FOREXYARD: Forex News Blog | |
- Awaiting Tomorrow’s Non-Farm Payroll Data?
- Swedish Krona Top Performer, Oil Dip Weighs on Norway’s Krone
- Japan Downgrade Spurs JPY Selling
- Aussie Dollar Inching Lower as China Hints at Policy Adjustment
- Swiss ZEW Reading Outperforms Region’s
- US Inflationary Data on Tap Tomorrow
- What to Expect Next Week in the Forex Market
- Weekly Forecast: USD to Pare Losses this Week?
- AUD Takes Dive Following Employment Reports
- Forex: This Week’s Economic Calendar (Jan. 10-14)
| Awaiting Tomorrow’s Non-Farm Payroll Data? Posted: 05 May 2011 12:38 PM PDT
A big hubbub has been made regarding the past two weeks. Last week it was interest rate differentials and the sharp decline of the US dollar. This week it is the death of Osama bin Laden, the Royal Wedding in Britain, and Golden Week in Japan (not to mention the celebration of Cinco de Mayo by the Spanish-speaking world is today). But have you forgotten the most impactful data release of each new month? This week is the long-awaited Non-Farm Employment Change (Non-Farm Payrolls, or NFP) release from the US Department of Labor's Bureau of Labor Statistics. This data release is perhaps the most important figure published by the US economy. More so than interest rate decisions. More so than inflationary figures. More so than industrial readings. Non-Farm Payrolls is the primary gauge of the US employment sector. It carries the heaviest impact on the forex market since it is a direct line into the lifeblood of the American economy: jobs. Yesterday's NFP estimate by Automatic Data Processing Inc. (ADP) revealed a below-forecasted figure of only 179K jobs being added by the private sector. Tomorrow's NFP report will factor in the same information but include jobs data from the public sector as well. It is a leading indicator of economic health and should never be disregarded, especially in these times of economic uncertainty. Today's rate statements out of Britain and the euro zone left many investors unsure about the timing of future rate decisions. The result has been a broad sell-off in the euro and British pound in exchange for safer assets like the US dollar and Japanese yen. Should tomorrow's NFP data come below forecasts, this shift into safe haven investments may pick up steam, further boosting the USD and JPY. Don't miss out on tomorrow's NFP data release, it should be a doozy. |
| Swedish Krona Top Performer, Oil Dip Weighs on Norway’s Krone Posted: 02 May 2011 11:11 PM PDT
Little appears to be rumbling on the surface in the currency world of Scandinavia since last week. Sweden still dominates the forex market with record gains against all of its currency rivals. Norway has been growing steadily as oil prices surge and Denmark remains hesitantly linked to the debt fears of the euro zone. What we can analyze for future currency moves, however, is the happenings among the banking world of these Norse giants. Business headlines across the region have loudly proclaimed the rise of banking profits since the start of 2011, primarily Sweden's. Nordea Bank, the largest bank in the Nordic region, recently posted a surprise 15% jump in Q1 profits with a $1.1 billion surge. The sudden influx of capital appears to be connected with recent optimism in Sweden regarding its position of working to tighten monetary policy and further enlarge bank capital requirements for loans, analysts have said. A 2011 study also suggests that Swedes are among the Nordic region's best "savers." Leading news in Denmark is targeting the scandal of a transportation subsidiary, DSBFirst, which bilked the public coffers and failed to report on the reality of its own financial chaos, all while failing to produce results on effectively managing public transportation. The company also operates in Sweden which has recently threatened to strip DSBFirst of its operating license in Sweden should they fail to improve upon their current performance record. The impact of this scandal is not yet known for the Danish body politic. In currency news, the Swedish krona (SEK) remains atop the ladder for best performers of FY 2010-2011 thus far. The Norwegian krone (NOK) experienced a short dip yesterday as oil prices fell due to a sudden surge in the US dollar brought about by the optimism which rocked markets after the announcement that Osama bin Laden had been killed by US commandos in Pakistan. The rise in USD values was short-lived, however, and Crude Oil looks to be finding support as of this morning. Should the greenback persist in its recent bearishness, which appears to be supported by fundamentals and technical analysis, then the Scandinavian kroner should remain ahead of the crowd, remaining top performers among regional and global currencies. |
| Japan Downgrade Spurs JPY Selling Posted: 27 Apr 2011 12:16 PM PDT
Today's cut of the Japanese sovereign debt by S&P was the trigger for today's yen selling but the news does not come as a shock following the agency's downgrade of Japan's sovereign credit rating in January. The cause of the downgrade is due to the immense reconstruction costs after the March 11th earthquake and tsunami. This should increase the fiscal deficits for Japan as the nation digs itself out from under the destruction and attempts to rebuild. S&P estimates Japan will need roughly Y20,000B – Y50,000B to finance the cleanup and construction costs. The numbers are well above the Japanese government's estimate. No plan has been released yet by the Japanese government entailing the mechanism to finance any cleanup plan and this is one point many JPY and JGB followers are looking for. S&P expects Japan's deficit is to rise an additional 3.7% of GDP in 2013 and a gross debit limit which is expected to rise to 200% of GDP this year. S&P's decision comes on the heels of last week's cut to the US sovereign debt as the rating agency reduced its view of the US long term outlook to negative. The initial move by the market was to sell the yen following the release of the S&P report. This knee-jerk reaction is in-line with the long term fundamentals of the yen. The Japanese central bank maintains an ultra-loose monetary policy combined with high deficits. This stands in contrast with the ECB and the BOE who are currently tightening monetary policy and reducing excess liquidity in the market. It seems that at this stage, S&P is out ahead of FX players when it comes to factoring in the rising Japanese deficit. |
| Aussie Dollar Inching Lower as China Hints at Policy Adjustment Posted: 15 Apr 2011 08:25 AM PDT
Talks of a possible tightening of China's monetary policy has a number of Pacific traders adjusting their portfolios ahead of the move, which has apparently caused a draw-down in the strength of the Australian dollar (AUD). The Aussie's recent bullishness was halted momentarily as many investors contemplated the move by China, but very little change in value has occurred prior to any announcements from China. This weekend's meeting of the G20 and IMF has helped generate much of the speculation regarding pressure on China, but the tightening of its monetary policy is also supported by recent data. Indeed, Chinese data reveals that its inflationary growth has reached a three-year peak in acceleration, suggesting heightened demand for a tightening of interest rates to prevent a hyper-inflationary spiral. First quarter economic growth data also outpaced most analysts' expectations. All of this data together paints a picture of not just a level of pressure, but of almost a necessity that China raise rates in the near term. The adjustment should have the effect of pushing a number of its Pacific neighbors' currency values lower in the immediate aftermath as values shift. As such, traders may want to begin expecting a quick downturn in AUD, and perhaps even NZD values. |
| Swiss ZEW Reading Outperforms Region’s Posted: 14 Apr 2011 08:40 AM PDT
This week's report from the Zentrum fur Europaische Wirtschaftsforschung (ZEW) was hardly digestible in regards to Germany and the euro zone. Both reports failed to meet expectations and the euro came under solid resistance as a result of their publication. What this meant for regional consumer sentiment has yet to be placed in context. Switzerland's ZEW reading, to the contrary, came out well above last month's reading. Showing significant pessimism last month, Swiss institutional investors and analysts have recently rated their 6-month outlook more optimistically. The ability of the Swiss banking and financial sectors to outperform regional neighbors has allowed the Swiss franc (CHF) to capture a large share of investor flight from recent binges of risk aversion. As traders witness a scaling back of risk flight in favor of higher yielding assets, the franc still appears to be making gains against its currency rivals. Such positive reports as this morning's ZEW reading will only help sustain the CHF's bullish momentum. |
| US Inflationary Data on Tap Tomorrow Posted: 13 Apr 2011 09:29 AM PDT
Investors have been witnessing stability in inflationary figures across Europe for the past several days. Indeed, one of the reasons posted for the European Central Bank's (ECB) decision to hike interest rates last week was stable growth in regional inflationary data. Tomorrow, the United States will begin posting its monthly figures on inflation, starting with the Producer Price Index (PPI) and followed by Friday's release of the Consumer Price Index (CPI). The PPI data may reveal a minor slow-down in growth, from 1.6% to 1.1%, if it gets published as expected, but the data does not seem significant enough to affect American growth figures. Friday's CPI figures may further fuel stability in growth forecasts as the core data reading, which excludes food and energy, is expected to remain stable at 0.2%. The overall reading is also being anticipated to reveal a growth from 0.5% last month to 0.6% this month. If US inflationary data can sustain such stability, arguments for monetary adjustments may become more pronounced in the near future. For now, the solid numbers could simply help the greenback push back against its recent weakness in the foreign exchange markets (FOREX). |
| What to Expect Next Week in the Forex Market Posted: 28 Jan 2011 11:15 AM PST
As this week is about to end and the market is set to be closed, here's a list of what looks to be next week's biggest events in the forex market. Next week will certainly be an unusual trading week, as two different monthly interest rates decisions will be announced, one from Australia and the other from the euro-zone. In addition, next week is also the first week of February, which means that the U.S. Non-Farm Payrolls report is scheduled for Friday. Let's review the biggest economic releases which are expected: Australian Cash Rate (Tuesday, 03:30 GMT) The Australian Cash Rate is in fact the Reserve Bank of Australia's (RBA) interest rate announcement for February. After the RBA has surprisingly hiked rates by 0.25% to 4.75% on November, analysts currently estimate that it will leave rates at 4.75%. However, if the RBA will surprise and hike rates once again, the AUD will probably see a sharp bullish move as a result. U.S. ADP Non-Farm Employment Change (Wednesday, 13:15 GMT) The Automatic Data Processing (ADP) publishes its estimation regarding the change in number of employed people during the previous month, excluding the farming industry and government. The ADP forecast is considered to be quite reliable, and thus its release usually has a large impact on the market. European Minimum Bid Rate (Thursday, 12:45 GMT) The Minimum Bid Rate is the euro-zone interest rates announcement for February. Analysis forecast that the European Central Bank (ECB) will leave rates at a record low of 1.00%. What should be more interesting is the ECB's press conference which will be held at the time, as Jean-Claude Tricet, the ECB President, is likely to discuss the ECB's plan to fight off the rising inflation. His speech is likely to create high volatility in the market. U.S. Non-Farm Employment Change (Friday, 13:30 GMT) The Non-Farm Employment Change report measures that change in the number of employed people during the January, excluding the farming industry. It is considered to be the release that has the largest impact on the market. If the report will show that the American labor sector continues to recover, the dollar might see a sharp bullish move as a result. |
| Weekly Forecast: USD to Pare Losses this Week? Posted: 24 Jan 2011 03:00 AM PST
The US dollar’s mixed results last week, on a fundamental level, may be broken down to a shift in risk appetite and consumer confidence. From a technical standpoint, the movement looks like a consolidating retracement against most of its rivals in anticipation of this week’s news. Here is a breakdown of this week’s events to give you an idea of how the US dollar will be affected in the days ahead. Tuesday: 15:00 GMT: USD – CB Consumer Confidence Wednesday: Thursday: 13:30 GMT: USD – Unemployment Claims Friday: 13:30 GMT: USD – Advance GDP What to expect: |
| AUD Takes Dive Following Employment Reports Posted: 12 Jan 2011 11:30 PM PST
At the start of today's economic calendar there was a severe blow to the Australian dollar. Amid the horrendous floods presently afflicting the nation, the Australian employment change report also came out well below forecasts and, despite a decrease in the unemployment rate, traders appear to have responded with a sell-off of AUD. Today's busy calendar will have forex traders highly active in the upcoming European and American sessions. Britain and the euro zone will both publish their interest rate decisions along with monetary policy statements. The US will later publish its trade balance and weekly unemployment claims reports. Here is a roundup of today's leading events: 12:00 GMT: GBP – Asset Purchase Facility and Official Bank Rate The release of the Bank of England's (BOE) latest decision regarding its short-term interest rates and its Asset Purchase Facility will no doubt have a heavy effect on the value of the GBP. Predicting the movement of the British currency following such reports is, however, highly difficult given the volatility typically experienced around this event. Traders should make sure to protect their positions today and expect sharp movements in the market. 12:45 GMT: EUR – Minimum Bid Rate Immediately following Britain's announcement regarding interest rates is the same decision and announcement on the interest rates for the euro zone. The European Central Bank (ECB), as well as the BOE, both plan to hold interest rates steady, but trading tends to become highly volatile around the publication of this event. Traders should guard their positions with conditional orders today to defend against the expected volatility. 13:30 GMT: USD – Trade Balance and Unemployment Claims The US will be publishing its recent monthly trade balance figure today alongside its weekly unemployment claims report. Given the moderate strength in the dollar lately, these two reports could help sustain those levels if they turn out better than forecast. |
| Forex: This Week’s Economic Calendar (Jan. 10-14) Posted: 10 Jan 2011 07:00 AM PST
The US dollar's recent bullish surge resulted largely from positive fundamentals in the American job sector last week. Wednesday's ADP Employment Change estimate showed private sector growth well above market forecasts. Friday's NFP, while below expectations, still highlighted the 100,000+ job growth in the world's largest economy. This week is lighter on the American side of economic news, with Europe leading the way, but the US will figure in as the week progresses. Below is a roundup of this week's primary market events. Tuesday: The day will be led primarily by early-hour figures released from Australia and Japan, though they will likely be less impactful than many would expect. Australia will reveal the monthly job advertisement indicator, which could potentially lift the AUD in the short-term. However, these gains could be offset by a shrinking trade surplus, expected to have diminished by 0.60B over the last 30 days. Japan's release of its leading indicators at 5:00 GMT will likely not affect the market too severely unless the report is well above or below the previous month’s reading. Wednesday: Australia will once again lead this day's market with an early housing report expected to show a decline in home loans at 00:30 GMT. The Aussie may turn down a bit if the report comes in line with expectations. Most other reports expected will likely have little impact on the market, especially considering the economic events being released Thursday. However, Wednesday's release of US Crude Oil Inventories has the potential to drive volatility in commodity trading and investors should take note of its release. Thursday: This will without a doubt be the most volatile trading day of the week with a series of reports expected out of Britain, the euro zone, and the United States, with Australia, once more, leading the way. At 00:30 GMT, Australia will be publishing its monthly employment figures, expected to show mixed results. Traders may digest this news and continue the week's momentum on the Aussie if the reports carry no surprises. Between 12:00 and 13:00 GMT, Britain and the euro zone will publish their latest decision regarding short-term interest rates, followed by statements from their respective central bank presidents. These decisions always drive heavy volatility in the forex market and traders will want to pay close attention to the comments from each bank president immediately following this publication. At 13:30, the United States will chime in with its weekly unemployment claims report, its latest PPI reading, as well as the US trade balance, which has been forecast to reveal a deepening trade deficit, likely brought on by the strengthening dollar. Fed Chairman Ben Bernanke will close out the day with a speech at 18:00 GMT titled "Overcoming Obstacles to Small Business Lending," to be delivered at the Federal Deposit Insurance Corp. Forum in Arlington, Virginia. Some volatility may be expected for the USD during this speech, but direction is unclear. Friday: The US dollar will become a major factor in Friday's trading. Britain will open the trading day with an early reading on its monthly PPI Input at 9:30 GMT. The US economy will take over the more relevant events on the calendar from then on, however. Starting at 13:30 GMT and lasting through 15:00 GMT, the US economy will publish a string of reports on CPI, Retail Sales, Industrial Production, and the University of Michigan's (UoM) Prelim Consumer Sentiment figures. Traders should anticipate heavy volatility in the USD during this period on Friday. |
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