FOREXYARD: Forex News Blog | |
- How Will the Fed Respond to Yesterday’s Stock Plunge?
- EUR Decline Halted by Bond Purchases
- Japanese Data Mixed
- Australian Job Advertisements Slump in July
| How Will the Fed Respond to Yesterday’s Stock Plunge? Posted: 09 Aug 2011 05:33 AM PDT
The fallout from the US rating downgrade hit equities the hardest with the S&P 500 falling 6.6% and the pain has continued today with the German DAX down 5.9%. In contrast to yesterday the USD is lower versus the majors. With the Fed due to release its FOMC Statement today market players are speculating just how the Fed will respond to the market turmoil. The ECB continued to buy Spanish and Italian bonds for the second consecutive day and has helped to stabilize European bond markets, albeit temporarily. Trichet was quoted by Reuters saying, "We are in the secondary market". Yields for the Spanish 10-year bonds are trading below 5% while Italian 10-year yields are slightly above this level. Germany reported a smaller than expected trade surplus and a contraction in exports. Both data points hint at slower growth in Q2 for Germany. UK manufacturing production was far from consensus forecasts with a contraction of -0.4% on expectations of 0.3% growth. The UK trade deficit was also noticeably weaker but the GBP has been resilient. A break above 1.6475 would likely take the GBP/USD to 1.6550. Today's low was halted at the 20-day moving average at 1.6267. A break below here could test 1.6230 near the 55-day moving average. Later today the Fed will release a statement from its FOMC meeting. Given the turmoil in the market expectations are for the Fed to take action. Announcing QE3 today could cause a panic from market players and reduce confidence in the Fed's ability to control the economy. However, the Fed could change the wording in its statement to reflect its intention to hold interest rates at lows for a longer period of time. The Fed could also signal its intention to hold longer maturity assets on its balance sheet. All of these would be a USD negative. A failure by the Fed to act may also unnerve investors which could be positive for the dollar. Yesterday's low at 1.4130 is the initial support for the EUR/USD followed by Friday's low at 1.4050. The August high of 1.4450 is the first resistance. Read more forex trading news on our forex blog. |
| EUR Decline Halted by Bond Purchases Posted: 08 Aug 2011 11:13 AM PDT
A sharp decline in the value of the euro (EUR) this morning was offset somewhat after the European Central Bank (ECB) decided to intervene by purchasing Italian and Spanish government bonds. The euro zone has been hit hard by debt contagion spreading to its peripheral countries with more force. Weathering this storm will require crafty work by the ECB in the days ahead. The ratings downgrade of US debt by S&P's ratings agency has caused a stir in financial markets, though few see the move as strongly affecting dollar values yet. A big loser in the downgrade has been non-US financial markets that are seeing more disruption by the turmoil recent events are causing on the economic landscape. Europe's intervention may not be the last of its kind by world leaders in the weeks ahead. Read more forex trading news on our forex blog. |
| Posted: 08 Aug 2011 11:12 AM PDT
Reports issued this morning by the Bank of Japan (BOJ) have created mixed results. The intervention by the BOJ in forex markets last Thursday has caused several swings in currency values over the last few trading days. This morning's data releases are generating similar movement. Annualized data on bank lending revealed a 0.5% decline, highlighting what many had already assumed was a suppressed lending market amid the recent turmoil in Japan over the past year. The island economy's Current Account also revealed sluggish growth in its trade balance, failing to meet market expectations. However, the Economy Watcher's Sentiment index rose by over 3 points to 52.6 this month, underlining a recent uptick in financial outlook which was largely unexpected. Read more forex trading news on our forex blog. |
| Australian Job Advertisements Slump in July Posted: 08 Aug 2011 11:12 AM PDT
The Australia and New Zealand Banking Group (ANZ) posted its latest findings on the percent change in job advertisements as posted in major newspapers and websites covering the major cities of Australia. The results show an ominous decline of 0.7% in new job postings for July, in a month-on-month format. Being released ahead of the Australian jobs report tends to give this figure more of an impact and traders have seen the AUD in decline all morning partially due to this figure. Though it cannot be held entirely accountable for the Australian dollar's recent decline, it does explain part of why this major Pacific currency was hit hard this morning when many were expecting an uptick from the flight away from the US dollar (USD). Read more forex trading news on our forex blog. |
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