17/2014 22:15
US
!
Industrial Production MoM
11/18/2014 08:30
AU
!!
RBA Minutes of Nov. Meeting
11/18/2014 17:30
UK
!!!
CPI YoY
11/18/2014 18:00
GE
!!
ZEW Survey Expectations
Period Actual
Survey
Prior
1.10%
Monday
11/17/2014 05:45
3Q
1.50%
0.80%
GDP Annualized SA QoQ
3Q
-1.60%
2.20%
-7.30%
Int'l Securities Transactions
Sep
4.37B
7.00B
10.29B
Oct
-0.10%
0.20%
0.80%
Oct
1.30%
1.20%
1.20%
Nov
11.5
0.5
-3.6
Tuesday
Nov
Wednesday
11/19/2014 05:00
US
!
Total Net TIC Flows
Sep
-$55.6B
--
$44.8B
11/19/2014 07:30
AU
!
Westpac Leading Index MoM
Oct
0.03%
--
-0.05%
11/19/2014 17:00
EC
!!
ECB Current Account SA
Sep
30.0B
--
22.8B
11/19/2014 17:30
UK
!!
Bank of England Minutes
Nov
11/19/2014 21:30
US
!!
Housing Starts MoM
Oct
-2.80%
0.80%
7.80%
11/19/2014 21:30
US
!!
Building Permits MoM
Oct
4.80%
0.90%
2.80%
Thursday
11/20/2014 07:50
JN
!!
Trade Balance Adjusted
Oct -¥977.5B -¥1100B -¥1067.7B
11/20/2014 09:45
CH
!!
HSBC China Manufacturing PMI
Nov
50.0
50.2
50.4
11/20/2014 17:00
EC
!!
Markit Eurozone Manufacturing PMI
Nov
50.4
50.8
50.6
11/20/2014 17:30
UK
!!
Retail Sales Ex Auto YoY
Oct
4.60%
4.20%
2.80%
11/20/2014 17:30
UK
!!
Retail Sales Incl. Auto YoY
Oct
4.30%
3.80%
2.30%
11/20/2014 21:30
US
!!!
CPI YoY
Oct
1.70%
1.60%
1.70%
11/20/2014 21:30
US
!!
Initial Jobless Claims
Nov
291K
284K
293K
11/20/2014 23:00
US
!!
Existing Home Sales MoM
Oct
1.50%
-0.40%
2.60%
11/21/2014 21:30
CA
!!
CPI YoY
Oct
--
2.00%
2.00%
11/21/2014 21:30
CA
!!
CPI Core YoY
Oct
--
2.20%
2.10%
Friday
For any enquiries, please call (852) 2860-0333.
Source: Source: Bloomberg L.P.
(K = Thousand, M = Million, B = Billion)
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