Posted on 27th November 2015 by barry norman in Stockpair Daily Insight

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Holiday Season Kicks Off

November 27, 2015


Wall Street is on holiday, one of the few days of the year that all US markets are shuttered. There is little to no data due in the European session and global volume is extremely light. Friday is a partial holiday in the US with most traders out of their offices but Wall Street will be open for a few hours.

The dollar gained and the euro fell as far as a seven-month low following a Reuters report that the European Central Bank is weighing further easing monetary policy soon, including buying more debt and charging banks for hoarding cash.

The policy divergence between the ECB and the Federal Reserve, which is seen raising rates as soon as next month, helped propel the dollar index to its highest level since March, which pushed oil and commodity prices sharply lower.

European stocks rallied and Wall Street was little changed, leaving an MSCI measure of equities globally up 0.2 per cent. Data showed a decline in US jobless insurance applications, while business investment is poised to rise.

“The bias of the ECB is to continue to lean towards a policy of easing; with monetary policy being what it is it will continue to keep equities as the asset class of choice,” said Matthew Kafuffle, portfolio manager at Federated Investors.

The euro is trading at 1.0615 down 9 points for the day while the US dollar holds just below the 100 mark.

eurusd parity

The euro is heading to parity with the dollar — and soon, according to analysts at Goldman Sachs. The euro dropped back below $1.06 for the first time in half a year on Wednesday and it’s been weakening from about $1.13 in early October.

A lot of analysts got excited about the euro reaching $1 early this year, immediately after the European Central Bank introduced a larger-than-expected quantitative easing program. Though the euro appreciated in value over the summer, Goldman’s analysts say that parity has just been delayed a little.

Traders are preparing for the new month as the end of the year grows closer. December has two hotly anticipated central banking highlights, with the decision meetings of the Federal Reserve and the ECB.

The two monetary authorities are likely to diverge. The Fed has made it clear that its next move will almost certainly be to tighten policy with an interest rate hike, while the ECB might cut rates even further, and seems bound to expand its quantitative easing program.

european currencies

Posted on 26th November 2015 by barry norman in Stockpair Daily Insight

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US Dollar Holds Above 100

November 26, 2015


Gold posted modest losses in preholiday trade, weakening after a deluge of U.S. economic data did little to dampen expectations of a rate increase by the Federal Reserve as early as next month. Gold fell $4.70, or 0.4%, to $1,069.10 an ounce. The government said U.S. orders for durable goods rebounded in October, rising a seasonally-adjusted 3% and topping forecasts. Consumer spending, however, rose just 0.1% in October versus an expected 0.3% rise. First-time unemployment claims fell by 12,000, to 260,000, in the week before Thanksgiving, keeping jobless claims near the lowest level in years.

The data helped lift the U.S. dollar, which was weighing on commodity prices. A stronger dollar is negative for commodities priced in the currency because it makes them more expensive to users of other currencies.

The euro fell below $1.06, trading at its lowest level since April, after a news report said the European Central Bank might widen the scope of its bond-buying program or implement other easing measures, including two-tier charges for banks hoarding cash. The two-year yield on German government debt fell further to yield negative 0.4%, taking the euro which is closely correlated with it to trade at 1.0579.

european currencies

Wall Street inched higher Wednesday as a pre-Thanksgiving round of U.S. economic data were interpreted as solid enough to keep the Federal Reserve on track for a potential interest-rate increase in December. The S&P 500 rose 1.5 points, or less than 0.1%, to 2,090. The Dow Jones rose 17 points, or 0.1%, to 17,828 and the NASDAQ was up 12 points, or 0.2%, at 5,114.

Trading will closed Thursday for Thanksgiving Day, and open for a half-day on Friday. No economic data are scheduled for release on either day.

Most Asian markets slipped Wednesday, still feeling the weight of geopolitical tensions, although a rise in oil prices overnight helped some energy shares. The Nikkei Average fell 0.4%, for its first loss in four sessions. European stocks were moving higher after Turkey’s president said the country isn’t looking to escalate tensions with Russia.

global equities

Posted on 25th November 2015 by barry norman in Stockpair Daily Insight

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Russian Turkish Tensions Mount

November 25, 2015


European equities are bleeding massively after an already very weak open this morning due to geopolitical anxieties. Main indices note losses of up to -2%. US equities opened in the red for the first time in over a week, but losses on Wall Street are limited. The S&P is currently down -0.3%.  At a meeting with King Abdullah II of Jordan in Sochi, Russia’s president confirmed that the Su-24 had been shot down over Syrian territory, 1km from the Turkish border, by an air-to-air missile from a Turkish F-16 jet. It crashed in Syrian territory 4km from the border, he added. Turkey has left its benchmark rate unchanged at 7.5%, as the Turkish central bank avoids causing more weakness to the Lira, which was hit heavy on the news of Turkey shooting down a Russian fighter jet this morning. This is exactly the kind of incident that many have feared since Russia launched its air operations in Syria. The dangers of operating near to the Turkish border have been all too apparent. Turkish planes have already shot down at least one Syrian air force jet and possibly a helicopter as well.

Russia insists that its warplane did not violate Turkish air space. So, was the Russian pilot’s navigation wrong? Questions will also be asked about the readiness of the Turks to open fire.

global equities

Wall Street declined at the opening bell as a conflict between Turkey and Russia over a downed warplane had investors flocking to safe havens, and as traders in America parsed a deluge of economic data.

The Dow Jones was 37 points lower, or 0.22% to 17752. The S&P 500 declined 6 points, or 0.32% to 2079, while the NASDAQ shed 20 points, or 0.41% to 5081.

The US Q3 GDP growth was revised up to 2.1% Q/Qa for the second reading, coming from 1.5% Q/Qa earlier. This growth was exactly in-line with the market expectations. Personal consumption in the US increased by 3.0% Q/Qa in Q3, which was slightly below the expected 3.2% Q/Qa.

The US consumer confidence for November plunged from an upwardly revised 99.1 to 90.4, continuing the fall that started in October, whereas the markets were expecting an increase to 99.5. The Richmond Fed manufacturing index also dropped unexpectedly from -1 to -3 in November. Consensus expected an improvement to 1.

The German business confidence remains very strong in November, as the IFO business climate unexpectedly improved from 108.2 to 109.0. The current assessment indicator improved from 112.7 to 113.4 and the future expectations indicator also improved from 103.9 to 104.7

Oil prices also reacted on the news of Turkey shooting down the Russian fighter jet. Brent Crude jumped more than 3% and is currently trading at 46$/barrel.

european currency

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

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US Dollar Rally Wreaks Havoc

November 24, 2015

The US dollar broke above the 100 level in the Asian session and remained strong most of the session. The dollar held on to gains to close the day at 99.96. The strength of the US dollar weighed heavily on cross currencies and commodities. Gold languished close to a near-six-year low on Monday, hurt by a robust dollar and upbeat comments by Federal Reserve officials regarding a US rate hike next month. Gold is down $8 at 1068.30. Speculation that the Fed will lift interest rates for the first time in nearly a decade this year has intensified since the release of strong US jobs data earlier this month, which triggered a sharp drop in gold prices.

Higher rates tend to weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while boosting the dollar.

us dollar

There is a “strong case” for raising interest rates when Fed policymakers meet next month, as long as US economic data does not disappoint, San Francisco Fed President John Williams said on Saturday.

The Fed should “soon” be ready to raise interest rates as US central bankers grow confident that low inflation will rebound and that employment remains stable, William Dudley, the influential head of the New York Fed, said on Friday.

Prices are trapped in their worst rout since July as Federal Reserve officials talk up improvements for the U.S. economy and reinforce signs that they’re ready to raise borrowing costs for the first time since 2006. That prospect has sent investors fleeing. Assets in exchange-traded products backed by gold have fallen to the lowest since 2009. Money managers are holding a net-short position in the metal for first time since August as their long wagers shrunk to the smallest in seven years.


The euro traded at $1.0637, compared with $1.0649 late Friday in New York. The shared currency traded as low as $1.0599, its lowest level since mid-April. The British pound traded at $1.5156, just above a two-week low reached earlier in the session. The dollar rose to ¥122.96, compared with ¥122.77 late Friday.

The copper price has hit a new 6.5 year low. Traders blamed concerns over China’s slowdown and the strong US dollar. But oil has recovered from its early losses. A statement from the Saudi cabinet, pledging to work with other producers, has spurred talk that OPEC might cut production.

euro currency

Posted on 23rd November 2015 by barry norman in Stockpair Daily Insight

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Holiday Week In US

November 23, 2015

As markets look towards the December 3rd meeting of the ECB and then to the US Federal Reserve meeting later in the month, there isn’t much action expected in this week.  Volumes are expected to be low with the US celebrating Thanksgiving on Thursday and Friday.

Gold rose 0.7 percent to $1,086 an ounce. New US applications for unemployment benefits fell last week while a gauge of US economic activity rebounded in October, signs of a healthy economy that could give the Federal Reserve confidence to raise interest rates next month.

Global stocks rally faltered on Friday with European equities stumbling as some investors took profits and eyed overnight US losses. The start of this week was overshadowed by last Friday´s deadly Paris attacks, which raised fears about security in Europe and its effect on the economy.

Markets then bounced higher after the US Federal Reserve on Wednesday flagged a likely December interest rate hike amid the brightening economic outlook. Minutes showing Fed policymakers are confident the US economy is strong enough to withstand a December hike had fuelled buying across global markets and sent the dollar climbing.

Heading into the weekend on Friday, many investors paused for breath. The S&P 500 rose 7.93 points, or 0.4%, to 2,089.17, notching a weekly gain of 3.3%, it best weekly gain since Dec. 19, 2014. The Dow Jones gained 91.06 points, or 0.5%, to 17,823.81, lifted by soaring shares in Nike Inc., which finished 5.5% higher.

world markets

In foreign exchange, the euro dipped against the dollar, as traders digested fresh comments from European Central Bank chief Mario Draghi. Draghi, speaking in Frankfurt, declared that the bank will “do what we must” to lift inflation as quickly as possible, in a new sign it could boost its anti-deflation defenses.

He also warned that inflation was stubbornly way below the target of close to 2 percent even though the bank has deployed a 1.1-trillion-euro stimulus scheme to help lift consumer prices. The quantitative easing program to buy sovereign bonds at a rate of 60 billion euros a month runs until at least September 2016, but inflation came in at zero in October.


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

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Why Is Gold Climbing ?

November 20, 2015

Gold prices rallied Thursday from the recent depths of a more-than-five-year low; one day after the Fed indicated an interest-rate increase is in the cards for next month. Analysts attributed the mini-rally to the closing out of bearish positions by traders with bets against the market as well as some bargain hunting. They said fundamentals remained weak overall for the metal.

Gold was up 1.3% at $1,082.10 after touching their lowest level since February 2010 two days ago. On Wednesday, the Federal Open Market Committee released the minutes from its October meeting. The market interpreted the news to mean that a December rise in U.S. interest rates is still likely but that further increases will be staggered slowly.

A rise in interest rates will strengthen the greenback, which is bad news for dollar-denominated commodities such as gold. The dollar was softer Thursday. The precious metal doesn’t offer a yield and finds it difficult to compete against assets that do, such as Treasury’s, when rates rise.

european currency thurs

Platinum recovered from its recent lows to trade up 1.1% at $857.70 an ounce. The metal, used in the car and jewelry industries, has been trading at seven-year lows.

Gold rose 1%, rebounding from near six-year lows as indications from the Federal Reserve that it may move cautiously into the rate hiking cycle weighed on the dollar and prompted investors to cover short positions. Fed officials on Wednesday continued to flag December as a likely time for US interest rates to rise after seven years near zero, but the central bank signaled an intention proceed slowly and steadily after that.

The ECB policy is about to diverge from the Federal Reserve leaving the euro hanging as trader expect to see the Eurodollar at parity. The ECB’s governing council is split over whether to cut interest rates again, according to minutes from their last meeting in Malta, with the issue surfacing as a potential tool to boost inflation.

The European Central Bank has deployed its heavy weapons to lift inflation, including launching a quantitative easing scheme to buy more than €1.1 trillion in sovereign bonds at a rate of €60 billion a month until at least September 2016.

euro usd volatility

But with inflation at zero in October, central bankers of the 19-member Eurozone are mulling over whether to turn to other measures such as further lowering its key lending rate, which is already at a record low of 0.05 per cent.

According to minutes of their meeting on October 22, released on Thursday, some central bankers raised the option of “further lowering policy rates, in particular the rate on the deposit facility”.

While foreign exchange markets are gearing up for the all-important Federal Open Market Committee meeting on December 16, implied volatilities in euro-dollar show that key events prior to that may prove even more important.

On December 3, the European Central Bank may announce further monetary stimulus. That same day, Fed Chair Janet Yellen testifies before the Joint Economic Committee of the U.S. Congress. A day later, the next U.S. employment report is due. These events may just help the market determine the common currency’s price action versus the dollar going into year-end and further out.

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

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Trio Of Fed Governors

November 19, 2015

European equities recovered part of the opening losses and trade currently with small losses. US equities opened in the green, with the S&P up 0.4%.US housing starts took a dive in October, unexpectedly declining following an increase of 6.7% last month. Market consensus was eyeing a smaller decline. The building permits increased slightly more than expected in October.

housing starts

Federal Reserve members Lockhart & Mester sounded hawkish in a panel. Lockhart stated that he was prepared to take a leap of faith that inflation will rebound as transitory factors fade. Loretta Mester felt that the U.S economy can now handle a modest rate hike. NY Fed governor Dudley, another influential voting governor, said that when the lift-off happens it won’t come as a big surprise. It seems that preparing markets for a December hike is exactly what the Fed is doing via its communication strategy. The hawkish tone of the comments strongly hints at a December lift off. The limited decline of US Treasuries suggests that markets discounted already largely such move. Commodities took a bit of a breather with Brent crude up 0.8%, currently trading at 44.37.

global stocks wed

The dollar weakened during trading day, but trimmed its losses after the comments. The greenback recently traded at ¥123.45, up slightly from ¥123.41 late Tuesday in New York. The euro traded at $1.0660, up from $1.0645 Tuesday, while the British pound traded at $1.5204, compared with $1.5215.

The dollar slid from a seven-month peak against a currency basket on Wednesday, as investors awaited minutes of the Federal Reserve’s latest policy meeting due later in the session, which could affirm expectations of a rate increase next month.

Despite Wednesday’s pullback, the dollar index was still up 2.7 percent so far this month, on track for its best monthly performance since March. Many analysts believed this afternoon’s Fed minutes could be a major catalyst for another leg-up in the dollar. The US dollar reversed course later in the trading day to gain 9 points and is trading at 99.81

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

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Greenback Continues To Rally

November 18, 2015

European equities perform extremely strong after a solid opening. Key indices show profits of up to 2%. US equities traded mixed, currently trading around yesterday’s close. US CPI inflation rose slightly higher than expected to 0.2% Y/Y in October, following a flat reading in September.

Global Equities

Market consensus was foreseeing a more marginal increase to 0.1% Y/Y. The core inflation remained stable at 0.2% M/M and 1.9% Y/Y in October. UK CPI inflation rose as expected from ‐0.1% M/M in September to 0.1% M/M in October. On an annualized basis, the inflation remained stable at ‐0.1% Y/Y. Core inflation rose slightly more than expected from 1.0% Y/Y to 1.1%.

The German ZEW current assessment among financial markets experts declined slightly in November from 55.5 to 54.4. At the same time, the expectations component of the survey improved substantially from 1.9 to 10.4, which was a lot more than expected.

The Hungarian central bank decided to leave its benchmark interest rates unchanged at the record low of 1.35%.  This was in line with economists’ expectations.

The European Commission communicated that Italy, Lithuania, Austria and Spain risk breaking European Union rules with their 2016 budget plans, as their draft budgetary plans might result in significant deviations towards medium‐term objectives.

European Currency

Tuesday’s risk sentiment remained constructive, but eventually it couldn’t help the dollar to any additional gains. The dollar held within reach of the recent highs against the euro and the yen. The EUR/USD and USD/JPY trade little changed, respectively at 1.0660 and 123.30/35 at the moment of writing.  Equities extended the risk‐on rally from yesterday in the US. At the same time, industrial commodities like copper continued to suffer substantial losses. A risk‐on context with at the same time a decline in a big part of the commodity complex, continued to support the dollar. The decline of EUR/USD accelerated (slightly) as the pair dropped below last week low. The EUR/USD touched an intraday low at 1.0643. USD/JPY trended also further north and traded in the 123.40 area at the start of the European trading session.  

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

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Terrorism & Safe Havens

November 17, 2015

crying for paris forexwordsGold climbed for the first time in five days as the attacks in Paris reinvigorated bullion’s traditional role as a haven. Analysts cautioned that the gains might be short-lived, with the metal’s trajectory still likely to be determined by the US Federal Reserve.

Bullion advanced as much as 1.2 percent to $1,096.44 per ounce Prices sank 0.5 percent last week, dropping to $1,074.25 per ounce on Thursday, the lowest since February 2010. Gold eventually gave back its gains to trade at $1084.50 just up $3 on the session.

Islamic State-backed attackers killed at least 129 people across the French capital on Friday in Europe’s worst terror incident in more than a decade.

The event might spur short-term demand for gold, according to Commerzbank AG. Prices have retreated 7.4 percent this year as signs of resilient US economic growth boosted the odds that the Fed would soon. Gold is heading for a third annual decline as Fed policymakers lay the groundwork to raise borrowing costs for the first time since 2006.

Bullion loses out when monetary policy tightens because the metal does not offer interest or pay dividends. Investors see a 62 percent chance the US central bank plans to boost rates next month.

European currencies weakened as investors, shaken by coordinated attacks in Paris late-Friday, moved into the perceived safety of the U.S. dollar and Japanese yen.

The euro weakened to $1.0716 Monday, down from $1.0769 late Friday in New York, dragging other European currencies. The British pound and the USDCHF also tumbled, trading at $1.5197 and 1.007 franc to the dollar, respectively. That is compared with $1.5232 and 1.006 to the dollar Friday afternoon.

european currency


The S&P 500 gained 5 points, or 0.2%, to 2,019, with nine of its 10 main sectors trading higher. The Dow Jones added 30 points, or 0.2%, to 17,218. The Nasdaq was up 5 points, or 0.1%, to 4,933.

“It is not unusual for markets to go higher after terrorist attacks; albeit this time it’s a little quicker than usual. The fact that all other global markets opened normally is probably a relief,” said Chief global investment strategist at Charles Schwab & Co.

global equities

Posted on 16th November 2015 by barry norman in Stockpair Daily Insight

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Fear Index Rising

November 16, 2015

The slide on Wall Street started last week along with the return of worries that have plagued the market for months. It’s the worst week for the Dow since late August when it briefly plunged 1,000 points. The holiday shopping season is just getting underway and American shoppers don’t appear that giddy to spend: U.S. retail sales rose a meager 0.1%, below expectations.

Both the Dow and the S&P 500 are back in negative territory for 2015. Many experts had hoped that stocks would finish the year up and rally towards the end of the year.

More importantly, a strong labor market helps the Federal Reserve justify the case for raising its key interest rate in December. It would be the first rate hike in almost a decade, and rates have been at zero since December 2008.

Higher interest rate from the Fed raises the cost of business for many companies — also not welcome news for stock market investors.

Several top Fed officials this week kept hinting at the likelihood of a rate hike at the next meeting. Just last week, Fed chief Janet Yellen, said that a December rate hike is a “live possibility.”

global markets

European stocks fell Friday, locking in the biggest losing week for equities in the region in more than two months. On national indexes Friday, Germany’s DAX fell to 10,708.40. But Volkswagen rose 1.1%. Volkswagen’s sales of VW brand vehicles fell 5.3% in October; the first full month of trading since revelations the company cheated on U.S. emissions tests. In Paris, the CAC fell 1% to 4,807.95. In London, the FTSE 100 fell 1% and logged its biggest weekly loss since late August.

Stocks this week were dogged by persistent investor worries about slowing global growth and the possibility of a U.S. interest-rate increase next month. Data released Friday showed the Eurozone’s gross domestic product rose by a slower-than-expected rate of 0.3% during the third quarter. Germany’s economy, the largest in Europe, also expanded at a slower-than-expected rate of 0.3% as exports weakened.

eurozone growth

The readings underscore worries that soft demand from China and other parts of the world will cut into growth in Europe and contribute to keeping inflation levels well below the European Central Bank’s inflation target of about 2%.

European Central Bank President Mario Draghi reiterated the bank’s pledge to re-examine monetary policy next month, but the fresh signal that stimulus efforts may be ramped up didn’t inspire a gain for equities Thursday.