Your forexlive.com ENewsletter

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• Women to compete in the Tour de France?
• Betting is open for who will be the next chair of the Federal Reserve
• China nearly doubles the ceiling on foreign investment in its financial markets
• China social financing for June fell to 1.04tr yuan (from 1.19tr in May)
• The market missed San Francisco Federal Reserve Bank head John Williams speaking in Vancouver late Friday – here it is
• ForexLive Americas wrap 12 July: French rating filched by Fitch
• Laurel and Hardy rumble on
• US stock close 12 July: A late run keeps stocks pointing north
• CFTC: Euro shorts more than double
• Fed’s Bullard says higher interest rates may reflect greater optimism
• Fed’s Plosser forecasts 6.5% unemployment rate by end of 2014
• Cyprus president hopes there will never be a need to sell off its gold reserves
• France downgraded by Fitch to AA+
• Fed Bullard says full steam ahead on QE
• UPS blames slowing US industrial economy for lower expected earnings
• Whoopee, a G20 finance and labour ministers meeting next week
• Phili Fed’s Plosser: Fed should halt QE by end of 2013
• One week left until highway freedom
• A reminder of Chinese GDP release over the weekend
• European stock close: Southern state equity markets take a pasting on Portugal worries

Women to compete in the Tour de France? Posted: 12 Jul 2013 11:51 PM PDT You can sign a petition asking to allow women to compete in the Tour de France. A group of champion female cyclists are circulating it to send on to TdF organisers. Story here. Direct link to petition is here: ASO (Amaury Sports Organization): Allow female professional cycling teams to race the Tour de France

Betting is open for who will be the next chair of the Federal Reserve Posted: 12 Jul 2013 11:43 PM PDT Yep, if you want to put your money where your mouth is, Paddy Power has opened the book: Here’s the link: The Next Chairperson of the US Federal Reserve I really like this part of the url:

China nearly doubles the ceiling on foreign investment in its financial markets Posted: 12 Jul 2013 11:27 PM PDT The Chinese securities regulator announced on Friday that overall quota under the Qualified Foreign Institutional Investor programme has been raised to $150bn from $80bn Also announced that foreign institutions holding renminbi in London, Singapore and Taiwan can now directly invest these funds in China (previously Hong Kong was the only offshore market with the right to directly invest renminbi in China). This should broaden the appeal of the yuan in overseas markets This is a further step on the road to opening up China’s financial markets.

China social financing for June fell to 1.04tr yuan (from 1.19tr in May) Posted: 12 Jul 2013 11:18 PM PDT Released in China late Friday by the PBOC Social financing is a broad measure of liquidity, includes bank loans and bond sales Now at its lowest level in nearly a year, though at levels still mostly deemed ample M2 money supply +14% y/y (forecast was +15.2%, and prior was +15.8%), slowest rise in 6 months New yuan loans 860.5bn yuan (forecast 800bn yuan, prior was 667.4bn yuan in May)

The market missed San Francisco Federal Reserve Bank head John Williams speaking in Vancouver late Friday – here it is Posted: 12 Jul 2013 10:38 PM PDT On Friday in Vancouver San Francisco Federal Reserve Bank head John Williams spoke, saying that using unconventional policy with moderation is like taking out an insurance policy. With “a policy designed for uncertainty about parameters, you pay a small price if actual uncertainty is low, but you are actually guarded against bad outcomes”. The other headlines on Reuters from Williams’ speech: Uncertainty about the effects of bond-buying  tells you to attenuate use versus conventional policies Not worried now about too-low inflation, but if  inflation does not rise as currently forecast, will need to  reassess Fed's current policies are "appropriate" 'Healthy' to have diverse views around the fed  policy-making table, good not to have groupthink Encouraged by the improvement in the employment data  and have been for quite some time He fully supports what Bernanke laid out as a road map on cuts to bond-buying later this year Fed communication can never be perfect Doesn't see a big difference between view to end  bond-buying by year-end and Bernanke's road map for QE Note – Williams is not a voter on the FOMC this year. - I’ll have more on the ‘taper question’ in upcoming posts, even though its getting a little yawn-inducing now. Taper will be announced in September (my pick), to start in October, or  announced in December to start January – subject to incoming data (the FOMC will want to see a continuation of the improving trend in the economy – no, I’m not saying the economy is great, only that its not as bad as it was (further details on what ‘improving’ means, if needed, can be found in any dictionary). Incoming data will need to be terrible to delay the taper. ps. ‘Tapering’ is not the end of asset purchases, just a reduction in the pace of purchases. pps. ‘Tapering’ is not a move to raise the Fed’s official interest rates, those are staying at current low levels for a long time to come.

ForexLive Americas wrap 12 July: French rating filched by Fitch Posted: 12 Jul 2013 01:16 PM PDT Forex trading headlines from the Americas session 12 July Spain’s deputy economic minister says Italy ratings cut not good news Germany seeks euro area consensus on Portugal JPM Q2 report up beat on US economy JPM’s Dimon sees US economy gaining strength but sees another year before normality returns JPM’s Dimon sees US unemployment at 6.5% next year and knocks back Fed chair Portuguese opposition party pushes for bailout re-negotiation Portuguese president says party negotiations should be over soon US June PPI come in over expectations due to higher energy costs 0.8% vs 0.5% exp m/m. 2.5% vs 2.1% exp y/y US senator Warren pushes for reviving Glass-Steagall act Merkel says euro area on right path and wouldn’t mind shopping in Slovenia US July Michigan consumer sentiment index 83.9 from 85.0 exp  US weekly ECRI economic index 130.3 vs 130.4 prior CFTC votes 3-1 to approve cross border swap guidance but is warned by industry groups Fed’s Plosser says Fed should halt QE by end of 2013. Unfortunately the hawk has no talons Fed’s Bullard trumps non-voting Plosser and calls for full power to QE UPS paints a grim economical picture ahead of official Q2 earnings release Cyprus president says it’s cool for government to hit savers while sitting on a pile of gold France loses triple A rating, downgraded to AA+ by Fitch Fed’s Plosser forecasts 6.5% unemployment rate by end of 2014 Bullard says higher rates may reflect greater optimism Plosser says Fed should defend 2% price goal while Bullard sees no signs of asset bubbles CFTC shorts double to 9 July and get creamed Currencies were generally following a risk on/off theme during the day. EUR/USD weakness carried over from the European session, with Portuguese worries playing a part. We slid on news of Portugal’s opposition leader calling for a re-negotiation of the bailout and hit 1.3000 on a combination of French downgrade rumours and a UPS earnings warning. We then picked back up on a general risk on theme with the comments from Bullard trumping comments from Plosser. The French downgrade was confirmed late in the day and the market had it priced in and we fell 60 pips from the Bullard high at 1.3090 to 1.3030 but soon reversed. We close out the week just over 300 pips from the low from a 450 odd pip weekly range. GBP/USD continued it’s fall from yesterdays 1.5200 perch getting as low as 1.5077 in other wise quiet trading. The pair is looking to close out the week above 1.51 which could signal further gains to come. USD/JPY followed the risk on theme and was underpinned by good JPM earnings and a fairly upbeat economic report. We topped out into orders at 99.70 but took a knock on the UPS news.  A brief look below 99.00 was swiftly turned around and we managed to post above 99.50 before settling the afternoon between 99.30/45 AUD/USD finally decided to pick a fight with the 0.9000 level but came out second best. We managed a tick below to knock out the options but was back trading up in the 0.9030′s within moments.  We managed to get back up to the 0.9070′s and close the week around the 0.9060 level. EUR/AUD was the main driver in the aussie fall as it tested August 2010 highs early on at 1.4442. Another run later in the day broke the high to touch 1.4478 but stalled ahead of  the next historical high of 1.4482. Right, that’s me done. What a week eh? Don’t forget Chines GDP, IP and retail data is up early Monday morning at 2am gmt. Thank you once again for taking part this week and I hope you all have a very good week end.

Laurel and Hardy rumble on Posted: 12 Jul 2013 01:09 PM PDT Plosser Fed should defend 2% price goal from above and below Sees risk in targeting inflation in excess of 2% Bullard Risk of asset bubbles absolutely a front and centre issue for central bank Not seeing bubbles now so focused on growth and low inflation Still sees very sluggish growth in US economy

US stock close 12 July: A late run keeps stocks pointing north Posted: 12 Jul 2013 01:04 PM PDT S&P +4.67 pts or +0.28% to 1679.69 Dow -3.61 pts or -0.02% to 15457.31 Nasdaq +20.07 pts or +0.56% to 3598.37 US 10′s 2.58% +1 bps

CFTC: Euro shorts more than double Posted: 12 Jul 2013 12:40 PM PDT Futures market speculative positioning data from the CFTC Commitments of Traders report as of the close on Tuesday, July 9: EUR net short 41k vs short 16k prior JPY net short 80K vs short 71K prior GBP net short 34K vs short 31K prior AUD net short 63K vs short 70K prior CAD net short 24K vs short 16K prior NZD net short 1K vs short 1K prior CHF net short 1k vs flat prior Dollar Index net long 29K vs 16K prior Gold net long 16K vs 21K prior You’ll have to wait for Aus as usual as I have to get the abacus out. I’m going to write a letter to this mob. What a performance for a Friday evening!! And I can’t believe the lazy bugger didn’t keep the cheese spec going. Cheese net shorts 221 vs 352 prior Euro shorts would have taken an absolute pounding this week and that could well be a reason behind the large move up. If they’re long on next weeks report we’ll know that for certain.

Fed’s Bullard says higher interest rates may reflect greater optimism Posted: 12 Jul 2013 12:16 PM PDT Dissented last month over Fed defence of inflation goal Many forces slowing down US economy are waning  Has supported policy of open-ended QE In case you were unaware both Bullard and Plosser are speaking at the Jackson Hole conference that Bernanke knocked back. With hindsight that was probably a very wise decision. Can you imagine the carnage if he’s spoken at this time of the day on a Friday? Evidence on current economy is mixed. Cannot justify rise in bond yields on basis of better US data MArket reaction to Bernanke after FOMC substantial even though Fed did not change policy Says that ECB deploying forward guidance may support EZ economy which is bullish for US

Fed’s Plosser forecasts 6.5% unemployment rate by end of 2014 Posted: 12 Jul 2013 11:53 AM PDT Sees rate at 7% by end of 2013 Calls on Fed to promise to raise interest rates when rate hits 6.5% Time has come to reduce pace of bond buying, Wants QE to end by year end in gradual predictable manner Repeated changed to Fed’s policy targets likely caused more confusion than clarity Latest FOMC forecasts show committee has taken on board drop in unemployment over last 3-5 years Current period of low inflation is transitory

Cyprus president hopes there will never be a need to sell off its gold reserves Posted: 12 Jul 2013 10:37 AM PDT Why sell the family jewels when you can tap the rest of Europe and clean out your own citizens savings? Well played Cyprus, well played.

France downgraded by Fitch to AA+ Posted: 12 Jul 2013 10:12 AM PDT Downgrade reflects higher forecast for general government gross debt Risks to fiscal projections lie mainly to the downside on uncertain growth and eurozone crisis Economic output and forecasts are substantially weaker than previously French economy faces number of structural challenges The drop in EUR/USD to 1.3000 could have been on a possible rumour of the downgrade earlier.  The fact we only fell to 1.3032 would suggest the news was expected.

Fed Bullard says full steam ahead on QE Posted: 12 Jul 2013 10:03 AM PDT A little bit of mixed bag on labour market data Sees gains in labour market data since 2012 Opposes dialing down stimulus amid disinflation Wants more Fed efforts to combat disinflation and is very concerned about low inflation Wants to see inflation tick up a little to 2% Saw Fed revert a bit to date-based policy guidance Predicts housing market will improve in future Smaller US banks would be more globally competitive Bullard is a voting member of the FOMC so his remarks trump Plosser’s as we see in the markets.

UPS blames slowing US industrial economy for lower expected earnings Posted: 12 Jul 2013 10:03 AM PDT Apologies folks for missing this one earlier. UPS has issued a warning of lower earnings ahead of the full Q2 release on 23rd July. The biggest global package delivery firm cites overcapacity in the global airfreight market and customers increasingly looking for cheaper shipping options, as reasons for revenue and operating profits dropping below expectations. Package volume growth also slowed as a result of labour negotiations. Shipping is obviously a big barometer in judging business growth and the warning from the biggest firm is going to weigh on markets minds when they release the full figures. Last month Fedex issued Q1 earnings and despite upbeat news their report highlighted some alarming drops in airfreight figures. Lower shipping demand points to strains in global economy

Whoopee, a G20 finance and labour ministers meeting next week Posted: 12 Jul 2013 09:38 AM PDT Another round of G20 meeting kick off next week in Russia Russian delegate Sherpa Ksenia Yudaeva says that they may talk about the spillover effects of Fed policy. At the end of the meeting they will issue a joint G20 statement.

Phili Fed’s Plosser: Fed should halt QE by end of 2013 Posted: 12 Jul 2013 09:14 AM PDT QE risks growing with size of balance sheet Should begin to taper in September Fed must be aware of QE’s unintendid consequences Doesn’t want to create another housing boom Changing course of Fed policy will be difficult Plosser does not hold a policy vote on the FOMC this year Plosser is a major hawk

One week left until highway freedom Posted: 12 Jul 2013 09:11 AM PDT In most cases, next week is the last week of UK school term meaning a 70% drop in crazy drivers between 8-9 am and 3-5 pm UK time. After that things may really start to quieten down in the markets as summer really kicks in. Here’s a freaky vid to get you on your way.

A reminder of Chinese GDP release over the weekend Posted: 12 Jul 2013 08:52 AM PDT Just for those who may be clocking off for the day. Early Monday morning at around 2 am GMT China release Q2 GDP, Industrial production and retail sales fiction data Consensus on the data is as follows; GDP 7.5% y/y. Prior 7.7% Industrial production 9.1% y/y. Prior 9.2% Retail sales 12.9% y/y. Prior 12.6% No doubt our very own Crocodile Dundee, Eamonn will have more on the release Sunday night. It’s certainly worth getting up for as it can be possible to get in on the initial moves before Europe wakes up.

European stock close: Southern state equity markets take a pasting on Portugal worries Posted: 12 Jul 2013 08:34 AM PDT FTSE flat Dax +0.6% Cac -0.5% Ibex -2.3% FTSE MIB -1.5% Portugals PSI 20 -1.35% European bonds Italy 4.48% +1 bps Spain 4.78% - 4 bps Portugal 7.53% +63 bps Germany 1.56% -7bps

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