FOREXYARD: Forex News Blog | |
- Consolidation before the Fed but Positioning Shows Markets Bearish on EUR
- Sweden Offers Hint of Budget Crisis for 2012
- US Housing Holding Steady
- Swiss Trade Balance in Decline
- ZEW Confidence Measure Stoking EUR Flames
- What Does the RBA Have to Say?
- Early UK Housing Report Shows HPI Expansion
| Consolidation before the Fed but Positioning Shows Markets Bearish on EUR Posted: 20 Sep 2011 07:52 AM PDT
The euro bounced off of its lows for the day despite S&P downgrading the credit rating of Italy. Today's price action may be seen as a consolidation with markets awaiting results from the Fed's meeting. Market players may be looking for further EUR declines as speculators have built their largest position against the EUR since early August. The majors have been unable to find direction today as many participants are eyeing tomorrow's FOMC statement. Expectations are for some form of "Operation Twist" with the likeliest path being the Fed purchasing US Treasuries at the long end of the curve using the proceeds from the maturing MBS the Fed holds on its balance sheet. This could be a positive for the USD if the Fed goes this route versus an expansion of the Fed's balance sheet. This stands in contrast to the ECB, BOJ and BOE who are likely to increase their balance sheets in the near term. The EUR was sold during the Asian trading session after S&P announced it was downgrading the sovereign debt rating of Italy, effectively beating Moody's to the punch. But the selling pressure was not enough to send the EUR/USD below yesterday's low which was made at the opening of the North American session. The pair found resistance at last Friday's low of 1.3750, essentially closing the opening gap from the weekend though a close above this level on the daily chart would be needed to test the next resistance of 1.3930. The euro zone debt saga continues to drag on with the Troika talks ongoing. Things may get better before they get worse with rumors flying of a Greek exit from the EMU. The downside beckons at 1.3500 though move lower and a failure to break last week's support would set up a double bottom, a bullish technical pattern. According to the latest CFTC Commitment of Traders report speculators seem well positioned to test the 1.3500 level as EUR shorts have grown to their largest positioning since early August. Any consolidation could hurt weak USD longs but rising open interest suggests speculators favor further moves lower in the EUR/USD.
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| Sweden Offers Hint of Budget Crisis for 2012 Posted: 20 Sep 2011 07:00 AM PDT
In a pledge to keep the budget balanced as the economy experiences reduced growth, Swedish Finance Minister Anders Borg hinted that a budget crisis may be underway for fiscal year 2012. Economists were not expecting Sweden to get hit very hard by the downturn in Europe, but some adjustments have been made. The Swedes have kept a budget surplus of roughly 0.1% over the past fiscal year, and the pledge Borg made was in trying to keep this surplus intact through what is anticipated to be a sluggish period. He noted that monetary measures made over the past 12 months have given the Riksbank room to maneuver should financials get tight. It should be remembered that Sweden was briefly in a period where it was hiking interest rates at every meeting. Should a crisis emerge, those rates can be reduced back to where they were just one year ago. Though this would undoubtedly harm Sweden's economic and business outlook and optimism levels, it would do the job at keeping the krona (SEK) strong. Read more forex trading news on our forex blog. |
| Posted: 20 Sep 2011 06:57 AM PDT
Expected declines in the housing sector of the United States did not materialize this week. Many economists had expected housing reports to show a bit of a dip this quarter in home sales and building permits, but so far the data has held steady. Today's release of Building Permits gave capital investors reason to feel secure as the figure was slightly better than many were anticipating. The Housing Starts gauge, however, did fall mildly below its expected mark, but not sufficiently enough to warrant concern. Read more forex trading news on our forex blog. |
| Swiss Trade Balance in Decline Posted: 20 Sep 2011 06:55 AM PDT
A trade balance report out from Switzerland this morning revealed the national surplus is beginning to decline as a strengthened Swiss franc (CHF) gouges exports. The decline does not seem to have been anticipated as deep as it eventually came, which has put many traders on the defensive. A move from a trade surplus of roughly 2.81B CHF to 1.97B CHF was priced in, but the actual results were well below this mark at 0.81B. The indication appears to be that demand for Swiss goods has declined as the value of their currency made the goods too expensive. The impact on the franc may be a deeper depreciation, but in a controlled manner as it was recently pegged to the EUR. Read more forex trading news on our forex blog. |
| ZEW Confidence Measure Stoking EUR Flames Posted: 20 Sep 2011 06:11 AM PDT
After last week's better-than-forecast confidence indicators out of the United States, similar reports out of the euro zone now seem to be coming into focus. Tomorrow's release by ZEW is forecast to show a deep contraction in the region's economic outlook. Speculators appear to be taking cues from such reports and going short on the region, stoking the flames of the EUR's current value crisis. Should tomorrow's ZEW report on Germany come in as poorly as anticipated, there is a strong likelihood that regional investors will flee risk and move more strongly towards the US dollar (USD). The correlated economic sentiment report on the broader euro zone carries similar implications and traders would do well to anticipate a sharp increase in risk aversion should tomorrow's data be as dismal as many expect it to be. Read more forex trading news on our forex blog. |
| What Does the RBA Have to Say? Posted: 20 Sep 2011 06:05 AM PDT
Tomorrow's early morning release of the Reserve Bank of Australia's (RBA) monetary policy meeting minutes will not likely carry a hefty impact on currency markets, though the commentary will be very prescient for analysts interested in what the RBA has to say about the current freefall of Australia's economic outlook. No doubt Australia's economy is coming under pressure lately. Housing reports seem to have leveled off, giving few indications of growth. Consumer confidence seems to be rickety, at best. Commodity prices are helping to hold the value of the AUD from entering a deeper devaluation, but high export prices and interest rate appear to be pulling some value away from the Aussie economy. What the RBA notes in its minutes will be worth reading for savvy investors. Read more forex trading news on our forex blog. |
| Early UK Housing Report Shows HPI Expansion Posted: 20 Sep 2011 04:43 AM PDT
An early report on housing inflation in the UK was released by Rightmove this morning, revealing a mild expansion in the asking price of home sales. The data has been mulling about in negative territory for the past two months, making this month's jump to positive territory more meaningful in a longer-term context. The Rightmove figure does not tend to carry as significant an impact as other housing reports, however. While it is a gauge of inflation, it only measures the asking price, not the selling price, of housing sales. Today's HPI report may be enough to bump the pound mildly, though traders shouldn't bank on today's figure. Read more forex trading news on our forex blog. |
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