April 2012 – Page 18 – InvestMacro Forex News

April 17, 2012

Australian and NZ Dollar Make Gains

The Australian dollar appreciated against most of its Major currency counterparts after the International Monetary Fund raised its global economic growth outlook, encouraging demand for high-yielding assets.

Australia’s neighbour New Zealand also saw its currency strengthen against both the U.S Dollar and the Japanese Yen. The New Zealand dollar also known as the “kiwi” saw gains as implied volatility of the G7 currencies hit its lowest level in three years.

The Kiwi dollar rose 0.1 percent versus the greenback as well as appreciating 0.6 percent versus the Yen.Tuesday’s trading saw the Aussie Dollar gain 0.3 percent against the U.S dollar whilst rallying 0.9 percent versus the Yen.

There are a number of financial reports due for release during Wednesday’s trading including Japan’s Trade Balance Report,New Zealand Consumer Price Index,National Australia Bank Quarterly Business Confidence and Bank of Japan Governor Shirakawa is due to give a speech.

Forex Market Analysis provided by ForexYard.

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

April 17, 2012

Yen Slides Against Majors Whilst Canadian Dollar Climbs

Source: ForexYard

Tuesday’s trading saw the Japanese Yen decline versus most of its Major currency counterparts including the Euro and the U.S Dollar. The fall in the Yen was due to a report out of Germany indicating a rise in investor confidence which is now at a two-year high, making riskier assets more appealing to investors.

The Yen dropped 0.4 against the U.S dollar and also fell short versus the Euro dropping 0.5 percent after seeing a 0.4 percent rise earlier on.

Elsewhere,the Canadian dollar performed well against the greenback as it appreciated the most in four months. The climb of the “loonie” came after the central bank commented on higher borrowing costs.

There are a number of financial reports still due for release this week that could affect the movements of the Major currencies including,UK Monetary Policy Meeting Minutes,Bank of Canada Monetary Policy Report,U.S Initial Jobless Claims and Existing Home Sales

Forex Market Analysis provided by ForexYard.

April 17, 2012

BOC to Keep Interest Rate, Loonie Rises

By TraderVox.com

Tradervox (Dublin) – The Canadian dollar is among the biggest movers today as it rose 1.4 percent against the yen. It strengthened against the Euro forcing the EUR/CAD to drop by 1.04 percent. The loonie advanced against the Aussie by 0.81 percent and against the US dollar by 1.03 percent. The gain in the Canadian dollar increased by after the BOC decided to leave the rate unchanged at 1 percent. In another report, manufacturing shipments in Canada dropped by 0.3 percent less than it had been expected. New motor vehicles MoM contracted by6.7 percent which is worse than expected.

The USD/CAD cross plummeted to 0.9900 after the report from the BOC. The pair had gone as low as 0.9896 which is a two week low. On the report by the Bank of Canada, policy makers said that higher borrowing costs would become appropriate since the economic growth and inflation will be faster than they had forecasted.

According to Shaun Osborne of Toronto-Dominion Bank, expectations of an earlier exit from the prolonged monetary policy are creeping in and rates might change in late 2012 or early 2013. He also indicated that there is a hawkish bias towards the headlines. The rise in the Canadian dollar is the strongest in two months. On April 2, Mark Carney, the Bank of Canada Governor, indicated that the economy had been stronger than expected while the inflation was higher. This caused the loonie to increase against most currencies. The Governor is expected to hold a press conference tomorrow as he releases a detailed quarterly economic forecast. The loonie increased against the dollar to trade at 99.13 cents per UD dollar in the early morning in Toronto.

The BOC also raised its growth forecast for the year from 2 percent to 2.4 percent but lowered the 2013 forecast to 2.4 from 2.8 it had previously given. The BOC Governor said in a statement that the exit from the current monetary policy will be weighed carefully against global and domestic economic developments.

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Article provided by TraderVox.com
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April 17, 2012

Pound Strong on Euro As Inflation Increases

By TraderVox.com

Tradervox (Dublin) – The National Statistics released its Consumer Price Index report today showing that inflation increased as expected. The CPI measures price movements through comparison of retail prices of representative shopping basket of goods and services. CPI is an indication of inflation and changes in purchasing trend where a high is seen as positive for the sterling pound and a low reading is negative.

The report released today showed an increase to 3.5 percent from 3.4 percent registered last month. This is in line with economists’ prediction and it led to a stronger pound against the euro. The GBP/USD cross climbed higher in anticipation of the report and remained high after the report was released. The Retail Price Index (RPI) declined to 3.6 percent as expected from 3.7 percent registered last month. In addition, the DCLG HPI rose as expected by 0.3 percent.

Before the report, the pound increased against the dollar to trade at 1.59 after it had fallen to 1.5820 yesterday. The pound rallied from 1.5860 to appreciate by 0.3 percent to $1.5949. It was also strong on the on the yen climbing 0.7 percent to trade at 128.69 yen. Against the euro, the Great Britain Pound rose by 0.4 percent to exchange at 82.34 pence per euro.

The sterling has been performing very well for the last one month increasing by 0.9 percent. It has been the second best performer among the ten top currencies in the world. According to David Bloom, inflation has been sticky across the board and he advises that the current increase in the UK inflation presents a good opportunity to sell into it.

The concerns in about the European debt crisis has caused investors to look for relative safe haven assets in the UK government debt hence causing gilts to decline for the first time in three days. The German bonds after Spain raised more than its target in a bill sale. Positive reports from UK have eased speculation of another round of asset purchases by the Bank of England.

April 17, 2012

Fed Struggling With a Monetary Policy Exit Strategy

By TraderVox.com

Tradervox (Dublin) – Last week saw a number of fed officials give speeches around the country talking about the current economic status and hinting on the threshold they expect to before they can abandon the near zero interest rate monetary policy. According to some analysts, the Fed is giving signals at the benchmark it is using to measure economic growth and when it expects to leave the monetary policy.

Ethan Harris, of Bank of America Merrill Lynch indicated that the policy makers are relying on communications about their expectations as a way of adding stimulus to the economy. Their sentiments so far have raised investor confidence and the dollar has advanced against major currencies.

Harris has indicated that the recent round of speeches by Fed officials is seen as a strategy to avert the actual hiking of interest rates and improve investor confidence. He explained that the present scenarios of showing the public how the Fed will react in case of any eventuality are aimed at guiding the market in advance by explaining the reaction function. This allows the market to react hence averting a possible scenario where the Fed would actually have to change the scenario.

According to the recent sentiments from Fed officials, there is little indication that the Federal Reserve market Committee will change the monetary policy before 2014. The jobless rate still remains well above the Fed’s target of 5 percent at 8.2 percent. Two Fed officials, the New York Fed President William Dudley and the Fed Vice Chairman Janet Yellen, have both supported the monetary policy in their separate speeches last week.

However, the biggest investors in the world still hold the view that the Fed will carry out another round of quantitative easing citing weakening growth and the return of the Europe debt crisis. Speculation about the intention of the Fed to buy home-loan bonds has increased 2012 returns on government backed mortgage debt.

April 17, 2012

Play Low Natural Gas Prices With Bonds

Article by Investment U

Bonds like ATP Oil and Gas provide a safe way to play record low natural gas prices and the coming boom in this fuel of the future.

I love it when things are bad! A 300- point drop in the market makes me feel like a kid at Christmas. In fact, I’m to the point where I won’t buy anything unless we have some sort of major correction or setback.

But the “wait for a market dump” philosophy presents a few problems for a bond guy like me.

The one thing about the bond market is that it doesn’t have as many wild swings as the stock market. And since there just aren’t as many sell-offs in the bond market, it requires a lot more patience to take advantage of good buying opportunities.

But there’s a very good buying opportunity in bonds, right now… It’s in an industry that is absolutely essential to our economic well being, and you definitely need to be a part of it.

Natural Gas Prices At Historic Lows

In case you don’t follow the energy markets, a glut of shale gas has driven NG prices to multi-year lows.

The Bakken, Eagle Ford, Utica and Marcellus shale gas fields are producing so much gas, developers have had to slow down and in some cases stop production. In many cases, drillers have shifted from gas drilling to shale oil drilling in the Bakken and the Utica areas.

There just isn’t the cash flow at the current market prices to justify further development of natural gas. And that’s the good news.

The slowdown in production and drop in revenue in natural gas have started showing up in the numbers of all gas developers, pipelines and sellers, and the bond and stock markets are reacting to them.

In the past few months, bond prices for most gas drillers have taken a big hit. Some of the price drops are understandable; you can’t have the bottom drop out of the market and not see a price correction in the underlying stocks and bonds.

But the bulk of the price fluctuations are the result of one of the saddest truths there is about the bond market.

The bond market is run by a bunch of hair-trigger cowards and “Chicken Littles.”

For two decades I watched bond traders, at the slightest hint of any bad news, run around like chickens without heads. I can’t count the number of times I was advised to avoid this bond or that bond, or to sell a bond just to watch it run right back up in price when the cackling finally quiets down.

In my experience, in every situation in the bond market where there has been any negative news, the traders have oversold and overreacted.

This Chicken Little attitude in the bond market is unnerving, but it creates excellent short-term buying opportunities.

Right now there are numerous gas company bonds at good discounts that are paying huge returns on very short maturities. If you’ve read any of my other articles, that description should sound very familiar.

Good companies, short maturities and discounts! Sign me up!

Here’s one I really like.

Unlike Dividends, Bond Yields Can’t Be Cut

The opening line in every research report about today’s Investment U Plus pick, and every other gas related company, is the same; they’ve been hurt by the glut of natural gas and the warmer-than-expected winter in North America.

This company missed its numbers, but management made some good decisions that improved seasonal spreads, and it upped its outlook for 2013.

But one of the reasons I really like this one is that it’s a partnership, and it can cut its payout to stockholders as necessary. So, as it claws out of this gas price pit, it can ease its fiscal burden by cutting the current $1.40 payout.

Oh, and it’s a BB- bond, which is just a hair below investment grade.

It’s an 8.875% bond that’s selling for about 94. It matures on 3/15/18, and its MEAR, minimum expected annual return, is listed below.

Twelve interest payments of $44.37, plus $60 capital gains, divided by our cost of $940, for a holding time 71 months, gives us a MEAR of 10.65%.

Keep in mind, the interest due on this bond cannot be reduced by the board. This is a legal contract between the company and the bondholders. Unlike the dividend payment on the stock, it’s written in stone and cannot be cut.

Since I know some of you won’t be satisfied with 10.6%, even though that’s 10 times what you made in the stock market over the past 12 years, and that’s assuming you did everything right. So here’s an idea for the folks out there who are looking for bigger returns.

This is a CCC- bond with an 11.875% coupon selling for about 75, or $750.

Higher Risk, Higher Reward

As with the last bond, ATP Oil and Gas has had a rough ride lately, but has lots of assets to offset even a worse case scenario in the gas business.

Here’s how the MEAR breaks down.

Seven interest payments of $59.37, plus $250 in capital gains, divided by our cost of $750, and our holding time of 36.5 months, for a MEAR of 29.17%.

Twenty-nine percent is huge, but this is a CCC-, which means it carries more risk than the BB- Investment U Plus pick.

In either case, these bonds are exactly what I live for; good companies in a beaten-up industry, high coupons, good long-term prospects, in this case, good gas assets and short maturities at a discount.

Natural gas is the fuel of the future. It will be one of our biggest exports, in the form of LNG and eventually it’ll be our primary transportation fuel. It isn’t a perfect play, there will be bumps along the way, but it beats the heck out of 2% from a 10-year treasury.

Good Investing,

Steve McDonald

P.S. Since bonds have a limited inventory, I wanted to make sure our Investment U Plus readers were able to take advantage of the BB- rated bond that I recommend in today’s article.

To access this bond and our other experts’ picks with each and every Investment U issue, click here.

Article by Investment U

April 17, 2012

“Bearish Trend Remains” for Gold, “Low Demand” for Silver sees Comex Warehouse Stocks Surge to 10-Year Highs

London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 17 April 2012, 08:30 EDT

SPOT MARKET gold prices were hovering just above $1650 an ounce ahead of Tuesday’s US trading – in line with where they have spent most of the last month – while stock markets in Europe ticked higher following Spain’s successful auction of short-term Treasury bills.

“Gold remains in a bearish trend so long as it stays below $1697, which was the most recent top on March 27,” say technical analysts at bullion bank Scotia Mocatta.

Silver prices rose to their highest level this week – hitting $31.81 per ounce – while other industrial commodities were broadly flat and government bond prices fell.

Stockpiles of silver bullion held in Comex warehouses meantime have hit their highest levels in at least decade, according to newswire Reuters, which first began compiling the data 10 years ago.

“When you are seeing people delivering into Comex, it is typically because they have nothing better to do with the metal,” explains David Jollie, strategic analyst at Mitsui Precious Metals in London.

“Generally if you are seeing Comex stocks building, you would say that means that premiums are not particularly high anywhere, and that means that demand is low.”

The Spanish government saw its short-term borrowing costs rise Tuesday when it auctioned 12-month and 18-month bills. The average yield on 12-month bills was 2.623% – up from 1.418% last month. The yield on 18-month bills jumped from 1.711% last month to 3.110%.

Spain did however manage to sell €3.2 billion of debt – above the maximum target of €3 billion announced before the auction.

“The key was again domestic bank bidding,” says Michael Leister, rate strategist at DZ Bank.
“But it doesn’t change the bigger picture too much. The key will be the bond auction on Thursday.”

Spain, whose banks were believed to be among the biggest borrowers at the European Central Bank’s longer term refinancing operations (LTRO) in December and February, plans to auction between €1.5 billion and €2.5 billion in 2-Year and 10-Year bonds two days from now.

Spanish 10-Year bond yields rose above 6% yesterday, before easing back slightly this morning, while spreads over 10-Year German bunds hit their highest levels since November.

“The positive effect of LTRO operations is now well on the wane,” reckons Lyn Graham-Taylor, London-based fixed income strategist at Rabobank.

“We are well and truly back in crisis mode.”

The government in Madrid has said it will seize control of the budgets of Spanish regions if they fail to stick to deficit limits, as prime minister Mariano Rajoy’s government seeks to bring Spain’s deficit down to the target of 3% of GDP next year, as agreed with the European Union.

Spanish debt is now the tenth riskiest sovereign debt in the world, according to a new report published by data analysis firm CMA Vision.

Inflation in the Eurozone as a whole meantime, as measured by the consumer price index, held steady at an annual rate of 2.7% last month, official data published Tuesday show. Core CPI – which excludes items such as food and energy – ticked higher, from 1.5% to 1.6%.

Here in the UK, CPI inflation rose to 3.5% last month – up from 3.4% in February.

The London Metals Exchange, which specializes in trading non-ferrous base metals, is reportedly considering offering settlement in Chinese Renminbi. Contracts are currently denominated in Dollars, Euros, Yen and Sterling – with the LME said to be considering dropping Sterling.

Over in India, traditionally the world’s largest source of gold bullion demand, jewelers are reporting a 50% drop in sales ahead of next week’s Akshaya Tritiya festival – seen as an auspicious day in the Hindu calendar to buy gold.

“Around this time, we [usually] sell 500-600 kilograms of gold daily,” former Bombay Bullion Association president Suresh Hundia, told the Wall Street Journal on Tuesday.

“But this time, purchases are down to 200-300 kilos.”

Indian jewelers staged a three-week strike recently following the Union Budget of March 16, which extended the reach of sales tax on gold as well as doubled gold import duties.

India’s central bank meantime cut its main policy interest rate today from 8.5% to 8%, the first cut in three years, citing a slowdown in economic growth.

“Upside risks to inflation [however] persist,” the Reserve Bank of India warned.

“These considerations inherently limit the space for further reduction in policy rates.”

The RBI also announced it has tightened its stance on gold lending companies, and set up a working group to look more closely at the industry.

Ben Traynor
BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

April 17, 2012

Euro Advances on German Confidence Report

By TraderVox.com

Tradervox (Dublin) – The report showed that economic sentiments grew to 13.1 against a projection of a decline to 10.7 by most economists from the previous reading of 11.0. This report indicates the difference between the share of investors who are optimistic and the share of analysts who are pessimistic. The increase in this number indicates that investors are bullish about the euro.

The yen has fallen against most of its major peers as Asian stock rose. Further, a report from the US showing that the US economy is improving might push the yen further down. However, the 17-nation currency pared some of the losses after Spain exceeded its maximum target in a bill sale earlier today. Spain sold 3.18 billion Euros of securities against a maximum target of 3 billion Euros which it had set. The sterling pound gained despite a report showing that inflation accelerated in March.

According to some analysts, the positive data from Europe and fully-participated auctions in the region are providing support for the euro and this might hold the EUR/USD cross at $1.32; however, there are those analysts who are predicting that the euro will finish the year at around $1.23.The current advance against the yen have been caused by the ZEW Economic Sentiment survey which unexpectedly rose and the demand of the Spanish 12-month bills witnessed in the last Spanish bill sale.

Reports from of Japans reluctance to embark on an easing operation have not helped the yen to with stand the pressure from the euro. However, the US dollar remained unchanged against the euro at the start of trading session in New York. The 17-nation currency advanced against the yen by 0.3 percent to trade at 105.98, it had declined by 0.4 percent yesterday. The euro remained unchanged against the greenback trading at $1.3148 after it recovered from a drop to 1.3091.

April 17, 2012

Crude Oil Trades Up on Retail Sales and Spanish Debt Crisis

Source: ForexYard

Crude oil prices reached a three-day high after better then expected U.S Retail Sales figures and played off the renewed concerns over the financial stability of Spain in the Euro-zone.

U.S retail numbers were on the rise for the month of March, coming as some what of a surprise as the outcome was greater then expected.

Crude for May delivery rose 0.8 percent to$103.77 per barrel on the New York Mercantile Exchange.The commodity was trading just below this rate at $103.68 at approximately 12:00pm London time. Despite the ongoing tensions with Iran and the West, Crude Oil has shown a 4.9% rise in prices for 2012 so far.

Forex Market Analysis provided by ForexYard.

April 17, 2012

South Pacific Dollars Decline over Concerns in Europe

By TraderVox.com

Tradervox (Dublin) – The Aussie and kiwi continued with their decline for the third day today as concerns in Europe escalated. Traders have been seen to move to safe haven assets as the crisis in Europe worsens. Traders are pointing that Spain has shown signs of a debt crisis that may warrant bailout just like Portugal, Ireland, and Greece.

The Australian dollar fell after minutes from the Reserve Bank of Australia showed that officials are willing to make interest rate cuts if the data from the country and around the world continue to deteriorate. The Chinese economy, which is Australia’s biggest trading partner, increased at a slower pace that it had been expected over the first quarter of the year.

Aussie’s South Pacific counterpart, the Kiwi, dropped to lowest in almost six weeks against the yen, as concerns about asset purchases eased last week after the Bank of Japan decided to keep it asset purchases program on hold as well as the monetary policy. The New Zealand dollar may also have been affected by the falling of global shares yesterday after Spain’s borrowing cost surged to the highest this year. Economists have given a dim outlook for the euro-zone causing the currency to decline further against major currencies.

According to Derek Mumford, market concerns are now likely to shift to Spain for the next few months which might not be good for the south pacific currencies. He expects the Aussie to test the 1.02 level against the dollar over the next couple of weeks.

The Australian dollar fell against the US dollar by 0.4 percent to $1.0317 in the Asia session making it the third day the currency have fallen. Against the yen, the Aussie fell by 0.4 percent to trade at 82.96 yen after it had weakened by 0.8 percent yesterday. The other South Pacific dollar, kiwi, dropped by 0.6 percent against the dollar to trade at 81.58 US cents; it touched 65.57 against the yen during the intraday trading, which is the weakest it has been since March 7, before closing the day 0.5 percent lower than yesterday’s close.