FOREXYARD: Forex News Blog

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• Snore-Inducing News Day Adds Focus to Greece Vote
• British M4 Money Supply Stagnant
• Canadian Dollar Soars alongside Inflationary Growth
• Greek Protesters Clash with Police but Euro Strength Prevails
• Stability in the Riksbank but SEK Slumps
• Greek Austerity Vote – Buy the Rumor, Sell the Fact

Snore-Inducing News Day Adds Focus to Greece Vote Posted: 29 Jun 2011 06:59 AM PDT In a bizarre circumstance, the news published on today's calendar – beyond the Greece riots and austerity budget vote – are being released predominantly in line with market forecasts. Daily news tends to generate swings in currency values because actual results rarely line up with market forecasts and the adjustments in portfolios which occur after a release generate volatility. Today's news out of Japan, Switzerland, and Great Britain, however, have all come in line with forecasts, creating a flat technical trading day amid one of the most tumultuous news days in recent memory. The Greece vote and concurrent riots are still capturing the spotlight, but today's snore-inducing news is aiding its central focus perhaps beyond what it otherwise would be. Is this good or bad for the EUR? Read more forex trading news on our forex blog.

British M4 Money Supply Stagnant Posted: 29 Jun 2011 06:56 AM PDT The amount of Great British pounds (GBP) in circulation domestically in the United Kingdom, and deposited in local banks, grew a meager 0.1% this past month, below expectations for a 0.3% increase, month-on-month. The report released on the M4 Money Supply this morning by the Bank of England (BOE) does not tend to have much impact on the currency market, but it struck me as interesting that the amount of GBP held locally shrank in June. The data lines up well with the ominous Current Account published yesterday that revealed a sharp increase to the nation's trade deficit; indicative of a movement of local currency away from its home market. Read more forex trading news on our forex blog.

Canadian Dollar Soars alongside Inflationary Growth Posted: 29 Jun 2011 06:48 AM PDT Today's consumer price index (CPI) reports out of Canada gave traders reason to buy into the Canadian dollar (CAD), colloquially known as the Loonie. Both the nominal and the core readings came in well above forecasts in the northern giant's first publication of highly bullish and impactful news since the June 10th publication of the country's unemployment rate. Forex traders took cue from the CPI figures as a sign to go long on the CAD. The nominal reading for the country's CPI was in at 0.7%, beyond the expected 0.2%. The core reading, which does not take into account 8 of the more volatile goods and services that distort the underlying trend, revealed 0.5% growth, beyond a similar 0.2% expectation. Read more forex trading news on our forex blog.

Greek Protesters Clash with Police but Euro Strength Prevails Posted: 29 Jun 2011 05:11 AM PDT The dollar was lower across the board and as it currently looks the Greek austerity vote is set to pass. As such the safe-haven currencies yen and the Swiss franc are lower with equities performing well. The euro is up versus the dollar and in the crosses as this week's recovery continues. Protesters are clashing with police in the streets of Athens but the main event remains inside the Greek parliament where the vote for the medium-term fiscal strategy will take place. With the euro climbing to its highest level in a week and the FTSE 100 up by 1.50%, markets fully expect the legislation to pass, if only by a narrow margin. The euro looks to move higher on a successful vote but this would by no means leave the euro out of the woods as further risks down the road could provide selling opportunities as the Eurogroup meeting on July 3rd draws near. Both S&P and Fitch remarked today that French debt plan would need a 2nd look before an immediate declaration of a credit event. Worst case scenario for today; should the legislation be voted down the euro would likely spiral lower towards support at 1.4115. As it stands the EUR/USD is currently testing the 1.4440 resistance level with the next resistance found at the falling resistance line from the May and June highs which comes in today at 1.4550. Read more forex trading news on our forex blog.

Stability in the Riksbank but SEK Slumps Posted: 29 Jun 2011 02:49 AM PDT The Swedish krona has been on its back foot versus the euro and yesterday's decline in retail sales shows a considerable drop in activity. The report overshadowed the stability that was added to the country's central bank the as Chairman Stefan Ingves was re-elected to another 6-year term as head of the Riksbank. The krona has struggled to find footing versus the euro and yesterday was no different. Swedish retail sales numbers for the month of May contracted from the previous year by -1.1%. The data was off from the April numbers which showed a sharp 5.6% y/y gain. The negative retail sales report overshadowed the additional 6-year term that was granted to current Chairman of the Riksbank Stefan Ingves. Despite the fact that 6-months remain in his current term, the Riksbank was out in front of the markets to announce Invges' extension. This will provide a level of stability for the Swedish central bank and serve to underline its independence from Swedish political pressures. Such a situation is needed for proper management of Swedish monetary policy which faces rising inflationary pressures due to strong economic growth and rising wages. Turning to the charts, the euro has just about retraced the entire move lower from the 2010 November high. The pair found support at the 9.1200 level and the next target for the EUR/SEK looks to be the 9.4250 off of the Q4 high. Read more forex trading news on our forex blog.

Greek Austerity Vote – Buy the Rumor, Sell the Fact Posted: 29 Jun 2011 12:14 AM PDT The euro continues to rise as the vote on the next Greek austerity program nears with market participants expecting a positive outcome. This may set up an opportunity to "buy the rumor, sell the fact," as the release of the next tranche from Greece's first bailout simply kicks the can down the road. A solution to the underlying burden of Greek debt remains to be found. EUR – Greek Austerity Vote The debate rages in the Greek parliament while rioters run amok in the streets of Athens leading up to today's austerity vote. The euro has been bid with a majority of expectations for a successful passage of the plan which would allow Greece to receive the final tranche from its first bailout. But the weight of the debt burden will not be lifted from Greece but only pushed further into the future. This may present a selling opportunity in the present euro rally. Last week's high at 1.4440 is the first resistance followed by the early June high at 1.4700. Support is found at yesterday's low at 1.4240 and the rising support line from the mid-May low at 1.4115. USD – Pending Home Sales m/m – 14:00 GMT Expectations: 2.4%. Previous: -11.6%. Forecasts are for a rebound from the previous month's sharp downturn in pending home sales though this data release will largely be put on the back burner to the events taking place in Greece. Read more forex trading news on our forex blog.

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FOREXYARD: Forex News Blog

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• Swiss Consumption Indicator Rises in June
• British Macro Data Suggests Economic Stagnation
• German Consumer Climate Report Reveals Growing Optimism
• Japanese Retail Sales Beats Forecasts
• Dollar Stronger as Austerity Vote Approaches
• Shifting Growth Expectations Supporting USD
• Weekly Fundamental FX Preview – Commodity Headwinds, Greece, and US Budget Talks

Swiss Consumption Indicator Rises in June Posted: 28 Jun 2011 07:09 AM PDT Switzerland's UBS AB investor and financial services company based in Zurich released its consumption indicator this morning at 7:00 GMT. The indicator, which represents the level of a composite index made of data from five consumer-based economic indicators, revealed mild growth in consumer optimism and spending. The indicator's growth level was minor in comparison to other data which has resulted in its muted impact on today's market. The news that consumption is rising in the European heavy-weight is a bullish note in these bearish days. Analysts have digested the news to represent a forecast of higher retail sales in the coming months, which may help Switzerland regain some of last month's economic losses. Read more forex trading news on our forex blog.

British Macro Data Suggests Economic Stagnation Posted: 28 Jun 2011 07:05 AM PDT The British economy released several reports this morning which appear to have underlined recent concerns of a flattening-out in market activity in the second quarter of 2011. Final GDP for the UK came in right at the expected level of 0.5% growth, dismal by any standard. Additionally, the economy's Current Account, a measure of the difference between imports and exports, revealed a widening trade deficit, well beyond market forecasts. Economists had anticipated a steadying of the deficit near 5 billion UK pounds, but the actual figure showed an expansion of the deficit to 9.4 billion pounds. A revised reading on business investment, however, did give minor cause for optimism, showing that business activity did not contract as much as previously assumed. The data was still bearish in overall investment activity, but the declining speed of contraction is a ray of light on an otherwise gloomy day for Britain. Read more forex trading news on our forex blog.

German Consumer Climate Report Reveals Growing Optimism Posted: 28 Jun 2011 07:02 AM PDT A recent survey by the GfK Group, one of the world's leading market research organizations, revealed a burst of optimism in Germany regarding its present financial situation. The monthly survey is a leading indicator of consumer confidence and often carries a moderate impact on market forecasts. Today's reading, which not only beat expectations but actually grew beyond last month's survey results, suggests that consumer fears of economic stagnation are beginning to abate. The mild uptick in consumer risk appetite was enough to give the EUR a small boost in earlier trading, but the currency has so far failed to maintain its recent support. Read more forex trading news on our forex blog.

Japanese Retail Sales Beats Forecasts Posted: 28 Jun 2011 06:57 AM PDT Yesterday's anticipation of Japanese retail sales data gave a tinge of pessimism regarding the island economy's ability to post gains amid this sluggish period. That pessimism was defeated this morning as Japan managed to post retail sales data that was better than forecast. Japan's consumer sector is still in a decline, of sorts, but this morning's news underlines the rapid pace with which the country is addressing its economic reconstruction. The effect has been positive for the Japanese yen (JPY) so far, with mild gains seen across the board. Read more forex trading news on our forex blog.

Dollar Stronger as Austerity Vote Approaches Posted: 28 Jun 2011 04:58 AM PDT The greenback was up albeit slightly versus the euro and rest of the majors as the Greek austerity vote approaches. A bounce higher in the euro may occur should the Greek parliament approve the additional tax increases, spending cuts, and asset sales. This afternoon US housing and consumer confidence data will be released which could continue to support the dollar until tomorrow's Greek vote. Early support for the euro faded while European banks squabble over an extension of the maturities for Greek debt. French banks have the largest exposure to Greek debt and yesterday released their suggestions which would call for a 30-year extension of the debt, similar to the Brady bond plan that was initiated in Latin American. A 48-hour general strike in Greece is also not supporting the euro as participants take to the streets of Athens to protest the austerity package. Previous protests have turned violent; such was the case on June 15th when the euro shed 1.9%. Today's selling has been lighter as expectations are for the austerity measures to pass parliament tomorrow. This could give the euro a short term bounce to resistance at last week's high of 1.4440 followed by 1.4500. To the downside the current consolidation pattern is found at 1.4110. A break here might have scope to the May low at 1.3970. Sterling was lower after a host of negative factors underline the recent weakness of the pound. The Q1 current account showed a larger than expected deficit. The Q4 2010 numbers were also revised to show a greater trade deficit and underscored the report's negative tone. BOE MPC member Adam Posen spoke for greater BOE independence as he lashed out at yesterday's Bank of International Settlements report that called for an increase in UK interest rates. Posen called the report's advice "nonsense." UK Q1 GDP went unchanged and remained at a tepid 0.5% increase. The negative data, bearish comments, and low growth numbers all underscore the reasons for sterling's recent weakness. Turning towards the US trading session the S&P/Case-Shiller index is expected to show further declines in US housing prices, a factor that is not likely to change in the near-term. Also due out are US consumer confidence numbers which are expected to remain the same. Disappointing data could feed into additional USD buying but market participants will be more focused on the outcome of the Greek Austerity vote. This could keep the majors in their current ranges for the meanwhile. Read more forex trading news on our forex blog.

Shifting Growth Expectations Supporting USD Posted: 28 Jun 2011 12:18 AM PDT A return of the European debt crisis combined with expectations of slowing global growth has broadly supported dollar over the past month. Should the Greek parliament approve the additional austerity measures USD strength may to wane in line with the longer term trends of the FX markets. However, in the near-term higher yielding currencies such as the AUD, NZD, and CAD could face headwinds should commodity prices continue to decline along with a further deterioration in the already sluggish US economic data. Economic Data Releases: GBP – Current Account – 08:30 GMT Expectations: -5.0B. Previous: -10.5B. UK trade data is expected to show an improvement in Q1 of this year and may support sterling in the short term. Unfortunately the effect of last week's UK MPC meeting minutes that opened the door for additional asset purchases may void the pound from maintaining any near term gains. Today's inflation report hearings at 09:00 GMT may also touch on the downside risks to inflation. On the charts 1.5880 is the 61.8% retracement from the January to April high. Below that the next support is the late January low at 1.5750. Resistance comes in at 1.6100. USD – CB Consumer Confidence – 13:00 GMT Expectations: 60.8. Previous: 60.8. No change is expected in the US consumer confidence numbers as the drop in oil prices may not have trickled down yet to the US consumers' wallets. EUR/USD resistance may be found at the 1.4350 where the current consolidation pattern rests while support is found at 1.4070 and 1.3970. Read more forex trading news on our forex blog.

Weekly Fundamental FX Preview – Commodity Headwinds, Greece, and US Budget Talks Posted: 28 Jun 2011 12:03 AM PDT The decline in commodity prices has begun to make headlines after the IEA's release of strategic reserves shocked the crude oil market while dragging spot crude oil prices lower by 4.6% on Thursday. Could additional weakness in commodity prices be on the way following the declines during the months of April and May? After the recent downturn in US data growth factors face major headwinds. Therefore the economic data releases from the G7 nations this coming week may carry further significance. Greece will also be a headline for next week as the next austerity vote is scheduled for Tuesday. Last week George Papandreou survived a no confidence vote by only 5 voices as the vote was split down party lines. Given the potentially negative effects the austerity measures may have on Greek society as a whole, the next vote may prove to be more challenging as Papandreou will face harsh criticism from both the political opposition his own PASOK party and Greek protesters. Key to the Greek situation is a plan for a voluntary debt roll over in return for the second Greek bailout. EU/IMF authorities face a formidable challenge to convince a number of parties to come aboard. How officials will entice private holders of Greek debt has yet to be unveiled. Rating agencies have taken a firm stance against any restructuring and have pledged to classify an increase in maturity lengths as a credit event. The ECB is also not yet onboard and has refused to allow restructured Greek debt to be used in its liquidity provisions. US budget talks are beginning to heat up following the Republican decision to walk out of talks with Democrats on Thursday. This may set up a final confrontation to be hashed out by the key players of the political parties; President Obama and Republican leaders John Boehner and Eric Cantor. The parties have until August 2nd to raise the debt ceiling or face the possibility of a US default. The rating agencies have previously warned on this deadline. Given the headwinds the US economy faces and the potential for political gridlock could the euro benefit from its recent safe haven status despite the obvious flaws the currency currently faces? Read more forex trading news on our forex blog.

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