市場新聞與洞察

Time Ticking for Brexit By Klavs Valters In just over a year – on 29 th March 2019 to be exact – Britain is scheduled to leave the European Union. It has been nearly a year since Theresa May triggered Article 50 and began the two-year process to negotiate an exit deal. As we know, the negotiations so far can’t be classed as successful.

Even though a breakthrough on the key issues of the deal (the Irish border, divorce bill, citizens’ rights and the European Court of Justice) was made back in December last year, there hasn’t been a great deal of clarity on how the relationship will look moving forward. A No-Deal Scenario A no deal would be bad news for both parties involved and could potentially cost £58 billion a year, with Britain’s financial sector taking the largest hit, according to a new research. The additional direct “red-tape cost” of tariff and non-tariff barriers would be £27 billion to UK firms and £31 billion to their EU counterparts, a report from global management consulting firm Oliver Wyman and law firm Clifford Chance estimates. “These increased costs and uncertainty threaten to reduce profitability and pose existential threats to some businesses ” the report stated.

Britain’s relationship with the EU would revert to World Trade Organisation (WTO) rules if no deal is in place by the end of a transitional period. This is set to start after the official Brexit deadline in March 2019 – a scenario which both sides would like to avoid. Five sectors – finance, automotive, agriculture, food and drink, and consumer goods would bear 70% of the burden of additional costs resulting from this scenario, according to the report.

The financial services industry would be hit the hardest and we are seeing some of the largest financial firms making plans of relocating their staff to other European Union countries. Last week, UBS and Goldman Sachs announced they had begun to transfer jobs to Frankfurt in preparation for Brexit. The Bank of England has also warned that around 10,000 jobs from the financial sector might leave by the end of next year because of Brexit.

Financial Markets GBP/USD Source: GO Markets MT4 At the end of January, we saw the Pound strengthen to its highest level since the Brexit referendum was announced. Since then we have seen the Pound weaken slightly against the US Dollar and currently trading at around 1.38 level (as of 13/3/18). EUR/GBP Source: GO Markets MT4 There hasn’t been too much movement against the Euro in recent months, however further developments in the talks will certainly have an impact moving forward.

The Euro currently trading at around 0.88 level against the Pound (as of 13/3/18). FTSE100 Source: GO Markets MT4 Since reaching its lowest level since the end of 2016 of around 6916, the FTSE100 has somewhat recovered the losses and currently trading at 7213 level (as of 13/3/18). Theresa May has repeatedly said that she wants a “strong and special relationship” and “Canada style trade deal” with the European Union and in every speech since the process began.

This hasn’t however given the public much clarity or confidence in what will happen. With the exit date just around the corner, can the “strong and stable” leader deliver the Brexit people of the UK voted for?

Last year the total sales of gold exports reached $310 billion mark. The top 5 countries made up a large portion of the total gold exports last year with shipments accounting to more than $177 billion, which was 57.30% of the world total. In 2011 we saw the price of gold reach record highs at over $1,900.

Since then we have seen the price fall and currently trading at around $1,219 level. In this article, we will take a look at the top 5 biggest gold exporters in the world. XAU/USD Monthly Chart Switzerland Switzerland was the largest gold exporter of gold in 2017 with $67.9 billion worth of exports which was around 21.9% of the total.

European Union is Switzerland ’s largest trading partner with 46.6% of all Swiss exports by value being delivered to the EU. Switzerland has the 20th largest economy in the world at $678 billion and 3rd in the world per capita at $80,189. Capital: Bern Official languages: German, French and Italian Population: 8,508,898 Gross Domestic Product: $678 billion Currency: Swiss Franc (CHF) Hong Kong Hong Kong, officially known as Hong Kong Special Administrative Region of the People’s Republic of China is the second largest exporter in the world with exports worth up to $52.2 billion, 16.8% of the total in 2017.

Hong Kong has the 33rd largest economy in the world at $341 billion and 16th per capita at $46,193. Hong Kong is the 2nd largest foreign exchange market in Asia and 4th largest in the world in 2016 with a daily average turnover of forex transaction reaching $437 billion, according to the Bank for International Settlements. Official languages: Chinese and English Population: 7,448,900 Gross Domestic Product: $341 billion Currency: Hong Kong Dollar (HKD) United Arab Emirates The United Arab Emirates is the third largest exporter of gold with $20.7 billion or 6.7% of the total world exports in 2017.

The United Arab Emirates has world’s 19th largest economy at $638 billion, and it’s the third largest in the Middle East, behind Saudi Arabia and Iran. Capital: Abu Dhabi Official language: Arabic Population: 9,575,729 Gross Domestic Product: $383 billion Currency: UAE dirham (AED) United States With exports worth $19.8 billion, United States is the fourth on the list of the largest exporters of gold which is about 6.4% of the world total. As you probably may know, the US has the largest economy in the world at a whopping $19 trillion.

Even though the US has the largest economy in the world, it also tops the list for the country with the largest total debt at over $18 trillion. Capital: Washington D.C. Official language: English Population: 325,719,178 Gross Domestic Product: $19 trillion Currency: United States Dollar (USD) United Kingdom The United Kingdom is fifth on the list of the largest gold exporters in the world at $17 billion worth of exports in 2017, which is 5.5% of the world total.

Same as on this list, it is also the fifth largest economy in the world at $2.6 trillion total Gross Domestic Product. United Kingdom is the home of the world’s second largest financial center in London, according to the Global Financial Centres Index (GFCI) report. Capital: London Official language: English Population: 66,040,229 Gross Domestic Product: $2.6 trillion Currency: Pound Sterling (GBP) This article is written by a GO Markets Analyst and is based on their independent analysis.

They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk. Sources: Go Markets MT4, Google, Datawrapper

By ​Deepta Bolaky Trade and geopolitical risks were at the forefront of the meltdown that rattled the markets on Friday. Turkey’s currency crisis prompted a massive sell-off across the markets hitting the European banking sectors the hardest. Fears began to mount as investors freted its rippling effects on the global markets.

The current risks and a hawkish Fed are giving rise to the “Strong Dollar Story” which are putting pressure on developed and emerging economies. Emerging markets are mostly being hit by rising protectionist measures and US sanctions. There was growing interest in the Earning Markets and the overall outlook was promising until rising protectionist measures started kicking-in.

Contagion Effect A diplomatic row between the US and Turkey sparked a contagion fear globally, resulting into new “lows” in the Forex markets at a time where major currencies were already facing a strong US dollar. EURUSD – Banking contagion The Turkish lira lost more than 13% against the dollar on Friday. The weakness in the Lira has elevated Turkey’s debt burden and the ECB expressed its concerns about the exposure of the European banks with Turkey.

The shared currency slipped on Friday and EURUSD fell to one- year low. Even though the contagion might have some lingering effects in the eurozone banking sector in the short-term, we note that bank supervisors might be able to pull tools at their disposal to contain the damage in the long-run. The key risk for the Euro might therefore be the policy divergence.

On the technical side, the pair has formed a descending triangle which indicates a bearish formation whereas the RSI value is currently at 28.916 indicating oversold conditions. The overall situation may suggest that EURUSD could bounce off before incurring deeper losses. NZDUSD – NZ-US interest rate advantage The New Zealand dollar was dragged down by subdued fundamentals at a time where the NZ-US interest rate advantage has been eroded.

The Kiwi was battered by the dovish statement by the RBNZ and the contagion fears following the currency crisis in Turkey. A sour risk tone in the markets is hauling the NZD pairs from a” negative” to a “bearish” outlook. The NZDUSD pair dropped to two-year low.

The pair has made a minor bounce back. Any move passed last week’s lowest level would most likely indicate the presence of sellers and can potentially drag the pair pass the 0.6400 level. Any sustained move above 0.6570 level will signal presence of buyers.

This can also be the profit-taking or counter-trend buying. AUDUSD The Australian Dollar is also feeling the heat of the geopolitical risks and a dovish RBA. The week kicked off on a sour note and AUDUSD fell below an important trendline at 0.7350.

The slide can continue if the contagion fears escalate in the Eurozone and risk aversion persists. AUDUSD bounced back after gapping lower on Monday. It is currently trading in the one-year low range.

Technically, the pair is also in a descending triangle suggesting a bearish trend but traders should keep an eye on the RSI which is moving towards the oversold conditions. This situation can also be driven by some short-covering rallies. GBPUSD- Brexit saga The pair is trapped at the 12-month lows as the volatility of a “no-deal” Brexit has increased.

The Sterling was already on the backfoot with the Brexit tensions and a full-blown return of risk aversion could open up further downside opportunities for the Cable. GBP bulls will have to rely on a series of data scheduled over the week for fresh impetus. Moving on to the emerging markets, contagion is the “buzzword of the week” and appears to be flowing through the emerging markets.

Emerging currencies are sliding under the influence of a stronger US dollar and currency crisis in Turkey. The rising contagion fears has even caused a flash crash in the South African Rand. As of this writing, Turkey’s central bank has announced intervention measures which is bringing some relief and toning down the bearish outlook in the Forex and equity markets.

The Reserve Bank of New Zealand (RBNZ) made its first interest rate decision and monetary policy, but it was not what the market participants expected. The Central Bank did not follow the same dovish theme seen by other central banks. The Official Cash Rate (OCR) was left at 1.75%, as widely expected, and the RBNZ expects to keep the OCR at this level through 2019 and 2020. “The direction of our next OCR move could be up or down.” Governor Adrian Orr has downplayed the odds of a rate cut but has not entirely removed it off the table.

Given the global risks and uncertainties, the chance of a rate cut is not eliminated but has not increased either. NZDUSD jumped on the signals to hold on to rates though to 2020 while the AUDNZD dropped by almost the same extent. We saw movements above 100 pips following the Rate Statement.

AUDUSD, which is highly correlated with the NZDUSD, added a few pips and built on gains from the uptick in the Westpac Consumer Confidence released before the RBNZ’s interest rate decision. The RBNZ strikes a “data-dependent” approach and says that they are comfortable with the inflation target and mid-point pressures. The Governor stretched that “ they need data from the financial markets around how they are pricing and seeing the risks as well.” When asked about the rise in unemployment, Orr mentioned that “ the surveys are not reflecting what we hear about the business tables”, and that “employment is near its maximum sustainable level".

Overall, the big picture here is that the RBNZ appears more confident that other central banks on its outlook for the New Zealand economy. The Central Bank noted that the low-interest rates and expected government spending would eventually support a pick-up in Gross Domestic Product over 2019. This article is written by a GO Markets Analyst and is based on their independent analysis.

They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk. For more information on trading Forex, check out our regular free Forex webinars.

Source: Bloomberg Terminal For the traders returning from the Christmas break, the sudden surge in the Dow Jones Industrial Average is probably the main event of significance to monitor. Major US equity benchmarks experienced the biggest daily gain in a decade. Until recently, those benchmarks were flirting with the bear market levels.

What has changed? “ A tremendous opportunity to buy ” and “ I have great confidence in our companies. ” were the comments from President Trump on the stock markets. The President may have encouraged the “buy-and-dip” strategy so when Amazon reported record-breaking sales, bulls came in with force, and Wall Street soared. The Dow surged by more than 1000 points on Wednesday, preventing the benchmark from falling into a bear market territory.

The technology and energy sector were among the best performing-sectors. Source: Bloomberg Terminal The S&P 500 also rose by 5%, and 11 sectors within the benchmark were trading in positive territory. The technology, consumer discretionary and energy sectors were leading the gains while the material sector was on the back foot dragged by metals and mining stocks.

US500 Source: Bloomberg Terminal Nasdaq Composite also added 5.84% after suffering the worst Christmas-eve session. The wave of selling was halted on Wednesday. Consequently, Asian stocks and the Australian equity benchmark are finding support from a historic night on Wall Street.

World Equity Indices Amid the recent ‘Global Stock Rout’ the S&P TSX ended October down 6.51% following a somewhat hard month. However, during this risk-off flight to safety, the S&P TSX Index may have had its pain exacerbated by the heavy makeup of energy companies populating the Canadian index. As discussed in previous articles - Oil - Can basic Economics be responsible for an 11% decline – Oil has seen some very aggressive sell-offs.

Current market conditions have the commodity breaking below the $50 a barrel level amid supply concerns and growing global tensions. Keep in mind with Canada’s energy companies occupying an 18.6% weighting of the S&P TSX; undoubtedly this has been a weight around the Index’s neck dragging it lower. Source: Bloomberg Terminal Investors welcomed the relief rally.

However, it may be too early to cheer up the recovery as the equity markets are still battling weak fundamentals, concerns over slow growth, trade tensions, political turmoil and higher borrowing costs.

Today’s flash crash in the FX markets was surprising to many of us. The triggers behind the slump in the currency’s markets are vague, and everyone was left wondering about a reasonable explanation. First of all, we think it is important to note that we are in a low volume trading environment and any reaction/news can be exacerbated in such thin markets.

Manufacturing Activity A series of PMI reports released on Monday and Wednesday highlighted the weakness throughout the global manufacturing sector which has increased fears about the outlook for global growth. Caixin Manufacturing PMI fell from 50.2 to 49.7 German Markit Manufacturing PMI fell from 51.8 to 51.5 EZ Markit Manufacturing PMI fell from 51.8 to 51.4 Canadian Markit Manufacturing PMI fell from 54.9 to 53.6 US Markit Manufacturing PMI fell from 55.3 to 53.8 The heightened concerns brought additional turbulence in the stock markets when trading resumed on Wednesday, the first trading day of the year 2019. Apple’s Revenue Forecasts Apple’s move to downgrade sales on slowing iPhone sales in China fueled the fears about the global economy.

Investors fled to safety and sought safe-haven assets like the Japanese Yen which surged through key support levels. Major currencies crashed against the Yen before paring some of the losses. The strong moves in the Yen pairs prompted speculators also to believe that Japanese traders were forced to exit their short yen positions.

USDJPY, AUDJPY, NZDJPY, GBPJPY, CHFJPY and EURPJY (Hourly Charts) Source: GO MT4 In the stock markets, given that Apple is the bellwether for the technology sector, the surprise announcement weighed on the technology stocks in the Asian session. The performance in Asia/Pacific region was mixed, and investors struggled to find a direction. Source: Bloomberg Ter minal We may see more downgrades in the months to come as slowing global growth and trade tensions will probably remain the key challenges in the financial markets.

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