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The market currently expects a 100% probability that the European Central Bank will raise interest rates twice by 25 basis points each time before the end of the year.July 23 – One of the worlds most attractive arbitrage opportunities will remain unattainable. The Korea Depository & Clearing Corporation (KDS) announced that SK Hynix has capped the conversion of its Korean-listed shares into American Depositary Receipts (ADRs) traded in the United States at 2.5% of its total share capital. This has been a key issue closely watched by investors since the companys ADRs were listed. The KDS CEO stated that the $26.5 billion in ADRs issued by SK Hynix on July 10 have exhausted the conversion limit. This means that unless existing ADR holders first convert their U.S.-traded ADRs back to Korean shares, thus freeing up conversion space, investors cannot convert their Seoul-listed shares into ADRs. SK Hynix ADRs are currently trading at a 51% premium to its Korean-listed shares.JPMorgan Chase lowered its price target for Tesla (TSLA.O) from $475 to $445.On July 23, Meng Huating, Director-General of the Department of Foreign Investment Administration of the Ministry of Commerce, responded to questions regarding the progress of the establishment of the China-US Trade Council and Investment Council at a press conference held by the State Council Information Office. She stated that the trade teams of both sides are currently maintaining close communication on the specific arrangements for the Trade Councils structure, functions, and operating model, and are exploring the implementation of a reciprocal tariff reduction framework of $30 billion each. China is widely soliciting opinions from domestic enterprises, business associations, local governments, and US-invested enterprises and business associations on relevant tariff reduction arrangements. The US is also soliciting public comments on the Trade Council and the reciprocal tariff reduction arrangements. Both sides will maintain close communication, finalize specific product tariff reduction arrangements as soon as possible, and promote their implementation to further expand bilateral trade.On July 23, Foreign Ministry Spokesperson Lin Jian held a regular press conference. In response to negative remarks made by a senior U.S. official regarding Chinas artificial intelligence, Lin Jian stated that China has consistently opposed the politicization and instrumentalization of science and technology trade issues. Such actions will only disrupt the global development of artificial intelligence and are not in the interest of any party.

EUR/USD Expects Fourth Weekly Gains Above 1.0900 Despite The US Dollar's Rebound Advance Ahead Of US NFP

Daniel Rogers

Apr 07, 2023 11:42

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Despite a recent retreat, the EUR/USD bulls maintain control around 1.0920. This reflects the typical Good Friday inactivity and apprehension ahead of the US Nonfarm Payrolls (NFP) report released early in the day. The major currency pair was volatile on Thursday as a result of the US Dollar's initial rebound on fears of a recession, but ended the day unchanged as disappointing US data contrasted with stronger Eurozone data.

 

Fears of a recession in the world's largest economy were prompted by consecutive lackluster US data and falling US Treasury bond yields, giving USD bears a reprieve on Thursday morning. As traders prepared for the all-important NFP, the dollar's subsequent gains were reversed by another disappointing US employment report.

 

Despite this, US Initial Jobless Claims for the week ending March 31 rose to 228K from 200K anticipated and an upwardly revised 246K the prior week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Notably, Reuters fanned fears of a recession by citing the most recent decline in the preferred bond market indicator of Federal Reserve (Fed) Chairman Jerome Powell. The most reliable bond market indicator of an imminent economic contraction, according to Federal Reserve research, is the "near-term forward spread" between the forward rate on Treasury bills 18 months from now and the current yield on three-month Treasury bills.

 

According to Reuters, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated in prepared remarks on Thursday that the global economy is projected to expand by less than 3% in 2023, a decrease from 3.4% in 2022.

 

In other news, Germany's Industrial Production (IP) increased 0.6% year-over-year in February, versus market predictions of -2.7% and previous readings of -1.7%. Additionally, the monthly figures exceeded expectations by 0.1%, coming in at 2.0% compared to 3.7% previously. On Wednesday, Germany Factory Orders for February improved to -5.7% YoY from -12.0% previously revised down and -10.5% market expectations, while MoM growth came in at 4.8% compared to 0.3% expected and 0.5% previous readings.

 

Wall Street and US Treasury bond yields have both reduced weekly losses as a result of these strategies, but investors remain skeptical.

 

In the context of less liquidity surrounding the March US employment report, sporadic activity on the major markets can keep the EUR/USD inactive and prone to abrupt price swings. Notable is the fact that recent dovish Fed forecasts and disappointing US data generate expectations for a positive surprise and enormous price volatility thereafter.


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