Forex Blog

September 25, 2014

EUR/USD at 1.2780 Before Draghi Speaks

The euro traded less than 0.1 percent from a 14-month low before European Central Bank President Mario Draghi speaks at a conference today.

Europe’s shared currency headed this month for the worst drop in 1 1/2 years after Draghi said in an interview published yesterday that policy will “stay accommodative.” Reports this week showed slowing regional manufacturing and faltering German business confidence. A gauge of the dollar was poised for its highest close in four years before U.S. data tomorrow that may confirm a pickup in growth and consumer sentiment. The Aussie fell before Reserve Bank Governor Glenn Stevens speaks.

“Just looking at the gap between European and U.S. business confidence, it’s clear the euro should be falling and the dollar rising,” said Yasuhiro Kaizaki, a vice president for global markets in New York at Sumitomo Mitsui Trust Bank Ltd. “The long-term trend for euro weakness isn’t going to change.”


August 22, 2014

Labor Shortage Limit Japanese Firms Profits

Some 60 percent of Japanese firms are finding it increasingly difficult to secure sufficient workers, hit by a pervasive labor shortage that is pushing up hiring costs and starting to eat into profits, a Reuters poll showed.

Stemming from a rapidly ageing society where immigration is limited, the labor crunch has emerged amid an economic turnaround engineered by Prime Minister Shinzo Abe and threatens to drag on growth.

Some restaurant chains and retailers such as home improvement firm Komeri Co have said they have been forced to rethink expansion plans, while others have actually shut stores. At the same time, a dearth of construction workers needed after the 2011 earthquake and tsunami and ahead of the 2020 Olympics has pushed up building costs for all sectors.

But even firms that are not as badly affected are worrying about a jump in labor costs, the pressure of having to scramble to attract qualified employees and to retain the ones they have.

“The hiring situation has become very severe,” Yoshiki Mori, vice president at retailing giant Aeon Co, said at an earnings briefing last month. He said Aeon is embarking on a range of initiatives to encourage part-timers to work more hours and is looking to employ more retirees and foreigners.

By sector, 80 percent of retail firms and 72 percent of companies in construction and real estate said they were finding it more difficult to secure enough workers, the Reuters Corporate Survey found. Among manufacturers, 70 percent of firms in the auto sector, which includes suppliers, said they are having more difficulty.

via CNBC

July 25, 2014

U.S. Dollar Higher on Growth Signs

The dollar was poised for back-to-back weekly gains versus major peers before data predicted to show U.S. durable goods orders rebounded in June, indicating manufacturing is strengthening with the economy.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, climbed to its highest in a month yesterday as the Standard & Poor’s 500 Index extended a record following a surge in sales for Facebook Inc. The yen held a decline from yesterday after a report showed Japan’s core inflation slowed from the strongest level since 1982. The pound was set for a third straight week of losses, the longest stretch in four months, before gross domestic product data due today.

“Dollar buying continues on the back of good U.S. corporate earnings,” said Yasuhiro Kaizaki, a vice president for global markets in New York at Sumitomo Mitsui Trust Bank. “Next week has GDP, FOMC and payrolls, so the market will try to figure out whether the current flow will continue watching those events,” he said, referring to gross domestic product and the Federal Open Market Committee.


July 4, 2014

U.S. Dollar Benefits from Jobs Data

The dollar headed for weekly gains versus most of its Group of 10 peers as signs of an accelerating U.S. recovery spurred speculation the Federal Reserve will bring forward the timing of interest-rate increases.

The greenback traded near a two-week high against the yen after nonfarm payrolls rose more than economists estimated and the unemployment rate fell to an almost six-year low. The euro held a three-day decline before data forecast to show factory orders in Germany dropped. Australia’s currency was set for the sharpest weekly decline in more than a month. Expectations for currency swings plunged to a record low.

“The payrolls report confirmed that from a macroeconomic perspective the U.S. economy is growing,” said Yasuhiro Kaizaki, a vice president for global markets in New York at Sumitomo Mitsui Trust Bank. “Based on fundamentals, recent dollar buying should continue.”


March 13, 2014

U.S. Foreclosure Filings Continue to Fall

The number of U.S. properties with foreclosure filings fell 27% in February from a year earlier to a more than seven-year low, according to market researcher RealtyTrac.

There were 112,498 U.S. properties with default notices, scheduled auctions and bank repossessions in February, a 10% decrease from the prior month, RealtyTrac reported Thursday.

“Cold weather and a short month certainly contributed to a seasonal drop in foreclosure activity in February, but the reality is that new activity is no longer the biggest threat to the housing market when it comes to foreclosures,” said Daren Blomquist, RealtyTrac vice president.


The post U.S. Foreclosure Filings Continue to Fall appeared first on MarketPulse.

March 6, 2014

Gold Rises On Ukraine Crisis

Gold futures rose for the second straight day amid forecasts that U.S. borrowing costs will hold at a record low and European inflation will pick up gradually.

Expectations that interest rates won’t rise until mid-2015 are appropriate, William Dudley, the president of the Federal Reserve Bank of New York, said today. European Central Bank President Mario Draghi said that the inflation rate will gain in the next 30 months, damping deflation risks. Yesterday, gold climbed after U.S. service industries expanded in February at the slowest pace in four years.

Through yesterday, gold climbed 11 percent this year on demand for a haven amid turmoil in Ukraine and concern that the U.S. is faltering. The Labor Department will release jobs data tomorrow. In 2013, the metal tumbled 28 percent, the most since 1981, as global equities rallied and U.S. inflation was muted.

“Comments from Dudley and Draghi have helped gold find support,” David Lee, a vice president at Heraeus Precious Metals Management in New York, said in a telephone interview. “People will be closely watching tomorrow’s employment numbers to assess the health of the economy.”

via Bloomberg

The post Gold Rises On Ukraine Crisis appeared first on MarketPulse.

February 15, 2013

Yen in G-20′s Firing Line

Japan’s economic policies, which have driven down the yen’s value and given local exporters a powerful boost, are expected to be in the firing line at a meeting of G-20 finance ministers. But perhaps it’s time to cut Japan a little bit of slack, some analysts say.

Policymakers from Asia and Europe have stepped up criticism of Japan, where expectations for aggressive monetary easing have pushed the yen down 15 percent against the dollar over the past three months. The yen has shed 20 percent of its value against the euro and fallen 13 percent versus South Korea’s won over the same time period.

While the yen has fallen sharply and quickly, its weakness should be seen in the context of a period of prolonged strength, said Vasu Menon, vice president for wealth management at OCBC Bank.

“The yen is weakening from a position of extreme strength,” he told CNBC Asia’s “Squawk Box.” “So, I think the G-20 will cut Japan some slack.”


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February 5, 2013

Euro Falls Strongly to 1 Week Low Below 1.35

The euro fell the most in a month against the dollar as Italian and Spanish bonds slumped amid political turmoil, damping demand for the shared currency.

The 17-nation currency dropped versus all but one of its 16 major peers as Spanish Prime Minister Mariano Rajoy faced calls to resign after newspaper reports alleged he accepted illegal cash payments. A poll showed former Italy Premier Silvio Berlusconi closed the gap on front-runner Pier Luigi Bersani even as he appeals a four-year prison sentence for tax fraud. The yen weakened beyond 93 per dollar for the first time since May 2010. European Central Bank policy makers meet this week.

“The euro obviously has come off quite sharply,” Fabian Eliasson, vice president of corporate foreign-exchange sales at Mizuho Financial Group Inc. (8411) in New York, said in a telephone interview. “I would attribute that to some negative headlines out of Europe. Obviously, things can’t go up forever.”


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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.

December 28, 2010

US Holiday Sales increase +5.5%

U.S. retailers’ 2010 holiday sales jumped 5.5 percent for the best performance in five years as shoppers snapped up clothing and jewelry at Macy’s Inc., Tiffany & Co. and other stores.

Retail sales, excluding autos, rose to $584 billion from Nov. 5 through Dec. 24, said MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. That compared with a 4.1 percent gain a year earlier. The numbers include sales made over the Web.

Consumers bought coats at chains such as Bloomingdale’s as their confidence improved alongside the U.S. job market. Their spending, which accounts for about 70 percent of the American economy, is a positive sign heading into next year, Michael McNamara, a vice president at Purchase, New York-based SpendingPulse, said yesterday.

“Increasing confidence has freed up more money from savings,” McNamara said. “We pretty much put a bow on what has been a positive season across a number of retail areas. We are seeing this momentum building and being sustained.”


EUR crapshoot

The Chinese rate hike has been brushed aside by the lightly staffed trading desks. It was expected and mostly priced into the market. A logical reaction would have been a stampede towards safety assets, alas, this has not developed. Perhaps it will be an issue for the first week of trading in the New Year. For now, this illiquid market is trying to stay out of trouble in the holiday shortened trading week. Despite the slightly heavier volumes this morning, universally its believed that the EUR remains vulnerable when normal trading resumes next week as some currency prices are an illusion as its difficult to get size executed.

The US$ is weaker in the O/N trading session. Currently, it is lower against 13 of the 16 most actively traded currencies in a ‘whippy’ O/N session.

Forex heatmap

Capital Markets has few reasons to want to do anything thus far in this extremely thin trading week. Light volume tends to exaggerate price movements and traders see ‘no pay from play’ until liquidity picks up. There seems to be more focus on the negative Chinese equity market. It has extended its losses after the PBOC rate hike to +5.81% at the weekend. With China implementing its proactive fiscal policy again in the New Year should eventually squeeze global bourses and commodity sensitive currencies. For now, staying out of trouble is the number one priority for most dealers.

The USD$ is lower against the EUR +0.49%, GBP +0.04%, CHF +1.32% and JPY +0.69%. The commodity currencies are stronger this morning, CAD +0.33% and AUD +0.53%. The market has strong bids all the way down to parity in this holiday shortened trading week. The loonie, if allowed at all, can only make modest gains technically until the year-end as the currency trades in this narrow range. The currency continues to modestly underperform against its major trading partners despite the stronger fundamentals out of the US. Canadian policy makers remain weary of Europe’s funding challenges, US growth risks and with benign domestic Canadian inflation worries will not pressurize the BOC to tighten monetary policy any time soon. This month the loonie has gained +1.1% outright vs. its largest trading partner. The currency has only witnessed modest strength compared to other growth sensitive currencies as Governor Carney highlights the dangers of a persistently strong domestic currency. The CAD continues to struggle within striking distance of parity because of the strong corporate interest to own dollars there. If the bids disappear it would become interesting. Overall, the market remains better buyers of dollars on dips.

The AUD extended gains to a fresh two month high in holiday thinned markets O/N. Ongoing M&A talks for Aussie companies as well as firmer commodity prices is lending the currency a hand despite the PBOC hiking rates +25bp at the weekend. A higher risk appetite is spurring a shift of money to the Aussie and other commodity sensitive currencies, temporarily at least. The currency had been trading under pressure outright as US Treasury yields climb, narrowing the yield advantage of assets down-under. Year-to-date, the currency has climbed +10.4% (second biggest winner after JPY), on prospects for commodity-driven economic growth and the yield advantage of the nation’s debt compared with other developed markets. The market is running into offers at 1.0150(1.0112).

Crude is higher in the O/N session ($91.10 +10c). After peaking at its two-year high yesterday, oil prices have retreated as the market digests the Chinese interest rate hike which may slow economic growth in the world’s biggest energy consumer. Colder conditions along the US east coast and throughout Europe seems to be providing a bid on pull backs in this weeks thin market action. Last week’s EIA report showed that crude inventories decreased by -5.3m barrels. At +340.7m barrels analysts note that current stocks are above the upper limit of the average range for this time of year. There was a similar scenario with gas inventories, they increased +2.4m and remain in the upper half of their range. OPEC believes that supply and demand are ‘in balance,’ and expect demand growth will slow as the global economy struggles to recover, amid ample supplies. Technically, expect the market to meet resistance all the way up to the psychological $100 limit as refiner’s actions to avoid year-end tax liabilities is priced in.

Gold prices again advanced this morning on speculation that currency volatility will boost demand for a safe heaven investment. The dollar weakening has also come to the commodity’s aid. Year-to-date the commodity has gained +26% as Europe’s debt crisis and low US interest rates has encouraged global investment in precious metals. The yellow metal continues to garner ‘physical’ interest on pull backs despite China hiking interest rates by +25bp on Christmas Day. Even though the one direction trade feels overdone, investors continue to hold gold as a hedge against long-term inflation. The Euro-zone contagion issues continue to put a floor on metal prices on demand for a haven. The commodity is poised to record its tenth consecutive annual gain ($1,394 +$11.50c). Technical analysts believe that gold will outshine other precious metal in 2011 and peak somewhere above $1,600 in 2012.

The Nikkei closed at 10,292 down-64. The DAX index in Europe was at 6,973 up+3; the +FTSE (UK) currently is 6,008 up+13. The early call for the open of key US indices is higher. The US 10-year eased 5bp yesterday (3.33%) and is little changed in the O/N session. Treasuries remain under pressure, heading for their biggest monthly decline in a year, as the market prepares to take down $99b of new product this week. There is speculation that the confidence print this morning will beat expectations, and with the market taking the Chinese rate hike in its stride, is pushing yields to test medium term resistance levels. Yesterday, the market took down $35b 2’s, today $35b 5’s and tomorrow $29b 7’s. The 2’s came at +0.74% vs. +0.755% WI’s. The auction did not tail and was well bid with 3.71 vs. 3.51 the four auction average.

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