Press review - page 20

Sergey Golubev
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Sergey Golubev  

2013-07-25 23:30 GMT (or 01:30 MQ MT5 time) | [JPY - Consumer Price Index (CPI)]

  • past data is 0.0%
  • forecast data is 0.3%
  • actual data is 0.4% according to the latest press release (by the way - there 2 sources as press releases for JPY CPIs)

If actual > forecast = good for currency (for JPY in our case)

==========

Basicly - there are many CPI news events coming on the same time for JPY. But high impacted events are core and monthly. I mean:

  • National CPI Ex Food, Energy (MoM) - it should be high impacted
  • Tokyo CPI ex Food, Energy (MoM) - it should have medium impact (by definition).
  • other JPY CPY news events - low impacted ones.

But as those JPY CPI news events are coming on the same time and as there are many of them (National CPI yearly and monthly, Tokyo CPI yearly and monthly, and core value of those CPI's) so any economic calendar is estimating just 1 or 2 of them. Of course, USDJPY price is moved according to the values of all JPY CPI's value. So, just some press releases about JPY CPI (read below).

==========

Japan Core CPI Jumps 0.4% On Year In June :

Core consumer prices in Japan spiked 0.4 percent on year in June, the Ministry of Internal Affairs and Communications said on Friday - marking the fastest annual increase since November.

The data also sparks hope that the country may finally be starting to pull out of the deflationary spiral in which it has been trapped for more than a decade.

The numbers likely are in response to the aggressive policy measures that Prime Minister Shinzo Abe and the Bank of Japan have put into place. The BoJ has set a target of 2 percent inflation in two years.

The headline figure beat forecasts for an increase of 0.3 percent on year following the flat annual reading in May.

Overall inflation was up 0.2 percent on year, also topping expectations for a 0.1 percent increase following the 0.3 percent contraction in the previous month.

By category, prices for fuel jumped 5.7 percent on year, followed by communication (1.8 percent), education (0.5 percent) and clothing (0.2 percent).

The gains were offset by furniture costs, which dipped 2.4 percent, recreation (1.2 percent), food (0.9 percent) and housing (0.5 percent).

Both overall CPI and core inflation were flat on month after adding 0.1 percent and 0.2 percent on month, respectively, in May.

By category, prices for fuel climbed 1.0 percent on month, while medical care costs were up 0.1 percent.

Furniture prices were down 0.4 percent and recreation costs dipped 0.3 percent.

Core inflation for the Tokyo region - considered a leading indicator for the nationwide trend - was up 0.3 percent on year in July. That was in line with expectations and up from 0.2 in June.

Overall CPI for Tokyo jumped 0.4 percent on year, beating forecasts for 0.2 percent following the flat reading in June.

By category, prices for fuel spiked 9.0 percent on year, followed by communications (1.2 percent) and education (0.3 percent).

The gains were offset by furniture costs, which lost 2.5 percent on year, while recreation costs lost 1.0 percent, medical care was down 0.8 percent and housing dipped 0.7 percent.

On month, core CPI in Tokyo was flat, while overall inflation added 0.2 percent.

By category, fuel costs were up 1.1 percent on month, while costs for communications and food were up 0.8 percent apiece.

Clothing prices declined 3.0 percent on month, while medical care eased 0.3 percent and housing fell 0.2 percent.

==========

Tokyo July Core CPI +0.3% On Year; Tokyo July Overall CPI Up 0.4% On Year
Statistics Bureau Home Page/Latest Monthly Results
  • www.stat.go.jp
is "Portal Site of Official Statistics of Japan" (external site) where you can browse statistics tables and database. Summary   The consumer price index for Japan in November 2013 was 100.8(2010=100), the same level as the previous...
Sergey Golubev
Moderator
113476
Sergey Golubev  

2013-07-25 13:55 GMT (or 15:55 MQ MT5 time) | [USD - Reuters/Michigan Consumer Sentiment Index (Jul)]

If actual > forecast = good for currency (for USD in our case)

==========

U.S. Consumer Sentiment Improves To Six-Year High In July :

Consumer sentiment in the U.S. improved to its best level in six years in the month of July, according to a report released by Thomson Reuters and the University of Michigan on Friday.

The report showed that the consumer sentiment index for July was upwardly revised to 85.1 from the preliminary reading of 83.9. Economists had expected the index to be upwardly revised to 84.0.

With the upward revision, the index is above the final June reading of 84.1 and at its highest level since July of 2007.

The monthly increase by the headline index reflected an improvement in the assessment of current economic conditions, which jumped to 98.6 in July from 93.8 in June.

On the other hand, the report showed that the gauge of consumer expectations dipped to 76.5 in July from 77.8 in June.

"This high level of confidence points toward a continued expansion of consumer spending in the year ahead," survey director Richard Curtin said, according to Reuters.

With regard to inflation, one-year inflation expectations rose to 3.1 percent in July from 3 percent in June, while the five-to-ten-year inflation outlook fell to 2.8 percent from 2.9 percent.

Reuters/Michigan Consumer Sentiment Index: United States
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Sergey Golubev
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Foreign Bonds Drop As Dollar Strengthens and Interest Rates Rise :




In “US Bonds Drop Value in 2013 Q2 As Interest Rates Rise” we wrote about how bonds and bonds funds drop in value as interest rates rise. Many investors don’t understand why a bond, which pays a fixed rate of interest and then at the end of the term pays a fixed amount of principle would have its price fluctuate. But they do. Foreign bonds also suffered from interest rates rising:

  • PIMCO Foreign Bond (Unhedged) I (PFUIX) has a yield of 3.44% and a average effective duration of 7.59 years. It was down 5.00%.
  • PIMCO Emerging Markets Bond Instl (PEBIX) has a yield of 5.66% and a average effective duration of 6.48 years. It was down 8.92%.
  • WisdomTree Australia & NZ Debt (AUNZ) has a yield of 3.54% and a average effective duration of 4.07 years. It was down 13.58%.
In addition to interest rate risk, foreign bonds also have currency risk.

Foreign bonds are repaid in foreign currencies. If the U.S. dollar is dropping in exchange rates against the foreign currency this can be good as you will get paid back in a foreign currency which is increased in value.

But if the U.S. dollar strengthens against the foreign currency then you will get paid back in a less valuable currency and lose some of your purchasing power.

The currency markets are over ten times as large as the equity markets. Putting a portion of your investments outside the danger of the U.S. dollar being devalued is a good idea. Sometimes that diversification means that you get a little better return and sometimes it means that you get a little worse return.

During the second quarter of 2013 the U.S. dollar Index strengthened. This means that the U.S. dollar gained in value against a specific mix of foreign currency used to measure the value of the U.S. dollar.



The drop for the average basket of currencies against the U.S. Dollar was greater or smaller depending on the country.

One of the worst drops during the quarter was the Australian Dollar:



Foreign bonds play a very specific role within a portfolio of protecting a portion of your stable fixed income funds against the devaluation of the U.S. Dollar.

Just because the dollar strengthens for a quarter does not mean you should abandon this strategy.

Foreign Bonds Drop As Dollar Strengthens And Interest Rates Rise
Foreign Bonds Drop As Dollar Strengthens And Interest Rates Rise
  • David John Marotta
  • www.forbes.com
Disclaimer: Both myself personally and the clients we manage invest in IVV, PEBIX, PFUIX, and AUNZ. In "US Bonds Drop Value in 2013 Q2 As Interest Rates Rise" we wrote about how bonds and bonds funds drop in value as interest rates rise. Many investors don't understand why a bond, which [...]
Sergey Golubev
Moderator
113476
Sergey Golubev  

Should Euro Debt Worry You? :

It was a heavy weak of earnings with wild after-hours trading as analysts digested the earnings reports. For example in the first ten minutes after Amazon.com (AMZN) reported its earnings on Thursday, the stock ranged from down $18 to down just $4.

Overall, over 70% of the companies have beat their earning’s estimates and just over 53% have beat on revenue. The earnings beat, so far, is the best since 2006 and was by far the best reading since the end of the bear market. Weaker revenue numbers have been a concern of many analysts and investors. The revenue has been in a gradual downtrend  since the 4th quarter of 2009.

The best news last week came from Facebook, Inc. (FB) whose earnings surprised everyone as its stock gained 22% the day after its earnings were released. In this week’s trading lesson, I took an in-depth technical look at five of the tech giants. The market has not been kind to those that missed earnings as Expedia Inc. (EXPE) lost 22% on the opening Friday.

I also reviewed one of the tech industry groups that has been leading the market higher. It has clearly been a stock picker’s market as the market-tracking ETFs have not allowed many good risk/reward entry points.

My current concern for the stock market is what I see as the longer-term bullish outlook from many analysts. It is not that I disagree with them, but it is not a positive sign for the near-term market outlook. The periodic weaker-than-expected economic news has not dampened the enthusiasm but maybe the Eurozone will again shake up the market before the summer is over. Some negative news from the Eurozone could increase the bearish sentiment enough to fuel another phase in the market’s rally.


The recent efforts by Germany to push their austerity plans fell on deaf ears at the recent economic summit as the majority of the Eurozone, including France, believes that more attention should be paid to economic growth.

The table above demonstrates why Germany is concerned as Greece’s debt is over 160% of its GDP—with Italy, Portugal, and Ireland all over 100% of their GDP, as well. France and Spain are not far behind either. I have favored the stimulus path as the disastrous austerity push in 1936-1937 clearly postponed the economic recovery. I discussed this period in depth last fall Austerity Didn’t Work in ’37…What About Now?.

Of course, I think more could still be done, especially to save the crumbling infrastructure as I fear future disasters will make it clear that this problem needs to be addressed. The US debt level has gradually improved as the economy has become stronger. A growing economy is the fastest way to reduce debt.


There has been some improvement in the economic data from the Eurozone as last Friday’s data on Spain’s unemployment was an encouraging sign. Even better was the purchasing managers data on the Eurozone, which moved above the key 50 level. Germany’s data was even better as after dropping below 50, it rose sharply to 52.8, and France also showed nice improvement.

The business sentiment in Germany, Belgium, and the Netherlands also perked up as Germany’s business confidence improved in each of the past three months. Italian consumer confidence hit its highest level in over a year.




This has given some of the Eurozone stock markets a boost as they had been under pressure for the first half of the year. The % Performance chart for 2013 shows that the iShares MSCI Italy ETF (EWI) was down almost 14% for the year in early April, but now is just down 3.6%.

The ETFs that follow Germany (EWG) and France (EWQ) are now up 7.3% and 6% respectively while Spain (EWP) has just moved back into positive territory. It was  down close to 9% at the start of the month. All are trailing the 18.2% gain in the Spyder Trust (SPY).

Despite these signs of improvement, a shock from the Eurozone is still possible, and next week the Federal Reserve, European Central Bank, and the Bank of England are all meeting. Though nothing substantial is expected from the meetings, a surprise is always possible.

Several of last week’s economic numbers beat expectations as the flash Purchasing Managers Index showed nice gains, and the Durable Good Orders were also much higher due to airplane orders for Boeing (BA). The final reading on consumer sentiment from the University of Michigan was released on Friday and at 85.1 was better than expected

The monthly jobs report is out this Friday, and there is a full slate of economic data this week starting with Pending Home Sales and the Dallas Fed Manufacturing Survey on Monday.

There is more housing data on Tuesday with the S&P Case-Shiller Housing Price Index. The FOMC also starts its meeting and the Conference Board releases its latest data on Consumer Confidence.

The data on Wednesday may set the tone for the whole week as we get the advance reading on the 2nd quarter GDP, the ADP Employment Report, the Chicago Purchasing Managers Index, and the FOMC announcement.

Besides the jobless claims on Thursday, we also get the ISM Manufacturing Index, which sets the stage for Friday’s monthly jobs report. The end of the month adjustment of positions and the full slate of economic data should keep volatility fairly high.

What to Watch

The flat close in the S&P 500 and the Dow Industrials last week was due to the rally late Friday, which brought these averages back to positive territory. The market internals on the NYSE were decidedly negative on Friday. This has weakened some of the A/D indicators, and we still may see a deeper correction as we head into the end of the month. There are no strong sell signals yet, but they may develop this week.

The typical short-term seasonal trend I discussed on June 21 indicated that July would be a better month for stocks. The pattern is also for the market to turn lower at the end of the month and then develop a trading range in August. Given the impulsive rally from the June lows, the pattern may be different this year.

This means that August may be a difficult month for many investors, but those that bought near the recent highs as I discussed last week, may already have some regrets. A further correction should be an opportunity to establish positions in some of the regional banks, as well as the homebuilders, which dropped last week. These stocks are likely to move even lower before their major up trends resume.

A further correction will help to turn the overall sentiment of both the professional investors and the public more negative. The public outlook for the economy is still quite negative as a recent survey by Rutgers University found that 54% of Americans believe the economy will take six to 10 years to recover or will not fully recover from the Great Recession.

This means that a much smaller percentage of the public is invested in the market than they were in the late 1990’s. Those who are investing, like those in the AAII survey, are still too bullish at 45%, even though this is down from 49% in May. The financial newsletter writers are also too bullish at 51.5%, up from a reading of 41.7% on June 26. The number of bears at 19.6% is also too low.

The daily chart of the NYSE Composite shows that while the S&P 500 and Dow Industrials were making new highs last week, it failed to surpass the May high at 9695.46, line a. There is minor support now at 9443-9462 with the 20-day EMA at 9474.

The quarterly pivot is at 9251, and if last week’s high was a short-term top, then the 38.2% Fibonacci retracement support is at 9348 with the 50% support at 9242. This also corresponds to the 20-week EMA at 9237.

The McClellan oscillator, which formed multiple positive divergences at the recent lows, line b, has been diverging as prices moved higher. The drop below the zero line, Friday, confirms the short-term negative divergence and does allow for a further decline.



The daily NYSE Advance/Decline line did not surpass the May highs last week and is now testing its still-rising WMA. It is still well above the support at line c, while the June lows are a more important area of support.

S&P 500

The Spyder Trust (SPY) tested the monthly pivot resistance for the first three days of last week before turning lower. This was the weakest weekly close in the past five weeks, suggesting the rally has lost momentum. The rally from the April lows also lasted four weeks and was then followed by a five-week correction.

There is next support at $167.07 and then at the 20-day EMA at $166.75. The mid-June high was at $166.12, with further support in the $162-$164 area.

The on-balance volume (OBV) turned positive in late June and early July when it moved through its WMA and the downtrend, line d. The OBV has failed to make new highs with prices and this divergence, may be warning of a deeper correction. The OBV has strong support at line e. The weekly OBV is still locked in its trading range and is above its WMA.

The daily S&P 500 A/D made new highs last Monday and has now dropped back to its rising WMA. The WMA could fatten out this week before it is ready to decline. There is initial resistance for SPY in the $168.75-$169.20 area.



Dow Industrials

The SPDR Diamond Trust (DIA) failed to make new highs last week with the Dow Industrials as the high at $155.70 was just below the prior week’s high at $157.74. The flat weekly close has weakened some of the momentum studies as the 20-day EMA at $153.55 was tested on Friday.

The former downtrend, line a, is now in the $150 area with the longer-term up tend, line b, in the $149 area. The key support from late June is at $145.17.

The daily Dow Industrials A/D line broke through the May-June trading range, line c, in early July, and made significant new highs this month. Another new high was made last week though it has now turned lower.

Nasdaq-100

The PowerShares QQQ Trust (QQQ) did much better last week after absorbing the losses from Google, Inc. (GOOG) and Microsoft, Inc. (MSFT) the prior week. Unlike SPY or DIA, it closed the week almost 1% higher as it held above the 20-day EMA at $74.13 and the support at $73.70, line a.

There is additional support now at $72-$73 with the 20-week EMA at $71.83. The quarterly pivot is at $71.03.

The Nasdaq-100 A/D line was stronger than prices last week as it made a new high before turning lower late in the week. The A/D line is still holding above its WMA as it staged a powerful breakout above resistance, line c, in late June.

There is first resistance for QQQ at $75-$75.54 and monthly pivot resistance at $76.08. The weekly starc+ band is at $77.42

Russell 2000

The iShares Russell 2000 Index (IWM) was down a bit for the week as its rally stalled just below $105. The daily starc+ band is now at $106.15 with the quarterly R2 resistance at $106.65.

The daily OBV did confirm the recent highs and is holding well above its WMA and long-term support at line e. The weekly OBV also made new highs, so both OBV time frames are positive.

After breaking out of its trading range, the Russell 2000 A/D line has continued to act strong as it did make a new high with prices and is holding above its WMA.

The rising 20-day EMA is at $102.25 with the daily starc band. There is further support in the $100.38 to $101 area with the quarterly pivot well below current levels at $95.50.

Should Euro Debt Worry You?
Should Euro Debt Worry You?
  • Tom Aspray
  • www.forbes.com
It was a heavy weak of earnings with wild after-hours trading as analysts digested the earnings reports. For example in the first ten minutes after Amazon.com (AMZN) reported its earnings on Thursday, the stock ranged from down $18 to down just $4. Overall, over 70% of the companies have beat their earning’s estimates and just over 53% have beat on revenue. The earnings beat, so far, is the best since 2006 and was by far the best reading since the end of the bear market. Weaker revenue numbers have been a concern of many analysts and investors. The revenue has been in a gradual downtrend since the 4th quarter of 2009. The best news last week came from Facebook, Inc. (FB) whose earnings surprised everyone as its stock gained 22% the day after its earnings were released. In this week’s trading lesson, I took an in-depth technical look at five of the tech giants. The market has not been kind to those that missed earnings as Expedia Inc. (EXPE) lost 22% on the opening Friday. I also...
Sergey Golubev
Moderator
113476
Sergey Golubev  
Forex - Weekly Outlook: July 29 - August 2

The dollar dropped against the yen on Friday and was trading near six-week lows against the euro as recent U.S. economic data failed to convince market participants that the Federal Reserve will soon begin to taper its stimulus program.

USD/JPY hit session lows of 97.96, the highest since June 27, before settling at 98.30, down 1% for the day and 2.07% lower for the week.

The yen gained ground against the greenback after the release of mixed U.S. data on initial jobless claims and durable goods orders on Thursday.

The Labor Department said the number of individuals filing for initial jobless benefits last week increased by 7,000 to a seasonally adjusted 343,000, compared to expectations for an increase of 6,000 to 340,000.

The Commerce Department said orders for long lasting manufactured goods rose by a seasonally adjusted 4.2% in June, compared to expectations for an increase of 1.3%, while core durable goods orders, which exclude volatile transportation items, were flat in June, compared to expectations for a 0.5% increase.

EUR/USD hit highs of 1.3296 on Friday, before settling at 1.3279, up 0.01% for the day and 0.91% higher for the week.

The dollar found support earlier in the week, after data revealed new U.S. home sales hit a five-year high in June.

The Commerce Department reported earlier U.S. new home sales jumped 8.3% to 497,000 units, their highest level since May 2008.

Analysts were expecting new home sales to rise 1.8% to 482,000, which bolstered the dollar.

The pound was rangebound against the dollar on Friday, with GBP/USD dipping 0.03% to settle at 1.5386, up 0.13% for the week.

On Thursday, the Office of National Statistics said the U.K. economy expanded by 1.4% on a year-over-year basis in the second quarter, in line with expectations. The U.K. economy grew by 0.3% year-on-year in the first quarter.

The U.K. economy expanded 0.6% quarter on quarter, after a 0.3% expansion in the first quarter.

Elsewhere, the Canadian dollar was steady Friday, with USD/CAD easing 0.01% to settle at 1.0278.

Meanwhile, the Australian and New Zealand dollars came under pressure after weak Chinese manufacturing data for July added to fears over a slowdown in the world’s second largest economy, but the kiwi found support as the Reserve Bank of New Zealand left interest rates unchanged.

The preliminary reading of China’s HSBC manufacturing purchasing managers’ index fell to an 11-month low of 47.7 in July, from a final reading of 48.2 last month. Analysts had expected the index to rise to 48.6.

On Thursday, the RBNZ held its benchmark interest rate at 2.50%, in a widely expected move, and said it will keep borrowing costs at a record low this year.

AUD/USD hit session highs of 0.9296, before settling 0.9263, 0.19% higher for the day and up 0.45% for the week.

NZD/USD hit highs of 0.8105 in Friday’s session before trimming gains to close at 0.7931, easing up 0.01% for the day and 1.80% higher for the week.

In the week ahead, the Federal Reserve, the Bank of England and the European Central Bank are to publish their monthly policy statements. Canada and the U.S. are to produce economic growth data and the euro zone is to release data on manufacturing activity.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, July 29

Japan is to publish government data on retail sales, the primary gauge of consumer spending.

The U.K. is to release official data on net lending to individuals, which is the change in the total value of new credit issued to consumers, followed by industry data on realized sales.

Later in the day, the U.S. is to produce industry data on pending home sales, a leading indicator of economic health.

Tuesday, July 30

New Zealand is to publish official data on building consents, while Australia is to produce official data on building approvals. In addition, Reserve Bank of Australia Governor Glenn Stevens is scheduled to deliver a speech.

Japan is to release a preliminary government report on industrial production, while Bank of Japan Governor Haruhiko Kuroda is set to speak at the Research Institute of Japan, in Tokyo.

In the euro zone, a Gfk German consumer climate report is to be released, as well as preliminary data on German consumer price inflation and Spain's gross domestic product.

Canada is to produce official data on raw materials price inflation.

The U.S. is to release a report on the Standard & Poor's/Case-Shiller Composite-20 house price index, followed by the Conference Board's report on consumer confidence.

Wednesday, July 31

New Zealand is to produce data on business confidence, a leading indicator of economic health, while Australia is to publish official data on private sector credit.

Elsewhere, Germany is to release official data on retail sales and unemployment change, while France is to publish an official report on consumer spending. In addition, official reports are to be produced on consumer price inflation and the unemployment rate for the entire euro zone.

Canada is to release official GDP data, which is the change in the inflation-adjusted value of all goods and services produced by the economy.

The U.S. is also to produce GDP data, as well as a report on non-farm employment change and data on manufacturing activity in Chicago. Separately, the Federal Reserve is to release its monthly monetary policy statement, which will be closely watched for indications on the future of the central bank's stimulus program.

Thursday, August 1

Australia is to publish industry data on new home sales.

In Switzerland, markets are to remain closed due to a national holiday.

In the euro zone, reports will be released on manufacturing activity in Spain, Italy and the entire single currency bloc. Later in the day, the European Central Bank is to release its monthly monetary policy statement, followed by a press conference.

The U.K. is to produce a report on manufacturing activity, while the Bank of England will also publish its monetary policy statement.

The U.S. is to release official data on weekly unemployment claims, followed by a report by the Institute of Supply Management on manufacturing activity.

Friday, August 2

Australia is to release official data on producer price inflation, a leading indicator of consumer inflation.

The U.K. is to produce industry data on house price inflation, as well as a report on construction activity.

In the euro zone, data is to be published on Spanish employment change, while Switzerland is to release a SVME report on manufacturing activity.

The U.S. is to round up the week with official data on non-farm employmet change, the unemployment rate, average hourly earnings and personal spending, as well as a report on factory orders.
Forex - Weekly Outlook: July 29 - August 2
Forex - Weekly Outlook: July 29 - August 2
  • Investing.com
  • www.investing.com
Investing.com - The dollar dropped against the yen on Friday and was trading near six-week lows against the euro as recent U.S. economic data failed to convince market participants that the Federal Reserve will soon begin to taper its stimulus program. USD/JPY hit session lows of 97.96, the highest since June 27, before settling at 98.30, down...
Sergey Golubev
Moderator
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Sergey Golubev  

FOCUS: No FOMC Tapering Expected This Week; Many Anticipate Announcement In September :

As much as anything, market participants will be eyeing this week’s meeting of the Federal Open Market Committee largely for clues on what to expect when the next monetary-policy confab occurs in September.

For some time now, traders in a range of markets – from currencies to Treasury bonds to gold – have tried to gauge when Fed members will start to taper their monthly bond-buying program known as quantitative easing. The central bank has been buying $85 billion a month in Treasury and mortgage-backed securities in a bid to push down long-term interest rates and boost the economy.

Federal Reserve Chairman Ben Bernanke has said that tapering could begin this year, assuming economic data continues to improve. But at the same time, Fed officials have also tried to emphasize that even when they start trimming bond purchases, monetary policy will remain accommodative and that tapering is still a long ways from actually hiking the federal-funds rate.

Many economists have said they expect tapering to be announced in September, although others suspect later.

Policymakers have let the markets know they are “very interested in reducing the amount” of quantitative easing as the economy improves, said Andrew Busch, editor and publisher The Busch Update political and financial newsletter. Yet, officials have also tried to emphasize this will be dependent on data, such as the rise of 195,000 in June non-farm payrolls, he continued.

“So, the markets interpret this as tapering will begin in September if the economy continues to show a trend of improvement,” Busch said. The general expectation is policymakers might then trim their monthly bond purchases by $20 million to $65 billion. “It’s nothing too significant but a gradual reduction,” Busch said.

U.S. Treasury yields began rising in May when Bernanke first hinted tapering could begin in the “next few meetings.”

FOMC members have been trying to be transparent, but “clearly are struggling” to communicate their message, Busch said. “That’s why we are getting volatility in bond yields,” he added.

Treasury yields and the dollar tend to rise, and gold fall, whenever markets ramp up expectations for tapering. Conversely, dovish comments from Fed officials on monetary policy tend to hurt yields and the dollar and help gold.

Traders To Be Watching Wednesday For Clues On Future

Observers do not expect Fed action as soon as the Tuesday-Wednesday meeting. If this is indeed the case, then market participants will be scrutinizing the Fed statement for any change in language that offers a clue on when policymakers will do something.

“You may get a little more of a hinting one way or another on what the voters are thinking regarding tapering in September, although the market is pretty much expecting them to (announce tapering in September),” said Jeffrey Rosen, chief economist with Briefing.com. “Or it might be the other way around, you may get more dovish talk to appease (the market).”

For instance, Rosen cited comments from St. Louis Fed President James Bullard this month saying the central bank should not start scaling back bond purchases until inflation accelerates the Fed’s target rate.

Currency analysts at Brown Brothers Harriman say if the Fed was to begin tapering in September, as many expect, they would expect stronger signals in the statement after this week’s meeting, which is the last one before September.

However, Busch doubts policymakers will try to communicate much new to avoid spooking markets again. In the two months, when the Fed has spooked the bond market and resulted in higher Treasury yields, officials then seemingly because more dovish, he pointed out.

“Because of what happened from May to June, the Fed spent a lot of time in July trying to back down market expectations of sharply higher interest rates….From that context, I doubt they are going to be very aggressive saying anything that would disrupt the markets at this point, given all of the work that they spent doing in the last month,” Busch said.

The 10-year Treasury yield hit a longtime high of 2.657% in late June and extended this to 2.725% in early July, before backing down and moving sideways. It was at 2.587% as of 12:40 p.m. EDT.

“In the U.S., our economists do not expect any change in the Fed’s asset purchases at this meeting, but will look for any update to its forward guidance on tapering and its first interest rate hike, as well as any indication of the impact of financial market volatility to its economic outlook,” Nomura said.

An article in the Wall Street Journal Friday suggested policymakers may describe whether to refine or revise their “forward guidance,” or their intentions for the future. The Fed previously indicated that short-term interest rates would remain near zero until the unemployment rate falls to 6.5% or annualized inflation is 2%. However, the Journal article written by Jon Hilsenrath pointed out that Bernanke last month suggested policymakers might lower the 6.5% jobless threshold, which would emphasize to the markets that short-term interest rates will remain low for a long time. Another option might be if the Fed, which has set an upper limit on inflation, also set a floor.

Nomura analysts questioned whether the Fed will lower the unemployment-rate threshold mainly because of a lack of clear consensus. Instead, the introduction of an inflation floor might be a more likely, thus Nomura says it sees “limited scope for a clear dovish surprise on Wednesday.”

Nomura added that market participants may have to wait until the FOMC minutes of this meeting are released on Aug. 21 to get more detailed information on future guidance, should any be forthcoming.

The International Monetary Fund last week went on record saying it wants to see the Fed not taper until next year, arguing that the benefits exceed the costs.

Some observers have commented that by delaying tapering until September, policymakers will have the benefit of two more monthly jobs reports. The July data is scheduled for release on Friday, with non-farm payrolls expected to rise 175,000. The August jobs report is due out in early September.

Also, the Federal Reserve’s Web site shows that the Sept. 17-18 meeting of the FOMC will include a summary of economic projections from Fed officials and will be followed by a news conference by Bernanke.

“I definitely think the Treasury market is (factoring) in tapering,” Rosen said. “The Treasury market had a run-up in rates that started soon after the Fed hinted that tapering (is) coming sooner than later. The consensus of expectations on surveys shows that September is the main view of when you’ll get an announcement on tapering.

“Are they going to taper as soon as the announcement? Possibly, possibly not. They may say they will start tapering in October or November, but the idea right now is that it’s coming…..”

FOCUS: No FOMC Tapering Expected This Week; Many Anticipate Announcement In September
FOCUS: No FOMC Tapering Expected This Week; Many Anticipate Announcement In September
  • Kitco News
  • www.forbes.com
(Kitco News) - As much as anything, market participants will be eyeing this week’s meeting of the Federal Open Market Committee largely for clues on what to expect when the next monetary-policy confab occurs in September. For some time now, traders in a range of markets – from currencies to Treasury bonds [...]
Sergey Golubev
Moderator
113476
Sergey Golubev  

Some European Markets Did Better Than Global Averages During Q2 2013 :

While the S&P 500 did reasonably well during the second quarter of 2013, the global markets did not. Emerging Markets did particularly poorly.

But, in a reversal from past trends, European markets did better:

  • iShares MSCI EAFE ETF (EFA) was down 0.93% during the second quarter, but still averaging 7.54% for the last 10 years.
    Vanguard FTSE Developed Markets ETF (VEA) was down 0.86% during the second quarter. [VEA has not been an ETF for 10 years.]
  • iShares MSCI Germany ETF (EWG) was up 2.88% during the second quarter, and still averaging 9.81% for the last 10 years.
  • iShares MSCI Netherlands ETF (EWN) was up 2.55% during the second quarter. [VEA has not been an ETF for 10 years.]
  • Global X FTSE Nordic Region ETF (GXF) was down 3.51% during the second quarter, but still up 22.34% for the past year.

Meanwhile the S&P 500 was also positive for the quarter:

  • iShares Core S&P 500 ETF (IVV) was up 2.90% during the second quarter, but only averaging 7.23% for the last 10 years and 6.96 for the last 5 years.

Diversifying your assets outside of the United States is part of protecting your assets against all being subject to a single country’s economic failure or success.

Some European Markets Did Better Than Global Averages During Q2 2013
Some European Markets Did Better Than Global Averages During Q2 2013
  • David John Marotta
  • www.forbes.com
Disclaimer: Both myself personally and the clients we manage invest in IVV, EWG, EWN, VEA, EFA, and GXF. While the S&P 500 did reasonably well during the second quarter of 2013, the global markets did not. Emerging Markets did particularly poorly. But, in a reversal from past trends, European markets did better: iShares [...]
Sergey Golubev
Moderator
113476
Sergey Golubev  

2013-07-30 01:30 GMT (or 03:30 MQ MT5 time) | [AUD - Building Approvals]

If actual > forecast = good for currency (for AUD in our case)

==========

Australia Building Approvals Contract Unexpectedly In June :

The number of dwelling units approved in Australia in June declined unexpectedly, the latest figures from the Australian Bureau of Statistics showed Tuesday.

Building approvals fell a seasonally adjusted 6.9 percent month-on-month in June compared with forecast of a 2 percent increase. The number of approvals declined 4.3 percent in May.

On an annual basis, building consents contracted 13 percent. The number of approvals totaled 12,778 during the month.

As many as 7,926 private sector houses were approved during the month. This was 1.2 percent less than a month earlier and represented the first monthly decline in six months. Year-on-year, number of private sector houses approved rose 9.9 percent.

Approvals for private sector dwellings, excluding houses, declined 12.6 percent month-on-month to 4,543. This was 37.4 percent lower than a year earlier
Sergey Golubev
Moderator
113476
Sergey Golubev  

2013-07-30 07:00 GMT (or 09:00 MQ MT5 time) | [EUR - Spanish GDP]

If actual > forecast = good for currency (for EUR in our case)

==========

Spanish Economy Contracts At Slower Pace In Q2

Spanish recession eased further in the second quarter of 2013, a preliminary report from the statistical office Ine suggested Tuesday.

The gross domestic product contracted 0.1 percent quarter-on-quarter in the second quarter of 2013, slower than a 0.5 percent fall in the first quarter.

The pace of contraction has now eased for a second consecutive quarter. The outcome was in line with economists' expectations.

Year-on-year, GDP fell 1.7 percent in the second quarter, slower than a 2 percent decline reported in the first quarter. Economists had forecast a 1.8 percent drop.

"This result was basically caused by a more negative contribution in the domestic demand, which was compensated partially by a positive contribution of the external demand," the statistical office said.

Another flash estimate from Ine today showed that the harmonized index of consumer prices rose 1.9 percent year-on-year in July as expected. The pace of increase was weaker than a 2.2 percent rise recorded in June.

The consumer price index increased 1.8 percent year-on-year in July, slower than 2.1 percent rise in June. On a monthly basis, the HICP fell 1.1 percent and the CPI decreased 0.5 percent, according to the flash estimate.

Instituto Nacional de Estadística. (National Statistics Institute)
  • www.ine.es
INE. Instituto Nacional de Estadistica. National Statistics Institute. Spanish Statistical Office. El INE elabora y distribuye estadisticas de Espana. Este servidor contiene: Censos de Poblacion y Viviendas 2011, Informacion general, Productos de difusion, Espana en cifras, Datos coyunturales, Datos municipales, etc..
Sergey Golubev
Moderator
113476
Sergey Golubev  

Forex News Trading Summary

One of the major economies that most traders keep their focuses on is the economic and the political situation of the American economy. Also, you should watch out for indicators from the European Union although they may have a smaller impact than those from the US

You may also check with heads of central banks announcements. This can give you ideas of possible increases or decreases in inflation and interest rates. Inflation has a direct effect on interest rates as when it goes up, banks try to leverage the interest rates.

Fundamental analysis comprises the examination of macroeconomic indicators and political considerations when evaluating one nation's currency relative to another.

Fundamental traders follow these news announcements, known as fundamental indicators, because they paint a picture of a currency's strength in relation to other countries.

Fundamental indicators are reports that include statistical data on things such as employment report,GDP, international trade balance, retail sales, manufacturing data, inflation and interest rates.

What you should know about trading the news in Forex

  1. Even if you do not trade news it is important to know about the date and time the news are due, Especially major economic news that can result in extreme short term market conditions. Some traders, actually, prefer not to trade at all during economic news releases.
  2. The less the price moves before news releases the greater the potential for a major market move after the news report
  3. Breakouts following the economic reports can sometime last for a very short period of time from several seconds to several minutes.
  4. Generally, if the news did not carry any surprise or unexpected data then there will be no significant reaction in the Forex market.
Forex News Trading & Factors of Trading News Breakouts
Forex News Trading & Factors of Trading News Breakouts
  • Atonnie
  • www.tradeforextrading.com
One of the major economies that most traders keep their focuses on is the economic and the political situation of the American economy. Also, you should watch out for indicators from the European Union although they may have a smaller impact than those from the US. You may also check with heads of central banks announcements. This can give you...