FOREXYARD: Forex News Blog | |
- Russia Adjusts Rate Differentials, Ruble in Decline
- US Retail Sales Data Disappoints
- British Employment Mildly Optimistic
- Risk Sentiment Falls and AUD Comes Under Pressure
| Russia Adjusts Rate Differentials, Ruble in Decline Posted: 14 Sep 2011 06:44 AM PDT
The Russian central bank decided to hold its interest rates steady on Wednesday, coming in line with market expectations and following suit with its westerly neighbors in Europe who held rates steady last week; though one adjustment does have some analysts abuzz. The bank decided to cut its repurchasing rate (also known as the repo rate) by 25 basis points while lifting its deposit rate by the same amount. The repo rate will be slashed from 5.50% to 5.25% effective 15 September 2011, while the deposit rate will be bumped up to 3.75% from 3.50%. The Russian refinancing rate was left unchanged at 8.25% The reasoning behind the move, according to the bank's official statement, was to position the nation's currency against unwanted volatility should a liquidity crisis take place. Narrowing the rate differential is expected to smooth the value changes in the Russian ruble (RUS) over time; giving investors more confidence against heavy losses should they decide to take on more RUS in their portfolios. These new rate levels are expected to act as a balance to various growth risks which have cropped up lately, and to the slowing speed of inflation. Read more forex trading news on our forex blog. |
| US Retail Sales Data Disappoints Posted: 14 Sep 2011 06:36 AM PDT
The figures on American retail sales this afternoon led several traders to surge into the greenback immediately following the release as safe havens appear to be gaining appeal. The two reports on retail sales coincided with the release of the producer price index (PPI), however, which did give a mild indication of positive data. The core report from retail sales highlights the crisis in the American market; mainly, that consumers are afraid to spend money. Combined with the nominal figure, the retail sales data becomes even more harrowing. The core report cited a 0.1% growth, but the nominal figure had 0% growth. Both appear to be feeding the bullishness of the greenback due to a heightened risk averse trading session. Read more forex trading news on our forex blog. |
| British Employment Mildly Optimistic Posted: 14 Sep 2011 06:32 AM PDT
Wednesday's data on employment and earnings in the United Kingdom have helped give some bullish sentiment to the British pound (GBP). The Claimant Count Change report, which measures the change in the number of people filing for unemployment benefits in the previous month, sunk well below market forecasts. The average earnings index was also bumped mildly above what many were expecting. The data, released by the UK Office of National Statistics, showed the number filing for unemployment benefits to be near 20,300, well below the forecast 34,800 and last month's reading of 33,700. The underlying reason may not be as optimistic as the report initially appears, but it does add to the mounting bullish pressure beneath the GBP. The earnings index also saw a rise of 2.8%, beating last month's report and this month's forecast for 2.7% growth in earnings. This news supports the growing value of employment in the UK. Read more forex trading news on our forex blog. |
| Risk Sentiment Falls and AUD Comes Under Pressure Posted: 14 Sep 2011 03:27 AM PDT
The Australian dollar has been one of the worst performing currencies this week as reduced risk sentiment weighs on the currency. The fact that AUD market positioning continues to increase stands out in this "risk off" trading environment. With market speculation running wild of a potential Greek default and French banks coming under funding pressures risk sentiment has plummeted as traders move into safe haven assets such as the USD and US Treasuries. The AUD is considered a high beta currency and has been sent sharply lower over the past few days. Versus the USD the AUD is down 2.1% this week alone and has shed 5.2% since its September 1st high. The AUD is also down sharply in the crosses with the AUD/NZD falling 1.1 % this week and the AUD/JPY down 3.1% as well. Data released on Monday showed the Australian trade surplus declined to AUD 1.826 bn while the June surplus was revised lower to 1.82 bn from 2.05 bn. The declines in the trade balance point to weaker future growth. Data released today showed Q2 housing starts declined -4.7% and underlines the slowing housing sector. Risks of a hard landing in China have also weighed on the AUD as over 21% of its Australian exports go to China, though positive new loan data and lower than expected CPI have reduced risks for a sharp decline in Chinese growth. At its last meeting the RBA highlighted of the increasing risks to the European and US economies but maintained its hawkish tone as inflation remains elevated at 3.6% and economic growth continues to increase due to higher commodity prices. However, it is unlikely for the RBA to continue its current rate hiking cycle given the western economies may be standing on the edge of a cliff. What stands out is the rising long position in the market for Australian dollar futures. The most recent CFCT Commitment of Traders report shows speculators have added to their long AUD positioning despite reduced market sentiment stemming from Europe. It will be interesting to see if this trend continues in this Friday's report. The technical picture is also looking bleak. After breaking its long term trend line from Q2 2010 the AUD/USD failed to make a significant move back above the trend line in early September. Often a currency pair will break below a trend line only to rise back to the previously broken trend lines which will then serve as a resistance level. A move below the support of 1.0315 has opened the door to 0.9925 at the August low/38% Fib retracement from the 2010-2011 up trend. Below that rests the March low of 0.9700. The AUD/NZD head and shoulders pattern failed to complete itself and likely caught AUD bulls long, triggering stops on the way down. The next support level for the AUD/NZD rests at the August low of 1.2625.
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