By CentralBankNews.info
Hungary’s central bank cut its base rate by another 15 basis points to 2.70 percent, its 19th cut in a row, but signaled that it may call a halt to further cuts by saying it would first decide on further moves following a review of the economic outlook in next month’s economic forecast.
The National Bank of Hungary, which has cut rates by 430 basis points since embarking on an easing cycle in August 2012, noted a deterioration in investors’ view of Hungary and other emerging markets during the recent volatility in global financial markets, with the country’s bond yields rising and higher volatility in the forint’s exchange rate.
“In the council’s judgement, a cautious approach to policy is warranted due to uncertainty related to the global financial environment,” the central bank said.
However, the central bank also said Hungary’s position was stronger than other emerging market economies, pointing to a decline in its external debt and a surplus in the current account that has reduced the country’s reliance on foreign investors.
But the central bank acknowledged that room for manoeuvre in monetary policy was influenced by investors’ perception along with how well inflation was approaching its 3.0 percent target.
“The Monetary Council will decide on the need and possibility for continuing the easing cycle after a comprehensive assessment of the macroeconomic outlook and developments in perceptions of the risks about the economy in view of the baseline projection and alternative scenarios of the March forecast,” the central bank said.
Hungary’s headline inflation rate fell to zero in January from 0.9 percent in December while the central bank’s own gauge of underlying inflation showed a rise in core inflation to 1.6 percent in January from 1.1 percent in December.
The drop in inflation was due to a moderation of fuel prices and the central bank said its own inflation gauge indicated moderate inflationary pressures due to weak domestic demand and low external inflation, helping anchor inflation expectations.
“Domestic real economic factors are expected to continue to have a disinflationary impact, although to a declining extent, as activity rises further,” the central bank said. The bank has said it expects inflation to move back toward its 3.0 percent target by the second quarter of 2015.
Economic growth in Hungary is likely to continue to strengthen this year and next and while employment is rising, the central bank said unemployment still exceeds the long-term level and there is unused capacity so inflationary pressures are likely to remain subdued over the medium term.
Hungary’s Gross Domestic Product expanded by a higher-than-expected 0.6 percent in the fourth quarter from the third quarter for annual growth of 2.7 percent, up from 1.8 percent, and the central bank said growth should pick up further in the quarters ahead, helped by higher corporate investment.
But growth in real incomes will be partly offset by continued reduction in debt that was accumulated in the years before the financial crises.
From August 2012 the central bank cut rates in 25-basis point increments until August 2013 when it reduced the pace of rate cuts to 20 basis points following an large outflow of capital from emerging markets, including Hungary. The central bank continued cutting rates in 20-basis points increments until last month when it reduced this to 15 basis points, as this month.
Hungary’s forint currency has been depreciating against the euro since mid-2012 and has continued to decline this year. The forint was trading at 310.33 to the euro today, down 4.3 percent since the beginning of the year.
Turkey holds rates, repeats tight stance till inflation falls
By CentralBankNews.info
Turkey’s central bank maintained its short-term interest rates, including the one-week repo rate at 10.0 percent, and reiterated that a “tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook.”
At an emergency meeting of its policy committee last month, the Central Bank of the Republic of Turkey (CBRT) raised its rates in response to a sharp fall in the lira currency and growing inflationary pressures, and pledged to maintain a tight stance until the outlook for inflation improved.
Following today’s meeting, the central bank said inflation was likely to hover above its 5.0 percent target “for some time due to recent tax adjustments, exchange rate developments, and elevated food prices” while the current account deficit was expected to show a “significant improvement” this year.
The growth of lending has slowed due to its tight policy stance, weak capital flows and other measures and data from the first quarter of this year showed a deceleration in domestic demand.
“Meanwhile, with the help of the recovery in foreign demand, the contribution of net exports to economic growth in expected to increase,” the CBRT said.
Turkey’s inflation rate rose to 7.75 in January from 7.4 percent in December.
In its January inflation report, the CBRT raised its 2014 inflation forecast by 1.3 percentage points, with the lira’s depreciation accounting for an estimated 0.5 percentage points of that increase and higher taxes for another 0.5 percentage points.
The central bank forecast that inflation would to ease in the second half of this year and fluctuate between 5.2 percent and 8.0 percent before ending the year at 6.6 percent.
In 2015 inflation is projected to fall further, fluctuating between 3.1 precedent and 6.9 percent, and stabilize around the bank’s 5.0 percent target by mid-2015.
In addition to raising its one-week repo rate to 10.0 percent from 4.50 percent on Jan. 28, the CBRT also said this would once again become its primary tool for providing liquidity to markets. At that meeting, the central bank also shifted its overnight rate corridor upwards by raising the marginal funding rate, the ceiling in the corridor, to 12.0 percent from 7.75 percent, and the borrowing rate, or the floor, to 8.0 percent from 3.5 percent.
“It should be emphasized that any new data or information may lead the Committee to revise its stance,” the CBRT said today.
In the summary of its Jan. 28 meeting, the central bank said that the current policy stance should be enough to anchor inflation expectations and if necessary, its liquidity policy may be tightened further to invert the slope of the yield curve.
Economists had expected the central bank to maintain rates today after last month’s surprisingly aggressive move that helped calm financial markets and seems to have put a floor under the lira.
The lira has been declining ever since early May 2013 and fell to a record low of 2.37 to the U.S. dollar on Jan. 27. Since the rate hike, the lira has strengthened by 8 percent, but is still down 1.4 percent since the beginning of the year. The lira was trading at 2.18 to the dollar today.
Turkey’s current account deficit widened to US$ 8.322 billion in December from November’s $4.098 billion while its Gross Domestic Product expanded by 0.9 percent in the third quarter from the second quarter for annual growth of 4.4 percent, down from the second quarter’s 4.5 percent rate.
Earlier this month, Standard & Poor’s cut its outlook on Turkey to negative from stable, citing risks of a hard economic landing amid a less predictable political environment. The rating’s agency said a corruption scandal involving the government of Prime Minister Tayyip Erdogan along with falls in the lira and inflationary pressures had raised concerns about political and economic stability.
BOJ holds QE target, doubles bank and growth facilities
By CentralBankNews.info
Japan’s central bank maintained its policy stance but extended and doubled the size of its bank lending and growth-supporting facilities while it repeated that it would continue with quantitative and qualitative monetary easing for as long as necessary to reach its 2 percent inflation target.
The Bank of Japan (BOJ) embarked on an aggressive easing campaign last April to rid the country of some 15 years of deflation by doubling the country’s monetary base by an annual 60-70 trillion through the purchase of Japanese government bonds, exchange traded funds (ETDFs) and real estate investment trust along with commercial paper and corporate bonds.
The BOJ reiterated its description of Japan’s economic recovery as moderate with the outlook for continued moderate growth affected by “the front-loaded increase and subsequent decline in demand prior to and after the consumption tax hike” in April.
Excluding the impact of the tax rise, the BOJ said consumer price inflation was likely to be around 1.25 percent for some time.
Japan’s inflation rate has been accelerating since June, following 12 consecutive months of declining prices, with inflation in December rising to 1.6 percent from November’s 1.4 percent.
The BOJ’s lending facility aimed at stimulating bank leading and another facility aimed at supporting economic growth were due to expire next month and the BOJ’s policy board extended the life of these facilities by another year and expanded them.
Under the bank lending facility, financial institutions will be able to borrow funds from the BOJ up to twice as much as the net increase in banks’ lending. Under the growth supporting facility, banks’ maximum provision of funds was doubled to 7.0 trillion yen from 3.5 trillion, with financial institutions able to borrow funds at a fixed rate of 0.1 percent per year for four years instead of 1-3 years.
“The Bank expects that these enhancements will further promote financial institutions’ actions as well as stimulate firms’ and households’ demand for credit, with a view to encouraging banks’ lending and strengthening the foundations for economic growth,” the BOJ said.
In addition, the BOJ extended its operations to support financial institutions in the areas that were affected by the 2011 earthquake and tsunami.
Japan’s Gross Domestic Product expanded by a lower-than-expected 0.3 percent in the fourth quarter of 2013 from the third quarter, renewing speculation that the central bank may ease its policy stance even further to help compensate for the expected negative impact from the tax rise in April.
Asian Stocks Slightly Higher Ahead BoJ Statement
Stocks in Asia were seen trading slightly higher on Tuesday, with shares in Japan rallying before the release of the Bank of Japan (BoJ) monetary policy statement, which is expected to be released later in the day.
The Japanese benchmark Nikkei 225 index came in at 1.26% to 14,573.95 at the time of writing, at the same time Tokyo’s Topix index climbed 0.98% higher to 1,202.94.
The Bank of Japan is expected to release its policy statement which is forecasted to show the bank keeping its policy unchanged.
Exporters such as Sharp climbed 2.5% higher, while carmaker giants Nissan motors rose 2% higher and Hitachi added more than 1.5%. Hong Kong’s Hang Seng index dropped 0.35% lower at 22,458.00 at the time of writing, at the same time Korea’s Kospi index declined 0.48% to trade at 1.937.11.
Stocks – Australia
Australia’s benchmark S&P/ASX 200 index was unchanged at 5,381.90 as of 1.46am GMT, after the Reserve Bank of Australia released its statement which revealed the bank would keep its benchmark rate despite the weak labour market.
According to the central bank’s minutes from its Feb 4 meeting, a period of steady interest rate is likely, with the record-low borrowing cost.
“If the economy evolved broadly as expected, the most prudent course would likely be a period of stability in interest rates,” the statement read.
The Aussie was seen trading 0.5% higher against the greenback following the bank’s release.
BHP Billiton shares climbed 2.3% higher to A$38.89, the highest close within a year. After the company posted its net profit of $8.11 billion in the six months through December 31 from a year earlier, according to the company’s statement released today.
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Article provided by HY Markets Forex Blog
Euro Drops From Three-Week High After German ZEW
The Euro declined from its three-week high against the US dollar after Germany’s ZEW indicator came in below expected, reports from the eurozone’s largest economy confirmed on Tuesday.
The 18-bloc currency traded 0.06 higher at $1.3717 against the US dollar at the time of writing, after the euro climbed to a three week-high, climbing to $1.3727.
Germany’s ZEW indicator came in at 55.7 in February, dropping from the previous reading of 61.7 seen in January and compared to analysts forecast of 61.5, marking its first drop in five months.
The ZEW Current Situation gauge came in 50.0 higher in February, picking up from the market consensus of 44.0 and 41.2 seen in the previous month.
The eurozone’s account surplus slightly lessened in December on a seasonally basis, according to reports from the European Central Bank.
Italy trade surplus climbed higher than expected to a non-seasonally adjusted surplus of 3.618 billion euros in December, picking up from the revised figures of 3.088 billion euros recorded in the previous month.
The eurozone’s gross domestic product (GDP) climbed 0.3% higher in the fourth quarter, rising above analysts’ forecasts, strengthened by the growth in France and Netherlands.
According to the German statistics office, the country’s fourth quarter expansion was boosted by the net trade, as exporting climbed higher than expected, while the private consumption slightly declined.
Euro – Expected Reports
Before the release of the German data, Unicredit stated in a note that an upbeat ZEW reading would boost the euro above $1.37.
The Empire State Manufacturing Survey is forecasted to come in slightly lower than the previous reading of 12.51 seen in January to 9.75 in February. The report is expected to be released later in the day.
Market participants will be expecting housing and inflation reports as well as minutes from the Federal Open Market Committee’s (FOMC) meeting.
The US Federal Reserve released the factory output report on Friday, which revealed a 0.3% contraction, compared to analysts forecast of a 0.2% growth.
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The U.S. Dollar Trading Mixed
The EURUSD Stands Still
Yesterday’s macroeconomic calendar was empty due to celebration of Presidents` Day in the U.S., so the market activity was low. Thus, many currency pairs were trading in rather tight ranges, including the EURUSD that essentially stood still. Fluctuations of the pair were limited by the 1.3723 and 1.3692 levels. Consequently, nothing new has not happened in the overall picture, the situation remains the same: the bulls should overcome the resistance around the 1.3723 level that will open the way to the 38th figure. The inability to break above will trigger profit taking and a decline of the pair.
The GBPUSD Corrects from Reached Levels
Yesterday, the GBPUSD was marked near fresh highs at the 1.6822 level, which was used by short-term players for profit taking, that triggered a price decline of the pair to 1.6695. A pullback in the euro contributed to it. Overbuying of the GBPUSD pair and reaching subsequent highs is a good reason for profit taking, but so far it is early to speak about peak formation and a trend reversal. The pound can continue declining, the next target looks the support at 1.6667, its loss can be the feature for the peak formation. Growth above 1.6800 is hardly probable.
The USDCHF Trading in Tight Range
The USDCHF as well as the EURUSD stood still. From the 89th figure the pair continues to be bought and it is not able to rise above 0.8927. Therefore, the situation in the pair remains unchanged. Loss of the 89th figure will open the way to the support around the 0.8800 level. To improve prospects the dollar should return above 0.8900 and overcome the resistance around 0.9040.
The USDJPY Tests Resistance 102.74
The USDJPY has returned successfully above the resistance around 101.60. Having consolidated above it, the pair could continue to grow and tested the resistance at 102.74 in the Asian session. Purchases of the pair from the support 101.59 testify about continued strength of the bulls, but as long as the 102.74 resistance holds their onslaught, the risks of falling below 101.59 are kept. It is possible that at the current high (102.74) the pair is forming a peak, from which we should expect the resumption of a downward correction. A breakout of this level will mean the resumption of an uptrend.
EURUSD: Presses Higher, Eyes The 1.3739 level.
EURUSD: Having continued to maintain its bullish out, it now looks to recapture the 1.3739 level followed by the 1.3800 level, its psycho level. Further out, resistance resides at the 1.3893 level, its Dec 27 2013 high. This view is consistent with its long term uptrend. Its daily RSI is bullish and pointing higher supporting this view. On the downside, support comes in at the 1.3673 level where a break will turn attention to the 1.3600 level and then the 1.3561 level, its Feb 12 2014 level followed by the 1.3476 level. Further down, support stands at the 1.3400 level, representing its psycho level where a breach will aim at its weekly 200 ema at the 1.3346 level. All in all, EUR remains biased to the upside below its broken trendline.
Article by www.fxtechstrategy.com
Bill Williams’ Indicators Analysis 18.02.2014 (USD/CAD, NZD/USD)
Article By RoboForex.com
Analysis for February 18th, 2014
USD CAD, “US Dollar vs Canadian Dollar”
At H4 chart of USD CAD, Alligator is moving downwards. Indicators are in grey zone; there is Fade bar on the MFI and no Squat ones. Bullish fractal may reach Alligator’s teeth (red line), and then I expect breakout of fractals to the downside.
At H1 chart of USD CAD, Alligator is sleeping. Indicators are in grey zone; there is Squat bar on the MFI. I expect slight breakout of fractals to the upside.
NZD USD, “New Zealand Dollar vs US Dollar”
At H4 chart of NZD USD, Alligator is moving upwards. Price is forming bearish fractal; AO and AC are in red zone; we can see divergence with AO; there is Green bar on the MFI and no Squat ones. Bearish fractal may reach Alligator’s jaw (blue line) and then I expect breakout of fractals to the upside.
At H1 chart of NZD USD, Alligator is sleeping. AO and AC are in red zone; there is Green bar on the MFI and might be Squat one too. I expect breakout of fractals to the downside.
RoboForex Analytical Department
Article By RoboForex.com
Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
Why Does This Sector Keep Bludgeoning Investors?
Pick any tired cliché about a dramatic shift in a short period of time…
Like nothing ever happened. What a difference a week makes.
They all apply.
Two weeks ago, stocks were in the midst of a nasty pullback. Correction chatter dominated the headlines. Heck, individual bullish sentiment dive-bombed nearly 50% from year-end levels.
And now?
The stock market has strung together six consecutive days of gains. The S&P 500 Index is back within striking distance of a new all-time high.
And everyday investors are downright giddy again, as the American Association of Individual Investors (AAII) bullish sentiment reading jumped from 27.9% up to 40.15% last week.
Now, don’t kill the messenger… But not every nook and cranny of the market is on the mend.
In fact, there’s one industry that could be setting up for a nasty fall. All I need is a single chart to prove it, too.
Retail Me Not
While everyone is fixated on the major market indices, few have noticed the terrible performance of the retail industry.
The SPDR S&P Retail Fund (XRT) was down a staggering 11.4% in the beginning of February. That’s the worst start to a year for the group in over a decade.
Even after the recent rebound, the industry is still down 7% versus only a 1% decline for the S&P 500.
I know, I know. The weather is entirely at fault, right? For when the weather outside is frightful (which it’s been for two months now), Americans stay indoors and don’t do much shopping.
Hogwash!
While that’s a convenient explanation, it’s not an accurate one.
Consider: The latest data reveals that headline retail sales slumped 0.4% last month. However, on a category-by-category basis, non-store retail sales (i.e., online shopping) dropped by even more (0.56%).
If being stuck indoors prevents shopaholics from hitting the malls, you’d expect them to get their fix online. But that didn’t happen.
In other words, weather has little to do with it. Americans simply aren’t shopping as much as economists expected.
Why?
Well, as I shared last week, the average consumer is getting pinched by rising fuel costs, soaring utility bills and stagnant wage growth. I’m sorry. But that’s not the recipe for runaway shopping sprees.
The problem is, retailers refuse to accept this cold reality. They keep hiring more employees in anticipation of increased shopping activity.
As Neil Dutta, Head of U.S. Economics at Renaissance Macro, says, “Something has to give… Either retailers stick with it and stay confident on the expectations that sales will improve, or they will be forced to cut employment dramatically.”
In other words, retailers are playing a nasty game of chicken. And I don’t see it ending well for them, particularly ones that rely heavily on brick-and-mortar sales in mall locations. Here’s why…
No More Mallrats
During the past holiday season, foot traffic fell nearly 15%, according to ShopperTrak.
Meanwhile, at the most recent National Retail Federation convention, Rick Caruso, CEO of Caruso Affiliated, predicted that traditional malls are on the brink of extinction. To his point, a new indoor mall hasn’t been built since 2006.
Heck, all we have to do is look at the performance of anchor tenants in many malls, like J.C. Penney Company, Inc. (JCP) and Sears Holdings Corporation (SHLD). They’ve been sucking wind for years.
And increasingly so, which explains the recent announcements that both companies are closing even more stores. Sears alone has shuttered about 300 stores since 2010.
Along with Radio Shack (RSH), I’m convinced that it’s only a matter of time before all three kick the bucket and file for bankruptcy. Given the current conditions, I wouldn’t be surprised if it happened before the year is out.
Bottom line: Blaming poor retail sales on the weather ignores a deeper, more troubling situation. U.S. consumers aren’t consuming as much as economists expected at this point in the recovery.
Until we see definitive signs of a change in behavior, the only way I’d put money to work in the industry is by betting against the most troubled retailers by buying some cheap January 2015 put options.
Ahead of the tape,
Louis Basenese
The post Why Does This Sector Keep Bludgeoning Investors? appeared first on Wall Street Daily.
Article By WallStreetDaily.com
Original Article: Why Does This Sector Keep Bludgeoning Investors?
Ichimoku Cloud Analysis 18.02.2014 (GBP/USD, GOLD)
Article By RoboForex.com
Analysis for February 18th, 2014
GBP USD, “Great Britain Pound vs US Dollar”
GBP USD, Time Frame H4. Tenkan-Sen and Kijun-Sen are influenced by “Golden Cross” (1); Tenkan-Sen is directed downwards. Ichimoku Cloud is going up (2), Chinkou Lagging Span is above the chart, and the price is between Tenkan-Sen and Kijun-Sen. Short‑term forecast: we can expect decline of the price towards D and W Tenkan-Sen – D Kijun-Sen.
GBP USD, Time Frame H1. Tenkan-Sen and Kijun-Sen intersected above Kumo Cloud and formed “Dead Cross” (1). Ichimoku Cloud is going down (2); Chinkou Lagging Span is below the chart, and the price is below the lines. Short‑term forecast: we can expect the price to return to the cloud’s broken border.
XAU USD, “Gold vs US Dollar”
XAU USD, Time Frame H4. Tenkan-Sen and Kijun-Sen are influenced by “Golden Cross” (1). Ichimoku Cloud is going up (2); price is between Tenkan-Sen and Kijun-Sen. Short-term forecast: we can expect support from Kijun-Sen and W Kijun-Sen.
XAU USD, Time Frame H1. Tenkan-Sen and Kijun-Sen intersected above Kumo Cloud and formed “Dead Cross” (1). Ichimoku Cloud is going up; Chinkou Lagging Span is below the chart. Short‑term forecast: we can expect support from Senkou Span A, and decline of the price.
RoboForex Analytical Department
Article By RoboForex.com
Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
