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American FX Outlook: China move set to roil US Markets overshadowing Fed speakers

Written Mario Blascak, PhD | 2018-01-10 06:53:34 GMT
  • News of China officials viewing the US Treasuries as less attractive spurred massive US Dollar selloff.
  • Global equity indices took the U-turn lower of the China news.
  • The UK manufacturing rose slightly above expectations, but the UK trade balance recorded higher deficit, coming in mixed for Sterling.
  • The combination of rising commodity prices higher debt issuance and a slowdown in central banks asset purchasing supports rising bond yields that will also define FX market repricing.

Wednesday’s market moving events

  • The US export price index is seen rising 0.3% m/m in December.
  • The US import price index is expected to rise 0.5% m/m in December.
  • Canada’s building permits are seen falling -0.3% m/m in November.
  • EIA crude oil inventories are expected to fall -4.1 million in the week ending January 5.
  • Chicago Fed president Charles Evans is due to discuss current economic conditions or monetary policy at the Lake Forest-Lake Bluff Rotary Club 2018 Economic Breakfast in Lake Forest, Illinois at 14:00 GMT.
  • The Bank of England Deputy Governor Ben Broadbent appears on BBC
  • Radio 4's Money Box Live to answer questions on central bank policy at 15:00 GMT.
  • St. Louis Fed president James Bullard is scheduled to give a presentation on the "U.S. Economy and Monetary Policy" at the 2018 Economic Outlook event in St. Louis at 18:30 GMT.

Major market movers

  • The US Dollar index is 0.5% on Wednesday, after the news of China pondering to cut the US Treasury buys.
  • Fed speakers are unlikely to alter the current view of the US central bank hiking rates three times in 2018.
  • The FX market is set to re-assess the relevance of news about China cutting the US Treasury buys with global implications for the US Dollar.

Earlier in Asia/Europe

  • China’s inflation rose 1.8% y/y in December while producers prices decelerated to 4.8% y/y.
  • Czech Central Bank Governor Jiri Rusnok expects at least two rate hikes by 25 bps each this year if the situation develops according to bank's assumptions.
  • China officials are said to recommend halving of ending the US Treasury buys as they view them as a less attractive investment.
  • The UK manufacturing output and industrial production both rose 0.4% m/m in November.
  • The UK trade balance with goods reached a deficit of £ 12.2 billion.

Author

Mario Blascak, PhD
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