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Asia Session: More Evidence Beijing Should Ease Policy
It didn't take much to halt the overnight rally, only JPMorgan reporting mark-to-markets losses, albeit a big loss, and some nonchalant inflation data out of China. Accordingly, most equity markets in Asia are slipping lower and commodity currencies have failed to make any headway against the dollar.
Whilst official estimates before the release of the Chinese consumer prices data for April were averaged at 3.4% y/y, which turned out to be correct, there was hope in the market for a figure closer to 3.0% which would have given Beijing more scope to cut the RRR, thereby stimulating growth. Thus, high beta currencies slid a little following the release of the data as the market priced in a decreased chance of more policy easing in China.
However, we are of the opinion the inflation data ...
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USD Softer as Sentiment Stabilizes
USD Softer as Sentiment Stabilizes
USD is mostly softer as sentiment stabilizes and amid slightly weaker US economic data. Weekly initial jobless claims dropped by 1k to 367k (cons. 368k) from an upwardly revised 368k (prior 365k). The 4-week moving average in initial claims fell for the first time in 5 weeks with a drop of -5.3k indicating marginal improvement in labor. The March trade balance showed a wider than expected deficit of -$51.8B (cons. -50.0B, prior -45.4B) as imports jumped 5.2% – the largest increase in over a year. European bourses are currently trading in positive territory, US stock futures are suggesting upside at the open, and UST yields are higher across the curve indicating a better risk environment today. The dollar index is lower and testing the 80.00 figure as ...
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US Dollar Pulls Back as Risk Appetite Makes an Appearance
After a few days of gloom over Europe, risk appetite is making an appearance in the financial markets. US dollar is pulling back from recent highs against the euro and the pound, and heading lower as Forex traders look for a little extra yield, and as a degree of optimism is seen as moves are made to shore up Spain.
US dollar was headed higher today, moving up as news about Great Britain’s economy disappointed. However, the Bank of England put quantitative easing on hold, and it appears that the body is prepared to maintain that position. So, even with the British economy in recession, the pound is getting a slight boost against the US dollar.
Against the euro, greenback reached a three-month high. Uncertainty about Greece continues, and worries about the relationship between France and ...
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European Market Update : 10/05/2012
Markets eye whether BOE extends its Asset Purchase Program later today; Greece continues to struggle to form new gov't
Economic Data
(RU) Russia Central Bank (CBR) left Refinancing Rate unchanged at 8.00%, as expected
(ID) Indonesia Central Bank left Reference Rate unchanged at 5.75%, as expected
(FI) Finland Mar Industrial Production M/M: -1.5% v -0.2%e; Y/Y: -5.7% v -2.2%e
(FR) Bank of France Apr Business Sentiment: 95 v 95e
(FR) France Mar Industrial Production M/M: -0.9% v -0.6%e; Y/Y: -0.9% v -1.3%e
(FR) France Mar Manufacturing Production M/M:+1.4% v -0.2%e; Y/Y: -0.3% v -2.8%e
(FR) France Mar Central Govt. Balance: -€29.4B v -€24.2B prior
(ES) Spain Mar House transactions Y/Y: -22.7% v -31.8% prior
(CZ) Czech Apr CPI M/M: 0.0% v 0.1%e; Y/Y: 3.5% v 3.6%e
(CZ) Czech Mar ...
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More QE From The BOE?
The Bank of England concludes its May meeting today. We expect no change in interest rates or in the Bank's GBP 325 billion of asset purchases, however this decision will be particularly close due to the continued weakness in the UK economic data and deteriorating sovereign situation in the Eurozone.
Why would the BOE do more QE? The main reason is down to growth. The UK economy plunged back into recession in the first quarter of 2012, consumption remains weak, exports have fallen sharply and bank lending to businesses continues to contract at a 3.5% annual rate. This is worse than in the Eurozone, where lending is flat, and the US where lending is up more than 10% over the past year. This is hurting business growth and keeping upward pressure on unemployment. Thus, more QE could ...
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EUR/USD Continues to Tumble
The euro continued to tumble vs. its main currency rivals yesterday, as traders remained cautious about investing in riskier assets due to political uncertainty in the euro-zone. The EUR/USD fell to a fresh three-month low during the afternoon session at 1.2929. Turning to today, traders should be prepared for market volatility, as significant indicators from the UK and US are scheduled to be released. Attention should be given to the UK MPC Rate Statement, followed by the US Trade Balance figure and a speech from Fed Chairman Bernanke. Should any of the news lead to additional pessimism in the global economic recovery, riskier currencies like the euro may fall further.
Economic News
USD - Safe Haven Dollar Extends Gains amid Euro-Zone Worries
A lack of news events yesterday helped the ...
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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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The Political Turmoil Continues in Greece, BoE to Announce Rates and APF for May
Another day comes for the old continent and still Greeks cannot find common grounds regarding the formation of the new government, where after Antonio Samaras failed to form a coalition government earlier this week, the leader of the leftist party Syriza, Alexis Tspiras, also failed yesterday, leaving the job in the hands of the PASOK party, led by the former Greek finance minister.
As the political conflict remains obvious in Greece, the tension continues to be significant in the market, where fears and debt concerns are still weighing sharply on the overall sentiment, with expectations negativity will return for the third consecutive day as Greek leaders still cannot reach an agreement in regards to the creation of the coalition government, which in result will trigger a fresh general ...
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