During last week, better than expected housing numbers continue supporting the US Dollar while weaker GDP print, -0.7% from 0.2%, was totally ignored as it seemed market players have already counted it. The growth number was lesser than the forecast of -0.8%. The Euro remained weaker against majority of its counterparts with Greece again failing to agree with its international creditors on its self-imposed deadline. The troubled country is due for paying nearly 300 million Euros of payment to the IMF on June, failing to pay could make it vulnerable to head towards filing bankruptcy. The UK GDP also matched its initial forecast of 0.3%, testing the lowest level since May 2013. JPY was a hard hit during last week as weaker economics, in terms of spending and inflation, while the commodity currencies maintained their downside against majority of its counterparts as weaker economics kept supporting their decline.
On early Monday, Official reading of Chinese Manufacturing PMI rallied to the year’s high level of 50.2 while the final reading of HSBC Manufacturing PMI confirmed consensus of 49.2. Both of them met the consensus while official reading rallied to year’s high. The Japanese Final Manufacturing PMI also matched the expectations of testing the three month high. Manufacturing details are likely to dominate today’s economic calendar with UK Manufacturing PMI & US ISM Manufacturing PMI left for publishing.
As the market continued favoring the greenback even with negative GDP, it would be wise to support the greenback; however, some sort of weaker economics, not the headline numbers like NFP, could provide chances for mild pullback before the USD enjoys Friday’s NFP. For the rest of the day, it would be better to target commodity currencies, AUD, NZD & CAD, as they are likely initial another decline against USD while GBPUSD shouldn’t traded ahead of UK Manufacturing PMI.
With little evidence the U.S. economy is rebounding after a very weak first quarter, the Federal Reserve is in no position to start raising interest rates for the first time since 2006, a top Fed official said on Monday.
"I would like to normalize (rates) as soon as possible … but the conditions haven’t been right,” Boston Fed President Eric Rosengren said, adding that there are side effects to keeping rates low for a long time. "In some sense when we start raising rates that’s good news."
The Fed has said it will raise rates only once it sees further improvement in the labor market, and is reasonably confident that inflation is headed back to the Fed’s 2 percent target.
But with growth in the first half of the year likely to run below the economy’s potential of about 2 percent, “I do not expect to see timely improvements in the unemployment rate and sufficient progress towards the 2 percent inflation target,” Rosengren said. "This, in my view, makes a compelling argument for continued patience in monetary policy."
Global risks also loom.
"I’m worried about what’s happening in Europe,” Rosengren said after his speech, adding, “It would be nice if they came to a conclusion over what’s happening in Greece.”
Athens and its euro zone and International Monetary Fund creditors are in talks over Greece’s debt and aid money, and without a deal, Greece could soon default or go bankrupt.
“If there was a disorderly outcome in Europe it would have an impact on New England,” Rosengren said.
A slowdown in China is also a concern, he said. “The things I worry the most about are the things I can least control,” he said.
Rosengren’s strongly dovish comments come as Fed policymakers prepare to meet in about two weeks to weigh a possible rate hike.
Policymakers have kept interest rates near zero since December 2008, and most, including Rosengren, have long thought they would be able to begin to lift rates this year. Even after the economy’s dismal first-quarter performance, policymakers stuck to that view, attributing the slowdown to the effects of a severe winter and predicting a snapback.
So far there is little sign of such a rebound, Rosengren said.
Past tightening cycles have typically taken place against the background of much stronger growth than seen currently.
Rosengren is not a voting member this year on the U.S. central bank’s monetary policy committee.
Agree that the US economy is into its nascent stage to confirm the rate hike; however, with sustained improvement in labor market details, coupled with rise in core CPI, chances are higher that the Fed will end up hiking the interest rate by the end of this year. Though, the consecutive hikes will be smaller and later than anticipated.
Yesterday was a volatile day for the forex market as first impressions of UK Manufacturing and the troubled talks between the Greek and its international creditors weakened the GBP and EUR during the initial trading session while lower US spending pulled back some of the USD strength; however, the ISM Manufacturing surpassed prior & consensus and again helped the greenback on its northward trajectory. The USDJPY rallied to the highest level since 2002 as the contradictory policies of BoJ and Fed continue fueling the pair. Japanese PM, Shinzo Abe, and central bank chief, Haruhiko Kuroda, met Tuesday and discussed the global economy amid a slump in the yen; however, the PM said they didn’t discuss the currency in their regular meeting as a weaker Yen is favorable for the export oriented nation.
During the early part of the day, RBA stood pat and favored no change in its current monetary policy, triggering a bit of pullback into the AUD while the international creditors to Greece remained concerned on fasting the process of Greek aid to avoid default. Market players are likely to concentrate on the UK Construction PMI, EU Flash CPI and the US Factory orders in order to determine market moves.
As the EU leaders are more concerned about the Greek aid and the USD has already gained enough of success without a pullback, chances are higher that any info about the strong measures by the international creditors to approve Greek aid could provide a bit more of pullback to the USD. Moreover, the weaker print of factory orders, as expected, could also weaken the greenback. Hence, it would be in the best interest of the market player to stay cautious before buying the USD unless there are strong readings or pessimism from EU talks.
With EU Flash CPI printing a six month high and the UK Construction PMI surpassing the consensus and prior, coupled with four month low US Factory Orders, Forex market yesterday traded heavily against the greenback. Moreover, creditors to the Greece drafted the broad lines of an agreement to help fasten the cash for reform talks that has been on hold since more than four months. The Euro rallied most in last 10 weeks while the greenback plunged heavily during the later part of trading hours on Tuesday.
During the early part of the Wednesday, Australian GDP rose to the year’s high, supporting the halt to interest rate hike during recent meeting. Chinese Services PMI also rallied to nine month high, providing additional fuel to the AUD up-move.
Today being one of the crucial days of the week, including UK Services PMI and ECB, together with US ADP numbers and trade balance details with Canadian trade numbers, market players are advised not to be in hurry to sell the USD even though chances are higher that yesterday’s greenback decline was much awaited correction.
Even if the ECB remained static in its monetary policy meeting with downgrading inflation forecast for 2016 and growth forecast for 2017, the Euro continue rallying considerably as volatility bond yields, mainly due to the upgrading near-term inflation forecast and optimism over Greek deal, continue favoring the regional currency. On the other hand, favorable ADP numbers and plunging trade deficit couldn’t counter the weaker ISM Services Index and pulled back the greenback for the second consecutive day. The GBP remained sideways to weaker after the Services PMI plunged to four month low while higher than forecast deficit in Canadian trade numbers weakened the Loonie. Also, Crude oil prices extended declines ahead of OPEC meeting, during the end of the week.
The Australian Retail Sales stagnated and the Trade Deficit widened to the record in April as per the release during early day announcements. BoE meeting, US Jobless Claims and the Canadian Ivey PMI data are likely to entertain the market players during the rest of the day.
As the US Dollar failed to strengthen even after positive economics, signaling more declines, market players are advised not to look for reversal unless the Friday’s labor market details prints considerably positive outcome. For the day, absence of major announcements may favor a slight pullback into the EURUSD but overall the sentiment has turned bullish and it would be better to avoid selling the pair for some big trades.
Fewer than expected Jobless numbers and probably another failed talks of Greek aid helped USD Dollar secure a positive daily close on Thursday. Yesterday, after the heavy talks between the Greece and its international creditors, the Greece postponed its IMF debt payment, scheduled for pay today, by asking to bundle all the $1.7 Billion payments to be made at the ned of June, signaling threat of Greek default. The Greece PM will put the international creditors’ draft version into parliament for approval, though the German Chancellor sound more offbeat and says the deal isn’t going to take place today. Moreover, the IMF urged US Fed to think of hiking interest rate before early 2016 and downgraded the 2015 US economic growth forecast to 2.5% from 3.1% expected earlier. Oil prices are trading with caution ahead of the OPEC meeting, scheduled to start today.
Being the NFP day, market players are likely to remain silent ahead of the US labor market details; however, German Factory Orders and UK Inflation expectations could provide intermediate moves to the market.
Expectations supports more or less no change in NFP reading together with unchanged 5.14% Unemployment Rate while positive expectations from Average Hourly Earnings may becomes a boost to the Greenback, fueling it to recover its early week losses. Moreover, updates from Greece could also become helpful to determine the market moves. The ECB has given renewed deadline, June 14, to the Greece to get the deal running, and hence today it is more likely that the Euro liquidates some of its early gains; however, surprise deal announcement could become important to fuel considerable strength in the regional currency.
Regarding your latest update, it kinda confused me about why IMF would urge FED to think of hiking rate and downgrade the country’s growth forecast at the same, I thought it is only suitable for FED to raise interest rate if the economic growth is substantial.
Even i’m confused as the international lender is not favoring the USD strength. Reason behind this could be Fed’s contradicting policies with the rest of the Globe may provide considerable USD strength, damaging global exporters that are now struggling. Moreover, the recent growth numbers were also not strong and hence could have helped them stemming the speculations of early interest rate hike by the Fed.
Having witnessed considerable US Dollar upside moves on Friday, on the back of largest NFP gain since December and the most Average Hourly gains since August 2013, market players seem supporting the greenback during early hours of Monday; however, the greenback registered weekly decline as early week losses were larger to tame during Friday’s trade. The Euro region seems in pessimistic mood as Greece and its international creditors kept falling apart in its final talks and targeted June 13-14 as final dates to decide Greek fate. However, the EU head, on Sunday, rebuked Greek PM in unusually sharp tone, considering the urgency of the matter, by saying that the PM should fasten the process quickly to get the funds and avoid Greek default during its Wednesday meeting. The Japanese yen trades a bit worried after plunging to 13-year low against its US counterpart as former ally to Japanese PM expects the Yen to recover soon and supported the ideal of not introducing further stimulus for now.
From the economic front, Chinese trade details, even after registering three month high trade surplus, disappointed the commodity markets as exports fell for a third month in May and imports slumped the most in three months. Further, Japanese GDP number surpassed its preliminary reading of 2.4% by printing an annualized 3.9% growth rate.
With lesser economic details on hand for the rest of the day, including German Industrial Production and Canadian Building Permits & Housing Starts, market players are more likely to continue supporting Friday’s USD recovery. However, progress on EU front coupled with some pullbacks can’t be denied. Moreover, there are lesser economic details scheduled to publish during the rest of the week, supporting more of the continuation of USD trend with Wednesday’s EU meeting being decisive.
On Monday, the US Dollar failed to maintain the Friday’s considerable gains and registered across the board losses as market players were less convinced that the Fed would hike interest rate sooner while technical inability of the EURUSD to break 1.1050-60 region also supported the pullback of the pair prices. Moreover, the European region in on its toes to get the Greece bailed out as soon as possible as it can be seen by the eagerness of the EU officials. On Monday, the German Chancellor said that the Greece must fast its process of agreeing to its international creditors in order to get the funds by the end of the month. The German authority and the France President is going to meet their Greek counterpart on Wednesday to discuss the basic of deal. Moreover, Canadian Dollar was a gainer after Building Permits surpassed expectations and Housing Starts rallied to November 2012 highs while a rise in crude prices was an added reason to support CAD up-move.
During the early part of the day, Chinese inflation numbers again spurred speculations that the dragon nation is in the need to get additional stimulus. Monthly reading of Chinese PPI fell 0.2% while the yearly number printed 1.2% mark as compared to 1.3% previously noted figure. The PPI fell 4.6% stretching more than three year’s decline. However, the Australian Business Confidence and Home Loans rallied more than expected and restricted further declines of the AUD.
With the little details on hand, UK Trade Balance and the Swiss CPI are likely to fuel forex market during the rest of the day with comments from EU continue to direct EURUSD moves. Moreover, inability on the part of the USD to respond rigorously to the positive labor market news and the nearness to Greek deal continue supporting the pair’s up-move and USD weakness. Hence, it should be taken care before taking USD trades.
Lack of progress in talks between Greece and its creditors coupled with improving US economics fueled Forex market volatility on Tuesday; Though, the day close with some positives on the part of USD. Jobs demand rallied 5.2% to 5.4 million during April, highest monthly result since December 2000, while Small business confidence perked up in May to five month highs. Latest proposal from Greece, to get the bailout funds, seemed to be lesser than the budgeted targets agreed by the Greek PM recently as gives further room for another failed talks; however, Germany and France are in its favor and will discuss the details on Wednesday to provide more support to present concrete steps to avoid an impasse in talks. EU GDP matches its 0.4% growth number while UK Trade deficit shrank and supported the GBP.
During the early part of the day, RBA Governor, Glenn Stevens, said that the economy isn’t moving as expected and weakness in China becomes a threat while further rate cuts can’t be denied if situation worsens, the talks pulled back AUD while in an aftermath of comments from BoJ Governor, that the JPY has weakened considerably and now it has little downside, all the currencies started rallying against its US counterpart.
Today, being the speech day, after heads of BoJ and RBA, the BoE head is likely to speak during the later part of the day and could weaken the GBP as he is likely to avoid spelling interest rate hike during the current year which he said in last year’s meeting at Mansion House. Moreover, monetary policy meeting by the RBNZ, followed by the Governor’s speech, becomes another imp event to fuel forex market volatility.
As market continue trading volatile and most of the time against USD, it would be better to wait for Thursday’s Retail Sales numbers to support the USD longs. However, upsides of other currencies are also at risk and hence it is unlikely to support them as well. Hence, it would be ideal to support a small profit taking trades in a quick decline against USD for the rest of the day.
Even with the Greece tantrum failed to help avoid the Grexit chances on June 14 deadline, the USD couldn’t enjoy the weekly positive closing as declines during early week days, mainly backed by the optimism that the Greece will be able to bridge the deal with its international creditors. Majority of the creditors are now thinking that the Grexit will have to bear if the Greece continue being so tough and kept avoiding the chances of getting the aid funds. Though, June 18 meeting seems to put a final force to help the troubled nation, as per the major creditors’ communications, rest the economy faces the chances of going bankrupt and leaving Euro-region. The Japanese Yen was trading in gains due to the uncertainty of Greece and much awaited FOMC, scheduled during the current week. Storm that could impact Gulf of Mexico operations supported U.S. crude prices gained for the first time on Monday after facing consecutive declines during last week as Saudi Arabia signaled hiking its record production if situation demands.
With the crucial week having FOMC, BoJ, SNB, UK Labor market numbers, US CPI and Manufacturing details, market players are more likely to trade cautiously and it is advisable to hold the trade ahead of data points, if not opened as significant volatility may eat your accounts up.
On Monday, Swiss PPI, Retail Sales, Manufacturing details from US and Canada and the testimony by ECB President may continue supporting the forex market volatility. However, US Industrial production is expected to rally for the first time after five months of contraction and could help the greenback recover some of the last week’s losses.
Although, US NAHB Housing Market Index, published on Monday, tested September 2014 highs, negative readings of Empire State Manufacturing Index and Industrial Production pulled back the US Dollar Index to register a negative daily closing. At the European front, testimony by the ECB President revealed the dire emergency on the part of the Greece to agree with its international creditors during Wednesday’s meeting to save its position into the Euro-region, pushing down the regional currency. Today, Euro-zone finance ministry officials are due to hold a Greece call ahead of a meeting of ministers later this week. The BoJ Governor, in a publics speech yesterday, said his comments last week, favoring the stronger Yen, wasn’t seemed to strengthen the national currency and he still favors the further weakness into the Yen prices. His comments during the last week was perceived as a hint to halt the BoJ’s easing bias; however, with the current statement, it becomes unlikely that the BoJ, in its meeting scheduled for Friday, could stay away from the loose monetary policy.
Early today, minutes from the recent RBA meeting revealed that the central bank continue supporting lose monetary policy even after cutting the benchmark interest rate twice into the current year as the measures couldn’t gain required benefits with the commodity prices pulling down the AUD and Chinese pessimism continue hurting the economic outlook for the export driven economy.
For the rest of the day, UK CPI, ZEW Economic Indices for EU & GE together with the housing market details from US are likely to take the center stage of the market; however, communications from Greek talks will continue driving the Euro. Should there be any confirmation for the Greek bailout funds, the regional currency is likely to rally.
Given the inability of the greenback to rally, coupled with weaker economics, there are likely chances that the USD may correct further before registering a bounce on FOMC. Hence, it would be into the best interest of the market players to stay alert before buying the USD.
With the US Building Permits surging to a near eight-year high in May, speculations concerning the strong economic forecast in Wednesday’s FOMC, coupled with hint of near-term interest rate hike, supported the USD on Tuesday while strong CPI numbers from UK provided a bit of strength to the GBP. Moreover, pessimism surrounding the Grexit, after the fierce words from Greek PM on Tuesday, continues hurting the Euro regional currency. On Tuesday, the Greek PM said that the EU and its international creditors treating Greece as if it is a “criminal” and are only forcing it towards exit, signaling that the PM would not be able to pass during the current talks on Wednesday and Thursday and may remained in trouble during the next two weeks closing which it will be on the way to file bankruptcy. The commodity basket was trading sideways, fearing the Fed meeting while Crude prices remained firm ahead of inventories’ data, scheduled for release later today.
During the early part of the day, Japanese trade details pulled back the recent JPY strength as the exports rose at the slowest pace since August. For the rest of the day, UK labor market details and minutes of recent BoE meeting, coupled with Canadian Wholesale Sales and the New-Zealand GDP are some of the important details that market players are going to observe. However, major attention of the market will be on FOMC meeting that includes the quarterly economic forecast and the speech by the Fed Chair. Should there be hawkish words by the Fed chair, coupled with improved forecast by fellow MPC members, the USD could become a strong buy case. However, in the last forecast, the members cut down the inflation and growth forecasts and hence this would be closely observed during this time.
As today, being the important day for the mark, mostly influenced by the FOMC, it would be in the best interest of the market players not to jump on the large trades during the day and all the trades should be closed ahead of the Fed meeting. Should they get any clear info, trades should accordingly be adjusted.
Recently released FOMC details disappointed the Forex market players, providing additional weakness to the greenback, as dovish tone of the central bank chief, coupled with downgraded growth forecast for 2015 & inflation projections for 2016, spread pessimism. The Federal Reserve, after its two-day monetary policy meeting, held it benchmark interest rate intact; though, it wasn’t expected to alter during this time, but the Fed Chair, Jannet Yellen, said she still wants to see more “decisive” evidence of a lasting turnaround in labor market while the economy is facing cyclical weakness with stronger Dollar hurting the growth prospects. Moreover, MPC officials reduced their median estimate for the federal funds rate at the end of 2016 to 1.625% from 1.875% in their March forecast, and to 2.875% for the end of 2017, down from 3.125% in March. The Euro region remained a bit sluggish, though not losing, as Greek woes continue favoring the EUR bears while recent FOMC doves restricted EUR declines. The GBP was a clear winner of the day as considerable improvement in Earnings growth fueled concerns that the UK economy is strong enough to trigger interest rate hike in 2016. The crude prices declined with US crude inventories posting another addition; however, weaker USD restricted higher declines. New-Zealand Dollar also sagged considerably against majority of its counterparts as quarterly reading of GDP plunge to the least in two years to 0.2% against 0.6% expectations.
Even after witnessing considerable volatility, mostly of adverse nature, today’s economic calendar is full of important details that starts with SNB meeting, followed by UK Retail Sales, US CPI, Philly Fed Manufacturing Index and Euro-group meetings. However, SNB & Euro-group meeting is likely to create headlines as the Greece is still at logger-heads with its international creditors and another failure to agree can strengthen the case for Grexit, coupled with considerable EUR weakness.
With the Core CPI numbers from US testing five month lows, speculations concerning the gradual interest rate hike strengthened, pulling back the greenback for one more day of the week on Thursday. At the European front, Greece talks again failed to pass the deal, as expected, forcing the EU to schedule emergency meeting on Monday to rescue the troubled nation leaving out of Euro region; however, Euro remained stronger against majority of its counterparts as market players know that the European leaders will any how stop Grexit. The UK currency also rallied to the highest level in seven months against its US counterparts as better than forecast retail sales strengthened expectations that the BoE will becomes the first major central bank to hike interest rate, beating Federal Reserve. The Swiss National Bank (SNB) also held its monetary policy intact in Thursday’s meeting by saying that the current policy is compatible to the on-going economic situation while the policy makers may take actions to counter stronger CHF, if needed.
During the early part of the day, monetary policy meeting by the Bank of Japan held its monetary policy unchanged with upbeat economic forecasts, signaling the economy will be able to reach its targeted inflation. 2.0%, sooner. However, speech by the central bank Governor, Hruhiko Kuroda, is still pending, so market players will take cues from its to determine future course of BoJ and the strength of export driven economy. For the rest of the day, Canadian CPI and Retail Sales are the only details left for publishing, giving almost no major events to take care of.
As the market have started favoring USD since early Friday, chances can’t be negated that the greenback may recover some of its recent losses; however, sharp up-move isn’t expected and intraday buying for the US currency, with small targets, becomes a good strategy for the day.
With a bit dovish FOMC, the US Dollar continued extending its decline towards third consecutive week. The Euro region currency remained a bit supported even if the Greece kept creating problems as market players are almost sure that the EU won’t allow Greece default at any cost. The troubled region tried with the impressive proposal on Monday to convince its international creditors and market players are more optimist that the deal will be reached during its final discussion. Moreover, the Crude prices remained a bit up-moved with uncertainty at EU and weaker Dollar supporting the demand; though, higher output kept restricting the crude prices.
With major details being published during last week, there are lesser important scheduled for publish during the current week; however, on-going talks between the Greece and its international creditors will be of utmost importance. Moreover, the Chinese Manufacturing PMI, US GDP and Durable Goods Orders are some other details that could make the market players busy during the week.
For the rest of the day, other than EU talks, US Existing Home Sales will be an important event to help determine USD moves. It is more likely that the USD continue losing its weight as Greece deal is about to be reached, so less advisable would be to support USD buy for the meantime.
Having extended its descending path during last week, the US Dollar closed on the positive side during Monday as monthly reading of Existing Home Sales rallied to the highest level since September 2013. Moreover, the emergency meeting by the EU to resolve the standoff between Greece and its international creditors, on Monday, provided 48 hours to the troubled nation to give a final push to get the emergency aid, failing which it would become bankrupt. European leaders were quite optimistic after the talks saying that the Greece is now being serious and complying with majority of creditors’ demands. However, the Greece, even after getting the deal approved, has to get an approval from its parliament where majority of the members may disagree, also, the final print of the agreement is something which is still debatable and could stretch the deal
to take place, pulling down the Euro during early Tuesday.
After witnessing the Flash reading of HSBC Chinese Manufacturing PMI, that ticked to three month high of 49.6; though, legging behind the 50 level, Tuesday has many important details, like Flash Manufacturing & Services PMIs from EU, Germany and US, together with the US Durable Goods Orders and New Home Sales. Hence, it would be better to take trades cautiously after considering the economic details.
Moreover, the recent strength in to the USD could extend as the Greece news will be on hold for today while optimistic forecasts of the scheduled details could help greenback extend its Monday gains.
Even if the Durable Goods Orders, published on Tuesday, revealed negative print, the Core number, rallied for the second time in the year, supporting the USD up-move for the second day of the week. Moreover, New Home Sales surged to the seven year highs after the Existing Home Sales increased to the highest level since 2009 on Monday, providing additional support to the greenback advance. The Euro region currency remained pressured ahead of the Euro-area finance ministers meet today to discuss the fate of Greek deal ahead of the Euro group meeting on 25-26 June. Should the Greece being able to secure the deal, which is more likely, the Grexit will be avoided providing additional support to the regional currency. At the Japanese front, the minutes of recent BoJ meeting, revealed that the central bankers is in less mood to add excess monetary easing, signaling a chances of scaling back the huge stimulus during 2016, supporting the JPY.
For the rest of the day, Euro leaders’ meeting and the Final version of US GDP will take the center stage of the market movements while German Ifo Business Climate Index can provide intermediate moves to the Forex market.
Should the Greece again fails to agree with its international creditors, the Euro will be weakening considerable while the positive reading of US GDP, surpassing the -0.2% estimation, can help fuel the USD rally. Hence, it would be advisable not to trade ahead of the BIG events, if you’ve already traded it, kindly take the required gains and exit ahead of the announcements.