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PositionTitle:
Shifting Dynamic on MPC?
Economic Data Analysis
Shifting Dynamic on MPC?
Growing risk aversion reflecting softer commodity prices, but markets remain volatile.
EU sovereign debt concerns remain in the spotlight as EU ministers meet to discuss bailouts, but solid Q1 GDP for Eurozone as a whole a boost.
Stronger than consensus UK inflation, retail sales and labour market data poses upside risk to market rates.
Key survey evidence guides US direction this week, while approach of US debt limit means scope for more volatility.
MPC minutes (May) dynamic changes. Following May's decision to leave policy unchanged, this month's minutes will be an interesting gauge of any change in dynamic on the Committee. May was Andrew Sentance's last meeting and we expect his final vote to have remained for a 0.50% ...
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Weekly Economic and Financial Commentary : 14/05/2011
U.S. Review
After a Momentous Week Comes a Discerning Week
U.S. inflation reports came mostly above expectations during the week with import prices increasing 2.2 percent, producer prices up 0.8 percent and consumer prices up 0.4 percent month-over-month. Meanwhile, core consumer prices were up 0.2 percent.
The good news for the U.S. economy is that oil and overall commodity prices continued to drop during this week and this will help the U.S. consumer as gasoline and food prices come back down. However, the drop in commodity prices
After a Momentous Week Comes a Discerning Week
In this week's economic releases there was something for everybody to discern so as to make sense of what is happening in the U.S. economy. For those that are concerned with inflation, we got very ...
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Larger Risk Retreat Now Looks to be Underway
The Week Ahead
Highlights
Larger risk retreat now looks to be underway
The UK leads the "soft patch" in global growth
The euro gets hit as sovereign crisis enters its second act
Asian growth outlook subdued
Is gold about to lose its luster?
Key data and events to watch next week
Larger risk retreat now looks to be underway
After last week's rout in risk assets (commodities, stocks and JPY-crosses)/rebound in the USD, we were largely constructive on the move, viewing it as only a positioning-driven correction within a larger uptrend. Price movements in the past week, however, have now convinced us that a larger trend reversal lower is likely taking place. While there are plenty of individual stories and themes playing out, we prefer to focus on the strength of ...
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Double Reversal - The Week in Review
Double Reversal - The Week in Review
Over the past eight trading days the euro has lost 5.5% against the dollar returning the united currency to levels not seen since March. The Australian dollar is down 3.9%, the New Zealand dollar 3.0% and the pound sterling 3.4%. Have the hidden qualities of the American dollar suddenly become glaring? Have Washington’s politicians suddenly discovered deficit and fiscal probity? Are US economic growth prospects better? Is the Federal Reserve about to recover rate normality? Exactly the opposite has occurred. The US economy appears much weaker now than it did two weeks ago. Washington has stopped talking about next month’s the debt limit as a deadline and the Fed rate policy is no closer to normality than it was in January.
What has happened is that ...
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Dollar and Yen Strengthens as Commodities Tumble
The U.S. dollar and the Japanese yen gained against all of their major currency counterparts on Friday as commodities and stocks fell, increasing demand for safe-haven assets.
The euro saw another bearish session today and is headed for a second weekly loss against the dollar on concerns that Greece will seek for an additional rescue package. Investors prefer to reduce their risk-exposure due to the uncertainty regarding the Greek economy, and prefer to open long positions on the dollar and the yen.
The euro fell about 250 pips vs. the dollar today, and the EUR/USD reached as low as the 1.4066 level. The euro also saw a 300 pip fall against the yen, and the EUR/JPY cross bottomed near the 113.50 level.
Looking ahead to next week, the most relevant financial topic in the market will ...
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Dollar Benefits from Growth Doubts
FX Briefing
Highlights
Doubts over strength of EM growth weigh on commodity prices and boost dollar
Chinese economic data and reserve requirement ratio increase spook markets
ECB chief economist Jürgen Stark signals rate hikes to come
Eurozone growth exceeds positive expectations, Germany excels
Dollar Benefits from Growth Doubts
The euro continued last week's slide. After falling from 1.49 to just over 1.45 last week, EURUSD edged closer to 1.41 briefly on Thursday, but recovered again towards the end of the week. At noon on Friday it was trading at 1.4280. Exchange rate movements on this scale are extremely rare; the last time the euro lost so much ground was a year ago, before the eurozone countries put together the first rescue package for Greece. Prior to that, ...
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Hedge funds stay positive after commodity rout
(Reuters) - Some hedge funds have been left vulnerable to further falls in the oil price after last week's rout, as they continue to bet on a long-term bull run in a market that has seen them rake in billions of dollars in gains in recent years.
Funds were badly caught out after going into last week's sell-off with big long positions, having ridden a bull market in oil that began in early 2009.
The sell-off, in which oil lost as much as $13 a barrel at one point on Thursday last week and silver posted its biggest one-day drop since 1980, saw big-name funds such as Astenbeck and BlueGold suffer double-digit losses over the week.
Nevertheless, many managers are still upbeat because they think the drivers behind oil's rally -- growing global demand and a lack of spare production capacity -- ...
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Analysis: Time to move some money to stocks from commodities
(Reuters) - Commodities have lost their luster for leading investment strategists on fears that global economic growth, particularly Chinese demand, may be lower than previously expected.
Instead, they are recommending investing in large-cap U.S. companies whose earnings have historically varied less through economic cycles. That includes defensive areas such as household products and utilities but also some technology and industrial companies.
Investors became more cautious about commodities after last week's vicious unwind of oil, copper and precious metals -- which some dubbed a mini "flash crash" similar to the one seen in U.S. equity markets a year earlier.
Even as strategists recommend steering away from commodities, they agree that the long-term outlook is positive. But over the ...
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Technical analysis of the EUR/CHF pair on May 13th, 2011
Commentary of the EUR/CHF pair:
The pair EUR/CHF continues to move between the support at 1.26 and the resistance at 1.27. Indicators are mitigated.
We stay neutral between 1.26 and 1.27. We advise to wait an exit of this range to take position:
- Long if 1.27 is broken. The breakout of 1.28 will give a new buy signal
- Short if 1.26 is broken. The breakout of 1.25 will give a new sell signal.
See the previous analysis of the EUR/CHF pair of May 12th, 2011
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