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Weekly Economic and Financial Commentary : 27/04/2012
Weekly Economic and Financial Commentary
U.S. Review
First-Quarter GDP Growth Slows
The U.S. economy grew at a 2.2 percent annual rate in the first quarter, somewhat slower than the consensus had expected. Consumption remained the primary driver of growth as business spending slowed and the government sector continued to scale back spending.
In our U.S. review section this week, we discuss the GDP report in the context of the big miss in durables and consider what it means for business spending going forward. We also look at a very small change in the Fed statement this week that reflects an improving view on the troubled housing sector.
Business Spending Poised for a Slowdown?
Durable goods orders for March were ugly. The 4.2 percent drop was the largest decline since the U.S. ...
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US Employment Data in Focus
The Week Ahead
Highlights
US employment data in focus
Bank of Japan underwhelms
RBA likely to cut
The SNB talks tough on the Swissie
Is the UK economy really that weak?
The Eurozone's growth pact
US employment data in focus
Earlier this week, the Federal Open Market Committee (FOMC) held its 2-day policy meeting. The bank kept policy on hold and upgraded the economic assessment, however comments from Ben Bernanke - which did not provide any new insight in our view - kept Treasury yields low, equity markets supported, and the dollar soft with QE3 speculation back into focus.
Fed projections showed upwards revision to real GDP growth with forecasts of 2.4%-2.9% for 2012 up from the prior 2.2%-2.7% estimate and the unemployment rate forecast was lowered to 7.8%-8% ...
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Oil pares losses after data
(Reuters) - Oil pared lossed on Friday to trade at around $119.90 a barrel after disappointing U.S. data revived hopes of further liquidity injections from the Federal Reserve to boost the flagging economic recovery.
Brent crude, widely used as a global oil benchmark, was down just 5 cents to $119.87 a barrel by 1341 GMT. U.S. crude oil was off 7 cents to $104.48 a barrel.
Oil was sold off earlier in the session after S&P downgraded Spain's credit rating but pared losses when U.S. first quarter GDP figures missed the consensus forecast. The data hit the dollar, and a weaker U.S. currency is supportive of commodities priced in dollars as it makes them cheaper for holders of other currencies.
Some traders also took the view that the below-expectations GDP figure would open the door to a ...
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U.S. First-Quarter 2012 GDP Growth Slows
U.S. First-Quarter 2012 GDP Growth Slows
- The advance, or first, estimate of US first-quarter 2012 annualized GDP growth was 2.2%, which represented a slowing from a 3.0% gain in fourth-quarter of 2011 and slightly lower than the 2.5% expected within financial markets.
- The moderation in the pace of activity was the result of a smaller addition to growth from inventories and a decline in business investment. Government spending continued to decline in the first quarter of 2012 although at a more moderate rate relative to the fourth quarter of last year. Additional offsets were provided by a strengthening in consumer spending and residential investment.
- While indicating moderation from the pace of growth in fourth quarter of 2011, the gain in first-quarter 2012 GDP suggests ...
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Oil down near $119.50, Spanish downgrade weighs
(Reuters) - Oil prices eased on Friday, trading at around $119.50 a barrel, due to renewed fears about the state of debt-laden eurozone economies following a downgrade of Spain's credit rating.
Traders and investors took a more cautious stance after Standard & Poor's reduced its credit rating on Spain by two notches to BBB+, citing expectations that the government's finances will deteriorate more than previously thought due to a shrinking economy and an ailing banking sector.
S&P also put a negative outlook on the credit and said Madrid's situation could deteriorate further unless ambitious measures were taken at the European level.
Brent crude, widely used as a global oil benchmark, was down 50 cents to $119.42 a barrel by 1030 GMT, after rising in the past two sessions. U.S. crude oil ...
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Asian Market Update : 27/04/2012
S&P cuts Spain; BOJ increases JGB facility by net ¥10T, reduces fixed-rate ops by ¥5T
Economic Data
(KR) SOUTH KOREA MAR CURRENT ACCOUNT: $3.0B V $557M PRIOR; GOODS BALANCE: $3.00B V $1.31B PRIOR
(UK) UK APR GFK CONSUMER CONFIDENCE SURVEY: -31 V -30E
(JP) JAPAN APR MARKIT/JMMA MANUFACTURING PMI: 50.7 V 51.1 PRIOR
(JP) JAPAN MAR JOBLESS RATE: 4.5% V 4.5%E; JOB-TO-APPLICANT RATIO: 0.76 V 0.76E PRIOR
(JP) JAPAN MAR NATIONAL CPI Y/Y: 0.5% V 0.4%E; NATIONAL CORE Y/Y 0.2% V 0.1%E (6-month high); APR TOKYO CPI Y/Y: -0.3% V -0.1%E; TOKYO CORE Y/Y: -0.5% V -0.3%E (5-month low)
(JP) JAPAN MAR OVERALL HOUSEHOLD SPENDING Y/Y: 3.4% V 4.1%E (2-year high)
(JP) JAPAN MAR PRELIMINARY INDUSTRIAL PRODUCTION M/M: 1.0% V 2.3%E;
(JP) JAPAN MAR RETAIL TRADE M/M: -1.2% V -0.5%E ; Y/Y: 10.3% V 10.0%E (multi-year ...
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Shares edge up; Spain downgrade caps gains
(Reuters) - Asian shares edged higher on Friday on firm U.S. data, but a two-notch downgrade of Spain's credit rating capped gains, while fresh easing measures by the Bank of Japan briefly pushed Tokyo stocks up over 1 percent and the dollar above 81 yen.
European shares were likely to fall, with financial spreadbetters predicting that major European markets would open as much as down 0.5 percent. U.S. stock futures were down 0.5 percent.
Japan's central bank moved as expected to help fight deep deflation, sparking a jump in the Nikkei stock average which helped temporarily drag the broader Asian stock higher.
MSCI's broadest index of Asia-Pacific shares outside Japan last stood up 0.2 percent, set for a weekly drop of 0.1 percent. The technology sector and Korean shares outperformed, ...
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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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Euro zone woes keep banks wary after Q1 bounce
(Reuters) - Quarterly reports from some of Europe's top banks showed the scars of the euro zone crisis on Thursday, with big losses on Spanish property, and fragile markets casting a shadow over the rest of the year despite an early investment banking rebound.
Spanish bank Santander said first quarter net profit dropped 24 percent after it took a 3.1 billion euro ($4.1 billion) provision to cover rising loan defaults, as the effects of Spain's property market crash were compounded by economic recession and joblessness afflicting nearly one in four workers.
Although results from Barclays and Deutsche Bank showed investment banking income bounced back strongly after a torrid end to last year, the sickly euro zone economy continues to dog the industry.
Barclays beat analysts' forecasts ...
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