Posted on 24th May 2015 by barry norman in Stockpair Daily Insight

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The US Dollar Makes A Spectacular Recovery

May 25, 2015

Barry Norman

 

greece eurGerman Chancellor Merkel and French President Hollande said today that the Greek government needs to do more work to flesh out its reform program and satisfy creditors. On Friday, the Greek government said it expects to reach a deal within the next 10 days. On Sunday, local elections will be held in Spain and on Monday, US, UK and most European markets will be closed for local holidays. The euro took a header late Friday to close near the 1.10 level while the US dollar surged to 96.26.

The US headline inflation was perfectly in line with expectations at -0.2% Y/Y. The core reading was unchanged at 1.8% Y/Y, while a marginal decline to 1.7% Y/Y was expected. So, the report was very close to expectations. Still it triggered a sharp repositioning especially in the FX market. Although headline inflation dropped to a new cyclical low in April, this was mainly due to a significant drop in energy prices. Underlying price pressures remain however healthy with core inflation only slightly below the Fed’s 2% inflation target.

Federal Reserve chair Janet Yellen has said the central bank is on track to raise short-term interest rates this year, but will likely proceed slowly and cautiously because the job market hasn’t fully healed, inflation is low and growth has again disappointed.

currency forex May 25

The comments, made just a few weeks before the Fed’s next policy meeting June 16-17, were the latest indication from the central bank it is highly unlikely to start raising rates at that gathering but could do so later in the year if the economy picks up.

Yellen made clear that even after that initial move she has little inclination to move quickly. It could be “several years,” she said, before the federal funds rate is back at a level the Fed considers being normal in the long-run. Fed officials see the rate getting to 3.75 per cent someday. Their March forecasts showed that even at the end of 2017, they expected the rate to still be slightly below that level.

 

Posted on 23rd May 2015 by barry norman in Stockpair weekly Insights

Stockpair Weekly Market Wrap – Prepare for the May 25th Trading Week

Major Economic Events for the week that you should be monitoring:

Cur. Imp. Event Actual Forecast Previous  
Monday, May 25, 2015
    Holiday United States – Memorial Day
    Holiday Switzerland – Pentecost Monday
    Holiday United Kingdom – Late May Bank Holiday
Tuesday, May 26, 2015
    USD Core Durable Goods Orders   0.4% 0.3%  
    USD CB Consumer Confidence   95.0 95.2  
    USD New Home Sales (Apr)   510K 481K  
Wednesday, May 27, 2015
  CAD Interest Rate Decision   0.75% 0.75%  
Thursday, May 28, 2015
    GBP GDP (YoY) (Q1)   2.5% 2.4%  
    USD Pending Home Sales (MoM)   1.0% 1.1%  
Friday, May 29, 2015
    GBP GDP (QoQ) (Q1)     0.3%  
    USD GDP (QoQ) (Q1)   -0.8% 0.2%  
    CAD GDP (MoM) (Mar)   0.2%  

 

Global Exchanges

Wall Street finished the week lower after core inflation numbers outstripped expectations and Federal Reserve chair Janet Yellen reiterated the central bank’s intention to raise short-term interest rates this year.  Many investors expect the Fed to increase rates in September, but there is little consensus as to whether slightly higher borrowing costs will derail a bull run that is in its seventh year. With higher rates well telegraphed, money managers are turning their attention to the likelihood of subsequent rate increases.

In her remarks Friday, Ms. Yellen also emphasized the economic headwinds such as slow wage growth, low inflation and disappointing growth, discouraging the view that the Fed would embark on a full-fledged tightening cycle.  At the closing bell, the Dow Jones Industrial Average fell 54 points, or 0.3 per cent, to 18,232. The S&P 500 gave up 5 points, or 0.2 per cent, to 2,126, while the Nasdaq Composite lost 1 point to 5,089.  Stock-trading volume was muted ahead of the long weekend, mirroring the past several trading sessions. The week is on pace to be the slowest since the week including New Year’s Day. The stock market will be closed Monday for Memorial Day.

In the euro area, Frankfurt’s DAX 30 lost 0.4 per cent to 11,815.01 points on Friday and the CAC 40 in Paris dipped 0.1 per cent to end the day at 5,142.89 points. But in London the benchmark FTSE 100 index rose 0.3 per cent at 7,031.72 points, boosted by gains to share prices of heavyweight miners that rallied on Chinese stimulus hopes.

“Eurozone indices have struggled… weighed down by Greek debt concerns,” research analyst at Sodden Financial, said.
global equities Stockpair

Currency Markets

The euro dropped to $1.1029 as the US dollar edged higher as US core inflation came in higher than expected and thus raised chances of an interest rate rise. The US Labor Department reported that consumer prices edged 0.1 per cent higher in April as energy prices tumbled and food prices were flat, but excluding those elements core inflation came in at a higher than expected 0.3 per cent. While the US Federal Reserve is no longer seen as likely to raise its key interest rates in June, markets have been left uncertain over the exact timing of a hike. While the EU summit in Riga was focused on developing the European Union’s relationship with the former Soviet states of Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine, the Greece crisis nevertheless remained in the spotlight. The Aussie dollar fell from highs near 0.7910 to lows around 0.7870 before ending US trade near 0.7890. And the Japanese yen eased from near ¥120.84 per US dollar to ¥121.24 and was around ¥121.00 at the US close.

global currencies stockpair

Commodity Markets

Gold eased on Friday, on course for its first weekly decline in four weeks, after US Federal Reserve Chair Janet Yellen said she expected an interest rate hike this year. The dollar extended gains following the speech, after initially climbing on a stronger-than-expected rise in US core consumer prices in April. Gold was little changed, settling down 10 cents at $1,204 an ounce.

gold vs dow forexwords

Oil prices fell on Friday as the dollar strengthened on firming US inflation data, and profit-taking weighing in after a two-day crude rally. West Texas Intermediate dropped US$1 to finish at $59.72 a barrel on the New York Mercantile Exchange.

Posted on 21st May 2015 by barry norman in Stockpair Daily Insight

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Eurogroup Meets With Greek Officials

May 22, 2015

Barry Norman

 

currency forexwordsThe US dollar gave up about 30 points on Thursday to trade at 95.36 showing little reaction to jobs data. US initial jobless claims rose slightly more than expected in the week ending the 16th of May, from 274 000 to 264 000, although remaining close its 15-year lows. Continuing claims, on the contrary, extended their downtrend falling to their lowest level since 2000, confirming that the US labour market continues to strengthen. All the rest of the US data was lackluster with manufacturing PMI falling, and existing home sales tanking followed by the Philly Fed which missed expectations. It was a bad day for the US economy, but traders are now sure that the Fed will not increase rates anytime soon.  The US Philadelphia Fed index weakened unexpectedly in May, falling from 7.5 to 6.7. The details were however more mixed with employment weakening significantly, but both new orders and shipments picked up, boding well for future activity

The euro recovered 30 points on disappointing data in Germany and the overall Eurozone limited gains against the weak US dollar. German manufacturing and service PMI both missed forecasts but the main focus is the Eurogroup meeting in Riga starting in a just a short while.

currency thurs

UK retail sales came out surprisingly strong in April, rebounding by 1.2% M/M following a setback in April. The figures were boosted by favorable weather conditions which spurred sales of textile, clothing & footwear.

The reaction of sterling was straightforward. Especially cable got a shot in the arm. The pair gained more than a full big figure from the mid 1.55 area to the mid 1.56 area and even touched the 1.57 barrier around noon in the UK. The gains of sterling against the euro were initially less pronounced as the euro was also fairly strong, despite a slightly disappointing EMU PMI. EUR/GBP drifted lower in 0.71 big figure. The pair finally tested the 0.7117 support The CBI trends orders were slightly disappointing but, as usual, were largely ignored. Even more EUR/GBP dropped below the 0.71 mark as EUR/USD returned south early in the US trading

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Posted on 20th May 2015 by barry norman in Stockpair Daily Insight

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Traders Sitting Tight

May 21, 2015

Barry Norman

 

bank vault forexwordsGreece will ask the ECB today to increase ELA funding by another €1.1 billion today, sources said, as deposit outflows continued. Rating agency Moody’s warned that there is a high likelihood that capital controls and deposit freezes will have to be imposed on Greek banks as it estimates that more than €30 billion has been withdrawn over the last five months. The euro fell to trade at 1.1103 down by 47 points as the greenback continued to gain touching 95.61 on indications that the FOMC might raise interest rates as early as June.

The Minutes of the latest Bank of England meeting showed that the MPC voted unanimously to keep its policy unchanged. Although the bank sounded slightly softer on growth, they expect slack in the economy might be absorbed within one year, which was slightly more hawkish. The pound gained 21 points against the climbing US dollar to trade at 1.5535.

 

currency wed forexwords

Gold moved higher Wednesday, after suffering from a nearly 2% decline a day earlier, as traders awaited minutes of the Federal Reserve’s April meeting for clues on interest-rate policy. At this writing gold is trading at 1211.30. Traders will review the release of the April minutes of the policy-setting Federal Open Market Committee that are due at 2 p.m. Eastern time — shortly after the close of metals trading on Comex.

Economists said the subdued tone of the Fed’s policy statement following that April meeting means the minutes, which will offer a summary of the panel’s policy debate, could virtually eliminate any remaining expectations for a rate hike in June.

gold wed forexwords

Posted on 19th May 2015 by barry norman in Stockpair Daily Insight

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Stockpair traders should keep an eye on these events today:

Cur. Event
  JPY GDP (QoQ) (Q1)
  JPY GDP (YoY) (Q1)
  AUD Westpac Consumer Sentiment
  EUR German PPI (MoM) (Apr)
  GBP BoE MPC Meeting Minutes
  CAD Wholesale Sales (MoM) (Mar)
  USD Crude Oil Inventories
  USD FOMC Meeting Minutes

 

The US Dollars Powers Up

May 20, 2015

Barry Norman

 

gold forecast forexwordsOn Tuesday the oil price continued to slide and at the moment of writing of this note is seen at 58.39 down $1.85 as the US dollar rallied. The market has however lately missed any stronger impulses that would either support or undermine the price. For example, yesterday’s sharp reversion of early gains suggests that room for prospective further gains of Brent is rather limited. This has also been suggested by the latest ICE Commitment of Traders report. Although the net speculative position in Brent futures declined, the report also showed that number of traders betting on the price decline fell quite sharply over the past two weeks.

The US finally saw some solid data with building permits and housing starts soaring above forecast, which might support the premise that the harsh winter weighed down the economy in the earlier part of the year and might indicate that upcoming data would return to the positive mode. The US dollar added 118 points to trade at 95.41 weighing heavily on the entire commodity sector.

Gold dropped for a second day as the dollar strengthened on the back of decent US housing data. Gold prices extended losses after the number of building permits and housing starts issued rose sharply in April, a sign of confidence among home buyers.

housing data

Gold was always unlikely to maintain the gains it made last week analysts at Commerzbank said, as the rise had come from a slight weakness in the dollar and uncertainty in the Eurozone.  As a result, with sizeable ETF outflows of 5.6 tons yesterday, “the gold price was unable to defend its gains” Commerzbank said. Minutes from the latest Federal Reserve meeting are due Wednesday evening, which may have prompted some caution, added traders.

The euro looked set to have its worst day in two months Tuesday after a European Central Bank official said the central bank will front-load some of its planned bond purchases, sending Eurozone sovereign-bond yields sharply lower.

currency forexwords tues

Posted on 18th May 2015 by barry norman in Stockpair Daily Insight

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Stockpair traders should keep an eye on these events today:

Cur. Event
  AUD Monetary Policy Meeting Minutes
  GBP CPI (YoY) (Apr)
  EUR German ZEW Economic Sentiment
  EUR CPI (YoY) (Apr)
  USD Building Permits (Apr)
  CAD BoC Gov Poloz Speaks

 

US Data Continues To Disappoint

May 19, 2015

Barry Norman

Currency-Hedging4 forexwordsFollowing a significant improvement in April, the US NAHB housing market indicator weakened again in May, falling from 56 to 54, while a further rebound was expected. Homebuilders were especially more cautious regarding their present sales, but sentiment over future sales improved in May.

The greenback enter calmer waters. The US currency rebounded slightly after Friday’s drop in the wake of a poor consumer confidence indicator. EUR/USD hovered around the 1.14 pivot. USD/JPY held a tight range in the 119.50/75 area. Trading was mostly technical in nature with no big story behind it.

housing data

Intraday, the dollar already regained some ground against the yen. USD/EUR initially hesitated to join the USD/JPY rebound. The EUR/USD pair hovered in the 1.1420/50 area in Asia. At the onset of the European trading session, it even looked that the pair could go for a retest of the correction top in the 1.1467 area. Finally, the retest of the topside didn’t materialize. On the contrary, EUR/USD tumbled from the 1.1440 area to the 1.1367 area early in European dealings. With little high profile news to guide the price action, uncertainty on the cash situation of Greece was mentioned as a potential driver behind the move.

A spate of weak U.S. economic data — disappointing retail-sales and consumer-confidence readings were among the highlights — pushed the dollar lower against the euro for the fifth straight week Friday, and added to the view that the hoped-for second-quarter rebound has yet to materialize.

Some traders worry that weaker-than-expected economic data since the beginning of the year will cause Federal Reserve policy makers to delay the first increase of the central bank’s policy rate since 2006. Policy makers have repeatedly said their decision would be data-dependent.

The dollar index a measure of the dollar’s strength against a basket of six rivals was up 0.9% to 93.95. The dollar traded at 119.79 yen, compared with ¥119.38 Friday afternoon; the Australian dollar traded at 79.93 cents, down from 80.03 cents.

eurusd

Posted on 17th May 2015 by barry norman in Stockpair Daily Insight

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Central Bank Meeting Minutes Dominate This Week

May 18, 2015

Barry Norman

interest rates forexwordsThis week traders will get a view into the thinking and decisions of the Reserve Bank of Australia, The Federal Reserve and the Bank of England.  The dollar depreciated against the euro for a fifth straight week on Friday, as weak U.S. economic data prompted traders to push back their expectations for when the Federal Reserve will raise interest rates.

A preliminary reading of consumer sentiment in May by the University of Michigan came in at 88.6, down from 95.9 in April — a seven-year low. That, combined with a disappointing result for the May Empire State manufacturing index and the Federal Reserve’s April reading on industrial-production activity pushed the dollar 0.3% lowers against the euro Friday. The data showed that the second-quarter rebound that many economists, including Federal Reserve policy makers, had hoped for has yet to fully materialize.

The euro traded at $1.1446, a three-month high, compared with $1.1400 Thursday; the pound traded at $1.5725, compared with $1.5774 Thursday; the dollar traded at ¥119.38. The Dollar Index a measure of the dollar’s strength against a basket of six rivals, was down 0.2% to 93.2710.

consumer sentiment

In a major speech delivered in Washington late last week, European Central Bank President Mario Draghi hit back at a popular argument that low interest rates, and quantitative easing in particular, not only hurt savers but also benefit the wealthy disproportionately and fuel inequality.

The remarks are notable as the criticism of the ECB’s action is similar to that faced by the Federal Reserve and other central banks for similar policies. The ECB‘s main interest rate is just above zero, and it announced it would start buying bonds in September.

eurusd week

Posted on 16th May 2015 by barry norman in Stockpair weekly Insights

Stockpair Weekly Market Wrap Ahead of the May 18th Trading Week

Major Economic Events for the week that you should be monitoring

Cur. Event        
Tuesday, May 19, 2015
  AUD Monetary Meeting Minutes        
  GBP CPI (YoY)        
  EUR German ZEW Economic Sentiment        
  EUR CPI (YoY)        
  USD Building Permits (Apr)        
  CAD BoC Gov Poloz Speaks        
Wednesday, May 20, 2015
    GBP BoE MPC Meeting Minutes        
    USD FOMC Meeting Minutes        
Thursday, May 21, 2015
    CNY HSBC Manufacturing        
    EUR German Manufacturing        
    GBP Retail Sales        
    USD Existing Home Sales        
    USD Philadelphia Fed Manufacturing        
Friday, May 22, 2015
    EUR German GDP        
    EUR German Manufacturing        
    EUR German Ifo Business        
    USD Core CPI        

Global Exchanges

Wall Street ended Friday’s choppy session with a slight gain as the main indexes recorded weekly gains. Investors dealt with weaker-than-expected economic reports which left them uncertain about the timing of the Federal Reserve’s next rate hike. The S&P 500 closed 1.61 points, or 0.1%, higher at 2,122.71, a fresh record. The index gained 0.3% over the week. The Dow Jones added 20.42 points, or 0.1%, to 18,272.62, rising 0.5% over the week. The NASDAQ ended the session down 2.5 points at 5,048.29, but booked 0.9% over the week.

Europe’s equities have closed down, losing steam after an early rally on the back of European Central Bank chief Mario Draghi’s vow to continue its stimulus program for “as long as needed” to stabilize prices. The mood of investors turned sour in afternoon trading on continuing worries over Greece, and a new batch of discouraging consumer data out of the US.

London’s FTSE 100 index of leading companies closed down 0.2 per cent to 6,960 points on Friday. In Paris, the CAC 40 dipped 0.7 per cent to 4,994, while Frankfurt’s DAX 30 lost 1 per cent to 11,447 points.

global equities

Currency Markets

With the Eurozone economy and inflation recently picking up, there has been speculation that the ECB would wind up early its unprecedented asset-purchase program, widely known as quantitative easing. Mr Draghi reinforced the belief the central bank will carry out the QE program in full. This seems to have been what investors wanted to hear as it had an immediate impact on markets, helping bond markets settle down and seeing equities rally as fears the ECB may pull the QE pin early abated. In response, the euro rallied to another three-month peak at $1.1445. The pound exchanged at $1.5725, compared with $1.5774 Thursday; the Japanese yen traded at ¥119.38, compared with ¥119.21.

global currency

 

Commodity Markets

Prices for the U.S. crude-oil benchmark settled lower on Friday, but still tallied a gain for a ninth week in a row—said to be the longest weekly streak of gains in at least 30 years. Concerns over a supply glut in the market pressured prices, but weakness in the U.S. dollar and a 23rd straight weekly decline in the number of active U.S. oil rigs helped cut losses. Crude oil is holding just under the $60 price level.

Gold futures turned higher during Friday’s final minutes of trading to climb a dime for the session and tally a more than 3% gain for the week. Prices found support from a weaker U.S. dollar as investors assessed the latest economic data and their influence on the metal’s investment appeal. Gold ended the week at $1223gold silver week

Posted on 14th May 2015 by barry norman in Stockpair Daily Insight

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Stockpair traders should keep an eye on these events today:

Cur. Event
  JPY BoJ Governor Kuroda Speaks
  CHF PPI (MoM) (Apr)
  USD NY Empire State Manufacturing Index
  CAD Foreign Securities Purchases (Mar)
  CAD Manufacturing Sales (MoM) (Mar)
  USD Industrial Production (MoM) (Apr)
  USD Michigan Consumer Expectations

 

May 14, 2015

Barry Norman

European Central Bank President Mario Draghi attends the monthly news conference in FrankfurtECB Director Draghi was the main focus of the markets this afternoon. Draghi spoke openly about the Bank’s policy and its current stimulus program. Some interesting insights into Draghi’s view of the world; a shame that Christine Lagarde didn’t seek his views on the Greek bailout talks.

He explains that the ECB has created a range of new tools since the financial crisis started. In five years’ time, we will be closer to what central banks are like in “ordinary places” — but still with a broader set of tools than before. Draghi explains that when people questioned recent policy measures, he would explain that the ECB needed more firepower to address its particular challenges.

Monetary policy has one objective – price stability. And that’s a pre-requisite for financial stability, says Draghi. One of the lessons of the crisis is that our monetary policy transmission was impaired because many banks held too many bad loans, says Draghi.

That, and the fragmentation of the banking sector, made it harder to get credit flowing again. So when the ECB pumped almost €1trn into the banking sector through its Long Term Refinancing Operations in 2011 and 2012, the banks used the cash to buy government bonds rather than lending to the real economy.

currency forexwords

The euro strengthened to its best level in 3-months against the US Dollar as concerns over the strength of the US economy dragged the ‘Greenback’ to multi month lows against a basket of major currency peers. The single currency advanced beyond the 1.14 level for the first time since February, the Pound Sterling climbed to its best level in six-months.

Further gains for the euro are likely to be restrained as worries continue to persist over Greece. Earlier in the session, Greek Finance Minister Yanis Varoufakis said that the nation’s debts were not viable and that repayments to the European Central Bank should be delayed until the summer at the earliest.

Posted on 13th May 2015 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  NZD Business NZ PMI (Apr)
  NZD Core Retail Sales (QoQ)
  NZD Retail Sales (QoQ) (Q1)
  GBP RICS House Price Balance (Apr)
  CNY New Loans
  USD Core PPI (MoM) (Apr)
  USD Initial Jobless Claims
  USD PPI (MoM) (Apr)

 

Eurozone Growth Outshines UK

May 14, 2015

Barry Norman

gdpThe most recent Eurozone GDP data shows France and Italy beat forecasts, but the Greek recovery has been stifled. The Eurozone economy grew by 0.4% in the first three months of 2015. That’s thanks to France’s unexpectedly strong growth, up 0.6%, and another solid month in Germany, up 0.3%. That’s broadly in line with forecasts, and means the Eurozone expanded faster than both Britain and the United States. The euro strengthened to $1.1330, compared with $1.1218 Tuesday; the dollar weakened to 119.2590 yen compared with ¥119.89; the pound strengthened to $1.5697, compared with $1.5667;

In Athens Prime Minister Alexis Tsipras has called another cabinet meeting for this afternoon. This follows a marathon five-hour session on Tuesday, where cabinet ministers representing his anti-austerity government hotly debated concessions and “red lines”.

Bank of England Governor Mark Carney said UK growth is susceptible to any escalation of the Greek debt crisis after the Bank of England cut its forecasts through 2017.

 

eurozone gdp

“An intensification of the Greek crisis would have an impact on global growth and would have a modest impact on UK growth,” the BOE governor said at a press conference in London on Wednesday.

He said European Central Bank stimulus, improvements in euro-area fundamentals and limited UK exposure would “come together to mitigate some of the spillovers from what would be an undesirable event.”

The BOE, which sees inflation returning to its 2 per cent target within two years, lowered its 2015 growth forecast to 2.5 per cent from 2.9 per cent in February.

“The most important legacies of the financial crisis are the persistent headwinds which continue to weigh on the UK economy,” the BOE governor said at a press conference in London. These require “not only a more gradual rate of increase in bank rate than in previous cycles, but also require levels of bank rate to remain below average historical levels for some time to come.”

uk gdp