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
- Anticipating American Confidence Levels
- Euro Zone Trade Balance Deep in Deficit
- Italian Trade Balance Enters Surplus
- FX Fundamental Weekly Preview – Is the ECB Preparing Europe for a Greek Default?
| 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.
Read more forex trading news on our forex blog. |
| 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. |
| Anticipating American Confidence Levels Posted: 16 Sep 2011 06:05 AM PDT
The University of Michigan (UoM) is set to release its data on consumer confidence and inflation expectations later today. The reports are anticipating a somewhat mild dip in confidence levels, though a case could be made that traders should fear for the worst from this report. What traders have seen these past few weeks is a serious shortfall in industrial and manufacturing output, as well as turns to safety by investors as a double-dip recession appears more and more imminent. The UoM reports may not affect currency values heavily is they come in near expectations, but a broad decline could send traders reeling and seeking safety in the value of the greenback. Read more forex trading news on our forex blog. |
| Euro Zone Trade Balance Deep in Deficit Posted: 16 Sep 2011 06:01 AM PDT
Contrary to the previous article on the Italian trade balance, the euro zone's trade data and Current Account both revealed a deep plummet into deficit territory. The Current Account was only forecast to undergo a 5.6B EUR decline; the actual results were harrowing. A reading of -12.9B EUR deficit being added to the euro zone's Current Account have so far put some pressure on the 17-nation currency. The trade balance data also revealed a dip of 2.5B EUR into deficit territory. So far, the EUR is balancing the disparate reports out of the broader region and Italy, but it doesn't seem to have much effect either way. Read more forex trading news on our forex blog. |
| Italian Trade Balance Enters Surplus Posted: 16 Sep 2011 05:52 AM PDT
The report out this morning on the Italian trade balance surprised several traders by publishing a surplus. September 2010 was the last time a trade surplus was experienced by the Italian economy. So far the news has only helped the EUR gain, albeit mildly, in today's trading. Trade reports such as this rarely have a hefty impact on a currency's value. The Italian trade balance report is one such example. Though it is a positive for the region in general, and Italy specifically, it doesn't really carry that much weight in forex valuations. Nevertheless, the EUR should gain some strength from this data. Read more forex trading news on our forex blog. |
| FX Fundamental Weekly Preview – Is the ECB Preparing Europe for a Greek Default? Posted: 16 Sep 2011 05:27 AM PDT
The coordinated move by the world's leading central banks has lifted the prices of risky assets with European banking stocks seeing a sharp bounce. While the new ECB liquidity provisions look to raise market sentiment in the short run one must ask what the world's central bankers expect down the road? The last time these parties worked in tandem was three years ago in the fallout of the Lehman Brothers default. With today and tomorrow's Ecofin meeting occurring just after the new policy move and an increase in chatter from European officials that entertain the possibility of a Greek default, could the ECB be preparing the European financial system for a Greek credit event? Comments coming from the Sarkozy/Merkel/Papandreou conference call initially helped to support market sentiment though the wording was noticeably less firm and opens the door for additional interpretations as often occurs when following carefully crafted political speeches and government press releases. Given Wednesday's statement, "France, Germany are convinced Greece's future is in the euro zone," it is noticeable that the wording is less concrete than previous statements that deny any possibility to exit the EMU. Given the two day Ecofin meeting that includes special guests US Treasury Secretary Timothy Geithner and the #2 at the IMF it may be fair to assume that a Greek default is on the agenda of the meeting. Additional liquidity provisions may be a way for the ECB to begin to cushion the European financial system from the pressures it might face from a potential Greek haircut or default should the Troika not approve the next tranche of aid. With the divisions between the ECB and Germany growing, the new unlimited 3-month liquidity provisions may be considered a preemptive strike. This once again brings headline risk back into play over the weekend with the EUR having the largest risk of an opening gap lower, much like we saw at the beginning of this week. Read more forex trading news on our forex blog. |
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