28/09/16 - Deutsche Bank Shares Hit New Low

EUR

Shares in troubled Deutsche Bank have fallen even further to new lows. They fell another 3% during morning trading on the Frankfurt stock exchange. Investors are increasingly worried about the financial health of the bank, which now faces a $14bn fine in the US for mis-selling mortgage-backed bonds before the financial crisis of 2008. On Monday, the bank had denied suggestions that it had asked the German government for help in reducing the fine however what has continued to unnerve investors is the apparently well-sourced suggestion that the German government will not offer help, even if asked. Deutsche’s woes illustrate how difficult it is for European banks to overcome the challenges of post-financial crisis banking. It has previously been suggested that bank mergers are one solution, and Deutsche has had talks with Commerzbank about a combination.
 

USD

The Mexican peso rebounded from a record low yesterday, a sign investors may perceive as showing Hillary Clinton outperformed Donald Trump in the first U.S. presidential debate. The currency rose 1.5% and was the biggest gain against 24 emerging currencies. In a CNN/ORC poll of debate watchers, 62% said Clinton won the exchange.  Sean Callow, a senior currency strategist at Westpac Banking Corp said “In FX markets, the most obvious trade to anticipate a Trump presidency is to short the peso.” Previous movements in peso suggest that when it seems Trump is ahead of Clinton the currency weakens and the opposite happens when Clinton is ahead.
 

GBP

Three months after Britain's vote to leave the European Union, fears in currency markets of a "hard Brexit" that would drive an exodus of banks from London have knocked sterling to within sight of its weakest levels in decades. It has been a rollercoaster ride for investors and companies worried by or speculating on the value of the pound, which slumped, 13 cents on the shock result of the June 23 vote but had recovered around half of that by early this month. That broadly reflects shifts in expectations of how the economy will deal with the fallout from talks that may deprive Britain of its membership of the single market as the quid pro quo for imposing controls on immigration.
 

Key Announcements

13:30 – USD – Core Durable Goods orders m/m; forecast at -0.5% against a previous of 1.3%

15:00 – USD – Fed Chair Yellen Testifies before Committee on Financial Services in Washington

15:30 – USD – Crude Oil Inventories; forecast at 2.4M against a previous of -6.2M

15:30 – EUR – ECB President Draghi speaks about Currency Developments in Euro Area at the German Bundestag in Berlin