FOREXYARD: Forex News Blog

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• ZEW Report Gouges Swiss Economic Outlook
• British Realized Sales in Decline
• New Zealand’s Retail Sales Bullish in August
• Gold Bubble Pops before Jackson Hole Speech

ZEW Report Gouges Swiss Economic Outlook Posted: 25 Aug 2011 05:52 AM PDT The Swiss economy has outperformed most of its regional neighbors and its currency, the franc (CHF), has undergone a meteoric rise over the past two years. Rumblings from within Switzerland, however, seem to show an economy teetering on the brink of a downturn. The Swiss National Bank (SNB) recently debated ways to curb the franc's rising strength, to no avail. Traders now see reports being published which show the Swiss economy getting gouged by their currency's penalizing strength and appeal. The ZEW report from this morning was the latest in a series of data which showed Switzerland's economy taking a beating. How much longer can the SNB hold out before it moves against the crushing weight of its own currency? Read more forex trading news on our forex blog.

British Realized Sales in Decline Posted: 25 Aug 2011 05:49 AM PDT This morning's release of the Realized Sales report from the Confederation of British Industry (CBI) revealed an economy a little worse for wear. Although housing remains an increasingly stable sector of Britain's economy, unemployment and consumer spending are lagging well behind. The Realized Sales report only highlighted this tension. Expectations for this composite index were for a contraction to a reading of negative 10. The actual result showed a reading of negative 14 and paints a far more grim picture than was earlier assumed. The index does not contain an accurate picture of the entire British economy, only a portion of it, making it less impactful but nonetheless ominous. Read more forex trading news on our forex blog.

New Zealand’s Retail Sales Bullish in August Posted: 25 Aug 2011 05:44 AM PDT The agency Statistics New Zealand published this morning a series of reports on retail sales and PPI. All figures seem to point to moderate bullishness and heavy momentum heading into the early part of the third quarter. Nominal and core retail sales data suggests that a solid uptick in consumer confidence has gripped New Zealand, with nominal sales rising 0.9% and the core data showing a 1.0% uptick. The sales data speaks to the sentiment of heightened optimism in the South Pacific. The bullish rise in PPI this month also supports the notion of moderate growth in New Zealand. Read more forex trading news on our forex blog.

Gold Bubble Pops before Jackson Hole Speech Posted: 25 Aug 2011 03:55 AM PDT The price action from yesterday's early New York trading session was particularly dramatic when gold prices collapsed. The 5.6% drop in the price of the NYMEX gold futures contract sends a signal from the commodities market that additional stress is apparent the financial markets. Since the beginning of July the price of gold has accelerated rapidly, rising from $1,500 to over $1,900 as of Tuesday morning. However, that all changed following the announcement that the Shanghai Gold Exchange would raise the margin requirements for gold forward contracts for the second time this month. This led to a decline to $1,823, a price below Monday's closing price. Technical analysts would note this as an outside day down candlestick, a powerful reversal signal. Wednesday's price action followed with a continuation of the move lower and the selling was intensified as the price dipped to a low of $1,741. Most of these losses came in the opening minutes of the New York trading session. As of Thursday morning the price of spot gold is testing the $1,700 level. I will not dive into the argument if the price of gold is fairly valued or currently an asset bubble, but as FT Alphaville pointed out the GLD gold trust overtook the SPY (S&P 500) as the largest ETF by market value. Market positioning was also stretched to say the least with the CFTC Commitment of Traders report showed in early August the number of net long gold futures and options contracts in managed money reached 250,000. Interestingly enough the dramatic drop in the price of gold occurred only days before what could be considered the most important event in financial markets this year, Ben Bernanke's Jackson Hole speech. The price action may be sending a signal that the financial markets expect further volatility to come in the near term. Read more forex trading news on our forex blog.

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