InvestMacro Forex News

By CentralBankNews.info
   Australia’s central bank held its benchmark cash rate steady at 2.50 percent, as expected, and expects to maintain the rate at the current level for a while.
    “In the board’s judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target,” the Reserve Bank of Australia (RBA) said in a statement quoting its governor, Glenn Stevens.
    “On present indications, the most prudent course is likely to be a period of stability in interest rates,” he added.
   

By CentralBankNews.info
    The central bank of Mauritius held its repo rate steady at 4.65 percent, but said members of its monetary policy committee were “divided on the need to rapidly normalize the Key Repo Rate to address the risks to inflation and the excess liquidity situation while enhancing savings in the economy.”
    The Bank of Mauritius, which last cut is rate by 25 basis points in June 2013, said inflation rose to 4.0 percent in December from 3.1 percent in August and core inflation had also risen, “reflecting underlying inflationary pressures in the economy” with prices of locally produced goods and services having a higher impact on inflation that prices of imported goods and services.
    The bank’s policy committee discussed alternative scenarios during ints meeting, with some members expecting inflationary pressures to remain subdued and economic recovery could be jeopardized by premature monetary policy tightening.
    Other committee members had argued that domestic growth was firmly recovering while upside risks to inflation were rising and on the basis on unchanged rates, inflation could rise to 5 percent by the end of the first quarter of this year and end the year around 4.0 percent.

    Ultimately, a majority of committee members voted to maintain the repo rate, but the bank said it would maintain “strong vigilance in monitoring economic and financial developments and stands ready to meet in between its regular meetings, if need arises.”
    The economy of Mauritius has continued to hold up well and economic output is estimated to be near its potential, the bank said, adding that Gross Domestic Product growth was forecast to pick up to a range of 3.7-4.0 percent this year, an increase of 0.5-0.8 percentage points above the 2013 estimated growth of 3.2 percent.

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By Bud Conrad, Chief Economist, Casey Research – Now Is the Time to Buy Gold

Gold has been in a downturn for more than two years now, resulting in the lowest investor sentiment in many years. Hardcore goldbugs find no explanation in the big-picture financial numbers of government deficits and money creation, which should be supportive to gold. I have an explanation for why gold has been down—and why that is about to reverse itself. I’m convinced that now is the best time to invest in gold again.

Gold Is the Alternative to Non-Convertible Paper Money

If you’ve been a Casey reader for any length of time, you know why gold is a good long-term investment: central banks are expanding paper money to accommodate the deficits of profligate governments—but they can’t print gold. Since the beginning of the credit crisis, the world’s central banks have “invented” $10 trillion worth of new currencies. They are buying up government debt to drive interest rates down, to keep countries afloat. The best they can do is buy time, however, because creating even more debt does not solve a credit crisis.

Asia Is Accumulating Gold for Good Reason

Since 2010, China has been buying gold and not buying US Treasuries. China’s plan seems to be to acquire a total of 6,000 tonnes of gold to put its holdings on a par with developed countries and to elevate the international appeal of the renminbi.

In 2013, China imported over 1,000 tonnes of gold through Hong Kong alone, and it’s likely that as much gold came through other sources. For example, last year the UK shipped 1,400 tonnes of gold to Swiss refiners to recast London bars into forms appropriate for the Asian market.

China mines around 430 tonnes of gold per year, so the combination could be 2,430 tonnes of gold snatched up by China in 2013, or 85% of world output.

India was expected to import 900 tonnes of gold in 2013, but it may have fallen short because the Indian government has been taxing and restricting imports in a foolish attempt to support its weakening currency. Smugglers are having a field day with the hundred-dollar-per-ounce premiums.

Other central banks around the world are estimated to have bought at least 300 tonnes last year, and investors are buying bullion, coins, and jewelry in record numbers. Where is all that gold coming from?

COMEX and GLD ETF Inventories Are Down from the Demand

The COMEX futures market warehouses dropped 4 million ounces (over 100 tonnes) in 2013. The COMEX uses two classes of inventories: the narrower is called “registered” and is available for delivery on the exchange. There are other inventories that are not available for trading but are called “eligible.” I don’t think it’s as easy to get holders of eligible gold to allow for its conversion to registered to meet delivery as the name implies. Yes, that might occur, but only with a big jump in the price.

The chart below shows the record-low supply of registered COMEX gold.

Meanwhile, SPDR Gold Shares (GLD), the largest gold ETF, lost over 800 tonnes of gold to redemptions. At the same time, central banks have provided gold through leasing programs (but figures are not made public).

Why Has Gold Fallen $700 Since 2011?

In our distorted world of debt-ridden governments and demand from Asia, gold should continue rising. What’s going on?

The gold price quoted all day long comes from the futures exchanges. These exchanges provide leverage, so modest amounts can be used to make big profits. Big players can move markets—and the biggest player by far is JPMorgan (JPM).

For the first 11 months of 2013, JPM and its customers delivered 60% of all gold to the COMEX futures market exchange; that, surely, is a dominant position that could affect the market. By supplying so much gold, they are able to keep the price lower than it would otherwise be.

A key question is why a big bank would take positions that could drive gold lower. Answer: Banks gain by borrowing at zero rates. But the Federal Reserve can only continue its large quantitative easing programs that bring rates to zero if gold is not soaring, which would indicate weakness in the dollar and the need to tighten monetary policy. Voilà—we have a motive. Also, suppressing the price of gold supports the dollar as a reserve currency.

The chart below shows the month-by-month number of contracts that were either provided to the exchange or taken from the exchange by JPM. For a single firm, the numbers are large, but the effect across all gold markets is greater because so many gold transactions follow the price set in the paper futures market.

What jumps out from the chart above is the fact that while JPM had been selling gold into the futures market for most of the year, it made a major shift in December, absorbing 96% of all gold delivered.

That is a radical shift and, I believe, an indicator that JPM’s policy has shifted. In my opinion, their deliveries of gold were suppressing the price during 2013, but now their policy has shifted in a way that will support gold going forward.

This leaves a vital question unanswered: Why?

Has the motivation to suppress the price of gold gone away? Not likely, and we may never know the full truth of what is happening, but I suspect the main reason for the shift is that they have done their damage. The $740 drop from top to bottom, a 39% decline, has shaken confidence in gold as a financial “safe haven” among many investors, especially those new to precious metals.

At the same time, continuing to lean on gold at this point could become very costly. JPM delivered $3 billion (about 2 million ounces of gold) into the market up to December in 2013, and may not have ready sources of gold to keep that up. It is dangerous to put on big short positions unless you have gold or some future gold deliveries as a hedge.

By now, everyone knows of the shortages in the gold market; JPM has to be as aware of that as the rest of us. It just isn’t safe for them to continue to lean on the market. Being aware, it looks like they are taking the bet that gold will rebound, so they could do well on the other side of the trade.

Another confirmation of the shift by big banks comes from data provided by the US Commodity Futures Trading Commission (CFTC) that shows the net positions of the four biggest US banks in the futures market. There has been a dramatic change from being short the market to now being long.

Crisis Brewing in the Gold Market

Germany claims to hold 3,390.6 tonnes of gold, about half of which is held by foreign central banks. Over a year ago, they announced a plan to repatriate 674 tonnes of gold from France and the United States. The US said it would comply, but told the German government that it would have to wait seven years for all the gold to be delivered. The news out last week was that after a year, Germany had only obtained 37 tonnes of its gold—and only five of them were from the US. That is a trivial amount (only 160,000 ounces).

So why can’t Germany get its gold? Explanations of having to melt down existing gold and recast it just don’t make sense. The most logical conclusion, and the one I’ve come to, is that the United States simply doesn’t have the gold it says it has—neither Germany’s nor its own.

Of course, the US government isn’t going to admit that there’s a problem, but I say there is.
More evidence: JPMorgan’s COMEX warehouse contained 3.0 million ounces of gold in 2012, but that had dropped to 0.5 million ounces by mid-2013. Its registered inventories are a razor-thin 87,000 ounces. These kinds of swings are indicative of shortages and instability.

Further, JPMorgan sold its gold vault in New York City—located next to the Federal Reserve’s vault—to the Chinese. The banking giant also just announced the sale of its commodities trading business (although it may not have sold the precious metals part of that business). Perhaps they were concerned about new regulations of banks with deposit insurance from the government.

In another relevant development, Deutsche Bank recently surprised the gold community by quitting its position on the committee that sets the London a.m. and p.m. fixings. This came a few weeks after a German regulatory body called BaFin started investigating how these prices were set. BaFin also gave an indication that the process appeared worse than the LIBOR fixing scandal, which resulted in billions in fines.

Putting Inventories and Traders Together

The futures market looks fragile to me. The basic problem is that there are many more transactions that could put a claim on gold than there is gold registered for delivery in the COMEX warehouses.

The chart below gives a dramatic picture by simply dividing the open interest of all futures contracts by the registered inventories. The black line at the bottom shows the big jump in the ratio as the registered inventories declined. There are 107 times more open-interest positions than there is registered gold.

The futures markets operate on the expectation that only a few big traders will demand delivery. JPMorgan has shown that it is in a position to demand almost all (96%) of the gold for delivery. They are big enough that they could cause a collapse of the market, if they were to force delivery of more than is available. They know better than to do so, though, and I would guess that they will just manage to try to gain back what gold they have been delivering over the last several years. That should support the price of gold.

Gold Will Rise, and It’s on Sale Now

Now is the time to stake your claim in gold. In the long term, we know that paper money will become worthless; in the short term, the biggest seller has just shifted its actions to becoming a buyer. That makes this a good time to accumulate gold and gold mining stocks before a major shift upward in price.

Speaking of gold mining stocks: My Casey Report co-editor Doug Casey, as well as other famous gold speculators, are also convinced that a turnaround in the gold market may be upon us. If you haven’t yet, do yourself a favor and watch “Upturn Millionaires,” Casey’s online video event with eight well-known resource speculators and investment experts that premieres Wednesday at 2:00 p.m. EST. It’s free, so you just have to sign up to register.

Article by Investazor.com

Last week closed almost unchanged for the USDJPY, although the economic data published surprised with better than estimates readings. The biggest surprise came from the National Core CPI which rose at 1.3%, surpassing the forecasts with 0.1%. A disappointment was the Prelim Industrial Production which rose with 1.1% and it was expected a 1.3% growth.

Investors took into consideration the fact that the inflation is heading the right way for Japan and they trust the country’s economy, so they bought the yen even though the US dollar was tempting. Let’s not forget that the Fed cut another 10B from the QE program and the economic releases were quite good. Continue reading this article to see what you can expect from this week.

Economic Calendar

Monetary Base – Monday 23:50 (GMT). It is the change in total quantity of domestic currency in circulation and current account deposit held at the BOJ. This is a low impact indicator. It is expected for the monetary base to rise with 47.2% this month.

10-y Bond Auction – Tuesday 3:45 (GMT). The average yield on the 10 year bonds that government sell at this auction continued to be on a run. This month it isn’t expected any big change.

Average Cash Earnings – Wednesday 1:30 (GMT). The change in the total value of employment income collected by workers rose during the past months. This month it is expected to grow with 0.7%.

Leading Indicators – Friday 5:00 (GMT). This is the level of a composite index based on 11 economic indicators. This Friday’s expectations are of 111.9%.

As we can see there are no important indicators to be published for Japan’s economy, but there will be some interesting events for the USA. Do not forget that the ADP Non-Farm Employment Change will be published on Wednesday and on Friday the Non-Farm Payrolls and the Unemployment Rate.

Technical View

USDJPY, Daily

Support: 101.00, 100.00, 99.00;

Resistance: 102.00, 103.00, 104.00

This week, the Japanese yen had a very good start. It rallied almost 0.9% in front of the US Dollar. Looking at the daily chart we can observe that it respected all our past support levels put on round numbers. Now the price hit 101.00 where it is also found the 50% retrace from the full uptrend. Even though it is pretty clear that the yen is strengthening in this period but it doesn’t mean that the dollar doesn’t have anything to say.

USDJPY, H1

Support: 101.00, 100.00;

Resistance: 101.50, 102.00;

On a lower time frame the trend is down. At this moment the price dropped and the RSI touched the oversold level. This could be a reversing signal. A close on the 60 minutes chart under the 101.00 level would sustain the strengthening of the yen, but we should expect a correction any moment now. If any bullish signal is given I would expect a retest on the 101.50 or 102.00 levels.

Bullish or Bearish

On the long term I still go with the US Dollar. On the medium term the yen gives strong buying signals and I believe that the price could keep on falling in this first part of the week. On the lower time frame and intraday lookout I would rather be very careful, because there are chances for the US dollar to rally.

The post USD/JPY Forecast February 3-7 appeared first on investazor.com.

EURJPY: Follows Through Lower, Tests. 618 Fib Retracement

EURJPY- With EURJPY following through lower on the back of its past week losses and testing its .618 Feb Ret (its 131.21 -145.61 rally) located at the 136.54 level, the risk is for price extension to occur. Support comes in at the 136.00 level with a cut through that level setting the stage for a run at the 135.50 level and possibly lower towards the 135.00 level, its psycho level. Further down, support comes in at the 134.50 level. Its daily RSI is bearish and pointing lower supporting this view. On the other hand, resistance resides at the 138.65 level, its Feb 03’2014 high. Further out, resistance comes in at 139.49 level, its Jan 31 2014 high. Further out, resistance resides at the 140.00 level and subsequently the 140.50 level, marking its psycho level. All in all, the cross remains biased to the downside.

Article by www.fxtechstrategy.com

By Chris Vermeulen – GoldAndOilGuy.com

Recent price action in the stock market has many traders on edge. With the market closing below our key support trend line last week, the market has now technically starting a down trend.

While trend lines are a great tool for identifying a weakening trend and reversals in the market, I do not put a lot of my analysis weighting on them.

Most of my timing and trading is based around what I call INNER-Market Analysis (Market Stages, Cycles, Momentum and Sentiment). Using these data we can diagnose the overall health of the market. Knowing the strength of the market we can then forecast short term trend reversals before they happen with a high degree of accuracy.

In this report I keep things clean and simple using just trend lines. During the last three weeks we have seen the price of stocks pullback. And because 2013 was such a strong year for stocks most participants are expecting a sharp market correction to take place anytime now.

So with the recent price correction fear is starting to enter the market and money is rotating out of stocks and into the Risk-Off assets like gold and bonds.

Stocks tend to fall in times of economic uncertainty or fear. These same factors push investors towards the safety trades (Risk-Off) high quality bonds and precious metals. As more money goes from risk-on to risk-off, stocks will continue to fall and the safety trades will rise. The move by investors to select the safety of gold and bonds compared to the volatility of stocks will result in these risk plays to moving in opposite directions.

Let’s take a look at the chart below for a visual of what looks to be unfolding…

How to Trade These Markets:

While these markets look to be starting to reverse trends, it is critical that we understand how the market moves during reversals and understand position/money management.

Getting short stocks and long precious metals in the long run could work out very well, but if you understand the price action that typically happens during reversals you know that the stock market will become choppy and we could see the recent highs tested or possibly even a new high made before price actually starts a down trend. And the opposite situation for gold and bonds. Drawdowns can be huge when investing and why I don’t just change position directions when the first sign of a trend change shows up on the chart.

Price reversals are a process, not an event. So it is important to follow along using a short term time frame like the daily chart and play the intermediate trends that last 4-12 weeks in length. By doing this, you are trading in the direction of the most active cycle in the stock market and positioned properly as new a trend starts.

What I am looking for in the next week or two:

1. Stocks to trade sideways or drift higher for 3-6 days, then I will be looking to get short. Again, cycle, sentiment, and momentum analysis must remain down for me to short the market. If they turn back up I will remain in cash until a setup for another short or long entry forms.

2. Gold remains in a down trend but is starting to breakout to the upside. I do have concerns with the daily chart patterns for both gold and silver, so next week will be critical for them. We will be using some ETF Trading Strategies to take advantage of these moves.

3. Bond prices (not yields) look to be forming a bottom “W” pattern. They have had a big run in the last few weeks and are now testing resistance. I think a long bond position is slowly starting to unfold but if we look at the futures price charts for both bonds and gold, they have not yet broken to the upside and have more work to do. As mentioned before ETFs are not really the best tool for charting but I show them because they what the masses follow and trade.

Get these reports every week free at: www.GoldAndOilGuy.com

Chris Vermeulen

GBPUSD has finally moved to the downside at the end of the last week, through 1.6470, into a third leg of decline from the top that can be wave (iii) heading towards 161.8% Fibonacci extension target that comes in around 1.6300. We will be looking down now as long as 1.6625 is not breached.

GBPUSD 4h Elliott Wave Analysis

GBPUSD 1h

GBPUSD is one of the weakest today, now already beneath 1.6350 after recent 100pip fall with accelerating price action that we think represents part of a red wave iii) that may look for a support around 1.6300.

GBPUSD 1h Elliott Wave Analysis

Written by www.ew-forecast.com

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By HY Markets Forex Blog

Prices for West Texas Intermediate (WTI) crude oil dropped for a second day on the first day of the trading week, as investors express their worries over the oil demand from China and the slow growth in the world’s second-largest oil consumer due to the weak manufacturing data.

The North American WTI for March delivery lost 0.35%, trading at $97.09 per barrel on the New York Mercantile Exchange at the time of writing.  At the same time the Brent crude oil for March settlement declined 0.09%, trading at $106.31 per barrel on the London-based ICE Futures exchange. The Brent crude was at a premium of $8.80 per barrel to WTI.

WTI- China Data

The Drop in oil prices were dragged lower by the downbeat Chinese manufacturing Data and service Purchasing Managers’ Index (PMI) data. The Chinese manufacturing PMI dropped to a six-month low of 50.5 for January, dropping from 51.0 previously recorded in December.

The gauge of non-manufacturing activity, released by China revealed the services sector PMI was dropping close to a two-year low of 53.4, adding signs of China’s growth slowdown.

WTI – US Data

Later during the day, the institute for Supply Management is expected to show manufacturing PMI figures, as analysts are expected to see a decline of 56 in January, compared to 57 recorded in the previous month.

Other news

Over the last week, the surge in crude oil prices were driven by the Federal Reserve’s (Fed) conclusion to cut its monthly bond purchases further as the world’s largest economy shows signs of improvement.

The rise in black gold prices was driven by the US Cushing crude inventories data, which revealed a rise of 237,000. Meanwhile in the Eurozone, the manufacturing gauge is forecasted to remain unchanged at 53.9 for January, while countries in the 18-nation euro region are expected to report final readings for January.

Visit www.hymarkets.com   to find out more about our products and start trading today with only $50 using the latest trading technology today.

The post WTI Crude Prices Declines on Concerns Over China Demand appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

The Australian dollar rose against the greenback on Monday, before members of the Reserve Bank of Australia’s (RBA) board assemble on Tuesday to discuss monetary policy. Market analysts are forecasting the bank to keep its interest rate unchanged after cutting its official cash rate by 25 basis points since November 2011 to its current record low level of 2.50%.

The Australian dollar rose 0.54% higher at $0.8797 at the time of writing, at the same time the aussie advanced by 0.32% to $1.5351 against the 18-block euro.

Data released earlier on Monday showed that building approvals for new buildings in the country dropped for a third month in December. A separate report released showed the job listings in Australia lowered for the fourth month in a row in January, showing signs that the labour sector has weakened further.

Australian Dollar – RBA Rate Decision

The Reserve Bank of Australia (RBA) has kept its interest rate since August 2013, after trimming its 2.75% benchmark rate by 25 basis points. In the previous meeting, officials of the bank did not close the possibility of reducing the rates further to support the economy growth and meeting the inflation target.

“While the exchange rate had depreciated over the month, members agreed that it remained uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy,” the December meeting minutes stated.

Fed-Tapering Decision

The Federal Open Market Committee (FOMC) concluded its two-day meeting last week by deciding to reduce the central bank’s monthly purchases of treasuries and mortgage-backed securities (MBS) by an additional $5 billion.

Fed members concluded to reduce the monthly asset purchases despite the weak employment report which came in below analyst forecast. The unemployment rate dropped to 6.7% in December, the lowest since October 2008.

Visit www.hymarkets.com   to find out more about our products and start trading today with only $50 using the latest trading technology today.

The post Australian Dollar Strengthens Ahead RBA Rate Decision appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

Senior Equity Strategist Lars Møller Pedersen outlines this weeks most important financial events and themes.

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