Daily Market Analysis by FxGrow - page 5
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Daily Market Analysis – 24th July, 2015
By FxGrow Research & Analysis Team
Gold prices hit 5-year lows on weak China PMI, Global cues
Gold prices fell in the Asian trading session as globally investors see a slowdown in the Chinese Economy which is one of the top buyers of the precious metal.
Gold touched a record low of $1078.67 in the early trading session and consolidated at $1081.40in the European trading session today.
The China Purchasing Managers Index (PMI) showed a decline to 48.2 a 15-month-low, well below analyst expectation of 49.7 on backdrop of the recent stock market crash and weak global exports.
“In our opinion, the movements in the gold price earlier this year reflected market expectations that the events in Greece or the pullback in Chinese stocks were local – not global – risks and that the possibility of a disorderly outcome was/is still low. This does not necessarily mean that the market is correct. It simply reflects its current view” - World Gold Council.
“Investors now seem focused on the direction of the US dollar and the Fed’s monetary policy stance... The gold price already reflects a possible rate hike later this year and that the US-centered perspective is missing a more comprehensive view of the market” - World Gold Council.
“Whether it happens over before the end of the year, or later, we believe that the gold price should already incorporate, at least in good part, current market expectations of a rate hike. In our view, the gold price may be less susceptible to the first rate hike when it actually occurs and the main focus will be the pace at which the Fed signals it will continue raising rates” - World Gold Council.
“Should the conditions change and the risk of contagion or the unintended consequences of a Greek exit increase, we would expect to see a stronger reaction from the gold price. As a high quality, liquid asset, it is likely that many investors would use gold to protect wealth. Similarly, the recent Chinese stock market sell-off hasn’t resulted in a large uptick in the gold price thus far. A more substantial market correction in China, however, could spill over to other economies, increase uncertainty worldwide and make gold a more relevant hedge” - World Gold Council.
The markets are now focusing on a Federal Reserve rate hike in September this year as geopolitical tension appears eased for now.
"What a conundrum we face: commodities are shouting that the global economy is deteriorating, key emerging markets are already seeing major volatility, and yet the world's most important central bank is close to tightening monetary policy" - Michael Every, Rabobank
Following the Weak China PMI Australian Dollar has dropped to a low of $0.7285 in the European trading session, the lowest levels since 2009.
Crude oil prices have moved lower to $48.64 on concerns of global oversupply and weak demand.
Gold prices tumbled to 5 year low and is currently trading at 1079.92, while Silver is weak at 14.49
24th July 2015 – 10:55hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.
Daily Market Analysis – 27th July, 2015
By FxGrow Research & Analysis Team
US Dollar weak ahead of FOMC Rate Decision
The US Dollar is weak ahead of the much awaited Federal Open Market Committee policy meeting this week on Wednesday.
According to the Analyst expectations 80% believe that Fed will hike interest rates in September and give a clear direction to the future rate hikes.
The Fed officials will meet on Tuesday and Wednesday and issue a statement at the conclusion of Wednesday’s meeting. Investors will be looking for directions as to whether the Fed is moving closer to raising interest rates in September this year.
Globally investors seem to be cautious if Fed fails to give any indication of a September rake hike in its policy meeting on Wednesday.
In the FOMC statement, look for only minor cosmetic changes to the post-meeting communique... do not expect policymakers to provide any new clues with regard to a potential rate hike in September - Deutsche bank.
In the minutes to the April meeting the FOMC had a discussion about whether or not to signal in the statements leading up to liftoff that a rate hike is likely coming in the near term. The Committee concluded that it would not signal a rate hike in the meeting prior to liftoff. Instead, the first hike would be decided on a meeting-by-meeting basis - JP Morgan.
The July FOMC statement should emphasize data dependence and eschew any overt signals about the timing of liftoff. We look for a cautiously optimistic assessment of the outlook as data have been somewhat more mixed since the June meeting. With the market pricing less than a 40% chance of a September hike, July communications should push those odds up slightly - Bank of America.
At issue is whether the FOMC will alter its forward guidance to prepare the markets explicitly for a near-term rate hike. If the Committee feels confident it can start normalizing policy in September, which has been our forecasted lift-off date, we believe it will adjust the language - Credit Suisse.
The Euro zone's manufacturing sector declined as the PMI for the Euro area came in at 52.2 for the month of July. German PMI fell to 52.2 while French PMI fell to 49.6 in the month of July.
"Eurozone economic growth lost only slight momentum in July amid the rollercoaster events of the Greek debt crisis during the month. The rate of expansion remained reassuringly robust to suggest that it was by-and-large 'business as usual' for the region as a whole" - Chris Williamson, chief economist at Markit.
Crude oil prices have moved lower to $47.87 due to a weak trend in Asia and slump in the manufacturing sector in China.
Gold has recovered its losses and is currently trading at 1099.57, while Silver is flat at 14.68
27th July 2015 – 09:55hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.
Daily Market Analysis – 28th July, 2015
By FxGrow Research & Analysis Team
China Slowdown worries Global Investors
In China growth has fallen to the lowest level since 2009 as Shanghai stocks plunged by 8.48% on Monday, in spite of government efforts as the world’s second largest economy is heading towards a slowdown.
Globally investors are worried that the slowdown in China will pull other major economies including the US and Japan as Europe is already under pressure from its member countries.
Major concerns are that the foreign trade between US and China may get affected and the slowdown will affect industries in USA. Many of US companies are involved in trade with China which may get affected.
As the economy of China is driven by debt, the slowdown will start a financial crisis which could spread to the other parts of the world.
"Even if China's economy maintained its growth rate, the main contribution would be from public investment, so the effect on Asian economies and Japan's exports warrants due attention. The slowdown in exports and output are likely temporary" - Bank of Japan Deputy Governor Hiroshi Nakaso.
Many U.S. consumer companies are brushing aside worries that China's weakening economy and sputtering stock market will dramatically damage their bottom lines even with early trouble signs in recent earnings reports - Reuters.
The Chinese economy has faced difficulties this year as decelerating growth in factory output, retail sales and domestic investment has been compounded by a slowing property market - Reuters.
A slowdown in China will have a spillover effect on many countries including USA, UK, Australia, India and Europe.
In China Manufacturing activity plunged in the month of July to 48.2 hitting a 15 month low showing signs of a slowdown in the world’s second largest economy.
Greek Prime Minister Alexis Tsipras seeks support of the Syriza party to tackle the new 86billion euro EU-IMF bailout.
"Collective, democratic regrouping procedures are called for. Our strategy must be clarified... The congress procedure must be set into motion as soon as possible" - Greek Prime Minister Alexis Tsipras.
Greek PM is aiming to strike a deal with its European creditors soon, before dealing with the internal conflicts in the party.
Crude Oil is trading lower at $47.13 on China stock market collapse and oversupply concerns.
Gold is trading lower in the Europe at 1094.60, while Silver is weak 14.57
28th July 2015 – 03:02hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.
Daily Market Analysis – 30th July, 2015
By FxGrow Research & Analysis Team
FOMC - September Rate Hike Remains Open
Federal Open Market Committee (FOMC) released its policy statement which showed that the members are locked in a debate on the timing of the rate hike as the US labor market continues to improve with solid job gains and declining unemployment.
The statement from the July meeting of FOMC suggests that September rate hike remains open as FOMC is on track to deliver a 25bp rate hike at the next meeting in September.
Information received since the Federal Open Market Committee met in June indicates that economic activity has been expanding moderately in recent months. The labor market continued to improve, with solid job gains and declining unemployment - FOMC.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate - FOMC.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress - both realized and expected - toward its objectives of maximum employment and 2 percent inflation - FOMC.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run - FOMC.
Following the FOMC statement US dollar rose against its major counterparts with EURUSD touching 1.0948 and GBPUSD 1.5593 in the European trading session today. USDJPY crossed the 124 handle to reach 124.20 while NZDUSD is trading at 0.6614
Global equity markets are up with the Dow Jones industrial average up by 121.12 points to close at 17,751.39; S&P 500 gained 15.32 points to close at 2,108.57; the Shanghai Composite index was up 0.7% to 3,819.27; the Nikkei Stock Average was up 1.1%; Australia’s S&P ASX 200 was up 0.6% today as Fed remains on track to hike interest rates later this year.
Greek PM Alexis Tsipras is facing opposition from Syriza party over the €86bn bailout deal and a series of economic reforms as demanded by its European creditors.
"I would be the last person to want elections, if I had the secured parliamentary majority to make it through to the end of the four-year term" - Greek PM Alexis Tsipras.
German consumer confidence index remained flat at 10.1 points amid uncertainty about Greece's financial stability.
"German consumers apparently assume that the hard-won solution in the debt dispute with Greece will have negative consequences on the German economy" - GfK analyst.
UK Retail sales growth slowed in the month of July according to a report by the Confederation of British Industry (CBI).
CBI Retail sales balance dropped to +21 in July while analysts expectations were for a rise to +30.
Crude oil prices have stabilized at $48.91 following the FOMC statement.
Gold is trading lower in the Europe at 1086.71, while Silver is flat at 14.67
30th July 2015 – 07:57hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.
Daily Market Analysis – 31st July, 2015
By FxGrow Research & Analysis Team
Greek Bailout - IMF won't back Greek deal without reforms
The International Monetary Fund said after its board meeting on Wednesday that it cannot officially join the €86bn third bailout deal for Greece as the country’s debt levels are unsustainable.
"As we've said before, the IMF can only support a program that is comprehensive. What do we mean? We mean a program that ensures medium-term sustainability" - IMF spokesperson, Angela Gaviria.
"In order to ensure that sustainability, that medium-term sustainability, there's a need for difficult decisions on both sides and by both sides. I mean, difficult decisions in Greece regarding reforms, and difficult decisions for Greece's European partners about debt relief” - IMF spokesperson, Angela Gaviria.
“According to its own rules, the IMF cannot participate in any new bailout. I mean, they’ve already violated their rules twice to do so, but I don’t think they will do it a third time” - Greek finance minister.
Germany has insisted that IMF has to be involved in the new 86 billion euro bailout deal.
Greece needs to repay 3.2 billion euro to the European Central Bank on August 20 and with the recent IMF move will make it difficult for Greece to receive the new bailout funds in time.
"There is a need for difficult decisions on both sides... difficult decisions in Greece regarding reforms, and difficult decisions among Greece's European partners about debt relief" - IMF official.
Greece's talks with its International creditors for a €86bn third bailout deal continue with top officials from the European Union and International Monetary Fund meeting key ministers in Athens.
Greek Prime Minister Alexis Tsipras is seeking support from Syriza party for accepting the tough bailout as demanded by its European creditors.
“We are telling the Greek people loud and clear and with no remorse that this is the deal we managed to bring to them and if there is someone who thinks that they could have achieved a better deal, let them come out and say that” - Greek PM Alexis Tsipras.
US Economy grew by 2.3% in the second quarter of 2015 according to the Commerce Department. Initial jobless claims rose by 12K in the week ended July 25 according to the Labor Department.
In Japan household spending declined for the month of June showing signs of contraction in the world's third biggest economy. Annual core consumer inflation rose 0.1% in June.
"There's a risk the recent softness in exports and output may hurt corporate sentiment just when companies were beginning to turn more aggressive on investment" - Koji Ishida, Bank of Japan board member.
New Zealand Business Confidence declined to the lowest level in 6 years according to ANZ Business Outlook.
Crude oil prices fell to $47.66 on concerns of oversupply after OPEC indicated there would be no cuts in production.
Gold is trading lower in the Europe at 1083.44, while Silver is weak at 14.62
31st July 2015 – 12:23hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.
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Daily Market Analysis – 03rd Aug, 2015
By FxGrow Research & Analysis Team
US Consumer Sentiment declines to the lowest level in the last eight months
Consumer confidence slipped a bit in the July 2015 survey. A disappointing pace of economic growth was the main reason for the small decline in consumer confidence - University of Michigan.
The Sentiment Index was 93.1 in the July 2015 survey, down from 96.1 in June. A disappointing pace of economic growth was the main reason for the small decline in consumer confidence. Importantly, consumers still anticipate that the expansion will continue - University of Michigan.
While expected changes in unemployment have been trendless at positive levels in the past year, the July survey was the first since last September that consumers on balance expected no significant change in the rate of joblessness during the year ahead - University of Michigan.
US economy growth has been low this year, with an annual rate of growth at just 0.6% from January to March 2015. Most of the economists still see that the Federal Reserve will raise its interest rates later this year.
Gold has opened the week lower with prices down as much as 7 percent after Federal Reserve indicated the prospects of raising its interest rates this year.
Investors are awaiting the US Non-Farm Payrolls data this week which will provide fresh clues on the timing of the rate hike and the strength of the US economy.
In China manufacturing activity declined to the lowest level in 2 years showing signs of a further slowdown in the later part of the year. Caixin manufacturing PMI declined to 47.8 in the month of July the weakest level seen since 2013.
Eurozone Consumer Inflation rose to 1.0%, while the unemployment rate remained at 11.1%
In Canada Economic output shrank 0.2% in May according to the data released by the Statistics Canada.
Greek Stock markets opened today after a 5 - week shutdown, with restriction put in place due to capital controls.
The Greek benchmark index slumped by 19 percent to 649.48 reaching the lowest levels seen since September 2012.
Greek Banking sector was in spotlight as their shares were down due to Recapitalization, Bad debts and they are not expected to make any profits this year.
Crude oil prices fell to $46.41 on weak China data and oversupply concerns.
Gold is trading lower in the Europe at 1092.90, while Silver is weak at 14.69
03rd Aug 2015 – 10:14hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.
Daily Market Analysis – 04th Aug, 2015
By FxGrow Research & Analysis Team
Reserve Bank of Australia holds rates steady at 2 percent
At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 percent - Reserve Bank of Australia.
The global economy is expanding at a moderate pace, but some key commodity prices are much lower than a year ago. Much of this trend appears to reflect increased supply, including from Australia. Australia's terms of trade are falling nonetheless - Reserve Bank of Australia.
The Federal Reserve is expected to start increasing its policy rate later this year, but some other major central banks are continuing to ease policy. Hence, global financial conditions remain very accommodative. Despite fluctuations in markets associated with the respective developments in China and Greece, long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low - Reserve Bank of Australia.
In Australia, the available information suggests that the economy has continued to grow. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet. Recent information confirms that domestic inflationary pressures have been contained. In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending - Reserve Bank of Australia.
Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target - Reserve Bank of Australia.
Following the news AUDUSD soared and is currently trading at 0.7382 in the European trading session.
The Euro zone manufacturing PMI came in at 52.4 for the month of July as the manufacturing sector continues to grow amid Greek debt crisis.
"Policymakers will be reassured by the robust growth rates seen in these countries and the resilience of the manufacturing sector as a whole, especially as growth is likely to pick up again now that Greece has jumped its latest hurdle in the ongoing debt crisis" - Chris Williamson, chief economist at Markit.
UK Manufacturing PMI rose to 51.9 for the month of July as the British economy continues to gain momentum.
"Although a tick higher in the headline PMI breaks the decelerating trend in UK manufacturing, growth in the sector remains near-stagnant and suggests that the sector is continuing to act as a drag on the economy" - Rob Dobson, Markit.
Crude oil is trading lower at $45.87 on slowdown in China and oversupply concerns.
Gold is trading lower in the Europe at 1092.85, while Silver is weak at 14.55
04th Aug 2015 – 09:50hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.
Daily Market Analysis – 05th Aug, 2015
By FxGrow Research & Analysis Team
Greece in severe depression after third bailout
Greece is trapped in a prolonged and severe depression after securing the third bailout from its European creditors. The country will need a debt write-down of €95 billion to avoid a permanent recession according to the National Institute of Economic and Social Research (NIESR).
“We don’t see Greece getting back to the level it was when it joined the euro in 2001, let alone anywhere near where it was before this crisis struck, so this is a prolonged and severe depression for Greece” - Jack Meaning, NIESR.
“Certainly, as the prospects for Greece deteriorate while inside the euro area, questions over Greece remaining a member will persist” - NIESR.
Greek bank shares sold off sharply for the third day in a row on Wednesday with buyers yet to emerge on a scale large enough to counter continued dumping of the stocks - Reuters.
Greece's banks have seen deposits severely depleted as Greeks pulled out their euros for fear they would be forcibly converted into a new drachma outside the euro zone. The banks have been propped up by emergency money from the European Central Bank - Reuters.
Greece's dismal economic prospects may also weigh on the market. The European Commission says the Greek economy will shrink by 2 to 4 percent this year, a return to the recession that plagued the country for six years until 2014 - Reuters.
EURUSD is down from the yesterday’s high of 1.0985 to trade at 1.0877 in the European trading session today.
US Dollar is stronger after comments from Atlanta Fed President Dennis Lockhart said that the US economy was ready for the first rate hike in September.
UK PMI services declined to 57.4 in the month of July. Investors are awaiting the Bank of England quarterly inflation report to know the central bank’s growth and inflation outlook.
UK construction PMI fell to 57.1 for the month of July amid weak demands. Shortage of new housing and increasing demand has pushed house prices upwards.
"Commercial activity was a key growth driver during July, which partly offset ongoing weakness in civil engineering and softer residential building trends" - Tim Moore, Markit.
New Zealand unemployment rate rose to 5.9% as the number of n ew jobs created could not meet the growing demand. It is expected that the Reserve Bank of New Zealand will consider further monetary policy easing.
"Despite lower quarterly growth, this is still the 11th consecutive quarter of employment growth, making it the second-longest period of growth since the period between 1992 and 1996" - Diane Ramsay, New Zealand.
In China services sector rose as Caixin services PMI surged to 53.8 in July, showing a positive sign in the world's second biggest economy.
Crude oil is trading lower at $46.20 after Iran’s oil minister said the country could boost output within a week of the lifting of international sanctions.
Gold is trading lower in the Europe at 1089.75, while Silver is flat at 14.61
05th Aug 2015 – 13:13hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.
Daily Market Analysis – 07th Aug, 2015
By FxGrow Research & Analysis Team
Bank of England maintains Bank Rate at 0.5% and the size of the Asset Purchase Programme at £375 billion
The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy in order to meet the 2% inflation target and in a way that helps to sustain growth and employment. At its meeting ending on 5 August 2015, the MPC voted by a majority of 8-1 to maintain Bank Rate at 0.5%. The Committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion, and so to reinvest the £16.9 billion of cash flows associated with the redemption of the September 2015 gilt held in the Asset Purchase Facility - Bank of England.
Robust private domestic demand is expected to produce sufficient momentum to eliminate the margin of spare capacity over the next year or so, despite the continuing fiscal consolidation and modest global growth. This is judged likely to generate the rise in domestic costs expected to be necessary to return inflation to the target in the medium term - Bank of England.
There had been a range of influences on international financial markets over the month, including: reactions to news on the progress of negotiations between the Greek government and its creditors; falls in global commodity prices; and large moves in Chinese equity prices. There had been some associated volatility in UK equity markets within the month - Bank of England.
Following the news GBPUSD plunged to a low of 1.5465 yesterday and is currently trading at 1.5517 in the European trading session.
"It would have been imprudent to push through a rate rise at this moment when our economic recovery remains in need of care and encouragement" - John Longworth, British Chambers of Commerce.
"Rates will eventually have to rise and when they do, it should be done slowly and steadily. Until that moment, the Bank of England is right to keep interest rates at current levels" - John Longworth, British Chambers of Commerce.
Globally Investors are awaiting the Non-Farm Payrolls report due to be released at 12:30 GMT today. US NFP is expected to come at 225K and Unemployment rate is expected to stay steady at 5.3%
This month Nonfarm Payroll release will decide the timing of the rate hike by the Federal Reserve this year.
A better than expected report will see US Dollar gaining ground and EURUSD is expected to touch 1.0800 on strong NFP data.
Crude oil is trading lower at $44.73 on oversupply concerns.
Gold is trading higher in the Europe at 1090.91, while Silver is up at 14.75
07th Aug 2015 – 10:51hrs GMT
For more in depth Research & Analysis please visit FxGrow.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.