FOREXYARD: Forex News Blog | |
- JPY May Gain from Industry Growth; BOJ May Intervene as a Result
- As USD Declines, Today’s News May Provide Insights
- BOJ Currency Intervention: What it Means for FX Traders
- GBP in the Spotlight with Asset Purchase Facility and Official Bank Rate
- EUR Straining Under Renewed Debt Concerns
- Will the Bank of Japan Intervene in the Currency Market?
- EUR/CAD Consolidating towards 1.3700
- ADP Foreshadows Sharper NFP Drop; USD Under Pressure
| JPY May Gain from Industry Growth; BOJ May Intervene as a Result Posted: 27 Sep 2010 08:13 PM PDT
The US dollar has been declining steadily against all of its currency rivals since the opening of this week's market. As of early Asian trading this morning, the buck has seen a view positive corrections, but little which would indicate a reversal to yesterday's movements. Today's economic news may add a boost to the greenback if the American consumer confidence figure at 14:00 GMT comes above expectations. Here is a recap of the day's events: 8:30 GMT: GBP – Current Account - This report measures the difference between imported and exported goods, services, income flows, and unilateral transfers during the previous quarter. It has a direct correlation with the demand of the country's currency, the British pound. Current expectations are for a reading of -9.6 billion pounds. If the actual figure is more positive, the pound sterling could see some bullish movement today. 14:00 GMT: USD – CB Consumer Confidence - The Conference Board's (CB) Consumer Confidence indicator is a gauge of economic sentiment among private households in America. It surveys roughly 5,000 households about their confidence regarding the economy and has a positive correlation with consumer spending, and thus demand for the greenback. This report has maintained a reading between 50.0 and 60.0 for the past few months, if today's report falls within this range, as it is expected to do, then the impact on the greenback may be positive, but minimal. 23:50 GMT: JPY – Tankan Manufacturing Index - This report is one of the few pieces of economic data which Japan releases publically. It is a measure of the health of Japan's manufacturing sector. A reading over 0.0 is a sign that manufacturing is healthy and growing; below 0.0 indicates the opposite. Expectations are for an increase from a reading of 1.0 to 7.0 from the previous release, which could lead to further strengthening of the JPY, and therefore has the potential to provoke the Bank of Japan (BOJ) into further monetary intervention. |
| As USD Declines, Today’s News May Provide Insights Posted: 16 Sep 2010 08:41 PM PDT
As the week comes to a close, clients are wondering if the USD's recent decline will continue. Today's news events seem to focus primarily on inflation and consumer confidence in the United States. This means we should receive a modest look into the reactions by US economists and consumers regarding the recent dollar valuations. Here is a round-up of today's leading events: 12:30 GMT: USD – CPI and Core CPI - The US Consumer Price Index (CPI) is an inflationary measure which helps determine the change in purchasing power of the USD. The rate of inflationary growth is also among the leading factors in the interest rate decision-making process by the Federal Reserve. - Core CPI includes the same set of data as the regular CPI, minus food and energy price inflation. Food and energy account for much of the volatility in inflationary figures, making them less reliable. Therefore, the Core CPI tends to have a higher importance on USD valuation as it provides a better look at real inflation. If these figures are released in-line with expectations, the USD should see a modest decline due to risk appetite growth. 13:55 GMT: USD – Prelim UoM Consumer Sentiment - The University of Michigan's (UoM) Consumer Sentiment report measures the level of economic confidence, as gauged by US consumers. When confidence is on the rise, riskier assets tend to gain in value. If confidence is in decline, it tends to reflect with a rise of safe-haven investments, such as the USD and Gold. |
| BOJ Currency Intervention: What it Means for FX Traders Posted: 15 Sep 2010 02:55 AM PDT
It didn't take long for forex traders to notice the sharp rise in JPY crosses this morning. But many have expressed a type of unfamiliarity with the politics of Japan to truly grasp what was happening. Let's try to understand what's going on there. First off, Japan likes having a weak yen. In fact, it loves having a weak yen. If the Bank of Japan (BOJ) could keep the yen exceedingly weaker than it currently is, it would. But there is the opposing pull of free markets, and the tenets of an international, free-floating, foreign currency exchange system which demands as much laissez faire as possible, and chastises those who act differently (e.g. China). But Japan is an export-dependent country that needs its currency weak to help its goods gain better access to markets. So the rise of the yen since 2007 (as much as 50% gain on the USD since then) has the BOJ fuming. But what can they do if they want to remain fair partners in the global economic community? Despite the political sensitivity surrounding a bank's attempts at currency intervention, Japan's central bank decided that it was time to step in and weaken the yen for its own economic survival. It's not the first time, either. The BOJ stepped in back in 1999 and 2004, but much earlier in comparison. It shouldn't have come as a surprise, though. Japan has been edging itself towards intervention for some time now. And speculators have been anticipating this move for weeks. So now that it has happened, try to grasp what this means. Basically, the BOJ is selling its own currency, en masse. It's flooding the market with its own currency by releasing its reserves of that currency. The result is what we've seen this morning: mass depreciation of the JPY. We shouldn't expect major changes anytime soon, either. Anticipate a continuation of the JPY's fall going into the next few weeks. |
| GBP in the Spotlight with Asset Purchase Facility and Official Bank Rate Posted: 08 Sep 2010 11:43 PM PDT
The EUR has been falling against a number of its currency rivals over the past day-and-a-half due to a sudden rise in risk aversion. However, yesterday's successful debt auction in Poland and Portugal helped add a minor boost to the 16-nation single currency. The US Federal Reserve's Beige Book release also highlighted a growing stagnation in US economic growth, fueling a large number of concerns worldwide. Today's major economic releases: 11:00 GMT: GBP – Official Bank Rate Great Britain is due to release its interest rate figure today, with high volatility being forecast as a result. Even though expectations are for interest rates to be held steady today, the announcement coincides with the Asset Purchase Facility update and a subsequent rate announcement which provides further details on the state of the British economy. This makes today an important day for GBP traders and many investors may want to be on the lookout for intense volatility. 12:30 GMT: USD and CAD – US and Canadian Trade Balance Reports Both the US and Canada are scheduled to publish their trade balance figures today. These figures report on the difference between imports and exports in each nation's economy, and have a direct correlation with supply versus demand. As a result, the USD and CAD will likely see high volatility, and potential growth if positive numbers are released. |
| EUR Straining Under Renewed Debt Concerns Posted: 08 Sep 2010 05:11 AM PDT
The euro dropped against the majority of its currency counterparts today as sovereign debt concerns returned. The bank stress tests performed over the past few months showed data favorable to the region, but new reports have highlighted the inherent weakness of the tests to apply ample strain to the banks, which led to misleading reports. Weak German industrial figures lately have also weighed on the 16-nation single currency. It appears that the euro zone’s strongest economy may be experiencing the start of a slow-down in recovery and this is having a direct impact on the strength of the EUR. This has combined with more speculation that European banks may yet have to seek more capital. However, even if depressed risk sentiment is likely to prevail, there could be some relief later in the day if the Bank of Canada (BOC) surprises the market with a rate hike, or if the latest U.S. Beige Book gives a more upbeat assessment of the U.S. economy than analysts have been anticipating. Either event could bring traders back into riskier assets, boosting the euro. |
| Will the Bank of Japan Intervene in the Currency Market? Posted: 06 Sep 2010 06:56 PM PDT
The US dollar's resurgence in today's early morning hours has led to a number of significant support levels on USD crosses being tested. The EUR/USD pair has dipped towards the 1.2790 support line, while the GBP/USD hit 1.5350 and seems to be holding steady at that mark. With today's news focusing primarily on Australia and Japan, we should see thin trading conditions continue while USD crosses shift in response to this morning's movements. Today's leading events: 04:30 GMT: AUD – Cash Rate Taking place during the early morning hours before most of Europe awakens means that this announcement will likely see a latent result on the value of the AUD throughout the day's trading and investors shouldn't rule out the fluctuations in the Aussie follow this figure's release. The Cash Rate is the Reserve Bank of Australia's (RBA) official short-term interest rate and therefore is one of the most important figures released regarding the direct value of a currency. The importance of interest rates in currency valuation makes today's announcement vital to the future movement of the AUD over the next few weeks. Tentative: BOJ – Press Conference The Bank of Japan's (BOJ) post-interest rate press conference is one of the most significant events for the Japanese yen. With all of the speculation surrounding possible bank intervention against the continuously rising JPY, this announcement will likely shed further light on the situation of the yen and give traders a better idea on how likely, or how close, Japan's central bank is on attacking what they view as the over-strengthened JPY. Hawkish statements could lead to a strong depreciation of the yen as this will likely signal future steps at weakening the currency to help boost Japanese exports. |
| EUR/CAD Consolidating towards 1.3700 Posted: 01 Sep 2010 10:31 PM PDT
The euro has been regaining its composure against its smaller North American counterpart due to recently boosted risk appetite. The Canadian dollar, to the contrary, has been under pressure lately due to a decline in crude oil futures as well as concerns that growth in the Canadian economy may be stagnating. As a result, we can see the value of the EUR gaining against the loonie in a consolidating wedge formation. - We can see on the daily chart below that the price has indeed been trading within a wedge formation which began in June. The price is currently finding support near 1.3400. - The upper barrier of this consolidation point also rests at the 38.2% Fibonacci retracement line. The consolidation price target appears to be 1.3700 and there is nothing in our technical indicators which suggests this consolidation will not be met. - We can also see an ascending pattern on both the Stochastic (slow) and MACD/OsMA, which support the continued upward movement in the direction of this consolidation level. EUR/CAD – Daily Chart |
| ADP Foreshadows Sharper NFP Drop; USD Under Pressure Posted: 01 Sep 2010 05:53 AM PDT
The US Non-Farm Employment Change report, or Non-Farm Payrolls (NFP) for short, is a strong indicator of market activity in one of the world’s largest economies. As such, this report carries a significant impact on the value of the US dollar (USD) through various channels, both direct and indirect. These channels have very broad implications for analysts. For instance, if the number of employed people in the US is increasing, we can deduce that more jobs are being created and the US economy is on its way to recovery. A negative reading may be reflected with a sharp flight away from the greenback. A positive figure, however, could help the USD halt its latest decline against the other major currencies. The US experienced a rapid rise in employment from January through June with the 10-year census hiring by the US federal government. However, those recently employed by the Census Bureau have now been counted, and we’ve seen US employment figures decrease just as rapidly over the past two months since those numbers are no longer included in the data. With Wednesday's ADP report verifying the recent pause in employment growth across the US, a number of analysts are now expecting Friday's release to be a bit more ominous than previously thought. With private sector employment showing a cut of 10,000 jobs, the addition of the federal government's cuts from the Census Bureau should show nation-wide employment in a much worse position than ADP's private sector figures. We have seen the downward pressure building on the US dollar this entire week as a result. At the moment, the NFP appears to be showing an expected 101,000 jobs lost in August. However, if today’s ADP figures are any sign of what to expect, a reading much lower than -101K may be developing. I wouldn’t be surprised to see the NFP forecast revised before Friday’s release to reflect this expectation. Tied in with this expectation is a pricing in of a weaker USD. We’ve seen the greenback dropping steadily against most of its currency rivals this week, likely due to a rise in risk appetite following positive news from China and Australia, but also from an expected slow-down in American economic recovery. |
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