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Daily FX Market Outlook by AceTrader-1-2-2011

Discussion in 'Forex Daily News & Outlook' started by acetraderfx, Jan 31, 2011.

  1. acetraderfx

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    Market Review - 31/01/2011 20:04 GMT

    Euro rises on higher-than-expected eurozone inflation data


    Euro rose on Monday as higher-than-expected eurozone data fueled speculation that European Central Bank (ECB) may raise its interest rate quicker than the U.S. or other developed economies. In addition, the single currency was also underpinned by the tightened yield spreads between the 10-year eurozone peripheral countries' bonds n German bund on talk of growing support in the eurozone for giving Greece more time to pay back its European Union bailout to avoid default.

    Despite extending Friday's decline to 1.3570 in Asian morning on Monday, the euro brushed aside the continued turmoil in Egypt n ratcheted higher, intra-day rise later accelerated after the release of higher-than-expected eurozone CPI, which came in at 2.4% vs previous reading of 2.2% Jan Y/Y, January figure was the highest in 2 years. Later, the single currency rallied to as high as 1.3740 in NY morning b4 retreating on profit-taking.

    The British pound also extended Friday's selloff in Asian morning to 1.5821, however, cable then rallied strongly to 1.6050 (10 pips shy of Jan 18 high of 1.6060) on active short-covering as Guardian newspaper quoted Bank of England policymaker Martin Weale saying that he saw a compelling case for an increase in the bank rate. Weale joined hawk Andrew Sentance in calling for a rate hike at January's meeting of the Monetary Policy Committee. The British pound was also supported by cross-buying in sterling vs euro n yen as eur/gbp fell sharply fm 0.8619 to 0.8530 n gbp/jpy rallied fm 129.88 to 131.60.

    Versus the Japanese yen, the dollar dropped below Friday's 81.98 low to of 81.77 in NZ trading on renewed cross-buying in yen, lack of follow-through selling swiftly prompted short-covering n the pair then recovered to 82.26 b4 retreating to 81.91 in NY again on dlr's broad-based weakness.

    Data to be released on Tuesday:

    Australia RBA rate decision, NAB business confidence and house price index, Switzerland retail sales and PMI, German Manufacturing PMI, unemployment rate and unemployment change, eurozone Manufacturing PMI and unemployment, UK Manufacturing PMI and Mortgage approval, and U.S. construction spending and ISM manufacturing.

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  2. acetraderfx

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    Market Review - 01/02/2011 20:20 GMT

    The dollar falls as upbeat global manufacturing ISM data boosts risk appetite

    The greenback declined against most of its counterparts on Tuesday as the solid global manufacturing ISM data together with rallies in global stock markets bolstered risk appetite, dampening the demand for dollar as a safe-haven asset. Easing fears on Egypt's geopolitical concerns also helped support the higher-yielding currencies. The dollar index, which tracks the greenback against a basket of currencies, fell as low as 77.092, its weakest since early November.

    The U.S. manufacturing ISM index unexpectedly increased to 60.8 in January, the fastest pace in nearly seven years in January fm 58.5 in the previous month.

    Despite Monday's retreat fm 1.3740 to 1.3664, the euro ratcheted higher to 1.3776 in European morning on Tuesday n price later rallied after the release of U.S. ISM manufacturing data n price later climbed to as high as 1.3843 ahead of NY closing. The euro was also supported by strong economic data fm Germany n eurozone. German unemployment fell to an 18-year low at 7.4% in January, unemployment change showed the number of people out of work dropped to a seasonally adjusted 13k to 3.135 mln, the lowest lvl since November 1992. Both German n eurozone manufacturing PMI in Jan were better-than-expected at 60.5 n 57.3 respectively.

    Despite the retreat from Asian high of 1.6080, the British pound then jumped from 1.6035/37 to 1.6143 after the release of much stronger-than-expected U.K. Jan manufacturing PMI, the index came in at 62.0, the highest since survey began in 1992 compared to the previous reading of 58.3 n street forecast of 57.9. Cable later rose further in NY mid-day to an intra-day high of 1.6164 near NY closing.

    Versus the Japanese yen, the dollar remained under pressure in Asian n European sessions n despite a brief but sharp bounce to 81.91 after the release of U.S. manufacturing PMI, the pair then tumbled to as low as 81.31 on dlr's broad-based weakness in NY afternoon b4 trading sideways.

    Swiss National Bank vice-chairman Thomas Jordan said that Switzerland is well positioned to deal with challenges such as the strong Swiss franc, which is a big burden for the country's exporters. Although the dlr/chf pair bounced briefly but strongly to 0.9457 on reaction to the stronger-than-expected U.S. ISM manufacturing PMI data, dollar later pierced through Monday's 0.9369 low easily n dropped to an intra-day low 0.9337 b4 recovering in NY afternoon.

    The Australian dollar, New Zealand dollar n Canadian dollar also strengthened against the dollar on Tuesday, aud/usd rallied fm 0.9963 to 1.0149, nzd/usd rose strongly fm 0.7712 to 0.7824, n usd/cad tumbled fm 1.0010 to 0.9900.

    Data to be released on Wednesday:

    U.K. BRC shop price index and PMI construction, eurozone PPI data, and U.S. ADP employment on Wednesday.
     
  3. acetraderfx

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    Market Review - 04/02/2011 19:49 GMT

    Dollar rallies broadly on surprised sharp fall in U.S. unemployment rate


    The greenback rallied versus the Japanese yen on Friday as U.S. Treasury yields jumped after the key U.S. jobs report showed U.S. unemployment rate fell sharply in January to 9.0% versus previous month's rate of 9.4%, this was the lowest level since April 2009, painting a brighter picture for the U.S. economy.

    Although the pair dropped briefly below Tuesday's 81.31 low to 81.10 immediately after the mixed U.S. jobs report, dollar swiftly rebounded n price later rallied to as high as 82.47 b4 stabilizing in late NY session. The benchmark U.S. 10-year treasury yields rose 11 basis points at 3.655% n 30-year treasury yields went up to a high of 4.74%. Eur/jpy, aud/jpy, gbp/jpy also rallied fm 110.77 to 112.06, 82.61 to 83.51 n 130.83 to 132.75 respectively.

    Euro traded steadily after Thursday's selloff fm 1.3826 before key U.S. employment report in Asia on Friday. Although euro jumped to 1.3680 immediately after the much-awaited U.S. Jan jobs report showed nonfarm payrolls added only 36,000 jobs versus forecast of 108,000 due to the cold bad weather, traders quickly sold the single currency when they saw unemployment rate fell sharply from previous 9.4% to 9.0%, euro tanked to 1.3577 and eventually ratcheted lower to an intra-day low of 1.3543 b4 stabilizing.

    The British pound moved sideways in Asia n briefly rose to an intra-day high of 1.6173 after stronger-than-expected U.K. house prices data. U.K. house prices unexpectedly rose by 0.8% (forecast was no change) in Jan. but fell by 2.4% (forecast was -3.0%) in the three months to Jan. compared with a year ago. Halifax economist Martin Ellis expected limited movement in house prices overall this year but said there are likely to be some monthly fluctuations with the risk on the downside. Later, despite cable's initial rebound to 1.6152 after the release of mixed U.S. jobs data, the pound also tumbled to 1.6036 in tandem with the single currency b4 recovering in NY mid-day.

    Data to be released next week:

    Australia retail sales, Japan leading indicator, Germany factory order, Canada building permit on Monday

    Japan current account, economic watch DI, Swiss unemployment rate, Canada housing starts on Tuesday

    Japan consumer confidence, Germany export/import data n trade balance, U.K. trade balance on Wednesday

    Japan domestic CGPI, machine order, Swiss CPI, U.K. industrial production, manufacturing production, BoE rate decision, Canada new housing price, U.S. jobless claims, wholesales inventories, Fed budget on Thursday

    Friday will be a holiday in Japan. Germany CPI, U.K PPI, U.S. trade balance n University of Michigan consumer confidence survey, Canada trade balance n export/import data on Friday.

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    Market Review - 07/02/2011 20:38 GMT

    Euro rebounds from a two-week low on short-covering in New York


    The single currency was little changed on Monday as the continued rise in U.S. stocks together with short-covering lifted the euro fm a two-week low in New York afternoon trading.

    Although the single currency recovered to 1.3627 at European opening on Monday after Friday's sharp fall to 1.3543, euro then ratcheted lower to 1.3508 in NY morning, however, short-covering lifted the single currency in NY mid-day and extended intra-day rebound to 1.3600 in late NY session after the hawkish remarks fm Yves Mersh. Governing council member Yves Mersh was quoted as saying that the European Central Bank could raise interest rates to contain inflation even before it exited measures to support liquidity in the bloc. Earlier, the euro was pressured by the release of weaker-than-expected German December industrial orders, which came in at a decrease of 3.4% versus street forecast of -1.5% n the previous reading of 5.2%.

    In the other news, ECB chief Jean-Claude Trichet said that the European System Risk Board, ESRB, will single out problems bubbling in individual countries if they pose a risk to the wider system.

    Despite the British pound's rebound to 1.6186 in European morning after Friday's selloff to 1.6336, cable retreated in tandem with the single currency to 1.6090, however, cross buying in sterling especially versus the euro cushioned the pound's downside n price traded sideways in NY mid-day. Eur/gbp extended recent descent to as low as 0.8389 as the above-target Britain inflation pressures the BoE to raise interest rate this year.

    Versus the Japanese yen, the dollar was relatively quiet compared to Friday's rally fm 81.10 to 82.47 as the pair was confined inside intra-day narrow range of 82.16-82.48. Yields on U.S. 10-year notes increased as much as six basis points to 3.69 percent, the highest level since May 4. 30-year T-bond yields rose as much as four basis points to 4.76 percent, the highest since April 12.

    Data to be released on Tuesday:
    Japan current account, economic watch DI, Swiss unemployment rate, Canada housing starts.
     
  5. acetraderfx

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    Market Review - 08/02/2011 20:07 GMT

    Euro rises on active cross buying


    Euro rose in volatile trading on Tuesday. Although euro ratcheted higher from Asian low of 1.3573 to 1.3667 in European morning, the single currency retreated after the release of much lower-than-expected German industrial production, which came in at -1.5% m/m n 10.00 y/y in December versus the previous readings of -0.7% n 11.1% respectively, however, active cross buying in euro vs Swiss franc (Eur/chf rallied fm 1.2974 to 1.3147) lifted price from around 1.3614 and eur/usd later rose to a high of 1.3689 before retreating again in New York mid-day.

    The British pound was under pressure on Tuesday. Cable fell from a high of 1.6163 to as low as 1.6027 on active cross-selling in sterling versus euro (the eur/gbp cross pair rose strongly from 0.8420 to 0.8509), cable then rebounded to 1.6100/05 in tandem with euro in New York mid-day on short-covering. Earlier, the British pound was sold after U.K. raised bank levy. The U.K. government said that it will increase a tax (an extra 800 million pounds) on banks aiming to reduce its fiscal deficit from an estimated 10% of GDP in the year through March to 1.9% five years from now.

    Versus the Japanese yen, dollar went through a roller-coaster session on Tuesday, the pair fell to 81.99 ahead of European opening n despite later staging a moderate recovery, the greenback extended intra-day decline to 81.77 in NY morning, however, the sharp rise in U.S. treasury yields together with dollar-positive remarks fm the Fed governors pushed price sharply higher in late NY trading n the pair eventually rose strongly to 82.43 b4 stabilising.

    Dennis Lockhart, the president of the Federal Reserve Bank of Atlanta told reporters that 'if the economy stays on the track that his forecast suggests, further QE will not be needed'; 'there wud be a high bar to raise the $600 billion bond buying program'.

    In other news, China raised interest rates by 25 basis points. Benchmark one-year deposit rates n one-year lending rates will be lifted by 25 basis points to 3% n 6.06% respectively effective fm Feb. 9.

    Data to be released on Wednesday:

    Australia W'pac consumer confidence, Japan consumer confidence, Germany export/import data n trade balance, U.K. BRC shop price index, trade balance.

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    Market Review - 09/02/2011 20:10 GMT

    Euro rises as Fed's Bernanke expects U.S. unemployment rate remains high


    Euro rose on Wednesday after Federal Reserve Chairman Ben Bernanke reiterated U.S. unemployment would remain high together with the fall in U.S. Treasury yields.

    Although euro retreated after recovering fm Asian low of 1.3613 to 1.3663 n price fell to an intra-day low of 1.3610 in reaction to the news that Bundesbank chief Axel Weber is not a candidate to succeed European Central Bank President Jean-Claude Trichet, the single currency later rebounded strongly in NY morning after Federal Reserve Chairman Ben Bernanke started speaking n euro eventually climbed to as high as 1.3745 in late NY session on dlr's broad-based weakness.

    Federal Reserve Chairman Ben Bernanke testified at the House Budget Committee and said U.S. unemployment rate remains too high for policymakers' comfort despite signs of strength in the economic recovery. Bernanke repeated overall inflation 'quite low' n added longer-term inflation expectations have remained stable.

    The British pound ratcheted high fm Asian low of 1.6050 to 1.6101 in European morning n although cable retreated to 1.6032 after the release of the biggest deficit on record, price then rebounded strongly to 1.6125 in tandem with the euro in NY morning b4 trading sideways. U.K. global goods trade balance came in at -9.247 bln pounds in December, the biggest deficit on record, against the economists' forecast of -8.60 bln pounds n revised reading of -8.46 bln pound in November. U.K. global non-EU goods trade balance was at -5.82 bln pounds in December, also the biggest deficit on record.

    Versus the Japanese yen, the dollar went through another day of choppy trading on Wednesday, price initially ratcheted higher fm Asian low of 82.25 to 82.68 in European morning but selling interest there knocked the usd/jpy pair down n although the greenback rebounded in NY mid-day, the pair then fell to a low of 82.20 in late NY session on dlr's broad-based weakness as U.S. bond yields fell after a solid $24 billion auction of 10-year Treasury notes. Ten-year Treasury note yields were down fm around 3.7% to 3.64%.

    Data to be released on Thursday:

    Japan domestic CGPI, machine order, Australia unemployment n employment change, Swiss CPI, U.K. industrial production, manufacturing production, BoE rate decision, Canada new housing price, U.S. jobless claims, wholesales inventories, Fed budget.

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    Market Review - 10/02/2011 20:14 GMT

    Euro tumbles on much lower-than-expected U.S. weekly jobless claims data

    The dollar rallied broadly (except vs the British pound) on Thursday after U.S. weekly jobless claims fell to a 2-1/2 year low last week.

    U.S. weekly jobless claims last week dropped to 383,000 versus the expectation of 410,000.

    In sharp contrast to the previous session, euro was under heavy selling pressure throughout the day in Asia, Europe and U.S. session on Thursday. Euro continued its intra-day decline in NY morning after the release of much lower-than-expected U.S. weekly jobless claims, the single currency eventually tumbled to a low of 1.3577 b4 recovering on short-covering. The pair was also weighed down by the lingering eurozone debt woes as Portugal is considered at risk of becoming the next eurozone periphery country to need a bailout. European leaders will meet next month to discuss bolstering a 440-billion euro fund.

    In the other news, sources quoted as saying that Bundesbank chief Axel Weber will meet German Chancellor Angela Merkel on Friday.

    The British pound ratcheted lower fm Asian high of 1.6111 n price was under pressure in European session on Thursday. Later, despite extending intra-day decline to 1.6011 in NY morning, cable then staged a strong rebound in NY mid-day to 1.6139 on active short-covering together with aggressive cross-buying in sterling, eur/gbp tumbled fm 0.8529 to 0.8444 n gbp/jpy rallied fm 132.54 to 134.26.

    BoE's Monetary Policy Committee kept interest rate unchanged at 0.5% as widely expected and maintained its asset purchase program at 200 bln pounds.

    Versus the Japanese yen, the dollar maintained a biddish tone in Asian n European sessions on Thursday and intra-day upmove accelerated in NY morning. The greenback eventually climbed to a high of 83.37 b4 stabilising in late NY trading.

    Friday will be a holiday in Japan

    Data to be released on Friday:
    Germany CPI n WPI, U.K PPI, U.S. trade balance n University of Michigan consumer confidence survey, Canada trade balance n export/import data.

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    Market Review - 11/02/2011 20:07 GMT

    The dollar rises broadly despite Egyptian Hosni Mubarak's resignation as president


    The U.S. dollar strengthened versus most of its counterparts on Friday even though Egyptian Hosni Mubarak finally resigned his post as president. The dollar index, which tracked the greenback against a basket of currencies, was up 0.3% at 78.508. Usd/jpy rose to a one-month high of 83.68 (just 2 pips shy of Jan 07 high) while usd/chf also climbed strongly fm 0.9679 to 0.9776 on Friday.

    Egypt's Vice President Omar Suleiman said in a television statement that 'President Hosni Mubarak had bowed to pressure fm the street and has resigned, handing power to the army.' In addition, a military source was quoted as saying that Egypt's defence minister Mohamed Hussein Tantawi is the head of the Higher Military Council that took control of Egypt after Hosni Mubarak resigned as president.

    Euro remained under heavy selling pressure on Friday after meeting renewed selling at 1.3621 in Asian morning, price continued to fall in Europe. The single currency later dropped below Monday's 1.3508 low to 1.3505 in NY morning. Although the pair managed to recover to around 1.3570/72 on short-covering together with the knee-jerk reaction after the news on Egypt's President Mubarak's resignation, another round of selling interest there pushed price to a fresh intra-day marginal low of 1.3497 b4 recovering in late NY trading on short-covering.

    In other news, a spokesman for German Chancellor Angela Merkel said Axel Weber will step down as head of Bundesbank with effect fm April 30 after they met together with Finance Minister Wolfgang Schaeuble. The spokesman also said a decision on Weber's successor will be announced next week.

    The British pound also tumbled on Friday after meeting renewed selling at Asian high of 1.6115, price then fell sharply to 1.5963 in European mid-day after triggering large stops below 1.6110/00. However, cable then recovered in tandem with the single currency later in the NY session.

    On the data front, Germany's consumer price index came in at -0.4% m/m n 2.0% y/y versus the economists' forecast of -0.5% m/m n 1.9% y/y respectively. U.K. producer price index rose by 1.0% m/m n 4.8% y/y in Jan., the highest annual rate since May 2010, versus the economists' expectation of 0.5% m/m n 4.4% y/y respectively. The core PPI came in at 0.7% m/m n 3.2% y/y against the expectation of 0.3% n 3.0%. U.S. trade deficit was 40.58 bln in December versus the economists' forecast of 40.40 bln and previous reading of 38.32 bln in November. U.S. University of Michigan consumer sentiment rose to 75.1 (forecast was 75.0) in February versus previous reading of 74.2 in January.

    Data will be released next week:

    New Zealand retail sales, Japan GDP, eurozone, industrial production, U.S. NAHB on Monday

    Japan capacity utilisation, U.K. DCLG house price, CPI, RPI, eurozone trade balance, GDP, Germany GDP, Zew index, U.S. Empire state manufacturing index, import/export price index, retail sales, net LT TIC flows, foreign treasury buys, business inventories on Tuesday.

    U.K. nationwide consumer confidence, claimant count, ILO unemployment rate, avg. earning, Canada leading indicator, U.S. housing starts, PPI, capacity utilisation, industrial production on Wednesday.

    Swiss ZEW index, U.K. CBI orders, CPI, U.S. CPI, jobless claims, eurozone consumer sentiment, U.S. real earnings, leading indicators, Philadelphia Fed survey on Thursday.

    Germany PPI, U.K. retail sales, Canada CPI on Friday.

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  9. acetraderfx

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    Market Review - 14/02/2011 19:13 GMT

    Euro hits a three week low versus dollar on WestLB rescue hitch


    The single currency pared its initial intra-day gain against the greenback in European session on Monday and fell from 1.3559 to a three-week low of 1.3428 in early New York trading as concerns over the eurozone debt concern heightened ahead of peripheral bond auctions in Spain and Italy this week after a source told Reuters that German bank WestLB was struggling to come up with a rescue deal ahead of presenting a restructuring plan to the European commission. Source quoted that saving banks are so far blocking the WestLB rescue.

    However, short-covering in euro lifted price from 1.3428 and eur/usd later rebounded to 1.3506 before retreating near New York closing. Euro cross-pairs also tumbled on increasing risk aversion and eur/jpy, eur/chf and eur/gbp fell fm session highs of 112.95, 1.3203 and 0.8448 to as low as 112.09, 1.3053 and 0.8399 respectively before staging a recovery in New York.

    In other news, Reuters reported German Finance Minister Wolfgang Schaeuble said there was no need to boost the firepower of the eurozone rescue fund and that discussion of the matter was fuelling market speculation over the finances of eurozone countries.

    The British pound also weakened versus the US dollar and cable tumbled from session high of 1.6080 to 1.5982 in U.S. morning, near Friday's European low of 1.5963 and then traded in a volatile manner later in the day after Moody's downgraded various Irish covered bonds.

    The euro-led decline also pressured the other higher-yielding currencies and the Australian dollar and New Zealand dollar fell from intra-day high of 1.0075 to 1.0003 and from 0.7620 to 0.7545 versus the US dollar respectively before stabilising.

    On the data front, economy in Japan shrank slightly in the final quarter of 2010 as GDP in Q4 showed an annualised contraction of 1.1% versus expansion of 4.5 percent in previous reading, the data also confirmed that Japan lost its place to China last year as the world's second-largest economy and highlighted Tokyo's increasing reliance on its giant neighbour. Other data reported that eurozone industrial production in December dropped 0.1 percent M/M and increased 8.0% Y/Y compared to consensus forecast of a decrease of 0.5 percent and a rise of 8.8 percent respectively.

    Economic indicators to be released on Tuesday includes:

    Australia RBA's Board February Minutes, Japan Capacity utilization, industrial production, machine tools orders and Bank of Japan rate decision, German GDP data and ZEW index, UK DCLG house prices, CPI and RPI data, eurozone GDP data and trade balance, and US Empire state manufacturing, retail sales, import price index, export price index, Net LT TIC flows, Foreign treasury buys, NAHB housing market index and Business inventories.

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    Market Review - 15/02/2011 19:36 GMT

    Cable rallies on Tuesday on future rate hike expectation

    The British pound rose broadly on Tuesday as rate hike expectation increased after U.K. data showed a thirteenth consecutive month of inflation rate which was above the upper target of the Bank of England (BoE). UK CPI rose to 4.0 percent (y/y) in January from 3.7 percent in December, in line with economists' consensus forecast but double of the BoE target rate. The persistently high inflation in Britain forced BoE Governor Mervyn King to write a letter to Chancellor of Exchequer George Osborne.

    In the written explanation of its position on higher prices, BoE Governor Mervyn King, on the whole, sticks to his view that prices would rise more and that the Central bank will act as needed on rates. He also said there was uncertainty about the medium-term outlook and differences of views on the Monetary Policy Committee about the balance of risks but that members were determined to act if necessary. In reply to King's letter, Osborne said he welcomed the MPC's determination to act to keep inflation in check if needed.

    The British pound rebounded strongly from session's low of 1.6008 in Europe after the release of CPI data and despite initial knee-jerk movement, price subsequent rallied above Monday's top of 1.6080 and touched a high of 1.6172 in early New York trading before easing on some profit taking. The pound also strengthened against the euro and Japanese yen, and eur/gbp dropped to a four-week low of 0.8357 whilst gbp/jpy surged to a six-month high of 135.46.

    The intra-day rally in cable also pushed the single currency higher against the dollar and eur/usd rose to a high of 1.3551 in New York before dropping again on renewed cross-selling in euro. Eur/chf penetrated Monday's low of 1.3053 to a session low of 1.3037 while eur/jpy was off from its session high of 113.40 to trade around 113.10/20 level ahead of New York closing.

    Higher US treasury yields increased the appeal of the dollar versus the yen in recent weeks and the greenback rose above January's high of 83.70 against the Japanese yen to a session's high of 83.93 before easing on lower-than-expected US retails sales, while dollar dropped to a low of 0.9650 against the Swiss franc on active cross-buying.

    On the data front, US retail sales rose less than forecast in January, increased 0.3 percent against the economists' expectation of a rise of 0.6 percent and 0.6 percent gain in December. The sales data suggested winter snowstorms may have played a role in the slowdown as Americans stayed away from restaurants and home-improvement stores. Business inventories in December rose to 0.8 percent from 0.2 percent in previous month and compared to expectation of an increase of 0.6 percent, while the National Association of Home Builders/Wells Fargo said its sentiment index registered a reading of 16 in February for the fourth consecutive month, in line with the median forecast of economists.

    Economic indicators to be released on Wednesday includes:

    Australia Westpac leading economic index, Japan Tertiary industry index and Bank of Japan monthly economic report, UK Claimant count, ILO unemployment rate, average earnings and Band of England quarterly inflation report, and US building permits, housing starts, PPI data, Capacity utilisation, industrial production and FOMC minutes of January 25-26 meeting.

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    Market Review - 18/02/2011 20:16 GMT

    Euro rallies as ECB official Lorenzo Bini Smaghi signals ECB may hike rates due to inflation pressures


    Euro rallied broadly on Friday after Lorenzo Bini Smaghi, an European Central Bank Executive Board member, signaled the European Central Bank may need to raise rates earlier than expected.

    Lorenzo Bini Smaghi told Bloomberg in an interview that as the economy gradually recovers n global inflationary pressures arise, the degree of accommodation of monetary policy has to be monitored and, if needed, corrected'. He added that 'it is a key challenge for monetary policy is to avoid spill overs from commodity prices; this requires the ability to take pre-emptive actions if needed'.

    Although the euro ratcheted lower fm Asian morning high of 1.3629 to a intra-day low of 1.3545 in European afternoon after PBOC raised banks' reserve-requirement ratio by 50 basis points on Friday, the single currency jumped fm there on the hawkish remarks fm Lorenzo Bini Smaghi. Price later extended this week's rise fm 1.3428 to as high as 1.3716 in late NY trading. Cross-buying in euro vs jpy, gbp n chf also supported the single currency as eur/jpy rose sharply fm 112.94 to 113.84, eur/gbp rallied fm 0.8359 to 0.8435 n eur/chf rebounded strongly fm 1.2896 to 1.2991.

    Japanese Finance Minister Yoshihiko Noda said the country intended to continue buying bonds issued by the European Financial Stability Facility as a stable investor.

    The British pound also strengthened on Friday as U.K January retail sales rebounded far more than expected, fueling speculation that BoE might be forced to hike rate in coming months. Despite trading sideways in Asian session, cable jumped fm 1.6148 after the release of much higher-than-expected U.K. retail sales data which came in at 1.9% m/m n 5.3% y/y in Jan. versus the economists' forecast of 0.5% m/m n 4.0% y/y respectively. The pound eventually climbed to a high of 1.6264 in NY mid-day in tandem with euro.

    China raised banks' official reserve-requirement ratio by 50 basis points to a record 19.5%, starting Feb. 24 on Friday. PBoC Governor Zhou Xiaochuan said policymakers may also use mean 'including rates n currency' to tackle inflation in an interview in Paris.

    A G-20 source quoted by Reuters as saying that Group of 20 negotiators have failed to reach agreement of a list of indicators by which to measure imbalances in the global economy n will leave it up to their finance ministers to try n seal a deal on Saturday.

    Data will be released next week:

    U.K. Rightmove house price, Germany manufacturing n service PMI n Ifo index, U.S. will be closed for President's day on Monday.

    Germany Gfk index, Swiss trade balance, U.K. PSNCR, PS net borrowing, Canada retail sales, U.S. S&P/ Case-Shiller home price index, consumer confidence, Richmond Fed manufacturing index on Tuesday.

    Japan import/export data, trade balance, Swiss combined PPI, BoE MPC minutes, eurozone industrial orders, U.S. existing home sales on Wednesday.

    Germany GDP, eurozone business climate, industrial, economic, consumer sentiment, U.K. CBI distribution trade, U.S. durable goods order, jobless claims, new home sales on Thursday.

    Japan National CPI, U.K. Gfk survey, Germany HICP n CPI, U.K. GDP, U.S. GDP, PCE core n University of Michigan consumer confidence survey on Friday.

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  12. acetraderfx

    acetraderfx Content Contributor <img src="http://www.einvestor

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    Market Review - 21/02/2011 16:01 GMT

    Dollar n yen strengthen on the escalation of geopolitical tensions in the Middle East and Libya


    The dollar n the Japanese yen strengthened on Monday as violence in Libya n the Middle East increased demand for both currencies as safe-haven assets.

    Although euro's breach of Friday's top of 1.3716 to a marginal high of 1.3727 in NZ trade on Monday, the single currency ratcheted lower in Asia due to the escalation of geopolitical tensions in the Middle East and Libya. Later, despite staging a brief recovery abv 1.3700 after the release of much stronger-than-expected German Ifo index, renewed selling at 1.3709/10 capped the pair's upside and the euro eventually weakened to an intra-day low of 1.3647 in late European session with financial markets in U.S. and Canada closed for holiday on Monday.

    German business confidence rose for the ninth month in a row to a record high of 111.2 in February fm the reading of 110.3 in January. German manufacturing PMI in February also came in better-than-expected at 62.6 vs forecast of 60.3 n the reading of 60.5 in January.

    The British pound also fell on Monday due to dlr's broad-based rebound. Cable ratcheted lower fm Asian morning high of 1.6263 (1 pip shy of last Friday's 1.6264 high) n price later dropped to 1.6205 in European mid-day b4 staging a recovery after mildly hawkish remarks fm MPC Martin Weale who joined BoE hawk Andrew Sentance last month in voting for a 25 b.p. rise in the U.K. official interest rates.

    Martin Weale was quoted on Reuters as saying that 'rising inflation matters a lot as expectation may get built into wage demands; raising interest rate in short term would not bring CPI rapidly back to target; perfectly possible that small rate rise now would stop bigger rise later.'

    Despite the dlr/jpy pair's recovery fm 83.01 (AUS) to 83.27, the Japanese yen strengthened on crosses on Monday as eur/jpy, aud/jpy n gbp/jpy fell fm 113.98 to 113.57, 84.35 to 83.91 n 135.17 to 134.72 respectively.

    Data to be released on Tuesday:

    Germany Gfk index, Swiss trade balance, U.K. PSNCR, PS net borrowing, Canada retail sales, U.S. S&P/ Case-Shiller home price index, consumer confidence, Richmond Fed manufacturing index.

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  13. acetraderfx

    acetraderfx Content Contributor <img src="http://www.einvestor

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    Market Review - 23/02/2011 20:08 GMT

    Euro strengthens to a 3-week high on ECB rate hike outlook


    Euro rose to a 3-week high on Wednesday on speculation that ECB may hike interest rates earlier than the Fed after recent hawkish comments fm ECB officials Yves Mersch n Lorenzo Bini Smaghi. The single currency extended Tuesday's rise and ratcheted higher in Asia, intra-day upmove accelerated after the mixed U.S. existing home sales data. Price eventually pierced through 1.3745 (9 Feb) resistance n climbed to a 3-week high of 1.3787 in New York trading before retreating on profit-taking.

    U.S. existing home sales rose by 2.7% to 5.36 mln unit annual rate in Jan. versus expectation of a drop of 2.1% to 5.24 mln unit annual rate. U.S. Jan National median price for existing home sales fell by 3.7% m/m to US$ 158,800, the lowest since April 2002.

    The British pound was little changed on Wednesday. Although cable rallied in tandem with euro in Asian session n intra-day rise briefly extended to 1.6275 after the release of BoE minutes of the meeting held on 9 & 10 February, failure to penetrate previous resistance at 1.6279 (3 Feb.) prompted investors to take profit and price later retreated to 1.6180 in NY trading on cross selling in sterling esp. versus euro as eur/gbp pair strengthened fm 0.8422 to 0.8495.

    The minutes of the BoE showed that Spencer Dale joined Andrew Sentance n Martin Weale to vote for a hike in Bank rate, Andrew Sentance preferred to increase by 50 points while Spencer Dale n Martin Weale preferred to increase by 25 basis points. The minutes also stated that only Adam Posen (Deputy Governor) was in favour of increasing the size of the asset purchase programme by 50 billion pounds to a total of 250 billion pounds.

    The Swiss franc, the traditional safe-haven asset, rose to 2011 high of 0.9307 (6 pips shy of its lifetime high of 0.9301 made on December 31, 2010) against the dollar on Wednesday as the continued political violence in Libya drove U.S. oil surging to $100 per barrel, fanning concerns about inflation and its impact on the global economy.

    Data to be released Thursday include:

    Germany GDP, eurozone business climate, industrial, economic, consumer sentiment, U.K. CBI distribution trade, U.S. durable goods order, jobless claims, new home sales.

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