Forex Blog

February 17, 2012

Bailout in Brussels to help the BoJ

Filed under: OANDA News — Tags: , , , , , , , , , — admin @ 11:01 am

The BoJ became the latest G8 central bank to ease policy this week. Governor Shirakawa and his policy makers announced a +Y10t increase in their asset-purchases and at the same time, formalized their inflation objective (an approach to fighting deflation). They intend to buy JGB’s with the new funds. The market risk is that the MoF follows this move with more aggressive intervention, normally this would be associated with the BOJ’s new policy stance. However, the MoF should be breathing a tad easier on the back of stronger US data which has the JPY under pressure outright, and on the crosses.

Taking into account the new BoJ emphasis on inflation, combined with the improvement in global equities this year, and the continued deterioration in Japanese trade dynamics, has many analysts revising higher their medium and long term dollar targets. If Monday’s ‘bailout in Brussels’ transpires, North American Yen Bears should be enjoying President’s Day that bit more!

Below are some other highlights of the week:


Asia

  • JPY: Finance Minister Azumi and Prime Minister Noda stress that Japan does not target specific levels of dollar yen. The comments follow references to specific levels by Azumi in parliamentary testimony.
  • JPY: Japanese GDP shrank an annualized -2.3% in Q4 after a revised +7% expansion in Q3. This was weaker than the -1.3% consensus. Analysts are optimistic for growth for Q1given the improved outlook for the US economy and the rebound in domestic production after the Thai floods.
  • CNY: It’s believed that China’s policymakers have told its banks to roll over loans to local governments. This reduces the risk of a hard landing in China, with banks extending maturities for local governments to avoid a wave of defaults.
  • AUD: Australia reported the number of home loans rose more than expected, +2.3%, m/m in December, up from +1.8% in November. This is the highest rise in seven months. The value of loans rose +2% while the number of loans for investment lending rose +7.5%.
  • JPY: The BoJ unexpectedly announced a +JPY10t expansion in its asset-purchase program to +JPY65t.They intend to buy JGBs with the new funds and have also made more formal its medium-term CPI goal of inflation below +2%, centered on +1% (an aggressive approach to fighting deflation, further reducing the scope for USDJPY downside). The overnight lending rate was maintained at 0-0.1%.
  • NZD: Kiwi REINZ house price index fell -1.4% last month following a -0.1% fall in December. On a year-on-year basis, house prices rose +4.3% and price levels appeared to have stabilized post the 2010 fall. Transaction volume also rose +25%, y/y. The futures market expects the RBNZ to keep rates on hold for the remainder of the year; recent Kiwi appreciation has also reduced the need for normalization.
  • INR: Indian inflation was lower than expected. WPI inflation fell to +6.6%, y/y, in January from +7.5% in December. It’s the lowest level in three-years and strengthens expectations for further RBI rate cuts. This would increase support of foreign inflows into Indian equities, and demand for the currency.
  • CNY: China again has pledged her support for the beleaguered European union and plans to invest in Europe’s bailout funds. PBoC governor Zhou said that the share of EUR in China’s reserves has not fallen and that China wants the single currency to play a larger role as a reserve currency. However, Chinese policy makers are waiting for the appropriate time to invest and that time is when European officials can produce innovative instruments with better return profiles.
  • AUD: Down-under, Westpac consumer confidence index rose +4.2%, m/m, this month to 101.1, the second straight increase after a +2.4% rise in January. New motor vehicles sales advanced +1.3%, m/m in January, the largest increase in five-months.
  • NZD: Kiwi retail sales volumes grew more than expected in Q4, rising by +2.2%, q/q (sa), after a revised +2.4% increase in Q3.
  • SGD: Singapore’s headline retail sales rose +4.2%, y/y in December, much weaker than the consensus forecast of +5.2%. This was due to a weakness in car sales, ex-auto retail sales grew much stronger than expected at +8.1%, y/y, from +6.4% in November.
  • SGD: South Korea’s import prices rose +7.9%, y/y in January, accelerating from a +7.1% gain in December. Export prices increased +4.6%.
  • AUD: Aussie employment report came in well above the consensus forecast, rising an impressive +46.3k last month. The participation rate rose to 65.3 from 65.2 and the unemployment rate fell to +5.1% from +5.2%. The stronger headline and better unemployment rate should keep the RBA on the sideline next month.
  • NZD: Kiwi Business PMI and consumer confidence both fell in January to 50.5 and 113.3 respectively. Analysts believe weaker domestic growth momentum should keep Governor Bollard and his policy member’s happy with current policy settings.
  • SGD: Singapore’s final Q4 GDP revised up to -2.5%, q/q, from the -4.9% advance earlier estimated. Analysts expect the MAS to maintain the SGD NEER on its current gradual appreciation path.
  • CNY: CNY: In the PBoC’s Q4 monetary policy report, members mentioned inflation risk while expressing concern over growth. Are they managing market expectations for monetary easing?

February 14, 2012

Risk Appetite Holds Up in Europe Despite Earlier Moody’s Moves

Filed under: Forex News — Tags: , , , , , , , , , , , , , — admin @ 7:31 am

By Joel Kruger, Technical Strategist

Talking Points

  • Market participants shrug off overnight Moody’s downgrades
  • China helps risk appetite after talking of added involvement in Eurozone
  • Eurozone auction results well received
  • German ZEW comes in much better than expected
  • USD/JPY breaks back above 200-Day SMA for first time in months
  • Check out “Global Equity Monitor”

Risk appetite has held up rather well in European trade after investors managed to absorb the negative headlines from a Moody’s downgrade to Italy, Portugal and Spain and additional downgrades to the outlook of the UK economy. A slew of solid auction results of the Eurozone, combined with some booming German ZEW data and comments from China that they would consider additional investment in the ESF and EFSF were all seen supporting risk off trade and helped to propel the Euro into one of the stronger performing currency slots on the day. Also out in European trade was UK inflation data which failed to factor into price action after the numbers came in as expected.

Relative performance versus the USD Tuesday (as of 11:00GMT)

  1. CHF +0.13%
  2. CAD +0.12%
  3. EUR +0.07%
  4. NZD -0.06%
  5. AUD -0.09%
  6. GBP -0.14%
  7. JPY -0.60%

Moving on, the Yen has been very well offered on the day thus far despite the risk negative developments, with the currency finding renewed offers on the back of the announcement from the Bank of Japan that they will boost long-term JGB and asset purchases by Y10Trillion. Although the central bank has one ahead and left the call rate unchanged, the move to increase quantitative easing measures is certainly acting as the driver for the underperformance in the Yen on Tuesday. USD/JPY has now broken back above the 200-Day SMA for the first time in several months and could be looking to carve out a longer-term basing pattern after setting record lows back in October by 75.55.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD:

The latest multi-session consolidation has been broken, with the pair clearing resistance at 1.3235 and opening a test of the 100-Day SMA just over 1.3300. Given the recent consolidation range of approximately 200 points (1.3025-1.3235), we will leave the door open for a move towards the 1.3450 area before the market eventually looks to stall out and carve a more meaningful lower top ahead of broader underlying bear trend resumption. A break back below 1.3025 is now required to officially alleviate immediate topside pressures.

GBP/USD:

Gains have stalled out just shy of the 200-Day SMA for now and the market looks to be entering a fresh period of consolidation before considering the next major move. Key levels to watch above and below come in by 1.5930 and 1.5700 respectively, and a daily close above or below will be required for clearer directional bias. A close below 1.5700 could open the door for some broader underlying bearish resumption, while back above 1.5930 exposes the October highs by 1.6170 further up.

December 29, 2011

2011 Top MarketPulse FX Stories

Filed under: OANDA News — Tags: , , , , , , , , — admin @ 1:46 pm

2011 was a year of momentous social, political, natural and economic turmoil the world over. The word “crisis” appeared again and again in headlines. While protests raged and governments collapsed, several unimaginable natural disasters gave poignant reminder that, in the grand scheme of things, human life is frail but the human condition resilient.

We wanted to share with you a few of the standouts from our blog over the past year. Here are some of our most popular postings based on number of views, starting with the earliest and moving forward chronologically.

Interest Rate Outlook for 2011
With a new year upon us, currency traders are once again turning to the old crystal ball in an attempt to predict interest rate actions for the major economies. While there are many storylines to watch as 2011 unfolds, two narratives in particular are expected to garner the most attention – the long-awaited recovery in the US, and the ongoing credit crisis in the Eurozone.

Dollar not Sick it’s Terminal
This week the dollar has had the classic opportunity to rally aggressively. Global risk appetite has subsided, commodity currencies have fallen and investors were willing to take profit. Instead, we have witnessed only a feeble attempt to rise. The dollar is more than sick, it’s terminal. Expect the fears of a debt default and reserve diversification to weigh heavily on the global ‘reserve’ currency. Investors are demanding higher yield to account for that risk and QE2 has done a good job in keeping them artificially low. Asian Cbanks are keen to diversify their dollar denominated reserves into other currencies like the EUR, CAD or other higher yielding currencies.

Time to load up on the EURO again
The EUR has held despite this week’s theatrics. Greek restructuring is apparently off the table, for now at least. In translation, the ‘strong advice and preference of the ECB has prevailed’ over Euro politicians grandstanding. There are even some tentative signs in Greece that a compromise is attainable between the government and opposition. However, this does not mean there will be no restructuring later on. Politicians and policy makers seem to be deluding themselves, systemic risk is real and may eventually be uncontrollable. For now, rather than painting over, they prefer whitewashing the problem.

EURO Panic Attack is Only a Step Away
The big dollar has traded surprisingly poorly despite the lukewarm news on Greece and global equities just about finding their feet in the overnight session. Any negative news from the ‘vote’ or the EU Leaders Summit later in the week will trigger a strong wave of selling and risk aversion driving markets into a new selloff. The panic attack is only a step away.

Sell EURs and Shut Your Eyes?
This month and year may be winding down, but the heat on the Eurozone is certainly becoming more intense. Investors are trading up against some key support levels for the currency, levels that when breached could see another decent run to the downside. Historically, the risk reward of holding large positions this time of year tends not to be worth it. The aggravation and headaches of trying to comprehend some of the currency moves, which tend to be driven by lack of liquidity, year-end positioning and the turn, usually dissuades most from having larger positions. Mind you, this negative EUR run has technical ‘stamina’ and traders are required ‘to pay to play,’ otherwise we will end up talking about the ‘opportunity cost’ or the big one that got away!

Where to sell the EUR again?
Even with Euro risk sentiment remaining on the back foot, the Euro periphery bond deals are getting done, but at a price. Now that there are more sales coming down the pipe, more concessions will be expected. The market was not that impressed with Italy yesterday, however, she came and delivered. It’s her 2012 issues we should be more worried about. Already this morning, Spanish bond yields managed to hold steady before the country’s final debt sale of this year; while with no sign of the debt crisis easing, Bunds remained supported by investors seeking safer liquid assets ahead of year-end.

Here are two standout postings on infographics and currency tools, which continued to be especially popular with our readers:

U.S. Debt Ceiling: Infographic
The U.S. debt has become a ferocious beast with an insatiable appetite. In 2010, mandatory spending grew nearly 15 percent over the previous year and totaled $2.17 trillion. Interest on the national debt– also a mandatory expenditure – cost American taxpayers $164 billion that year. Discretionary spending was also up significantly in 2010, increasing almost 14 percent over the previous year to $1.38 trillion.

Forex Correlation Heatmap and Correlation Table
Some currency pairs tend to move together in the same direction. Other currency pairs tend to move in opposite directions. Understanding how currency pairs tend to move relative to one another can be used in a number of different ways. It can be used to analyze how diversified your Forex portfolio is and, indirectly, your risk profile. It can also be used to understand how to enter into hedging trades.

As 2011 comes to an end, the team at MarketPulse FX would like to wish you a Happy 2012. We hope you continue your trading journey with great success.

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December 4, 2011

Trading Week Outlook: Dec. 5 – Dec. 9

Filed under: Forex News — Tags: , , , , , , , , , , , , , , — admin @ 8:07 am

Dec. 3, 2011 (Allthingsforex.com) – With the European Central Bank interest rate announcement and the EU Summit on the horizon, the trading week ahead could prove crucial for the future fate of the euro and the debt crisis-stricken euro-area.

In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

1.    USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions in the services industries: agriculture, mining, construction, transportation, communications, wholesale trade and retail trade, Mon., Dec. 5, 10:00 am, ET.

In light of the stronger-than-expected manufacturing index, the U.S. services industry activity is also forecast to expand for another month with an index reading of 54.0 in November from 52.9 in October.

2.    AUD- Reserve Bank of Australia Interest Rate Announcement, Mon., Dec. 5, 10:30 pm, ET.

The latest economic data from “down under” proved that the Australian “miracle economy” is not immune from the global slowdown, which coupled with easing inflationary pressures has raised the odds of another 25bps rate cut by the Reserve Bank of Australia to 4.25% from the current 4.50% level. A rate cut combined with risk aversion could become the formula for Australian dollar weakness.

3.    CHF- Swiss CPI- Consumer Price Index, the main measure of inflation preferred by the Swiss National Bank, Tues., Dec. 6, 3:15 am, ET.

Deflation has once again become a threat as the Swiss inflation gauge unexpectedly dropped below zero in October. With forecasts pointing to another decline at -0.3% y/y in November and the government “examining feasibility” on measures to deal with the strong currency, the Swiss National Bank might be forced into stepping up its efforts to weaken the franc. Although the next move by the central bank is still a bit of a “mystery”, the odds that we could witness a historic decision by the SNB to raise the EUR/CHF floor from 1.20 up to 1.25, or even to 1.30, are rising exponentially.

4.    EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Dec. 6, 5:00 am, ET.

The revised reading of the Q3 GDP is expected to confirm that the Euro-zone economy is losing steam, growing by only 0.2% q/q in the third quarter, same as the 0.2% q/q reading in the second quarter of 2011, and less than the 0.8% q/q increase in Q1 2011.

5.    CAD- Bank of Canada Interest Rate Announcement, Tues., Dec. 6, 9:00 am, ET.

Acknowledging that the global economy has “slowed markedly” with “significantly less favorable external environment affecting Canada”, the Bank of Canada is not expected to make any changes to its existing accommodative monetary policy and would be likely to keep the benchmark interest rate at the current 1.0% level.

6.    AUD- Australia GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Dec. 6, 7:30 pm, ET.

Despite of the anticipated rate cut by the Reserve Bank of Australia, the Q3 GDP might lend some support to the Aussie with forecasts pointing to a stronger 2.3% y/y growth in the third quarter of 2011, compared with 1.4% y/y in Q2 2010. On the other hand, quarter-on-quarter growth is forecast to be unchanged at 1.2% q/q in Q3, same as the 1.2% q/q growth in the second quarter.

7.    NZD- Reserve Bank of New Zealand Interest Rate Announcement, Wed., Dec. 7, 3:00 pm, ET.

Becoming the most surprisingly hawkish of all major central banks, it would be interesting to find out if the Reserve Bank of New Zealand might change its position as a result of the global slowdown. The bank is expected to keep rates at the current 2.50% level for another month, but the Kiwi dollar could get a boost from any hints that the bank is still not steering away from a future rate hike.

8.    GBP- Bank of England Interest Rate Announcement, Thurs., Dec. 8, 7:00 am, ET.

With the largest U.K. trading partner, the Euro-zone, slowing and the EU debt crisis far from over, the odds are rising that the Bank of England’s policy makers could be prompted to increase the size of the Asset Purchase Program beyond the current 275 billon pounds; however, they might decide to wait until 2012 to do so. In the meantime, the likely outcome of the MPC meeting would be to keep the benchmark rate at its record low 0.5% level and to leave the door open to additional quantitative easing if conditions deteriorate. As a result, the GBP should continue to be confined in its current $1.50’s range, unless the EU debt crisis take a turn for the worst and massive risk aversion sends the sterling into the $1.40’s against the U.S. dollar.

9.    EUR- European Central Bank Interest Rate Announcement, Thurs., Dec. 8, 7:45 am, ET.

As many economists lower their Euro-zone growth forecasts and the ECB President warns about the potential for a “mild recession” on the horizon, it shouldn’t be a surprise to see the European Central Bank producing another 25bps rate cut at the upcoming meeting in an effort to avoid a double dip. Navigating through a sea of uncertainty, while at the same time trying to fend off political pressure to become the “lender of last resort”, the ECB might end up giving up the resistance and turning the printing presses on if the EU debt crisis escalates with borrowing costs rising to unsustainable levels. It is hard to see such scenario as a EUR positive…

10.    EUR- EU Summit of leaders of the 27 countries in the European Union, Fri., Dec. 9, all day event.

The outcomes of the EU summits in the last couple of years have a common thread- they all tend to remind us of Naked Eyes’ hit from 1983, as the markets around the world expect to see comprehensive solutions to contain the euro-area sovereign debt crisis but all they get are “promises, promises”. Will it be the same this time? Despite of the previous summit’s glimpse of hope that EU leaders have finally realized the seriousness of the situation after about 2 years since the beginning of the crisis, there are many murky details in the recently proposed strategies, some of them named “yesterday’s solutions” by Financial Times. The list of unanswered questions includes: how will EFSF be leveraged; can politicians effectively persuade the ECB to stand as a “lender of last resort”, or will that role be given to the IMF, or a newly-created European Monetary Fund; will EU members be willing to “sacrifice sovereignty in exchange for providing the economic and monetary union with a structural credibility”? Ahead of the last summit, “better late than never” optimism helped the euro register its biggest rally since March, 2009. Although another “hope rally” in the days leading to this summit would be sure to give the single currency a boost, the pressures on the euro could quickly mount if EU leaders fail to deliver the concrete and bold measures needed to win the debt crisis battle.

December 2, 2011

US unemployment rate drops for all the wrong reasons

Filed under: OANDA News — Tags: , , , , , , , , , , , , , , — admin @ 10:30 am

North American employment reports came, we saw and they have been trying to conquer the risk trade ever since. It certainly was a mixed bag of data to end ‘this’ of all weeks on. Canada did a U-turn, and provided us with as many job losses (-18.7k) as positives (+18.6k) the market had been expecting. Unlike its southern neighbor, the unemployment rate inched higher (+7.4%). In contrast, the US hit headline expectations (+120K) and gave us some strong positive revisions. The unemployment rate firmly beat everyones expectations (+8.6%), however, the labor force participation rate eased to a 28-year low (+64%) as people dropped out in droves, either because they are retiring or simply too discouraged to continue looking for employment. It was driven by a drop of-315k in the labor force and a big-594k drop in the number of unemployed despite just +120k more people getting work.

Below are some other highlights of the week:


Americas

  • USD: The long-term foreign and local currency issuer default ratings of AAA were affirmed by Fitch. However, the outlook on the long-term rating was revised to negative from stable.
  • CAD: Current account improved to CAD-12.13b in Q3 after CAD-16.14b in Q2.
  • USD: Consumer confidence climbed this month (56 vs. 40.9) by the most in more than eight-years as Americans grew more upbeat about employment and income prospects.
  • USD: US home prices eased in September from a month earlier, the first decline after five straight monthly increases according to S&P’s Case-Shiller.
  • Most of the world’s major central banks (Fed, ECB, BoE, BoJ, BoC and SNB) agreed that they would take “coordinated actions to enhance their capacity to provide liquidity support to the global financial system.” Specifically the Banks have cut the price on existing temporary US dollar swap arrangements to USD OIS plus 50bp which is a cut of about 50bp from what is currently charged. It will apply this from December 5 to February 1 2013.
  • CBanks: Agreed to set up bilateral liquidity swap arrangements to cover any of their own currencies should that be needed.
  • US fundamentals are again doing their bit. The ADP employment report suggested that jobs rose +206k last month, a hefty +76k above consensus. Pending home sales surged +10.4% in October and the Chicago PMI rose to 62.6 from 58.4.
  • CAD: Q3 GDP annualized +3.5% vs. market expectations of +3%. Q2 revised to -0.5% from -0.4%. September GDP +0.2% from August.
  • USD: New jobless claims rise to +402k, largest level in more than a month. This suggests that labor markets are healing but very slowly.
  • USD: ISM November manufacturing PMI rises to 52.7 vs. Octobers 50.8. However, the employment index fell to 51.8 vs. Octobers 53.5.
  • CAD: November full-time jobs +34.6k, part-time -53.3k giving us a monthly loss of -18.7k. The participation rate at +66.6% eased a tad from +66.7% while the unemployment edged higher to +7.4% vs. +7.3%.
  • USD: NFP headline print was up +120k, private up +140k. The prior month revisions were significantly positive with September +52k to +210k and October +20k to +100k. The unemployment rate eased a whopping-4 ticks to +8.6% (the lowest level in two-years). Does this take QE3 off the table? However, the labor force participation rate eased from +64.2% to +64%-lowest level in 28-years. It seems that people dropped out of the workforce in droves, either because they are retiring or simply too discouraged to continue looking for employment. Monthly paychecks also slipped as average hourly wages fell-0.1% (second negative in three-months).

ASIA is doing its bit too

Filed under: OANDA News — Tags: , , , , , , , , , , , — admin @ 10:10 am

The BoJ and PBoC did their bit and helped take some heat off a burdened Euro financial system. Japan took part directly in coordinated actions to provide liquidity support to the global financial system. China, she took the internal route and cut its domestic banks reserve ratio. The PBoC actions is supposed to provide support for global growth expectations and growth sensitive assets. Looking at Friday’s price action, capital markets fear that Europe is on the verge of imploding again. In reality, very few want to own risk ahead of next weeks Central Bank rate announcements and the now highly anticipated Euro summit.

Below are some other highlights of the week:


ASIA

  • NZD: NBNZ activity outlook index rose to 28.8 this month from 26.1.
  • PHP: Q3 GDP rose +3.2%, y/y, less than the +4.1% consensus forecasted. The Q2 growth number was revised down-0.3pts to +3.1%. The weak export and manufacturing sector continues to be a drag on growth.
  • THB: IP collapsed in October. Manufacturing production fell -35.8%, y/y, much more than the -15% drop consensus had forecasted. The collapse was due to the extreme flooding in much of central Thailand. Capacity utilization dropped from +65.5% in September to +46.4% in October. Immediate term, problems are to persist.
  • JPY: Retail sales rose +1.4%, m/m, in October, up from a contraction of -1.5% the prior month and stronger than the consensus forecast for a +0.6% rise. However, the October unemployment rate rose to +4.5% from +4.1% in September.

  • JPY: BoJ Governor Shirakawa told Japan’s parliament that he viewed yen strength as being due to credit stress in Europe and hoped that their efforts to lower long-term Japanese yields would weaken the yen.
  • KWN: Current account surplus was +$4.2b in October, down from +$5.1b in October 2010. The trade surplus of +$3.6b is expected to rise if oil prices soften further.
  • INR: The RBI has warned banks not to use “their open position allowances to run speculative long USDINR positions lest the RBI change regulations”.
  • MYR: The government announced that foreign direct investment into Malaysia rose +42% in the first three-quarters of 2011 to +$8.3b.
  • CNY: China’s repo rate fell to a 5-day low of +3.66% midweek. The recent increase in fiscal spending is adding more liquidity to China’s financial system than the PBoC has sterilized with bill issuance.
  • AUD: Aussie was able to breach parity midweek after Fitch upheld its long-term foreign currency rating. It was upgraded to AAA from AA+, citing low government debt levels and a flexible policy framework. Also aiding was the OECD forecasting that Australia would be the one of the fastest growing economies in the world in 2012.
  • CNY: PBoC announced it would lower its required reserves ration by-50bp to +21.5% (first easing in three-years) and should provide support for global growth expectations and growth sensitive assets. Bigger picture, alone not enough to offset the acute danger to financial market stability stemming from the euro sovereign crisis for long.
  • Most of the world’s major central banks (Fed, ECB, BoE, BoJ, BoC and SNB) agreed that they would take “coordinated actions to enhance their capacity to provide liquidity support to the global financial system.” Specifically the Banks have cut the price on existing temporary US dollar swap arrangements to USD OIS plus 50bp which is a cut of about 50bp from what is currently charged. It will apply this from December 5 to February 1 2013.
  • CBanks: Agreed to set up bilateral liquidity swap arrangements to cover any of their own currencies should that be needed.
  • JPY: IP grew +2.4%, m/m, in October, which was stronger than expected and reversed the -3.3% fall in the prior month. However, the level of production is still lower than that in August by -0.9%.
  • JPY: The MOF confirmed that October intervention totaled JPY9.1t . Most of this is believed to have occurred in a single day, which would mark a new record for intervention.
  • AUD: Capital expenditure rose a strong +12.3%, q/q, in Q3, much higher than the consensus forecast for +8.0%. Futures traders continue to expect the RBA to normalize rates, with another-25bp rate cut at this months meeting as inflation projections allow it.
  • NZD: Building permits rose +11.2%, m/m, last month. This reversed much of the drop in permits from the previous month, pushing the rise in permits since June to +22.1%.
  • IDN: Headline GDP for Q3 was in line, but with weak details. GDP growth slowed to +6.9%, y/y, in Q3 from +7.7% in Q2.
  • KRW: IP fell -0.7%, m/m, largely reversing the +1.2% rise in September.
  • CNY: China’s PMI fell-1.4pts to 49.0 in November, below the consensus forecast of 49.8. Details were soft with new orders and new export orders falling sharply and supports the PBoC’s decision to cut the commercial banks’ reserve requirement ratio this week.
  • AUD: Building approvals and retail sales disappointed. Building approvals fell -10.7%, m/m, in October and follows the -14.2% drop in September. Retail sales rose a smaller than expected +0.2%, m/m, vs the consensus forecast for +0.4%.

November 29, 2011

U.S. Home Prices Drop 3.6% in September

Filed under: OANDA News — Tags: , , , , , , , , , , , , , — admin @ 7:19 am

The S&P/Case-Shiller index of property values indicated a decline of 3.6 percent in September compared to the same month one year ago. The continued drop in the index which measure property values in 20 cities, suggests that many homeowners find themselves holding mortgages worth more than the current value of their homes.

With unemployment continuing to hold at about 9 percent and a growing inventory of distressed properties, the outlook for the housing sector remains weak.

“Housing probably won’t go anywhere for the next couple of years,” Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before the report. “We’re just mired in this swamp with a huge overhang of distressed properties that prevents the market from gaining any traction.”

Source: Bloomberg

Eurozone Officials Meet in Brussels

Filed under: OANDA News — Tags: , , , , , , , , , , , , , — admin @ 7:10 am

A meeting of Eurozone finance ministers today in Brussels was expected to produce a statement on the release of additional bailout funds for Greece as well as plans to expand the European Financial Stability Facility to 1 trillion euros. According to sources, it now appears unlikely that the goal can be met in the short term.

The EFSF currently has 440 billion euros available for ending but this is considered far short of what could be needed as the debt crisis spreads to other Eurozone countries. Should larger economies such Italy or Spain require emergency funding, the amount currently available is considered far from sufficient to prevent default.

Source: BBC News

November 25, 2011

Week in FX: Europe Nov. 20-25

Filed under: OANDA News — Tags: , , , , , , , , , , , , , — admin @ 11:55 am

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