{"id":8055,"date":"2010-03-29T07:58:08","date_gmt":"2010-03-29T11:58:08","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=8055"},"modified":"2010-03-29T07:58:08","modified_gmt":"2010-03-29T11:58:08","slug":"forex-weekly-market-review-march-29th-2010","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/03\/29\/forex-weekly-market-review-march-29th-2010\/","title":{"rendered":"Forex Weekly Market Review March 29th, 2010"},"content":{"rendered":"

By eToro <\/strong>– The slow grinding increase in the equity markets continued this week as did the strength of the US dollar.\u00a0 Over the past few weeks the strong correlation that seem to grip the currency and equity markets has now dissipated as the dollar has now become the currency of choice give the fiscal issues that have plagued the European Monetary Union.\u00a0 For the week, the S&P 500 Index closed up higher by 1% at 1166.\u00a0 For the past 4 weeks the Dow Jones Industrials, the S&P500 Index and the NASDAQ have all closed higher.<\/p>\n

EU – The Bailout of Greece and Euro Weakness<\/strong><\/p>\n

The divergence of opinions with regards to Greece, has created strife in the marketplace as the ECB President Jean-Claude Trichet has made public comment as late as Thursday, that the IMF has no place in deciding how any European country should handle its fiscal issues.\u00a0 This news came right before the EU agreed to a plan that would set up a safety net for Greece.\u00a0 Trichet\u2019s comments are directly opposite to the current opinion of Germany and France who have made the IMF involvement a condition of their participation in so called bailout of Greece.\u00a0 Trichet also flip flopped on the issue of collateral.\u00a0 The extension of the relaxed collateral rules is an important issue, even if lower quality paper gets a bigger haircut.\u00a0 The size of the haircuts will be the main market focus of the next ECB meeting on April 8th.\u00a0\u00a0 These relaxed collateral rules, some argue, is tantamount to some easing of monetary policy.\u00a0 The uncertainty comes on the back of a downgrade by Fitch which lowered Portugal\u2019s sovereign credit rating one notch to AA- and warned of further cuts unless the government changes its fiscal course.\u00a0 The cumulative effect on the currency has been dramatic.\u00a0 Volatility in the Euro market has been relatively high with multiple day ranges.\u00a0 During the course of the week, the Euro currency vs. the US dollar broke through support levels at 1.3400, and touched a low of 1.3267, before retracing some of the losses for the week (which opened near 1.36).\u00a0 After the news that the EU would create a backstop for Greece, the Euro began to rally. Technically, the breakthrough along with the uncertainty created by multiple debt issues within the EU has formed a resistance level for the Euro, which could lead to additional selling near 1.3450.<\/p>\n

\"1\"<\/a><\/p>\n

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Deflation in Japan<\/strong><\/p>\n

Meanwhile, the deflationary grip on Japan continues.\u00a0 Headline CPI in February was 1.1% below year ago levels, the same pace as recorded in January.\u00a0 The Core CPI (ex food and energy) figure was slightly higher than expected but still negative for a year in a row.\u00a0 This follows Thursday\u2019s report of a slightly larger than expected decline in corporate service prices.\u00a0 The corporate service price index fell 1.3% year over year in February and the January series was revised down to -1.2% from -1.0%.\u00a0 The Bank of Japan expects deflation to persist through the next fiscal year.\u00a0 Of the 525 items tracked by the CPI basket, 335 fell in February compared with January when prices for 342 items fell.\u00a0\u00a0 The Japanese finance ministry has been persistent in pushing the BOJ to enhance its quantitative easing measures in an effort to stem further deflation.\u00a0 Eventually, this will spill over into growth and create further downward pressure on the Japanese economy.<\/p>\n

UK<\/strong> – Inflation Easing<\/strong><\/p>\n

In the UK, inflation data is beginning to ease after a couple of months of upward pressure.\u00a0 The pace of inflation for February released this week was slightly lower than expected and BOE Governor King did not have to write an explanatory letter to the government as he was obliged to do in December and January.\u00a0 The headline CPI rose 0.4%, slightly less than the market expected.\u00a0 The year-over-year rate slipped for the first time since last September (3.0% vs. 3.5% in January).\u00a0 Core inflation, which in the UK excludes energy, food, alcohol and tobacco, slowed to 2.9% from 3.1%.\u00a0 Core measures of inflation have been generally tame in developed countries with the UK being the exception recently.\u00a0 The ease in inflation will only help the BOE and allow for further quantitative easing if the economy stumbles.\u00a0 Additionally, the easing of inflation expectations shifted bids pressure on the pound.\u00a0 Technically, the pound faces a moving average crossover which is relatively bearish for the currency.<\/p>\n

\"2\"<\/a><\/p>\n

US – Bernanke speech, Housing prices, GDP<\/strong><\/p>\n

In a speech at a House hearing, Federal Reserve Chairman Ben Bernanke acknowledged that the Federal Reserve is closer to selling some of its $1.25 trillion portfolio of mortgage securities.\u00a0 Chairman Bernanke has resisted this idea in the past because millions of U.S. homeowners and many investors would be affected by Federal Reserve sales which would push down prices and increase Mortgage rates.\u00a0 This is Bernanke\u2019s way of preparing the market for a normalization process.\u00a0 \u201cI anticipate that at some point we will, in fact, have a gradual sales process,\u201d Chairman Bernanke said at a House hearing. The Fed has been purchasing mortgage-backed securities in an effort to stimulate the housing market with lower mortgage rates.<\/p>\n

In US housing economic news, Sales of existing homes fell a third time in a row during February, but the decline was less than expected, spurring hope for a turnaround in the spring. Home re-sales tumbled by 0.6%, to a 5.02 million annual rate from an unadjusted 5.05 million in January, according to the National Association of Realtors.\u00a0 Economists surveyed expected sales last month to decrease 2.0%, to a rate of 4.95 million.\u00a0 The median price for an existing home was $165,100 in February, down 1.8% from February 2009.\u00a0 The housing market has continued to show conflicting signals but the majority of the economic news has shown a market that is slow to recover.<\/p>\n

Growth in the U.S. economy at the end of 2009 was slightly less than earlier estimates, according to the Commerce Department, mainly due to downward revision to consumer and business spending.\u00a0 Gross domestic product rose at a 5.6% annual rate October through December, the Commerce Department reported Friday in its third GDP estimate for the final quarter of 2009.\u00a0 Corporate profits climbed 8.2% in the fourth quarter, lower than the 13.8% surge in the third quarter. Year-over-year, earnings were up 51.8%.<\/p>\n

\"321\"<\/a><\/p>\n

Next week<\/strong> that market will be focusing on a plethora of economic data.\u00a0 On Monday the EMU will release consumer confidence, expectations are for an index level of -17 compare to last month\u2019s -17.\u00a0 Later on Monday the US will release Personal Income and Consumption.\u00a0 On Tuesday, market participants will focus on the UK GDP, US Consumer Confidence and Japanese PMI Manufacturing.\u00a0 On Wednesday, Australian Retail Sales and EMU Employment take the headlines, along with the ADP Employment number.\u00a0 Thursday is purchasing manager\u2019s day, with the UK, EMU and US ISM all being released.\u00a0 The big number for the week is Friday\u2019s US Employment number.\u00a0 Analysts expect a positive reading of 187 thousand jobs, which would be the first increase in more than a year.<\/p>\n

Daily Forex Market Analysis provided by eToro<\/a><\/strong><\/p>\n

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don\u2019t trade with money you can\u2019t afford to lose.<\/p>\n

\u00a9 2009 eToro Blog.<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By eToro – The slow grinding increase in the equity markets continued this week as did the strength of the US dollar.\u00a0 Over the past few weeks the strong correlation that seem to grip the currency and equity markets has now dissipated as the dollar has now become the currency of choice give the fiscal … <\/p>\n

Continue reading “Forex Weekly Market Review March 29th, 2010”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-8055","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/8055","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=8055"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/8055\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=8055"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=8055"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=8055"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}