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Gbp/usd Parity The ParityTitle:
Forex - FX Markets Waiting for US Data
It’s been a relatively quiet morning through Asia & into European session. Asia regional indexes were broadly lower and European is having a hard time staying green – the market definitely has a negative bias heading into the US session. There is a slew of US data coming out this afternoon. After the last of the US data comes out today, the Forex market should find itself range bound going into the weekend.
A UK Telegraph article cited that traders will risk significant losses on EU debt under a German proposal which is believed to win support from the EU. The program, if passed, could push investors away from the troubled peripheral bonds which trigger today EUR selloff. Yesterday’s news cycle was once again all about speculation surrounding the absolute size & strategy of the Fed’s ...
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Forex - QE2 Expectations in Flux
During this morning’s Asian session, the RBNZ held rates at 3.00% as was generally expected. The accompanying statement was slightly dovish but not enough to really move NZD. The Central Bank seems to feel comfortable with the current level stating "while it is appropriate to keep the OCR on hold today, it remains likely that further removal of monetary policy support will be required at some stage." The AUDNZD’s recent pullback looks to have run into a horizontal support and without a surprise interest rate story, watch for a bounce off the 1.3000 level.
In Japan, the BoJ outlined further easing measures stating it would purchase lower-rated corporate bonds than it announced in the compensative package release in September. Regarding FX intervention, the BoJ sounded unhurried to move ...
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Forex - Markets Ponder QE2 Size and Revisits Greece's Troubles
Once again we are confronted with a lack of new data that has allowed official speak, media commentary and general speculation to drive asset prices. The current USD strength has traders looking for answers. EURUSD tradeed down to 1.3771 while USDJPY climbed to 81.99. The most likely explanation is supported by the recent rally in treasuries which came off the back of reduced US QE2 expectations. Recent US economic data has been slightly supportive as consumer confidence index rose to 50.2 – so if the Fed does enact QE2, it should be a trimmer version of the once expected “shock-and-awe” strategy. The divergence in public statements by Fed members continues to erode upside potential for the Greenback. Comments by New York Fed President Dudley asserted recently that "I would put very ...
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Forex - Despite G20 Communiqué JPY Rhetoric Increases
The lack of fresh news or economic data has left the Forex market mostly range bound throughout the Asian session. Asia’s regional indexes were a mixed bag as the Shanghai pulled back slightly from yesterday’s strong showing.
The empty G20 commitment to "refrain from competitive devaluation" didn’t stop the Japanese from verbally protecting their currency this morning. Finance Minister Noda droned that FX moves were unwelcome and pointed out that the language in the G20 communiqué gives him justification for intervention if needed (a sentiment shared by Deputy Finance Minister Igarashi). Noda went on to assert that Forex moves were “one-sided”, a term he had used prior to the September intervention.
Economic Minister Kaieda cautioned that "excessive intervention should be avoided but ...
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Forex - G20 Communiqué Triggers Further USD Weakness
The G20 communiqué from Finance Ministers' meeting in S. Korea contained some surprising language and cohesiveness but was generally vague. Forex traders were quick move back into their USD short positions. Clearly the divergence of “in country” perspectives & objectives eroded the ability for any meaningful consensus among the ministers. In addition the choice of Brazil not to send a high ranking official was the equivalent of an EM coup and may pay off.
In regards to FX intervention, G20 countries pledged "to refrain from competitive devaluation" while remaining watchful for "disorderly movements in exchange rates", in order to limit "excessive volatility in capital flows facing some emerging countries.” On trade imbalances, the statement issued an empty promise to keep trade balance “ ...
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FX Strategy Weekly: 23/10/2010
FX Strategy Weekly
Market Outlook
=> GBP: prel Q3 GDP to seal Nov MPC QE vote?
=> AUD vs CAD: correlation switches
The preference of investors to buy USD/G10 on dips ahead of the G20 meeting following supportive comments by US Treas Sec Geithner indicates that the phase of USD weakness may at least be temporarily exhausted. Having said that, currencies remain in a state of flux and USD selling may well still be the preferred course of action if central bank discussions this weekend come to nothing and discord over external imbalances and exchange rate coordination remain subordinate to individual economic interests. However, with QE2 in the US now fully discounted and risk reversals showing demand for USD puts stalling, a widening in EU peripheral spreads and profit taking in risk ...
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USD Reverses Gains, Drops against Major Counterparts
The U.S. dollar on Wednesday gave back most of the gains against major counterparts, dropping against the EUR and felling to a 15-year low against the Japanese yen, as the knee jerk reaction to China's interest rate hike subsided.
Economic News
USD - USD Reverses Gains, Dropping versus Most Currency Counterparts
The USD fell yesterday, reversing Tuesday's gains, as the knee jerk reaction to china's small interest hike subsided and a renewed interest in growth linked currencies such as the EUR and Australian Dollar reemerged. The dollar was put under further pressure as the release of the Beige Book showed continued weakness in the U.S economy, intensifying expectations of renewed quantitative easing measures by the Federal Reserve. The dollar plunged to a new 15-year-low against the ...
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QE Speculation Leads to Broad-based USD Weakness
The Week Ahead
Highlights
* QE speculation leads to broad-based USD weakness
* The UK's deficit plan under the microscope
* MPC minutes crucial for sterling in the short-term
* Europe's peripheral concerns put to bed for now
* BoC likely to hold steady on rates, growth concerns
* Key data and events to watch next week
QE speculation leads to broad-based USD weakness
The markets have been fixated on the potential of further Fed easing measures in the form of a second round of asset purchases or 'QE2'. This past week gave a lot of clues into the Fed's thinking with the release of the September 21 FOMC meeting minutes and Fed Chairman Ben Bernanke's speech at Friday's Boston Fed conference. The meeting minutes showed that 'many' on FOMC noted too-slow growth and ...
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Mid-Terms Key to USD Bounce?
FX Strategy Weekly
Market Outlook
=> USD priced for QE2 after Bernanke, pro-risk flows weigh
=> GBP: MPC minutes ahead, policy bias still neutral?
Fed chairman Bernanke implicitly admitted in his Boston speech that the Fed was likely to push ahead with more QE on Nov 3 as risks of deflation are currently "higher than desirable". The limited scope for US short end yields to fall suggests that USD downside may now be limited. However, with QE2 now effectively priced in, the risk of a counter trend move cannot be ruled out, though a leveraging up of G10 and EM currencies threaten to squeeze the USD lower still backed by positive US Q3 company earnings and a rally in commodities. In general, a combination or reasonable US activity data and a Fed commitment to more accommodation should be ...
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