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Currency market

The eyes of the market are on the United States.

We begin an undoubtedly marked week for presidential elections that they will take place tomorrow in the United States and that, let alone we approached the key date, polls seem to give an advantage out of 3 and 5 points a Hillary Clinton on its adversary the republican Trump. In addition, yesterday the FBI stated that after recent investigations in which they examined new emails related to the Democratic candidate, there are no grounds to bring charges against her, thereby definitively exonerating her two days from the election.

All of this seems to have halted the falling price of the dollar in recent days, as fears of a Trump victory had sped up depreciation of the greenback and we saw it fall against the euro to levels of 1.1140 EURUSD. The week begins with a change in trend and the dollar is seeing significant rises with respect to the main currencies. Against the euro, it is listed at around 1.1050 EURUSD, with the potential to fall even further to around 1.1010 EURUSD, which is a significant support area to watch, being the average of the last 200 hours. Against the yen, the area has recovered by 104.50 USDJPY, with the yen losing its safe-haven status.

Not even the data from the U.S. labour market published last Friday have deflected the attention from the market. Nevertheless, it can be stated that the labour market remained positive in October, whereas the review of previous months reflects the fact that the economy was creating employment at a more dynamic rate than was expected. The U.S. economy generated 161,000 new jobs in October and, although it is below expectations (173,000 according to Bloomberg), the review of the data adds 44,000 jobs compared to the previous estimate. Salaries are putting certain upward pressures on prices, as earnings per worked accelerated to a rate of 2.8% year-on-year, the biggest rate since mid-2009, thereby strengthening even more the expectations that the Fed will raise rates in December. This increase in the price of money in December seems to already be an established fact on the market, even regardless of the government that could be chosen tomorrow (Tuesday).

The Mexican peso also recorded significant rises, already registering an appreciation against the dollar of almost 2%, reaching 18.54 USDMXN, the lowest of the pair since October past. During the electoral period, the peso has been a good barometer for the election, as it is one of the assets most affected by the uncertainty and unease of the market faced with a possible Trump victory.

Today we will have retail sales data in the Eurozone, Germany and France and data on the state of the U.S. labour market. However, it goes without saying that what will contribute increased volatility to the market will be the results and polls that will gradually become known a few hours from knowing who will be the candidate that takes the reins of the world's leading power.

Indicative ranges for today:

EURUSD
1.1010-1.1090

EURGBP
0.8850-0.8930

EURJPY
114.60-115.80

 
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Short-term exchange rates Public debt Stock markets Exchange rates
Short term:
The fall in the interbank risk premium may delay the expected recovery of the 12M EURIBOR, which will still remain stable around -0.07%.
Short term:
Until the U.S. election result is known, the 10-year Internal Rates of Return could still reach 1.70% in the USA and 0.10% in Germany. Afterwards, if Clinton wins, the upward trend will resume.
Short term:
A victory for Trump could cause falls in the S&PP 500 to 2000-1950 points, but our more probable scenario is a Clinton victory, which is why the week should finish in rebound.
Short term:
Clinton's victory would have a positive effect on the dollar, albeit limited, facilitating a recovery of up to 1.10-1.09 eur/usd.
In the medium term:
The 12M EURIBOR should come close to levels of -0.06% at the end of this year.
In the medium term:
Evidence suggests that the Internal Rates of Return are already immersed in a medium-term upward trend. The central banks would to take measures again if they receive that the movement is losing control.
In the medium term:
The Trump event aside, the other macro and micro factors are favourable to equities. From this perspective, the medium/long-term upward trend is still valid.
In the medium term:
The dollar may have left behind its highs for the cycle with the euro. It may recover somewhat, but we limit its trajectory to 1.08 eur/usd for what is left of the year.

Goirigolzarri announces at the inauguration of Bankia Fintech a new call to accelerate international start-ups

3 November 2016

Today, Bankia inaugurated the first fintech incubator and accelerator in Spain, Bankia Fintech by Innsomnia, which is located at Base 2 of the Marina of Valencia (former headquarters of Team Germany) and whose first intake has 14 participating start-ups.

Financial and Economic Bulletin

4 November 2016

The most important contents of this edition are: (i) In the EMU, the growth remains as projected and inflation is continuing on an upward trend; (ii) The U.S. economy has been revitalised; (iii) The Fed has made its intention clear to increase rates at its meeting in December; and (iv) Pessimism of the stock exchanges has reached excessively high levels.

Macro Comment/Pending the American elections

4 November 2016

It's the economy, stupid! With this phrase thought up by an adviser (James Carville), Bill Clinton tipped the scales in his favour in the 1992 campaign to win the American presidential election, where he faced Bush senior. Almost a fourth one of century later, is its wife, Hillary Clinton, that which tries to become the first American woman in accessing the office oval.

USA / Jobs were created at a decent pace and wage growth accelerated in October
Spanish economy indicators. 4 November 2016
Spanish property indicators. 4 November 2016
Fed / Clear on increasing rates in December
Spain / Sharp acceleration of job creation
USA / Less optimism from entrepreneurs in October

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