2010 November

Market Nerves Extend EUR & AUD Losses | November 30, 2010

November 30, 2010 By Vantage FX

The Euro extended its decline against the US Dollar overnight, breaching 1.31 and pushing down to 1.3060. In November alone EURUSD has seen a range of over 12 cents – with a high of 1.4280 reached when the US Federal Reserve made their announcement about their second round of quantitative easing, but since then the pair has since lost 8.5% since 3^rd November.

There’s been two main reasons behind the decline in EURUSD – European sovereign debt issues undermining investors confidence in the European currency; and a flight to safety in light of escalating tensions in Korea. Indeed on this last point, yesterday the South Korean President said that North Korea will pay the price if there were more provocations. The markets didn’t react well to this, especially on the knowledge that North Korea has a secretive leader with nuclear weapons at their disposal.

The Australian Dollar fared badly in the nervous sentiment, reaching a low of 0.9565. AUDUSD has also seen a bumpy month in November – it reached a near 30 year high of 1.0182 against the Greenback on November 5^th but has since lost over 6% in the last 3 weeks. This week’s GDP news release for the preceding quarter, which is forecasted to show a softer rate of growth, may pose more downside risk.

Filed Under: November Tagged With: AUDUSD, Australian Dollar, currency trading, Euro, European Sovereign Debt, EURUSD, Foreign Exchange, forex, forex market wrap, GDP, greenback, Korea, North Korea, November, Quantitative Easing, South Korea, US Dollar, US Federal Reserve, vantage fx

Friday’s European Jitters Spook The Markets | November 29, 2010

November 30, 2010 By Vantage FX

After what was looking to be a quiet end to the week in the absence of any major data releases and the US on their Thanksgiving holidays, European jitters took hold once again and currencies took a tumble in the European session. EURUSD hit 1.32, GBPUSD fell 1.5 cents pushing below 1.56 & AUDUSD fell to 0.9620 driven by lingering nervousness about the other European economies of Spain and Portugal who are both firmly in the spotlight.

In the US, retail shopping sales figures showed that high street sales on Black Friday was up just 0.3% from last year. Black Friday, which is regarded as the busiest shopping day of the year, and can be the day when many retailers return to the black, and this slight rise may have been a lot softer than many retailers had hoped for. The upcoming release of the Non-Farm Payroll data will be, as always, keenly watched.

In Australia on Wednesday we look forward to the GDP figures for the September quarter. The expectation is for GDP to expand by 0.5% in the 3 months to September, which is a pullback from the 1.2% GDP growth that was recorded in the previous quarter. So whilst the economy will still be growing, there’ll be a slight pullback in the rate of growth.

Filed Under: November Tagged With: AUDUSD, Australia, Black Friday, currency trading, european debt, EURUSD, Foreign Exchange, forex, forex market wrap, GBPUSD, GDP figures, Non Farm Payroll Data

Who Pulls Aussie Lower? Ricky Ponting or Glenn Stevens | November 26, 2010

November 26, 2010 By Vantage FX

A fairly quiet end to the week, with much of the market either enjoying the US Thanksgiving break or more locally tuning into the first day of The Ashes cricket contest. Apparently the high Aussie Dollar has stifled the numbers of fans coming across from the UK – I’m sure the British fans will be hoping that an Australian middle order collapse will be a catalyst for the Dollar to weaken, making their holiday spending money go further and their slabs of VB cheaper.

The Australian Dollar has in fact declined to 2-day low of 0.9750 against the Greenback, perhaps because of the loss of Australian Skipper Ricky Ponting, but more likely to do with comments from Glenn Stevens. The Reserve Bank of Australia Governor suggested that current interest rates are satisfactory for the time being and hinting that a rate rise in February may not be necessary. The Aussie has pulled back in response.

Japanese consumer prices fell for the 20th straight month in October although the pace of decline moderated sharply. Core consumer prices, excluding fresh food, dropped 0.6% year-on-year last month, slowing sharply from the 1.1% fall in September.

Nothing out of the US due to the long weekend – it should be a quiet end to the week, unless that is if North Korea fancies another round of target practise with their neighbour or investors realise just how big Spain’s debt problems really are, making Ireland’s problems look like pocket change.

Have a great weekend.

Filed Under: November Tagged With: Aussie, Aussie Dollar, Australian Dollar, currency trading, dollar, european debt, Foreign Exchange, forex, forex market wrap, Glenn Stevens, greenback, Ireland, Japanese Consumer Prices, North Korea, Reserve Bank of Australia, Ricky Ponting, Spain, UK, US, vantage fx

Aussie Reaches All Time High Against Euro | November 25, 2010

November 25, 2010 By Vantage FX

After the initial hit the markets took in reaction to the Korean conflict, the markets held their ground in Wednesday’s trading session and seemed in the main to ignore this and instead choosing to trade water.

In the US the main release was the minutes of the November Federal Open Market Committee (FOMC), at which it agreed to buy $US600billion of Treasury securities, in which it was expected that unemployment will remain stubbornly high above 8% over 2011 and into 20102. The FOMC also lowered its year end GDP growth forecast to 2.4% down from 3%.

The Canadian dollar was muted in response to a jump in inflation from 1.9% to 2.4%.

Despite the bearish sentiment in Europe, German business confidence actually rose to a record high of 109.3 in November. In the UK GDP rose 0.8% in the last quarter, with exports rising 2.2% following a 2.3% rise the previous quarter. It spent the day trading in a 1 cent range between 1.5740 and 1.5840 against the US Dollar.

The Australian Dollar pushed to an all time high against the Euro, reaching 0.7370. Since 2009, the Aussie has appreciated by over 50% against the single European currency.

Filed Under: October Tagged With: Aussie, Australian Dollar, bearish, canadian dollar, Euro, Europe, Federal Open Market Committee, Foreign Exchange, forex, forex market wrap, German, Korean conflict, UK GDP, unemployment rate, US Dollar, US GDP, vantage fx

Korean Conflict Causes Flight To Safety | November 24, 2010

November 24, 2010 By Vantage FX

As quickly as it seemed the market was taking a breather after the Irish situation, a fresh bout of risk aversion was prompted by the renewed conflict between North and South Korea. Gold pushed towards 2 week highs and the US Dollar made significant ground benefitting from the inevitable flight to safety as North Korea attacked its southern neighbour.

The Australian dollar continued its downward move against the US dollar during the New York trading session. The Aussie dropped to a fresh multi-week low of 0.9711 against the Greenback and a 1-week low of 0.9957 versus the Canadian Dollar at around 2:20 pm ET from Monday’s closing values of 0.9889 and 1.0076, respectively.

The US Dollar also made gains across the board, making new multi-day high of 0.9977 against the Swiss franc, a new 2-month high of 1.3363 versus the euro and nearly a 4-week high of 1.5761 against the British pound, which may be compared to Monday’s closing values of 0.9897, 1.3628 and 1.5959, respectively.

As long as the Korean conflicts remain, the US Dollar will benefit from risk aversion and could see the Australian Dollar on the backfoot.

Filed Under: November Tagged With: Aussie, Australian Dollar, British Pound, canadian dollar, Euro, Foreign Exchange, forex, forex market wrap, Gold, greenback, Ireland, Korean conflict, North Korea, South Korea, Swiss Franc, US Dollar

Kiwi On Backfoot After Credit Rating Downgrade | November 23, 2010

November 23, 2010 By Vantage FX

Risk sentiment in the forex markets improved yesterday as Ireland’s confirmation to accept the much needed financial stimulus package calmed investors nerves. The Australian Dollar was one of the biggest winners and climbed over half a cent to US99.46 yesterday afternoon. EURUSD and GBPUSD also benefitted and climbed higher to 1.3627 and 1.5960 respectively.

The biggest loser of the day was the New Zealand Dollar which lost 1.2% yesterday against the Greenback on the back of a credit rating downgrade. Standard & Poors highlighted their concern over increasing current account deficit problems facing the NZ government and downgraded the country’s credit rating from stable to negative. The Kiwi Dollar fell to US77.36 immediately following the announcement and continued to fall breaching 0.77 overnight, and against the Australian Dollar the Kiwi fell to 1.2850.

Filed Under: November Tagged With: Australian Dollar, Credit Rating, dollar, EURUSD, financial stimulus, Foreign Exchange, forex, forex market wrap, GBPUSD, greenback, Ireland, Kiwi, New Zealand Dollar, NZ Government, Standard & Poors

China’s Moves Pose Risk To Aussie | November 22, 2010

November 22, 2010 By Vantage FX

Good morning. In a move made late on into Friday’s trading session, officials in Beijing attempted to control the country’s inflationary pressures by increasing their banks’ reserve requirement ratio. This is the sixth time this year that the reserve ratio has been raised and now stands at 18.5%. The knock-on effect of the ratio increase is that the banks will have to stump up an extra $350bn to meet the new requirement levels, thereby reducing the ability of the banks to lend and indirectly cool growth in the economy.

Over the coming weeks it’s expected that Beijing will resume tightening its monetary policy by raising their official cash rates again, potentially within the next two weeks. China last raised their interest rates on October 19^th by a quarter of a point which was the first rise in 3 years. Inflation rose to 4.4% in October climbing at its quickest rate in 2 years, driven in the main by rising foods prices.

The markets are likely to react negatively to China’s moves and the Australian Dollar will be particularly sensitive to how this situation unfolds.

Filed Under: November Tagged With: AUD, AUDUSD, Aussie, Australian Dollar, Beijing, China, Foreign Exchange, forex, forex market wrap, inflationary pressure, monetary policy, Reserve Ratio, USD

Markets Reacting Well | November 19, 2010

November 19, 2010 By Vantage FX

Well as we edge ever closer to finalizing a deal for the Irish bailout package, the markets have reacted well for a second day in a row, with Sterling, Euro and the Australian Dollar continuing to retrace some of their lost ground.

The global equity markets also breathed a sigh of relief with the Dow Jones, Nasdaq, FTSE 100, Dax and ASX all finishing on a positive note after Ireland’s Finance Minister publically welcomed the financial aid.

GBPUSD pushed above 1.60 and was helped by better than forecasted Retail Sales figures in October, which showed that household spending was up for the first time in 3 months. GBPUSD has enjoyed a good move upwards from the May low’s and it will be interesting to see whether the Bank of England move towards a more conventional interest rate policy over the coming months with the lingering inflationary pressures.

Filed Under: November Tagged With: ASX, Australian Dollar, Bank of England, DAX, Dow Jones, Euro, Financial Aid, Foreign Exchange, forex, forex market wrap, FTSE 100, GBPUSD, Household Spending, Irish bailout, Irish Finance Minister, Nasdaq, retail sales figures, Sterling

Is The EU Closer To A Resolution? | November 18, 2010

November 18, 2010 By Vantage FX

After a another down day across the financial markets in the local trading session, in which the ASX fell by 1.62% – its biggest one-day decline for a month – the markets have staged a cautious comeback.

The markets recovered slightly overnight as there appears to be an end in sight to the Ireland bailout situation. The EU confirmed that it will be working with the IMF and ECB to provide a potential bailout of 100 billion Euros to help support the Irish banking sector. The FX markets responded well to this clearer picture and the Aussie rallied up from the month low of 0.9720 to above 0.98 US cents. The Euro and Sterling also recovered some of the ground lost in recent trading sessions.

UK jobless claims fell unexpectedly for October, so a hint of positive data for the UK. Deflationary pressures are still lingering in the US – core consumer inflation hit a 49 year low of 0.8% in September but is expected to pick up over the coming 12 months.

So a slight improvement in mood although buyer beware as the situation unravelling in China has the potential to undermine any renewed optimism.

Filed Under: November Tagged With: ASX, Aussie, China, core consumer inflation, ECB, EU, Euro, Euros, Foreign Exchange, forex, forex market wrap, FX Markets, IMF, Ireland Bailout, Sterling, UK, UK Jobless Claims, US

Risk Aversion Benefits US Dollar | November 17, 2010

November 17, 2010 By Vantage FX

The US Dollar strengthened across the board overnight as investors continued their flight to safety in the wake of a potential Ireland bailout. Pressure is mounting on Ireland to accept a bailout package from Brussels but their refusal so far has undermined investor confidence and sparked volatility – the market doesn’t like uncertainty. As a result, EURUSD, GBPUSD, AUDUSD were all sharply lower overnight.

The Greenback was further strengthened by the Factory Production figures rising by the most in three months, signalling continued support of a US economic recovery.

In Europe, the UK CPI data showed inflation has pushed higher to 3.2% in October, ahead of the 3.1% expectation, and will now prompt a letter from the Chancellor to the Bank of England explaining why inflation is above the 3% guideline for the eighth month. This comes just a day ahead of the release of the MPC minutes from the Bank of England’s last interest rate decision meeting.

Filed Under: November Tagged With: AUDUSD, Bank of England, brussels, Europe, EURUSD, Factory Production Figures, Foreign Exchange, forex, forex market wrap, GBPUSD, greenback, inflation, Ireland Bailout, MPC, October, UK Chancellor, UK CPI Data, US Dollar, US Economic Recovery, volatility