FOREXYARD: Forex News Blog | |
- AUD/USD Maneuvering Higher after Jump in Aussie Trade Balance
- CPI Data Weighs on Swiss Franc
- Greek Debt Crisis and ECB Interest Rates Driving the Euro
- Halifax House Price Index (HPI) in Steep Decline
- European Investor Confidence Drops, Should We Be Surprised?
- Will the Reserve Bank of Australia Raise Interest Rates in 2011?
| AUD/USD Maneuvering Higher after Jump in Aussie Trade Balance Posted: 10 May 2011 09:44 AM PDT
The Australian economy, among the top performers these past three years, published its trade balance data this morning only to reveal a A$1.25B surplus beyond the expected A$0.49B rise. The final figure for this past month's trade balance was A$1.74B and has so far helped the Aussie dollar climb strongly against its currency counterparts, particularly the US dollar. The AUD/USD moved upward within its current bullish channel to a price which is challenging a weekly high of 1.0815. Though the current price has fallen from this high somewhat, the pair's upward momentum remains. Yesterday's employment data release by the Australia and New Zealand Banking Group (ANZ) showed a 1.0% climb in job advertisements since last month, and National Australia Bank (NAB) published a positive reading for business confidence in April. Fundamental data supports the recent rise of the Aussie, and the pair appears to be maneuvering higher after this morning's trade balance report. Should the pair continue finding additional support through the remainder of the week, forex traders may see the AUD climb beyond its 1-week high and push towards the May 2nd high of 1.1010. Thursday's employment reports could provide this additional support. The Australian equivalent of Non-Farm Payrolls is scheduled to get published on Thursday morning at 2:30 GMT during the Pacific trading sessions. The Employment Change measure could reveal a slowdown in job growth, but the unemployment rate is forecast to hold steady. Both have the high probability of granting additional support to the AUD in this week's trading. |
| CPI Data Weighs on Swiss Franc Posted: 10 May 2011 09:39 AM PDT
The consumer price index (CPI) data out of Switzerland this morning revealed slower inflationary growth than was originally expected. The sluggish 0.1% ascent in consumer prices, well below the 0.5% forecast growth, may end up adding weight to the upcoming Swiss National Bank (SNB) policy meeting in a way which has the SNB holding rates steady instead of hiking them, as many had expected. A report in the Financial Times noted that the SNB was more likely to tighten its interest rates at its September meeting instead of in June as a result of today's CPI and several other factors. Analysts had cited a number of reasons for the delay, including an uncertain outlook for commodity prices, doggedly persistent debt concerns across the euro zone and, more recently, squishy economic data out of the United States which may cause some outlook forecasts to fall below previous expectations. Coming just prior to the CPI report was a consumer climate estimate performed by the State Secretariat for Economic Affairs (SECO). This less impactful piece of data revealed a stark downturn in consumer optimism. The expectation was for the measured consumer climate to hold stable, but actual results had the number drop into negative territory, revealing ominously growing consumer pessimism. The impact these data had on the value of the Swiss franc (CHF) in today's trading was highly visible. The USD/CHF, shortly after this morning's SECO report, jumped in value by 73 pips from 0.8731 to 0.8804 before settling near the latter. The value of this pair has held steady above 0.8800 and was seen rising late into the trading day. With expectations for interest rates to be held steady, the Swissie may continue to lose support in the weeks ahead of the June quarterly meeting by the SNB. |
| Greek Debt Crisis and ECB Interest Rates Driving the Euro Posted: 10 May 2011 07:57 AM PDT
The euro continues to tread water as the common currency has come off its recent lows but still trading inside yesterday's range versus the major currencies. Fears of a Greek restructuring and even threats of succession from the euro zone have pushed the euro to its lowest level in 3-weeks. However, traders should keep in mind that the underlying factors driving the euro's previous gains have not changed. New rumblings from Greece caused an emergency meeting of the EU financial heads this past Friday. The not so secretive euro summit identifies the headline risk for the euro as talk of Greece leaving the euro zone compounds the difficulties EU finance minsters face. New measures will need to be taken in order to dissipate market fears of a Greek restructuring but at this time it is unclear what approach the EU will take. The Financial Times noted in comments from a Greek official, one possibility may be for Greece to sell bonds to an EU bail-out fund, or extend the maturities on its existing debt. Any talk of a restructuring, which is simply a nice word for a default has been staunchly denied by EU and ECB officials. Interestingly enough, the Financial Times also noted the first public mention of Greece's inability to return to the market next year to support its funding needs. This should be taken as a significant point in the ongoing crisis as it displays the failure of the measures taken by European leaders to solve the Greek debt crisis. This renewed flair up combined with last week's lack of "Strong vigilance" from ECB President Trichet has dropped the euro and kept the EUR/USD range bound this week. The Greek debt crisis has reemerged to one of the factors contributing to the recent decline in the 17-nation currency, but as was the case from January to May when the euro put in an astounding performance the Greek debt issue may be once again put on the sideline and continue to be temporary issue in the FX markets. Traders should keep in mind that the underlying factors driving the euro's previous gains have not changed. The Federal Reserves is not expected to raise interest rates until mid-2012 while the ECB is forecasted to increase rates another 25 bps in July. The interest rate differential between Europe and the US should continue to support the euro. Today the spread between the 2-year German Bund and the 2-year US Treasury stands at 115.9 and should continue to rise, highlighting traders focus on yield and supporting the euro in turn. |
| Halifax House Price Index (HPI) in Steep Decline Posted: 09 May 2011 10:44 AM PDT
The Halifax Bank of Scotland published its monthly indicator on housing prices today, revealing a stark downturn in housing prices by approximately 1.4% since March. The reading comes one week after a similar report by Nationwide which highlighted a 0.2% decline in housing prices over the same period. Many forex analysts have commented that the Halifax indicator tends to be more volatile than its Nationwide counterpart, but forex traders should look to both indicators together to get a feel for what is happening in the housing market across the United Kingdom. Unfortunately, both reports for the past month tell the same story: housing prices are in decline. Both British HPI reports gather their information by looking at the value of homes listed on new mortgage approvals. A recent article in the Financial Times noted that high unemployment, tightening monetary policies, negative real income growth, and recent declines in consumer confidence across the UK have all played a significant part in the depreciation of home values. Furthermore, elevated debt levels and the increased difficulty in getting a mortgage due to bank limitations have also generated a downturn in the British housing market. What this could mean for traders reading this forex blog is that the British pound (GBP) is coming under the pressure of market forces which have indirect links to the value of currencies. If consumer spending is in decline, which it tends to be when confidence drops and paychecks become weakened, the respective value of the currency also tends to enter a downturn. |
| European Investor Confidence Drops, Should We Be Surprised? Posted: 09 May 2011 10:41 AM PDT
This morning's release of the Sentix Investor Confidence report out of the euro zone showed a wide gap emerging between this month's expectations and today's actual results. But should forex traders really be surprised by such a downturn? Perhaps, yes. The Sentix report is a leading indicator based around a diffusion index which asks approximately 2,800 investors and market analysts in Germany and parts of the broader euro zone to rate their expectations for investment in the region through the upcoming six months. The surveys for this report are conducted on each Friday of a month and collated for a single report released at the start of the subsequent month. The April report showed overall confidence plummet to a reading of 10.9 from an expected 14.3. The report is relatively new, however, first getting published in 2006, and tending to have very little impact upon its initial release. Today's reading was not surprising in the sense that investor confidence continued to remain low due to the debt concerns in the region. But what is interesting is that its recent fall appears to have been muted. The month of April was a divided month in regards to the strength of the euro zone. The start of the month, for those forex traders who remember, was heavily bullish for the EUR and the region. The second half of the month, however, was harshly bearish given the sudden return of Portuguese debt concerns, rumors of Greece exiting the euro zone, and the ambiguous rate statement by ECB President Trichet. Given this information, and this week's early sentiment, the Sentix report should have reflected the major shift away from the euro zone, but only appears to have captured a small portion of this. The downturn is far more detrimental than many forex traders may expect. This downtick came with only a week and a half of data which supported such a bearish sentiment. What will happen with the Sentix report should it receive a full month of the same attitude? |
| Will the Reserve Bank of Australia Raise Interest Rates in 2011? Posted: 09 May 2011 10:27 AM PDT
Perhaps sliding past market analyses last week amid the hullabaloo over European interest rates and US Non-Farm Payrolls (NFP) was the official rate policy statement by the Reserve Bank of Australia (RBA). Not affecting currency values in any extreme way, the RBA nevertheless made a remark which could eventually force a reevaluation by traders investing in the Australian dollar (AUD). The remark was in connection with the RBA's inflation forecast for the upcoming two years. The potential reevaluation these remarks could foster was a hint that the inflation forecast could see an adjustment that may lead to an interest rate hike during the second half of 2011. The initial inflation forecast had a rate hike potentially coming at the start of 2012, but fears of runaway inflation grabbing hold may have possibly sped up this monetary tightening schedule. Analysts have commented that inflation in Australia is gaining momentum alongside the expected growth in the labor market as the mining industry boosts output in the months ahead. The RBA has therefore had to adjust its stance towards its monetary and credit policies, trying to get a rate adjustment priced in ahead of schedule. Forex traders may see the potential from this adjustment as they view the AUD/USD in their online trading platforms with Forexyard to see the recent uptick in value. The Aussie initially gained ground last Friday as traders largely fled riskier assets, but moved into the AUD as part of this upward adjustment sparked from Friday's RBA rate statement. If this momentum can hold, forex traders may continue seeing some upward mobility in the AUD's pairs and crosses. |
| You are subscribed to email updates from Forex Trading Education : Forex Trading Blog by FOREXYARD To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment