1: Open Directory Project | The Web Directory Solution Google+ Economic news: 2012

Tuesday, December 11, 2012

Follow LIVE President Ben Bernanke press conference

Live stream videos at Ustream

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Wednesday, December 5, 2012

Follow LIVE the ECB press conference

Here is the link to be redirected to the ECB press conference following the meeting of the Governing Council of the European Central Bank. The conference will take place on December the 6th 2012 starting at 2:30 p.m. CET

                                                                ECB press conference


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Thursday, November 8, 2012

Follow the ECB rate Decision

Following the ECB rate decision , President Mario Draghi and Vice-President Vìtor Constancio will held the usual press conference in Frankfurt.
The press conference is scheduled for November the 8th at 2.30 p.m. CET.

                                                        Follow LIVE the ECB press conference

Thursday, October 4, 2012

Follow LIVE the ECB Press Conference

Here is the link to follow the ECB Press Conference following the October rate decision on October the 4th at 2:30 p.m. CET (8:30 EST):

                                                             LIVE ECB Press Conference

Wednesday, September 12, 2012

China, Europe and US; who's going to win the stimulus award?

The world is begging for stimulus, and markets will never be satisfied. It sounds a little radical, but this is, in reality what we are looking at since the subprime crises started in 2007 and exploded in 2008.
After sinking interest rates to minimum levels Central Banks used a variety of instruments to boost stagnant economies.

First was the FED pumping money into the system hoping to avoid the worst recession from the 30's of last century, then, most Central Banks, from the Bank of England to the European Central Bank, People's Bank of China and Bank of Japan (among others) injected massive quantity of liquidity into markets, some to avoid economic contraction, some others to help sustaining growth.
Different methods were used around the world to bring liquidity back to markets, from the most direct Quantitative Easing programs (FED's QE and QE2 ), to the acquisition or the extension of liability of the acquired national debts in form of bonds (operation twist from United States and Gilt massive purchases from the UK), passing trough the extensions of assets accepted as collateral by private banks (ECB and PBOC), gigantic public infrastructure projects (China) and discounted loans at 1% from the ECB to the financial institutions of Europe called LTRO (this is how some automakers like Volkswagen can sell their cars with little or no down payment and an interest rate of 2 or 3%).

Last act in this stimulus run across the globe was the announcement, last week, from president of the ECB, Mr. Mario Draghi of the OMT program which will make sure (under strict conditions), that public debt in European countries is sold at a sustainable level, in fact, paying interest rates of more than 6-7% from countries like Italy or Spain would not be sustainable for a long period of time and could bring the Euro zone to implosion.
Recently, at the World Economic Forum in Tianjin (Shanghai), Chinese premier, Mr. Wen Jiabao, affirmed it could use his budget surplus, set aside in a special reserve fund, to boost fiscal spending in order to support the economy, and when we talk about a gigantic economy like China we know we are talking about massive quantity of money, just to have an idea, the budget surplus from 2012 alone has recently raised to US$ 158 Billions.
After all, liquidity injection, is the best recipe to revitalize the economy; the problem is that markets became addicted to stimulus and like a junkie in need of his drug, when the drug is no longer available, the user start shaking, it feels bad and would do anything to get his dose.

The question is , how effective can stimulus be? Specially if we think that major corporations, who never stopped making profits, are literally sitting on piles of in utilized cash, waiting to decide if is better to invest in infrastructure, acquisitions or simply give it back to investors in form of dividends. If we could bring half of this cash back to the real economy we would probably live an economic boom just like during the late 80's or the mid 90's; research could be a wise way of exploiting these resources; the biggest effort from this companies will be bringing new innovative products to the public, stimulating demand(let's just think of what Apple did when it launched the first I-Phone six years ago).
Some academics and analysts affirm that further stimulus will not be effective and will hardly achieve results we've seen in the past, just like an addicted, market, need a bigger quantity of liquidity to be reactive.
We are now, anxiously waiting for the FOMC meeting of September to see if some form of stimulus will be announced, markets are heavily betting on a new Quantitative Easing, partly due to the latest Non Farm Payrolls data that were far from encouraging, but the FED will probably take time till next meeting to announce anything and will surprise markets with some creative form of stimulus instead of a new QE program.

Images: FreeDigitalPhotos.net

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Tuesday, September 4, 2012

Follow LIVE the ECB press conference.

Probably the most waited press conference of Governor Mario Draghi since his investiture as President of the European Central Bank.

Follow LIVE the ECB question and answer session where registered journalists pose questions to Mario Draghi, President of the ECB, and to Vítor Constâncio, Vice-President of the ECB.

Click on the link to be re-addressed to the ECB site:
Webcast of the ECB press conference 6 September 2012

The press conference will follow the meeting of the Governing Council of the European Central Bank on September the 6th 2012 at its premises in Frankfurt at 2:30 p.m. CET (8:30 a.m. EST).

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Monday, August 27, 2012

FOMC Minutes - New stimulus measures on sight?

Here are the most relevant quotes from the minutes of the Federal Open Market Committee of July 31st - August 1st, the impression is that further easing in monetary policy is a probable option for the near future.
On August 31st- September 1st, at the Jackson Hole Economic Symposium, some announcement and/or clarification is expected but, probably, the FED will wait till September to take action.

FOMC minutes August 1st

Economic situation

The information reviewed at the July 31-August 1 meeting indicated that economic activity increased at a slower pace in the second quarter than earlier in the year and that labor market conditions had improved little in recent months. In the second quarter, consumer price inflation was markedly lower than in the first quarter, mostly reflecting substantial declines in consumer energy prices, while measures of longer-run inflation expectations remained stable.
Private nonfarm employment expanded in June at about the same modest pace as in the second quarter as a whole, and government employment decreased slightly. The unemployment rate was 8.2 percent in June, the same as its average during the first half of the year. The rate of long-duration unemployment stayed elevated, and the share of workers employed part time for economic reasons was still high. Indicators of job openings and firms' hiring plans were generally subdued. While initial claims for unemployment insurance trended down a bit over the intermeeting period, they remained at a level consistent with continued modest increases in employment in the coming months.
Manufacturing production decelerated significantly in the second quarter following a large gain in the first quarter, while the rate of manufacturing capacity utilization was unchanged on balance. The production of motor vehicles and parts increased considerably last quarter, but factory output outside of the motor vehicle sector was essentially flat.
Real personal consumption expenditures increased at a slower rate in the second quarter than in the first quarter, primarily reflecting a decrease in spending for motor vehicles. Meanwhile, real disposable personal income rose at a faster pace than consumer spending in both the first and second quarters, boosted in part in recent months by lower energy prices. Consumer sentiment as measured by the Thomson Reuters/University of Michigan Surveys of Consumers (Michigan Survey) was more downbeat in June and July than earlier in the year.
Conditions in the housing market generally improved further in recent months, but activity remained at a low level against the backdrop of the large inventory of foreclosed and distressed properties and tight underwriting standards for mortgage loans. Both starts and permits of new single-family homes increased in the second quarter. Starts of new multifamily units were about the same last quarter as in the previous quarter, but permits rose, which pointed to higher multifamily construction in the coming months. Home prices increased in May for the fifth consecutive month. Sales of new homes in the second quarter were moderately higher than in the first quarter, but existing home sales decreased slightly.
Real business expenditures on equipment and software rose in the second quarter at a faster pace than in the first quarter. However, new orders for nondefense capital goods excluding aircraft decreased last quarter, and the backlog of unfilled orders decelerated sharply. Other recent forward-looking indicators, such as surveys of business conditions and capital spending plans, also suggested that increases in outlays for business equipment would slow in coming months. Real business spending for nonresidential construction increased somewhat in the second quarter but remained at a relatively low level.
Real federal government purchases decreased a little in the second quarter, following a much sharper decline in the previous three quarters, as the continued contraction in defense spending eased.
The U.S. international trade deficit narrowed in May, as exports edged up and imports declined.
Consumer food prices posted only a small increase last quarter, but the recent sizable run-up in spot and futures prices of farm commodities, reflecting the effects of the drought and hot weather in the midwestern part of the United States, pointed to some temporary upward pressures on retail food prices later this year. Consumer prices excluding food and energy increased more moderately in the second quarter than in the first. Near-term inflation expectations from the Michigan Survey rose a little in June and July, while longer-term inflation expectations in the survey continued to be stable.
Foreign economic growth continued to be subdued, as fiscal retrenchment and financial stresses in the euro area continued to weigh on economic activity in Europe and elsewhere. Recent indicators of production and confidence in the euro area remained weak, and the preliminary second-quarter estimate of real GDP in the United Kingdom showed a contraction. Real GDP in China accelerated somewhat in the second quarter following a relatively weak expansion in the first quarter, and recent monthly data suggested some further improvement. However, data for other emerging market economies generally pointed to a deceleration in economic activity last quarter. Foreign inflation eased in the second quarter and remains well contained, as earlier declines in the prices of energy and other commodities passed through to the retail level.

Financial Situation

Several factors influenced developments in financial markets since the time of the June FOMC meeting. Generally weaker-than-expected economic data in the United States, concerns about the fiscal and banking situation in the euro area, and the outlook for global economic growth weighed on investor sentiment. However, the effects of these factors were offset to some extent by actual and expected easing of monetary policy in the United States and abroad and by better-than-anticipated profits at some S&P 500 firms.
Interest rates generally moved down, on net, over the intermeeting period. The yield on nominal 10-year Treasury securities declined to a historically low level, partly due to a lower expected path of the federal funds rate, the continuation of the maturity extension program announced at the June FOMC meeting, and perceptions of an increased likelihood that the Federal Reserve will ease monetary policy further.
The staff's broad nominal index for the foreign exchange value of the dollar changed little, on net, over the intermeeting period, although the dollar appreciated against the euro. Financial markets in the euro area were volatile, as a deterioration in market sentiment gave way to periods of optimism following the euro-area summit in late June, the decision by the European Central Bank (ECB) to ease policy in early July, and indications from the ECB later in July that the central bank might take further steps to support the monetary union. On net, European stock markets finished the period higher. Yield spreads on Spanish and Italian 10-year bonds over their German equivalents, which rose sharply over most of July, fell back from their intermeeting peaks but remained elevated.
Several foreign central banks eased monetary policy over the intermeeting period. The ECB cut its benchmark policy rate by 25 basis points and reduced the rate on its overnight deposit facility to zero. The Bank of England increased the size of its asset purchase program and announced details on its new program designed to boost bank lending to the nonfinancial sector. The central banks of Brazil, China, and South Korea all reduced official rates as well. Amid policy easing in the euro area and United Kingdom, yields on German and U.K. sovereign bonds declined, with two-year German sovereign bonds trading at yields below zero.

Economic Outlook

In the economic forecast prepared by the staff for the July 31-August 1 FOMC meeting, the near-term projection for real GDP growth was revised down somewhat. The revision primarily reflected a slower pace of consumer spending than the staff expected at the time of the previous projection, along with a deterioration in some forward-looking indicators. However, the staff's medium-term forecast for real GDP growth was little changed, as the slightly weaker underlying pace of economic activity suggested by the recent data was roughly offset by the anticipated effects of the continuation of the maturity extension program announced following the June FOMC meeting, which had not been incorporated in the previous projection. With the restraint from fiscal policy assumed to increase next year, the staff projected that increases in real GDP would not significantly exceed the growth rate of potential output in 2013. Thereafter, economic activity was expected to accelerate gradually, supported by an eventual easing in fiscal policy restraint, gains in consumer and business sentiment, further improvements in credit conditions, and continued accommodative monetary policy. The expansion in economic activity was anticipated to reduce the substantial margin of slack in labor and product markets only slowly over the projection period, and the unemployment rate was expected to remain elevated at the end of 2014.
The staff's forecast for inflation was little changed from the projection prepared for the June FOMC meeting. With crude oil prices expected to decline a bit from their current levels, the boost to retail food prices from the current drought in the Midwest anticipated to be only temporary and relatively small, longer-run inflation expectations remaining stable, and substantial resource slack persisting over the forecast period, the staff continued to project that inflation would be subdued through 2014.

Participants' Views on Current Conditions and the Economic Outlook

In their discussion of the economic situation and the outlook, meeting participants agreed that the information received since the Committee met in June suggested that economic activity had decelerated in recent months to a slower pace than they had anticipated. Indicators of manufacturing activity had softened. Recent monthly gains in payroll employment had continued to be small, and the unemployment rate in June remained at an elevated level. Consumer price inflation had been low in recent months, as declines in the costs of crude oil were passed through to retail energy prices. Longer-term inflation expectations had remained stable.

Regarding the economic outlook, most participants agreed that
economic growth was likely to remain moderate over coming quarters and then pick up gradually. Some participants expressed concern about the persistent headwinds restraining the pace of the recovery, including the weak housing sector, still-tight borrowing conditions for some households and firms, and fiscal restraint at all levels of government. 

Financial markets remained sensitive to ongoing developments related to the sovereign debt and banking situation in the euro area, and participants continued to view the possibility of an intensification of strains in global financial markets as a significant downside risk to the domestic economic outlook. Several participants indicated that recent trends in euro-area equity indexes and sovereign debt yields had not been encouraging, and some noted that the uncertainty prevailing in global financial markets was showing through in a cautious posture of investors. Nonetheless, participants generally agreed that conditions in domestic credit markets remained more favorable than they were a year ago. 
Participants discussed a number of policy tools that the Committee might employ if it decided to provide additional monetary accommodation to support a stronger economic recovery in a context of price stability. One of the policy options discussed was an extension of the period over which the Committee expected to maintain its target range for the federal funds rate at 0 to 1/4 percent. It was noted that such an extension might be particularly effective if done in conjunction with a statement indicating that a highly accommodative stance of monetary policy was likely to be maintained even as the recovery progressed.
Participants also exchanged views on the likely benefits and costs of a new large-scale asset purchase program. Many participants expected that such a program could provide additional support for the economic recovery both by putting downward pressure on longer-term interest rates and by contributing to easier financial conditions more broadly. In addition, some participants noted that a new program might boost business and consumer confidence and reinforce the Committee's commitment to making sustained progress toward its mandated objectives. A few participants were concerned that an extended period of accommodation or an additional large-scale asset purchase program could increase the risks to financial stability or lead to a rise in longer-term inflation expectations. Many participants indicated that any new purchase program should be sufficiently flexible to allow adjustments, as needed, in response to economic developments or to changes in the Committee's assessment of the efficacy and costs of the program.
It was noted that the ECB's recent cut in its deposit rate to zero provided an opportunity to learn more about the possible consequences for market functioning of such a move. In light of the Bank of England's Funding for Lending Scheme, a couple of participants expressed interest in exploring possible programs aimed at encouraging bank lending to households and firms, although the importance of institutional differences between the two countries was noted.

Committee Policy Action

The information received over the intermeeting period indicated that economic activity had decelerated in recent months, with a notable slowing in consumer spending.  Members generally expected that economic growth would be moderate over coming quarters and then would pick up very gradually. While most members did not view the medium-run economic outlook as having changed significantly since the June meeting, several noted that they had lowered their expectations for economic growth over coming quarters.  A number of members noted that if the recent modest rate of economic growth were to persist, the economy would be less able to weather a material adverse shock without slipping back into recession. Most members continued to anticipate that, with longer-term inflation expectations stable and the existing slack in resource utilization being taken up very gradually, inflation would run over the medium term at a rate at or below the Committee's objective of 2 percent. In contrast, one member thought that the economy may be operating near its current potential and, thus, that maintaining the Committee's current highly accommodative policy stance well into 2014 would pose upside risks to the inflation outlook.

The Committee had provided additional accommodation at its previous meeting by announcing the continuation of the maturity extension program through the end of the year, and more time was seen as necessary to evaluate the effects of that decision.  A number of them indicated that additional accommodation could help foster a more rapid improvement in labor market conditions in an environment in which price pressures were likely to be subdued. Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery. Several members noted the benefits of accumulating further information that could help clarify the contours of the outlook for economic activity and inflation as well as the need for further policy action. One member judged that additional accommodation would likely not be effective in improving the economic outlook and viewed the potential costs associated with such action as unacceptably high. At the conclusion of the discussion, members agreed that they would closely monitor economic and financial developments and carefully weigh the potential benefits and costs of various tools in assessing whether additional policy action would be warranted.
 Many members expressed support for extending the Committee's forward guidance, but they agreed to defer a decision on this matter until the September meeting in order to consider such an adjustment in the context of updates to participants' individual economic projections and the Committee's further consideration of its policy options. The statement also reiterated the Committee's intention to extend the average maturity of its securities holdings as announced in June. Consistent with the concerns expressed by many members about the slow pace of the economic recovery, the downside risks to economic growth, and the considerable slack in resource utilization, the Committee decided that the statement should conclude by indicating that it will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

Tuesday, July 31, 2012

ECB press conference - LIVE

Follow LIVE the ECB question and answer session where registered journalists pose questions to Mario Draghi, President of the ECB, and to Vítor Constâncio, Vice-President of the ECB.

Click on the link to be re-addressed to the ECB site:
European Central Bank - Press TVservice - Webcast

The press conference will follow the meeting of the Governing Council of the European Central Bank on August the 2nd 2012 at its premises in Frankfurt at 2:30 p.m. CET (8:30 a.m. EST).

Monday, June 11, 2012

100 Billions to save the World

The announcement, on Saturday, that Europe will save Spanish banks with 100 billions Euro is the catalyst markets where waiting for to bounce from depressed prices we've seen lately.
Finally European Community is taking her destiny into her hands and, with determination, announces is willing to do something concrete; of course such statement couldn't come without some protests from previously bailed out countries (the magic trio Greece,Ireland and Portugal) with Ireland asking why she had to pay such an high price (in terms of austerity) when Spain is getting it for "free".
The answer might be founded in the austerity measures Spain already took with Zapatero first and Rajoy lately, measures that Ireland wouldn't have taken if not obliged by European Institutions.

Spanish house market is heavily depressed from the old days of the subprime crises dating back in 2008 and never recovered, things started to get worse when private debts where taken from the private sector (banks who paid mortgages with carelessness to people who would have never been able to pay them back) and spread it over the public sector.

Image courtesy of FreeDigitalPhotos.net

How else would you define the big efforts Governments put in the past years on saving banks? Let's just think that if the same money spent on banks would have simply gone to Governments, Europe could have saved not only the magic trio but probably Spain, Belgium and at least half of Italy. What certainly couldn't miss was the disapproval of Germany that apparently is working against Europe and seems like it doesn't miss opportunity to talk markets down. What was said yesterday by Bundesbank was just another broadside, they basically said Germany's patience is limited and if they agreed once to help it doesn't mean they will always do. The Bundesbank probably realized that German Banks are the most heavily exposed to Spain after French Banks and come just before British Banks, so there was no way they could have let any of the Iberic Institute fail without provoking something probably much bigger than the collapse of Lehman was in 2008.

The result of this announcement was a jump in market indexes during the Asian session with Tokyo closing 2% higher followed by the Kospi, the Hang Seng and the Strait Times and Oil jumping $2 higher in the first minutes of trading.
On the chart below you can see how oil bounced right at the beginning of the trading day, the dotted line represent the closing of  New York on Friday afternoon, a similar movement was seen in most commodities from Gold to Copper and is a clear sign of risk appetite.

We should also mention much better than expected data coming from China; imports and exports rose in May  more than double of what was expected but on a day like this when Europe finally gives a sign of life nobody will pay attention to the Asian giant.

Tuesday, May 22, 2012

Yen weakness and BOJ meeting

Bank of Japan started today the monthly two days meeting to discuss the economic situation that usually precede any rate or monetary policy adjustment; with an interest rate close to zero there won't be any action on the rate side but what speculators are betting on is an increase or continuation of bond purchase that usually act as a boost to equities.
This is probably the reason of the YEN weakness we've seen from the beginning of trading on Monday across Asia that continued through the North American session with a pause during the European opening hours.

                                         CLICK ON THE CHART TO GET A BETTER VIEW

On the chart you can see how the USD/JPY bounced from the 61.8% Fibonacci retracement calculated from the low of February the 2nd to the high of March the 15th.

Yen particularly weakened against the so called "commodities currencies" (CAD-NZD-AUD) and perhaps the most aggressive traders and money managers are starting a new round of "carry trade" after the huge unwinding of position that took place on the currency market last week.

The Japanese currency was sold massively against the Mexican Peso and Singapore Dollar among the others; the MXN/JPY is considered the king of carry trade since it offers one of the greatest interest rate differential on the currency spot market.

Yen strength and volatility is seen by Japanese officials as the biggest threat to a stable recovery as recently stated by Nissan CEO Carlson Ghosn and we all know the impact on the GDP of the third largest economy of the world the automotive industry has.

The leadership of Japan in electronic products was gained over the years by more aggressive nations like South Korea and China in fact, SONY, the biggest and most famous Japanese producer of consumer electronics has recorded, in 2011 the first year in red since more than two decades.

Monday, May 14, 2012

Is the Aussie ready to bounce?

Now that the Australian dollar dropped to parity with the U.S. dollar many are wondering if this level will work as support or if the value of the southern pacific currency will continue to move south.
As we know the dilemma is not an easy one to answer, in fact, nobody knows what the next move will be in any currency since there's such a variety of  participants in the forex market that only Central Banks have the power to really move a price.
Most of the times, even their efforts to depreciate or appreciate a currency has a short term effect and market always win the battle. Anyway RBA has never manipulated the market and Prime Minister Gillard recently stated that will never act in such direction, beside that, a weaker AUD can only benefit the Australian economy that recently showed signs of difficulty.

Home loans in Australia are moderately rising (+ 0.3 %) despite the prediction was of a substantial decrease of  2 % and the move from the People's Bank of China of cutting reserves ratio requirements is the equivalent of an interest rat cut.
The surprise from investor may help boosting equities for a while and as we know, when equities rise, riskier assets like the AUD rise with them.

The only question is, how long will markets need to be stimulated with emergency liquidity injections?                     It seems like Central Banks around the world are acting according to a mutual agreement, whenever liquidity is required to keep economies buoying there will be a major Bank providing it; first was QE from the FED, then Japan and Europe and lately China.
For how long will this game keep working and what will happen when the game breaks down?       

Thursday, May 10, 2012

Will "risk off" take a pause

What we' ve seen in the past two days in markets is commonly called a "risk off" scenario.
 Market participant are suddenly realizing the overall economic situation is not as nice as it appeared and they are massively getting rid of risky assets; the Euro,the Aussie, the Kiwi, Gold and Silver dropped significantly.
Oil is at the lowest level of the past 3 months, the U.S. dollar and the Yen are rising and all major indexes in Europe and Asia are heavily heading down.

Wall Street is holding, but if we take a closer view of the past two trading days in the U.S. we can notice market opened with a big drop to recover at around 11 a.m. EST, just when European markets closed for the day.
This is not  a coincidence, in fact, most of the bad news are coming from Europe: Greece, after the elections held on Sunday is facing a political situation that will probably bring the country to new elections.

                                                          image © Daniel Steger for openphoto.net CC:Attribution-ShareAlike

 None of the parties is able to form a coalition government, the numbers are simply not there to form a stable coalition and Mr. Tsipras, the politician who is supposed to form the government instead of Mr. Samaras  who couldn't form it without the consensus of the second political force elected, already said the measures adopted to bring the desperate financial situation of the country back in track will be re-discussed.
Of course this is not good news for the financial institutions who saved the country from bankruptcy and a new bailout will probably be necessary. Will Greece leave the Euro? What was considered a taboo is now been taken into consideration and major banks across Europe are preparing to this event that could undermine European confidence. Is Europe and the Euro really just an experiment as some american academics has always alleged or the Euro is here to stay? History is teaching us all monetary unions has not survived after the the first decade so the Euro would be the exception.

On the other side, European banks are, once again, under pressure; Bankia, the third biggest Spanish Bank had to be nationalized, the State had to purchase 45% of the Bank in order to keep it alive and avoid a Tsunami that is barely comparable to what Lehman Brothers was in 2008. Analysts around the world are starting to think: who will be next? Dexia ,who was massively helped by French, Belgian and Luxembourg intervention to avoid the collapse or maybe the Italian Monte dei Paschi di Siena who booked major losses during 2011 ( something around 8.5 billions €)?
Or maybe Royal Bank of Scotland who had to be saved by the U.K. or  even CommerzBank who was taking big loans from the exceptional LTRO issued by the ECB witch gave the continent relief basically giving money almost for free at 1% interest rate for three years?

Looking at Asia and the rest of BRICS we notice that the so called emerging economies are actually taking the role emerged economies once had,  being now the locomotives of the world.
But for how long will China grow at this pace? We are already seeing a slowdown from the double digit growth rate we where used to, China's growth is now close to 8% and the quinquennal plan did not gave any solution on how to boost internal
consumption of goods in order to make China less dependent from export. Salaries are growing but they will have to grow much more to see the Chinese middle class taking part to the Real Estate market witch will probably be the next bubble if  those hundreds of thousands of houses and apartaments don't find a owner.
In conclusion the crisis is far from being over and maybe the best start of the year for equities we've seen in years will just remain a year that started well to pull back in the second half, something we've already seen in 2010 and 2011.        

image © bman ojel
for openphoto.net CC:Attribution-ShareAlike
agenzia delle entrate; equitalia

Monday, May 7, 2012

Euro break support

                                            CLICK ON THE CHART TO GET A BETTER VIEW   
Euro broke a strong support level against the dollar. The 1.30 figure, over the past 3 month, worked as support and price was bouncing off every time was approaching this level. Markets are probably worrying about French presidential and Greek Parliamentary elections results.
There was quite of a huge gap down right at the open, but shall we trust this as a signal price will drop further or shall we expect a rapid retracement back to the Friday close?
Investors are looking for safety in this uncertain moments buying U.S. dollars and Japanese Yen witch are widely perceived as safe heaven currencies, on the other side we see depreciation of the most risky assets like the commodity currencies (AUD,NZD and CAD).
Volatility is expected to rise significantly during the day not only on Forex; all major indexes are testing important support levels (see DAX, NASDAQ, ITA 40 for example).

                                              CLICK ON THE CHART TO GET A BETTER VIEW 

Friday, May 4, 2012

U.S. Non-farm payrolls report

U.S. Non farm payroll came out at 115.000 Vs. 160.000 expected and unemployment showed a decrease at 8.1% Vs. 8.2% expected. A mixed picture here that perfectly reflects on market reaction. Take a look at the 15 minutes chart of  USD/CAD for example (above): a big spike down followed by a jump up.

Same thing on the USD/JPY showed on the second chart: dollar depreciate first to run back up.
A similar reaction was recorded on the U.S. equities futures with a 5 point drop followed by a sudden recover.

This is to remember that trading the news is extremely difficult specially when you get mixed data, markets not always have a clear idea of how interpret the readings and volatility spikes up hitting stops and limits levels pre-set on trading platforms around the world.

To notice the Oil depreciation that took place during the Asian and European sessions showed here on a Daily time frame; Oil stands now just above 100 $ and seems to want a test of the 200 Simple Moving Average (one of the most watched by traders) witch stands now at 96.39 $. Operators are anxious on the  Wall Street open ; what the reaction will be to this weak economic data from the U.S.? This next November will take place presidential elections and a slow recovery certainly doesn't help Obama, many people still remember what happened last year (and the previous) when we had a second part of the year characterized by bad economic data and drops in stocks despite a beginning of it that was showing improvements and stocks appreciations.

Thursday, May 3, 2012

Australian dollar Vs New Zealand dollar

The Aussie nicely broke a triangle congestion pattern against the Kiwi dollar and after a long spike up retraced half of the movement.
NZD dollar was weakening due to relatively weak data from the labor market; unemployment rate came out at 6.7 % Vs 6.2 % expected, confirming what Central Bank and politicians affirmed last week.
A strong Kiwi dollar is perceived as the major cause of problems for the southern pacific country witch heavily relies on soft commodities and dairies exports, few days ago trading balance also showed a strong contraction for March and for 2012 on the overall.
RBNZ also stated that could intervene to weaken the currency if the situation will require it.


Tuesday, May 1, 2012

British Pound Rally

British Pound rallied for 10 consecutive days breaking previous resistance levels before pausing at the 1.63 figure despite bad economic data from the U.K.like low GDP (-0.2) that brought Great Britain to a double dip recession.
Unemployment is also raising at record levels, so what is pushing the GBP so high? Is it just a weak dollar ? Or  international investors from around the world perhaps are dropping the European Bond and buying Guilts?
Here is a chart of GBP-USD (above) and EUR-GBP showing a decline of  700 pips from the October 27th high    


Tuesday, April 24, 2012

AUD-USD Drops after CPI datas release

Australian Dollar drops after the release of a disappointing CPI number of 1.6% (2.2% expected), this will probably bring RBA to cut interest rate as suggested by the minutes of the last RBA meeting.
Will the 61.8% Fibonacci retracement hold as it did recently or shall we expect price to drop lower? Let's see if it makes it to the 76.4% which stands at 1.01 roughly.
Volatility ( measured using ATR set at 14 periods) is at the lowest level since January the 11th


Monday, April 23, 2012

European Stocks plunge

Sell in May and go away? Apparently in 2012 we should say sell in April and avoid the peril.
European Stocks plunged today due to a mix of concerning news and events.
French presidential elections showed voters are more inclined to a less restrictive economic policy and (former?) President Sarkozy has clearly lost the first turn of the elections; as showed by polls in the last months Mr. Hollande is the favorite, a big surprise was the rise of the votes for Mrs. Le Pen.
Dutch Parliament faces problems approving laws to reinforce fiscal and spending austerity and Government resigned during the weekend.
German "Purchasing Manager Index Manufacturing" falls way below expectations (46.3 - 49.0 expected), Italian Consumer Confidence and French Business Confidence also fell below expectations. Particularly worries about the Italian data which fell  7.2 points below expectations; the austerity measures implemented by Prime Minister Mario Monti are starting to affect the real economy and recession is now called out even by more optimistic economists even though they keep calling it a mere technical recession without realizing that the recession is more structural than technical.
Chinese HSBC Flash Manufacturing PMI for April shows during the European night little signs of improvement as it record at 49.1 (a reading above 50.0 has to be considered positive showing expansion and a reading below 50.0 has to be considered negative showing recession) even though is above March reading of 48.3

Here are some more numbers about the European carnage:

 DAX                    -3.36% 
 CAC 40              -2.83%  
 EU Stoxx 50      -2.87%
 UK 100              -1.85%
  ITA 40               - 3.83%
Datas provided by Forexpros


Friday, April 20, 2012

NZD - USD in a tight range

NZD/USD has been trading in this pretty tight range since the beginning of February, it seems like the 200 simple moving average is giving support. How long is it going to hold? Is this just a consolidation period that will bring the pair higher with a resume of the previous trend or shall we expect it to drop significantly lower? The Pivot points are calculated on a monthly base and clearly show the pair doesn't know where it want to go.   

GOLD - Is the uptrend over?

This trend line start back in 2008 and supported the incredible uptrend we've seen in Gold in the past years. The shiny metal has historically played the role of defensive asset but lately is acting more like a risky asset showing a quite strong (positive) correlation with equities. Will the line hold once again or after three tests of it shall we expect price to break down?

Monday, April 16, 2012

Swiss Franc - Euro floor

Euro struggle to stay above the 1.20 figure against the Swiss Franc, SNB may have to intervene again and again to keep it this level. Will it raise the floor to 1.30 ?

Monday, January 9, 2012

USD - CHF continue to move higher.

USD continue to move higher against CHF touching levels we haven't seen since mid February of last year; the pair appears to be in a nice uptrend since Suisse National Bank intervened twice in August and September.   Today's unemployment data from Switzerland could surprise; let's see if the employment situation in the small European country is closer to Germany, which is at the highest level since re unification or if it follow the Italian path.
Certainly a strong Swiss Franc is not helping national producers to sell their goods to the rest of Europe but we have to consider the efforts done by some Swiss areas to attract foreign investors suchlike tax cuts to new businesses.

Friday, January 6, 2012

AUD-JPY bounces off of a rising trend line.

AUD-JPY is nicely bouncing off of a rising trend line that starts in late November.Will the 79.00 figure hold or shall we expect a fall? It all comes back to risk appetite.

Wednesday, January 4, 2012

USD-JPY - Moving away from the 200 moving average.

After three interventions from BOJ the pair is still moving lower, with few test of the past low of  76.30 recorded on march the 17th 2011 the pair touched a new low around 75.55 in early November.
Is it going to test it again or shall we expect another intervention before it moves to new lows? Exporters in Japan are struggling to still be profitable with goods they sell abroad.

Gold - Testing strong support area.

Is Gold ready for a recovery or it will keep moving lower? The ellipse may be a strong support area but it all depends on how strong the USD will be.

EUR-AUD drops to record lows.

This is the impressive move recently seen in the EUR/AUD pair. I draw Fibonacci retracements to have an idea of where could the pair bounce before moving even lower.