A review of this weeks key macro-economic events and developments. We cover the FOMC’s interest rate decision and US 4th quarter GDP, the recent hawkish tone of the ECB, the tough situation the BOE is in regards to high inflation and low growth, Japan’s credit rating downgrade and the protests in Egypt.
The Euro rose on the back of comments from ECB President Trichet – we outline some of the latest developments. We also look ahead to the US data this week including US FOMC interest rate statement and our first look at 4th quarter GDP figures.
Today’s session featured some very good reports from the US including a better than expected drop in weekly jobless claims – undoing some of the anxiety from last week’s poor report – as well as a surge in existing homes in December. The labor and housing market are the weak links for the US economy right now, and today’s data can help to shift conventional wisdom again to better underlying fundamentals for the US. The USD responded positively today, can it extend those gains into a rally?
Today’s session featured the European Central Bank and Bank of England decisions, and while there wasn’t too much in the way of new surprises it gives us a good chance to take a look at why we have seen both the EUR and GBP rallying. Are these fundamental shifts sustainable?
Today was a day for risk appetite in European equity markets, and it helped to translate to gains in EUR pairs. Portugal’s awaited debt auction went off smoothly, easing concerns about sovereign debt fears, and there was increased specualtion that some changes would be made to the European Financial Support Facility – the €450 billion euro bailout fund – that could help increase its effecting lending capabilities.
There were 3 developments in the Euro-zone that could help support the EUR. I talk about these main events in the video. The ECB continues to buy up Portuguese bonds ahead of a crucial debt auction tomorrow. We take a look at how that has affected yields on the 10-Year Portuguese bond. In another development Japan said it will buy 20% of bonds issued by the EFSF, a reassuring sign, while Portugal said that the country met its 2010 budget deficit targets and does not need a rescue deal.
We start the new week, and before markets even open in NY we have our latest sovereign-debt rumblings. There was some pick-up in speculation that Portugal will be forced to seek external financial assistance. There was press reports that France and Germany were putting pressure on Portugal to accept some kind of loan rescue deal – structured on what happened with Ireland. Officials denied the report, but yields on Portuguese bonds continued to soar. Even if reports were overblown, the reality is that there is great uncertainty that Portugal will be able to generate the funds required for 2011 without foreign aid. Therefore, this kind of speculation and worry will continue.
The Euro was pressured today as the European Commission said it would go through with having senior bondholders take some kind of cost in a any bank failure. Any talk of haircuts has hurt the EUR. We look at the EUR’s slide and at US jobless claims, and some consolidation in USD pairs ahead of NFP.
A very strong ADP employment change – a gain of 297K private sector jobs – combined with some worries about Euro-zone sovereign debt, meant we had a strong USD and a weak EUR. The USD gained against its other safe-havens – JPY, CHF, though it did weaken against the CAD.
Trends do not have to be aggressive to be relentless suspect $DJIA is (iii of 3) like $AUDUSD has been last few weeks..slow but sure $
This! RT @CVecchioFX Mind boggling and absolutely backwards that market rallies on poor growth data...$FED (cont) http://t.co/hMrJxJW6 **BOE Fisher: Would Be "Uncomfortable" With Continued GBP Appreciation (via DJ)
Good bye Awfully disappoining Philly Fed at -5.8 vs exp 10. LEI -0.1 #forex
$GBPUSD Shed more weight after PM Cameron's remarks that Euro Zone must “make-up or break-up” and that a collapse would hurt the UK economy
USD/MXN stalling at resistance now - another chart coming in 7 minutes http://t.co/1JMTooeo RT @alaidi: starting to think $EURGBP can do mid 60s =||= Interesting - maybe a touch of resistance first? http://t.co/T66MKfMF Keep your eye on these levels - they're really all that have mattered lately (USD/CAD at resistance) http://t.co/qwMiwacS Thinking about selling some USD/CAD? Here's a chart for you: http://t.co/8rDw3OSv Buy-Time for NZD/JPY? It's showing some Arizona Rules counter-trend divergence on 5M: http://t.co/DW9STU47 #Bankia has called on depositors to remain calm, responding to today's reports that over €1bn had flowed out in recent days #forex €€€ leaking of Spain too. #Bankia, just nationalised last week, said to hemorage € 1bn in withdrawals #forex What @vicky_malhotra Which pair in particular? It does look OB across the board Fed ahead of the artificial growth, FX devaluation curve RT @conorsen Really enjoying the divergence of views (cont) http://t.co/KlJqONB7
$USDJPY is the only pair in which traders are not short the USD. Ratio at 4.3 longs per short. I'm not bearish, however, as pair range-bound
Although U.S. jobless claim figures missed market expectations, they're still holding at the lowest rate since 2008. Extreme RSI and Rate of Change measures on $USDOLLAR emphasize that the risk of short-term pullback is high, but I'm looking to buy dips. $USDOLLAR http://t.co/6UHs6oqT SSI Snapshot: crowds still heavily short USD, uptrend remains very much intact. $USDOLLAR http://t.co/f7Wmp0Ng Daily RSI at most extreme in its 2yr history, 14-day ROC most extreme since 11/2011 top. Stole away from the expo to get down to markets. (Not like I'm useful to FXCM Italy at the booth since I don't speak Italian..) bottom feeders helping to keep bearish momo intact MT @ZipperTheory markets cant hold gains for anymore than 20 mins..certainly not bullish Bigest weekly run-up in $EURUSD option volatility since September. Premium subscribers see Tuesday chart for reference #forex Moody's Eyes Spanish Banks, Stocks Reach 7% Territory http://t.co/2w6M7lw7 #forex $SPX While rate differentials aren't conducive to a weaker $EURAUD, commodity currencies still viewed as a safer alternative to debt-plagued euro
REPORT: Check out our "Morning Slices" report at http://t.co/CA4ZFwMi for an overview of the latest developments. lol *DJ Spain Deputy Finance Minister: Bankia Has Strong Future -not to worry, stock only down 25% 1320 marks that 7% peak-to-trough move in $SPX. Now we're talking #forex #stocks US crude ($CL_M) again slowest to react to overall selloff in risk assets, eyeing 89.90s from here. Our Premium targets 60 pts from 93.90 Repeating the same $AUDUSD idea from Tuesday's Premium shorts/parameters #forex $EURUSD: Clears stops below 1.2680 and would now expect to see a test of the 1.2625 yearly lows from January into North American trade.
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Video – Previewing the Week Ahead – Jan 31st-Feb 4th: Non-Farm Payroll, EU Summit, ECB Rate Decision
Nick Nasad \In this video article we preview the week ahead, talking about the upcoming week, which is filled with important releases including the January non-farm payroll report. We examine what to expect from that and other US releases this week. We also examine the recent hawkish tone of the ECB as we head into an interest rate decision. We also discuss what to expect from the upcoming EU Summit.