World currency markets have been largely sluggish as the continued US dollar roller coaster ride with the greenback continues to play around its recent 15 year lows against the yen. As the November date of the FOMC draws ever nearer, there is a wait and watch situation developing about the level of any stimulus especially in light of some of US Treasury Secretary Tim Geithner’s recent comments with respect to the major currency pairs.
Low US Industrial Production: Meanwhile a worse then expected US industrial production figures for September at -0.2% against an expectation of a 0.2% gain, seems to reinforce the case for additional stimulus measures and saw the US dollar slide back from the highs of the day, especially against the euro as 10 year bond yields closed in the single currency’s favor for the first time in 10 months
Improved Home Builder Confidence had earlier helped the dollar to improve across the board after all three of the HMI’s components registered gains in October. The index of current sales conditions improved by 3 points to 16, the index for sales expectations for the next 6-months rose 5 points to 23 and the index gauging traffic of prospective buyers rose 2 points to 11. The improved data gave investors an excuse to lay off the buck as it briefly put into question the extent of Fed easing.
Some of the other potential catalysts that can act for a positive Dollar Index are discussed here.
G20 Finance Meet: With no US data ahead of this weekend’s G20 finance ministers and central bankers meeting in South Korea, it appears caution about being overly bearish on the dollar is starting to set in a little. Although traders and market analysts are waiting for the meet to conclude before jumping to any conclusions, the overall mood is that the meet is is unlikely to achieve anything of note apart from a few sound bites about monitoring the situation, and urging countries not to use their currencies as weapons of devaluation.
China Rate Hike: China’s central bank today raised its benchmark interest rates for the first time since December 2007, following signs the China’s economic slowdown is bottoming out in recent months. The interest rate increase comes as the economy has shown signs of rebounding from its slowdown in recent weeks, and ahead of a range of important data later this week. August retail sales quickened to 18.4% y/y, while industrial output quickened to 13.9% year/year, and both are forecast to accelerate further when September figures are released. Lending has also been strong, with new loans raising some 596B renminbi in September.
China Hike And Dollar Index: More than any US Data, the real thrust in the US Dollar appears to come from least expected quarters after a surprise move by China raised its one year lending and deposit rates by 25 basis points. Despite a number of Fed officials indicating that the US central bank will soon embark upon further monetary stimulus for the US economy it would appear that the Chinese may have done something the Fed had been unable to do and that is to stem the tide of negative sentiment against a rapidly falling greenback.
World Market Pulse Weekly Euro Update: Traders are likely to remain in a Euro Bullish mode despite the firming up of the US dollar amid Improved Home Builder Confidence even as EUR together with Scandinavian currencies under performed the rest of G10 at the start of the week after investors sought to take profit on their USD-short positions. EU’s Economic and Monetary Commissioner Olli Rehn has meanwhile indicated that the currencies will feature prominently on the agenda after Eurogroup’s Chairman Juncker had said that there has been too much volatility between the main global currencies.
Possible ECB Intervention: Even though the basic decision to intervene on the FX market lies with the ECOFIN, the economy and finance (and budget) ministers of the euro zone member countries, there is a possibility that the ECB could still take part in the discussions as a consultant. Analysts feel that the ECB is thus much more closer to the decision making process than say the BoJ which acts as an agent of Japan's MoF. On the flip side, the ECB has shown very little desire so far to engage in any interventionist talk or indeed into discussions about the EURUSD level.
Yen And Chinese Yuan: The Chinese economic data was broadly close to expectations with a GDP figure of 9.6% and risk conditions were broadly stable following the batch of releases with no major impact on the yen. The Yuan meanwhile strengthened at times during the week, but was unable to make strong headway and consolidated slightly weaker near 6.67 against the US dollar.
World Market Pulse Australian Dollar Update: Although the Australian dollar was unable to gain much on parity against the US dollar during the week, there is a growing sentiment that the Reserve Bank of Australia could decide on a rate increase at the November meeting.
For More World Market Pulse ETFs stocks futures commodities forex indicators forecast http://worldmarketpulse.com/
Low US Industrial Production: Meanwhile a worse then expected US industrial production figures for September at -0.2% against an expectation of a 0.2% gain, seems to reinforce the case for additional stimulus measures and saw the US dollar slide back from the highs of the day, especially against the euro as 10 year bond yields closed in the single currency’s favor for the first time in 10 months
Improved Home Builder Confidence had earlier helped the dollar to improve across the board after all three of the HMI’s components registered gains in October. The index of current sales conditions improved by 3 points to 16, the index for sales expectations for the next 6-months rose 5 points to 23 and the index gauging traffic of prospective buyers rose 2 points to 11. The improved data gave investors an excuse to lay off the buck as it briefly put into question the extent of Fed easing.
Some of the other potential catalysts that can act for a positive Dollar Index are discussed here.
G20 Finance Meet: With no US data ahead of this weekend’s G20 finance ministers and central bankers meeting in South Korea, it appears caution about being overly bearish on the dollar is starting to set in a little. Although traders and market analysts are waiting for the meet to conclude before jumping to any conclusions, the overall mood is that the meet is is unlikely to achieve anything of note apart from a few sound bites about monitoring the situation, and urging countries not to use their currencies as weapons of devaluation.
China Rate Hike: China’s central bank today raised its benchmark interest rates for the first time since December 2007, following signs the China’s economic slowdown is bottoming out in recent months. The interest rate increase comes as the economy has shown signs of rebounding from its slowdown in recent weeks, and ahead of a range of important data later this week. August retail sales quickened to 18.4% y/y, while industrial output quickened to 13.9% year/year, and both are forecast to accelerate further when September figures are released. Lending has also been strong, with new loans raising some 596B renminbi in September.
China Hike And Dollar Index: More than any US Data, the real thrust in the US Dollar appears to come from least expected quarters after a surprise move by China raised its one year lending and deposit rates by 25 basis points. Despite a number of Fed officials indicating that the US central bank will soon embark upon further monetary stimulus for the US economy it would appear that the Chinese may have done something the Fed had been unable to do and that is to stem the tide of negative sentiment against a rapidly falling greenback.
World Market Pulse Weekly Euro Update: Traders are likely to remain in a Euro Bullish mode despite the firming up of the US dollar amid Improved Home Builder Confidence even as EUR together with Scandinavian currencies under performed the rest of G10 at the start of the week after investors sought to take profit on their USD-short positions. EU’s Economic and Monetary Commissioner Olli Rehn has meanwhile indicated that the currencies will feature prominently on the agenda after Eurogroup’s Chairman Juncker had said that there has been too much volatility between the main global currencies.
According to analysts at CitiFx, ahead of the G20 meetings in Korea, euro area officials should continue to concentrate their efforts on promoting coordinated solution to the ‘currency wars’. In this regard we would expect to see further calls on EM economies to allow more flexibility of their currencies. At the same time there should be still fairly muted critique (if any) of the Fed plans to potentially add to its unconventional monetary policy accommodation. We think that the European officials continue to see the problems of euro area’s fiscally weak members as a far greater threat to its stability and growth outlook than the strong EUR of late.
Possible ECB Intervention: Even though the basic decision to intervene on the FX market lies with the ECOFIN, the economy and finance (and budget) ministers of the euro zone member countries, there is a possibility that the ECB could still take part in the discussions as a consultant. Analysts feel that the ECB is thus much more closer to the decision making process than say the BoJ which acts as an agent of Japan's MoF. On the flip side, the ECB has shown very little desire so far to engage in any interventionist talk or indeed into discussions about the EURUSD level.
Yen And Chinese Yuan: The Chinese economic data was broadly close to expectations with a GDP figure of 9.6% and risk conditions were broadly stable following the batch of releases with no major impact on the yen. The Yuan meanwhile strengthened at times during the week, but was unable to make strong headway and consolidated slightly weaker near 6.67 against the US dollar.
World Market Pulse Australian Dollar Update: Although the Australian dollar was unable to gain much on parity against the US dollar during the week, there is a growing sentiment that the Reserve Bank of Australia could decide on a rate increase at the November meeting.
For More World Market Pulse ETFs stocks futures commodities forex indicators forecast http://worldmarketpulse.com/
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