FOREXYARD: Forex News Blog | |
- Russian Ruble Clambering for Gains as Oil Demand Rises
- Euro Zone Economic Sentiment in Decline
- US Housing Market Stabilized in June
- Euro and Kiwi Trading Higher
- Swedish Central Bank Signals Readiness to Tighten Interest Rates
- Canadian Dollar Could Gain if BOC More Hawkish than Expected
| Russian Ruble Clambering for Gains as Oil Demand Rises Posted: 19 Jul 2011 06:24 AM PDT
The strength of the Russian ruble (RUS) was seen climbing over 0.3% against the US dollar (USD) today after data revealed that China was boosting its oil demand over the coming months. While experiencing a modest decline of approximately 0.5% yesterday due to risk aversion and a strengthening USD, the ruble now appears poised to pare these losses and ride the wave of profits which derive from oil exports. Russia's economy has been shaky over the last several years, most recently from a food crisis which saw prices begin climbing around this time last year, eventually forcing the country to severely reduce its exports. Climbing oil prices helped offset some of the economic disadvantages brought as a result of the food price crisis, but Russian business leaders, as explained in an earlier article, see less value in domestic investments. The Russian economy cannot depend solely on the whim of oil demand to support its economic growth. The crisis of confidence revealed in the survey of Russian business leaders highlights the underlying tension which surrounds Russian investments. The ruble may make gains in the short-term from oil profits, but if steps are not taken to address the lackluster support seen at home, a longer-term bearish movement may be impending. |
| Euro Zone Economic Sentiment in Decline Posted: 19 Jul 2011 06:21 AM PDT
It was no surprise this morning that the economic sentiment reports from the ZEW were in below market expectations. Declines in consumer confidence are seeping across boundaries and dragging overall economic sentiment lower as the euro zone region grapples with rampant debt concerns. The ZEW (Zentrum fur Europaische Wirtschaftsforshung), an agency which issues surveys and analyzes consumer confidence, economic sentiment and other statistics, published its latest findings for Germany and the broader euro zone today. The reports revealed slightly better than forecast results for the broader region, but a severe downturn for Germany. Risk aversion may be growing as a result, and the EUR is therefore likely to see some further downtime this week. Read more forex trading news on our forex blog. |
| US Housing Market Stabilized in June Posted: 19 Jul 2011 06:16 AM PDT
The economic reports from the US housing sector earlier today has helped push back against some of the pessimism dominating the market lately. US housing, while still not performing at a stellar rate of growth, nevertheless appears to be holding its own. Data from today's housing starts and building permits reports revealed solid and stable growth, mildly above market forecasts. Expectations for both were in the ball park of 0.58M and 0.61M, respectively. Actual results were in at 0.63M and 0.62M. Read more forex trading news on our forex blog. |
| Posted: 19 Jul 2011 05:19 AM PDT
The euro is stronger versus both the dollar and in the crosses as Thursday's EU summit approaches. Traders may be looking for a "buy the rumor, sell the fact" type scenario with the euro. The kiwi is now trading at a 30-year high versus the dollar on better terms of trade and growth expectations. Yesterday's failure of the EUR/USD to breach below the 1.4000 level has helped the euro rebound during today’s European trading session. A softening of the ECBs position against a default was perhaps hinted at by Ewald Nowotny, the governor of the Austrian Central Bank and a member of the ECB governing council. Nowotny said a "selective default" by Greece might not have "major negative consequences". The euro later reached an intraday high at 1.4216 following mixed ZEW surveys. The German ZEW Economic Sentient survey shows analysts and investors are more pessimistic going forward. This hints at economic weakness in the euro zone for the second half of the year. Multiple options are being considered for a second Greek bailout package and these will be debated on Thursday as the European elite are scheduled to meet in Brussels. The split between the ECB and Germany remains the biggest roadblock to any deal. Any gains in the EUR/USD may make for a selling opportunity. A breach of today's intraday high at 1.4220 would likely test the resistance from last week's high and the 200-day moving average at 1.4290. The kiwi has jumped out to a 30-year high versus the USD. The New Zealand dollar has performed particularly well as a rising trade surplus and increasing GDP has boosted the commodity currency. Rising inflationary forces may also force the RBNZ to raise interest rates sooner than expected. The NZD/USD is up 19.5% since reaching a low in mid-March. In comparison, the AUD/USD is only up 10% over the same period. Read more forex trading news on our forex blog. |
| Swedish Central Bank Signals Readiness to Tighten Interest Rates Posted: 19 Jul 2011 04:25 AM PDT
Meeting minutes from the last monetary policy meeting for the Riksbank shows the Executive Board is ready tighten interest rates further should inflationary pressures fail to subside. This would likely lead to gains in the Swedish krona but the SEK remains pressured due to events in Europe. The Swedish central bank indicated it would stand ready to tighten interest rates again should inflation expectations fail to dissipate and if wages continue to rise. The Riskbank increased the repo rate by 25 bps at its last policy meeting on the 4th of July and the repo rate now stands at 2%. Investors have priced in another two interest rate increases for later this year given the market's implied forward rate. However, Sweden's central bankers did leave themselves an out of the latest tightening cycle of Sweden's monetary policy as an easing of the interest rate may be necessary given the slowing of the US economic recovery. A deterioration of public finances in Europe is also a risk for the Swedish economy. Liquidity for Swedish banks has noticeably tightened in markets for the krona, euro, and US dollar. A positive note for the Swedish financial system came from the European banking stress tests which were released last Friday. The examination showed the Swedish banks of Nordea, Handelsbanken, SEB, and Swedbank all passed with Teir One capital above the 5% requirement as administered by the European Banking Authority. While rising interest rates are typically a catalyst for a currency the Swedish krona is susceptible to a downturn in risk sentiment. This type of price action is predominant in the EUR/SEK with the pair rising amid market tensions over the European debt crisis and falling with the "risk-on" trade. Initial resistance at 9.2700 has held the most recent move higher but a break above this level would likely take the pair to the October and November highs near 9.4260. To the downside the July low at 9.0540 is the next pivot lower. Read more forex trading news on our forex blog. |
| Canadian Dollar Could Gain if BOC More Hawkish than Expected Posted: 19 Jul 2011 12:51 AM PDT
The European periphery continues to come under pressure with yields of Italian and Spanish debt trading at stressed levels while threats of a US rating downgrade has prevented the US dollar from making substantial gains. The Canadian dollar looks set for further gains given market positioning and increased inflationary pressures. Today's Key Economic Data Events: EUR – German ZEW Economic Sentiment – 09:00 GMT USD – Building Permits – 12:30 GMT CAD – BOC Overnight Rate/Rate Statement
Read more forex trading news on our forex blog. |
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