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Daily FX Market Outlook by AceTrader-March

Discussion in 'Forex Daily News & Outlook' started by acetraderfx, Mar 1, 2011.

  1. acetraderfx

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    Market Review - 01/03/2011 20:21 GMT

    Euro falls in NY as the rise in oil prices dents risk appetite


    Euro fell on Tuesday as crude oil prices surged due to the supply disrupttions n more turmoil in the Middle East n North Africa, increasing demands for the dollar n the Japanese yen as safe-haven assets.

    Despite the single currency's brief rebound fm 1.3786 to 1.3855 in European morning on Tuesday, price then traded in a volatile manner in NY morning during Federal Reserve Chairman Ben Bernanke's testimony to the Senate Banking Committee. Later, the single currency ratcheted lower to an intra-day low of 1.3762 in late NY trade as the intra-day decline in U.S. stocks accelerated on fears that high oil price would slow down global economic recovery. DJI tumbled 168 points or 1.38%.

    The Fed Chief's Bernanke, in his prepared remarks before the Senate, said downside risks to growth have declined n the risk of deflation was negligible. He added that the surge in oil n other commodity prices probably won't cause a permanent increase in broader inflation n repeated that borrowing costs are likely to stay low. He later added that 'don't expect big impact on interest rates when Fed ends easing program'.

    The British pound retreated fm a 13-month high on Tuesday on profit-taking. Cable initially extended recent ascent to a 13-month high of 1.6330 in European morning after triggering stops abv 1.6300 option barrier, however, lack of strong follow through buying together with the dovish remarks on sterling fm Bank of England Governor Mervyn King prompted investors to take profit n the pound then fell to an intra-day low of 1.6251 in late NY session.

    Bank of England Governor Mervyn King said in his testimony to Parliament's Treasury Committee that increasing the benchmark interest rate to make a gesture in the fight against inflation would be self-defeating. He also said financial markets do not believe rate of price increase will persist; 'inflation pressures are back to target by mid 2011 but will not show up in Y/Y measure until 2012'.

    The Japanese yen also strengthened broadly on Tuesday as investors flock to the yen as a safe-haven asset. Usd/jpy, eur/jpy, aud/jpy n gbp/jpy fell fm 82.24 to 81.74, 113.73 to 112.76, 83.75 to 82.98 n 134.13 to 132.97.

    Data to be released on Wednesday include:

    Japan business capex, Australia GDP, Germany retail sales, U.K. construction PMI, eurozone PPI, U.S. ADP employment n Canada PPI.

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  2. acetraderfx

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    Market Review - 02/03/2011 19:48 GMT

    Euro strengthens to a 2011 high on ECB rate hike outlook


    Euro rose sharply on Wednesday as higher-than-expected eurozone PPI fueled speculation that ECB may raise interest rate to curb inflation earlier than the Fed. Although euro dropped briefly below Tuesday's low of 1.3762 to an intra-day low of 1.3744 in Asian morning, price then ratcheted higher n intra-day rise gathered momentum after eurozone PPI surged to 1.5% M/M vs forecast of 1.1% whilst Y/Y figure jumped to 6.1%, the highest lvl since September 2008. The single currency eventually rose abv 1.3862 (Feb) to a fresh 2011 high of 1.3890 in NY mid-day on dlr's broad based weakness b4 retreating on profit-taking.

    The British pound also rallied to a fresh 13-month high on Wednesday on dlr's broad-based selloff. Despite initial weakness to 1.6216 in Asian afternoon, cable rebounded n jumped to 1.6300 after release of stronger-than-expected UK construction PMI, Feb figure came in at 56.5 vs forecast of 52.8, Feb PMI was the highest in 8 months according to Markit/CIPS, citing news UK business growth. The pound eventually climbed to a fresh 13-month high of 1.6344 in tandem with euro in NY morning b4 stabilising.

    The dollar blipped up to an intra-day high of 82.13 against the Japanese yen after the release of much better-than-expected U.S. ADP employment in NY morning, the usd/jpy pair then tumbled to as low as 81.57 b4 recovering in NY afternoon. The Swiss franc strengthened to a fresh lifetime low of 0.9202 in NY mid-day as the continued unrest in Libya n Middle East prompted investors to flock to the swissy as a safe-haven asset.

    The nzd tanked fm 0.7482 to 2011 low of 0.7385 on Wednesday after Prime Minister John Key said he would 'welcome' an interest rate cut to boost the economy following last month's earthquake in Chrischurch.

    The European Central Bank will hold its policy meeting on Thursday at 12:45GMT. Although the ECB is widely expected to keep interest rates unchanged at 1.0%, pay attention to the press conference after the rate decision as the ECB chief Jean-Claude Trichet may sharpen its anti-inflation rhetoric.

    Data to be released on Thursday include:

    Australia building approvals, Swiss retail sales, Germany, U.K. n eurozone services PMI, eurozone GDP, retail sales, ECB rate decision, U.S. jobless claims, productivity n ISM non-manufacturing.

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  3. acetraderfx

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    Market Review - 04/03/2011 20:19 GMT

    Euro rises to a fresh 4-month high despite better-than-expected U.S. jobs report


    The single currency rose for three consecutive days to a fresh 4-month high in a volatile New York session on Friday as the better-than-expected U.S. jobs data could not convince investors that the Fed could raise interest rates anytime soon.

    After strong rally to 1.3976 on Thursday, euro traded sideways in Asian n European sessions ahead of the much-awaited U.S. jobs report. Later, despite euro's initial spike up to 1.4002 after the better-than-expected U.S. jobs data, price retreated briefly to 1.3940, however, renewed buying interest there lifted the single currency to an intra-day fresh 4-month high of 1.4009 b4 retreating again on cross-selling in euro vs jpy n chf together with profit-taking ahead of weekend.

    U.S. non-farm payrolls increased by 192,000 in February versus the street forecast of 185,000 n the upwardly revised reading of 63,000 in January. The U.S. unemployment rate continued to edge lower to 8.9%, lowest since April 2009, fm 9.0% in January. The private payrolls rose by 222,000 in February against the upwardly revised reading of 68,000 in Jan.

    The British pound was little changed on choppy Friday trading. Despite cable's brief but sharp selloff to 1.6235 after the release of lower-than-expected UK Halifax house prices, price then rebounded strongly to an intra-day high of 1.6306 b4 gyrating inside aforesaid range in NY trading.

    UK Halifax house prices showed a decline of 0.9% in Feb M/M versus the previous reading of 0.8%.

    The greenback weakened against the Japanese yen on Friday. Although the dollar extended Thursday's rally and jumped to an intra-day high of 83.09 after the U.S. jobs report, price then quickly retreated n later dropped to 82.22 on active cross buying in yen as eur/jpy, aud/jpy, gbp/jpy pairs tumbled 116.00 to 114.87, 84.00 to 83.13 n 135.12 to 133.67 respectively.

    The Swiss franc strengthened against the greenback n euro on Friday due to hawkish remarks by SNB Vice President Thomas Jordan together with the escalation of violence in Libya. Although the usd/chf pair extended the corrective rise fm Wednesday's lifetime low of 0.9202 to 0.9332 in Australia, price then fell in European morning n intra-day selloff accelerated in NY session after the U.S. jobs report, the pair eventually hit a day's low of 0.9224 b4 recovering on short-covering. Eur/chf also tumbled fm 1.3025 to 1.2917.

    SNB Vice President Thomas Jordan said in an interview with Swiss French language paper Le Temps published on Friday that 'current interest rate level not sustainable in medium term; still watching Swiss housing market carefully; housing market situation has not become more problematic but some causes for concern remain.

    Data to be released next week include :

    Japanese leading indicators n Canadian building permits on Monday.

    Australian NAB business confidence, Japanese current account n economic watch DI, U.K. BRC retail sales n RICS house prices , Swiss unemployment rate, Germany factory orders, Canadian housing starts on Tuesday.

    Australian W'pac consumer confidence, Japanese machine orders, U.K. BRC shop price index n trade balance, Germany WPI n industrial production, Swiss CPI, U.S. wholesale inventories on Wednesday.

    Australian unemployment rate, Japanese GDP n domestic CGPI, German Import n Export, U.K. industrial production, manufacturing production, rate decision n asset purchase target, Canadian trade balance n import/export, U.S. Fed budget on Thursday.

    German CPI, U.K. input/output PPI n PPI core, Canadian employment change unemployment rate, U.S. retail sales , U. Michigan survey n business inventories on Friday.

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    Market Review - 07/03/2011 20:11 GMT

    Euro falls in NY as continued rise in oil prices dampens risk appetite


    Euro reversed intra-day gains on Monday as the continued rise in oil prices dented risk-appetite, decreasing the demand for higher-yielding assets. On the New York Mercantile Exchange, crude oil for April delivery settled at $105.44 a barrel on Monday, the highest close since Sept. 2008, as supply disruption worries with violence in Libya escalating n investors feared unrest wud affect other producers in the Middle East n North Africa.

    Earlier, despite euro's brief retreat to 1.3956 in European morning after Moody's downgraded Greece rating to B1 fm Ba1, renewed buying interest there lifted the single currency and the pair later climbed abv last Friday's high of 1.4009 to a fresh 4-month high 1.4036 b4 retreating sharply to around 1.3957 in NY afternoon session.

    Moody's cut Greek debt rating by three notches n kept it on review for further downgrades on Monday, citing significant risks to its fiscal restructuring program n chance of a voluntary debt restructuring.

    The British pound tumbled on Monday due to dollar's broad-based rebound in NY session. Despite the pound's intra-day brief but strong rise fm 1.6240 to 1.6342 (just 2 pips shy of last Wednesday's 13-month high of 1.6344), price then tanked to the day's low of 1.6184 partly due to news that BoE hawk Andrew Sentance will be replaced at the end of May, however, this news was made known in February. Cross selling in sterling vs the euro also weighed on the pound as the eur/gbp cross pair extended recent upmove to a 5-week high of 0.8635 on Monday.

    Britain's government appointed Goldman Sachs economist Ben Broadbent to succeed Bank of England hawk Andrew Sentance on the BOE's Monetary Policy Committee when his term expires at the end of May. In other news quoting from Bloomberg, U.K. Prime Minister David Cameron told a local enterprise summit in Coventry central England that business can't
    rely on a further easing of momentary policy to stimulate growth. He also added that 'we can't make monetary policy any looser than it is, what with rates as they are'.

    Data to be released on Tuesday include :

    Australian NAB business confidence, Japanese current account n economic watch DI, U.K. BRC retail sales n RICS house prices , Swiss unemployment rate, Germany factory orders, Canadian housing starts

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    Market Review - 08/03/2011 20:02 GMT

    Euro falls on concerns over European debt woes


    The euro fell on Tuesday as Moody's cut Greek debt rating on the previous session ignited investors' attention back to the lingering European debt woes. Yields on Portuguese and Irish debt rose to a record high. Despite the early recovery to 1.3989 in Asian midday, the single currency ratcheted lower in European session and price later declined to an intra-day low of 1.3862 in NY morning b4 recovering on short-covering together with the rally in U.S. stocks.

    EU will intend to approve a 'comprehensive' package of measures at a March 24-25 summit in a bid to calm bond markets.

    ECB policymaker Axel Weber said the European Central Bank's signal last week that it is ready to raise interest rates was 'quite necessary' to tackle firming inflation pressures. He added that policymakers needed to be vigilant to the risks posed by tensions in Arab countries and rises in the oil price.

    On the other news fm Bloomberg, S&P saw more sovereign ratings downgrades for euro countries.

    The British pound also fell on Tuesday, earlier, cable showed muted reaction to UK data at Asian opening when UK retail sales fell 0.4% on a like-for-like y/y basis in February (January's figure was +2.30%), a separate RICS data showed decline in UK house prices continued to ease in the 3 mths through February, after a 6-month slide. However, intra-day decline in euro dragged the British pound lower in European session and price later hit an intra-day low of 1.6125 in NY morning b4 recovering on short-covering.

    The dollar strengthened against the Japanese yen and the Swiss franc on Tuesday as the slide in oil prices discouraged demand for both the yen and franc as the safe-haven assets. Usd/jpy surged from 82.21 to 82.86 whilst usd/chf rallied from 0.9262 to 0.9364.

    Kuwait's oil minister said OPEC was in talks to boost oil production.

    Data to be released on Wednesday include

    Australian W'pac consumer confidence, Japanese
    machine orders, U.K. BRC shop price index n trade balance, Germany WPI n industrial production, Swiss CPI, U.S. wholesale inventories, Canada New housing price index, and New Zealand Central Bank rate decision.

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    Market Review - 09/03/2011 20:41 GMT

    Euro little change after successful Portugal bond auction


    The single currency was little changed as the successful Portugal bond auction eased the ongoing concerns about eurozone debt woes on Wednesday. Earlier, although euro traded narrowly in Asian n price dropped briefly below Tuesday's low of 1.3862 to 1.3855, lack of strong follow through selling prompted investors to close their euro short positions n the single currency then rose swiftly to an intra-day high of 1.3942 on talks that ECB stepped in to buy Greek and Portuguese bonds b4 retreating again in NY mid-day.

    Portugal's Treasury Secretary Carlos Pina said Portugal sold 1 bln euros in bonds in an auction at a rate of record high at 5.993%.

    News fm Reuters quoting French gov't source, reporting that EU Leaders will discuss situation in Portugal on Friday but not preparing any EU intervention. EU leaders will hold a summit at 24-25 March.

    Cable rose on Wednesday after report showed that Britain's trade deficits narrowed as exports rose to a record. Although sterling traded sideways in Asian morning after resumption of recent decline fm 13-month high of 1.6344 to 1.6125 on the previous session, the British pound rebounded fm 1.6142 on talk of buying fm Middle East names n cable then strengthened to as high as 1.6244 after the release of narrower-than-expected trade deficit which came in at -4.17 bln pounds, the smallest deficit since April 2010, versus the economists' forecast of -5.10 bln pounds. Later, price retreated in NY morning in tandem with the single currency.

    The Swiss franc rallied against the greenback n euro on Wednesday as a report showed Swiss CPI accelerated last month, fueling speculation that the Swiss National Bank would raise interest in the coming months to curb inflation. In addition, concerns over that the continued turmoil in North Africa n the Middle East especially in Libya also underpinned the Swiss franc as a safe-haven asset. The usd/chf tumbled fm 0.9370 to 0.9269 while eur/chf tanked fm 1.3015 to 1.2895. Swiss consumer price index rose by 0.4% m/m n 0.5% y/y in Feb. versus economists' forecast of 0.3% m/m n 0.4% y/y respectively.

    Reserve Bank of New Zealand reduced official cash rate by 0.5% to 2.5%. RBNZ governor Alan Bollard said that 'rate move was to reduce the quake impact; stimulatory policies not right during reconstruction.' He added 'current policy will be removed when rebuilding starts but will take some time.' Regarding the future policy, he said it depends on data. Nzd/usd tumbled to as low as 0.7332 after the rate decision, however, price then staged a strong rebound to around 0.7375/80 b4 trading sideways.

    Data will be released on Thursday include:

    Australian unemployment rate, Japanese GDP n domestic CGPI, German Import/Export, WPI n current account, U.K. industrial production, manufacturing production, rate decision n asset purchase target, Canadian trade balance n import/export, U.S. jobless claims, trade balance n Fed budget.

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    Market Review - 10/03/2011 20:45 GMT

    Euro tumbles after Moody's downgrades Spanish credit rating


    The single currency tanked in European session after Moody's lowered Spain's government rating on Thursday. Despite the initial brief recovery to 1.3925 in Asia morning, euro then dropped sharply to 1.3864 in Asia mid-day on dollar's broad-based strength after China posted a surprise trade deficit of $7.3 billion in February, its largest in seven years. Later, the single currency then fell further due to Moody's downgrade of Spanish sovereign debt rating in European morning, price eventually ratcheted to a day's low of 1.3775 in late New York trade.

    Moody’s lowered Spain’s credit rating by one notch, to Aa2 from Aa1, with a negative outlook, warning of further rating cuts to come as it expected bank restructuring will cost more than twice what the government expected.

    In the other news from Reuters quoting comments from German Chancellor Angela Merkel who said in a closed meeting with German lawmakers that Germany could agree to increase the lending capacity of Europe's European Financial Stability Facility (EFSF) rescue fund if lower-rated euro members contributed capital.

    The British pound also tumbled broadly on Thursday after the Bank of England held rate unchanged. Earlier, cable fell in tandem with euro in Asian session and despite staging a brief rebound from 1.6123 to around 1.6195/97 in European morning, sterling then tanked broadly after the Bank of England's rate announcement. Price eventually hit an intra-day low of 1.6038 on dollar's broad-based rally before stabilising in late New York trade. Eur/gbp rallied from 0.8534 to 0.8609 while gbp/jpy tumbled from 134.35 to 132.95.

    The Bank of England kept interest rates at a record low of 0.5% and maintained its asset-purchase program at 200 billion pounds, judging that Britain's economic recovery remains too weak to sustain an inflationary spiral.

    The greenback also rallied against the three commodity-linked currencies on Thursday. Aud/usd and nzd/usd tumbled from 1.0118 to 0.9991 and from 0.7380 to 0.7322 respectively whilst usd/cad surged from 0.9684 to 0.9768.

    First-time claims for U.S. jobless benefits rose last week from an almost three-year low, highlighting the uneven nature of the improvement in the U.S. labor market. The U.S. trade deficit widened more than forecast in January to the highest level in seven months as a surge in imports led by costlier crude oil overshadowed record exports.

    Data will be released on Friday include:

    German CPI, WPI and HICP final, U.K. input/output PPI and PPI core, Canadian employment change and unemployment rate, U.S. retail sales, University of Michigan survey and business inventories.

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    Market Review - 11/03/2011 20:32 GMT

    The Japanese yen rallies broadly after massive earthquake in Japan


    The Japanese yen surged across the board on Friday on speculation that Japanese insurance companies will need to sell foreign assets to pay for claims after a devastating 8.9 magnitude earthquake hit the northeast coast of Japan.

    Despite dollar's initial brief jump from 82.78 to 83.30 against the Japanese yen immediately after the earthquake news, the pair then reversed all its gains and tumbled to 82.00 in European midday. Later, although price staged a moderate recovery, the dollar extended intra-day selloff after triggering stops below 81.95/00 level to a day's low of 81.65 in NY mid-day before stabilising. Eur/jpy, aud/jpy, gbp/jpy tanked from 115.02 to 112.93, 83.29 to 81.98 and 133.73 to 130.89 respectively before recovering on short-covering.

    In sharp contrast to the previous session, euro rallied in NY on Friday on active short-covering. Despite extending erratic fall from Monday's high of 1.4036 after meeting renewed selling at 1.3841 in European morning as the earthquake in Japan dampened risk appetite initially, lack of strong follow through selling below Thursday's low of 1.3775 prompted euro to rebound and price then surged from 1.3752 to 1.3884 in NY midday on aggressive short-covering together with active cross-buying in euro, eur/gbp rose strongly from 0.8590 to 0.8656 whilst eur/jpy and eur/chf rebounded sharply from 112.93 to 113.86 and 1.2827 to 1.2931 respectively. The single currency eventually extended intra-day rise to 1.3916 in late NY trade after news from Reuters quoted the chairman of the EU meeting Herman Van Rompuy as saying in a message on his Twitter page that Eurozone leaders have reached an agreement on a competitiveness pact for the single currency area.

    Similar to the euro, the British pound also rallied against the greenback in NY on Friday. Despite falling below Thursday's low of 1.6038 from Asian high of 1.6080 in European midday, intra-day rally in euro lifted cable and price surged from 1.5977 to 1.6080 in late NY trade.

    On the data front, German's consumer price index rose by 0.5% m/m and 2.1% y/y in February. versus economists' forecast of 0.5% m/m and 2.0% y/y respectively. German final HICP rose by 0.6% m/m and 2.2% y/y. While the U.K. producer input price rose by 1.1% m/m and 14.6% y/y in February, highest annual rate since Oct. 2008. U.K producer output price increased by 0.5% m/m and 5.3% y/y, also highest annual rate since Oct. 2008.

    Data to be released next week include:

    Japan BOJ rate decision, capacity utilisation, industrial production and consumer confidence, Eurozone industrial production and Canada capacity utilisation on Monday.

    Australian RBA's board minutes, Japan machine tools orders, U.K. DCLG house prices, Eurozone employment, Germany ZEW index and current situation, U.S, import/export, foreign treasury buys, Net LT TIC flows, NAHB housing market index and Fed rate decision on Tuesday.

    Eurozone HICP index, U.K. ILO unemployment, claimant count and Average earning 3-months, Swiss ZEW index, U.S. current account, housing starts, building permits and PPI on Wednesday.

    Swiss SNB rate decision, U.S. CPI, real earnings,jobless claims, midwest manufacturing index, capacity utilisation, industrial production, leading indicators and Philadelphia fed survey on Thursday.

    Japan BOJ minutes, Germany PPI, Swiss combined PPI, U.K. Nationwide consumer confidence, Eurozone current account and trade balance, Canada CPI on Friday.

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    Market Review - 14/03/2011 20:14 GMT

    Euro strengthens as EU leaders widen the scope of rescue plan


    The euro extended its Friday's rally on Monday as the EU leaders surpassed all expectations by agreeing to widen the scope of the euro zone rescue fund, allowing it to spend its full 440 billion euros capacity as well as to buy bonds directly from governments on Saturday. They also agreed to make its loans cheaper and lower the interest rate on funds extended to Greece.

    Earlier, although the euro retreated after rising to a high of 1.3986 in (NZ/AUS) as EU leaders finally struck a deal in the early hours on Saturday, buying interest at 1.3905 in European morning lifted the single currency again and price eventually climbed to 1.4003 in NY mid-day after Eurogroup Chairman Jean-Claude Juncker expressed concerns on inflation caused by recent continued high commodity prices.

    The British pound also strengthened against the greenback on Monday as Fitch affirmed Britain's 'AAA' rating. Despite a brief drop from 1.6100 (AUS) to 1.6028 in European morning, cable then rebounded after finding renewed buying there and intra-day rise accelerated after the affirmation of the UK's sovereign rating by Fitch. Price eventually climbed to 1.6200 before retreating in NY mid-day. Cross buying in sterling versus euro also supported the British pound as eur/gbp cross pair retreated from 0.8692 to 0.8636.

    Fitch affirmed United Kingdom at 'AAA' rating underpinned by high value-added wealthy and flexible economy.

    The dollar went through a roller-coaster session versus Japanese yen on Monday, having tanked to a four-month low of 80.60 in Australian morning on concerns over Japanese earthquake-related repatriations before staging a strong rally to 82.47 on short-covering due to intervention fear, however, renewed selling there capped dollar's intra-day gain and price later ratcheted lower in European and NY sessions.

    Japan's central bank doubled its asset buying scheme to 10 trillion yen and held interest rates at 0-0.1 percent after it earlier said it would pump a record 15 trillion yen into the banking system.

    Data will be released on Tuesday include:

    Australian RBA's board minutes, Japan machine tools orders, U.K. DCLG house prices, Eurozone employment, Germany ZEW index and current situation, U.S. import/export, foreign treasury buys, Net LT TIC flows, NAHB housing market index and Fed rate decision.

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    Market Review - 15/03/2011 20:21 GMT

    The Japanese yen surges broadly as Japan nuclear crises triggered active risk aversion


    The Japanese yen rallied against all of its counterparts on Tuesday as nuclear crises in Japan worsened, fueling speculation Japanese insurers and companies will repatriate assets to pay for earthquake claims and reconstruction costs following the devastating earthquake last Friday.

    The dollar went through another volatile session against the Japanese yen on Tuesday. Despite dollar's initial spike from 81.22 to an intra-day high of 82.05 in Asian morning, price then swiftly retreated and the pair later tumbled to as low as 80.60 in NY midday as fear grew on possible radiation catastrophe in Japan. Eur/jpy, aud/jpy, gbp/jpy tanked from 114.66 to 111.96, 82.63 to 79.29 and 132.54 to 129.20 respectively before recovering. The Nikkei 225 index closed the day down by 10.55% at 8,605, posting its biggest two-day drop since 1987.

    The Bank of Japan added 5 trillion yen to the financial system in a one-day operation on Tuesday after doubling its asset buying scheme to 10 trillion yen n pumping a record 15 trillion yen into the banking system on Monday.

    The euro rallied in NY on Tuesday on active broad-based short covering. Earlier, although the single currency was under pressure in Asia on risk aversion following Japan PM Kan's warnings to public that radiation had leaked after Friday's massive quake, buying interest at 1.3855 limited intra-day selloff and price then rebounded strongly in NY morning. Later, despite the knee-jerk reaction after Fed's rate announcement, price eventually strengthened above Monday's high of 1.4003 to 1.4013 before retreating in late New York session. Cross-buying in euro also supported the single currency as eur/gbp rose to a 4-month high of 0.8710 whilst eur/chf rebounded sharply from 1.2735 to 1.2848/50 in late New York trade.

    The British pound tracked intra-day movement of euro on Tuesday. Despite cable's initial selloff after Monday's strong rebound to 1.6200, buying interest at 1.5978 (1 pip above last Friday's low) in European mid-day contained the British pound's downside and price then staged a strong recovery to 1.6100/04 in tandem with euro in late NY session.

    U.S. Fed kept the funds rate unchanged at 0-0.25% and repeated 'to keep rate at a exceptionally low for a extended period' after the FOMC meeting. They expected the effect of oil and commodity prices rise would be transitory but will pay close attention to evolution of inflation and inflation expectations. They also repeated 'Unemployment rate elevated, measures of underlying inflation continues to be somewhat low relative to Fed's mandate.'

    Data will be released on Wednesday include:

    Australia Westpac leading economic index, Eurozone HICP index, U.K. ILO unemployment, Claimant count and Average earning 3-months, Swiss ZEW index, U.S. current account, housing starts, building permits and PPI.

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    Market Review - 16/03/2011 20:40 GMT

    The Japanese yen reaches record high on worsening Japan nuclear crisis


    The Japanese yen surged across the broad on Wednesday as the deepening Japan's nuclear crises triggered heavy risk aversion. Usd/jpy pair tanked below 79.75 (the same as April 1995 low) to 79.56 ahead of NY closing.

    The EU energy Commissioner Guenther Oettinger said on Wednesday that the situation at Japanese reactor is 'effectively out of control' and there could be catastrophic events in a short period. U.S. Nuclear Regulatory Commission Chairman Gregory Jaczko also recommended an evacuation area must larger than has taken place around Japan's reactors.

    Earlier, the dollar continued to ratchet lower against the Japanese yen from Asian high of 81.81 on Wednesday n intra-day decline accelerated in NY morning after triggering stops below 80.60 on the remarks from EU energy chief Guenther Oettinger. The pair eventually tumbled below 79.75 (the same as April 1995 low) to 79.56 before NY closing. Eur/jpy, aud/jpy, gbp/jpy also tanked from 113.48 to 110.59, 80.74 to 77.98 and 130.53 to 127.12 respectively before rebounding.

    The euro fell on Wednesday on aggressive cross-selling versus the Japanese yen and the Swiss franc. The euro dropped briefly to an Asian low of 1.3961 as traders sold the single currency as a late reaction to news of Portugal's downgrade by Moody's during the Australian session. Although price staged a brief recovery, the single currency then fell sharply from 1.4001 to as low as 1.3867 in late NY as the fear escalated over a nuclear crisis in Japan, dampening risk appetite. Cross-selling in euro versus the yen and Swiss franc put heavy pressure on the single currency as eur/chf also tumbled from 1.2853 to 1.2588.

    In other news, Governing Council member Erkki Likkanen was quoted as saying that it is still early to determine how the Japanese earthquake will affect the European Central Bank's decisions in coming months.

    The British pound also fell against the dollar on Wednesday. Despite a brief rise from Asian low of 1.6048 to 1.6132 in European morning, cable then pared early gains after the release of mixed U.K. jobs report and intra-day weakness in the euro dragged price to as low as 1.5985 in late NY trading.

    The Swiss franc rose to a fresh lifetime high of 0.9072 against the dollar on Wednesday as investors flock into to franc as a safe-haven asset.

    On the data-front, The January Australia Westpac leading economic index came in as -0.1% versus previous reading of 0.8%. U.K. Feb. Claimant count fell by 10,200, biggest monthly drop since June 2010, versus economists forecast of an increase of 1,000. U.K. ILO unemployment rate in 3-months to Jan was 8.0%, the highest rate since Jan-Mar 2010. EU HICP final value came in as 0.4% m/m and 2.4% y/y which meeting economists' forecasts. And U.S. PPI rose by 1.6% m/m and 5.6% y/y versus the economists' forecast of 0.7% m/m and 4.8% y/y respectively. U.S. housing start and building permits dropped by 22.5% and 8.2% to 479,000 and 517,000.

    Data will be released on Thursday include:

    Japan Tertiary industry index, Swiss SNB rate decision and industrial production, U.S. CPI, real earnings, jobless claims, midwest manufacturing index, capacity utilisation,industrial productions, leading indicators and Philadelphia fed survey and Canada wholesale sales.

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  12. acetraderfx

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

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    Market Review - 21/03/2011 20:14 GMT

    Euro rises after ECB officials signal rate hike in April is ready


    The single currency strengthened to a fresh 4-1/2 month high on Monday after European Central Bank governing council members signaled that European Central Bank is ready to raise interest rate in April to curb inflation despite the uncertainties related to Japan's nuclear crisis together with the lingering eurozone woes.

    Executive Board member Gertrude Tumpel-Gugerell said that 'the European Central Bank is exercising strong vigilance and will act to counter inflationary pressures.'

    ECB Governing Council member Yves Mersch said 'ECB is ready to act decisively, timely to ensure price stability risks do not materialise.'

    Earlier, the euro traded sideways in Asian session (Japanese financial markets were closed for Vernal Equinox Monday holiday) after rising above Friday's high of 1.4185 to 1.4200 in New Zealand morning and despite a brief retreat from 1.4202 to 1.4138 at New York opening due to market talk that Portugal would need bail out as soon as in April, buying interest quickly emerged and lifted price, the single currency later climbed to a fresh 4-1/2 month high at 1.4240 in New York midday.

    The British pound also rose against the dollar on Monday. Similar to euro, cable retreated to 1.6205 after rising to 1.6261 in New Zealand session, the pound continued to ratchet higher in tandem with euro in European and New York tradings and eventually hit an intra-day high of 1.6328 in New York mid-day.

    In sharp contrast to last week's volatile sessions, the dollar traded narrowly against the Japanese yen on Monday. The greenback edged higher following Friday's selloff from 82.00 to 80.52 and touched 81.32 in European mid-day b4 trading sideways in New York session.

    Data to be released on Tuesday include:

    Japan all industry index, Swiss trade balance (chf), U.K. CPI, RPI, PSNCR, PS net borrowing and CBI Orders, US Richmond Fed manufacturing index, Canada Leading indicators and retail sales.

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  13. acetraderfx

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

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    Market Review - 22/03/2011 19:10 GMT

    Euro retreats from a 4-1/2 month high after Irish note yields surge


    The single currency retreated from a fresh 4-1/2 month high on rumours that a large Irish bank may have missed an interest payment on Tuesday. Although the euro initially extended recent ascent to a fresh 4-1/2 high of 1.4249 in European midday following hawkish remarks from ECB President Jean-Claude Trichet and other policy makers in the previous session, price then swiftly fell to an intra-day low of 1.4179 after the rumour. The single currency later staged a recovery as Ireland's NTMA, National Treasury Management Agency, said speculation on sovereign debt was unfounded.

    According to Bloomberg, Irish 2-year note yields surged 62 basis points to as high as 10.18% on Tuesday.

    The British pound strengthened to a 14-month high in European morning due to renewed speculation that BoE would raise rate in coming months after U.K.'s CPI rose more than expected in February. Despite cable's sideways move in Asian session, price climbed in European morning and the pound later surged to a fresh 14-month high of 1.6403 after the higher-than-expected February CPI data.

    U.K. February CPI rose by 0.7% m/m and 4.4% y/y versus the economists' forecast of 0.6% m/m and 4.2% y/y respectively. U.K. RPI increased by 1.0% m/m and 5.5% y/y against the expectations of 0.7% m/m and 5.2% y/y. U.K. PSNCR came in at 6.981 bln pounds in Feb whilst PS net borrowing was 10.28 bln.

    Cross-buying in sterling versus the euro also supported cable as eur/gbp declined sharply from 0.8730 to 0.8661.

    In other news, Portugal's parliament will vote on the government's latest austerity measures on Wednesday. Prime Minster Jose Socrates has threatened to resign if the new budget is not approved by the opposition. The main opposition Social Democrats has refused to back them and has begun to talk about snap election, bringing more uncertainties to the eurozone.

    Data to be released on Wednesday include:

    U.K. Bank of England meeting minutes and Budget report, Eurozone industrial orders and consumer sentiment, U.S. new home sales.

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  14. acetraderfx

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

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    Market Review - 23/03/2011 20:36 GMT

    Euro falls after Portugal's parliament rejects government's austerity plan


    The single currency declined after Portugal's parliament rejected the government's austerity plan and this may lead to fall of Portugal's government as Prime minister Jose Socrates submitted his resignation.

    Earlier, despite euro's brief rebound from 1.4149 to 1.4215 in European midday after remarks from ECB's Bini Smaghi, price then nose-dived to 1.4100 in NY midday and then weakened to 1.4075 after vote outcome from Portugal's parliament.

    ECB governing member Bini Smaghi said in an interview that keeping interest rates so low risks creating market distortions, excessive risk-taking.

    Draft conclusions prepared for a summit this week showed eurozone member states will only take a decision on how to increase the effective capacity of their bailout fund by the end of June. The draft conclusions read 'The preparation of the ESM treaty and the amendments of the EFSF agreement, to ensure its 440 bln euro effective lending capacity, will be finalised so as to allow national procedures to be completed in good time for signature of both agreements at the same time before the end of June 2011'.

    The British pound tumbled against the dollar after the minutes of Bank of England Monetary Policy Committee meeting in March. Despite cable's sideways trading in Asian session following the rise to a 14-month high of 1.6403 in previous day, price fell sharply lower in European morning on active cross-selling in sterling vs euro, eur/gbp jumped from 0.8654 to 0.8725, and the pound's intra-day decline accelerated after the release of March minutes. Cable eventually reached 1.6219 after the UK government lowered its 2011 growth forecasts.

    Minutes of BOE's March 9-10 meeting showed the Bank of England's Monetary Policy Committee maintained its 6-3 split in favour of keeping rates on hold this month. Andrew Sentance maintained his call for a 50 basis point rate rise whilst Adam Posen reiterated his lone call for an additional 50 bln pounds of quantitative easing.

    British Finance Minister George Osborne cut the 2011 growth forecast to 1.7% from previous 2.1% in his budget. He also added that 'soaring oil prices meant inflation would remain between 4-5% this year'.

    Data to be released on Thursday include:

    Japan Import/Export and trade balance. Germany Import price index, manufacturing and service PMI, Eurozone manufacturing and service PMI, U.K. retail sales, U.S. jobless claims and durable goods orders.

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