Month: September 2012

By Central Bank News

By Central Bank News
   The balance sheet of the U.S. Federal Reserve will expand about 5 percent to around $2.9 trillion by the end of 2012 as a result of its latest plan to purchase additional mortgage-backed securities (MBS), according to a study by the Federal Reserve Bank of Cleveland.
    The Federal Reserve’s policy-making body, the Federal Open Market Committee (FOMC), decided on Sept. 13 to expand its purchase of assets to strengthen the U.S. economy and improve the jobs market, a move known as QE3 (Quantitative Easing 3).
    The Federal Reserve’s balance sheet was just under $900 billion in early 2008 but it has expanded to just over $2.8 trillion currently, following earlier rounds of purchases of assets, such as Treasury bonds, MBSs and other debt issued by government agencies.
    Under the latest asset purchase program, the Federal Reserve will purchase $40 billion of agency MBSs a month. Unlike earlier asset purchase programs, the Federal Reserve did not put a time or size limit on the program, but said it would continue to purchase the securities until the outlook for the labor market improved substantially.

     “Looking ahead to next year, if the Committee continues to purchase MBS to support the economic recovery, the size of the Federal Reserve’s balance sheet will likely continue to expand,” the authors, Bill Bednar and Todd Clark, wrote in “Balance Sheet Implications of New Fed Policies.”
     The Federal Reserve will also continue its current policy of reinvesting proceeds from its current holdings of agency debt and MBSs in new mortgage-backed securities, which means that there would be no reduction in the holdings of MBSs over time.
    “Assuming a constant level of current holdings through the end of the year, the decision to purchase an additional $40 billion each month will expand the Fed’s portfolio of MBSs by about $145 billion during that time. This would bring the total value of MBS holdings up to nearly $987 billion, a 17 percent increase from the value in early September,” the authors said, adding:
    “Assuming that the level of the other assets on the Fed’s balance sheet remain somewhat constant throughout the remainder of the year – a reasonable assumption – the $145 billion in additional mortgage -backed securities should lead to a comparable increase in the size of the balance sheet overall. The resulting size of approximately $2.9 trillion would be about a 5 percent increase from the balance sheet’s current level,”
    www.CentralBankNews.info

By Central Bank News

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.

London Gold Market Report
from Ben Traynor
BullionVault
Friday 21 September 2012, 08:15 EDT

WHOLESALE gold bullion prices held above $1770 an ounce Friday morning in London, a few Dollars below six-month highs hit earlier in the week, while stocks and commodities were also broadly flat ahead of a meeting between the leaders of Spain and Italy, with press reports suggesting plans are being discussed for a Spanish bailout.

Heading into the weekend, spot gold would make its fifth straight weekly gain if it closes above $1770 per ounce later today, while gold in Euros remained within 1% of last year’s all-time high this morning.

“The large uptrend is still intact, and it is positive that gold has been able to hold onto recent gains,” says the latest technical analysis note from bullion bank Scotia Mocatta.

“The long-term inflation outlook…is keeping gold sentiment buoyed,” says one trader in Shanghai, referring to last week’s Federal Reserve decision to begin open-ended quantitative easing.

Gold bullion holdings to back the world’s biggest gold ETF SPDR Gold Shares (GLD) rose to a new 13-month high of 1308.4 tonnes yesterday.

Deutsche Bank Asset Management meantime reports growing interest in gold among its clients, who are “increasingly concerned” about inflation risks.

Silver bullion meantime fell to $34.63 an ounce this morning – slightly below last week’s close.
The world’s biggest silver ETF, iShare Silver Trust (SLV) saw its holdings hit a new 11-month high yesterday at over 9940 tonnes.

Chinese silver imports rose 304 tonnes last month, up nearly 12% from a month earlier but down 3.4% year-on-year, official Chinese customs data show.

“We still believe that domestic stockpiles [of silver in China] are extremely large when compared to the lackluster fabrication demand,” says a note from Standard Bank, whose analysts highlighted the problem of Chinese silver stockpiles back in February.

“We do not expect Chinese fabrication demand for silver to improve any time soon.”

European Union officials are in talks with Spain’s government over conditions that might be imposed should Spain ask for a bailout, the Financial Times reports.

“It is a kind of ‘proto-program’, if such were needed,” an EU official told the FT.

Spanish leaders are considering a freeze on pension payments and a sooner-than-anticipated raising of the retirement age in a bid to save an annual €4 billion, according to newswire Reuters.

A condition of the European Central Bank’s new Outright Monetary Transactions program – which would see the ECB buy sovereign debt on the open market to reduce borrowing costs – is that beneficiary nations must already be in a bailout program and must be fulfilling agreed conditions such as meeting deficit targets.

Spain has already agreed to borrow up to €100 billion to fund the restructuring of its banking sector.

An independent stress test of Spanish banks is expected to show that between €50 billion and €60 billion will be needed, Reuters reports, raising the prospect that Spain could seek to use the remainder to fund the government and stave off the need for a formal sovereign bailout.

Spanish prime minister Mariano Rajoy is due to meet with Italian prime minister Mario Monti in Rome around lunchtime. Both countries saw their borrowing costs rise sharply in the summer, with benchmark 10-Year yields on Spanish government debt hitting new Euro-era highs in July.

Like Rajoy, Monti is reported to be reluctant to request a sovereign bailout.

“There won’t be any nation that voluntarily, with a preemptive move, even if rationally justified, would go to an international body and say: ‘I give up my national sovereignty’,” said Italian undersecretary of finance Gianfranco Polillo last night.

“I rule it out for Italy and for any other country.”

Here in the UK, the government’s deficit was smaller than expected last month, official figures published Friday show.

Investment managers holding UK government bonds meantime have said the British government can relax its austerity measures, according to a report by Bloomberg.

“Now that growth has continued to disappoint, there is a good case for higher spending in public-sector investment,” says Michael Amey, London-based portfolio manager at world’s biggest bond fund Pimco.

“Every government has to cut spending, but too many cuts may slow the economy,” agrees Yoshiyuki Suzuki, head of fixed income at Fukoku Mutual Life Insurance in Tokyo.

In Vietnam meantime, the central bank-owned Saigon Jewelry Company began processing and rebranding the gold bars of other refiners yesterday, after the central bank handed it a monopoly on gold bullion production earlier this year.

AngloGold, the world’s third-largest gold bullion producer, became the latest gold mining firm in South Africa to be hit by strike action late Thursday.

“The night shift embarked on an unprotected strike at Kopanang and the morning shift didn’t go down either,” said AngloGold spokesman Alan Fine.

The strike follows a series of stoppages that have hit platinum and gold mining operations in South Africa. These include protests at mines operated by Gold Fields and demonstrations at Lonmin’s Marikana platinum mine in which 46 people have dies, including 34 shot dead by police in one incident.

“Both workers and government are seeking a greater share of the returns from mining, just as the mines themselves become more costly to run due to falling ore grades and rising energy costs,” says the weekly commodities note from French investment bank Natixis.

World number one producer Barrick Gold meantime closed its Pierina mine in Peru for one day Thursday, after one person dies and four were injured in clashes between police and nearby villagers.

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. Ben writes and presents BullionVault’s weekly gold market summary on YouTube and can be found on Google+

(c) BullionVault 2012

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.

By TraderVox.com

Tradervox (Dubline) – The Japanese currency is headed for a weekly gain against more of its major peers as speculation global economy is slowing down boosted demand for the yen as investors look for refuge. The euro is the biggest loser this week against the dollar as German report next week is forecast to show business sentiments remained lowest in more than three years. The demand for safety was also spurred by comments by an International Monetary Fund official who indicated that the organization will cut global economic forecast by few decimal points in a statement yesterday.

Junichi Ishikawa, a Tokyo-based analyst at IG Markets Securities Ltd, has noted that the market has shifted its focus from monetary policy by central banks to economic fundamentals and also predicted that buying pressure on yen will increase should data continue to confirm global economic slowdown. The business climate index report from Ifo Institute in Munich is set to indicate a slight rise on the index to 102.8 from 102.3 recorded last month when it is released on September 24. Ishikawa noted that the European economy is weak as the German data has continued to be negative for the euro, putting a lot of downward pressure on the 17-nation currency.

According to a composite index for services and manufacturing sectors, the services and manufacturing sectors shrunk the most in three years while the Chinese factory output report showed the worst contraction in eleven month. Khor Hoe Ee, an Asia Pacific Department assistant director at the IMF said that the weakening global economy has forced the organization to reduce global growth forecast by few decimal points.

The euro is set to make a drop to its 200-day MA after it failed to break about the $13178, which is the 78.6 retracement from February’s high and July’s low on the Fibonacci char. The Japanese currency have advanced by 0.2 percent this week to 78.25 per dollar. It has gained by 1.4 percent against the euro to trade at 101.47, its close yesterday.

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

Article by AlgosysFx Forex Trading Solutions

The US dollar is set to lose ground opposite its Australian counterpart to conclude the week’s trades as the markets cling onto positive remarks from various Federal Reserve officials, enhancing appetites for risk. Likewise, a newspaper report indicating that Spain could seek a new rescue plan within a week, managing to reduce the risks associated with the outlook for the Euro Zone.

Amid skepticism over the effectiveness of the third round of quantitative easing unveiled by the Fed last week, three central bank officials defended the policy yesterday and assured that inflationary risks are remote. In separate speeches yesterday, both Cleveland Federal Reserve Bank President Sandra Pianalto and Atlanta Fed President Dennis Lockhart said they see positive effects from the latest bond-buying. The asset purchases should put downward pressure on longer-term interest rates, which will likely help the real estate sector. Addressing concerns that the scheme would stoke high inflationary pressures, Lockhart said the risk of a serious bout of inflation was remote. Both also assured that the Fed will continue to evaluate the pros and cons of the program to suggest that central back stands prepared to support the economy.

Meanwhile, Minneapolis Fed President Narayana Kocherlakota said that the central bank should hold rates near zero until the unemployment rate drops below 5.5 percent. Though such objective would likely take four or more years, he said that the Fed should keep its vow as long as inflation expectations remain under control. His current position seemingly reverses his view in May that the Fed could need to raise rates this year or next. His change in view likely signifies how concerned the Fed is over the sluggish US economy. With the Fed officials providing assurance over the effects of QE3, the Greenback is apt to lose ground on risk-on trades.

Optimism over the European debt outlook is also set to put the markets on a high after the Financial Times reported that European Union officials are construction a new Spanish rescue program that will allow for the ECB bond-buying to go ahead. According to the report, the plan is focused on ensuring that reform measures insisted upon by international lenders are in place before a bailout is requested. The plan will likely be announced on September 27 and will focus on structural reforms to the Spanish economy rather than new taxes and spending cuts. On views that Europe is finally taking considerable progress toward a resolution, commodity-linked currencies such as the Aussie are deemed to shine. Hence, a long position is advised for the AUDUSD today.

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

Source: ForexYard

Risk aversion returned to the marketplace yesterday after disappointing economic indicators out of China and the euro-zone resulted in higher-yielding currencies and commodities turning bearish throughout the day. In addition to the EUR/USD, which hit a one-week low, the AUD and crude oil also saw downward movement. As markets get ready to close for the week, traders should note that a lack of significant news events today may result in a low liquidity trading environment. That being said, any talk of a euro-zone bailout of Spain, which is widely expected to occur in the near future, may lead to volatility.

Economic News

USD – Dollar Benefits from Risk Aversion

The US dollar was able to take advantage of risk aversion in the marketplace following a series of disappointing indicators out of China and the euro-zone, which led to gains against several of its main currency rivals. The AUD/USD tumbled close to 100 pips during Asian trading, eventually reaching as low as 1.0366. Despite a slight upward correction later in the day, the pair was once again bearish by the evening session. Against the Swiss franc, the greenback gained more than 90 pips during the first half of the day, and by the end of the European session was trading at the 0.9350 level.

Turning to today, traders will want to pay attention to announcements out of the euro-zone, particularly with regards to the current situation in Spain. It is widely expected that the Spanish government will soon request a bailout from the ECB. Any signs today that the request may come soon could lead to significant volatility before markets close for the weekend. If the situation in Spain turns out to be worse than originally thought, the dollar could extend its upward trend vs. its riskier currency rivals.

EUR – Disappointing French News Turns EUR Bearish

The euro fell against most of its main currency rivals yesterday, after several worse than expected French economic indicators led to risk aversion in the marketplace. In addition, a disappointing Chinese manufacturing figure led to fears regarding the pace of the global economic recovery. Against the US dollar, the euro slipped more than 80 pips during European trading to reach as low as 1.2917, a one-week low. Meanwhile, the EUR/JPY dropped some 78 pips to trade as low as 100.92, its lowest level since last Friday.

As markets get ready to close for the week, traders will want to pay attention to announcements out of Spain regarding its debt issues and whether the Spanish government will seek a bailout package. Despite the fact that a bond auction yesterday signaled increased demand for Spanish debt, most investors remain convinced that a bailout request is likely to happen in the near future. Any signs that the situation in Spain is worse than previously thought could result in the euro extending yesterday’s losses.

Gold – Gold Turns Bearish after Disappointing Global News

Gold spent most of yesterday’s trading session in a bearish trend, as a series of disappointing economic indicators out of China and the euro-zone weakened demand for commodities and precious metals. The price of gold fell by more than $15 an ounce over the course of the day, eventually reaching as low as $1755.60 before staging a mild upward correction during the afternoon session.

Today, gold traders will want to pay attention to the EUR/USD. If the euro continues to fall against the greenback, gold may extend yesterday’s bearish trend. A weakened euro typically means that gold becomes more expensive for international buyers, which can lead to a drop in prices.

Crude Oil – Crude Oil Sees Minor Gains in European Trading

The price of crude oil saw minor gains during European trading yesterday, following its drop to a six-week low during the Asian session. After reaching as low as $90.94 during early morning trading, crude was able to stage a brief recovery which brought it above the $92 a barrel level by the afternoon.

Today, crude traders will want to note that if risk aversion continues to dominate market sentiment, the price of crude may extend yesterday’s losses. Attention should be given to higher yielding currencies, including the EUR and AUD. If they see additional bearish movement today, so might oil.

Technical News

EUR/USD

The Slow Stochastic on the weekly chart appears close to forming a bearish cross, signaling that a downward correction could occur in the coming days. This theory is supported by the daily chart’s Williams Percent Range and Relative Strength Index, both of which have crossed into overbought territory. Going short may be the best choice for this pair.

GBP/USD

The daily chart’s Relative Strength Index is currently in overbought territory, indicating that this pair could see downward movement in the near future. This theory is supported by the Slow Stochastic on the weekly chart which has formed a bearish cross. Opening short positions may be the preferred strategy today.

USD/JPY

The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a price shift in the coming days. That being said, most other long-term technical indicators are currently range trading, making the direction of the price shift difficult to predict. Taking a wait and see approach for this pair may be the best choice.

USD/CHF

The Slow Stochastic on the daily chart appears close to forming a bullish cross, signaling that this pair could see upward movement in the near future. Furthermore, the Relative Strength Index on the same chart has dropped below the 30 level. Traders may want to open long positions for this pair.

The Wild Card

USD/SEK

A bullish cross on the daily chart’s Slow Stochastic indicates that this pair could see upward movement in the near future. This theory is supported by the Williams Percent Range, which has crossed into oversold territory. Going long may be the smart choice for forex traders today.

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 TraderVox.com

Tradervox.com (Dublin) – Aussie advanced against most of its peers as signs Federal Reserve is supporting growth and Europe is heading closer to solving the debt crisis emerged, spurring demand for higher yielding currencies. The Australian dollar advanced against the yen and the US dollar after the Minneapolis Federal Reserve Bank President Narayana Kocherlakota indicated that the Federal Reserve should continue with its near zero interest rates until the unemployment drops from above 8 percent to below 5.5 percent. The Australian currency also gained after a report in Financial Times indicated that European Union leaders are in talks about a new rescue plan for Spain. The south pacific currency is set for a weekly decline after the International Monetary Fund member indicated that the organization is considering lowering global economic forecast.

According to Jonathan Cavenagh, a Currency Strategist in Singapore at Westpac Banking Corp, the Spain seems to be closer to bailout, which will reduce the tail risks related to the European economic outlook. Further, he pointed out that Kocherlakota’s comments have boosted growth sentiments, which will be positive for the Aussie in the short term. Despite today’s ascent, the Australian dollar is set to register a weekly decline against the US dollar. The New Zealand dollar is set to make a weekly gain against the US dollar.

The Australian dollar is set to decrease by 0.8 percent this week against the US dollar while the New Dollar will increase by 0.1 percent after increasing by 2 percent in the previous week. This comes at a time when the Fed is seen supporting low interest rates as long as inflation remains below 2.25 percent. This week has also witnessed the start of talks among EU leaders and Spanish authorities on ways to start the ECB bond purchasing program according to a report by Financial Times. The results of the discussions are expected to be announced on September 27.

The Australian dollar rose by 0.3 percent yesterday to exchange at $1.0468. The currency was higher by 0.3 percent against the yen, trading at 81.89. The New Zealand currency has added 0.1 percent against the US dollar to exchange at 83 US cents.

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

By TraderVox.com

Tradervox.com (Dublin)- The Canadian dollar has declined to its lowest in eight weeks against the US dollar as global reports indicate global manufacturing is slowing. The loonie fell for the second day as manufacturing and services report from euro zone showed a decline to its lowest in more than three years. Another report showing a decline in China’s manufacturing is expected to be released while US leading economic indicator index fell in August and the manufacturing dropped in September. These reports are indicating global slowdown in manufacturing, leading to a decline in risk related currencies such as the loonie.

The Canadian currency declined by 0.4 percent against the US dollar yesterday to trade at 97.79 cents per dollar after declining by as much as 0.7 percent during the day to its July 23 low. According to technical Analyst Shaun Osborne, the USD/CAD cross is approaching short-term resistance in the range between 98.40 and 98.60 where the 200 SMA resides. He also added that a push back from this resistance range would push the cross down to support at 97.

Shaun Osborne, who is the Chief Currency Strategist in Toronto at TD Securities, noted that the Loonie has continued to decline to the higher end of 97 cents per dollar, where it has sustained the move which exposes it to further loss to 99.02 cents. He also added that the general flow of news suggests that the dollar-loonie will move higher. The pair is seen consolidating after breaking above the September Channel, which it has extended after breakout during the Sept. 20 session. The 14-day Relative Strength is moving close to 70 showing that there is a bullish momentum according to the chart.

Some of the factors affecting the pair include the risk-off tone in the market and the prices of crude oil which have declined for four days now.

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