FOREXYARD: Forex News Blog | |
- NOK Positioned for Gains, Possibly to its Detriment
- British Consumer Inflation Holds, Housing Prices Don’t
- NAB Reports Business Confidence Slump in Australia
- Headlines Continue to Drive the Markets
- Heightened Volatility Highlights Today’s FX Trading
| NOK Positioned for Gains, Possibly to its Detriment Posted: 13 Sep 2011 06:22 AM PDT
The Norwegian krone (NOK) is one of the few currencies which face only minor threats in these gloomy days of market pessimism. Its southern neighbors of the euro zone are undergoing constant crises of sovereign debt which could put strain on the relationships holding the monetary union in tact. The NOK has recently undergone three consecutive days of losses, though few economists consider this short-term trend to be lasting. Norway has weathered the economic storms of the last four years better than most. Its economy is set to experience 3% GDP growth this year, with an expected 3.75% growth next year, according to its central bank forecasts. Underlying inflation is holding steady near 1.2%, up from 0.8% earlier this year, and the relatively high value of crude oil is supporting solid financial growth in the Scandinavian giant. What worries several analysts on this matter, though, is what impact a stronger krone will have on high-valued sectors of Norway's economy. The proxy safe-haven status given to the Scandinavian currencies these past few months has helped their values soar, but high currency values gouge industry's ability to export their goods at affordable prices. As companies like Norsk Hydro – a frequent company of concern in times of currency appreciation – deal with more expensive export costs, the potential exists for various sectors of Norway's economy to become unsustainably expensive; mainly utilities and housing costs. Moreover, the weakening of traditional safe havens, like the Swiss franc (CHF), could place additional strain on this relationship, artificially driving the NOK higher due to flights from risk, but to the detriment of Norwegian industry, which, harshly enough, exports mainly to the euro zone (a double whammy to growth reduction if there ever were one). Read more forex trading news on our forex blog. |
| British Consumer Inflation Holds, Housing Prices Don’t Posted: 13 Sep 2011 06:18 AM PDT
The much-anticipated inflationary reports from Great Britain were released this morning, highlighting the positive move being made in consumer and retail inflation levels. Today's figures came in roughly as expected, with mild optimism on at least one, but the house price gauges produced consternation among capital investors. The CPI and RPI data released by the British Office of National Statistics showed solid growth at the consumer levels of inflation across Britain. Two reports on housing, however, revealed diminishing housing inflation. The DCLG report on HPI had deeper losses than expected, showing a 1.5% contraction. The RICS House Price Balance report also revealed 23% of surveyors citing reduction in house prices, worse than the anticipated 22%. Read more forex trading news on our forex blog. |
| NAB Reports Business Confidence Slump in Australia Posted: 13 Sep 2011 06:15 AM PDT
The National Australia Bank Limited (NAB) published its monthly report on business confidence this morning, with news echoing what many traders were already assuming. Confidence in the Australian economy has ebbed over the past 30 days, with many indicators supporting a moderate downturn in growth activity. The Australian dollar (AUD) has seen sizeable downticks in value against most of its currency rivals. This week is likely to remain so with news such as this morning's accumulating into a long-term analysis that shows Australia entering the economic doldrums. Read more forex trading news on our forex blog. |
| Headlines Continue to Drive the Markets Posted: 13 Sep 2011 06:01 AM PDT
Continuing with the trend of headlines driving financial markets the European trading session was highlighted by the announcement of a joint Sarkozy/Merkel statement to be released later today. Upon the news hitting the wires both European equities and the EUR/USD rallied to their daily highs. Subsequently the report turned out to be false and the gains were squandered. Yesterday markets rallied in the North American trading session on reports China would begin buying Italian bonds. This morning the report appears to have contained mixed information and the EUR declined following a clarification by Chinese officials. As previously mentioned in this forex trading blog, these types of events highlight the forces at work in markets which are driven not on economic data or fundamentals but on headlines and a little bit of panic thrown in. FT Alphaville has a done a good job summarizing today's events. According to Greek State TV, Greek PM George Papandreou will hold a conference call tomorrow with German Chancellor Angela Merkel and French President Nicolas Sarkozy. A position of solidarity needs to be staked out to support the financial markets that appear to be in a panic since last Thursday. Read more forex trading news on our forex blog. |
| Heightened Volatility Highlights Today’s FX Trading Posted: 13 Sep 2011 03:55 AM PDT
The first two days of this week's trading have been extremely volatile with negative headlines driving the direction of the majors in an absence of economic data. The threat of a Greek default is weighing on the EUR while French banks continue to face pressure over funding concerns. The EUR/USD bounced 200 pips yesterday in the North American trading session only to shed most of those gains this morning after continued pressure from Italy, France, and Greece. Support for the EUR that was seen after the FT reported Chinese interest in Italian faded this morning after a disappointing Italian bond auction. Italian 5-year debt yielded 5.59% vs. 4.93% at the previous sale in August. The auction also had a weak bid to cover ratio of 1.28 from 1.93. French banks continue to be pressured from downgrade concerns and a WSJ article cited a lack of dollar funding facilities for some French banks. The French CAC40 is the weakest European bourse, trading lower by 2.20%. The pressure on the French banks is a direct result of default fears by Greece. The 2-year Greek note yielded for the first time above 75% while the 10-year bond was yielding 25%. These levels show the incredible amount of stress on Greek paper and market expectations of a Greek default. Due to the pressures in Europe the EUR has been volatile the last two days but the EUR/USD failed to make a new low below 1.35 and moved back to even on the day. The pair has traded between 1.3700 and 1.3550. Short term technical indicators are oversold, much like many French banks, though headline risk is the key in this trading environment. Additional resistance is found at 1.3835 while a break of this week's low may have scope to 1.3430. Read more forex trading news on our forex blog. |
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