Forex News (from InstaForex) - page 11
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The global economy is probably out of freefall and stabilizing faster than previously expected, European Central Bank President Jean-Claude Trichet said Monday.
"We are probably in large part of the global economy out of the period of free-fall," he said at the end of a discussion held at the Bank for International Settlements, Basel, Switzerland.
Trichet, who chairs the oversight body of the Basel Committee on Banking Supervision, said the outlook for the global economy had brightened and the recovery would be faster than anticipated.
"We have to remain prudent and cautious and it's not excluded we will have a bumpy road. Uncertainties are big," Trichet said. He stated that the current situation still requires "caution, prudence and alertness."
Further, Trichet pointed out that protectionism and imbalances in the world economy are the two main risks to a recovery.
"Authorities and the private sector will not be forgiven if we again have to cope with a situation as dramatic as the one we have had to cope with in September last year," Trichet warned.
He also noted that reforms are necessary to strengthen the financial system to avoid further risks.
Late on Sunday, leading central bank governors and banking regulators agreed on a new set of measures to strengthen supervision of the global banking system. With the new rules in force, banks would be required to earmark major part of their profits as reserve to use in tough times.
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Thursday, the Bank of England is set to announce its interest rate decision. The central bank is widely expected to leave the interest rate untouched at a record low of 0.5% and to continue its GBP 175 billion asset purchase programme.
At 2.45am ET, the French statistical office INSEE is scheduled to issue industrial production data. Month-on-month, industrial production is forecast to rise 0.4% in July and manufacturing output growth is seen at 0.5%.
Thereafter, the Hungarian CPI and Turkish GDP reports are due. Economists forecast Hungarian annual inflation to rise to 5.8% in August from 5.1% in July. The Turkish economy is forecast to shrink 8% annually in the second quarter.
Half an hour later, consumer prices details are due from Denmark and Sweden. Sweden consumer prices are forecast to drop 1% annually in August compared to a 0.9% fall in July. Meanwhile, Danish annual inflation is expected to rise to 1.1% in August from 1% in July.
At 4.00am ET, the European Central Bank is set to issue monthly bulletin. In the meantime, Norwegian CPI and PPI reports are also due.
At 5.00am ET, a final report for the second quarter GDP is due from the Italian statistical office.
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The dollar was stable Monday morning in New York following last week's brutal losses, as traders geared up for a busy week on the economic front.
Increased risk aversion has driven the dollar to its lowest level of the year versus a basket of major currencies, but renewed concerns about the sustainability of the economic recovery could give the buck a boost in the coming days.
Monday's economic calendar is fairly light, with President Obama giving a speech on the economy and financial regulation in New York.
However, later in the week, traders will be flooded with a spate of economic data, which could help them gain more clarity on the economy's course.
The Commerce Department's retail sales report for August, the results of the New York Federal Reserve's and Philadelphia Federal Reserve's manufacturing surveys for September and the Federal Reserve's industrial production report for August may be closely watched.
The dollar rose sharply versus the sterling, jumping almost 2 cents to 1.6550 from a monthly low set late last week.
The buck also firmed up versus the euro, holding near 1.4550. Last week, the dollar hit a 2009 low of 1.4634 as stocks continued to improve.
The European Commission kept its economic outlook unchanged from May's spring forecast. Gross domestic product or GDP is expected to fall 4% this year in both the Eurozone and in the EU.
The dollar pared some of its recent losses versus the yen, improving to 90.90 from a February low of 90.18. With the advance, the dollar stayed away from a 13-year low of 87.08 set back in January.
Meanwhile, the buck hit a weekly high of C$1.0900 versus the loonie. Early in August, the dollar hit a yearly low of C$1.0630, but has since managed to stabilize.
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During early European deals on Monday, the US dollar rose to new multi-day highs against its major counterparts as a fall in most Asian and European stocks boosted demand for the safe haven greenback.
The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.
Most of the stock markets were modestly lower today as investors look to this week's Federal Reserve meeting for more clues about the strength of the U.S. Recovery.
Early in Europe, Britain's FTSE 100 lost 0.4 percent, Germany's DAX fell 0.8 percent and France's CAC-40 dropped 0.3 percent.
In Hong Kong, the Hang Seng fell 150.60 points, or 0.7 percent, at 21,472.85 in back-and-forth trade, while South Korea's Kospi lost 0.3 percent to 1,695.50. China's Shanghai benchmark was up 0.2 percent at 2,967.01 and Australia's benchmark shed 0.3 percent.
Japanese financial markets are closed today for public holidays. Financial markets in India, Indonesia, Malaysia, Philippines and Singapore were also closed Monday for holidays.
World markets posted more gains last week as U.S. Federal Reserve Chairman Ben Bernanke said recession in the world's largest economy was "likely over."
This week, investors will watch closely what the Fed has to say about the economy and the scale of the recovery after a two-day meeting that wraps up Wednesday.
At its August meeting, the FOMC decided along the expected lines and maintained the fed funds futures rate unchanged. In its post-meeting policy statement, the Fed noted that economic activity is leveling out, an improvement from its previous opinion that the pace of contraction is slowing. There weren't any major changes to the references the committee made towards other measures.
Regarding its Treasury securities purchasing program, the central bank said the committee would gradually slow the pace of these transactions. The central bank anticipates the full amount of $300 billion to be purchased by the end of October. The FOMC reiterated its commitment to retain interest rates at exceptionally low levels for an extended period.
Against the European currency, the US dollar edged higher during early deals on Monday. At 2:35 am ET, the dollar reached a 6-day high of 1.4639 against the euro, compared to 1.4704 hit late New York Friday. The next upside target level for the dollar is seen around 1.437.
The US currency that closed Friday's North American session at 1.6246 against the British pound rose to a 19-day high of 1.6137 at 2:35 am ET Monday. The pound-dollar pair is currently trading at 1.6168 with 1.603 seen as the next target level.
British house prices increased in September on rising confidence and dwindling stock of property, results of a closely watched survey showed Monday.
Average asking prices were up 0.6% in September from August as autumn sellers raised price expectations, the property website Rightmove reported. House prices had declined 2.2% in August after rising 0.6% in July.
Meanwhile, the latest Quarterly Bulletin from the Bank of England showed today that sustainable rebalancing in the UK and the global economy depend on structural forces, including the extent to which consumers in deficit nations remain restrained and domestic demand in surplus countries pick up.
Against the Swiss franc, the greenback traded higher during Monday's early deals. At 5:15 am ET, the dollar-franc pair climbed to a 4-day high of 1.0357, compared to Friday's closing value of 1.0305. If the pair gains further, 1.055 is seen as the next target level.
The Swiss National Bank said today in a report that the M3 money supply increased 7.7% year-on-year in August, unchanged from the previous month. A year ago, the M3 money supply was up 2.5%. The M2 money supply climbed 41.8% on an annual basis in August, faster than the 41.3% growth in the previous month.
The dollar that closed Friday's New York deals at 91.46 against the Japanese yen advanced to 92.21 at 5:15 am ET. This set a 11-day high for the dollar. On the upside, 93.4 is seen as the next target level for the dollar-yen pair.
The Conference Board is scheduled to release a report on the U.S. leading index for August at 10 AM ET. The consensus estimate calls for a 0.7% increase in the leading indicators index for the month.
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Singapore's consumer price index dropped 0.3% year-on-year in August, slower than than a 0.5% fall in the preceding month, a report by Statistics Singapore said Wednesday. Economists expected a 0.4% fall.
Housing costs fell 1.6%, due to lower electricity and gas tariffs and cheaper liquefied petroleum gas (LPG). Transport and communication costs fell 0.4%, mainly due to cheaper petrol prices. Excluding accommodation costs, the consumer price index declined 0.9%.
Month-on-month, consumer prices were up 0.4%, owing to higher costs of transport and communication, clothing and footwear, as also housing and stationery items. Excluding accommodation costs, consumer prices were up 0.5%. Meanwhile, after adjusting for seasonal effects, consumer prices were up 0.4% on a monthly basis in August.
In the first eight months, consumer prices rose 0.5% compared to last year.
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Pound Climbs To Multi-day Highs Against Majors.
Extending its early European session rally, the UK currency advanced further against its major counterparts ahead of the North American session on Tuesday.
The pound jumped to a 5-day high of 0.9106 against the euro and 1.6617 versus the Swiss franc by 8:00 am ET, compared to 0.9207 and 1.6408, respectively hit late New York Monday.
The pound also advanced to a 4-day high of 1.5992 against the US dollar and 143.85 versus the Japanese yen around this time, compared to yesterday's closing values of 1.5887 and 142.44, respectively.
As of now, the sterling is trading at 143.65 against the yen, 1.597 versus the greenback, 1.6597 versus the Swiss franc and 0.9116 against the euro.
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Tuesday, Malaysian Prime Minister Najib Razak said the government intends to reduce operating expenditure and to broaden its tax base. However, the reduction in expenditure would not affect the efficiency of the government, said Najib.
The government's pump priming measure is currently costing a billion ringgit a month. The government is set to present its 2010 budget next month.
Najib, who is also the finance minister, told reporters that the government is mindful of the need to rein in the fiscal deficit. The government expects the budget deficit to fall to 7.6% of GDP this year.
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Following the release of the French August PPI report, the euro showed mixed trading against its major counterparts. While the euro fell against the pound and the yen, it rose versus the franc. Against the dollar, the euro was little changed during this time.
Currently, the euro is worth 0.9095 against the pound, 1.4618 against the dollar, 131.20 against the yen and 1.5114 against the franc.
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Unemployment Hits 26-Year High As Job Losses Soar In September.
Job losses in September were sharper higher than economists had expected, driving the unemployment rate to its highest level in 26 years and pushing the number of people out of work above 15 million.
The U.S. Labor Department revealed Friday that non-farm payrolls dropped 263,000 in September. Economists had expected a decline of 170,000 jobs, though some disappointing employment news over the last few days raised doubt about whether the result could meet expectations.
The report included revised data for the last couple months as well, showing that payrolls dropped by 201,000 in August and 304,000 in July.
The unemployment rate for September came in at 9.8% compared to 9.7% in the previous month. This represented the highest unemployment rate since mid-1983.
September saw the number of unemployed rise to 15.14 million, compared to 14.93 million in August. There were about 7.6 million unemployed at the end of 2007, when the recession officially began.
The construction sector lost 64,000 jobs in September, while manufacturing lost 51,000. There was a 38,000-job decline in retail. Professional and business payrolls slipped 8,000 and job in the leisure and hospitality sector declined by 9,000.
There were losses on the government payroll as well, with a decline of 53,000 for September.
Education and health jobs were up slightly in the month, edging higher by 3,000.
The average work week dipped to 33 hours after coming in at 33.1 in August. Average hourly earnings ticked up to $18.67 from $18.66.
Earlier this week, payroll processor ADP released its figures for private-sector employment. The report came in worse than expected, with payrolls dropping 254,000.
This was followed on Thursday by a disappointing report on weekly jobless claims. A Labor Department report showed that the number of people filing first-time unemployment claims climbed 17,000 last week to 551,000. Economists were looking for a reading around 535,000.
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German Construction Sector Drops In September.
Germany's construction sector activity dropped for a nineteenth straight month in September, a report by the Markit Economics said on Tuesday.
The seasonally adjusted Construction Purchasing Managers' Index or PMI rose to 43.8% from 43.6 in August. The PMI reading above 50 indicates expansion, while a reading below 50 signals contraction.
In September, the construction companies were again pessimistic about the twelve-month outlook for activity, the Markit said.
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