FOREXYARD: Forex News Blog | |
| Weekly Fundamental FX Preview – The Silver Lining Posted: 05 Aug 2011 06:54 AM PDT
It is difficult to find a highlight from this week; is it the compromise between Democrats and Republicans to stave off a bankruptcy and raise the debt ceiling? Two separate failed attempts by central banks to weaken their respective currencies? The ECB's renewing sovereign bond purchases and emergency liquidity provisions? Or is it the 4.78% plunge the S&P 500 took after Italian and Spanish bond yields ballooned? Wednesday and Thursday saw both the SNB and the BoJ attempting to weaken their respective currencies but at this stage of the game the market has apparently called the central banks' bet. Japanese exporters were all too pleased to sell their dollars at the 80 yen level while traders seeking to avoid the euro pushed the EUR/CHF to a new low. Talk of the pair trading at parity sounds more than just a pipe dream given the spread of the euro zone debt crisis to both Spain and Italy. In response to the pressure being felt in Italian and Spanish bond yields the ECB decided to resume its 6-month refinancing facility, an emergency measure that increases liquidity when at the same time ECB is tightening interest rates. The ECB has also resumed purchasing sovereign debt on the open market but only for the bonds of Portugal and Ireland. This move came with some objection as the Bundesbank was in firm opposition to this step. Markets now await the next move from the euro zone as deterioration in sentiment can be directly tied to events in the euro zone, including the dramatic plunge in equity values over the last two weeks. But the highlight of the week goes to the US after the President and Republican congressman successfully agreed to raise the debt ceiling while allowing for some austerity measures to be put in place, an often overlooked asset as the European peripheral states can attest to. Tea party hawks were disappointed as the agreement does not address the large social welfare programs that are the main drag on the deficit but the silver lining to legislation may be the budget cuts puts the US on a path of fiscal austerity. Today's positive non-farm payrolls report may also support the USD as it give the Fed some breathing room at its meeting next week to stave off the Q3 mongers for the meanwhile. Read more forex trading news on our forex blog. |
| USD Gains on Equity Woes before NFP Posted: 05 Aug 2011 01:42 AM PDT
A dramatic decline in US equities led to safe-haven buying of US Treasuries and the USD. A combination of global growth concerns and a lack of confidence in the new European bailout have increased market tensions to their highest levels since the financial crisis of 2008. The USD along with the yen and Swiss franc were well bid with the S&P 500 falling 4.78% yesterday. The yen and franc gains are a surprise given the intervention undertaken over the past 48 hours by the SNB and the BoJ. A tumultuous week will end with the non-farm payrolls report which may highlight a continued weak US macro picture. Today's Key Economic Events: USD – Non-Farm Employment change – 12:30 GMT CAD – Ivey PMI – 14:00 GMT Read more forex trading news on our forex blog. |
| 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