With three credit rating downgrades in the past week and now news that Portugal’s deficit last year was much higher than expected, speculation has intensified that Portugal will be forced to turn to the European Union for help in meeting its upcoming debt obligations. According to the National Statistics Institute, Portugal’s budget deficit actually totaled 8.6 percent and was considerably more than the government’s target of 7.3 percent.
Source: The Associated Press
This morning the Euro has rocketed higher despite the fact that Ireland will release the results of its banks’ stress tests, which could show a more dire situation than previously thought. Once considered a shining light on the economic scene, Ireland has been reduced to the poster-child of the global economic bubble.
Yet the market is willing to push that aside as CPI data in the Euro zone came in slightly higher than expected, and traders are pricing in a rate hike at the next policy meeting in early April. Yet the ECB has a difficult task, as entering into a tightening cycle could prove disastrous for both Spain and Portugal who are fighting higher interest rates that are pushing them closer to a bailout.
Meanwhile here in North America, Canada will report GDP figures later this morning and in the US we will have another round of initial jobless claims data which as long as it stays in the 300s, should be seen as positive.
So this morning there is a bit of risk appetite, with commodities higher. Curiously, US stock futures are not higher so perhaps the market is waiting to see the jobless claims. There is still a lot of risk in the markets, so the slightest perception that things aren’t improving could reverse this recent up trend in a heartbeat.
In the forex market:
Aussie (AUD): The Aussie is mostly higher, reaching a new all-time high vs. USD at 1.036 earlier this morning. Retail sales figures came in slightly better than expected, though building approvals came worse than expected. A monthly gain was expected for building approvals which came in negative.
Kiwi (NZD): The Kiwi is also higher despite negative business confidence figures, though this is to be expected after the earthquake they experienced.
Loonie (CAD): The Loonie is showing strength this morning ahead of the GDP report as oil prices have eclipsed 105 again and risk appetite appears to be healthy to start the morning. (Click chart to enlarge)
Euro (EUR): The Euro is the big winner this morning despite the report expected from the Irish bank stress tests. Meanwhile, Portugal has missed its deficit target moving them one step closer to bailout, though German joblessness is the lowest it has been in nearly 20 years. Inflation though accelerated at its fastest pace in nearly 2 years, and the market is fully expecting a rate hike at the next meeting. This could push yields higher on the debt-laden countries, making it harder for them to service their debt. (Click chart to enlarge)
Pound (GBP): The Pound is mostly lower as the UK’s close ties to Ireland put them in a precarious position heading into the bank stress tests.
Dollar (USD): Dollar weakness has been the primary driver of markets of late and the “don’t fight the Fed” mentality has been in full effect. Initial jobless claims are expected to be still in the 300s, though it appears that risk appetite may be waning as the morning progresses. Tomorrow’s NFP will be a major market mover.
Yen (JPY): The Yen is flat to slightly lower, balancing its status as a safe-haven with the weakness inherent from the economic conditions due to the natural disaster.
I’ll keep harping on it—there is still a TON of risk in the markets. I don’t feel that the risk of not gaining interest in the US should out-weigh the potential for another Euro collapse. The debt-stricken countries in the EU have not been provided with relief, and no solution to this crisis has been offered.
The amount of interest these countries have to pay is unsustainable and it is only a matter of time before someone walks away from the table. Germany is still taking a hard-line approach, as internal politics show that the bailouts are unpopular.
Yet they are attempting to force change on some of these regions as pre=conditions for bailout. One such change that they want is for Ireland to raise their corporate tax rate. This is the only thing Ireland has going for them economically so this would be a disaster for their economy.
How this plays out is anyone’s guess, but being Irish myself, I can tell you that they would be more likely to tell Germany to “shove it”, rather than capitulate.
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No one seems to be fazed by the crisis in Portugal or the Irish stress tests. After this mornings Eurozone’s flash inflation print (+2.6%), more than ever, the market expects the ECB to start the rate normalization process on April 7. In reality, the EUR bulls have two further events to overcome before the ECB meeting, this morning Irish stress test announcement and tomorrows NFP.
The Irish central bank will release the results of the ‘test’ later this morning. If the capital requirements were to suggest the need for further official assistance, more than the already earmarked 35b EUR’s in the EFSF negotiations, should be EUR negative. However, month-end and quarter-end shenanigans tend to distort asset prices and muddy the waters. Traders will try to keep their wits about them and navigate the illiquid markets keeping it close to home if there is a payroll surprise.
The US$ is weaker in the O/N trading session. Currently, it is lower against 13 of the 16 most actively traded currencies in an ‘orderly’ session.
Yesterday’s ADP print (+201k) offered few surprises and will not be boosting analysts forecasts for tomorrows NFP. This months release is consistent with the general view that the pace of improvement in the jobs market is little changed month over month and looks to be in line for an NFP consensus of +191k. A distortion in the ADP print would only have heightened suspicion and require analysts to question the strength of the correlation between the two reports again.
Digging deeper, it was no surprise that the service sector led the way, posting a rise of +164k jobs. This is a whopping 82% of the overall job growth. The goods producing sector added +37k jobs, dominated by manufacturing sector. The USD is weaker against the EUR +0.62%, GBP +0.42%, CHF +0.31% and JPY +0.13%. The commodity currencies are stronger this morning, CAD +0.13% and AUD +0.13%.
The loonie only knows one direction when global risk sentiment increases and commodity prices remain elevated, and that’s higher outright. Despite a Canadian government being toppled last week, the ‘hawkish’ tone coming from Governor Carney about how the elevation in commodity prices generally leads to higher interest rates continues to give the loonie its bid tone as traders happily sell Yen against CAD, pushing that pair towards a yearly high.
There is a general feeling that the recent CAD move may be over extended and requires a pull back. However, in the wings there is further interest to buy the loonie as ‘carry’ trades again become in vogue. Also aiding the currency’s appreciation is merger and acquisition flow buying by US based investment houses.
Investors should expect the Federal political uncertainty to have a limited affect on the Canadian dollars strength. The currency will be supported in the long term by its fundamentals, a sound financial system and a strong job environment.
Dealers will take their cue from this morning’s Canadian GDP print, the only important release of the week. In the short term, any dollar rallies and the CAD will be bought. Expect the market to try to keep it close to their chest until tomorrow’s US employment release (0.9700).
It’s quarter end and the AUD is heading for a third consecutive gain outright and against the yen, boosted by last nights retail sales beating analysts expectations (+0.5% versus +0.4%).
The AUD has strengthened +0.9% versus the dollar in the quarter ending today and +3% against the yen. The currency again managed to touch a record high, post 1983 float, after the RBA said loans provided by banks and finance companies climbed last month. The currency pared some of these gains after another report showed home building approvals unexpectedly declined last month (-7.4%) as a flooding and a cyclone hurt the housing market.
The currency has been supported by investors pricing out the possibility of a rate cut and pricing in the chance of a rate hike again next month. The probability of a reduction in Australia’s benchmark interest rate on April 5 is 13%, down from as much as 34% last week.
Appetite for growth and commodity sensitive currencies depends on the new found stamina of risk tolerance by investors. Further appreciation depends on investor’s interpretation of global future interest rates as the carry trade becomes in vogue again (1.0353).
Crude is little changed in the O/N session ($105.24 +60c). Crude prices initially retreated after a strong weekly EIA reporting inventory at Cushing has now reached record highs. Also aiding the fall was fuel demand plummeting to its lowest level in four-months.
Crude stocks climbed +2.95m barrels to +355.7m last week. The market had forecasted a rise of only +1.5m barrels. At the other end of the pendulum, fuel demand fell to its lowest level since November with gas softening -2.3% to +8.87m barrels a day. That is -2.1% less than a year ago. Perhaps higher prices are beginning to hurt the consumer? No matter, the market is well supplied. Gas inventories were down -2.7m barrels, while distillate (heating oil and diesel) were up +710k barrels.
Expect the market to remain skeptical about how soon things could return to normal in North Africa if NATO and the rebels get the upper-hand in Libya. Damage to the Libyan facilities remains unknown. Libya has seen its oil exports cut off due to the month long rebellion and Western sanctions. Market participants continue to worry about contagion.
Recent events will make it unlikely that investors will see a ‘swift normalization’ of crude-oil production in the region. On any pull backs the Middle East and North African situation will continue to dominate in the event risk category.
Gold has found renewed support on the back of European debt fears and the ongoing crisis in Libya is boosting the appeal of the commodity as an alternative investment. Geopolitical reasons continue to provide support on these pull backs, justify consumers wanting to own some of the asset in their own portfolios.
Despite prices gaining 28% in the last year, the commodity is down -0.3% this quarter. The prospect of a sustainable economic recovery will crowd out some of this over subscribed trade. After reaching record highs last week commodities are finding it difficult to create any follow through, despite the geopolitical and event factors. However, with so much global uncertainty it’s difficult to find a reason not to own some of the commodity in your portfolio.
The metals bull-run is far from over with investors continuing to look to buy the commodity on dips. These price pullbacks are viewed as favorable opportunities for investors to continue to diversify into safe-haven assets and push for those new record highs. With the metal being used as a store of value, the asset class is expected to remain better bid ($1,430 up+$5).
The Nikkei closed at 9,755 up +46. The DAX index in Europe was at 7,069 up+12; the FTSE (UK) currently is 5,957 up+9. The early call for the open of key US indices is higher. The US 10-year eased 4bp yesterday (3.46%) and is little changed in the O/N session.
Treasuries are little changed after the ADP report came in slightly weaker than expected. Elevated yield this week on the back of hawkish Fed members have been high enough to entice some investors back into the fixed-income market.
The last of this week’s $99b issues, the $29b 7-year auction also tailed, 1.75bp stopping at 2.895%, similar to the two previous soft auction this week. Non-dealers took 58% of the issue, and the auction had a 2.79 bid-to-cover ration, compared to an average cover of 2.88.
Investors can expect geopolitical and event risks to continue to support FI on much deeper pull back. The whole FI landscape could change after tomorrow’s payroll report.
Wednesday’s employment report provided further evidence that the U.S. labor market is gaining strength. According to the monthly report published by payroll services firm ADP, another 210,000 jobs were created in March marking the sixth straight month of employment gains after several months of losses. In addition to these gains, when compared to last year, the number of planned layoffs in March fell by 39 percent to 41,428 according to statistics tracked by executive placement service provider Challenger, Gray & Christmas.
If the ADP result is confirmed by the Non-Farm Payroll report scheduled for release this Friday morning, the U.S. economy will have created more than 450,000 jobs since the beginning of the year. In the last two quarters, the number of new positions created will be nearly one million.
Despite the predicted increase in jobs this month, the overall unemployment rate is expected to remain at 8.9 percent for March. This is clearly a vast improvement from the 10.0 percent recorded at the end of the fourth quarter but it is a far cry from the five to six percent unemployment which was the “norm” in the years immediately prior to the recession.
So, with unemployment improving, and the economy seemingly on the rebound, should we expect an interest rate increase in the near future? Probably not based on recent comments from Fed Chair Ben Bernanke.
In his testimony before the Committee on Banking, Housing, and Urban Affairs earlier this month, Bernanke made it clear that until conditions show significant improvement, the Fed will hold the line on interest rates for an “extended period”.
As part of his address, Bernanke identified three criteria that must be met before the Fed will consider hiking rates. First off, Bernanke said there must be a marked improvement on the employment front and most would agree that 8.9% unemployment simply fails to meet this standard.
Next, Bernanke said the Federal Open Market Committee (FOMC) must be convinced that the economy has entered a sustainable period of recovery and the rate of inflation must climb to the point that it threatens to exceed the Fed’s mandated target of 2% annual growth. There is no question that, on most fronts, the economy has made gains this quarter but based on Bernanke’s own requirements, we still fall short of the conditions necessary to force the Fed to raise rates.
This morning the ADP employment change figures came out showing a gain of 201K jobs which was slightly lower than the expectation of 208K. This seems to be good enough for the markets to continue to plow higher to start the morning, ahead of Friday’s all-important Non-Farm Payrolls Report.
The weak Dollar story continues to drive markets and the market is willing to suspend its disbelief that anything can derail the move higher. This includes risk.
One potential risk event is the slow but sure deterioration of Euro fundamentals, yet the market’s blind eye to the problems resurfacing only masks what is taking place. S&P joined the downgrade party and lowered ratings on Portuguese debt, though this went largely unnoticed. Also, the Irish bank stress tests could show that the government may need to take control over all banks. Yet the market’s singular focus on the potential for a rate hike shows little appreciation for risk.
Let’s also not forget the Japanese nuclear crisis and the Libyan civil war as potential risk events.
Overnight, Asian equity markets were up big-time, following the lead of yesterday’s US stock market gains. Commodities are mostly flat, after yesterday’s reversal in oil prices. Yen weakness continues.
In the forex market:
Aussie (AUD): The Aussie is mostly higher as the risk appetite appears to be strong to start the US session. Yesterday, the Aussie put in a new all-time high vs. USD. (Click chart to enlarge)
Kiwi (NZD): The Kiwi is also higher across the board catching a lift from the rebound in the MSCI Pacific Equity Index despite a report that showed building permits declined nearly 10%. While this is likely to be the result of the earthquake, expect this number to pick up in the ensuing months.
Loonie (CAD): The Loonie is also higher across the board as oil prices are fairly steady around $105. The Canadian raw materials price index came in higher than expected showing that inflation may be creeping higher.
Euro (EUR): The Euro is mostly lower though not as low as one might expect given the risk specific to the Euro zone. Downgrades, stress tests, and high yields should all be reason for concern, yet in the global currency beauty contest the Euro is slightly more attractive than USD. (Click chart to enlarge)
Pound (GBP): The Pound is mostly higher after the index of services reading came in and showed a gain vs. last month’s decline. In addition, the CBI reported sales figure came in much better than expected, showing signs of life for the UK consumer.
Dollar (USD): The Dollar is mixed, trading lower vs. the commodity bloc but slightly higher against the rest. The ADP jobs figures were good but not great, though expectations were higher. Friday’s NFP will let us know where we really stand in the jobs picture and the reported unemployment rate will be interesting if enough people have dropped out of the workforce to warrant a lower number.
Yen (JPY): the Yen continues to weaken with G-7 support and the correlative effects of higher stock prices. Industrial production figures came in better than expected last month, showing that the Japanese economy may have been improving prior to the earthquake.
This Friday’s NFP number will very important as it will show whether of not the employment picture is starting to show meaningful improvement. Everyone knows that QE2 is going to end soon so if the economy can’t stand on its own two feet then we may be in for major trouble.
The selling that is bound to ensue after the Fed removes the punch bowl could be exacerbated if some of these risk events start to unfold negatively. It seems as though the “wait and see” approach to the global economy leaves too much room for error, and my hope is that we see enough improvement in jobs to support economic growth.
But just remember, hope is not an investment strategy!
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
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The yen fell 0.7 percent to 83.07 to the dollar at 8:30 am in New York this morning from yesterday’s close of 82.48. Recent comments from the European Central Bank have raised expectations of an interest rate hike at the next ECB scheduled for early April and this has investors selling yen to purchase Euro-based assets.
There is a growing belief that the yen will be used as the funding currency for a resurgence of the carry trade. This could be beneficial to Japan and may help prevent an appreciation of the yen thereby supporting Japan’s export industry struggling to recover from the damage caused by this month’s tsunami.
Source: FT.com
The employment report created by Payroll services company ADP shows the US economy added 201,000 jobs in March. The Friday’s Non-Farm Payroll report is expected to reveal an increase of 210,000 new jobs.
“This data is pointing to a turnaround in labor-market conditions,” Joel Prakken, chairman of Macroeconomic Advisers LLC in St. Louis, which produces the report in conjunction with ADP, said in a conference call with reporters. “It’s pretty clear that employment now has in fact accelerated. Equally encouraging is the breadth of the strength.”
Source: Bloomberg
Markets seem oblivious to any geopolitical data and event risk. Even another Portuguese and Greek downgrade, not far from junk status, has done little for or against the EUR. It just puts further pressure on their bond yields, making it more expensive for Portugal to fund, proof that markets remains resilient or something else at play?
The more hawkish rhetoric we are exposed to the higher US yields want to go. It seems to be Fed Bullard and Fisher’s new ‘vocation’, spread the hawkish gospel. This pick up is supporting the dollar especially against the CHF and JPY and not so much so versus the EUR. This morning’s ADP employment data could set the stage for Fridays’s NFP. The consensus forecast is for +210k this month. Close to expectation and we are back to trading these contained ranges. The market requires a surprise to break the monotony. A strong NFP this Friday will be the best of excuses to push US yields much higher.
The US$ is stronger in the O/N trading session. Currently, it is higher against 12 of the 16 most actively traded currencies in a somewhat ‘subdued’ session.
The US housing market recession is not over yet. January’s reading for the 20-city S&P/Case-Shiller HPI yesterday (-3.1%, y/y) points to further softening in house prices before the housing sector reaches a bottom. Analysts note that the monthly decline is similar to the two preceding months, but, seasonally adjusted and the loss was the ‘smallest of the seven straight negatives which followed the loss of tax credit support to home buyers’. This data supports the disappointing housing starts and sales reports and provides some confirmation that we are in the midst of a double-dip scenario.
US consumer confidence fell shy of expectations this month (63.4 versus 64.9), entirely because of less confidence in the ‘future’ whereas confidence in the ‘present’ circumstances picked up. This scenario is at odds with market thinking, who expected that currently higher fuel costs, stock market volatility, little job growth and falling house prices would hit the assessment of ‘present’ circumstances. This thinking is leading to lower spending intentions as higher fuel and other charges crowd out discretionary spending.
Digging deeper, the expectation index (next six-month) led the decline, falling sharply to 81.1 from 97.5, the lowest reading in five-months and the first decline in seven. It was not the only category at fault, weakness was widespread. Consumers’ views on business conditions, employment and income deteriorated, as did their buying intentions for major appliances.
Inflation expectations jumped aggressively (6.7% a year from now versus 5.6%) from February. The problem with this indicator is that customers are influenced by what is already happening to ‘highly visible prices’ (food and energy) rather than where inflation is going in the future.
The USD is stronger against the EUR -0.11%, CHF -0.24% and JPY -0.74% and weaker against GBP +0.35%. The commodity currencies are stronger this morning, CAD +0.22% and AUD +0.16%.
The loonie only knows one direction when global risk sentiment increases and commodity prices remain elevated, and that’s higher outright. Despite a Canadian government being toppled last week, the ‘hawkish’ tone from Governor Carney over the weekend about how the elevation in commodity prices generally leads to higher interest rates is giving the loonie its bid tone.
Investors should expect the Federal political uncertainty to have a limited affect on the Canadian dollars strength. The currency will be supported in the long term by its fundamentals, a sound financial system and a strong job environment.
The market continues to focus on the global ‘big picture’. With stronger data from its largest trading partner and global hawkish rhetoric ahead of inflation will in the end benefit the CAD. Its longer term support will continue to come from commodities and increased risk tolerance.
These dollar rallies are providing an opportunity to want to own some of the commodity and growth sensitive currency (0.9715).
The AUD rose to its strongest level since its 1983 float benchmark high (1.0316) in the overnight session, as demand for the Aussie on these pullbacks is being boosted by expected government reports this week likely to signal a strengthening in the domestic economy. The twin theme of inflation and commodity prices continue to support the currency. The AUD had failed on its last attempt at the new record, on speculation that the Fed will end its bond-buying program, raising prospects the supply of dollars will eventually fall.
The currency has been supported by investors pricing out the possibility of a rate cut and pricing in the chance of a rate hike again next month. The probability of a reduction in Australia’s benchmark interest rate on April 5 is 13%, down from as much as 34% last week.
Appetite for growth and commodity sensitive currencies depends on the new found stamina of risk tolerance by investors. Further appreciation depends on investor’s interpretation of global future interest rates (1.0287).
Crude is little changed in the O/N session ($104.54 -0.25c). Crude prices broke the trend and rallied for the first time in four-days in yesterdays session on signs that the US economy is gaining momentum. Fed Bullard indicating that the CBank may need to exit QE2 early and US bourses seeing black has given some positive sentiment to the black stuff. Oil has risen +28% in the past year.
Also aiding prices was the Saudis indicating that they were planning to boost its drilling rigs by as much as 30% to maintain its spare capacity after making more oil available to compensate for shortfalls in Libyan production.
Expect the market to remain skeptical about how soon things could return to normal if NATO and the rebels get the upper-hand in Libya. Damage to the Libyan facilities remains unknown. Libya has seen its oil exports cut off due to the month long rebellion and Western sanctions. Market participants continue to worry about contagion. Recent events will make it unlikely that investors will see a ‘swift normalization’ of crude-oil production in the region.
Today we get the weekly inventory report and the market anticipates a small headline drawdown, unlike last weeks EIA inventories reporting the expected supply increases. Stocks of crude rose +2.1m barrels, right on estimates. Unlike gas, whose stockpiles declined -5.3m barrels versus a market drawdown of only-2m. Distillates (heating oil and diesel) were flat for the week. Analysts had anticipated a decline of -1.5m barrels.
On deeper pull backs the Middle East and North African situation will continue to dominate in the event risk category.
Gold is trading on the back foot again, capping its longest losing streak in three months, on bets that US interest rates are about to move higher as the economy strengthens, eroding the allure of the yellow metal as an alternative investment.
Despite prices gaining 28% in the last year, the commodity is down -0.3% this quarter. The prospects of a sustainable economic recovery will crowd out some of this over subscribed trade. After reaching record highs last week commodities are finding it difficult to create any follow through, apart from silver. However, with so much global uncertainty it’s difficult to find a reason not to own some of the commodity in your portfolio.
The metals bull-run is far from over with investors continuing to look to buy the commodity on dips. These price pullbacks are viewed as favorable opportunities for investors to continue to diversify into safe-haven assets and push for those new record highs.
Geopolitical uncertainties and event risk to date have managed to support higher commodity prices. With the metal being used as a store of value, the asset class is expected to remain better bid on deeper pullbacks ($1,420 up+$3).
The Nikkei closed at 9,708 up +250. The DAX index in Europe was at 7,016 up+82; the FTSE (UK) currently is 5,956 up+24. The early call for the open of key US indices is higher. The US 10-year backed up 4bp yesterday (3.49%) and is little changed in the O/N session.
Treasuries fell as the US government sold $35b of five-year notes at the highest yields in almost a year on concern that the Fed may end debt purchases early as the economy is beginning to shows signs of recovery. Fed President Bullard stating that they may be able to cut about $100b from QE2 program managed to push the curve higher.
Yesterday’s five-year auction was ‘soft’, indicating that investors and dealers are confused in what the Fed is going to do. The issue was 2.79 times subscribed, versus four-auction average of 2.73%. Indirect bidders took 42.4% of the supply, above the 36.6% average and direct bidders took 11.2%. The market will now focus on the last of the week’s auctions, the $29b 7-year issue this afternoon. Will dealers manage to make it a third consecutive soft issue this week?
Investors can expect geopolitical and event to continue to support FI on much deeper pull back.
Just when you think you know what is going on in the marketplace, you get thrown for a loop. Apparently now the market believes that the safest place to be is in US stocks. No matter what the situation or risk in the market, stocks seem to keep climbing higher.
Last night President Obama gave his speech on why the US is involved in Libya and at the end of the day he should be afforded the same leeway as every other president who takes military action.
Oil prices are pulling back some, stocks in Europe and Asia are lower, yet US stock futures are higher to start the morning.
IN the UK, GDP figures came in slightly better than expected, posing a decline of .5% vs. an expectation of a .6% decline, with the YoY number coming in as expected at 1.5%. This isn’t too bad considering that the austerity measures are starting to kick in. Right now, the market is expecting the ECB to raise rates before the BOE does, despite the high inflation in the UK.
US home price figures are due out later this morning, s are US consumer confidence figures. It will be interesting to see whether US stocks can hang on, or if the Dollar turns around and weakens.
In the forex market:
Aussie (AUD): The Aussie is lower this morning after putting in a multi-decade high vs. USD. The Aussie had put in 6 days of gains prior to today’s pullback.
Kiwi (NZD): The Kiwi is lower against all but the Yen as overnight trade balance figures came in lower than expected. However, both imports and exports were higher, showing the potential for economic growth.
Loonie (CAD): The Loonie is higher across the board despite lower oil prices to start the day. With relatively little news out of Canada, this appears to be more of a fundamental play on the perceived strength of the Canadian economy. (Click chart to enlarge)
Euro (EUR): The Euro is mostly lower as Dollar strength is driving the forex market this morning. While there is an expectation that the ECB will raise rates at the April 9th meeting, they first have to navigate the Irish bank stress-tests.
Pound (GBP): The Pound is also some strength, higher against all but the Dollar as the GDP figure came in slightly better than expected. A call for measured rate hikes from a hawkish BOE policy-maker were countered by a statement from the BOE dove who said he would resign if inflation didn’t come back to normal levels this year.
Dollar (USD): The Dollar is stronger across the board despite higher stocks to start the day. Home price figures and consumer confidence numbers are due out later this morning.
Yen (JPY): The Yen is weaker across the board this morning as no additional news about the nuclear crisis has induced Yen buying. The Yen should be weakening after the G-7 intervention, and last night employment figures came out that showed that the economy was actually improving prior to the earthquake. (Click chart to enlarge)
Sometimes the market doesn’t behave as we would expect it to and that is something that all traders have to deal with. Correlations that we rely on sometimes break down and as the saying goes, “the correlations work great until they don’t.”
So it is important to remember to look at the technicals of each pair individually, as anything can happen. Be married to a certain view can sometimes prove dangerous.
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!
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St. Louis Reserve Bank President James Bullard was quoted at a conference suggesting it was time for the Federal Reserve to consider slowing and even ending its current monetary easing policy. According to Bullard, the U.S. Federal Reserve’s $600 billion asset purchase program could be trimmed by some $100 billion given the recovery in the U.S. economy.
“One of the things that I’m concerned about is that policy is so easy right now that we have to get started on the process of getting back to normal, because it will take a long time to get back to normal,” Bullard told reporters on the sidelines of the conference.
Source: Reuters
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