Trichet

Markets Choppy As Investors Buoyed By The European Banks Stress Test | July 18, 2011

July 18, 2011 By Vantage FX

EURCHF touched all time lows early on Monday morning in light trading.

The Australian equity market is pointed to a higher open Monday after the US stocks advanced on Friday evening on the back of massive earnings from Google overshadowed another warning about the US.’s credit rating and a disheartened reading on consumer sentiment. The S&P credit rating agency said there is a 50% chance it would lower the AAA bond rating on U.S. debt within three months.

The S&P index rose 7.2 points to finish the day at 1316.14 while the Dow rose 42.61 points to finish at 12479.73, both the indices are down over 1% for the week.

EURCHF (see above chart) touched all time lows early on Monday morning in light trading. It opened Monday morning on a high of 1.1578 to then trade a low of 1.1373. Investors seem to be choosing the CHF as a safe haven after a weekend interview with Merkel and Trichet seem to be making the Greek debt crisis more unclear and difficult to understand.

Only eight banks out of 90 top lenders in Europe failed the tests for a worst case economic scenario, between them there is a combined shortfall of 2.5 billion Euro’s of capital. Analysts had speculated that over 20 of the banks would fail the tests.

Crude oil futures prices capped a choppy week with a 1.6% rise to above $97 a barrel in U.S. trading Friday, on expectations that U.S. Federal Reserve board policy will continue to support the underlying strength in oil.

Gold finished the week off trading up 0.5% to settlement in U.S. trading Friday at 1593.7, while silver made steady gains, as bleaker U.S. consumer sentiment and government debt concerns in Europe and the U.S. roused investor demand for a safe haven.

INDICES
	Last Traded
SPI 200	4455
S&P500 Index	1316.10
Dow Jones Indus. Avg	12479.7
FTSE 100 Index	5843

COMMODITIES
	Last Traded
Gold	1597
Oil (Nymex)	97.55

CURRENCIES
	Last Traded
AUDUSD	1.0650
EURUSD	1.4124
GBPUSD	1.6115
USDJPY	79.07

Filed Under: July Tagged With: AAA bond rating, AUDUSD, Australian equity market, capital, CHF, consumer sentiment, crude oil, currency trading, Dow, Dow Jones Indus. Avg, EURCHF, Euro, EURUSD, Foreign Exchange, forex, forex market wrap, FTSE 100 Index, GBPUSD, Gold, Google, Greek debt crisis, iEurope, market wrap, Merkel, Nymex, Oil, S&P credit rating, S&P500 Index, silver, SPI 200, Trichet, US consumer sentiment, US credit rating, US Debt, US Federal Reserve, US stocks, US trading, USDJPY, vantage fx

CPI And Its Effects On Gold | May 16, 2011

May 16, 2011 By Vantage FX

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.

Filed Under: May Tagged With: Alibaba, austerity measures, Building Permits, Chinese Inflation Data, commodity market, consolidating, Consumer Price Index, Continuing Claims, contraction, CPI, currency market, currency trading, ECB, ECB Chairman, equity market, Euro, european debt, Existing Home Sales, Foreign Exchange, forex, forex market wrap, Germany, Greece, greenback, Housing Starts, Industrial Production, inflation, Initial Claims, intervention, JC Penny, Leading Indicators, liquidity requirements, market wrap, S&P500, Swiss Franc, Trichet, Urban Outfitters, US Dollar, US inflation, USDCHF, vantage fx, yahoo, Yen

Initial Claims Figures Spark Global Market Selloff | May 6, 2011

May 6, 2011 By Vantage FX

Aussie dollar savaged by global commodity selloff

Good morning. Equity and Commodity markets experienced heightened levels of volatility on Thursday with Initial Claims data disappointing. Reporting a jump for the period, the market had initially priced in 400,000. Other key economic news that was released on Thursday included Productivity and Continuing Claims. Productivity rose to 1.6%, with continuing claims tracking initial claims. Tomorrow will see the release of Non Farm Payrolls, and the Unemployment rate. Across the Atlantic, European Central Bank President Trichet commented on the current economic and debt situation in the Eurozone, citing the potential for sustained debt problems. The Central Banker was cautious in his estimates of economic growth.

On the equity market front, the Dow Jones finished the session 140 points lower. AIG announced that it had posted a $543 million quarterly loss. Food company Kraft released buoyant revenue data, which initially spurred a rise in the stock. The 11% gain in revenue was not able to translate into a higher net profit, with $799 million announced.

On the currency front, the Euro Dollar posted one of the biggest falls during the session, with debt worries and fears of a global economic slowdown, pressuring the currency. Announcing a 78 billion emergency package for Portugal, the EU gave little indication of growth forecasts. This led to speculation that interest rates may be on hold over the coming year. Traders also capitalised on the pullback to crystallise profits and losses. The EURUSD traded at 1.4537. Volatility and Economic fears pushed the Japanese Yen lower on Thursday. Breaking through the psychological level of 80, the Japanese Finance Ministry commented on the moves citing the potential for further action to stabilise the currency. This led to a slight surge late in the day, as the US dollar gained. Economists predict another round of Japanese Intervention, as the currency continues to press on local economic growth. The rising currency however will be subject to yield attractiveness, housing and Manufacturing data. The USDJPY traded at 80.16. The Aussie Dollar experienced a sharp sell off on Thursday with markets reacting to commodity movements. A significant fall in Oil, and Silver translated into a contraction in the demand for the resource based currency pair. Early in the week, the Reserve Bank announced that rates would stay on hold, citing the potential for weakness in the housing and consumer spending sectors. This also contributed to movements during the session. The AUDUSD traded at 1.0576.

Filed Under: May Tagged With: AIG, AUDUSD, Aussie Dollar, commodity market, consumer spending, Continuing Claims, currency market, currency trading, Dow Jones, ECB, equity market, EU, euro dollar, euro zone, european central bank, EURUSD, Foreign Exchange, forex, forex market wrap, housing data, Initial Claims Data, interest rates, Japanese Finance Ministry, Kraft, manufacturing data, market wrap, Non Farm Payroll, Oil, Portugal, Productivity Claims, Reserve Bank, silver, Trichet, unemployment rate, US Dollar, USDJPY, vantage fx, volatility, Yen, yield

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

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

Inventories Data Affects Oil Prices | April 7, 2011

April 8, 2011 By Vantage FX

Aussie dollar rallied off the back of a decisive carry trade scenario

Good morning. Equity and Commodity markets opened the session slightly firmer with Light Crude Oil influenced by inventories data. Reporting 1.95 million for the period, the figure came in below the previous month of 2.94 million. Economists have noted the impact of the Libyan Civil War on the price. Other economic news released included the MBA Mortgage Index. This paints a picture of the sustainability of the mortgage market. The index was still in a contracting phase, with -2.0% recorded. This was a vast improvement from the previous -7.5%. Across the Atlantic traders eyed key monetary policy decisions from the ECB and Bank of England. Industrial Output data released in the UK disappointed the market and indicated that the economy was still in a slow recovery. Economic news released on Thursday in the US includes Initial Claims, Consumer Credit and Continuing Claims. The market has factored in 386,000 – 388,000 for initial claims. This will be a slight improvement from the previous period.

On the equity market front, volatility in the S&P500 fell with the market trading in a range early in the day. Key corporate announcements during the early part of the session included broker downgrades for car manufacturer BMW, and Financial Services Provider Commerzbank. Analysts highlighted key macroeconomic risks. Both stocks fell greater than 2%.

On the currency front, The Aussie Dollar rallied against the greenback on Wednesday, with traders looking for a carry trade scenario. Although the RBA kept rates on hold, the market expects a rise in the coming months. Buoyant commodity prices during the session, coupled with expectations of a jump in employment figures contributed to movements. The AUDUSD traded at 1.0425, with a session start close to 1.032. Breaking through 85, the Japanese Yen continued to weaken against the greenback. Traders continued to highlight yield play as a key level of measure. With the Bank of Japan expected to keep rates on hold, the US dollar came into favour. The differential between the two currencies has come under scrutiny, with intervention measures warranted. Since the G7 intervention, the Yen has weakened considerably against the majors. The USDJPY traded at 85.27. ECB speculation drove the Euro higher on Wednesday. Trading at 1.4335, the market reacted to news that the Central Bank was looking at increasing rates to combat inflation. Economists were also confident that the move would herald a shift in sentiment towards the Euro zone. Recent market reactions to debt contagion and crisis had a damaging effect on the smaller European countries. Trichet is forecast to raise rates by 25 basis points.

Filed Under: April Tagged With: AUDUSD, Aussie Dollar, Bank of England, Bank of Japan, BMW, broker downgrades, carry trade, Central Bank, Commerzbank, commodity market, commodity prices, Consumer Credit, Continuing Claims, currency market, currency trading, debt contagion, ECB, equity market, Euro, euro zone, Foreign Exchange, forex, forex market wrap, greenback, Industrial Output data, inflation, Initial Claims, inventories data, Libyan Civil War, Light Crude Oil, market wrap, MBA Mortgage Index, monetary policy, oil price, RBA, S&P500, Trichet, UK, US, US Dollar, USDJPY, vantage fx, volatility, Yen, yield play

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

Consumer Spending Data Support Equity Markets | March 29, 2011

March 29, 2011 By Vantage FX

Canadian Dollar strengthens against the greenback, with traders eyeing possible gains in Oil.

Good morning. Equity markets reacted to buoyant Personal Spending data on Monday with a rise in the major indices. Announcing that Personal Income had fallen in line with initial forecasts of 0.3%, the market was happy with a 0.7% rise in spending. This was expected to top 0.5% for the period. Across the Atlantic, European banking concerns were laid to rest with Central Banker Trichet highlighting the potential for further growth in the economy and inflation. The comments come as traders forecast a tightening in monetary policy. Stability in the region could translate into a reduction in borrowing costs. Rebel forces in Libya announced on Monday that they had secured several major towns along the coastline. One of the areas is a key Oil distribution port. This led the market to speculate over the viability of oil supply and exports. Economic data set to be released on Tuesday includes Consumer Confidence and Case Shiller City Index. Markets are factoring in a score of 65 for the march confidence figures.

On the equity market front, the Dow Jones opened the session on a positive note with the tech sector leading the way. Nvidia Corp rose 4% off the back of a broker upgrade to outperform. Apple opened firmer with the release of the IPAD2 expected to influence earnings growth. The conservative movement led traders to believe that the market had already factored in much of the demand for the product.

On the currency front, the Japanese Yen weakened against the US Dollar on Monday with concerns over nuclear waste playing havoc on the currency. Reporting contamination in the seas of Fukushima, the Japanese government was quick to comment on the situation, highlighting the potential for further radiation leaks. Markets reacted to key US personal spending and income data with a rise in spending and a flat income figure recorded. The USDJPY traded at 81.79. After breaking through 1.03, the AUDUSD weakened to trade at 1.0259 late in the day. Heightened awareness of the carry trade scenario, helped support the currency, with traders eyeing the potential for further Aussie investment. Economists noted that yield was still a key driver, with the RBA’s recent comments driving gains. A tightening in monetary policy could spark a surge in buying pressure and demand. The Canadian dollar rose significantly against the greenback on Monday, with traders eyeing elections in the country. Initial strength in the Oil price drove gains, before weakening midsession. The Canadian elections are expected to be hotly debated with expectations of a close result. This will further impact market movements and volatility in the coming months. The USDCAD traded at 0.9749.

Filed Under: March Tagged With: Apple, AUDUSD, Aussie, buying pressure, canadian dollar, Canadian elections, carry trade, Case Shiller City Index, Central Banker, Consumer Confidence, currency market, currency trading, Dow Jones, equity market, Foreign Exchange, forex, forex market wrap, Fukushima, greenback, inflation, iPad2, Libya, market wrap, monetary policy, Nvidia Corp, Oil, oil exports, oil price, oil supply, Personal Income, Personal Spending data, RBA, Trichet, US Dollar, USDCAD, USDJPY, vantage fx, Yen, yield

Tensions In Libya Drive Uncertainty | March 23, 2011

March 23, 2011 By Vantage FX

Gold weakened late in the session, with the Libyan conflict driving market uncertainty.

Good morning. Equity markets traded in and out of positive territory on Tuesday with little economic and corporate leads. Markets watched the Libyan situation closely, with Oil reacting. Rising to $104.06, the commodity experienced strong buying pressure early in the session, with fears of a political contagion effect in the middle east. The Federal Reserve of New York announced on Tuesday that it had successfully completed a bond purchase of 7.5 billion to further stimulate the economy. Across the atlantic, UK Officials released CPI data, which indicated a 4.4% rise year on year. This was well above initial estimates. Traders have highlighted the pressure of rising oil costs on the economy. European leaders agreed to extend the bailout plan to 500 billion euros, with the market concerned that debt and fiscal issues could continue to hinder economic recovery.

On the equity market front, the S&P500 was flat midsession, with mixed corporate news from the technology and financial sectors. Research in Motion announced that it would enter the tablet market with a new consumer product set to be released. The market sees the product as a very real competitor to the IPAD. RIM rose slightly. Netflix bucked the overall market trend with the stock rising 3.8% off the back of a broker earnings and share price upgrade.

On the currency front, sterling followed its European counterpart lower late in the session, with the currency trading at 1.6368. Market momentum pushed the currency higher early in the day with UK Inflation data supporting the argument for a rate rise. Inflation touched 4.4 for the February period. This continued to be well above the comfortable level for the Bank of England. Lacklustre session recorded for the Swiss Franc on Tuesday, with trader and economic uncertainty contributing to the movements. Strong export data released in Switzerland, came as a surprise to economists with a 16% rise year on year recorded. Recent appreciations in the Franc were expected to dent economic output and growth. Central Banker Hilldebrand noted that the local economy continued to be vibrant and on target to meet expectations. Debt risk in the EU and political risk in the Middle East were highlighted as key areas of concern. The USDCHF traded at 0.9036. The Euro bucked the risk trend and weakened against the US dollar on Tuesday. Falling to 1.418, European leaders agreed to increase the bailout amount to 500 billion by 2013. Initial discussions over the prescribed level, and uncertainty as to the amount that could be fully drawn led to weakness in the Euro. Markets have factored in a rate rise next month, with ECB Chairman Trichet highlighting the importance of inflationary and cost management.

Filed Under: March Tagged With: Bank of England, bond purchase, Central Banker, CHF, commodity prices, CPI Data, currency market, currency trading, ECB Chairman, equity market, EU, Euro, export data, Federal Reserve of New York, Foreign Exchange, forex, forex market wrap, franc, Hildebrand, inflation, iPad, Libya, market wrap, Middle East, Netflix, Oil, political contagion effect, rate rise, Research in Motion, RIM, S&P500, Sterling, Swiss Franc, Switzerland, Trichet, UK, UK Inflation data, US Dollar, USD, USDCHF, vantage fx

Traders Eye Safety of Franc | Febraury 24, 2011

February 24, 2011 By Vantage FX

Good morning. Commodity markets continued to react to political unrest in Libya and Bahrain, with Light Crude Oil touching $99 a barrel. Existing Home Sales data strengthened 2.7% during the January period, with the market initially forecasting 5.36 million. Across the Atlantic, the European Industrial Output for December increased 2.1%, which was in line with initial estimates. Economists cited that the report was a key barometer for inflation and economic growth. Comments from ECB Chairman Trichet indicated the possibility of a tightening in monetary policy in the short term if costs remain robust. Ireland heads into an election this week, with the current Prime Minister Cowin stepping down. Thursday will see a slew of economic announcements in the US with Initial Claims, Durable Orders and New Home Sales.

On the equity market front, the Dow Jones fell 104 points on Wednesday. Newspaper giant The Washington Post struggled during the session, with the company posting weaker than expected fourth quarter results. The stock reacted to the downgrade with a 5% fall intraday. Diversified oil and gas producer Denbury Resources, announced a significant jump in revenues with $10.4 million in net income for the period. The market warmed to the news with the company closing 3.4% higher.

On the currency front, the Swiss Franc rose against the greenback on Wednesday with the currency pair touching 0.9328. Safe haven buying from yesterday extended to today, with traders surprised at the movements. Speculation that Euro zone interest rates may rise soon, also had a positive effect on the Swiss Franc. Recent comments from the Swiss Central Bank have indicated that they are also looking at the impact of inflation on economic growth. Pound Sterling rose against the greenback on Wednesday with BOE minutes supporting the currency. Highlighting the need for a tightening of policy, one of the Bank of England officials was in favour of a shift in rates. Trading at 1.6223, the currency pair also experienced relief rally buying. Yesterday’s sell off in the sterling was a result of Libya and Middle East tensions and the potential for a fall in Oil output. Rebounding during the session, the Euro reacted positively to monetary policy sentiment. Speculating that the ECB may raise rates in the coming months, economists looked towards previous inflationary and growth reports for an indication of how Trichet and the Board will move. A number of European countries have warmed to the idea of a tightening in policy, to combat long term inflation. The EURUSD traded at 1.3760.

Filed Under: February Tagged With: Bahrain, Bank of England, BOE, commodity market, currency market, currency trading, Denbury Resources, Dow Jones, ECB, ECB Chairman, equity market, Euro, euro zone, European Industrial Output, Existing Home Sales, Foreign Exchange, forex, forex market wrap, greenback, inflation, interest rates, Ireland, Libya, Light Crude Oil, Middle East, monetary policy, pound, Prime Minister Cowin, Sterling, Swiss Central Bank, Swiss Franc, The Washington Post, Trichet, US Durable Orders, US Initial Claims data, US New Home Sales, vantage fx