Forex Blog

January 27, 2014

Treasury Yields Rising Ahead of FOMC Meeting, First Positive Move In 3 Days

Treasuries fell, pushing the 10-year yield up from near a two-month low, before the Federal Reserve begins a two-day meeting tomorrow and the U.S. sells a combined $111 billion of notes and floating-rate debt this week.

The benchmark 10-year rate rose for the first time in three days before a report economists said will show a gauge of home sales declined for a second month in December. The 10-year note yield will rise to 3.37 percent by Dec. 31, according to the weighted average estimate in a Bloomberg survey of analysts. The Fed decided in December to reduce its monthly bond buying to $75 billion from $85 billion, starting in January.

“I’m kind of cautious of Treasuries at these levels because they may be a little bit too rich,” said Kei Katayama, a Tokyo-based money manager at Daiwa SB Investments Ltd., which oversees the equivalent of $48.2 billion. “The basic fundamentals of the U.S. are still healthy. At some stage, I’m expecting some pickup in the yield.”

Bloomberg

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EUR/USD Stays Below 1.37 despite Highest German IFO Business Climate in 2.5 Years

German business sentiment rose in January, beating analysts’ expectations, according to the latest data from Germany’s Ifo Institute for Economic Research.

The German business climate index rose to 110.6 in January versus a Reuters forecast for 110.0, the Munich-based research group reported on Monday. In December, the Ifo index had risen to 109.5.

Other data collected by the institution showed that German business expectations also rose to 108.9 in January, above the 107.4 recorded in December and again above expectations of a 108.0 figure from analysts polled by Reuters.

CNBC

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GBP Recovers From 2-Day Decline Ahead of GDP Tomorrow

The pound snapped a two-day drop versus the euro before a report tomorrow that analysts said will show the U.K. economy expanded at a slower pace in the three months through December.

Sterling strengthened against the dollar after sliding the most in six months at the end of last week. Britain’s gross domestic product increased 0.7 percent in the the fourth quarter after growing 0.8 percent in the three months through September, according to the median forecast of economists in a Bloomberg News survey.

The pound gained 0.1 percent to 82.94 pence per euro as of 7:35 a.m. London time after depreciating 1.5 percent in the previous two days. Sterling rose 0.2 percent to $1.6511 after falling 0.9 percent on Jan. 24, the steepest one-day decline since July 5.

Bloomberg

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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August 31, 2011

SNB Forgets To Jaw-Bone Swiss Franc Lower!

The financial markets can sometimes be described as creatures of habit so when the market is expecting some type of action and it doesn’t occur, it can lead to a snap-back.  This appears to be taking place with the Swiss franc (CHF) today, as so far every Wendesday this month, teh Swiss National Bank (SNB) has “jaw-boned” the Franc lower.

What this means is that they have been out describing things that would potentially do to try to weaken the Franc and so far it has been largely successful.  So when they failed to do so this morning, what happened?

Well the markets took this as a sign that maybe the jaw-bonig is over, so the bought the Franc despite the risk appetite in the markets this morning.  Should the Franc stregthen further, expect the rhetoric to resume!

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