InvestMacro FX

By TraderVox.com

It was an important day for GBP as Bank of England was to decide two important matter- interest rate and quantitative easing. The interest rate was kept unchanged at 0.5%. There were rumors of pumping in more money than expected 50 billion pounds. Bank of England introduced only 50 billion pound so the market reacted positively and pound rose to high of the day at 1.5885. It has since retraced those gains and is currently trading at 1.5858, up about a quarter of percentage. Now the support lies at 1.5850 and below 1.5820. The resistance may be seen at 1.5900.

Some positive developments were also seen for Euro as well. ECB kept the interest rate unchanged at 1%. Some reports of clinching Greek deal by Greek politicians propelled Euro break the 1.3300 levels within minutes. It formed a high of 1.3320, level last seen almost 2 months back. It is currently trading at 1.3285, up about 0.20%. The support now may be found at 1.3260 and 1.3220. The resistance will be seen at 1.3300 and 1.3330.

Australian dollar hit many times to an important psychological level of 1.0800. But after hitting a high of 1.0825, it failed to hold the levels. The support is at 1.0870 and 1.0730. The resistance may be seen at 1.0800 and at 1.0830.

The USD/CHF pair has come closer to 0.9100 levels again during the US session. The risk appetite has forced the pair lower. The support may be seen at 0.9070 and 0.9050. The resistance may be seen at 0.9120 and 0.9150.

An exception to US dollar weakening move is USD/JPY pair. It is taken out the previous high of the day and formed a new high of 77.46. It is currently trading near the high at 77.42, up about half a percentage. The support may be seen at 77.25 and below at 77/77.10. The resistance may be seen at 77.50 and 77.70.

The dollar index is trading at 78.54. The US dollar is clearly under the pressure as the Greek deal seems to be a reality now. An official announced on the deal may push the Euro higher towards 1.3400 levels.

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The Bank of Korea kept its 7-day repurchase rate at 3.25%.  The Bank said: “In Korea, economic growth has slowed, with domestic demand subdued overall and exports also decreasing. On the employment front, however, the uptrend in the number of persons employed is being sustained, led by the private sector. The Committee anticipates that the domestic economic growth rate will gradually return to its long-term trend level going forward, although viewing downside risks as likely to remain high for some time due mostly to the impact of external risk factors.”

At its January meeting the Bank of Korea also held the interest rate unchanged at 3.25%, after increasing the 7-day repurchase rate by 25 basis points to 3.25% at its June meeting.  South Korea reported a steady consumer price inflation of 3.4% in January, down from 4.2% in November, compared to 3.9% in October, 4.3% in September, 5.3% in August, 4.7% in July 4.4% in June, 4.1% in May, and 4.2% in April. 

The inflation rate is currently just within the Bank’s inflation target of 2%-4% through 2012.  The South Korean economy grew 0.7% in Q3 (0.9% in Q2), placing annual GDP growth at 3.4% (3.4% in Q2).  The South Korean Won (KRW) has gained about 1% over the past year against the US dollar, while the USDKRW exchange rate last traded around 1,120.

The European Central Bank (ECB) kept its Main refinancing operations rate at 1.00%.  ECB governor, Mario Draghi, said: “Inflation is likely to stay above 2% for several months to come, before declining to below 2%. Available survey indicators confirm some tentative signs of a stabilisation in economic activity at a low level around the turn of the year, but the economic outlook remains subject to high uncertainty and downside risks…. A very thorough analysis of all incoming data and developments over the period ahead is warranted.”

The ECB previously announced (noting further collateral approvals) a series of measures “to support bank lending and money market activity”. These measures included longer-term refinancing operations (LTROs), reduction in the reserve ratio to 1% from 2% presently, and increasing collateral availability through reducing the rating threshold for asset-backed securities (ABS), and allowing national central banks to accept bank loans as collateral. Essentially the moves are designed to prevent a freezing up of credit markets and liquidity akin to that seen during the global financial crisis. 

Previously the ECB cut the interest rate by 25 basis points at its November and December meetings.  The ECB last increased the interest rates by 25 basis points at its July meeting; pausing in May and June, after raising the rate by 25 basis points to 1.25% in April last year.  The Euro Area reported annual HICP inflation of 2.7% in January, 3% in November and October and September, 2.5% in August and July, 2.7% in June (same as May) and above the Bank’s inflation target of maintaining inflation below, but close to, 2% over the medium term. 

The Euro Area reported quarterly GDP growth in the September quarter of 0.2% (1.4% y/y); the same as the June quarter of 0.2%, following a 0.8% increase in the March quarter, and a 0.3% increase in the December quarter of 2010.  The Euro (EUR) has weakened by about 3% against the US dollar over the past year, while the EURUSD exchange rate last traded around 1.33

www.CentralBankNews.info

Source: ForexYard

The US dollar saw a mixed trading day today, as positive news boosted risk taking in the marketplace which led to gains for currencies like the euro and British pound. News that the Bank of England will inject an additional 50 billion pounds to support the economic recovery, combined with word that Greece had finally reached an austerity deal, caused investors to shift their funds away from safe-havens. As a result, the EUR/USD spent much of the day hovering around the 1.3300 level, an increase of almost 100 pips from a day earlier.

While the greenback dropped against riskier currencies, it was able to extend its gains against the Japanese yen following the release of a better than expected US Unemployment Claims figure. The figure showed that 358K people claimed first time unemployment benefits in the US last week. That number was substantially lower than the anticipated 369K, and was seen as further proof that the US economy was moving ahead with its recovery. The USD/JPY reached as high as 77.34 after the news was released, before staging a slight downward reversal.

Turning to tomorrow, traders will want to continue paying attention to any news out of the euro-zone, which could lead to an increase in risk taking. In addition, the UK PPI Input figure at 09:30 GMT, followed by Trade Balance reports from the US and Canada at 13:30 GMT, are likely to generate heavy trading to close out the week. Should any of the economic indicators come in above expectations, the dollar is likely to extend its losses against the European currencies.

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.

The Bank of England (BoE) held the Bank Rate at 0.50%, and expanded its Asset Purchase Program (Quantitative Easing) target by 50 billion to a new total of GBP 325 billion, after increasing it by 75 billion at its October meeting.  On its asset purchase program, the Bank said: “In the light of its most recent economic projections, the Committee judged that the weak near-term growth outlook and associated downward pressure from economic slack meant that, without further monetary stimulus, it was more likely than not that inflation would undershoot the 2% target in the medium term.”

The Bank also held the official Bank Rate unchanged at 0.50% at its December meeting last year; the rate has remained on hold since March 2009, when the Bank reduced the interest rate by 50 basis points to 0.50%.  The United Kingdom reported annual consumer price inflation of 4.2% in December, 5.2% in September, 4.5% in August, and 4.4% in July, and still above the Bank’s inflation target of 2.00%.

Cisco Systems (CSCO) announced earnings that beat analyst expectations, and raised its quarterly dividend. The networking equipment manufacturer reported earnings of $2.6 billion, or 47 cents per share during the fiscal second quarter and revenue of $11.5 billion.

EWI’s new eBook helps you identify trading opportunities

By Elliott Wave International

Elliott waves often correct in terms of Fibonacci ratios. The following article, adapted from the eBook How You Can Use Fibonacci to Improve Your Trading, explains what you can expect when a market begins a corrective phase. Learn how you can read the entire 14-page eBook below.

Retracements — Corrective Waves

If we look on the left side of this chart, we see a diagram of wave 1 followed by wave 2. It is common for second waves to retrace .618 of wave 1 — thereby making a deep retracement. We will also be looking for .786. We might often see .5, 50%, but .618 is common. On the right side, fourth waves will commonly retrace a smaller percentage or .382 of wave 3. We might also see something like .236.

Examples

I have put the wave count on this chart of the S&P 500. We have waves 1, 2, 3, 4 and 5. Wave 2 is an expanded flat. Wave 4 is a zigzag. Let’s look at the retracements that waves 2 and 4 make.

We see that wave 2 makes a deep retracement. It comes close to .618. Look at this Fibonacci table that I put up; notice that I put .382, .5, .618, and .786. .618 is 1087.75, and the S&P low is 1090.19.

We see that wave 4 makes a shallow retracement of wave 3. It goes just beyond the .382 retracement. .382 is 1169.1, and wave 4 actually bottoms at 1163.75.

In a nutshell, this is what we mean when we say that Elliott waves often correct in terms of Fibonacci ratios.

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By TraderVox.com

The US dollar gained from a two-month low against the Euro, after the announcement Greek Prime Minister that they may be running into some problem on the discussions on cutting down the country’s expenses.  The Finance Minister Evangelos Venilos left Athens for Brussels as the politicians were left discussing the pension cuts which have threatened to stall meeting.

As investors wait for the Troika meeting and the ECB decision, some analysts have already indicated that there will be no deal today. The comments from some of the leaders from the Greece meeting have indicated that they might need some more time to discuss some issues on the agreement. These comments have resulted favorably to the dollar with many investors preferring haven assets. Earlier speculations of a deal had forced the dollar to a two months low against the euro.

The dollar continued with its bullish trend against 14 of its major peers. This trend has been precipitated by the declining Asia equities which has boosted demand for the US dollar. This trend is expected to continue if no more good news coming from the Troika and Greece meeting.

With a 0.2 percent increase against the euro at 12:26 p.m., the euro was exchanging at $1.3237 down from $1.3313 that was reached since December 12. The dollar also gained against the Japanese currency by 0.2 percent to exchange at 77.19 yen per dollar. These levels are expected to change as the region’s finance ministers convene a meeting at 6 p.m. in Brussels.

The European Central Bank is expected to benchmark its interest rate at 1%. The meeting which is expected later today and the announcement by the banks president later today is expected to make some changes on its interest rate. Majority of the analysts are projecting the rate to be at 1% while others are projecting a cut to 0.75%. The last ECB announcement in Jan 12 saw the euro rise to .8 and .7 percent against the dollar and the yen respectively.

Article provided TraderVox.com
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News and analysis are produced throughout the day by our in-house staff.
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By TraderVox.com

The possibility of Greece securing a second bailout has pushed the Euro to a two-month high against the Yen and the Dollar. The regions Finance Ministers are expected to meet today for the approval of the second financing agreement for Greece. This has resulted to significant increase in demand for the European assets.

Despite the dispute over the pension cut, Greek politicians agreed on other aspects of the deal which has resulted to the advancement of the euro against the Yen for the second day. ECB is expected to meet today to put in place monitory policy required before Mario Draghi, the Bank’s President announces the policy at a press conference. Analysts are speculating that investors will be looking for haven assets.

According to Neil Jones, a hedge-fund sales head at Mizuho Corporate Bank, the euro has gained tremendously because investors are expecting a deal from today’s meeting. He added that only the final touches on the agreement will be done after which the market will be waiting for the announcement from Draghi to gauge hawkishness or dovishness.

The Euro rose 0.3 percent to 1.3303 at 8.44 a.m. London time but had touched it’s highest against the dollar since December 12 of 1.3313. Against the yen, Euro rose 0.4 percent to settle at 102.66; earlier, it had reached 102.77 yen which is the highest since December 13.

The gain was as a result of speculation that the Greece would pass the agreement on spending cuts which is one of the requirements for a second bailout set by the Troika which comprise of IMF, ECB, and the EU. However, the discussions stalled after the Greek lawmakers failed to agree on the pension cuts.

Later the Greek Finance Minister announced that there were doubts on the agreement which has caused the Euro to pare the previous gains. As of 12:22 PM, the euro was trading at $1.3239. The Prime Minister Lucas Papademos and the three political leaders agreed on all other requirements except for the pension cuts which they said required more elaboration and discussions.

Article provided TraderVox.com
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News and analysis are produced throughout the day by our in-house staff.
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London Gold Market Report
from Adrian Ash
BullionVault
Thurs 9 Feb., 08:45 EST

The WHOLESALE MARKET gold price slipped 0.6% to $1730 in London on Thursday morning, regaining most of that dip as the European Central Bank kept its key lending rate on hold and the Bank of England extended its purchases of UK government bonds to £325 billion ($515bn).

When completed, this new Quantitative Easing will see the Bank hold nearly one-third of the UK’s outstanding national debt.

“The growing consensus among central bankers is that their experiment with QE is still working,” wrote Gavyn Davies, now of Fulcrum Asset Management and previously a policy advisor to the UK government, as well as head of global economics at Goldman Sachs until 2001 and chairman of the BBC until 2004, in the Financial Times on Wednesday.

“It was a shot in the dark, and a rather desperate one at that. But up to now it has had the desired effect, which is certainly a far better outcome than the alternative.”

“The Bank of England’s latest round of quantitative easing is likely to increase the risk of higher inflation,” said World Gold Council director Marcus Grubb to Reuters, “and prompt investors to seek assets, such as gold, which can act as a hedge against rising prices.”

The gold price for UK investors today slipped 0.5% to £1093 per ounce as the Pound rallied.

Since the Bank of England began quantitative easing 3 years ago, gold has risen 70% for Sterling investors.

“Continued optimism over Greece is supportive of gold,” said one London dealer this morning, noting the recent link in daily moves between the gold price and the European single currency vs. the Dollar.

“There is agreement on all the issues bar one,” said Greek finance minister Evangelos Venizelos to reporters in Athens today, claiming that only state pensions remain under discussion in budget cuts demanded by Greece’s EU partners and the International Monetary Fund in return for their €130 billion ($172bn) bail-out.

Greek unemployment has risen to 20.9%, the Statistical Authority said today. A large chunk of Greece’s outstanding debt is due for repayment on March 20th.

Holding UK rates today at a record low of 0.5% for the 36th month in succession, the Bank of England announced a shift in its purchases of government debt, targeting more 3-15 year maturities than long-dated gilts.

Twenty and 30-year gilt prices fell on the news, nudging interest rates higher, but shorter-term UK debt rose sharply, knocking the annual yield offered to buyers of 5-year gilts back down towards last month’s record lows beneath 1.0%.

UK inflation over the last 5 years has averaged 3.2% per annum. The Bank’s official target is 2.0% per year.

Back in the gold bullion market, “Everyone is in wait-and-see mode,” Reuters quotes Ronald Leung at Lee Cheong Gold Dealers in Hong Kong.

“We don’t see much scrap [supply] and buying has cooled after prices rebounded. [But] Greece seems to be closer to a concrete deal, which weighs on the Dollar and helps [the gold price].”

Keeping its key lending rate at 1.0% again on Thursday, the ECB will this month repeat its unlimited offer of 3-year loans to Eurozone banks, an offer which drew demand of nearly half-a-trillion Euros in December.

Many analysts expect demand to top €1 trillion on Feb. 29th.

“[Such action] will lead to a lot of interest into gold,” reckons UBS Wealth Management’s head of commodity research, Dominic Schnider.

“Real assets remain something people like to have in their portfolios. $2000 an ounce should be easily achieved. We actually expect prices to go above.”

Adrian Ash
BullionVault

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 today vaulted in Zurich on $3 spreads and 0.8% 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.