Press review - page 368

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AUDIO - Planning For The Worst with Michelle Volmering (based on the article)

"As markets gyrate wildly, veteran trader cautions investors and traders to prepare for downside moves! While nobody knows 100% where the markets are headed, may are sitting in big gains thinking the markets can only go up! Michelle and Merlin take a look the current market landscape, and touch on some important correlation aspects which may give you a competitive advantage."


 

GBP/USD Intra-Day Fundamentals: GBP Gross Domestic Product and 73 pips price movement

2016-01-28 09:30 GMT | [GBP - GDP]

if actual > forecast (or previous one) = good for currency (for GBP in our case)

[GBP - GDP] = Change in the inflation-adjusted value of all goods and services produced by the economy.

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  • "Change in gross domestic product (GDP) is the main indicator of economic growth. GDP is estimated to have increased by 0.5% in Quarter 4 (Oct to Dec) 2015 compared with growth of 0.4% in Quarter 3 (July to Sept) 2015.
  • Output increased in 2 of the main industrial groupings within the economy in Quarter 4 (Oct to Dec) 2015. Services increased by 0.7% and agriculture increased by 0.6%. In contrast, production decreased by 0.2%, while construction output decreased by 0.1%.
  • GDP was 1.9% higher in Quarter 4 (Oct to Dec) 2015 compared with the same quarter a year ago. GDP in 2015 as a whole increased by 2.2% on 2014. xxx In Quarter 4 (Oct to Dec) 2015, GDP was estimated to have been 6.6% higher than the pre-economic downturn peak of Quarter 1 (Jan to Mar) 2008. From the peak in Quarter 1 (Jan to Mar) 2008 to the trough in Quarter 2 (Apr to June) 2009, the economy shrank by 6.1%.
  • The preliminary estimate of GDP is produced using the output approach to measuring GDP. At this stage, data content is less than half of the total required for the final output estimate. The estimate is subject to revision as more data become available, but these revisions are typically small between the preliminary and third estimates of GDP."

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GBPUSD M5: 73 pips price movement by GBP Gross Domestic Product news event :


 

EUR/USD Intra-Day Fundamentals: Durable Goods Orders and 25 pips price movement

2016-01-28 13:30 GMT | [USD - Durable Goods Orders]

  • past data is 0.0%
  • forecast data is -0.7%
  • actual data is -5.1% according to the latest press release

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - Durable Goods Orders] = Change in the total value of new purchase orders placed with manufacturers for durable goods.

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EURUSD M5: 25 pips price movement by Durable Goods Orders news event :


 

USD/JPY Intra-Day Fundamentals: BOJ Monetary Policy Statement and 252 pips price movement

2016-01-29 03:38 GMT | [JPY - BOJ Monetary Policy Statement]

[JPY - BOJ Monetary Policy Statement] = It's among the primary tools the BOJ uses to communicate with investors about monetary policy. It contains the outcome of their decision on asset purchases and commentary about the economic conditions that influenced their decision.

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1. The  Introduction  of  "Quantitative  and  Qualitative  Monetary  Easing (QQE) with  a  Negative Interest Rate"
  • The Bank will apply a negative interest rate of minus 0.1 percent to current accounts that financial institutions hold at the Bank. It will cut the interest rate further into negative territory if judged as necessary.
  • The Bank will introduce a multiple-tier system which some central banks in Europe (e.g. the  Swiss  National  Bank)  have  put  in  place. Specifically, it will adopt  a  three-tier system in which the outstanding balance of each financial institution's current account at the Bank will be divided into three tiers, to each of which a positive interest rate, a zero interest rate, or a negative interest rate will be applied, respectively.
2. "QQE  with  a Negative Interest  Rate" is  designed  to  enable  the  Bank  to pursue additional monetary  easing  interms  of three dimensions,combining a  negative  interest  rate  with quantity and quality.
  • The  Bank  will  lower  the  short  end  of  the  yield  curve  and  will  exert  further  downward pressure  on  interest  rates  across  the  entire  yield  curve through  a  combination  of a negative interest rate and large-scale purchases of JGBs.
  • The Bank will achieve the price stability target of 2 percent at the earliest possible time by making full use of possible measures in terms of the three dimensions.

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USDJPY M5: 252 pips price movement by BOJ Monetary Policy Statement news event :


 

Intra-Day Fundamentals: Gross Domestic Product and 114 pips price movement for EUR/USD and GBP/USD

2016-01-29 13:30 GMT | [USD - Gross Domestic Product]

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - Gross Domestic Product] = Annualized change in the inflation-adjusted value of all goods and services produced by the economy.

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"Real gross domestic product -- the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 0.7 percent in the fourth quarter of 2015, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.0 percent."

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EURUSD M5: 63 pips price movement by Gross Domestic Product news event :


GBPUSD M5: 51 pips price movement by Gross Domestic Product news event :


 

AUDIO - Capital Preservation with Paul Buzby (based on the article)

"One of the secrets of wealth is growing your wealth regardless of market condition. Merlin welcomes Paul Buzby of RCW Financial, to talk about the use of metals and rare coins to help diversify holdings as well as hedge downside risk. The show focuses on rarity of coins, and presents a 1797 US dollar worth over $325,000… and climbing!"


 

Week Ahead by Crédit Agricole: NFP, RBA, FX Wars, GBP Squeeze, Sell AUD, NZD Rallies (based on the article)


  • "The calm maybe deceiving and the bulls maybe heading to a ‘China’ shop. Indeed, potential disappointments from the China PMIs could well halt the risk bounce in its tracks. Apart from the RBA, which may sound extra dovish just to keep AUD from bouncing further, there will not be many central bank speeches to sooth market nerves further."
  • "We remain constructive on USD against the background of raging global currency wars that should more than offset the negative impact of the recently more dovish Fed. Next week’s US data calendar could further boost policymakers’ confidence in the near-term outlook of the US economy and even inflation, and help USD."
  • "GBP looks oversold to us and more indications that PM Cameron and his EU colleagues are inching closer to a deal could help the currency consolidate. The BoE Inflation report should not trigger another bout of re-pricing of BoE rate hike prospects and, with so many negatives in the price by now, that could leave GBP as a prime candidate for a short squeeze."

  • AUD – 'Next week’s Chinese business activity data should prove the currency’s main driver. We expect rallies to remain a sell.'
  • GBP – 'We see limited scope of next week’s BoE announcement and inflation report pushing GBP lower.'
  • USD – 'Next week’s payrolls report should prove constructive enough in order to prevent rate expectations and the greenback from falling further.'
  • NZD – 'The policy outlook should keep the NZD a sell on rallies.'
 

Forex Weekly Outlook February 1-5 (based on the article)

US ISM Manufacturing PMI, rate decision in Australia and the UK, Employment data from New Zealand, Canada and the US, including the all-important NFP release, Mark Carney speaks in London and Trade balance in Canada and the US. These are the main highlights for this week. Here is an outlook on these important events.

  1. US ISM Manufacturing PMI: Monday, 15:00. The manufacturing PMI continued its contraction in December after a disappointing reading of 48.6 in the previous month. This was the lowest reading since July 2009 with declines across the board. The New Orders Index increased 0.3 points reaching 49.2. The Production Index registered 49.8% from 49.2% in November. The Employment Index declined 3.2 to 48.1. The manufacturing PMI  is expected to remain at 48.6 this time.
  2. Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia maintained the official cash rate at 2.0% on its December meeting. Governor Glenn Stevens noted a certain improvement in economic conditions, but the outlook for may require further monetary easing. Stevens said he is willing to cut rates if economic data worsens.
  3. NZ Employment data: Tuesday, 21:44. New Zealand employment market unexpectedly contracted for the first time in three years in the third quarter, mainly due to a decline in part-time workers. Employment fell 0.4% after rising 0.3% in the previous quarter. Economists expected employment to grow 0.4% in the third quarter. Furthermore, the unemployment rate increased to 6% from 5.9 in the second quarter. Economists expect New Zealand’s labor market to expand by 0.8%  while the unemp[loyment is predicted to rise to 6.1%.
  4. US ADP Non-Farm Employment Change: Wednesday, 13:15. US private sector employment expanded by 257,000 jobs in December according to the ADP report. The reading pointed to underlying strength in the economy and followed a 211,000 gain in the previous month. Labor market strength suggests the economy’s condition remains solid, and may prompt the Federal Reserve to raise interest rates again in March. US private sector is expected to gain 191,000 in January.
  5. US ISM Non-Manufacturing PMI: Wednesday, 15:00. US service sector expanded less than expected in December with the slowest growth pace in almost two years. The index declined to 55.3 from 55.9 in November, missing market forecast for a reading of 56.0. The New Orders Index posted 58.2, rising 0.7 points; the Employment Index increased 0.7 points to 55.7, while the Prices Index declined 0.6 points from November. However the majority of respondents’ comments remain positive about business conditions and the overall economy. US service sector activity is expected to decline to 55.2.
  6. UK Rate decision: Thursday, 12:00. The Bank of England maintained interest rates in January amid volatility in global markets and a continuous fall in oil prices slowing inflation even further. Only Ian McCafferty voted for a rise to 0.75%. MPC members believed “the outlook remained unchanged from the previous economic forecasts in November. But the minutes also noted the volatility on financial markets, and in share prices in particular. Furthermore, the MPC highlighted a 40% fall in the oil price which would badly affect inflation growth.
  7. Mark Carney speaks: Thursday, 12:00.  BOE Governor Mark Carney will speak about the Inflation Report, in London. Carney said at a speech in London that the Bank of England should not begin raising interest rates in the coming months, stating the weak condition of the global economy and the slowed growth in the UK. He also said that the  MPC will watch for signs of renewed downturn in inflationary pressures before offering another round of monetary easing.
  8. US Unemployment Claims: Thursday, 13:30.   The number of new US claims for unemployment benefits declined last week from a six-month high of 294,000 to 278,000, reaffirming the strength of the US labor market. Economists forecasted a drop to 282,000 in the latest week. The four-week moving average is now 23,750 above its post-recession low of 259.250 from last October. The number of new claims is expected to be 286,000 this week.
  9. Canadian Employment data: Friday, 13:30. The Canadian labor market expanded unexpectedly in December adding 22,800 jobs, amid a large gain in part-time work. The number of full-time employment actually declined in December by 6,400 while the economy added 29,200 part-time jobs. Meanwhile, the unemployment rate remained unchanged at 7.1%. The overall picture is less appealing; indicating hiring in the private sector is weak. The 2015 employment growth rate was slightly stronger than in 2014 and 2013, when the overall number of jobs expanded by just 0.7% in each of those years.
  10. US Non-Farm Employment Change and Unemployment rate: Friday, 13:30. U.S. payrolls surged in December by 292,000 following 252,000 in the previous month. Hiring got a boost from unseasonably warm weather and the unemployment rate remained unchanged at a 7-1/2-year low of 5%. The firm employment data indicates the economy sustains growth while the recent weakness could be attributed to the manufacturing and export-oriented sectors. U.S. payrolls for October and November were revised up to show 50,000 more jobs created than previously reported, adding to the report’s upbeat tone. US private sector is expected to expand by 192,000 in January, while the unemployment rate is estimated to remain at 5%.
  11. US Trade Balance: Friday, 13:30. US trade deficit contracted in November to a nine-month low of $42.4 billion as a sharp decline in imports outweighed a decline in exports. However, the overall picture shows both exports and imports are now falling due to the dollar’s strength and the weakness in global economy. Exports fell 0.9% to US$182.2 billion, more than a four-year low. US trade deficit is predicted to inch up to $42.8 billion in December.
 
The Importance Of Interest Rates To Investors, Retirees, And The Economy (based on the article)



Interest Rate Basics

Interest rates are one feature of a debt instrument and are issued by governments and corporations who need to raise capital. There are several types of interest rates, each with a different structure, maturity, etc. Here are some of the major types and a brief explanation of each.

• Fed Discount Rate: This is a short-term rate set by the Federal Reserve and is the rate charged to member banks that borrow from the Fed. Banks often base their lending rates on it.

• Fed Funds Rate: The fed funds rate is established by the market, influenced by the Fed, and is the rate of interest charged when banks lend to each other. For example, if Bank A has excess reserves at the Fed, and Bank B is short on its reserve requirement (established by the Fed), Bank B may borrow from Bank A to meet their requirement. These are usually overnight loans.

• Prime Rate: This is set by banks and is the rate banks charge on loans to their most credit-worthy customers.

• U.S. Treasury Bills: These are short-term debt instruments (maturity of 1 year or less) and are issued and backed by the federal government.

• U.S. Treasury Notes: These are intermediate-term debt instruments (maturity of 1 – 10 years) and are issued and backed by the federal government.

• U.S. Treasury Bonds: These are long-term debt instruments (maturity of 10 years or more) and are issued and backed by the federal government.

 

NZD/USD Intra-Day Fundamentals: Caixin Manufacturing PMI and 13 pips price movement

2016-02-01 01:45 GMT | [CNY - Caixin Manufacturing PMI]

if actual > forecast (or previous one) = good for currency (for CNY in our case)

[CNY - Caixin Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry.

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"Chinese manufacturers signalled a modest deterioration in operating conditions at the start of 2016,  with  both  output  and  employment  declining  at slightly  faster  rates  than  in  December. Total new business meanwhile fell at the weakest rate in seven months, and despite a faster decline  in  new export  work.  Nonetheless,  lower  production  requirements  led  companies  to cut back on their purchasing activity and inventories of inputs. On the prices front, both input costs and output charges fell again in January, though at the weakest rates in seven months."

"At  48.4  in  January,  the  seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a  composite  indicator  designed  to provide  a  single -figure  snapshot  of  operating  conditions  in  the  manufacturing  economy – remained  below  the  crucial  50.0  value  separating  growth  from  contraction  for  the  eleventh  successive  month.  The  reading  was  up  slightly  from 48.2  in  December,  and  sign alled  a  further  modest  deterioration in the overall health of China’s manufacturing sector."

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NZDUSD M5: 13 pips price movement by Caixin Manufacturing PMI news event :


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