FOREXYARD: Forex News Blog | |
- Weekly Fundamental FX Preview – Weekend Risk is Back with Greek Crisis
- Dead Cat Bounce for the Euro?
- Philly Fed Manufacturing Data Underlines Economic Stagnation
- Canada Subject to Foreign Investment Surge
- US Building Permits Foreshadow Rise in Summer Construction?
- Aussie Motor Vehicle Sales Plummet as AUD Declines
- Swiss Industry Taking a Beating; Libor Kept Low
| Weekly Fundamental FX Preview – Weekend Risk is Back with Greek Crisis Posted: 17 Jun 2011 06:55 AM PDT
Weekend risk is back on the table as all eyes will be focused on the differences between the Germany and the ECB/France at this weekend's ECOFIN meeting in Luxembourg. Ben Bernanke's 2nd press conference and the FOMC statement will also highlight the week. As the Greek debt crisis continues to garner market attention the coming week is highlighted by the ECOFIN meeting on Sunday and Monday. European heads are confident that a compromise will be reached by Monday and the next round of funding for Greece will be released by the EU and the IMF. This only became relevant yesterday after the IMF retreated from a previous position that would deny Greece funding should the EU not secure Greece's financial needs for the next 12 months. The decision to release the funding prior to the EU's guarantee comes at a time when the major political parties at stake look to be at an impasse. Today's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy helped to achieve a breakthrough between the parties but the key player who has not weighed in today was the ECB. The central bank has made its position clear it is against any involuntary restructuring that would cause a credit event. Nevertheless the markets took this as a positive sign and the euro has temporarily halted its sharp decline. A roadblock may also have been put up in Greece given the drama that is being played out via internal Greek politics. Greek prime minster George Papandreou's head fake resignation and subsequent reshuffling of his cabinet led to the termination of Greek finance minister George Papaconstantinou. On Tuesday a vote of confidence will be taken and at this time it is unclear if the current administration will survive the vote which may lead to a general election. Greece must still muster enough votes to win approval to qualify for the EU/IMF loan which would require additional austerity measures. One must only look to the public demonstrations/confrontations in the streets of Athens from last week to get an idea of the country's sentiment. On the other side of the pond come Wednesday the Fed will likely leave Fed Funds rate at its current ultra-low level and perhaps adjust the accompanying FOMC statement with a downgrade of the Fed's economic assessment. However, the main event for the day will be the FOMC press conference to follow. All eyes will turn to the Fed chief as Bernanke will give prepared remarks followed by a subsequent Q&A session with the members of the press. Looking back at the first press conference in April Bernanke gave the green light for dollar selling after signaling the Fed's intention to complete the full $600Bn QE2 program. We shall presume that Bernanke will be questioned regarding the downturn in US economic data and the longshot possibility of QE3. Read more forex trading news on our forex blog. |
| Posted: 17 Jun 2011 04:31 AM PDT
The euro paired its losses during the European trading session, continuing to build on slight gains made late yesterday. Supporting the euro were comments from the German finance ministry and German Chancellor Angela Merkel . This afternoon traders will be eyeing developments in the European debt crisis as well as consumer sentiment data from the US. Comments by German finance ministry spokesman Martin Kotthaus gave the euro a boost when he said a solution to the key elements of the program may be agreed upon on Monday. Beginning on Sunday euro zone finance ministers will meet in Luxembourg with an additional meeting scheduled for Monday where the European elite are expected to hash out a new aid package for Greece. This may include some sort of investor participation as lobbied for by Germany. Also supporting the euro was a meeting today between German Chancellor Angela Merkel and French President Nicolas Sarkozy. France is aligned with the ECB and is against any restructuring of Greek debt that may trigger a credit event as defined by the major rating agencies. Following Merkel's comments that she will be willing to compromise with the ECB the euro rallied. However, this doesn't change the facts on the ground as the ECB has been staunchly against any debt restructuring. The price action over the past 24 hours may have the effect of shaking out some of the recent euro shorts before the EUR/USD makes another move lower. Initial resistance is found at 1.4320 and a break here would likely test 1.4500 where the euro bears would need to make a stand. To the downside, a move below yesterday's low of 1.4070 would open the door to May's low at 1.3970 and the 200-day moving average at 1.3825. The latter of the two options is more likely as today's euro rebound may be a "dead cat bounce". Later this afternoon US consumer sentiment will be released and may be better than expected as a decline in energy prices may have a positive effect on the US consumer. However, the economic data cold pass unnoticed as market players focus on the European debt crisis. Weekend risk is back on the table as all eyes will be focused on the differences between the Germany and the ECB at this weekend's meeting in Luxembourg. Read more forex trading news on our forex blog. |
| Philly Fed Manufacturing Data Underlines Economic Stagnation Posted: 16 Jun 2011 11:57 PM PDT
This afternoon's publication of the Philly Fed Manufacturing Index cast doubt on speculations for positive growth in the second quarter across the manufacturing and industrial sectors of the American economy. The reading's significant contraction underlined the growing weakness in the nation's manufacturing sector, first outlined by the Empire State index published yesterday. With global manufacturing in such sharp decline, many analysts are beginning to consider the possibility of significantly reduced growth outlooks in several leading industrial nations. Forecasts for today's numbers were for a mildly bullish reading of 7.1. The negative 7.7 reading published recently has helped drive many more investors into risk flight mode, which in turn is driving the safe-haven USD and CHF ever higher. Read more forex trading news on our forex blog. |
| Canada Subject to Foreign Investment Surge Posted: 16 Jun 2011 11:54 PM PDT
Statistics Canada published a report early this afternoon which reviewed the change in the amount of foreign purchases of domestic securities. The data suggests that investors are beginning to find greater value in Canadian securities as soaring oil prices help the Canadian economy gain value at a faster pace than some of its rivals. Many analysts had assumed, given the recent downtick in Canadian industrial and manufacturing figures, that foreign investment would slow down in comparison with the previous month's reading of C$6.44B. The expectations for C$5.45B in investment growth, however, were trounced when the report was published with a reading of C$8.22B in foreign purchases of domestic securities. The timing of the report couldn't be better considering the slew of data which has pulled down on the CAD in recent weeks. Read more forex trading news on our forex blog. |
| US Building Permits Foreshadow Rise in Summer Construction? Posted: 16 Jun 2011 11:51 PM PDT
The US Census Bureau published its June report on approved building permits this afternoon. The annualized data suggests that new housing demand may be rising as we head into the turbulent summer months. Expectations for this report were for the issuance of 0.55M building permits for the previous month. The actual results, however, surprised some investors with an optimistic jump to 0.61M new building permits issued. The report could serve as a foreshadowing of increased activity in the US housing market, but whether it will help lift home prices from their detrimental low is yet to be seen. Read more forex trading news on our forex blog. |
| Aussie Motor Vehicle Sales Plummet as AUD Declines Posted: 16 Jun 2011 11:49 PM PDT
As with a recent report out of Canada which showed new motor vehicle sales in distinct decline, a similar report released this morning by the Australian Bureau of Statistics centered on a seemingly connected plummet in new motor vehicle sales in the Land Down Under. The report comes as many economists analyze the sudden downturn in AUD values brought on by an environment of global risk aversion. The report, which came without built-in expectations, revealed a 7.6% decline in vehicle sales for the previous month. Last month's revised numbers revealed a previous 4.1% decline, month-on-month, for April. May's number's combine to form an ominous outlook for Australian manufacturing which lines up with similar reports across Europe and the Western Hemisphere. Such news points to an expected sluggish second quarter for manufacturing-based companies. Read more forex trading news on our forex blog. |
| Swiss Industry Taking a Beating; Libor Kept Low Posted: 16 Jun 2011 11:40 PM PDT
A report out of the Swiss National Bank (SNB) today highlighted just how much havoc the super-strength Swiss franc (CHF) has wrought on the Alpine economy. Expectations were for a stark contraction of 7.5% in industrial output, yet the report's actual results revealed a 9.2% decline for the month of May. The rate statement out of the SNB regarding its 3-month inter-bank lending rate with London (Libor) should have addressed this downturn, yet appears to have shrugged at the news. SNB board member Jean Pierre Danthine commented that he saw no need for the bank to intervene in the market to weaken the top performing CHF as he views the Swiss economy to be in great shape. Read more forex trading news on our forex blog. |
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