Forex All Aboard The Qe

(Reuters) - Brent crude oil rose above $110 a barrel on Tuesday as expectations of a U.S. economic stimulus outweighed fears of recession and a worsening euro zone debt crisis. ICE Brent futures for October climbed 85 cents to $110.93 a barrel by 0900 GMT (5 a.m. ET), after rising more than $1. U.S. crude futures traded around $84.70 a barrel, down from Friday's close at $86.45. The contract had no settlement on Monday due to the U.S. Labor Day holiday. Both crude contracts rose briefly after the Swiss National Bank set a minimum exchange rate target of 1.20 francs per euro, but then slipped back to their previous levels. The announcement depressed spot gold by 2 percent. "Prices are being supported by hopes there will be another economic stimulus," said Carsten Fritsch, commodities ...

(Reuters) - Oil rose on Thursday due to concerns about Hurricane Irene's impact on U.S. East Coast fuel supplies and fighting in Libya. Crude supported by strong gains in gasoline and heating oil futures as the market kept a close watch on powerful Hurricane Irene, which threatened East Coast refineries. The storm was forecast hitting the U.S. eastern seaboard by the weekend, and the U.S. Coast Guard was closely monitoring its track but has yet to carry out any traffic restrictions on the New York Harbor, the delivery hub for U.S.-traded gasoline futures. "Products are leading the way as the East Coast refining center is in the bullseye of Hurricane Irene." said John Kilduff, partner at Again Capital LLC in New York. "We have not experienced a storm of this magnitude in quite some time. ...

The start of a new week brought some solid sentiment-positive news which has helped risk-correlated trades rally. China inflation data came in broadly in-line with expectations as CPI printed at 5.1% and PPI at 6.1%. The RRR hike of 50 bp seems to have appeased Chinese policymakers for now and the much hyped rate increase never materialized. While we suspect that tightening will be in the cards for 2011, right now the market looks content with a PBoC on hold. Shanghai rallied up 2.88% and pulled the rest of Asia higher (Note: S&P 500 posted a 2010 high on Friday). On the flipside, the USD has been supported by emerging confidence in a bipartisan fiscal package, which has allowed the upgrading of growth prospects. The shift has given stocks a boost and 10yr US trsy yields climbed to 3.32% ...

Forex News and Events: As discussed on Friday, we suspected that the pressure building in the market compounded by fears of contagion would force Ireland to accept a bailout before Monday’s open. Following a Sunday cabinet meeting, Irish Prime Minister Cowen officially requested support from the EU. Immediately following was a statement from the EU Finance Minister stating “in the context of a joint EU-IMF program, the financial assistance package to the Irish state should be financed from the European financial stabilization mechanism (EFSM) and the European financial stability facility (EFSF), possibly supplemented by bilateral loans to be negotiated by EU Member States. The United Kingdom and Sweden have already indicated today that they stand ready to consider a bilateral loan.” It’ ...

No new Irish news during the Asian session. Markets are now waiting for the Irish bailout announcement and given the growing pressure, we suspect that a bailout will be announced before Monday. Ireland’s Central Bank governor Patrick Honohan stated yesterday that the country will likely accept a EU / IMF bailout worth tens of billions. One of the main sticking point seems to be Ireland’s low corporate tax rate verse mainland Europe. However this tax arbitrage has given Ireland a competitive advance, boosted growth and will be difficult for politicians to yield. Given the reversal in USD fortunes and a rally in risk-correlated trades, we suspect that the bailout will in aggregate be positive for risk sentiment. Barring an immediate escalation in one the peripheral nations, we suspect a ...

This morning’s story is clearly USD weakness in Asia with the primary catalyst being Singapore’s MAS (Monetary Authority of Singapore) decision to expand the SGD trading band. Historically, Singapore has always been a strong indicator of growth in Asia and today’s adjustment encouraged further capital inflows for the nation while further indicating a certain level of acceptance of USD deprecation. Confirming this viewpoint, the Chinese in a separate policy decision set the mid-point for USDCNY at of 6.6582, a record low. Singapore’s MAS uses currency exchange rates as a form of monetary policy – thus, this morning’s adjustment can be considered a rate tightening. There was heavy intervention by Asian Central Banks to smooth currency appreciation. Most likely, the additional USD ...

“This week, Tokyo’s central bankers rediscovered a modicum of their old mojo,” The Financial Times told the world on Wednesday. Typically, the FT reports the dialogue correctly but misunderstands the plot action. But we can correct the sentence with a single capital letter. For what they really discovered was a modicum of their old Tojo. Japan’s Co-Prosperity Sphere expanded greatly in the ’30s, as the Imperial army marched through Asia. But as its supply lines stretched, Japan became more and more vulnerable to interdiction by the US navy. Rather than restrain its ambitions, Tojo Hideki bombed Pearl Harbor. One of the eternal puzzles of history is why smart people do such silly and stupid things. We have no answer, but we’re happy to see the Central Bank of Japan, the US Federal ...

Just about every talking head who is anyone has now jumped on the QE Part Deux bandwagon – the result has been the massive deprecation of the USD. Chicago Fed President Evans revealed in a WSJ piece that he expected the Fed to do more to aid the fledging US economy and thus helped fan the quantitative easing (QE) flame. Interestingly though, yesterday’s US data surprised to the upside as non-manufacturing ISM improved to 53.2 – nevertheless, the chant for more easing continued uninterrupted. The prospect of more “endless liquidity” (money printing) has sent risky asset prices soaring with the S&P up 2.1% and Gold nearly reaching the $1350/oz level which predicted 2 days ago. For traders looking outside the major economies, EM currencies are experiencing rapid appreciation which is ...