FOREXYARD: Forex News Blog | |
- TIC Long-Term Purchases Fall Short of Expectations
- Hawkish RBA Statement Pushes AUD Higher
- British Employment Sector in Bad Shape
- New York Manufacturing Index Plummets
- Euro Zone Industrial Production Returns to Growth
- Dollar Stronger on Greek Debt Concerns
- Yields Favor Gains for Swedish Krona
- Euro Under Pressure Once Again
| TIC Long-Term Purchases Fall Short of Expectations Posted: 15 Jun 2011 06:58 AM PDT
This afternoon's investment data from Treasury International Capital (TIC) revealed worse than forecast growth in foreign investment levels for domestic, long-term securities. The TIC Long-Term Purchases report measures the difference between domestic securities purchased by foreign investors and foreign securities purchased by domestic investors. A positive reading represents a higher level of foreign investment in American securities than vice versa. Today's expectations were for a positive growth in the TIC report from last month's $24B to a near-doubling of $45.3B. The actual results came out at $30.6B, suggesting a sluggish period of foreign investment over the past 30 days, despite being better than the previous month's reading. Impact on the USD is being overshadowed by Greece default concerns and S&P's recent downgrade of Greek bonds. Read more forex trading news on our forex blog. |
| Hawkish RBA Statement Pushes AUD Higher Posted: 15 Jun 2011 06:54 AM PDT
This morning's rate statement by Reserve Bank of Australia Governor Glenn Stevens hinted at an impending rate adjustment sometime in the coming months. The hawkish sentiment expressed by the RBA governor has so far helped the Australian dollar (AUD) jump broadly against its currency counterparts. Stevens conditioned his statement, however, by noting that the point at which rates are increased is to be determined by the board. At the moment, there does not seem to be enough data to warrant a rate adjustment in the immediate future, but sometime in the later months of 2011. It was highlighted that pricing data released in late July will likely provide the necessary information to guide the interest rate adjustment. Email: greg@forexyard.com The Royal Institute of Royal Surveyors (RICS) published a report showing an increase in house price declines this morning. The RICS House Price Balance report gauges the level of a diffusion index based on surveyed property surveyors who were asked whether housing prices in their districts were rising or declining. Forecasts surrounding this report were anticipating a return of approximately 20% of surveyors reporting a price decline. When 28% of RICS surveyors reported a decline, investors took cues that the British housing sector may still be in a ragged state and began to push against the nation's currency in early trading. Read more forex trading news on our forex blog. |
| British Employment Sector in Bad Shape Posted: 15 Jun 2011 06:51 AM PDT
The morning publications by the British Office of National Statistics regarding the UK's employment sector highlighted the deep structural deficiencies in the labor market which the Confederation of British Industry (CBI) noted in their recent report. The number of British residents filing for unemployment benefits for the first time rose by 19,600 this past month, well above the forecasts that called for 7,100 claims. Additionally, the Average Hourly Earnings Index grew less than expected, climbing only 1.8% over the last 3 months. Analysts were expecting an earning's index boost of 2.1%. The British employment sector appears to be in bad shape and so far the effect has gouged the British pound's (GBP) value against several currency rivals. The sterling was seen in decline against several other currencies and leveling off against others. If the labor market's structural weaknesses are not addressed soon, the UK may find itself in a losing position as 2011 reaches moves beyond its mid-point. Read more forex trading news on our forex blog. |
| New York Manufacturing Index Plummets Posted: 15 Jun 2011 06:48 AM PDT
The Empire State Manufacturing Index for June, published this afternoon, revealed a stark downturn in manufacturing output for New York. The wide gap between expectations and the actual figure are ominous for the American economic recovery considering growth has been more than a bit sluggish this past quarter. The forecast for this afternoon's report was for a positive reading of 13, but actual results came in at negative 7.8. The turnaround from growth in New York's manufacturing to drastic shrinkage suggests a wider problem in consumer demand, rising inflation (Core CPI rose 0.3%; higher than economist forecasts), and transportation costs for raw materials with crude oil prices soaring. The index highlights an impending slow-down over the summer months and a likely dismal second quarter for manufacturing and industry. Read more forex trading news on our forex blog. |
| Euro Zone Industrial Production Returns to Growth Posted: 15 Jun 2011 06:44 AM PDT
Last month's reading from the euro zone's regional industrial production report showed stagnation at 0% growth. This month's forecast was for a 0.1% downturn in industrial output. Today's morning publication of this month's production figure, however, revealed mild growth in the region's industrial sector. The morning release highlighted an optimistic 0.2% growth in industrial output, likely connected to the region's boost in German factory hiring, which has risen 2.7%, year-on-year. Also behind the surprise uptick was a boost in demand for durable consumer goods such as electronics and furniture. Analysts have so far said the data is a positive indicator, but will likely not be enough to prevent a sluggish second quarter. Read more forex trading news on our forex blog. |
| Dollar Stronger on Greek Debt Concerns Posted: 15 Jun 2011 05:47 AM PDT
The dollar is stronger across the board as the Greek debt crisis comes to a head with the failure of European finance ministers to come to an agreement for a second bailout package. Moody's put three French banks on credit watch which compounded the negativity as the majors were all sold versus the USD. The lack of a solution is beginning to press market participants as the June 20th self-imposed deadline nears. Euro zone leaders left the meeting with the major conflict between Germany and the ECB unresolved. Germany is requesting investor participation in return for additional bailout funds but the ECB is staunchly against any restructuring or haircut on Greek debt that would cause a credit event as defined by the major rating agencies. Negative euro sentiment was compounded after Moody's announced it was placing three large French banks on credit watch due to their exposure to Greek debt. While most expectations are for some sort of bailout package to be strung together, the risk stands for a Greek default and traders have taken up a defensive position in US dollars. The EUR/USD has shed a quick 2 cents since late yesterday afternoon in the New York trading session. 1.4250 is the 61% retracement from the May to June gains. The next support for the pair is found at the rising trend line from the January 2010 low at 1.4150, a level that coincides with the 100-day moving average. Sterling is also down sharply versus the dollar and the GBP/USD could test the trend line off of the May 2010 low comes in today at 1.6200. An overall dollar rally is carrying out with both the safe haven Swiss franc and Japanese yen rising to new weekly highs. The USD/CHF broke above resistance at 0.8470 and is encroaching on the 0.8550 resistance. Additional resistance is located from the falling trend line off the February high which comes in today at 0.8700. USD/JPY is testing its 20-day moving average. Further resistance can be found at 81.75. Read more forex trading news on our forex blog. |
| Yields Favor Gains for Swedish Krona Posted: 15 Jun 2011 03:57 AM PDT
Fundamentals appear in favor of the Swedish krona according to interest rates and bond yields. One of the major driving factors in the valuation of a currency is interest rates and Sweden enjoys higher yields versus both its European and US counterparts. The Riksbank is forecasted to continue to raise interest rates over the mid-term which should be supportive of the Swedish krona. Currently the repo rate maintained by the Riksbank is 1.75%. The EU interest rate currently stands at 1.25% and is expected to rise 25 bps in the next ECB meeting in July. The US maintains an interest rate below 0.25% and is forecasted to continue its ultra-loose monetary policy. Strong yield differentials between the Swedish 2-year bond and the 2-year German bund are in Sweden's favor by 81 bps while Sweden enjoys a 197 bps spread between the equivalent US 2-year Treasury. Currently the Swedish 2-year yields 2.41%. However, traders should be aware that the 2-year US Treasury note has plummeted since April (bond prices and yields have an inverse relationship) as the yield has risen to 0.44%. As such, traders may look to play the euro versus the Swedish krona rather than the USD. Read more forex trading news on our forex blog. |
| Euro Under Pressure Once Again Posted: 15 Jun 2011 01:00 AM PDT
The euro fell in early European trading following a Bloomberg report that yesterday's meeting of Europe's finance ministers in Brussels failed to resolve the differences between the ECB and Germany. After two days of euro gains this puts the pressure on the 17-nation currency once again and may be the driving factor in today's trading. Yesterday's high at 1.4500 stands as short term resistance for the EUR/USD while a clear breach below 1.4320 could open the door to test the 1.4000 level for the second time in as many months. Today's Economic Data Releases: GBP – Claimant Count Change – 08:30 GMT USD – Core CPI m/m – 12:30 GMT Read more forex trading news on our forex blog. |
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