AUDIO - Weekend Edition with John Tamny
Political Economy editor at Forbes, John Tamny joins John O’Donnell and Merlin Rothfeld
for a look at how the government is slowing Economic Growth, and
wasting our money. The trio discuss government spending, the dollar and
the healthy justification for recessions.
Bank of America says the euro is still going to plunge to parity with the dollar (based on businessinsider article)
Bank of America Merrill Lynch's latest forecast for the euro suggests
it's still going to get a lot weaker against the dollar, despite a
BAML's researchers are saying the euro will reach parity (where one
euro is equal to one dollar) by the end of the year. That's despite the
fact that the euro's plunge has stalled, and even reversed a little.
Here's their forecast in Green:
The euro slumped from nearly $1.40 during the middle of last year to
$1.0484 on March 15. It's since risen, and currently sits above $1.08.
Here's Bank of America's justification for another big decline:
"Beyond the short-term, we would expect
divergence of monetary policies to continue weighing on the Euro. The
ECB has announced optimistic macro projections, which we see as targets,
justifying QE at least until September 2016, even if data improves
further. Whether EUR/USD weakens well below current levels will depend
to a large extent on whether the market starts expecting QE2 by the ECB
next year. It is too early to make this call, but our economists believe
that ECB QE 2 is more likely than not based on their inflation
The basic thesis is that the Fed will be hiking US interest rates in
the months and years ahead, which will drive demand for dollars, since
investors will be able to make more on their dollar-denominated
investments. The opposite is true for Europe, where the European Central
Bank's QE programme suggests it's trying to keep interest rates as low
as possible for at least 18 months.
if actual > forecast (or previous data) = good for currency (for NZD in our case)
[NZD - Building Permits] = Change in the number of new building approvals issued. It's a leading gauge of future construction activity because obtaining
government approval is among the first steps in constructing a new
building. Construction is important because it produces a wide-reaching
ripple effect - for example, jobs are created for the construction
workers, subcontractors and inspectors are hired, and various
construction services are purchased by the builder.
New Zealand February Building Permits Drop 6.3%
The total number of building permits issued in New Zealand tumbled a
seasonally adjusted 6.3 percent on month in February, Statistics New
Zealand said on Tuesday - standing at 1,758.
the number of building permits dipped 1.4 percent to 1,598. Permits
were issued for 160 apartments, including 28 retirement village units.
"The trend for new dwellings has more than doubled since March 2011," business
indicators manager Neil Kelly said. "But it is now showing signs of
decreasing after generally increasing for almost four years."
Permits had fallen 3.8 percent in January.
The total number of permits fell 0.6 percent on year in February.
regions that consented the most new dwellings were: Auckland - 528
(including 98 apartments); Canterbury - 517 (including 62 apartments);
and Waikato - 195.
The annual unadjusted value of consents for
February was: all buildings - up NZ$136 million (12 percent) to NZ$1.2
billion; residential work - up NZ$43 million (5.9 percent) to NZ$769
million; non-residential work - up NZ$93 million (25 percent) to NZ$469
[USD - FOMC Member Lacker Speech] = Due to speak about the economic outlook at the Greater Richmond Chamber
of Commerce's Spring Regional Forum. Audience questions expected. Federal Reserve FOMC members vote on where to set the nation's key
interest rates and their public engagements are often used to drop
subtle clues regarding future monetary policy
Trade Ideas For EUR/USD, USD/JPY, USD/CAD - UBS (based on efxnews article)
The following are UBS' latest short-term (mostly intraday) trading strategies for EUR/USD, USD/JPY, and USD/CAD.
EUR/USD: remains heavy after breaking below 1.0800 as
the dollar headed higher overnight. We are happy to sell rallies to
1.0830-40 with stops above 1.0890.
USD/JPY: With the dollar strengthening across the
board, we would look to buy USDJPY on dips to 119.70 with a stop below
119.10. First resistance lies at 120.50 ahead of 121.30.
USDCAD: Square longs and buy below 1.2450, sticking to
the strategy of buying spot on dips rather than chasing it higher at
the wrong levels.
EUR/USD nearing important downside pivots (based on dailyfx article)
if actual > forecast (or previous data) = good for currency (for GBP in our case)
[GBP - Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry. It's a leading indicator of economic health - businesses react quickly
to market conditions, and their purchasing managers hold perhaps the
most current and relevant insight into the company's view of the economy.
UK Factory Growth At 8-month High
British manufacturing sector expanded at the fastest pace in eight
months during March on stronger growth in production and new orders that
led to increased hiring, survey results from Markit Economics and the
Chartered Institute of Procurement & Supply showed Wednesday.
Markit/CIPS Purchasing Managers' Index rose to 54.4 from 54 in
February, which was revised down from 54.1. The latest reading was in
line with economists' expectations.
A PMI score above 50
indicates growth in manufacturing and the British factory sector
expanded for the 24th consecutive month. The average reading for the
first three months of 2015, at 53.8, was the best growth outcome since
the second quarter of last year, the survey said.
industrial groups, consumer goods remained the strongest performing
sector. On the inflation front, selling prices and input costs both fell
Forex technical analysis: EURUSD rallies after weaker than expected ADP employment (based on forexlive article)
So, although the number is week, it must be taken in context with the recent history.
Nevertheless, the EURUSD has moved to new session highs on the
initial move (it has since come off a bit). However, on the move to the
upside, the price did stall at the 1.0800 resistance target level (high
came in at 1.0799). This level corresponds with the low price from last
week's trading (at 1.08003). The 38.2% retracement of the move down
from the high on March 27 (see chart below), comes in near that level as
well (at 1.08035).
EURUSD Continues to Carve Lower-Highs; 1.0710 Near-Term Support (based on dailyfx article)
EURUSD Under Pressure Amid Greek Headlines; Downward Trending Channel in Focus.