1 Dec 2014
Policy divergences, decline in commodity prices, and China’s slowdown continue to drive the markets – BBH
FXStreet (Barcelona) - The Research Team at Brown Brothers Harriman have identified three forces that are shaping the investment climate: the economic and monetary divergence that favors the US, the decline in commodity prices, and a slowing of China, which have strengthened and are reinforcing each other.
Key Quotes
“Throughout the last few months, we have identified three forces that are shaping the investment climate: the economic and monetary divergence that favors the US, the decline in commodity prices, and a slowing of China. These forces remain very much intact, and if anything, have strengthened and reinforcing each other. “
“Over the weekend, the PBOC announced it is ready to implement guarantees on deposits (as much as RMB 500,000 or about $81,500). This pushes the agenda towards interest rate liberalization.”
“The US dollar is mostly softer as North American participants prepare to return from what was a long weekend for many. The greenback had initially moved higher, hitting ¥119.15, while the euro slipped to $1.2420. The proximate cause was the continued fall in oil prices and news that Moody's cut Japan's credit rating to A1 from Aa3.”
“However, the dollar shed its gains in the European morning, as falling equity markets sent the dollar to almost JPY118 and the euro recovered to almost $1.2480.”
“There was little sustained reaction to the EU PMI, which fell to 50.1 from the 50.4 flash reading. Germany's PMI was the lowest since June 2013, and the second sub-50 reading in the past three months.”
“In the EM space, RUB is again making new lows, falling 4.5% against the basket. Other oil exporters have also been hit heavily, notably Malaysia and Colombia.”
“Brent futures fell below $68.0 per barrel, but have since recovered back to just under $70.0.”
Key Quotes
“Throughout the last few months, we have identified three forces that are shaping the investment climate: the economic and monetary divergence that favors the US, the decline in commodity prices, and a slowing of China. These forces remain very much intact, and if anything, have strengthened and reinforcing each other. “
“Over the weekend, the PBOC announced it is ready to implement guarantees on deposits (as much as RMB 500,000 or about $81,500). This pushes the agenda towards interest rate liberalization.”
“The US dollar is mostly softer as North American participants prepare to return from what was a long weekend for many. The greenback had initially moved higher, hitting ¥119.15, while the euro slipped to $1.2420. The proximate cause was the continued fall in oil prices and news that Moody's cut Japan's credit rating to A1 from Aa3.”
“However, the dollar shed its gains in the European morning, as falling equity markets sent the dollar to almost JPY118 and the euro recovered to almost $1.2480.”
“There was little sustained reaction to the EU PMI, which fell to 50.1 from the 50.4 flash reading. Germany's PMI was the lowest since June 2013, and the second sub-50 reading in the past three months.”
“In the EM space, RUB is again making new lows, falling 4.5% against the basket. Other oil exporters have also been hit heavily, notably Malaysia and Colombia.”
“Brent futures fell below $68.0 per barrel, but have since recovered back to just under $70.0.”