Unusually Uncertain!
By Mike Conlon | July 22, 2010
Those were the comments that were made by Fed Chairman Bernanke at yesterdays testimony to Congress in describing his current view of the economy. This sent the market into a bit of tizzy, causing a sell-off in stocks and creating Dollar strength.
However this morning the markets are riding higher on the back of good US corporate earnings and better than expected European economic data. While stocks have been volatile lately, investors are starting to come around to realize that stocks may be the only chance they have to see gains in their portfolios as bonds are paying next to nothing.
That is investors who are unaware of the forex market. Those of you who have been following this blog know that the currency market offers added protection against downside risk and allows you to diversify into the economic story of other countries.
In Europe, stronger than expected PMI and industrial new orders data have helped the Euro rebound from yesterdays lows. This all adds up to risk-taking in the market ahead of tomorrows release of the results of the European bank stress tests.
In the UK, retail sales figures came in better than expected and US jobless claims are due out at 8:30 AM EST.
In the forex market:
Aussie (AUD): The Aussie is higher on risk-taking despite the fact that business confidence figures declined for the third straight month.
Kiwi (NZD): The Kiwi is higher much like the Aussie but has the added benefits of comments from the finance Minister who stated that he is seeing signs of economic rebalancing. The tradables sector expanded 3.4%, negating declining consumer confidence figures which were down 5.2%.
Loonie (CAD): The Loonie is somewhat mixed today as oil is higher following risk taking themes. However the market is a tad hesitant as concerns over US growth could affect Canada more than the other commodity currencies. This is evidenced by Euro strength vs. the Loonie. BOC Governor Carney is due to speak today and there is some speculation that he may back away from the dovish comments which accompanied the most recent rate hike.
Euro (EUR): The Euro is higher this morning as better than expected industrial orders and PMI data show signs of economic growth. This comes a day in advance of the bank stress tests, which is currently expected to project further Euro strength and not weakness. Something interesting to note is that China has been European debt despite the risks which shows that perhaps they favor the European plan of austerity over the US plan of extend and pretend.
Pound (GBP): The Pound is trading as would be expected on a risk taking day. In addition, household spending figures showed an increase of .7% vs. the expectation of .5%, and retail sales ex auto came in at 1% vs. an expectation of .6%. This may cause the BOE to re-think policy if inflation does not fall back below 3%.
Dollar (USD): The Dollar is the whipping boy today as Bernanke basically told the world that the US economy stinks in no uncertain terms. This morning, jobless claims came in higher than expected at 464K vs. and expectation of 445K. Existing home sales and the house price index are due out later this morning but I dont expect those figures to be encouraging either.
Yen (JPY): The Yen is mostly lower though trading higher against the Dollar, despite the fact that the rhetoric is starting to pick up from various ministers who are concerned about Yen strength. The Japanese are known to intervene in their currency but at this point the market does not care as the US dollar is clearly the least desirable currency.
Well short of calling Bernanke Captain Obvious; no kidding that US economic prospects are uncertain. However I dont know why he thinks it is unusual. Lets face it, Bernanke is more of a history buff than forward-thinker, and perhaps his reliance on his study of the Great Depression has led him astray.
World economies couldnt be more different today than they were some 70 years ago. To think that because the economy is not behaving like you thought it would based on interpretation of an event that occurred so long ago is borderline stupidity.
Heres some certainty for ya Ben: encourage this administration to stop the profligate spending! Economies around the globe have decided to cut the fat and take their medicine; its a shame that US politicians dont have the same political backbone.
This is akin to saying that it is unhealthy for a person to lose 50 pounds. While this would be true for a 100 pound woman, it most certainly would NOT be for a woman who weighed twice that amount.
And that is the problem that we have in the US today folksthat when politicians look in the mirror, they cant recognize that we are obese! Its like reverse economic anorexia!
Its time to cut the fat here in the US, starting with our politicians and this administration. Trying to maintain an unhealthy weight is, well unhealthy.
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
To follow these events live with a free, real-time practice account, click here! Dont miss out on the worlds fastest growing market!
By Mike Conlon | July 22, 2010
Those were the comments that were made by Fed Chairman Bernanke at yesterdays testimony to Congress in describing his current view of the economy. This sent the market into a bit of tizzy, causing a sell-off in stocks and creating Dollar strength.
However this morning the markets are riding higher on the back of good US corporate earnings and better than expected European economic data. While stocks have been volatile lately, investors are starting to come around to realize that stocks may be the only chance they have to see gains in their portfolios as bonds are paying next to nothing.
That is investors who are unaware of the forex market. Those of you who have been following this blog know that the currency market offers added protection against downside risk and allows you to diversify into the economic story of other countries.
In Europe, stronger than expected PMI and industrial new orders data have helped the Euro rebound from yesterdays lows. This all adds up to risk-taking in the market ahead of tomorrows release of the results of the European bank stress tests.
In the UK, retail sales figures came in better than expected and US jobless claims are due out at 8:30 AM EST.
In the forex market:
Aussie (AUD): The Aussie is higher on risk-taking despite the fact that business confidence figures declined for the third straight month.
Kiwi (NZD): The Kiwi is higher much like the Aussie but has the added benefits of comments from the finance Minister who stated that he is seeing signs of economic rebalancing. The tradables sector expanded 3.4%, negating declining consumer confidence figures which were down 5.2%.
Loonie (CAD): The Loonie is somewhat mixed today as oil is higher following risk taking themes. However the market is a tad hesitant as concerns over US growth could affect Canada more than the other commodity currencies. This is evidenced by Euro strength vs. the Loonie. BOC Governor Carney is due to speak today and there is some speculation that he may back away from the dovish comments which accompanied the most recent rate hike.
Euro (EUR): The Euro is higher this morning as better than expected industrial orders and PMI data show signs of economic growth. This comes a day in advance of the bank stress tests, which is currently expected to project further Euro strength and not weakness. Something interesting to note is that China has been European debt despite the risks which shows that perhaps they favor the European plan of austerity over the US plan of extend and pretend.
Pound (GBP): The Pound is trading as would be expected on a risk taking day. In addition, household spending figures showed an increase of .7% vs. the expectation of .5%, and retail sales ex auto came in at 1% vs. an expectation of .6%. This may cause the BOE to re-think policy if inflation does not fall back below 3%.
Dollar (USD): The Dollar is the whipping boy today as Bernanke basically told the world that the US economy stinks in no uncertain terms. This morning, jobless claims came in higher than expected at 464K vs. and expectation of 445K. Existing home sales and the house price index are due out later this morning but I dont expect those figures to be encouraging either.
Yen (JPY): The Yen is mostly lower though trading higher against the Dollar, despite the fact that the rhetoric is starting to pick up from various ministers who are concerned about Yen strength. The Japanese are known to intervene in their currency but at this point the market does not care as the US dollar is clearly the least desirable currency.
Well short of calling Bernanke Captain Obvious; no kidding that US economic prospects are uncertain. However I dont know why he thinks it is unusual. Lets face it, Bernanke is more of a history buff than forward-thinker, and perhaps his reliance on his study of the Great Depression has led him astray.
World economies couldnt be more different today than they were some 70 years ago. To think that because the economy is not behaving like you thought it would based on interpretation of an event that occurred so long ago is borderline stupidity.
Heres some certainty for ya Ben: encourage this administration to stop the profligate spending! Economies around the globe have decided to cut the fat and take their medicine; its a shame that US politicians dont have the same political backbone.
This is akin to saying that it is unhealthy for a person to lose 50 pounds. While this would be true for a 100 pound woman, it most certainly would NOT be for a woman who weighed twice that amount.
And that is the problem that we have in the US today folksthat when politicians look in the mirror, they cant recognize that we are obese! Its like reverse economic anorexia!
Its time to cut the fat here in the US, starting with our politicians and this administration. Trying to maintain an unhealthy weight is, well unhealthy.
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
To follow these events live with a free, real-time practice account, click here! Dont miss out on the worlds fastest growing market!
Filed under Latest FX Articles · Tagged with downside risk, fed chairman bernanke, mike conlon, retail sales figures, uk retail sales
Market Review - 11/06/2010 21:43 GMT
Dollar gains on concerns over economic recovery
http://www.acetraderfx.com
Despite falling for 3 consecutive days versus the euro, dollar gained on Friday after the release of much weaker-than-expected U.S. retail sales data, rekindling concerns that global economic recovery remained fragile and prompted risk aversion activities.
Although the single currency ratcheted higher to 1.2153, the pair fell sharply to 1.2045 after the unexpectedly weak U.S. retail sales figures, retail sales dropped by 1.2% in May versus economists forecast of an increase of 0.2%. This was also the biggest and first decline recorded since the reading of -2.2% in September 2009, however, cross-buying in euro provided support to the single currency throughout the day as eur/gbp rose from 0.8210 to 0.8327 while eur/chf surged from 1.3816 to 1.3947 and the single currency rebounded strongly from said low in late NY session.
The British pound initially edged up to 1.4760 in European morning as traders braced for a better-than-expected U.K. industrial and manufacturing production data and active cross-buying in sterling lifted price initially. However, the data turned out to be weaker-than-expected and a wave of long liquidation sent cable sharply lower and sterling fell to as low as 1.4505 in NY afternoon before staging a minor rebound. U.K. industrial and manufacturing production in April came in at -0.4% m/m and 2.1% y/y (forecast was 0.4% and 2.2%) and -0.4% m/m and 3.4% y/y (consensus forecast was 0.5% m/m and 3.8% y/y) respectively.
Versus the Japanese yen, the greenback traded with a firm undertone in Asia and climbed to 91.79 on renewed cross selling in yen due to early rise in Asian stocks and European stocks. However, the pair briefly dipped to 91.20 in NY morning after the weak US retail sales figures. Despite the aforesaid retreat, the pair later rebounded on short-covering before moving sideways and ending the day at 91.67. On economic front, U.S. Michigan Consumer Sentiment Index rose to 75.5, higher than the economists' forecast of 74.5, from previous reading of 73.6.
Aud/usd and nzd/usd also gained strength in the late US session on improved risk appetite as DJI pared morning losses and turned into positive territory in NY afternoon lifted by gains in NASDAQ which rose by 1.12%. DJI rose by 0.38%, aud/usd climbed to 0.8507 and nzd/usd rose to 0.6912.
In other news, ECB's Stark told Reuters Insider that there would be no alternative to the euro for Europeans. Stark added the single currency is the future and said the debt crisis would not limited to the euro area of regions. Separately, Greek Prime Minister Papandreou said that 'We will pay our debt' and 'Greece's fiscal consolidation program is on track and will remain so.'
Meanwhile, China said it would keep on high alert on euro zone crisis but euro zone crisis helped China ease inflationary pressure as China's CPI accelerated to a 19-month high of 3.1% in May y/y.
Economic data to be released in next week include: New Zealand Retail sales , Japan Industrial prod'n, Japan Capacity utilisation , Swiss Combined PPI , EU Industrial prod'n on Monday, U.K. RICS house prices , Australia Reserve Bank's Jun Minutes , Japan BOJ rate decision , U.K. CPI, RPI , DCLG house prices , Germany ZEW index , EU Employment , Trade balance , U.S. Empire state mfg, Net LT TIC flows , NAHB housing mrkt index on Tuesday, Australia Westpac leading economic index , Japan BoJ Monthly Report , Machine tools orders , U.K. Claimant count , ILO unemployment rate , Swiss ZEW index , EU HICP , Labour cost , U.S. Building permits and Housing Starts , PPI , Capacity utilisation and Industrial prod'n on Wednesday, Swiss SNB rate decision , U.K. Retail sales , U.S. CPI , Current account, Real earnings , Jobless claims, Leading indicators on Thursday, Germany PPI , U.K. PSNCR and PS net borrowing , Canada Leading indicators on Friday.
Dollar gains on concerns over economic recovery
http://www.acetraderfx.com
Despite falling for 3 consecutive days versus the euro, dollar gained on Friday after the release of much weaker-than-expected U.S. retail sales data, rekindling concerns that global economic recovery remained fragile and prompted risk aversion activities.
Although the single currency ratcheted higher to 1.2153, the pair fell sharply to 1.2045 after the unexpectedly weak U.S. retail sales figures, retail sales dropped by 1.2% in May versus economists forecast of an increase of 0.2%. This was also the biggest and first decline recorded since the reading of -2.2% in September 2009, however, cross-buying in euro provided support to the single currency throughout the day as eur/gbp rose from 0.8210 to 0.8327 while eur/chf surged from 1.3816 to 1.3947 and the single currency rebounded strongly from said low in late NY session.
The British pound initially edged up to 1.4760 in European morning as traders braced for a better-than-expected U.K. industrial and manufacturing production data and active cross-buying in sterling lifted price initially. However, the data turned out to be weaker-than-expected and a wave of long liquidation sent cable sharply lower and sterling fell to as low as 1.4505 in NY afternoon before staging a minor rebound. U.K. industrial and manufacturing production in April came in at -0.4% m/m and 2.1% y/y (forecast was 0.4% and 2.2%) and -0.4% m/m and 3.4% y/y (consensus forecast was 0.5% m/m and 3.8% y/y) respectively.
Versus the Japanese yen, the greenback traded with a firm undertone in Asia and climbed to 91.79 on renewed cross selling in yen due to early rise in Asian stocks and European stocks. However, the pair briefly dipped to 91.20 in NY morning after the weak US retail sales figures. Despite the aforesaid retreat, the pair later rebounded on short-covering before moving sideways and ending the day at 91.67. On economic front, U.S. Michigan Consumer Sentiment Index rose to 75.5, higher than the economists' forecast of 74.5, from previous reading of 73.6.
Aud/usd and nzd/usd also gained strength in the late US session on improved risk appetite as DJI pared morning losses and turned into positive territory in NY afternoon lifted by gains in NASDAQ which rose by 1.12%. DJI rose by 0.38%, aud/usd climbed to 0.8507 and nzd/usd rose to 0.6912.
In other news, ECB's Stark told Reuters Insider that there would be no alternative to the euro for Europeans. Stark added the single currency is the future and said the debt crisis would not limited to the euro area of regions. Separately, Greek Prime Minister Papandreou said that 'We will pay our debt' and 'Greece's fiscal consolidation program is on track and will remain so.'
Meanwhile, China said it would keep on high alert on euro zone crisis but euro zone crisis helped China ease inflationary pressure as China's CPI accelerated to a 19-month high of 3.1% in May y/y.
Economic data to be released in next week include: New Zealand Retail sales , Japan Industrial prod'n, Japan Capacity utilisation , Swiss Combined PPI , EU Industrial prod'n on Monday, U.K. RICS house prices , Australia Reserve Bank's Jun Minutes , Japan BOJ rate decision , U.K. CPI, RPI , DCLG house prices , Germany ZEW index , EU Employment , Trade balance , U.S. Empire state mfg, Net LT TIC flows , NAHB housing mrkt index on Tuesday, Australia Westpac leading economic index , Japan BoJ Monthly Report , Machine tools orders , U.K. Claimant count , ILO unemployment rate , Swiss ZEW index , EU HICP , Labour cost , U.S. Building permits and Housing Starts , PPI , Capacity utilisation and Industrial prod'n on Wednesday, Swiss SNB rate decision , U.K. Retail sales , U.S. CPI , Current account, Real earnings , Jobless claims, Leading indicators on Thursday, Germany PPI , U.K. PSNCR and PS net borrowing , Canada Leading indicators on Friday.
Filed under Latest FX Articles · Tagged with cross buying, retail sales data, retail sales figures, risk aversion, single currency
In a surprising development, both U.S. retail sales and core retail sales figures came in well above expectations today, defying most predictions. Analysts had predicted that the numerous winter storms that had wreaked havoc on much of the United States in February would cause consumer spending to drop. This was not the case, [...]
Filed under ForexYard, Latest FX Articles · Tagged with consumer spending, havoc, retail sales figures, united states, Winter Storms
The British Pound declined against the spectrum of major currencies in overnight trade after a disappointing set of house price and retail sales figures as well as rumors that Moody’s may downgrade the bonds of several UK banks.
Filed under Forex and Currency Trading News, Latest FX Articles · Tagged with house price, house prices, retail sales figures, rsquo, uk banks
The British Pound declined ahead of an interest rate decision from the Bank of England, falling to the lowest level in over a week to trade at 1.5930 against the US Dollar. Swiss inflation and Euro Zone retail sales figures are also on tap.
