AUDUSD stays in a trading range between 0.9280 and 0.9526. As long as 0.9280 support holds, the price action in the range could be treated as consolidation of the uptrend from 0.8892, one more rise towards 1.0000 is still possible after consolidation. On the downside, a breakdown below 0.9280 support will indicate that the uptrend from 0.8892 had completed at 0.9526 already, then the following downward movement could bring price 0.8500 zone.
Provided by ForexCycle.com
Article by Investazor.com
Mario Draghi delivered a speech today, during which no spectacular information impressed investors as the benchmark interest rate was left unchanged as expected. More broadly, Mario Draghi’s promises are highlited by the engagement to ensure interest rates in line with price stability. The European Central Bank is ready to react to any weakness or error of the system as it disposes of a vast vary of instruments which have the power to reset the stability. As it concerns other aspects of the economy, the unemployment rate remains at high levels, the economic recovery maintains a poor pace of recovery while inflationary risks doesn’t represent a concern.
On the other hand, the news that came from Italy have troubled the market more than expected. The Italian Premier Enrico Letta won a confidence vote. Along with this decision the risks to see the former Prime Minister Silvio Berlusconi being thrown out of the Senate. A final decision concerning Silvio Berlusconi is going to be taken soon as the Senate committee is due to meet on Friday and have a vote on whether or not to take Berlusconi’s street. The Italian political scene may know a better picture as the changing of the Prime Minister is expected to lead the Italian economy towards stability.
The post Italy Wants a Change While Euro Zone Remains Stable appeared first on investazor.com.
Article by Investazor.com
Ross Ulbricht, 29, was arrested today by the FBI, as the head of the Silk Road. The website was an anonymous Internet marketplace known for illegal buying of drugs and phony identification documents. Silk Road was active from January 2011 to September 2013. Its users and transactions should have been untraceable and for this the payment on the website was done with Bitcoins. The digital currency is anonymous and can be easily turned into real money.
When the FBI held Ross they also have seized 26,000 Bitcoins that worth around $3.2 million. Right after the announcement the price of this currency dropped 20% , from 136$ to 110$.
But why did Bitcoin dropped? Silk Road was one big website that used Bitcoins, as payment, so the clients had to buy the digital currency. Buying it meant demand so the price was held at an equilibrium price. Because the site is now gone, the demand dropped instantly so the price plunged. But it wasn’t enough to keep the price too low. It climbed back to 127.50$ at this point.
Other websites that are using Bitcoins for payment: BitcoinShop, ThinkPenguin Inc, bitvapors, Private Internet Access, BitRoad, SomethingGeeky.
If you remember our last analysis, Bitcoin (BTCUSD) Consolidated in a Symmetrical Triangle? We were then saying that the price was consolidating in a triangle and a breakout out of it could tell us more about the direction. It broke under the lower line of the pattern, but the price touched the price’s target only several hours ago after the Silk Road went offline.
Chart: BTCUSD, H4
The price might oscillate now between 110$ and 140$ for the next period. Taking into consideration the price action we should keep an eye for a drop under the current support level or a daily close above 150$ per Bitcoin.
The post Silk Road Out, Bitcoin Down 20% appeared first on investazor.com.
By www.CentralBankNews.info Poland’s central bank, which earlier today held rates steady, repeated that expects to keep its reference rate “unchanged at least until the end of 2013, which will support a return of inflation to the target in the medium term.”
The National Bank of Poland (NBP) has cut rates by 175 basis points this year, most recently in July when it said the cycle of easier policy had ended. Last month it then said it would maintain the rate at least until the end of 2013 given low inflation pressures and moderate economic recovery.
In a statement to a news conference, the NBP said the gradual economic recovery is likely to continue in coming quarters but inflationary pressure will remain subdued.
Poland’s inflation rate was unchanged at 1.1 percent in August from July – well below the NBP’s target of 2.5 percent – while most core inflation measures declined.
“Developments of inflation indices confirm still weak demand and cost pressures in the economy,” the central bank said.
August data on industrial and construction output, and retail sales confirms a weak economic recovery though better than last quarter and indicators suggest the gradual recovery will continue in coming quarters, the bank said.
Poland’s economy expanded by 0.4 percent in the second quarter from the first for annual growth of 0.8 percent, up from 0.5 percent in the first.
Growth in lending to the private sector remains limited with annual growth in loans sluggish while there was a gradual recovery in consumer credit. Unemployment fell in August to 13 percent from 13.1 percent but the central bank said the persistently high rate is supporting slow wage growth.
www.CentralBankNews.info
By www.CentralBankNews.info Uganda’s central bank maintained its Central Bank Rate (CBR) at a neutral 12 percent but warned that it would raise the rate if there are signs that core inflation is starting to accelerate.
The Bank of Uganda (BOU), which raised its rate by 100 basis points last month to discourage higher food prices from spilling over to overall inflation, said its “policy priority is to ensure that annual core inflation is brought back down to 5 percent over the medium term.”
“As such, if there is any increase in the medium term forecast for core inflation in the months ahead, the BoU will raise the CBR,” the bank said.
Uganda’s headline inflation rate rose to 8.0 percent in September from 7.3 percent in August and annual core inflation rose to 6.9 percent from 6.6 percent due to higher food crop prices from drought.
Economic growth in Uganda has also picked up with the statistics office revising upwards its estimate of growth for financial 2012/13, which ended June 30, to 5.8 percent from 5.1 percent, and banks’ lending to the private sector recovering.
“Given these indicators of stronger economic activity, the 6.0 percent economic growth projection for 2013/13 can be achieved,” the bank said.
BOU expects the rise in food prices to be temporary with prices falling by the end of this year or early next year so inflation should also start to fall back in the first half of next year.
The BOU said its rate rise last month should help limit the pass-through of food prices to non-food prices and annual core inflation is forecast to range from 7 to 8 percent over the next 12 months before gradually declining to the 5 percent target in subsequent months.
“Nevertheless there are upward risks to the inflation forecast, which could arise from stronger than anticipated domestic demand growth in the current fiscal year or a weaker balance of payments,” he said.
The BOU’s rate hike last month reversed a 100 basis point rate cut in June aimed at stimulating demand.
By The Sizemore Letter
There are three ways to get exposure to emerging markets, according to Barron’s Shuli Ren:
I’ve written about the first option recently, giving my recommendation on choosing the right emerging market ETF. The most direct route I have found is via the EG Shares Emerging Market Consumer ETF (ECON). The underlying holdings of ECON get about 90% of their revenues from selling within their home markets and other emerging markets, which is a stark contrast to most mainstream emerging market ETFs.
For example, the iShares MSCI Emerging Markets ETF (EEM) is comprised of companies that, while domiciled in the emerging world, get a large chunk of their revenues from exporting to the West. Think Samsung (SSNLF) and Taiwan Semiconductor (TSM). (Whether or not South Korea and Taiwan are “emerging markets” or “developed markets” is another debate for another day, but both countries are well represented in EEM.)
What about the Ren’s second option, buying a global materials index?
I’m not the biggest fan of commodities as an asset class. There were numerous studies in the early-to-mid 2000s that showed a basket of commodities offering “equity like” returns (such as this one) and recommending commodities.
But things have changed over the past decade; correlations between commodities has increased. As commodity mutual funds and ETFs such as the PIMCO Commodity Real Return Fund (PCRDX) and iShares S&P GSCI Commodity-Indexed Trust (GSG) have become popular, commodities that once traded largely independently of each other now get lumped together and bought and sold as a group. Furthermore, the financialization of commodities has caused their correlation to stocks to rise as well. So, the touted diversification benefits are now mostly moot.
Furthermore, most investors have little understanding of how commodities investing works. Outside of a few ETFs that hold the physical commodity, such as the SPDR Gold Trust (GLD), most funds and ETFs use commodities futures. And the price of the underlying spot commodity is only one return driver. You also have to take into consideration the roll yield (or the return you from buying a futures contract and having its price converge to the spot price) and the return from the collateral (which is usually Treasury securities).
Well, the collateral returns—which were significant in decades past—have been close to zero in the age of quantitative easing. And due in no small part to excessive interest from new retail investors, many commodities futures have been trading in contango (i.e. have a negative roll yield). This means that futures investors actually lose money every month relative to the price of the underlying commodity.
Why does this matter? Gorton and Rouwenhorst wrote a paper that compared spot commodity returns to futures returns to see how commodities stack up as an asset class. Their “investable” futures portfolio had annual returns of 10.31% from 1959 to 2004. Yet the spot return was only 3.47%…which was actually lower than the 4.15% in inflation over the period.
This means that two thirds of “commodities” returns were actually from the roll yield and the collateral…neither of which is a source of return in today’s market.
This brings us to multinationals. This is my preferred way to invest in emerging markets for most clients because, if done right, it is the best of all possible worlds. You can get emerging market growth from companies with Western management and subject to higher standards of governance and regulation. I call the strategy “Emerging Markets Lite” or “Emerging Markets though the Back Door.” But whatever you want to call it, it’s a great way to invest the growth portion of your portfolio.
By and large, you’re going to get a better selection of Emerging Markets Lite stocks in Europe. Want a few examples? How about consumer products and food giants Unilever (UL) and Nestle (NSRGY). Both are stable performers with long histories of paying and raising their dividends. And both have monster presences in emerging markets. Unilever gets nearly 60% of its revenues from emerging markets, and while that has hurt the company this past quarter, it ensures that it has a bright future. Nestle gets more than 40% of its revenues from emerging markets.
Exposure to emerging markets is a double-edged sword. You benefit from the growth, but you also get whacked by the occasional currency crisis and by the occasional bout of political instability. Just consider it a cost of doing business. The rise of the emerging market consumer is a durable investment theme, and any macro shocks that cause Emerging Market Lite stocks to take a short-term tumble should be viewed as a buying opportunity.
Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he was long ECON, UL and NSRGY. Click here to learn about his top 5 global investing trends and get your copy of “The Top 5 Million Dollar Trends of 2013.” This article first appeared on InvestorPlace.
This article first appeared on Sizemore Insights as The Best Way to Invest in Emerging Markets
London Gold Market Report
from Adrian Ash
BullionVault
Weds 2 Oct 09:45 EST
WEDNESDAY morning in London saw gold recover half of yesterday’s $50 plunge per ounce, rising back above $1300 as world stock markets slipped and the US government shutdown spread to new departments.
Commodities also recovered, and government bonds extended their gains, pushing US interest rates down to 2.62% on 10-year debt.
Euro investors saw gold recover less sharply, as the single currency jumped – and Italian bonds gained – after Rome’s coalition government won a vote of confidence against former prime minister and convicted criminal Silvio Berlusconi.
The European Central Bank today kept its main interest rate at 0.5%.
Rising from near two-month lows today, gold will move to $1405 per ounce by November next year, according to the average forecast from delegates at this week’s London Bullion Market Association conference in Rome, which ended Tuesday.
The best-attended LBMA annual conference to date, its final session saw 4 leading figures from the bullion market agree that $1050 per ounce is a “key level” for gold.
“Technically it’s a good floor,” said Marwan Shakarchi, chairman of refining group MKS Switzerland.
Prices at $1050 are also, he noted, where the Reserve Bank of India bought 200 tonnes of gold from the IMF in late 2009 – a move announced during the LBMA’s conference, then in Edinburgh.
“Believe me,” Shakarchi said, “the RBI technocrats will have analyzed every angle” before deciding to buy gold at that level “as insurance”.
“The RBI didn’t take that decision lightly,” agreed independent analyst Andy Smith. “And they really do know a thing or two about gold.”
“It’s a good call,” agreed Jeremy East of Standard Chartered Bank and Philip Klapwijk, formerly GFMS and now running boutique consultancy Precious Metals Insights. But prices need to reach that level, the panel also agreed, to “clear out weak longs” from gold investments before a new bull phase can begin.
“One reason for pessimism short-term,” said Klapwijk, “is that the surplus [of total supply over jewelry demand] remains high historically. Gold needs to fall further to narrow the gap.”
On his forecast, 2013 will see net gold investment worldwide fall dramatically from 2012 to $40 billion – “close to pre-financial crisis levels.”
Elsewhere today, the shutdown spread across US government departments spread as the $17 trillion debt-ceiling drew nearer.
“There are no other legal and prudent options to extend the nation’s borrowing authority,” said Treasury secretary Jack Lew on Tuesday, again urging lawmakers to end the shutdown and avoid a possible US default on its debt repayments and spending by raising the debt ceiling limit.
Speaking at the LBMA conference’s debate on gold Tuesday, “Detroit is not an outlier,” said Andy Smith.
Defaulting today on $600 million of debt due for repayment, “The city has only half the debt per head of the US national average,” Smith noted, comparing the devalued Dollar to the debasement of ancient Rome’s currency, the Denarius.
“Can you imagine what would happen if the Fed sold what it’s bought?” said Smith, noting the US Federal Reserve’s vote last week not to “taper” its current $85bn of government purchases each month.
As the Fed’s Treasury bond holdings come due, said Smith, “It will be called one arm of government forgiving another. But it will in fact be one giant step close to Weimar [hyperinflation].”
Gold price chart, no delay | Buy gold online
Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.
(c) BullionVault 2013
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 www.CentralBankNews.info The European Central Bank (ECB) repeated that it expects to keep its policy rates “at present or lower levels for an extended period of time,” but added that it was keeping a close eye on conditions in money markets “which may have implications for the stance of monetary policy and are ready to consider all available instruments.”
The ECB, which last cut its benchmark refinancing rate to 0.50 percent in May, also repeated its guidance that its policy stance would “remain accommodative for as long as necessary” based on an unchanged overall outlook for subdued inflation given the broad-based weakness in the economy.
Last month ECB President Mario Draghi told the European Parliament that he was ready to offer banks more long-term loans to keep money market rates from rising, mentioning the ECB’s previous use of a long-term refinancing operation (LTRO) as an option.
Overnight bank rates in the euro area have risen in recent months along with government bond yields, causing concern that it may threaten the economic recovery.
Draghi told journalists in Paris that the latest data confirmed the ECB’s view with underlying price pressures expected to remain subdued and inflation expectations firmly anchored around the ECB’s target of inflation below, but close to 2.0 percent.
Inflation in the euro area eased to 1.1 percent in September from 1.3 percent in August while the economy expanded by 0.3 percent in the second quarter from the first – the first quarterly growth after six consecutive quarters of contraction. On an annual basis, however, Gross Domestic Product still shrank by 0.5 percent.
Inflationary pressures are expected to remain subdued due to weak demand and the “modest” pace of recovery and based on futures prices for energy, inflation rates are expected to remain at low levels in coming months, Draghi said.
Recent industrial production data point to somewhat weaker growth at the start of the third quarter while confidence surveys up to September had improved, “confirming our previous expectations of a gradual recovery in economic activity.”
Economic output is expected to recover at a slow pace as domestic demand gradually improves and external demand for euro area exports strengthens. That said, Drahhi noted that unemployment remains high – it was unchanged at 12 percent in August from July – and the necessary adjustments in public and private sector balance sheets will continue to weigh on economic activity.
As his custom, Draghi appealed to politicians to keep up their efforts to reduce deficits and put government debt ratios on a downward path along with strengthening their efforts to reform product and labour markets to help countries regain their competitiveness.
EURGBP – With more downside threats seen, further decline is expected. Support comes in at the 0.8300 level, its psycho level where a break will aim at the 0.8250 level. Further down, support resides at the 0.8200 level with a breach of there turning attention to the 0.8150 level. A violation will call for a run at the 0.8100 level. Its daily RSI is bearish and pointing lower supporting this view. Conversely, on a recovery higher the 0.8400 level is seen as the initial target followed by the 0.8466 level and then the 0.8550 level. Above here will aim at the 0.8600 level with a breach targeting further upside. All in all, the cross remains biased to the downside.
USDCAD is recovering from 1.0180 but in corrective fashion labeled as wave (iv) that is part of a larger incomplete five wave decline from August high. We can see that rally from 1.0180 is in three waves that retraced back to former wave four for 38.2%-50% retracement area. As such, thats an ideal zone for a reversal back to previous lows; 1.0280 break will confirm the bearish case for this market, while rise above 1.0450 will invalidate it.
USDCAD 4h Elliott Wave Analysis Chart
Written by Elliott Wave Analysis Services
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