Daily Market Analysis by FxGrow - page 6
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Daily Market Analysis – 10th Aug, 2015
By FxGrow Research & Analysis Team
US Non-Farm Payrolls support Fed Rate Hike in September
Total nonfarm payroll employment increased by 215,000 in July, and the unemployment rate was unchanged at 5.3 percent. Job gains occurred in retail trade, health care, professional and technical services, and financial activities - US Bureau of Labor Statistics.
Following the NFP data US Dollar rose to a 2 month high versus the Japanese Yen and to a 5 month high against the Swiss Franc. Towards the end of the trading session US dollar gave up its gains due to drop in long bond yields.
Non-Farm Payrolls supports the Fed outlook to begin raising Interest rates later this year in September.
"I don't think it's done any harm but I don't see anything here that screams that Sep hike chances have increased. The revision to June helps, as does the increase in working hours and the underemployment rate falling. Wages rose as expected but y/y only showed a small gain. There's reasons to be bullish but I don't see this report making the Fed's mind up for definite" - Janus Capital's Bill Gross.
"If I had to pick trigger for the Fed to act on jobs it would probably be the unemployment rate dropping to 5.0% or better, and/or a big uptick in wages. Get them up to 2.5%+ y/y and that might be enough for the Fed to pull the trigger" - Janus Capital's Bill Gross.
The US dollar remained supported against its major counterparts on Monday after Friday’s strong NFP report supported the Fed rate hike view.
In China Exports declined in the month of July due to a strong Yuan and weaker demand in the European Union.
"As global growth moderates and commodity prices remain depressed, it is unlikely to see China's trade growth pick up significantly in the remainder of the year" -ANZ Bank.
In Canada employment growth was better than expectations with creation of 6.6K Jobs in the month of July. The unemployment rate remained at 6.8%, while participation rate was at 65.7% according to a report by Statistics Canada.
German Industrial output declined for the month of June to 1.4% mainly due to risks in the Euro zone and a weak growth in the emerging market countries including China.
The British Deficit widened to 1.6 billion pounds in the month of June according to the Office for National Statistics.
Greek government is close to securing the third bailout deal of €86bn to prevent an economic collapse just a week before €3bn debt repayment to the European Central Bank is due.
"When the new bailout comes to parliament for a vote it will be one bill with two articles - one article will be the loan agreement and the MoU (memorandum of understanding) and the second article will be the prior actions" - Greek official.
"Efforts are being made to conclude the negotiations, the horizon is by Monday night or early Tuesday" - Greek official.
Crude oil is trading lower at $43.86 amid rising US rig count.
Gold is trading higher in the Europe at 1094.69, while Silver is up at 14.93
10th Aug 2015 – 10:13hrs 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 – 11th Aug, 2015
By FxGrow Research & Analysis Team
People's Bank of China Devalues Yuan to Increase Exports
China has devalued the Yuan to combat slowdown, which had ripple effects on the Forex markets as the People’s Bank of China cut its daily reference rate by 1.9 percent.
People's Bank of China depreciated Yuan by 1.9 percent against the US dollar to levels seen almost three years back, which came as a shock to the currency markets.
The statement that was released by the Central Bank said it had changed the way it calculated the currency's daily midpoint against the greenback, now taking the midpoint from market-makers quotes and the previous day's closing price.
Monetary policies in emerging market economies diverged and it was hard to make policies - People's Bank of China.
The Yuan dropped 1.8 percent to 6.32 per dollar as of 1:34 p.m. in Shanghai. It slid 2.3 percent in Hong Kong’s offshore trading.
The ECB reinforced its accommodative monetary policy. The euro area is confronted with the threat from persistent declining inflation and low growth potential. The Bank of Japan announced additional easing monetary policies. The Bank of England maintained its easing monetary policies - People's Bank of China.
The Federal Reserve ended the program of asset purchases. The world economy faces the challenge that the policy rate of the U.S. may rise. The global financial conditions may tighten and emerging market economies may be faced with the sudden reversal of capital flows if the Federal Reserve raises its policy rate earlier than expected - People's Bank of China.
"Since China's trade in goods continues to post relatively large surpluses, the Yuan’s real effective exchange rate is still relatively strong versus various global currencies, and is deviating from market expectations" - People's Bank of China.
The devaluation followed weekend data that showed China's exports tumbled 8.3 percent in July, hit by weaker demand from Europe, the United States and Japan, and that producer prices were well into their fourth year of deflation - Reuters.
The move by the People's Bank of China overnight could have a significant impact on whether the Federal Reserve decides to hike interest rates this year.
Greece has agreed a bailout deal with its European creditors according to the European Commission as it said a technical agreement had been reached with Greece, which now requires political approval.
In Germany Investor confidence dropped to 25.0 in the month of July according to a report released by the ZEW Center for European Economic Research.
Crude oil is trading lower at $44.07 on oversupply and weak global demands.
Gold is trading higher in the Europe at 1109.31, while Silver is up at 15.25
11th Aug 2015 – 11:41hrs 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 – 12th Aug, 2015
By FxGrow Research & Analysis Team
Euro hits 2-week high after Greece reached third bailout deal with creditors
Greece and its international lenders reached an 85 billion euro bailout agreement on Tuesday after nailing down the terms of new loans needed to save the country from financial ruin - Reuters.
European Commission spokeswoman said that a technical deal has been reached between Greece, the International Monetary Fund, the European Central Bank, and the European Stability Mechanism.
The deal, which came after 23 hours of talks that continued through the night, must still be adopted by Greece's parliament and by euro zone countries - Reuters.
Following the news EURUSD reached a 2 week high of 1.1115 and is currently trading at 1.1142 in the European trading session.
“The crucial nature of the situation requires the immediate convening of parliament to proceed with the deal’s approval and allow disbursement of the first installment” - Greek PM Alexis Tsipras.
The Greek government has submitted a Draft bill in the Parliament today which contains an agreement with its European creditors for securing the third bailout funds. They are expected to pass the bill on Thursday with Euro group meeting scheduled on Friday.
According to the agreement, Greece will have to produce a primary budget deficit of 0.25 percent of GDP in 2015, followed by surpluses of 0.5 percent in 2016, 1.75 percent in 2017, and 3.5 percent in 2018.
"After this deal the prime minister should call for elections, so that the Greek people can vote on whether they approve the programme or want something else" - Greek Health Minister.
Global investors are awaiting the Germany’s IFO survey, which is likely to indicate Europe’s largest economy is on track to post a reasonable pace of growth.
Gold rose more than one per cent on Tuesday as the dollar cut gains and European stocks fell and investors assessed the impact of China’s move to devalue its currency and prop up its economy.
“Gold’s best moment this year came in the first few months when we saw various FX swings, lots of different central banks cutting interest rates or intervening in their monetary policy, so probably there is some element of that which has helped the rally from Monday continue a bit. Probably gold is benefiting from fears that this is a new round of currency war" - Matthew Turner, analyst at Macquarie.
Consumer confidence in Australia rose for the month of August by 7.8% to 99.5 points according to the Westpac-Melbourne Institute.
"Movements of the Index of this magnitude are unusual and generally associated with highly significant events such as interest rate moves or Commonwealth Budgets" - Bill Evans, Westpac chief economist.
Crude oil is trading lower at $43.45 due to a rapid decline in the value of Yuan.
Gold is trading higher in the Europe at 1116.20, while Silver is up at 15.31
12th Aug 2015 – 11:42hrs 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 – 14th Aug, 2015
By FxGrow Research & Analysis Team
Greek parliament approves €85bn bailout deal
Greek parliament has approved the new €85bn rescue package following a debate and voting on the deal on Friday.
The new deal which seeks harsh austerity measures was approved with 222 votes for, 64 votes against and 11 absent in a 24 hour session in the Greek parliament.
Greek PM Alexis Tsipras is facing harsh criticism from his own party for accepting the demands of its European creditors, with several members showing dissent and threatening to split the party and call for early elections in Greece.
EURUSD was supported by the news that Greek parliament has approved the new bailout deal terms and is currently trading above the 1.1100 level at 1.1133 in the European trading session.
International Monetary Fund has welcomed the bailout deal but said that it will wait to see if there is a plan for reducing Greece's debt.
“The IMF will remain closely engaged with the Greek government and the European partners to assist in this process, and will make an assessment of its participation in providing any additional financing to Greece once the steps on the authorities’ program and debt relief have been taken” - Delia Velculescu, IMF.
“The IMF has been adopting a line of, not silence but, we try to be mindful of developments and not be excessive in our positions” - IMF managing director.
“There’s a need for difficult decisions on both sides and by both sides. I think everybody understands that the IMF can only be involved when these decisions on these two sides are taken.” - Senior IMF official.
Greek PM has called French president François Hollande, European Commission president, leader of European parliament members for approval of the rescue package by the Euro group.
Greece Economy has grown unexpectedly in the second quarter of the 2015 as its GDP rose 0.8% from the previous quarter.
“The surprise is partly explained by some consumption indices, such as retail sales, that were in positive territory in the second quarter and this was helped by some improvement in the labor market. There was also a very strong positive impact from tourism, which is having increasing knock-on effects on the economy” - Nikos Magginas, economist at National Bank of Greece.
The Peoples Bank of China put the Yuan's central parity rate at 6.4010 Yuan for US$1, a drop of 1.11% from the previous day.
“The central bank, if necessary, is fully capable of stabilizing the exchange rate through direct intervention in the foreign exchange market to avoid the herd mentality resulting in irrational movements of the rate” - Peoples Bank of China economist Ma Jun.
In New Zealand Retail sales fell short of analyst expectations. Retail sales in the second quarter of the 2015 grew by 0.1% while the expectations were for a 0.5% growth.
Weak economic data from New Zealand has increased the expectations for a further rate cut by the Reserve Bank of New Zealand.
Crude oil is trading lower at $41.92 on oversupply concerns and weak global demand.
Gold is trading higher in the Europe at 1117.34, while Silver is up at 15.46
14th Aug 2015 – 08:57hrs 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 – 21st Sept, 2015
By FxGrow Research & Analysis Team
Greek Elections - Alexis Tsipras secures clear victory
Alexis Tsipras’s has secured a clear victory in Sunday’s Greek general election, with more than 90 percent of the votes counted.
Syriza party got 35.5 per cent of the vote, giving it 145 seats in the 300 member parliament, well ahead of the conservative New Democracy party which is on 75 seats.
This is the third time Greeks have voted this year after the January elections which saw Alexis Tsipras coming to power, a referendum in July which was to reject the reform proposals of its European creditors and this time.
Turnout in this poll was just over 55%, down from 63% in January and low by Greek standards.
"This result does not belong to Syriza. This result belongs to the working classes of this country, the people who fight for a better tomorrow, who dream of a better tomorrow and this is something that we will achieve through a lot of hard work" - Alexis Tsipras.
"The mandate that the Greek people have given is a crystal clear mandate to get rid of the regime of corruption and vested issues. We will show how effective we will be. We will make Greece a stronger place for the weak and vulnerable, a fairer place" - Alexis Tsipras.
Eurozone officials have welcomed the re-election of Mr. Tsipras as the PM of the country after he secured third bail-out deal for Greece in five years.
"Now a solid government ready to deliver is needed quickly" - President of the European parliament, German Martin Schulz.
"From Monday, we are ready to collaborate to implement the programme to reform the Greek economy" - Italy's La Stampa.
"Given how challenging the bail-out agenda is between now and year-end, a return of the previous coalition isn't great news" - Mujtaba Rahman, head of Europe practice at the Eurasia Group.
US Dollar has staged a strong recovery post FOMC after Fed decided to keep its interest rates unchanged. Fed showed increasing concerns over the negative impacts of the recent global financial market volatility, as well as rapid slowdown in China and other emerging markets, on growth and inflation outlook.
EURUSD is trading at 1.1310 in the early Asian trading session while USDCHF is stable at 0.9683
Asian Stocks have dropped on Monday as a ripple effect of the Fed's decisions to hold its interest rates. Investors are worried about the strength of the Chinese economy.
Hong Kong's Hang Seng index dropped 1.39% to 21,638.22 points shortly after the opening bell, while mainland China's benchmark Shanghai Composite fell 0.64% to 3,077.97 points.
The Australian S&P/ASX 200 index dropped 2.44% to 5,044.40 points in Sydney, with almost all 200 stocks on the index trading lower for the day.
Crude oil is trading lower at $45.03 amid ongoing concerns over sluggish global growth.
Gold is trading higher in the Europe at 1137.24, while Silver is stable at 15.11
21st Sept 2015 – 03:53hrs 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 – 22nd Sept, 2015
By FxGrow Research & Analysis Team
Chinese economy weaker, but far from collapse
In China economy is not as weak as it looks according to a survey done by a New York research group. In a report published by the CBB International in the aftermath of the Stock market plunge in China and its currency devaluation Capital expenditure has rebounded and services sector is showing signs of growth.
"Perceptions of China may be more thoroughly divorced from facts on the ground than at any time in our nearly five years of surveying the economy” - CBB President Leland Miller.
“Global sentiment on China has veered sharply bearish — too bearish. While we have long cautioned clients against relying on rosy official views of the Chinese economy, we believe sentiment has swung substantially too far in the opposite direction” - CBB President Leland Miller.
"The best situation for most economies is stable and low inflation. China appears to be enjoying exactly that, notwithstanding the widespread fear of deflation” - CBB International.
Asian shares rose on Tuesday and the dollar held steady as U.S. markets bounced back and the European Central Bank said it was prepared to ease monetary policy further - Reuters.
European markets are seen steady, with financial spread betters expecting Britain's FTSE 100 (FTSE) and France's CAC 40 (FCHI) to open flat and Germany's DAX (GDAXI) to start the day up 0.1 percent - Reuters.
MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was up 0.4 percent at 0039 EDT. Australia (AXJO) advanced 0.3 percent and South Korea (KS11) almost 1 percent, but most Southeast Asian markets retreated. Japanese markets are shut through Wednesday - Reuters.
In Switzerland’s trade balance fell to 2.869B, from 3.579B in the preceding month according to a report released by the Federal Statistical Office.
Global investors are awaiting Septembers Manufacturing PMI data from China and Europe today as markets in Japan are closed for the next three days.
European Central Bank and Bank of Japan dovish bias is expected to provide support to the markets. If ECB will extend its QE program beyond September 2016 EUR will come under pressure and slip below 1.1000
Crude oil is trading higher at $46.01 as investors are waiting for the weekly stockpiles report.
Gold is trading higher in the Europe at 1135.02, while Silver is up at 15.22
22nd Sept 2015 – 07:34hrs 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 – 23rd Sept, 2015
By FxGrow Research & Analysis Team
China manufacturing PMI falls to lowest in more than 6 years
Activity in China's manufacturing sector unexpectedly shrank to a 6½-year low in September, indicating a sharper slowdown in the world's second-largest economy that could spell more turmoil for financial markets.
The preliminary Markit China Manufacturing Purchasing Managers' Index (PMI) fell to 47.0 in September, the worst since March 2009 and below market expectations of 47.5 and August's final 47.3. Levels below 50 signify a contraction.
Global investors and policymakers are on edge over China after the U.S. central bank last week held off from raising interest rates, saying it was unsure if international problems and China's slowdown in particular, will hurt the U.S. recovery - Reuters.
"The weaker-than-expected PMI suggested domestic and external demand remained sluggish. It's almost certain China's economic growth will slide below 7 percent in the second half of this year" - Minsheng Securities.
"The principle reason for the weakening of manufacturing is tied to previous changes in factors related to external demand and prices" - Chief economist at Caixin Insight Group.
"Fiscal expenditures surged in August, pointing to stronger government efforts on the fiscal policy front. Patience may be needed for policies designed to promote stabilization to demonstrate their effectiveness" - Chief economist at Caixin Insight Group.
The Asian Development Bank has cut its estimate for China's growth to 6.8 percent for 2015. It expects the growth rate of the world's second largest economy will fall to 6.7 percent in 2016.
Mario Draghi, European Central Bank President, will speak on monetary policy before the European Parliament’s Economic and Monetary Committee providing insight into whether the central bank is contemplating expanding its bond buying and if so, when.
The Eurozone continues to experience extremely low levels of inflation and unemployment is very high.
The UK manufacturing sector growth stalled for the first time in more than two years, with a stronger Pound and weak exports weighing on the sector's margins and volumes.
The trade surplus in Switzerland contracted in August, as the strength of the Swiss Franc hit demand in the European Union and China.
Crude oil is trading higher at $46.80 as market survey points to fall of crude oil stocks.
Gold is trading lower in the Europe at 1127.06, while Silver is up at 14.79
23rd Sept 2015 – 09:00hrs 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 – 29th Sept, 2015
By FxGrow Research & Analysis Team
Stocks fall on weak Chinese data
In China Industrial profits dropped 8.8% last month, showing the world’s biggest consumer of commodities is struggling with excess capacity, sluggish investment and weaker manufacturing, according to data released by China’s National Bureau of Statistics.
Following the weak Chinese data Major Stock indexes ended in loss yesterday. The S&P 500 and NASDAQ finished modestly in the red and strong gains for Nike (NKE) keeping the Dow Jones in the black.
Euro climbed up against the US Dollar and is presently trading at 1.1277 in the European trading session today.
In China a combination of lower sales, higher costs and weak prices as a result of soft demand has been weighing on the manufacturing sector’s earnings power. The pressure is particularly notable in the mining sector, offsetting modest gains elsewhere. China and the Fed have been the market’s primary pre-occupations lately, and this report adds to those worries.
The Australian dollar has fallen after weak Chinese industrial data added to evidence that the Chinese economy is slowing down. AUDUSD is trading at 0.6949 in the European trading session.
European stocks also declined on Monday as more disappointing Chinese data and downbeat analyst comment weighed on the stocks.
London's benchmark FTSE 100 index ended the day down 2.46 per cent to 5,958.86 points compared with Friday's close. In the Eurozone, Frankfurt's DAX 30 finished 2.12 per cent lower at 9,483.55 points and the Paris CAC 40 plunged 2.76 per cent to 4,357.05.
"Both the Australian and Canadian dollars fell sharply today as profits fell by the largest amount in four years. Earnings in the resource sector have been hit particularly hard and this put additional pressure on commodity prices. There are major economic headwinds in China and this will limit growth in countries that rely on Chinese demand" - BK Asset Management.
In the US, New York Fed President William Dudley noted that the Fed is still on track to increase interest rates in this year. He, however, stressed that the decision would be depend on the health of US economy and financial conditions, as well as global economic development.
In an interview with Wall Street Journal, Dudley suggested that "if the economy continues on the same trajectory it’s on…and everything else suggests that’s likely to continue…then there is a pretty strong case for lifting off".
"I am starting to see signs of imbalances emerge in the form of high asset prices, especially in real estate, and that trips the alert system. Given the progress we've made and continue to make on our goals, I view the next appropriate step as gradually raising interest rates, most likely starting sometime later this year" - San Francisco Fed President John Williams.
Crude oil is trading lower at $44.43 ahead of the estimates of U.S. crude stockpiles report.
Gold is trading lower in the Europe at 1127.87, while Silver is weak at 14.54
29th Sept 2015 – 06:42hrs GMT
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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.