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All Eyes on BoE
Forex News and Events:
Bank of England stands to make a crucial decision today as turmoil hinders most of its peer Euro Zone economies. UK’s GDP contracted in the last quarter of 2011 by a revised 0.3%, and inflation remained higher than the 2% average target set by the BoE. During the last weeks, economic data in services and manufacturing were mainly affected by rising petroleum prices and austerity budget cuts biting deep into consumer / household spending. But MPC member Adam Posen, hitherto a fervent supporter of QE stated: “My own personal view is that I think the economy is stronger than what data is going to show”. The central bank last increased its asset purchase program target by 18% in February to GBP325bn as the money supply gauge M4 dipped heavily, suggesting a tightening of ...
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Euro Extends Its Trip South As Speculation On Greek Exit Is Growing
Sunrise Market Commentary
- Fixed Income: Core bonds higher at first, but gave back gains in US session
- Fears about Greece and Spain continued to boost core bonds, but a rumours, later confirmed, that the EFSF would today disburse a tranche of the Greek bail-out loan triggered some correction and erased part of the German bond gains and almost all of the US ones. Today, the BoE decision on QE may affect overall bond markets.
- Currencies: euro extends its trip South as speculation on Greek exit is growing
- On Wednesday, trading on global markets was still dominated by negative headlines on Europe. This weighed on the euro. After all, the decline of EUR/USD developed in an orderly way even as several EMU policymakers pondered the option of a Greek exit. Today, the BoE holds ...
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Will The Bank Of England Surprise The Markets?
The euro (EUR) plummeted yesterday against the dollar falling as low as 1.2911 from 1.3003 on growing fears about Europe's debt crisis. Investors are worried about Greece's ability to avoid bankruptcy and that it may have to leave Europe's single currency. Greek leaders failed to form a new government on Wednesday and fears of another election are heightened. Developments in Spain and its banking system continue to weigh on the euro after the nationalization of the country's fourth-largest bank, Bankia. The Spanish government's action to take a 45% stake on Bankia aims to dispel concerns about the country's financial problems but fears pushed Spanish bond yields back above 6% today.
The US dollar (USD) strengthened against a basket of currencies yesterday as risk aversion dominated the ...
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Politics Rule
Markets woke up on a strong bearish tone as political jitters from France and Greece dominate the scenes, sparking a flight to safety across the global markets.
The anti-austerity French presidential candid Mr. Hollande was officially elected the new president, which is considered another political issue that may add further complications to the already uncertain outlook of the euro area. The new president has clearly disclosed his tendency towards less austerity and further growth, which may be a setback to the current fiscal pact and reforms that Sarkozy and Merkel pledged to tackle the debt crisis.
On the other hand, the two main pro-bailout political parties in Greece fell short in the parliamentary elections, as Greeks gave their votes to parties that have always stood against the ...
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YouTradeFX Daily Market Analysis : 07/05/2012
Fundamental News
The new Euro-zone politics will dominate markets throughout this week, as anti-austerity political parties take hold in Europe. The confirmation of Hollande’s victory in France marks the end of the Merkel-Sarkozy dominance at the political heart of Europe. Investors are acutely aware of the new leader's distain for austerity measures and some elements of the EU's new fiscal treaty. Mr Hollande has vowed not to ratify the new EU treaty unless new growth promoting measures are added, which is going to significantly draw-out the process of fiscal integration, if not stop it altogether. While in Athens, both mainstream political parties saw a dramatic collapse in support with anti-austerity groups seizing the opportunity to bolster their support. The head of the Syriza party, ...
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ADP misses big time
Private sector jobs creation in the form of ADP report missed estimates of 170,000 to print a modest 119,000 gain, down from 201,000 in February. The figure is considered a good indication for the NFP number and thus weighs on investors’ expectations.
The initial reaction has been risk negative so far, as the higher yielders are adding to their earlier losses against the greenback, while the JPY rallies. Anyhow, markets were already under downside pressure today after figures showed deepening contraction of the European manufacturing sector. The Risk-off mode is expected dominate the scenes over the short term eying tomorrows ECB rate decision and press conference, in addition to Friday’s NFP release.
The EUR/USD has broken the main short term ascending trend line in addition to the ...
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The Weekly Bottom Line : 27/04/2012
The Weekly Bottom Line
HIGHLIGHTS OF THE WEEK
United States
- Europe provided plenty of negative headlines this week. Both Spain and the U.K. confirmed their economies fell back in recession, while the former saw its unemployment rate jump to 24.4%.
- The Dutch government collapsed over a dispute regarding fiscal tightening measures and S&P downgraded Spain's sovereign rating by two notches to BBB+.
- Although unspectacular, things were better in the U.S. First quarter GDP growth came softer than expected. However moderate, a 2.2% q/q annualized economic expansion feels comforting against the European backdrop.
Canada
- Retail trade slid by 0.2% in February as auto sales declined following strong January results.
- Newfoundland and Labrador brought down its budget, ...
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The Markets Rally On A Potential Liquidity Boost Looks Fragile
The Markets Rally On A Potential Liquidity Boost Looks Fragile
The markets have decided that Ben Bernanke was dovish at his speech yesterday, although not as dovish as his fellow Princeton economist Paul Krugman. The Fed Governor reiterated that economic conditions 'are likely to warrant exceptionally low levels for the Federal Funds rate at least through late 2014'.
This was expected, although the FOMC's statement highlighted that the Bank remains concerned about external and internal factors that could weigh on growth. Although the statement said that the 'economy has been expanding moderately' and that the unemployment rate has declined it also stuck a note of caution saying that the unemployment rate remains elevated and the housing sector remains depressed. Perhaps the biggest cause ...
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Rally looks fragile, needs some support
Higher-yielders recovered briefly some of yesterdays losses, risky assets look fragile ahead of the main releases from the U.S; in the form of consumer confidence and new home sales. Confidence among consumers is expected to show a slight setback while new home sales expected to signal further recovery within the housing sector.
In general, the risk-off theme continues to dominate the scenes , while markets eagerly waiting tomorrow's FOMC meeting outcome for a clue that will outline the next short term direction.
The EUR/USD rebounded slightly currently trading just below the 50-days SMA; meanwhile a bearish technical pattern could be in the process of completion, where we expect the bearish sentiment to dampen further upside for the pair. Anyhow, 1.3210-1.3220 is the main resistance ...
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