But The Rallies Are Getting

(Reuters) - Copper fell to a one-week low on Wednesday, retreating from its highest levels since February as disappointment over the U.S. Federal Reserve's retreat from another round of monetary stimulus seeped through financial markets, while traders pared back risk ahead of the Easter break. Three-month copper on the London Metal Exchange fell 3.1 percent to close at $8,350 a tonne from $8,615 on Tuesday, when it rallied to a near two month high above $8,700 a tonne. "The dimmed prospects for U.S. easing seem to be the main driver, also via the dollar, so we've seen some liquidation come through on copper today," analyst Robin Bhar of Societe Generale said. Minutes from the Fed's March meet showed less support for more easing, or bond-buying, in the face of improved economic data, ...

Traders moving assets to safer, lower yielding currencies appear to be playing a factor in the correction of the major crosses. The USD and JPY, which are seen as a safer bet than others currencies in times of market stress, will likely keep drawing demand as investors stay away from riskier assets. Economic News USD - U.S Dollar Soars against the EUR and GBP The dollar rose against the EUR on Thursday, reversing the single currency's earlier gains, as investors grew more risk averse and sought safety in the dollar. By yesterday's close, the USD rose against the EUR, pushing the oft-traded currency pair to 1.3370. The dollar experienced similar behavior against the GBP and closed at 1.5900. As the U.S economy stabilizes, currency traders have started to focus more on fundamentals such ...

Forex News and Events: In yesterday's ECB meeting, the ECB president did not even mention the subject of rate cuts but did highlight inflationary pressures. Suggesting to us and the market that rates will stay at 1.00% for the rest of the year. The 2012 inflation midpoint forecast was increased to 2.4% y/y from 2.0% y/y previously, higher than the central banks mid target of 2.0%. The 2012 growth forecast was revised lower to -0.1% y/y from +0.3% y/y previously. Risk appetite held firm for most of the Asian session until the much anticipated results of the bond swap offer were announced. Reuters reported that Greece announced that 85.8% of bondholders (€172bn tendered in swap ) have accepted the offer. "I wish to express my appreciation to all of our creditors who have supported our ...

Forex News and Events: FX risk appetite was relatively unchanged in Asian session after the broad pullback triggered by Federal Reserve Chairman Bernanke's undovish comments to the US House Committee on Financial Services. From China a bit of good news as February manufacturing PMI came in at 51.0 vs 50.9 exp, 50.5 prior, while new orders sub-index climbed to 51.0 vs 50.4 prior. The details suggested that a post Chinese new year demand has picked up broadly and the general economy is closer to a soft landing verse hard. This is good news after a somewhat difficult January where the softer economic data hinted that perhaps the world's engine of growth might be stumbling. We suspect that growth will be closer to 9.0 in 2012 (with strong Q2 & Q3) and drops in exports will be offset by ...

Forex News and Events: Today’s ECB 3yr LTRO was greater than the market expected and therefore we should expect to see an positive push in risk assets as the cash actually hits the market. This was the highest take up in LTRO history. Earlier there was a slight migration to risk off trades as S&P's decision to downgrade Greek debt to 'Selective Default' rating, caused the ECB to announce that it would temporarily suspend using Greek debt as collateral. Both events have been pretty much priced in, so the correction was short lived. There were also headlines that Germany's Constitutional Court Tuesday ruled it would be unconstitutional for a small sub-parliamentary committee to make decisions on the euro-zone bailout fund. In effect, the decision gave parliament a larger influence in the ...

Forex News and Events: It’s been a very quiet day as traders await news surrounding the European crisis. Yesterday German parliament backed the second Greek bailout in a 496-90 vote, despite growing pressure from voters to step away from the deal. However, the vote did not go completely smooth as the debate was lively. Interestingly, Merkel tried to protected herself from potential backlash should the bailout go poorly, by stating that there was 100% guarantee of success with the new program. In addition, she seemed to steer clear of the topic of a greater “firewall” so omnipresent in this weekend’s G20 meeting comments. This vote clears the way for Merkel to negotiate the final deal at the end of the weeks EU summit in Brussels. In other news the S&P downgraded Greece to 'selective ...

Forex News and Events: By late Sunday evening, it was clear there had been little real progress from the G20 summit in Mexico. While expectations had been low, there was an outside chance that the G20 would make a significant announcement (like 2008 when the G20 secured $1 trillion to rescue the world economy). But the comments coming from Mexico had a similar theme that G20 nations wanted Europe to do more to solve its own problems before additional resources would be provided. British finance minister George Osborne's statement highlighted the sentiment “We are prepared to consider IMF resources but only once we see the color of the euro zone money and we have not seen the color of the euro zone money,” he told Sky TV. “I think that quid pro quo will be clearly established here.” ...

Forex News and Events: The residual risk appetite remaining from the agreement on the second Greek bailout package, slowly dissolved as the day progressed. With a lack of fresh news, the markets focused on the Eurozone PMI number that generally disappointed. The primary concern was the French and German PM,I which indicated that conditions in the Eurozone's core country had marginally deteriorated in February. Eurozone new industrial produce did come in a bit stronger than expected, but the underlying remains a bit worrying as y/y figures remain negative, while m/m had a volatile reads in Sept and Nov. and is unpredictable. Obviously, these latest reads highlight the fragility of the region and calls into question how quickly the Eurozone will be able to reverse the contraction ...

Where we part company with Warren Buffet… Here’s the Sage of Omaha, explaining, in Fortune Magazine, why bonds are dangerous: Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as “safe.” In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge. Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies ...