Stronger Yen And A Slower

The Week Ahead Highlights Europe steps closer to the cliff edge Can the USD extend its rally? Bank of Japan may extend maturity of its bond buys Pricing in more QE from the Bank of England Europe steps closer to the cliff edge It was a pivotal week for the Eurozone after Greece announced that it was heading back to the polls after the top three parities failed to form a coalition government. So now Greece is leaderless, there is a caretaker government in place but it won't be able to enforce the austerity required to get the next tranche of bailout funds necessary for Greece to avoid running out of money in July. So as time runs out for Greece the European authorities have been clear: the upcoming election is a referendum on euro-membership. Either vote for pro bailout ...

USD is trading mixed against the majors - weaker against the commodity currencies (CAD, AUD, NOK, NZD) and stronger against most European FX. Uncertainty arising from elections in Europe saw an increase in risk aversion which is seeing UST yields lower. The decline in Treasury yields is also a result of Fed policy expectations as hopes for QE3 are supported following Friday's weak employment report. Despite the option of QE3 being on the table, we maintain the view that it will take a significant deterioration for the Fed to provide more stimulus. While both risk aversion and QE3 hopes depress Treasury yields, they have adverse effects on the USD. Risk aversion is supportive of the buck as investors seek safety in Treasuries and QE3 speculation weakens the dollar as it suggests the Fed ...

Fundamental Analysis EUR "The grim unemployment figures for March will likely encourage talk about a long overdue ‘growth pact’ for the euro zone" - Martin van Vliet, an economist at ING Group Euro area unemployment rose to the highest level since 1997 in March and manufacturing contracted in April, adding to signs the economy is still far from out of the woods. USD "Employment growth is slowing" - David Sloan, an economist at 4Cast Inc. The number of Americans, who have found a job in the private sector fell to 119,000 in April from a revised 201,000 in March, the ADP Employer Services said on Wednesday. GBP " points to clear, decent construction expansion in April" - Howard Archer, chief UK economist at IHS Global Insight U.K. construction sector expanded slower in April, compared ...

The Canadian dollar climbed against the euro today as declining manufacturing of the eurozone weakened the shared 17-nation currency. Canada’s currency erased losses versus the US dollar and was flat against the Japanese yen. It is not surprising that the Canadian currency gained against the euro, considering the shrinking eurozone manufacturing and the unexpected growth of German unemployment. Yet it is surprising to see the growth-related loonie to hold ground versus the safe currencies of the United States and Japan, considering the negative sentiment of Forex traders. The slower-than-expected growth of US employment worsened already sour mood of investors, but somehow the Canadian dollar was able to withstand the impact of the bad news. Bank of Canada Governor Mark Carney was ...

Fundamental Analysis EUR German jobless rate unexpectedly climbed first time in last six months as debt turmoil curbed economic growth. The number of unemployed people increased by 19 000, reaching 2.87 million, compared to an expected drop by 10 000 people. The adjusted unemployment rate was 6.8%. USD Mitt Romney announced that Yuan's 23% appreciation versus U.S. Dollar in last five years is not enough and branded world's second largest economy as currency manipulator. Romney promised in his campaigns to put more pressure on China as he claimed Obama hasn't done enough to boost stronger Yuan. Economists questioned by Bloomberg expected Yuan to climb versus greenback to CHY 6.15 by the end of 2012. GBP FTSE 100 index traded lower on Wednesday as record high unemployment level and ...

The Week Ahead Highlights UK Q1 GDP to put the brakes on more QE French political risk comes to a head Italy and Spain turn attention to fiscal targets BOJ to back up rhetoric with action FOMC still in wait-and-see mode Market Moves UK Q1 GDP to put the brakes on more QE The major data release in the UK this week will be the preliminary Q1 GDP reading. There is considerable uncertainty around this figure due to some strong data in the services sector, especially retail sales, balanced by some disappointments in the manufacturing and construction sectors. Retail sales for March rose 1.5%, more than the 0.4% expected. This was mostly due to the effects of good weather boosting demand for clothes, footwear and gardening equipment. This helped to reverse some of the ...

(Reuters) - Gold prices fell 1 percent on Monday, extending the previous session's losses, as concerns intensified over the outlook for Spain ahead of a bond auction this week, denting appetite for assets seen as higher risk and hurting the euro. Fears about Spain's ability to keep its finances under control sent the cost of insuring its debt against default to record highs, after data on Friday showed record borrowing by Spanish banks from the European Central Bank. Spot gold was down 0.7 percent at $1,647.81 an ounce at 1110 GMT, off an earlier low of $1,640.64. Gold futures for June delivery were down $11.20 an ounce at $1,649.00. Spot prices fell 1 percent on Friday as a stronger dollar and soft Chinese growth data prompted a wave of liquidation, pushing gold into soft territory ...

Forex Morning Briefing : Euro, Aussie hurt by China's growth data What’s new: Forex: Riskier currencies weighed by downbeat Chinese growth data Global Markets: Equity markets lifted by satisfactory Italian debt auction, trim gains on China GDP China: Real GDP eases to 1.8% q/q vs 1.9% and 8.1% y/y vs 8.4% United States: CPI probably rose at slower pace in March; data scheduled for today United States: Fed NY President Dudley supports holding rates “close to zero” till late 2014 Euro zone: Italy sells 2015, 2020, and 2023 bonds at upper end of target Rates in Asia and Indices: EUR/USD: 1.3159 - 1.3201 -0.17 % USD/CHF: 0.9104 - 0.9134 -0.17 % GBP/USD: 1.5934 - 1.597 -0.12 % USD/JPY : 80.86 - 81.2 -0.12 % EUR/CHF: 1.2014 - 1.2021 -0.01 % EUR/JPY : 106.51 - 107.11 +0.05 % Dow Jones: 12806.3 - ...

Fundamental Analysis EUR "The results are a far cry from the blowout auctions we saw between December and February, which will no doubt be interpreted as the LTRO bid having dried up" - Peter Chatwell, Interest Rate Strategist at Credit Agricole in LondonSpain’s cost of borrowing surged after the first auction since the country presented its austerity budget. Yields on 10-year sovereign bonds soared by 11 basis points to 5.52%. USD "I would have to see some pretty severe circumstances before I endorse for another round of quantitative easing" - Dennis Lockhart, Atlanta Fed President Federal Reserve policymakers believe that improving US economy reduces the need for further monetary accommodation, with reference to minutes of the central bank’s March meeting. GBP "The last five years ...