Overview of the main economical events of the current day - 29/03/2013
EUR finally shows some gains as banking crisis in Cyprus winds down
EUR demonstrated some growth vs USD on the back of falling yields of Spanish and Italian bonds which some investors saw as signal that banking problems of Cyprus are likely to be not so extreme as thought before. Cypriot banks opening their doors after more strict banking capital movement rules were applied, which also fueled EUR’s growth.
Weak statistics from the USA also allowed the union currency to finally offset some of the earlier losses. According to a published report, US initial jobless claims were unexpectedly high, which might be a signal that labor market is losing momentum. GDP data came stronger than last year – 0.4% growth compared to a 0.1% gain a year before. Nonetheless, the number is also below expectations (of 0.5%), but, still, looks like the year starts quite nicely for US economy giving hope for a fast recovery.
GBP showed gains vs USD thanks to strong service sector data that showed highest growth rates in January since August. Another report, showing that housing prices climb is continuing, supported the trend, allowing for nice gains.
By MasterForex Company
Overview of the main economical events of the current day - 01/04/2013
EUR drifting lower still; market activity is low due to Easter holidays
Friday trading volumes were quite low, while weekend was relatively free of market moving headlines – all thanks to Easter holidays in both Europe and USA. And while there is not much to say regarding the States, some information on Europe did hit the wires.
First of all, there are fresh indicators that deposits greater than EUR 100K in two largest Cypriot banks are likely to sustain larger losses than originally feared – again, negative news not only for Cyprus but for EU as whole. And if this was not enough, additional pressure was put on EUR on Saturday with a release of a quarterly IMF survey that showed that reserve managers were net euro sellers during 4Q12 – a signal, that investors are losing confidence in the currency.
Meanwhile in Japan, USDJPY traded heavy in the wake of quarterly Tankan report and China PMI data. Tankan showed that large Japanese manufacturers see USDJPY trading well off current levels, which is the latest piece of evidence that corporate Japan remains skeptical that this USDJPY can last without experiencing a major correction.
Today, much of Europe is still on holiday as well as USA due to Easter Monday so expect low market activity today and possible volatility tomorrow if any market moving news hit the wire today, making US and EU investors adjust their positions tomorrow when markets open.
By MasterForex Company
Overview of the main economical events of the current day - 02/04/2013
Europe returns from holidays, expect much attention to data releases
Europe returns from Easter holidays today so expect some extra volatility as well as be prepared for investors paying much of their attention to data releases during the week. Most important thing on the agenda is probably a ECB meeting this Thursday with some parts of the market expecting a rates cut – at least consensus surveys are certainly not unanimous in expecting unchanged rates.
Bank of Japan, represented by its Head Mr. Kuroda, continues its rhetoric promising to do “whatever it can” to beat deflation and conduct “bold easing” though it might take 2 years to reach the targets. Nothing new here, but watch out for BoJ meeting this week (April 3-4) as Kuroda might use a recent decline in manufacturing production as a leverage in his talks aimed adopting a bolder policy.
From US we saw some disappointing headline PMI numbers, which resulted in USD declining versus JPY, however we urge to look deeper into the numbers: sure, they do show a decline, but employment index is higher and indications are that housing and automotive sectors are doing well – which might mean that while US fiscal issues start to take toll on both activity and sentiment, US consumers may in fact have been reasonably resilient.
By MasterForex Company
Overview of the main economical events of the current day - 03/04/2013
EUR heavily declines on poor statistics
EUR showed quite a loss yesterday due to poor data releases as well as increased volatility. According to a recently published report, unemployment level in Europe reached a record high number in February, which adds to concerns regarding recovery of the European Union. However, January data was revised to 12%, meaning there actually was no mom change across the Europe, but it still means a slight increase in EU.
Weak PMI data also put pressure on EUR, as the numbers show declining activity. This is yet another hint of shrinking GDP of the Eurozone, meaning that the economic decline continues, after ravaging for 15 months.
JPY declines vs USD, which is quite expected as investors are waiting for a two-day meeting of Bank of Japan this week. Another factor is the new Head of BoJ saying that they should not “sacrifice everything” in a attempt to reach a 2% inflation target – which potentially means that economy support is likely to be less aggressive as expected before.
GBP declined vs USD for the first time in 4 days after a report was published, showing that while UK manufacturing activity is falling, the decline was less than a month before – showing some hints of accelerating recovery. Nonetheless, the number was below expectations, resulting in a quick sell-off.
By MasterForex Company
Overview of the main economical events of the current day - 04/04/2013
Markets are in caution mode ahead of central bank meetings today
Bank of Japan has just made its very aggressive announcement after a first meeting headed my Kuroda, who definitely left his mark. First of all, there is a very strong commitment to a 2% inflation target – BoJ says they will attempt to reach it as soon as possible with a 2 year guidance. Add to this quite aggressive bond purchases coupled with increased maturity and monetary framework changes and it looks like Mr Kuroda delivered. At first glance market reaction confirms it: USD was showing gains vs JPY after trading downside before the meeting.
Yesterday’s US data was quite weak, adding to recent data disappointments and hinting once again, that fiscal problems are bound to affect the economy. The non-manufacturing ISM fell short of expectations, while ADP report showed a decline in private-employment growth. As a result, markets become more and more concerned regarding US recovery and even Fed’s words that the substantial improvement in labor market may arrive already by the summer did not have much effect on trading.
Today all eyes are on ECB meeting, during which there is a possibility (albeit, quite small) for a rate cut. However, Draghi is more likely to present some kind of a new non-standard measure target at improving credit conditions for SMEs. Bank of England is also having a meeting, but is unlikely to surprise the market with any decisions. In USA, Fed’s speaker will talk on economic conditions and monetary policy.
Finally, before all the meetings, we‘ll get service PMI for the Eurozone and UK. Focus will be on first estimates for Spain, Italy and UK.
By MasterForex Company
Overview of the main economical events of the current day - 05/04/2013
JPY continues its decline on aggressive measures introduced by Bank of Japan
JPY continues to fall fast, reaching 17 months low vs USD after Bank of Japan surprised the markets with its quite aggressive measures aimed at fighting currency devaluation. The decision was made with a vote count of 8 pro against 1 contra. Quite a result for a first meeting headed by Mr Kuroda.
EUR is swinging back and forth vs USD after Head of ECB Mario Draghi announced that EU officials are ready for decisive steps if the economy does not show signs of improvement. As expected, no rate cut was proposed, however it was said that ECB will closely monitor economy developments in order to assess risks for reaching a target inflation level, set slightly below 2%.
GBP rose on the news that Bank of England decided not to expand its asset purchase program and left the key interest rate unchanged at a record low level of 0.5%, which was quit expected. Another factor supporting the growth was strong service PMI data that shows a record high growth rates in the last 7 months.
By MasterForex Company
Overview of the main economical events of the current day - 08/04/2013
USD is falling vs EUR on weak data releases
USD reached a 9 day low vs EUR on Friday after disappointing employment data release, which suggests that the growth of the largest economy in the world is slowing down. This falls under the trend we’ve been observing for last few days: looks like recovery in USA is slowing as fiscal problems take their toll on the economy. As a result, USD is declining as investors are getting more and more concerned that FOMC will be forced to continue its asset purchase programs due to weak growth.
JPY is unsurprisingly declining vs USD, reaching a new low since 2009 after Bank of Japan announced its aggressive measures aimed at fighting deflation in the country. We’ll remind that BoJ decided to expand its bond purchase program up to JPY 7tn compared to expectations of just JPY 5.2tn in an attempt to reach a 2% inflation target in next 2 years.
Today watch out for a speech by Head of FOMC, during which we can expect both information on asset purchase program and hints regarding possible future interventions.
By MasterForex Company
Overview of the main economical events of the current day - 09/04/2013
Both USD and JPY are under pressure which falls under recent trends
JPY continues its decline, trading at 2009 levels on rumors that measures proposed by Bank of Japan last week will result in further decline of the currency. This comes as no surprise as new Head of Bank of Japan is a supporter of aggressive measures – and that’s a fact the market knew well ahead of him actually taking the position. Basically what we see here falls perfectly under JPY downside trend first occurred when Mr Kuroda was announced as a candidate for the Head position.
USD is also trading down vs EUR as market participants are waiting for FOMC meeting today, with the next one due on April 30th – May 1st. Currently FOMC buys USD 40bn of mortgage backed securities and USD 45bn of treasures per month which is part of the attempt to stimulate mortgage market and economy in general – and it looks like FOMC does not plan to stop these measures any time soon.
Another thing helping EUR was surprisingly strong German PMI data, which shows that the largest EU economy is slowly recovering after a decline in 4Q12.
By MasterForex Company
Overview of the main economical events of the current day - 11/04/2013
Trading remains quite calm as investors are waiting for newsflow
Trading activity remains somewhat low with most of the currencies trading more or less flat.
The most important thing yesterday was probably FOMC minutes leaked accidentally earlier than expected. The document revealed that “many” FOMC member would like to slow the pace of purchases over the next several meetings, while only “a few” deemed it necessary to continue at current pace “at least until late in the year”. It’s important to add, that these comments were made well before a soft patch in growth that US has recently hit, which has clouded the outlook. As a result, we would not expect any major changes in asset purchases at least until autumn.
JPY depreciation continues even despite Bank of Japan’s Head Kuroda saying that all “necessary” and “possible” measures have already been taken. Nonetheless, Kuroda also reiterated his commitment to achieve a 2% inflation goal – which potentially keeps the door open for further easing.
Today is going to be a rather quite day in terms of newsflow, however there are some stories worth following today. First of all, there is some employment data from USA and while it is bound to be somewhat skewed due to Easter holidays, it is still an important indicator. Next big market mover will be US retail sales for March tomorrow, which will give us more insight on how soft the soft patch may actually be. Finally, another important thing is Bank of Japan meeting – and while we are unlikely to hear any surprises, we recommend to check it out anyways.
By MasterForex Company
Overview of the main economical events of the current day - 12/04/2013
Currencies remain in a coma mode
Thursday trading was quite similar to what we’ve been seeing during the week with currencies pairs basically trading flat with little movement in either direction or, alternatively, following the previous trends.
EUR was showing some growth vs USD in the beginning of the day, however the European currency declined after surprisingly strong jobless claims data from USA, which might be a hint that US economy is actually recovering.
GBP continues its climb vs USD which is probably investors playing the currency as a defensive option against JPY aggressive depreciation, Cyprus problems and concerns regarding US hitting a soft patch.
Speaking about JPY, Head of Bank of Japan has suddenly slightly changed his rhetoric saying that they will be flexible in achieving a 2% inflation goal, which some market participants regarded as backing off after making extremely aggressive promises.
Today watch out for US retail sales and expect to find USD under serious pressure in case no growth is reported – and even worth if there is a major decline in numbers.
By MasterForex Company
Overview of the main economical events of the current day - 15/04/2013
Friday: a slow end to a slow week
Friday was in line with the rest of the week in terms of trading activity, with most currencies jumping back and forth in rather narrow corridors without any real breakouts.
EUR was under pressure due to concerns regarding Cyprus situation as EcoFin ministers limited their aid to only EUR 10bn, fueling investors’ panic regarding the region once again. This allowed USD to show some gains vs EUR, however most of them were erased later in the day after weak US retail sales data.
GBP was declining versus USD even after these disappointing results. However, market participants should remember that GBP was showing quite unexplainable gains recently (probably a defensive play) without any real catalyst – so, perhaps, on Friday we saw some market correction.
This week is likely to be a much more active one – lots of data releases as well as policy meetings are likely to stimulate market activity, which was surprisingly low last week. Watch out for CPI and Beige Book from USA as well as some FOMC speakers giving comments on the economy, Bank of England meeting, ZEW data from Germany and other news flow during the week.
By MasterForex Company
Overview of the main economical events of the current day - 16/04/2013
JPY rebounds, EUR still under pressure
JPY showed some impressive gains after somewhat disappointing Chinese GDP data, which suggest that the growth is slowing down, making JPY an attractive defensive option. And while JPY was trading at a 4 year low vs USD last week after BoJ’s announcement, Japanese currency has been rising vs USD for the last 4 days fueled by USA urging Japan not to make any aggressive steps as they might lead to trade wars of some kind, according to States.
EUR continues to feel pressure coming from Cyprus problems. Moody’s cut the rating of the largest Cypriot bank – Bank of Cyprus – by 2 notches as analysts expect huge losses from uninsured deposits in coming months.
At the same time EU, ECB and IMF made a joint announcement, saying that the government is ready to implement all and any measures needed to spark an economic growth in Greece by 2014, which seems to put at least this story to rest – or, at least, so it seems.
Finally, GBP was enjoying strong housing sales data, which showed another increase in April, which potentially decreases risks of another recession. Today expect an inflation report to come from UK, which is also likely to be a positive one.
By MasterForex Company
Overview of the main economical events of the current day - 17/04/2013
JPY and USD declines on a falling demand for defensive assets as stock and gold markets are up
A recovery in gold prices coupled with rising American stock market resulted in falling demand for defensive assets, destroying recent gains of both USD and JPY.
Euro climbed up to a 7 weeks high vs USD after stop orders placed on short EUR positions resulted in EUR showing highest growth rates since February and close to this year record daily gains.
GBP continues to fall, fueled by disappointing CPI data from UK, that shows that while inflation growth rates are quite stable, they still are higher than the speed of growth of the labor prices, which potentially creates quite a nasty gap for British economy.
This Thursday and Friday look out for a G20 banking leaders meeting in USA, during which we are likely to hear some more ranting regarding aggressive measures recently introduced by Bank of Japan. Nonetheless, it is unlikely that we’ll hear anything new as Japanese government stands firm on a statement that the measures are aimed exclusively at fighting deflation and not at decreasing the exchange rate of JPY.
By MasterForex Company
Overview of the main economical events of the current day - 18/04/2013
USD rebounds, EUR and GBP are still under pressure
EUR continues to decline after an interview with the head of Bundesbank, who admitted that ECB might cut the rates if the economy continues to slow down, which set the union currency in a free fall. At the same time he said that monetary policy is not the key question and rather prefers to concentrate on reforms in Germany and EU, saying that the full recovery might take as long as 10 years.
GBP continues its decline, showing a record loss in 6 weeks vs USD after disappointing statistics from UK, that suggest rising unemployment level on the back of declining wages growth. British currency declined vs most of the major currencies after Bank of England meeting minutes were released, showing that Head of BoE supports the idea of expanding the asset purchase program by another GBP 25bn.
This comes as almost no surprise, given the fact that yesterday IMF cut the growth forecasts for UK and announced that BoE needs to increase its measures. Given the condition of the economy, we’d say that it is a really possible scenario – in that case, expect GBP to fall even further.
By MasterForex Company
Overview of the main economical events of the current day - 19/04/2013
EUR can’t find its place, USD shows some minor gains
EUR is trading up and down vs USD on a not-so-straightforward statistics and conflicting market rumors. It all started with news of large losses allegedly booked by Societe Generale (which turned out to be a false rumor) and continued with Beige Book data from USA, that showed that while business activity is still in a positive zone, it does slow down, adding to the worries regarding the slowdown of an American economy.
GBP continues to fall reaching a 4 weeks low vs EUR on a disappointing retail sales data from UK, which is another proof of rising pressure on the consumers’ income – a negative factor which threatens economy’s recovery. Nonetheless, there were some positive hints as well – for example, the volume of sales was rising in 1Q13, which potentially supports the theory that UK might avoid another recession.
JPY declines as usual after aggressive measures introduced by a new Head of Bank of Japan and, quite as we expected, we haven’t really heard any market moving news coming form a G20 meeting yet, but it might change today.
Also look out for EU trade balance and German manufacturing prices, as well as some data from Spain and Italy that is due today and don’t forget that there is an IMF meeting over the weekend – expect somewhat increased volatility on Monday.
By MasterForex Company
Overview of the main economical events of the current day - 22/04/2013
GBP rapidly declines on a surprising Fitch decision
Friday surprisingly turned out to be a much more interesting day than one could expect based on the planed data releases as Fitch Ratings decided to cut UK’s rating from AAA to AA+ due to revised debt forecasts and increased possibility of future recession. While it is no news that UK economy is in a tough shape, Fitch’s move still came quite unexpected, putting serious pressure on GBP and EUR as well, which lost its recent gains after the decision was made public.
USD continues to rise vs JPY fueled by the comment of the Japanese Prime Minister, who promised that no G20 meeting participants will be against the new monetary policy.
Today we’ve got GDP data for 1Q13 from both UK and USA and that’s a really important piece of statistics as both economies are currently under close market attention. These numbers are going to show if these economies are falling into recession or not, forming long-term trends for the currencies.
By MasterForex Company
Overview of the main economical events of the current day - 23/04/2013
Major currencies rise vs USD on different trends
EUR showed some gains vs USD on the news of the re-election of the current President of Italy, which not only decreases political risks in the region, but also makes market sure that the current course of action is to remain unchanged. USD was also under pressure following somewhat weak secondary housing sales data that shows a decline last month. Given that this indicator is usually quite an accurate tool for measuring state of economy, no surprise that US currency was down.
GBP was also rising as investors were looking for defensive options. Seems like the market got over the shock of quite unexpected (in terms of timing, not the fact itself) rating cut by Fitch. This makes sense as, once again, the decision itself was of little surprise, especially given the fact that it follows the same move of Moody’s. All in all, it looks like market understands that from a fundamental point of view nothing’s changed regarding UK, so the currency is rebounding after recent losses.
It was definitely not a finest hour for USD, as even JPY was rising vs the American currency. And while JPY was not able to hold above 100, it still showed some impressive gains after G20 gave a green-light to Japanese monetary measures.
By MasterForex Company
Overview of the main economical events of the current day - 24/04/2013
EUR reaches 2-week low vs USD on poor data reports, drags GBP downwards
EUR erased its recent gains vs USD after ECB published a report with somewhat weak data, increasing market concerns that a rate cut is possible. EU service sector PMI was slightly up reaching 46.6 compared to 46.4 in March, however the number is still below a threshold level of 50, which separates growth from recession. Moreover, this decline is in line with the decline in Germany, which is the strongest economy in the Union, adding to the concerns.
GBP was declining vs USD as well, partly fueled by disappointing UK CBI industrial trends and budget deficit numbers, however it didn’t have a major impact on the currency and GBP was trading pretty much in line with EUR as European problems are perceived by the market as a more important driver.
Today, UK lending data and some other British statistics are up for release, while from Eurozone watch out for German IFO. We do not expect major market reaction to UK data as the planned releases are quite volatile and have little correlation with retail sales, but IFO might actually have quite a strong effect on trading, especially if the number comes strongly above expectations contradicting recent disappointing PMI data.
By MasterForex Company
Overview of the main economical events of the current day - 25/04/2013
EURUSD little changed as markets wait for new information
Despite showing some volatility on Wednesday after the release of German IFO, EURUSD trades more or less flat even after somewhat disappointing data, which suggests that short-term the market sees the current levels as fair. New information regarding the US economy is to be released this Friday and, perhaps, it will be finally enough to move the currency – or, perhaps, we will see some movement next week after FOMC and ECB meetings.
Intra-day, GBP was rising vs EUR and showed strong gains after weak German IFO data. However, just like with EURUSD, there was no follow-through GBP buying – and, no sell-offs either following a weaknesss in UK CBI Distributive trades survey.
Today the UK Q1 GDP figures will get lots of attention. While the market looks for marginal growth (up 0.1% qoq), we would not be very surprised if the numbers come on a negative side, «officially» pushing the economy into recession. Given that, expect to find GBP under some pressure.
Other than that, today is quite a slow day in terms of news with only the US initial jobless claims and the Spanish unemployment rate for release. Most likely the impact will be minor.
By MasterForex Company
Overview of the main economical events of the current day - 26/04/2013
GBP rises on strong statistics
GBP was rising yesterday with a help of 1Q13 GDP data that came surprisingly high at 0.3% compared to expectations of 0.1% qoq growth. Moreover, we had some concerns that the number might actually be a negative one, meaning another recession for UK, however it seems that British economy is actually in a better shape than one could expect based on preliminary indicators. While this positive news do strengthen the position of Bank of England regarding not making any changes to the monetary policy during the meeting in 2 weeks, there are some hints being transmitted to the market that it might actually happen – so keep an eye on further developments in this area.
At the Bank of Japan meeting that ended early this morning BoJ kept the pledge to double the monetary base in 2 years. Focus now turns to the revised macroeconomic forecast that is due today.
EUR was under serious pressure yesterday on rumors that ECB will cut the key interest rate to a record low level during the next week, helping the region’s economy. Moreover, some ECB members also hint that this issue might be discussed during the meeting on May 2nd. Given the amount of rumors regarding the rate cut we’ve seen recently, one might conclude that there is no smoke without a fire, but only time will tell if it’s the right conclusion or not.
By MasterForex Company