*Daily Forex market overviews by MasterForex.com* - page 32
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Overview of the main economical events of the current day - 09/01/2013
Investors remain cautious; Japan is likely to be a news flow generator in the coming weeks.
EUR was demonstrating quite a performance yesterday, however it ended up decreasing vs. USD for the first time in 3 days on the rumors that France received a downgrade warning. While the rumors turned out to be false, this illustrates the underlying lack of confidence from the investors. The currency was also somewhat affected by rather weak German trade balance figures.
Nonetheless, EUR was rising for the most part of the day fueled by Japan's comment as Finance Minister Aso said the country would buy a portion of Europe's ESM bonds continuously using foreign reserves as Europe's financial situation would help stabilize currencies including the Japanese yen. Also, Aso noted that ESM bond is considered by Japan to be a "major investment tool" just like euro-denominated sovereign bonds".
Meanwhile, it's seen that purchase of ESM bonds would help Japan avoid criticism from Eurozone on currency manipulation and would also help weaken the yen. So far, Japan bought around EUR 7b of ESFS bonds, around 6.7% on issue. Regarding monetary policy, Aso said the government is keen to issue a joint statement with BoJ and the 2% inflation target would be the main focus in the statement.
We recommend investors to keep an eye on Japan in the coming days as Bank of Japan's next policy decision is just a couple weeks away. While it is safe to expect a weaker JPY to some extent, the news flow around the fact is crucial for investors and is bound to affect other currencies as well.
By MasterForex Company
Overview of the main economical events of the current day - 10/01/2013
ECB meeting to drive trading in the coming days
While yen and euro weakened against the dollar, strong data from China supported rallies in equities and some currencies as well. However, industrial production from Germany was weaker than expected, making the market more concerned about the possibility that ECB might cut its rate.
The ECB meeting thus is likely to be a key focus this week. There is a real chance that the central bank elects to cut its repo rate following weak growth expectations delivered last months. While we think that the rate cut is not a very likely turn of events given the macro situation, however EUR is vulnerable to loss of interest rate support if the ECB eases or simply continues to send a dovish message.
Bank of England is having a meeting today too, however we do not expect it to deliver any policy changes. The ongoing improvement of statistical data coupled with rising inflationary risks makes further easing unlikely in our view.
Finally, USA is expected to post weekly jobless claims. However we do not expect any strong market reaction to these news unless there is a huge surprise in numbers.
By MasterForex Company
Overview of the main economical events of the current day - 11/01/2013
ECB looks optimistic; YEN is remains vulnerable
EURUSD rallied on the back of a change in rhetoric at ECB monetary policy announcement. The main shift was ECB President Mario Draghi saying that the decision to leave rates unchanged was unanimous and listing a number of significant improvements in the economy. This differs drastically to what we heard in December when ECB was having wide discussions on the subject. Seems like further ECB easing is off the agenda now provided we do not see any serious economy deterioration any time soon.
While Japan's trade balance numbers came lower than expected yesterday which resulted in a brief round of selling, the new policy of the recently elected government remains the key driver. According to Japanese press, Bank of Japan's adoption of a 2% inflation target on January 22nd is basically a done deal – and investors seemed to appreciate some clarity.
Today's calendar is really light with attention likely to be focused on UK industrial production. With ECB meeting behind us, we recommend investors to keep an eye on the situation in Japan as it looks like a one of the most important factors right now.
By MasterForex Company
Overview of the main economical events of the current day - 14/01/2013
JPY continues to decline, while all main currencies demonstrated growth against USD last week.
Last week resulted in most of the major currencies demonstrating growth against USD. JPY is a notable exception from this observation – a 1.16% decline vs. USD resulted in Japanese currency reaching a new a low. This is explained by the fact that the currency was caught in a perfect storm last week: not only trade balance numbers were disappointing, but newly elected government has accepted a USD 116bn stimulus package – not an unexpected decision however it definitely puts JPY in quite a weak position.
EUR, on the other hand, demonstrated quite a performance fueled by Draghi's comments after ECB meeting, who pointed out that this time the decision was unanimous, showing investors that Eurozone is still capable of finding a consensus.
Seems like this week will be a rather quite one in terms of meetings and press-conferences. In the last couple of weeks US government agreed on the "fiscal cliff problem", Japan started economy stimulation and Eurozone finally made a unanimous decision (albeit not a big one, but it's the effort that counts). If you think about it, it looks like quite a lot of important decisions and the market likely has not yet fully priced all the information in. For investors it means that some trading correction is possible as market participants will adjust to a new reality. As usual there is some data to come out over the week, however it is more on the statistics side rather than some market changing political or macro news. Despite it, keep a close eye on the newsflow – surprises may happen.
By MasterForex Company
Overview of the main economical events of the current day - 15/01/2013
Quite a slow day with EUR being the strongest currency
Today was quite a slow day in terms of news which was expected by us though.
JPY keeps falling fast, reaching another 2-year low on the news that Japanese Prime Minister plans to announce a new head of the Central Bank, who is likely to force PM's policy of quantitative easing which is bound to put pressure on the currency. Add a coming raise to the planned inflation rate and it's obvious why the picture isn't so rosy for the Japanese currency right now.
USD declined versus EUR after US President Barack Obama announced during a press conference that USA can not afford any further discussion of the government debt limit, sending a negative signal to the market.
GBP also continued its downward motion against EUR resulting in a longest decline since October after UK government announced it might revise its terms of becoming a EU member.
There are some things to keep an eye for tomorrow coming from the statistics department. UK will release December Housing Prices, inflation update and a bunch of price indexes. Coming from Eurozone expect November Trade Balance figures and German CPI data for December. USA will publish some trading data and oil update and Japan will finish the day with the numbers on the Production of Machinery Orders Received.
By MasterForex Company
Overview of the main economical events of the current day - 16/01/2013
USD looks like a defensive option; Japanese officials try to support the currency
Looks like in a current situation with a lack of strong drivers investors are trying to secure their positions and USD seems somewhat like a safe heaven which explains its rising against most of the currencies.
Sure, US government still needs to solve the debt ceiling problem and in theory the country has enough money only till March. However that's theory and real life is something different: it's actually more a political problem than a financial one and it is likely to be solved – and investors seem to agree with that. Just a little piece of a historical evidence – the level of the debt ceiling has been increased roughly 80 times in last 50 years, so it is not something uncommon. And while there bound to be some scary headlines like the one we saw yesterday saying that Fitch might downgrade USA's rating if the problem is not solved, we remain optimistic and think that a negative turn of events is highly unlikely in this case – however some short term volatility is possible.
Japan's economy minister surprised financial markets by warning of the potential ill effects of a sharply weaker yen. We see this change in rhethoric as an attempt to slow down JPY depreciating, which is falling rapidly lately. And while JPY has been rising against USD for some time yesterday, that is explained by market participants overreacting the incorrect news headline, which suggested that Japanese government think JPY is too weak already. Once the headline was corrected, USD quickly recovered some of its losses.
That basically illustrates the state of the markets today: investors are paranoid and quickly react to any bit of news as they are hungry for trading ideas. Seems like once some drivers become clearer we might expect less intraday volatility afterall.
By MasterForex Company
Overview of the main economical events of the current day - 17/01/2013
EU and Japanese officials are concerned about their national currencies exchange rates.
EUR-crosses have recovered in the European session after comments from ECB officials negated comments from Eurogroup head Juncker that the EUR exchange rate is "dangerously high". EURUSD and EURGBP have both regained about 50% of the losses of the past two sessions, but crosses like EURAUD and EURJPY have seen a more subdued recovery. This morning ECB Nowotny said the EURUSD rise is "not a big concern" while member Praet suggested the EUR remains an input for policy but not a goal in itself. Both comments follow ECB President Draghi who said the currency was at its longterm average level, and suggest the EURUSD is not yet a major concern.
JPY has continued to correct higher for the second session driven by signs other Government members may not be on board with PM Abe's prescription for aggressive JPY weakness. LDP secretary Ishiba, considered an important pillar of support to successful contest the upper house elections, followed Economics Minister Amari in suggesting excessive JPY weakness could hurt certain industries. We think the market is beginning to come around to the view that BoJ will be unable to satisfy elevated expectations for a strong response next week (Jan 22); it is not even clear if big response comes next week, or pending the change of the Governor in early April.
Coming from USA we saw a release of so called "Beige Book" which describes current state of US economy. According to the document, American economy is recovering with most of the indicators demonstrating at some growth. This is likely to strengthen USD even further as a defensive option.
By MasterForex Company
Overview of the main economical events of the current day - 18/01/2013
EUR strength returns, JPY continues to fall
The recent trends of EUR strength and JPY weakness have returned. The catalyst for the EUR has been a continued improvement in sentiment in the Eurozone debt markets. It all started with local press suggesting that Portugal may be returning to debt markets and continued with strong debt auctions in other European countries such as Spain and Italy.
US data flow continues to be somewhat weak and looks like earnings season will continue to dominate the sentiment over the next few days. Watch out for hits and misses and pay close attention to financial sector companies as their earnings are extremely illustrative in terms of the economy situation. Friday's Chinese data (December IP, retail sales, FAI and Q4 GDP) will be important into next week; there has already been some risk-reduction in Asia today ahead of those figures.
USDJPY has continued trade back-and-forth given the varying political rhetoric and has now almost fully recovered the decline seen since the beginning of the week. Economic Minister Amari announced that his comments on the JPY earlier this week (that excess JPY weakness not desirable) were misinterpreted. Apparently, he actually meant that yen 'is still in the process of correction' from excessive strength and that he did not state that USDJPY at 100 is a "turning point". Still, there is no denying that the political rhetoric has turned more two-way, with LDP heavy-weight Ishiba yesterday suggesting JPY weakness could hurt agriculture industries. Again, we are skeptical that come January 22nd Bank of Japan will release a strong response especially given the already elevated expectations.
By MasterForex Company
Overview of the main economical events of the current day - 21/01/2013
Get ready for a busy week
Friday was a relatively slow day with investors trying to secure their positions before the weekend. And while there was not much action, this is likely to change soon with quite a lot of important things to happen over the course of the week.
On Monday expect January Rightmove housing prices index from UK, manufacturing prices from Germany and Canadian wholesale trade balance for November. Also keep in mind that this Monday is a holiday in USA as the country celebrates Martin Luther King's Day.
Tuesday is probably one of the most important days this week. First of all, Bank of Japan is to make an announcement regarding its financial policy. New inflation targets and some kind of quantitative easing are among the things we expect from BoJ – and these are likely to lead to a weaker JPY. On the other side, any positive surprise might turn the currency around which has been falling for quit some time already. There is also some data coming from around the world with most important being secondary housing market sales and crude oil reserves from USA and UK's 10-year bonds placement.
On Wednesday all eyes on Eurozone. Lots of business activity indexes coming from all over Europe will start the day and then turn your attention to UK: Bank of England to release it's last financial policy meeting minutes followed by a number of statistical data.
Thursday and Friday are also somewhat heavy on the statistics but they will probably not move the markets but rather support whatever trends should form during the week.
Finally, the World Economic Forum is happening this weekend in Switzerland and you can expect some market moving quotes coming from the speakers.
By MasterForex Company
Overview of the main economical events of the current day - 22/01/2013
JPY is in focus as Bank of Japan started its 2-day meeting
Monday was marked with JPY finally showing some growth versus USD after Bank of Japan started its 2-day financial policy meeting. Last month JPY lost about 6% vs. USD on rumors that BoJ will increase its stimulus measures in order to fight recession and it looks like investors actually appreciate some clarity on the matter. The consensus is that Bank of Japan will expand its asset purchase program by 10tn JPY and an increase in inflation target up to 2% is also possible.
GBP has also increased vs. USD after a release of strong Rightmove housing prices index numbers. According to the index, housing prices demonstrated a 0.2% growth in first weeks of January compared to a 3.3% decline in December.
EUR remained somewhat flat against USD on Monday. While manufacturing prices from Germany demonstrated some increase in December, the growth rates were lower than expected so it was not enough to move the currency.
By MasterForex Company