Posted on 22nd October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  AUD RBA Governor Stevens
  NZD CPI (QoQ) (Q2)
  CNY HSBC Manufacturing PMI
  EUR German Manufacturing PMI
  EUR German Services PMI (Oct)
  EUR Manufacturing PMI (Oct)
  EUR Services PMI (Oct)
  GBP BBA Mortgage Approvals
  GBP Retail Sales (MoM) (Sep)
  GBP CBI Industrial Trends Orders
  USD Initial Jobless Claims

 

US Dollar Continues To Gain Momentum

October 23, 2014

Barry Norman

The US dollar gained its dominance today as traders dumped the euro on worries about ECB stimulus and monetary policy changes.  The euro fell close to 60 points on Wednesday to trade at 1.2660. The US is doing better than it has in years. Jobs growth is up, unemployment is down, the manufacturing sector carries the rest of the world on its shoulders and the World Economic Forum named the U.S. the third-most competitive nation, our highest ranking since before the recession. Although our currency has softened recently, it has put pressure on two commodities that we consider our lifeblood at U.S. Global Investors: gold and oil.

us dollar

It’s worth noting that we’ve been here before. In October 2011, a similar correction occurred in energy, commodities and resources stocks based on European and Chinese growth fears. The US dollar gained 0.4% today to forcing dollar denominated commodities to trade in the red. Gold prices pulled back with the yellow metal — often viewed as an inflation hedge — making a leg down after a report showed inflation remains in check.

The metal is pulling back after rising on Tuesday to levels last seen in early September, and some analysts suggest it’s just catching its breath after a solid advance.

gold

A Labor Department report on Wednesday indicated that U.S. consumer prices rose slightly last month owing to higher costs for food and housing, but inflationary pressures continue to be held in check by falling energy expenses. The consumer price index climbed a seasonally-adjusted 0.1% in September, meeting the consensus forecast from economists. At this writing gold is trading at 1243.60 down over $8.00 on the day. Crude oil reversed its up movement earlier today to fall 4 cents to trade at 82.45. On Thursday there is a rash of economic data due throughout the day but German PMI data could send the euro tumbling while retail sales in the UK are pegged to reach expectations but there is a possibility that it might miss sending the pound on a downward spiral.

eurusd

Posted on 21st October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  JPY Adjusted Trade Balance
  AUD CPI (YoY) (Q3)
  AUD CPI (QoQ) (Q3)
  GBP MPC Meeting Minutes
  USD Core CPI (MoM) (Sep)
  USD CPI (MoM) (Sep)
  CAD Retail Sales (MoM)
  CAD BoC Monetary Policy

 

Chinese Data Better Than Expected But Was It Good

October 22, 2014

Barry Norman

 

central-bank-of-china_1388666352Markets reacted positively to the release of better than expected GDP data along with a rebound in Industrial Production.  There’s a couple of ways to look at this data but clearly investors are focusing more on the positives once again. The fact that the economy grew at 7.3% compared to a year earlier, ahead of expectations of 7.2%, obviously means the economy isn’t slowing as much as people thought, but it also leaves the door open to further targeted stimulus from the People’s Bank of China if the country is to achieve its 7.5% growth target. Industrial production increased by 8% in September, bouncing back from the unexpected decline in August. Retail sales and urban investment both fell short of expectations in China for September, but these misses were only small and therefore taking everything into account, investors were more encouraged by the data than disappointed. The fact that it was the perfect balance of being strong enough to ease fears of a major slowdown in China but weak enough to leave the door open to more targeted stimulus is perfect for the markets. A two-day rebound in global shares slowed and the dollar edged lower, as slightly above forecast Chinese growth data failed to erase concerns that the world’s second-biggest economy is losing momentum. However, the growth was the weakest for any quarter since the 2008/09 global financial crisis.

gold stockpair

Gold hit its highest since Sept. 10 at $1,253.70 an ounce in earlier trade U.S. gold futures were up $6.70 an ounce at $1,251.30. The dollar was unchanged versus a basket of leading currencies, undermined by a dip in U.S. government bond yields.

The U.S. currency has lost ground in recent weeks as concerns about slowing global growth prompted investors to trim bets that the U.S. Federal Reserve will raise interest rates soon after an expected end in its stimulus later this month.

us dollar stockpair

Posted on 20th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  AUD Monetary Meeting Minutes
  CNY Fixed Asset Investment (YoY)
  CNY GDP (YoY) (Q3)
  CNY GDP (QoQ) (Q3)
  CNY Industrial Production (YoY)
  AUD RBA Assist Gov. Lowe
  USD Existing Home Sales (MoM)
  USD Existing Home Sales (Sep)

Slumping Oil Prices Begin To Worry Russia and Iran

October 21, 2014

Barry Norman

Oil SpillCrude oil continues trade on a weak note while Brent oil continues to fall. Iran’s oil ministry was speaking confidently despite the 20% global price decline, insisting that it wouldn’t affect the budget. Deputy Oil Minister Javadi said the decrease would be “short lived,” an oil ministry information service said. But Iranian President Hassan Rouhani, clearly concerned, has directed the oil ministry to seek a meeting of the Organization of Petroleum Exporting Countries cartel next month to discuss propping up the price, Iranian news agencies are reporting. Crude oil has fallen from over $100 a barrel in spring to under $85 a barrel. About 75% Iran’s government revenues come from oil sales, and analysts say the country needs an oil price of around $140 a barrel to sustain its budget.

Oil analysts say it is uncertain how long the decline in prices will last. It has been driven by a slowdown in the economies of China and Europe, coupled with strong supply from the United States and some Middle Eastern countries. But some analysts speculate that it could reflect a longer-term shift away from petroleum usage.

A decline in global oil prices, driven in part by a boom in U.S. shale oil production, is threatening to hit the economy of energy-exporting Russia harder than Western economic sanctions have done. The decline is bringing growing political and economic pressure on Russian President Vladimir Putin. Moscow has been socked this year by U.S. and European Union sanctions over Russia’s annexation of Ukraine’s Crimea region and its operations in eastern Ukraine.

oil prices stockpair chart

Surging U.S. oil production and falling crude oil prices are shaking up world markets, but leading OPEC producer Saudi Arabia and U.S. shale producers have vastly different views of how the markets will react in the coming months. The producers are sort of a bullish, they’re kind of confident that oil prices are going to remain strong. And when you start to broach the subject, Saudi Arabia and OPEC countries would have to cut output to keep prices at $90 but OPEC nations are trying to freeze out shale producers by lowering prices making it less profitable for shale manufacturing which is much more expensive than standard extraction.

oil stockpair

Posted on 18th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event      
  EUR German PPI (MoM) (Sep)  
  CAD Wholesale Sales (MoM) (Aug)  

 

The ECB Jumps To Action

October 20, 2014

Barry Norman

eurozone recessionNews that the ECB will start buying private-sector debt instruments within days in order to steer the balance sheet of the ECB to higher levels and improve the transmission to the real economy, ECB’s Coeuré said helped shift market to risk on. Comments by ECB Coeure were a perfect excuse for equity markets to undo some of this week’s losses. This positive risk sentiment weighed on the German market. The ECB board member said amongst others that the ECB is committed to take additional measures if needed and that they will start within days to buy assets. Nothing new, but markets often just react selectively. BuBa Weidmann for example, who didn’t see the need for additional fiscal or monetary easing, was selectively ignored. Dovish Boston Fed governor Rosengren said that QE‐4 should be considered if the economy weakens. Fed Yellen’s speech was a wildcard for trading but she didn’tecb balance sheet comment on the economy or headlines rates.

 

US housing data were mixed and close to expectations. Russian President Putin and Ukrainian President Poroshenko failed to reach a breakthrough to end the crisis in Ukraine, but this couldn’t spoil sentiment on equity markets.

ECB ‘s Coeure repeated that the ECB will start asset purchases within days and that it is committed to take additional measures of needed. Nothing really news, but it helped to reinforce confidence. Nowotny said that the different dynamic in the US and Europe will have impact on exchange rates and that a weaker currency will help the European economy and raise inflation. EUR/USD traders were not really impressed by this analysis, especially not as Buba’s Weidmann indicated that there was no lack of monetary or fiscal stimulus.

eurusd stockpair

Posted on 18th October 2014 by barry norman in Stockpair weekly Insights

Stockpair Weekly Market Wrap

October 13-17, 2014

 

Stockpair traders should keep an eye on these events this week:

Cur. Event Forecast Previous
  CNY GDP (YoY) (Q3)   7.2% 7.5%
  CNY Industrial Production (YoY)   7.5% 6.9%
  USD Existing Home Sales (Sep)   5.10M 5.05M
  AUD CPI (QoQ) (Q3)   0.4% 0.5%
  USD Core CPI (MoM) (Sep)   0.1%
  CAD Core Retail Sales (MoM)   -0.6%
  CAD Interest Rate Decision   1.00%
  CNY HSBC Manufacturing PMI   50.2
  EUR German Manufacturing PMI   49.5 49.9
  GBP Retail Sales (MoM) (Sep)   -0.1% 0.4%
  GBP GDP (YoY) (Q3)   3.0% 3.2%
  USD New Home Sales (Sep)   470K 504K

Global Exchanges

U.S. stocks extended their rebound from this month’s bruising selloff on Friday, giving the S&P 500 its best day in over a week, as worries about the U.S. earnings outlook eased, but the S&P 500 still posted its fourth straight week of declines. The drop follows worries over the health of the global economy, the spread of the Ebola virus, as well as factors including lower oil prices and uncertainty about the Federal Reserve’s next steps. For the week, the Dow and S&P were down 1 percent while the NASDAQ was down 0.4 percent.

The turmoil has not been limited to the floor of the New York Stock Exchange. Bonds, overseas stock markets and commodities prices have all had big moves this week. The Dow advanced 263.17 points, or 1.6 percent, to 16,380.41, its second-best day of the year. The S&P 500 rose 24 points, or 1.3 percent, to 1,886.76 and the NASDAQ composite rose 41.05 points, or 1 percent, to 4,258.44.

global exchanges

Currency Markets

The greenback ended on an up note against other currencies following dovish comments from US and British central bankers and continued concern about the Eurozone. The dollar rose against the euro and yen for a second day running as global financial markets steadied, in part in response to soothing commentary from central bankers. On Thursday, James Bullard, head of the St Louis branch of the Federal Reserve, suggested the US central bank could extend its bond-buying program rather than winding it down, as had been expected. Then on Friday, Andrew Haldane, chief economist of the Bank of England, said recent economic weakness implied the need for a “back foot,” or slower, approach to raising rates.

global exchanges

Commodity Markets

Crude oil futures are sharply lower this week, trading at $83.07 per barrel on Friday afternoon. Gold ended higher this week, trading at $1238.95. Gold edged higher on Friday and was poised for a second straight week of gains as persistent fears over the health of the world economy took a toll on global equities and the dollar, bringing in safe-haven bids for the metal.

Posted on 16th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Event
  USD Building Permits (Sep)
  USD Fed Chair Yellen Speaks
  CAD Core CPI (MoM) (Sep)

Janet Yellen To Star Today

October 17, 2014

Barry Norman

Markets are still firmly in risk aversion mode, as the US 10‐year remains at 2.01% and equities are weak. Thursday’s focus was a slew of Fed speakers where the market is looking for reassurance that recent developments are not shifting the Fed off course. Today’s speech by Chair Yellen has become pivotal. The outlook for the Fed has shifted by not dramatically—markets have re‐priced the expectations for the Fed’s tightening cycle, pushing out the first hike from July to October. The recent shift in expectations is most likely to weigh on U.S. trade and confidence (and therefore business investment); however both the consumer and housing should be supported by lower oil prices and low interest rates. Accordingly, analysts expect the Fed to maintain its tone. Chair Yellen’s speech at 8:30am US time could prove a critical opportunity for the Fed to deliver its interpretation of recent events and the impact they could have on policy.

us dollar

The safe haven risk supporting USD and JPY is the likely near‐term response; however it is important that so far the DXY USD index has been unable to break to new highs. Once markets settle, we would expect EUR to weaken on a deterioration to its outlook; JPY to be torn between its safe haven status and relative policy outlook; GBP to stabilize, given its relative growth outlook and strong sovereign status; stronger sovereigns, like AUD and CAD, to fall victim to re‐pricing in growth and commodities but for their strong sovereign status to help ease the downside risk.

eurusd

Posted on 15th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  EUR Core CPI (YoY) (Sep)
  EUR CPI (MoM) (Sep)
  USD Initial Jobless Claims
  CAD Foreign Securities Purchases
  CAD Manufacturing Sales (MoM)
  USD Industrial Production (MoM)
  USD Philadelphia Fed

US Data Disappoints Sending The Greenback Tumbling

October 16, 2014

Barry Norman

The US is in the phase of slow growth as evidenced today with the release of retail sales for September. Core retail sales fell 0.2% m/m, much weaker than consensus at +0.4% m/m. Headline sales fell 0.3% m/m. The greenback dollar touched a short term low against the euro and a more than one-month low against the yen after weak US economic data on retail sales and producer prices heightened concerns that the Federal Reserve would delay its first rate hike. The dollar’s slide to a three-week low against the euro helped gold. A recovery in the dollar had prevented gold from gaining traction after it rebounded last week from its lowest since mid-2013. Gold is trading at 1242.50 while the euro 117 points to trade at 1.2774.

Empire State manufacturing index tumbled reminding traders that economic growth, even in the U.S., is tenuous at best. Equity prices are also lower. The US dollar fell 64 points to 85.27

us dollar

European Central Bank President Mario Draghi helped save the euro with his pledge to do “whatever it takes” as lenders prepared for a collapse of the currency, an ECB lawyer told a hearing today. Draghi has held out the prospect of stepping up stimulus to include sovereign-bond purchases, even though the current plan already sparked an outcry among academics and representatives of all major political parties in Germany and drew opposition from Bundesbank President Jens Weidmann and two other ECB council members.

Sterling fell to a one-month low against the euro while 10-year gilt yields dropped to the lowest since June last year after UK inflation slowed more than expected, pushing back expectations of a rise in UK interest rates. The pound fell to trade at 1.5959.

eurusd

Posted on 14th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  CNY CPI (YoY) (Sep)
  EUR ECB President Draghi
  GBP Average Earnings Index
  GBP Claimant Count Change (Sep)
  USD Core Retail Sales (MoM)
  USD PPI (MoM) (Sep)
  USD Retail Sales (MoM) (Sep)
  EUR ECB President Draghi

 

Draghi To Address Markets Twice Today

October 15, 2014

Barry Norman

The German Economy Ministry slashed its growth forecasts for this year to 1.2%, sharply down from 1.8% in April and also lowered growth expectations for next year to 1.3% (from 2%). The Ministry said that geopolitical crises increased uncertainty in Germany and moderate growth is weighing on the German economy. Eurozone industrial production dropped more than expected in August, by 1.8% M/M, mainly due to awful German output, while also in other countries production remained sluggish. The German ZEW indicator for October showed a further worsening in investor morale, to the lowest level since end 2012. The euro tumbled to trade at 1.2664 giving up 88 points. The US dollar added 57 points to reach 85.84. Markets saw a slew of red numbers today. No one escaped the carnage.

eurusd

UK inflation declined more than expected; the ZEW investor confidence was much weaker than expected and EMU production missed the consensus estimate, too. This string of negative news was too much for the euro to endure. EUR/USD started a new down‐leg below 1.27 and found a new intraday equilibrium in the mid 1.26 area. The NFIB small business confidence in the US was marginally weaker than expected, but had not lasting impact on USD trading.

Sterling trading was mostly driven by global factors and by the price action in the euro and/or the dollar. Today, the UK data finally came to the forefront. The UK CPI inflation dropped more than expected in September. It declined from 1.5%Y/Y to 1.2%Y/Y. Core inflation declined from 1.9%Y/Y to 1.5Y/Y. Declining inflation eases the pressure on the BoE to raise rates soon. The BoE can take time to implement its policy normalization. Sterling initially lost ground against the euro and the dollar. The EURGBP is up 25 bps at 0.7953 while the Pound lost 161 points to trade at 1.5923.

gbpusd

Tomorrow’s data will be very important as German CPI will give up a further clue as to as what the ECB will do in the near term. Mario Draghi will make two speeches on Wednesday which will be the main market focus.

Posted on 13th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  GBP CPI
  EUR German ZEW Economic Sentiment

The Pound Fails To Make Headway While The Euro Gains

October 14, 2014

Barry Norman

bank of englandMonday was a day without data which left traders on their own as they pushed up the euro and pressured the pound. Bank of England Governor Carney said in a television interview that weakness in the euro zone provides an additional drag on growth, but does not dictate the monetary policy of the Bank of England. Carney however added that the BoE expected growth would slow towards the end of the year. .He indicated that the BoE has to take into account a more modest global recovery and eurozone weakness. At the same time, he said euro zone weakness does not dictate monetary policy of the BoE.

Sounding more dovish on monetary policy than he has in recent months, the governor of the Bank of England told CNBC in a rare interview that global weakness, lower inflation and troubles in European economies would influence policy at the bank’s meeting next month.

Mark Carney didn’t signal any overt change in policy ahead of the meeting, but he was clear that the BOE would incorporate recent economic developments, which have included a downgrade to the global economy by the International Monetary Fund and recent negative growth numbers from Europe. The Great British Pound tumbled 21 points to trade at 1.6054 even against a weaker US dollar which is trading at 85.71 on Monday.

gbp stockpair

 

As usual, the G20 didn’t provide a detailed plan to address the risk of too low growth and too low inflation. There was quite some pressure on the ECB to take additional steps and ECB’s Draghi stayed open to more unconventional easing, if necessary. However, this didn’t translate into additional euro losses.  At the end of last week, it looked as if the euro was becoming more sensitive to the risk‐off sentiment and to the risk of disappointing global and European growth. The euro gained 44 points to trade at 1.2670. The signs of disagreement between German policymakers and a majority of the ECB on further monetary erasing might block the downside in EUR/USD, too. The trading pattern didn’t really change during the afternoon session.

euro stockpair

Posted on 11th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

 Cur Event
CNY New Loans (Sep)
NZD REINZ House Price Index
CNY Trade Balance (Sep)
AUD RBA Assist Gov. Debelle

Gold Remains Weak After Being Bolstered By FOMC Minutes

October 13, 2014

Barry Norman

federal reserve goldLast week China reopened after a week long holiday as gold traders returned to the markets. Gold remained near recent lows at the beginning of the week as traders waited for the FOMC minutes scheduled for release on last Wednesday. Prices reached a two-week high on Thursday after the Fed raised concerns about the strong US dollar

Gold prices climbed to $1,233, its fourth straight day of gains after falling to a 15-month low of $1,183.46 per ounce on Monday. The gains came after the United States Federal Reserve, in the minutes of its latest policy meeting, expressed concerns about the country’s strengthening currency and tepid economic growth overseas.

Officials were worried that a burgeoning US dollar could impact the domestic economy, as imported goods and services become cheaper and more attractive. The minutes also showed Fed officials expressing concern that disappointing growth in Europe, Japan and China could crimp US exports.

This prompted investors to buy into gold, betting that the Fed is in no rush to cut back on its massive economic stimulus programme, which has kept global interest rates at rock-bottom for years. Higher interest rates would weigh on the price of the metal, which struggles to compete with investments that offer yield.

Gold retained gains from a four-day rally on Friday and was headed for its best week in nearly four months as a slump in equities and growing worries over the global economy attracted safe-haven bids for the metal.

The question is whether or not the gold market will be able to sustain the rally or if it will simply fizzle out. Two key talking points that suggest the Fed will continue to be very lax with their policy are inflation and the labor market. The talk of inflation remaining low for the foreseeable future and the mention of underutilization in the labor market both build the case to keep rates low. It was as if the central bank sought to downplay the positive job reports over recent months. Comex gold was as high as $1,234 an ounce, which was a bounce of 4.3% from the low for the year hit on Monday.

gold