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Daily Market Outlook By PYX Markets
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[QUOTE="PYX Markets London, post: 108620, member: 38730"] [b]Daily Market Outlook 29 August[/b] [img]https://scontent-amt2-1.xx.fbcdn.net/v/t1.0-9/13938553_118457278597764_4706199327588223406_n.jpg?oh=4cb4000aa052d5b9cf8c6e211c4ac665&oe=581DD5BC[/img] The dollar gained further against the yen and Aussie in Asia on Monday as remarks from Fed Chiar Janet Yelllen at the end of last week were parsed as consistent with earlier language suggesting that any rate hike would be data dependent with the economy getting stronger, setting up nonfarm payrolls at the end of the week as key for the September meeting. At the weekend, China's National Development and Reform Commission made loud and clear the current bank deposit reserve ratio is too high and that there is significant room for long-term bond yields to decline. "The current deposit reserve ratio of 16.5% is relatively high both compared with historical levels and to other countries. The benchmark deposit rate is not near a zero interest rate either. In the coming week in China data on the country's manufacturing sector are on the calendar, amid ongoing concerns over the health of the world's second biggest economy and in the U.K., traders will be awaiting reports on activity in the manufacturing and construction sectors for further indications on the continued effect that the Brexit decision is having on the economy. Markets in the U.K. are closed on Monday for a national holiday. Overnight, the U.S. dollar skyrocketed against a basket of major currencies on Friday, following comments from two top Federal Reserve officials that hinted at a potential U.S. interest rate hike as early as next month. During a much-awaited speech at the Fed's Jackson Hole symposium Friday, Yellen said the case for U.S. interest rate hikes has “strengthened” in recent months due to improvements in the labor market and to expectations for solid economic growth. Federal Reserve policymakers are signaling they could raise U.S. interest rates soon but they are already weighing new tools they may need to fight the next recession. A solid U.S. labor market "has strengthened" the case for the first rate increase since last December, Fed Chair Janet Yellen told a central banking conference in Jackson Hole, Wyoming. Several of her colleagues said the increase could come as soon as next month if the economy does well. Further rate hikes are expected to be few and far between as the U.S. central bank tries to balance a desire to fuel growth against worries it could overheat the economy. But Fed officials at three-day conference that ended Saturday also said they need to consider new policy tools for use down the road, such as raising the inflation target or even Fed purchases of non-government-backed assets like corporate debt. Such ideas would test the limits of political feasibility and some would need congressional approval. The view within the Fed is that it could take effort to win over a public already skeptical of the unconventional policies the Fed undertook during the last crisis. Policymakers think new tools might be needed in an era of slower economic growth and a potentially giant and long-lasting trove of assets held by the Fed. And they are convinced the time to vet them is now, while rates look to be heading up. The conference, attended by all but two of the Fed's 17 policymakers as well as central bankers from around the world, also presented a menu of more exotic proposals. This included a Fed takeover of short-term debt markets and abolishing cash in order to charge negative interest rates. Crude prices dropped in Asia on Monday as investors noted Saudi Arabia does not see the need for major efforts by global producers on output, fanning oversupply concerns. Overnight, oil futures managed to hold on to modest gains on Friday, but suffered a decline for the week after the Saudi energy minister shrugged off the need for OPEC to intervene to stabilize markets. Reuters reported late Thursday that Saudi Arabia's Energy Minister Khalid al-Falih told the news agency in an interview that he does not believe any "significant intervention" in the oil market is necessary. His reported comments come ahead of an informal meeting of the OPEC in Algeria late next month, during which major oil producers are expected to discuss a potential output freeze. Traders also assessed the likelihood of an interest-rate increase at the next Federal Reserve meeting September, following comments from the top two officials at the central bank. An increase in U.S. interest rates tends to lift the dollar, which would make oil more expensive for traders who conduct business in other currencies. Analysts and traders remain skeptical the meeting would result in a coherent effort to reduce the global glut. An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus. Meanwhile, market players continued to focus on U.S. drilling prospects, amid indications of a recent recovery in drilling activity. According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week was unchanged at 406. That followed eight straight weeks of increases. [/QUOTE]
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