The speculation that Japan’s policy makers would not be able to limit the yen’s gains pushed the New Zealand dollar down against the Japanese currency; the kiwi (as the NZD nicknamed) also fell against the US dollar as New Zealand trade balance posted the deficit for the first time in seven months.
The Bank of Japan‘s decision to intervene in order to support the nation’s economy reflects the concerns for the growth of the advance economies across the world. The New Zealand economy also gave reasons for the concern as the trade balance posted the deficit of NZD 186 million in July, the reading which is much worse than the figure of the previous month (the surplus of NZD 214 million) and the forecast (the deficit of NZD 28 million).
Tuesday, August 31, 2010
Saturday, August 28, 2010
Euro Follows Continental Stocks
The euro has continued its recovery trend against the dollar and the yen today as some more-or-less positive news spurred the growth of the stock market up from its bottom.
Positive profit reports of the biggest European companies inspired investors to buy the stocks today. The euro managed to grow against the safe haven dollar and yen for the second day, setting a new weekly maximum. Traders also reacted to the US jobless claims report, which wasn’t as bad as the previous one and didn’t disappoint the market participants.
Positive profit reports of the biggest European companies inspired investors to buy the stocks today. The euro managed to grow against the safe haven dollar and yen for the second day, setting a new weekly maximum. Traders also reacted to the US jobless claims report, which wasn’t as bad as the previous one and didn’t disappoint the market participants.
Wednesday, August 25, 2010
Yen Reaches New Decade Highs on Forex Risk Aversion
The expectations for the worsening of the global economic situation in the developed nations fueled the risk-averting mood in the foreign exchange market, pushing the Japanese yen to the new yearly maximums today.
The yen reached its new record high level against the US dollar since June 1995 and the strongest level against the euro since September 2001. A three-month high was reached against the Great Britain pound. As almost always with the yen, the reason for the gains lies not in the exceptional growth rates of the country but in the global risk aversion, which once again begins dominating the minds of the traders. The commentaries of the officials and the economic analysts that explicitly signal a second wave of the crisis don’t leave a chance for the high-yielding currencies against the safe haven currencies (such as yen).
The yen reached its new record high level against the US dollar since June 1995 and the strongest level against the euro since September 2001. A three-month high was reached against the Great Britain pound. As almost always with the yen, the reason for the gains lies not in the exceptional growth rates of the country but in the global risk aversion, which once again begins dominating the minds of the traders. The commentaries of the officials and the economic analysts that explicitly signal a second wave of the crisis don’t leave a chance for the high-yielding currencies against the safe haven currencies (such as yen).
Monday, August 23, 2010
Industry giants a study in contrasts
Top two insurers Suncorp and IAG are expected to deliver vastly different results when the pair unveil their end-of-year financials this week.
As Suncorp prepares to release a strong rise in net profit – tipped by analysts to be more than double last year’s result – struggling competitor IAG is forecasting a 50 percent reduction in profit once natural catastrophe and UK losses are taken into account.
While storm damages are expected to cut marginally into Suncorp’s insurance profit margin, analysts are predicting an overall net profit after tax between USD 720 million and USD 800 million – more than double last year’s result of USD 348 million.
As Suncorp prepares to release a strong rise in net profit – tipped by analysts to be more than double last year’s result – struggling competitor IAG is forecasting a 50 percent reduction in profit once natural catastrophe and UK losses are taken into account.
While storm damages are expected to cut marginally into Suncorp’s insurance profit margin, analysts are predicting an overall net profit after tax between USD 720 million and USD 800 million – more than double last year’s result of USD 348 million.
Sunday, August 22, 2010
Australian Dollar Falls This Week
Last week was volatile for the Australian dollar, but it generally declined against most other major currencies as the concern for the economic growth continues to haunt the markets.
The currencies linked to the growth had hard time to sustain their strength as signs of the slower economic growth were coming from all parts of the world. The main source of the worries is, of course, the US with its economic data, which causes the talks about the possible double-dip recession. But the traders’ concerns aren’t only about the US as Europe too reminded about its economic weakness. The forecast, that the report will show the worsening German business climate, significantly slashed the confidence in the European economy, as Germany was the main reason for the hopes in the brighter future for the EU fiscal conditions.
The currencies linked to the growth had hard time to sustain their strength as signs of the slower economic growth were coming from all parts of the world. The main source of the worries is, of course, the US with its economic data, which causes the talks about the possible double-dip recession. But the traders’ concerns aren’t only about the US as Europe too reminded about its economic weakness. The forecast, that the report will show the worsening German business climate, significantly slashed the confidence in the European economy, as Germany was the main reason for the hopes in the brighter future for the EU fiscal conditions.
Thursday, August 19, 2010
Japanese Yen Strengthens on Renewed Demand for Safety
Japanese yen has risen today as the renewed concerns that the recovery of the global economy is losing the traction fueled the demand for the safer assets.
The experts said that Federal Reserve was expected to increase its purchasing of the bonds as the US economy may weaken. The recent improvement of the sentiment on the global markets was not strong enough to completely remove the concerns for the global economy. The yen also strengthened as the concerns, that the policy makes will intervene to limit the currency’s gains, eased.
The gains of the yen were limited, nevertheless, by the rally of the stocks. The Standard and Poor’s 500 Index gained 0.5 percent, following the previous decline.
The experts said that Federal Reserve was expected to increase its purchasing of the bonds as the US economy may weaken. The recent improvement of the sentiment on the global markets was not strong enough to completely remove the concerns for the global economy. The yen also strengthened as the concerns, that the policy makes will intervene to limit the currency’s gains, eased.
The gains of the yen were limited, nevertheless, by the rally of the stocks. The Standard and Poor’s 500 Index gained 0.5 percent, following the previous decline.
Tuesday, August 17, 2010
Crude Oil Falls for the Fifth Session, Gold Rally Continues
Crude Oil Falls for the Fifth Session
Commentary: Monday was a day of pause for crude oil and equity markets, as risk assets generally fluctuated between small gains and small losses. Oil would register its fifth loss in as many sessions, but clearly downside momentum is waning now that prices are notably below last week’s highs. Prices are currently near the USD 75.50 level, which is close to the midpoint of crude oil’s 11-month range, with prices below that having turned out to be attractive buying opportunities. U.S. economic data set to be released on Tuesday will include figures on Housing Starts (549K expected), Building Permits (586K expected), and Industrial Production (0.5% expected). Whether crude oil continues lower will be determined largely on the market’s assessment of these and other economic data points. Anything that suggests a double dip recession on the horizon will likely send risk asset prices lower, while better-than-expected data could catalyze a bounce in crude oil and equities alike.
Commentary: Monday was a day of pause for crude oil and equity markets, as risk assets generally fluctuated between small gains and small losses. Oil would register its fifth loss in as many sessions, but clearly downside momentum is waning now that prices are notably below last week’s highs. Prices are currently near the USD 75.50 level, which is close to the midpoint of crude oil’s 11-month range, with prices below that having turned out to be attractive buying opportunities. U.S. economic data set to be released on Tuesday will include figures on Housing Starts (549K expected), Building Permits (586K expected), and Industrial Production (0.5% expected). Whether crude oil continues lower will be determined largely on the market’s assessment of these and other economic data points. Anything that suggests a double dip recession on the horizon will likely send risk asset prices lower, while better-than-expected data could catalyze a bounce in crude oil and equities alike.
Monday, August 16, 2010
Gold Consolidation May Persist But Risks Are to the Upside
Gold prices haven't mirrored the breakouts seen across other benchmark financial assets, with traders seemingly unsure which of the yellow metal’s properties – its allure as a store of value, that would attach it to safe-haven assets, or its perceived attraction as an inflation hedge, that would link it to risk appetite – are going to dominate price action in the near term.
The risk aversion has staged a comeback, with stocks reversingsharply lower having tested May’s swing top to post the worst weekly performance in over three months. This seems reasonable considering most of the engines of the global economic recovery are meaningfully faltering. Indeed, European growth is likely to remain lackluster as the region tries to trim its sovereign debt burden, Japan remains in deflation, China is willfully pulling on the brakes amid fears of overheating, and the US has notably lost pace.With that being said, risky assets seem to be scope for a corrective rebound in the near term given the pace of last week’s selloff as well as expectations of some encouraging results on second-tier US economic indicators. Producer Prices are set to rise for the first time in four months, Industrial Production is expected to pick up momentum, and Housing Starts are set to snap a two-month losing streak in July. Traders have long looked to the health of the world’s largest consumer market as a proxy for the global recovery at large, and while these results are unlikely to prove sufficient to stop risk aversion in its tracks, they could certainly engineer an upward retracement across global stock exchanges.
The risk aversion has staged a comeback, with stocks reversingsharply lower having tested May’s swing top to post the worst weekly performance in over three months. This seems reasonable considering most of the engines of the global economic recovery are meaningfully faltering. Indeed, European growth is likely to remain lackluster as the region tries to trim its sovereign debt burden, Japan remains in deflation, China is willfully pulling on the brakes amid fears of overheating, and the US has notably lost pace.With that being said, risky assets seem to be scope for a corrective rebound in the near term given the pace of last week’s selloff as well as expectations of some encouraging results on second-tier US economic indicators. Producer Prices are set to rise for the first time in four months, Industrial Production is expected to pick up momentum, and Housing Starts are set to snap a two-month losing streak in July. Traders have long looked to the health of the world’s largest consumer market as a proxy for the global recovery at large, and while these results are unlikely to prove sufficient to stop risk aversion in its tracks, they could certainly engineer an upward retracement across global stock exchanges.
Saturday, August 14, 2010
Japanese Yen Declines vs Dollar and Pound
Today the Japanese yen weakened against the US dollar and the Great Britain pound and traded near the opening level versus the euro as the traders consider the possibility of the intervention by the Bank of Japan in order to curb the currency’s gains.
The Japanese currency gained on the concern for the global economic recovery, spurred by the dovish statement of the Federal Reserve this week. The problem is that the strong currency may hurt the Japanese exporters, and thus harm Japan’s economic growth. The BoJ policy makers acknowledged this problem and said that they would monitor the currency markets to evaluate the impact of the yen’s moves on Japan’s economy.
The minutes of the Monetary Policy Meeting of the Bank of Japan Policy Board said:
The Japanese currency gained on the concern for the global economic recovery, spurred by the dovish statement of the Federal Reserve this week. The problem is that the strong currency may hurt the Japanese exporters, and thus harm Japan’s economic growth. The BoJ policy makers acknowledged this problem and said that they would monitor the currency markets to evaluate the impact of the yen’s moves on Japan’s economy.
The minutes of the Monetary Policy Meeting of the Bank of Japan Policy Board said:
Friday, August 13, 2010
Aussie & Kiwi Decline on Unemployment
The New Zealand and The Australian dollars fell today because the jobless claims in the US rose unexpectedly and equities dropped, damping the investors’ willingness to risk and decreasing the appeal of the higher-yielding currencies.
The initial unemployment claims rose to 484,000 from the previous week’s revised figure of 482,000. The analysts were totally wrong, expecting the decrease to 465,000. The MSCI World Index dropped as much as 1.1 percent. The Australian dollar also weakened after the unemployment rate unexpectedly increased from 5.1 percent in June to 5.3 percent in July, while the economists expected it to remain on the same level.
There are more and more evidences appear every day about the deteriorating of the global economy and the talks about the possible double-dip recession persist. In this kind of environment the riskier currencies have hard times to find the support.
AUD/USD traded at 0.8945 today as of 18:00 GMT after opening at 0.8969. NZD/USD fell from 0.7144 to 0.7078.
The initial unemployment claims rose to 484,000 from the previous week’s revised figure of 482,000. The analysts were totally wrong, expecting the decrease to 465,000. The MSCI World Index dropped as much as 1.1 percent. The Australian dollar also weakened after the unemployment rate unexpectedly increased from 5.1 percent in June to 5.3 percent in July, while the economists expected it to remain on the same level.
There are more and more evidences appear every day about the deteriorating of the global economy and the talks about the possible double-dip recession persist. In this kind of environment the riskier currencies have hard times to find the support.
AUD/USD traded at 0.8945 today as of 18:00 GMT after opening at 0.8969. NZD/USD fell from 0.7144 to 0.7078.
Wednesday, August 11, 2010
Crude Oil Tests Levels Below $80
Crude Oil (WTI) - $80.12 // -$0.13 // -0.16%
Commentary: As has been the pattern in recent sessions, crude oil followed the movements in equity markets, declining sharply in the early morning, and then recovering after the Fed policy decision and statement were released. Crude oil declined as much as $2.28 to $79.20, but settled the day $1.23, or 1.51% lower. As we have stated in the past, it will be difficult for crude oil to break above the 11-month resistance area in the mid-$80’s in the near-term, given the abundant supply picture. Up next, traders will be looking to the DOE inventory report on Wednesday for guidance. As U.S. inventories are already at 10-year highs, a bearish report would likely weigh on the commodity.
Technical Outlook: Prices are testing support at $79.38 having been rejected at resistance below $82.55, the 138.2% Fibonacci extension of the 6/28-7/6 downswing. Support is reinforced by the close proximity of the bottom of a rising channel set from the low in May, now at $77.94. A break below that exposes the congestion region around the $75.00 figure.
Gold Looks to the US Dollar
Gold - $1203.55 // -$0.70 // -0.06%
Commentary: Gold again took its cues from the US Dollar in Tuesday’s session. Prices got as low as $1190.77 in the morning, but proceeded to finish higher by $2.90, or 0.24%, following the Fed announcement and subsequent dollar decline. Gold ETF holdings remain remarkably stable and about 1.2 million troy ounces below the record highs of mid-July. With Euro-area sovereign debt concerns seemingly in the rear-view mirror, expect gold to continue to move inversely to the US Dollar for now.
Technical Outlook: Prices remain wedged between the broken top of a falling channel set from the swing high in June (now acting as support) at $1188.80 and horizontal resistance at $1215.47. A move above that barrier will open the door for a challenge of the record high at $1265.30.
Silver - $18.30 // -$0.03 // -0.16%
Commentary: Silver staged a remarkable comeback on Tuesday, rebounding $0.38 off session lows. The metal settled $0.01, or 0.05% lower on the day. The gold/silver ratio ticked slightly higher to 65.77, but remains well within the 2010 range of 60 to 71.
Technical Outlook: Unchanged from yesterday: “Prices have stalled at resistance marked by the upper boundary of a descending triangle chart formation above support at $17.45 that has contained prices for much of the year (now at $18.51). A break below initial support at $18.17 opens the door for a move to test the $18.00 figure and another run toward $17.45. Alternatively, renewed bullish momentum would expose the $19.00 mark.”
Monday, August 9, 2010
Crude Oil May Consolidate
Crude Oil (WTI) $81.05 // +$0.35 // +0.43%
Commentary: Last week saw crude oil advance over the $80 level for the first time since May. Traders took profits on Friday, however, after U.S. nonfarm payroll data came out weaker than expected. This week is looking rather light on the U.S. economic front. The FOMC will make its rate decision on Tuesday, but no significant actions are expected from the central bank. Initial jobless claims on Thursday always bear watching, and retail sales on Friday are notable as well. Traders will be looking to the DOE inventory report on Wednesday to see if U.S. inventories, which are already at 10-year highs, continue to swiftly move higher. With oil prices closer to the top of an 11-month range than the bottom, there is ample opportunity for prices to slip this week. We are expecting a period of consolidation at the very least.
Technical Outlook: Prices have turned lower from resistance at $82.55, the 138.2% Fibonacci extension of the 6/28-7/6 downswing. Initial support lines up at $79.38, a barrier reinforced by the close proximity of the bottom of a rising channel set from the low in May.
Saturday, August 7, 2010
Dollar and Euro Falls on Lower German Production
Euro fell vs. dollar after the report showed which the industrial output in Germany declined and on the speculation which the conditions on the US labor market improved.
The German industrial production fell 0.6 percent in June, while the economists expected another month of the growth after the production expanded as much as 2.9 percent in May. The US non-farm payrolls expected to fall as the temporary census workers quit job, but the number of jobs, excluding the government workers, should increase.
The German industrial production fell 0.6 percent in June, while the economists expected another month of the growth after the production expanded as much as 2.9 percent in May. The US non-farm payrolls expected to fall as the temporary census workers quit job, but the number of jobs, excluding the government workers, should increase.
Thursday, August 5, 2010
Dollar Strengthens on Services & Employment
The currency of US rose today against the Japanese yen and the euro after the reports showed that the US employers added more jobs than expected and the service industries expanded with increasing pace.
The US non-farm payrolls increased by 42,000, as was reported by ADP Employer Services. The median forecast was the 38,000 growth. The non-manufacturing sector grew in July for the seventh consecutive month, as was shown by the non-manufacturing index, which registered 54.3 percent in July, compared to 53.8 percent registered in June. The figure above 50.0 indicates industry expansion, below indicates contraction.
The employment was the one of the main sources of concerns for the US citizens. Therefore, the good news from the labor market improved the outlook for the US economy significantly. The Federal Reserve acknowledges the slowdown of the economy, but may refrain from adding more stimulus after the reports suggested that the US economy is healthier than it looked previously.
EUR/USD traded near 1.3137 as of 17:13 GMT today after it opened at 1.3229. USD/JPY rose to 86.22 from 85.76 after slumping as low as 85.32.
The US non-farm payrolls increased by 42,000, as was reported by ADP Employer Services. The median forecast was the 38,000 growth. The non-manufacturing sector grew in July for the seventh consecutive month, as was shown by the non-manufacturing index, which registered 54.3 percent in July, compared to 53.8 percent registered in June. The figure above 50.0 indicates industry expansion, below indicates contraction.
The employment was the one of the main sources of concerns for the US citizens. Therefore, the good news from the labor market improved the outlook for the US economy significantly. The Federal Reserve acknowledges the slowdown of the economy, but may refrain from adding more stimulus after the reports suggested that the US economy is healthier than it looked previously.
EUR/USD traded near 1.3137 as of 17:13 GMT today after it opened at 1.3229. USD/JPY rose to 86.22 from 85.76 after slumping as low as 85.32.
Wednesday, August 4, 2010
Kiwi Strengthens on Positive Data from Asia
The New Zealand dollar strengthened today as the signs of improving global economy and the accelerating economic growth in Asia, particularly in China, causes the speculation that the demand for the currency will rise.
The MSCI Asia Pacific Index of shares climbed 0.6 percent. China demonstrated the stable economic growth, bolstering the kiwi as China is New Zealand’s second biggest export market. The positive economic data encourages the analysts to say that the kiwi would jump past its resistance levels versus other currencies.
The MSCI Asia Pacific Index of shares climbed 0.6 percent. China demonstrated the stable economic growth, bolstering the kiwi as China is New Zealand’s second biggest export market. The positive economic data encourages the analysts to say that the kiwi would jump past its resistance levels versus other currencies.
Tuesday, August 3, 2010
Swiss Franc Fall Despite Record Industrial Activity
The Swiss franc fell today against the US dollar and the euro, as the rally of the equities damped the demand for the currency as the safe haven, despite of the favorable fundamentals.
The Stoxx Europe 600 Index climbed as much as 1.9 percent. The rally of the stocks outweighed the data, showing that the industrial activity reached the all-time record. The SVME PMI rose from 65.7 in June to 66.9, the all-time highest level, the last month.
USD/CHF rose from 1.0402 to 1.0441 today as of 10:45 GMT, jumping earlier this day as high as 1.0475. EUR/CHF climbed from 1.3588 to 1.3652 after it reached 1.3697.
The Stoxx Europe 600 Index climbed as much as 1.9 percent. The rally of the stocks outweighed the data, showing that the industrial activity reached the all-time record. The SVME PMI rose from 65.7 in June to 66.9, the all-time highest level, the last month.
USD/CHF rose from 1.0402 to 1.0441 today as of 10:45 GMT, jumping earlier this day as high as 1.0475. EUR/CHF climbed from 1.3588 to 1.3652 after it reached 1.3697.
Monday, August 2, 2010
Loonie Rises vs. Greenback, Falls vs. Euro
The Canadian dollar rose against its U.S. counterpart after two days of decline as demand for the crude oil, the main Canada’s export, increased and the commodity prices rallied. The loonie performed not so well against other currencies, including the euro, against which Canada’s currency continued to fall.
The S&P 500 Index dropped 0.8 percent. The decline of the stocks usually followed by the decline of the loonie, but this time the effect of the falling equities was muted by the rallying commodities. Crude oil futures rose for the first time in a week, advancing by 1.4 percent to $78.03. Copper futures went up to $3.2765 per pound, the highest level since May 4th. The natural gas futures rallied for the fourth day.
The Canadian currency lagged behind other currencies, failing to profit from the greenback’s weakness to the full extent. One of the reasons for this is the bad economic data from Canada. The government report showed that the industrial product price index dropped 0.9 percent in June from May, the biggest decline since May 2009.
The S&P 500 Index dropped 0.8 percent. The decline of the stocks usually followed by the decline of the loonie, but this time the effect of the falling equities was muted by the rallying commodities. Crude oil futures rose for the first time in a week, advancing by 1.4 percent to $78.03. Copper futures went up to $3.2765 per pound, the highest level since May 4th. The natural gas futures rallied for the fourth day.
The Canadian currency lagged behind other currencies, failing to profit from the greenback’s weakness to the full extent. One of the reasons for this is the bad economic data from Canada. The government report showed that the industrial product price index dropped 0.9 percent in June from May, the biggest decline since May 2009.
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