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2. Markets Wind Down Currency Market News Winds Down For Chritmas Too...
23, December 2009
Markets get more and more illiquid and technicals become more and more relevant. To that end, EUR/USD remains the driver for forex markets and the target is very much the 200 day moving average level of just below 1.4200.
Given the current penchant for buying Dollars, this looks a better than evens bet today. The turn in the dollar to date comes from a better relative economic performance than other majors, rather than any concern that the global recovery will derailed. As such, we should not necessarily be seeing weakness in high yield commodity and emerging currencies. Certainly the renewed strength in the dollar may be discouraging funding carry trades out of the dollar, and renewing the case for funding out of the JPY or even the euro, but it suggests a broad carry trade unwind is unlikely to last.
The recent improvement in the US Dollar against other major currencies reflects the relative rise in US bond yields. The EUR/USD slid in December as the Euro yield advantage on 2-year government bonds has slipped from 0.62% in late Nov to 0.28% today. A move that MUST reverse going into 2010. Going back to recent US economic performance, the reported strength in the existing home sales supports the view that things are on the up.
December has been a pretty good month for the US on the whole. Although recent manufacturing indicators have proved mixed, November payrolls were a big boost for sentiment. The significant trade balance improvement reported for October and strong Nov retail sales were also confidence boosts. It all leaves the market wanting Dollars as we career towards the end of the year.
2010 should prove a different kettle of fish however and I still look for EUR/USD to be nearer 1.50 than 1.40 by the end of the 1st Qtr.
Sterling had a good news / bad news day yesterday. The GDP figure was revised better but not by as much as had been hoped whilst the current account was reported to be much better than had been anticipated. Perhaps the weaker Sterling is at last paying dividends in the performance of the UK’s export trade.
Fitch however, did caution over the longevity of the AAA sovereign rating enjoyed by the majority of the current holders. They pointed out the "unpleasant fiscal arithmetic" needing to be faced by many states across the Old World and tagged Britain and France for special mention, stating that their debt to GDP ratios will both likely exceed 90% by 2011 , higher than the 80% level breeched by Japan earlier in this decade which triggered their own loss of the AAA status.
Only other data of importance was a slightly worse than expected revision to the New Zealand 3rd qtr GDP data which knocked the recent shine off the Kiwi Dollar. This does however just look like an end of year correction to the currency’s recent appreciation and a return of strength in the New Year appears extremely likely.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only.
The Dollar index which measures the strength of the USD against a basket of currencies hit a 3 month high as the USD extended its recent rally. However the motivation for the rally shifted. Previously the USD gained on the back of recent positive economic data in the form of retail sales and payroll numbers.
Yesterday it was more a case of good old fashioned risk aversion creating a demand for the safe-haven USD. A more upbeat statement from the Fed may also have helped as they slowly turn more hawkish, however it was a clear case of risk off that drove the US dollar higher yesterday. The problem is that a weaker USD will have contributed to better economic data and now the USD is gaining we could see future economic feedback stuttering.
Looking at current levels, EUR/USD has now fallen back to 1.4380 and hit a low of 1.4304 a level not seen since September. The euro is still struggling on structural weaknesses within certain nations in the 16 nation zone. GBP/USD also fell into 1.60 territory before creeping back to 1.62. A fall in BRC retail sales was not good news for the UK economy and this number on release caught the market off guard with sterling dropping sharply.
Today we have not got much in the way of economic data, however as the holiday season winds closer we could see volatility as positions are closed ahead of the festive period.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only.
This time of year, from 15th Deember, is oficcially sSilly Season for traders. The markets are thin and apt to be flukey so many traders, including me, opt out at Christmas.
This year is no different and if anything, there are more compelling reasons to take this position. Over the past few months we have been looking at the trading videos from MarketClub. Today I have three videos from Adam Hewison
These videos take a look at some of the trades we have been following, namely Dollar index, crude and oil.
In this first video you will see the position of the Dollar index back as far as March and what the various signals we were following during the year. It also shows a divergence with the MACD where the trend has been showing up while the market went down. This is something Adam explains very wellin this short video about the Dollar index. He also gives an opinion on what position to take right now which I share...namely do nothing.
The next video deals with crude oil. The market has weakened to some slightly concerning levels so it is timely
to look at this market. In the video you will see the special "Trade Triangles" that MarketClub use as monthly, weekly and daily indicators. In this case they are in conflict because as the trend is high so the market is weakening.So what are you to do about it? In this case I consider the Silly Season and once again choose to opt out. Take a look at what Adam has to say on the subject.
Finally if you are a gold fan like me, This video is for you.. We have seen the market fall a little from recent highs and right now that retracement is close to the 61% as shown on the Fibonacci tool. However the MACD is just starting to turn indicating an upward trend is coming. At the same time, the daily chart triangles are showing a postive sign while the weekly "Trade Triangles" point down. All this conflict is better explained by watching Adam's video. It indicates to me that we should maintain our positions and just watch the gold market until Silly Season is over.
Good Trading,
Tom
Currency Market Updates are compiled by Tom Nadir.
The contents of this report are for information purposes only.
6. It’s All About Confidence!
Currency Market News Reflects on Eurozone Problems
16, December 2009
That is when looking at the eurozone as a whole. Since the beginning of December the euro
has shed 500 points against the USD
, recent problems in Greece and Austria and further structural problems within the eurozone are zapping confidence.
In a nutshell along with recent problems within Greece and Austria, you also have concern over Italy, Spain and Portugal and exposure in Eastern Europe; take this alongside a strong euro and expanding deficits and you have forward looking issues which are shaking investor confidence. To add to the woes of the euro, the USD has had a fine run in the last week being largely supported by stronger economic data.
Tonight we have the US interest rate meeting from the FOMC and based upon the recent turn of fortunes for the USD the market will be looking for a hawkish statement. The key levels should a more positive statement occur would be 90 on USD/JPY
and 1.45 on EUR/USD
for the USD to break through.
Sterling has jumped a little this morning as UK unemployment data confirmed that the number of people claiming benefits unexpectedly dropped by 6,300 in November. A good number and good signal a turning point for the UK labour market. In addition average earnings has come in at +1.5% against expectations of +1.2%. The pound is up against EUR
and USD
on the data.
7. Euro on the Backfoot Currency Market News on the Euro, Greece and Austria
15, December 2009
The euro has again moved lower against the majors and in particular against the USD moving down to 1.4523 overnight and overall down 500 points from recent highs. The cause of the downturn has been attributed to the recent jitters in Greece and more recently in Austria.
The Greek prime minister commented yesterday that Greece does not have much time and must take tough decisions within the next three months; decisions that have been left for decades. In a very direct address he stated that "we must change or sink" and vowed that he will tax the bonuses of Greek bankers by 90%; move over Alistair Darling!
Reports on the web also suggested that a second bank in Austria may require a government rescue; this follows yesterdays' nationalization of an Austrian bank yesterday. The euro has suddenly in the space of week turned from an alternative buy from the USD to a prospective risk. Going forward there are other economies in the eurozone that could create pressure and further banking issues such as the Balkan nations, Spain, Italy & Ireland.
On the back of the euro weakness the pound has managed to claw back over 1.11 in more a case of euro weakness over pound strength. In addition looking at the euro from a technical perspective it has looked overvalued and recently we hit a double top at 1.5140 against the USD.The next major support level is at 1.4480.
Data from the UK economy showed that CPI came in a tad higher than expected at 1.9%.This is in line with an expected increase in inflation and is not significant to concern the Bank of England. Later today we have more economic feedback from the US with PPI and Industrial Production. If we see more good news then the data will back up recent positives in non farm payrolls and retail sales and lead to more USD strength.
As we get into December, so forex markets become less and less liquid. This, combined with the lack of any significant data on Friday, left the technical traders very much in charge. EUR/USD obeyed the charts almost to the Nth degree with the closing support at 1.4610 holding even though we had seen slightly lower in late afternoon trading.
Having broken the early November low of 1.4626 we are left with some fairly definite support and resistance levels to look at between now and the end of the year.
There has been a considerable amount of trade around the 1.4700 level and this looks to be the initial Euro resistance level with last week’s high of 1.4780 the next resistance level. In a nutshell, if we don’t back up through 1.4800 in the next few days then the downside beckons.
Recent moves suggest that short term trading will focus on being short of Euro with a target of 1.4450/1.4500 on the cards. This directional trade has been given impetus by what appears to be an improving relative economic performance from the US, which is in turn giving the Dollar a modicum of support.
This has been helped by comparatively weaker factors coming from the other major centres including problems in Greece, weaker European industrial production data in October, budget and election woes in the UK, and budget stress, weak economic data and more QE in Japan. It has become harder to argue that the USD should be the weakest of the major global currencies and hence the preferred funding currency for yield trades. Again, a lack of transactional flow is giving the strategists more success.
This morning we have seen news from the Middle East that had been largely anticipated…. That is, that the Government of Dubai has authorised the use of $4.1 billion to settle the maturing Sukuk that was causing the market some concerns. A Sukuk is an Islamic financial certificate, similar in function to a Western market bond, only one that complies with the strict criteria of Islamic religious law, Sharia. A source close to the Dubai Government added that other government-related entities will be considered for funding assistance on a case-by-case basis.
So where is Dubai going to get these funds from? Well, their beneficial neighbour, Abu Dhabi has pledged immediate financial support for both Dubai and Dubai World, with no conditions attached, to the tune of $ 10 billion; that will help, pushing Dubai’s total assistance fund now up to $25 billion.
We are thin on meaningful data today with just industrial production and 3rd quarter employment numbers from the EU and Canadian industrial capacity utilisation the highlights, although the release of the BoE’s quarterly bulletin might produce a couple of interesting pointers. Sterling has held up reasonably well despite the quality weekend press being full of articles concerning the UK debt mountain and the problems that might evolve over its funding.
That could be one reason for the fall in sterling since close of play yesterday. The Pre-budget report will set out government plans for tackling the UK deficit and also define growth forecasts. A big factor will be how the government plans to reduce the deficit which is a major issue for the UK economy and the next government. Expect lots of political sabre rattling as Darling attempts to set out a fiscal election strategy.
The UK government has promised to cut the deficit in half within 4 years and the market will want to see a viable plan for this to give comfort to sterling. Other items could include a change in the growth forecasts, cuts in spending and increased taxes, possibly on bankers bonuses or even banking institutions. Darling says his plan will maintain credibility with investors, while protecting people most vulnerable to the recession - it needs to.
The pound has drifted lower against the USD, the EUR and the YEN; the fall in pound commenceed in Asian trading and was instigated by a market order to sell GBP and but EUR
The Dubai crisis reared its head again as Dubai stocks fell and worries mounted on Dubai World's debt restructuring once again; this may have contributed to the dip in the pound. In addition Moody's described the UK as weaker than top rated peers including Germany and France. So probably a number of factors leading to a lower pound this morning. One good snippet of news was that UK Halifax November house prices jumped 1.4% against the expectation of a 0.5% rise, however not enough to support the pound.
Looking at the USD, Fed chairman Ben Bernanke brushed aside the recent positive non-farm payroll report by underlining that the job market was "weak" and more sustained evidence is needed to assure of a self sustaining recovery. Fridays US retail sales data will be the next window to assess the health of the US economy.
The surprise US non farms payrolls that came out on Friday took centre stage. A reading of -125k was expected but the actual data came out at -11k. This shook the markets, giving the USD a boost as investors scrambled out of most majors including JPY, GBP and EUR positions. JPY
weakened by 2.4 cents, GBP
fell 2.5 cents on the day and EUR
fell by 2.7 cents. The far better than expected payrolls reading showed that US employers cut the fewest jobs in November since the recession began.
This positive reading surprised the market and is a strong recovery sign. However, a large portion of the better than expected reading is attributed to the seasonal temporary increases in staff over the holiday period. It is not surprising that there is such a strong influx in temporary staff numbers as many companies have aggressively cut their permanent staff in order to cut costs.
The headline payrolls data overshadowed the unemployment rate which came out at 10.0%, whilst this an improvement on last month’s reading (of 10.2%) it is still an ongoing concern to US recovery (the last time unemployment was this high was back in 1983).
In the UK the Pre Budget Report is due out on Wednesday which will give some insight into where the Chancellor is expecting GDP to track over the coming months and what the anticipated borrowing levels will be. A downgrade to the GDP forecasts (from 1-1.5% for 2010) would obviously signal a slower recovery for the UK and may, therefore, dent confidence in GBP. We may also see him hike the anticipated borrowing to around the £190bn level.
There are still concerns that the global economy is on the brink of another downturn. The IMF Managing Director, Dominique Strauss-Khan said that about half of bank losses from the financial crisis are yet to be reported. The IMF have said that banks which have already taken $1.72 trillion in losses and writedowns (as measured by Bloomberg since the start of 2007), may have an additional $1.5 trillion of so called toxic debt on their books. Some US equity traders are also concerned that the rallies seen since the low in March will not be extended.
Supporting this notion is the fact that US S&P 500 equity options have gone up in price. The options that offer protection against declines in stocks over the next year cost 40 per cent more than one month contracts, the largest premium since 1999.
Yesterday was a day of mixed messages and movements in the FX markets. The USD lost ground against AUD and NZD but gained against the pound and the euro in later trading. The main event on yesterday's calendar was the ECB interest rate decision. As expected the interest rates were left on hold but it was the eagerly awaited press conference that was the main event. The ECB took baby steps to scale back on their emergency measures as Trichet announced that they will terminate the one year tender in December and that the final tender will be offered at an average policy rate.
They also announced that the 6 month tender will end on March 31. Thus they are signaling a cut in the stimulus program. In essence this should be hawkish and euro positive but in typical Trichet style he fanned the flames by confirming that inflation will remain low and pledging to provide abundant liquidity for the first 3 months of 2010. Therefore interest rates likely to remain low for some time. EUR/USD initially jumped towards the 1.5150 level before waning to 1.5060 later in trading.
Tapering and removal of exit strategies will be a key theme over the coming months as central banks try to wean off the life support of unconventional monetary measures. The market is looking for signals on who will be first and thus who will raise rates first- expect mixed messages from central banks as they keep their cards close to their chests.
Data from the US yesterday was mixed. Worryingly the US PMI services confirmed that the service sector had slipped back into contraction, ADP employment softened the blow coming in above expectations. The ADP report was taken as an appetizer for today’s non-farm payroll data. This could be a mistake although a decent number is predicted we have had waves of recent warnings on the payroll/employment sector. A poor number today could raise a few eyebrows and cause a few jitters.
Either way the market is expected to be volatile this afternoon on the back of the payroll and unemployment data.
It was back to business as usual in the markets as the search for yield gathered momentum. The big loser was the Japanese Yen surpassing the USD as the currency of choice to sell in the thirst for yield. The recent stimulus from Japan and recent verbal attempts to weaken the currency are finally starting to undermine the Yen. USD/JPY is heading back towards 88.00 and GBP/JPYGBP/JPY is back up at 146. The recovery trade is glaringly apparent again with equities gaining. The Nikkei up 3.3%; Gold hitting new highs and Oil gaining.
EUR/USD
is still pushing north although momentum has slowed due to the market awaiting the ECB rate decision at 12:45 today. As usual it will be the press conference following the decision that will be closely eyed. What the market will be scrutinizing is the potential for a shift in the terms that the ECB offers funding to banks on a long term basis. Previously a spread of 1% was utilized.
What they could look to do is raise the tender or remove it completely and leave it floating. Both moves would be considered hawkish and thus euro bullish. In addition to this they could upgrade their GDP outlook which again would be a positive and bullish signal. The main focus will turn to EUR/USD
and the next key level is 1.5160 and beyond this 1.5290 to really enforce the bull run. GBP/EUR
has softened a little this morning, possibly due to UK PMI services data which came in weaker than expected at 56.60 down from 56.90 in October.
Yesterday the Federal Reserve beige book was released reporting on economic conditions in 12 Fed districts. The tone was slightly upbeat with moderate improvements in most areas, however credit remains tight and employment weak. The key data for the US will be tomorrow’s payroll and unemployment numbers.
The move back into USD did not last too long as was mainly attributed to the fear factor surrounding Dubai. As the markets started to feel more comfortable the USD fell pretty much across the board. EUR/USD again pushed through 1.5050 and then through the 1.51 level, GBP/USD also gained back to the 1.66 level.
Apparently unnamed sources from the ECB are saying that ECB officials are not concerned about the recent euro strength against the USD - not sure I believe that. This week we have the ECB and the improvement in economic data recently has caused speculation that the ECB will turn more Hawkish in their approach to monetary policy. The problem with this is that it would lead to further euro strength if the ECB move before the US Fed and this will certainly be an issue on the agenda for the ECB going into Thursday’s interest rate meeting.
The forex markets will be heavily influenced by the monetary policy strategy of major economies. The higher yielding currencies in particularly the AUD have performed well lately as a move out of fear into yield is becoming more apparent. The same philosophy has led to the rally in Gold and commodities to new highs. At the moment the Bank of England are the most dovish out of the major central banks contributing to the weakness in the pound. All major economies have introduced unconventional measures to help their ailing economies; the first to look at exit strategies and interest rate rises will equal a stronger currency.
Today is another quiet day on the data side with the main interest likely to be the release of the Fed's Beige Book this evening. Tomorrow we have the ECB rate decision and on Friday we have payroll data from the US.
The Dubai furore continues and undoubtedly will do so for some time; the market seems to have contained the news with a rally in Asian stocks and US stocks steady yesterday. What we do know is that if Dubai World defaults then lenders will have to take the hit, however the market feels this is unlikely.
As UK banks will be the hardest hit in this eventuality, then sterling has remained soft as the USD
gives up its gains. Let us see if the pound can start to play catch up today. It is certainly out of the blocks well.
There were other things happening in the world although they all took a bit of a back seat. Most important was the result of and action that followed the Monetary Policy meeting in Japan this morning. Interest rates were, as expected, left unanimously at 0.1%. But the market was surprised by the announcement of a Yen 10 trillion injection of funds into the economy to attempt to stave off the ongoing deflation in the country. The cash would be introduced to lenders and be backed by JGBs, Corporate Bonds and Commercial Paper. the YEN
dipped initially, recovered a tad and then eased again; nothing substantial but a move in the right direction as far as the UK Government is concerned.
The Reserve Bank of Australia, as predicted, raised their official rate by 25 basis points to 3 3/4% completing a hat-trick of interest rate rises; a first for the central bank. The Aussie remained very quiet with both the decision and the comments that followed widely anticipated.
The Nationwide Building Society in the UK this morning released data that indicated house prices had risen by 0.5% in November and a slightly more sustainable 2.7% on the year. No real reaction from the FX markets although this data will help consolidate the pound.
Looking ahead this week we have the European Central Bank rate decision with the Bank of England the following week. Recently the feedback in economic data from the eurozone has been good with consumer sentiment improving, along with better feedback on indicators for retail, services and manufacturing sectors. There is now a strong possibility that the European central Bank may raise their GDP outlook and look towards an exit strategy from their unconventional monetary policy measures.
However there is also real concern growing over the health of the economy of Greece, with rumours abounding that it has sought the help of China to relieve its latest trench of government debt.
In addition German Chancellor Angela Merkel is rushing through a fresh package of measures to shore up ailing banks and prevent a second wave of the debt crisis suffocating large parts of manufacturing industry. The potential for future problems within credit for european economies and banks would certainly undermine the euro. Recently the euro
has gained across the markets and it has been heaviliy bought into as an alternative reserve currency over the USD by Asian central banks and Russia.
Any fears surrounding the health of the eurozone and the potential for another credit crunch, say in Germany, would lead to a sharp sell off in the euro.
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Dubai fears rattle markets with currencies largely unaffected in London trading although the Dollar edged stronger as market liquidity thinned out. The big movers were the CDS and equity markets with the cost of insuring against sovereign default leaping and equities dropping sharply, led by the banks perceived to have most risk out to the UAE region. Overnight analysis of the situation threw up only less certainty and none of the data produced has actually diminished the possible risk to global stability.
This morning, there has accordingly been a rush into risk averse investments ie the Dollar, with gold, oil and equities all dropping sharply as market participants both bank recent gains and hedge against further bad news.
The ongoing Dubai restructuring story, combined with recent restructurings in Kazakhstan and Ukraine, raises questions over the quality of sovereign support for quasi-sovereign names. The risk is that in the aftermath of this, rating agencies take a less generous interpretation of sovereign support and we see a wave of quasi-sovereign downgrades. Investors will then demand a higher risk premium for holding assets of those quasi-sovereigns without explicit sovereign guarantees. Hence, developments in Dubai have broader market resonance and the CDS market has continued to react negatively with spreads widening dramatically, especially those of the less well thought of sovereign names.
At least the Japanese authorities can breathe a sigh of relief (for now anyway) as the return of Dollar appetite has bounced USD/YEN from its 14-year low by 2 1/2 %. It remains far too strong for the Ministry of Finance's liking though and if you were a betting man, you would put money on the Bank of Japan using this change in direction to 'encourage the move' by the odd bit of foreign exchange dabbling.
The Japanese weren’t the only country whose Central Bank was pleased to see a return to Dollar holding. Both Australia and (especially) New Zealand have been most vocal over the last few months with regards to what they perceive to be the unwarranted strength of their currencies. The Kiwi$ weakened to a near 6-month low and the Aussie also soften.
A return of confidence in the global recovery will quickly create the mood for a return to riskier investments and on that basis, a weaker Dollar once more. It probably won’t happen today and more than likely, not for a couple of weeks but the markets tend to have short memories and once liquidity builds up again the current levels will be seen to have good value.
Long term risk takers tend to shun illiquid markets leaving the arena to the intra-day traders hence the danger today is that stop losses and technical signals will be targeted creating overly volatile swings. There is of course the chance, with most of the US again on holiday that market players get bored and make an early break for the door.
Sterling has suffered a bit in the above melee on the back of UK banks assumed to having the largest exposure to the UAE region and a source yesterday suggesting that Alistair Darling will downgrade his 2009 UK growth forecasts at next month’s pre-budget statement. An overnight assessment of the UK banks' 'loan' exposure to the UAE comes up with figures that show that the UK has over 50% of the European total and considerably more than any other nation’s total. This, remember, is only a loans total and does not include any capital markets exposure. In US$ billions: UK 49.5, France 11.3, Germany 10.2 and the US 9.9 - no wonder Sterling reacted worse.
After a good performance last week by the USD the market was looking to see if the fight back could be sustained. From looking at the markets this morning then the answer is no. EUR/USD
is again pushing towards 1.50 and GBP/USD has recovered from 1.64 levels back to 1.66.
Influence on the USD has arisen from Federal reserve Governor Bullard who recently made interesting comments on Fed policy. He said that it will be difficult for the Fed to hike interest rates if the jobless data continues to worsen or look fragile and also tellingly that the Fed should keep alive its asset purchasing programmes beyond the first quarter of 2010 to give policy makers flexibility. This is somewhat akin to the strategy of the Bank of England and the comments dampen the hopes of rate hikes and exit strategies from unconventional monetary policy measures and thus weakening the USD. Although the comments are not yet official strategy, they still lend an insight to potential Fed policy. We will learn more in the Feds minutes on Tuesday.
An interesting article in Bloomberg notes that the most accurate dollar forecasters predict a further slide in the USD and to continue even if the US look to hike interest rates. Standard Chartered Plc, Aletti Gestielle SGR, HSBC Holdings Plc and Scotia Capital Inc. say the dollar will depreciate as much as 7.1 percent versus the euro.
Sterling having retreated at the end of last week still looks a little nervous; although it has made gains against the USD,
this is more in line with broad USD weakness. There is not too much in the form of data this week. Wednesday's GDP report is the big focus for sterling and the latest release will hopefully upwardly revise the third quarter figures. Data today from the Eurozone has confirmed that November manufacturing PMI has come in at 51.0, up from 50.7 in October and slightly lower than forecast. This has tempered the euro's advance but has not weakened GBP/EUR.
You can expect thin trading and volatility in the week ahead; today we have a holiday in Japan and on Thursday we have Thanksgiving.
Disappointing data on Friday coupled with little headway in the APEC conference has served to undermine the USD as we start the week. EUR/USD is approaching the 1.50 level; GBP/USD made a short breach of 1.67 and USD/JPY remains pegged under 90. On Friday data showed a higher deficit with a surge in imports and the Michigan University consumer sentiment came in weaker than expected.
What has weakened the US dollar is continued talk of the negative impact of a weak USD. Liu Mingkang, the Chairman of the Chinese Banking Regulatory Commission said that the combination of a weak US Dollar and ultra low interest rates had encouraged huge volumes of carry trades that were having a "massive impact on global asset prices". A weaker USD on the one hand will help the US recovery and prolonged low interest rates will have the same effect. The issue here is that the knock on effects of this scenario hit global economies that rely on a stable and strong USD.
The fallout from the latest Quarterly Inflation report was digested in the papers over the weekend; The Banks assessment for growth is now twice the latest consensus of their panel of independent forecasters and their predictions for inflation and interest rate levels over the next couple of years have been revised sharply higher. There is still a cautious tone especially when relating to further stimulus in Quantitative Easing. It will be interesting to see whether Mervyn King and David Miles again voted for a greater increase in the level of QE than their other 7 colleagues when the minutes from the November MPC meeting are released this week.
This morning, Japan also reported strong 3rd Quarter GDP data but again, this remarkable recovery can be attributed to short term stimulus measures and is not expected to be sustained going into 2010.
The UK Rightmove house price data, released earlier today, came in on the soft side with prices showing a month on month fall of 1.6%.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. Compiled by Tom Nadir.You can view a new trading video here, with my compliments.BlogCatalog - Finance
Yesterday sterling weakened after the release of the Quarterly Inflation report and the accompanying speech by Mervyn King. The feedback from King was actually not too bad when taken into context over the last six months; inflation was earmarked to rise and growth forecasts were upped. The reason why the pound weakened was related to the Bank keeping an "open mind" on further Quantitative Easing and also noting that the weaker pound is a key driver for the UK economy.
It seems the Bank is still treading tentatively and is taking no chances. We have little data for the rest of the week for sterling; sterling has held firm after falling yesterday holding above 1.10 against the euro and 1.65 on the USD The market will want to see continued improvements in economic data following small improvements in manufacturing, jobless claims and housing data.
This morning EUR/USD has failed to hold on to the key 1.50 level falling to 1.4950; 1.50 is a stubborn barrier that the euro cannot seem to push through with strong support for the USD at this level. This move has allowed sterling to creep higher against the euro towards 1.11 but I would expect range trading on EUR/USD and a possible re-test of 1.50.
In other news the Australian economy is still driving forward with the unemployment rate holding at 5.8% but with 24,500 new jobs created raising the chances of another 25 basis point rate rise. This puts the Australian economy well ahead of the curve and naturally the AUD has strengthened on the improved sentiment and the recent rise in interest rates. Eurozone data just released confirmed a fifth consecutive increase in Industrial production by 0.3%; later European Central Bank president Trichet will speak later in Frankfurt.
Speaking in Singapore U.S Treasury Secretary Tim Geithner has again reaffirmed the importance of a strong dollar and also a stable USD. In addition he also noted that Asia and in particular China will play a major role in leading global recovery. The importance of a strong and stable dollar are key to global economies; Singapore and Indonesia, Malaysia and Taiwan among others need to regularly buy USD to keep their local currencies from strengthening too much against the USD.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. Compiled by Tom Nadir.You can view a new trading video here, with my compliments.BlogCatalog - Finance
… in the Far East just as the currency looked as though it might consolidate at its recently hard won higher levels ahead of the release of the latest Quarterly Inflation Report from the Bank of England and the US public holiday - both tomorrow.
Then at 5:18 this morning, Fitch said that the UK was most at risk of losing its AAA sovereign rating amongst the major economies, with Germany being the least likely. Cable dropped from 1.6755 to 1.6610 without touching the sides and GBP/EUR witnessed a corresponding fall from 1.1183 to 1.1090 before a recovery of sorts.
At 6.14am the ratings agency attempted to repair the earlier damage to Sterling by reiterating its outlook for the UK as stable because the Government (which ever party this relates to) is expected to articulate a stronger fiscal consolidation plan over the next 12-months. Sterling bounced a tad, up to 1.6660 and 1.1120 which are about the levels we are at now.
This price action, unfortunately, negated some earlier positive news from the UK showing that the RICS house price balance came in better than the pre-release survey and that, on the same vein, Britains are expecting things to improve with a poll in The Times indicating that people foresee good times just around the corner…. Today, with a lack of market moving data scheduled for the UK, the early drop in Sterling will likely weigh for most of the day.
A strong German ZEW could add to pressure on the pound later this morning. I suppose the BIG question that comes from this little cameo is whether the UK Government will be able to deliver the goods in terms of the assumed spending cuts. A maintaining of the tighter fiscal policy will also support the opinion that UK interest rates will stay lower for a longer period than had been originally assumed and that these facts favour the view that Sterling's cyclical weakness is set to continue for some time yet.
Other than that, equity markets had another good day, Wall St up by a strong 2.03% and S&P up 2.22% leading to an expectation for a good showing in Europe. It is possible that ahead of the Veteran's Day holiday in the US tomorrow, we see a little profit taking but the trend for the remainder of the year looks set to carry on ever onwards and upwards.
Again, this will add further downwards pressure on the the US dollar and lead to a test of the support level against the euro at 1.5060 and the more important Fibonacci level of 1.5168 which is the 76.4% retracement of the July/November 2008 extremes.
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The pound is off to a flyer in particular against the USD
hitting 1.68 and pushing to 1.12 against the EUR. Some attention in the markets is focusing on the Kraft/Cadbury developments which is sterling supportive in relation to M & A flows. EUR/USD is also testing the 1.50 level again this morning; Euro zone investor confidence has come in much better than expected with the highest reading since June 2008. GBP/EUR struggling to gain further due to the EUR
strength against the USD
Over the weekend the G20 agreed a new framework aimed at re-balancing the global economy and will present detailed plans by the end of Jan. In the meantime the US dollar is weak and this is leading to a stronger euro and Yen; the IMF have also noted that the USD is still overvalued raising concerns that the USD could weaken further. Targets will be for the euros to hold above 1.50 and GBP/USD to push towards 1.70.
On Friday the non-farm payrolls for the US slipped by a worse than expected 190k and the unemployment level hit 10.2%. This was not good news for the US economy in the short term, although the market may still look forward to a slowly improving employment sector. It was not enough to turn the market into risk aversion and USD strength.
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Today at midday the MPC will announce the decision on interest rates and Quantitative Easing. Interest rates are almost certain to remain on hold at 0.5% with the decision on QE to take the spotlight. As today has drawn closer the expectation has escalated that the Bank of England will expand, the question is if they do by how much? The argument is that if they are going to expand then why not do 50 billion pounds rather than 25 billion pounds.
The reasons for expanding are very apparent. The recent dire GDP number, rising unemployment, dire public finances and banks that are still not passing on this increased liquidity. On the other hand most major economies are now looking at exit strategies from unconventional measures and there is a danger that over cooking QE could stoke inflation and lead to an inflationary problem and sharp interest rate increases to combat this.
At the same time there are whispers that the Q3 GDP will be revised upwards and that Q4 GDP will show an exit from recession and a slow recovery for the UK. So the arguments and the significance of today's decision are evident. The BoE are walking a fine tightrope and they do not want to topple either way and obviously stay on track in controlling inflation.
The implications for the currency markets today are high. Volatility will be severe with the decision at midday followed by the European Central Bank decision at 12:45. If QE is expanded then this should lead to a sterling sell off, if they do not then we could see a sterling rally. The ECB are not likely to throw in any surprises today holding rates at 1% and giving little away in relation to monetary policy measures.
Last night the Federal Reserve maintained their rates and offered up no surprises with the statement to maintain "exceptionally low levels for an extended period". They were slightly more optimistic than previously but nothing close to hawkish. The reaction therefore was to sell USD and an initial surge pushed GBP/USD towards 1.66 and EUR/USD towards 1.49 before fading in later trading.
One eye would have been on today’s central bank decision suppressing the appetite of the dollar sellers. Hold on to your hats today!
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Tomorrow the MPC will meet for their monthly meeting but this time around the implications are huge. The decision on whether to pump billions more into the economy or hold fire has caused widespread debate with increasingly confusing economic signals adding to the issue.
The problem for the MPC is that it does not want to not do enough especially with the prospect of unemployment pushing past the 3 million mark. Data released overnight showed that UK Nationwide Consumer Confidence remained unchanged from September. The pound has surprisingly rallied against the USD and EUR with a good day for equities helping to boost the risk on trade. The USD and JPY fell yesterday and the pound was a major beneficiary of this weakness.
Supporting sterling this morning is economic data that UK PMI for services was up to 56.9 from 55.3 in September. Another good number from the UK. Could sterling be building up for another fall? We will see tomorrow!
Tonight we have the interest rate decision from the US FOMC and the rates look almost certain to be kept on hold. The market will gauge the Fed’s tone regarding existing and possible future policy. In the past the Fed have continued to use the statement "for an extended period" in describing how long rates will remain at very low levels. If this phrase is removed or toned down then the USD should strengthen due to the potential of interest rate increases being more imminent. Also from the US we have ISM services today which will be a key number in monitoring the economic recovery.
In other news poor retail sales data from Australia undermined the AUD slightly as the rest of the commodity currencies gained. Retail Sales came in at minus 0.2% a surprise number especially as Australia have recently upgraded their outlook.
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The beleaguered pound was in demand yesterday reaching a six week high verses the euro and holding its own against the stronger USD due to a combination of short covering and negative Euro sentiment on the back of the recent slide in global equity markets. Stronger than expected UK mortgage approval data also added to reasons to buy sterling with mortgage approvals numbering 56,215 in September, up from 52,970 in August and better than the increase of 54,000 forecast.
There was however a cloud on the horizon in the shape of the M4 money supply data although the headline M4 grew by 0.8% in September taking the annual rate of growth to 11.6% the BOE's preferred measure which excludes some non-bank financial intermediaries fell 0.9% on the month and declined at an annualized rate of 1.7%. So while there continues to be encouraging signs of recovery coming from the housing market the money supply figures will surely support the case for more QE next week.
Later in the day US Q3 GDP recorded a rise of 3.5% in line with expectations and the biggest quarterly increase since the third quarter of 2007. The last time GDP was in positive territory was during the second quarter of 2008. The figures show that the recovery was broad based with consumer spending, which makes up more than two thirds of economic activity increased by a healthy 3.2% compared to a fall of 0.9% in the previous three months. Residential investment which was the catalyst for the downturn jumped 23% contributing to GDP for the first time since 2005.
But don't get too carried away it must be noted that the key drivers for both consumer spending and residential investment has been massive US government stimulus packages totaling some US$1.7trn, which have already or will come to an end eventually i.e. Cash for Clunkers. Business inventories declined at a slower pace this quarter falling by US$131bn compared to US$160bn last quarter. In a separate report weekly jobless claims fell by a modest 1,000 last week to 530,000 encouraging but with the weekly average running well above 500k it does not bode well for the Non Farm Payrolls data due next week.
Markets took heart from all this positive US data and as risk aversion abated, equity and commodity prices responded positively oh and the dollar got sold. As mentioned yesterday all eyes and hears will now turn towards the round of central bank policy meetings taking place next week for direction.
Other key data will be the forward looking Chicago PMI and University of Michigan confidence index. The Chicago PMI is expected to rise back to 50 this month after falling to 46 in September while the University of Michigan confidence index is forecast to remain little changed form the 69.4 reading in September.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
25. MarketClub Reviews - The S&P 500 Index and Spot Gold Keep a Close Eye on the S&P 500 Index and Gold
28 October, 2009
A few days ago I suggested that the time was right to be cautious with the S&P 500. This short video strenghtens that view and I suggest you take a few minutes to watch it.
I have another video for you too today. This one looks at the gold market. Spot gold may look a little shaky right now but we have seen this before. The underlying energy field in the market suggests that gold is still reaching for highs os 1200 or even up to 1300.
The big news in the markets yesterday was the rally of the USD
in particular against the euro
but in addition against the yen
and higher yielding currencies. Is this the start of a sustained rally after prolonged USD weakness?
Probably not yet but it is a relief rally and again highlights the fragility and volatility in the global markets. At US open yesterday equities rallied and the USD weakened further;it looked business as usual. However the markets suddenly turned and equities and commodities dropped sharply and strength came back into the USD led by the drop in stocks. It is a little uncertain what caused the sell off. There were reports of heavy selling of EUR/USD
by a Swiss private bank and the fact that EUR/USD looked tired at the 1.50 level probably led to jitters that a top had been reached.
GBP/USD came out unscathed and was largely supported to 1.64 by the dividend related buying by the UK oil company which was completed in the early afternoon. We did then see a dip back to 1.63, however in overnight trading we experienced another rally towards 1.64 with rumours noting that a US bank acting on behalf of an Asian sovereign supporting the overnight gains.
The pound may have also been supported by feedback from Goldman Sachs stating that the pound is the most undervalued since 1999 based on the purchasing power parity theory. The pound also gained against the euro pushing back towards 1.10 helped in part through euro weakness against the USD. Expect further ups and downs with sterling as dovish comments from Bank of England members are stacking towards further QE expansion in November which would undermine the pound again.
Not a great deal of data for the market to get its teeth into; we have UK CBI Distributive trades which is expected to improve from September. For the USD we have Consumer confidence which may be a weak number given the recent drop in the IBD confidence report. A weak number should help the USD to gain further after yesterdays rally.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
In the wake of Friday’s horrendous GDP data, there is now growing speculation that the Bank of England will extend their Quantitive Easing programme at the next meeting on November 5. This was reiterated by former MPC member Mr Blanchflower who on Bloomberg TV noted that the Bank of England will have to do another 50 billion pounds and they could extend by as much as £250 billion in all from the current 175 billion pounds.
Naturally this is not good news for the pound and it is understandably under pressure this morning in the markets. The next major level on GBP/USD is 1.6240 and on GBP/EUR 1.0750.
Today is the last installment of the oil company purchase of GBP from USD. The company has needed to turn USD into sterling in order to pay shareholder dividends and this could offer GBP/USD some support for today.
This morning we have seen data from Germany come in weaker than expected. The November consumer sentiment indicator has come in down at 4.0 against forecasts of 4.5. The decline is symptomatic of growing concerns within the German labour market. EUR/USD is relatively untouched on the news and is holding above 1.50 for now and Thursdays German unemployment data will now be closely scrutinized. If unemployment begins to rise again then the current strength of the euro in particular against the USD will raise concern. This is maybe why there is little follow through in the rally above 1.50.
On the other side of the coin an article in the Financial news Which is affiliated with China’s central bank, calls for China to increase its reserve holdings of euros and yen and USD holdings should be reduced.
In other news Australian Producer Prices came in weaker than expected at 0.1% against the forecast of 0.3%- this news suggests that tomorrows CPI data may be also weaker and this will alleviate the need for the RBA to raise interest rates quickly to curb inflation- this could soften the AUD strength witnessed recently.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
It was the big one that the market had been waiting for, the UK GDP. This was touted to show that the UK economy had exited the recession but it was woefully disappointing. UK Q-3 GDP has come in demonstrably weaker than expected, -0.4% quarter on quarter, -5.2% year on year compared to median forecasts of +0.2%, -4.6% y/y. Following on from yesterdays weaker retail sales data the pound has once again fallen of a cliff this morning.
So far we have lost over 1.5% against the USD and the EUR. Unfortunately the good cheer surrounding sterling earlier in the week following a less dovish stance from the Bank of England has now been smashed and talk of parity against the euro is likely to be the market chatter once again.
Over to the Eurozone and we have seen some decent data in the form of PMI (Purchasing Manager Index) for services and manufacturing. The data came in better than expected and is an important indicator of business conditions in the Eurozone. Meanwhile the German IFO came in pretty much as expected.
Looking at the currencies this morning we can see that EUR/USD is still holding firm above 1.50 following the positive economic data. Sterling is the big loser as you would expect and is still falling against the major currencies. It has breached 1.10 against the euro and is testing 1.64 against the USD; the next support is 1.6340.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Yesterday the spotlight was firmly on the Bank of England minutes in the morning and onto the Fed beige book in the afternoon. The BoE minutes cheered sterling into a rally against the USD over 1.66 and to 1.11 against the euro. The tone from the BoE although not conclusive was more hawkish and importantly there was no mention of expanding the Quantitative Easing programme. This facet was the impetus behind sterling gaining across the markets. In addition there is ongoing interest in GBP/USD by an oil company who are touted to be buying as much as £500 million each day supporting the rally to 1.66.
Yesterday afternoon we finally saw a breach of 1.50 for EUR/USD; however it did not last long as the Fed beige book release brought a sense of reality back into the markets. The disappointing feedback from the Fed beige book which offers a survey of economic conditions led to a dip in the Dow and some strength coming back into the USD in later trading. The feedback suggests that the economic recovery in the US could be prolonged and shaky.
Today UK retail sales data came in lower than expected with month on month sales coming in flat against the expectation of a 0.5% rise. This has taken the shine away from sterling after an impressive rally over the last few trading days. Currently the pound although dipping on the news is still above 1.10 on the euro and 1.65 against the USD and 150 against the Japanese Yen. Tomorrows GDP will now be the focus of attention for sterling.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Last night Mervyn King made a speech in Edinburgh and did not mention an expansion of Quantitative Easing. This morning the released minutes from the MPC showed a vote of 9-0 to keep rates at 0.5% and QE at 175 billion pounds. Therefore recent developments were not enough to justify immediate change to rates or QE and evidence suggests that QE’s effect on asset prices "had been substantial" and of the type planned.
Although the MPC indicated that in the November meeting QE will be looked at, this feedback has given the market confidence that no expansion will now be undertaken and hence sterling has rallied.
Feedback from the retail sector and the GDP data on Friday will give further clues to the health of the UK economy and good numbers could push GBP/USD and GBP/EUR higher still.
The USD is still under pressure as Chinese Industrial Production was rumored to come in much better than expected; the theme is a recovering China is the pre-requisite to a recovering global economy.
Key levels now to breach are 1.66 on GBP/USD and still 1.50 on EUR/USD We have feedback from the US economy later in the form of the Fed beige book.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
31. MarketClub Reviews - Which Way the S&P 500 ? Time to Check Your Perception of the S&P 500 Index
20 October, 2009
Are you like me and wondering if the S&P 500 is going to continue rising? I feel that caution should be applied right now and I have ensured that my stops are tightly controlled. I suggest you do the same if you are feeling the same way.
The perception (always dangerous) is that the market will continue to rise and in today's trading video you will see what I am talikng about. Perception is a very powerful element in the market, possibly stronger than both the fundamental and technical elements.
So what’s going to happen with the S&P 500 index? Will it continue rising for the rest of the year or are we close to a turning point? Take just a few minutes out to review the charts with Adam.
As always, no sign up or registration is necessary to watch the trading video.
Successful trading to you
Tom.
PS. Keep an eye open for MarketClub on Fox Business and MSNBC.You can view new daily trading videos by clicking here, with my compliments, Tom.Currency Market Updates are compiled by Tom Nadir.The contents of this report are for information purposes only.BlogCatalog - Finance
The prevailing market sentiment is for a weaker USD and EUR/USD is driving towards a key barrier option at 1.50 and the pound is piggy backing on USD weakness to push up to the 1.64 levels. The pound is targeting the support level of 1.6450 and a breach of this should open the door to test 1.66. USD weakness is continuing to ensue on the improved confidence in equities and the appetite for risk catalysed by the Dow Jones breaching 10,000 and further boosted by a decent run of US corporate earnings data most notably through Apple.
This week we have data snaps from the UK and the Eurozone which will be closely watched. For the UK the Bank of England will be looking closely at economic data; better than expected UK retail sales data on Thursday and GDP on Friday may comfort the MPC not to expand further on QE. We have Mervyn King speaking tonight and the Bank of England minutes tomorrow which may shed more light on the Bank of England’s current thoughts. The thoughts on the expansion of QE are what will potentially move sterling higher or lower in the short term.
For the Eurozone this week will be a good indicator on whether the pace of recovery is receding. The most important economic releases to watch this week will be German producer prices, Eurozone current account numbers, German IFO report and PMI figures from the entire region. If we see disappointing numbers then this could signify that the recovery is losing traction as was largely stimulus led. This could then take the shine from the euro.
Finally the Australian dollar remains buoyant and the minutes from the Reserve Bank of Australia have indicated that inflation control is their priority which opens the door for further imminent rate hikes and further AUD strength.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
We ended last week looking more positive for the beleaguered pound which gained against both the euro and the USD from a poor start to the week. We are getting mixed messages on Quantitative Easing and the possibility of expanding the programme further; the pound gained following a report in the FT that the Bank of England may hold back from extending QE as it felt the economy " was in good shape"
However this morning we are again on the back foot as Sir Howard Davies, director of the London School of Economics, said that Britain faces a dangerous rise in the levels of public debt; even inclusive of proposed tax increases…depressing! The article reported in the Telegraph went on to suggest that the government is running out of weapons to fight the crisis and the fall in the pound which should boost exports has been fairly benign and he added that "The pound never stops where you want it to," indicating a possible run on the pound.
However depressing the slide in sterling looks at least it is reflective of the health of the economy. The same cannot be said for the strength of the euro which has gained to some extent as an alternative reserve currency to the USD even in the light of weak economies throught the eurozone.p>
Jean-Claude Trichet, European Central Bank president, said this week that "the euro was not created to be a global reserve currency." Highlighting the concern on this factor. The problem for the eurozone is that an over inflated euro could hurt the economies in the long term, where as the pound should gain with growth; time will tell.
This week for the UK we have Q3 GDP on Friday and retail sales on Wednesday to focus our attentions on.
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The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Overnight comments from the Governor of the Reserve Bank of Australia, Glenn Stevens will only serve to underpin the currency. The Dollar now appears firmly on course for a stronger period after Mr Stevens agreed that the Australian economy's strength could drive it "way up" to US$ 1.10 to 1 AUS$ and further suggested that the Central Bank would not be "too timid" in further increasing the official interest rate. Money markets are now firmly betting that interest rates will be at 3.75% before Christmas with a strong feeling that we could now see a 50bp hike following their November meeting.
Other than the numbers from Citibank yesterday, the US Corporate earnings released yesterday were overall positive but the divergence between the releases from Goldmans and Citibank highlight that the decision is still pending with regards to the US recovery. This if anything has held the Dollar back more than the shift into riskier asset classes.
The US Central Bank's own Mr Fisher added to the air of unease when he said that he didn't think that the US Treasury's asset purchase programme had really done much good and that he was glad it was now complete. Fisher isn't a voter at the November 4th meeting, so if there's discussion of whether to extend the scheme he won't be part of the final say. Still, it's interesting to see members not convinced of its benefits. It looks increasingly likely the Fed will pause here to see how the Treasury market performs without its support.
Euro/Dollar again brushed up to the 1.4965 level overnight, the second failed attempt to break up through this strong Euro resistance. The Euro's decline can be attributed to Trichet's comments yesterday, playing down the currency as a global reserve alternative and repeating the importance of the US Government's strong Dollar policy.
Sterling hit 1.6400 overnight before settling back to this morning's level of 1.6290 and against the Euro, Sterling maintained yesterday's positive run pushing up through 1.0900 up to 1.0965 before settling back at 1.0935 this morning.
The Swiss National Bank Chairman, Jean-Pierre Roth was quoted as saying that the SNB will raise interest rates as soon "as we have the feeling the economic recovery is well established". Switzerland is emerging from the financial crisis "in better shape than the remaining European countries" he was reported as saying. They have to be careful here because the last thing that the authorities want is a strengthening Swiss Franc and an emerging economy plus higher rates is likely to put the currency in much demand.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Sterling for once is the star of the show. A large GBP/EUR sell order from a UK clearer kicked things off this morning, followed by a report in the FT that the BoE may hold back from extending its QE program as it felt the economy “was in good shape”. It now waits to be seen if this is just a rally in a downward trend for Sterling or potentially the start of a concerted rally.
The dollar again fell following the release of the minutes from the most recent Federal Reserve's policy meeting. The minutes had a distinctly dovish tone to them, they indicated that just one member had advocated a reduction in the buying of financial assets, with most of the committee favoring an increase in Fed purchases in order to speed the economic recovery.
The overall tone was cemented when the discussion turned to the outlook for inflation with the suggestion being that the Central Bank is still a long way away from raising its interest rates. The dollar fell sharply to near 15 month lows against the euro, touching 1.4970 The Euro level is particularly interesting, with 1.4950-70 range having proved particularly Dollar supportive in the past (during the 4th Qtr of 2007) but upon breaking, the rate rushed up to just under 1.6000 where it remained for some time before falling back. Technical analysts are targeting 1.5700 as a near term objective.
Prior to the minutes' release, equities was already having a good day with the DJIA breaking up through the 10,000 mark for the 1st time in more than a year. The spur here was the release of the JP Morgan quarterly earnings numbers which exceeded expectations and further increased the prospect of the financial system's recovery. This positive sentiment was continued from earlier data from the UK which showed a reversal in the recent employment trend. This had underpinned Sterling during the day but it wasn't until yesterday evening that the currency started to make headway across the board.
In a speech this morning, RBA Governor Stevens noted that interest rates in Australia will have to move to more "normal" settings as the severe downside risks to the economy seen earlier in the year had not come to pass. That suggests a move back to 4-5% for the cash rate; with current expectations for a move to 4.00% reasonably quickly with perhaps a 50bp hike in November followed by another 25bp hike in December, or maybe three 25bp moves finishing in February (the RBA are on holiday in January, so no meeting will take place).
Underlying inflation In Australia remains above the 2-3% target range and with consumer and business confidence recovering rapidly in recent months, the current monetary stance is clearly becoming inappropriate. New Zealand, not to be outdone, released their own set of economic numbers indicating that CPI was on the march in Kiwi-land as well. Qtr 3 figures for both qtr/qtr and qtr/year periods were much higher than expected which reinforces the view that NZ Dollar interest rates will follow Aussie rates on a generally higher tack.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Traditionally the crude market takes adive this time of year. However the indications on the "Trade Triangles" are all pointing to green. That effectively indicates that there are some strong trends in place and the odds are that the market should go higher.
This trading video uses the "Trade Triangles" and the Fibonnaci tool. What the latter does is show the possible and unseasonable highs that crude could reach.
Professional traders are looking for crude to break the $75 mark and if it does it could go even higher. If that does work out it will not be good for the general economy of course but there will be some profitable opportunities.
If you are trading in this market be sure to manage your trades with stops as there are no guarantees where this will go.
First of all Tom, I want to thank you for having me as a guest today!
My name is Adam Hewison. You might want to Google Me to confirm what I am about to share with you.
There are plenty of people out there that create “exclusive email courses” with little or no credentials to actually backup their teachings. So, I think it’s right that I share a little bit about myself with you before we even start.
I was a former floor trader on the IMM, IOM, NYFE and LIFFE as well as a risk manager of a large, multinational corporation in Geneva, Switzerland. I also have written books on forex trading and trend following. In 1995, I founded INO.com and later co-founded MarketClub. I’ve been in the trading biz for over three decades and have seen it all. I created this course as a way to give back and share trading tips and techniques that I still use in my trading today.
In my Free Mini Email Course, I will show and explain the tools and strategies you need to increase your success rate in the marketplace.
(1) The importance of psychology in price movement
(2) How to spot mega trends
(3) Understanding of technical price objectives
(4) How to picture price objectives
(5) How to trade with moving averages
(6) How to use point and figure trading techniques
(7) How to use the RSI indicator
(8) How to correctly use stochastics in your trading
(9) How to use the ADX indicator to capture trends
(10) How to capitalize on natural market cycles.
Plus, you will you will learn all about fibonacci retracements, MACD, Bollinger Bands and much more.
Every success,
Adam Hewison
President, INO.com & Co-Creator, MarketClub
================================================
Thanks Adam. I am sure you enjoyed Adam's blog, now enjoy the free e-mail course.
Currency Market Updates are compiled by Tom Nadir.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Sterling again takes the lead today as the “pound gets pounded”, It`s very difficult to put a forward a case for buying Sterling at the moment when so much negativity continues to undermine it. One thing to bear in mind is only the UK and US have expanded their money supply by over 100 % in the past 18 months and both have interest rates at near zero.
It’s no surprise then that both currencies are being used to fund positions in high yielding currencies and will continue to remain under pressure in the coming months. Key levels to watch GBP/EUR 1.0685 break this and we could see parity before the end of the year.
News over the weekend was a bit gloomy on the Sterling and Dollar front with continued talk of UK rates staying below 2% for some considerable time yet with the added prediction of the currency dropping below 1.4000 against the Dollar and to below parity against the Euro.
The Dollar was similarly put on the backfoot by continued speculation of reserve divestment although The Times did sum up this scenario quite nicely by pointing out that talks amongst the Middle East nations on using Euro more has a target date of 2018, as the paper says, ‘The Dollar is going to be around as the world's reserve currency for a long time'. Other than that, the press was full of asset sales and other cash raising exercises, those going ahead, planned and speculated upon.
Economic news out of the UK this week in the form of unemployment data and CPI will hold the key to further moves; if it comes in better than expectations then you could see a strong oversold rally for Sterling. If it comes in below then the pound really could be in for a toasting.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
You may find gold not to your liking. I like it but it is not for everyone of course. While I was pondering this my mail box shouted me and there was the answer.
My friend Adam had donoe it again! Here is his alternative to the gold markwet that everyone is talking about. Basically it trades the same as gold but knock a zero off the end...much more manageble.
The scheduled monthly get-togethers take place in London, MPC/BoE and in Venice, the ECB. There is a general consensus that following both meetings, interest rates for the respective currencies will remain at their present lowly levels.
Taking the meetings in chronological order. The MPC are expected to say very little, if indeed anything at all, following the rates announcement at 12.00. They have recently only adjusted the level of QE based asset purchases at the meeting closest to the release of the Quarterly Inflation Report (next due in November) and this situation does not look likely to change. The decision to increase the level of stimulus will therefore be deferred until the next meeting even though some discussion will probably take place today. The minutes will tell us more.
I would also not expect to hear anything today related to the much talked about negative interest rates on banks' reserves held by the Bank of England. All in all, a bit of a non-event which perversely might prove to be Sterling positive on a day of little data release. The ECB meeting will produce a similar outcome on rates ie no change, the difference being that the Central Bank always has a press conference following their monthly meeting and Trichet feels obliged to occupy the crease for at least a good hour. He is expected to reaffirm the growth outlook for the Eurozone, "economic activity is expected to recover at a very gradual pace" but recent data has not been sufficiently soft for any more dovish a sentiment. On the other side of the equation, and as I mentioned yesterday, the ECB do now appear to be taking a closer interest in future inflationary indicators (which are signalling a firming trend) and as such will wary of allowing upward pressures to get a hold. Status quo the obvious result.
Yesterday was significant for its lack of any sort of action, other than gold which hit a record high during the day's trade. Both currencies and equities remained becalmed although the Yen extended its bullish run on chatter of Euro 18 billion of Eurozone bond redemptions taking place yesterday in conjunction with a generally positive assessment of the Far East growth recovery. Sterling remained subdued, still affected by the apparent official sanctioning of a weaker currency.
All the market moving action happened after Wall Street's close with Alcoa reporting a surprise quarterly profit and the Australians releasing better than expected employment data.
The employment numbers from Oz were very much stronger than had been mooted with expectations of a 10K fall flattened when a 40K rise in jobs came through. This spurred the exchange traders into pushing the USD/AUD through the 90 cents level and again focused attention on organising the ‘parity parties'.
This could have been viewed a reason for the interest rate rise earlier this week but the market is on a roll and are now betting that we will say a further 25bp rises at the next two monetary meetings. A bit over the top perhaps but definitely a possibility. The Kiwi Finance Minister quickly saw the writing on the wall and expressed his concern over the weak US Dollar, repeating that he is 'uncomfortable' with the level of the NZ Dollar and that given the local currencies strength, any recovery would be unlikely to be export led.
Outside of the policy meetings we are due to get speakers only from the US with the Fed widely represented. Lacker speaking on economic education, Tarullo speaking in the wake of the financial crisis and Bernanke giving an update on the Feds balance sheet.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Let's talk about gold shall we? The market may have hestited the other day but hang on to your hats because we look all set to reach a new all time high by Christmas as I mentioned before.
We are just on 1400 today and we may see a slip back as far as 1200 (buy) but a glance at the MACD will show the positive cross over we have been waiting for. Gold is heading for higher ground!
This is a only a short but valuable trading video prepared by Adam Hewison of MarktClub and he has something special lined up for you so be sure to take the time to watch it.
Sterling never really recovered from the Double Whammy yesterday of Mandelson extolling the virtues to exporting companies of a weaker currency and the much worse than expected UK industrial & Manufacturing production figures. When you are already on the ropes, it is far more likely that you are going to get a further pummelling. Compare that to the stock market. Indices seem to set new yearly highs on a regular basis and nobody wants to be left on the side-lines and miss the recovery trade. The similarities between the Dollar and Sterling are getting more obvious.
Despite brief flurries of profit taking and more comments from the Japanese Finance Minister, the Dollar remained vulnerable during the day and in overnight trade. Chinese markets were closed so volumes in the Far East were light. The Yen retained its positive bias throughout. Mr Fujii did his best. In a Wall Street interview, he defended FX interventions in the case of outrageously reckless movements, adding that current Yen strength was consistent with market activity. He also further leant his support to the Dollar remaining the key reserve currency.
Sterling took its cue from the weaker than expected production data. Despite a strong Halifax house price number, a flat GDP figure from the NIESR and rumours of a huge semi-official EUR/Sterling sell order in the market, the currency continued in its recent weak trend. The Nationwide consumer confidence number for September also added some support in Asia this morning (the index was reported at 71 in September, the highest since April 2008, against an upwardly revised August figure of 65) but the demand then fell away and Europe joined the fray with Sterling a tad weaker than the previous London close.
Going into the BoE and ECB policy meetings, the Pound is likely to remain weak with little surprise expected from either rate decision. There is a chance however that M. Trichet highlights a pick up in inflationary expectations in the Eurozone and that following the rate hike in Australia yesterday, attention might turn towards who is next in the G20 rate rise stakes? It certainly won't be the UK.
Yesterday saw a good supply of sovereign debt issues with the US, the UK and Ireland all issuing in a cross section of maturities and all drawing solid demand. The 2013 gilt issue was covered 2 times, the 3-year treasuries auction was covered 2.76 times and Ireland's 15-year syndicated bond issue for Euro 7 billion attracted Euro 16 billion in bids. Global bond yields obviously have further to fall yet.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
As had been anticipated for some time now Australia became the 1st of the OECD countries to raise their official interest rates since the global introduction of the far reaching stimulus measures and historically low interest rates that followed the financial meltdown in 2008. Australia can not claim to be the very first nation to move, Israel took that honour but is the first economy of significance to have taken steps to reverse the easy monetary conditions.
In raising their rates from the 49-year low 'emergency' rate of 3% to 3 1/4%, Glenn Stevens, the governor of the Reserve Bank of Australia, said that economic conditions in the country are now stronger than had been expected whilst measures of confidence have recovered. The RBA made it clear in the statement that this would be the first of a series of interest rate increases and the likelihood is that official rates will be nearer 4% than 3% by year end. The move is obviously a very strong indicator that the Australian Treasury feel that economic recovery in China and the Far East is a done deal and the chances of a double dip recession, remote.
Back to normal yesterday with a very strong ISM number from the US creating a rush into equities and a drop in the dollar's value. The ISM's index of non-manufacturing businesses, which make up almost 90% of the economy, rose to 50.9 (50.0 expected) from 48.4 in August – the first expansion in a year. The FTSE surged to close above 5000 and the DOW and S&P 500 both rose sharply.
The weakness in the Dollar has been maintained overnight and cable has broken back up through 1.6000 this morning, although sterling itself is weaker against the euro, for which the multitude of tests at 1.4550 and then 1.4500 now seem a long distant memory. The sentiment towards the Dollar has been helped by an article in this morning's Independent newspaper talking of the currency's demise. It claims that secret meetings have already been held between finance ministers and central bank governors in the BRIC nations plus Japan to work on a scheme which will mean that oil will no longer be priced in US Dollars. p>
Discussions between the above countries, oil producing nations in the Gulf and, apparently, France centre on dealings in crude being priced against a basket of currencies which will include the Yuan, the Yen, the Euro, Gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia, Abu Dhabi, Kuwait and Qatar. Both the new Japanese Finance Minister, Fujii and the Saudi Central Bank Head have been quick to deny the report with the latter stating that the content was ‘absolutely incorrect'. This has had the effect of putting the brakes on the Dollar's decline and with little or no significant data scheduled today, I would not expect to see the major crosses move very far from here.
That said, there are still items of interest for the markets to take on board. The UK DMO are auctioning £5 billion of 2013 gilts this morning (this following the furore over the FSA's plan to require UK banks to hold an extra 110 billion pounds in government bonds in a bid to prevent a repeat of the banking crisis) and the US Treasury are scheduled to sell 39 billion dollars of 3-year notes this evening. With treasuries' yields looking to head down to beneath 3% expect the auction to attract plenty of demand.
The other headline maker this morning is Latvia, and more specifically the fragile state of its economy and the knock on effect that a 'failure' would have in Europe, and more specifically, Sweden. The Swedish banks have by far the largest exposure to the Latvian economy and a fall out would have dire consequences for their already weakened balance sheets. The Krona looks vulnerable to adverse news.
Comments from Mr Fujii following the G7 meeting at the weekend indicate that the weakness of the Dollar had been discussed by the participants but that he had made it clear that a weak yen policy was not a desirable option for the Japanese. The outlook for the Dollar is still uncertain however given affirmation from the NY Fed's Dudley that low rates will persist for an extended period.
Last comment on currencies; UK Industry Secretary, Mandelson is quoted as saying that a competitive exchange rate would boost exports in a desirable and timely way. Interesting use of tense here and similar in context to the comment made by Mervyn King that put the skids under the Pound a couple of weeks ago.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The stimulus package has not really had the desired effect. The jobless totals are mounting in the US and figures of 10 or 11% unemployment are being predicted and sadly I think that is a reality we have to face.
With loss of jobs and the hardship this inflicts comes the lack of spending and that is where we will see a fall in the S&P into next year. The dollar continues to be under pressure and with it the dollar index is set to suffer for a good time yet.
Is there any good news here? Yes. Gold has been rising and although stalled at the moment we are still looking for that commodity to continue its gains and value during this last quarter.
We are not out of the woods yet despite what the politians would have you believe. The economic downturn will see the dollar reach new lows, allow gold to find new highs while the equity markets will back down at least into the New Year.
I know it’s not a pretty picture but let's be real here. The US is not in good shape just now and you will need to arm yourself with the facts to ride the storm.
UK PMI released early today came in above expectations however Sterling failed to respond and we are still trading friday`s ranges. Key levels still hold at $ 1.60 & € 1.10
Friday's Lisbon Treaty vote in Ireland went through with a resounding 67.1% of the Irish electorate voting ‘Yes' following a 58% voter turnout. This turnout was five percentage points up on the first Lisbon referendum in June 2008. Pressure from EU leaders now falls on Czech president Vaclav Klaus to sign the treaty; although the Czech parliament has ratified the Treaty, a presidential signature is still required to formally complete the process.
With all this going on over the past few days, there has been surprisingly little impact on the Euro as it remains well-supported above the key levels of 1.4550 against the USD and 0.9100 against sterling Back across the Channel, Tory leader David Cameron has said he will hold a referendum if the Lisbon Treaty has not been ratified in all member states by the time he is prime minister.
The G7 finance ministers' meeting in Turkey on Saturday went without a hitch, with the subject of foreign currency volatility on the agenda as predicted. The G7 audibly welcomed China's pledge for greater FX flexibility moving forward. Japan's new Finance Minister Fujii was again in the press commenting (post conference) currency devaluation was not welcomed, and that Japan would take FX market action (i.e. intervention) if moves were excessive/one-sided. Mr Fujii also emphasised the Japanese economy was not ready for exiting financial stimulus strategies just yet. This statement echoes similar comments from fellow G7 members recently. World Bank and IMF meetings in Istanbul yesterday and today respectively followed the G7 discussions.
Elsewhere overnight saw increased speculation down under of an interest rate hike by the Reserve Bank of Australia at its next meeting tomorrow. Well-respected editors of the Australia Financial Review and the Sydney Morning Herald newspapers both wrote that a move to 3.25% was now likely at Tuesday's meeting. The RBA's last move was a 0.25% cut in May this year.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Ready for the weekend? I have two new videos for you both on the subject of divergence.
The first deals with trading divergences in the S&P 500 and the second with a divergence we see developingthe mighty Apple.
Take a few minutes to discover some of the possible negative divergences that are building for this market. Divergences do not mean that Apple is going to collapse, as the major trend in the stock remains firmly in the positive camp. However, it could indicate that Apple is at a highpoint for the time being.
All the US economic recovery euphoria disappears in a couple of days of poor employment data. If you remember, the week started with one US institution talking of a much better than market consensus, non-farm payrolls figure, being released today. Since then, we have had a worse than expected ADP employment number and higher than expected jobless claims alongside economic data and surveys reported weaker than had been expected. And this from the largest economy in the world (for the present anyway).
This leaves ‘scribblers' re-writing their estimates for this afternoon's figure with the emphasis, who can come up with the least positive figure. The consensus is still for a drop of about 150-170K, which would not be too bad given it would signal the second consecutive month in which the job loss number had narrowed by about 60K, but I have seen a report this morning that the figure could be as high as -250K. We have seen a big risk aversion shift with equities off again, bond and gilt yields down and the Dollar stronger.
Oil is lower and gold has taken a breather from its seemingly inexorable rise towards $1200. The break down through 1.4550 versus the euro is proving a tough nut to crack however, and despite several attempts at getting beyond this level, the invisible elastic thread is so far successful in reeling the rate back. Given that we are not due significant data until the aforementioned US non-farm payrolls, I would expect this pattern to be reproduced throughout the morning session.
That said, there is plenty to keep an eye on (or rather keep an ear open for). The Ecofin grouping of all EU Finance Ministers are meeting for a 2nd day today in Gothenburg. Yesterday they discussed stimulus exit strategies, the recent G20 meeting in Pittsburgh and probably most relevant, the upcoming G7 meeting with a focus on the strength of the Euro.
Also today, Ireland are voting for the 2nd time on the Lisbon Treaty. A 'YES' result is vital to the ongoing development of the EU as an entity. Latest polls indicate a swing towards a YES result (55% for, 27% against and 18% don't know) but markets will keep in the back of their minds that a rejection of the EU constitutional treaty by France and The Netherlands in 2005 caused a slump in the Euro's value. The official result is due sometime on Saturday
We then have preparations for this weekend's G7 meeting in Istanbul, with all the posturing and comment that usually accompanies this sort of get together. The difference this time is that with G7 as a group is losing its importance in global terms, the participants might be tempted to break the mould and make a comment on currency values. It's a long shot but the Europeans are making sure they have their story established just in case. Tim Geithner, the US Treasury Secretary, started the ball rolling, prior to his leaving the US for Istanbul last night, by affirming the US strong Dollar policy and promoting its value as the global reserve currency.
From the UK, the Nationwide Building Society reported that house prices rose 0.9% month on month, to give a flat result for the year, in September. That follows August's +1.4% mom and -2.7% yoy. This is the first time that the year-on-year hasn't been negative since March 2008. Nationwide added that although the upturn fitted well with other macro-economic indicators, they were actually very cautious on the near term outlook as the gain had been achieved on very low turnover.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
4:30 PM ET. Sept 30 Foreign Central Bank Holdings, in dollars
Foreign US Debt Holdings 2.86T
US Foreign Agency Holdings 770.34B
Foreign Treasury Holdings 2.09T
4:30 PM ET. Sept 21 Money Supply
N/A Sep Auto Sales
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Update cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Sterling this morning has enjoyed a brief rally, on the back of better than expected economic numbers. Key levels to watch $ 1.60 & € 1.10.if we can break and hold above these levels then Sterling could continue to rally.
Currency markets are trying to come to terms with just what the Yen policy of the new Japanese Government is and what the repercussions are for other global currencies. The series of conflicting messages coming from the new Finance Minister, Mr Fujii, is keeping attention on the Government’s likely tolerance for a stronger currency but on balance, it appears that intervention is unlikely.
The Finance Ministry would clearly prefer not to get involved but feel that in the current economic phase, a state of 'laissez-faire' might not be viewed too favourably at home. Hence we get more vocal than actual support for the Dollar. The Finance Minister, Gyohten, commented that Japan should fully support the USD as the global reserve currency. Outlook for the Yen is for further strength over the next few weeks, targeting the 85.00 level but that the Dollar will begin to have recovered prior to year end with estimates of the cross being in the low 90s by then.
On a quiet day for data yesterday, the press and hence the forex market got itself into a bit of a tiz about the possible outcome of a couple of Bank of England meetings this week. Firstly, they interpreted The Governor, Mervyn King's meeting in Sweden with the Riksbank as a sure sign that the BoE was about to implement a negative interest rate structure on commercial banks' deposits at the Central Bank.
Secondly, rumours abounded over the agenda and outcome of the meeting called by the BoE today with economists and market participants purportedly related to the current QE stimulus measures. Whatever the outcome of the respective get-togethers, traders will remain nervous of being long of Sterling in the near term.
The pound might be underpinned should Euro/Dollar test the strong Euro support point of 1.4550 at which point we find out whether it is stop losses or real money investors who hold sway at that level.
Also overnight we had statements related to monetary policy from both the Canadian and Australian Central Bankers. The Bank of Canada's Mark Carney, when questioned about intervention, reiterated that he will do whatever is necessary to ensure inflation targets are met and also that he did not foresee Can$ interest rates moving until well into the summer of 2010.
The Reserve Bank of Australia's chief economist talked about the housing boom and the inevitability that interest rates could not remain at current low levels for any length of time. Perception is still that there will be no change in Aussie rates at the October meeting but that we could see a 25bp hike at both the next 2 meetings. Aussie and Kiwi currencies both firmed up.
Elsewhere, the South Korean central bank voted unanimously to hold rates at current levels whilst later this morning, the Romanian Central Bank is expected to cut the official ROM lending rates by 50bp to 8% and this afternoon the Israeli Central Bank meet. Remember, Israel were the first of any of the monetary authorities to increase rates (at their last meeting) so expect no change this time.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The G20 meeting concluded with little unexpected emerging. The draft statement promised to maintain policy stimulus for as long as it was necessary and to ensure that policies were in place to rebalance the world's economies. Other than that, details were sketchy and if hadn't been for comments from the new Japanese Finance Minister, Mr Fujii followed by a good amount of back-tracking, the meeting might very well have come and gone without causing a ripple in global markets.
As it was, Mr Fujii initially stated that he viewed previous intervention as inappropriate and that recent moves were not abnormal which was taken as affirming the new Finance Minister's non-intervention stance and saw the Yen firm up, reaching 88.25 against a broadly firmer dollar.
The Yen has been in buoyant mood over the last few weeks on repatriation trades ahead of the half-year end and Mr Fujii's comments added impetus to the Yen buying. This was only tempered when he added that his earlier comments were not a sign of neglect over the Yen's value and that he is watching the Yen's rise carefully. He added that he was coming to the view that the move is becoming 'one-sided'. The Yen softened a little but do not expect any serious weakening prior to October trading.
Friday's economic data was not particularly conducive to the global growth story with disappointing capex numbers from the US offsetting better consumer confidence figures from the US, Germany and Korea. US equities were disappointed by the weak August durable goods report and finished the day on a bit of a downer. Added to gold trading back below $1000/oz and oil down at $67/barrel, this persuaded traders to take out some of their short Dollar positions going into the weekend.
Although the follow through didn’t materialise in the Far East this morning, the proximity of the current Euro/Dollar rate (1.4600) to the strong support levels of 1.4550 and 14500 will concern those traders still sitting very long of Euro. A move lower will certainly create some unease and the market will spend the early part of the week looking for data/events that might provoke a sudden bout of weakness in the Euro. The ECB chairman, Trichet attempted to get the Euro moving easier with comments on US support for the Dollar being vital. It looks like all the Central Bankers are following Mr King's lead in trying to make their currencies more receptive to increased exports.
Today we get little economic data of significance, just a spate of German CPI figures for the individual States. The election in Germany this weekend went largely as expected with Merkel being returned as Chancellor for a second term. Her coalition partner however has changed. After struggling to deal with the SPD party over the past 4 years, she is now indebted to the FDP for her return to power. The FDP are more centre-right than the SPD and mirrors the situation we had under Helmut Kohl in the period 1982 - 1998. The election result is viewed as being neutral to small positive for the Euro.
We have already seen the UK Hometrack housing data released, showing a slightly better out-turn than had been expected, with month/month at +0.2% and year/year at -5.6%. No reaction from Sterling.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The combination of negative sentiment towards the pound's value from the supposed Guardian of the currency, the Bank of England, coupled with international concern over the UK's prospects going forward and rumours of the Bank calling a 'crisis' meeting of economists have left Sterling mighty vulnerable. As I said yesterday, it appears that any bounce in its value is solely down to Sterling shorts taking profits and then looking for a better level to re-open their short positions.
Expect a lull during the day but then a dip lower at the European close. The weekend press sentiment will be vital for Sterling's health next week as the Far East seem to take what appears in the Sunday Times business comment as being gospel and trade accordingly.
Outside of Sterling, interest centres around the G20 get together this weekend and the Swiss National Bank. In Pittsburgh, the focus appears to be shifting away from the Global Financial Crisis towards wranglings over the make up and operation of the IMF. Recent proposals from the US remove the UK and France from the board of the 'new' IMF, which, as I am sure you don't need telling, didn't go down well this side of the Atlantic. Watch this space…..
Suffice to say, I don't expect much of substance related to currencies or interest rates but plenty of hot air about bankers' bonuses and who should 'rule the world' in terms of Financial Centre.
The Swiss continue their battle against a stronger Franc, emulating King Canute in his abortive attempt to hold back the tide. The nearer we get to 1.50 in Euro/Swiss, the more vocal the Central Bank becomes. Expect lots of comment over the next few days.
Conversely, the new Japanese Finance Minister has affirmed that the BoJ will not embark on an exercise to weaken the Yen, for now anyway.
Bits and pieces out today but G20 the main point of interest
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
If you have been following this market for any length of time you will have made a good profit. This market is a prime example showing that you do not have to be frantically trading day in and day out to make money with forex trading.
The spot gold market has proved to be cyclical and taking the 86 day periods we have experienced combined with other prevailing factors we can expect to see gold pushing higher.
The long term outlook is good and as we keep watching this market I believe those who stay the distance will be enjoying a very happy and golden Christmas. This new video will show you why.
The USD traded well for the most part of yesterday as the anticipated a more hawkish tone from the FOMC interest rate meeting due tomorrow night. In particular it is expected that FED will look at an exit strategy soon on measures introduced. In addition as the USD has been sold aggressively in the last 2 weeks so it was unsurprising to see some profit taking in the markets.
However in later trading the USD once again turned negative as rumours surrounding the G20 escalated. The talk was that the G20 will call for gains in certain currencies to help reduce global trade imbalances. The USD was further hindered by increased risk appetite as the Asian Development bank upgraded their growth forecasts for Asia for 2009 and 2010.
The pound remained under pressure yesterday in particular against the euro hitting a 5 month low. The key level will be 1.10/0.9090 and for the moment this is holding, however we do have the risk event of the Bank of England minutes tomorrow which is expected to reiterate the negativity and dovish tone of the Bank of England. The BoE yesterday in their quarterly report said that "It is possible that sterling's depreciation may be part of a more prolonged process of rebalancing of the UK economy, generating a fall in the long-run sustainable real exchange rate." This statement confirms that the BoE expect a weaker pound going forward.
The euro has pushed up to 1.48 against the USD and is still looking bullish especially on the chatter of concern surrounding the USD as a reserve currency.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The pound came under intense pressure last week falling to 1.10 against the euro and slipping against the USD. The pound has not been helped by wobbly risk sentiment, but the main damage seems to have been inflicted by an article in the Telegraph. The paper reported that Lloyds Banking Group has been forced to abandon it’s plan to withdraw from the Government’s toxic debt insurance scheme after failing to raise enough capital to meet the FSA’s strict requirements.
Among the other factors weighing on the pound; likelihood of early move by Bank Of England to cut deposit rate paid on bank reserves; likelihood of additional Quantitative Easing coming soon, and of course dire public finances. The recent rally in the FTSE will have provided the pound with some support. The concern is that if equities sell-off the pound could drop further. We need to see some consolidation over the next few trading sessions to support the pound.
On top of the bad news surrounding the pound we have also simultaneously witnessed consistent euro strength against the USD pushing up over 1.47. This has helped to keep the euro strong across the markets and also against the pound. In an article over the weekend the Telegraph are pointing towards GBP/EUR hitting parity in the first quarter of 2010. Whilst this cannot be ruled out we must consider that economic sentiment is very fickle at the moment and the tide can change very quickly. This week the Bank of England minutes will be closely scrutinized to asses on further or imminent QE measures from the Bank of England.
The USD has made a comeback against the EUR, AUD, JPY and GBP over the last trading session. Previous to this USD weakness seemed to be engrained into the markets as various factors converged to heap pressure on the USD. The recent USD strength coming back into play has been attributed to this weeks FOMC interest rate meeting in the US; the expectation is growing that the Fed will discuss exit strategies in the near future and this will signal a hawkish tone with the potential for interest rate rises to follow.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Currency Market Updates - The Pound Under Pressure
18, September 2009
The pound is under intense pressure this morning falling to 1.10 against the euro and slipping against the USD. The pound has not been helped by wobbly risk sentiment, but the main damage seems to have been inflicted by an article in the Telegraph.
The paper reports Lloyds Banking Group has been forced to abandon it’s plan to withdraw from the Government’s toxic debt insurance scheme after failing to raise enough capital to meet the FSA’s strict requirements. As we experienced previously jitters in the UK banking sector hurt the pound and given the bad sentiment already surrounding the pound it is no surprise to see it fall on this news.
Among the other factors weighing on the pound are the likelihood of early move by Bank Of England to cut deposit rate paid on bank reserves, the likelihood of additional Quantitative Easing coming soon and of course dire public finances.
The recent rally in the FTSE will have provided the pound with some support The concern is that if equities sell-off the pound could drop further. We need to see some consolidation over the next few trading sessions to support the pound. The better than expected public sector net borrowing data gave the pound a reprieve this morning and it has edged up from the lows but a dead cat does not bounce.
Yesterday we saw some respite in the selling of USD with a little US dollar strength coming back into the markets against the euro, pound and Japanese Yen. Equities struggled a little yesterday too and this could be a sign that the recent push to sell USD is starting to look tired.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The dollar continued to come under pressure across the markets as more positive feedback from global markets spurred on the sentiment that the recession is nearing the end. Yesterday from the US we saw that industrial production and CPI data came in better than expected. Industrial production up 0.8% following the previous days' positive retail sales data. This has given the markets a comfort factor and lessened chatter on a double dip recession. EUR/USD continues to drive towards 1.48 and USD/JPY is pegged at 90.80; even the pound managed to gain up against the USD.
From the UK we had retail sales data and this came in as expected. Although this was slightly disappointing for sterling we have not seen any further selling on the pound. Elsewhere, Bank of England quarterly survey shows Britain's inflation expectations for the coming year holding steady at 2.4% in August, unchanged from May.
In other news the Bank of Japan and the Swiss National Bank both left their interest rates unchanged as expected. Japan upgraded their outlook for the economy and in recent talk they have even moved away from discussing the problem of a stronger Yen. This is an interesting change in rhetoric as a strong Yen undoubtedly impacts on the economy of Japan as an export driven economy, however a stronger Yen will help to boost domestic demand and should actually help formulate a sustainable recovery.
The key levels to look out for today are centered around further USD weakness with 90 on USD/YEN
a huge level; 1.48 on EUR/USD and 1.6650 for GBP/USD. The factors that could turn this seemingly relentless selling of dollars would be a pull back in equities or hawkish comments arising from the Fed.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
We have experienced a bumpy ride so far this morning in the markets. Sterling started positively touching 1.6650 against the USD and 1.1380 against the euro.EUR/USD also achieved 1.4647 in early trading.
Overnight we had the RICS UK house prices show a rise for the first time in 2 years and then this morning we saw that CPI (Consumer Price Index) data from the UK came in stronger than expected at 0.4% for August. This feedback should have given the markets some assurance that inflation levels are slowly rising in line with the impetus of QE. Sterling initially moved higher against the USD and the EUR. As the morning has progressed we have seen German ZEW come in weaker than expected and this has led to a slight sell off in EUR/USD back under 1.46.
However later in the morning Mervyn King swung the markets and sterling into a negative tone. Despite stronger than expected CPI report, Bank of England Governor King feels risks to inflation to the downside. Sterling is sold off across the board after BoE King says he may reduce the interest rate on bank reserves and highlights the long slow road ahead. Sterling has lost over a cent against the USD and is testing the 1.13 level against the euro.
In other news the Reserve Bank of Australia were less hawkish than expected in the minutes of their last interest rate meeting. This has slightly eased the strength of the AUD against the USD back under 0.86. Later today we have US retail sales which volatility is expected and this number should provide more clues to the pace of the recovery in the US.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
See How MarketClub Trade Triangle Alerts Give You The Edge
15 September, 2009
This brand new MarketClub video shows you how "Trade Triangle" ALERTS work and how to use them successfully. It really is not so hard to be a trader in healthy profit if you use this amazing technology.
The recent rise in gold prices for example has given us a great boost and if you were following the "Trade Triangle" alerts I am sure you are smiling now. Take a few minutes to see how it is done. If you missed it, don't worry there are plenty more good trades to do and profit from.
Keep an eye open for the new educational trading videos which come out regularly.
The start of this week marks the one year anniversary of the collapse of Lehman Brothers when the financial world was turned upside down. Within a close time span of the collapse of Lehmans we witnessed the ripple effect as Halifax Bank of Scotland was swallowed up by Lloyds. We then saw Bradford & Bingley nationalized and further down the line Lloyds and RBS propped up by the UK government. As we recalled the crisis in UK banks ultimately shook the confidence of sterling to the very core and we experienced a seismic shift in the exchange rates with sterling falling swiftly against the euro!
So one year on where do we stand? Well after worldwide economies have injected billions in stimulus to faltering economies we thankfully have experienced some positives on a global scale particularly since June. We have recently witnessed a sustained rally in the equity markets with the FTSE breaking through 5,000 last week for the first time this year. However overall the economic conditions are still far from the pre- Lehman levels and although improvements have ensued we still need to see underlying economic data and consumer data to continue to be positive.
This week we have lots of UK and US data to digest. In the UK we have consumer prices, employment data and retail sales. The market will want to see an improvement in spending. In the US we will see housing data, consumer and producer prices and again retail sales. The big one will be retail sales with strong gains expected.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
As expected the Bank Of England left interest rates unchanged yesterday and also did not expand the QE measures any further from the £175bn current level. This gave sterling a swift boost as it pushed higher across the markets, gaining on the USD and the euro. Further good news today from the UK as UK August PPI input prices came in at +2.2% stronger than forecasted and the highest since June 2008, output prices came in close to forecasts at +0.2%. GBP/USD has today touched over 1.67 and GBP/EUR has gradually climbed to 1.1450.
The USD is still under immense pressure across the markets losing against most currencies with EUR/USD peaking over 1.46 and NZD/USD hitting a yearly high. The problem with the USD is that it has broken past key levels and the momentum is still there.
In addition, economic news is still coming in positive which is a natural USD sell. Most notably we had improved data from China which encouraged more risk to be undertaken in the markets. US equities have also hit a 2009 high and gold has gone back above $1000.00/oz heaping more pressure on the beleaguered dollar.
The US treasury emissary in Beijing, aptly named David Dollar, added more pressure by stating that "China has a huge amount of foreign reserves and it makes a lot of sense for it to diversify" adding "I think it is healthy to have a variety of different reserve-type currencies. We welcome the internationalization of the renmimbi." Economic data also did not help as the US trade deficit widened in July.
In other news the Bank Of Canada (BOC) left rates unchanged but strongly affirmed that they are not happy with the strength of the Canadian dollar. This led to a sell off in the Canadian currency across the markets as the bank hinted that unconventional measures could be introduced to counter this problem. Basically Canada is hinting at introducing QE.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The Monetary Policy Committee of the Bank Of England today announce their monthly interest rate decision. As we stand it is not expected that interest rates will be cut or that any extension of the Quantitative Easing programme will take place. However last month the market was jolted into life with the shock announcement that QE was expanded by £50 billion and therefore we cannot rule out further expansion today.
The market is reflective of this and sterling has fallen back a little against the USD to the low 1.65’s and as low as 1.1320 against the euro. If we do see a further expansion of QE expect more selling of the pound. If you were a market speculator you would be brave to bet against further action from the BoE although no action is expected…
In other news the Reserve Bank Of New Zealand left interest rates unchanged at 2.5% as expected, they cited that further rate cuts remain possible but rates will eventually rise when economic recovery is entrenched. The bank also mentioned that the high value of the NZD is threatening to undermine the economic recovery of New Zealand. Similar concerns hold true in Canada, Australia and Japan.
You may have noticed that the UK government and the Bank Of England have not exactly supported the pound with their bearish comments through the economic crisis and although caution has been warranted it has also become beneficial for the UK’s economic recovery via a weaker pound.
Yesterday the Federal Reserve’s beige book confirmed that the economy continued to stabilize in July and August again supporting the better economic news of late. Equity markets continued to perform strongly with the FTSE breaking through 5,000 for the first time this year. Data out of the UK this morning showed that UK Halifax House Price index rose +0.8% which was a touch lower than forecasts.
Expect volatility again in the markets ahead of the BoE decision and the Bank Of Canada decision later…also across the markets the USD remains weak with the dollar index (the USD relative strength against a basket of currencies) falling below 77. Beware of a correction in the USD as it has hit lows across the markets notably against the EUR
, AUD
and NZD.
.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
This video will show you what you missed!
While you have been sleeping, the gold market has been gradually moving up in a healthy way to give us a nice profit. That is not to say you cannot still benefit.
If you prefer to stay on the sidelines, that's OK. Just keep an eye open for the new videos coming out.
That is according to the NIESR (National Institute for Social and Economic Research) who yesterday heralded that the in the three months to August the UK economy grew by 0.2%. This news was followed with consumer confidence data improving and follows yesterday's improved numbers in Industrial output and Manufacturing output.
However this morning the pound has already lost ground against the USD and the EUR as the threat of further surprise action in tomorrows Bank of England is weighing on the pound. According to sentiment the BoE should not move on QE, however this cannot be ruled out with the bearish tone of the Monetary Policy Committee. If we do see a further expansion of QE then we will see further weakness in the pound.
The big news yesterday was the sell off in the USD which was across the markets and relentless; the dollar index hit a fresh low as a culmination of facets undermined the USD. The continued boost in equities and the rally in gold is one reason for the USD weakness. In addition the continued call for a new reserve currency most recently by the UN and the concern over the huge deficit in the US. The ECB did back up the USD yesterday by stating that it would be very unlikely for the euro to replace the USD as a reserve currency; notably the USD recovered a touch on this.
Overnight some mixed data from Australia as consumer confidence pushed higher but retail sales came in weaker than expected. This pushed the AUD a little lower, back below 0.86 against the USD and to 1.92 against sterling. For today the theme will be the performance of the USD. Will it rebound or show further weakness? First thing it moved towards 1.645 from 1.6550 against the pound and from 1.4517 to 1.4465 against the euro.
However as I write GBP/USD has pushed back above the 1.65 resistance level and EUR/USD over 1.45. GBP/USD needs to forge above 1.66 on the upside and EUR/USD 1.4550 to underpin the USD weakness and push to higher levels.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Gold and commodities continue to outperform in the markets helping lift the ZAR, AUD and CAD. In particular THE AUD
is the star performer hitting yearly highs against the USD
and new highs against sterling.
Sterling had a mixed day against the majors initially pushing higher against the USD and the EUR before losing ground in later trading.
Today UK industrial production is due for release and in the light of the recent drop in manufacturing PMI it could disappoint. News out already from the UK showed that like-for-like retail sales fell 0.1% in August year on year, however overall retail sales increased 2.2%.
As I am writing the USD has lost across the board. Sterling is pushing towards 1.65 and EUR/USD 1.4450; sterling not quite pushing through 1.65 as we await the UK data. So what is causing the USD weakness?
Personally I feel it is a culmination of factors. We have the increased appetite for risk and recent improvements in economic data helping the risk appetite trade. Also the G20 have given the markets comfort by stating that stimulus will not be removed anytime soon until recovery is assured. Another reason is that the markets may be looking at the huge deficit for the US and with recent chatter from the UN that a global reserve currency is required also undermining confidence in the USD.
Look out for volatility today as price action in the equities and commodities sectors will lead to currency volatility.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Sterling started on a weak note at the beginning of last week as concerns grew over the effectiveness of Quantitative Easing. With the Bank Of England raising the amount of QE last month by another £50 billion there has still been little real effect in the lending patterns of UK banks which is concerning.
Aside from this the spiraling public debt levels and confirmation from the OECD (The Organisation for Economic Cooperation and Development) that the UK will lag other major economies in a recovery was all weighing on sterling. However we did see gains in sterling come back into play on Thursday and Friday; can this continue?
This week we should see lots of price action in sterling with Industrial Production, producer prices and RICS house price balance. The main event this week will be the interest meeting from the Bank Of England. It is not expected that rates will move even in the light of a call for another cut! However the tone of the Bank Of England will be scrutinized for future action in relation to further QE.
GBP/EUR needs to get back above the psychological 1.15 level before we can relax and feel more comfortable and GBP/USD over 1.65.
On Friday US non-farm payrolls came in better than expected coming in at -216k; this boosted the move into risk appetite and equities rallied and the USD and JPY weakened. It was not all good news for the US economy as the unemployment level rose to 9.7% still enforcing a weak labor market in the US. Should be a little choppy today as we have a US holiday.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
A good day for the pound yesterday UK PMI services came in better than expected showing the strongest reading since February 2008 and marking the fourth straight month of expansion. This was good news for sterling which traded higher against the USD and the EUR. Against the EUR the pound hit 1.145 and is now eyeing a recovery back over 1.15.
As expected the European Central Bank left rates unchanged. The euro was not helped with a more negatively weighted tone from the European Central Bank in their statement following the decision, although the ECB did upgrade their forecast for growth there was an undertone of caution.
The ECB did not increase the spread on the one year tender and this led to selling of euros. In this case actions spoke louder than words and the improved growth forecast was not backed up with an increase in the one year spread. The central bank also warned that "prudence and caution are the essence" to cement the disappointment for the markets.
Today we have US non-farm payrolls and unemployment. The non-farm payroll data will be a key piece of market information, the expectation is for the number to come in at -230k. A number better or less than this will lead to a boost in risk appetite with the USD gaining against the YEN and losing against most other currencies. However if we see a number over -350k we could see a sharp move into risk aversion and USD strength. With US unemployment data out in addition expect lots of volatility this afternoon.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Yesterday was a strange day in the markets as gold perplexed the markets soaring to $22. The reason could be attributed to a move out of equities or a hedge from equities as a safe haven. This backs up the nervous sentiment for September. Within the currency markets this did not lead to any significant breaks out of the current trading ranges, however we did see weakness in the USD
against the pound and the euro. Equities also stuttered yesterday with the DOW finishing down on the day. However the Shanghai index rallied; very strange markets at the moment!
The Federal Reserve as expected kept interest rates on hold and did not offer any surprises on future action maintaining that rates will remain low for some time and a cautious approach is still prevalent even in the light of improved economic conditions.
Today we have the ECB rate decision and it is anticipated that a similar tone will be affirmed, Trichet will rightly want to cement a tone of caution even after the positive GDP postings by France and Germany. The market will look to see whether the ECB increase their growth forecasts. If so, this will be euro positive; another aspect will be whether the ECB increase the spread on the one year tender. If yes, this will denote a hawkish stance and be euro positive and if not the opposite.
Data out already has confirmed that Eurozone retail sales came in at -0.2% which was worse than expected and has led to a little euro weakness in the markets. In the UK services PMI has come in at 54.1, up from 53.2 in July and better than expected. In addition the business expectations index has come in at 72.3 in August from 69.3 in July. This is the highest reading since August 2007. Sterling looking a little more positive today backing up yesterdays gains.
Interesting news in that a joint letter to the European Commission has been issued from the Swedish PM, Italy’s Confindustria and Germany’s BDI warning that the signs for the second half of 2009 are not encouraging. The concern is of a credit crunch to develop in Germany and Italy and drastic action should be taken There has been undertones of rising credit issues for some time and this could de-rail the recovery in Germany. One for the ECB to think about today.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Despite good economic data yesterday from the US in the form of US pending home sales and Manufacturing ISM the market flipped into negative mode. There is no one reason for this shift but a culmination of reasons and this led to equities tumbling and Oil and commodities falling. The main losers were the banks as fears rose on renewed balance sheet concerns.
September was previously touted as the month for stocks to fall and the first day of the month definitely backed up this prediction. Concerns over the sustainability of China's growth were a big factor and also discouraging data from automakers. In the markets we witnessed further strength in the USD and the JPY as the risk aversion trend came into play.
GBP/USD
moved from a morning high of 1.6350 to a low of 1.6111 and USD/EUR retreated from 1.43 to 1.42. GBP/YEN fell back under the 150 level as the positive YEN feel on the new leadership continued coupled with strength on the back of risk aversion. USD/YEN moved into 92.00 levels and this brings the 90.00 level into focus again.
Yesterday in the UK economy we had mixed economic data with a rise in mortgage approvals and an improvement in M4 money supply. This is a positive as it lends some weight to the argument that QE may be starting to kick in, however still early days. The bad news was that net lending fell in July by the sharpest pace since records began in 1993 and UK PMI contracted sharply which led to a sharp sell off in sterling. UK construction PMI data just out came in better than previous at 47.7 showing a slowing pace in the contraction in the construction industry. The pound is up slightly on the news.
The big loser yesterday was the AUD losing 2% against the USD as the shift out of risk and commodities weakened the AUD and other commodity currencies. Concerns over China and if September does turn out to be a bad month for stocks could see a turnaround from recent AUD strength. The market was a little disappointing at the dovish tone set by the Reserve Bank of Australia and the failure to specify when rates would be hiked. However second quarter GDP came in last night at 0.6% which is much better than expected giving the AUD some support.
Eurozone GDP and Federal Reserve minutes will dominate the data releases for today.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
In this article Charles Maley from ViewPointsofaCommodityTrader.com takes a stab at digging into our psyche…enjoy the article!
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I keep CNBC on all day while I work. Perhaps I think I will miss something, or maybe it's the background noise that's appealing. In any event, what I always find amazing is the parade of experts making one prediction after another. I think I would fall out of my chair if I heard one of them say "Well, to tell you the truth Mark, I have no idea".
What's most surprising is the arrogance in which these forecasts are made. The forecaster always seems convinced he is right. I think the world is far more complicated than we think, yet we always seem to place way more value in what we know over what we don't know. If you are an auto mechanic, you most likely know more about fixing cars than you don't know about fixing cars. Also, errors are easily rectified. In this light, a good mechanic is an expert.
If you are a psychologist or an economist, I don’t think so. In fact, it's practically impossible that your knowledge of the human condition would exceed your lack of knowledge of the human condition. Not to mention that mistakes can be catastrophic in these "big system" type professions. Plumbers don't kill people but doctors do. Mistakes when predicting the weather, the economy, or the financial markets can and do ruin our lives. Nothing is as potentially dangerous as a rational prediction in an irrational world. So, are there really experts in these professions or are they just the one-eyed men in the land of the blind? I Guess Yogi Berra, the great baseball player/coach had it nailed when he said "It is tough to make predictions, especially about the future."
I think we love predictions because if we make predictions, and/or concoct explanations for those events we predicted wrong, then we won’t feel like victims of randomness. We feel more in control. But are we more in control or just intoxicated by some illusion of control?
In his book "The Black Swan" Nassim Taleb says,"We have seen how good we are at narrating backwards, at inventing stories that convince us we understand the past. In spite of the empirical record we continue to project into the future as if we were good at it, using tools and methods that exclude the rare events." Funny isn't it, since the big, rare, unpredictable events are precisely what shape the world. Events like the automobile and the World Wars, the internet and the Beatles.
I think it's ironic that by accepting we have little control over most things, actually gives us greater control over what might happen. By realizing our lack of control we may be able to minimize the more negative events. If we realize anything can happen when trading commodities, then we are more likely to actively manage our exposures to big loss and potential ruin.
Charles Maley
ViewPointsofaCommodityTrader.com
Charles has been in the financial arena since 1980. Charles is a Partner of Angus Jackson Partners, Inc. where he is currently building a track record trading the concepts that has taken thirty years to learn. He uses multiple trading systems to trade over 65 markets with multiple risk management strategies. More importantly he manages the programs in the "Real World", adjusting for the surprises of inevitable change and random events. Charles keeps a Blog on the concepts, observations, and intuitions that can help all traders become better traders.
I hope you enjoyed the article,
Good Trading,
Tom.
Currency Market Updates are compiled by Tom Nadir.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
The pound had another dismal day in the markets yesterday and has not started particularly well this morning. The pound has slipped to 1.63 against the USD and to 1.1379 against the euro.
With little fresh data from the UK the market is selling sterling more on sentiment, the sentiment being that the UK is diverging in its central bank policy from the ECB and the Federal Reserve. With the prospect of a further contraction in UK GDP on Friday this could be a week to forget for the pound.
Economic data just out from Germany in the IFO survey also came in slightly better than expected for both business sentiment and expectations. This could add more woes to the pound although no price action seen as yet.
Yesterday we had more upbeat data from the US with Consumer Confidence way above expectations and the Home price index also better than expected. This positive feedback from the consumer and housing sector does reinforce the good sentiment in the industry and manufacturing sectors. President Obama also confirmed the re-appointment of Federal Reserve chairman Ben Bernanke for another 4 year tenure with much back slapping for his aggressive policies. Although the policies are showing good results now, the question will remain on whether this is sustainable going forward.
In other news Oil dropped in later trading topping out at the $75 level. The Bank of Canada also expressed concerns on the recent strength of the Canadian Dollar
suppressing export related growth. The CAD is particularly strong against
the USD with speculation of moving to parity. Yesterday the fall in Oil and possible the expressed concerns eased USDCAD
the USD/CAD from 1.07 levels to 1.09.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Yesterday sterling was on the back foot against the USD and the EUR. In particular the move lower against the euro is important. Although the drop was not significant in size, the fact that we have now breached two key support levels could open the door for a further move lower. The key levels breached were 1.1494 and 1.1467. The pound needs to find some resilience quickly or we could see further drops towards 1.11.
The move lower in the pound was not related to economic data but more to the sentiment divergence between the ECB and the BoE. The ECB yesterday hinted at an exit strategy for stimulus and QE measures, whereas the Bank of England could in fact add more to the QE programme before the end of the year. In addition it is widely expected that on Friday UK GDP will post a further contraction. This contrasts to recent improvements in GDP for France and Germany and the Eurozone as a whole. So this week is going to be important for the pound against the euro as psychologically we are now in a lower trading range.
Later today we have important economic data from the US in the form of Consumer Confidence and the S&P home price index. The Consumer confidence number is important as recently we have seen improved confidence in business and industry sectors. However will this be reflective in the consumer, retail and service sectors. In addition the home price index may highlight a trend of improved data on the back of bargain hunting rather than an improvement in the sector as a whole. Either way the data is important as it is consumer related and the market will look for it to reflect recent positive sentiments.
President Obama is due to re-appoint Ben Bernanke as the Chairman of the Federal Reserve. This will comfort the markets somewhat and underline the strategy that the Fed has taken over the last year. Personally I don't think he has much choice as a change in the Fed chairman would send out the wrong signals and alarm fragile market conditions.
The big gainer yesterday was the CAD which strengthened on the good performance of Oil but also due to retail sales data coming in at a fantastic 1%, well ahead of forecasts. The AUD retreated a little against the USD but pushed to even higher levels against the pound.the pound. We currently sit at 1.9530.
This morning the USD and the YEN are a little firmer after the Shanghai index lost 5% overnight, this following cautious comments from the Chinese premier and also due to concerns raised on asset bubbles in Chinese banks via the China construction bank.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
On Friday we had further positive feedback from the US economy as existing home sales came in much better than forecast hitting 2 year highs. This data and a healthy economic assessment from Ben Bernanke boosted the good cheer in the markets. We are approaching the one year mark from the collapse in the financial systems and at the moment things are looking pretty steady and stable.
However I feel economic data will be closely scrutinized in the next quarter to look for sustainability in the markets and not simply a knee jerk response to extra stimulus. An article in the FT by Nouriel Roubini points to a threat of a double-dip recession if recovery turns anaemic.
In the UK, the Institute of Chartered Accountants in England and Wales reported that business confidence turned positive for the first time in 2 years rising from -28.2 to +4.8. From the UK this week we see little data until Thursday with Gfk consumer confidence and then Q2 GDP. For the US we see the US S&P Home Price index, US Consumer Confidence, Durable goods and New Home Sales. The market will be looking for more signs of growth and sustainability to back up the positive testimony from Ben Bernanke.
Chin up Australia. Yes you have lost the Ashes and the rugby against rivals New Zealand over the weekend. However do not despair as your currency is strong! Hitting new 12 year highs againststerling at 1.9608. Probably not the best news for our Australian friends here in the UK though ;-)
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Yesterday we saw a period of consolidation after the markets dipped from Friday. GBP/USD recovered from the 1.62 levels to move back to 1.64 and GBP/JPY gained from 154 to 156 as fears subsided and confidence crept back in. As we have seen on many occasions we are swinging like a pendulum between risk aversion and risk appetite and yesterday’s small bounce in equities helped the USD to weaken against sterling.
Data out this morning from the UK demonstrated that July CPI came in at +1.8% month on month, stronger than median forecasts of a fall of -0.3%. This was a surprise and a boost for the pound as the market was looking at more deflationary pressure especially following the Bank of England’s quarterly inflation report which noted that inflation is set to fall below 1% by the autumn. The chief reason for the upward trend of CPI was attributed to the recreation and culture sector, specifically the prices of computer games, DVDs and CDs.
In other data out we saw the ZEW survey on economic sentiment for August in Germany come in at 56.1 versus 39.5 in July, this was stronger than forecast and is reflective of the positive growth in Q2 GDP. You may have expected this to rally the euro but no gains as it remains mute at 1.4120 against the USD and GBP/EUR is up a touch to 1.1630.
Economic data and risk appetite/aversion in equities has been the recent drivers for the forex markets. However be aware that on a technical basis GBP/USD and EUR/USD are now looking in a bearish trend and could forge a move to 1.5980 on GBP/USD and 1.3850 on EUR/USD If the markets fail to be led by sentiment and equities then we could see a move lower on the technicals. Sterling may be nervous also ahead of UK retail sales data on Thursday
Report by Phil McHugh.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
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The markets had an optimistic start yesterday buoyed with the positive news that France and Germany posted positive Q2 GDP numbers at +0.3% respectively. The news rallied the markets with sterling
and the euro
both making some gains against the USD.The FTSE also hit a 10 month high. GBP/USD made a move back above 1.66 and EUR/USD to 1.43 as appetite increased. The mood changed in later trading as US data came in weaker than expected. US retail sales posted lower at -0.1% and weekly jobless claims rose by 4,000 swinging the market back into more caution with USD gaining back.
Overnight the cautious mood was reflective in the Shanghai index which fell 3% and just after 8:00 am this morning GBP/USD dropped 75 pips down to 1.65. With little data today I would expect to see markets led by equities and in all probability no significant breaks with GBP/USD in the 1.65's and EUR/USD between 1.4250-1.43.
Last night we had a 50 basis point cut in interest rates in South Africa down to 7%, also the Reserve Bank of Australia affirmed that they will look to raise interest rates when economically viable. This has added more strength to the AUD versus the USD and sterling;
GBP/AUD is now just over 1.96 bringing us back to 1997 lows.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Official data this morning has confirmed that Q2 GDP has come in positive 0.3% for both France and Germany. Far better than expected and very surprising against a back drop of heavily contracting GDP for the nations at the back end of 2008 and early 2009. In addition Eurozone GDP has just come in at -0.1% much better than the forecast of -0.5%- this means that the Eurozone as a whole is nearing a turn to positive growth.
In the markets the euro has gained a little against the USD but no move at all against the pound. Personally I thing the good numbers should be taken with a pinch of salt as the GDP gains could align to stimulus input over a real turn in demand. Recently we saw that Eurozone Industrial Production fell 0.6% with falls noted in France and Germany and credit conditions remain tight, especially in Germany. I feel we need to look for more economic feedback to substantiate this gain in GDP before we can declare that France and Germany are on the road to recovery.
Yesterday we had lots of news; firstly in the UK unemployment came in at 7.8% higher than forecast and the eagerly awaited Bank Of England quarterly inflation was released. The report offered no real surprises but was slightly more upbeat than expected. In summary lets look at the negatives. The recovery could be slow and protracted, interest rates will remain low for some time and inflation could fall below 1% by the autumn. On the upside growth should resume in Q1 2010 and attain a level of 3% in 2 years. Sterling gained slightly on the news but no big movements as the FED decision loomed.
Onto the FED and again no real surprises. More optimism noted as the Fed affirmed that the US economy is leveling out and no expansion of the $300 bn treasury purchase programme which should expire in October- 1 month later than predicted. There naturally was a cautious tone noting that the economy could remain weak for some time and that interest rates should remain exceptionally low for an extended period. This last point on interest rates is important as the market was hoping that interest rates could rise in the near future. This could now lead to USD weakness again in the near term as global optimism will reinforce the risk appetite momentum with less optimism on interest rate hikes which is USD positive.
Huge volatility in the markets as they change gear quicker than a Ferrari (not that I would know). The return to risk appetite has seen GBP/JPY
now move from 156 back to 159 and GBP/AUD
from 2 down to 1.97 so a complete reversal to the position yesterday morning...
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Already this morning we have had the release of eagerly awaited jobless claims and UK unemployment. UK jobless claims came in better than expected at +24,900 against expectations of +28,000, however the ILO unemployment rate nudged up to 7.8% from 7.6% against the expectation of 7.7%, worse than expected. No move in the markets as yet.
We have seen a sell off in sterling ahead of today so to a large extent negativity has already been factored in. The market will also be focusing mainly on the Bank of England's quarterly inflation report and we will wait to hear substantiation of last weeks expansion of QE coupled with growth and inflation forecasts. The tone is expected to be dovish and could lend to further weakness in the pound. However, if the Bank close the door on further monetary stimulus we should see a bounce in the pound.
Yesterday we saw further USD gains against the pound and the euro and also in later trading a move into risk aversion mode as the YEN also gained and commodity linked currencies weakened. This was very apparent in GBP/JPY moving from 160 to 156, however, on the other hand GBP/AUD moved up from 1.9650 back over 2.
Concerns over China and caution ahead of the Federal Reserve meeting tonight changed the tone back to risk aversion. In China loan growth fell to $52 billion from $248 billion a month earlier. China is still spending like a footballer's wife in Bond Street and GDP based on output is near 8%. However the fear is that this growth and stimulus is ultimately not sustainable and banks the extra liquidity is not having the desired effect and instead is buoying equities with the Shanghai index up 80% this year. The central bank estimates that 20% of fresh credit has ended up in equity markets.
The main event for today is the FED decision with no change in rates expected but focus on the strategy going forward- particularly in relation to inflation expectations and a potential exit strategy from QE.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The pound suffered heavily in trading yesterday and has continued on a weak tome this morning. Yesterday the pound fell against the USD,EUR, JPY, NZD, AUD. So basically across the markets. The reason for the fall in the pound is down to the factoring in of negative feedback from the UK economy tomorrow from the UK Quarterly Inflation Report and from UK unemployment data.
The quarterly inflation report is expected to emphasise a downgrade in growth forecasts for the UK and to highlight why the expansion of QE by 50 billion pounds was deemed necessary. The UK unemployment data is expected to show further rising unemployment in the UK as we approach unemployment levels of 2.5 million.
GBP/USD
retraced from 1.67 to 1.645 and GBP/EUR
dropped from 1.1770 to 1.16. Sterling also slipped under 160 against the Japanese Yen, hit a Feb 2008 low against the NZD at 2.4337 and hit lows not seen since 1997 against the AUD of 1.9622.
One positive that helped to stem the free fall came in the form of data from RICS (Royal Institution of Chartered Surveyors) which identified that house price balance came in at -8.1, better than the expected -10 and the highest reading since August 2007. In addition newly agreed sales also rose to the highest reading since August 1999.
Recently we have seen a flurry of improved data from the housing sector and this has rallied the optimists into talking of a recovery in this sector. So can we sit back and expect to see a recovery and rising house prices?
Personally I fear not as normally a property crash lasts about 5 years. In the UK we still have rising unemployment which will undoubtedly have a knock on effect in the housing sector and lastly when interest rates increase from current low levels we could see a reality check as repayments and mortgage rates rise.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
On Friday we saw the much anticipated US non-farm payroll numbers come in far ahead of expectations. The number of job losses in July came in at -240,000 against a forecast of -325,000. This was a huge lift for the markets and the US economy following 19 months of dire payroll numbers.
As anticipated the Dow and the FTSE rallied on the news as investor optimism increased. However, in the currency markets we did not see the typical play into risk appetite trading and USD weakness. Initially we did see the USD weaken against the euro
and the pound however this weakness was short lived and the USD rallied back considerable across the markets.
So what does this mean? Well it could mean a change in sentiment for the US economy whereby it no longer weakens on good news. The key driver for this is the anticipation that the Federal Reserve may now look to raise interest rates sooner than other major economies and is better placed to do so. The economic data also helped to comfort the markets to viewing that the Fed will not look to expand (like the UK) its current measures on QE and ultimately that the economy is out of the deep water it was once in.
It is still early days but a very good number nonetheless and could mark a turning point. GBP/USD filtered down to 1.66 and EUR/USD down to 1.4155.
A big mover after the data was USDJPY,
the USD finally managed to jump clear of 95.00 and gain 200 points to move over the resistance level of 97.00. This could open the door for a move to 100. Another one to watch is GBP/AUD which is back down to 1.98; this is due to a dampened pound following the QE expansion and expectations that Australia will also look to raise rates before most major economies.
The main news this week will focus on the Quarterly Inflation Report on Wednesday from the Bank of England. Here the market will be looking to gauge the UK's inflation projections and growth projections. The projections are especially key following last weeks expansion of QE by 50 billion pounds.
The market will want to see evidence to see why this expansion occurred and that it reflects and underlying reason. It is widely expected that the Bank will confirm that the economy has shrunk by more than Alistair Darling's estimate of 3.5%. No surprise there.
On Wednesday we also see official unemployment data from the UK, contrary to the US numbers we are expected to see a rise in the number of jobless.
Another key event this week is the Federal Reserve's meeting on Wednesday evening, the expectation is that the Fed will confirm no extension of easing policies and may refer to a turning point in the economy.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Then next week we will be looking for more profit.
Remember, it is our old Fibonacci, the thirteenth century Italian mathematician, who is helping us here. He discovered a set of numbers which have been found to have a major affect on the market. His work produced a useful tool which we use in technical analysis along with our "Trade Triangles" and "Talking Charts"
The Bank of England left interest rates on hold at 0.5% but in a surprise move they increased the QE programme by 50 billion ponds. This immediately caused a sharp drop in sterling across the markets losing about 1% against the USD and the euro.
The move can be described as aggressive and ultimately cautious at the same time; aggressive in relation to instilling the liquidity to revive a strong recovery and cautious in the sense that recent positives have not swayed the BoE into taking a recovery for granted.
Next week we have the quarterly inflation report from the Bank of England and this will be interesting as the extra QE measures will be extra inflationary. Will the report make a view on this? The move by the bank clearly indicates that deflation remains a concern coupled with tight lending and credit conditions. Expect the pound to come under pressure as a cautious note will surround the pound ahead of next week's inflation report.
The European Central Bank (ECB) also left rates unchanged at 1% and offered no change in mood from the last monthly meeting. Trichet mentioned that they remain cautious on growth but at the same time there were no additional QE or stimulus measures hinted at. This will be largely supportive of the euro as a currency and although EUR/USD fell slightly yesterday expect to see it hold firm around 1.44 before the US data this afternoon.
Later today we have the US non-farm payroll data at 13:30 GMT. This is the biggest economic data release for the markets and the number today will be closely scrutinized. The labor market has been suffering since early 2008 and unemployment is now approaching 10%. Recently however, jobless claims have moderated and therefore it is expected that the number released today will be better than expected.
Last month we saw a loss of 467,000 jobs and this month the forecast is for -325,000. However, whispers are circulating that the number could be as good as -200,000. If we get a number better than -250,000 expect to see a big move with the USD weakening as risk appetite explodes onto the market. GBP/USD will move higher on the back of dollar weakness over sterling strength and EUR/USD will move back over 1.44.
However a number over -250/300k will disappoint and could lead to USD strength. Either way expect lots of volatility in the run up and immediate aftermath.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
That is will the Bank Of England extend the current measures in place for Quantitative Easing? It will be a mighty close call and will be a defining juncture for the UK's monetary policy sentiment. On the one hand the economy is still fragile objectively and lending certainly has improved. In July the measure of money supply fell by the most this year and lending to companies has fallen for three months in a row.
On the other economic data in the last week could sway a decision to hold and adopt a wait and see approach. The problem with this is that if they hold now and start again later then it will not look very good. QE already introduced will not have had much effect in the markets as it will take time to filter through. For the currency markets the repercussions should be very clear. An increase in QE will lead to selling pressure in sterling and no change could push us beyond 1.70 against the USD
and 1.18 against the EUR.
We also have the European Central Bank (ECB) decision today and no change is expected in the rate of 1%. However will the ECB adopt more QE measures themselves? Personally I doubt it. The IMF recently stated that the ECB should look to cut further, however I would expect a stoic disregard of their view from the ECB. The ECB may offer clues to future monetary policy strategies and again this could play into the relative strength of the euro.
Yesterday we saw lots of positive data snaps from the UK economy with Halifax House prices, PMI services, Industrial output, manufacturing output all better than forecast. Sterling tried to push higher and did break above 1.70 but could not hold ahead of today's announcement.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Mostly sideways trading yesterday as sterling and the euro failed to advance further against the USD We did see a test of the key 1.70 level but if you blinked you may have missed it. US equity markets also struggled to find a direction swinging between gains and losses with the Dow Jones finally ending slightly up.
A pause is probably sensible now as news may materialize that the optimism is not warranted and the overheated markets will quickly retreat. We have a three-pronged event risk this week as we have the monthly BoE and ECB meetings on Thursday and also the payrolls report on Friday from the US. It seems the market will await further direction from these event risks.
News out already in the UK confirmed that UK Nationwide consumer confidence rose to 60 in July, up 1 point from June, not earth shattering but good news nonetheless. The UK Halifax house price index rose +1.1% month on month again above median forecasts of +0.6%. Lloyds banking group announced that they lost 4.0 billion pounds in the first half of 2009 attributing most of the losses to HBOS assets. The number again was better than forecast for a 5.1 billion pound loss.
UK July services PMI has come in at 53.2, up sharply from 51.6 in June, some way better than median forecast of 51.8. UK June industrial/manufacturing output data has come out at +0.5% m/m and +0.4% month on month respectively, stronger that median forecasts of flat and -0.1%. So good news flowing from the UK economy this morning but the markets are yet to sustain a move above 1.70 on the USD or 1.18 on the euro.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
If you have never heard of Fibonacci, he is the thirteenth century Italian mathematician who discovered a set of numbers which have been found to have a major affect on the market. His work produced a useful tool which is used in technical analysis and by scientists in a large array of fields to this very day.
The pound rediscovered its former glory yesterday but will it last? This morning we have tested the much feted 1.70 level but quickly retreated. We have witnessed a few false dawns in the past for the pound and the Bank Of England decision on Friday will be in the back of the mind for sterling bulls.
On Thursday the Bank Of England may announce a further expansion on the quantitative easing programme by 25 billion pounds which will be sterling negative. On the other hand they may decide to leave it be and this could help sterling push over the 1.70 level and advance against other major currencies such as the euro and the yen.
The pound has been boosted by improved economic data,in particular the UK manufacturing PMI which rose to 50.8 from 47.4 on June. This was well above expectations and a number above 50 denotes expansion in the sector. This is the first sign of expansion since March 2008. In addition to this economic data the results from HSBC and Barclays were a great comfort to the pound removing some of the fears surrounding the UK banking sector.
More bank results this week from Lloyds and RBS. Northern Rock has reported a loss of 724.2 million pounds for the first 6 months of 2009 and confirmed that 3.92% of its mortgage loans were over three months in arrears. This is worrying as it is well above the national average of 2.39%. However losses were expected and there are signs of optimism for the Rock with applications for new mortgages doubling in the second quarter of the year.
In other news the Reserve Bank Of Australia (RBA) left interest rates unchanged and in their statement following they removed the line "there remains some scope for further easing of monetary policy" indicating that no further cuts will be on the table.
The USD remains under pressure across the markets with EUR/USD hitting 1.44 and GBP/USD 1.70. The dollar index fell to its weakest level since mid December
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
Sterling has pushed up to over 1.18 against the euro and just over 1.68 against the US dollar. Sterling was helped by improved housing data and better than expected banking numbers and results from UK corporations including BT and Cadbury.
Second quarter GDP data in the US was also better than expected as GDP fell by 1% in the second quarter against an expected 1.5%. This helped comfort the markets, weaken the USD and continue the bull-run in equities. We have now shifted into a higher trading range against the USD after breaking above 1.66 finally.
Barclay's results showed that first half earnings rose 10% and net income came in at 1.89 billion pounds from 1.72 billion pounds a year earlier. This is below median forecasts but still strong numbers- we have Lloyds and RBS later in the week.
One particularly big event risk for GBP/USD comes later in the week in the form of the latest Bank of England MPC meet. Rates are almost certain to be kept on hold but it is what the bank does regarding quantitative easing that matters. This could stem the sterling bulls as we approach the decision on Thursday.
German retail sales for June have come in at -1.8% month on month, -1.6% year on year, demonstrably weaker than median forecasts calling for rises of +0.5%, +0.9% respectively. This has helped the pound test the 1.18 level.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
As we saw yesterday German unemployment figures rose to 3.46m from 3.41m. German unemployment has been on the rise since November 2008 and in March 2009, it hit its peak to date, by 66,000. The government expects unemployment to increase to 3.7 million this year and to 4.6 million in 2010, which is yet another indicator that The Eurozone will leave interest rates unchanged at 1% next week at the monetary meeting and it is widely understood that the key interest rates for the Eurozone will remain around this level for the rest of 2009, heading into 2010. Thursday next week we also have the Bank of England interest rate decision, where again we are likely to see no change from current levels of 0.50%.
Consumer prices in Japan continued to fall for the fifth consecutive month in June on a year-over-year basis, with the latest decline being the steepest on record, government data showed this morning. At the same, unemployment increased further.Month-on-month, overall consumer prices were down 0.2% in June, and core consumer prices also dropped at the same pace.
Meanwhile, jobless rate climbed further to hit a six-year high in June. The seasonally adjusted jobless rate climbed to 5.4% from 5.2% in May. Economists expected the rate to come in at 5.3%. This is the highest rate since June 2003, and was just short of the record 5.5% set in April 2003. On the back of this data the Yen is trading around the 157.60-158.00 level.
Data due out today includes Eurozone Consumer price index, Eurozone unemployment figures, US Personal consumption and US Gross domestic produce. With Germany being the largest country in the Eurozone expect today's unemployment figures to follow trend on German figures, so we could see euro weaken slightly further throughout the day.p>
The start of August could continue with the theme of volatility for anyone trading USD, EUR and pretty much most of the widely traded currencies.
Business Trading: Challenging traditional banking conventions, Currencies Direct guarantees to beat any retail bank both in price and service.
Personal Trading: From the moment we were established our aim has been simple. To provide a personalised service and save our clients money from dealing with traditional banks.
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The most anticipated moment of the past few years in Forex Automated Trading Systems is finally here.
IvyBot is available to the public for the first time and I thought you should be among the first to hear about it and use it if you have not already. I cannot remember having never seen this much fuss made over any product release before.
Many of you have viewed the report put out by IvyBot, I know thousands attended the webinars, which turned out to be extremely good by all accounts! If you did have a chance to attend I am sure you have noticed that these guys are all about presenting the facts, features and benefits. They are not ones to add all the hype, because frankly, IvyBot doesn't need all of that...it speaks for itself.
IvyBot has established a new standard in Forex Trading. You can now see what all the financial heavyweights have been talking about and become an owner yourself for very little money.
But what is so different about this Forex Robot? It's simple really, every robot on the market today has 1 system (robot) trading multiple currency pairs. This didn't make sense to the Ivybot team and it shouldn't make sense to you either. That's where the real genius of IvyBot comes in. IvyBot gives you 4 Robots, 1 for each currency pair in which it was designed. How can the other systems possibly have ONE piece of code capable of performing all the calculations on more than one currency pair? THEY CAN'T!IvyBot has a robot that is designed, optimized, and perfectly tailored to trade each currency pair and you have four of them.
These are the four currency pairs you will be trading with IvyBot EUR/JPY, EUR/USD, USD/CHF (some interesting trades there) and USD/JPY. Technology is improving our lives daily, in ways we can only imagine. So why not allow it to improve your Forex Trading?
So finally, the market insiders have brought you the technology previously enjoyed by only a select group of sophisticated individuals, the same individuals who have enjoyed these successes all to themselves for years.
From today forward, being "an insider" isn't important because you will now have something better, something more profitable and something you will never see on the market again.
The best part is that the IvyBot Team will keep you in the "Know" with constant updates to the member's area. There is a very good reason why IvyBot has been posted all over the Net these past weeks...because it truly is a unique robot.
Interestingly, Bank of England data released yesterday highlighted the fact that British companies are paying down bank loans at a record rate. Whilst at the outset this may be seen as a positive, it is highly likely that the reason behind the debt repayments is not because firms are cash rich, but rather due to firms breaking their banking covenants and banks placing pressure on firms to repay.
Moreover, the option of re-financing is likely to be very slim as few banks have appetite to take on new deals, especially from struggling firms. The flurry of debt raising activity that we saw in the first quarter of this year appears to not be going towards expansion and is simply going to pay down bank debt. This raises the important question as to whether the Bank of England will look to extend their quantitative easing programme.
Other UK data out yesterday showed that mortgage approvals jumped to their highest level in more than a year but consumer lending remained very weak, recording the smallest rise on record. A small easing in credit conditions coupled with increased buyers interest have been cited as the reason for the 14 month high in home loan approvals. But don't get too excited, approvals need to be translated into hard sales, whilst most believe the housing market is starting to improve few will call a bottom to the market.
Nationwide house prices out this morning echoed the positive housing sentiment with a 1.3% month on month gain in prices, taking the yearly change to -6.2%; this beat expectations of a small 0.2% monthly gain (and -7.2% year on year).
This positive data has given GBP/USD a boost this morning seeing GBP/USD touch 1.65 level before retreating back to current levels of 1.6475.
GBPEUR has also hit a month high at 1.1750,on the release of the German data.
In the Eurozone, Germany reported unemployment figures this morning, the number of people out of work rose to 3.46m from 3.41m. This is hardly surprising as companies have cut jobs to protect margins. Note that July's seasonally adjusted reading came in at -6,000 due to a statistical change; the adjusted jobless rates was unchanged at 8.3%.M
On a sweeter note, we all appear to be eating more chocolate as Cadbury's announced a surprise 13% jump in chocolate revenues for the 1st half of 2009.
Report by Currencies Direct
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Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
The gold market is causing frustration to us traders so we need to keep a close eye on what is happening.
Yesterday's drop is typical of what gold is currently doing as there is no definite trend and it caught a lot of people out. The daily "Trade Triangles" (used for timing) turned down and enabled us to get out of this market with a small profit.
Using a combination of the candlestick charts, watching the MACD start to roll over (although not cross over) and our Fibonacci tools it is evident that this market is looking for further falls before revcovering.
In the last few weeks we have seen a number of attempts to breach 1.65 on GBP/USD and every time the market has failed to hold above this level. A similar pattern has emerged in USD/JPY which has struggled to hold over 95. In the last four trading days we have seen a tight trading range for GBP/USD which is unusual in the light of the volatility in the last few months.
Today we have a few data snaps in the calendar for the UK which could shake the markets back into life. We have UK mortgage approvals, consumer credit, net lending and M4 money supply out this morning.
Yesterday the USD strengthened against the pound from over 1.65 back to 1.6350 and from 1.4280 down to 1.4108 against the euro. US stock markets fell more than 1% and this helped swing money back into the USD. US economic data supported the trend into risk aversion as consumer confidence fell from 49.3 to 46.6, the lowest level in 3 months.
The S&P/Case-Shiller home price index fell 17.1% in May. This is the main measure of US house price movements. In addition US corporate earnings were shaky and Bank of America announced that they will be shutting 10% of branches signaling further lay offs.
Later today we have durable goods orders and the Fed beige book which will give further insight into the health of the US economy. Again good data will lead to a weaker USD and vice versa. Key moves in the markets from yesterday were EUR/USD topping just under 1.43; AUD making gains across the markets and GBP/USD retracing from 1.65.
Report by Phil McHugh
Receive daily currency rate updates and market commentaries direct to your e-mail daily FREE from Currencies Direct
Currencies Direct is a leading commercial foreign exchange company with offices in the UK, Australia and Spain and has offices across 5 continents. Currencies Direct's head office and global trading centre is based in the City of London.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currency Market Updates or Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Currency Market Updates are compiled by Tom Nadir.
More positives as equities continued their bull run with the FTSE posting another gain yesterday. The markets were boosted by further signs that the weakness in the US economy was bottoming out. US new home sales rose 11% in June far outstripping expectation. Firming and improvement in the housing sector is vital to underpinning recovery.
The housing sector is a leading indicator to downturn/upturn in any economy and the news yesterday was greeted well by the markets. Sustainability is still the key going forward in this sector and we are still not out of the woods but closer than ever.
As is the trend this good news led to further weakness in the USD and stocks experiencing their longest rally since 2003. The dollar index dropped to its lowest level this year and the main beneficiaries were higher yielding commodity based currencies such as the New Zealand and Australian dollar.
Later yesterday the Reserve Bank of Australia left interest rates unchanged, however the speech by governor Glenn Stevens certainly livened the markets into more action. His speech basically underlined a change in tact from dovish to neutral and raises the prospect of interest rate rises in Australia before any other major economy.
The AUD rallied across the market, AUD/GBP down under 2 at 1.9840 and AUD/USD jumping to 0.8250 on the news. Potentially the AUD could reach new highs if risk appetite continues and commodities continue to rally.
Other economic data affirmed that Italian July consumer confidence rose to 107.5, up from 105.4 in June and better than the median forecast of 105.9. It is the highest read since November 2007. Meanwhile, French industry demand fell in the Q-2 but less sharply than in previous two quarters.
