According to the Overnight Index Swaps, markets are 100% priced in for the Bank of Canada to cut interest rates by 50 basis points, which would bring rates to 0.50%.
Mike Leavitt, futures broker at MF Global, said a 50 basis point cut is probably the only option the central bank has left. He also said rate cuts, and even quantitative easing measures, will have limited impact because the global economy continues to pose a risk for the domestic economy.
“Quantitative easing will help to cushion the blow but we are being dragged down by a bigger beast,” he said.
Friday’s U.S. employment report will highlight further weakness in the American economy. According to some market strategists, investors will be hesitant to take long positions in equities ahead of Friday’s data.
The S&P 500 is trading near session lows and, according to Mike McCarty, senior options and equities specialist at Meridian Equity Partners, next week’s data is going to be critical to determining the next market trend.
“Most of the data is expected to be bad,” he said. “If the employment number is worse-than-expected we will make new lows in markets. But if the data is slightly better-than-expected we could see a nice rally higher.”
Saturday, February 28, 2009
Friday, February 27, 2009
Durable Goods Orders Fall By Much More Than Expected In January
The report showed that durable goods orders fell 5.2 percent in January following a revised 4.6 percent decrease in December. Economists had expected orders to fall 2.5 percent compared to the 3.0 percent decrease that had been reported for the previous month.
The steep drop in orders was due in large part to a 13.5 percent decrease in orders for transportation equipment, which followed a more modest 1.5 percent decrease in December.
A 6.4 percent decrease in orders for motor vehicles and parts contributed to the drop in orders for transportation equipment along with a 28.3 percent decrease in orders for defense aircraft and parts. The decreases more than offset a rebound in orders for commercial aircraft.
Excluding the steep drop in orders for transportation equipment, durable goods orders fell by a more modest 2.5 percent in January after a revised 5.5 percent decrease in December.
The drop in orders excluding transportation was more in line with the expectations of economists, who had expected a 2.2 percent decrease compared to the 3.6 percent that had been reported for the previous month.
The steep drop in orders was due in large part to a 13.5 percent decrease in orders for transportation equipment, which followed a more modest 1.5 percent decrease in December.
A 6.4 percent decrease in orders for motor vehicles and parts contributed to the drop in orders for transportation equipment along with a 28.3 percent decrease in orders for defense aircraft and parts. The decreases more than offset a rebound in orders for commercial aircraft.
Excluding the steep drop in orders for transportation equipment, durable goods orders fell by a more modest 2.5 percent in January after a revised 5.5 percent decrease in December.
The drop in orders excluding transportation was more in line with the expectations of economists, who had expected a 2.2 percent decrease compared to the 3.6 percent that had been reported for the previous month.
UK Consumer Confidence Rises Unexpectedly In February - GfK NOP
A monthly survey from the market research group GfK NOP showed that consumer confidence rose 2 points to minus 35 in February from minus 37 in the prior month. Economists had expected the index to drop to minus 39 in February. However, it stood well below minus 17 reported in the same period of previous year.
Rachael Joy from GfK NOP said, “Consumer confidence remains very fragile, although rose slightly from its January figure.”
The consumer confidence survey was conducted by GfK NOP on behalf of the European Commission. The survey was carried out between February 6 and 15 amongst a sample of 2001 individuals.
The research agency found that improvement in February was driven by rise in confidence regarding future personal financial situation and general economic outlook. This suggests a rising number of consumers believed that things would be better this time next year.
Among five sub indicators, three of them increased in February from the prior month, one declined and the other remained constant.
The index measuring personal finances in the past one year remained stable at minus 18, while forecast for personal finances over the coming year rose six points to minus 8 in February. While, assessment of general economic situation in the last twelve months slid 2 points to minus 82, expectations for the general economic situation climbed 8 points to minus 40.
Rachael Joy from GfK NOP said, “Consumer confidence remains very fragile, although rose slightly from its January figure.”
The consumer confidence survey was conducted by GfK NOP on behalf of the European Commission. The survey was carried out between February 6 and 15 amongst a sample of 2001 individuals.
The research agency found that improvement in February was driven by rise in confidence regarding future personal financial situation and general economic outlook. This suggests a rising number of consumers believed that things would be better this time next year.
Among five sub indicators, three of them increased in February from the prior month, one declined and the other remained constant.
The index measuring personal finances in the past one year remained stable at minus 18, while forecast for personal finances over the coming year rose six points to minus 8 in February. While, assessment of general economic situation in the last twelve months slid 2 points to minus 82, expectations for the general economic situation climbed 8 points to minus 40.
Tuesday, February 24, 2009
German Ifo Business Confidence Sinks To Historical Low
German business confidence deteriorated to a record low in February after showing slight improvement in January, a survey showed Tuesday.
A monthly survey from the Munich-based Ifo Institute for Economic Research revealed that business confidence in the largest Eurozone economy fell to 82.6 in February from 83 in the prior month. This was the lowest reading since the survey began in 1991. Economists were expecting the indicator to remain unchanged at 83.
The Ifo Business Climate Index is based on 7,000 monthly survey responses of firms engaged in manufacturing, construction, wholesaling and retailing.
A monthly survey from the Munich-based Ifo Institute for Economic Research revealed that business confidence in the largest Eurozone economy fell to 82.6 in February from 83 in the prior month. This was the lowest reading since the survey began in 1991. Economists were expecting the indicator to remain unchanged at 83.
The Ifo Business Climate Index is based on 7,000 monthly survey responses of firms engaged in manufacturing, construction, wholesaling and retailing.
Sunday, February 15, 2009
Euro Falls as Traders Lean to Safety
The euro declined today against the Japanese yen as the traders sold the risky assets and moved to the «safe cash» after the Asian stock markets tumbled today; investors also expect that the inflation report in Eurozone will add more space for ECB to cut the interest rate.
Against the U.S. dollar the European currency showed a significant decline during the early trading session and reached the record low since December, but then corrected almost to the daily opening level. But the weekly opening gap still makes the euro to be lower versus the dollar compared the Friday’s close level.
The only major currency that was literally squashed by the euro today is the British pound, which suffers from the worsening banking crisis in U.K. along with the galloping decline in all the sectors of the economy. It looks like the currency traders have already set their priority ranks among the major currencies — from the safest to the most dangerous: the yen, the dollar, the euro and only then the pound.
Analysts believe that tomorrow’s report on Eurozone December PPI will show a strong slowdown of the inflation in the region, which will indicate a jeopardy of the deflation. That would allow the European Central Bank to think about the lower interest rate, which in their turn will push the euro down to near 1.24 against the U.S. dollar.
EUR/USD rose from 1.2749 to 1.2755 as of 8:48 GMT today — still below the Friday’s close rate of 1.2812. EUR/JPY fell from 114.31 to 113.58, while EUR/GBP soared up from 0.8832 to 0.8949 today.
Against the U.S. dollar the European currency showed a significant decline during the early trading session and reached the record low since December, but then corrected almost to the daily opening level. But the weekly opening gap still makes the euro to be lower versus the dollar compared the Friday’s close level.
The only major currency that was literally squashed by the euro today is the British pound, which suffers from the worsening banking crisis in U.K. along with the galloping decline in all the sectors of the economy. It looks like the currency traders have already set their priority ranks among the major currencies — from the safest to the most dangerous: the yen, the dollar, the euro and only then the pound.
Analysts believe that tomorrow’s report on Eurozone December PPI will show a strong slowdown of the inflation in the region, which will indicate a jeopardy of the deflation. That would allow the European Central Bank to think about the lower interest rate, which in their turn will push the euro down to near 1.24 against the U.S. dollar.
EUR/USD rose from 1.2749 to 1.2755 as of 8:48 GMT today — still below the Friday’s close rate of 1.2812. EUR/JPY fell from 114.31 to 113.58, while EUR/GBP soared up from 0.8832 to 0.8949 today.
New Zealand Dollar Corrects vs. All Majors
The New Zealand dollar went up against all other major currencies today as the country’s jobless report wasn’t as bad as some traders expected and the kiwi needed to correct after some of its greatest losses.
The report regarding the unemployment rate in the fourth quarter in New Zealand was released late yesterday at 21:45 GMT. It showed that the unemployment rate climbed to 4.6 percent from 4.2 percent, while some market analysts predicted a growth to 4.7 percent.
The currency traders now expect the Reserve Bank of New Zealand to cut only 50 basis points on its next monetary policy meeting in March. The optimism gained with this report helped the New Zealand dollar to recover its losses, especially against the Japanese yen. But in the long-term and even medium-term period it wouldn’t wise to bid on the NZD.
NZD/USD went up from 0.5080 to 0.5121 as of 10:13 GMT today. NZD/JPY rose from 45.37 to 45.96, while AUD/NZD advanced from 1.2601 to 1.2630 after reaching as low as 1.2555 today.
The report regarding the unemployment rate in the fourth quarter in New Zealand was released late yesterday at 21:45 GMT. It showed that the unemployment rate climbed to 4.6 percent from 4.2 percent, while some market analysts predicted a growth to 4.7 percent.
The currency traders now expect the Reserve Bank of New Zealand to cut only 50 basis points on its next monetary policy meeting in March. The optimism gained with this report helped the New Zealand dollar to recover its losses, especially against the Japanese yen. But in the long-term and even medium-term period it wouldn’t wise to bid on the NZD.
NZD/USD went up from 0.5080 to 0.5121 as of 10:13 GMT today. NZD/JPY rose from 45.37 to 45.96, while AUD/NZD advanced from 1.2601 to 1.2630 after reaching as low as 1.2555 today.
Friday, February 13, 2009
Yen Rises on Risk Appetite Decline
The Japanese yen rose by the most in February against the U.S. dollar and posted the considerable gains versus the euro and the pound as the investors and traders became less confident in the U.S. stimulus plans and were reluctant to buying anything else than the yen or the greenback.
The recent uprise of the yen-based currency pairs was connected to the global growth of the stock markets and the elevated optimism of the market participants that believed that the U.S. «bad bank» plan will be soon adopted. Now it seems that the plan is no longer on the U.S. government’s agenda and the liquidity-providing measures will be less interesting.
According to some of the currency analysts, another reason of the Japanese yen’s growth today can be seen in the exporters buying the currency. Perhaps, they have some long-term expectations for its growth and to preserve at least a part of their competitiveness they decide to buy the yen at its current levels.
USD/JPY fell from 92.11 to 91.43 as of 9:47 GMT today. EUR/JPY declined from 119.47 to 118.15 with a daily low at 117.08. GBP/JPY went down from 136.42 to 135.49 after falling as low as 133.60 today.
The recent uprise of the yen-based currency pairs was connected to the global growth of the stock markets and the elevated optimism of the market participants that believed that the U.S. «bad bank» plan will be soon adopted. Now it seems that the plan is no longer on the U.S. government’s agenda and the liquidity-providing measures will be less interesting.
According to some of the currency analysts, another reason of the Japanese yen’s growth today can be seen in the exporters buying the currency. Perhaps, they have some long-term expectations for its growth and to preserve at least a part of their competitiveness they decide to buy the yen at its current levels.
USD/JPY fell from 92.11 to 91.43 as of 9:47 GMT today. EUR/JPY declined from 119.47 to 118.15 with a daily low at 117.08. GBP/JPY went down from 136.42 to 135.49 after falling as low as 133.60 today.
Pound Bounces Up on Stock Market Growth
The British pound showed the first daily gain today after three consecutive losses against the U.S. dollar as the country’s stock market showed an unexpected growth.
The pound sterling also rose against the Japanese yen — for the first day this week after the FTSE 100 (the Britian’s stock market benchmark index) went up by more than 1.5 percent during the early trading session. The pound advanced against the euro snapping its yesterday loss after the reports showed that the new cars registrations fell significantly in European Union in January.
The Eurozone’s weakness appeared to be the pound’s strength — both German and French GDP reports for the fourth quarter of 2008 showed declines that exceed the average forecasts by the market analysts.
Despite the problematic situation in the world’s economy, investors seem to be leaning toward the risky assets today and while the Eurozone’s reports scare off the majority of the traders, the United Kingdom offer them a high-yielding but not-so-risky opportunity.
GBP/USD rose from 1.4284 to 1.4462 as of 8:42 GMT today. GBP/JPY advanced from 129.78 to 132.18, while EUR/GBP fell from 0.9019 to 0.8936 today.
The pound sterling also rose against the Japanese yen — for the first day this week after the FTSE 100 (the Britian’s stock market benchmark index) went up by more than 1.5 percent during the early trading session. The pound advanced against the euro snapping its yesterday loss after the reports showed that the new cars registrations fell significantly in European Union in January.
The Eurozone’s weakness appeared to be the pound’s strength — both German and French GDP reports for the fourth quarter of 2008 showed declines that exceed the average forecasts by the market analysts.
Despite the problematic situation in the world’s economy, investors seem to be leaning toward the risky assets today and while the Eurozone’s reports scare off the majority of the traders, the United Kingdom offer them a high-yielding but not-so-risky opportunity.
GBP/USD rose from 1.4284 to 1.4462 as of 8:42 GMT today. GBP/JPY advanced from 129.78 to 132.18, while EUR/GBP fell from 0.9019 to 0.8936 today.
Subscribe to:
Comments (Atom)
