FOREXYARD: Forex News Blog | |
- ECB Provides New USD Liquidity Measures
- New York Manufacturing in Steep Decline
- US Inflationary Figures Add Boost to Risk Appetite
- Euro Zone CPI Adds Boost to EUR
- Euro Bond Talk Prompts EUR Bid
| ECB Provides New USD Liquidity Measures Posted: 15 Sep 2011 07:36 AM PDT
The world's leading central banks have come to the rescue of the European banks' USD funding crisis with the announcement of unlimited amounts of USD liquidity operations. The new ECB liquidity operations underlines a key driver over the past two months as European financial institutions have been unable to secure USD funding, thus pressuring European banking stocks while increasing demand for the USD. Early in the North American trading session the ECB announced additional 3-month liquidity provisions in coordination with the Fed, BOE, BOJ, and the SNB. This is in addition to the 7-day dollar liquidity provisions the ECB currently provides. Immediately following the announcement the three-month euro-dollar cross-currency swap dropped to -86.6 bp from -92, a sign of increased USD liquidity. With the new liquidity measures coordinated with the major central banks of the world, one must wonder to what extent is the funding crisis in the European financial system. Two European banks have already accessed the ECB's USD Auction Allotment worth $575m. While the move by the ECB is constructive it may keep the pressure on European equities as well as the EUR. The USD tumbled on the announcement with the EUR/USD rising as high as 1.3935, a level which coincides with the hourly trend line that falls from August 30th. But the EUR looks to be unable to hold the daily highs as the surge may have offered better entry levels into the EUR downtrend. Resistance above the trend line is found at the previously broken trend line from the Q2 2010 low at 1.4010. Support is at the upper boundary of the recent consolidation pattern at 1.3810 followed by 1.3650. Read more forex trading news on our forex blog. |
| New York Manufacturing in Steep Decline Posted: 15 Sep 2011 07:06 AM PDT
The measurement of manufacturing output from New York this afternoon gave some cause for concern in capital investment circles. The Empire State Manufacturing Index was expected to dip mildly this month after last month's deep decline, but actual results came in well below forecasts. The data, released by the Federal Reserve Bank of New York at 13:30 GMT, represents the results of a diffusion index based on surveyed manufacturers in the state of New York. Coming in at -8.8, below the -3.9 expectations, as well as last month's -7.7 reading, makes this reading all the more dire. Explanations have ranged from a global downturn in manufacturing demand to the more acute examples such as the recent earthquake, hurricane scare, and 9/11 terrorist threat and memorial ceremony, which would likely create a slowdown from inspections, safety precautions, and diminished worker presence. Read more forex trading news on our forex blog. |
| US Inflationary Figures Add Boost to Risk Appetite Posted: 15 Sep 2011 07:01 AM PDT
Shortly after the publication of euro zone CPI data, the US published its core and nominal readings of the same reports. The core data came in as forecast, with 0.2% growth, while the nominal reading outpaced forecasts for a 0.2% expansion and came in at 0.4% instead. The safe-haven US dollar (USD) was seen trading moderately lower Thursday following these data releases since most of today's numbers supported higher risk taking. Consumer inflation is a key level behind the engine of growth making today's CPI numbers a positive step for both Europe and the United States at a time when many economists are discussing the possibility of a double-dip recession. Read more forex trading news on our forex blog. |
| Euro Zone CPI Adds Boost to EUR Posted: 15 Sep 2011 06:57 AM PDT
Solid numbers were released regarding the euro zone's regional consumer price index (CPI). Both the core and nominal readings came in as expected with 1.2% and 2.5% growth, respectively. With the Swiss National Bank (SNB) reiterating its commitment to maintaining a floor value for the CHF, the EUR found itself gaining moderately Thursday morning. The CPI figures were also joined by news that Switzerland's industrial production was up 3.6%, beating forecasts for 3.3% growth, and following last month's dismal 9.6% contraction. Employment change in the euro zone also saw a 0.3% bump in the right direction, stepping past expectations of 0.2% growth. Read more forex trading news on our forex blog. |
| Euro Bond Talk Prompts EUR Bid Posted: 15 Sep 2011 03:02 AM PDT
Despite the string of negative headlines coming from Europe the EUR has firmed as a renewed discussion of Eurobonds and the French/German/Greek conference call have markets responding in a positive way. The consolidation in the EUR may have some EUR shorts cutting their positions though price action is bearish in nature. Yesterday European Commission President Jose Manuel Barroso stated that the Commission would soon be presenting options for Eurobonds backed by all of the EMU nations up to 60% with the remaining amount backed by individual states using their respective credit ratings. The idea for jointly issued euro bonds found support this morning from ECB board member Yves Mersch. Dow Jones quoted him saying the creation of euro bonds for AAA rated nations would be “the embryo of a stability-oriented fiscal union with an agency for debt management as is the case in larger countries.” The introduction of euro bonds has the support of the peripheral nations but German Chancellor Angela Merkel said today it is, “absolutely wrong” for the creation of a euro bond. Also this month's ruling by the German Constitutional Court forbids the Bundestag from assuming liabilities from other sovereign states. Given Germany's opposition to euro bonds both from a political and legal standpoint, one must question how long the renewed euro bond chatter can support the EUR. The Sarkozy/Merkel/Papandreou conference call also helped to support market sentiment with a joint statement affirming the nations' commitment to "the Greek economy to return to a path of lasting and balanced growth," as well as Papandreou determination to achieve Greece's budget targets. The statement also stressed Greece's place belongs in the euro zone but the statement by no means nullifies comments from within Chancellor Merkel's coalition from those who believe Greece should be expelled from the EU, nor does it prevent Greece taking unilateral action to leave the EUM should it default on its debt. Looking at the technical picture the EUR/USD continues to recover from its Monday morning low of 1.3500 and a break of 1.3800 would encounter resistance at 1.3835 followed by an initial retracement target of 1.3900. While the EUR temporarily recovers the price action shows a distinct bearish flag pattern forming on the charts. Support from the chart pattern comes in at 1.3650 with additional support at the Monday low. Read more forex trading news on our forex blog. |
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