Mexican Peso, Asian Stocks Surge as Clinton Comes Out Debate Winner for Investors
The Mexican peso as well as Asia-based shares experienced an upsurge last Tuesday after investors seem to pick out Democratic Party nominee Hillary Clinton as the winner of the first US Presidential Debate against Republican pick Donald Trump. South Korea’s .KS11 and Shanghai’s .SSEC increased its value, while MSCI’S index of Asia-Pacific shares (.MIAPJ0000US) went up by 0.2%. The USD decreased in relation to the JPY, going down from 100.74 to 100.08 JPY=. The Mexican peso also strengthened against the USD, with the USD weakening by 1.9% against the MXN after consecutive price lows on top of concerns that a possible Trump administration could become a threat to Mexican exports to the US.
Analysts are stating that this sudden increase in the Mexican peso as well as in Asian stocks are indicators that market players and investors are closely monitoring the financial market, especially now that the United States will soon be electing its new head of state.
Weak Canadian Dollar Possibility for a Cut Rate or a Price Hike?
Annual inflation Rate plunged to a 10-month low this August caused by unexpected decline in retail sales. It dropped to 1.1% for seven consecutive months which is below than the target of 2.0% by the Bank of Canada.
This implies a higher risk for a price cut to take place more than a hike next year. The probability of 20% rate cut has doubled to 40% from the reports based on Overnight Index Swap. Household debt reached a record high in the 2nd quarter this year which becomes a problem since majority of the economy relies on domestic spending. Price hike is not happening soon until 2018 whereas the Bank of Canada will publish its economic forecast by third week next month.
The slowdown of China is a big threat for the global economy, Rogoff said.
The BBC News conducted an interview with the former American economist, Ken Rogoff stating that it was very perilous when the economy of China slowed down because it would create a great impact for the global economy.
Moreover, the economist affirmed such statement seeing that the sovereign state is struggling under a political power and structures which resulted for the so-called “largest manufacturing economy” to fall off. The country also were able to sustain its position for 30 years, however, profuse analysts got upset when the stock market of the country crashed.
Goldman Sachs MBS to Cut Down Investment Banking Jobs in Asia by Up to 25%
New York-based banking firm Goldman Sachs is set to do a retrenchment in its investment banking jobs in Asia by up to 25% excluding Japan following a collapse in banking deals in the region. According to a reliable source, the firm is planning cut down 75 banking jobs in Asia before the year ends. The sudden cut down in jobs has come out as Goldman Sachs is now in its lowest equity issuance ranking in Asia since 2008, with the firm going down to 11th place from last year’s 2nd place.
Representatives from Goldman Sachs MBS has not yet released their sentiments on the said issue.
The Industrial sector in China booms at the fastest pace in three years. Profits in the said sector leaped from 19.5% compared to last year’s data. A total of 534.5 billion Yuan equivalent to $80 billion which is the highest increase since August 2013. The Steel and oil refining and auto sector also contributed in profit gains.
This indicates growth and stabilization of the economy that is relevant since China is in economic crisis. Economists say that this is just a short-term growth factoring the growth drivers that are not viable in the long run. Although, Industrial sector is giving a positive outlook but other sectors are still in a difficult situation. China is set for a campaign to reduce capacity in the coal and steel sectors which has always been their focal point in business for the past 20 years that makes this not just a simple plan.
UK commercial property remain unshaken despite the British Exit.
The industrial property of Britain continued to establish a firm condition despite of the Brexit decision happened last June 23. Although, there is a tendency that the economy might become weaker considering that prices were forecasted to perform successive declines.
The EU exit created a negative medium-term impact in the market as it was stated in a report on Monday. Regardless of the uncertain factors caused by the political risk, the commercial sector of Europe remains powerful, said by Kattan.
Lagarde Favors Less Strict Trade Policies
The stricter protectionist trade measures slows down the current frail economy not only in United States but including other countries as said by the head of the International Monetary Fund, Christine Lagarde. She described it as an “economic malpractice”. Restricting trades would worsen the status of workers and families.
It has pros and cons for members of trades but considering present weak economy and bigoted politics, an open trading is more advantageous to all. However, if the trade policies are neglected, the opportunity for progress is lessened since global economy still needs it to drive growth.
ECB should not be blamed for the problems of the Deutsche Bank, says Draghi
ECB President, Mario Draghi emphasized that the European Central Bank holds no responsibility regarding the negative monetary rate policy that the Deutsche Bank is currently facing.
On Wednesday, the chief of Association of German Banks, Michael Kemmer stated that the central bank were partially liable on the current point of issue. But Draghi did not agree on Kemmer's comment because the Italian economist believes that the bank is not able to imply a systematic risk against the euro area in view of that the financial institution already suffered from a low rates of interest.
Japanese Yen Declines, Commodity Currencies Hold Fast after OPEC Cuts Oil Outputs
Commodity currencies such as the AUD and the CAD held fast to their positions while the JPY experienced a significant decline in its value after the OPEC decided to cut back on its oil outputs, the oil organization’s first time to make such a move since 2008, causing oil prices to rise. OPEC has decided to reduce its oil output to a range of 32.5-33.0 million barrels per day from its previous output of 33.24 million barrels per day. Currencies such as the CAD, AUD, and NOK went up significantly, with the Norwegian Crown (NOK) hitting its highest level in five months at 8.0222 against the USD. Meanwhile, the Japanese yen weakened further as investors are growing more skeptical with regards to the BoJ’s capability to cheapen the yen’s value and ease its monetary policies, especially since most of Japan’s economic stimuli are about to reach their limit.
German Government Supports Deutsche bank
Deutsche bank has the German government support when they could not increase capital for their legal proceedings. A “rescue plan” is created and initially the proposal is to sell assets to other lenders at a lower price to lessen the load of the problem with the bank.In serious cases, the government is willing to give 25% support. Both parties are hopeful not to end up using this rescue plan although the subject matter only includes the possible situations that may happen.
