Market news by Solforex

[limyeeshin]

Edition 60｜July 11, 2016

The U.S. dollar ended lower against other major currencies on Friday despite upbeat U.S. jobs data as investors broadly dimmed their expectations for another interest rate hike in near future. The Labor Department reported that the U.S. economy added 287,000 jobs in June, much higher than 175,000 jobs expected by the analysts. Average hourly earnings also came in at 2.6% increase, compared to the previous year. Unemployment rate however ticked up to 4.9% and May’s figure was revised down to 11,000. Despite the strong jobs report, the Federal Reserve’s cautious path for next rate hike seemed to be continuing following the threat of a Brexit from the EU. The dollar fell to 96.31 in late Friday against major six currencies. USD/JPY fell 0.19% and closed at 100.59.

In China, National Bureau of Statistics reported that June’s Consumer Price Index moderated to 1.9% in annual basis due to the changed weighting of the goods sentiments in the index and weaker gains in food prices. Food prices rose 4.6% year on year, dropped from 5.9% rise in May and 7.4% increase in April. Pork prices, which were the biggest driver of consumer inflation in recent months, rose 30.1% year on year. The report implies that China is in a sustained period of moderate inflation, giving thoughts that the People’s Bank of China is less likely to take aggressive monetary easing. China is to report on second quarter growth on Friday.

The British pound slightly gained against the U.S. counterpart on Friday as the dollar wavered broadly in up and down trades following June’s labor report. GBP/USD pair traded between 1.2881 and 1.3018 before settling at 1.2952, up 0.36%. Sterling recorded its fourth winning session after the Brexit vote. The pound has tumbled nearly 13% since the referendum result decided the U.K. to leave European Union, hitting lowest level against the dollar in 31 years, at below 1.28. The outlook for the pound still remained to the downside ahead of the monetary policy announcement by the Bank of England on Thursday.

Commodity linked currencies generally were higher against the dollar. AUD/USD pair advanced 1.18% at 0.7571. NZD/USD pair also rose by 1.09% to 0.7307. Canadian dollar however tumbled against the greenback as the Canadian jobs data declined further than expected level. USD/CAD gained 0.32% to 1.3042 in late trade.

In the week ahead, investors will closely watch monetary policy announcement by the Bank of England. The Bank of Canada is also to hold a policy meeting in this week. Investors will be looking ahead to the U.S. reports on consumer inflation and confidence and second quarter GDP growth data from China.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, July 11
Japan is to release data on core machinery orders.
Australia is to publish data on home loans.
In the Eurozone, Financial Ministers are to hold a meeting in Brussel.
The U.S. is to report on labor market conditions for June.

Tuesday, July 12
Japan is to release data on produce price inflation.
China is to publish data on foreign direct investment.
In Australia, NAB is to report on business confidence.
Germany is to release data on consumer price inflation and wholesale prices.
Bank of England Governor Mark Carney is to testify on the economic outlook at the Parliament’s Treasury Committee.
The U.S. is to publish data on wholesale inventory.

Wednesday, July 13
China is to release trade balance for June.
In Australia, Westpac is to report on consumer sentiment.
Euro zone is to publish data on industrial production.
Bank of Canada is to hold a monetary policy meeting and announce its rate statements.
The U.S. is to release data on import prices and mortgages.

Thursday, July 14
Australia is to report on employment and consumer sentiment on inflation.
The Bank of England is to publish the meeting minutes of the day and announce its monetary policy decisions.
The U.S. is to release data on producer prices and its weekly initial jobless claims.

Friday, July 15
China is to release a string of data on industrial production, retail sales, fixed asset investment and second quarter GDP growth.
Euro zone is to publish data on trade balance and revised consumer price inflation.
Canada is to report on manufacturing sales.
The U.S. is to release a file of reports on consumer prices, retail sales, average real income, industrial production and New York State manufacturing.


The above schedule may change*

 

[limyeeshin]

Thursday 14 July 2016

Sterling holds higher ahead of BoE policy meeting

The British pound pushed higher ahead of the Bank of England’s monetary policy meeting on Thursday. The currency limited its gains as the meeting is expected to carry an easing policy to diminish the economic fallout from Brexit vote. Earlier, sterling held lower against the dollar with increased possibility of quantitative easing. The BoE is expected to cut its benchmark interest rate to 0.25% from 0.5% at this meeting. FX strategy managing director Kathy Lien said even if the central bank passes on a move Thursday, they will prepare everyone for easing this year. GBP/USD pair added 0.5% to 1.3212, climb off its session low of 1.3105.

Dollar recovers from its sharp loss

The U.S. dollar reduced its losses, keeping near three-month highs after the release of a Federal Reserve Beige Book. Earlier, the greenback fell after the import prices came in at -4.8% and a dovish statement from Dallas state Fed president Robert Kaplan. The Beige Book’s survey showed evidence of modest economic growth in most regions except Dallas, Chicago and Boston, where claimed the U.K. referendum affected on business activities. The dollar hit a day low of 96.09 and rebounded to 96.36, down 0.19%.

Yen reduces gains with focuses on BoJ meeting

Japanese yen slightly reduced its gains amid investors focusing on whether the Bank of Japan will add its monetary stimulus at its meeting this month. The former U.S. Federal Reserve chair Ben Bernanke told Japanese Prime Minister Shinzo Abe that the central bank has still got measures to support the economy on his visit to Tokyo. Tokyo FPG Securities president Koji Fukaya said whenever the dollar reaches 105 level, people will be selling in to this. He added that the Bank of Japan will do anything at its meeting at the end of the month that the BoJ could increase its asset purchases. USD/JPY gained 0.2% at 104.65 yen, close to its post-Brexit high of 104.98. EUR/JPY also rose 0.3% at 116.20 yen.

Emerging goes generally lower, Aussie gains after jobs data

The emerging currencies broadly fell against the dollar as safe-haven demand slightly reduces with blunted stock prices and oil price drops. The Australian dollar ticked up after the jobs report on Thursday despite the data was weaker than expectations. The RBA said that the latest data may comfort the bank but its next monetary policy decision is likely to depend more on the inflation and growth forecast for the economy. AUD/USD ticked up 0.22% to 0.7625.

Major pairs (Thursday update)

USD/JPY ↑0.46% 104.98
EUR/USD ↑0.23% 1.1115
EUR/JPY ↑0.72% 106.72
USD/CAD ↓0.25% 1.2944
GBP/USD ↑0.57% 1.3221
USD/CHF ↓0.17% 0.9835
AUD/USD ↑0.11% 0.7616
NZD/USD ↓0.82% 0.7215

 

[limyeeshin]

Edition 61｜July 18, 2016​

The U.S. dollar strengthened against major currencies last week after an attempted coup within the Turkish military. The dollar rallied against the Turkish lira by jumping 4.73% at 3.0137 after Turkey’s prime minister announced there was a coup attempt under way. A faction inside the Turkish military attacked parliament building in Ankara and took over bridges in Istanbul. The dollar pushed higher after the release of upbeat U.S. economic report. The U.S. Commerce Department reported that the retail sales rose 0.6% in June following the third consecutive increase. Demand for save haven yen was also boosted as the market shows volatility, USD/JPY pair was down 0.47% at 104.88. The dollar still gained 4.16% against the yen for the week as widely expected additional quantitative easing by Bank of Japan pressured the currency lower. The dollar gained 0.62% against other major currencies at 96.70.

The euro tumbled against the dollar and yen on late Friday with increased risk aversion after Turkey’s attempted military coup was announced by the prime minister. EUR/USD fell sharply by 0.83% to 1.1029 and EUR/JPY fell 1.22% at 115.74 after the announcement. The euro however rose against sterling after the Bank of England’s chief economist said it is poised to ease monetary policy in August as a counteract for the economic shock from the Brexit vote. EUR/GBP rose 0.56% and traded at 0.8366. Investors are looking ahead to ECB meeting this Thursday for the indication of further easing measures to settle the fallout from Brexit shock. The ECB is however widely expected to remain the monetary policy unchanged ahead of inflation forecasts.

The pound fell sharply against the dollar on Friday after the announcement from the Chief economist of BoE with negative stance on easing monetary policy. The currency still ended the week with gains of 1.85% as The Bank of England kept the interest rates on hold at the recent policy meeting, breaking the expectation of a rate cut. GBP/USD traded at 1.3181 late Friday, down 1.2%.

New Zealand dollar held lower on early Monday in Asia after the downbeat consumer price data for second quarter. New Zealand second quarter CPI came in at 0.4%, below 0.5% gain expected. The Reserve Bank of New Zealand is to review the rate in next month and the slower data widened the scope for lowering the official cash rate. NZD/USD traded at 0.7083, down 051% after the CPI release. In the weekend, China released reports on industrial production and retail sales beating expectations. AUD/USD traded at 0.7586, up 0.08%.

In the week ahead, investors will closely watch the outcome of European Central Bank meeting on Thursday for indication of whether the bank will increase easing measures to mitigate the economy fallout from the Brexit vote. The U.K. economic reports on employment and inflation will be also in focus.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, July 18
Markets in Japan are closed for the national holiday.
New Zealand is to release data on consumer price inflation.
The U.S. is to release NAHB housing market index for July.

Tuesday, July 19
The Reserve Bank of Australia is to publish minutes on its recent monetary policy meeting.
In the Euro zone, German institute ZEW is to report on economic sentiment.
The U.K. is to publish data on consumer price inflation, retail sales, producer prices inflation and housing price index.
The U.S. is to release data on new starts and building permits.

Wednesday, July 20
In Australia, Westpac is to report on CI.
Euro zone is to release data on consumer sentiment and current account.
Germany is to publish data on producer price inflation.
The U.K. is to release monthly employment report.

Thursday, July 21
Japan is to release data on machinery orders and industrial activity.
Australia is to releaser private sector report on business sentiment.
The European Central Bank is to hold monetary policy meeting and announce its policy and rate decision. The Governor Mario Draghi is to hold press conference following the meeting.
The U.K. is to publish data on retail sales.
The U.S. is to release data on weekly initial jobless claims and FHFA housing price index.

Friday, July 22
Japan is to release data on PMI manufacturing.
Germany is to publish PMI data on manufacturing and service sector.
The U.S. is to release data on manufacturing.
Canada is to release data on retail sales and consumer inflation.

The above schedule may change*

 

[limyeeshin]

Thursday 21 July 2016

Dollar rises supported by upbeat economic reports

The U.S. dollar rose against other major currencies as improvements in the U.S. economy, supported by recent upbeat reports, widened expectations for the Federal Reserve to raise interest rates in this year. Federal Funds Futures Market reflected the probability for July rate hike at 1.2% but increased probability for rate hike in September from 18.8% to 24.6% and December from 46.9% to 50.7%. Rise in New York stock prices also supported strengthening greenback. Market participants are remained cautious after the International Monetary Fund revised the global economic growth down to 3.1% from 3.2%. The IMF also lowered the forecast for U.S. growth to 2.2% from 2.4% but the reduction was more taken from the weaker first quarter GDP rather than Brexit impact. The dollar was quoted at 97.16, up 0.10% against other major currencies. Also, the currency gained as much as 1.50% against the Turkish Lira to a record high of 3.0974 after Turkey president declared a three month State of Emergency in the wake of last week’s coup attempt. The pair surged over 7% over last four sessions.

Euro and sterling rebounds ahead of ECB meeting

The British pound slightly gained against the U.S. counterpart ahead of the first European Central Bank’s monetary policy meeting after the Brexit vote. On Wednesday, a report showed that Euro zone’s consumer confidence declined sharply by 1.8% to -7.6%. The Governing Council in ECB is broadly expected to stick to current policies at Thursday’s meeting as being short of data to combat post Brexit market shock. Also, the IMF cut U.K. growth forecast to 1.7% from 1.9% for this year and 1.3% for the 2017 growth due to the Brexit. Sterling found some support on Wednesday after the U.K. Office for National Statistics reported that the unemployment rate fell. GBP/USD traded at 1.3230, up 0.19 and EUR/USD rebounded to 1.1018 after shedding 0.5% overnight.

Kiwi drops sharply after sign of easing from RBNZ

The New Zealand dollar dropped sharply after the recent assessment from the Reserve Bank of New Zealand showed possibility for further easing. On Thursday, the RBNZ suggested that more easing is possible from the overnight cash rate of 2.25% with an objective of weaker exchange rate policy. NZD/USD traded at 0.6977, dropping sharply by 0.64% after the bank’s review. Nearby Australian dollar also fell slightly after the business confidence survey came in lower than expected. AUD/USD traded at 0.7472, down 0.01%.

Major pairs (Thursday update)

USD/JPY ↑0.19% 107.08
EUR/USD ↑0.19% 1.1035
EUR/JPY ↑0.42% 118.19
USD/CAD ↓0.11% 1.3043
GBP/USD ↑0.23% 1.3235
USD/CHF ↓0.25% 0.9848
AUD/USD ↑0.21% 0.7490
NZD/USD ↓0.50% 0.6986

 

[limyeeshin]

Edition 62｜July 25, 2016

The U.S. dollar rallied against other major currencies, hitting four month highs amid widened expectations on rate hike before the end of year with supports from upbeat U.S. economic reports. Federal fund futures increased the possibility of the rate hike by December to 45% from 9% in beginning of July. Meanwhile, other global central banks hinted future adjustment of the interest rates. Minutes from central banks meetings showed that the Reserve Bank of Australia let the door opened for the possibility of further rate cut in near future and the European Central Bank remained current monetary policy but indicated further easing if needed. The dollar closed at 97.41 Friday, up 0.50% other major currencies.

Japanese yen held weaker after the release of trade balance despite better than expected figures as investors are more eyed on monetary policy divergence ahead of Bank of Japan’s policy meeting on Friday. Japan’s adjusted trade balance came in at a surplus of ¥33 billion, above ¥24 billion expected. But imports and exports declined noticeably with imports falling 18.8% and exports dropping 7.4%. The overall trade balance came in at a surplus of ¥693 billion, much better than ¥495 expected. Ahead of this week, investors are looking ahead to a monetary policy announcement from the Bank of Japan on Friday, amid broadly grown expectations for further stimulus. USD/JPY traded at 106.45, up 0.30%.

The euro weakened against the dollar on Friday after news of shooting incident at a shopping center in Munich where police said there were multiple deaths and casualties stoked investor jitters and spurred selling in the single currency. On Thursday, the European Central Bank kept the interest rates unchanged at record lows, seeking to revive growth and inflation. It opened the possibility for further stimulus in near future, emphasizing uncertainty and risks on economic outlook. EUR/USD traded at 1.0976, down 0.45%. EUR/JPY fell 0.3% at 116.31.

British pound also tumbled after the release of downbeat economic data adding concerns over the national economic growth following Brexit. GBP/USD traded at 1.3110, down 0.92%. The pound has declined almost 12% against the dollar after the referendum decisions came in to leave the European Union on June 24. Market participants widely expect the Bank of England is to cut interest rates and extend further stimulus in the August.

In the week ahead, investors will closely watch the Wednesday’s Federal Reserve policy statement for the indication on the pace of rate hike within the year. Also, monetary policy announcement from the Bank of Japan on Friday will be closely watched. Traders will be looking ahead to data on second quarter GDP from U.S., Euro zone, and U.K., for guidance on the overall global outlook in the wake of Brexit last month.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, July 25
Japan is to release trade balance.
In the euro zone, Ifo institute is to report on business climate.
The U.S. is to publish data on manufacturing in Dallas region.

Tuesday, July 26
New Zealand is to publish its trade balance.
The U.S. is to release data on new home sales, consumer confidence, PMI service sector and manufacturing in Richmond region.

Wednesday, July 27
Australia is to release data on second quarter consumer price inflation.
China is to publish data on industrial profit.
In the euro zone, GFK is to report on consumer sentiment.
The U.K. is to release a first read on second quarter gross domestic product.
The U.S. is to publish data on durable goods orders and pending home sales.
Federal Reserve is to announce the benchmark interest rate and give rate statement after the FOMC meeting.

Thursday, July 28
Australia is to release data on import and export prices for the second quarter.
Euro zone is to publish data on consumer sentiment.
Germany is to report on unemployment and release data on consumer price inflation.
The U.K. is to release data on housing prices.
The U.S. is to publish its weekly initial jobless claims and manufacturing data in Kansas region.

Friday, July 29
Japan is to release string of data on unemployment, retail sales, new starts and consumer price inflation.
Bank of Japan is to hold the monetary policy review and give rate statements.
New Zealand is to publish data on business confidence.
Australia is to release data on producer price inflation.
Euro zone is to release data on unemployment rate, consumer price inflation followed by a gross domestic product reading for the second quarter.
The U.K. is to publish data on mortgage approvals.
The U.S. is to report on second quarter GDP reading and manufacturing in Chicago region.


The above schedule may change*

 

[limyeeshin]

Thursday 28 July 2016​

Dollar slips after FOMC holds rate as expected

The U.S. dollar skid lower after the Federal Open Market Committee (FOMC) left the target range of benchmark Federal Funds Rate unchanged at 0.25*0.50% by a 9 to 1 vote on Wednesday. The FOMC said near term risks to the economic outlook have diminished, while economic activity since June has expanded at a moderate rate. The FOMC lifted the Fed Funds Rate by 25 basis points in last December after a decade and said it could raise the rates as much as four times in 2016. The Committee however lowered the median projections down to two rate hikes for the year in June. Earlier the day, pending home sales index came in at 0.2% increase, below 1.4% rise seen. Durable goods orders also fell 4.0%, further 1.1% decline expected. The dollar fell more than 0.40% against other major currencies to an intraday low of 96.71 and closed at 96.75.

Euro surges against the dollar after FOMC statement

The euro climbed against greenback as the Federal Reserve decided to hold the interest rate at current level with a 9-1 vote. In the euro zone, Deutsche Bank shares fell almost 4% to 13.63 after the beleaguered German bank’s second quarter income tumbled almost 100% on annual basis. The earnings were released before Friday’s highly anticipated figures from the European Banking Authority’s stress tests of the 51 largest banks. EUR/USD rose sharply by 0.65% and settled at 1.1058 in late trading. The euro has still fallen about 3% against greenback since unexpected Brexit referendum result in June.

Sterling stays calm despite upbeat GDP and FOMC rate hold

The U.K. Office for National Statistics reported that gross domestic product rose 0.6% in the second quarter, above 0.4% growth expected. The U.K. economic growth expanded 2.2% year-on-year, also better than 2.0% increase seen. However the report did not satisfy to boost the optimism over the outlook of the U.K. economy as it is the final measure of the growth in the run up to the Brexit from European Union on June 23. A consensus from Bloomberg shows the U.K. to contract growth by 0.1% in the third quarter. GBP/USD traded at 1.3131.

Yen edges higher ahead of BOJ

Japanese yen gained in Asia Thursday after the Fed held steady as expected overnight and investors eyed on the view on policy from the Bank of Japan on Friday. The yen weakened after reports said Prime Minister Shinzo Aba and his government will compile a stimulus package up to ¥28 trillion, or $265.3 billion to strengthen its sluggish economy. The BOJ is broadly expected to ease policy further at its meeting on Friday, which could include a rate cut into negative territory as well as additional asset purchase. USD/JPY changed hands at 105.20, down 0.18% in early trading.

Major pairs (Thursday update)

USD/JPY ↓0.54% 104.82
EUR/USD ↑0.07% 1.1068
EUR/JPY ↓0.47% 116.03
USD/CAD ↓0.42% 1.3131
GBP/USD ↓0.28% 1.3187
USD/CHF 0.00% 0.9859
AUD/USD ↑0.47% 0.7526
NZD/USD ↑0.49% 0.7111

 

[limyeeshin]

Edition 64｜August 8, 2016​

The U.S. dollar rose sharply to a one-week high against other major currencies after the release of better than expected employment report. The Labor Department reported that U.S. economy added 255,000 jobs in July, much higher than 180,000 jobs expected. June’s figure was also revised up to 292,000 jobs from 287,000. The unemployment rate held steady at 4.9% and average hourly earnings had monthly increase of 0.3%, above 0.2% gain seen. The upbeat employment data widened expectations of the interest rate hike by the Federal Reserve this year. Fed funds futures priced the possibility of the rate hike by September to 15% chance, and 44% chance by December. The greenback rose 0.5% for the day to 96.19 against other major currencies.

Japanese yen held lower after the release of disappointing adjusted current account on Monday. Japan’s adjusted current account came in at ¥1.65 trillion, much lower than ¥3.20 trillion surplus expected for July. Bank lending rose 2.1%, slightly above 2.0% seen by consensus. Earlier in Japan, investors were disappointed by details of Japanese Prime Minister Shinzo Abe’s fiscal stimulus program which led yen rose to a three week highs against the dollar. USD/JPY changed hands on Monday at 102.02, up 0.23% after the data release.

Australian dollar fell after Chinese trade data showed decline in imports. In China, July’s trade balance came in at a surplus of $52.31 billion, better than $47.6 billion expected but annual exports fell by 4.4%, further than 3.0% drop seen and imports fell 12.5%, much worse than 7.0% drop expected. FX reserves came in at CNY3.2 trillion as expected. Better surplus in trade balance was from the huge drop in imports which have lowered Australian dollar, where the country’s biggest export partner is China. AUD/USD traded at 0.7611, down 0.08%.

Elsewhere, the euro slid against the dollar with EUR/USD pair hitting 1.1046 before settling at 1.1086, down 0.4% for the day. The sterling also tumbled after the Bank of England cut interest rates to a record low of 0.25% on Thursday with fresh easing measures to combat economy downturn following the Brexit vote. GBP/USD slumped to a three-week low at 1.3022 and settled at 1.3070, 1.2% drop of the week.

In the week ahead, investors will closely watch U.S. economic reports to indicate the health of the economy that is strong enough to bear a rate hike in close future. Euro zone is to release second quarter GDP growth. Also, U.K.’s manufacturing production is to be closely watched to clarify the economy’s strength in wake of Brexit vote.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, August 8
Japan is to release data on current account.
China is to publish trade balance.
Germany is to release data on industrial production.
Canada is to report on building permits.

Tuesday, August 9
In Australia, NAB is to report on business confidence.
China is to publish data on consumer and producer price inflation.
Germany is to release trade balance.
The U.K. is to publish data on mining and manufacturing production followed by trade balance release.
In the U.S., NFIB is to report on small business optimism index followed by data release on nonfarm productivity and wholesale inventory.

Wednesday, August 10
Japan is to release data on home loans, core machinery orders as well as producer price inflation.
In Australia, Westpac is to report on consumer sentiment followed by data on home loans.
China is to release data on new yuan loans and foreign direct investment.
The U.S. is to publish private sector data on mortgage applications.

Thursday, August 11
Markets in Japan is to be closed for its national holiday.
The Reserve Bank of New Zealand is to announce its overnight official cash rate and publish rate statements.
Australia is to publish data on consumer price inflation forecast.
The U.K. is to report on housing prices.
The U.S. is to release weekly initial jobless claims report and import prices.

Friday, August 12
China is to release data on manufacturing production, retail sales, and fixed asset investment.
Germany is to publish data on consumer price inflation.
Euro zone is to report on industrial production and second quarter GDP growth.
The U.S. is to release data on retail sales, producer prices, and consumer sentiment.

The above schedule may change*

 

[limyeeshin]

Thursday 11 August 2016​

Dollar tumbles as sterling and yen rises

The U.S. dollar fell sharply as the British pound and Japanese yen rose steadily against the currency, falling to a fresh one week low against major currencies. Meanwhile in the U.S., the Department of Labor reported that job openings rose by 2.0% in June at 5.624 million, better than 5.588 million expected by analysts. Job Openings and Labor Turnover Survey also came in at 5.1 million hires in June, up 1.7%, offsetting 2.9 million quits on the same month. The dollar vs a major currencies fell more than 0.55% to 95.38 and settled at 95.59 at the close of Wednesday trading. The dollar tumbled nearly 2% since late July.

Japanese yen rises against the dollar after upbeat data

Japanese yen sharply rose against the dollar after Japan’s core machinery orders surged by 8.3 in July, far above 3.4% increase expected. The data marked the first increase in the reading in three months. The greenback has fallen almost 4% against the yen since the Bank of Japan proceeded its modest easing program and launched a ¥1 trillion ETF program on July 29. USD/JPY fell more than 0.65%, hitting below 101 after the data release.

British pound strengthens after BoE meeting

The British pound gained modestly after the Bank of England announced that it would make up a £52 million shortage of bond purchases. It was a day after the pound hit one month low at 1.2992 after the BOE resumed its purchasing program of long term sovereign bonds. Investors were reluctant to sell long-dated debts to the central bank in a reverse auction. The Bank of England said last week it would hold three gilt reverse auctions each week until the end of October, buying gilts with maturities of 3-7 years, 7-15 years, and more than 15 years. GBP/USD rose to an intraday high of 1.3095 before settling at 1.3011, up 0.07%.

Kiwi gains despite rate cut from RBNZ

New Zealand dollar rose in Asia on Thursday despite the Reserve Bank of New Zealand lowering 25b.p cut in the official cash rate to a record low 2%. The RBNZ also added that further rate cut were possible if necessary. NZD/USD traded at 0.7280, up 0.93% after the decision. Nearby, the Australian dollar also rose modestly with AUD/USD pair trading at 0.7714, up 0.13%.

Major pairs (Thursday update)

USD/JPY ↑0.15% 101.44
EUR/USD ↓0.12% 1.1166
EUR/JPY ↑0.08% 113.28
USD/CAD ↑0.14% 1.3076
GBP/USD ↓0.08% 1.3001
USD/CHF 0.00% 0.9751
AUD/USD ↑0.10% 0.7697
NZD/USD ↑0.50% 0.7249

 

[limyeeshin]

Edition 65｜August 15, 2016

The U.S. dollar held lower against other major currencies after downbeat U.S. consumer spending and inflation data, diminishing expectations for the sooner pace of Federal Reserve rate hike. The U.S. Commerce Department reported that the retail sales were flat in July, compared to 0.8% growth in previous month and lower than 0.4% rise expected. Producer prices also fell 0.4%, showing the largest drop since last September. Consumer sentiment for August also came in below expectations. The unexpectedly weak data led investors to push back expectations for the next rate hike. Fed fund futures changed the probability of a rate hike by September down to 9%. The dollar fell about 0.25% to 95.68for the day, after disappointing data.

Japanese yen rose against the dollar up to 0.7% after bundle of downbeat U.S. data release on Friday. The yen has gained in a three consecutive week against the dollar. Monday, Japan reported second quarter GDP with a gain of 0.2% annually, disappointing 0.7% increase expected. The figures weighed down by sluggish private consumption and net exports. Consumer spending, which accounts for 50% of the GDP, increased 0.2% for the quarter, slightly better than 0.1% decline expected. Japan has put together an economic stimulus package in total of ¥28.1 trillion including ¥7.5 trillion fiscal spending over next few years. USD/JPY changed hands Monday at 101.33, up 0.06% after the GDP data.

The British pound weakened further against the greenback, amid expectations that the U.K. monetary policymakers will be forced to add to recent stimulus measures to buffer the economy from Brexit vote aftershock. GBP/USD hit 1.2904 against the greenback and settled at 1.2914, down 0.3% for the day and -1.15% for the week. Meanwhile in the euro zone, industrial production rose 0.6% in June, after a 1.2% decline in previous month and above 0.5% gain expected. Also Germany’s economy has expanded 0.4% in the second quarter, above the expectations. EUR/USD climbed to a more than one week peak at 1.1221 before settling at 1.1161.

Elsewhere, the commodity linked currencies came under pressure after lower-than-expected Chinese economic data. In China, the industrial production gained 6.0% in July, slightly below 6.1% gain seen. Fixed asset investment rose 8.1%, disappointing 8.8% increase expected. Retail sales rose 102%, also missing the projections of 10.5%. Australian dollar traded at 0.7650 after the downbeat China data, where the country is Australia’s major trading partner.

In the week ahead, investors will be attentive to Wednesday’s FOMC meeting minutes for the fresh indication on the pace of next rate hike. Japan is to release second quarter preliminary growth reading, which will hint for the next step from the government, amid concerns over recent yen strength. U.K’s employment reports and prices data will also be in focus to indicate continuing effect from the Brexit decision.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, August 15
Japan is to release data on second quarter GDP, manufacturing and private spending.
China is to publish data on new yuan loans and foreign direct investments.
Switzerland is to release producer price index.
The U.S. is to report on New York state manufacturing followed by NAHB housing market index.

Tuesday, August 16
The Reserve Bank of Australia is to release minutes of its recent monetary policy meeting.
The U.K. is to publish data on consumer prices, retail prices, producer prices inflation, as well as housing price index.
Euro zone is to release data on trade balance.
In Germany, ZEW institute is to report on economic sentiment in the euro zone.
Canada is to report on manufacturing sales.
The U.S. is to publish bundle of data on new starts, building permits, consumer prices and industrial production.

Wednesday, August 17
New Zealand is to release quarterly employment report.
In Australia, Westpac is to report on economic leading indicators, followed by data on wage price index.
The U.K. is to publish data on unemployment.
In the U.S., the Federal Reserve is to release its latest meeting minutes.

Thursday, August 18
Japan is to release data on trade balance and machinery orders.
China is to publish data on property prices.
Australia is to report on employment.
Euro zone is to release data on current account and consumer price inflation.
The U.K. is to publish data on retail sales.
The U.S. is to report on its weekly initial jobless claims and Philadelphia state manufacturing.

Friday, August 19
Japan is to publish data on industrial activity.
Germany is to release data on producer price inflation.
The U.K. is to report on public sector borrowing.
Canada is to publish data on retail sales and consumer inflation.


The above schedule may change*

 

[limyeeshin]

Thursday 18 August 2016​

Dollar falls slightly after the FOMC minutes

The U.S. dollar slightly fell against the basket of major currencies after the release of recent FOMC minutes on Wednesday. The meeting depicted a committee divided for the pace of next rate hike, making investors confused to indicate the Federal Reserve’s next rate hike timing in coming months. Some members anticipated that economic conditions would soon to be strong enough to take another step in removing policy accommodation. Several members expressed concern that holding rates at persistently low levels could prompt investors to search higher yields in equity markets that leads to misallocation of capital and mispricing of risk. Others emphasized that it was better to wait for further data to determine whether prices could firm in sooner period as the inflation continues to be below 2% of Fed’s goal. The dollar fell 0.26% to 94.44 after the minute release.

Yen gains after July trade data with surplus

Japanese yen strengthened in early Asia after the trade balance came in with wider than expected surplus figures. In Japan, July’s adjusted trade balance surplus came in at ¥320 billion, more than double the ¥140 billion expected. However, imports plunged 24.7%, much more than 20.6% annual decline expected and continuing its 19th consecutive drop. Exports also fell 14.0% as expected, with 10th decline in a row. Overall the trade balance had a surplus of ¥514 billion. USD/JPY changed hands at 99.72, falling 0.56% after the data.

The aussie rises after better than expected job growth

The Australian dollar rose after the employment data showed better than expected figures. The employment change for July boosted to 26,200, much higher than 11,000 jobs expected. Unemployment rate also fell to 5.7% from stubborn 5.8% with the participation rate of 64.9% as seen. The country’s biggest trade partner China released house prices for July at an increase of 7.9% year on year from 7.3% in previous month. AUD/USD rose 0.72% and traded at 0.7711.

Major pairs (Thursday update)

USD/JPY    ↓0.11%    100.17
EUR/USD    ↑0.12%    1.1304
EUR/JPY    ↓0.02%    113.19
USD/CAD    ↓0.11%    1.2831
GBP/USD    ↑0.11%    1.3053
USD/CHF    ↓0.11%    0.9615
AUD/USD    ↑0.54%    0.7697
NZD/USD    ↑0.40%    0.7281

 

[limyeeshin]

Edition 66｜August 22, 2016​

The U.S. dollar bounced from its two months low against major currencies after San Francisco Fed President John Williams indicated optimistic views on near term rate hike. On Thursday afternoon, Williams signaled support for rate hike in September in his speech. He said, “In the context of a strong domestic economy with good momentum, it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later.” Earlier the week, New York and Atlanta Presidents also mentioned a September rate increase may be on the table. The hawkish stances of these top Fed officials reignited hopes for a sooner rate hike and boosted the dollar. The Fed funds are pricing the probability of rate hike by September at 12% and December odds are increased to 46%. The greenback gained 0.4% on Friday to close the week at 94.48.

The British pound gained higher for the week against the greenback, amid easing concerns over post Brexit growth shock. In the U.K., the data showed that retail sales, employment report and inflation index all came better than expectations, hinting that the British economy is resilient for the post-Brexit prospects. Earlier the week, sterling almost hit 31 year low of 1.2798 against the dollar after the Brexit vote in July. The pound fell 0.7% for the day but closed 1.2% higher for the week at 1.3076. Meanwhile, EUR/USD pair slipped 0.25% and traded at 1.1323 but with 1.5% weekly gain.

Japanese yen weakened against the dollar after the hawkish comments from the Federal Reserve presidents. On Monday, the Federal Reserve vice Chair Stanley Fischer hailed about the U.S. economy, boosted the dollar further. In the coming week, the speech by Federal Reserve Chair Janet Yellen will be in focus as well as Japanese inflation data to hint on Bank of Japan’s further monetary stimulus. USD/JPY changed hands at 100.72, up 0.51%.

In the week ahead, investors will be focusing on a highly anticipated speech by Federal Reserve Chair Janet Yellen for the better clues of next U.S. rate hike path. Also, the U.S. economic data will support to hint on the health of the economy for withstanding a next rate hike in sooner period. In the Eurozone, data on business activity and U.K.’s second reading on GDP will be in focus to indicate the economy in the wake of Brexit vote.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, August 22
The U.S. is to release data on Chicago region activity.
Canada is to produce data on wholesale sales.

Tuesday, August 23
Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Tokyo.
China is to release July’s CB leading indicator.
Euro zone is to produce data on PMI manufacturing, service sector, and consumer sentiment.
The U.S. is to publish data on PMI manufacturing, Richmond state manufacturing activity and new home sales.

Wednesday, August 24
New Zealand is to report on the trade balance.
Australia is to produce data on construction activity.
Germany is to release data on second quarter growth.
The U.K. is to publish private sector data on housing loans.
The U.S. is to report on existing home sales.

Thursday, August 25
In Germany, IFO institute is to report on business climate in the Euro zone.
The U.S. is to report on durable goods orders, service PMI and weekly initial jobless claims.
The Jackson Hole meeting is to take place with top central bankers and economists in Wyoming.

Friday, August 26
Japan is to release data on consumer price inflation.
The U.K. is to publish data on second quarter growth.
The U.S. is to release data on second quarter GDP followed by data on personal spending and consumer sentiment.
Fed Chair Janet Yellen is to speak at Jackson Hole meeting.


The above schedule may change*

 

[limyeeshin]

Edition 67｜August 29, 2016​

The U.S. dollar boosted against other major currencies after comments from the top Federal Reserve officials indicating potential interest rate hike as early as September. At the Jackson Hole symposium on Friday, the Federal Reserve Chair Janet Yellen commented the case for U.S. interest rate hike has strengthened in recent months with improvements in labor market and to expectations for solid economic growth. She did not indicate when the Fed would proceed but mentioned the higher rate will be decided on upcoming economic data. Fed Vice Chair Stanley Fischer also said Yellen’s speech was consistent with expectations for possibly two more rate hikes this year. He also added that the Labor Department’s August jobs report will likely weigh on the rate hike decision. The comments from the top two officials opened the door to a September rate hike. The dollar rose more than 0.8% for the day at 95.48 and gained 1.12% for the week.

Japanese yen weakened against the dollar after the release of downbeat consumer prices. In Japan, consumer prices declined by the most in three years in July, giving pressure on Bank of Japan and the government to expand measures to withstand sluggish inflation. USD/JPY soared 1.26% at 101.80 in late trading after hitting 101.94, highest level in in two weeks.

The British pound fell against the greenback but ended the week higher amid easing concerns over the economy in the wake of Brexit. On Friday, the data confirmed that the U.K. economy grew by 0.6% in the second quarter and 2.2% on annual basis. The data indicated that the economy was in healthy condition ahead of the Brexit referendum. GBP/USD traded at 1.3140, down 0.4% for the day and up 0.5% for the week. Meanwhile, the euro fell 0.77% against the dollar and traded at 1.1195, lowest level in two weeks. The euro tumbled 1.13% against the dollar on the week.

In the week ahead, investors will be focusing to U.S. economic reports to indicate better on the health of the economy for withstanding further rate hikes in short coming months. Friday’s nonfarm payrolls will be closely watched. Elsewhere, China is to release data on its manufacturing sector. Investors will also be attentive to the U.K.’s manufacturing and construction data for gauging economy’s strength amid ongoing effect over Brexit.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, August 29
Markets in the U.K. are closed for a national holiday.
The U.S. is to publish data on personal income and expenditure.

Tuesday, August 30
Japan is to release data on household spending, unemployment rate and retail sales.
Australia is to report on building approvals.
Euro zone is to publish data on consumer prices.
The U.K. is to release data on net lending.
Canada is to report on the current account.
The U.S. is to produce data on consumer sentiment.

Wednesday, August 31
New Zealand is to release data on business confidence.
Australia is to publish data on private sector credit.
Germany is to report on movements in employment and retail sales.
Euro zone is to produce data on unemployment rate and consumer price inflation.
Canada is to report on its monthly GDP.
The U.S. is to release ADP nonfarm payrolls report followed by data on pending home sales and business activity in Chicago region.

Thursday, September 1
China is to release data on manufacturing and service sector activity followed by Caixin manufacturing index.
Japan is to release data on capital expenditure.
Australia is to publish data on retail sales and product index.
The U.K. is to produce data on manufacturing.
Euro zone is to release PMI manufacturing.
The U.S. is to release bundle of data on weekly initial jobless claims, nonfarm sector productivity, PMI manufacturing, ISM manufacturing and ISM purchase price index.

Friday, September 2
The U.K. is to publish data on construction index.
Euro zone is to release data on producer price inflation.
Canada is to publish its trade balance.
The U.S. is to report on trade balance, non-farm payrolls, and durable goods orders.



The above schedule may change*

 

[limyeeshin]

Thursday 1 September 2016​

Dollar gives up gains ahead of jobs report

The U.S. dollar wavered against the euro and yen ahead of the U.S. non-farm jobs data on Friday which is likely to shape the Federal Reserve’s rate hike decision in coming months. Investors awaited Friday’s jobs report to indicate further on U.S. labor conditions to bear the rate hike and guide on Fed’s monetary policy stance. Earlier the week, the dollar surged after the Jackson Hole meeting last week after top Fed officials revived near term rate hike depending on the upcoming economic data. EUR/USD traded at 1.1162, rebounding from a three week low of 1.1123. USD/JPY traded 103.21, down 0.2% after the region’s equities held defensive with overnight drop in oil prices.

The Australian and New Zealand dollars held higher against the greenback on Thursday despite the downbeat data as investors weighed more on Friday’s closely watched U.S. employment report. In Australia, the Australian Bureau of Statistics reported that retail sales were flat in second quarter, disappointing the expectation of 0.3% increase. Another report showed that private capital expenditure dropped by 5.4% in second quarter, further than 4.2% drop seen. Also, Australia’s biggest trade partner China has released manufacturing PMI which ticked down to 500 in August from 50.6 in July. AUD/USD traded 0.7533, up 0.19%. Nearby, NZD/USD traded at 0.7254, adding 0.08%.


Major pairs (Thursday update)

USD/JPY    ↓0.14%    103.28
EUR/USD    ↓0.09%    1.1147
EUR/JPY    ↓0.23%    115.13
USD/CAD    ↓0.04%    1.3102
GBP/USD    ↑0.05%    1.3146
USD/CHF    ↓0.02%    0.9837
AUD/USD    ↑0.31%    0.7542
NZD/USD    ↑0.21%    0.7264

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[limyeeshin]

Thursday 8 September 2016​

Yen holds on gains after the upbeat GDP

Japanese yen continued to gain to on Thursday despite the release of lower-than-expected current account. Japan reported the adjusted current account with a ¥1.45 trillion surplus, below ¥1.59 trillion surplus expected and un-adjusted current account came in at surplus of ¥1.938 trillion, also below ¥2.09 seen. Bank lending for August rose 2.0% annual basis as expected. Earlier in Japan, second quarter GDP showed quarterly gain of 0.2%, surprising expectations to be flat. Year on year, GDP rose 0.7%, beating 0.2% seen. Real GDP for the second quarter upwardly revised from a preliminary estimate. Investors are looking ahead to a speech by Bank of Japan Deputy Governor later in the day for the indications central bank’s monetary policy review later the month. USD/JPY traded at 101.69.

Aussie gains as China trade data goes up

The Australian dollar rose in Asia as China trade data showed better than expected figures. The Australia’s biggest trade partner China reported that the trade balance came in at a surplus of $52.05 billion, below $58.00 billion seen and exports slowed 2.8%. But imports increased 1.5%, beating 4.9% decline expected which is the first gain in 22 months as global commodity prices showed signs to rebound. China is the world’s second largest buyer of the precious metal. In Australia, trade balance came in at a deficit of A$2.41 billion, narrower than the A$2.75 billion expected in July. The Australian dollar rose against the U.S. counterpart by 0.12% at 0.7682 after the trade report.

U.S. dollar remains moderately higher

The U.S. dollar continued on modest gains overnight against other major currencies but yet remained limited as the downbeat U.S. data lowered speculations for a next rate hike in shorter term. Earlier in the U.S., the Institute of Supply Management reported that non-manufacturing purchasing manager’s index dropped to 51.4 last month from 55.5 in July, far lower than 55.0 expected. The data came after the downbeat employment last Friday that disappointed expectations for an upcoming rate hike from the Federal Reserve. Investors are currently pricing in a 15% change of rate hike at the Fed’s meeting in September. The dollar eased 0.11% against other major currencies at 94.8.

Investors will look ahead to the European Central Bank’s views on further stimulus at the ECB meeting on Thursday, amid growth and inflation remain weak.

Major pairs (Thursday update)

USD/JPY    ↓0.09%    101.66
EUR/USD    ↑0.11%    1.1251
EUR/JPY    ↑0.03%    114.37
USD/CAD    ↓0.13%    1.2870
GBP/USD    ↑0.01%    1.3342
USD/CHF    ↓0.09%    0.9691
AUD/USD    ↑0.33%    0.7698
NZD/USD    ↑0.21%    0.7466

 

[limyeeshin]

Edition 68｜September 12, 2016​

The U.S. dollar rebounded from the two-week lows after the comments from a Federal Reserve official that ignited expectations for the near term rate hike. Boston Fed President Eric Rosengren said on Friday that a reasonable case can be made for raising interest rates in order to ovoid overheating economy. He said, the U.S. economy has proven to be more resilient to exogenous risks and gradual tightening is likely to be appropriate. Earlier in the U.S., the downbeat data had weakened the greenback with slowest level of service sector activity after 2010 following the weak jobs report that dampened the expectations for the September rate hike. The dollar held steady on Monday ahead of FOMC member Lael Brainard speech later the day. The dollar rose 0.31% to 95.33 late Friday after the hawkish comment and weighted 95.27 on Monday against other major currencies.

The euro remained with modest support after the European Central Bank held back from adding further stimulus measures last week and kept the interest rates on hold. Last week the single currency was pressured after the German exports came in with a surprising largest drop in a year, giving concerns to investors over the health of largest euro zone’s economy. EUR/USD fell 0.21% in late Friday to 1.1235 and traded at 1.1245 on Monday. Sterling also held weaker after the July’s trade balance, despite the deficit narrowed with rise in exports. GBP/USD traded at 1.3267, down 0.21%. A monetary policy decision by the Bank of England will be closely watched this week.

Japanese yen held early gains on Monday after the data release on core machinery orders with unexpected boost. In Japan, core machinery orders jumped 4.9% monthly in July with a second straight increase and beating 3.5% drop expected. Year-on-year, it gained 5.2%, compared to 0.3% rise seen. Another report of producer price index showed 0.3% fall in August, slight below 0.2% decline seen. The Cabinet Office official said there was a wide spread increase in orders from the manufacturing and non-manufacturing sectors showing a clear pickup in core orders. USD/JPY changed hands and traded at 102.54, down 0.18%.

In the week ahead, investors will be looking ahead to U.S. retail sales and inflation reports for better indications on the near term rate hike decision by the Federal Reserve. German economic sentiment will also be closely watched after the unexpected downbeat data from Germany last week.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, September 12
Japan is to release data on core machinery orders and producer prices.
In the U.S., FOMC voting member Lael Brainard and Atlanta Fed President Dennis Lockhart are to speak at an event.

Tuesday, September 13
Japan is to publish data on manufacturing activity.
China is to release data on manufacturing production and retail sales.
Australia is to produce data on business confidence.
Germany is to report on consumer prices followed by ZEW institute’s economic sentiment report.
The U.K. is to publish data on consumer price inflation and retail sales.

Wednesday, September 14
New Zealand is to release data on current account.
In the U.K., monthly employment report is due and Bank of England Governor Mark Carney and other officials are to give comments on inflation and the outlook of the economy before the Parliament’s Treasury Committee.
Euro zone is to publish data on industrial production.
The U.S. is to report on import prices.

Thursday, September 15
Financial markets in Shanghai are closed for a national holiday.
New Zealand is to produce data on second quarter GDP.
Australia is to report on monthly employment.
The U.K. is to publish data on core retail sales.
Bank of England is to announce its monetary policy decision and release its meeting minutes.
Euro zone is to release data on consumer price inflation.
The U.S. is to produce bundle of data on current account, core retail sales, producer price inflation, New York region manufacturing and weekly initial jobless claims.

Friday, September 16
Financial markets in Shanghai are remain closed for a holiday.
Canada is to publish data on manufacturing sales.
The U.S. is to release data on consumer price inflation followed by Michigan University report on consumer sentiment.

The above schedule may change*

 

[limyeeshin]

Edition 70｜September 19, 2016​

The U.S. dollar closed last week with boost to two-weeks high against other major currencies after better than expected U.S. inflation data release. The Labor Department reported that consumer prices rose 0.2% in August, slight above 0.1% gain expected. In a year, consumer prices increased 1.1%. Core consumer prices excluding food and energy categories rose 0.3% and 2.3% in a year. Investors digested the faster than expected consumer price growth to a better change of rate hike later this year. FedWatch Tool is currently pricing the short term rate hike at a 55% probability by December. The dollar edged down from its two-weeks high on Monday as investors are focusing on BOJ meeting ahead. The dollar climbed to 96.11 after the inflation data on Friday and slipped down to 95.88 on Monday.

Japanese yen held lower but with losses remained limited as expectations of radical easing measures from Bank of Japan are eased. The BOJ is to conduct a comprehensive review of its current monetary policy that combines with negative rates and an asset buying program. Some investors expect that the central bank will consider lowering interest rates to negative area as the focus of easing by shifting the main monetary policy target to rates from base money measure. The central bank is seen highly unlikely to resort to foreign bond purchases. USD/JPY eased 0.2% to 102.02 in a thinned trading due to Japanese markets being closed for the public holiday.

Meanwhile, the euro edged up against the greenback on Monday from its lowest level hit on September 6. Sterling remained under pressure after the Bank of England left the monetary policy on hold last Thursday. The central bank however indicated that there could be further cut on interest rates unless the economy catches up, and it can be as soon as November. EUR/USD traded at 1.1166, up 0.1% and GBP/USD traded at 1.3038, up 0.3% after falling 1.8% on Friday. Sterling has been retreating after hitting a seven-week high of 1.3445 in early September.

Commodity currencies found support from a rebound in oil prices on Monday after Venezuela said OPEC and non-OPEC producers were close to reaching agreement on stabilizing. AUD/USD gained 0.68% and traded at 0.7539, the highest level since Sept. 13. NZD/USD also rose 0.55% at 0.7307.

In the week ahead, investors will be looking ahead to announcements from central bank meetings in the U.S. and Japan. The Reserve Bank of Australia and Reserve Bank of New Zealand is to announce monetary policy announcement as well on Tuesday and Thursday respectively. The euro zone business activity data will also by closely watched for better indication of the health of the euro zone’s economy in the wake of Brexit vote.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, September 19
Financial markets in Japan are closed for a national holiday.
China is to release data on property prices.
Euro zone is to publish data on current account and construction production.
In the U.S., NAHB is to report on housing market index.

Tuesday, September 20
The Reserve Bank of Australia is to publish its latest policy meeting minutes.
Australia is to release data on second quarter house price inflation.
Germany is to publish data on producer price inflation.
The U.S. is to report on new starts and building permits.

Wednesday, September 21
The Bank of Japan is to announce the benchmark interest rate and give its rate statement followed by the announcement by a press conference afterwards.
Japan is to release data on trade balance and machinery orders.
The U.K. is to report on borrowing.
Canada is to publish data on wholesale sales.
The Federal Reserve is to announce the monetary policy decision and publish data on upcoming two year economic outlook.

Thursday, September 22
Financial markets in Japan will be closed for a national holiday.
The Reserve Bank of New Zealand is to announce benchmark interest rate and publish rate statement.
Euro zone is to release data on consumer sentiment and ECB economic report.
The U.S. is to publish data on initial jobless claims, FHFA housing price index, existing home sales and manufacturing activities in Chicago and Kansas City region.

Friday, September 23
Japan is to report on industrial activity.
In the euro zone, Markit is to report on manufacturing PMI and service PMI.
Canada is to publish data on retail sales and inflation.

The above schedule may change*

 

[limyeeshin]

Edition 71｜September 26, 2016​

The U.S. dollar closed last week near two weeks low amid investors await policy announcements from the Federal Reserve and the Bank of Japan. The FOMC kept the interest rate unchanged at last Wednesday’s meeting but hinted possibility for the next hike could be in December if the labor market continues to improve. According to the projection of forecast in its meeting statement, the Federal Reserve also cut the number of rate increases it expects next year and 2018. Some economists expect policymakers to avoid rate hike in November as the meeting holds few days before the election for the U.S. president. Currently, the chance for a rate hike is priced in 13%. The dollar wobbled on Monday, cautiously in a narrow range ahead of first debate between U.S. presidential candidates that could determine greenback’s near-term direction. Many expects to see dollar/yen slip on risk aversion if the debate ends in favor of Trump. Trump has strongly backed a weaker dollar. The index lost 0.75% for the week and ended the week at 95.40 against other major currencies.

Japanese yen held higher ahead of the Bank of Japan’s meeting amid investors remained skeptical about whether the last BOJ measures will be enough to target inflation. The BOJ refrained from cutting rates further or increase asset purchase measures at its last policy meeting. It instead switched to target interest rates for a way to reach its object for inflation. USD/JPY traded at 100.86, pulling back from one-month low of 100.10 on Thursday.

The euro nudged up against the dollar as well after the release of upbeat euro zone flash composite purchasing managers index. Earlier in the euro zone, the data showed that business activity in September expanded at the slowest rate since 2015. Markit’s preliminary PMI also showed drops in 19 country regions, falling to 52.6 from August figure 52.9. EUR/USD traded at 1.1234, the currency briefly rose to as high as 1.1258 on Thursday.

The British pound plunged to a session low, the lowest since August, on nerves about the pace and course of talks on Brexit. The U.K. Foreign Secretary Boris Johnson said that the country will start formal Brexit negotiations early next year, suggesting that Britatin could be on a faster pace to and exit from European Union than market’s expectations. Sterling hit 1.2915 and settled at 1.29956, down 0.92% for the day.

Commodity currencies held generally lower after crude oil prices tumbled on Friday. The Australian dollar extended Friday’s losses and traded at 0.7613 against greenback. The Canadian dollar also fell sharply on Friday after the release of disappointing domestic inflation and retail sales data. USD/CAD rose 0.96% on Friday and traded 1.3172 on Monday. Brent crude was up 0.7% after almost 4% drop on Friday amid signs Saudi Arabia and Iran showing a slight progress for preliminary agreement to freeze production.

In the week ahead, investors will be looking ahead to fresh comments from the Federal Reserve Chair Janet Yellen amid ongoing uncertainty over the next rate hike. Also European Central Bank President Mario Draghi is to speak which will guide on further ECB steps on monetary stimulus in coming months for boosting inflation. In addition, the Bank of Japan Governor Haruhiko Kuroda’s speech will be closely watched in the wake of last week’s timid decision by the BOJ to modify the monetary policy framework.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, September 26
In the Eurozone, German institute IFO is to report on business climate.
In the U.S., the first debate between U.S. presidential candidates to hold.
Also, data on new home sales and manufacturing in Dallas region are to be reported in the U.S.

Tuesday, September 27
China is to publish data on manufacture profits.
The Federal Reserve Janet Yellen is to speak at an event in Washington D.C.
In the U.S., data on hosing price index, Markit PMI and consumer sentiment are to be reported.
ECB President Mario Draghi is to speak about current development in the euro zone in Berlin.

Wednesday, September 28
The U.S. is to publish data on durable goods orders and MBA mortgage claims.
The Federal Reserve Chair Janet Yellen is to testify at the House Financial Services Committee.
St. Louis Fed chief James Bullard is to speak at an event in St. Louis.

Thursday, September 29
The Bank of Japan Governor Haruhiko Kuroda is to speak in Tokyo.
Japan is to release data on consumer sentiment.
Germany is to report on preliminary inflation data and unemployment changes.
The U.K. is to publish data on mortgage claims.
Euro zone is to produce data on business and consumer sentiments.
The U.S. is to release data on wholesale inventory, second quarter GDP, personal spending and initial jobless claims.

Friday, September 30
Japan is to release data on unemployment, consumer price inflation, manufacturing production, and construction activity.
In China, Caixin manufacturing index is to be published.
The U.K. is to report on revised second quarter GDP.
The euro zone is to release data on consumer inflation.
Germany is to report on retail sales.
The U.S. is to publish data on personal income and spending and business activity in Chicago.

The above schedule may change*

 

[limyeeshin]

Edition 72｜October 3, 2016​

The euro rose back against the U.S. dollar as concerns over the health of Deutsche Bank eased. The single currency retreated as Deutsche Bank shares rebounded after the reports that it is getting close to a deal to settle a mortgage securities investigation by paying a $5.4 billion fine. The fine was paid below the Justice Department’s original proposal of $14 billion however it reduced concerns over the outlook of German banking. The dollar was pushed to one and a half week highs against the Swiss franc, hitting USD/CHF pair to 0.9752. EUR/USD rose 0.19% at 1.1240.

The U.S. dollar started off the week with firmer trades on Monday with reduced fears over Deutsche Bank and investors looked ahead to this week’s U.S. labor reports. The dollar was up 0.1% against Japanese yen, holding above last week’s low of 100.085 which is the weakest level since late August. The Bank of Japan’s quarterly tankan survey of business sentiment released early Monday showed that Japan’s large manufacturers expect the dollar to average 107.82 yen for the fiscal year to March 2017. USD/JPY traded at 101.49.

The British pound tumbled after British Prime Minister Theresa May said that she would trigger the process for the U.K. to leave the European Union by the end of March 2017. May also told the ruling Conservative party’s annual conference that she was determined to move on with the process and win the “right deal”. GBP/USD traded at 1.2931, down 0.4%.

The Australian dollar edged down ahead of a monthly policy decision by the Reserve Bank of Australia on Tuesday. It is widely expected that the central bank is to hold is official cash rate at a record low of 1.5% following cuts in August and May. In Australia, AIG manufacturing index came in at 49.8, ticking off from sharp fall in August.

Meanwhile, gold prices erased early gains to end lower amid concerns over the path of U.S. rate hike before the year’s end and arose concerns over Deutsche Bank. Gold for December delivery fell $7.25, down 0.55%, to settle at #1,313.8 a troy ounce. Safe haven demand for gold eased as Deutsch Bank shares rebounded after the payment of %.5.4 billion fine. Gold prices generally rise when times of political or economic being uncertain. The precious metal ended down 1.79%, silver futures for December delivery were at $19.22 a troy ounce and copper for December delivery settled at $2.212 a pound.

In the week ahead, investors will be looking ahead to U.S. nonfarm payrolls report on Friday, to digest the health of the labor market amid ongoing speculation over the pace of U.S. interest rate hike. It is broadly expected that a rate hike is unlikely to be proceeded in next Federal Reserve meeting in November as it is only few weeks ahead of the presidential election.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, October 3
Financial markets in Shanghai are to be closed for a national holiday.
Financial markets in Germany will also be closed for a holiday.
In Japan, Tankan surveys are to be released on manufacturing and service sector activity.
The U.K. is to report on manufacturing activity.
The U.S. is to publish ISM data on manufacturing activity.

Tuesday, October 4
Financial markets in Shanghai are to remain closed for a national holiday.
The Reserve Bank of Australia is to announce its official cash rate and give rate statement.
Australia is to release data on building permits.
The U.K. is to report on construction activity.

Wednesday, October 5
Financial markets in Shanghai are to remain closed for a national holiday.
Australia is to publish data on retail sales.
The U.K. is to release data on service sector.
The U.S. is to release data on ADP jobs report, the ISM service sector, factory orders, and trade balance.
Canada is to publish trade balance.

Thursday, October 6
Financial markets in Shanghai are to remain closed for a public holiday.
Australia is to publish trade balance.
The European Central Bank is to release its recent meeting minutes.
Germany is to publish data on factory orders.
The U.S. is to release its weekly initial jobless claims report.

Friday, October 7
Financial markets in Shanghai are to remain closed for a public holiday.
The Swiss National Bank is to publish its foreign currency reserves.
The U.K. is to report on property price inflation and industrial production.
The U.S. is to produce data on nonfarm payrolls which will give clearer indication over U.S. labor market.


The above schedule may change*

 

[limyeeshin]

Edition 73｜October 10, 2016​

The U.S. dollar fell against major currencies last Friday after the release of disappointing U.S. employment data for September. The Labor Department reported that the U.S. economy added 156,000 jobs last month, falling from 167,000 gain in August and disappointing 176,000 new jobs seen, while the unemployment rate rose to 5.0%, above 4.9% expected. Despite the slower than expected data, the Federal Reserve’s rate hike still seems to be on foot this year. Markets currently pricing in around a 65% chance of rate hike at December’s meeting. The dollar gained 1.3% for the week with grown expectations for the Federal Reserve to raise interest rates by the end of this year.

The British pound sharply fell on Friday, falling further than 6% in Asian trading for the day. Most analysts expected that it could have caused by algorithms picking up on comments from French President Fancois Hollande, who took a rough position on Brexit. The currency has been under pressure for selling amid fears of the impact of Britain’s exit from the European Union. GBP/USD fell as low as 1.2035 before recovering to 1.2436, down 1.5% at closing. Meanwhile, the EUR/USD inched up 0.5% and settled at 1.1201.

Chines yuan was sharply lower against the dollar on Monday at 6.7015 after the People’s Bank of China weakened the fixing to the lowest since September 2010 in the first trading before the week-long National Day holiday. People’s Bank of China Governor Zhou Xioachuan and Bank of Japan Governor Haruhiko Kuroda as well as Fed Vice Chairman Stanley Fischer made comments at the weekend on the policy outlook at the IMF meeting in Washington. USD/JPY changed hands on Monday at 102.94, up 0.03% after the 1% drop on Friday. Markets in Hong Kong, Japan, and Taiwan were shut regionally on Monday.

The Australian and New Zealand dollars slightly held lower within light trade ahead of the U.S. presidential debate between Donald Trump and Hillary Clinton. The Commonwealth Bank of Australia’s currency strategist Elias Haddad said that if Trump outperforms, there would be a greater chance of the U.S. dollar would rise against most major currencies. It’s because his economic policies are inflationary and would force the Federal Reserve to increase the rates at a faster pace. Haddad also corecasted slightly firmer Aussie and Kiwi should Clinton outperform. AUD/USD traded at 0.7545, while NZD/USD traded at 0.7166. Mexican peso and Canadian dollar also rose ahead of the debate.

In the week ahead, investors will be looking ahead to Federal Reserve’s September policy meeting minutes on Wednesday for fresh indication on the pace of the rate hike. There are several speeches from Fed members including the Chair Janet Yellen within this week, amid traders look for more hints on a December rate hike. The U.S. retail sales data will be also closely watched. Elsewhere, China’s trade and inflation data will be released amid ongoing concerns over the world’s second largest economy’s slowdown.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, October 10
Financial markets in the U.S., Japan, Canada, Hong Kong, and Taiwan are to be closed for the national holidays.
Australia is to release data on foreign exchange holding.
Germany is to publish data on current account.
In the Eurozone, Sentix is to report on investors’ sentiment.
In the U.S., Chicago Fed President Charles Evans is to speak on monetary policy.

Tuesday, October 11
Japan is to release data on current account.
Australia is to publish data on home loans and NAB business confidence.
In the euro zone, ZEW institute is to report on German economic sentiment.
The U.S. is to produce data on labor market condition index.

Wednesday, October 12
Japan is to produce data on core machinery orders.
Euro zone is to release data on industrial production.
The Federal Reserve is to publish its September’s policy meeting minutes.
The U.S. is to release data on job openings and labor turnover (JOLTs).
New York Fed President Bill Dudley and Kansas City Fed President Ester George are to speak on Business Council of New York and Federal Reserve Bank of Chicago Annual Payments Symposium.

Thursday, October 13
China is to release data on trade balance.
Germany is to publish data on consumer price inflation.
The U.S. is to report on import prices and initial jobless claims.

Friday, October 14
The Reserve Bank of Australia is to release its financial stability report.
Japan is to produce data on producer price inflation.
China is to publish data on consumer and producer price inflation.
The Bank of England will release credit conditions survey.
The euro zone is to publish data on trade balance.
The U.S. is to report on retail sales, core producer price inflation and Michigan University report on consumer sentiment.
The Federal Reserve Chair Janet Yellen is to speak on macro-economic research after the crisis at the Fed Boston’s Annual Research Conference.

The above schedule may change*

 

[limyeeshin]

Thursday 13 October 2016​

Yen slightly recovers after weak Chinese data

Japanese yen changed hands against the U.S. counterpart on Thursday after the release of downbeat Chinese trade balance. The yen traded a tad weaker in early Asia after the Federal minutes showed indications to increased likelihood of rate hike before the end of this year. In Japan, bank lending for September came in at 2.2% gain, better than expected rise of 2.0%. China’s trade balance for September showed a surplus of $41.99 billion, much lower than $53 billion expected. USD/JPY changed hands at 103.70, down 0.49%.

Dollar eases after the Fed minutes

The U.S. dollar continued to hover at seven-month highs against other major currencies overnight and slightly eased on Thursday. The dollar rose ahead of the Federal meeting minutes with increased speculations for a rate hike by December, pricing at 69.5%. The minute showed indicated a rate hike is highly possible by the December. Earlier, three members of the FOMC who dissented at the last meeting may soon have the needed support for a raise, and the minutes showed that members noting a reasonable case could be made on both sides of the argument. The dollar eased 0.16% against other major currencies to 97.63.

Aussie holds lower after the inflation data

The Australian dollar traded lower against the greenback Thursday after the release of inflation data. Earlier in Australia, MI inflation expectation rose to 3.7% from 3.3% previous figure. A rise in inflation expectation would comfort the central bank as its impact on wage and price-setting behavior. The price survey however has shown some volatility in recent months. AUD/USD fell 0.36% and traded at 0.7534.

Sterling eases further with ongoing concerns on Brexit

The British pound slightly eased after some gains supported by the British Prime Minister Theresa May was forced to give way to members of parliament for influence of Parliament over her Brexit plan. She was pushed to allow Tory MPs on Tuesday to vote for a Labour motion calling for better analysis of her Brexit proposals. The motions demands for MPs to scrutinize May’s negotiating position before she proceeds withdrawal talks with other EU members. Such motion suggest the weakness of the Prime Minister’s position in Parliament. The pound has been under selling pressure with grown concerns over a hard Brexit for Britain. The Times reported on Tuesday that the U.K. could lose up to £66 billion a year with a hard Brexit. GBP/USD traded at 1.2191, down 0.02%.

Major pairs (Thursday update)

USD/JPY    ↓0.44%    103.75
EUR/USD    ↑0.13%    1.1024
EUR/JPY    ↓0.28%    114.4
USD/CAD    ↑0.06%    1.3284
GBP/USD    ↓0.11%    1.1022
USD/CHF    ↓0.14%    0.9892
AUD/USD    ↓0.38%    0.7532
NZD/USD    ↓0.08%    0.7057