UK Economy Stays In Recession – According To OECD And Morgan Stanleyhttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/UK-Economy-Stays-In-Recession.jpg
August 1, After today’s shockingly disappointing PMI release, most analysts have downgraded their forecasts on UK’s economy. Analysts are calling a contraction of 0.5% for 2012 and a modest growth of only 1.0% for 2013, and that’s the optimistic estimate, without considering the implications of a potential Greek Exit, Spanish Bailout, and Italian Aid. With all of the hopes of recovery resting on the Olympics, which could bring its GDP up by 1.0 ~ 1.5%, may not be enough to bring growth back...
POST FOMC Statement Analysis (Aug. 1, 2012) – Forex Breaking Newshttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/FOMC-QE3.jpg
August 1, The FOMC statement remains largely unchanged compared to the previous statement, roughly along the same lines of Bernanke’s testimony in front of Congress a few weeks ago. Some analysts are saying that because of the language in the first paragraph where the FOMC acknowledged decelaration of the U.S. economy, the justification for QE is there, especially considering the carefully chosen words of “will provide additional accommodation” in today’s statement versus “prepared to take further action”, as the former one implies a plan and the latter one implies planning for a plan… I am definitely expecting further weakness in the USD...
POST ECB Press Conference Highlights And Analysishttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/ECB-conference.jpg
August 2, Market sold off on the Euro after the ECB press conference today, mainly due to the lack of concrete measures to match the high expectation set by Draghi’s comments on “will do whatever it takes” to solve the EU crisis. In essence, the ECB didn’t deliver what it promised, and the market decided to punish the Euro by selling it. Looking ahead, ECB is now tying its involvement with formal bailout requests, which pretty much deters Spain from moving forward due to the harsh austerity requirements that are likely to be included with the bailout...
Surprise US Nonfarm Payroll Release Cuts QE3 Probability…http://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/NFP-news.jpg
August 3, US Nonfarm Payroll printed a surprise 163K, beating an optimistic 100K estimate, confirming the Federal Reserve’s view that the recent down-turn in the employment sector is due to seasonal factors. Of course, this is not good news for investors expecting handouts from the Feds as this positive release is perhaps the most compelling argument that the economic recovery is still on going, and a full-scale stimulus may not be the right instrument for the market at this time.
BOE Quarterly Inflation Report Expected To Be Sharply Downgraded…http://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/BOE-inflation-report.jpg
August 6, Considering that OECD, IMF, and even some private institutions have already downgraded their asessments of UK’s GDP for 2012 from +0.5% to -0.5%, I really don’t see much risk in EURGBP to drop down and retest the 0.77 level, but the potential to go up above the 0.8000 level is high, especially with ECB’s pledge to “do whatever it takes” to solve the EU crisis…
RBNZ Rate Cut Is Coming, But Will It Affect The Kiwi?http://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/RBNZ-rate-cut.jpg
August 7, With recent data showing a strong economy (1.1% Q1 GDP) with low inflationary pressure at 1.1% year on year, plus a strong trade balance for the recent month, RBNZ is not likely to hike rates any time soon, especially considering the demand on NZD currency on the back of recent risk appetite sentiment… However, as stated by both RBNZ Bollard and PM Key, NZD’s strength could be detrimental to its economy and future growth, and that’s why most analysts are now calling for a potential rate-cut towards the end of 2012 or early 2013...
US Dollar Strengthening On Euro Consolidationhttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/US-Dollar-Strengthening-On-Euro-Consolidation.jpg
August 8, Market saw US Dollar strengthening on the back of S&P’s reminder of the dire situation in Greece, and the sentiment was further compounded by ECB’s reminder of the upcoming German Court’s decision on the injunction to prevent Germany’s participation in the ESM until the court ruling, which if you remember, could possible drag into the 2013… Of course, the speculation of a sharp downgrade in today’s BOE Inflation Report didn’t help either, as the USD gained across the board against all majors except for the JPY…
China Economy Continues To Slow, Showing Signs Of Bottominghttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/China-Economy-Continues-To-Slow.jpg
August 9, After recent aggressive easings by the Chinese government, China economy’s potential ”hard landing” seems to be all but an unlikely possibility now, especially confirmed by the controlled gradual slowdown in its recent economic readings. With China PBoC’s new intensified policy fine-tuning and the shift of focus from curbing inflation to stimulate growth, I believe China may achieve its GDP target of 8.0% for 2012, which means the recent gains in the AUD may very well be justified, and that the risk currency may still have plenty of potential in the months to come.
Bank Of England (BOE) Minutes Show That Further Easing Is Likely…http://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/BOE-easing-likely.jpg
August 15, With Bank of England being rather open with its monetary policy directions, it takes no genius to see that BOE is likely to keep rates at the current level of 0.50% until the economy recovers, but will increase its APT in upcoming meetings. Most analysts are considering another £50 billion of increase by year end, making the total APT of £425 billion. This continuous support by the BOE is likely to keep Sterling well bid, especially considering that since UK’s economy has been in a technical recession, more stimuli could only help its economy.
Spanish Bank Aid – How Spain Fools The EUhttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/Spanish-Bank-Aid.jpg
August 16, Spanish Bank Aid is a clever scheme to circumvent a normal bailout request and the austerity conditions that come with it. Now with ECB requiring a formal bailout request before they can intervene in bond purchases, this new attempt by the Spanish government could potentially satisfy the bailout requirement while limit the punitive damage that the Germans were so eager to lay on Spanish government in the forms of strict austerity demands; let’s face it, how much can the Germans ask of Spain on a €40 Billion bailout?
European Crisis Update: ECB Intervention And Greek Exithttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/euro-crisis.jpg
August 20, As much as it is hard to imagine, with the European debt crisis unfolding in the last few months and Euro’s fall from grace against the USD, Euro has become more competitive to say the least, and what goes down must come up, that’s the rule in Forex. All in all I’m more inclined to buy EURUSD on dips, considering the potential for improvements, ECB intervention, and Fed QE announcements, it is a no-brainer in my opinion…
The Crucial Turning Point In The Eurozone Debt Crisis…http://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/Eurozone-Debt-Crisis.jpg
August 21, With rumors flying high, especially with the new one about ECB may go ahead with bond purchases despite of opposition from Germany, this is indeed a better outcome that no one saw coming, especially considering Asmussen’s support on unlimited bond purchases to cap bond yields… I believe Euro traders have what they need to BUY the Euro, as we may get official announcements in early September, this is indeed a turning point for the Eurozone debt crisis…
FOMC Minutes: Quantitative Easing Justified In The Short Term…http://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/FOMC-QE-Easing1.jpg
August 22, I really don’t see a big deal with today’s release as the Committe made it plenty clear that it has a plan to launch further QE pending economic conditions, but I guess the market lost sight of that after the stellar NFP and Retail Sales release we got earlier this month… Moving forward, I still believe that QE3 is not a done deal, especially when you consider the term “a substantial and stable strengthening in the pace of economic recovery”, which in my opinion, is exactly the case right now, and with the next NFP release scheduled on September 7, I believe the Feds...
Spanish bailout is just weeks away…http://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/spain-bailout-soon.jpg
August 29, Following the news from yesterday on the Spanish Valencia region requesting aid from the federal government, Catalonia also decided to ask for aid today. These new headlines add more pressure to Spain and the expectation for ECB to intervene is at all time high. Of course, ECB has made it clear that no bond purchases before September 12, but I believe it is just a formality, as the decision has already made. Spanish Bailout request will soon follow after September 12, especially considering the dire situation that Spain is in...
Fed Bernanke Jackson Hole speech to disappointhttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/bernanke-jackson-hole.jpg
August 30, Fed Bernanke Jackson Hole speech is poised to disappoint the market, as most analysts agree that it is highly unlikely for Bernanke to break out the heavy artillery at this junction in time. Furthermore, the very title of the scheduled speech (10:00am EST) on Friday is ”Monetary Policy Since the Crisis,” which suggests Bernanke might take a closer look at policy responses since the launch of QE2 and Operation Twist, rather than lay out potential policy directions for the rest of the year… Looking at the potential scenarios, there are three possibilities...
Post Bernanke Jackson Hole Speech Analysishttp://www.currencynewstrading.com/wp-content/uploads/slideshow-gallery/post-bernanke-speech.jpg
August 31, How to interpret Bernanke Jackson Hole Speech? I believe that Bernanke has effectively disappointed the market by offering nothing new in this speech... Some analysts argue that Bernanke has signaled for more easing, and in that general sense, I would agree; however, the timing is what’s important here, and the very fact that no explicit Fed actions were announced today points to no QE announcements in the near term. Let’s face it, the Federal Reserve will never surprise market intentionally with unscheduled QE announcements, unless the economy is at the brink of collapse.
Month In Motion – August 2012
September 3, 2012 by Leave a Comment