Below Parity In The Past

Central Banks' to the Rescue? The Bank of England stole the headlines this morning as it delivered its second Inflation Report of the year. Its message was fairly grim: the UK won't regain its 2007 level of output until 2018. The biggest threat to the UK economy right now according to the bank is the impasse in the Eurozone (something the BOE can't control). The BOE: "blame the Royal Family and the Eurozone" However, the one thing it can control is QE and interest rates, and it kept the door to more QE firmly open today. It noted that Q1 GDP figures could be revised higher, however a number of "one off" factors like the Queen's Jubilee bank holiday this year could knock 0.5% from GDP. This "holiday" could have a more damaging economic effect than the Royal Wedding, according to the Bank. ...

Forex News and Events: The S&P GSCI Index reversed its 2011 gains in the last six consecutive trading sessions. As a matter of fact, the index tracking 24 commodities broke down 7.6% from a high of 684.15 on April 30th to a more than four-month low low of 634.25 during yesterday’s trade session. This downturn in commodity prices can be explained on the one hand by headlines from the Euro area, as markets seem to be pricing in a second round of elections in Greece as well as a probable EU exit. On the other hand, the marked slowdown of commodity-intensive economies such as China -see Newsletter May 14- pushed prices lower in light of atrophied demand and lower infrastructure investments. From the foreign exchange perspective, the Australian dollar having experienced a 34% appreciation ...

This is the fifth day without a firm government in place for Greece; if a coalition is not found soon then we could be heading back to the polls, which open up the possibility of a prolonged period of Greek political instability. There was some hope this morning of the Conservatives forming a coalition with the Socialists and other moderate pro-bailout parties that would have a mandate to govern until 2014. This helped to lift the euro from its daily lows; however for a sustained rally in risk we need to get a firm commitment that a 'moderate' pro-European government will take the reins of power in Athens. Unless that happens then the markets are likely to remain jittery. Mixed signals The markets are particularly cloudy today. Some bullish reversal patterns that formed yesterday were ...

USD is trading firmly against the majors (except the JPY) with the Dollar Index advancing to approach the pivotal 80.00 level. With little economic data due out today, the market's focus remains on political developments in Europe and the elevated uncertainty is seeing traders shift away from risky assets and into safe havens. US Treasury yields are lower with the 10-year yield currently around 1.84% and US equities are lower with the DJIA and S&P 500 currently down by -0.60% and -0.68% respectively. The dollar is strongest against the commodity currencies (AUD, NZD, CAD) amid growth concerns and significant technical declines in commodities. Gold (XAU/USD) is currently trading below a long term trendline support which began at the lows in Oct. 2008 and crude oil is currently below its 200- ...

The Reserve Bank of Australia slashed the Official Cash Rate from 4.25% to 3.75%. The 50 basis point cut was more than the 25-bps cut the market has expected. In Glenn Steven’s (Governor of the RBA) statement, he mentioned slowdown in China as well as the challenge in the Eurozone. He also noted a slowing domestic economy despite a growth in demand: “In Australia, output growth was somewhat below trend over the past year, notwithstanding that growth in domestic demand ran at its fastest pace for four years. Output growth was affected in part by temporary factors, but also by the persistently high exchange rate. Considerable structural change is also occurring in the economy. Labour market conditions softened during 2011, though the rate of unemployment has so far remained little changed ...

The Week Ahead Highlights FOMC minutes and US labour market in focus More QE for the UK Spain and other sovereign concerns RBA to hold for now Market Moves FOMC minutes and US labour market in focus The past week has seen a multitude of Fed speakers express their views on the economic outlook and monetary policy. Voting members Bernanke, Lacker, Lockhart, Duke, and Dudley all delivered speeches as well as non-voters Plosser, Fisher, and Rosengren. The main focus was on Chairman Bernanke who reiterated his concern that the economic recovery is "slower than we would have hoped" and that "the job market remains far from normal". The Fed Chairman noted the benefits of continued accommodation and kept open the option for further easing. Markets will look to the release ...

The Weekly Bottom Line : 27/02/2012 HIGHLIGHTS OF THE WEEK United States U.S. stock markets have been on a tear over the past several weeks reflecting newfound optimism in the economic outlook. The housing market is leading the improvement in economic indicators and showed continued momentum this week. Existing home sales rose to levels last seen during the homebuyer tax credit of early 2010. Supported by continued job gains, the housing market looks to be turning a corner. The one caveat to rising optimism is rising gas prices. As tensions with Iran push up crude oil prices, consumers are feeling it at the pumps. A sustained gain in oil prices presents a key downside risk to recent economic momentum. Canada Canada's S&P TSX, which is up a solid 3% over the past two ...

(Reuters) - Gold steadied on Wednesday after rising to its strongest in more than two weeks as concerns about Greece's ability to implement an unpopular bailout deal balanced gains triggered by the actual agreement. Spot gold rose to $1,759.84 an ounce in early trade, its highest since February 3, before steadying at $1,757.80 by 0716 GMT. Slower factory activity in China also helped erase some of the early gains. U.S. gold bounced from lows and added $1.20 to $1,759.70 an ounce. Cash gold staged its biggest one-day rise in two weeks on Tuesday, climbing 1.5 percent along with riskier assets after euro zone finance ministers gave the greenlight to a 130-billion-euro bailout for Greece. The euphoria faded quickly, however, as worries about implementation resurfaced, and data pointing to ...

(Reuters) - U.S. farmers this spring will seed the largest area with corn since World War Two as a mild and dry winter has raised expectations for a quick planting this spring , a Reuters poll of 24 analysts showed, signaling a boost to razor-thin stocks and lower prices in 2012. The survey showed that farmers were gearing up to plant 94.2 million acres, which could produce a record crop of 13.8 billion bushels based on a trendline yield of 161.4 bushels per acre. It would surpass the previous record of 13.1 billion in 2009. Farmers were expected to plant 75.3 million acres with soybeans, up slightly from last year's 75 million. Seeding of corn, used primary as livestock feed and to produce the gasoline additive ethanol, kicks off in the southern states in March and winds its way up to ...