Currency Market News
MARKET ALERT - November 3, 2011
ECB cuts rates rates 0.25%: The European Central Bank, led by new Central Bank President Mario Draghi, unexpectedly cut interest rates today to 1.25%.
MARKET ALERT - June 9, 2011
ECB leaves rates unchanged: The European Central Bank met today and kept its interest rate unchanged, at 1.25%, as expected.
ECB President Jean- Claude Trichet signaled the bank intends to raise interest rates next month, saying “strong vigilance” is warranted to contain inflation.
MARKET ALERT - June 9, 2011
BOE leaves rates unchanged:
The Bank of England met today and maintained its benchmark interest rate at 0.50% and held its asset purchase target at 200 billion pounds, as expected.
MARKET ALERT - May 5, 2011
ECB leaves rates unchanged: The European Central Bank met today and kept its interest rate unchanged, at 1.25%, as expected.
ECB President Jean- Claude Trichet signaled the bank will wait until after June to raise interest rates again.
MARKET ALERT - May 5, 2011
BOE leaves rates unchanged:
The Bank of England met today and maintained its benchmark interest rate at 0.50%.
MARKET ALERT - April 7, 2011
ECB raises rates 0.25%:
The European Central Bank met today and raised interest rates by 25 bp to 1.25%, their first rate increase since 2008.
ECB President Trichet commented that the increase wasn’t the "first of a series" of rate hikes, which dampened speculation that the ECB will be overly aggressive in tightening monetary policy.
MARKET ALERT - April 7, 2011
BOE leaves rates unchanged:
The Bank of England maintained its benchmark interest rate at 0.50% and kept its asset purchase target at 200 billion pounds following the conclusion of today's monetary policy meeting, as expected.
MARKET ALERT - April 5, 2011
RBA leaves rates unchanged:
The Reserve Bank of Australia met today and left interest rates on fold for a fourth meeting.
RBA's Governor Glenn Stevens said the currency’s recent strength was helping to control prices, damping the need for further rate increases.
MARKET ALERT - March 16, 2011
FOMC leaves rates unchanged:
The Federal Open Market Committee met today and left its benchmark interest rate in a range of zero to 0.25 percent, where it’s been since December 2008, as expected
The post-FOMC statement reaffirmed the Feds plan to buy $600 billion of Treasuries through June 2011.
MARKET ALERT - March 3, 2011
ECB leaves rates unchanged: The European Central Bank met today and kept its interest rate unchanged, at 1.0%
ECB President Jean- Claude Trichet said the ECB may raise interest rates next month to counter accelerating inflation.
MARKET ALERT - December 14, 2010
FOMC leaves rates unchanged:
The Fed left the Fed Funds target range unchanged between 0.0% and 0.25% and maintained the amount and schedule of its quantitative easing Treasury bond purchase program.
In its last statement for the year, the Federal Reserve acknowledged very little improvement in the American economy.
MARKET ALERT - December 7, 2010
BOC leaves rates unchanged:
The Bank of Canada left its interest rates unchanged at 1.00% as expected.
MARKET ALERT - December 7, 2010
RBA leaves rates unchanged:
The Reserve Bank of Australia left its overnight cash rate target at 4.75% today and RBA Governor Stevens said monetary policy is "appropriate for the economic outlook."
MARKET ALERT - November 3, 2010
FOMC Rate Decision:
The Federal Open Market Committee decided to keep its benchmark interest rate unchanged between 0.0% and 0.25%, as expected
The Federal Reserve also announced their QE2 plan to buy $600 billion of Treasuries to spur economic growth, bringing down USD across the board.
MARKET ALERT - November 2, 2010
RBA raises rates .25%: The Reserve Bank of Australia raised its key interest rates today by 25 basis points to 4.75 percent from 4.5 percent.
The move was not entirely expected and AUD has strengthened against most currencies.
MARKET ALERT - September 21, 2010
FOMC leaves rates unchanged: The Federal Reserve's Open Market Committee met today and kept the federal funds rate unchanged at .125%
The Federal Reserve said it is worried about the weakness of the recovery and is willing to ease monetary policy further to boost the economy and lower unemployment, while refraining from expanding its holdings of securities at this time.
MARKET ALERT - September 9, 2010
BOE leaves rates unchanged: The Bank of England kept its key interest rate at 0.50 percent and held quantitative-easing asset purchases at 200 billion pounds ($308 billion).
MARKET ALERT - September 8, 2010
BOC raises rates .25%: The Bank of Canada decided this morning to raise its benchmark interest rate from 0.75% to 1%, as expected.
MARKET ALERT - August 10, 2010
FOMC leaves rates unchanged: The Federal Reserve's Open Market Committee met today and kept the federal funds rate unchanged at .125%, as expected
The FOMC said “The pace of economic recovery is likely to be more modest in the near term than had been anticipated.” also adding “to help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level.”
MARKET ALERT - August 5, 2010
BOE leaves rates unchanged: The Bank of England met and kept the interest rate unchanged at .50%, as expected
They also kept the size of their asset-purchase program unchanged at 200 billion pounds ($317 billion).
MARKET ALERT - August 5, 2010
ECB leaves rates unchanged: The European Central Bank met today and kept its interest rate unchanged, at 1.0%, as expected
ECB President Jean- Claude Trichet said the euro-area economy is strengthening faster than forecast and money markets are improving as the region recovers from its sovereign debt crisis.
MARKET ALERT - July 20, 2010
BOC raises rates: The Bank of Canada raised its benchmark lending rate for a second month.
The BOC suggested that it may slow the pace of interest-rate increases, and that slower economic growth through next year means any future moves will be “weighed carefully.”
MARKET ALERT - July 8, 2010
BOE leaves rates unchanged: The Bank of England met and kept the interest rate unchanged at .50%, as expected
MARKET ALERT - July 8, 2010
ECB leaves rates unchanged: The European Central Bank met today and kept its interest rate unchanged, at 1.0%, as expected
MARKET ALERT - July 6, 2010
RBA leaves rates unchanged: The Reserve Bank of Australia met and kept its interest rate unchanged at 4.5%, as expected.
Glenn Stevens commented that "underlying inflation appears likely to be in the upper half of the target zone over the next year."
MARKET ALERT - June 23, 2010
FOMC leaves rates unchanged: The Federal Reserve's Open Market Committee concluded its two-day meeting and kept the federal funds rate unchanged at .125%, as expected
They commented that economic conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period," however there was one dissenting vote.
VENSTAR MARKET OUTLOOK – June 15, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): United States: US Empire Manufacturing, Jun index is expected to edge up slightly from 19.11 in May to 20.00 in June.
Canada Data (USD/CAD): Canada Manufacturing sales, Apr sales is forecasted to grow by a modest 0.3% mom, after the 1.2% gain seen in March.
Europe Data (EUR/USD): Europe: The ratings cut on Greece by Moody's takes GGBs out of most index tracking funds. The estimated total forced selling in GGBs could amount to some EUR 30 bn with the downgrading of Greece to junk status by Moody's.
UK Data (GBP/USD): GBP (Sterling / Pounds): UK: CPI inflation is forecast to have peaked at 3.7% in April, but will remain fairly high. Forecast shows CPI falling - and remaining - below 3% at the start of 2011, returning to its 2% target at end-2011. RPI inflation forecast to have peaked at 5.4% in April. Projections show a decline to 3.5% by end-2011. CPI inflation forecast to fall to a four-month low of 3.1% in June 2010 from 3.4% in May. Core CPI inflation is forecasted to stabilize at 2.9% in June 2010. RPI inflation forecast to decline to 4.9% in June from 5.1% in May.
Asia Data (USD/JPY , USD/SGD , USD/HKD): Chinese May Data: CPI at 3.1% yoy was consistent with expectations. The %3m change is steady at around 3%. Food prices, the largest driver of the CPI, rose just 6.1% yoy, while the %3m change has actually slowed modestly in recent months, helped by broadly lower vegetable prices. The FAI was steady at 25.9% yoy in the first five months of the year. May's IP at 16.5% was below expectations, confirming a gradual deceleration in growth, consistent with the pullback in capital-related spending. May's new loans at 639.4bn Yuan were modestly larger than expectations and suggest tighter capitalization requirements are not causing a dramatic decline in new loans being originated.
Australia and New Zealand Data (AUD/USD, USD/NZD): RBA minutes: The minutes from the RBA's 1 June meeting show that the Bank will leave rates unchanged at its next meeting in July, but a high Q2 CPI due out in late July could fuel a resumption of rate hikes in early August.
MARKET ALERT - June 10, 2010
ECB leaves rates unchanged: The European Central Bank met today and kept its interest rate unchanged, at 1.0%, as expected.
MARKET ALERT - June 10, 2010
BOE leaves rates unchanged: The Bank of England met and kept the interest rate unchanged at .50%, as expected, and held its asset purchase target at 200 billion pounds.
MARKET ALERT - June 1, 2010
BOC raises rates: The Bank of Canada became the first G7 nation to increase its interest rate today, going from .25% to .50%.
MARKET ALERT - June 1, 2010
RBA keeps rates unchanged: The Reserve Bank of Australia met and kept its interest rate at 4.50%, as expected.
VENSTAR MARKET OUTLOOK – May 11, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): United States: The market reaction after the EU rescue plan has subsided. Likely, because the plan lack’s teeth. Tough challenges for the ECB lay ahead and will likely have to keep policy rates lower for longer. Most favor, sell EUR/USD. For now, short GBP/USD is favored by most. Once the market starts to look at fundamentals again, risk will likely resume as global economic data recovers.
Canada Data (USD/CAD): CAD appears to be well placed to benefit, particularly versus EUR and JPY, given the prospect of BoC tightening as early as its June meeting.
Europe Data (EUR/USD): Europe: The market has subsided as seen in the wake of the EU rescue plan. On a mix of profit taking and the fact that although he plan is significant, is does bring the Euro area debt problems into the fore front. Failure to break through key technical levels suggests that the EUR's downtrend is likely to continue.
UK Data (GBP/USD): GBP (Sterling / Pounds): UK: GBP remains vulnerable due to current political uncertainty. The risk that the UK is heading towards another election later this seems likely. Most suspect the odds still look slightly more in favor of a conservative/liberal Democrat coalition, which could help GBP. The longer it takes for a concrete agreement, the more vulnerable GBP could be.
Asia Data (USD/JPY , USD/SGD , USD/HKD): China released strong data and the PBOC's Q1 MPR raised expectations that China is getting ready to re-evaluate the RNB.
Australia and New Zealand Data (AUD/USD, USD/NZD): The AUD has received a boost from the resources boom. Inflation is forecast by the RBA to remain close to the top of the target band over the coming years, implying a high risk that the market should price in further rate hikes.
MARKET ALERT - May 10, 2010
European Union creates $1 Trillion bailout package: The European Union put up a staggering $1 Trillion today to contain its spreading government debt crisis and keep from tearing the euro currency apart.
MARKET ALERT - May 10, 2010
BOE leaves rates unchanged: The BOE left its benchmark interest rate unchanged at 0.50%, as expected, and left its asset purchase program unchanged at 200 billion pounds
MARKET ALERT - May 6, 2010
ECB leaves rates unchanged: The European Central Bank met and kept the interest rate unchanged at 1.00%, as expected.
ECB Council member and Bundesbank President Axel Weber who warned that there is a threat of "grave contagion effects" from the Greek fiscal crisis.
MARKET ALERT - May 4, 2010
RBA Raises rates again: The Reserve Bank of Australia met and increased its interest rate from 4.25% to 4.50%, as expected.
It is the third rate hike in a row from the central bank. The Reserve Bank governor Glenn Stevens said rates were now back at "average levels".
VENSTAR MARKET OUTLOOK – April 22, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): United States: PPI continues to be one of inflation pressures lessening. Somewhere in there profit margins are being minimized, but it seems increased productivity, soft unit labor costs, and the recovery of volumes is offering some earnings protection. There is nothing that immediately changes the Fed having plenty of flexibility to concentrate on pushing growth.
Canada Data (USD/CAD): The BoC today maintained its key policy rate at 0.25%. The most significant news was the board abandoning the conditional commitment about keeping rates unchanged through July. The Central bank finally acknowledged economic recovery to be proceeding more rapidly than projected. This profile highlights very strong housing activity in Canada. Caution was raised regarding the persistent strength in CAD combined with low level of U.S. demand which can drag the economy down.
Europe Data (EUR/USD): Europe: Greek yields continue to drift out alarmingly. The situation is not contained and remains the number one risk factor for global markets. 10 year Greek yields rose 27bp to 7.88%, up over 100bp in the last week to a new high. 2yr yields rose 21bp, up 120bp over the last week to 7.30%.
UK Data (GBP/USD): GBP (Sterling / Pounds): UK: Retail sales disappointed in March. Revisions show that the fall in sales during January's white-out was worse than previously thought (a 0.4pp downward revision to -2.3% m/m in January, with February's index unchanged).
Asia Data (USD/JPY , USD/SGD , USD/HKD): Japan trade balance, Mar: The surplus rose from JPY472b to JPY666b, which was the largest surplus since February 2008, with exports broadly flat and imports down 4%.
Australia and New Zealand Data (AUD/USD, USD/NZD): The RBA minutes said, ""Developments in commodity markets meant that the increase in the terms of trade through 2010 was likely to be substantially larger than forecast in the February Statement on Monetary Policy." The minutes expressed a need to get policy at neutral sooner, in light of the faster rebound in the terms of trade. Another hike next month taking rates to 4.5%, around neutral is possible.
MARKET ALERT - April 8, 2010
ECB leaves rates unchanges: The European Central Bank kept its interest rate unchanged at 1.0%, as expected.
VENSTAR MARKET OUTLOOK – April 08, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): United States: Geithner's visit to China is in focus, with talk that China may be on the verge of revaluing its currency and rumors of a possible rate hike. US yields have pulled back and USD/JPY seems to have stalled in the interim.
Canada Data (USD/CAD): With commodity prices continuing to rally this week, the CAD has reached parity against the USD. With a stronger policy stance and stronger than projected growth, many expect CAD to continue to outperform.
Europe Data (EUR/USD): Europe: Greek debt worries continue to worry markets, with news suggesting that some in the market feel a default is now a high probability. Greek assets continue to fall sharply in recent sessions taking a toll on the market as a whole.
UK Data (GBP/USD): GBP (Sterling / Pounds): UK: British industry staged a stronger-than-expected rebound in February following weather-related disruption in January. The bulk of improvement in the month was simply a return to more normal levels of output. The UK looks on course to broadly maintain the 0.4% q/q pace of expansion seen in Q4 2009.
Asia Data (USD/JPY , USD/SGD , USD/HKD): Asian central banks appear to be slowing the pace of their rate hikes or deferring the start in some cases. As the battle continues between USD, EUR and JPY, Asian currencies are benefitting from the uncertainty.
Australia and New Zealand Data (AUD/USD, USD/NZD): Another solid rise in Australian employment stabilizes the AUD's solid fundamentals and expectations for further RBA rate hikes.
VENSTAR MARKET OUTLOOK – March 31, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): United States: It appears that the first Fed rate hike may be pushed back from June to September. Given the expectations for above trend growth and slowly rising inflation this year, there is still an expectation that the Fed will be forced to raise rates sooner than markets anticipate. The market currently expects the Fed to alter its forward-looking language by the June meeting at the latest.
Canada Data (USD/CAD): 2y rate spreads continue to move in favor of the CAD against the USD. Further support for the CAD comes from the US growth play without the structural issues. For now, sovereign risks are also CAD positive given Canada's relative solid government budget. However, a move in yields to 75bp would make Treasuries simply too attractive for many fixed income investors.
Europe Data (EUR/USD): Europe: While the Greece crisis remains the main focus, survey data point to a strengthening of the cyclical recovery. They have revised up euro area GDP to an above-consensus 0.5% q/q and 0.3% q/q in Q2 and Q3 respectively. Therefore the anticipated first ECB rate hike of Q1 2011, could be pushed back, contrary to what markets have been doing.
UK Data (GBP/USD): GBP (Sterling / Pounds): UK: Forecasts remain sub-consensus for 2010 (GDP: 1.0%; consensus: 1.3%) and many have cut their 2011 GDP forecast to 2.3% from 2.7%. The BOE remains unchanged with the first hike in Q4 but may believe that the risks of a later hike have increased.
Asia Data (USD/JPY , USD/SGD , USD/HKD): Manufacturing continued to grow at a moderate rate with the PM broadly unchanged at 52.4.
Australia and New Zealand Data (AUD/USD, USD/NZD): Many have recently upgraded their growth forecasts and now expect the RBA to raise rates to 6½% by end-2011. The RBA has signaled more rate hikes, although they didn't give any guidance in terms of timing of those hikes. Many slimly favor another rate hike in April.
VENSTAR MARKET OUTLOOK – March 24, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): Risk appetite, is holding up well with US equities rallying to new 2010 highs. Recent Fed statements have maintained the dovish bias suggesting that US liquidity remains open. The durable goods orders data was close to expectations in February. The non-defense capital goods ex aircraft that is the most closely watched indicator and a good indicator for future business investment trends was fairly close to expectations at +1.1%, which was a solid contribution to GDP from business investment. Inventories were also positive.
Canada Data (USD/CAD): Canadian CPI accelerated unexpectedly to 1.6% yoy in February, though this was down from the 1.9% previously. Consumer demand also released today further boosted the CAD. Furthermore, last month's prints were revised higher. The inflation release saw USD/CAD reversing all its gains and the pair continues to establish fresh 2009 lows. With the central bank starting to sound a little more positive, CAD could well outperform as rates will still be raised ahead of the G4.
Europe Data (EUR/USD): The EUR remains broadly under pressure, posting fresh lows for the year. News that Germany and France agreed to request an aid package involving the IMF has not removed any uncertainty over the Greece situation and this is likely to persist ahead of this week's European Council meeting. The bias for EUR/USD remains to the downside with many watching for a close below 1.3436.
UK Data (GBP/USD): GBP (Sterling / Pounds): The UK budget is in focus. No major changes to fiscal policy or the government's borrowing projections are expected. There is a risk of disappointment if the market is looking for any detail on how fiscal tightening will actually be achieved, but with the election getting closer it shouldn't be too informative at this time. Overall GBP downside risks likely should be limited and the EUR/GBP is likely to trade lower on a weaker EUR.
Asia Data (USD/JPY , USD/SGD , USD/HKD): The large position built-up when the USD/JPY drops, suggests investors do not see much downside risks from here, though the unwinding of long positions when the USD/JPY gains also reflects the short-term nature of investor margin positions, as the USD/JPY continues to trade in a tight band until today.
Australia and New Zealand Data (AUD/USD, USD/NZD): The RBA has signaled more rate hikes, although they didn't give any guidance in terms of timing. Many slimly favor another rate hike in April.
MARKET ALERT - March 16, 2010
U.S. Fed leaves rates unchanged: The Federal Reserve met today and kept the federal funds rate unchanged at .125%, as expected.
They continue to say that economic conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
VENSTAR MARKET OUTLOOK – March 11, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): The US like many countries is in hopes that given enough time, the cumulative gains on the income statement can repair much of the balance sheet damage before any emergency measures would be needed. Budget decisions will have to be faced, including how to correct a deficit where non-defense discretionary spending only makes up a rough one-sixth of Federal expenditure, and conditional on continued recovery.
Canada Data (USD/CAD): Positive economic data continues. The CAD is also benefiting from sovereign fears elsewhere and Canada's solid sovereign metrics. CAD positives go beyond just sovereign risks. The BoC has finally started to sound a little more positive. In its latest policy statement it said that the level of economic activity in Canada was slightly higher than projected and that growth had been spurred by "vigorous domestic spending and further recovery in exports. Longer term, stretched valuations can be an issue, with USD/CAD's Purchasing Power Parity level 1.20 against a 1.0280 spot rate.
Europe Data (EUR/USD): A EUR/USD rate of 1.40, which is near the estimate of appropriate value based on current risk and rates, is now seen as the top of its near-term range. The 1.20s are likely when it becomes evident from central bank actions have delayed ECB tightening relative to the Fed.
UK Data (GBP/USD): GBP (Sterling / Pounds): The UK rating agencies will likely not allow it to be stretched beyond this year. The UK is the one country where almost every sector looks highly leveraged or overextended. Compared with the Greeks, where only the public sector looks negative, and only Ireland is comparable on these valuations.
Asia Data (USD/JPY , USD/SGD , USD/HKD): Japan GDP, Q4 (revised): Growth was nudged down from 1.1 to 0.9%. China CPI, Feb: February's data provided few surprises. CPI inflation of 2.7% was higher than consensus, but the underlying trend looks stable.
Australia and New Zealand Data (AUD/USD, USD/NZD): Australia employment, Feb: Employment was mostly unchanged, disappointing forecasts of a further rise. Low unemployment of 5.3% matched expectations. RBNZ interest rate decision: The RBNZ kept its forecast to start hiking around the middle of the year. It scaled back its forecast profile for short rates a little given wider bank margins, although it raised its inflation forecasts.
MARKET ALERT - March 4, 2010
BOE leaves rates unchanged: The Bank of England met and kept its interest rate unchanged at .50%, as expected.
ECB leaves rates unchanged: The European Central Bank met and kept its interest rate unchanged at 1.00%, as expected.
MARKET ALERT - March 2, 2010
RBA Raises rates .25%: The Reserve Bank of Australia raised its interest rate from 3.75% to 4.00%. It was the fourth increase in the past twelve months.
BOC leaves rates unchanged: The Bank of Canada met and kept its interest rate unchanged at .25%, as expected.
They also raised their view of the inflation risk upwards to "roughly balanced" which might indicate a rate increase in the coming months.
MARKET OUTLOOK – February 26, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): Flight to safety to the USD over the past two weeks, however, before anticipating a complete collapse of the EUR, you have to note that the Budget positions in the UK, US and Japan are hardly better than Europe and the core European countries have better Budget position. The ECB is holding steady and has not conducted the same extensive asset purchases as other major economies, and as the EUR falls the export performance in Europe will likely improve. While the ECB looks further from hiking policy rates, Bernanke and colleagues have also emphasized low rates this week.
Canada Data (USD/CAD): With commodity prices retracing yesterday and the USD gaining on the backs of a flight to security, the 1.0600 mark was broken with many feeling there is another leg or two in this recovery.
Europe Data (EUR/USD): The EUR has tried to strengthen this week, but keeps getting pushed back by deteriorating news surrounding Greece. It is trading like the market is EUR short, which creates the risk that if anything breaks positively for Greece, there will likely be a rally. However, in all likely-hood it does not appear that either Greece or the EUR will catch a break any time soon.
UK Data (GBP/USD): GBP (Sterling / Pounds): After yesterday's weaker than expected business investment data, the upward revision to GDP was higher than expected and not anticipate. However, the details of the data give rise to significant concerns. The upward revisions were in large part from much stronger retail sector output. On the expenditure data, the large boost was from lagging inventories, therefore it appears that the foundations of the UK recovery continue to look troublesome.
Asia Data (USD/JPY , USD/SGD , USD/HKD): The USD/JPY dropped yesterday to 88.8, but with the weekend ahead, upward adjustments are likely and the early February low of 88.56 is likely to support.
Australia and New Zealand Data (AUD/USD, USD/NZD): Australia Capex survey, Q4: Investment surprised on the high side, up 5.5% in Q4. The investment outlook was significantly upgraded as the mining boom returns.
MARKET OUTLOOK – February 19, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): Fed's decision to hike the discount rate. This is largely a signal to the markets as to monetary policy in the future. After a large and swift monetary easing, and with rates just above 0%, the next move is tightening, the issue now is proper timing. Many continue to believe that it will be a long time before the Fed hikes policy rates, however, this latest move by the Fed should be likely taken as a signal that the hawks in the Fed's are gaining.
Canada Data (USD/CAD): Retail sales have held up well so far, with the exception of November. Expectations are for a decent improvement in December. Sales are expected to rise 0.5% mom, with sales ex autos up 0.3%.
Europe Data (EUR/USD): PMIs out of Europe this morning. Manufacturing surging higher, while the services PMI for the Euro zone unexpectedly falls for a second month. The manufacturing sector is, globally, outperforming the services sector continues. Some say that this shows the manufacturing sector is in the the leader out of the recession and the service sector will be sure to follow. Others believe that the inventory cycle collapse is now being followed by a modest recovery.
UK Data (GBP/USD): GBP (Sterling / Pounds) Sales slumped 1.2% mom which was significantly below expectations, but there was a small upward revision to December from 0.3% to 0.5%. On the year, sales actually came in at a higher than expected at a 2.6% yoy pace, having moderated from a 2.9% clip previously. Monthly data raises fresh concerns about the strength of the economic recovery.
Asia Data (USD/JPY , USD/SGD , USD/HKD): Many believe that the USD/JPY has the best fit with rate spreads and that the charts are currently USD positive. Many continue to position for US economic out-performance.
Australia and New Zealand Data (AUD/USD, USD/NZD): AUD/USD The RBA Governor was upbeat, signaling more hikes in the future. Look for hikes to possibly resume in March, reaching 5% by year-end.
MARKET OUTLOOK – February 11, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): Even a moderate US recovery is being seen so far the strongest of all the G4 economies. The Fed will likely lead the G4 central bank tightening by late H2. A EURUSD move down to 1.28 by year-end is possible, with the US's own fiscal policy the main factor longer-term.
Canada Data (USD/CAD): In this interest rate sensitive climate, the attention will continue to turn to those currencies that might be next to increase their policy rate. In the G10, this is likely the CAD.
Europe Data (EUR/USD): Problems with the EUR can be covered up with bail-outs only in the short-term, however, concerns remain about failed long-term EU structural fundamentals are likely to continue to pull down EUR/USD, encouraging selling near 1.40 and above.
UK Data (GBP/USD): GBP (Sterling / Pounds) With the BoE recent Inflation Report coming in as dovish as it was, most market experts have discounted the report and are waiting for the next slew of inflation and cpi data to be released.
Asia Data (USD/JPY , USD/SGD , USD/HKD): USD/JPY short-term suggests 'fair value' is near or around the 97.00 JPY level. JPY will likely be the financing/carry currency of choice when the Fed considers raising policy rates likely by year-end.
Australia and New Zealand Data (AUD/USD, USD/NZD): AUD/USD has been aided by a much better than expected Australian employment report that makes a RBA rate hike next month almost a certainty, polled by most experts.
MARKET ALERT - February 4, 2010
BOE leaves rates unchanged: The Bank of England met today and kept its rate unchanged at .50%
The BOE also stated that it was putting its program of quantitative easing on hold
ECB leaves rates unchanged: The European Central Bank kept its interest rate unchanged at 1.0% today, as expected.
The EUR fell against most currencies with increasing concerns about debt problems in Greece, Portugal, and Spain.
MARKET OUTLOOK – February 02, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): The Treasury market has continued to out-perform given the positive data that came out last week. Friday's Non-Farm Payrolls report will be one to watch; as many are looking for a reasonable 60k increase in jobs for January. The USD index breach of the 200-day moving average continues to dominate.
Canada Data (USD/CAD): Canada: USD/CAD: The Bank of Canada left policy rates at 0.25% and reiterated that current policy rates wouldn't be raised in H1:10.
Europe Data (EUR/USD): Euro area manufacturing PMI, Jan was revised up to 52.4 from the flash estimate of 52. The reading is the highest in 2 years. The final manufacturing new orders were also revised up to 53.8 from the flash reading of 53.2. Relative CPI performance and PPP points to 1.20, while long-term valuation model’s has 1.30. It appears there is plenty of downside if Greece worries continue to escalate, with an extreme change in sentiment required for this trend to reverse in the short term. Wednesday, the EC releases its official recommendation on the Greece’s fiscal outlook. The ECB is unlikely to change its stance on bailing out Greece at Thursday's post policy meeting press conference. .
UK Data (GBP/USD): GBP (Sterling / Pounds) has moved down into the 1.50s, however, many feel there is perhaps another 5% in this move. The MPC will likely stop rate cuts this Thursday, but this is largely expected. Many expect a rather dovish accompanying statement. UK newspaper opinion polls show both political parties are focused on the need to correct the fiscal deficit, however increased uncertainty could dominate as a GBP negative.
Asia Data (USD/JPY , USD/SGD , USD/HKD): China PMI, Jan continued to point to solid growth, ranging between 56 and 57, although this was slightly under market expectations. Korea exports, Jan printed growth of 47% yoy, which fell short of expectations.
Australia and New Zealand Data (AUD/USD, USD/NZD): RBA cash rate decision shocked by keeping rates on hold, warning that policy "will need to be adjusted further". A hike was expected by many today, but expect the possibility of more to come given inflation rising and unemployment is now falling.
MARKET ALERT - February 2, 2010
RBA keeps rates unchanged: The Reserve Bank of Australia surprised the markets today by keeping their interest rate unchanged at 3.75%.
The markets had been expecting a 25 bp hike, and the unexpected pause pummeled the Australian dollar to a 6-week low.
MARKET ALERT - January 27, 2010
U.S. Fed leaves rates unchanged: The FOMC met today and kept its interest rate unchanged at a range of 0-.25%, as expected and indicated they would hold rates there for an “extended period” to nurture the economic recovery and lower unemployment.
MARKET OUTLOOK - January 19, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): M&A: Kraft (US) raised its offer 9% to about GBP12bn for Cadbury (UK). 840 pence per share, including 500 pence cash. UK press reports the Cadbury board will accept the bid.
Canada Data (USD/CAD): Canada: USD/CAD: The statement from the Bank of Canada disappointed many people that look for monetary policy in Canada to be tightened earlier than the USA. The BoC reiterated that current policy rates wouldn't be raised in Q1 2010. They did hint that global growth outlook was 'somewhat stronger' than projected in the October Monetary Policy Report. The 'persistent strength' of the CAD and the low level of US demand were seen as the most significant drains on economic activity. The reference to the CAD was stronger than in the December statement when it was thought that the CAD 'could' act as a drag on growth. Canadian exports (relative to US demand) have held strong and natural gas prices have been rising.
Europe Data (EUR/USD): German ZEW, Jan: expectations index declined to 47.2 from 50.4 in Dec, weaker than market expectations of 50. This is the fourth consecutive monthly decline, increasingly suggesting expectations have peaked for now. As expected, the current conditions index continues to trend modestly higher, to -56.6 from -60.6 in Dec.
Eurogroup head Juncker on Greece: some supportive words saying that "the measures were one step in the right direction. We believe the Greek government will do what is necessary and we have to support them in their efforts."
UK Data (GBP/USD): UK CPI, Dec: Prices rising 2.9% yoy against an expected 2.6% and 1.9% in Nov. The overshoot was far more dramatic on the core data which shot up to 2.8% from 1.9% in Nov.
Asia Data (USD/JPY , USD/SGD , USD/HKD): China: The PBoC guided the one-year bill rate higher by 8bp to 1.9264% for a second week in a row.
MARKET OUTLOOK - January 05, 2010
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): The New Year is starting with the NFP on Friday and Manufacturing ISM. The former is important as we appear to be around the neutral position in NFP, with economists, according to Bloomberg, split as to whether we get a positive number or not. The question of whether this recovery has self-sustaining legs once stimuli and free money are removed is the central issue.
Since 17th December (when volumes started to disappear across all markets), equities have rallied 2-3% and FX has seen EUR/USD, EUR/GBP and GBP/USD all virtually unchanged (with some yen weakness) but the real interest comes from rates and credit. In government bonds, US 2y and 10y yields are around 40bp higher, German/UK yields 30bp higher, with a 6% target for 10y US yields eventually.
US manufacturing ISM: Look for the ISM headline measure to have rebounded in December, rising to 55.
The USD's sensitivity to this week's data will depend on whether the market believes a very gradual rise in Fed rates in 2010. EUR/USD losses do have some momentum. The 1.4220 range lows, and beyond this the 38.2% fib of the March/December up-trend will be an early focus. EUR/GBP level to watch is 0.8830. Two stories stand out e - UK fiscal concerns and Pimco cutting US, UK bonds as borrowing increased.
Canada Data (USD/CAD): Canada: USD/CAD: USD/CAD's break of 1.0450 as this level provided support during Nov\Dec. A clear break would open the door to a test of parity during January.
Europe Data (EUR/USD): Euro area manufacturing PMI, Dec: Final reading of the PMI was unchanged from the flash estimate of 51.6, as expected.
Sweden PMI, Dec: PMI rose to 58.2 from 56.0 in November, well above expectations. Riksbank rate decision minutes: The board was split over the decision to keep the repo rate at 0.25% and to the keep the repo rate path unchanged in December. Svensson wanted to cut the repo rate to zero and also wanted a lower repo rate path. Nyberg and Wickman-Parak felt that the more positive outlook for growth made it "necessary to raise the interest rate sooner than" autumn 2010.
Swiss PMI, Dec: PMI fell to 54.6 from 56.9, well below expectations. In the breakdown, orders slumped to 56.0 from 66.5 but output continued to improve rising to 59.6 from 59.4.
UK Data (GBP/USD): UK manufacturing PMI, Dec: PMI posted a larger than expected increase, up to 54.1 from 51.8 in November. Driven by a jump in new orders ( 57.4 from 53.3, a 29-month high). UK Chancellor Darling: Tightening the fiscal reins too hastily could harm the economy and derail the recovery. UK lending to individuals, Nov: New mortgage approvals rose to a higher than expected 60.5k from 57.7k. Cash-terms net mortgage lending rose to £1.5bn from an upwardly revised £1.1bn in Oct, above forecasts. Net unsecured lending was again negative coming in at -£0.4bn. UK M4 & M4 lending data, Nov: Lending data was noticeably firmer. On the ex-intermediate OFCs basis (the MPC's preferred measures), M4 rebounded by 0.9% m/m in Nov after hefty falls in Oct (-0.6%) and Nov (-0.9%). M4 lending up 1.1% m/m in Nov after a 0.6% fall in Oct.
Asia Outlook (USD/JPY, USD/SGD, USD/HKD): Singapore GDP, Q4: Rose 3.5%y/y in Q4, less than the 3.8% median market expectation. Japan: Performance of the JGB was mixed over the past 10 Januaries, from 2000 to 2009. There were five Januaries that 10yr yields moved up (January close vs December close); there were also five Januaries that yields dropped. Expectation for 10yr yields with little changes in January compared to December close.
MARKET ALERT - December 16, 2009
U.S. Fed leaves rates unchanged: The Federal Reserve concluded its meeting this afternoon and kept the federal funds rate unchanged at .125%, as expected. They noted that "economic activity has continued to pick up and that the deterioration in the labor market is abating."
MARKET OUTLOOK - December 16, 2009
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
USA Data (USD): Smaller than expected 0.034% increase in core CPI. The rebound in starts and the C/A headline were both as expected.
Breakdown of the data shows few surprises in CPI. Apparel was soft again and vehicle prices were up solidly as the post clunkers impact continued. Medical care was also solid at +0.3. Despite this, core CPI was soft helped by very soft housing where owner’s equivalent rent was -0.1% and the key depressant Lodging away from home. The CPI data will reinforce the view that the Fed has plenty of leeway to focus on growth without any immediate inflation fears. Nonetheless, USD has not moved much on the data mainly due to: 1) caution before the FOMC meeting; 2) a more positive USD rally already supported.
Europe Data (EUR/USD): One key to the next move remaining whether EURUSD will hold the Oct low at 1.4480. A breach of this level would be taken as a signal of renewed downside momentum. Any shift on the FOMC 'extended period' language would be key in taking out this level near-term of 1.4480.
Greece remains a banking scare - although December moves can be exacerbated, sovereign balance sheets will remain in focus for 2010. The US and the UK are countries where many worry, but worries are increasing in Europe as well, especially outside of the core countries.
UK Data (GBP/USD): UK Labor market conditions continue to show some improvement, but underlying fundamentals remain significantly more fragile than the headline employment data shows. The increase in total employment is entirely the result of higher part-time and self-employment. The number of full-time employees - an important gauge of labor market conditions - continues to show significant layoffs (85k in the latest 3 months). This represents an improvement relative to the spring and summer (when jobs losses of 200k+ were the norm) but it is some way from 'real' job creation. A modest pick-up in average working hours shows some improvement in overall labor market conditions.
Japan Outlook (USD/JPY): There exists a possibility of USD/JPY to rise further; although still in a down trend, many speculators are probably still holding onto JPY longs. A break above the recent high of 90.77, should start to shift sentiment more clearly against JPY. There is strong resistance around 92. Support on the downside near 88.0 and 87.5. JPY.
MARKET ALERT - December 10, 2009
BOE leaves rate unchanged: The Bank of England met and kept its interest rate unchanged at .50%, as expected.
MARKET OUTLOOK - December 9, 2009
North American & European Outlook
EUR/USD: The market is asking questions about whether USD tides have turned since the USA employment report. Although a pause in the USD's weakness has been under way, a complete turnaround is not likely this far ahead of Fed tightening.
There are a number of factors supporting the USD: EUR/USD trend line was broken from the March low when risk started to move upwards. The 1-month trailing EURUSD correlation with its risk reversal shows signs of EURUSD consolidation, if not a complete turn. Many EUR pairs look weak. Greece's financial crisis is obviously EUR-negative, showing once again that the EUR has many countries affecting its value, that can affect the currency most adversely, for example Germany maybe performing, but Greece can bring the EUR down on its own.
There are a number of fundamental factors as well against USD strength, dovish comments by Bernanke and Dudley point in regards to the Fed’s easy policy to promote a sustainable recovery, putting the first tightening move no sooner than late summer and possibly substantially later.
USA: Since the employment data are in line with a mild recovery, the USD risks of another downturn leading to a fiscal shock is lessened. The employment data should reduce the probability, including the risk of a USD collapse. All in all there are strong signs of a period of consolidation in EUR/USD, however by early next year the market should be buying USD.
The US trade deficit was significantly smaller than expected, while the initial claims were slightly higher than expected. The majority of the trade surprise was in the petroleum balance. Additionally, exports appear strong, with a moderate up-tick in global trade. There were no shocks in the bilateral trade balances, with the China imbalance remaining overly concerning.
MARKET ALERT - December 8, 2009
BOC leaves rate unchanged: The Bank of Canada met and kept the interest rate unchanged at .25%, as expected.
The BOC commented that it will continue to keep the interest rate low, at least through June of 2010.
MARKET ALERT - December 3, 2009
ECB leaves rate unchanged: The European Central Bank met and kept its interest rate unchanged at 1.0%, as expected.
ECB President Jean Claude Trichet commented that they will be ending some emergency funding measures this month.
MARKET ALERT - December 1, 2009
RBA raises rates: The Reserve Bank of Australia increased its interest rate from 3.50% to 3.75%, as expected.
This is the third consecutive month where RBA has increased interest rate. AUD is up on the news.
MARKET OUTLOOK - December 1, 2009
November 2009 Recap | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP, NZD)
Fresh highs for the year were made in riskier/commodity currencies, equity markets and commodities, notably gold. Due to the news of financial problems in Dubai, moves in financial markets were sharp. A severe risk sell off was seen towards the end of the month as worries over a default in the Middle East surfaced which left the JPY as the sole FX outperformer. This prompted tougher talk from Japanese officials on currency strength.
USD/CHF: CHF also performed well, forcing the SNB to intervene to stem the currency's strength.
USD / USA: The weak USD trend continued, as Fed officials continued to issue statements on keeping monetary policy accommodative for the foreseeable future. In the bond market, US yields moved lower over the month, hitting 3.15% towards month-end. US September employment report disappointed as payrolls pulled back significantly. The 263k fall was 100k worse than expected. The unemployment rate rose to 10.2% from 9.8%. The October US employment report was as disappointing as the jobs situation after improving through the summer. Payrolls fell 190k but upward revisions to August and September were made.
GBP: Bank of England monetary policy remained uncertain. Policy rates were left at 0.5%. The Minutes revealed a three-way split. Some MPC members suggested that the November extension may be the final one and this could bring the exit. There was also talk of lowering the bank deposit rate in the future. The November Inflation Report was much more dovish than expected, with inflation still under wraps. The view that UK policy rates will be lower for longer was tightened and further rate cuts couldn't be ruled out. As a result, GBP was one of the worst performers.
AUD: The Reserve Bank of Australia tightened its policy rate by 25bp to 3.50%. The RBA minutes showed that the board was open to a pause in December but there was evidence of further recovery abroad keeping the possibility open for a December hike.
EUR / Euro: The ECB left rates on hold at 1% as expected. EUR maintained its trading range of 1.47-1.51 throughout November.
USD/NZD: Worries over the health of the New Zealand economy, with the Treasury calling for significant tax reform/tighter fiscal policy to allow the RBNZ to target lower interest rates and to weaken NZD. This left NZD as the worst performer.
MARKET OUTLOOK - November 12, 2009
North American Highlights | USD Outlook (CAD, AUD, EUR, CHF, JPY, GBP)
The price of gold continues to track higher than other commodity prices and faster than the rate of appreciation of other currencies against the USD over the last two weeks.
The market may not be buying those particular currencies that have had very strong runs and are meeting greater resistance from Government/central bankers, but investors continue to like the USD and are running with arms outstretched towards gold. This sentiment is helping give stability to most currencies, commodities and US asset prices suggests the general concern is still towards inflation for those assets priced in USD.
GBP has slipped in response to the BoE inflation report. In regards to the exchange rate, the BoE were hinting for a weaker GBP saying, "this process of balance sheet adjustment implies the need for the UK economy to rebalance away from private and public consumption towards higher net exports [and] the fall in the exchange rate over the past two years will help to smooth that process".
In the US, Geithner said that he "believes deeply" in a strong dollar, whereas the Fed's Fisher said that the dollar's fall is an orderly reversal of its rise after the Lehman crisis.
USA: US Treasury Secretary Geithner continued by saying “The challenge "right now" is to restore growth and most countries see the need for more government support”. He singled out Asia as the region to lead the global recovery. Also, reiterated that it's very important to have a strong USD.
Asia: Japan Ministry of Finance official Furumoto said “Japanese domestic demand is in a severe condition, the jobless rate is a pressing issue and the corporate earnings outlook for 2009/10 is 'gloomy'”.
Europe: Euro area industrial production, Sept: IP rose a smaller than expected 0.3% mom to -12.9% yoy, slightly weaker than expected. However, the August prints were revised up to 1.2% mom and -15.1% yoy.
Sweden CPI, Oct: Inflation was higher than expected, rising 0.3% mom to -1.5% yoy, up from -1.6 % yoy in September. Underlying CPI rose 0.3% mom, pushing the annual rate to 1.9%, up from 1.4% yoy. Despite the data exceeding consensus forecasts, this is the 7th consecutive month of deflation
Swiss ZEW survey, Nov: Expectations balance fell back to 56.4 after the strong jump to 65.0 seen in October.
MARKET ALERT - November 4, 2009
U.S. Fed Leaves Rates Unchanged: The Federal Reserve concluded its two-day meeting this afternoon and kept the federal funds rate unchanged at .125%, as expected.
USD has been down against most currencies since the announcement and following comments. They noted that the economy has continued to pick up, but they anticipate that economic conditions are likely to warrant exceptionally low levels of the fed funds rate for an extended period.
MARKET ALERT - November 3, 2009
RBA Raises Rates Again: The Reserve Bank of Australia increased its interest rate from 3.25% to 3.50% today, which was expected.
There are some expectations that rates may rise to 4.25% in the next six months.
MARKET ALERT - October 20, 2009
BOC leaves rates unchanged: The Bank of Canada met and kept its interest rate unchanged at .25%, as expected.
Comments indicate they expect rates to remain the same until at least June of 2010.
MARKET ALERT - October 14, 2009
BOJ leaves rates unchanged: The Bank of Japan met and kept its interest rate unchanged at .1%, as expected.
MARKET ALERT - October 8, 2009
BOE and ECB leave rates unchanged: The Bank of England and the European Central Bank both met and kept their interest rates unchanged, as expected.
MARKET ALERT - October 6, 2009
RBA raises interest rates: The Reserve Bank of Australia surprised the markets today and raised its interest rate from 3.00% to 3.25%. They became the first G-20 member to raise rates since the global crisis.
The Australian economy is showing signs of inflation, where most other major economies are still showing signs of deflation.
