InvestMacro Forex News

Source: ForexYard

The US Dollar received some added support yesterday evening after the Federal Reserve issued a statement saying there are clear signs that the American economy is on its way to recovery. While the Fed stopped short of raising record low interest rates, the positive statement was enough to boost the Dollar against both the EUR and Yen.

As of this morning, the USD had reached below the 1.44 price level against the EUR, and seems poised to stay above 90 Yen throughout the day. If today’s market news continues showing positive American data, and relatively stable European data, this trend will likely hold for the rest of the week.

Additionally, we have on one hand a rising Dollar, which normally puts downward pressure on commodities like Gold and Crude Oil. On the other hand we have large declines in oil inventories which suggest a boost in demand, or a shortening of supply, both of which are driving oil prices back up towards $75 a barrel. I suspect that the rising dollar simply has not yet been felt in oil trading and we should see some downward corrections later 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.

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 4 July 2012, 07:00 EDT

WHOLESALE MARKET gold prices held steady around $1615 an ounce during Wednesday morning’s London trading – 1.1% up on last week’s close – while stocks edged lower and the Dollar gained, amid reports that the European Central Bank is expected to cut interest rates tomorrow.

A day earlier, gold prices rallied as high as $1624 an ounce during Tuesday’s US trading, the last trading day before today’s Independence Day holiday.

“Short covering and bargain hunting helped support the rally,” says a note from Commerzbank, referring to the practice of traders who have bet on gold going lower closing their position by buying gold futures or options.

Spot silver prices meantime climbed as high as $28.41 an ounce this morning – 3.2% up on the week so far – as other industrial commodities edged lower.

On the currency markets, the Euro fell below $1.26.

“The main focus of the week is Thursday’s ECB meeting, where a rate by of 25 basis points [one quarter of a percentage point] by the ECB is expected,” says a note from Swiss bullion refiner MKS.

The ECB’s main policy rate currently stands at a record low of 1% – though it remains higher than those of the Bank of England and the Federal Reserve.

“The economic case for a 50 basis-point rate cut is pretty watertight,” says Ken Wattret, chief Euro-area economist at BNP Paribas.

“But for now it’s easier to just cut by 25 basis points…that is enough to show you are standing ready to do something,” he adds, noting that a cut in rates would benefit banks that borrowed over €1 trillion at the ECB’s three-year longer term refinancing operations (LTROs) in February and December.

Cutting interest rates would be “a bold move and will lead the ECB into uncharted territory” says Julian Callow, chief European economist at Barclays Capital in London.

“With soaring unemployment and few signs of the economy recovering, some strong monetary medicine is needed. But let’s be honest, a rate cut by itself will not end the recession, we need much more for that.”

The services sector of the Eurozone economy continued to contract last month, although at a slowly rate than in May, according to purchasing managers index data published Wednesday. The June Eurozone Services PMI was 47.1 – up from 46.7 in May (a figure below 50 indicates sector contraction).

Germany’s Services PMI meantime fell by more than expected, from 51.8 in May to 49.9 last month.

Here in London, the Bank of England is also due to announce its latest policy decision on Thursday, when it is widely expected to announce at least a further £50 billion in quantitative easing asset purchases.

“As everybody now expects QE the announcement effect has already happened so there will be very little negative impact [on Sterling], if any at all,” reckons Adam Cole global head of FX strategy at investment bank RBC Capital Markets.

Last month’s UK Services PMI showed a bigger sector slowdown than most analysts were expecting, coming in at 51.3 – down from 53.3 in May.

The front pages of British newspapers are dominated today by the appearance before the Treasury Committee of former Barclays chief executive Bob Diamond (available to watch live at 2pm UK time), after written evidence from Barclays included reference to a conversation between Diamond and the Bank of England’s Paul Tucker.

Tucker, the Bank’s deputy governor for financial stability and a possible replacement for Mervyn King as governor, was one of two Bank staff members cited by the Telegraph this week as having benefited from pension pot gains in excess of £1 million over the last year, “due mainly to a fall in gilt yields”.

The US economy meantime will grow at 2% this year, according to revised International Monetary Fund forecasts. The IMF also cut its 2013 growth forecast yesterday, from 2.4% to 2.25%, citing the risks posed by the so-called “fiscal cliff” – the combination of spending cuts and tax rises due to come in next January unless lawmakers agree alternative policies.

“It is critical to remove the uncertainty created by the ‘fiscal cliff’,” the IMF’s report says, “as well as promptly raise the debt ceiling, pursuing a pace of deficit reduction that does not sap the economic recovery.”

“No country can go on with heavy and growing debt,” added IMF managing director Christine Lagarde.

“In order to bring the debt under control, action needs to be taken over a period of time…it needs to be gradual, not so contractionary that the economy stalls.”

“Americas debt/GDP [ratio] at close to 100% is not near-term threatening,” says Bill Gross, founder of world’s largest bond fund Pimco, in his monthly Investment Outlook.

“But if continued upward on trend could be absolutely debilitating….an authentic debt crisis – which the world is now experiencing – can only be ultimately cured in two ways: 1) default on it, or 2) print more money in order to inflate it away. Both 1 and 2 are poison for bond and stock holders.”

Back in Europe, Deutsche Bank has cuts its gold forecast for 2012 to an average gold price of $1726 per ounce – down from the previous forecast of $1800 – with analysts citing the “holding pattern” they say has been adopted by central banks. Next year, however, Deutsche Bank forecasts gold will average $2050 per ounce – more than 25% higher than its current level.

“While we question the effectiveness of [monetary policy] in sustainably supporting growth in the western world,” a note from Deutsche says, “we do believe that it will have the effect of pushing up gold prices as the metal responds to the implied erosion in value of money in Dollar terms.”

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

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.

By Central Bank News

By TraderVox.com

Tradervox.com (Dublin) –After last Friday’s announcement by the EU leaders, the market has been volatile with risk appetite growing by the day. Today, the Services PMI report in England and the Retail Sales in Australia are what investors are looking at. However, some of the reports that are shaping sentiments today include the Final Services Purchasing Managers’ Index which shows the results of a monthly survey on the rate of business conditions including employment, supplier deliveries, inventories, and new orders. This is expected to remain at 46.8 points for June. Further, the retail Sales in Europe is expected to show an increase to 0.2 percent. Investors will also be keen on the Final Gross Domestic Product for the euro region.

Prior to BOE rate decision meeting tomorrow, the market will be treated to PMI report which is expected to come at 53.0 this time down from 53.3. Great Britain Housing Equity Withdrawal report is due to be released today where a rise to negative 7.9 billion pound is expected. In addition, the market will be waiting for the Retail Sales report from Australia which might add to the strength of the Aussie as an increment to 0.3 percent is expected from last month’s 0.2 percent.

Investors will be looking at the indications of stimulus in those reports and we might see the market preparing for stimulus which will increase the demand for riskier assets. Economists and analysts are also looking at conditions in Germany to see whether the recent decision by the EU summit will give euro the required impetus to rally for longer. Further, as Spain troubles continue with some countries in the euro region opposing the decision to give ESM the ability to buy bonds directly, Italy has been seen as the next bailout-case in the euro region. Finally, there are sentiments regarding the Fed’s action that have added to the demand for riskier assets.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By TraderVox.com

Tradervox.com (Dublin) – There is a upsurge in demand for riskier assets in the market as speculation that central banks around the world are making efforts to spur growth in their respective economies. This has led to the weakening of safe haven currencies such as the US dollar and the yen. The yen has dropped the most against most of its peers as investors scramble for riskier assets.

According to the Bank of Tokyo-Mitsubishi UFJ Ltd, the US job data expected to be released may add to the case of Federal Reserve adding stimulus to spur growth in the US economy which has faltered according to the recent data. The Dollar Index fluctuation has been associated to the expected results of the job data. Further, economists are also projecting a rate cut by the European Central Bank which meets tomorrow. According to Adrian Schmidt of Lloyds Banking Group Plc, economists are expecting the ECB to lower interest rates and the Bank of England to engage in more quantitative easing or large-scale buying of assets.

The European Central Bank and the Bank of England will publish their policy decisions tomorrow. The ECB officials are set to announce a reduction in interest rate to 0.75 percent while the deposit rate will be set at zero. Market analysts have also suggested that the Bank of England will announce quantitative easing measures as the Governor of the BOE had voted to add stimulus in their last meeting. The Fed is expected to add stimulus through quantitative easing as poor employment figures continue to show signs of economic slowdown. Nonfarm payrolls due on Friday July 6 will is expected to show a drop.

The Japanese currency dropped by 0.7 percent against the euro to trade at 100.72 yen per euro yesterday during the New York trading session. The yen also dropped by 0.4 percent against the US dollar to trade at 79.79 but the greenback fell against the euro by 0.4 percent to trade at $1.2622.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Daily Market Analysis by Real-Forex

Tracking the EUR/USD pair

Date: 03.07.2012   Time: 18:36  Rate: 1.2622

Daily chart

Last Review

The price has stopped at the 1.2436 price level and created a large green candle in the weekend. Breaching the 1.2750 price level will indicate that an uptrend is building up while this level is the neckline of the “Double bottom” pattern which has a target around the 1.3090 price level. On the other hand, if the price will not break the 1.2750 price level and will move downwards under the 1.2436 price level will indicate that the price will descend at first stage to the last low on the 1.2290 price level.

Current review for today

The price has descend to check the Bollinger moving average which is suppose to use as a dynamic support, in case it will actually become a support- the price should breach the 1.2750 price level since this level is the neckline level of the “Double bottom” pattern and its target is around the 1.3090 price level. on the other hand, if the price will not break the 1.2750 price level and go back under the 1.2436 level, it is possible to assume that in first stage the price will check the last low on the 1.2290 price level.

You can see the chart below:

4 Hour chart

Date: 03.07.2012   Time: 18:07 Rate: 1.22621

Last Review

The price has stopped at the 1.2440 support level, jumped to the 1.2690 price level and stopped at this level while correcting the last move upwards by exactly 38.2%. Stoppage of the price at the current area and its breaking of the 1.2690 price level will probably continue the uptrend while its first target is the last peak on the 1.2750 price level. On the other hand, breaking of the 1.2580 price level will probably continue the correction with targets at the 1.2550 and the 1.2516 price levels.

Current review for today

It looks like the price has stopped at the 38.2% Fibonacci correction level of the last uptrend (blue broken line) and it is possible to assume that its first target from this point is the 1.2690, while breaking this level will lead the price towards the last peak on the 1.2750 price level. on the other hand, proven breaking of the 1.2580 price level will probably continue the correction towards the 1.2550 and the 1.2516 price levels.

You can see the chart below:

GBP/USD

Date: 03.07.2012   Time: 17:10  Rate: 1.5690

4 Hour chart

Last Review

The price went back to the 1.5540 support level and went back to check the trend line which connects the lows (points 2 and 4). Breaching of the 1.5716 price level will indicate that it is possible that the price will check again the last peak on the 1.5777 price level. On the other hand, breaking of the 1.5660 price level will indicate that the price is headed towards the closest support on the 1.5613 price level.

Current review for today

The price is clearly supported by the dynamic support in the shape of the Bollinger’s moving average which sharply goes upwards and brings power to the ascending move. Breaching the 1.5716 price level will probably lead the price to check again the last peak on the 1.5777 price level. on the other hand, breaking the 1.5660 price level will probably lead the price towards the closest support level at first stage.

You can see the chart below:

AUD/USD

Date: 03.07.2012   Time: 17:22  Rate: 1.0282

4 Hour chart

Last Review

The price did break the 1.0075 price level and reached the target of the last review on the 1.224 price level and even passed it. At this point the price is checking whether the resistance level can be used as a support, while breaching of the 1.0278 price level will continue the current uptrend. On the other hand, breaking of the 1.0224 price level will indicate that it is possible that we will see a correcting move towards the 1.0171 price level at first stage, this is a 38.2% Fibonacci correction level of the move upwards )blue broken line).

Current review for today

The price breached the 1.0278 price level and currently going back to check whether this level can switch its role from a resistance to a support. In case it will, the first target will be the 1.0326 price level. On the other hand, breaking of the 1.0224 price level will probably lead the price to a correction towards the 1.0170 price level at first stage, this is a 38.2% Fibonacci correction level of the last move upwards (blue broken line)

You can see the chart below:

Important announcements for today:

09.30 (GMT+1) GBP – Services PMI

Daily Market Analysis by Real-Forex

By Central Bank News

By TraderVox.com

Tradervox.com (Dublin) –The Canadian dollar rose against the US dollar the most in six weeks after crude oil climbed on speculation the European Central Bank may cut interest rate. The advance was also supported by the Chinese central bank decision to help the Euro region in dealing with the debt crisis. The loonie has advanced against most of its 16 major counterparts as commodity related currencies gain traction in the market. Risk appetite has emerged in the market since Friday, but it has been hampered by the recent opposition to the EU Summit decision.

Joe Manimbo of Western Union Business Solutions in Washington said that the current surge in commodity currencies is as a result of speculations that central banks around the world will offer stimulus to spur growth in the global economy. Shane Enright, an Executive Director at Canadian Imperial Bank of Commerce in Toronto said that the advance of the Canadian dollar will determined further by the US payrolls data expected on July 6. On the same day, the Canada’s Jobless report will be released and these two reports will determine how the Canadian dollar closes the week.

It is expected that jobless rate remained unchanged in June from May 7.3 percent; this report will be released by the Statistics Canada agency on July 6. Economists are also projecting an addition of 5000 jobs in the economy as compared to 7,700 jobs in May. In US, a government report is set to show that employers added less than 100,000 jobs in June.

However, the Canadian dollar added 0.5 percent against the dollar to trade at C$1.0122 as crude oil climbed by 5.1 percent to trade at $88.04 a barrel in New York. Further, the currency advanced as economists predict the European Central Bank will cut interest rate by 0.25 percent to set a new interest rate at 0.75 percent when they meet later this week.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By Central Bank News
    The Riksbank, Sweden’s central bank, kept its benchmark repo rate unchanged at 1.50 percent to support the country’s economy as problems in the euro area cast a shadow.
    But the Swedish economy continues to grow and many of the country’s most important trading partners are expected to continue to expand, albeit at a slow pace, the Riksbank said in a statement.
    “There is considerable uncertainty concerning economic developments,” the bank said, adding that work on rectifying problems in the euro area is continuing but the economic downturn there is expected to be protracted, subduing Swedish exports.
    “The situation in the euro area is problematic and could worsen, which could have further negative effects on the Swedish economy. In this situation, the repo rate may need to be lower,” the bank said.

     “However, it is also possible that confidence in economic developments could return sooner than expected, which could lead to higher demand in the Swedish economy. This would justify a higher repo-rate path.”
    The bank said it expected to hold its repo rate at this level for just over a year and when inflationary pressures resume, the repo rate would have to be gradually raised.
    “This repo-rate path will contribute to stabilising inflation around 2 per cent and resource utilisation in the economy around a normal level. Compared with the decision in April, the repo-rate path has been adjusted downwards somewhat as a result of the poorer outlook abroad.”
   The bank’s new average quarterly forecast showed the repo rate falling to 1.4 percent in the fourth quarter of this year, down from April’s forecast of 1.5 percent, and then rising to 1.6 percent in Q3 2013, down from the April forecast of 1.8 percent. It is then forecast to rise to 2.4 percent in Q3 2014, down from a previous forecast 2.6 percent. It’s new forecast included an average repo rate of 3.1 percent in the third quarter of 2015.
    Inflation (CPI) is now expected to average 1.1 percent in 2012 and rise to 1.7 percent in 2013 and 2.8 percent in 2014.
    The Riksbank’s last rate cut was in February, when it was cut by 25 basis points to the current 1.5 percent.
    www.CentralBankNews.info

By MoneyMorning.com.au

‘The success of Asian economies such as Korea didn’t happen through the ideological miracle of economic bushfires, where the conditions need to be just right for their creation naturally.

‘They were deliberately built through considered and targeted government policy – picking winners and planning for long-term growth.

‘The Samsung story itself is incredible.

‘Driven by government-sponsored credit and policy vision, Samsung now accounts for more than ten per cent of the country’s GDP.’

In one breath, Mr. Howes denies the existence of entrepreneurialism and creative destruction.

In Mr. Howes’ (and other central planners’) world, it’s government that creates jobs.

They believe that a nation needs a group of wise overlords to guide and direct the economy.

In their view, nothing happens without government intervention.

As they see it, governments come up with the bright ideas and it’s then up to the market to fulfil those ideas. If the market doesn’t do it, it’s not because the idea is rubbish, it’s because the market has failed.

But while Samsung may be a wonderful example of a government picking winners, let’s not forget the other side of the coin — the hundreds or thousands of South Korean businesses that failed, the money lost and the lives ruined because the government backed Samsung while not giving the same favours to others.

Or let’s look at an example of another global brand that received government support — Nokia.

Until recently, Nokia was the world’s leading mobile phone company. And it was Finland’s biggest company.

Government Intervention and the Lesson of Nokia

But having favoured status didn’t protect the company from error. It made two crucial business mistakes that would cause it to miss out on the two biggest trends in the mobile phone industry during the past 10 years.

First, it missed the trend towards ‘flip’ mobile phones. It stayed with the ‘brick’ style that had won it millions of customers over the years. But at the time consumers wanted compact and sleek phones. The kind you could neatly hide away in a pocket or handbag.

But as you know, technology changes quickly. The trend for compact and sleek phones didn’t last long. Perhaps if Nokia caught the next trend wave it would be fine.

But no, it missed that too. That was where consumers wanted the opposite of sleek and compact. Mobile phones (smart phones) became fashion accessories.

Consumers wanted big screens. The bigger the better. No longer were mobile phones stashed in pockets or handbags, now they were laid out on the table or desk where everyone could marvel at the size of your screen and the smallness of your pixels.

Nokia missed out. But Apple and Samsung didn’t.

The result is that Nokia’s share price has fallen from USD$40 in 2008 to just USD$2.82 today.

Success and failure come and go quickly in business, especially in technology. So the idea that any business should account for 10% of a nation’s GDP (gross domestic product) isn’t a point of pride, it’s a point of concern.

Take an example close to home. BHP Billiton [ASX: BHP] and Rio Tinto [ASX: RIO] made combined revenues of $127 billion last year.

That’s about 10% of Australia’s GDP. Again, that may sound great, but not so much when those revenues are at the mercy of a slowing Chinese economy.

So South Korea, like Australia, isn’t a poster-child for positive government intervention. Rather they are poster-children for what happens when a government intervenes and manipulates to create a lop-sided and fragile economy.

Of course, the idea that government intervention creates prosperity is nonsense.

Government Intervention Hinders, Not Helps

Government’s don’t create opportunities…or plan for long-term growth. Governments hamper opportunities. And they only ever plan for short-term growth (even though they pretend they’re planning for the future).

That governments take the credit for progress, wealth and high standards of living is a falsity that must be corrected. Progress and wealth comes from freedom and opportunity, not from central planning and State intervention.

Tomorrow, we’ll explain how it hasn’t been the increase of government intervention powers that has created so much wealth and progress. Instead, it was the end of centuries of human oppression and the reduction in government involvement.

Kris Sayce
Editor, Money Morning

From the Archives…

The Hard Lesson of a Stock Trader: No Pain, No Gain
2012-06-29 – Kris Sayce

How Gold Prices Look Set to Climb As Banks Crumble
2012-06-28 – Peter Krauth

‘Big Wednesday’ For the Aussie Dollar
2012-06-27 – Dr. Alex Cowie

Three Reasons Why Silver Could Take Off in 2012
2012-06-26 – Dr. Alex Cowie

Who is Winning the Battle Between the Bulls and Bears?
2012-06-25 – Kris Sayce

Why Government Intervention Hinders Progress and Innovation