| Market Overview | Written by ActionForex.com | Feb 22 08 07:48 GMT | | | Euro remains firm after taking out 1.48 level against dollar and is set to face test of PMI data. Even though inflation in Eurozone has accelerated to a 14 year high of 3.2% in Jan, well above ECB's 2% target, there has been speculations slowing growth would eventually force ECB to follow Fed's path to cut rates in the second half of the year. Hence, the PMI indices will continue to be closely watched by the markets for evidence on whether the economy in Eurozone remain healthy or is deteriorating like that in US. PMI manufacturing is expected to drop slightly from 52.8 to 52.3 in Feb while PMI services is expected to recover mildly and stay slightly above the 50 contraction/expansion level. Solid data today will provide the fuel for further rally in EUR/USD to test upper end of the medium term range at 1.4951 and probably 1.5 psychological resistance too. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 21 08 15:36 GMT | | | Dollar dives against the Japanese yen and remains soft across the board in US session after the release of much worse than expected Philly Fed index. The index dropped another month from -20.9 to -24.0 in Feb, lowest since 2001, versus consensus of a rebound to -10.5, suggesting that manufacturing activity continued to contract further. The data is supportive to further easing from Fed in near term. Other data saw Leading Indicators dropped -0.1% in Jan. Jobless claims dropped 9k from upwardly revised 358k to 349k. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 21 08 08:12 GMT | | | Sterling recovers mildly against major currencies ahead of retail sales report from UK. Sales is expected to rebound from Dec's -0.4% mom fall to rise 0.1% mom in Jan. Yoy rate is expected to climb from 2.7% to 4.6%. The expectation is inline with recent BRC survey which showed 2.6% rebound. So far, sterling has been under much pressure on expectation of further rate cut of 50bps to 75bps from BoE by the end of the year. Such expectation was reinforced by yesterday's dovish BoE minutes which showed ultra dove Blanchflower voted for a 50bps cut in Feb. It will need some persistent improvement in consumer spending to shift such expectations and any downside surprise today will trigger another round of sell off in the pound. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 20 08 22:08 GMT | | | Dollar gives back most of earlier gains, in particular against Euro, Aussie and Canadian dollar, after the release of FOMC minutes which reaffirmed markets' expectation that further rate cut from Fed will be seen down the road. In general, the minutes emphasized the risks to growth. In particular, some members noted that the "risks of a downturn in the economy were significant". With the background of deepening housing correction, slowing consumer spending, tightening credit conditions deteriorating labor markets as well ass softening business investments, the accumulated 125bps cuts in Jan was needed to help the US economy to expand at a "moderate pace over time". | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 20 08 14:33 GMT | | | Dollar surges in early US session, after release of stronger than expected inflation and housing data. Headline CPI rose 0.4% mom in Jan, pushing yoy rate higher from 4.1% to 4.3%, above expectation of 4.2% and just slightly below the two year high of 4.4% last November. Core CPI rose 0.3% mom, pushing yoy rate from 2.4% to 2.5%, which also beat expectation and being at a 11 month high. Housing starts surprisingly recovered by 0.8% to 1012k annualized rate in Jan after two consecutive months of decline. Building dropped -3.0% to 1048k. Dollar's strength could be attributed to markets' view that higher inflation could tie Fed's hands up for more aggressive rate cut in the near term. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 20 08 08:14 GMT | | | The forex markets are mixed as traders prepare for an eventful day featuring BoE minutes, US CPI and new residential construction data as well ass FOMC minutes. Sterling continues to trade with an undertone ahead of BoE minutes for Feb meeting there a 25bps rate cut to 5.25% was decided. Last week's Quarterly Inflation Report showed the committee members are still concerned with inflation pressure in the short term. In fact, the report anticipated that CPI could accelerate to above 3%, a level which Governor King needs to write a letter to Chancellor Darling. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 19 08 13:57 GMT | | | The Japanese has another volatile day today. Most yen crosses dive in European session following news of more writedowns from Banks. Barclays reported a 21% drop in H2 profits which Credit Suisse said writ downs will cut net income by $1b. The Yen also rose on speculation that PBoC will raise interest rates in near term after China's inflation accelerated to the highest reading in more than 11 years. However the yen gives back most gains into US session, as solid results from world's largest retailer, Wal-Mart, is set to lift US stocks for a higher open. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 19 08 08:21 GMT | | | Aussie surges further across the board today after RBA minutes for the Feb 5 meeting revealed that the board seriously debated if a 50 bps rate hike, was required to keep inflation in control. Though, as the statement said, "the judgment was finely balanced," and "the case for the 25 basis point rise was, at this time, the more persuasive." Also, the minutes said that "additional tightening could be implemented at the March and/or subsequent meetings as judged necessary." Markets generally perceive that as a signal RBA will continue the tightening cycle by having another 25bps rate hike in Mar and May. After taking out 0.91 level yesterday, AUD/USD is now taking 0.92 level and is set to retest 0.9386 high. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 18 08 14:44 GMT | | | European majors are generally weaker today, led by weakness in Sterling and Swiss Franc. Sterling is sent lower in European session as markets digest news of nationalization of subprime-troubled Northern Rock. While the trouble is new, the news was taken by the markets as a signal that the instability in the UK financial sector may continue for a while. Swissy, on the other hand, was weighed down by disappointing retail sales which slowed much more than expected to 1.2% yoy in Dec, even though it's the consecutive expansion for the 19th month. Elsewhere, Euro is dragged down by weakness in Sterling and Swissy. Dollar is the major gainer today, except versus Aussie, which remains generally firm after earlier rally today. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 18 08 07:06 GMT | | | Markets are generally quiet as the week starts and activity will likely remain low with market holiday in US today. The major mover today so far is the Aussie which strengthens across the board on firm expectation for further rate hike from RBA in near term. AUD/USD surges further to 0.9133 today, finally takes out 0.91 level. Technically speaking the correction from last year's high of 0.9398 should have already completed at 0.8512 in Jan and rise from there is expected to extend further to retest this high. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 16 08 23:00 GMT | | | Dollar weakened generally last week on intensified worry of recession in the US economy after dovish Bernanke Testimony as well as a string of poor economy data. That was a sharp contrast to the situation down under in Australia with Aussie boosted by strong economic data and a hawkish monetary policy statement from RBA. Euro recovered most of prior week's losses while the Japanese yen weakened in general after global stock markets stabilized. FOMC minutes will be the main feature next week but the another bunch of US economic data will likely be the trigger of further volatilities in the markets. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 15 08 14:39 GMT | | | The Japanese yen and Swiss Franc are boosted in early US session after a surprisingly weak NY State Manufacturing index spurred worries on risks of deeper slowdown and recession in the US economy. The index unexpectedly sank from 9.0 to -11.7, marking the first contraction reading in nearly three years. Stocks are set to have a lower open in the US. Yen and Swissy both rebounds strongly against the greenback on risk aversion. Meanwhile, dollar is mixed against other major currencies. Other data from US saw TIC capital flow dropped more than expected to 56.5b in Dec. Industrial production rose 0.1% in Jan, inline with consensus while Capacity utilization was unchanged at 81.5%. Import prices rose more than expected by 1.7% mom, 13.7% yoy in Jan. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 15 08 09:01 GMT | | | The Japanese yen weakens broadly into European session after Asian stock markets pared earlier losses. BoJ left rates unchanged at 0.50% as widely expected, by unanimous vote. In the monthly report , BoJ left economic assessments unchanged, saying that the Japanese economy is still expanding moderately even though the space is slowing due to drop in housing investment. Fukui later mentioned that risks to the Japanese economy have heightened and inflation risks are smaller than those of the US and Europe. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 14 08 20:41 GMT | | | Dollar gives back earlier gains against the Japanese and weakens generally across the board after Bernanke's Testimony before Senate. While the testimony was brief, the message was clear. "The outlook for the economy has worsened in recent months, and the downside risks to growth have increased." Risks to growth in the US outweigh inflation and further rates are likely from Fed as the Fed needs to provide "adequate insurance against downside risks." Baseline forecast suggest growth in first half will be sluggish even though the change in monetary policy and fiscal stimulus package will support a stronger economy in the second half. Credit conditions could also tighten further. Futures are pricing in a 80% odd of 50bps cut in Mar from Fed and further rate cut by Jun to bring the federal funds rate down to 2%. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 14 08 14:35 GMT | | | Dollar remains mixed in early US session after narrower than expected trade deficit in Dec and as traders are cautiously waiting for Bernanke's Testimony before Senate Committee. Trade deficit in US narrowed more than expected by 6.9% from -63.1b -58.8b, better than expectation of -61.0b, thanks to rising exports and falling imports. The goods deficit with China also narrowed 0.6% to 18.8b. Jobless claims dropped 9k from 357k to 348k near to the 4 week average of 347k. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 14 08 07:23 GMT | | | The Japanese yen remains generally weak today as global equity markets rally following strength in the US stock markets. Japanese Q4 GDP rose 0.9% qoq with annualized rate at 3.7%. Both are much stronger than expectation of 0.4% and 1.5%. The report today suggests growth in Japan is still robust but two issues undermine the strength of the result. Firstly, the stronger Q4 result was somewhat inflated by lower base effect in Q3, in particular considering the second downward revision. Secondly, the GDP deflator dived further negative to -1.3% which suggests that real GDP was inflated. Other data from Japan saw industrial production rising 1.4% mom, 0.8% yoy. Capacity utilization rose from 018.4 to 110.2 in Dec. Jan machine tools orders was flat. Anyway, the yen paid little attention to the data as focus carry trade and risk appetite/aversion are still the main driver in the currency. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 13 08 15:19 GMT | | | Dollar surges across the board in early US session after upside surprise in retail sales. The latest retail sales report suggests that consumers are just down but not out,. Headline sales rose 0.3%, up from Dec’s 0.4% fall and beat expectation of -0.3% fall. A 0.6% gain in autos boosted overall sales in January. Ex auto-sales also rose 0.3%, beating expectation of 0.2%. Dollar strengthens across the board after the release. In particular, with stock markets rallying too, yen and swiss tumbles as usual on increased risk appetite. Business inventories rose 0.6% in Dec, beating expectation 0.5%. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 13 08 07:19 GMT | | | The Japanese yen recovers come of yesterday's loss after data showed wholesale inflation hits 27-year high. Domestic CGPI climbed from 2.6% yoy to 3.0% yoy, beating expectation of 2.8% on rising oil and material costs. Trade surplus rose to 1013b, slightly below consensus of 1027b. While exports to US continued to drop by 4.5% Dec, exports to Asia offset that and rose 8.2%. Exports to EU rose 2.4%. Consumer confidence in Jan dropped from 38.2 to 37.9 in Jan. There have been speculation that BoJ may follow Fed to cut rates later this year as the Japanese economy is dragged down by recession in the US. But it's to early to have such conclusion yet. | | Read more... | |
| Market Overview | Written by ActionForex.com | Feb 12 08 15:37 GMT | | | The Japanese yen is sharply lower across the board in early US session, following rally in the US stock markets. Stocks are boosted by news that Warren Buffett offered to help out troubled bond insurers. Buffett's Berkshire Hathaway has offered to reinsure $800b in municipal bonds insured by monoline firms Ambac Financial Group, MBIA, and Financial Guaranty Insurance Company. The announcement improved the general sentiments in Wall Street dramatically, sending the DOW close to 200 pts higher. The Japanese is in turned sold off on improved risk appetite. Meanwhile, most currencies, except the greenback, rise following strength in respective yen crosses. | | Read more... | |
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