Forex Blog

April 23, 2014

UK Government Borrowed 107.7 GBP Very Close To Budget

The UK government borrowed £107.7bn in the financial year to April 2014, lower than the £115.1bn amount it borrowed the previous year.

In the Budget, the Office for Budget Responsibility (OBR) had estimated a deficit for the full year of £107.8bn.

The government wants to eliminate the budget deficit by 2017-18.

Borrowing in March fell to £6.7bn from £11.4bn a year earlier, excluding financial interventions, the Office for National Statistics (ONS) said.

Meanwhile, the figure for February was revised down from £9.3bn to £8.8bn.

via BBC

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AUD/USD – Aussie Tumbles On Disappointing CPI

AUD/USD has registered sharp drops on Wednesday, as the pair trades in the mid-0.92 range early in the North American session. The Aussie has lost about 100 points following a weak Australian CPI release, which fell to a three-month low. Over in the US, the major event of the day is New Home Sales. The markets are anticipating a stronger reading for the March release.

Australia’s highlight event of the week was CPI, one of the most important consumer indicators. The indicator is released each quarter, magnifying the impact of each release. The index proved once again to be a market-mover, as the Australian dollar slipped badly, as CPI posted a gain of 0.6% in Q1, falling short of the estimate of 0.8%. CPI has now dropped for a second straight quarter, and is sharply down from its gain of 1.2% in Q3 of 2013.

US Existing Home Sales edged lower in March, dropping to 4.59 million, down from 4.60 million a month earlier. However, it did beat the estimate of 4.57 million, marking the first time that the indicator has beaten the forecast since August. There was also good news form the manufacturing sector, as the Richmond Manufacturing Index jumped to 7 points, crushing the estimate of 0 points.

The markets haven’t reacted to events in Ukraine so far, but that could change if the violence in the east of the country worsens. Russian President Vladimir Putin has threatened to act on his “right” to invade Ukraine, and has also given the country an ultimatum regarding its gas debt. The gas supply from Russia to western Europe is in danger, and if the situation spills out of control, we could see a sharp response from the markets. US Vice-President Joe Biden is in Kiev for a symbolic visit. The West doesn’t have many cards to play against Russia, so every move by Putin will be scrutinized and could impact on the markets.

 

AUD/USD for Wednesday, April 23, 2014

Forex Rate Graph 21/1/13

AUD/USD April 23 at 13:30 GMT

AUD/USD 0.9269 H: 0.9377 L: 0.9268

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9000 0.9119 0.9229 0.9361 0.9446 0.9542

 

  • AUD/USD has reversed directions on Wednesday, posting sharp losses. The pair broke below the 0.93 line during the Asian session and has edged lower in European trading.
  • 0.9229 has weakened as the pair trades at lower levels. There is stronger support at 0.9119, which is protecting the 0.91 line.
  • On the upside, 0.9361 has some breathing room and is strong resistance line.
  • Current range: 0.9229 to 0.9361.

Further levels in both directions:

  • Below: 0.9229, 0.9119, 0.9000 and 0.8893
  • Above: 0.9361, 0.9446, 0.9542, 0.9617 and 0.9703

 

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Wednesday. This is consistent with the movement of the pair, which has dropped sharply. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar reversing its current downward movement.

AUD/USD has posted sharp losses in Wednesday trading. The Australian dollar remains under pressure early in the North American session.

 

AUD/USD Fundamentals

  • 1:30 Australian CPI. Estimate 0.8%. Actual 0.6%.
  • 1:30 Australian Trimmed Mean CPI. Estimate 0.7%. Actual 0.5%.
  • 13:45 US Flash Manufacturing PMI. Estimate 56.2 points.
  • 14:00 US New Home Sales. Estimate 455K.
  •  14:30 US Crude Oil Inventories. Estimate 2.6M.

*Key releases are highlighted in bold

*All release times are GMT

 

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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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April 7, 2014

World Bank Trims China Forecast to 7.6 Percent

The World Bank has trimmed its growth forecast slightly for China, citing a “bumpy start to the year”.

It now expects the Chinese economy to grow by 7.6% in 2014, down from its earlier projection of 7.7%.

A slew of disappointing figures has triggered concerns of a slowdown in the world’s second-largest economy.

However, the bank said recent reforms unveiled by China were likely to help it achieve “more sustainable and inclusive” growth in the long term.

The Chinese government set out an ambitious and comprehensive reform agenda in November last year, aimed at overhauling its economy over the next decade.

These include reforming the financial and services sectors as well as the big state-owned enterprises.

“If implemented, the reforms will have a profound impact on China’s land, labour, and capital markets, and enhance the long-term sustainability of its economic growth,” the bank said in its latest report.

“Some reforms, including efforts to reduce regulatory and administrative burdens, reform taxation, and make more land available for commercial activities, are also likely to support growth in the short term.”

via BBC

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February 28, 2014

US GDP Revised Down in Q4

The US economy grew at a much slower rate from October to December than originally predicted, the US Commerce Department said.

US gross domestic product (GDP) grew at an annualised rate of 2.4% in the fourth quarter of 2013, down from an initial estimate of 3.2%.

The revision is down to weaker than expected consumer spending.

Severe winter weather in the US is expected to slow growth further in the current quarter.

The Commerce Department initially predicted consumer spending had expanded by 3.3%, but spending is now estimated to have grown at a 2.6% annual rate.

Consumer spending accounts for roughly 70% of US economic activity.

Bad winter weather has cut into vehicle sales, among other purchases.

Despite the revised GDP estimate, US growth should be regarded as strong, the financial information firm Markit said.

via BBC

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GBP/USD – Pound Pushes Above 1.67 Ahead of Key US Numbers

The British pound has posted slight gains on Friday. In the European session, the GBP/USD is trading in the low-1.67 range. Taking a look at economic news, British Nationwide HPI matched the forecast. In the US, it’s a busy day with three key events on the schedule - Preliminary GDP, Chicago PMI, and Pending Home Sales.

Federal Reserve Chair Janet Yellen testified on Thursday before a Senate committee. As expected, Yellen said that the Fed remains committed to tapering QE and would like to wind up the bond-buying scheme by the fall. At the same time, she acknowledged the string of weak US releases recently and said that the Fed would closely monitor to what extent the weak numbers are due to cold weather and what portion can be attributed to a “softer outlook”. The next Fed policy meeting takes place in mid-March and the markets will be looking for another $10 billion cut to QE.

Thursday was a mix for US key releases. Manufacturing data looked strong, as Core Durable Goods Orders jumped 1.1% in January. This surprised the markets, which had expected a decline of -0.1%. However, Unemployment Claims did not look as sharp, as the key indicator rose to 348 thousand, well above the estimate of 333 thousand. Meanwhile, a nasty streak of weak US releases ended on Wednesday as New Home Sales jumped by 468 thousand, crushing the estimate of 406 thousand. It was the housing indicator’s best showing since last June, and helped allay concerns about the health of the housing sector, following weak housing numbers last week. We’ll get another look at key housing data on Friday, with the release of  Pending Home Sales. The markets anticipate a strong gain after a miserable reading in December.

British releases have enjoyed a strong week. Second Estimate GDP posted a gain of 0.7%, matching the forecast, as British economic activity continues to head in the right direction. Preliminary Business Investment sparkled with a gain of 2.4%. This was a strong improvement from the 1.4% gain in the previous release. However, the indicator fell short of the estimate of 2.6%. Earlier in the week, CBI Realized Sales and BBA Mortgage Approvals looked strong, with both improving in January.

December 24, 2013

PBOC injects $4.8 Billion To Ease Liquidity Concerns

China’s central bank has pumped RMB29 billion ($4.8 billion) of money into the financial system, its first market-wide injection in three weeks, as it looks to put an end to the cash crunch that has rattled the economy.

Chinese banks have been hoarding money, charging each other nearly 9 percent to borrow cash in a near doubling of rates from just one week earlier, a sign of extreme stress in the interbank market.

Over the past week the central bank had provided targeted money to cash-strapped lenders but it had yet to offer any liquidity via its open-market operations, a more transparent and powerful channel for influencing the financial system.

CNBC

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October 30, 2013

Gold Rises on Fed No Taper Expectation

Gold advanced for the first time in three days as the smallest gain in U.S inflation in five months bolstered expectations that Federal Reserve policy makers meeting today will delay curbing stimulus measures.
Consumer prices increased 1.2 percent in the 12 months through September, the lowest since April, a government report showed today. U.S. central bankers are set to maintain $85 billion in monthly bond purchases until March, a Bloomberg News survey of economists on Oct. 17-18 showed. Bullion rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system.

via Bloomberg

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Oil Falls With Inventory Climb

West Texas Intermediate crude decreased, extending a second monthly loss, after a government report showed that U.S. inventories surged to a four-month high.

Futures fell after the Energy Information Administration said stockpiles rose 4.09 million barrels to 383.9 million last week. A 2.4 million-barrel gain was projected in a Bloomberg survey. The EIA, the Energy Department’s statistical arm, said supplies at Cushing, Oklahoma, the delivery point for WTI traded in New York, increased 2.18 million barrels to 35.5 million, a two-month high.
WTI for December delivery declined $1.17, or 1.2 percent, to $97.03 a barrel at 10:37 a.m. on the New York Mercantile Exchange. The contract traded at $97.15 before the release of the report at 10:30 a.m. in Washington. The volume of all futures traded was 25 percent lower than the 100-day average. Prices are down 5.2 percent this month after losing 4.9 percent in September.

Brent for December settlement rose 15 cents to $109.16 a barrel on the London-based ICE Futures Europe exchange. Volume was 21 percent below the 100-day average. The European benchmark traded at an $12.13 premium to WTI, up from $10.81 yesterday.

Crude supplies gained 7.9 percent in the six weeks ended Oct. 25. The U.S. will account for about 21 percent of global oil demand this year, almost double the estimate for China, the second-largest consumer, according to forecasts from the International Energy Agency in Paris.

via Bloomberg

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October 11, 2013

IMF Says Central Banks Should be Independent With Banking Oversight

Central banks should be independent in setting monetary policy but they should also be tasked with monitoring financial market stability under political supervision, the International Monetary Fund’s (IMF) chief economist said.

Olivier Blanchard also told Handelsblatt newspaper’s Friday edition that Germany should take on a stronger role in Europe and needed to invest more rather than focus on saving.

“If there is one lesson to be learned from the crisis, it must be: it’s not enough to keep an eye on monetary stability. We must also look at the stability of the financial system,” Blanchard was quoted as saying.

“(Central bank) independence should be tiered. Classical monetary policy must remain independent. The control of the financial markets by the central bank, however, should be put under some kind of political supervision.”

via Reuters

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