Daily Reviews of major currencies from Globe Gain Forex Rebates - page 4
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26/03/2012 USD prefers to close out the week on a declining note
EUR/USD
For two weeks in a row the dollar experienced heavy sales, which started on Thursday afternoon and reached their hottest point on Friday. As highlighted in the press, last week the dollar decline was caused by growing concerns about the US and Chinese economic growth. This explanation sounds a bit controversial though, as Friday’s data indicated a sudden 4.1% rise in the level of the Chinese coincident indicators in February. Of course, we shouldn’t forget that this happened after the 2% decline a month ago, but even with this fact considered the current pace is good. Technically, the markets were disappointed by the statistics on new homes sales. The annual sales rate totaled 313K in February, against 318K a month earlier and the expected growth of 326K. But here again we come across a familiar pattern: a small decline in sales occurs when prices rise. In our case the median home sale price leaped up from 215,700 to 233,700. Under such circumstances the 1.6% decline in sales m/m is more than a good result. In addition, compared to the figures reported the same month a year ago the sales have grown by 11.4%. The market actually doesn’t seem to have strong reasons to sell risky assets now. Even the ECB's head Draghi mentioned that the euro area is already over the worst. It can be true with the financial system, but it’s hardly so with the regional economies, which are still to face a long period of fiscal austerity and economic hardships.
GBP/USD
The British pound has been displaying an enviable steadiness over the last few days, holding tight to the bargaining mark of 1.5860, which coincides with the level of the annual moving average (200 days MA)...Read full review
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27/03/2012 Bernanke: more, more, more…
EUR/USD
Ben Bernanke’s speech stirred up the market yesterday, reviving hopes for the Fed’s further support of the economy through asset buying and other unconventional measures. The Fed’s chief emphasized that to reduce unemployment the country needs a higher growth rate. He also mentioned that in the near future unemployment might decline even at a slower pace than now. Unfortunately, markets preferred to ignore Bernanke’s doubts and interpreted them as hints at new bond purchases. This interpretation immediately spurred the across-the-board weakening of the dollar. The single currency fluctuated wildly. In the European session it fell below 1.32, but at the end of the day it was making advances already to 1.3370. The growth pattern of the pair – by fits and starts – is still preserved. The single currency grows on execution of sell orders at local highs. Such dynamics may hold for several more days or even weeks, while markets, on the one hand, feel confident about further economic stimulation and, on the other hand, see real improvement in economic indicators. All this will allow for further asset purchases on the overall positive and high risk appetite. But why should Bernanke be so enthusiastic to support the economy? He is not sure that economic indicators will keep indicating improvement in the future. Over the last few years he proved right, in fact. The economy and labour market suffer a stronger slowdown in summer, when there are more workers. In spring many still believe that sparse green shoots will grow into dense fields, and only then notice that soil has been sucked dry and can yield a good crop only when nourished.
GBP/USD
Technically, the British pound enjoyed even a more advantageous position than the euro at the time of Bernanke’s address. As has already been mentioned, the pound had been trading near the 200-day moving average for several days in a row, but to make a decisive breakthrough it needed some important news...Read full review
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28/03/2012 Markets climb extremely high to launch correction next
EUR/USD
Markets cracked under their own weight and after an impressive rally on Monday launched a deep correction. Formally, the sales were triggered by a dramatic deterioration of the consumer confidence, recorded by Conference Board. In March the figure made 70.2 against 71.6 a month earlier. Besides, the worsening was mainly caused by ongoing concerns of the Americans about the employment situation in the country. Remember that just a few days ago everyone saw only positive changes in this sector and drew the parallel with the figures at the start of recession? Of course, the labour market issue may pale into significance this week, but next week it will again fully absorb investors’ attention as new data on employment are scheduled to be released then. Meanwhile, current movements in the market impress by their diversity. The unison we observed earlier in the phase “risk on/off” is missing. EUR/USD has been hovering around 1,33 for three days in a row. Many of the coming signals are discrepant. WTI Oil hasn’t seen any significant motion and trend in March. The stock markets are climbing up, though it’s often the case that they stumble on their way. For all that, the US growth rate remains higher than in any other countries, which is actually not surprising. In this connection we really wonder if improvement in the USA necessarily leads to the higher demand for such risky assets as the euro, Aussie and commodities.
GBP/USD
The British pound reached the 1.60 level yesterday, but the cautiousness, dominating the markets at the time, didn’t allow for setting of positive sentiments. The sterling rolled back a bit and is now trading around 1,5950. The final GDP figures for 4Q, published today, have been unexpectedly revised down to -0.3%...Read full review
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29/03/2012 Has ECB's liguidity reversed the falling lending trend?
EUR/USD
As reported in the press, the European leaders are considering the possible extending of bailout funds. Released at the end of the day, this news managed to restore confidence in the markets and hold the euro back from falling. As a result, EUR/USD is trading evenly at the same level as a day ago, around 1,3310. Not very prominent, but quite alarming news came in yesterday from the ECB. As shown in the regular statistics, M3 Money Supply grew from 2,5% to 2,8% in February. It indicates the reversal from the terrible figures of December and accounts for the ECB’s liquidity infusions at the time. Anyway, we should bear in mind that the main target was to boost lending to the real sector and this is the point where we have problems. The annual growth rate of private loans, published in the same report, instead of the expected increase showed a significant decline in the sector – from 1,1% down to 0,7%. It points to the fact that the ECB’s money was not spent on lending, as Draghi wanted, but just helped the banks to exchange poor bonds for more liquid ones. Eventually, a considerable part of this liquidity is likely to shortly go into reserves, as many banks have to draw large capitals to meet the new demands of capital adequacy by June. Still at closer consideration, the single currency displays certain stability, gradually winning back figure by figure from the dollar. It will last until the Eurozone indicators enter the red zone as a result of fiscal policy tightening. How much time does Europe have at its disposal, we wonder?
GBP/USD
Yesterday luck failed the pound. As we know, it was one of the strongest rivals of the dollar for a while, but yesterday even before the release of the Final GDP data the currency came under a strong pressure...Read full review
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30/03/2012 European bears, American bulls
EUR/USD
It’s great when officials pay their attention to the same figures as analysts do. Like was mentioned yesterday, although filling of the European banks with liquidity has helped to save the regional financial system from complete collapse, it still hasn’t reached the ultimate goal that Draghi talked about. Namely, it hasn’t managed to increase lending to the business and household sectors. However, as the ECB’s vice-president quite unexpectedly put in his speech, the Bank didn’t pursue the goal of supporting lending in the region. It’s a bit surprising. At the same time, the situation in Spain is becoming tenser and tenser. Yesterday trade unions launched a 24-hour strike against the labour market reform. The Spanish have been suffering for too long. They have stoically endured unemployment exceeding 20% (such figures can be hardly found anywhere else in Europe now), haven’t worried about the 30% decline in housing prices, but all at once have taken to the streets when their lifestyle has come under threat. The strike and negative sentiment across Europe put pressure on the quotes of equity futures, which had been declining for 3 days in a row. However, by the end of the day the situation had changed. The end-of-quarter effect went off. The stocks, which were strong at the beginning of the year and then fell in price due to the correction in the markets, again have attracted investors’ interest. This turn of events in the stock markets managed to change the situation with EUR/USD. Having fallen down to 1,3250 by the start of trading in the USA, the pair then reversed and during trading in Asia completely recouped its Thursday’s losses and reached 1,3365. These days we see abrupt reverses in the pair, so it’s of interest what it will look like in the second quarter. Will we possibly see the same situation as a year ago, when the markets and the euro went into decline in May after the sharp upward movement in April? Everything seems to be heading for this.
GBP/USD
The British pound cannot decide which way to go. Almost for the whole March EUR/GBP has been trading sideways, having a day of growth after a day of decline. For all that, for GBP/USD the end of March can be called quite favourable...Read full review
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02/04/2012 Forex got stuck in flat trading
EUR/USD
This Monday stock exchanges are mainly growing, though it’s hard to single out any dominating sentiments. The euro started the week with a positive gap, which was closed in a few hours though. EUR/USD jumped up to 1,3375 at the opening (which coincided with Friday’s maximum) and then again fell down to 1,3330. And at the beginning of the European session the quotes started to gradually crawl up and now trading is held approximately in the middle of the above-mentioned corridor. Today markets have received data on PMI of different European countries. On the whole, the data point at the conspicuous decline of manufacturing activity in the region, even despite the fact that statistics for Germany and Italy have been revised up. The German PMI made 48.4 in March against the prior estimation at 48.1. Anyway, the Euro-Zone Composite PMI has remained at the same level of 47.7, as was estimated at the beginning of the month. In contrast, the USA and Switzerland are mainly increasing their activity. There is a suspicion though that, judging by the results of 1Q, Euro-Zone has fallen into the technical recession after the slowdown in 4Q of the previous year. However, if the US economy manages to maintain the current pace of growth, it may tell favourably on the figures, demonstrated by Europe. The current week abounds in important news releases, which may produce a considerable impact on the course of trading for the whole month. Traders will have to face a difficult choice. The equity market has already climbed very high on the hopes that the global economy growth will speed up. If there aren’t any obstacles on the way, the current levels will seem to be acceptable for buying. But there is also a grave risk that by summer the economic and business activity will again (for the third time) wind down and financial losers of Europe will again force its leaders to call countless meetings.
GBP/USD
After a short hitch on Wednesday the sterling now again feels in the saddle. On Friday the pair went above 1.60 and managed to close out the week, month and quarter above this mark. This promising start of the new quarter gives the sterling strength for growth today...Read full review
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03/04/2012 Does China’s slowdown play into the USA’s hands?
EUR/USD
The disappointment at yesterday’s PMI data lasted for a few hours and brought EUR/USD down to its daily low of 1.3278. However, later the euro gained support on the returning demand for risk. The first trading day of the new quarter was marked by dominance of the moderate positive across the markets. The analysts more and more often point out that China’s slowdown and simultaneous demand growth in the USA will make it possible to build a favourable environment for creation of new jobs. Can it really happen that the USA will turn from the world’s largest consumer into the biggest producer? Very likely, as at present the pace of labour cost in China is rising quicker than the labour efficiency. In addition, there has set up a new trend for locating of manufacture closer to the consumers. Still we shouldn’t think that all the models, which were in use earlier, will collapse in a moment. Anyway, there is a chance to see that China will stop building up its export at an unprecedented rate and switch over to serving its own needs. Europe meanwhile is likely to keep stagnating under such conditions, being suppressed by a heavy burden of tax toughening and high household and corporate debt load. Anyway, all these trends are long-term and it will take time for them to develop and become clearer. And for now the single currency has been hovering around 1.3350 for 7 days in a row. Probably, on the portfolio rebalancing and relatively high pace of the US economy growth the markets will tend to buy the common currency in the coming days.
GBP/USD
While Europe grieved over its poor PMI figures, Britain on the contrary was rejoicing at its own ones. The British PMI data proved quite strong, which was immediately exploited by the bulls. They drove the pair up to 1.6060, and though they didn’t manage to consolidate at the reached levels, the pair has progressed conspicuously against its rivals...Read full review
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04/04/2012 Fed’s cautiousness about further incentives triggers the dollar rally
EUR/USD
The Fed’s minutes published yesterday afternoon produced a dramatic influence on the market. They made it clear that the Fed is now less inclined to provide further incentives for the economy. Speculators immediately reacted to that, having started to buy dollars and sell risky assets and currencies. As a result, the single currency, for example, sank from 1,3340 to 1,3215 in an hour. During the Asian session sales continued, which brought the pair below 1,32. Exactly the soft Fed’s policy, which doesn’t fully fit the current circumstances, is called the impetus of the 30% rally in the stock markets since last October. Of course, it’s quite possible to understand Bernanke, who cannot introduce very quick and also pleasing to markets changes in the policy. To some extent, the market rally, which has driven the indices up to their 4-year highs, can be called the side-effect of the Fed’s endeavours. However, it’s of interest if the labour market will further retain the positive mood. The release of employment data is scheduled for the end of this week. It may exert a considerable impact on the situation in the market. And later today we’ll see data on the private sector from ADP. In the last five months the average increase in the number of the employed has exceeded 200K. Starting with March the increase is expected to be the same, of 209K. Other employment indicators also point at a higher pace of job creation than before. Shortly after this publication the ECB press conference is to be held. This time Draghi can allow himself to refrain from talking about new measures to support the troubled European countries, but he will still have to specify his stance for the future. As was forecasted by the ECB in autumn, the regional economy has slid into “slight recession”, however its further prospects are no longer that gloomy as before. Now politicians have to concentrate on the structural economic reforms, which will bring together the labour market competitiveness in different countries. It can be both the cost reduction in weak countries and wage growth in Germany and the like.
GBP/USD
Britain feels better and better, judging by the PMI reports. Earlier this week we observed a sharp contrast between the manufacturing activities of the Continent and Britain: while the former was suffering a slowdown, the latter managed to demonstrate a higher growth rate...Read full review
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05/04/2012 The dollar keeps strengthening – be careful
EUR/USD
The euro decline, started after the release of the Fed meeting minutes, persisted for most part of the day yesterday. EUR/USD fell down to 1.31, though a couple of days ago it was high at 1.3350. Technically the euro/dollar is close to an important support level. The continuous slackness in the preceding days spilt over into the vigorous action. However, it seems to subside now on the reduced volumes before the holidays. It’s of interest that yesterday’s euro sales occurred on the upward revision of Services PMIs in the greater part of Europe. In March the Euro-zone final services PMI made 49.2 and PMI Composite -49.1 against the primary estimate of 48.7 for both the indicators. The cautiousness about the euro was caused by a poor Spanish auction, which failed to attract the required buying interest. Still, for some European countries economic news pales in comparison with the situation in the financial markets. However, with the USA it’s different. Despite a short hitch with the ISM service-sector index, more and more commentators and analysts find the situation in the country improving. The Services PMI showed a certain slowdown in the pace of expansion, having fallen from 57.3 down to 56.0. Actually, the slowdown was expected to be more moderate, down to 56.9. Anyway, the figure for the first quarter of this year is 3 bp higher than that of 4Q of the last year. The ADP data didn’t display any downward deviation from the trend set over the recent months either. Private sector employment grew by 206K, which coincides with the average figures of last year’s October. Apart from statistics, yesterday the attention of markets was compelled by Draghi’s press-conference. There’s small wonder about the interest rate being kept at the current level. But Draghi’s comments on the possible acceleration of inflation in the coming quarters really surprise. It looks as though Germany forced the Bank to keep this parameter as its prime target.
GBP/USD
Yesterday Britain again enjoyed a batch of good news. Just like it was recently demonstrated by the manufacturing and construction sectors, the data on the service sector exceeded the previous figures and expectations... Read full review
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06/04/2012 Good Friday for the euro?
EUR/USD
Yesterday the single currency rewrote its local lows and went sideways on very thin volumeless trading. On Thursday EUR/USD went down to 1.3034 at the beginning of the active US session, but then it moved sideways. Now the currency is quoted at 1.3070. It’s often the case that a day before the payrolls release volatility abandons the markets, and traders place large orders at the current levels. But today the most part of Europe is getting ready for the coming Easter, so the markets are almost completely deprived of volume. Very often the trend, which has been dominating the markets over the week, reverses after the release of the US statistics. But it’s not very clear what logic should the markets follow this time in order to see the same scenario. If the factual employment data doesn’t differ much from the now expected growth at 200K, the chances of further QE this year will fade greater. By contrast, the situation in Europe has been causing some concern over the recent days. Now again spreads on bonds of the European fiscal violators are growing against their German counterparts. The European stock markets are declining faster than the American ones, and the economic indicators show a growing contrast between the USA and Euro-Zone. This cannot last for long and in a quarter or two Europe will also catch up, but at present the economic situation is not favourable for the euro. Anyway, here we cannot find any contradiction with the existing perennial tendencies. Providing there’re no cataclysms, the dollar usually tends to grow in the warm season, but in August-September it frequently looks weaker than its rivals. In case there are some drastic troubles in the economy, the situation may unfold in an absolutely different way, like it was in 2008, for instance. So, technically, today the euro may correct this week’s decline and grow slightly on the payrolls release, but the dollar also has good chances to go up in the coming days and weeks.
EUR/GBP
Following the euro, the British pound was also declining yesterday, but got support at 1.58. The bulls do not want to give up their positions, especially after trading has returned to the level of the pair’s 200-day moving average. As we mentioned yesterday, the British economic indicators dispose to buying of the sterling rather than of the euro...Read full review
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