EURO Archives - The Industry Spread

Ignazio Visco: The economic and financial outlook of the euro area -halfway down “the long and winding road”

May 20, 2019 by Reg Hub Leave a Comment Filed Under: Central Bank Annoucements, Central Bank News Tagged: app, Bank of Italy, CET1, ECB, EURO, European Union, Eurosystem, Italy budget, NPL, TLTRO-III

The economic outlook

This conference comes at a difficult and uncertain juncture for the global economy, the euro area and Italy. After solid growth in 2017 and early 2018, world GDP decelerated significantly in the second half of last year. Although there are signs that the downward momentum might have stopped, in many countries economic activity remains weak.

According to the IMF’s latest forecasts, in 2019 the global economy will expand at the lowest rate since 2009, when it recorded a recession.

Trade tensions, mostly fuelled by the new protectionist strategy pursued by the United States, and their effects on confidence, especially of private enterprises, are contributing significantly to this poor performance of the world economy. International trade progressively slowed in 2018, falling by 1.0 per cent in the last quarter of the year, and recent data suggest that the economy remained weak in the early months of 2019.

The progressive liberalisation of trade that has characterised the last few decades has come to a sudden halt and is being reversed in some important economies. The average tariff rate applied to imports by the United States, for example, more than doubled in 2018 (from 1.5 to 3.3 per cent). More generally, the system of supranational institutions and multilateral rules on international trade that supported the sustained global economic expansion after World War II is encountering serious difficulties.

Protectionism is a response – a wrong one – to the challenges of globalisation and technological change, which both have momentous consequences for the job prospects of workers with lower skills. In the OECD countries, for example, the rise of automation is estimated to cause a high probability that as much as one job out of seven will be lost, while three out of ten may undergo significant changes over the next fifteen to twenty years. Even though new jobs will be created, managing the transition will be no easy task. Not enough has been done up to now to make appropriate plans for an affordable, timely and adequate retraining of workers, to invest resources in education, and to combat poverty and inequality.

Ignazio Visco

In the shorter term, global risks are still tilted to the downside. The economic outlook remains vulnerable to persistent trade tensions, to a greater-than-expected cyclical slowdown in China, and to the possibility that the United Kingdom exits the European Union without a deal. GDP growth decreased markedly in the euro area as well, to 1.8 per cent in 2018 (from 2.4 per cent in the previous year). The euro area is much more open to foreign trade than the United States and Japan. For this reason its business cycle is highly correlated with the international one. Dependence on external demand is especially high in Germany, where the export-to-GDP ratio is close to a stunning 50 per cent, but it is also significant in France, Italy and Spain (where it is slightly above 30 per cent) due to their integration in the global value chains, including the European ones, commonly known as the “European factory”.

In the euro area the negative impact on GDP growth of weaker exports has been amplified by a slowdown in domestic demand. Since mid-2018 the outlook for investment has progressively deteriorated due to the adverse effects of increased global uncertainty on firms’ confidence and capital accumulation plans. The drop in production in the car sector following the introduction of a new international regulation on emissions from light-duty vehicles has also played an important role.

Against this background, the European Central Bank’s monetary policy continues to be highly expansionary. The Governing Council expects official rates to remain at their current low levels at least until the end of 2019 and, in any case, for as long as necessary to ensure the convergence of inflation towards its target of a growth rate of consumer prices “below but close to 2 per cent” to be maintained over the medium term. Even after the first rate hike, the Eurosystem will continue for an extended period of time to reinvest in full the principal payments from maturing bonds purchased under the asset purchase programme (APP). Last March we also decided to launch a new series of targeted longer-term refinancing operations (TLTRO-III), the first of which will be conducted next September; these operations will help to preserve favourable bank lending conditions and ensure the smooth transmission of monetary policy.

Our stance does not endanger overall financial stability. In the current situation, the main risks come from the weak growth and inflation outlook. As is well known, the global crisis spurred a widespread debate on whether the mandate of central banks should be broadened to formally include the preservation of financial stability. Even though the latter is certainly a precondition for price stability, this change could raise potential conflicts between the two objectives, undermining the credibility of central banks and the effectiveness of their policies. Preserving financial stability should instead be the main task of macroprudential action. The same considerations apply to regulation and microprudential supervision: each policy can work well only if it has clear objectives and targeted intervention tools to achieve them.

The deterioration in the international outlook has also had a strong negative impact on the Italian economy: economic activity progressively weakened in 2018, recording a slight contraction – a so-called “technical recession” – in the second half of the year.

Overall GDP growth was just 0.9 per cent last year, around half the level recorded in 2017; all the main international forecasters expect it to decelerate further this year. The slowdown of activity in Germany, with which we share close economic ties, and the fall in business confidence, have been especially important factors in the weakness of aggregate demand and, especially, the marked deceleration in investment by Italian firms.

Our surveys confirm that weak capital accumulation reflects greater cautiousness on the part of enterprises in the face of uncertainty about economic and political factors, and the persistent trade tensions.

Economic activity returned to slightly positive growth in the early months of this year: according to the preliminary estimate GDP increased by 0.2 per cent in the first quarter of 2019. This trend could continue, especially if the global rebound in investors’ confidence observed since late 2018 proceeds and continues to exert its effects in Italy too. But to fully recover the path of sustainable growth, Italy must tackle its two main structural problems: the stagnation of productivity observed since the 1990s and the high level of public debt. Italy has been growing on average by around 1 percentage point less than the rest of the euro area since 1999. This is the result of the country’s delayed response to the big changes of our era: globalisation and the technological revolution. A short-lived relief provided by fiscal or monetary policy, albeit important, is not enough to solve this problem. To address it, Italy must quickly adopt a consistent growth strategy combining measures to support innovation, with those to improve the quality of human capital, and to create a more favourable environment for “doing business”.

Following the double-dip recession associated with the two financial crises that erupted in the past decade (the global financial crisis of 2007-09 and the euro-area sovereign debt crisis of 2010-13), many Italian firms have introduced organizational changes that have enhanced their efficiency, making them more competitive on international markets. The restructuring process has been more intensive in the export sector and, as a result, domestic firms have been gaining market shares in many countries. It is a process that must continue and be extended to the rest of the economy, supported by appropriate public policies.

In recent years various measures have been introduced to support high-tech investments and innovative start-ups. In order to be effective, industrial policy needs stable and appropriate fiscal incentives, while the regulatory framework must be aligned with international best practices. The Italian economy has many strengths that can help support these recent positive developments: private sector net wealth is high by international standards, the debt-to-income ratio of Italian families is low, exports remain strong and the current account of the balance of payments is in surplus – it has been this way for many years now, so much so that the net foreign asset position is balanced.

A reduction in the risk premium on Italian public sector bonds is another crucial objective: at the beginning of this week the yield differential with respect to 10-year German bonds was over 270 basis points, more than twice the level prevailing in early 2018, before the latest general elections.

The premia on credit default swaps suggest that the yield differential has risen as a result of the increase in both credit risk and the risk of redenomination of bonds in a different currency. The high public debt-to-GDP ratio exposes Italy to the volatility of financial markets, with the annual amount of bonds to be refinanced currently standing at around €400 billion. The average residual maturity of the public debt is above 7 years; therefore, the initial impact of higher interest rates on servicing costs is small but, if the increase in rates persists, it would inevitably weigh on expenditure. Reducing the differential between the interest burden on public debt and the nominal rate of growth of GDP – which is positive in Italy, compared with negative values in most advanced countries and throughout Europe, including in Greece – while maintaining an adequate primary surplus, is therefore of vital importance.

The transmission of higher rates from government bonds to the cost of loans for households and firms has been limited so far, thanks to banks’ ample liquidity and improved balance sheets. But signs of tension are beginning to emerge. According to our surveys, credit conditions tightened somewhat, especially for small enterprises, following the increase in banks’ funding costs and the deterioration in the economic outlook. In the longer run, a high risk premium on government bonds would inevitably end up affecting the real economy. A credible strategy to reduce the burden of Italy’s high public debt in the medium term can no longer be postponed and the factors that lead investors to perceive higher risks, such as lax budgetary conditions and the prevalence of transfers and subsidies over growth-enhancing measures, should be tackled.

The financial sector: progress and open issues

In the euro area banks’ capital position has strengthened considerably. Between mid-2015 and end-2018 the capital (CET1) ratio of the so-called “significant institutions” – those under the direct supervision of the ECB, which account for around 80 per cent of the area’s banking assets – increased from 12.7 to 14.3 per cent. For the entire Italian banking system it stands at 13.3 per cent.

In Italy the stronger capital position of banks has been accompanied by a substantial improvement in the quality of their assets, mainly thanks to large disposals of non-performing loans (NPLs). The deterioration in credit quality recorded during the global financial crisis and the European sovereign debt crisis was due for the most part (about 90 per cent according to our estimates) to the negative developments in the macroeconomic outlook. As of end-2018 the ratio of NPLs, net of provisions, to total loans had fallen to 4.3 per cent, more than halving with respect to mid-2015, when it had reached 10 per cent; in the same period, the value of net NPLs diminished from almost €200 billion to €90 billion. According to the plans requested from all banks by the supervisory authorities – the ECB for the significant institutions and the Bank of Italy for the others – the net NPL ratio should decline further, to around 3 per cent at the end of 2021.

Notwithstanding significant progress in Italy and in the rest of the euro area, much remains to be done. Four areas require special attention: banks’ profitability, where intermediaries need to tackle the difficult challenges posed by technology; the appropriate treatment of risks on the asset side of banks’ balance sheets; the management of higher funding costs (and the need to satisfy the new requirements on “bail-inable” liabilities); and the framework for managing banking crises, which has turned out to be rather complex in recent years.

Profitability. Despite recent improvements, the profitability of European banks remains weak: the average return on equity (around 6 per cent for the major intermediaries) is barely in line with the cost of equity in the euro area (and is somewhat lower in Germany and in Italy). The reasons are not only those related to the weak economic outlook.

Indeed, in Europe the role of banks in financing the economy has been diminishing for over a decade, making it difficult to increase revenues by expanding credit volumes. The transition towards a more market-based financial system is necessary in a modern economy. In this respect, in the euro area non-financial companies continue to be excessively dependent on bank credit. The ratio of bank loans to total financial debts is 36 per cent in the euro area (56 per cent in Italy), against 33 and 27 per cent in the United States and the United Kingdom. By contrast, the share of bonds is still about 10 percentage points lower than in the United Kingdom and 30 points less than in the United States. The market capitalisation of listed non-financial companies is also insufficient: at end-2017 it stood at 25 per cent of GDP in Italy and 60 per cent in Germany, against around 125 per cent in the United States.

In order to raise profitability banks must contain costs, diversify the sources of income, and find ways to significantly raise efficiency levels. The changes that are currently taking place in the financial sector pose novel challenges, but also provide fresh opportunities for well-managed financial intermediaries, among which banks can certainly be included. FinTech and Big Tech companies are offering new financial services and exploiting innovative technologies and massive amounts of data. Banks are responding by expanding the range of products provided through digital channels. It is a process that is bound to continue, as more intensive use of new technologies is necessary to compete effectively in the market and achieve adequate levels of profitability.

Risks on the assets side. We can draw a number of lessons from Italy’s double-dip recession and the consequences for its banking system of both the global financial crisis and the sovereign debt crisis. The first lesson concerns the treatment of impaired assets, an area where Italy’s experience has been especially important. Following the large-scale disposals of bad loans completed in recent years, in Italy more than half of banks’ total NPLs currently consist in exposures to firms whose difficulties may prove to be temporary (loans defined as “unlikely to pay”). Their management should aim at maximising the probability that these loans become performing again. On the one hand, significant benefits could be obtained if non-financial firms, where necessary with the collaboration of banks, resorted to specialised operators such as “turnaround funds”, able to provide the knowledge and resources to relaunch impaired enterprises. On the other hand, supervisory and regulatory authorities should consider how best to support these strategies, including through the adoption of new specific measures.

The current European regulation on minimum coverage of new NPLs, for instance, imposes increasing provisions on loans based only on the time that has elapsed since their classification as non-performing (known as “calendar provisioning”) and distinguishes only between guaranteed and non-guaranteed loans. The difference between bad and unlikely-to-pay loans is instead overlooked. There is therefore the risk of creating perverse incentives for banks to hold fire sales or liquidate NPLs, amplifying losses for both the banks and their customers and discouraging an active management of the credit relationship. This is an area in which regulation could be improved.

Another lesson regards the debate that has intensified in the aftermath of the sovereign debt crisis about the so-called “bank-sovereign nexus” (or “doom loop”).

Some have proposed that the prudential treatment of banks’ sovereign exposures be made more restrictive. These recommendations are built on the premise that a capital requirement or the assignment of a risk charge would break the link between banks and the State. But this link goes well beyond the holding of sovereign bonds. Indeed, it is the real economy that provides the most important connection: a restructuring of the public debt, for example, might be so disruptive that firms and households could be swept away by it, damaging the entire banking system regardless of its capitalisation or its holdings of government bonds. These proposals, moreover, overlook the stabilising role that banks, by acting as contrarian investors, can play on bond markets in periods of tension.

For these reasons, after almost three years of work and intensive discussions, at end-2017 the Basel Committee decided to maintain the current regulation.

The reduction in sovereign risk must ultimately come from sound government policy, as it cannot be obtained by simply shifting sovereign bonds from the balance sheet of one economic sector to that of another. This requires not only balanced and prudent fiscal policies but, most importantly, structural reforms aimed at regaining sustained GDP growth. The latter, in turn, would help make loans to households and firms more attractive, and reduce the share of government debt in banks’ balance sheets.

While there has been a heated debate about NPLs and sovereign bond holdings, much less attention has been paid on the risks deriving from the stock of illiquid and opaque assets in banks’ balance sheets, including the instruments classified as Level 2 and Level 3 assets in the fair value hierarchy. These risks are not easy to measure, but available estimates put them broadly on a par with those associated with NPLs. The Single Supervisory Mechanism has recently adopted some initiatives aimed at defining the most appropriate interventions to take adequate account of these risks. These efforts must be intensified.

The increase in the cost of funding is the third area that should not be neglected. In the coming years all large banks will have to raise a significant amount of “bail-inable” liabilities in order to fulfil the new global and European regulation on total loss-absorbing capacity (TLAC) and the minimum requirement for own funds and eligible liabilities (MREL). Raising funds may indeed pose a difficult challenge. Regulators and supervisors have to strike the right balance between the need to set appropriate criteria in order to stop taxpayers bearing the cost of future banking crises, on the one hand, and, on the other hand, the need to be sufficiently rigorous, with the risk, in persistently adverse market conditions for many intermediaries, of ultimately increasing the probability of future banking crises. The principle of bailing-in creditors makes sense but its concrete application requires care, especially in the current circumstances.

The management of banking crises. Italy’s experience has revealed serious drawbacks in the new European regulation governing small-and medium-size intermediaries which, under the new rules, cannot access the facilities embedded in the so-called “resolution” procedure. For these banks – the vast majority of the roughly 3,000 euro-area institutions – a piecemeal liquidation is the only option currently available in the absence of interested buyers. But liquidation threatens the continuity of the supply of financial services, may imply large losses for both creditors and debtors and, due to potential contagion effects, may pose serious risks to overall financial stability. More must be done in this field, and from this perspective the experience of the United States is especially important. The US Federal Deposit Insurance Corporation – a government entity whose reserves are made up of private funds, but which can activate a large line of credit with the US Treasury – has successfully managed the crisis of almost 500 financial intermediaries since 2007, minimising the harm for the economy at large. It is a lesson that merits careful consideration.

Conclusion

Let me conclude. As the economic prospects for the euro area are currently dominated by uncertainty, many analysts fear that should the situation degenerate into a full-blown recession or lead to deflation, monetary policy would be disarmed. This is a mistake. Central banks can rely on a wide range of instruments to support economic activity and, if necessary, the Eurosystem is ready to use them all in order to fulfil its mandate. But monetary policy should not remain alone in sustaining the economy. In the absence of a common European budget, threats to the growth or inflation outlook require greater coordination of national fiscal policies, while structural reforms would provide essential help by boosting productivity dynamics.

On the financial front, the most serious difficulties posed by the global financial crisis and the European sovereign debt crisis are now being overcome. In Italy there has been significant progress: NPLs have been halved, provisions have increased considerably and banks’ capitalisation has risen significantly, even though the legacy of the double-dip recession continues to weigh on some intermediaries. Further progress will depend not only on banks’ continued efforts to improve their balance sheets and lending strategies, but, above all, on their ability to rise to the challenges posed by the digital revolution, adopt strategies based on higher investment in new technologies, reduce operating costs and restructure their distribution network.

Today there are also risks associated with the incompleteness of the European construction, as we have witnessed since at least 2010. The standstill in the reform of economic governance, due to a mutual lack of trust among countries that developed during the crisis, is particularly dangerous at this stage, as the constraints on national policies have been rapidly made more stringent but the introduction of their supranational counterparts has been delayed.

In the economic and financial domain, it is clear what the most immediate steps should be: completing the banking union, rethinking the management of banking crises, and establishing a well-functioning capital markets union. But, at the same time, the reasons for discontent and criticism of European institutions also require a response. We must work to restore mutual trust, enhance security, and to create a sense of belonging. Italy must play its part by working hard and consistently to improve its economic environment and to make a credible commitment to a path of gradual but significant debt reduction. The hope is that, after the forthcoming European elections, the conditions will be established for resuming the reform agenda and pushing it forward with renewed vigour. Otherwise, as the song says, “the long and winding road will never disappear”.

Benoît Cœuré: Exchange of views with members of the French Parliament

May 16, 2019 by Reg Hub Leave a Comment Filed Under: Central Bank Annoucements, Central Bank News Tagged: CET1, EURO, European Central Bank, European Central Board, EuroStat, TLTRO-III

Mr Chairman,

Ladies and gentlemen of the National Assembly,

Thank you for inviting me here today. It is a pleasure to engage in an informal exchange of views with you today on the ECB’s monetary policy, and on policies to raise the economic potential of the euro area.

Allow me to start by briefly discussing the economic situation of the euro area.

The euro area economic outlook

In 2018 the euro area economy grew by 1.9%, compared with 2.4% in the previous year. This moderation in economic growth was mainly due to weaker global trade, as well as some temporary factors at both the domestic and global levels.

While there are signs that some of the idiosyncratic domestic factors dampening growth are fading, global headwinds continue to weigh on euro area growth developments. Moreover, the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets is leaving marks on economic sentiment. As a result, the slower growth momentum has extended into the current year.

At the same time, the euro area economy continues to exhibit a high level of capacity utilisation, and the unemployment rate has continued its downward trend. In March it stood at 7.7%, its lowest level since September 2008. Employment gains and rising wages continue to underpin the resilience of the domestic economy.

Looking ahead, the latest ECB staff projections from March 2019 put euro area annual real GDP growth at 1.1% in 2019, 1.6% in 2020 and 1.5% in 2021. At the same time, the persistence of uncertainties, mainly stemming from the global environment, continues to pose downside risks to the growth outlook.

Looking at inflation developments, euro area annual HICP inflation was 1.7% in April 2019. While measures of underlying inflation remain generally muted, the ongoing economic expansion, with tightening labour markets and rising wages, will support the further build-up of price pressures. The latest ECB staff projections foresee annual euro area headline inflation of 1.2% in 2019, 1.5% in 2020 and 1.6% in 2021.

Benoît Cœuré

The ECB’s monetary policy and its impact on the euro area economy

At its last monetary policy meeting on 10 April, the ECB Governing Council confirmed that an ample degree of monetary accommodation remains necessary to safeguard favourable financing conditions and support the economic expansion. This will ensure that inflation remains on a sustained path towards levels that are consistent with our inflation aim – a rate of inflation which is below, but close to, 2% over the medium term.

We continue to expect the key ECB interest rates to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation consistent with our inflation aim.

The Governing Council also confirmed its intention to continue reinvesting, in full, the principal payments from maturing securities purchased under the asset purchase programme. This will continue for an extended period of time past the date when we start raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

To preserve favourable bank lending conditions and the smooth transmission of monetary policy, and to support access to financing, in particular for small and medium-sized enterprises, the Governing Council decided in March to launch a new series of quarterly targeted longer-term refinancing operations (TLTRO-III). They will start in September 2019 and end in March 2021.

Significant monetary policy stimulus is thus being provided by our forward guidance on the key ECB interest rates, reinforced by the reinvestments of the sizeable stock of acquired assets and the new series of TLTROs. The Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation continues to move towards our inflation aim in a sustained manner.

The benefits of our monetary policy measures have been sizeable and tangible. Lending rates for euro area firms and households have declined to historic lows and converged across the region, and growth in bank lending volumes has significantly recovered since the beginning of 2014, thereby supporting investment and job creation.

According to today’s preliminary flash data release provided by Eurostat, there are now 9.2 million more people in employment in the euro area than there were at the end of 2014, just before the ECB announced its expanded asset purchase programme, and 10.8 million more than in the second quarter of 2013, when the number of people in work fell to its lowest point during the crisis.

Completing Economic and Monetary Union

In order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively to raising the longer-term growth potential of the euro area and reducing its vulnerabilities.

Sound fiscal and economic policies at the national level are the first line of defence to make the euro area stronger.

Economic reform needs to be substantially stepped up in euro area countries to increase resilience, reduce unemployment in a lasting way and boost productivity. The country-specific recommendations that the European Commission will publish next month will lay down the main reform priorities to be implemented.

On the fiscal side, the mildly expansionary euro area fiscal stance and the operation of automatic stabilisers are providing support to economic activity. Countries which have fiscal space should use it in a way that makes their economies stronger and more resilient for the future. At the same time, countries where government debt is high, including France, need to continue rebuilding fiscal buffers. All countries can and should reinforce their efforts to achieve a more growth-friendly composition of public finances.

The euro’s benefits, however, will not fully materialise for as long as the architecture of Economic and Monetary Union (EMU) remains incomplete.

Material progress has been achieved in recent years. The European Stability Mechanism has become established as an important safeguard and the reforms currently being discussed will provide it with new instruments to better protect Member States, keeping in mind the longer-term objective of making it a Community institution accountable to the European Parliament.

The creation of banking union, meanwhile, has considerably strengthened the resilience of the euro area financial sector and, together with the Bank Recovery and Resolution Directive, has created instruments to combat banking crises in a way that is swifter and fairer than in the past. Banks directly supervised by the ECB have built up strong capital positions in recent years, with a Common Equity Tier 1 (CET1) ratio of 14.3% at the end of 2018 compared with 11.3% at the end of 2014, and have substantially reduced non-performing loan ratios. These are important steps forward as euro area firms rely to a very large extent on bank credit to finance growth and investment. Let us also keep in mind that these measures build on the achievements of ten years of financial regulatory reform, which should not be reversed.

So what more should be done at the European level?

First, we need to further strengthen the ability of the financial sector to contribute to economic stabilisation. Increased financial integration is the key competitive advantage the euro area should leverage here. During the crisis, integration in the euro area reversed and it has only gradually recovered over the past years. The creditworthiness of banks remains linked to that of national governments. Cross-border investment is not a significant buffer against economic shocks, as it is across US states. The euro area still lacks genuinely integrated capital markets, which hinders the efficient investment of European savings as well as the use of the euro as an international currency.

Recent legislative steps are commendable but they do not measure up to the initial ambition of the capital markets union project. Brexit will further accentuate the need to develop and integrate the EU’s capital markets to prepare for the likelihood that the City of London will play a more reduced role in the future as a hub of European savings.

Second, we need to ensure that the EU fiscal framework delivers on its main objective: preserving fiscal sustainability while allowing room for automatic fiscal stabilisation. This is essential to help stabilise the euro area in the face of large shocks without having to rely excessively on the ECB’s policies.

Sound national fiscal policies should remain the basis. Simpler and more credible fiscal rules would help ensure that euro area countries build adequate fiscal buffers in good times so that fiscal policy can be used in bad times. The euro area budgetary instrument currently under discussion is a welcome step to support competitiveness and convergence, but it is not designed to fulfil a stabilisation function. In order to play that role, it would therefore have to evolve further in the future.

In the longer term, the creation of a common euro area safe asset, if done in a way that does not undermine incentives for sound national fiscal policies, could have a beneficial impact on the conduct of the ECB’s monetary policy, help strengthen the international role of the euro and contribute to completing EMU.

Conclusions

Let me conclude.

The euro, as it marks its 20th anniversary, enjoys broad support among European citizens, with three in four people in the euro area in favour of the single currency. Its growing popularity is testimony to the fact that people have trust in the currency and in the ECB’s strong commitment to price stability, which supports investment and job creation.

To preserve this trust, and to deliver on the promise we made when the euro was introduced, namely that it would bring prosperity and opportunities, we need to step up our efforts at both national and euro area level to strengthen the architecture of the single currency. Many of the failings that caused and perpetuated the crisis remain unresolved.

At a time of heightened global uncertainty, completing the euro area’s architecture is also necessary for Europe to be able to achieve its other objectives. Europeans won’t be able to foster cooperation on security and defence, or to speak with one voice on international affairs, or to complete the Single Market if they repeatedly have to tackle economic crises which are largely of their own making. A sound and sustainable euro area will help redirect political capital where it is most needed.

Ensuring the political relevance and legitimacy of this process is in the hands of the European Parliament and national parliaments. I very much look forward to today’s discussion.

Thank you.

Luis de Guindos: Challenges for bank profitability

May 7, 2019 by Reg Hub Leave a Comment Filed Under: Central Bank Annoucements, Central Bank News Tagged: EURO, European Central Bank, European Central Board, non performing loans, NPL, risk premia

Introduction

Sustained economic expansion over the past six years and greater banking sector resilience have supported financial stability within the euro area.

But the recent softening of growth prospects heightens risks. The financial stability environment has become more challenging than it was a year ago. The risks that have been with us for some time now – a possible disorderly increase in risk premia, debt sustainability concerns, low bank profitability and imbalances in the non-bank financial sector – are still present. But they are no longer being mitigated by an improving macroeconomic outlook.

Indeed, the deteriorating macro outlook renders some of these risks more acute. In particular, it may reawaken concerns over debt sustainability and worsen the outlook for bank profitability. Debt sustainability concerns could drive up sovereign bond spreads. In turn higher spreads generate losses on bond portfolios and higher market-based funding costs for financial institutions.

Bank profitability tends to go hand-in-hand with economic activity. Slower growth prospects may dent bank profitability through a reduction in lending activity and a possible increase in credit impairments.

Moreover, the ongoing political uncertainties – including trade disputes – and the softer economic momentum may trigger volatility in asset prices. And if a sudden, disorderly increase in risk premia were to materialise, it could further elevate banks’ funding costs.

Against this backdrop, I am going to focus my remarks today on bank profitability. Returning banks to sustainable rates of profitability is a key step towards ensuring that the sector remains resilient, particularly in the face of slowing economic momentum and the potential for market distress.

Euro area banks have certainly improved their profitability in recent years. Their return on equity reached 6% at the end of 2018, up from 3% two years earlier. But their profitability remains below their long-run cost of capital, which most banks estimate to be in the range of 8-10%.¹Low profitability prospects translate into low bank valuations, as observed in price-to-book ratios well below one, hindering the ability to raise capital, where needed.

European bank profitability has been structurally weak since well before unconventional monetary policy measures were introduced. Broadly speaking, the sources of that weakness can be divided into cyclical factors, cost inefficiencies and competitive challenges arising from outside the sector. Before discussing these sources, let me begin by reminding you why bank profitability is important.

Why bank profitability matters

Clearly, bank profitability matters for financial stability. Profits are the first line of defence against losses from credit impairment. Retained earnings are an important source of capital, enabling banks to build strong buffers to absorb additional losses. Those buffers ensure that banks are able to provide financial services to euro area households and businesses, even in the face of adverse developments, thereby smoothing rather than amplifying the impact of negative shocks on the real economy.

Banks with poor structural profitability can face higher funding costs and may be tempted to take on more risk.² Within the euro area, weak banks are more likely than healthy banks to be connected to unprofitable firms.³ This reduces the flow of lending to profitable firms that need funding to invest and grow. The resultant misallocation of capital⁴ towards unproductive businesses weighs on long-run economic growth.⁵

Low bank profitability can also matter for monetary policy by impairing the accumulation of bank capital over time. Thinly capitalised banks stymie the ability of monetary policy to stimulate economic activity in downturns. Their capacity to lower the interest rates they charge their customers and increase the volume of lending to the real economy is constrained.⁶ This limits the effectiveness of an important transmission channel of monetary accommodation in the euro area, which relies on bank lending supporting consumption and investment.

As the crisis showed, dislocations in the banking sector can deepen recessions and seriously impair the smooth transmission of monetary policy across the euro area. That risk remains today. We recently carried out what we call a macroprudential stress test, which assesses this amplification of shocks using a micro-macro model that feeds back individual bank reactions into macroeconomic outcomes. On the basis of the 2018 European-wide stress test data, we estimate that the banks’ behavioural reaction to the adverse scenario exacerbates the fall in GDP by a further 1.6% with respect to the initial shock, which itself further depletes banks’ capital.⁷

Cyclical factors

Given that important link between bank behaviour and the cycle, let me turn to the cyclical factors affecting bank profitability in the euro area.

The economic expansion continued through 2018, although with a sizeable reduction in the pace of growth relative to the previous year. Since the trough, the number of people in employment has increased by over 10 million. While the data since the end of 2018 have been weak – notably in manufacturing and the external sector – the economic fundamentals remain in place to support continued expansion.

The economic expansion and employment growth have supported bank profitability. Loan growth has been robust in recent years, with higher volumes helping to mitigate margin compression.⁸

The stock of non-performing loans (NPLs) has been substantially reduced. Outstanding NPLs fell by €142 billion in 2018 and the aggregate ratio dropped to 3.8% of significant banks’ loans at the end of 2018, from 7% at the end of 2015.

NPLs represent a double drag on bank profitability. First, NPLs have to be recognised and provisioned for, reducing current profitability. Indeed, the major driver of the increase in bank profitability over the past two years has been the smaller flow of new impairments. But even when fully provisioned, NPLs hamper profitability by tying up scarce capital without providing returns, absorbing operational capacity and incurring legal and administrative costs.

While NPL ratios have improved over the course of the expansion, overall revenue growth remains subdued across the banking sector. Aggregate net interest income as a share of equity fell marginally between 2015 and 2018, although it is still higher than in countries such as the United Kingdom that have not had negative policy rates.

Yet a number of euro area banks have successfully delivered robust earnings in recent years. A recent study by the ECB highlighted the differences between this group and the remainder of significant euro area banks.⁹ The median of these best performers managed to lift its return on equity by 3.6 percentage points in 2014-17 relative to 2009-13. By contrast, the median profitability for other significant banks was essentially unchanged.

Between those periods, the best performers managed to keep net interest income growing roughly in line with costs, whereas the other banks generally witnessed cost growth outpacing growth in net interest income. Moreover, the best performers managed to increase net fee and commission income by more than half between 2009 and 2017, relative to the less than 10% growth managed by the remainder.

Developing sustainable revenue streams beyond net interest income – such as fee and commission income – remains vital in order to buttress profitability in the coming years. The low interest rate environment is with us for the foreseeable future and is caused in large part by durable structural factors.¹⁰ The interest rate below which monetary policy is accommodative has fallen in the euro area, as is the case in much of the developed world.¹¹ Even once monetary policy normalises, interest rates are likely to remain below levels that were common in previous decades.

Cost inefficiencies

The second source of low profitability for euro area banks is enduring cost inefficiencies. Cost-to-income ratios remain high in the euro area relative to international peers. The euro area has too many banks, too many branches and too many bankers. The aggregate cost-to-income ratio of euro area banks reached 66% in 2018, up from 62% in 2010, as the dip in revenues was not offset by cost containment. While similar to that of peers in Japan and the United Kingdom, it is above the ratio typical for US banks, and substantially above the ratio of roughly 50% for Nordic banks.

Reducing costs requires grasping the opportunities offered by technology. Banks have been able to make greater reductions in the density of the branch network in countries where the take-up of online banking is higher. The number of branches in the Netherlands and the Baltic states has halved since 2008, but progress in other countries has been much more limited. Technology can also help enhance operational efficiency by improving processes for loan origination and servicing and enable workloads to be shared better across employees in multiple locations.

That requires substantial investment in information technology (IT). The best performing euro area banks I mentioned earlier increased their IT spending by around 60% between 2009 and 2017, whereas the remaining banks increased theirs by just 10%. Such investment is expensive, but has proven worthwhile. The cost-to-income ratio for the median of the best performers fell by 5.5 percentage points, whereas that for the median of the other banks increased by 3.1 percentage points.¹²

The other source of higher costs for euro area banks is the adjustment to a suite of post-crisis regulation. This includes holding greater amounts of high-quality capital and debt instruments that can be “bailed in” should resolution become necessary. It is also more difficult now to increase measured profitability by increasing leverage. And whilst international requirements on loss absorption only apply to the most systemic banks – so-called G-SIBs – and the Basel standards typically apply to internationally active banks, in the euro area such requirements are applied to all banks. Of course, such regulations have been put in place in recognition of the significant public costs borne throughout the banking crisis. And regulation cannot be seen as the main driver of costs – Nordic banks operate under the same regulatory framework and have been able to attain a high rate of profitability.

But one key element in regulation worth noting is the lack of waivers for liquidity and capital in the euro area. As a result, euro area cross-border banking groups potentially face higher costs than interstate banking groups in the United States.

This recourse to ring fencing takes a narrow national perspective. At present, national deposit insurance schemes will be drawn upon should depositors need to be compensated during bank resolution. Hence the desire of national authorities to ensure that each national subsidiary is sufficiently capitalised and has adequate liquidity. Completing banking union, including the introduction of a European deposit insurance scheme and the removal of the remaining national options and discretions, would help ensure that the costs of resolution are equitably shared. Meanwhile, it would enable banks to use liquidity and capital efficiently at the euro area level.

Competition from outside the sector

The final challenge for bank profitability comes from increasing competition from outside the sector, in particular from financial technology companies (fintech) and non-bank financial companies.

Lightly regulated fintech companies have begun to encroach into the realm of payment and settlement systems. More than 60% of incumbents view fintechs as a threat to their income from these activities.¹³ Given the greater desire by consumers for instant payments and the use of mobile payments, investment in IT is vital to secure future revenue streams.

Banks also face increasing competition in the provision of credit. Total assets of non-bank financial intermediaries doubled in the euro area between 2008 and 2017, whereas total banking sector assets remained broadly unchanged. The growth is particularly marked in the investment fund sector. Around 28% of euro area non-financial company debt issuances are held by euro area investment funds, compared with 18% pre-crisis.

The greater provision of market-based credit is welcome, and indeed the capital markets union agenda has been put in place with this aim in mind. But banks will need to carefully consider how to adjust their business models to accommodate this greater degree of competition. It certainly increases the urgency to improve efficiency in credit provision.

Conclusion

Let me conclude.

The structurally low profitability of the euro area banking sector remains a concern for financial stability and for monetary policy.

Return on equity below the cost of capital is unsustainable in the long run. The causes of low profitability are for the most part structural and hence require structural solutions. Successful implementation of long-run profitable business plans is essential.

Consolidation remains necessary.

There are a number of benefits arising from cross-border consolidation. Cross-border holdings of deposits and loans can help bolster economic resilience within the euro area by helping to smooth shocks through income sharing. Such private sector risk-sharing channels play an important role in smoothing shocks in the United States, but currently smooth a much smaller share in the euro area.¹⁴

Moreover, it can provide benefits for the banks themselves. In general, more geographically diversified banks have displayed stronger revenue performance in recent years.¹⁵

But there are a number of national banking sectors that would also benefit from consolidation within national borders, allowing for greater cost synergies and rationalisation of branch networks. Such consolidation would permit small and medium-sized banks to attain sufficient scale to undertake the IT investment necessary to meet the challenges of the digital era.

While both national and cross-border consolidation options are potentially viable, the key consideration for financial stability is that the combined entity should be able to successfully execute the merger, resulting in a bank that can sustain profitability in the long run.

Volatility Returns as US Plans To Raise Tariffs Due to China Renege

May 7, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, EURO, FX trading, GBP-USD, USD/CNH, USD/JPY

Summary: Markets re-discovered volatility following Donald Trump’s tweets yesterday which ended the tariff truce with China. China’s Foreign Ministry said they would still send a trade delegation to Washington. Risk assets (stocks, commodities, the Aussie and USD/JPY) pared losses. Just at the bell, US top trade negotiator, Robert Lighthizer accused Beijing of reneging on commitments it made during negotiations. And that the US plans to raise tariffs on Chinese goods. Volatility returned, stocks, yields and risk assets fell. China’s Offshore Yuan plummeted, USD/CNH closed 6.7910 from 6.7350, it’s weakest since January. The Dollar Index (USD/DXY) ended little-changed at 97.557 (97.48). USD/JPY rallied back from near 3-week lows to 110.72 (111.10 yesterday). The Australian Dollar extended its fall to 0.6989 (0.7023), down 0.4% while the Kiwi fell to 0.6608 (0.6645). The Dollar was higher against the Emerging Market currencies. USD/ZAR soared 1.73% to 14.4425 (14.3300). USD/TRY (Dollar – Turkish Lira) rallied 1.97% to 6.0800 ((5.9800 yesterday). Bond yields are lower. The US 10-year Treasury yield fell 6 basis points to 2.47%. Australia’s 10-year bond yield dropped to 1.73% from 1.79%. Stocks fell back but clawed back from their lows. The DOW closed at 26,290 (26,525 yesterday) while the S&P 500 was at 2,932 (2,945).

AUD/USD – The Australian Dollar remained under pressure with the market’s risk-off stance and today’s RBA rate decision. The line ball call saw AUD/USD close at 0.6989, under the 0.780 cent psychological support level. AUD/USD traded to an overnight low at 0.69627.

DAILY FX USD JPY 1 D Chart – 07 May 2019

USD/JPY – Risk aversion continued to favour the Yen. The Dollar slid to 110.282, near 3-week lows before settling at 110.72.
EUR/USD – the Euro was little-changed, finishing around 1.1200 (1.1202 yesterday). Euro area Services PMI’s were in line with expectations while Retail Sales saw a small improvement. EUR/USD traded to an overnight low of 1.11642. The deterioration in trade negotiations between Beijing and Washington puts pressure on the EU, who have their trade issues with the US.

On the Lookout: Welcome back volatility! Markets were lulled into a false sense of security with majority of participants expecting that a trade settlement between the US and China was a gimme. President Trump and his trade team are not happy with China’s backpedalling on some of its commitments and responded.
Australia’s central bank (RBA) will announce its monetary policy decision in the most anticipated interest rate verdict in recent years. Almost half of the analysts polled by Bloomberg expect the RBA to cut rates by 0.25% to 1.25% (1.5%) for the first time since August 2016. Australia’s economic growth has slowed markedly since the second half of last year while inflationary pressures weakened.
Today sees Australian April Retail Sales and Trade Balance data before the RBA rate decision. German Factory Orders and the EU Economic forecasts are top of the European reports. The US JOLT Job Openings round off the day’s economic data.

Trading Perspective: The Dollar remains supported but within a range overall against most of its major Rivals. The market’s risk-off stance and central bank meetings this week will keep the pressure on the Aussie, Kiwi and EM Asian currencies. Asian central banks from Malaysia, Thailand and Philippines meet on policy this week. Subdued inflation in Malaysia and the Philippines could see rate cuts from both countries central banks. The Bank of Thailand is more likely to stay on hold. Renewed drama on trade between the US and China provides added threat to global economic risks.
In Europe, local issues will have more impact on their currencies. Euro area composite Services PMI’s were mostly in line with forecasts. Progress on Brexit talks between the UK’s main two parties remain elusive.

INVESTING.COM AUD USD Hourly Chart – 07 MAY 2019

AUD/USD – Half of the market are expecting the RBA to cut its Official Cash rate to 1.25% from 1.5% today. Me thinks not. The Australian Dollar made a decent recovery overnight from the lows triggered at 0.6962 following Trump’s tweet yesterday to 0.6990 at the close. The 0.6960 support level is immediate and should hold regardless of what the RBA’s decision is. The Aussies current level reflects the market expectations. Immediate resistance lies at 0.7005 followed by 0.7030. Expect a range initially between 0.6960 and 0.7010.
USD/JPY – The Dollar will stay on the defensive against the Yen. US 10-year yields fell 6 basis points to 2.47%. Japan’s 10-year JGB yield was unchanged at -0.06%. The combination of risk-aversion and a narrowing differential between US and Japans yields favours a continuation of USD/JPY’s downtrend. USD/JPY has immediate resistance at 111.00 (overnight high 110.99). Immediate support can be found at 110.50 followed by 110.20. Look to sell rallies with a likely range today of 110.30-111.00.
EUR/USD – The Euro should continue to trade within its overnight range for today. Let’s not forget the speculative Euro short bets are at multi-year highs. EUR/USD has immediate resistance at 112.10 (overnight high 1.1209). Immediate support can be found at 1.1170 followed by 1.1140. Look to buy dips with a likely range today of 1.1170-1.1240.

Happy trading all.

Powell Stays “Patient”, Dollar Edges Higher, Kiwi Tumbles

May 2, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, BOE, Brexit, EUR-USD, EURO, FX, FX trading, GBP-USD, golden week, Jerome H. Powell, USD/DXY, USD/JPY

Summary: Federal Reserve Chair Jerome Powell chose to remain patient on policy, with no bias to hike or cut rates. Powell said that “job growth was stronger than expected while inflation has been somewhat weaker”, which was what the markets anticipated. The Fed kept interest rates unchanged following its two-day meeting. At the end of trading, the Dollar Index (USD/DXY), a measure of the Greenback’s strength against six of its rivals, edged 0.11% higher at 97.62. The Kiwi ended up worst performing currency at 0.6625 (0.6675) after a worse-than-expected employment report, dragging the Australian Dollar lower to 0.7018 (0.7050). The Euro slipped 0.12% to 1.1202 (1.1216) while Sterling kept its firm tone to close at 1.3055 (1.3037), up 0.13%. The Dollar was little-changed against the Yen at 111.35 (111.40). Currency volatility remained near 5-year lows despite Tokyo’s absence for their Golden Week holidays.

FOREX FACTORY – US APRIL ISM Manufacturing Chart – 02 MAY 2019

Wall Street stocks slumped. The Dow closed at 26,380 (26,658). The S&P 500 fell to 2,916 (2,953).
The yield on the benchmark US 10-year bond closed flat at 2.5%. Two-year yields rose to 2.3%.
Economic releases were mixed. US ADP Employment (private sector) surged to 275,000 jobs added in April from a revised gain of 151,000. Manufacturing activity slumped to a 2.1/2 year low with April’s ISM Index down to 52.8 from 55.3 in March.

EUR/USD – the Euro ended with modest losses at 1.1202 from 1.1216 yesterday. Earlier in the day, the Single currency rallied to a high of 1.12647 on short-covering. Euro area Manufacturing PMI’s are released later today.
GBP/USD – The Pound stayed steady ahead of tonight’s Bank of England interest rate policy meeting. Overnight Sterling climbed to a high of 1.31025 as PM May comments on signs of progress in Brexit talks between her government and opposition Labour party. GBP/USD dropped back to finish at 1.3055.
AUD/USD – The Australian Dollar slumped to an overnight low of 0.7007 before settling at 0.7018 at the New York close. March HIA New Home Sales figures are due later this morning.
USD/JPY – the Dollar ended little-changed against the Japanese Yen at 111.36 (111.43 yesterday). With stocks lower and no-change in the US 10-year bond yield, USD/JPY struggled to gain ground despite Powell’s playing down a Fed interest rate cut.

On the Lookout: While Fed Chair Jerome Powell played down an interest rate cut, markets are not convinced. The benchmark US 10-year bond yield stayed stuck at 2.5%, near one-week lows. Implied interest rate futures traders see a 55% chance of a rate cut this year, down from 66% yesterday. Which is still above 50%.
Following the stronger-than-expected rise in private job employment, tomorrow’s Payrolls report will be closely monitored. Manufacturing in the US continues to suffer. On Tuesday, Chicago’s PMI slumped to 52.6 in April from March’s 58.7. Last night the Institute of Supply Management reported its barometer for the US factory sector plummeted to 52.8 in April from the previous months 55.3.
Today data releases begin with Australia’s HIA New Home Sales for April. German Retail Sales (April) start off the data from Europe. Manufacturing PMI reports from the Euro area, including Switzerland follow. UK Construction PMI report then precedes the Bank of England’s policy meeting. The BOE is not expected to change interest rates but could provide more clarity on Brexit.

Trading Perspective: While the Dollar did stabilise following Powell’s speech, it failed to gain fresh ground. The two-year bond yield climbed 3 basis points to 2.30% but the benchmark 10-year yield was flat at 2.5%. Without fresh yield support the Dollar will struggle to move higher.
The rally in the Dollar’s Rivals earlier this week was mainly due to position adjustments, with traders paring their USD long bets against respective rivals. Speculative market positioning is still long US Dollars.

EUR/USD – The Euro stabilised to close just above the 1.1200 area. Markets will keep a close eye on the Euro area PMI reports later today to see whether April’s concerns of a slowdown in the European economy are overdone. Tuesday’s Euro zone reports allayed some of those concerns. EUR/USD has immediate resistance at 1.1230 followed by 1.1270. Immediate support can be found at 1.1190 followed by 1.1160. Look for a likely range of 1.1190-1.1240 today with the preference to buy Euro dips.

Daily FX GBP USD 1H Chart – 02 MAY 2019

GBP/USD – Sterling ripped higher to 1.31025 on optimism from PM May’s positive comments on Brexit talks between the British government and leading opposition Labour party. Markets will be closely watching BOE Governor Mark Carney’s press conference following their interest rate policy meeting. While the BOE is not expected to change interest rates, they may provide clarity on Brexit. GBP/USD has immediate resistance at 1.3070 and 1.3110. Immediate support can be found at 1.3030 and 1.3000. Look for a likely trading range today of 1.3010-1.3110. Keep trading the range on this puppy.
AUD/USD – The Aussie held 7-week lows just above 0.70 cents. The market keeps trying to sell it lower but hits a rock near 0.70 cents. AUD/USD traded to an overnight low at 0.7007 before grinding back in true Battler fashion to 0.7015. AUD/USD has immediate support at 0.7000 followed by 0.6970. Immediate resistance can be found at 0.7040 and 0.7060 (overnight high 0.70611). Look for a likely trading range today of 0.7005-0.7065. Prefer to buy dips.

Happy trading all.

Upbeat Data Lifts Euro, Pound Climbs, Dollar Extends Fall

May 1, 2019 by Michael Moran Leave a Comment Filed Under: Market News - Asia Open Tagged: AUD/USD, Dollar Extends Fall, EUR-USD, EURO, FOMC statement, GBP-USD, USD/JPY

Summary: Upbeat Eurozone Q1 GDP and Jobless data boosted the Euro to 3 weeks highs at 1.1229 before settling at 1.1215. Economic growth in the Euro area accelerated 0.4% (against f/c 0.3%) in the first quarter of 2019. The Unemployment rate fell to 7.7%, the lowest in over a decade. Caution ahead of tomorrow’s Federal Reserve meeting pushed the US Dollar lower against most of its rivals. Traders continued to pare their long Dollar positions, currently at multi-year highs. The British Pound soared above 1.30, settling at 1.3037, up 0.75% ending as best performing currency. The improved tone of Brexit talks between the UK government and Opposition Labour Party boosted Sterling. USD/JPY fell 0.24% to 111.45 while the Australian Dollar was little-changed at 0.7048 after a weaker than expected Chinese Caixin PMI report. The New Zealand Dollar dipped after a weaker-than-expected NZ Labour report. US data was mixed. The US Conference Board Consumer Confidence and Home Sales beat expectations but Chicago’s PMI (factory activity) fell to its weakest since January 2017. US bond yields fell back with the 10-year yield finishing at 2.5%, 3 basis points down. Wall Street stocks ended with modest gains.

FOREX FACTORY EUROZONE UNEMPLOYMENT RATE (APRIL) – 01 MAY 2019

EUR/USD – The Single Currency extended its rally, breaking above the 1.12 resistance level to finish at 1.1217, 3-week highs. The data dispelled some pessimism over the Euro area economy which regained some lost momentum.
GBP/USD – Optimism on Brexit talks between PM May’s Government and the opposition after reports of progress lifted the Pound above the 1.30 resistance to 1.3037. The overall weaker Greenback also supported Sterling. Just last week the British currency slumped to 1.2868 on the back of a stronger Greenback and Brexit pessimism.
USD/JPY – the Dollar slipped against the Yen in thin volume trading to 111.237 overnight and over 3-week lows before settling at 111.45 at the New York close. The 3-basis point fall in the US 10-year bond yield to 2.50% weighed on USD/JPY.
AUD/USD – The Australian Dollar closed little-changed at 0.7052 (0.7055 yesterday) after rallying to 0.7069 overnight. China’s Caixin Manufacturing PMI fell to 50.2 from 50.5 and a forecast of 50.7 in April. This constrained the Aussie from climbing against the overall weaker Greenback.

On the Lookout: Yesterday, currency volatility picked up due to low volume trade. The Japanese holiday and month-end factors contributed to the thin conditions. Today sees China and most European nations celebrating Labour Day with a public holiday. Expect similar conditions today.
Its all about the Fed meeting and FOMC Statement. Analysts and the markets are not expecting any policy changes from the Fed at the conclusion of their two-day meeting (4.30 am Thursday morning in Sydney).
Data releases today include Japanese Final Manufacturing PMI, UK Nationwide House Price Index, Manufacturing PMI, Net Lending to Individuals and Mortgage Approvals.
The US reports its ADP Non-Farms Employment Change (Private Sector), ISM Manufacturing PMI and Construction Spending.

Trading Perspective: The Dollar’s fall has mostly been the result of traders adjusting positions ahead of the Fed meeting and Jobs report on Friday. We highlighted the fact that net total speculative Dollar bets are at their biggest since December 2015. Most of these USD longs are against the Euro, Yen and Australian Dollar. Analysts don’t expect US policymakers to make any changes to the FOMC statement on policy so soon. The market’s eyes and ears will be on Fed Chair Jerome Powell’s assessment of recent economic developments, which are solid economic growth and slowing inflation. This could be a market mover. If Powell recognises the improvements, this would be Dollar supportive. Market positioning is still long of Greenbacks and a neutral FOMC stance could see further Dollar corrective moves lower. Conditions will be thin, so volatility could pick up. Happy days!

Reuters – Speculative Net Dollar Positioning – 01 May 2019

EUR/USD –The Single currency rallied to 3-week highs at 1.12289 before settling at 1.1217, above the 1.1200 immediate support. The Eurozone economy gained back some momentum on the upbeat GDP and Unemployment report. Tomorrow sees crucial Euro area Manufacturing PMI’s with the Eurozone CPI report on Friday. The next support level for the Euro is at 1.1180. Immediate resistance can be found at 1.1230 and 1.1260. Keep in mind that net speculative Euro short bets (-EUR 105,400) are at multi-year highs. Likely range today 1.1190-1.1240. Still prefer to buy dips.

Trading View FXCM EUR USD Chart – 01 MAY 2019

USD/JPY – The Dollar’s fall against the Yen was cushioned by the uncertainty ahead of the conclusion of the Fed meeting and FOMC statement. USD/JPY dropped to an overnight and 3-week low of 111.237 before rallying to close at 111.45. Immediate resistance lies at 111.70 followed by 112.00. Immediate support can be found at 111.20 followed by 110.90. The latest COT/CFTC report saw net short JPY bets increase to -JPY 94,400 from the previous -JPY 87,100 contracts. Watch the US 10-year yield. Look to sell rallies with a likely range today of 111.10-111.90 today.
GBP/USD – Sterling outperformed its G10 peers, climbing 0.75% to 1.3037 at the close. The overnight high traded was 1.30487, 2-week highs. The Pound’s rise was due to a combination of optimism on Brexit talks between the UK government and opposition party and an overall weaker US Dollar. Market positioning on the Pound is roughly square (-GBP 1,800). Immediate support lies at 1.30 followed by 1.2970. Immediate resistance can be found at 1.3050 followed by 1.3080. Look for a likely trading range of 1.2970-1.3070. Just trade the range shag on this one.
AUD/USD – The Aussie failed to gain from the Greenback’s weakness after weaker-than-expected Chinese Manufacturing PMI which printed at 50.2 from a previous 50.5. While it was lower, its still above the expansion 50 level. Speculative Aussie short bets increased to -AUD 50,400 contracts from the previous week’s -AUD 46,900 according to the latest COT/CFTC report (week ended 23 April). Immediate support for the Aussie Battler lies at 0.7030 followed by 0.7010. Immediate resistance can be found at 0.7070 and 0.7100. Look to buy dips with a likely range of 0.7035-0.7085 today.

Happy trading all.

Growth Woes on Dovish Cues from BOJ & BOC Influence Dovish Price Action

April 26, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: BOJ, Crude Oil, equities, EUR-USD, EURO, Japanese yen, USD/CAD

Dovish cues from major central banks, disappointing macro data updates from key economies hurt investor sentiment resulting in bearish price action in global market.

Summary: Both Equities and Forex assets are seeing dovish price action in global market today. Dovish cues from Bank of Canada & Bank of Japan’s outlook statements, declining crude oil price action and disappointing macro data updates from major European and Asian markets served as factor hurting investor risk appetite in the broad market. The outlook of Bank of Canada took a 180 degree turn towards dovish side as the central bank abandoned its hawkish stance towards future rate hikes and announced downgrade of growth forecast for Canada for the year ahead citing global economic slowdown and uncertainties surrounding crude oil market as the reason. Similarly, Bank of Japan also gave dovish signs in their economic outlook and forward guidance update citing concerns of global economic slowdown. These factors increased investor concern surrounding global growth which is the main driving force behind today’s bearish price rally. Meanwhile, US Dollar gained a strong bullish boost which has capped gains in major forex pairs resulting in range bound price action in forex market.

Precious Metals: Precious metals are seeing divided price action in global market today. While strong dollar pressures Silver into trading in red, concerns of global economic slowdown has helped gold trade positive. Despite strong dollar capping gold’s gains, the yellow metal has held firm in positive territory across both Asian and European market hours.

Crude Oil: Post slight decline in previous session, both major crude oil benchmarks are trading positive in global market today. Brent crude oil price rose above $75 handle for first time in nearly six months while WTI crude oil price is back above $66 handle where price action has remained steady across European market hours.

USD/JPY: The pair has been on path of steady decline since late yesterday’s trading session. Risk averse investor sentiment which dominated global market provides strong fundamental support to Japanese Yen which fueled the pair’s decline. Further, dovish outlook from Bank of Japan’s interest rate decision update today also supported demand for Yen resulting in downward price action holding steady across today’s trading session.

On The Lookout: Brexit talks are back in focus once again as headlines indicate that cross party talks relating to Brexit deal seems to be on verge of fallout. Despite, UK being granted yet another deadline extension there seems to be a clear lack of motivation from lawmakers into working out a deal for moving forward. Disappointing macro data hinting at Euro area economic growth slowing down and increasing hard Brexit possibilities weigh down investor sentiment in European markets. Major bond yields are seeing sharp declines adding strength and support to dovish cues in market. This suggests increased possibility of dovish price action in European market in immediate and near future trading session. Most of major US corporate earnings released yesterday saw disappointing results causing mixed activity in US Wall Street. US earnings reports expected today are from T-Mobile US, Starbucks, VeriSign and Ford Motors. On the release front, Investors await US Durable goods orders data, Initial jobless Claims data and core durable goods orders data ahead of Wall Street opening and US Treasury department report and Tokyo CPI in Pacific-Asian market hours.

Trading Perspective: Influence from earnings updates is likely to dominate price action in US Wall Street while Forex market is likely to see major pairs trade range bound with bearish bias having breached critical support levels earlier this week.

EUR/USD: The pair yesterday breached yearly lows as predicted and continued its steady downward price action. The pair continues to scale new 2019 lows with price near 22 month lows well below mid-1.11 handle. Dovish European macro data updates continue to fuel Euro’s declines while USD’s strength in broad market also puts pressure on Euro bulls. Investors await macro data updates for short term directional cues ahead of tomorrow’s US GDP update.

GBP/USD: The pair is on its fourth consecutive session of bearish decline as headlines hint at fallout in cross party Brexit talks which suggests key decisions relating to Brexit could be delayed further. Meanwhile, growing strength of USD also adds pressure to British Pound pushing the pair towards 10-week lows. Investors await further headlines on Brexit talks for directional cues ahead of which macro data updates provide short term profit opportunities.

USD/CAD: The pair holds steady above 1.35 handle but has declined from weekly highs as crude oil price rebound in the global market. Despite USD remaining strong in the global market, disappointing earnings updates during yesterday’s US market hours and US government bond yields seeing dovish activity continue to limit further upside price action. Ahead of tomorrow’s US GDP update the pair is likely to continue trade rangebound within this week’s price range limit.

G10 FX Volatility Stays Depressed, Dollar Ends Flat

April 18, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, EURO, euro area, Eurozone, G10 markets, GBP-USD, RBA, USD/CHF, USD/CNH, USD/JPY, USD/TRY

Summary: The Dollar Index (USD/DXY) closed little-changed (97.011) for the 3^rd day running. G10 FX volatility stayed depressed, at 5-year lows. China’s economy grew at 6.4% in Q1, slightly higher than analyst’s forecast of 6.3%. Chinese Industrial production and Retail Sales also beat expectations, but markets were cautious after recent slowdowns in import growth and automobile sales. The Australian Dollar jumped to a two-month high at 0.7206 before easing to close flat at 0.7173. Even the British Pound failed to excite following a softer inflation report. Sterling traded in a relatively tight 1.3029-1.3067 range, closing at 1.3040 (1.3047 yesterday). The Euro was modestly higher at 1.1290 from 1.1283 while USD/JPY settled at 112.05 (112.02). USD/CHF was the exception, extending gains to 1.0106 (1.0080), up 0.25%. Emerging Market currencies which have earned Investment banks more trading revenue than the G10 markets last year, extended gains versus the Greenback. USD/TRY (Dollar- Turkish Lira) fell 1.19% to 5.7250 (5.7650). The Offshore USD/CNH was changing hands at 6.6750 from 6.7135 yesterday.

Reuters Graphics – EM FX Revenues Outshine G10 – 18 April 2019

The slowdown in volatility in the major G10 markets were highlighted by an exclusive Reuters report. It showed that the 12 biggest investment banks made more trading revenue from Emerging Market currencies than the G10 counterparts last year.
Stocks eased and bond yields were steady. The US 10-year yield was unchanged at 2.59%.

EUR/USD – The Euro rallied to 1.13236 following the upbeat Chinese reports. The Single Currency then spent the rest of the trading session drifting lower after failing to break higher. EUR/USD closed at 1.1295.
AUD/USD – The Australian Dollar managed to have a little more life in it’s trading session yesterday. Upbeat Chinese data saw the Battler break above 0.72 cents hitting fresh two-month highs at 0.72058. AUD/USD then drifted lower to finish little-changed at 0.7173. Australia’s Employment data is released today.
USD/CHF – The Dollar continued to make headway against the Swiss Franc trading to a one-month high at 1.0110. Swiss Franc interest rates are currently the lowest among the Majors. Swiss 10-year bond yields closed at -0.29%.

On the Lookout: The low FX volatility will not linger for too much longer. Traders should be prepared (and hopeful) for a breakout attempt in the current Easter markets. With a lot of data out, we may be in for a change. Happy days ….
Today sees another data dump with Japanese Flash Manufacturing PMI’s to start off. Australia’s March Employment Change and Unemployment rate follow. National Australia Bank’s Quarterly Business Confidence Index is also released. Australia is expected to have added 15,200 Jobs from the previous 4,600. The Jobless Rate is expected to increase to 5.0% from 4.9%. Apart from AUD traders, the RBA will closely monitor this report.
Europe sees Swiss Trade Balance and German PPI data. Euro area and Eurozone Services and Manufacturing PMI’s follow. Production data in the Euro area is expected to have stabilised after a period of weakness in Q1. The UK, Canada and the US release their Headline and Core Retail Sales reports for March. US Flash Manufacturing and Services PMIs, Weekly Jobless Claims and Philly Fed Manufacturing reports round off the day’s data releases.

Trading Perspective: While the G10 FX volatility remained close to 5-year lows, traders should be prepared for a breakout. In a separate study, BNN Bloomberg noted that over the last 25 years, periods of low volatility have preceded a big move for the Dollar. Which is great for any currency trader, whether you are a Greenback bull or a bear. As an experienced former bank FX trader, this observation is accurate. A return to more volatile markets is not far away.

Daily FX EUR USD Chart – 18 April 2019

EUR/USD – The Euro has been holding on to the 1.1300 level for this week. Euro area PMIs will be closely watched by the markets today. Most of the reports are expected to beat forecasts. They will have to after the disappointment seen in Q1. The big levels EUR/USD remain 1.1250 and 1.1350. With market positioning still short Euro bets are multi-year highs, the risk is for a topside attempt. Immediate resistance can be found at 1.1330 followed by 1.1350. Immediate support lies at 1.1280 and 1.1250. Likely trading range today 1.1280-1.1330. Prefer to buy dips.
USD/JPY – This currency pair has grinded higher to the 112.00 level where is has settled in the past three trading days. Overnight high traded last night was 112.165, near 6-week highs. The climb in the US 10-year bond yield to its current 2.59% and a risk-on market profile has supported USD/JPY. However, it is struggling to make much headway from here.
Market positioning saw an increase in JPY short bets to -JPY 71,500 contracts from -JPY 62,700. The next likely move for USD/JPY is south. Immediate support lies at 111.80 followed by 111.50. Immediate resistance can be found at 112. 20 and 112.50. Likely range today 111.70-112.10. Look to sell rallies.
AUD/USD – the Australian Dollar came to life this week, falling to 0.7140 following the RBA minutes which was initially interpreted as dovish. The market changed its mind quickly and AUD/USD climbed to 0.7175. Upbeat Chinese data boosted the Battler to fresh 2-month highs at 0.72058 before drifting lower to close at 0.7175 for the 2^nd day running. Today’s Australian Jobs report will be closely watched by both traders and the RBA. Speculative market positioning in the Aussie remains short. Immediate support lies at 0.7140 and 0.7110. Immediate resistance can be found at 0.7210 and 0.7240. Keep an eye out on the EM currencies as well. If they stay elevated against the US Dollar, this will be Aussie supportive. Look to buy dips in a likely range of 0.7160-0.7210 today.

Wishing you the best for the Easter break. Happy trading all.

Higher US Yields Boost Dollar, Euro, Pound, EM’s Retreat

April 17, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, CPI inflation, EUR-USD, EURO, Euro zone, FOMC, GBP-USD, greenback, PPI, Sterling, US-China Trade Talks, USD/JPY

Summary: Higher US bond yields boosted the Dollar despite a decline in Industrial Production. The benchmark US 10-year yield climbed 3 basis points to 2.59%, back to March 20 pre-FOMC levels. The Euro retreated to finish at 1.1280 (1.1302) while Sterling fell back 0.39% to 1.3051 (1.3100). Germany’s ZEW Economic Sentiment Index in March soundly beat forecasts. A solid UK Employment report failed to lift the British currency against the overall stronger Greenback. The Dollar Index (USD/DXY) rose to 97.085, up 0.15%, its highest in 4 days. Elsewhere, the Australian Dollar slumped to 0.71396 immediately following the release of the RBA minutes which traders interpreted as dovish. The Aussie Battler bounced back to close little-changed at 0.7172. A data-dump from China, the trifecta of Industrial Production, Retail Sales, Fixed Asset Investment, including Q1 GDP, will determine the fate of risk and the Aussie today. Emerging Market currencies eased. Stocks slipped at the close. The Dow was down 0.06% while the S&P 500 lost 0.03%.

Trading View – One Month US 10-year bond yield – 17 APR 2019

AUD/USD – the Aussie closed flat at 0.7172 after testing an overnight low at 0.71396. Markets initially interpreted the RBA minutes as dovish. Policymakers were less confident in the labour and housing markets. However, the RBA did not weigh an interest rate cut.
EUR/USD – the Euro failed to break up through the strong resistance level of 1.1320-30 and closed at its immediate support level of 1.1280. Germany’s ZEW survey showed concerns on the region’s outlook are fading. Tomorrow’s Eurozone Trade and inflation followed by Thursday’s Euro area and Eurozone PMI’s will be closely watched.
GBP/USD – Sterling fell against the overall stronger Greenback to 1.3050 from 1.3100. Reports that talks between PM May and the Labour party had stalled also weighed on the Pound.
USD/JPY – the Dollar finished little-changed against the Yen. Higher US yields will continue to support this currency pair. Market talk of an options play with a 112.00 strike abound.

On the Lookout: It’s all about China today. Analysts are expecting the worst for the world’s second largest economy to be over with. Recent export and credit data beat expectations. China’s Q1 GDP is expected to grow at an annual 6.3% from the previous 6.4%. Improvements are forecast in China’s trifecta of Industrial Production, Retail Sales and Fixed Asset Investment. We could be in for a few surprises. Tin helmets on.
Apart from China, the Eurozone reports on its Current Account and Final Headline and Core CPI data for March. The UK follows with its Headline, Core CPI, PPI input and House Price Index. Canadian Inflation (CPI, Core CPI and Trimmed-Mean CPI) are next. US March Trade Balance rounds up today’s busy data.

Trading Perspective: Easter markets are always characterised by less liquidity which lead to break-out attempts and wider trading ranges. Often, the break-outs are temporary. Traders need to keep aware of the respective levels. Market positioning will have a greater impact in thin conditions. There may be some large options strategies lying around with expiries in the next few days. The currencies have been stuck in relatively tight ranges content to consolidate, searching for catalysts to move. There is a lot of economic data released this week, the bulk of which come today and tomorrow. Keep watch on the data.

EUR/USD – The Euro slipped to its immediate support level, settling just above 1.1280. The next support level lies at 1.1250. This is a strong support level and should hold if the Euro is to continue its march higher. Immediate resistance today can be found at 1.1310 and 1.1330. Bear in mind the speculative short Euro bets are at multi-year highs. Some of those shorts will be looking to cover on any dips. Sentiment on the Single currency is still bearish which should keep the Euro between 1.1250-1.1330 for now. Prefer to buy on dips.

DAILY FX AUD USD Hourly – 17 APR 2019

AUD/USD – The Aussie had a good bounce off it’s RBA induced lows. At the end of the day, the RBA did not signal any rate cuts even if policymakers expressed less confidence on the recent labour and housing data. It’s all about China today. AUD/USD has immediate resistance at 0.7180 and 0.7210. Immediate support lies at 0.7140 and 0.7110. Speculative Aussie short bets were pared to -AUD 54,400 from the previous -AUD 55,700. Look for a likely range today of 0.7160-0.7210. Prefer to buy dips.
USD/JPY – The Dollar failed to gain ground against the Yen despite the climb in the US 10-year yield. Stocks reversed to ease at the close. USD/JPY closed at 112.01 (112.04 yesterday). Overnight high traded was 112.045. Immediate resistance lies at 112.10 followed by 112.30. Immediate support can be found at 111.85 followed by 111.55. The close around 112.00 is not surprising considering reports of an Options play with the strike price at 112.00. JPY short bets are the second biggest next to the Euro. The latest COT/CFTC report (week ended April 9) saw a build-up of net JPY shorts to -JPY 71,500 bets from the previous week’s -JPY 62,700. Look to sell rallies with a likely range of 111.60-112.10 today.
GBP/USD – Sterling traded to an overnight low of 1.30425 after failing to clear above 1.3100. Solid UK Employment data which saw UK Unemployment remain at 45-year low of 3.9%, and an Employment rise to 179,000 failed to lift the Pound. Sterling has immediate support at 1.3040 followed by 1.3010. Immediate resistance can be found at 1.3100 and 1.3140. Look to buy dips today with a likely range of 1.3040-1.3110.

Happy trading all.

Equities Positive on Trade Talk Optimism, Sino-U.S. & E.U.-U.S. Trade Negotiation Headlines in Focus

April 16, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: Chinese markets, Crude Oil, EURO, forex pairs, futures trading, Precious Metals, Trade Negotiation, USD/JPY

Progress in key geo-political events underpin market bulls influencing positive price action, lack of macro data results in broad based investor sentiment controlling price action in the global market.

Summary: Global equity market saw a shaky start for the day but bulls have gained control over the momentum. Major equities and benchmark indices in Chinese markets traded positive as headlines from US boosted optimism surrounding Sino-U.S. trade talks. U.S. Treasury Secretary Steven Mnuchin’s comments stating that trade talks between the two nations are entering final leg was a fresh breath of positive influence on market. However, Singapore and Chinese equity market still saw mixed price action amid lack of high impact market headlines. However, equities and major benchmark indices saw steady positive price action across all major European stock exchanges. Healthy risk appetite in the global market also underpinned positive price action in USD denominated major global currency pairs. Sino-U.S. trade talk related headlines remain the main focus of investors as the month progresses given the fact that both countries are likely to sign a trade deal in near future.

Precious Metals: Precious metals see decline in the global market as risk appetite hurt demand for safe haven assets. As trade talk related optimism boosted risk appetite in broad market and underpinned market bulls, fund flow to precious metals market took a hit. Gold hit 1-week lows but declines were capped owing to relatively weak USD in the global market.

Crude Oil: Crude oil price is seeing dovish price action in the global market today despite prevalent risk appetite. Dovish cues from last week’s close still retain some level of influence on price action in the crude oil market. But positive progress in trade talks hint at possibility for increased demand keeping decline in check resulting in range bound price action.

USD/JPY: The pair hit new 2019 highs and is trading range bound near said level owing to strong resistance which is preventing further upside price action. The price action of USD took a sharp upswing as risk appetite boomed in the market on Sino-U.S. trade optimism. Further, safe haven assets saw profit booking and decreased demand which also supported positive price action of USD in Asian and European market hours.

On The Lookout: Given the fact that Brexit has been delayed till October and headlines hinting at trade talks between USA and China entering final leg, all focus is on trade talk related headlines and EU-U.S. trade negotiations. The headlines last week saw tensions in European markets escalating on two fronts – Brexit and trade tensions on US over tariff on Airbus-Boeing conflicts. Given that both US & EU have been blaming each other over providing Boeing and Airbus with illegal benefits, both countries are on each other’s throat in world court arguing over imposition of tariff worth several billion dollars. Further, US has been trying to coerce EU into opening access to its agriculture market via threat of tariff on Auto market. Headlines hit market that EU council has given the EU trade commission to start negation for eliminating tariff on industrial products. As trade related events which have been causing serious price swings in the market are seeing progress, optimism surrounding same is influencing positive price action in high risk assets across the global market. Amid lack of high impact macro data updates, headlines on geo-political events will continue to dictate price momentum in the day ahead.

Trading Perspective: The price action of major forex pairs and Wall Street equities are expected to see positive momentum during American market hours today. The next major release is RBA meeting minutes during Pacific-Asian market hours which is likely to influence some level of volatility during late American market hours.

US Indices: Major US benchmark index futures trading in the international market are seeing mixed price action in the global market ahead of US market opening today. Optimism surrounding Sino-U.S. trade talks continue to underpin market bulls in the global market. US Wall Street is likely to see subdued opening and range bound price action today as traders wait for further updates on Sino-U.S. trade talks before placing major bets to ensure that the latest update is not yet another dead-beat attempt at stating the obvious.

EUR/USD: The pair is trading range bound with slight positive bias in favor of Euro in the global market. US T.Yields saw a spike in Asian market hours but German T.Yields also saw upward action preventing USD from gaining upper hand. Further, optimism surrounding trade talks underpinned EURO helping the pair see positive price action today. Investors now await further updates and cues from US market hours for short term trading opportunities amid silent macro calendar schedule.

GBP/USD: The pair is seeing positive price action today as delay in Brexit deadline continues to underpin Sterling bulls. But gains are capped as lack of further progress in UK cross party talks and lack of initiative from law makers to focus on resolving Brexit related issues affect sentiment surrounding British Pound in the broad market. Broad based investor sentiment surrounding both currency pairs will dictate price action ahead of tomorrow’s earning and employment update from UK.

Ignazio Visco: The economic and financial outlook of the euro area -halfway down “the long and winding road”

The economic outlook

The financial sector: progress and open issues

Conclusion

Benoît Cœuré: Exchange of views with members of the French Parliament

The euro area economic outlook

The ECB’s monetary policy and its impact on the euro area economy

Completing Economic and Monetary Union

Conclusions

Luis de Guindos: Challenges for bank profitability

Introduction

Why bank profitability matters

Cyclical factors

Cost inefficiencies

Competition from outside the sector

Conclusion

Volatility Returns as US Plans To Raise Tariffs Due to China Renege

Powell Stays “Patient”, Dollar Edges Higher, Kiwi Tumbles

Upbeat Data Lifts Euro, Pound Climbs, Dollar Extends Fall

Growth Woes on Dovish Cues from BOJ & BOC Influence Dovish Price Action

G10 FX Volatility Stays Depressed, Dollar Ends Flat

Higher US Yields Boost Dollar, Euro, Pound, EM’s Retreat

Equities Positive on Trade Talk Optimism, Sino-U.S. & E.U.-U.S. Trade Negotiation Headlines in Focus

More than just a news source

Links

Social Media

Subscribe