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Saturday, May 11, 2013

Your forexlive.com ENewsletter

Link to ForexLive

The one basis point mortgage cost rise story gains ground!

Posted: 11 May 2013 12:16 AM PDT

During the week I posted how a one basis point rise in Japanese mortgage rates was headline news: Japan overnight press: Japan mortgage costs rise. One of my favourite bloggers, Tim Duy takes the gloves off in commenting on the same story:

Seriously?  The case against Kuroda is that after declining since February, mortgage rates climbed a whole basis point?

:-)

Duy’s blog is here, he is well worth reading for his insights into the US Federal Reserve: Tim Duy’s Fed Watch

The post I’ve quoted from is here: Really? One Basis Point?

Economic growth slows in China … portends trouble for China growth?

Posted: 10 May 2013 11:57 PM PDT

  • Hong Kong real gross domestic product +0.2 per cent on a seasonally adjusted basis in Q1 2013, down from 1.4 per cent in Q4 of 2012
  • HK officials maintain their forecast for GDP to grow by 1.5 to 3.5%this year
  • Inflation expected to edge up in the coming months, but full-year inflation still forecast at 4.2 per cent
  • Yen depreciation could be impacting on HK’s exports

Economic growth slows in first quarter as inflation looms

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Poor growth in Hong Kong could well be a sign of continuing lower than expected growth in China. This could be construed as a negative for the Australian dollar, for example, although the relatively subdued inflation numbers out of China this last week could allow further government stimulus to counter expected growth concerns.

 

Jon Hilsenrath: Fed Maps Exit From Stimulus

Posted: 10 May 2013 05:48 PM PDT

The long-awaited, much-talked about article from Jon Hilsenrath has been published in the Wall Street Journal. Its headlined: Fed Maps Exit From Stimulus

The article isn’t as paradigm-shifting as expected, note what he says here (my bolding):

Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an effort to preserve flexibility and manage highly unpredictable market expectations.Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.

Its the timing question that we’re all waiting on, and the article provides no timeframe.

Hilsenrath goes on:

The Fed’s strategy for how and when to wind down the program is of intense interest in financial markets.

Yes, indeed it is.

While the strategy being debated leaves the Fed plenty of flexibility, it might not be the clear and steady path markets expect based on past experience. Officials are focusing on clarifying the strategy so markets don’t overreact about their next moves.

Yes, makes sense.

But, timing … what about the timing? :-)

The link is here: Fed Maps Exit From Stimulus (The Wall Street Journal is often gated, so if you're unable to access the article try a a Google news search using the headline) (ADDED: here’s a link to the article that is NOT gated)
hilsenrathJohnWSJ-082608

 

 

Have a good weekend everyone

Posted: 10 May 2013 01:05 PM PDT

Thank you for your attention today ladies and gentlemen and i hope you all have a good weekend ahead.

ForexLive Americas wrap: USD flexes its muscle again

Posted: 10 May 2013 12:59 PM PDT

Forex news headlines from May 9, 2013:

The main theme for today’s NY session was a continuation of the USD strength that we saw on Thursday afternoon. One key difference today was the catch up that gold and oil played, although oil recovered sharply on short covering to end the day down 0.54%.

The EUR/USD opened in NY at 1.2984 and traded a 1.2935-1.3015 range and was last at 1.2977. EUR/USD suffered at the hands of USD strength from the open in NY before short covering and profit taking ahead of the weekend saw the pair drift off the lows in NY afternoon trading once London had clocked off for the week. EUR/USD lost  around 1% on the week.

Cable remained capped at the 1.5418 level during NY trading before dipping towards 1.5300. The pair opened in NY at 1.5379 and managed a low of 1.5314 before recovering a little lost ground into the NY close and was last at 1.5358, down 1.4% on the week.

USD/JPY continued its push higher and has not even looked like trading back below the 100.00 level since Thursday’s sharp move higher. USD/JPY ran out of steam just ahead of the 102.00 level today having traded a 101.37-101.98 range in NY and was last at 101.58. Given that the Bank of China was seen supporting the pair at 97.00 on a rumoured 97.00-102.00 double no touch and the pair stopped on a dime ahead of the 102.00 level the option could still be in play. USD/JPY is up around 2.5% from opening levels this week.

The AUD/USD has also been a big mover this week with the pair breaking back below parity for the first time in 10 months during NY trading. The pair began the NY session at 1.0014 and traded down to the day’s lows at 0.9961 before regaining some lost ground on short covering and profit taking in the NY afternoon to trade a 0.9961-1.0030 range during the session. The AUD/USD was last down 2.8% on the week.

Gold played catch up today in resposnse to the USD strength with the shiny stuff opening in NY at 1432 and trading down to 1419 before regaining lost ground into the close to be last at 1443 and down 1.8% on the week. Oil was the big mover in afternoon trading, and after being down as much as 3% during NY trading WTI crude ended the day down 0.4%.

US equity markets did little to end the week with the S&P500 trading a 1624-1633 range, ending the day at 1632 and up 0.34%.

1.3050-70 region will by key for EUR/USD next week

Posted: 10 May 2013 12:19 PM PDT

Following the move below 1.3000 to end the week as the USD continued where it left on on Thursday, the 1.3050-70 region will be key for EUR/USD next week. If bounces fail in this region overall attention will remain on a retest of the 2013 lows.

EURUSDdaily10mayb

Oil recovering most of the day’s losses

Posted: 10 May 2013 12:03 PM PDT

Short covering to end the week and stops above 95.00 in WTI crude could be behind the move off the lows of 93.36 to the session highs at 96.24. WTI crude was last at 95.89.

Fed’s George commenting on the US economy

Posted: 10 May 2013 11:49 AM PDT

Kansas City fed reserve president George’s comments are hitting the wires:

  • US employment picture getting better
  • Housing recovery gaining momentum
  • Fiscal policy producing headwind to US economy but he expects the impact to be felt mainly in 2nd and 3rd quarters this year and then fade
  • Expects US growth to continue around 2% this year
  • Yet to see any obvious impact on real economy from higher equity prices, may take some time
  • Hopes that there will be an opportunity to reduce the level of Fed bond buying going forward
  • Fed will face a challenge in communicating its exit in fashion that does not produce sharp increaes in market rates
  • Must look carefully at capital levels in large banks, dont wait for next crisis to tackle this issue

Esther George is a voting member of the FOMC.

Now this is what i call a water hazzard!

Posted: 10 May 2013 11:19 AM PDT

For all the golfers out there, here is something to think about next time you are approaching a water hazzard. In Australia we have not one, but two golf courses with water hazzards that involve sharks, and i am not referring to Greg Norman. It seems as a result of strong rains two courses have had a shark washed into their water hazzards. I used to go diving for balls at my local course to make some money when i was younger, cant see anyone doing that at these courses for a while.

Federal budget balance +112.9B

Posted: 10 May 2013 11:06 AM PDT

The US federal budget balance numbers have just been released, coming in at +112.9B vs +108.3B forecast and -106.5B previously. This represents the largest surplus in 5 years.

USFedBudgetBalance10mayb

Wall St doing little today

Posted: 10 May 2013 10:40 AM PDT

The S&P500 has been confined to a 1624-1632 range today and was last around the 1628 level, smack bang in the middle of the day’s range as Wall St looks like having a quiet end to the week. With a lack of US data and Bernanke not rattling the cage at all there has been little for the market to go on.

EUR/GBP bouncing from support

Posted: 10 May 2013 10:26 AM PDT

EUR/GBP has found decent support so far today at the 0.8431 level and has bounced back towards the day’s highs as EUR/USD recovers on profit taking in the NY afternoon. The overall feeling for EUR/GBP is that while the pair remains capped in the 0.8480-98 region a retest of the 0.8395-00 region is favoured with potential for a break lower. Selling bounces back to the 0.8480-00 region with a stop above 0.8500 is probably not a bad idea next week.

eurgbp10maydaily

 

AUD/USD still down over 2% for the week

Posted: 10 May 2013 10:08 AM PDT

With the AUD/USD at current levels of 1.0015 it is still down over 2% on the week from opening levels, the worst week for the pair in some time. Further downside remains favoured while the 1.0096-1.0155 region caps with the 0.9570-80 region looking like a viable overall target.

audusdweekly10mayb

For all the Yen’sters out there

Posted: 10 May 2013 10:07 AM PDT

It’s been another rocking end to the week. I’m clocking out and leaving you in Kyle’s capable hands.

Thank you all very much  for your participation this week

Hope you all have a very good weekend.

FOMC’s George to speak at 1800GMT

Posted: 10 May 2013 09:49 AM PDT

The president of the Kansas City Fed, Esther George is scheduled to speak at the Wyoming Business Alliance in Jackson at 1800GMT today. George is a 2013 FOMC voting member so his thoughts certainly count and the market will be watching for any comments in relation to QE and the US economy in general.

Japanese companies facing massive declines in revenues

Posted: 10 May 2013 09:41 AM PDT

  • April Indonesian bike sales -0.7% to 6.7%. Prior 7.4%

They love a bike over that way, but that drop will have Honda and Kawasaki executives quaking in their boardrooms

 

This one’s for Pip-eh-de-do-da

Posted: 10 May 2013 09:24 AM PDT

Rocking in his cave in Tokyo getting smashed on margaritas.

I can picture him now brushing his glam rock perm….as it sits on his lap. ;-)

Here comes the profit taking

Posted: 10 May 2013 09:12 AM PDT

USD/JPY coming off the highs near 102 to 101.50.

We’ll get our first taste of where the dip buyers are at least.

The first slide met support at 101.70 and 101.50 is holding for now.

It’s now going to depend on how much money from the move up comes off the table.

Dollar reversal in EUR and GBP as they both come off the lows.

EUR/USD up to 1.2967

GBP/USD 1.5341

AUD/USD back up through 1.000.

Don’t chase this one folks. The market hasn’t come all this way to give it back up on a Friday afternoon.

Bill Gross calls end of the world April 29th

Posted: 10 May 2013 09:08 AM PDT

Not quite but he’s calling it the end of the bond rally. Not just in treasuries but “To all bonds” including high yield debt.

Position yourselves accordingly ;-)

Yen theory Part 1

Posted: 10 May 2013 09:05 AM PDT

Some natter starting to come out. Not directly attributable to these moves but part of the overall picture nonetheless.

Repatriation is said to have reduced greatly over the last few months with Japanese corporates starting to trust the BOJ’s moves.

Corporates were hedging against any rises in the yen but that too has been reduced dramatically.  If US based Japanese companies start seeing earnings rise then they naturally will benefit on both sides, the increased business and the currency.

They will also continue to look to put their money into US treasuries rather than JGB’s whose yields are so low.

The US and Japanese recoveries could start becoming a perpetual circle with each feeding off and to the other. If that does happen then we will really see some fireworks.


at 5:07 PM

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