Month: August 2012

By Central Bank News

EURUSD has formed a cycle top at 1.2589 on 4-hour chart. Deeper decline would likely be seen, and the target would be at the lower line of the price channel. As long as the the channel support holds, the fall from 1.2589 is treated as consolidation of the uptrend from 1.2241, and another rise towards 1.2800 is still possible. On the downside, a clear break below the trend line support will indicate that lengthier consolidation of the uptrend from 1.2042 is underway, then further fall to 1.2400 area to complete the consolidation could be seen.

Forex Signals

Financial changes can happen with lightning speed

By Elliott Wave International

History books call the period after the War of 1812 “The Era of Good Feelings.”

America was a young nation that had a sense of purpose. National political strife was at a minimum; optimism was in the air.

Major advances in technology and engineering brought the country turnpikes for easier travel and “The Canal Craze” for more efficient commerce.

Once the Erie Canal became an obvious commercial success, imitators borrowed heavily to build more. Eventually the U.S. had constructed 4,500 miles of canals.

Alas, the railroads arrived and made canals obsolete. Canal investors were ruined.

Swift economic changes have happened throughout U.S. history. And they continue to happen still.

Major economic changes come via technology: consider the automobile, telephone, radio, television, the computer and the Internet (to name a few).

At other times, economic changes are systemic.

The Next Major Economic Change May Come from the Credit Craze

Deflation is always accompanied by a preceding credit build-up.

The Era of Good Feelings came to a screeching halt when America’s first deflationary depression occurred from 1835 – 1842. Before then, credit had boomed.

America’s second major deflationary depression was the Great Depression that began in 1929. That was also preceded by a credit boom.

Today’s credit boom dwarfs those earlier examples.

The March 2008 Elliott Wave Theorist elaborates on the next potential shift in the financial tectonic plates.

Over the past 300 years the bigger the investment mania, the faster has been the ensuing collapse. The peaks of 1968 and 1835 led to deep bear markets of six and seven years, respectively. The wilder Roaring ‘Twenties, capping an 87-year rise, led to a deeper bear market, yet it was faster, lasting less than three years. The even more dramatic South Sea Bubble, which peaked in 1720, led to a still deeper bear market, yet it was even faster, lasting only two years. So given that the past ten years of topping has produced the craziest overvaluation, the largest number of bubbles and the most persistent period of market-related optimism ever, by a huge margin, I am more than ever expecting a swift resolution.

This excerpt is from an issue that published just a few months before the fastest financial changes to occur in the U.S. in the past 80 years.

The financial world doesn’t seem to feel major rumblings right now. And that’s why so many can be lulled into a false sense of financial security.

Yet, EWI’s economic indicators suggest that the next slippage of the financial plates could unleash far more financial destruction than before.

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This article was syndicated by Elliott Wave International and was originally published under the headline U.S. Economy: The Financial Tectonic Plates Are Shifting Once Again. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Domestic demand for gasoline in Iran was driving growth in the energy sector for the year. OPEC, in its latest report, said retail gasoline consumption in Iran was up more than 20 percent for the first five months of the year, though overall oil demand was relatively flat.  Inflation, meanwhile, was up from stable levels reported last year.  Iran has struggled to find a reliable consumer base given international sanctions pressure and the recent levels suggest the Islamic republic is retreating somewhat from the international energy sector.

The Organization of Petroleum Economies, in its August report, said Iranian crude oil production in part led to a decline in overall output from the Vienna-based cartel. OPEC said crude oil production for its members, not including Iraq, was reported at 28.1 million barrels per day in July, a decline of 270,000 bpd compared with the previous month.  The decline in OPEC oil production in part was led by Iran, which saw its export options curtailed by sanctions imposed by the U.S. and European governments. Tehran announced it still had a viable consumer base in China, however, which received about 12 percent of its oil needs from Iran. The Indian government, meanwhile, said it would circumvent EU sanctions by extending government-backed insurance to tankers carrying Iranian crude because of the “definite need” for oil.

Sanctions, however, have hurt the Iranian economy and its overall crude oil levels. Italian energy company Eni reported that it’s been unable to get oil out of Iran for the second straight month, however, because of insurance and banking problems. OPEC reported that the Iranian central bank posted an inflation rate of 22.9 percent this year after ending last year relatively flat. Domestically, oil demand reported a growth rate for May of 7.9 percent, or around 100,000 barrels per day. OPEC suggested any growth from Iran’s oil demand was likely the result of gasoline consumption. The Iranian Oil Ministry, however, reported that domestic gasoline consumption was down 6.1 percent during the first two weeks of Ramadan, but has since recovered modestly by 1.8 percent. Gasoline consumption in Iran was up 22 percent during the first five months of the year compared with the same period last year, OPEC said.

Growth in Iranian gasoline demand could be a sign that the country’s energy sector is retracting in response to sanctions pressure. Any external inhibitors fro Iran were in contrast to neighbouring Iraq, whose crude oil production is at least partially handicapped by domestic political disputes. On Monday, Iraqi officials said oil output reached 3.2 million bpd, taking the No. 2 spot from Iran among OPEC members.

Iranian threats to close the Strait of Hormuz in early 2012 caused an increase in oil prices. While recent spikes in crude were in response to Persian Gulf tensions, long-term trends were attributed mostly to economic stimulus initiatives in the United States and European Union.

Source: http://oilprice.com/Energy/Energy-General/Sanctions-Force-Iranian-Retreat-from-Global-Stage.html

By. Dan Graeber of Oilprice.com

By Central Bank News
    The Bank of Israel left its benchmark interest rate unchanged at 2.25 percent, as expected, as the economy continues to expand at its recent pace and inflation remains within the bank’s target range.
    But global risks remain high and this could affect Israel’s economy, the central bank cautioned, adding it expected to trim its growth forecast next month.
    “The level of economic risks from around the world, due to the developments in Europe, remains high—leading to concerns of negative effects on the domestic economy,” the Bank of Israel said in a statement, adding:
   “Second quarter macro figures which became available this month indicate continued deterioration in the state of the economies in the eurozone, the UK, Japan, and emerging markets. In contrast, there was a slight improvement in US economic activity this month.”
    The Bank of Israel cut interest rates twice this year for a total cut of 50 basis points. Rates have been on an easing path since July 2011 when they were cut from 3.25 percent.

    Consumer price inflation rose slightly in July to an annual rate of 1.4 percent from 1.0 percent in June due to higher housing costs. On a seasonally adjusted basis, the bank said inflation has been running at an annual rate of 0.9 percent, below the bank’s target of 1 to 3 percent.

By TraderVox.com

Tradervox.com (Dublin) – Last week, the FOMC Meeting Minutes were dovish and signaled Fed’s readiness to print more money spur growth in the country. Despite the lack of a clear date on when such an action will be made, the market reacted and the dollar lost ground against major peers. On the other hand, the ECB readiness for new bond buying program sparked demand for the 17-nation currency. There are seven major events this week that will affect major crosses in the market.

Monday 27

At 0800hrs, the Institute for Economic Research will release the German Ifo Business Climate data in Munich. In its previous release, the German business sentiments declined for the third straight month to 103.2 last month. The business climate in EU and Germany was at a record low in 28 months. Economists are expecting the survey to reveal improved sentiments this time round.

Tuesday 28

The US CB Consumer Confidence report will be released at 1400hrs GMT where economists are expecting a low reading. The US household’s confidence appreciated last month against the market expectation to reach 65.9 as short term improvements were expected in the housing sector.

Wednesday 29

The US GDP report will be the main report on this day, which will be released at 1230GMT. The second quarter result came out as expected, with an annualized growth rate of 1.5 percent. The market is expecting the first revision to be on the upside due to the favorable trade balance figures. On the same day, the US pending Home Sales report will be released at 1400hrs GMT. The housing sector has shown some improvements in the recent time which has provided a very positive outlook for the sector. However, Pending Homes Sales declined in June by 1.5 percent after increasing by more than five percent in the previous month. The market is expecting a rise this time round.

Thursday 30

US Unemployment Claims data will be released at its usual time at 1230hrs. Previous reports has shown signs of stabilization, with the recent figure coming out at 372K. the market is expecting a similar figure this time round.

Friday 31

The Canadian GDP data and Bernanke Talk at Jackson Hole are the main events on this day. Canadian GDP report will be released at 1230hrs where economists expect further expansion to be announced. The Canadian economy expanded at a slower pace in May, recording a 0.1 percent growth down from 0.3 percent growth in April. At 1400hrs Bernanke will talk at Jackson Hole where he is expected to provide hints on the future of monetary policy. The talks at Jackson Hole will be of interest over the weekend as Mario Draghi, the ECB President is also expected to speak but on Saturday.

Disclaimer
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Article by AlgosysFx Forex Trading Solutions

With the Euro Zone economy continuing to take a hit from the heightened uncertainty over a way forward for the debt crisis plaguing the region, the Euro is deemed to lose ground opposite the British pound today. Bundesbank voiced its opposition to the European Central Bank’s bond-buying plans, while an ally of German Chancellor Angela Merkel suggested a Greek exit from the bloc by next year, both reflecting mounting skepticism over the policies being used to combat the crisis. Such uncertainty is seemingly hampering economic prospects in the bloc as a report on German business confidence is projected to reach a more than two-year low this month.

With continuing uncertainty from the Euro Zone debt crisis seemingly taking its toll on the region’s economic prospects, the Euro is deemed to succumb to the US dollar in the exchanges to begin the week. Bundesbank expressed its criticism of the European Central Bank’s plans to buy distressed bonds while a German government official brought up the idea of Greece exiting the region by next year, reflecting the escalating skepticism over the policies being proposed to combat the crisis. Such turmoil is likely the reason why the business confidence continues to deteriorate, as evinced by today’s German Ifo report.

European leaders are entering a critical month in the debt crisis that involves the formulation of a European Central Bank bond-buying plan, a progress report by Greece’s international creditors or the troika, and an awaited German court decision on bailout funding. Earlier this month, ECB President Mario Draghi expressed that the central bank may intervene to lower yields in countries that ask Europe’s bailout fund to buy its bonds. However, Bundesbank President Jens Weidmann opposed such plans, saying that sovereign bond purchases could increase the Euro Zone governments’ reliance on such funding, making it addictive like a drug. In other words, Wiedmann does not believe that it would solve the crisis. Meanwhile, Euro leaders have said that they will wait a report from Greece’s troika of creditors before making a decision on potentially easing the terms of the $240 Billion lifeline for the nation. Nevertheless, finance and economy ministers in Germany have reaffirmed their opposition to any easing of time frame for Greece, saying that giving it additional time is tantamount to giving it more money. Alexander Dobrindt, general secretary of the governing Bavarian Christian Social Union and an ally of German Chancellor Angela Merkel, even told the German newspaper Bild that Greece would not be part of the Euro in 2013.

On the economic front, conditions are set to continue deteriorating as the Ifo Institute for Economic Research is projected to report that business confidence in Germany fell to its weakest state in 22 months in August. The German Ifo Business Climate is dropped from 103.2 points to 102.3 points this month, potentially its lowest reading since June 2010. With turmoil from the crisis continuing to hurt economic prospects, the German economy, which has carried the overall Euro Zone economy, is likely to lose further steam in the months ahead. Considering these, a short position looks viable for the Euro-Dollar today.

For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx

Source: ForexYard

The euro fell against the US dollar for the first time in a week on Friday, as questions regarding how the European Central Bank plans on containing the euro-zone debt crisis led to risk aversion in the marketplace. In addition, a worse than expected US Core Durable Goods Orders figure caused crude oil to reverse gains from earlier in the day. This week, traders will want to note a batch of potentially significant news events, including a speech from Fed Chairman Bernanke on Friday. Investors will be looking for clues in the speech regarding a possible new round of quantitative easing to boost the US economic recovery.

Economic News

USD – US Data Set to Generate Volatility This Week

The US dollar closed out last week on a moderately bullish note, as questions regarding the ECB’s ability to revive euro-zone economies, combined with worse than expected US data led to risk aversion in the marketplace. The USD/CHF gained more than 60 pips during the first half of the day, reaching as high as 0.9620, before staging a mild reversal. The pair finished out the day at 0.9595. After dropping more than 25 pips during early morning trading, the USD/JPY was able to recover its earlier losses during the afternoon session and finish out the week at 78.67.

This week, a batch of potentially significant US news is set to generate market volatility. Traders will want to note the results of Tuesday’s CB Consumer Confidence and Wednesday’s Prelim GDP and Pending Home Sales figures. Finally, investors are eagerly awaiting a speech from Fed Chairman Bernanke on Friday. Last week, the Fed hinted that a new round of monetary stimulus could happen as early as next month. If Bernanke’s speech reinforces that notion, the dollar could take significant losses as a result.

EUR – Ongoing Concerns Regarding Debt Crisis Weigh Down on Euro

After hitting a new seven-week high last Thursday against the US dollar, the euro was not able to sustain its earlier upward momentum before markets closed for the weekend. The EUR/USD fell more than 80 pips during morning trading to reach as low as 1.2480. An upward correction during the second half of the day resulted in the pair finishing out the day at 1.2513. The common-currency saw similar movement against the Japanese yen. After dropping more than 70 pips to trade as low as 97.96, the EUR/JPY was able to bounce back to close out the day at 98.44.

This week, several euro-zone indicators could lead to volatility for the euro. Today, the German Ifo Business Climate could lead to risk taking in the marketplace if its comes in above the forecasted 102.7. Traders will also want to note the results of Thursday’s Italian ten-year bond auction. High borrowing costs in Italy are one of the main concerns among investors regarding the euro-zone debt crisis. If there is solid demand for Italian bonds on Thursday, the euro could see significant gains.

Gold – Gold Finishes Week Close to 4-Month High

Hopes that the Fed will initiate a new round of monetary stimulus to boost the US economic recovery caused gold to remain close to a four-month high hit earlier in the week on Friday. The precious metal gained more than $7 an ounce for the day and closed out the week at $1669.98, just below its recent high of $1674.93.

This week, in addition to US news which is likely to lead to volatility for gold, traders will also want to pay attention to today’s German Ifo Business Climate figure and an Italian bond auction on Thursday. Any signs that the euro-zone economic recovery is speeding up could help gold extend its recent bullish trend.

Crude Oil – Crude Oil Comes Off Recent Highs

After hitting its highest level since early May during the middle of last week, worse than expected US news caused crude oil to turn bearish before markets closed for the weekend. A disappointing Core Durable Goods Orders figure led to fears that demand in the US could slow down, and caused the commodity to slip more than $1 a barrel during afternoon trading on Friday. Crude finished out the week at $96.04.

Turning to this week, traders will want to pay attention to a batch of US news set to be released in the coming days. Perhaps most importantly, a speech from Fed Chairman Bernanke on Friday is set to generate market volatility. Any mention of a new round of quantitative easing is likely to lead to risk taking in the marketplace, which could result in major gains for oil.

Technical News

EUR/USD

The weekly chart’s Bollinger Bands are beginning to narrow, signaling that this pair could see a price shift in the near future. Furthermore, the MACD/OsMA on the same chart has formed a bullish cross, indicating that the price shift could be upward. Opening long positions may be the wise choice.

GBP/USD

While the Williams Percent Range on the weekly chart has crossed over into overbought territory, most other long-term technical indicators are currently in neutral territory. Taking a wait and see approach for this pair may be the best choice, as a clearer picture is likely to present itself in the near future.

USD/JPY

The Bollinger Bands on the weekly chart are narrowing, signaling a possible price shift could occur in the coming days. In addition, the MACD/OsMA on the same chart appears close to forming a bullish cross. Traders will want to keep an eye on this indicator. If a bullish cross does indeed form, it may time to open long positions.

USD/CHF

Most technical indicators on the daily and weekly charts show this pair range-trading, making it difficult to predict long-term price trends. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself later in the week.

The Wild Card

USD/SEK

The Relative Strength Index on the daily chart is very close to dropping into oversold territory, indicating that upward movement could occur in the near future. Additionally, the Slow Stochastic on the same chart has formed a bullish cross. Forex traders may want to open long positions ahead of a possible upward breach.

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
    Here’s today’s Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.

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