Published On: Tue, 02 Oct 2012
The dollar fell against most major currencies on Tuesday after solid U.S. manufacturing data published earlier, sparking a risk-on trading session. In the U.S. earlier, the Institute of Supply Management’s U.S. purchasing managers’ index beat expectations in September, rising to 51.5 from 49.6 in August. Analysts had expected the ISM manufacturing PMI to rise to 49.7 last month. The news boosted spirits in global markets, enticing investors out of the safety of the U.S. dollar and into higher-yielding currencies and stocks. Meanwhile, the euro and other currencies saw demand after Spain’s finance minister reportedly said the country was studying financial aid game plans with the European Central Bank. Spain announced recent bank stress tests revealed financial institutions need just shy of EUR60 billion to return to health, and European Union Commissioner Olli Rehn said earlier that he doesn’t expect bank recapitalization efforts to affect the country’s structural deficit. Rehn added the country’s 2012 deficit target is within reach. Further fueling the risk-on session, the euro zone unemployment rate remained unchanged at 11.4% in August, in line with expectations.
Published On: Wed, 03 Oct 2012 0
The dollar rose against most major currencies on Wednesday after investors sought out the safe and liquid greenback to await official news over a Spanish bailout. Concerns retail sales in Europe due out later may disappoint sparked demand for the dollar as well. A Reuters report that Spain may request a bailout in the coming days bolstered the euro early, even though Germany was reportedly urging Madrid to hold off. A bailout could open the door for the European Central Bank to buy sovereign Spanish debt carrying maturities of up to three years, which would lower borrowing costs in the crisis-weary country. Yet until Spain requests a bailout or rejects plans to do so, uncertainty will keep the currency moving up and down in choppy trading, as was the case on Wednesday. European policymakers are due to hold a summit later this month, and anticipation of announcements concerning Spain and other crisis-related issues moved the euro up and down against safe-haven currencies such as the dollar. Later Wednesday, the euro zone will release retail sales figures, and concerns the data may disappoint sent the euro and other higher-yielding dipping against the greenback as did a Reserve Bank of Australia decision to cut benchmark interest rates to by 25 basis points to 3.25%. Meanwhile in the U.S., payroll processor ADP will release its September report on private-sector hiring on Thursday while on Friday, the U.S. Department of Labor will release the country’s official September jobs report. Uncertainty over the health of the U.S. labor market sent investors to the greenback as well. However, the Federal Reserve is currently running a third round of quantitative easing, a monetary stimulus tool that sees the U.S. central bank buying USD40 billion in mortgage-backed securities a month to spur recovery. Such policy tools weaken the greenback, which dampened the dollar’s gains on Wednesday. Later Wednesday, the U.S. will release industry data on non-farm employment change, followed by a report by the Institute for Supply Management on non-manufacturing activity, as well as government data on crude oil stockpiles.
Published on: 04/10/2012
Euro Firm ahead of ECB Meeting
Main focus today will be on ECB meeting. The ECB would very likely leave its policy rate unchanged at the October meeting. In fact, after the announcement of the OMT in September and release of the meeting statement, we expect policymakers would leave interest rates unchanged for the rest of the year unless economic data suggests that more downside risks would be seen on economic growth and inflation.
BoE will also announce monetary policy decision today. Interest rates will remain at 0.5%, and the asset purchase program at GBP 375b. The quantitative easing program is expected to be expanded once again after the latest GBP 50b program completes in November.
FOMC minutes would also be featured today. This minutes is particularly important as Fed announced the effectively unlimited QE3 program during the meeting. Markets perceived that as an important move towards adopting an explicit target for unemployment rate.
Published on : Fri, 05 Oct 2012
The Bank of Japan held off from more easing after adding to stimulus last month, preserving its policy firepower despite increased political pressure and signs of an economic contraction. The BOJ kept its asset-purchase fund, the main policy tool amid near-zero rates, at 55 trillion yen ($700 billion), the bank said in a statement in Tokyo today. Attention now turns to the next meeting on October 30 as Morgan Stanley and Credit Suisse AG forecast two straight quarters of economic contraction through year-end. Economy Minister Seiji Maehara attended today’s central bank meeting, the first minister to do so for over nine years, adding to pressure on BOJ Governor Masaaki Shirakawa. Japan’s central bank kept its benchmark interest rate between zero and 0.1 percent and monthly bond purchases at 1.8 trillion yen.
Published on : 08/10/2012
The dollar rose against most major currencies on early Monday after investors spent the weekend digesting a stronger-than-expected U.S. September jobs report, concluding the numbers did not indicate significant recovery was taking shape in the U.S. economy.
The U.S. unemployment rate fell to 7.8% percent in September from 8.1% in August, the Bureau of Labour Statistics reported Friday.
Employers added a net 114,000 jobs in September, while households reported that total employment rose by 873,000 in September following three months of little change.
Meanwhile, the creation of just 114,000 new nonfarm payrolls reflected no major improvement from previous monthly jobs reports, investors concluded, which prompted many to take up long dollar positions early in Asian trading.
Elsewhere, demand for safe-haven currencies like the dollar rose ahead of the release of output data out of Germany, Europe’s largest economy.
Germany will release month-on-month industrial output figures later in the day and until the numbers hit the wire, investors opted for safe-haven currencies such as the yen and the dollar.
A group of eurozone finance ministers are due to meet on Monday in Brussels, and investors sold the euro to await any policy announcements that may come from the talks.
Published : 09/10/2012
The dollar fell against most major currencies on early Tuesday after investors sold the unit for profits. The greenback rose earlier amid a risk-off session sparked by World Bank and International Monetary Fund cuts to growth forecasts, though profit-taking sent the currency softening somewhat.
The World Bank earlier said it had cut its 2012 growth forecast for developing Asia-Pacific economies to 7.2% from a May forecast of 7.6%. The World Bank also said China’s economy will growth 7.7% this year, down from a May forecast of 8.2%. The International Monetary Fund, meanwhile, cut its 2012 global growth forecast to 3.3% from a July estimate of 3.5%.
E.U. ministers are holding talks this week over how to firewall and extinguish the debt crisis, while German Chancellor Angela Merkel is making her first trip to Greece since 2007.
Merkel’s visit takes place as representatives from Greece’s Troika of international creditors — the ECB, the European Commission and the International Monetary Fund — mull whether the country is meeting terms required to receive its next shot of financial aid.
Later Tuesday, eurozone finance ministers will hold talks to discuss ways to firewall and extinguish the debt crisis.
Published on: 10/10/2012
The dollar rose against most major currencies on early Wednesday as fears grew the global economy continues to cool after the International Monetary Fund trimmed growth forecasts for the world economy.
The euro and other higher-yielding currencies fell after investors sold and jumped to the side-lines ahead of the release of French and Italian industrial production data.
Uncertainty elsewhere in Europe also kept investors in the safety of the greenback.
Protestors clashed with police in Athens to mark German Chancellor Angela Merkel’s visit to Greece, as the German leader urged Greeks to stick with austerity measures, adding the country will be better off in the long run.
Uncertainty over whether Spain will seek a bailout made the liquid dollar an attractive safe haven even more.
The dollar also saw gains against the euro and elsewhere as investors sold stocks and braced for U.S. third-quarter earnings, which hit the wire beginning this week.
In the U.S. later Wednesday, the Federal Reserve is to publish its Beige Book, which outlines current economic conditions.
Published on: 12/11/2012
The U.S. dollar traded sharply lower against its rivals Thursday, after official data indicated U.S. initial jobless claims fell to their lowest level since February 2008 last week.
The U.S. Department of Labour said the number of individuals filing for initial jobless benefits last week fell by 30,000 to a seasonally adjusted 339,000, compared to expectations for an increase of 1,000 to 370,000. The previous week’s figure was revised up to 369,000 from a previously reported 367,000. A separate report showed that the U.S. trade deficit widened to USD44.2 billion in August, broadly in line with market expectations, as imports outpaced exports.
Earlier Thursday, the minutes of the Bank of Japan’s September meeting indicated that some policymakers were leaning towards more aggressive easing measures, boosting expectations that the central bank may ease policy again later this month.
The euro remained supported amid hopes that a ratings downgrade on Spain by Standard & Poor’s would force Madrid to formally request a bailout, which investors hope will ease the debt crisis in the euro zone.
In Canada, official data showed that the trade deficit narrowed to CAD1.3 billion in August, compared to expectations for a deficit of CAD2.0 billion.
The Australian dollar remained supported after official data showed that the country’s economy added 14,500 jobs in September, easily beating expectations for an increase of 3,800.
Published on: 15/10/2012
The dollar gained against most major currencies on Monday as investors flocked to the safety of the greenback to await policy announcements at an E.U. summit later this week. Investors also sought safe harbor in the dollar ahead of third-quarter earnings due out in the U.S. later this week as well.
European Union policymakers will hold an Oct. 18-19 summit in Brussels to discuss Greece’s steps towards fiscal health as well as ways to firewall and extinguish the debt crisis. Greece has requested a two-year extension to meet deficit targets. Meanwhile, uncertainty surrounding Spain’s plans to request a bailout or not made the dollar even more attractive. Last week, Standard & Poor’s said it lowered Spain’s long-term credit rating to ‘BBB-‘ from ‘BBB+’ and cut its short-term credit rating to ‘A-3’ from ‘A-2’. The ratings agency said Spain’s deepening economic recession is limiting the Spanish government’s policy options and added that rising unemployment and spending constraints are likely to fuel social discontent and contribute to friction between Spain’s central and regional governments. The news prompted many investors to interpret the downgrade as a tipping point pushing Madrid closer to requesting financial aid from its neighbors. A bailout would allow the European Central Bank to step in and buy Spanish sovereign debt in the secondary market, which would lower borrowing costs in the crisis-weary country, yet Madrid has yet to seek such assistance, which continued to bolster the dollar on Monday.
Investors also stocked up on dollar positions on Monday ahead of a flurry of data due out of the U.S. this week, including reports on retail sales, manufacturing activity, initial jobless claims and housing starts, among others. Earnings season is under way in the U.S. as well, and investors stayed in safe-haven dollar positions ahead of time.
On Monday, the U.S. is to produce official data on retail sales, an indicator of consumer spending, which accounts for the majority of economic activity. In addition, the U.S. is to release data on manufacturing activity in New York state, as well as official data on business inventories.
Published on: 16/10/2012
The dollar firmed against most major currencies amid a waning risk-on trading session on Tuesday, as investors went long on the unit to face eurozone uncertainty after selling it on stronger-than-expected U.S. retail sales figures. Soft U.S. manufacturing data fueled dollar demand as well.
The dollar weakened earlier on news retail sales in the U.S. beat expectations, which fueled investor appetite for risk. The Commerce Department reported earlier that retail sales rose by a seasonally adjusted 1.1% in September, outpacing market calls for a 0.8% increase. Retail sales in August were revised up to a 1.2% gain from a previously reported increase of 0.9%. Core retail sales, which exclude automobile sales, rose by 1.1%, beating expectations for a 0.6% increase.
The dollar, however, saw demand on a report showing that manufacturing activity in New York State contracted for the third consecutive month.
The dollar also saw support amid ongoing uncertainty as to whether or not Spain will seek a bailout. Market talk says the country is growing closer to requesting rescue financing, though Madrid has yet to officially do as such, which continued to fuel uncertainty and gave the dollar support on Tuesday. Markets are keeping an eye on Greece as well, growing a little edgy as the country prepares for its next tranche of financial aid.
Meanwhile in Japan, industrial production in Japan fell more than expected in August. In a report, the Ministry of Economy, Trade and Industry said that industrial production fell 1.6% in August after contracting 1.3% in July. Analysts had expected industrial production to fall 1.3% last month.
Later Tuesday, the U.S. will release government data on consumer price inflation and industrial production. The U.S. is also to produce official data on treasury long-term purchases and the capacity utilization rate.
Published on: 17/10/2012
The euro gained against the U.S. dollar as concern over U.S. corporate earnings eased and German economic data improved. The euro jumped above $1.31 after market hours in New York to its highest since September 18 after rating agency Moody’s affirmed its investment grade sovereign rating on Spain. Markets had feared that a downgrade could have forced some holders of Spanish debt to sell, further lifting Madrid’s borrowing costs.
The closely watched monthly survey from the ZEW institute showed a better-than-expected improvement in German investor confidence, adding to recent signs that the euro zone’s biggest economy is fighting hard to stave off the bloc’s debt troubles.
U.S. Labor Department reported earlier that its month-on-month consumer price index rose by 0.6% in September, above expectations for a 0.5% gain basically due to higher gasoline prices.
Later Wednesday, the U.S. will publish government data on building permits as well as data on housing starts. The U.S. is also to produce official data on crude oil stockpiles.
Published on: 18/10/2012
The dollar rose against most major currencies on Thursday, gaining strength amid a waning risk-on trading session stemming from hopes Spain may be growing closer to seeking a bailout. European Union policymakers on Thursday will open a two-day summit in Brussels to discuss Greece’s steps towards restoring fiscal health as well as ways to firewall and extinguish the debt crisis, especially in Spain. Still, investors grew cautious by Thursday, as Madrid has yet to announce any official plans to seek rescue financing from its neighbors.
The U.S. Census Bureau reported earlier that housing starts rose 15% in September to a seasonally adjusted 872,000 units, far surpassing market calls for a 2.7% increase to 770,000.
The U.S. government added that the number of building permits issued in September rose 11.6% to a seasonally adjusted 894,000, beating out expectations for a 1.1% gain to 810,000.
The numbers weakened the greenback initially. Housing continues to weigh on U.S. recovery, though data showing a bump up in groundbreaking gave investors reason to take on risk.
Later, the U.S. is to publish weekly government data on initial jobless claims, as well as a report on manufacturing activity in Philadelphia, a leading indicator of economic strength.
Daily Morning Report 24/10/2012
Moody’s Investors Service cut the ratings of five Spanish regions while sparring the federal government’s rating from. Both Italian and Spanish bond yields have moved higher while equity markets have tumbled, weighing on the Euro and other high beta currencies.
The FOMC began its two day meeting as traders will wait to see their assessment of the US economy. Also some of the QE introduced last month by the Fed was tied directly to unemployment and with the rate dropping to 7.8% as reported earlier this month.
Reserve Bank of Australia monetary easing over the last six months as policy officials gashed the cost of capital in May, June and October this year in an attempt to counter the economic slowing happening in China and Europe.
The yen earlier in the global session hit a three-month low against the dollar and a five-month trough versus the euro on expectations that the Bank of Japan will further loosen policy later this month.
The bank of Canada held its rate on hold at 1%, as expected but the real good news came along with the release of the policy statement that stated that interest rate hike may be in the cards in the near future
EUR/USD The dollar gained 0.1 percent to $1.2974 per euro at 5 p.m. New York time and touched $1.2921, the strongest level since Oct. 15. It was little changed at 79.81 yen. Europe s shared currency fell 0.1 percent to 103.54 yen.
USD/JPY Japan ’s currency fell 0.2 percent to 79.98 per dollar as of 1:44 p.m. in Tokyo from the close in New York, nearing the three-month low of 80.01 reached on Oct. 23. It dropped 0.3 percent to 103.81 per euro. The 17-nation euro fetched $1.2980 from $1.2974 yesterday, when it reached $1.2921, the weakest level since Oct. 15.
GBP/USD Pound Sterling gained 0.7 percent to 80.89 pence per euro at 4:23 p.m. London time, posting the steepest intraday advance since July 5, after reaching 81.65 pence on Oct. 22, the weakest since June 11. Sterling rose 0.4 percent to $1.6023.
Crude Oil Crude for December delivery was at $86.05 a barrel in electronic trading on the New York Mercantile Exchange, up 32 cents, at 1:30 p.m. Singapore time. The contract settled at $85.73 yesterday, the lowest since July 10. Prices are down 13 percent this year.
Brent oil Brent oil for December settlement on the London-based ICE Futures Europe exchange was at $108.12 a barrel, up 27 cents. The European benchmark crude was at a premium of $22.05 to New York-traded West Texas Intermediate grade, from $22.12 yesterday.
Gold Spot gold climbed as much as 0.4 percent to $1,708.85 an ounce and was at $1,706 at 12:06 p.m. in Singapore. The metal slumped to $1,699 yesterday, dropping below $1,700 for the first time since Sept. 7, as the European Central Bank warned about the risk of deflation in some countries.
GBP/USD The pound climbed the most in three weeks against the dollar after Britain’s economy expanded by more than analysts forecast in the third quarter, pulling the nation out of a recession.
The pound added 0.6 percent to $1.6128 at 4:21 p.m. London time, after rising as much as 0.7 percent, the steepest gain since Oct. 4.
USD/JPY The dollar may strengthen to a six- month high against the yen should it break through a level of so-called resistance, Credit Suisse Group AG said, citing trading patterns.
The dollar gained 0.5 percent to 80.20 yen at 4:15 p.m. London time, extending this month’s advance to 2.9 percent. The U.S. currency last traded at 81.49 yen was on April 25.
Gold climbed the most in three weeks as Brazil and Turkey’s central banks increased holdings of the precious metal and amid signs that purchases are rising in India, the world’s biggest buyer.
Gold futures for December delivery advanced 0.7 percent to settle at $1,713 at 2 p.m. on the Comex in New York, the biggest gain for a most-active contract since Oct. 4.
Crude for December delivery was at $86.01 a barrel, down 4 cents in electronic trading on the New York Mercantile Exchange at 10:44 a.m. in Tokyo. It rose 32 cents yesterday to settle at $86.05. Prices are down 13 percent this year. Prices have declined 4.3 percent this week, set for a second weekly drop.
Brent oil for December settlement on the London-based ICE Futures Europe exchange was at $108.53 a barrel, up 4 cents. The European benchmark crude increased 64 cents, or 0.6 percent, to end the session at $108.49 yesterday. It was the first gain in eight days, ending the longest losing streak since July 2010
Technical Analysis and Indicator 10/26/2012
EUR/USD , USD/JPY , GBP/USD , USD/CHF
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