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Dollar Sees Modest Recovery Ahead of Retail Sales Data
Source: ForexYard
The US dollar was able to recover some of yesterday’s losses during morning trading today, as investor’s attention began shifting from the expansion of the Fed’s bond back program back to the ongoing “fiscal cliff” negotiations. A lack of progress in the negotiations between US Congressional leaders and President Obama led to risk aversion among investors, which in turn boosted safe-haven assets.
The EUR/USD has fallen close to 40 pips since the beginning of the European session, and is currently trading just above the 1.3050 level. The GBP/USD fell some 35 pips before reacing as low as 1.6115. The pair is currently trading at 1.36133.
Looking toward the rest of the day, dollar traders will want to pay close attention to the US Retail Sales and Core Retail Sales figures, both set to be released at 13:30 GMT. If either of the indicators come in above their expected values, the greenback may be able to extend this morning’s bullish trend.
Read more forex news on our forex blog
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Major central banks extend dollar, bilateral swap lines
By www.CentralBankNews.info Five of the world’s most powerful central banks – the Federal Reserve, the European Central Bank, the Bank of Canada, the Bank of England and the Swiss National Bank – have extended their temporary U.S. dollar and bilateral currency swap arrangements through February 1, 2014.
The swap arrangements, which were due to expire on February 1, 2013, enable the central banks to immediately provide commercial banks with liquidity, either in U.S. dollars or any of their currencies, if necessary during periods of stress in financial markets.
The Bank of Japan will consider an extension of both sets of swap arrangements at its next monetary policy meeting, according to similar statements issued by all six central banks.
Under the swap lines, each central bank can provide their own currency to the other central banks and also provide commercial banks with liquidity in U.S. and Canadian dollars, British pounds, Japanese yen, euros and Swiss francs.
The central banks have not had to draw on these swap lines, which were re-established in May 2010 in response to strains in U.S. dollar short-term funding markets.
Switzerland maintains interest, exchange rate targets
By www.CentralBankNews.info The Swiss central bank maintained its targets for interest and exchange rates, as expected, saying the downside risks to the country’s economy “remain considerable” and fourth quarter growth should be significantly weaker than in the third quarter.
The Swiss National Bank (SNB) kept its target for three-month Libor at 0-0.25 percent and said that “if necessary, it stands ready to take further measures at any time.”
The bank also confirmed its intention to enforce the ceiling on the Swiss franc and keep it below 1.20 euro “with the utmost determination” and that it remains prepared to “buy foreign currency in unlimited quantities for this purpose.” The ceiling was introduced in August last year after the franc rose to almost parity with the euro as investors sought safety in the Alpine country.
The SNB said its latest inflation forecast was largely unchanged from September, with inflation subdued by Europe’s weak economy and the impact of the past rise in the Swiss franc on prices stronger than originally expected.
“In the foreseeable future, therefore, there is no risk of inflation in Switzerland,” the bank said, forecasting deflation of 0.7 percent this year and 0.1 percent in 2013 and inflation of 0.4 percent in 2014. Inflation was 0.2 percent in 2011.
Switzerland’s Gross Domestic Product expanded by 0.6 percent in the third quarter from the second for annual growth of 1.4 percent, up from the second quarter’s 0.5 percent growth rate.
But the SNB expects significant weakening in the fourth quarter and growth this year is forecast at around 1.0 percent and in 2013 1.0-1.5 percent.
The SNB said the European Central Bank’s actions had significantly reduced the probability of extreme developments in the euro area but there was still substantial uncertainty and it is also unclear how much U.S. economic growth will be hampered by the budget consolidation talks.
“Moreover, momentum in the Swiss residential mortgage and real estate market remains strong, and has led to a further increase in risks for financial stability,” the SNB said.
Philippines holds rate steady, economy picking up speed
By www.CentralBankNews.info The Philippine central bank held its key interest rate steady at 5.50 percent, as widely expected, saying the inflationary outlook is manageable and the domestic economy is starting to pick up speed on the back of strong demand and buoyant business sentiment.
Bangko Sentral ng Pilipinas (BSP) said this year’s four rate cuts, for a cumulative reduction in the key overnight borrowing or reverse repurchase facility of 100 basis points, were working their way through the economy and third quarter economic growth was stronger than expected.
“In the months ahead, adequate liquidity and strong bank lending are expected to continue to support domestic economic activity and sustain the economy’s momentum,” the bank’s monetary board said in a statement after a meeting.
The Philippine Gross Domestic Product rose by 1.3 percent in the third quarter from the second, for an annual expansion of 7.1 percent, up from 6.0 percent in the second quarter, driven by private spending and fiscal stimulus.
“Moreover, global economic activity as stabilized in recent months, although fiscal consolidation and financial market stresses in advanced economies continue to temper overall market sentiment,” the bank said, adding that global economic prospects are likely to stay subdued and this will reduce upward pressure on commodity prices.
Inflationary expectations in the Philippines are in line with the bank’s 3-5 percent target, the bank said. Headline inflation fell to 2.8 percent in November from 3.1 percent in October. The BSP has forecast inflation this year of 3.3 percent, rising to 3.9 percent next year.
The BSP was expected to keep rates on hold at its meeting following a statement last month by the governor that the policy stance appeared to remain appropriate given the high growth rate and low inflation.
Market Trends 13.12.12
Source: ForexYard
Hey Everyone,
Below are some market trends for today.
Good luck!
-Dan
Gold- May see upward movement today
Support- 1688.70
Resistance- 1714.72
Silver- May see upward movement today
Support- 32.55
Resistance- 33.33
Crude Oil- May see upward movement today
Support- 85.77
Resistance-86.92
Dax 30- May see upward movement today
Support- 7534.29
Resistance- 7630.56
EUR/USD May see downward movement today
Support- 1.3012
Resistance- 1.3118
Read more forex news on our forex blog
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Market Review 13.12.12
Source: ForexYard
The US dollar extended its bearish trend against most of its higher-yielding currency rivals during overnight trading, following the Fed’s announcement of a new round of quantitative easing yesterday. The EUR/USD gained some 30 pips to trade as high as 1.3097, while the USD/CHF fell 15 pips.
Speculations that the Bank of Japan will initiate a new round of monetary easing following upcoming elections in Japan resulted in the USD/JPY gaining an additional 25 pips during Asian trading to trade as high as 83.65.
After dropping more than $20 an ounce during afternoon trading yesterday, gold was able to stage a modest recovery last night, and is currently trading just below the $1700 level. Crude oil spent the majority of the night range trading around its current level of $86.50 a barrel.
Main News for Today
US Retail/Core Retail Sales- 13:30 GMT
• While a significant improvement over last month is expected for the Retail Sales figure, the Core Retail Sales, (which excludes automobile sales), is forecasted to remain at 0.0%
• A worse than expected result for either indicator today could lead to additional dollar losses during afternoon trading
US PPI- 13:30 GMT
• Forecasted to come in at -0.5%, which if true, would represent a decrease over last month
• A worse than expected result today may lead to dollar losses
US Unemployment Claims- 13:30 GMT
• Forecasted to come in slightly below last week’s figure, which if true, would represent an improvement in the US labor sector
• If today’s news comes in below the expected 368K, the dollar may be able to recoup some of its recent losses
Read more forex news on our forex blog
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Gold & Silver Fall Hard from 2-Week High as New Fed Easing Spooks Traders
London Gold Market Report
from Adrian Ash
BullionVault
Thursday 13 Dec, 07:30 EST
GOLD and silver fell hard overnight and early Thursday in London, dropping as European stock markets also fell and the US Dollar rose despite yesterday’s latest “easy money” policy from the Federal Reserve.
Holding its key interest rate in the record low range of 0% to 0.25% for the 48th month running, the Fed’s open market committee swapped its guidance for any rise in interest rates from mid-2015 to a target unemployment rate of 6.5% or below.
The Fed also confirmed it will begin a new round of quantitative easing in January, spending $45 billion per month to buy US government debt with no limit on the program’s total purchases.
“Any QE should be positive for the yellow metal,” said one wholesale gold dealer before Wednesday’s announcement.
Yet after jumping $10 an ounce to a 2-week high of $1723 on the news, the Gold Price then fell back, dropping through $1700 at the start of Asian trade.
“What is behind this weakness?” asks Dubai-based gold dealer INTL FCStone.
“We suspect that with the Fed now on a prolonged easy stance, the lack of progress coming out of Washington with respect to the fiscal cliff talks [regarding $600bn of scheduled US spending cuts and tax hikes] is causing increasing concern.
“We would rather watch things from the sidelines for the time being, as the markets are getting too choppy to trade.”
More than 60% of the new, open-ended QE program will be spent on medium and long-term US Treasury bonds, the New York Fed said yesterday.
Yet longer-dated US bonds fell early Thursday, pushing the interest rates they offer to investors higher.
The US Dollar meantime reversed an overnight drop versus the Euro and British Pound, helping the gold price in those currencies recover a little from 1-week lows.
Silver fell to $32.79 on Thursday morning, down $1.00 per ounce from Wednesday’s 2-week high.
“We remain gold bulls,” says Swiss investment and bullion bank UBS in a new commodities review today.
“Ongoing uncertainty around US fiscal issues, together with the view that major central banks will maintain loose monetary policies for longer, are key supports of our outlook.
“Gold’s ‘X-factor’ is a resolution [to the fiscal cliff] that includes a lift to the debt ceiling which, in turn, increases the likelihood of ratings agency action [ie, downgrading the United States’ long-term credit rating], boosting gold’s popularity in 2013.”
The Bank of Japan is meantime planning to allow hedge funds and other financial speculators to receive money from its quantitative easing program, according to Bloomberg, removing the current restriction on interbank lending.
Bloomberg’s “insider sources” also say the BoJ wants to avoid boosting Japan’s huge government debts, and so will target private-sector assets with its newly-created money instead.
“While the Yen has fallen almost 5% against the Dollar in the past month,” notes the newswire, “it’s still stronger than the ¥100 per Dollar that Nissan Motor Co. chief executive Carlos Ghosn said is the currency’s ‘neutral range’.”
The Swiss National Bank remains “prepared to buy foreign currency in unlimited quantities” it said again today, creating and selling Francs on the FX market to its hold its value beneath €1.20.
Swiss banking giant UBS this week joined its rival Credit Suisse in setting its short-term interest rate for depositors below zero, charging account holders for running a positive balance.
Gold price chart, no delay | Buy gold online at live prices
Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver vaulted in Zurich for just 0.5% in dealing fees.
(c) BullionVault 2012
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
US News Once Again Set to Impact Markets Today
Source: ForexYard
The US dollar took losses against most of its main currency rivals throughout European trading yesterday, amid speculations that the Fed would announce an expansion of its bond buying program to boost the US economic recovery. As a result, commodities, including gold and crude oil, saw upward movement over the course of the day. Today, US news is once again forecasted to generate market volatility. In addition to any developments in the ongoing “fiscal cliff” negotiations, traders will also want to pay attention to the Core Retail Sales, Retail Sales, PPI and Unemployment Claims figures, all set to be released at 13:30 GMT.
Economic News
USD – Dollar Takes Losses against Riskier Currency Rivals
Speculations that the Fed would announce a new round of quantitative easing yesterday caused the US dollar to fall against most of its higher-yielding currency rivals. The AUD/USD rose as high as 1.0555 during European trading, its highest level in almost three-months. Against the CAD, the greenback fell 0.9852, its lowest level since mid-October. Still, the news was not all bad for the dollar. The USD/JPY hit an eight-month high at 82.90 due to speculations that the Bank of Japan is likely to initiate a new round of monetary easing in the very near future.
Today, dollar traders will want to pay attention to a batch of US news set to be released during mid-day trading. With both the Core Retail Sales and PPI figures forecasted to come in below last month’s results, the USD could see additional bearish movement during afternoon trading. That being said, a better than expected Unemployment Claims or Retail Sales figure could help the greenback recoup some of its recent losses.
EUR – Risk Taking Helps Euro Extend Gains
The euro was able to advance against several of its main currency rivals throughout the day, as the combination of positive German data from earlier in the week and signs of progress in US “fiscal cliff” negotiations led to investor risk taking. The EUR/USD gained more than 50 pips during the European session, eventually reaching as high as 1.3052 before dropping back to the 1.3030 level. Against the Japanese yen, the common-currency advanced more than 60 pips to trade as high as 108.20.
Today, euro traders will want to pay attention to any announcements out of the EU Economic Summit, scheduled to take place throughout the day and tomorrow. While positive German news helped the euro in recent days, uncertainties regarding the economic and political situations in Italy and Spain still threaten to turn the currency bearish. If today’s summit signals any kind of slowdown in the EU economic recovery, the euro could see downward movement going into the end of the week.
Gold – Gold Capitalizes on Bearish US Dollar
Gold prices increased throughout the day yesterday, amid bearish movement for the US dollar which made the precious metal more affordable for international buyers. As a result, prices were able to advance close to $7 an ounce during European trading before peaking at $1718.80. By the beginning of evening session, gold was priced just below the $1717 level.
Today, gold traders will want to pay attention to announcements out of the EU economic summit regarding the current state of the euro-zone recovery. Any indication of an economic slowdown in the EU could result in gold giving up some of yesterday’s gains.
Crude Oil – Signs of Increased Demand Boost Oil Prices
The price of oil was able to move up close to $1 a barrel during European trading yesterday, amid signs of an increase in global demand. Furthermore, speculations that the US Federal Reserve was getting ready to expand its bond buying program generated risk taking among investors, which helped boost commodity prices. By the end of the European session, crude was trading just below the $87 level.
Today, oil traders will want to pay attention to a batch of US news, set to be released at 13:30 GMT. Should any of the news come in above expectations, it may be taken as a sign that US demand for oil will increase, which could help crude extend its bullish trend.
Technical News
EUR/USD
The Bollinger Bands are narrowing on the weekly chart, indicating that this pair could see a price shift in the coming days. Furthermore, the Williams Percent Range on the same chart is approaching the overbought zone, signaling that the shift could be downward. Traders may want to open short positions for this pair.
GBP/USD
While the Relative Strength Index on the daily chart is approaching the overbought zone, most other long-term technical indicators show this pair range trading. Taking a wait and see approach may be the best choice at this time, as a clearer picture is likely to present itself in the near future.
USD/JPY
Both the Williams Percent Range and Relative Strength Index on the weekly chart are currently in overbought territory, signaling that this pair could see a downward correction in near future. Furthermore, the Slow Stochastic on the same chart is close to forming a bearish cross. Opening short positions may be the best choice for this pair.
USD/CHF
The daily chart’s Bollinger Bands are narrowing, indicating that a price shift could occur in the near future. Furthermore, the Williams Percent Range on both the daily and weekly charts is approaching the oversold zone, signaling that the shift could be bullish. Opening long positions may be the smart choice for this pair.
The Wild Card
EUR/JPY
The daily chart’s Relative Strength Index has crossed over into overbought territory, signaling that this pair could see a downward correction in the near future. Furthermore, the MACD/OsMA on the same chart appears close to forming a bearish cross. Opening short positions may be the smart choice for forex traders today.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Central Bank Prints More Money — No One Cares
This morning the Financial Times reports:
‘The Fed also beefed up its third round of quantitative easing to $85bn a month – adding $45bn of Treasury purchases to its commitment to buy $40bn of mortgage-backed securities each month – and said it will keep buying until there is a substantial improvements in the labour market.’
There was a time when an announcement about central bank money-printing would have sent the market cock-a-hoop.
Stocks would have taken off.
But the market met this latest round of money-printing by the US Federal Reserve with little more than a pfffffffftttttt. The S&P 500 gained a total of 0.04%.
It’s good to see the market has finally caught up with our view on this. News of Fed money-printing has bored your editor rigid for the past two years.
We’re more inclined to think that the best way to defeat the central bankers is to employ the ‘bad child’ strategy – just ignore them.
Because one thing now appears clear: the days of making money from central bank money-printing are over. It’s back to old-school investing…
Face it, even Goldman Sachs hasn’t made the same megabucks that it did a few years ago.
In 2009, Goldman Sachs made $13.4 billion profit. In 2010 it made $8.4 billion profit. In 2011 it made $4.4 billion profit…
And for the first nine months of this year, world governments’ favourite bankers have racked up USD$4.6 billion in profits (USD$5.6 billion if you include the last three months of last year).
So, why did investors give this round of Fed money-printing the cold shoulder? We asked our resident Fed-watcher and technical trading guru, Murray Dawes, to explain:
‘The $45 billion of Treasury purchases announced last night just replaces the buying that occurred with Operation Twist. In Operation Twist they sold short-term bonds and bought long term Treasury bonds. But they have run out of short-term bonds to sell, so now they are going to buy $45 billion of Treasuries outright. If they didn’t do that and Operation Twist ended, then their buying at the long end of the yield curve would have more than halved.’
The fact is the world has been turned on its head for the past four years. People and investors have forgotten the real driver of prosperity and wealth.
It’s not central bankers or governments that create wealth, it’s entrepreneurs, business people, and individuals…each acting in their own selfish interest.
That’s best shown in an article in the UK Daily Telegraph discussing Google’s tax avoidance methods:
‘”It’s called capitalism,” he [Google chairman, Eric Schmidt] said. “We are proudly capitalistic. I’m not confused about this.”
‘In Britain Vince Cable was unimpressed by Mr Schmidt’s views. The Business Secretary told The Daily Telegraph: “It may well be [capitalism] but it’s certainly not the job of governments to accommodate it.”‘
We’ll agree that avoiding taxes is capitalistic. But we’ll take issue with Mr Schmidt’s claim that he and Google are ‘proudly capitalistic’. After all, as the Daily Mail reported, Google donated USD$1.9 million to Barack Obama’s re-election fund.
Donating money to the State isn’t capitalistic…it’s fascistic at best.
The Economy’s Engine Room Starts to Fire-Up
But Mr Cable’s comment on the role of government is key. Governments aren’t interested in entrepreneurialism, wealth or prosperity. They just want to take money from one group of folks and give it to another.
That’s why investors have to stop begging central banks and governments to ‘do something’ about the economy.
What really needs to happen is for the meddlers to leave the economy alone. They need to let entrepreneurs do what they do best – create ideas and wealth.
But right now, with central bank meddling, the big banks have received a free-kick, while the entrepreneurial engines of the economy (small companies) have gotten kicked in the teeth.
You can see this on the chart below of the banking sector (blue line) and the Emerging Companies Index (pink line):
Source: CMC Markets Stockbroking
Small companies can’t get access to funding because investors are too cautious about the direction of the economy. OK, that’s not strictly true. They can get funding by issuing new shares, but at a big discount to the current market price.
Most investors would rather keep their money safe than punt on a risky stock.
Trouble is that becomes self-fulfilling. The more the meddlers meddle, the more uncertain investors become, and the less likely they are to take risks. That’s until it reaches a stage where no one cares what the central bankers do.
In our view the market has hit that point now…
Why 2013 Could be a Great Year for Small-Cap Stocks
That should be good news (finally) for smaller companies. If investors start believing the easy money is over, it means they’ll look at risky stocks again.
There are a lot of good little companies trying out some pretty incredible things. For instance, over the past few months we’ve come across a bunch of companies in the IT and internet sector that stand to make big strides in the coming years as the National Broadband Network (NBN) nears completion.
But these companies were doing great things even before the NBN. The point is business people come up with new ideas all the time. They just need the opportunity to express those ideas.
We thought that time wouldn’t come until the meddlers stopped meddling. But perhaps we got that wrong. All it needed was for investors to become desensitised to the meddling.
As last night’s performance of the S&P 500 shows, that’s happening now. We can’t guarantee it, but after more than a year of terrible small-cap stock market returns, we’re prepared to bet that 2013 could be a great year for those investors who are prepared to take a risk.
Cheers,
Kris
From the Port Phillip Publishing Library
Special Report: The Fuse is Lit
Daily Reckoning:
The Australian Dollar Flys Higher While Investors Look to Get High
Money Morning:
The Price of Risk in the Stock Market
Pursuit of Happiness:
The One Industry Where the State and Government Excels
Australian Small-Cap Investigator:
Why Invest In Small-Cap Stocks? And Why Now?
