Daily Market Review 23/09/2013

Shares and core euro zone bonds have secured minor gains today as fresh concerns about the Federal Reserve’s policy stance to some extent undermined the election triumph for Angela Merkel in Germany and some upbeat euro zone data.

Merkel’s resounding win in Sunday’s German elections, seen as a strong vote of support for her efforts in keeping the euro together, was followed by forward-looking euro zone PMI data showing the bloc’s economy continuing to pick up pace. Markit’s September Flash Composite Purchasing Managers’ Index jumped to 52.1 from last month’s 51.5, its highest since June 2011 and beating expectations for 51.9. New orders were at their fastest pace in over two years.

Stock markets finally found direction after a choppy start with gains of 0.2 and 0.3 percent on Germany’s DAX and France’s CAC 40 helping lift the FTSEurofirst 300 0.2 percent.

European stocks hit a five-year high last week and the chairman and senior market analyst for Saxo Bank capital markets indicated that Merkel’s election win was “a ringing endorsement” to ensure the euro survives. Merkel’s victory gave the euro only the briefest of lifts, however, as she will still need a new coalition partner to rule. Having initially gained a quarter of a U.S. cent to $1.3555, it quickly faded to $1.3516. Against the yen, the common currency eased to 133.67, from an early 134.56 while against sterling it inched down to 1.1867 per pound. That left the dollar index little changed at 80.382, not far from a seven-month trough of 80.060 plumbed last week.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan had dipped 0.1 percent. U.S. futures pointed to a slightly firmer open on Wall Street. Some Asian markets had started the week with significant gains, thanks to a survey that showed a promising pick up in Chinese export orders, another sign of stabilisation in the world’s second biggest economy. A preliminary HSBC Purchasing Managers’ Index China climbed to 51.2 in September, from August’s 50.1, with 10 out of 11 sub-indices up in the month. New export orders jumped to a 10-month peak of 50.8, the first time in six months that exports have grown. Readings on manufacturing across Europe are due later on Monday.

Shares in Shanghai gained 1.0 percent and Taiwan’s main index was up 0.9 percent. Australian shares were down 0.5 percent and Japanese markets were closed for a holiday. The upbeat China survey sent the Australian dollar a quarter of a U.S. cent higher to $0.9422. China alone takes around one-third of all Australia’s exports, chiefly commodities such as iron ore.

The Dow Jones industrial average lost 1.2 percent on Friday, while the S&P 500 Index eased 0.7 percent. Some of Friday’s dip was attributed to comments from St. Louis Federal Reserve Bank President James Bullard who said that a start to winding down the stimulus program was possible in October, depending on coming economic data. Even the thought the Fed might start tapering in October jolted commodity markets, leaving gold down at $1,321.81 an ounce, from Thursday’s peak of $1,374.54. Copper futures were off 1.2 percent. U.S. crude remains also flat at $104.79.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Daily Market Review 20/09/2013

World shares are holding at a five-year high on today, while bond and commodity markets are consolidating a week of major gains after the U.S. Federal Reserve’s surprise decision to keep its stimulus intact.

After the sharp moves of Wednesday and yesterday, Asian and early European trading remains largely subdued as investors took stock of their positions and locked in some of the gains, with half an eye on German elections this weekend.

The pan-European FTSEurofirst 300 share index has fallen 0.1 percent in opening trading, core and peripheral euro zone bonds were little changed, while the euro was holding near an eight-month high after its best week since July. MSCI’s index of world shares was also flat but this week’s rises, the best in over a year for Asian stocks, put it was on track for its first three-week run of plus 2 percent gains since 2009.

Behind the moves was Wednesday’s surprise decision by the Fed not to scale back its support for the U.S. economy. For the dollar, the prospect of extended Fed stimulus has not been good news. It was holding above its week lows against a basket of major currencies in early European trading having found support after a string of upbeat U.S. data on Thursday.

Emerging market currencies and stocks are up on the Fed news. Indian financial markets were roiled again on Friday, however, after the Reserve Bank of India unexpectedly raised interest rates by 25 basis points. The Indian rupee fell 1.0 percent to 62.40 to the dollar while Indian shares fell more than 2 percent. The Indonesian rupiah also gave up some of Thursday’s gains to trade at 11,390 to the dollar, down 1.0 percent on the day. Jakarta shares, which jumped 4.7 percent on Thursday, lost 1.3 percent.

Benchmark 10-year German government are stable at 1.865 percent at 0750 GMT after yields – which move inversely to prices – sank to a one-month low of 1.812 percent on Thursday. The euro was at $1.3533 not far from a nearly-eight-month high.

The common currency and the bloc’s shares have been supported by signs of recovery in the euro zone, but some traders are getting nervous before Sunday’s German election.

While Chancellor Angela Merkel is likely to win a third term, her lead has narrowed in recent opinion polls and a new euroskeptic party could make headway in parliament, which might rattle some traders.

In commodities, oil has steadied at $109 a barrel after a 1.5 percent drop the previous day on increased Libyan production and signs of a restart of diplomatic relations with the West. Gold has hovered around $1356 an ounce, on track for its best week in five

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Economic Events 20/09/2013

Holiday:         All Day                                   China – Mid-Autumn Festival

12:30 CAD   Core CPI (YoY)

Forecast: 1.0%                                  Previous: 1.4%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer excluding food and energy, which prices tend to be very volatile. It is a key way to measure changes in purchasing trends and inflation. The impact on the currency may go both ways, a rise in CPI may lead to a rise in interest rates and a rise in local currency, on the other hand, during recession, a rise in CPI may lead to a deepened recession and therefore a fall in local currency.

12:30 CAD   Core CPI (MoM)

Forecast:                                            Previous:

The Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding  food  and  energy.  The  CPI  measures  price  change  from  the  perspective  of  the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the CAD, while a lower than expected reading should be taken as negative/bearish for the CAD.

12:30 CAD   CPI (MoM)

Forecast:                                            Previous: 0.1%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the CAD, while a lower than expected reading should be taken as negative/bearish for the CAD.

12:30 CAD   CPI (YoY)

Forecast: 1.0%                                  Previous: 1.3%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the CAD, while a lower than expected reading should be taken as negative/bearish for the CAD.

13:30  USD    Core PPI (MoM)

Forecast: 0.1%                                              Previous: 0.1%

The Core Producer Price Index (PPI) measures the change in the selling price of goods and services sold by producers, excluding food and energy. The PPI measures price change from the perspective of the seller. When producers pay more for goods and services, they are more likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

13:00  MXN   Mexican Unemployment Rate

Forecast:                                                        Previous: 5.12%

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment.

A higher than expected reading should be taken as negative/bearish for the MXN, while a lower than expected reading should be taken as positive/bullish for the MXN.

 

Economic Events 19/09/2013

Holiday:         All Day                                   China – Mid-Autumn Festival

08:30  GBP    Core Retail Sales (MoM)

Forecast:                                Previous: 1.1%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. The Core number excludes Auto sales and Fuel, which tend to be very volatile. A higher than expected reading should be taken as positive/bullish for the GBP while a lower than expected reading should be taken as negative/bearish for the GBP.

08:30  GBP    Core Retail Sales (YoY)

Forecast: 3.1%                      Previous: 3.1%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. The Core number excludes Auto sales and Fuel, which tend to be very volatile. A higher than expected reading should be taken as positive/bullish for the GBP while a lower than expected reading should be taken as negative/bearish for the GBP.

08:30  GBP    Retail Sales (MoM)

Forecast: 0.4%                      Previous: 1.1%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

08:30  GBP    Retail Sales (YoY)

Forecast: 3.3%                      Previous: 3.0%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

10:00  GBP    CBI Industrial Trends Orders

Forecast: 2                 Previous:

The Confederation of British Industry (CBI) Industrial Trends Orders measures the economic expectations of the manufacturing executives in the U.K. It is a leading indicator of business conditions. A level above zero indicates order volume is expected to increase; a level below zero indicates expectations are for lower volumes. The reading is compiled from a survey of about 550 manufacturers. A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

12:30  CAD    Wholesale Sales (MoM)

Forecast: 1.0%                      Previous: 2.8%

Wholesale Sales measures the change in the total value of sales at the wholesale level. It is a leading indicator of consumer spending. A higher than expected reading should be taken as positive/bullish for the CAD, while a lower than expected reading should be taken as negative/bearish for the CAD.

12:30  USD    Continuing Jobless Claims

Forecast: 2,913K                   Previous: 2,871K

Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance. A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

12:30  USD    Current Account

Forecast: 97.2B                    Previous: 106.1B

The Current Account index measures the difference in value between exported and imported goods, services and interest payments during the reported month. The goods portion is the same as the monthly Trade Balance figure. Because foreigners must buy the domestic currency to pay for the nation’s exports the data can have a sizable effect on the USD. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

12:30  USD    Initial Jobless Claims

Forecast: 330K                                  Previous: 292K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week. A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

14:00  USD    Existing Home Sales

Forecast: 5.25M                                Previous: 5.39M

Existing Home Sales measures the change in the annualized number of existing residential buildings that were sold during the previous month. This report helps to gauge the strength of the U.S. housing market and is a key indicator of overall economic strength. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

14:00  USD    Existing Home Sales (MoM)

Forecast: 2.8%                                             Previous: 6.5%

Existing Home Sales measures the change in the number of existing (not new) residential buildings that were sold during the previous month. This report helps to gauge the strength of the U.S. housing market and is a key indicator of overall economic strength. A higher than expected number should be taken as positive to the USD, while a lower as expected number as negative.

14:00  USD    Philadelphia Fed Manufacturing Index

Forecast: 10.2                                    Previous: 9.3

The  Philadelphia  Federal  Reserve  Manufacturing  Index  rates  the  relative  level  of  general business conditions in Philadelphia. A level above zero on the index indicates improving conditions; below indicates worsening conditions. The data is compiled from a survey of about 250 manufacturers in the Philadelphia Federal Reserve district. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

 

Daily Market Review 19/09/2013

World shares and global bond prices surged today whilst the U.S. dollar tumbled following the U.S. Federal Reserve’s shocking decision not to cut back on its asset-buying program for now, with aftershocks felt on markets worldwide. The Fed also cut its projection for 2013 economic growth to a 2.0 percent to 2.3 percent range from a June estimate of 2.3 percent to 2.6 percent.

MSCI’s world share index, which tracks 45 countries, jumped 1.2 percent to a fresh five-year high as large gains in Asian markets were quickly matched in Europe where the FTSEurofirst 300 opened up over 1 percent.
The Fed’s decision to keep its asset buying at $85 billion a month was seen as a rebuff to the sharp rise in Treasury yields over recent months, which was proving a headwind for the wider U.S. economy.

The bond market got the message and 10-year Treasury yields tumbled as low 2.675 percent before steadying at 2.704 percent. That was an effective easing in world financial conditions as Treasuries set the benchmark for borrowing costs almost everywhere.

The chance that U.S. interest rates could stay low for longer was further enhanced by news from the White House that noted-dove Janet Yellen was the front-runner to take over the Fed when Ben Bernanke steps down in January.

Emerging markets jumped at the positive news,with the Turkish lira and Indian rupee up more than 2 percent while Indonesia’s main stock index climbed 4.8 percent , the Philippines 3.1 percent, Australia 1.1 percent and Japan’s Nikkei 1.8 percent., while yields on benchmark Japanese debt promptly dropped to four-month lows while in Europe German Bunds at 1.827 percent saw their biggest drop in a month.

The market’s pushing back of the likely timing of the first hike in U.S. rates into 2015 sent the dollar tumbling across the board. The euro was up at $1.3533 after the early flurry of European deals, having already gained 1.2 percent on Wednesday to its highest in almost eight months.

Against an array of major currencies, the dollar lost 1.1 percent in under 24 hours to hit its lowest in 7 months of trade. Only against the yen did it show some resilience, as the Bank of Japan is itself only in the early stages of a bond-buying programme even larger than that of the Fed. The Australian dollar surged 1.5 percent to $0.9498, an effective tightening in conditions that will pressure the Reserve Bank of Australia to cut rates to compensate.

In commodities, the extension of U.S. stimulus was seen as a huge positive for global demand, and prices. Gold stormed ahead to $1,370.06, a gain of almost $70 from early Wednesday, while copper jumped 2 percent to $7,328. Brent crude added another 34 cents to $110.98 a barrel, up from a low of $107.64 on Wednesday. U.S. crude reached $108.71 compared with $105.32 early on Wednesday.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Daily Market Review 18/09/2013

Markets have taken up last minute positions today ahead of what is expected to be the first tentative step by the U.S. Federal Reserve to roll back the stimulus program it has used to treat the last five years of financial ruin.

Expectations are that the Federal Open Market Committee (FOMC) will be cautious with cuts to its $85 billion in monthly asset buying when it announces its plans at 1800 GMT, while also seeking to reassure investors that an actual rise in interest rates is still distant. However, uncertainty has kept the dollar pinned near a four-week low against an array of major currencies, stalled at 99.20 yen and approaching the week’s low against the euro at $1.3358.

The consensus is that traders will see a reduction of $10-$15 billion a month with all purchases ending by the middle of next year. Yet even that cautious timetable would be contingent on the economy performing as well as hoped. With such an outcome largely priced in, it could lead Treasuries and the dollar to rally modestly. A slower tapering would tend to benefit bonds and stocks but hurt the dollar. The bigger reaction would likely come if the Fed pulled back more aggressively, as that would lead market to price in an earlier start to rate rises as well. That would be especially painful for emerging market countries that rely on foreign capital to fund current account deficits, with India and Indonesia among the most vulnerable. The tension was evident in Jakarta where both shares and the rupiah are under pressure.

After months of speculation about the Fed’s intentions, caution ruled world markets anticipating the decision. European shares have inched up 0.1 percent at the open after MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.2 percent. Japan’s Nikkei was the main standout with a jump of 1.35 percent, after reaching its highest since late July.

European traders had matters of their own to attend to; namely, the minutes from the Bank of England’s most recent meeting and the latest instalment in Italy’s ongoing political drama. A Senate committee will rule on whether to expel Silvio Berlusconi from parliament over his tax fraud conviction, wit the latest prediction being that he will indicate via a public statement that he cannot bring himself to harm his country by pulling the government dowm, should the committee ruling go against him. Italian bonds extended the gains of the previous two days to leave yields at 4.368 percent and at their lowest in two weeks, though Milan’s stock market remains flat and is still underperforming.

The Fed may choose to alter its threshold for tightening, perhaps by lowering the trigger level on unemployment from the current 6.5 percent. On top of that it will also publish its first economic forecasts for 2016 and the stronger the picture the harder it will be to persuade markets that any future rise in interest rates will only be slow and measured.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Economic Events 18/09/2013

12:30   USD   Building Permits

Forecast: 0.950M                  Previous: 0.954M

Building Permits measures the change in the number of new building permits issued by the government. Building permits are a key indicator of demand in the housing market.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

12:30  USD    Building Permits (MoM)

Forecast:                                Previous: 3.9%

Building Permits is a report closely watched by economists and investors alike. Since all related factors associated with the construction of a building are important economic activities (for example, financing and employment), the building permit report can give a major hint as to the state of the economy in the near future. A higher than expected number should be taken as positive to the USD, while a lower as expected number as negative.

12:30   USD   Housing Starts

Forecast: 0.920M                              Previous: 0.896M

Housing starts measures the change in the annualized number of new residential buildings that began construction during the reported month. It is a leading indicator of strength in the housing sector.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

12:30  USD    Housing Starts (MoM)

Forecast:                                            Previous:

The German Consumer Price Index (CPI) measures the changes in the price of goods and services purchased by consumers.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

18:00  USD    FOMC Statement

Forecast:                                            Previous:

The U.S. Federal Reserve’s Federal Open Market Committee (FOMC) statement is the primary tool  the  panel  uses  to  communicate  with  investors  about  monetary  policy.  It  contains  the outcome of the vote on interest rates, discusses the economic outlook and offers clues on the outcome of future votes.

A more dovish than expected statement could be taken as negative/bearish for the USD, while a more hawkish than expected statement could be taken as positive/bullish for the USD.

18:00  USD    Interest Rate Decision

Forecast: 0.25%                                Previous: 0.25%

Federal Open Market Committee (FOMC) members vote on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.

A higher than expected rate is positive/bullish for the USD, while a lower than expected rate is negative/bearish for the USD.

18:30  USD    Fed Chairman Bernanke Speaks

Forecast:                                            Previous:

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to speak. As head of the Fed, which controls short term interest rates, he has more influence over the U.S. dollar’s value than any other person. Traders closely watch his speeches as they are often used to drop hints regarding future monetary policy. His comments may determine a short-term positive or negative trend.

22:45  NZD   GDP (QoQ)

Forecast: 0.1%                      Previous: 0.3%

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

A higher than expected reading should be taken as positive/bullish for the NZD, while a lower than expected reading should be taken as negative/bearish for the NZD.

23:50  JPY     Trade Balance

Forecast: 1,101B                  Previous: 1,024B

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

A higher than expected reading should be taken as positive/bullish for the JPY, while a lower than expected reading should be taken as negative/bearish for the JPY anyways.

 

Daily Market Review 17/09/2013

Shares have dipped and the dollar has fallen today as traders consolidated positions before a U.S. Federal policy meeting at which the central bank is set to start scaling back stimulus.

German Bunds also edged lower, with the 10-year yields rising 1 basis point to 1.888 percent.

The FTSEurofirst 300 index of top European shares was down 0.3 percent in early trade, retreating from a five-year high hit yesterday.

In Asia, the MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.3 percent, while Japan’s Nikkei stock average downshifted and closed 0.7 percent lower despite opening higher after a holiday on Monday,

The US Federal Reserve’s Open Market Committee begins its two-day meeting today, and despite sub par August U.S. jobs data, it is expected to trim its monthly asset purchases by about $10 billion from $85 billion

The dollar was lower versus an array of currencies, at 81.193, after having set a four-week low of 80.968 the previous day.

With the Fed looking set to take its first step to wind down its stimulus, traders will also be focusing on the central bank’s guidance on its future policy stance on Wednesday.

In Europe, all eyes are on the U.S. Federal Reserve. Carmakers dropped 1.3 percent, the top falling sector, after the Association of European Carmakers said European car sales fell 4.9 percent last month.

German car parts and tyre maker Continental AG shed 3.9 percent, the top faller on the FTSEurofirst 300 , with traders citing news that major shareholder Schaeffler had placed shares in the group worth 950 million euros to cut debt.

The pan-European FTSEurofirst 300 fell 0.3 percent to 1,254.44, having posted a close of 1,258.42

in the previous session – its highest close since June 2008.

In commodities, brent oil futures edged lower, extending the previous day’s steep losses, as easing worries over direct action in Syria calmed fears that crude supply from the Middle East would be at risk.

Brent crude for delivery in November was down 23 cents at $109.84 a barrel, after touching a near one-month low of $108.73 in the previous session. Gold hovered just above a five-week low, while copper edged higher on Tuesday but stayed close to five-week lows in cautious trade ahead of the Fed announcement tomorrow.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Economic Events 17/09/2013

 08:30  GBP   CPI (MoM)

 Forecast: 0.5%                         Previous:

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

08:30  GBP    CPI (YoY)

Forecast: 2.7%                      Previous: 2.8%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

08:30  GBP    PPI Input (MoM)

Forecast: 0.2%                      Previous: 1.1%

Producer Price Index (PPI) Input measures the change in the price of goods and raw materials purchased by manufacturers. The index is a leading indicator of consumer price inflation.

A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

09:00  EUR    German ZEW Economic Sentiment

Forecast: 46.0            Previous: 42.0

The German Zentrum für Europäische Wirtschaftsforschung (ZEW) Economic Sentiment Index gauges the six-month economic outlook. A level above zero indicates optimism; below indicates pessimism. The reading is compiled from a survey of about 350 German institutional investors and analysts.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

12:30  CAD    Manufacturing Sales (MoM)

Forecast:                                Previous: 0.50%

Manufacturing Sales measures the change in the overall value of sales made at the manufacturing level.

A higher than expected reading should be taken as positive/bullish for the CAD, while a lower than expected reading should be taken as negative/bearish for the CAD.

12:30  USD    Core CPI (YoY)

Forecast: 1.8%                      Previous: 1.7%

The Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding  food  and  energy.  The  CPI  measures  price  change  from  the  perspective  of  the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

12:30  USD    Core CPI (MoM)

Forecast: 0.2%                      Previous: 0.2%

The Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding  food  and  energy.  The  CPI  measures  price  change  from  the  perspective  of  the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

12:30  USD    CPI (YoY)

Forecast: 1.6%                      Previous: 2.0%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

12:30  USD    CPI (MoM)

Forecast: 0.2%                      Previous: 0.2%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

13:00  USD    TIC Net Long-Term Transactions

Forecast:                                Previous: 66.9B

Treasury International Capital (TIC) Net Long-Term Transactions measures the difference in value between foreign long-term securities purchased by U.S. citizens and U.S. long-term securities purchased by foreign investors. Demand for domestic securities and currency demand are directly linked because foreigners must buy the domestic currency to purchase the nation’s securities.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

 22:45  NZD    Current Account

Forecast: 1.80B                    Previous: 0.66B

The Current Account index measures the difference in value between exported and imported goods, services and interest payments during the reported month. The goods portion is the same as the monthly Trade Balance figure. Because foreigners must buy the domestic currency to pay for the nation’s exports the data can have a sizable effect on the NZD.

A higher than expected reading should be taken as positive/bullish for the NZD, while a lower than expected reading should be taken as negative/bearish for the NZD.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Daily Market Review 16/09/2013

 The U.S. dollar has slid, while bonds and shares rallied today following the withdrawal of Lawrence Summers from the race to head the Federal Reserve suggested that a more gradual approach to tightening monetary policy is on the horizon.
Summers’ surprise decision came just before the central bank meets on Tuesday and Wednesday to decide when and by how much to scale back its asset purchases from the current pace of $85 billion a month. Traders are assuming that U.S. monetary policy will stay easier for longer should the other leading candidate for Fed chair, Janet Yellen, get the job. Markets had perceived Summers as more likely to scale it back more quickly than the more dovish Yellen, who is currently second in command at the Fed.

It was even possible a first rate rise could be pushed out into 2016, rather than 2015 as currently planned according to analysts. Going by Yellen’s past speeches, it was said she would most probably prioritize reducing the jobless rate.
Further whetting risk appetite was a growing expectation of a diplomatic solution to the Syrian crisis after a Russian-brokered deal averted U.S. strikes for now. This helped propel world shares to just short of a five-year high.

In Europe, bourses were quick to catch on after a strong day in Asia, with London’s FTSE , Frankfurt’s Dax and Paris’s CAC 40 opening 0.8 – 1 percent higher to lift the pan-regional FTSEurofirst 300 0.75 percent. The euro was up more than half a U.S. cent at $1.3370, after hitting its highest in almost three weeks. The dollar also dropped against sterling and the Swiss franc. It proved more resilient against the yen, paring early losses to stand at 98.72. Liquidity was lacking with Japanese markets closed for a holiday today.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.5 percent to their highest since early June. South Korean shares added 1 percent, Australia .AXJO 0.5 percent and Indonesia 1.7 percent.

Elsewhere, the prospect of a more protracted stimulus easing cycle in the U.S. would be a big relief to emerging markets from India to Brazil which have been hurt by expectations offshore funds would switch to developed markets as yields there rose.

In commodities markets, gold recouped some of last week’s losses, rising to $1,327 an ounce, while copper lifted off a five-week low. Oil prices declined as the likelihood of a U.S. strike on Syria had all but evaporated, with brent crude losing $0.52 to $111.15 a barrel.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.