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Daily Market Outlook By PYX Markets
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[QUOTE="PYX Markets London, post: 115058, member: 38730"] [b]Daily Market Outlook 21st November [/b] [img] https://scontent-fra3-1.xx.fbcdn.net/v/t1.0-9/14570478_1179904372071111_6911470945801757702_n.jpg?oh=9845bf4fa52573c04cc18bf21e2e3939&oe=58875384 [/img] Asian shares were on the defensive on Monday, undermined by fears that the strength in the U.S. dollar and rising U.S. bond yields since Donald Trump's election to president could accelerate fund outflows from emerging markets. Trump's unexpected election victory has led to a major repricing of assets, with investors rushing to buy U.S. stocks and the dollar, while dumping bonds and emerging market assets. Carrying out even some of Trump's plans for deregulation and tax cuts would undermine assumptions investors had long held - that the U.S. economy would grow modestly and inflation would remain tame in the foreseeable future. As expectations grow that the Federal Reserve might have to raise interest rates faster than expected under Trump's reflationary policies, markets have moved towards U.S.-dollar based assets at the expense of emerging nations. Heightened uncertainty prompted investors to demand a larger premium for holding long-term U.S. debt, with the 10-year U.S. Treasuries yield US10YT=RR soaring to 2.364 percent by last week from around 1.86 percent before the elections. To be sure, investors have little idea to what extent Trump can implement his proposals, including slapping tariffs on major trading partners such as China and Mexico and going ahead with heavy tax cuts that would widen the U.S. fiscal deficit. Some investors think the market will have a reality check as soon as differences start to emerge between the new administration and Congress over some of Trump's policies. The data from the U.S. financial watchdog showed on Friday that in the first week after the U.S. elections speculators hardly increased their net long positions in the dollar. Many emerging market currencies remained under pressure on fears investors could bring their money back to the United States. The Malaysia ringgit hit 14-month low MYR= while the Philippine peso PHP= edged near its 2008 low. The Organization of the Petroleum Exporting Countries is moving closer to finalizing its first deal since 2008 to limit output, with most members prepared to offer Iran flexibility on production volumes, ministers and sources said. The dollar nudged up to a six-month high in early Asian trading on Monday, as investors continued to back bets that the administration of President-elect Donald Trump would embark on expansionary fiscal policies and boost growth. Data from the Commodity Futures Trading Commission released on Friday showed that speculators trimmed their dollar bets in the week through Nov. 15, as profit taking reduced net long positions after they had risen seven straight weeks. Japanese yen net longs, meanwhile, posted their lowest level since early June, the data showed, with the yen a casualty of the dollar's strong rally. And expectations that a Trump presidency will usher in higher growth and lead to faster-than-expected Fed hikes have helped power the dollar to 13-1/2-year highs against a basket of currencies. James Bullard, a voting member of the U.S. central bank's rate-setting committee, said last week that the Fed will raise U.S. interest rates in December barring a major shock, such as global market volatility or bad U.S. jobs data. Oil prices rose around 1 percent on Monday as producer cartel OPEC moved closer to an output cut to rein oversupply that has kept prices low for over two years. Traders said that markets were being supported by advancing plans by the OPEC to cut production in a bid to prop up the market following over two years of low prices as a result of output exceeding demand. Such a deal has proved tricky to agree as some producers, most notably Iran, have been reluctant to cut output. But an agreement has become more likely as Iran, keen to increase output after international sanctions against it were lifted last January, was expected to be given an exemption if it agrees to cap its production rather than cutting it, leaving the onus of a an outright reduction on other OPEC-members, including its political rival and de-facto OPEC-leader Saudi Arabia. As a result, Barclays said that some form of production cut deal was likely, but the bank added that any such agreement might have little impact on markets. Beyond the talk of a potential production cut, there were also signs of ongoing market weakness. Japan on Monday reported a fall of 9.5 percent in crude oil imports in October from the same month a year earlier, to 2.78 million barrels per day. [/QUOTE]
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