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Daily FX Market Outlook by AceTrader-5-1-2011

Discussion in 'Forex Daily News & Outlook' started by acetraderfx, Jan 4, 2011.

  1. acetraderfx

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

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    Market Review - 04/01/2011 21:21 GMT

    Dollar rises on upbeat US economic data


    The dollar recovered from 3-week low against euro on Tuesday as robust U.S. economic data suggested the U.S. economy was gaining strength and bolstered the greenback's appeal. US factory orders unexpectedly rose by 0.7% in November versus the forecast of decrease of 0.1%. Durable goods excluding transportation also recorded their largest gain in eight months and came in at 3.6%.

    The greenback rose sharply against the Japanese yen from Tokyo low of 81.61 to 82.28 in early European trading on heavy unwinding of recent long yen positions. Although the pair stage a pullback to around 81.68 in NY session, the pair rebounded and edged up in late NY trade.

    In other news, FOMC meeting minutes showed Fed officials still expected gradual pickup in economic growth and slow job gains. While outlook was seen improving, it was not enough to warrant adjustments to $ 600 billion bond buying program. FOMC participants also anticipated inflation would remain below levels consistent with mandate for some time. Prices of some commodities and goods have risen but businesses mostly were unable to pass such increases on to customers. Fed staff revised up near term GDP increase but medium term outlook was little changed.

    The single currency weakened to 1.3324 ahead of European opening on talk of euro-selling in related to German and Austrian bond redemptions/coupon, however, euro staged an intra-day rally to a 3-week high 1.3435 on buying by Asian central banks. The single currency later retreated sharply from there and tumbled to 1.3292 in NY session after the release of a series of upbeat U.S. economic indicators.

    On economic front, German unemployment in December unexpectedly rose for the 1st time since June 09' (actual unemployment change was +3k vs forecast of -15k) as the coldest weather in more than 40 years led companies to lay off staff.

    Despite sideways movement in Asia, the British pound jumped in London trading on early buying by Asian central bank near 1.5480/90, such action triggered intra-day short-covering and sent cable sharply higher and the release of stronger-than-expected U.K. Dec Manufacturing PMI (actual 58.3 vs forecast of 57.0), the highest index in 16 years, pushed the pound to as high as 1.5646 before easing.

    Economic indicators to be released on Wednesday include:

    Germany Services PMI, EU Service PMI and PPI and Industrial orders, U.K. Construction PMI, U.S. ADP employment and ISM Non-manufacturing.

    Market would focus on Portugal's sales of 6-month Treasury bills on Wednesday.

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  2. acetraderfx

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

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    Market Review - 06/01/2011 21:36 GMT

    Euro falls below $1.30 level to a 5-week low against dollar


    The single currency tumbled to a five-week low against the dollar on Thursday as the recent release of upbeat U.S. economic data painted a rosier picture of the US economy while worries over the European sovereign debt crisis continued to pressure euro. Traders would pay attention to the release of U.S. non-farm payroll data due out on Friday following the strong ADP jobs data released earlier this week.

    The single currency remained under pressure after meeting renewed selling at 1.3170 in Asian morning on lingering concerns over European sovereign debt crises. Price eventually edged lower and once fell below 1.3000 level and reached 1.2997 in NY before recovery.

    In other news, the Daily Telegraph reported that the European Commission would discuss a plan to spread the cost of bank failures to senior bond holders. Bloomberg also reported that the EU might give regulators power to block new products and limit trading risks at banks deemed too big to fail.

    The spreads between peripheral eurozone government bond yields and German debt widened on Thursday as driven by gains in Portuguese yields following Portugal's debt agency said it would issue a total of between 750 million euros and 1.25 billion euros in two bond maturities at an auction on Jan 12.

    The greenback traded narrowly against the Japanese yen after marginal rise above Wednesday's high of 83.38 to 83.40 at Tokyo opening. The greenback retreated from there and then edged lower to 82.88 but the pair managed to rebound and spent the rest of the day inside the range of 82.88-83.40 as traders waited for the release of US non-farm payroll data on Friday.

    The British pound initially edged higher in Asia but cable fell immediately after the release of a surprise sharp fall in December U.K. PMI Services index, which actually came in at 49.7 vs forecast of 52.8. The index dropped below the 50.0 mark to a 20-month low, analysts attributed this sharp drop to the severe wintry conditions which hit the U.K. last month. Sterling declined from London morning high of 1.5564 after the data and eventually fell to 1.5450 in NY.

    Economic indicators to be released on Friday include:

    Swiss Unemployment rate, Germany trade data and Industrial production, EU GDP, US non-farm payrolls and jobs data.
     
  3. acetraderfx

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

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    Market Review - 07/01/2011 18:57 GMT

    Euro tumbles to 4-month low despite weaker-than-expected U.S. payrolls report


    The single currency fell broadly on Friday as renewed euro zone sovereign risk pressured the euro. Although eur/usd managed to stage a strong rebound from 1.2945 to 1.3020 after release of weaker-than-expected December U.S. non-farm payroll data, the pair swiftly dropped again in New York as U.S. unemployment rate unexpectedly fell to its lowest level in 19 months, offsetting initial disappointment in US jobs market, the single currency later tumbled to a 4-month low of 1.2906 before stabilising.

    U.S. non-farm payroll came in an increase of 103,000 in December against the consensus forecast of +175,000 and +39,000 in November, while the U.S. unemployment rate unexpectedly dropped to 9.4% in December from 9.8% in previous month.

    Versus other currencies, the euro tumbled to 4-month lows of 0.8299 and 106.94 against the British pound and Japanese yen respectively on Friday, while eur/chf also fell to near its all time low of 1.2398 (Dec 30) to 1.2450 in New York afternoon.

    Cable fell initial to 1.5407 in Europe on broad-based firmness in greenback, however, active cross-buying in sterling versus the euro lifted the pair there on speculation that UK economy will outperform the common currency bloc and sterling later rallied in U.S. session after release of weaker-than-expected U.S. non-farm payroll data and touched a session high of 1.5579 before easing.

    The dollar weakened against the Japanese yen after the release of U.S. jobs reports and usd/jpy pared its intra-day gain and dropped sharply from 83.70 to 82.90 in New York on fall in U.S. Treasury yields.

    Earlier, ECB President Trichet said on Friday that he saw no danger of inflation taking off in euro zone, and he also called for governments to consolidate their finance and added the European Union budget rules should not be stricter than those proposed by the Commission. He also added that the bond purchase was part of efforts to stave off Europe's debt crisis and to get the markets back into order and most economists believed the ECB was focusing its purchases almost exclusively on euro zone debt trouble spots Ireland, Greece and Portugal.

    Federal Reserve Chairman Bernanke testified before the senate budget committee on Friday and said that decline in the unemployment rate would be likely to be slow even with a pickup in U.S. growth this year, signaling no change in the central bank's monetary stimulus.

    Markets in Japan will be closed on Monday due to 'Coming of Age Day' holiday.

    Economic indicators to be released next week include:

    New Zealand trade data, Australia retail sales, Switzerland retail sales, Canada building permits on Monday; Japan current account and leading indicators, UK RICS house prices, Australia trade balance, Canada housing starts and US wholesale inventories on Tuesday; Japan machine orders, trade balance and Economic watch DI, UK trade balance, Canada new housing price index, and US export price index and Fed budget on Wednesday; UK industrial production, manufacturing and Band of England rate decision, Canada trade data, and US trade balance, jobless claims and PPI on Thursday; and Japan Domestic CGPI, Germany CPI final and HICP final, Switzerland Combined PPI, UK PPI and CPI, and US retail sales, real earnings, industrial production, capacity utilisation and business inventories on Friday.

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  4. acetraderfx

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

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    Market Review - 10/01/2011 21:47 GMT

    Euro recovers from 4-month low on short-covering


    The single currency extended last week's selloff to a fresh four-month low at 1.2860 (NZ) on Monday due to lingering eurozone sovereign debt crisis after a senior eurozone source said on Sunday that pressure was growing on Portugal from Germany, France and other eurozone countries to seek financial help from the EU and IMF, however, a Portuguese government spokesman later denied a German magazine report that Lisbon was under pressure from Berlin and Paris to seek a bailout. Euro recovered from said intra-day low and reached 1.2965 in NY on short-covering.

    In addition, a French government source said 'it's nonsense to say France, Germany pressuring Portugal to take aid.' German Chancellor Angela Merkel also said Germany was not trying to force Portugal to accept a EU bailout and would not do so in the future.

    In other news, Greece is set to sell 1.5 billion euros (US$ 1.94 billion) of short-term debt on Tuesday and Portugal will sell as much as 1.25 billion euros in government bonds on Wednesday, followed by Spanish and Italian bond sales on Thursday.

    The greenback recovered from last Friday's NY low 82.85 against the Japanese yen and reached 83.30 in NZ, however, price retreated from there and edged lower to 82.66 in NY session.

    Minneapolis Fed President Narayana Kocherlakota said 'sees U.S. GDP growth of 3-3.5% in 2011; sees inflation rising 1.5-2% in 2011'; he said bar would be very high for him to support stops to bond buying program. Kocherlakota added that 'unemployment rate between 6.5-8% is range that could lead to inflationary pressures'; he expected U.S. unemployment rate declining to close to 9% by end-2011, staying above 8% through 2012.

    Atlanta Federal Reserve Bank President Lockhart said US economy gained durable momentum and Fed's QE helped. Friday's job report confirmed economy is moving forward at modest pace with labor market improving. There was little sign of inflationary pressures and household deleveraging to continue in 2011.

    The British pound briefly retreated to 1.5505 (NZ) but cable rebounded in tandem with euro and reached 1.5569 in Asian morning. Although price fell sharply to 1.5475 later, cable rebounded strongly and rose sharply to 1.5604 in NY session as cross-buying in pound provided support to cable. Eur/gbp weakened to near 4-month low of 0.8285 before staging a recovery.

    Earlier in London morning, cable tanked after U.K. Halifax house price in December fell more than street forecast, came in at -1.3% m/m vs forecast of -0.4% m/m , recording the largest decline in 3 months.

    Economic indicators to be released on Tuesday include:

    Japan leading indicators, UK RICS house prices, Australia trade balance, Canada housing starts and US wholesale inventories.

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  5. acetraderfx

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

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    Market Review - 11/01/2011 21:40 GMT

    Euro edges higher before Portugal's debt auction


    The euro ratcheted higher against the dollar on Tuesday due to short-covering as traders became cautious ahead of a heavy schedule of debt issuance by southern European countries this week. Traders would pay attention to Portugal's debt auction on Wednesday and the country will sell up to 1.25 billion euros of bonds, followed by Spanish and Italian bond sales on Thursday.

    Euro was supported as Japan's Finance Minister Yoshihiko Noda said Japan will buy euro bonds to help boost trust in European Financial Stability Facility (EFSE) scheme while eurozone sources said the finance ministers of the region would be likely to consider the option of raising the effective lending capacity of the zone's rescue fund as part of efforts to calm sovereign debt markets. Market speculation of increased Portuguese bond buying by ECB also lifted the single currency. Although the single currency retreated to 1.2904 from Asian high of 1.2992, the euro later edged higher to 1.2994 in NY.

    In other news, Portuguese Prime Minister Jose Socrates echoed earlier comments by his finance minister Santos and said in a speech in Lisbon that Portugal wouldn't need a bailout from the EU and its 2010 budget deficit would be lower than forecast, he also added rumours that the country needed aid are only helping 'speculators' while hurting Portugal and the euro.

    The greenback rose from 82.68 against the Japanese yen in Asian morning and although the pair staged a pullback, renewed buying interest at 82.90 lifted up the pair and dollar reached 83.50 in NY before retreating.

    Minneapolis Federal Reserve Bank President Narayana Kocherlakota said this would not be the time to start tightening policy now. He added 'if U.S. Fed haven't started to consider tightening by end-2011, it may need to start considering by 2012.' In other news, U.S. sold $32 billion 3-year notes at high yield 1.027% with a bid-to-cover ratio at 3.06.

    The British pound initially edged lower and dipped to 1.5513 in Europe after U.K.'s BCC warned that Britain's economic recovery was risking a setback in Q4, 2010, however, cable rebounded strongly from there and rose to 1.5640 in NY before moving sideways.

    Economic indicators to be released on Wednesday include:

    Japan trade balance and Economic watch DI, UK trade balance, Canada new housing price index, and US export price index and Fed budget.
     
  6. acetraderfx

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

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    Market Review - 13/01/2011 21:53 GMT

    Euro surges broadly on short-covering due to Trichet's hawkish comments


    Euro rose sharply across the board on Thursday after head of ECB Trichet expressed concerns about inflation. Traders bought the single currency aggressively on short-covering following his hawkish comments.

    Although the single currency staged a pullback to 1.3088 in European morning, euro then staged a spectacular rally on hawkish remarks by ECB President Jean-Claude Trichet at the ECB press conference after ECB kept benchmark interest rate unchanged at 1.00% as expected. Trichet said 'euro zone inflation was somewhat higher than expected in Dec., could temporarily increase further; risks to inflation outlook are still broadly balanced and risk could move to the upside.'

    Trichet's comments triggered broad-based short-covering in euro, the single currency eventually climbed to 1.3383 versus the dollar. Cross-buying in euro also helped price as eur/jpy surged to 110.67 from 108.72, eur/chf rallied to 1.2885 from 1.2686 and eur/gbp rose to 0.8443 from 0.8314.

    In other news, the much-awaited Spanish bond auction ended successfully as demand was strong with a bid-to-cover ratio of 2.6 vs previous 1.6 in Nov 2010, however, Spain had to pay 4.542% interest for its 5-year debt vs previous rate of 3.576%.

    The greenback initially rose to 83.15 against the Japanese yen in Asia, however, the pair fell sharply to 82.55 in NY session before recovery. The greenback was pressured as U.S. initial jobless claims came in at 445,000, much higher than the forecast of 405,000 and the previous reading of 409,000.

    Despite the British pound's initial dip to 1.5719, cable later rose sharply in tandem with euro and climbed to 1.5885 before retreating. On economic front, U.K. Nov manufacturing production came in at 0.6% vs forecast of 0.4%, Nov industrial production was weaker than expected, actual 0.4% vs forecast of 0.5% (British industrial output grew at its slowest annual pace since July). Later, BOE kept key interest rate unchanged at 0.50% and asset purchase target remained at 200 billion.

    Economic indicators to be released on Friday include:

    Japan Domestic CGPI, Germany CPI final and HICP final, Switzerland Combined PPI, UK PPI and CPI, and US retail sales, real earnings, industrial production, capacity utilisation and business inventories.

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