Analitics
Gains may be limited by nervous sentiment
After a massive positive overreaction to the news of the Spanish bailout, risk sentiment turned soon thereafter. AUDUSD was initially sent through parity on the back of the news out of Madrid, before price action reversed and the pair was sent through 0.9900. In fact, price action in the FX market only managed to recover late in the NY session.
Source: Forex.com
11.06.2012
Is the rally over for good?
Sentiment has continued to dip during the European session as the market has woken up to the fact that central banks won’t prop up the markets during the latest bout of volatility. The rally of the last few days was born on shaky foundations as investors priced in the prospect that global authorities would act to ease market stress. But after the ECB passed the baton to European governments to sort out the crisis, the Bank of England remained on hold and Bernanke told the markets not to hold their breath waiting for more QE, it was only the PBOC in China who cut interest rates for the first time in 3 years. Hence the sell-off as investors re-assesses the prospect of dealing with uncertainty in the currency bloc without official help.
Source: Forex.com
08.06.2012
Dead cat bounce? Not if Bernanke has anything to do with it…
It was the ECB yesterday, now it’s the time of the BOE and the Federal Reserve. The BOE announces its policy decision at 1200BST today. The market expects rates to be left on hold at 0.5% and for asset purchases to remain at GBP325bn. However, the outcome of this BOE meeting is more uncertain than usual because of some conflicting economic data. On the one hand PMI Manufacturing data fell to its lowest level last month for three years – back in the depths of the last recession. However, on the other hand the services sector PMI held up better than expected. The May survey result was 53.3, versus 52.4 expected. Since the service sector makes up nearly three quarters of the UK economy, you could argue that as long as this sector is expanding the UK economy is on the right track. However, such a sharp drop in manufacturing combined with the Eurozone debt crisis is likely to leave the BOE on high alert.
Source: Forex.com
07.06.2012
The ECB is unlikely to solve Europe's problems
On Wednesday 6th June 2012 the ECB announces its interest rate decision at 1245BST/ 0745 ET and it holds a press conference with President Mario Draghi at 1330 BST/ 0830 ET. We don't expect any change to interest rates at the meeting or for the Bank to extend other policy support to help the struggling Eurozone.
Source: Forex.com
06.06.2012
As London celebrates, Spain commiserates
The markets are predictably quiet today as London is out for the Jubilee Bank Holiday. But for those not watching the fly past at Buckingham Palace they had a G7 conference call to digest. It had virtually no impact on the markets, which barely budged even though there were rumours that Germany pushed Spain towards accepting a bailout. The US Treasury’s official statement post the call said that the ministers and governors reviewed “progress towards financial and fiscal union in Europe”. This is a massive leap for the currency bloc and far too big to be solved in one phone call, hence the US also noted that global authorities will monitor the situation in the Eurozone closely ahead of the G20 summit later this month in Mexico.
Source: Forex.com
05.06.2012
BOJ testing illiquid conditions?
USD modestly firmer across the board on light volumes as desks in NZ and UK are off on holiday. Aussie leading the G10 pack lower as data released earlier suggesting room for more RBA rate cuts – TD Securities Inflation was flat in May versus a +0.3% rise in April and while AZN May Job Advertisements declined twice in as many months. Comments by Australia’s Hockey stating government surplus may give RBA more room to move alongside a large domestic AU bank’s statement that AUDUSD may decline to test the 2011 lows around 0.9388 didn’t help much. Initial support comes in around 0.9625.
Source: Forex.com
04.06.2012
1.20 could be close for EURUSD
The relentless decline in EURUSD had looked like it was staging a mini-pullback earlier, but that proved to be short-lived. A wave of weaker economic data knocked sentiment. The final version of the Eurozone’s May PMI figure was revised slightly higher to 45.1 from 45, but this is still the lowest level since mid- 2009. But it was the record high unemployment rate that caused the biggest drop in risk assets after the jobless rate across the currency bloc rose to 11% - it’s highest ever level in the euro-era. The periphery is still the most affected, unemployment in Italy rose to 10.2% in April and in Spain it remains at nearly 25%.
Source: Forex.com
01.06.2012
Signs that bearish sentiment may be wearing a bit thin
The Facebook IPO today has temporarily knocked Europe from the headlines as the world’s eyes are focused on the Nasdaq at 1430 GMT/ 0930 ET when Facebook will start trading for the first time. CNBC anchors have been wearing honorary hoodies to mark the occasion so it must be big. I still find it hard to reconcile how FB is worth $140 billion when the site is used by both advertisers and cyber bullies, but perhaps I’m missing the point. The point today is that it is the third largest IPO in the US ever, Zuckerberg will be a gaszillionaire and U2’s Bono is likely to earn $1.5bn from his initial $90 million investment. Facebook might not change the trading world, but it could change the Forbes rich list quite dramatically.
Source: Forex.com
18.05.2012
Precious metals and JPY are back in vogue as potential for QE3 lurks
Today’s price action was interesting as yesterday’s FOMC meeting minutes, which hinted that further quantitative easing may be needed if economic conditions deteriorate, was put to the test on the back of the abysmal U.S. Philadelphia Fed data which came in at -5.8 vs. expectations of 10.0. This sent the buck, which at the time was near its respective highs on the day, reeling as it sparked speculation of QE3. Interestingly, the USD managed to claw back most of its prior gains relative to the European and commodity based currencies, however it continued to weaken versus the JPY as broader ‘risk’ sentiment melted into the close – The Dow Jones Industrial Average finished lower by about -1.24%, S&P 500 fell by -1.51% and U.S. 10-year yield was sunk by -3.59% on the day.
Source: Forex.com
17.05.2012
Central Banks’ to the rescue?
The Bank of England stole the headlines this morning as it delivered its second Inflation Report of the year. Its message was fairly grim: the UK won’t regain its 2007 level of output until 2018. The biggest threat to the UK economy right now according to the bank is the impasse in the Eurozone (something the BOE can’t control).
Source: Forex.com
16.05.2012
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