Solforex.com - Weekly/Daily Forex Market Analysis

[limyeeshin]

Edition 60｜July 11, 2016​

The U.S. dollar ended lower against other major currencies on Friday despite upbeat U.S. jobs data as investors broadly dimmed their expectations for another interest rate hike in near future. The Labor Department reported that the U.S. economy added 287,000 jobs in June, much higher than 175,000 jobs expected by the analysts. Average hourly earnings also came in at 2.6% increase, compared to the previous year. Unemployment rate however ticked up to 4.9% and May’s figure was revised down to 11,000. Despite the strong jobs report, the Federal Reserve’s cautious path for next rate hike seemed to be continuing following the threat of a Brexit from the EU. The dollar fell to 96.31 in late Friday against major six currencies. USD/JPY fell 0.19% and closed at 100.59.

In China, National Bureau of Statistics reported that June’s Consumer Price Index moderated to 1.9% in annual basis due to the changed weighting of the goods sentiments in the index and weaker gains in food prices. Food prices rose 4.6% year on year, dropped from 5.9% rise in May and 7.4% increase in April. Pork prices, which were the biggest driver of consumer inflation in recent months, rose 30.1% year on year. The report implies that China is in a sustained period of moderate inflation, giving thoughts that the People’s Bank of China is less likely to take aggressive monetary easing. China is to report on second quarter growth on Friday.

The British pound slightly gained against the U.S. counterpart on Friday as the dollar wavered broadly in up and down trades following June’s labor report. GBP/USD pair traded between 1.2881 and 1.3018 before settling at 1.2952, up 0.36%. Sterling recorded its fourth winning session after the Brexit vote. The pound has tumbled nearly 13% since the referendum result decided the U.K. to leave European Union, hitting lowest level against the dollar in 31 years, at below 1.28. The outlook for the pound still remained to the downside ahead of the monetary policy announcement by the Bank of England on Thursday.

Commodity linked currencies generally were higher against the dollar. AUD/USD pair advanced 1.18% at 0.7571. NZD/USD pair also rose by 1.09% to 0.7307. Canadian dollar however tumbled against the greenback as the Canadian jobs data declined further than expected level. USD/CAD gained 0.32% to 1.3042 in late trade.

In the week ahead, investors will closely watch monetary policy announcement by the Bank of England. The Bank of Canada is also to hold a policy meeting in this week. Investors will be looking ahead to the U.S. reports on consumer inflation and confidence and second quarter GDP growth data from China.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, July 11
Japan is to release data on core machinery orders.
Australia is to publish data on home loans.
In the Eurozone, Financial Ministers are to hold a meeting in Brussel.
The U.S. is to report on labor market conditions for June.

Tuesday, July 12
Japan is to release data on produce price inflation.
China is to publish data on foreign direct investment.
In Australia, NAB is to report on business confidence.
Germany is to release data on consumer price inflation and wholesale prices.
Bank of England Governor Mark Carney is to testify on the economic outlook at the Parliament’s Treasury Committee.
The U.S. is to publish data on wholesale inventory.

Wednesday, July 13
China is to release trade balance for June.
In Australia, Westpac is to report on consumer sentiment.
Euro zone is to publish data on industrial production.
Bank of Canada is to hold a monetary policy meeting and announce its rate statements.
The U.S. is to release data on import prices and mortgages.

Thursday, July 14
Australia is to report on employment and consumer sentiment on inflation.
The Bank of England is to publish the meeting minutes of the day and announce its monetary policy decisions.
The U.S. is to release data on producer prices and its weekly initial jobless claims.

Friday, July 15
China is to release a string of data on industrial production, retail sales, fixed asset investment and second quarter GDP growth.
Euro zone is to publish data on trade balance and revised consumer price inflation.
Canada is to report on manufacturing sales.
The U.S. is to release a file of reports on consumer prices, retail sales, average real income, industrial production and New York State manufacturing.


The above schedule may change*

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[limyeeshin]

Thursday 14 July 2016​

Sterling holds higher ahead of BoE policy meeting

The British pound pushed higher ahead of the Bank of England’s monetary policy meeting on Thursday. The currency limited its gains as the meeting is expected to carry an easing policy to diminish the economic fallout from Brexit vote. Earlier, sterling held lower against the dollar with increased possibility of quantitative easing. The BoE is expected to cut its benchmark interest rate to 0.25% from 0.5% at this meeting. FX strategy managing director Kathy Lien said even if the central bank passes on a move Thursday, they will prepare everyone for easing this year. GBP/USD pair added 0.5% to 1.3212, climb off its session low of 1.3105.

Dollar recovers from its sharp loss

The U.S. dollar reduced its losses, keeping near three-month highs after the release of a Federal Reserve Beige Book. Earlier, the greenback fell after the import prices came in at -4.8% and a dovish statement from Dallas state Fed president Robert Kaplan. The Beige Book’s survey showed evidence of modest economic growth in most regions except Dallas, Chicago and Boston, where claimed the U.K. referendum affected on business activities. The dollar hit a day low of 96.09 and rebounded to 96.36, down 0.19%.

Yen reduces gains with focuses on BoJ meeting

Japanese yen slightly reduced its gains amid investors focusing on whether the Bank of Japan will add its monetary stimulus at its meeting this month. The former U.S. Federal Reserve chair Ben Bernanke told Japanese Prime Minister Shinzo Abe that the central bank has still got measures to support the economy on his visit to Tokyo. Tokyo FPG Securities president Koji Fukaya said whenever the dollar reaches 105 level, people will be selling in to this. He added that the Bank of Japan will do anything at its meeting at the end of the month that the BoJ could increase its asset purchases. USD/JPY gained 0.2% at 104.65 yen, close to its post-Brexit high of 104.98. EUR/JPY also rose 0.3% at 116.20 yen.

Emerging goes generally lower, Aussie gains after jobs data

The emerging currencies broadly fell against the dollar as safe-haven demand slightly reduces with blunted stock prices and oil price drops. The Australian dollar ticked up after the jobs report on Thursday despite the data was weaker than expectations. The RBA said that the latest data may comfort the bank but its next monetary policy decision is likely to depend more on the inflation and growth forecast for the economy. AUD/USD ticked up 0.22% to 0.7625.

Major pairs (Thursday update)

USD/JPY ↑0.46% 104.98
EUR/USD ↑0.23% 1.1115
EUR/JPY ↑0.72% 106.72
USD/CAD ↓0.25% 1.2944
GBP/USD ↑0.57% 1.3221
USD/CHF ↓0.17% 0.9835
AUD/USD ↑0.11% 0.7616
NZD/USD ↓0.82% 0.7215


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[limyeeshin]

Edition 61｜July 18, 2016​

The U.S. dollar strengthened against major currencies last week after an attempted coup within the Turkish military. The dollar rallied against the Turkish lira by jumping 4.73% at 3.0137 after Turkey’s prime minister announced there was a coup attempt under way. A faction inside the Turkish military attacked parliament building in Ankara and took over bridges in Istanbul. The dollar pushed higher after the release of upbeat U.S. economic report. The U.S. Commerce Department reported that the retail sales rose 0.6% in June following the third consecutive increase. Demand for save haven yen was also boosted as the market shows volatility, USD/JPY pair was down 0.47% at 104.88. The dollar still gained 4.16% against the yen for the week as widely expected additional quantitative easing by Bank of Japan pressured the currency lower. The dollar gained 0.62% against other major currencies at 96.70.

The euro tumbled against the dollar and yen on late Friday with increased risk aversion after Turkey’s attempted military coup was announced by the prime minister. EUR/USD fell sharply by 0.83% to 1.1029 and EUR/JPY fell 1.22% at 115.74 after the announcement. The euro however rose against sterling after the Bank of England’s chief economist said it is poised to ease monetary policy in August as a counteract for the economic shock from the Brexit vote. EUR/GBP rose 0.56% and traded at 0.8366. Investors are looking ahead to ECB meeting this Thursday for the indication of further easing measures to settle the fallout from Brexit shock. The ECB is however widely expected to remain the monetary policy unchanged ahead of inflation forecasts.

The pound fell sharply against the dollar on Friday after the announcement from the Chief economist of BoE with negative stance on easing monetary policy. The currency still ended the week with gains of 1.85% as The Bank of England kept the interest rates on hold at the recent policy meeting, breaking the expectation of a rate cut. GBP/USD traded at 1.3181 late Friday, down 1.2%.

New Zealand dollar held lower on early Monday in Asia after the downbeat consumer price data for second quarter. New Zealand second quarter CPI came in at 0.4%, below 0.5% gain expected. The Reserve Bank of New Zealand is to review the rate in next month and the slower data widened the scope for lowering the official cash rate. NZD/USD traded at 0.7083, down 051% after the CPI release. In the weekend, China released reports on industrial production and retail sales beating expectations. AUD/USD traded at 0.7586, up 0.08%.

In the week ahead, investors will closely watch the outcome of European Central Bank meeting on Thursday for indication of whether the bank will increase easing measures to mitigate the economy fallout from the Brexit vote. The U.K. economic reports on employment and inflation will be also in focus.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, July 18
Markets in Japan are closed for the national holiday.
New Zealand is to release data on consumer price inflation.
The U.S. is to release NAHB housing market index for July.

Tuesday, July 19
The Reserve Bank of Australia is to publish minutes on its recent monetary policy meeting.
In the Euro zone, German institute ZEW is to report on economic sentiment.
The U.K. is to publish data on consumer price inflation, retail sales, producer prices inflation and housing price index.
The U.S. is to release data on new starts and building permits.

Wednesday, July 20
In Australia, Westpac is to report on CI.
Euro zone is to release data on consumer sentiment and current account.
Germany is to publish data on producer price inflation.
The U.K. is to release monthly employment report.

Thursday, July 21
Japan is to release data on machinery orders and industrial activity.
Australia is to releaser private sector report on business sentiment.
The European Central Bank is to hold monetary policy meeting and announce its policy and rate decision. The Governor Mario Draghi is to hold press conference following the meeting.
The U.K. is to publish data on retail sales.
The U.S. is to release data on weekly initial jobless claims and FHFA housing price index.

Friday, July 22
Japan is to release data on PMI manufacturing.
Germany is to publish PMI data on manufacturing and service sector.
The U.S. is to release data on manufacturing.
Canada is to release data on retail sales and consumer inflation.

The above schedule may change*

(Mia Chung)
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[limyeeshin]

Thursday 21 July 2016​

Dollar rises supported by upbeat economic reports

The U.S. dollar rose against other major currencies as improvements in the U.S. economy, supported by recent upbeat reports, widened expectations for the Federal Reserve to raise interest rates in this year. Federal Funds Futures Market reflected the probability for July rate hike at 1.2% but increased probability for rate hike in September from 18.8% to 24.6% and December from 46.9% to 50.7%. Rise in New York stock prices also supported strengthening greenback. Market participants are remained cautious after the International Monetary Fund revised the global economic growth down to 3.1% from 3.2%. The IMF also lowered the forecast for U.S. growth to 2.2% from 2.4% but the reduction was more taken from the weaker first quarter GDP rather than Brexit impact. The dollar was quoted at 97.16, up 0.10% against other major currencies. Also, the currency gained as much as 1.50% against the Turkish Lira to a record high of 3.0974 after Turkey president declared a three month State of Emergency in the wake of last week’s coup attempt. The pair surged over 7% over last four sessions.

Euro and sterling rebounds ahead of ECB meeting

The British pound slightly gained against the U.S. counterpart ahead of the first European Central Bank’s monetary policy meeting after the Brexit vote. On Wednesday, a report showed that Euro zone’s consumer confidence declined sharply by 1.8% to -7.6%. The Governing Council in ECB is broadly expected to stick to current policies at Thursday’s meeting as being short of data to combat post Brexit market shock. Also, the IMF cut U.K. growth forecast to 1.7% from 1.9% for this year and 1.3% for the 2017 growth due to the Brexit. Sterling found some support on Wednesday after the U.K. Office for National Statistics reported that the unemployment rate fell. GBP/USD traded at 1.3230, up 0.19 and EUR/USD rebounded to 1.1018 after shedding 0.5% overnight.

Kiwi drops sharply after sign of easing from RBNZ

The New Zealand dollar dropped sharply after the recent assessment from the Reserve Bank of New Zealand showed possibility for further easing. On Thursday, the RBNZ suggested that more easing is possible from the overnight cash rate of 2.25% with an objective of weaker exchange rate policy. NZD/USD traded at 0.6977, dropping sharply by 0.64% after the bank’s review. Nearby Australian dollar also fell slightly after the business confidence survey came in lower than expected. AUD/USD traded at 0.7472, down 0.01%.

Major pairs (Thursday update)

USD/JPY ↑0.19% 107.08
EUR/USD ↑0.19% 1.1035
EUR/JPY ↑0.42% 118.19
USD/CAD ↓0.11% 1.3043
GBP/USD ↑0.23% 1.3235
USD/CHF ↓0.25% 0.9848
AUD/USD ↑0.21% 0.7490
NZD/USD ↓0.50% 0.6986

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[limyeeshin]

Edition 62｜July 25, 2016​

The U.S. dollar rallied against other major currencies, hitting four month highs amid widened expectations on rate hike before the end of year with supports from upbeat U.S. economic reports. Federal fund futures increased the possibility of the rate hike by December to 45% from 9% in beginning of July. Meanwhile, other global central banks hinted future adjustment of the interest rates. Minutes from central banks meetings showed that the Reserve Bank of Australia let the door opened for the possibility of further rate cut in near future and the European Central Bank remained current monetary policy but indicated further easing if needed. The dollar closed at 97.41 Friday, up 0.50% other major currencies.

Japanese yen held weaker after the release of trade balance despite better than expected figures as investors are more eyed on monetary policy divergence ahead of Bank of Japan’s policy meeting on Friday. Japan’s adjusted trade balance came in at a surplus of ¥33 billion, above ¥24 billion expected. But imports and exports declined noticeably with imports falling 18.8% and exports dropping 7.4%. The overall trade balance came in at a surplus of ¥693 billion, much better than ¥495 expected. Ahead of this week, investors are looking ahead to a monetary policy announcement from the Bank of Japan on Friday, amid broadly grown expectations for further stimulus. USD/JPY traded at 106.45, up 0.30%.

The euro weakened against the dollar on Friday after news of shooting incident at a shopping center in Munich where police said there were multiple deaths and casualties stoked investor jitters and spurred selling in the single currency. On Thursday, the European Central Bank kept the interest rates unchanged at record lows, seeking to revive growth and inflation. It opened the possibility for further stimulus in near future, emphasizing uncertainty and risks on economic outlook. EUR/USD traded at 1.0976, down 0.45%. EUR/JPY fell 0.3% at 116.31.

British pound also tumbled after the release of downbeat economic data adding concerns over the national economic growth following Brexit. GBP/USD traded at 1.3110, down 0.92%. The pound has declined almost 12% against the dollar after the referendum decisions came in to leave the European Union on June 24. Market participants widely expect the Bank of England is to cut interest rates and extend further stimulus in the August.

In the week ahead, investors will closely watch the Wednesday’s Federal Reserve policy statement for the indication on the pace of rate hike within the year. Also, monetary policy announcement from the Bank of Japan on Friday will be closely watched. Traders will be looking ahead to data on second quarter GDP from U.S., Euro zone, and U.K., for guidance on the overall global outlook in the wake of Brexit last month.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, July 25
Japan is to release trade balance.
In the euro zone, Ifo institute is to report on business climate.
The U.S. is to publish data on manufacturing in Dallas region.

Tuesday, July 26
New Zealand is to publish its trade balance.
The U.S. is to release data on new home sales, consumer confidence, PMI service sector and manufacturing in Richmond region.

Wednesday, July 27
Australia is to release data on second quarter consumer price inflation.
China is to publish data on industrial profit.
In the euro zone, GFK is to report on consumer sentiment.
The U.K. is to release a first read on second quarter gross domestic product.
The U.S. is to publish data on durable goods orders and pending home sales.
Federal Reserve is to announce the benchmark interest rate and give rate statement after the FOMC meeting.

Thursday, July 28
Australia is to release data on import and export prices for the second quarter.
Euro zone is to publish data on consumer sentiment.
Germany is to report on unemployment and release data on consumer price inflation.
The U.K. is to release data on housing prices.
The U.S. is to publish its weekly initial jobless claims and manufacturing data in Kansas region.

Friday, July 29
Japan is to release string of data on unemployment, retail sales, new starts and consumer price inflation.
Bank of Japan is to hold the monetary policy review and give rate statements.
New Zealand is to publish data on business confidence.
Australia is to release data on producer price inflation.
Euro zone is to release data on unemployment rate, consumer price inflation followed by a gross domestic product reading for the second quarter.
The U.K. is to publish data on mortgage approvals.
The U.S. is to report on second quarter GDP reading and manufacturing in Chicago region.


The above schedule may change*

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[limyeeshin]

Thursday 28 July 2016​

Dollar slips after FOMC holds rate as expected

The U.S. dollar skid lower after the Federal Open Market Committee (FOMC) left the target range of benchmark Federal Funds Rate unchanged at 0.25*0.50% by a 9 to 1 vote on Wednesday. The FOMC said near term risks to the economic outlook have diminished, while economic activity since June has expanded at a moderate rate. The FOMC lifted the Fed Funds Rate by 25 basis points in last December after a decade and said it could raise the rates as much as four times in 2016. The Committee however lowered the median projections down to two rate hikes for the year in June. Earlier the day, pending home sales index came in at 0.2% increase, below 1.4% rise seen. Durable goods orders also fell 4.0%, further 1.1% decline expected. The dollar fell more than 0.40% against other major currencies to an intraday low of 96.71 and closed at 96.75.

Euro surges against the dollar after FOMC statement

The euro climbed against greenback as the Federal Reserve decided to hold the interest rate at current level with a 9-1 vote. In the euro zone, Deutsche Bank shares fell almost 4% to 13.63 after the beleaguered German bank’s second quarter income tumbled almost 100% on annual basis. The earnings were released before Friday’s highly anticipated figures from the European Banking Authority’s stress tests of the 51 largest banks. EUR/USD rose sharply by 0.65% and settled at 1.1058 in late trading. The euro has still fallen about 3% against greenback since unexpected Brexit referendum result in June.

Sterling stays calm despite upbeat GDP and FOMC rate hold

The U.K. Office for National Statistics reported that gross domestic product rose 0.6% in the second quarter, above 0.4% growth expected. The U.K. economic growth expanded 2.2% year-on-year, also better than 2.0% increase seen. However the report did not satisfy to boost the optimism over the outlook of the U.K. economy as it is the final measure of the growth in the run up to the Brexit from European Union on June 23. A consensus from Bloomberg shows the U.K. to contract growth by 0.1% in the third quarter. GBP/USD traded at 1.3131.

Yen edges higher ahead of BOJ

Japanese yen gained in Asia Thursday after the Fed held steady as expected overnight and investors eyed on the view on policy from the Bank of Japan on Friday. The yen weakened after reports said Prime Minister Shinzo Aba and his government will compile a stimulus package up to ¥28 trillion, or $265.3 billion to strengthen its sluggish economy. The BOJ is broadly expected to ease policy further at its meeting on Friday, which could include a rate cut into negative territory as well as additional asset purchase. USD/JPY changed hands at 105.20, down 0.18% in early trading.

Major pairs (Thursday update)

USD/JPY ↓0.54% 104.82
EUR/USD ↑0.07% 1.1068
EUR/JPY ↓0.47% 116.03
USD/CAD ↓0.42% 1.3131
GBP/USD ↓0.28% 1.3187
USD/CHF 0.00% 0.9859
AUD/USD ↑0.47% 0.7526
NZD/USD ↑0.49% 0.7111


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[limyeeshin]

Edition 63｜August 1, 2016​

The U.S. dollar eased off from a five week low against the other major currencies late Monday ahead of U.S. manufacturing activity data release. The dollar tumbled last Friday after the U.S. second quarter gross domestic product came in at a 1.2% growth rate, disappointing expectations for 2.6% growth. The first quarter GDP was also revised down to 0.8% from 1.1%. The downbeat data lowered expectations for the rate hike from Federal Reserve in sooner period. Fed funds futures revised down the change of a rate hike by September to 12% and December to 33% from 53%. The dollar slightly recovered from Friday’s five-week lows of 95.33 and traded at 95.61% at late trading, up 0.08%.

Chinese yuan firmed on Monday as the dollar plunged in global markets after the weak U.S. growth report. Reuters reported that the Chinese market still saw robust dollar demand, while major state banks were suspected of selling dollars on behalf of the central bank to help support the yuan. Investors still believe the yuan will depreciate by the end of this year, possibly to 6.8 per dollar, said a trader at European bank in Shanghai. Earlier, China’s official manufacturing purchasing manager’s index came in at 49.39 in July from 50.0 in previous month. Caixin manufacturing PMI however rose to 50.6 from 48.6 in June, above 48.7 seen. China is Australia’s biggest export partner and New Zealand’s second biggest export partner and both currencies firmed after the data release. AUD/USD traded at 0.7615, highest level since July 15. NZD/USD climbed 0.11% to 0.7215.

Japanese yen rallied against the dollar after the Bank of Japan approved only moderate stimulus measures at Friday’s meeting. The market participants expected more aggressive easing but the BoJ eased its monetary policy by only increasing its purchases of exchange traded funds and did not lower the rates deeper into negative territory or increase monetary base as widely expected. USD/JPY tumbled to the day low of 101.97 on Friday, and settled 102.03, down more than 3% for the day. USD/JPY recovered 0.15% on Monday and traded at 102.18.

The British pound tumbled further after the U.K. manufacturing data release. Markit Research group reported that the U.K. manufacturing purchasing managers’ index fell to 48.2 last month from 52.1 in previous month. It was the lowest level since 2013 and worse than a preliminary reading. The downbeat data fueled concerns over the U.K. economy outlook and expanded the expectations for the rate cut by the Bank of England at its next week’s monetary policy meeting. GBP/USD fell 0.32% at 1.3186 and EUR/USD pair traded at 1.1167.

In the week ahead, investors will closely watch U.S. economic reports for better indication of the U.S. economy is healthy enough to withstand the rate hike by the Federal Reserve in sooner period. Also, Bank of England’s rate announcement will be in focus, amid increased expectations that the bank will expand its stimulus to combat negative economic aftershock from Brexit.

Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.

Monday, August 1
The U.S. is to release ISM manufacturing activity.

Tuesday, August 2
New Zealand is to release data on quarterly inflation expectations.
The Reserve Bank of Australia is to announce its rate decisions.
The U.K. is to release data on construction activity.
The U.S. is to publish reports on personal income and expenses.

Wednesday, August 3
In China, Caixin is to release service sector index.
The U.K is to publish data on service sector.
In the U.S., monthly ADP nonfarm payrolls report is due followed by ISM non-manufacturing index.

Thursday, August 4
Australia is to release data on retail sales.
The Bank of Japan is to release its recent meeting minutes and announce its monetary policy decisions. Followed by its quarterly inflation report from BoE.
The U.S. is to publish its weekly initial jobless claims reports and data on factory orders.

Friday, August 5
The Reserve Bank of Australia is to announce its monetary policy statement.
The U.S. is to release nonfarm payrolls report.
Canada is to publish its trade balance.

The above schedule may change*

(Mia Chung)
COMPANY PROMOTION
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[limyeeshin]

Edition 64｜August 8, 2016​

The U.S. dollar rose sharply to a one-week high against other major currencies after the release of better than expected employment report. The Labor Department reported that U.S. economy added 255,000 jobs in July, much higher than 180,000 jobs expected. June’s figure was also revised up to 292,000 jobs from 287,000. The unemployment rate held steady at 4.9% and average hourly earnings had monthly increase of 0.3%, above 0.2% gain seen. The upbeat employment data widened expectations of the interest rate hike by the Federal Reserve this year. Fed funds futures priced the possibility of the rate hike by September to 15% chance, and 44% chance by December. The greenback rose 0.5% for the day to 96.19 against other major currencies.

Japanese yen held lower after the release of disappointing adjusted current account on Monday. Japan’s adjusted current account came in at ¥1.65 trillion, much lower than ¥3.20 trillion surplus expected for July. Bank lending rose 2.1%, slightly above 2.0% seen by consensus. Earlier in Japan, investors were disappointed by details of Japanese Prime Minister Shinzo Abe’s fiscal stimulus program which led yen rose to a three week highs against the dollar. USD/JPY changed hands on Monday at 102.02, up 0.23% after the data release.

Australian dollar fell after Chinese trade data showed decline in imports. In China, July’s trade balance came in at a surplus of $52.31 billion, better than $47.6 billion expected but annual exports fell by 4.4%, further than 3.0% drop seen and imports fell 12.5%, much worse than 7.0% drop expected. FX reserves came in at CNY3.2 trillion as expected. Better surplus in trade balance was from the huge drop in imports which have lowered Australian dollar, where the country’s biggest export partner is China. AUD/USD traded at 0.7611, down 0.08%.

Elsewhere, the euro slid against the dollar with EUR/USD pair hitting 1.1046 before settling at 1.1086, down 0.4% for the day. The sterling also tumbled after the Bank of England cut interest rates to a record low of 0.25% on Thursday with fresh easing measures to combat economy downturn following the Brexit vote. GBP/USD slumped to a three-week low at 1.3022 and settled at 1.3070, 1.2% drop of the week.

In the week ahead, investors will closely watch U.S. economic reports to indicate the health of the economy that is strong enough to bear a rate hike in close future. Euro zone is to release second quarter GDP growth. Also, U.K.’s manufacturing production is to be closely watched to clarify the economy’s strength in wake of Brexit vote.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, August 8
Japan is to release data on current account.
China is to publish trade balance.
Germany is to release data on industrial production.
Canada is to report on building permits.

Tuesday, August 9
In Australia, NAB is to report on business confidence.
China is to publish data on consumer and producer price inflation.
Germany is to release trade balance.
The U.K. is to publish data on mining and manufacturing production followed by trade balance release.
In the U.S., NFIB is to report on small business optimism index followed by data release on nonfarm productivity and wholesale inventory.

Wednesday, August 10
Japan is to release data on home loans, core machinery orders as well as producer price inflation.
In Australia, Westpac is to report on consumer sentiment followed by data on home loans.
China is to release data on new yuan loans and foreign direct investment.
The U.S. is to publish private sector data on mortgage applications.

Thursday, August 11
Markets in Japan is to be closed for its national holiday.
The Reserve Bank of New Zealand is to announce its overnight official cash rate and publish rate statements.
Australia is to publish data on consumer price inflation forecast.
The U.K. is to report on housing prices.
The U.S. is to release weekly initial jobless claims report and import prices.

Friday, August 12
China is to release data on manufacturing production, retail sales, and fixed asset investment.
Germany is to publish data on consumer price inflation.
Euro zone is to report on industrial production and second quarter GDP growth.
The U.S. is to release data on retail sales, producer prices, and consumer sentiment.

The above schedule may change*

(Mia Chung)
COMPANY PROMOTION
20% Recovery Bonus (Volt-Mini Account only)
Instant 100% Credit Bonus (Up to $3,000)
2$ Cashback promotion per every trader
2.5% Annual Interest Event per every trader

 

[limyeeshin]

Thursday 11 August 2016​

Dollar tumbles as sterling and yen rises

The U.S. dollar fell sharply as the British pound and Japanese yen rose steadily against the currency, falling to a fresh one week low against major currencies. Meanwhile in the U.S., the Department of Labor reported that job openings rose by 2.0% in June at 5.624 million, better than 5.588 million expected by analysts. Job Openings and Labor Turnover Survey also came in at 5.1 million hires in June, up 1.7%, offsetting 2.9 million quits on the same month. The dollar vs a major currencies fell more than 0.55% to 95.38 and settled at 95.59 at the close of Wednesday trading. The dollar tumbled nearly 2% since late July.

Japanese yen rises against the dollar after upbeat data

Japanese yen sharply rose against the dollar after Japan’s core machinery orders surged by 8.3 in July, far above 3.4% increase expected. The data marked the first increase in the reading in three months. The greenback has fallen almost 4% against the yen since the Bank of Japan proceeded its modest easing program and launched a ¥1 trillion ETF program on July 29. USD/JPY fell more than 0.65%, hitting below 101 after the data release.

British pound strengthens after BoE meeting

The British pound gained modestly after the Bank of England announced that it would make up a £52 million shortage of bond purchases. It was a day after the pound hit one month low at 1.2992 after the BOE resumed its purchasing program of long term sovereign bonds. Investors were reluctant to sell long-dated debts to the central bank in a reverse auction. The Bank of England said last week it would hold three gilt reverse auctions each week until the end of October, buying gilts with maturities of 3-7 years, 7-15 years, and more than 15 years. GBP/USD rose to an intraday high of 1.3095 before settling at 1.3011, up 0.07%.

Kiwi gains despite rate cut from RBNZ

New Zealand dollar rose in Asia on Thursday despite the Reserve Bank of New Zealand lowering 25b.p cut in the official cash rate to a record low 2%. The RBNZ also added that further rate cut were possible if necessary. NZD/USD traded at 0.7280, up 0.93% after the decision. Nearby, the Australian dollar also rose modestly with AUD/USD pair trading at 0.7714, up 0.13%.

Major pairs (Thursday update)

USD/JPY ↑0.15% 101.44
EUR/USD ↓0.12% 1.1166
EUR/JPY ↑0.08% 113.28
USD/CAD ↑0.14% 1.3076
GBP/USD ↓0.08% 1.3001
USD/CHF 0.00% 0.9751
AUD/USD ↑0.10% 0.7697
NZD/USD ↑0.50% 0.7249

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[limyeeshin]

Edition 65｜August 15, 2016​

The U.S. dollar held lower against other major currencies after downbeat U.S. consumer spending and inflation data, diminishing expectations for the sooner pace of Federal Reserve rate hike. The U.S. Commerce Department reported that the retail sales were flat in July, compared to 0.8% growth in previous month and lower than 0.4% rise expected. Producer prices also fell 0.4%, showing the largest drop since last September. Consumer sentiment for August also came in below expectations. The unexpectedly weak data led investors to push back expectations for the next rate hike. Fed fund futures changed the probability of a rate hike by September down to 9%. The dollar fell about 0.25% to 95.68for the day, after disappointing data.

Japanese yen rose against the dollar up to 0.7% after bundle of downbeat U.S. data release on Friday. The yen has gained in a three consecutive week against the dollar. Monday, Japan reported second quarter GDP with a gain of 0.2% annually, disappointing 0.7% increase expected. The figures weighed down by sluggish private consumption and net exports. Consumer spending, which accounts for 50% of the GDP, increased 0.2% for the quarter, slightly better than 0.1% decline expected. Japan has put together an economic stimulus package in total of ¥28.1 trillion including ¥7.5 trillion fiscal spending over next few years. USD/JPY changed hands Monday at 101.33, up 0.06% after the GDP data.

The British pound weakened further against the greenback, amid expectations that the U.K. monetary policymakers will be forced to add to recent stimulus measures to buffer the economy from Brexit vote aftershock. GBP/USD hit 1.2904 against the greenback and settled at 1.2914, down 0.3% for the day and -1.15% for the week. Meanwhile in the euro zone, industrial production rose 0.6% in June, after a 1.2% decline in previous month and above 0.5% gain expected. Also Germany’s economy has expanded 0.4% in the second quarter, above the expectations. EUR/USD climbed to a more than one week peak at 1.1221 before settling at 1.1161.

Elsewhere, the commodity linked currencies came under pressure after lower-than-expected Chinese economic data. In China, the industrial production gained 6.0% in July, slightly below 6.1% gain seen. Fixed asset investment rose 8.1%, disappointing 8.8% increase expected. Retail sales rose 102%, also missing the projections of 10.5%. Australian dollar traded at 0.7650 after the downbeat China data, where the country is Australia’s major trading partner.

In the week ahead, investors will be attentive to Wednesday’s FOMC meeting minutes for the fresh indication on the pace of next rate hike. Japan is to release second quarter preliminary growth reading, which will hint for the next step from the government, amid concerns over recent yen strength. U.K’s employment reports and prices data will also be in focus to indicate continuing effect from the Brexit decision.


Weekly Events and Forecasts
Ahead of the coming week, Solforex has compiled a list of these and other significant events likely to affect the markets.


Monday, August 15
Japan is to release data on second quarter GDP, manufacturing and private spending.
China is to publish data on new yuan loans and foreign direct investments.
Switzerland is to release producer price index.
The U.S. is to report on New York state manufacturing followed by NAHB housing market index.

Tuesday, August 16
The Reserve Bank of Australia is to release minutes of its recent monetary policy meeting.
The U.K. is to publish data on consumer prices, retail prices, producer prices inflation, as well as housing price index.
Euro zone is to release data on trade balance.
In Germany, ZEW institute is to report on economic sentiment in the euro zone.
Canada is to report on manufacturing sales.
The U.S. is to publish bundle of data on new starts, building permits, consumer prices and industrial production.

Wednesday, August 17
New Zealand is to release quarterly employment report.
In Australia, Westpac is to report on economic leading indicators, followed by data on wage price index.
The U.K. is to publish data on unemployment.
In the U.S., the Federal Reserve is to release its latest meeting minutes.

Thursday, August 18
Japan is to release data on trade balance and machinery orders.
China is to publish data on property prices.
Australia is to report on employment.
Euro zone is to release data on current account and consumer price inflation.
The U.K. is to publish data on retail sales.
The U.S. is to report on its weekly initial jobless claims and Philadelphia state manufacturing.

Friday, August 19
Japan is to publish data on industrial activity.
Germany is to release data on producer price inflation.
The U.K. is to report on public sector borrowing.
Canada is to publish data on retail sales and consumer inflation.


The above schedule may change*

(Mia Chung)
COMPANY PROMOTION
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