Libya

Volatile Markets See Nymex Crude Drop Over 5% | June 24, 2011

June 24, 2011 By Vantage FX

WTI crude futures fell over 5% to lows of below $90 a barrel

The U.S. stock market ended the overnight session small down after an evening of volatile trading, the Dow settled down 0.50%, to 12050, after recovering from a low of 11874 while the S&P500 index dropped 3.5 points.

The Euro which traded as low as 1.4127 overnight has rallied above the 1.4250 level on the back of reports that suggest Greece has had an agreement with the team of EU-IMF inspectors for its new five-year austerity plan after committing to an additional round of taxes and widespread spending cuts.

GBPUSD traded to a low of 1.5934, the break below the 1.6000 level is the first time since early April following weaker data from the retail sector early in the European session.

WTI crude futures fell over 5% to lows of below $90 a barrel overnight after the International Energy Agency announced that they would release 60 million barrels of oil from the strategic petroleum reserves of 28 nations over the next month. The decision was aimed to offset market disruptions prompted by the war in Libya, this is only the third time the IEA has undertaken such a collective action.

Gold and Silver both tumbled after the IEA announcement intensified investor expectations of lower inflation.

INDICES
	Last Traded
SPI 200	4487
S&P500 Index	1281
Dow Jones Indus. Avg	12008
FTSE 100 Index	5686

COMMODITIES
	Last Traded
Gold	1522
Oil (Nymex)	91.80

CURRENCIES
	Last Traded
AUDUSD	1.0542
EURUSD	1.4274
GBPUSD	1.6025
USDJPY	80.44

Filed Under: June Tagged With: AUDUSD, austerity plan, barrel, crude, crude oil, currency trading, Dow, Dow Jones Indus. Avg, EU, Euro, European session, EURUSD, Foreign Exchange, forex, forex market wrap, FTSE 100 Index, GBPUSD, Gold, Greece, IEA, IMF, inflation, International Energy Agency, Libya, market wrap, Nymex, Oil, petroleum reserves, S&P500 Index, silver, spending cuts, SPI 200, tax, US Stock Market, USDJPY, vantage fx, volatile trading, WTI, WTI crude

De-Leveraging Time | May 26, 2011

May 26, 2011 By Vantage FX

MT4 Chart for GBPUSD

A mixed bag of numbers were released in UK overnight, which gave the markets a boost with GDP came in as expected at 0.5% and 1.8% for QoQ and YoY respectively. Exports up at 2.3% (higher than analyst expectation) where as imports fell to 2.3%, which was less than expected at -0.7%. Moreover, government spending is high and private consumption was low (there is no surprise there).These numbers somewhat sent good news into the markets and fuelled GBPUSD to rallied over 100 points. Despite the numbers were not that strong, however, it did not surprised the market which is a good thing given all the uncertainties that Europe is currently enduring.

Commodities rallied again for a second day, Nymex breached the 101 level where as Gold continued to steady itself back to 1550 level (which could easily be the next stop). The movements are becoming clearer by the day, sending a signal into the markets that these two are on a one way street. Oil is becoming a scarce commodity as mentioned in the last two reports that OPEC is running out of its reserves trying to fill the gap that Libya caused. Gold is now back to “defensive” category as Europe trying to outline its austerity measure for Greece.

Strong commodities allowed AUDUSD and AUDJPY to regained all of its losses incurred during its trading hour due to the stream of bad news. Trading back at 1.0550 and 86.50 levels respectively.

Australia downgraded its banks, media sector and especially its market targets by 8%, this was followed by China had some downgrades on its own, in particular growth. These downgrades are forcing the markets to put back the bear hat. However, let’s not forget that this is not all entirely bad news as the markets looks to tighten both fiscal and monetary policies (across Asia and Europe) because there is capacity.

INDICES
	Last Traded	Previous Close	Change %	Net Change
SPI 200 Futures	4629	4589	0.872	40
S&P500 Index	1320.47	1316.28	0.318	4.19
S&P500 Futures	1317.25	1316.5	0.057	0.75
Dow Jones Indus. Avg	12394.66	12356.21	0.311	38.45
FTSE 100 Index	5870.14	5858.41	0.200	11.73
Volatility Index	17.07	17.82	-4.209	-0.75

COMMODITIES
	Last Traded	Previous Close	Change %	Net Change
Gold	1527.5	1527.8	-0.020	-0.3
Oil (Nymex)	101.47	101.32	0.148	0.15

CURRENCIES
	Last Traded	Previous Close	Change %	Net Change
AUDUSD	1.053	1.0532	-0.019	-0.0002
EURUSD	1.4086	1.4088	-0.014	-0.0002
GBPUSD	1.6289	1.6274	0.092	0.0015
USDJPY	82.01	81.97	-0.049	0.04

Filed Under: May Tagged With: Asia, AUDJPY, AUDUSD, austerity measures, Australia, bank downgrades, bearish, China, commodities, currency trading, Dow Jones Indus. Avg, downgrades, Europe, EURUSD, Exports, fiscal policy, Foreign Exchange, forex, forex market wrap, FTSE 100 Index, GBPUSD, GDP, Gold, government spending, Greece, Imports, Libya, market wrap, media sector, monetary policy, Nymex, Oil, oil (nymex), OPEC, private consumption, QoQ, S&P500 Futures, S&P500 Index, SPI 200 Futures, UK, USDJPY, vantage fx, volatility index, YoY

A Tenuous Market… | May 25, 2011

May 25, 2011 By Vantage FX

Chart for Gold (XAUUSD)

US market overnight tracked sideways as they tentatively waited for some sort of resolution in the European region. SP500 attempted to rally after the open within the interval of 40 minutes. However, it was not long until it slowly headed south and traded within a 6 points range for the remaining of the session.

The “fear” sentiment largely driven by the downgrade of Greek’s debt as well as S&P also set the Italian credit rating from stable to negative. Markets in the last 48 hours looked at Treasuries, USD and commodities for some salvations. This explains why gold and oil (back up above the 100 level) slowly creeping north, coupled with the fact that Goldman upgraded from bearish to bullish view (as the market is embracing the loss in Libyan’s oil production and OPEC lack of interjection). Hence, allowing AUDUSD to hold its 1c gain after the dip to 1.0480.

FTSE and DAX continued to displayed weakness and this is no surprise. Both tried to convert themselves to a “bid” market, however, ended at previous day lows of 5850 and 7150 respectively. Apart from Greece is now looking to default just around the corner (as its current supply can only last to July 2011), sentiment was not helped when PMI in Eurozone pulled back to the mid 50s level, slender the market conditions even further.

PBOC has explicitly made it clear that they will tighten their monetary policy in the short term. This has created a very “restrictive nature” in the market and had the Shanghai composite down 0.28%, which is holding a 3% down from Monday. Goldman downgraded their 2011 GDP to 9.4% from 10%. Furthermore, across the emerging markets realm, the respective regulator bodies are now on the “rate hike” band wagon, fighting inflationary pressure (so too is RBA).

AUDUSD currently range trading at present and the last 3 sessions has proven that. Partly because of China tightening policy view as Australia has great leverage in that nation, as well as RBA consistently promulgates that it must raise the rate soon to curb inflation.

INDICES
	Last Traded	Previous Close	Change %	Net Change
SPI 200 Futures	4633	4630	0.065	3
S&P500 Index	1316.28	1317.37	-0.083	-1.09
S&P500 Futures	1313	1313.5	-0.038	-0.5
Dow Jones Indus. Avg	12356.21	12381.26	-0.202	-25.05
FTSE 100 Index	5858.41	5835.89	0.386	22.52
Volatility Index	17.82	18.27	-2.463	-0.45

COMMODITIES
	Last Traded	Previous Close	Change %	Net Change
Gold	1525.4	1523.3	0.138	2.1
Oil (Nymex)	99.19	99.59	-0.402	-0.40001

CURRENCIES
	Last Traded	Previous Close	Change %	Net Change
AUDUSD	1.0555	1.0559	-0.038	-0.0004
EURUSD	1.4096	1.41	-0.028	-0.0004
GBPUSD	1.6178	1.6181	-0.019	-0.0003
USDJPY	82.04	81.95	-0.110	0.09

Filed Under: May Tagged With: AUDUSD, Australia, bearish, Bullish, China, commodities, Credit Rating, currency trading, DAX, Dow Jones Indus. Avg, Europe, Eurozone, EURUSD, Foreign Exchange, forex, forex market wrap, FTSE, FTSE100 Index, GBPUSD, GDP, Gold, Goldman, Greece, Greek debt, inflation, inflationary pressure, Libya, market wrap, monetary policy, Nymex, Oil, OPEC, PBOC, PMI, rate hike, RBA, S&P500, S&P500 Futures, S&P500 Index, Shanghai composite, sovereign downgrade, SPI 200 Futures, tightening policy, treasuries, US Dollar, US market, USD, USDJPY, vantage fx, volatility index, XAUUSD

Retail Sales Data Falls In Line With Initial Estimates | April 14, 2011

April 14, 2011 By Vantage FX

Canadian Dollar weakened against the greenback, with commodity strength having little effect on the movements

Good morning. Equity markets were modestly higher on Wednesday with low volumes and volatility recorded. The Federal Reserve released the Beige Book during the session with indications that the Japanese and Libyan events have had significant impact on growth and economic efficiency. Retail Sales data recorded a 0.4% gain, which was in line with initial estimates. Crude Inventory levels also contracted slightly from the previous period. US President Obama announced that health care was an important issue that required significant reform. The proposed medicare changes would have dramatic impact on the biotech and pharmaceutical sectors. Across the Atlantic, European Central Bank officials continued to watch movements in the currency, as speculation of a rate rise had little impact on price movements. The market have cautiously watched the recent debt crisis in Portugal and the ensuing borrowing costs associated with sovereign downgrades in Greece and Ireland. Economic news set to be released on Thursday includes PPI and Initial Claims.

On the equity market front, the S&P500 closed the session flat with mixed corporate leads from the tech and financial sectors contributing to movements. Riverbed Technology finished the day on a strong note with an upgrade in broker 12 month estimates driving gains. IBM and Microsoft also rose in trade with the sector receiving a boost in market sentiment. Biotechnology company Biosante Pharmaceuticals was a stand out performer, with the company reacting to Obama’s medicare reform comments.

On the currency front, the Euro weakened against the US dollar on Wednesday, with debt concerns playing on the minds of traders. Portuguese woes and the potential for further bailout measures led to a discourse in the Euro currency. Economists have also factored in the potential for a tightening in monetary policy. This has recently been supported by gains in GDP growth and employment. Risks that have been highlighted in the region include sovereign debt and borrowing costs. Greece, Ireland and Portugal have felt the effects of a surge in costs. The EURUSD traded at 1.4446. Swiss Producer Price Index data supported gains in the currency. Trading at 0.8961, the Statistics office announced that PPI fell in line with initial estimates of 0.4%. Market Analysts were comfortable with the figure, indicating the potential for further GDP growth in the short term. The recent appreciation in the currency has been watched with anticipation, as traders factor in the potential for a tightening in global interest rates. Yield attraction and aversion to the carry trade pushed the greenback higher against the Japanese Yen. Trading at 83.84, the market initially factored in the nuclear disaster into the equation, with the currency falling against most of the majors. Recovering late in the session, the Japanese Yen received support from covering trades. The market continues to be cautious in its estimation of economic growth and interest rates in light of the recent disasters.

Filed Under: April Tagged With: aversion, Barak Obama, Biosante Pharamaceuticals, biotech sector, carry trade, Crude Inventory, currency market, currency trading, debt crisis, equity market, Euro, european central bank, EURUSD, Federal Reserve, Foreign Exchange, forex, forex market wrap, GDP, Greece, greenback, health care, IBM, Initial Claims, interest rates, Ireland, Japan, Libya, market wrap, medicare, microsoft, monetary policy, nuclear disaster, pharamaceutical sector, Portugal, PPI, retail sales, Riverbed Technology, S&P500, Sovereign Debt, sovereign downgrade, Swiss PPI, The Beige Book, US Dollar, US President, vantage fx, volatility, Yen, yield attraction

Trade Balance Data Contributes To Market Volatility | April 13, 2011

April 13, 2011 By Vantage FX

Safe haven buying continued to drive the Swiss Franc higher against the greenback.

Good morning. Equity and Commodity markets reacted to Trade Balance data on Wednesday with falls recorded across all major asset classes. Reporting a deficit of $45.8 billion, the market had initially factored in $45.7 billion. Treasury Budget figures were also released during the session with $188.2 billion posted. Across the Atlantic, CPI, and Retail Sales figures contracted sharply in the UK, with a 4% fall in costs. Surprised by the result, economists had factored in significant growth patterns for the year. Libyan leader Gaddafi continues to defy and denounce calls to stand down as the leader of Libya. Violent clashes between rebel and government forces continue to drive market volatility and overall regional uncertainty. Key economic news released on Wednesday in the US includes Retail Sales, Initial Claims and the Beige Book.

On the equity market front, the Dow Jones closed the session 117 points lower, with insurance and industrials companies slipping. Everest Re announced that $320 million was used to cover costs associated with the Japanese earthquake. In other corporate news Alcoa weakened 6% of the back of continued market uncertainty.

On the currency front, uncertainty in the global economic markets continued to pressure the greenback and other risk currencies. The Swiss Franc received sustained buying pressure during the session, with traders concerned over the impact of natural disasters in Japan and the impact of War in Libya, on the region. Trading at record levels, economists are cautious on currency estimations, in light of the volatility and uncertainty in the markets. The USDCHF traded intraday at 0.8968. Comments from the International Monetary Fund on Tuesday had limited impact on the EURUSD. Citing the possibility of further economic weakness and instability in the region, the IMF was concerned that a tightening of monetary policy could dent growth and push the Euro zone back into a recessionary state. The news had a temporary effect on the currency pair, with traders continuing to eye a rise in yield. Trichet has hinted at a rate rise at the next board meeting. The EURUSD traded at 1.4476. The Aussie dollar weakened against the greenback before strengthening late in the session. Trading intraday at 1.0467, the market continued to factor in the possibility of further rate rises by the RBA. Treasurer Wayne Swann released a statement to the market that highlighted the growing problem of a stronger currency on the export and tourism markets. Indicating that GDP will rise by 3% per annum, the treasurer was comfortable with the level of growth in the economy. The comments had a subdued effect on the currency.

Filed Under: April Tagged With: Alcoa, Aussie Dollar, commodity market, CPI, currency market, currency trading, Dow Jones, equity market, euro zone, EURUSD, Everest Re, Foreign Exchange, forex, forex market wrap, Gaddafi, GDP, greenback, IMF, Initial Claims, international monetary fund, Japan, Libya, market wrap, monetary policy, RBA, recessionary state, retail sales, Swiss Franc, The Beige Book, Trade Balance, Treasury Budget, Trichet, USDCHF, vantage fx, volatility, Wayne Swann, yield

Commodity Sell Off Shapes Equity Markets | April 12, 2011

April 12, 2011 By Vantage FX

Swiss Franc strengthened on risk aversion buying

Good morning. Equity markets were relatively flat on Monday, with traders eyeing commodity movements, debt woes, and a possible Libyan cease fire. Light Crude Oil finished 3.4% lower with traders capitalising on a lull in the market and positive news in Libya and the Middle East. President Obama noted in a speech, that the debt situation in the US was a problem and the initial vote to remove the ceiling, was incorrect. Citing continuing factors, Mr Obama was confident that the US economy was resilient and was on track for a strong recovery. Key economic reports set to be released this week include Trade Balance (market expects 45 billion), Treasury Budget (market expects 45.7 billion) on Tuesday, Retail Sales (market expects 0.5%), Business Inventories (market expects 0.8%) and the Beige Book on Wednesday, Initial Claims (market expects 385,000), PPI (market expects 1.0%), and Core PPI (market expects 0.2%) on Thursday and CPI (market expects 0.5%), Core CPI (market expects 0.2%), Industrial Production (market expects 0.6%), and Capital Utilisation (market expects 77.4%) on Friday.

On the equity market front, the S&P500 posted a slight fall with a small range recorded. Alcoa announced positive earnings with $300 million of net profit highlighted. The company was confident that the future result would fall in line with forecasts and growth estimates. This did not translate into the price with a 3.5% fall. Industrials giant Proctor and Gamble announced a 9% increase in the current Dividend level, pushing the stock higher.

On the currency front, risk aversion pushed the swiss franc higher in trade on Monday. Caution in the equity and commodity markets sent the Swiss currency higher. Recent appreciations have however been cause for a concern for the central bank, with the tourism and export sectors significantly affected. The USDCHF traded at 0.9062. Moving away from risk appetite, traders were cautious on holding the Euro, Pound, and Aussie during the Monday session. Commodity weakness early in the day resonated throughout the market, with traders concentrating on the impact of the Portuguese debt crisis on the Euro. Economists have noted that refinancing costs will outstrip the cash deposits of the country. This would have a significant impact on borrowing levels and the sovereign debt rating for the country. This impacted the pair with the EURUSD trading at 1.4430. Aussie Dollar weakened against the US Dollar on Monday with traders moving away from risk. After a strong couple of sessions, the AUD reacted to a sharp selloff in the commodity space, in particular Oil and Gas. The key drivers for the session included the Japanese earthquake and speculation that the Rebels in Libya had disagreed with a proposed cease fire drawn by the African Union. This had a significant impact on global oil supply and demand, with markets factoring movements. The AUDUSD traded at 1.0515.

Filed Under: April Tagged With: African Union, Alcoa, AUDUSD, Aussie, Aussie Dollar, Business Inventories, Capital Utilisation, Central Bank, commodities, commodity market, Core CPI, Core PPI, CPI, currency market, currency trading, equity market, Euro, EURUSD, Foreign Exchange, forex, forex market wrap, gas, Industrial Production, Initial Claims, Japan Earthquake, Libya, Light Crude Oil, market wrap, Middle East, Obama, Oil, oil demand, oil supply, Portuguese debt, pound, PPI, President Obama, Proctor and Gamble, retail sales, risk appetite, risk aversion, S&P500, Sovereign Debt, swiss, Swiss Franc, The Beige Book, Trade Balance Figures, Treasury Budget, US, US Dollar, US Economy, USDCHF, vantage fx

Japanese Quake Fears Drive Market Volatility | April 8, 2011

April 8, 2011 By Vantage FX

Euro traded in a range on Thursday, with a rate hike by the ECB driving movements

Good morning. Equity markets reacted to a Japanese earthquake on Thursday with the indices falling intraday. Reporting a 7.1 magnitude quake, Japanese officials cited the epicentre as the north east region of the country. The government was quick to rule out the potential for nuclear power plant damage. Speculation of further repatriation of funds led to a short spike in the Yen against the greenback and other major currencies. In economic news, Initial Claims data, came in slightly below estimates with 382,000. Consumer Credit posted a significant rise to $7.6 billion. NATO forces came under criticism from Libyan rebels with the group highlighting the number of deaths caused by stray bombs. The recent uncertainty in the region continues to pressure energy prices. On the commodities front, Light Crude Oil rose to $110.29 and Gold flat lined at 1461 an ounce. Across the Atlantic, the European Central Bank announced a 1.25% rise in interest rates. This came after the Bank of England decided to keep rates on hold. Portuguese Banks received an unexpected boost with a bailout fund approval. This would translate into increased liquidity in the monetary system. Wholesale Inventories data is the only prominent economic release on Friday.

On the equity market front, the Dow Jones weekend 41 points intraday. Music and Entertainment company, Warner Music is reported to have received an offer from a prominent billionaire investor for the purchase of the company. The market speculated that the price tag could be close to $3 billion. Pharmaceutical company Xenoport reported that the FDA had provided approval for its Restless Legs Syndrome drug. The stock rose 57% of the back of the news.

On the currency front, the EURUSD consolidated during the Thursday session. The ECB announcement to raise rates to 1.25% had only a temporary effect on the currency, with markets already factoring in interest rate gains. Economists had initially factored in stronger policy guidance and the potential for further rate rises. Trichet did not accommodate the speculation, with the European Central Bank cautious in their growth forecasts. Profit taking pushed the Aussie lower in trade on Thursday. Touching 1.05 early in the session, the currency pair was buoyant for much of the session with jobs data beating initial expectations. Recording a 22,000 rise for the month, the market continued to factor in the potential for interest rate risk in the coming months. The Australian dollar also tracked the equity markets with a softening early in the day. The AUDUSD traded at 1.0434. Range bound for much of the day, Pound Sterling reacted to the Bank of England decision to keep rates at 0.5%. The market had looked for a tightening in monetary policy to combat inflation. Industrial Output and Manufacturing data released recently contradicted growth estimates, with economists undecided in the CPI forecasts. Relative costs as a percentage of GDP has been highlighted as key concern, with certain sectors supported by price gains. The GBPUSD traded at 1.6307.

Filed Under: April Tagged With: AUDUSD, Aussie, Australian Dollar, bailout fund, Bank of England, commodities, Consumer Credit, CPI, currency market, currency trading, Dow Jones, earthquake, ECB, energy prices, equity market, european central bank, EURUSD, FDA, Foreign Exchange, forex, forex market wrap, GBPUSD, GDP, Gold, greenback, indices, industrial output, inflation, Initial Cliams data, interest rate, interest rates, Japan, Libya, Light Crude Oil, liquidity, manufacturing data, market wrap, NATO, portugese banks, pound, Restless Legs Syndrome, Sterling, Trichet, vantage fx, Warner Music, wholesale inventories data, Xenoport, Yen

Euro Zone Inflation Fears Mount | April 6, 2011

April 6, 2011 By Vantage FX

Canadian dollar strengthened as precious base metals prices rose.

Good morning. Equity markets reacted to inflation fears with the major indices flat for much of the session. Light Crude Oil came under selling pressure with supply fears easing in Libya and the Middle East. Gold received a boost from inflation speculation in Europe, US and the UK. China announced that it would raise its benchmark rate by 25 basis points. This did not coincide with expectations. The market had factored in the potential for a tightening in policy midyear. European Central Bank leader Trichet hinted at the potential for interest rate rises in the next month, as inflation poses a risk on growth. The RBA left rates on hold in Australia. Bernanke announced that the $600 billion bond buying program would be completed by June. Highlighting the effectiveness of the stimulatory exercise, the Fed Chief was conscious of rising cost pressures. Limited economic news to be released in the US on Wednesday with Crude Inventories and the Mortgage Index the key data sets.

On the equity market front, the S&P500 closed the session flat with mixed corporate leads. American Airlines announced that carrying capacities had risen by 0.8%. This had little effect on the share price. Commodities giant Newmont Mining, finished the session on a strong note with buoyant gold prices contributing to gains.

On the currency front, the Dollar continued to rally against the Japanese Yen with traders eyeing comments from the US Central Bank. Bernanke in his speech highlighted the growing global concern of inflation, and the potential for a tightening in monetary policy. Rising oil prices have led to heightened degrees of money in the system. Stimulatory measures imposed by the US over the last couple of years had also contributed to the rise in overall CPI. Traders bought the greenback to gain exposure to yield. The USDJPY traded at 84.82. Reacting to Bernanke’s comments, the Aussie dollar weakened against the greenback, as traders eyed yield adjustment. Keeping rates on hold, the Reserve Bank governor noted the possibility of a tightening in monetary policy towards the end of 2011. A softening in housing growth, and consumer sentiment led to the decision to keep rates at 4.75%. Disappointed with the news offshore traders looked for potential yield in the US dollar, Pound and Euro. China raised rates by 25 basis points, shocking markets. This also impacted the Aussie in trade. The AUDUSD traded at 1.03307.

Filed Under: April Tagged With: American Airlines, AUDUSD, Aussie, Aussie Dollar, Australia, benchmark rate, Bernanke, bond purchasing, China, consumer sentiment, CPI, Crude Inventories, currency market, currency trading, dollar, ECB, equity market, Euro, Europe, european central bank, Fed Chief, Foreign Exchange, forex, forex market wrap, Gold, greenback, indices, inflation, interest rate, Libya, Light Crude Oil, market wrap, Middle East, monetary policy, Mortgage Index, Newmont Mining, oil prices, pound, RBA, Reserve Bank, S&P500, stimulatory measures, Trichet, UK, US, US Central Bank, US Dollar, USDJPY, vantage fx, Yen, yield

Uncertainty in US Equity Markets | April 5, 2011

April 5, 2011 By Vantage FX

The Aussie Dollar weakened against the greenback, with risk appetite contracting during the session

Good morning. Equity and Commodity Markets experienced a mixed session, with the tech heavy Nasdaq weakening. Relatively low volumes and volatility recorded during the session, with limited economic news. Economists reiterated their recovery concerns with forecasts of a softening in growth, as a result of high inflation levels and a possible tightening of monetary policy. The Bank of England and the ECB are expected to raise rates at their respective next meetings, as CPI and costs continue to pressure growth. News that Gaddafi’s sons were in talks to oust the beleaguered leader, sent shockwaves around the region. The unconfirmed reports come as the rebels fight for several oil towns along the Mediterranean coast. Light Crude Oil weakened during the session, as traders saw little supply risk in the reports. Economic news released today in the US includes ISM Services, with a market expectation of 59.5 for March. Bernanke will also release Fed minutes at 2pm.

On the equity market front, the Dow Jones closed the session higher with the technology sector experiencing headwinds. Analysts highlighted the potential earnings fall in certain technology sales. This translated into weakness in tech giant Intel, and Taiwan Semiconductor. National Semiconductor bucked the trend, as the company announced a takeover bid from Texas Instruments. The $6.5 billion cash offer translated into a $25 price tag.

On the currency front, the Aussie dollar experienced heightened levels of volatility late in the session. The Reserve Bank will meet on Tuesday to discuss interest rate policy, inflation and growth patterns. Economists do not expect a tightening or change in the short term rate. Fund inflows and capital investment in the Australian economy have recently been cited as the primary causes for the strong rise in the currency. The AUDUSD traded at 1.0354. The Japanese Yen broke out if its trend on Monday, strengthening late in the day against the US dollar. Initially reacting to a lack of risk aversion, the market began to factor in the potential for inflationary pressure in Europe and the US. This in effect could translate into a rise in interest rates and a demand for yield. The Tankan report was released over the weekend, with the sentiment level unchanged. Traders were surprised by the result and confident that the local economy could rebound from recent disasters. The USDJPY traded at 83.89. Tracking other risk pairs, the Euro weakened off the back of a stronger US dollar. Recording a 0.8% rise in Producer Prices for the period, the market had initially forecast 0.9%. Traders cited a rise in energy costs as a significant contributor. Trading at 1.4240, the EURUSD also reacted to continued uncertainty in north Africa and the Middle East. With British and French Air and Navy forces deployed to Libya, the rising cost of military action has also dented currency gains.

Filed Under: October Tagged With: Africa, AUD, AUDUSD, Aussie Dollar, Australian economy, Bank of England, Bernanke, British Air Force, capital investment, commodity market, CPI, currency market, currency trading, Dow Jones, ECB, equity market, EUR, Euro, Europe, EURUSD, Fed, Foreign Exchange, forex, forex market wrap, French Air Force, Gaddafi, inflation, inflationary pressure, Intel, interest rates, ISM Services, JPY, Libya, Light Crude Oil, market wrap, Middle East, monetary policy, Nasdaq, National Semiconductor, Navy Forces, Oil, Producer Prices, Reserve Bank, risk aversion, Taiwan Semiconductor, Tankan Report, Texas Instruments, US, US Dollar, USD, USDJPY, vantage fx, volatility, volume, Yen, yield

Unemployment and NFP Data Exceed Estimates | April 4, 2011

April 4, 2011 By Vantage FX

Japanese Yen continued to weaken against the US Dollar

Good morning. Equity and Commodity markets finished Friday on a strong note with the market supported by buoyant Non Farm Payrolls and Unemployment data. Reporting a rise in NFP to 216,000, the market had factored in 185,000. The Unemployment Rate coincided with this result, posting a fall to 8.8%. Construction Spending contrasted these results with a 1.4% contraction for the period. Economists cited the continued dependency of the housing market and sector on consumer sentiment. Libyan forces over the weekend lost ground to rebels as allied air attacks continued to bombard the eastern part of the country. The World Bank announced that it would extend support to the region economically if required. In preparation to a transitioning government, the World Bank commented on support for both Egypt and Libya in light of recent events. Economically, this week will see limited economic data released in the US. ISM Services (market expects 59.5) data will be released on Tuesday, Crude Inventories and the Mortgage Index on Wednesday, Initial Claims (market expects 388,000), Continuing Claims (market expects 3.7 million), and Consumer Credit (market expects 3.6 billion) on Thursday and Wholesale Inventories (market expects 1.0%) on Friday.

On the equity market front, the S&P500 closed 6 points or 0.5% higher on Friday. Key movements came from the diversified industrials sector with Caterpillar continuing to experience positive earnings sentiment. The tech sector was dragged lower by JDS, who reported a possible contraction in forecasted earnings. Traders pushed the stock 8.3% lower.

On the currency front, the Japanese Yen continued to weaken against the greenback on Friday. Touching 84.03, the pair reacted to speculation that the Bank of Japan may keep rates at current levels. The recent earthquake and tsunami has been forecast to impact economic growth in the country. In an effort to continue stimulation, the BOJ has begun using measures to protect both the currency and inflation levels. Yield play also influenced movements, with the yen falling against most majors. Slingshot session for the Euro on Friday, with the pair experiencing heightened volatility. Trading at 1.4232, the currency rallied off the back of interest rate expectations. The market although factoring in 3 rate rises by December, continued to push the EURUSD higher. Debt worries in Europe continue to persist with borrowing costs rising in Spain, Ireland and Greece. The reaction to proposed austerity measures in Portugal still play on the minds of economists, with many believing that the robustness of the Euro zone economy will depend on sovereign sentiment. Rising oil prices supported the Canadian dollar in trade on Friday. Renewed speculation that the Libya crisis could extend to the whole of the middle east led to a temporary surge in Light Crude Oil. Traditionally the CAD is a resource based currency, sensitive to the movements in specific commodities such as oil and gas. The USDCAD traded at 0.9628.

Filed Under: April Tagged With: austerity measures, Bank of Japan, BOJ, canadian dollar, caterpillar, commodity market, Construction Spending, consumer credit figures, Continuing Claims, Crude Inventories, currency market, currency trading, Egypt, equity market, Euro, euro zone, Europe, european debt, EURUSD, Foreign Exchange, forex, forex market wrap, Greece, greenback, inflation levels, Initial Claims Data, interest rates, Ireland, ISM Services, JDS, Libya, Light Crude Oil, market wrap, Middle East, Mortgage Index, NFP, Non Farm Payroll Data, Oil, oil prices, S&P500, Spain, unemployment data, USDCAD, vantage fx, volatility, Wholesale Inventories, World Bank, Yen, yield play