Month: September 2011

Source: ForexYard

The producer price index (PPI) input and output data was released by the UK’s Office of National Statistics this morning and revealed a potential decline in the inflationary growth of raw materials. The price paid by manufacturers for the purchase of raw materials dropped 1.9% this month, lower than the forecast decline of 1.6%.

The input data translated to a slower increase in the price of goods sold by manufacturers as well. The percent change in output prices rose by only 0.1% this month instead of the expected 0.2% growth. The data signals a potential contraction in manufacturing growth which could translate into fewer jobs and a sluggish economy in Britain.

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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.

Sept. 9 (Bloomberg) — Socrates Lazaridis, chairman of the Athens Stock Exchange, discusses the Greek debt crisis and investor confidence. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

London Gold Market Report
from Ben Traynor
BullionVault
Friday 9 September, 08:20 EDT

U.S. DOLLAR gold prices plunged sharply Friday morning in London, hitting a low of $1826 per ounce – 4.9% down on Tuesday’s all-time high – while stocks and commodities also fell and European government bonds gained.

Going into the weekend, the gold price at Friday lunchtime looked headed for 3.3% weekly drop after speeches from US and European policymakers did little to calm market nerves.

“Gold prices enjoyed a white-knuckle ride this week,” says a note from French investment bank Natixis.

“There are very good reasons why people long on gold may be taking profits,” Jesper Dannesboe, analyst at Societe Generale, told Bloomberg this morning when asked about Friday morning’s sudden drop.

Dannesboe cited a stronger Dollar, as well as the technical explanation that gold prices are forming a so-called ‘double top’ – an M-shaped-pattern than some technical analysts view as bearish.

“The swings have been quite dramatic in the last two weeks between $1704 and $1920,” adds a report from bullion bank Scotia Mocatta.

“We do not [however] expect sizeable liquidation unless $1704 breaks.”

Silver prices meantime fell to $41.37 per ounce – 4.3% down for the week so far.

European stock markets fell Friday morning. In London the FTSE was down 0.6% by lunchtime, while the German DAX was off over 1% – and down 7.6% since the start of the month.

The Euro Stoxx 50 index of leading Eurozone shares meantime was down 1.3% – also making a 7.6% loss for the month so far.

“The economic situation is getting worse,” says Markus Steinbeis, head of equity portfolio management at the Pioneer Investments in Unterfoehring, Germany, which manages around $221 billion.

“It depends more than ever on what policy makers will do. As long as economic indicators remain as they are right now and emerging markets are tightening their monetary policies, the upside should be limited.”

On the US markets meantime, the correlation among the largest 250 stocks in the S&P 500 has reached 81%, research from JPMorgan shows – suggesting stocks prices are moving together in response to wider market conditions rather than individual company fundamentals. This is the highest level since the stock market crash of 1987, the Financial Times reports.

President Obama announced his “jobs plan” on Thursday, exhorting Congress to pass $447 billion in proposed spending and tax cuts. Press reports ahead of the announcement predicted the package would be worth $300 billion.

“The plan reflects the government’s deep concern about the economy,” adds Duan Shihua at Haitong Futures in China.

“[It raises]the real possibility of another round of quantitative easing, which is supportive of gold.” “Markets have been uninspired [by the plan],” adds Marc Ground, commodities strategist at Standard Bank.

The US Federal Reserve meantime will “do all that it can to help restore high rates of growth and employment in a context of price stability,” Fed chairman Ben Bernanke said in a speech on Thursday.

“The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus…[we] will continue to consider those and other pertinent issues, including, of course, economic and financial developments, at our meeting in September.”

The Federal Open Market Committee is next due to meet on 21 and 22 September, with the meeting extended to two days rather than the usual one.

Here in Europe, the European Central Bank has “delivered price stability impeccably,” outgoing ECB president Jean-Claude Trichet told reporters on Thursday.

Trichet was responding to the suggestion that some German economists are privately calling for a return to the Deutsche Mark, as well as comments from German opposition leader Sigmar Gabriel that the ECB’s purchases of Eurozone government debt was putting “the stability of the currency in danger”.

“It is not by chance that we have delivered price stability,” said Trichet. “We were asked [by Eurozone governments] to decrease rates in 2004…we said ‘No’.”

Over in China – the world’s second largest gold bullion consumer – industrial production growth slowed to 13.5% year-on-year in August – down from 14.0% a month earlier – according to official data published Friday. Chinese consumer price inflation meantime fell to 6.2% last month – down from 6.5% in July.

Former Libyan leader Muamar Gaddafi sold 29 tonnes of gold bullion – 20% of the country’s reserves – during his final weeks in power, according to Libya’s new central bank governor.

“The gold was liquidated in order to pay salaries and to have liquidity, in Tripoli in particular,” said Qassem Azzoz on Thursday.

Ben Traynor
BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Source: ForexYard

Despite a heartfelt tangent by ECB President Jean-Claude Trichet during yesterday’s ECB press conference investors only came away with a revised euro zone growth projection. A lack of a policy response to the European debt crisis and markets adjusting forecasts for the ECB tightening has the EUR coming under intense selling pressure. Given the EUR price action over the past two days we may assume that next week will continue to see increased volatility for the EUR both versus the USD and in the crosses.

The take away from yesterday’s ECB press conference was the downgrade of euro zone growth and a lack of a policy response to the euro zone debt crisis. The lowering of growth forecasts is having an immediate impact on the EUR as market players adjust their expectations for the ECB rate tightening cycle.

An environment of heightened tensions in the euro zone can be inferred by the comments coming from the Eurocrats this week, in particular, comments to Dow Jones FX Trader from euro zone finance minister Jean-Claude Juncker who referred to the next tranche of aid, “Greece has to know that the disbursement should not be taken for granted–they have to deliver… I have the impression that things are not moving at the right speed–the results are not there.” Greece will be hard pressed to meet its financial requirements as the austerity program is having a negative impact on the Greek economy which contracted -7.3% in Q2 and 8.1% in Q1. Next week the Troika is expected to return to Greece to finish its review Greece’s progress implementing the agreed upon austerity measures in return for the original EUR 110 bn bailout. The risk is for additional volatility surrounding this event. Trichet’s passionate response to a question concerning the working relationship between the ECB and Germany underscores this risk and the tensions surrounding the European debt crisis. Given the price action of the EUR both yesterday and today, it appears the tensions are coming to a head.

Read more forex trading news on our forex blog.

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.

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By ForexYard

The euro was indeed seen dropping against the USD following the European Central Bank’s (ECB) latest announcement regarding interest rates, known as the Minimum Bid Rate. Stuttering mildly ahead of the decision, there was an atmosphere of EUR avoidance in the market even prior to the statement by ECB President Jean-Claude Trichet.

Economic News

CAD – Canadian Dollar Falls as Investors Seek Safety

The Canadian dollar (CAD) was seen moving lightly bearish late Thursday as investors fled the higher yielding assets from speculation on a market downturn following recent releases on interest rates. A weaker-than-forecast uptick in US private sector employment Wednesday added to risk sensitivity for many investors, leading some to await today’s news before entering more strongly.

The Bank of Canada (BOC) also held rates steady this week, along with every other major economy announcing a rate decision, but talk was slightly more optimistic in the northern giant’s economy than elsewhere. The downtick seen in the Loonie was significantly milder than in other currencies. This may be partially due to the CAD’s disconnect from some of the market turmoil, but it could also be from some optimistic data emerging from the economy lately.

Most significant on today’s calendar will be the Canadian publication of its employment change data and unemployment rate. Should today’s news foreshadow a modest growth in the Canadian economy’s employment sector, an assessment that does, however, seem less likely from data released these past few weeks, there is a possibility that more investment will get pushed towards the higher yielding abilities of the European currencies as investors seek to diversify their portfolios, which could also support the CAD in short term trading.

EUR – EUR Sinks after Interest Rate Announcement

The euro (EUR) was seen trading with largely mixed results yesterday as traders moved into and away from riskier assets across the region. Against the US dollar (USD) the euro was seen trading bearish in late trading as shifts away from the greenback, due to uncertainty about global employment levels, caused several market participants to opt for other stores of value. The pair was last seen holding near 1.3970 in late trading Thursday.

The euro was indeed seen dropping against the USD following the European Central Bank’s (ECB) latest announcement regarding interest rates, known as the Minimum Bid Rate. Stuttering mildly ahead of the decision, there was an atmosphere of EUR avoidance in the market even prior to the statement by ECB President Jean-Claude Trichet.

With nearly every analyst anticipating yesterday’s move, and the accompanied dovish statement by Trichet, the market followed suit with expectations and witnessed a quick plummet in EUR values. Several reports have begun to assume a possible rate reduction as early as mid-2012 by the ECB, though future economic growth will factor heavily in such a decision. For now, traders appear to be looking to a weakening of the EUR through the remainder of the week.

JPY – Japanese Yen Bearish as Data Reveals Contraction

The Japanese yen (JPY) was seen consolidating in an ascendant flat formation these past few days, as market reports showed modest declines across the boards. Despite recent reports on Japan’s shrinking housing sector, yesterday’s publication of Japanese bank lending and machinery orders showed a broadening contraction striking several sectors of the island economy.

Expectations for these reports were for modest growth from last month’s reading. The actual figures shrank below forecasts, however, leading to some odd downticks in JPY values amid an environment of risk aversion. National data on housing and manufacturing has somewhat halted the JPY’s ascent as many investors hesitate to move into the once-burgeoning JPY. This data, combined with the recent interventions by the BOJ, has so far caused the yen to weakly move bearish.

Crude Oil – Oil Sees Uptick after Inventory Report Shows Supply Decrease

Crude Oil prices found support Thursday, moving towards $89 a barrel in late trading as sentiment appeared to shift in favor of a price increase following news that supply in the United States declined by 4 million barrels this week. With supply falling and manufacturing and industry in decline, the balance between supply and demand appear to be reaching agreement as the value of oil seems to be leveling out in recent trading, despite the recent swings in currency values.

As investors seek shelter from recent market uncertainty, the value of crude oil, which was seen holding steady all week, may see additional gains before today’s close. A sudden jump in dollar values due to a sudden return to risk aversion, as was expected following the recent interest rate announcements, could drive many investors into lower investments on physical assets; driving oil prices back downward by the middle of next week.

Technical News

EUR/USD

Last week’s candlestick highlights two key points; the inability of the EUR to maintain a bid above the 1.4500 level and the formation of an outside day down candlestick pattern on the close. As such the key support levels for the pair are found the 1.4100 level where the August 11th low coincides with the 61% Fib retracement from the July to August move. The other key level is the rising trend line from the May 2010 low which comes into play at 1.3975. To the upside resistance is found at this week’s opening gap of 1.4180 followed by 1.4325 and last week’s high of 1.4550.

GBP/USD

The GBP/USD has the monthly, weekly, and daily stochastics falling while the price is encroaching upon significant support where the 200-day moving average and the August 11th low coincide at 1.6110. A break here could open the door to 1.6000 with additional support way down at 1.5780. To the upside the high from last Thursday/Friday at 1.6250 stands as initial resistance followed by 1.6450 and 1.6615.

USD/JPY

The JPY has formed a base at 76.40 while failing to move below the all-time low of 75.94 set earlier in August. Weekly and daily stochastics have turned up but monthly stochastics remain firmly to the downside. Initial resistance is found at 77.70 followed by the post intervention high of 80.20 and finally at 81.30 off of the 2007 falling trend line.

USD/CHF

The appreciation of the pair failed at the 0.8275 resistance and the long term downtrend continued with a vengeance, falling as low as 0.7710 before recovering slightly. There are two levels that stand out from the August move higher; 0.7650 at the 50% Fibonacci retracement and the 0.7510 at the 61% retracement.

The Wild Card

EUR/GBP

With yesterday’s bearish engulfing candlestick it appears the pair has failed to complete its head and shoulders bottom reversal chart pattern. Forex traders may eye the 0.8660 level from the rising support line off of the August lows. A break here would take the pair out of its 1.5 month consolidation pattern. Additional support to the downside is found at the May low of 0.8610 as well as the pair’s rising trend line from the June 2010 low which comes in at 0.8550. Resistance is located at the July/August high of 0.8880.

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.

GBPUSD stays below a downtrend line on 4-hour chart, and remains in downtrend from 1.6453, and the fall extended to as low as 1.5912. As long as the trend line resistance holds, downtrend could be expected to continue, and one more fall to 1.5850 area is still possible. On the other side, a clear break above the trend line will indicate that a cycle bottom has been formed at 1.5912 and the fall from 1.6453 has completed.

Written by ForexCycle.com

Sept. 8 (Bloomberg) — Maarten-Jan Bakkum, an emerging markets strategist at ING Investment Management, talks about the outlook for emerging markets including South Korea, Taiwan, China and Brazil. He speaks with Francine Lacqua on Bloomberg Television’s “Countdown.”

The Bank Negara Malaysia held its Overnight Policy Rate (OPR) unchanged at 3.00%, and held the floor and ceiling rates of the corridor for the OPR at 2.75 percent and 3.25 percent respectively.  The Bank said: “In the MPC’s assessment, while inflation remains a concern, the increased uncertainties on the global and domestic economic growth prospects and their potential consequences could have a moderating impact on inflation.”  On its own economy the Bank said: “Domestic growth prospects, however, continue to remain positive, underpinned by the expansion in private consumption and private investment.  Employment conditions remain favourable amid sustained business and consumer confidence. The public sector will also continue to support economic growth.”