Month: August 2012

By Central Bank News
    The U.S. Federal Reserve kept its ultra-low benchmark federal funds rate unchanged, as expected, and repeated that it expected to keep the rate at “exceptionally low levels” at least through 2014, dashing the hopes of some that hoped it would to extend the period to 2015.
    But the U.S. central bank firmed up its statement about its readiness to boost the economy further, signaling that it is now ready to move ahead with stimulus measures if required.
    In its latest statement, following a two-day meeting of the Federal Open Market Committee (FOMC), the Federal Reserve said that it “will provide additional accommodation as needed.” This compares with the June statement in which it said it “is prepared to take further action as appropriate.” 
    To underline that readiness, the Federal Reserve said economic activity had decelerated during the first half of the year and it expects growth to remain moderate over the next few quarters before picking up “very gradually.” In June the Federal Reserve said the economy had been expanding moderately.
    “Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook,” the U.S. central bank said. 

    The Federal Reserve has held its federal funds rate at 0-0.25 percent since December 2008.
    Although economic activity decelerated in the first half, the Federal Reserve said fixed investment by business continued to advance and household spending was rising, albeit at a somewhat slower pace than earlier in the year. The housing sector remains depressed and unemployment remains elevated.
    The Federal Reserve said it expected the unemployment rate to decline only slowly towards levels that it considers consistent with its dual mandate, which calls for an inflation rate of 2 percent and maximum employment. The target for the unemployment rate has never been published but is seen to be around 6 percent.
    The Federal Reserve said it expects inflation to be around or below its 2 percent target in the medium term. Inflation was unchanged at 1.5 percent in June while GDP expanded 2.2 percent in the second quarter over the same 2011 quarter for an annual rate of 1.5 percent.

By TraderVox.com

Tradervox.com (Dublin) – The Canadian dollar weathered the demand for safety sparked by poor Chinese PMI to post a second monthly gain against the US counterpart as speculations Federal Reserve and European Central Bank might extend liquidity operations increased the Canadian dollar demand. The Canadian dollar has increased by 1.4 percent in July after posting a 1.6 percent gain in June. The increased demand for commodity related currencies has been sparked by speculations that the ECB will act to lower bond yields in Italy and Spain. The Canadian currency also posted this gain as the Federal Open Market Committee prepared to meet for their two day meeting.

Charles Arnaud, an Economist at Nomura Holdings Inc in New York noted that investors are looking at what the Fed and the European Central Bank officials will do in their respective reports this week. He added that the good run posted by the Canadian dollar has been pegged, in part, on speculation that ECB of Fed will make some form of easing. However, according to Todd Elmer of Citigroup Inc, the recent gains in commodity related dollars of South Pacific and Canada together with the Norway Krone and Swedish krona may increase further if the Chinese data improves.

In addition to these comments, Todd Elmer also suggested that the rise in riskier currencies is modest than it had been anticipated as they are closely tied with the euro. Depending on ECB’s action, there might be more risk-currency buys in this week and the coming week. The Canadian dollar has however started the month on a wrong footing as the demand for risk diminished after China’s PMI came in lower than the market had expected.

The Canadian currency closed the month at C$1.0031 per dollar, increasing by 0.2 percent on July 31.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
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By TraderVox.com

Tradervox.com (Dublin) – After a positive S&P/Case Shiller HPI data showed an increase of 2.2 percent in May from April, most economists are of the opinion that the FOMC meeting which started today will vote to delay the asset-purchases program which has been predicted as the solution to the US slowing growth. According to a survey conducted by one of the leading forex companies, investors in the market are projecting that the Federal Reserve Chairman will not announce a third round of quantitative easing this week and might wait until September to do so.

Economists are of the opinion that the Federal Open Market Committee will delay in making such a decision as they wait to see data from the job market. If there is not sustained progress in this sector and the unemployment rate remains above 8 percent, then the committee will probably announce another round of asset purchases. These comments were shared by Michael Gapen who is a senior US economist in New York at Barclays Plc. He also indicated that the Fed is not under pressure to act immediately as the economy has grown by 1.5 percent for the second quarter and the financial market have not weakened as much. Most economists are expecting the Fed to extend its commitment to hold interest rates near zero beyond the late 2014 horizon, instead of additional stimulus.

According to Paul Edelstein who is a Director of Financial Economics at HIS Global Insight in Massachusetts, there are no signs that the Fed is under pressure to act and choosing to wait until September will give the FOMC a chance to guide the market as it provides an outlook for the US economy. The FOMC is expected to keep a close eye on the Labor Department reports to be released on August 3.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Source: ForexYard

GBP

The Pound has become increasingly volatile in the past week as forex traders struggle to determine the correct market price for the Pound and its main currency crosses. Lately, the GBP has been moving on economic data coming out of the British economy. It still isn’t clear if the worst of the economic recession is over for Britain. According to unemployment figures released today, it seems the recession is far from over. However, it may be beginning to ease, as the number of people claiming the Job Seekers Alliance was nearly 30,000 less people than forecasted. As a result the GBP went bullish today. This was also helped by better than forecasted Trade Balance and Manufacturing Production figures.

Since the release of these important figures earlier today the Pound has climbed against most of its major currency pairs. The GBP/USD rate rose by a massive 140 pips as trader confidence returned back to the former safe-haven Pound. The Pound has risen by 70 pips against the EUR so far today to stand at the 0.8926 level. The question now is can GBP bullishness continue? A strong Pound may only be maintained in the coming days, if the British economy releases more better-than-expected economic figures. If this does occur, then the confidence of investors may continue to return back to the Pound in the short-term.

EUR

The focus of the minds of EUR traders has altered dramatically in the past 6 months. For example, earlier the year people were talking about EUR/GBP parity. Now investors are asking themselves if the EUR/USD can reach the 1.4000 level. This has returned to the forefront as the Dollar continues to lose strength against the Euro-Zone currency as stock market rallies in the U.S. in the past several weeks and Obama’s handling of the economy has given investors confidence that the U.S. can climb out of the recession by the 2nd or 3rd quarter of 2010. EUR bullishness vs. the USD depends a lot on the EUR and U.S. publishing to post better-than-expected data releases.

As of now in Tuesday’s trading, the EUR is up against the Dollar by 20 pips at 1.3621, down from the day’s high of 1.3709. It seems that in order for the EUR to become more solid against the USD, the EUR will need to show more proof of economic improvement in the Euro-Zone. Against the EUR today, the EUR is trading significantly lower against the JPY, as the JPY fights to show that it’s the number one safe-haven currency. Additionally, many analysts believe that Japan’s economic fortunes are beginning to improve, whereas Europe’s economy continues to falter. The key for the EUR’s fortunes for the coming week will be Germany’s ability to tackle the deepening recession. A failure to do so will lead to a bearish EUR.

CHF

The CHF or Swiss Franc has shown some increasing bullishness in the past several weeks. The markets are proof that the Franc continues to go from strength to strength, despite the global economic downturn. The CHF owes a lot of its strength to economic uncertainty amidst the financial crisis. Many forex traders feel that the Swiss economy and Swiss currency are a safe bet until the conclusion of the current global recession. Additionally, Swiss banks, such as Credit Suisse are already showing signs of improvement as the Swiss National Bank (SNB) shows its effectiveness in tackling the recession in Switzerland.

The EUR/CHF rate today currently stands at 1.5078 as this currency cross remains fairly stable. However, against the USD, the CHF is up 20 pips at 1.1064. The CHF is likely to continue its bullishness against the USD, provided that the optimism from the U.S. and Switzerland does not dissipate. Against the GBP in the past week, the CHF has climbed significantly. However, in today’s trading the Swiss Franc is down 125 pips against the British Pound due to a string of better-than-expected economic figures released from the British economy. A strong Swiss Franc may only be maintained if the Swiss government continues to successfully uphold the value of the CHF. Traders are advised to follow PPI figures from Switzerland on Thursday morning at 7:15 GMT.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

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.

By Central Bank News

By TraderVox.com

Tradervox.com (Dublin) – Reports coming from Spain indicate that ECB and German Government have offered to help Spain in lowering sovereign bond yields if the government establishes new cuts. According to reports by El Economista, German and ECB officials want Spain to commit to lowering bond yields before they can agree to help the country. This would mean that the nation would bypass full bailout if this were to be the case. The proposal is to establish new cuts in the health and education sector. Investors are looking to see whether the move to commit to new cuts will spur the European Central Bank President Mario Draghi to act, as he promised last week.

In their recent meetings, the Spanish Finance Minister Luis de Guindos and his German counterpart Wolfgang Schauble agreed that the Spanish borrowing costs are unjustified; however, the European Central Bank and Spanish Finance Ministry has refused to comment on the matter but credible sources claim that this is a matter that has been talked about. Whether this is the move Draghi was talking about or not, it is yet to be seen this week when ECB makes its Rate Decision.

Analysts have said that such a move would rule out a full bailout, which Spanish government has already denied exploring. Further, analysts have noted that establishing cuts in the health and education sectors, which are governed by autonomous regions, will cause tensions and we are yet to see how that will play itself out. However, German acceptance will quell most of Spanish public’s fears.

Whether a commitment to new cuts is a prerequisite for ECB help and German acceptance to the bond buys is something analysts are still looking at. However, it must be remembered that last year, Trichet, the former ECB President sent recommendation to Spain and Italy and after Italy announced new measures, ECB bought the nations bonds. Italy retreated from its commitment which forced the ECB to terminate the program. With these issues in focus, and Germany still opposed to direct bond buying and offering ESM a banking license, there is a high chance that Draghi and ECB might disappointment in the coming press conference. The market eagerly awaits for ECB decision and the Spanish report adds to confidence in Draghi’s words.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 1 August 2012, 07:15 EDT

U.S. DOLLAR gold prices traded around $1615 an ounce during Wednesday morning’s London session – 0.8% off this week’s high – while European stock markets were also broadly flat and US Treasuries dipped, ahead of the Federal Reserve’s latest monetary policy announcement later today.

Silver prices dropped below $28 an ounce – though they remained up on the week so far – while other commodities were broadly flat, with the exception of copper which fell following disappointing global manufacturing data.

“Investors [are] continuing to favor the US Dollar over bullion as the key safe-haven trade,” says a note from ANZ Bank.

“However we see this changing in the next six months as heightened negative sentiment surrounding Europe eases and the US Dollar loses some ground to a cheap Euro.”

“Gold’s near-term fortunes are tied to central banks’ actions,” adds Sun Yonggang, macroeconomic strategist at Everbright Futures, a division of China’s largest state-owned investment firm.

“As long as investors hold on to the possibility of further monetary easing, whether in the US or Europe or China, any decline in [gold prices] will be limited.”

Following two days of meetings, the Federal Open Market Committee is due to make its latest monetary policy announcement later today.

“I think they are inching towards another round of quantitative easing, but I am not convinced they will get there at this meeting,” says Paul Edelstein, director of financial economics at consultants IHS Global Insight.

“We do not expect any new initiative from the Fed,” agrees Eric Green, economist at TD Securities in New York.

In addition to action from the Fed, “there’s a lot of things Congress can do…to make growth stronger,” said US Treasury secretary Timothy Geithner on Tuesday.

“We pay about 1 1/2 percent for a 10-year Treasury now…because fundamentally people have faith in the ability of the US to solve its problems…It’s sensible for us to take advantage of this moment to do things that will make the economy stronger.”

Geithner also said that leaders in Europe “have to do some more things to help support growth in the near term”.

European Central Bank president Mario Draghi last week said the ECB is “ready to do whatever it takes to preserve the Euro”, a statement which led to speculation that the ECB could intervene in government bonds markets.

“We are skeptical that such intervention will come as soon as this week,” says Slavena Nazarova, economist at Credit Agricole.

“So there is quite a big risk of disappointment for the markets.”

The ECB is due to announce its latest monetary policy decisions on Thursday.

“The ECB has become more pragmatic under Draghi,” notes Berenberg Bank economist Christian Schultz, who used to work at the ECB.

“Many taboos have been shed and precedents set…the crisis has escalated to the level that the tools devised under Trichet are just not sufficient anymore, and a less dogmatic board also helps.”

“Some light is appearing at the end of the tunnel,” said Italian prime minister Mario Monti Tuesday, following a meeting with French president Francois Hollande.

“We are now seeing the results both in the willingness of European institutions as well as from the governments of individual countries, including Germany.”

Monti, who issued a joint statement with Hollande saying they will “do everything” to save the Euro, was due to fly to Helsinki today for talks with Finnish prime minister Jyrki Katainen.

“The question is whether the Germans and the Finns have the stomach for a much looser ECB policy that is more suited to the south [of Europe],” says Jonthan Tepper, partner at economic research firm Variant Perception in London.

“So far we haven’t seen much appetite for that.”

German manufacturing activity continued to contract last month, according to purchasing managers index data published Wednesday. Germany’s manufacturing PMI fell from 43.3 in June to 43.0, with a figure below 50 indicating sector contraction.

The overall Eurozone manufacturing sector also shrank at an accelerated rate, as did that of the UK, PMI figures show.

Over in China, official PMI data show manufacturing growth continued to slow, with the PMI falling from 50.2 in June to 50.1.

“The data flies in the face of assumptions that Beijing can simply place a floor under short term demand by pushing through approvals of scores of domestic projects,” says today’s currency note from Standard Bank researchers.

“Asia is finally getting caught up in the European mess with trade finally starting to buckle,” adds HSBC economist Frederic Neumann.

Sales of American Eagle gold coins by the US Mint meantime fell by nearly 50% in July compared to the previous month. Sales of American Eagles, which are specifically minted for gold investment purposes, totaled 30,500 ounces last month, the lowest July total since 2007.

Sales of silver American Eagles were down 20% month-on-month, falling to just under 2.3 million ounces, the lowest July total since 2008.

Gold ETFs meantime saw a third straight monthly decline in July, losing 3 tonnes overall, according to figures from newswire Reuters. The world’s biggest gold ETF, the SPDR Gold Shares (GLD), saw outflows of 27.6 tonnes in July, a drop of 2.2%.

Silver bullion held by the world’s largest silver ETF, the iShares Silver Trust (SLV), fell 1.4% to 9687.7 tonnes.

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.

(c) BullionVault 2011

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.

Article by AlgosysFx

The number of people unemployed across the 17 countries that use the Euro hit a record high in June, a stark reminder that Europe’s debt crisis has ramifications beyond the financial markets. Eurostat, the European Union’s statistics office, reported that 17.801 Million people were out of work in the Euro Zone in June. That was 123,000 more than in May and is the highest level since the Euro was formed in 1999. The monthly increase was the 14th in a row and means that about 2.25 Million people have lost their jobs since April 2011. Despite the increase, unemployment on a seasonally adjusted basis in June remained unchanged at a record 11.2 percent, three percentage  points higher than the US’s equivalent 8.2 percent. Europe’s Unemployment Rate for May had originally been estimated at 11.1 percent.

Spain, which is at the forefront of Europe’s debt crisis concerns, had the highest Unemployment Rate across the Euro area of 24.8 percent. Greece’s jobless rate was not far behind at 22.5 percent, although the latest figures available were for April. Many countries that use the Euro, including France and Italy, also have double-digit Unemployment Rates. Germany, Europe’s biggest economy, continues to fare far better, and its rate, according to Eurostat, dropped to 5.4 percent in June from the previous month’s 5.5 percent, but analysts believe that the powerhouse will soon start to see rising Jobless Rates.

Nonetheless, hopes have risen over the past week that Europe is preparing new measures to handle the crisis. Last week, European Central Bank president Mario Draghi said the bank is ready to do what it takes to preserve the Euro. Those comments raised expectations that, at the very least, the ECB is likely to ramp up its bond-buying program in the hope of keeping a lid on Spanish and Italian borrowing rates.

Get more news and analysis at AlgosysFx Forex Trading Solutions

Third waves are “wonders to behold”

By Elliott Wave International

Financial markets always have and always will pose two basic questions that investors seek to answer:

1. What’s the direction of the main trend?
2. How far will it go?

Systematic approaches to these questions commonly belong to either fundamental or technical analysis. Let’s consider each one briefly.

Fundamental analysis studies how a market behaves in response to external influences such as earnings, sales, competitive outlook, economic outlook and the like.

Technical analysis studies a market’s internal behavior — mainly price, but also internal measures like volume.

Elliott wave analysis is a branch of technical analysis, specifically pattern recognition.

In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns…Elliott isolated five such patterns, or “waves,” that recur in market price data.

Elliott Wave Principle: Key to Market Behavior (p. 19)

In a five-wave progression, the third wave is the most powerful.

Third waves unfold in bull and bear markets alike. Elliott Wave Principle (p. 80) describes a third wave in a bull market:

Third waves are wonders to behold. They are strong and broad, and the trend at this point is unmistakable…Third waves usually generate the greatest volume and price movement and are most often the extended wave in a series. It follows, of course, that the third wave of a third wave, and so on, will be the most volatile point of strength in any wave sequence.

Third waves can be more powerful during market declines because fear is a stronger emotion than greed.

Look at the third wave on this S&P 500 chart which published in the January 2009 Elliott Wave Financial Forecast. Notice that prices dropped like a rock, plunging well over 600 points in less than a year. (The third wave starts where the chart shows (2) and ends at (3)):

You can see on the chart that the S&P 500 had rebounded after the third wave had bottomed. Even so, the chart’s title states that there was “Room for a New Low.” Indeed, after the rebound which was wave (4), wave (5) took prices to a March 6, 2009 intraday low of 666.79.

How about now?

That depends on who you ask.

On July 10, CNBC reported on the sentiment of a chief market strategist of a capital management firm:

Ever the optimist, he is holding to his market call this year for the S&P 500 to hit 1,500.

A principal of a financial advisory firm and guest columnist for Marketwatch wrote a July 10 article titled “Stock charts don’t lie: the trend is up.” The article says:

Shares continue their winning ways, technically. The averages show a stair-step series of higher highs and higher lows, the definition of an uptrend.

By contrast, the latest Financial Forecast flat out says:

The stock market is nowhere near a lasting low.

Why does the Financial Forecast differ from the two opinions above?

Because Elliott analysts know that during a market downtrend, second waves can convince investors that the rally is a new bull market.

That can be a financially dangerous mind-set.

Optimism precedes third waves lower. Then, seemingly out of nowhere, a third wave can commence with unrelenting violence and speed.

In the chart above, you saw the optimism-driven rebound just before prices plunged.

Do not expect the financial media to provide you with advance warning of a third wave. The crowd is almost always on the wrong side of the market. Third waves arrive unannounced.

Learn How to Spot Third Waves and More – FREE! The Elliott Wave Crash Course is a series of three FREE videos that demolishes the widely held notion that news drives the markets. Each video will provide a basis for using Elliott wave analysis in your own trading and investing decisions. You’ll get the Why, What, and How of Elliott Wave Analysis: Video 1: Why Use the Wave Principle — a comprehensive look at what the financial media say drives the markets and why their “fundamentals” are usually wrong. Video 2: What is the Wave Principle — explains in vivid detail the recurring “motive” and “corrective” patterns R. N. Elliott discovered in the DJIA in 1938. Video 3: How to Trade the Wave Principle — real charts and strategies for position management, such as entry, stop, target and risk/reward assessment. Access the Elliott Wave Crash Course Now >>

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