Housing Jitters Extend The Dow’s Losing Streak | May 18, 2011

May 18, 2011 By
USDCHF

Swiss Franc recommenced its long term trend, with the greenback weakening against the safe haven currency

Good morning. Equity markets were mixed on Tuesday, with the major indices experiencing heightened volatility. Opening weaker, traders shifted from currencies and treasuries to equities late in the session. On the economic front, Housing Starts and Building Permits fell short of initial estimates with 523,000 for HS recorded. Building Permits were forecast to reach 590,000 for the April period. The figure was however significantly lower with 551,000 recorded. Across the atlantic, EU officials commented on the Greek debt situation, with Jean Claude Juncker noting the importance of economic stabilisation in the region. He did not rule out the potential for debt refinancing as Greece continues to struggle with the current austerity package. The market is eagerly watching the situation in Portugal and speculating over the economic impact the crisis is having on the small country.

On the equity market front, the S&P500 finished the session flat at 1329. Computer and Technology manufacturer Dell posted a significant rise in profits for the period, with the company recorded a net income of $945 million. This translated into a 134% rise in income. In other corporate news, HP posted a slight increase in profits for the period. The report however fell short of initial forecasts, pushing the stock 7% lower.

On the currency front, the Japanese Yen weakened against the greenback with markets factoring in a possible easing of monetary policy. Citing extended economic pressure from natural disasters and sluggish growth, the Bank of Japan was confident that long term deflation could be alleviated. This had the reverse effect on the pair, with traders moving out of the low yield currency and shifting into the riskier assets. Markets also eyed the potential for further debt worries in Europe and the impact this would have on the yen. The USDJPY traded at 81.36. Aussie dollar consolidated on Tuesday, with the currency reacting to further speculation over interest rates in Australia. The RBA have recently been analysing the housing and retail sales data, with the market cautious over the short term impact of a drop in property prices. Noosa, the Sunshine and Gold Coasts in Queensland have begun to show signs of weakness in the sector, with a significant contraction in housing prices. This could translate into a fall in the currency. The AUDUSD traded at 1.06225. Strong surge in the Euro on Tuesday, with interest rate speculation driving gains. The announcement that British inflation rose during the period, translated into a cross regional currency push. Economists expect a similar scenario in the Euro zone. Debt concerns were eased during the session, as Greece reaffirmed that they would be able to cover their short term debt obligations. Traders continue to be sceptical. The EURUSD traded late in the day at 1.4234.

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Traders Watch The Events Play Out In Greece | May 17, 2011

May 17, 2011 By
EURUSD

Significant range for the Euro dollar, with traders assessing the Greek debt situation

Good morning. Equity markets remained weak on Monday with the major indices reacting to economic uncertainty. Oil and Gold futures opened the session on a positive note before contracting late in the session. This had a significant effect on the resource based currencies of the AUD and CAD. News stories that commanded the headlines included the arrest of IMF chief for sexual assault. Economists reassessed the outcome for the debt talks in light of this breaking story. Economically the Housing index and Empire Manufacturing were released during the session. According to the report, the housing market stayed in line with initial forecasts. Manufacturing however contracted significantly, with 11.9 recorded for the 1st week of May. Tomorrow will see the important release of Housing Starts, Building Permits and Industrial Production.

On the equity market front, the Dow Jones closed 47 points lower with the index reacting to mixed corporate earnings and merger and acquisition speculation. NY Stock Exchange shares weakened considerably, as news broke that the bid from the Nasdaq and ICE would be blocked. Cash rich Google announced that it would use its large balance sheet for debt issuance opportunities. This could result in a significant upside adjustment in earnings.

On the currency front, the Aussie dollar weakened against the greenback on Monday with the currency reacting to speculation over RBA minutes. Leading up to the key meeting, traders were cautious and apprehensive in light of recent developments. Risk aversion also played an important role during the session, with an equity and commodity market selloff pushing all of the major risk pairs lower. After a big week of economic news last week, traders have little leads or direction. The AUDUSD traded at 1.0564.  Consolidating late in the session, the Japanese Yen rallied against the greenback early in the day. A dismissive and sentiment focused market, the currency pair initially reacted to volatility before strengthening after Mitsubishi’s earnings news. Announcing a significant uplift in profits for the period, the car manufacturer highlighted that a stronger yen had a slight impact on the result. The company cited that a reduction in overall borrowing costs had contributed to the result. The USDJPY traded at 80.76. Sterling followed other risk currencies during the session with the currency falling to 1.6197. The market continued to focus on the debt concerns in Greece and the possibility of default. Limited economic leads this week will also spur thin trading and heightened degrees of volatility. The Bank of England is forecast to release its minutes very soon, with traders speculating that rates will continue to stay on hold.

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CPI And Its Effects On Gold | May 16, 2011

May 16, 2011 By
XAUUSD

Volatility in Gold with CPI data pushing the commodity into a range

Good morning. Equity and Commodity markets closed the Friday session off on a weaker note with Consumer Price Index data falling in line with initial estimates. Recording 0.4% for the period, the market was disappointed with the result. European debt jitters continued with the possibility of further default by Greece. Germany announced that they would not extend the emergency bailout package, and pushed for stricter austerity measures. Chinese Inflation data continues to pressure the markets, with the large economic power announcing last week a new increase in liquidity requirements for banks. This had the subdued effect on the global economic outlook, as traders eyed the possibility of a slight contraction in the shirt term. Key economic data released in the US this coming week includes Housing Starts  (market expects 565,000), Building Permits (market expects 590,000), Industrial Production (market expects 0.5%), on Tuesday, and Initial Claims (market expects 420,000), Continuing Claims (market expects 3.713m), Existing Home Sales (market expects 5.22 million), and Leading Indicators (market expects no change) on Thursday.

On the equity market front, the S&P500 weakened 0.7% or 100 points. The market reacted to corporate news in the tech sector, with Yahoo shares falling considerably, due to the Alibaba news. Key corporate data released on Monday includes earnings from JC Penney, and Urban Outfitters. Both companies are forecast to report solid profits.

On the currency front, the Japanese Yen continued to track yesterday’s movements with the currency consolidating at 80.71. CPI data fell in line with estimates with 0.4% recorded for the period. The market reacted to the economic results with trepidation and caution. Traders continue to be concerned over the economic implications of a stronger yen. Intervention fears have however been eased recently, with the greenback rising against the currency.  Weakening to 1.41051, the Euro reacted to US Inflation news and Greek debt concerns. Speculation that refinancing may be required to cope with the ballooning interest costs, the market reacted negatively to the currency. Recent positive comments from ECB Chairman Trichet have had little impact on the region, with economists continuing to see very real risk in the economic system and the debt markets. Key data released next week, will paint a defining picture of the recovery and whether further government stimulation is required.  The greenback rose against the Swiss Franc on Friday, with traders moving away from the European based currencies. A sharp rise in the afternoon session was recorded with the market finding Solis in the US dollar. Across the board, traders eyed weakness in the commodity space, coupled with low volatility in inflation. The CPI result was in line with estimates.  Private Banking firms in Switzerland highlighted the degree of pressure the strong currency had on investment. A reduction in investment has begun translating into a fall in overall headcount. The USDCHF traded at 0.8926.

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Housing Starts and Building Permits Top Estimates | April 20, 2011

April 20, 2011 By
EURAUD

EURAUD rallied off the back of heightened risk appetite during the tuesday session

Good morning. Equity and Commodity markets rebounded on Tuesday with Housing Starts and Building Permits contributing to gains. Reporting 549,000 new Housing Starts in March, the market had initial forecast 520,000 for the period. Building Permits also outperformed with 594,000 recorded. Economists were happy with the relevant gains in the sector, with the stimulatory measures highlighted as key growth contributors. Important Existing Home Sales and Crude Inventories are released on Wednesday. Across the pond, the European car industry took an unexpected turn, with car registrations falling in Greece, Italy and the UK. The 5% reduction translated into further economic woes in the region. Recent debt refinancing concerns have influenced trading conditions in the local equity and currency markets. In Australia, the Reserve Bank released its headline comments with Officials highlighting that rates should at 4.75%, as this fell in line with the central banks long term monetary and inflationary strategy.

On the equity market front, the Dow Jones closed 65 points higher with technology giant IBM announcing buoyant quarterly earnings. Reporting a 10% rise for the period, the company was confident in its 12 month outlook. Yahoo and Intel also exceeded estimates.

On the currency front, the Aussie dollar rallied against the greenback, with traders eyeing carry trade scenarios. After a disappointing previous session, traders covered short positions and increased their exposure to risk currencies. Rebounding Gold and Oil prices also helped push the Aussie dollar higher, with economists speculating over the impact of a surge in commodity values. The effect of the Chinese government’s announcement to raise bank reserve requirements also helped support the currency during the session. The AUDUSD traded at 1.0523. Risk appetite drove the Euro higher on Tuesday, with the currency touching 1.4343. PMI Data released during the session exceeded initial estimates with 57.8 recorded. Economists had factored in 57.1. Traders warmed to the results driving the price higher. Greek and Irish debt refinancing worries continue to plague the currency, however the markets have cited adequate risk controls that have been implemented by the EU and the ECB. Key US data released later in the day will confirm the trend. The Swiss Franc weakened against the US Dollar, with traders attracted to risk. Supporting the Euro during the day, economists moved away from the safe havens of the Japanese Yen and the Franc. The Switzerland Central Bank have watched recent developments in the currency and have noted the impact of the stronger pair on the economy. European PMI Data helped boost sentiment in the region, with the potential for a mid-term shift in currency demand. The USDCHF traded at 0.8993.

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US CPI Data Falls In Line With Estimates | April 18, 2011

April 18, 2011 By
USDCAD

Canadian Dollar reacted to strong Oil prices on Friday

Good morning. Equity and Commodity markets finished Friday on a positive note, with mixed economic data released in the US. Consumer Price Index figures fell in line with initial estimates with 0.5% recorded. Industrial Production exceeded forecasts by 0.2% to post 0.8% for March. The Federal Reserve was comfortable with Core CPI, as the measure fell slightly below the previous period recorded. Traders were comfortable with Consumer Sentiment figures which painted a positive economic picture. Across the Atlantic, Ireland received a sovereign downgrade from ratings company Moody’s. The country is now teetering on the investment grade level. Economic news released in the US this coming week includes NABHB Housing Market Index (market expects 17) on Monday, Housing Starts (market expects 520,000) and Building Permits (market expects 538,000) on Tuesday, Existing Home Sales (market expects 5 million) and Crude Inventories on Wednesday, Initial Claims (market expects 390,000), Continuing Claims (market expects 3.65 million) and Leading Indicators (market expects 0.2%) on Thursday.

On the equity market front, the Dow Jones closed 56 points higher, with the market reacting to subdued CPI data. Pharmaceutical company Merck confirmed that their dispute with Johnson and Johnson had finished. This spurred a 1.9% rise in the stock. Bank of America reported weaker than forecast quarterly earnings, with the company citing challenging trading conditions. The stock closed 2.3% lower.

On the currency front, the Canadian Dollar rallied against the greenback with commodity strength pushing the currency higher. Light Crude Oil rose 1.5% on Friday to close just below $110 a barrel. Trader speculation over the impact of firming prices on resource demand influenced market currency pair movements. Disappointing PPI and CPI data released also compounded movements in the US dollar.  Closing the Friday session on a strong note, the Japanese Yen strengthened against the greenback in light of CPI data released. Falling in line with initial estimates, the market was cautious on holding US dollars. Fiscal reform details also emerged in Japan on Friday, impacting repatriation of the currency. Highlighting the long term rebuilding structure for the economy, the Finance Ministry noted an extension for disaster relief to $48 billion. This also had an impact on the daily currency movements. The USDJPY traded at 83.10. The Aussie Dollar rallied towards the close, with yield play driving gains. Trading at 1.0564, speculation that the RBA would raise rates further led to consistent buying pressure. Earlier in the session, the AUD weakened as fears that China would raise rates in light of inflationary pressure. This could lead to a contraction in resource demand from the region. Markets continue however to factor in higher yield differential between the US and Australia, which continues to support movements.

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Equities and Commodities React To PPI Data | February 17, 2011

February 17, 2011 By

Gold

Good morning. Equity markets reacted to US economic data on Wednesday with the major indices rallying. Core Producer Price Index figures helped support moves with a 0.5% rise for the corresponding period. Economists had initially factored in 0.2%. Housing Starts also highlighted a recovery in the economy with 596,000 new residential properties. In contrast to these figures, Building Permits fell shy of market expectations with 562,000 recorded for January. Economists are still undecided over the extension of stimulatory bond purchasing measures and whether excessive monetary supply is still required. Comments from the Fed have provided an indication of longer term growth forecasts, with an expected 3.5% for 2011. Across the Atlantic, European officials continue to disagree on the governmental and fiscal reforms. The proposed bill, which looks at pension age and government wage calculation has met resistance with Belgium being the latest country to argue against its introduction. In the middle east, political tensions continue to fuel market volatility with protests in Libya and Bahrain, spilling over into the streets.

On the equity market front, the S&P500 rose 8 points to close at 1336. Financial stocks led the charge with traders increasing their exposure in light of solid economic data. Retail company Abercrombie and Fitch closed 7% higher, with earnings beating initial estimates. Online Forex company FXCM felt the effects of a broker stock revaluation with the stock recording a 12% loss for the session.

On the currency front, Sterling fell heavily against the US dollar on Wednesday with the Bank of England indicating that the UK economy could be subject to tighter monetary control in 2011, Forecasting a rise in inflation to 5%, the longer term forecast is 2-3%, in light of a rise in interest rates. Central Banker Mervyn King was confident that the UK economy would not be subject to a double dip scenario. The GBPUSD traded at 1.6037. The Japanese Yen weakened in trade on Wednesday with risk appetite pushing the US dollar higher. US Wholesale data that was released during the session indicated that cost pressure was continuing to cause concern. A rise of 0.8% for the January period, was  driven by a rebound in fuel and energy costs. Core PPI figures were above initial forecasts with 0.5% recorded. Traders reacted to the news moving away from the traditional safety blankets of the yen and Swiss franc. The USDJPY traded at 83.89.

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Aussie Reacts To Chinese Inflation | February 16, 2011

February 16, 2011 By

AUDUSD

Good morning. Equity markets reacted to Retail Sales data on Tuesday with the indices lower in trade. Reporting a 0.3% rise for the period, economists had initially factored in 0.5%. Indicating that costs had resulted in a reduction in buying power, the Commerce Department was comfortable with the lacklustre results. Building confidence also contributed to the weakness in the market, with the NA Home Builders indicating that the market was still apprehensive when referencing real estate and building. Across the globe, China announced that CPI had topped 4.9% for the period. Currency traders and Analysts expected a mid 5% range. New loan data also gave rise to a tightening in rates, with a significant jump in approvals for the month of January. According to a local correspondent, a staggering $157 billion was lent during the period. Key economics to be announced on Wednesday include Housing Starts, Building Permits, PPI, Industrial Production and Crude Inventories.

On the equity market front, the Dow Jones fell 41 points to close at 12,227. Profit taking and a slew of economic data drove the trend for much of the session. Dell announced in after hours that its net earnings were $927 million for the fourth quarter. EPS exceeded analysts’ expectations, whilst revenues were in line for the period.

On the currency front, the Aussie dollar had a subdued reaction to Chinese inflation data, with the currency pair falling to 0.9963 late in the session. Economists were unable to ascertain whether the news was good or bad, as a slowing in inflation data could spell a stabilisation of the economy. On the other hand, the news triggered a reassessment of resource demand and growth in the region.  RBA minutes released on Tuesday indicated that the local economy was on track to meet growth guidelines and forecasts, with inflation in a manageable range.   Rebounding from earlier lows, the US dollar rose against the Japanese Yen on Tuesday. Trading at 83.57, the currency reacted to news that Chinese inflation was below initial estimates. The January figure surprised the market and led to a selloff in the safe haven currencies. The 4.9% annualised figure was expected to top 5.4% due to significant economic growth in the region. Traders however are still cautious on the outlook for Japan and the public debt situation.

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Is Inflation The New Beast? | January 20, 2011

January 20, 2011 By

GBPUSD

Good morning. Equity markets were impacted by a slew of corporate data on Wednesday with the major indices weakening late in the session. Retail sales figures for the week recorded their smallest gain, indicating a possible softening in consumer sentiment and discretionary spending. Housing Starts and Building permits were released during the session, with economists speculating over the potential recovery in the sector. Generally regarded as a key barometer for economic growth, housing starts provide an insight into the number of private dwellings which have begun construction. This is an after effect of Building permits. Today’s result fell well below estimates with 529,000 recorded for the December period. Building Permits in contrast exceeded expectations with 635,000 recorded. The market had factored in 560,000.

On the equity market front, the S&P500 fell 1% with the financial sector weighing on the index. American Express announced that it would be axing 500 jobs due to cost pressure. This had a negative effect on the stock with the company recording a 2% drop. Goldman Sachs surprised the market with a significant reduction in fourth quarter earnings. Tough trading and economic conditions were cited as contributing factors.

On the currency front, sterling experienced a relatively subdued session on Wednesday with job claims data pushing the currency into a range. Reporting a fall of 4100 job claims in December, the result did not spur economists to reassess their growth forecasts for the UK. Recent government adjustments in spending have led rise to fears that the unemployment rate may rise in the coming months. The GBPUSD traded at 1.5993. The Canadian dollar bucked the trend on Wednesday, with the currency pair falling against the greenback. Trading at 0.9957, the CAD was influenced by mixed commodity leads and comments from the Bank of Canada. Indicating that GDP and long term growth could be influenced by adverse currency movements, the central bank was also cautious on inflationary forecasts. This had a direct impact on sentiment pushing the currency lower.

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Risk Appetite Influences Spot Gold and Silver | January 17, 2011

January 18, 2011 By

Spot Gold and Silver

Good morning. Equity markets on Friday were buoyant with Retail Sales and CPI data painting a positive economic picture. With a 0.6% rise for the December sales period, retailers highlighted that the holiday season had beaten initial forecasts. Consumer Price Index figures fell in line with forecasts with a 0.5% seasonally adjusted increase. Fed Chairman Bernanke noted the importance of sustained stimulatory measures to ensure that the economy does not contract. These comments were supported by the Beige Book in the previous session. Key economic news released in the coming week includes building permits, housing starts on Wednesday and initial claims and existing home sales on Thursday. Economists have forecasted a strong recovery in housing data and a slight fall in claims. Gold and Silver experienced sharp falls, with risk appetite and flat inflationary forecasts the primary contributing factors.

On the equity market front, the Dow Jones rose 55 points with the financial sector leading the charge. JP Morgan announced strong corporate earnings with a 47% rise for the period. Technology Company Intel was sold down by the market, even after releasing better than expected results. Citing cost pressures and an increasingly competitive landscape, economists and analysts were sceptical over future earnings.

On the currency front, the Japanese Yen continued to concern the Bank of Japan and Japanese government with a strong finish on Friday. Recent appreciation in the currency has led to unsustainable impacts on corporate and export earnings. Car manufacturer Daihatsu, highlighted this on Friday with the company announcing that it would reduce its exposure in Europe. Toyota Chairman and son of founder Toyoda forecast a shift in manufacturing offshore due to cost pressures sustained by a stronger currency. This would have severe implications on employment and economic growth. The USDJPY traded at 82.93. Sterling rose against the US dollar on Friday with the currency pair reaching 1.5864. Speculation that the Bank of England could be looking to raise interest rates helped support the pound during the session. PPI data released indicated a significant acceleration in economic growth, which translates into heightened price and cost pressure. The move to raise rates would attract carry traders and funds looking for yield play.

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