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Daily Market Outlook By PYX Markets
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[QUOTE="PYX Markets London, post: 108076, member: 38730"] [b]Daily Market Outlook 19 August[/b] [img]https://scontent-amt2-1.xx.fbcdn.net/v/t1.0-9/13938553_118457278597764_4706199327588223406_n.jpg?oh=4cb4000aa052d5b9cf8c6e211c4ac665&oe=581DD5BC[/img] Asian stocks retreated on Friday as traders took profits from shares close to one-year highs, while the dollar edged up from a near eight-week low after some Federal Reserve officials reiterated the case for raising interest rates in coming months. Markets have been left confused by mixed messages from the Fed, with hawkish comments from New York Fed President William Dudley and San Francisco Fed President John Williams clashing with the Fed's July meeting minutes this week saying more data is needed before interest rates can rise. Investors are awaiting an annual meeting of central bankers from around the world in Jackson Hole, Wyoming, next week, in which Fed Chair Janet yellen is likely to cement expectations for a slow pace of rate increases. The dollar recovered on Friday following Williams' and Dudley's comments overnight, after falling to the lowest level since June 24 in response to the July minutes. Dudley, who said earlier this week that the central bank could possibly hike rates in September, reinforced his hawkish message on Thursday. Williams also signaled support for an interest rate hike in the coming months, warning that waiting too long could see the economy overheat. Williams does not have a vote on Fed policy this year, but his views are seen as influential due to his longstanding relationship with Yellen. Fed officials agree that more economic data is needed before raising interest rates, although they were generally upbeat about the U.S. economic outlook and labor market. Saying he is in no hurry to raise rates, San Francisco Federal Reserve Bank President John Williams nevertheless warned that the economy could overheat if rates are kept low for too long, like a party at which the host fails to remove the punch bowl. Data on Thursday showed the number of Americans filing for unemployment benefits dropped more than expected last week. Despite improving labor conditions, economists see the December meeting as the most likely time for a rate increase, after the U.S. presidential election in November, according to a Reuters poll last week. With an eventual U.S. interest rate hike on the horizon, Bill Northey, chief investment officer of the private client group at U.S. Bank in Helena, Montana, said the U.S. currency could appreciate to 110 yen by the end of the year. Bank of Japan says there is no possibility of helicopter money, and by a strict definition they are correct. But as the government plans to issue more 40-year bonds, it is looking more and more like some monetization of debt is underway. The BOJ says as long as it buys Japanese government bonds (JGB) from the market, it is not directly underwriting bonds to fund government spending. However, that distinction has become blurred as investors buy bonds only to take profits by selling them immediately to the bank - a transaction coined the "BOJ trade." "The BOJ is now buying the entire 30 trillion yen ($299.1 billion) in bonds newly issued by the government annually. In a sense, it has the same effect of helicopter money," said Etsuro Honda, a former special adviser to the cabinet and a close associate to Prime Minister Shinzo Abe. Some economists, however, fear such moves could trigger hyperinflation and uncontrollable currency devaluation. The BOJ seems more relaxed than in the past about markets thinking it may resort to quasi-helicopter money, say officials familiar with its thinking, partly on hopes that such market views could help contain the strength of the yen currency. Brent crude oil prices dipped in early Asian trading hours on Friday, but remained near two-month highs with Brent still holding above $50 per barrel in a bull-run that has lifted the market by over 20 percent since early August. The lower prices during early Asian hours - which is late the previous day in the Americas due to the time zone difference - continues a trend this week in which prices have tended to dip during Asian mornings/American evenings, only to turn stronger once the Americas returns the next day and Asia logs off. Traders said the dips during Asian hours were largely due to profit taking in the Americas following sharp price increases during the day there. However, analysts warned the rally was overblown, especially since planned talks between the Organization of the Petroleum Exporting Countries (OPEC) and other major producers like Russia to rein in on ballooning overproduction were unlikely to lead to a reduced supply overhang. [/QUOTE]
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