*Daily Forex market overviews by MasterForex.com* - page 36
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Overview of the main economical events of the current day - 11/03/2013
Labor market data supports USD
USD was enjoying quite a growth on Friday fueled by strong labor data which showed higher than expected employment rates in February, while unemployment level declined by 0.2% reaching 7.7% - a record low level since beginning of 2008. This resulted in speculations that FOMC might end its extremely soft monetary policy sooner than previously expected, allowing USD for gains, which reached a record high level vs JPY since August 2009.
EUR on the other hand was growing vs USD after dipping on the labor data publications even despite Fitch cutting Italy’s rating from “A-“ to “BBB+” with a negative outlook. The agency says that their outlook reflects deeper and longer recession than expected before, while political uncertainty is also amongst the reasons for the cut.
Today keep an eye on Japan’s Parliament (that might elect a new Head of Bank of Japan) as well as BoJ’s monetary policy meeting minutes, while from Europe expect some trade and manufacturing numbers.
By MasterForex Company
Overview of the main economical events of the current day - 12/03/2013
USD remains strong, however EUR outperforms it
USD trades more or less flat vs JPY remaining close to a maximum level since 2009 after hints that American economy is gearing up resulted in increased demand for USD. Market participants are also waiting for retail sales figures, which are believed to show improvement in February. Also keep an eye on upcoming retail prices data, which is also likely to show increase.
EUR grew vs USD erasing some Friday losses after US bond auction which ended up with slightly decreased average yield.
JPY trades close to 3 week low vs EUR after disappointing statistics from Japan. According to data, manufacturing orders are down 13% mom in January compared to expectations of only 1.7% - this is the highest drop in 8 months. Moreover, Haruhiko Kuroda (a most likely candidate for Head of Bank of Japan position) once again announced that more aggressive monetary policy is necessary, putting more pressure on the national currency.
By MasterForex Company
Overview of the main economical events of the current day - 13/03/2013
JPY finally shows some gains
JPY has shown gains vs USD for the first time in 5 days after an opposition member announced that his party will vote against Deputy Head of Bank of Japan candidate Ivata, who is perceived by the market as a supporter of softer monetary policy.
EUR on the other hand is declining vs USD erasing recent gains on the back of German Minister of Finance saying that the lower house of Bundestag might make a decision regarding Cyprus during next week. He also added that inflation remains under control which is a sign that ECB might follow up with additional stimulation.
GBP is also under pressure thanks to poor manufacturing statistics that show a 1.2% mom and 2.9% yoy contraction in January with the main reason for the decline being lower oil and gas production, which was seen as a sign that the economy is entering into a 3rd recession in the last 5 years.
By MasterForex Company
Overview of the main economical events of the current day - 18/03/2013
EUR was quite strong during most of last Friday, however this is likely to change today due to Cyprus news
USD reached a 7 day low vs EUR on Friday mostly on negative market sentiment as market participants are waiting for upcoming FOMC meeting during which they expect the terms of quantitative easing program to be revised. With these negative expectations in mind, investors were just waiting for a trigger to come and they found one in CPI rising by 0.7% mom in February compared to expectations of just 0.4% growth. This piece of news resulted in a prompt sell off of American currency.
GBP also rose vs USD on Friday thanks to Head of Bank of England Mervyn King who decided to calm the markets – and succeeded at that too. While he was known as a supporter of weaker GBP, King said that it’s market job to price the currency – not theirs. Moreover, he also commented that he finds current trade levels as comfortable, further calming the markets.
However probably the most important piece of news that is likely to set a trend for at least this week is an unprecedented step in a long-running Eurozone crisis – international lenders agreed to provide a EUR 10bn bailout package for Cyprus, but demanded that the nations pays for the help by taxing bank deposits. As a result, Cyprus government plans to impose a one-time 6%-9% tax (depending on the amount of a deposit) on all deposits in the country. This potentially creates an extremely unpleasant precedent – not only for Cyprus, but for other troubled EU economies as well, such as Italy and Spain. Banking customers realizing that government nationalizing part of their deposits in order to pay the debt is a real possibility might try and secure their funds by withdrawing their banking deposits – creating a Europe-wide banking run, which is could have unimaginable negative affect on recovery in Eurozone.
By MasterForex Company
Overview of the main economical events of the current day - 19/03/2013
EUR shows a 14 month record decline against USD
Just as we expected, EUR found itself in quite a tough spot after announcement that Cyprus government might nationalize part of the banking deposits in the country. Not only this situation shows that EU is far from recovery, but it also sets a not so pleasant precedent. As a result, EUR hit a 14 months low against USD and a 2 week low vs JPY. This Eurogroup’s decision was met with an extreme opposition which led to Cyprus government cutting small deposits tax rate from 6.75% to 3% in this proposed measure.
However not all is lost for EUR as the currency actually climbed a bit up after Cypriot government postponed its bailout meeting to today in order to have time to provide some proposals which will put the largest levy on large deposits as opposed to small ones. Moreover, EUR also found some support in debt placements by Italy and Spain, whose yields remained almost flat after the news, showing some stability in European debt markets.
GBP is enjoining some healthy growth rates as investors are running from risks and this trend is likely to continue at least for a short term. However, watch out for today’s UK CPI data – if the numbers come too low, even weak EUR is unlikely to protect the British currency from a sell-off.
By MasterForex Company
Overview of the main economical events of the current day - 20/03/2013
EUR reaches 3 months low vs USD
EUR heavily declined reaching a 3 months low vs USD on a rumors that Cypriot officials are unlikely to support the idea of a one time tax on banking deposits in the country – at least, in its current form. And indeed, news hit the wires in the evening – the Parliament voted against the idea. As a result, President of Cyprus invited party leaders for a meeting this morning, hoping to find some common ground. It looks like everything is about balance: Cyprus needs to find EUR 5.8bn to repay its foreign creditors and at the same time the government does not want to put a tax burden on small deposits in the country. At the same time, Central Bank of Cyprus says that if small deposits are not taxed as well, the government will not be able to collect the required funds. Eurogroup announced that Cyprus will be given a chance to leave small deposits untaxed, while Head of IMF supported the idea, proposing to put a 30%-40% tax on the largest deposits.
GBP on the other hand is feeling weak vs USD after reports that show growing inflation in February that reached a record high level since May, which puts additional economic pressure on households, slowing down the recovery. CPI rose by 0.7% mom in February after declining by 0.5% a month before. On a yoy basis, this means a 2.8% growth – negative news for GBP, however we were expecting some volatility on these numbers.
By MasterForex Company
Overview of the main economical events of the current day - 21/03/2013
Lots of market moving news made yesterday’s trading quite volatile
Market focus remains on EUR and Cyprus problems in particular. However, despite the fact that Cyprus government did not accept EU's aid and the President was forced to start talks with party leaders and Head of Central Bank in order to find an alternative, the market seems to appreciate Cyprus looking for plan B resulting in EUR rising against USD. Moreover, there is a fair chance that Cyprus will find help elsewhere – and on a better terms: for example, Finance Minister of the island visited Moscow to prolong a EUR 2.5bn loan and to possibly secure some additional funding as Russia wants to protect its deposits in Cypriot banks.
USD remained somewhat flat after a two-day FOMC meeting as no changes were made to the monetary policy, which is a signal that officials do not believe that economy has recovered enough to cut the stimulus measures. Fed said they expect the unemployment to reach a required level of 6.5% only by 2015 and no rates increase is planned before that. As a result, FOMC is to continue its QE program in an attempt to fight high unemployment level, which sits above 7% since November 2008.
GBP's volatility was extremely high, swinging the British currency back and forth. While GBP was declining in the morning, it jumped up on the release of Bank of England meeting minutes that show that most of the members are against increased bonds purchases. As a result, labor market figures did not have a strong effect on GBP even despite the fact that unemployment level declined less than expected in February.
By MasterForex Company
Overview of the main economical events of the current day - 22/03/2013
EUR is swinging back and forth vs USD
EUR is trading back and forth vs USD after showing a decline following weak PMI data from Germany, France and EU. Moreover, March numbers were a 4 months low for European Union, which is a signal that Eurozone is far from recovery. Nonetheless, EUR was able to offset most of the losses after a debt placement by Spain, which was oversubscribed with lower yields, showing growing investor confidence at least in Spain.
However Cyprus problem still remains probably the most important driver for European currency as EU government still hopes for a positive outcome during this weekend despite growing uncertainty as per recent survey 70% of Cyprus nationals would rather leave the Union.
JPY climbs up on comments of the new Head of Bank of Japan who says that exchange rate stability is a responsibility of Ministry of Finance, adding that purchase of foreign bonds by Bank of Japan might be seen as an intervention. Nonetheless, he still supports policy easing saying that the country needs to achieve a 2% inflation level in 2 years.
GBP showed gains vs USD thanks to strong retail sales data and lower than expected government borrowing level. According to the report, retail sales were up 2.1% in February compared to expectations of only 0.5% growth.
By MasterForex Company
Overview of the main economical events of the current day - 25/03/2013
EUR reaches a weekly high on Friday
EUR was showing quite a rebound on Friday fueled by optimism regarding the Cyprus situation. EUR was growing against all major currencies after Deputy Head of the ruling party announced that political forces are close to finding a consensus. However, soon another piece of news followed the wires suggesting that ECB after all declined measures proposed by the Parliament of Cyprus. Despite all this, official persons remain relatively calm, and try to pass this state of mind to the markets – for example, Minister of Finance of Holland denied rumors that Cyprus might leave EU.
Even unexpectedly declined German business confidence index, that reached 106.7 in March compared to 107.4 in February was not enough to put any serious pressure on European currency.
GBP used to trade at a 4 weeks high vs USD, however this quickly changed after Fitch Ratings announced they might cut UK's AAA rating due to weak growth rates and unsettling debt forecasts. However this comes as a little surprise after UK said they expect their debt-to-GDP ratio to reach 100% in 2015-2016, which prompted a fast reaction from rating agencies saying that if the ratio climbs above 100%, a ratings cut is imminent. Fitch said they will wait until end of April to make a final decision.
By MasterForex Company
Overview of the main economical events of the current day - 26/03/2013
EUR shows a major decline on Monday
EUR showed quite a fall on Monday due to European leaders saying that saving Cyprus might set an example, fueling safety concerns regarding other large EU members. Head of Eurogroup announced that it is important to avoid risks in government sector and added that he believes that agreement on Cyprus might lead to a restructuration of the banking industry. Add to the mix Head of the Financial Committee of Cyprus Parliament saying that they might leave EU and rumors regarding Italian rating cut and you’ll get the picture why EUR is under pressure right now.
GBP was enjoining string growth vs EUR, however it actually declined against USD – poor mortgage and housing prices statistics took care of it. Nonetheless, this is likely just an immediate market reaction rather than a forming trend of some kind.
JPY is growing vs USD, offsetting previous losses as investors are using the currency as a defensive option given European uncertainty. We want to remind, that new Head of Bank of Japan Mr. Kuroda announced last week that he will do everything in his power to reach a 2% inflation level.
By MasterForex Company