| Daily Forex Fundamentals | Written by ecPulse.com | Aug 25 09 11:36 GMT | | |
| Today we see that the British Banker's Association (BBA) released its loans for house purchases showing that they climbed to the highest level since February 2008 surpassing markets expectations while net mortgage lending dipped to the lowest level since nearly 9 years! BBA loans for house purchases for the month of July rose to 38181 which is higher than the revised prior reading of 35564 from 35235 while also better than the predicted reading of 37800. The rise in loans for house purchases is showing us that activity in the housing sector is improving which therefore supports the fact that the government interventions next to the Bank of England buying 175 billion pounds of gilts is easing the frozen credit conditions as lending is slowly increasing again and more Britons are able to gain access of loans. The BoE began using quantitative easing after interest rates were already reduced to the their lowest since 1694 at 0.5% to encourage borrowing, stimulating economic growth while at the same time battling deflation risks that were aroused from the crippled domestic demand and plummet in energy prices. Mortgage approvals is a good gauge for measuring activity in the housing sector and since it showing that it is rallying, this supports the fact that the housing sector is bottoming out and all from the aid of the central bank and government measures. The Association also released its net mortgage lending seasonally adjusted for July showing that it fell to 1.6 billion pounds which was the lowest increase since October 2000 while the revised prior month was at 2.2 billion pounds. This shows that banking systems have not fully stabilized as lending is still rigid. Lending to non-financial companies in July fell to 4.1 billion pounds from the previous 0.3 billion pounds decline; this marked the most slip in three years before the credit quake began in the United Kingdom. A major factor that is weighing on the housing market is the softening labor market because usually buying a home requires a great amount of money and since already there are low levels of income in the nation while more employees are being terminated from their job daily, there is weaker demand on homes. Prime Minister Gordon Brown is having a difficult time to try and get banks lending again as some remain reluctant which is further choking a recovery in the housing sector yet data continues to chime together in the housing market that is hinting the housing sector is starting to show slight recovery. When the housing sector begins to prosper accurately next to dominate sectors that once fueled economic growth expanding will all be factors that jolt the nation of its worst economic recession since post world war era, yet this will not take place if the banking and financial systems do not stabilize which is why we see the nation begin to expand not before next year especially as there are high unemployment rates that are undermining growth prospects. Now turning to UK stocks we see that the they are shedding points falling from a 10-month high as a result of metal prices plummeting therefore weighing on raw-material producer company stocks. As of 10:38 GMT the FTSE-100 dipped 9.59 points or 0.20% to 4,886.64 points. disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk | |
Tuesday, August 25, 2009
BBA Posts Highest Home Mortgages Approved Since 2008
London Session Recap
| Daily Forex Fundamentals | Written by Forex.com | Aug 25 09 12:17 GMT | | |
| The pendulum of risk continues to swing and late London trading saw optimism return. Economic data was nothing to write home about and the only noteworthy release was the final cut of German GDP. The number came in bang-on expectations, rising 0.3% in the quarter. Nonetheless, equity marts in Europe managed to press back to flat after being down more than -1% in some parts. US futures are now firmly in the green as we write. The price action in currencies looks flow driven rather than news driven and talk that a large European bank was a good buyer of EUR/CHF got the ball rolling ahead of the NY open. EUR/USD has recovered all the way back from a 1.4253 low to trade near the 1.4330/40 highs currently. Stops are seemingly building above 1.4340/50 so we would expect some decent short-term resistance into this zone. The yen crosses have recovered in obvious fashion and EUR/JPY has rallied from a 133.96 low back towards the 134.80 area. USD/JPY remains more of a mixed bag and trades just 20 pips above its intraday 93.79 low. The shift back to risk has seen the commodity complex recover as well. Oil is comfortably back above $74 and this saw AUD/USD test the air above 0.8400 briefly while USD/CAD continues to flirt with 1.0750 support here. Looking ahead to NY trading, we have a few important economic events. Fed Chairman Bernanke is set to be reappointed by President Obama shortly after 9am ET and while this is baked in the cake, it will remove some uncertainty from the marketplace. On the data front, we have Case-Shiller home prices for the US at 900am ET and the Conference Board consumer confidence index at 1000am ET. Consumer confidence is the more forward looking of the two and thus will be closely watched. Should the number print above the expected 47.9 for August, look for the rally in risk to extend. Upcoming Economic Data Releases (NY Session) prior expected
Forex.com DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions. | |
USD Lower Despite Weaker Asian Equity Market Trade
| Daily Forex Fundamentals | Written by Easy Forex | Aug 25 09 12:18 GMT | | |
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By Michael J. Malpede Michael J. Malpede is Chief Market Analyst with Easy-Forex® and has previously been featured on Bloomberg TV, Bloomberg radio, Reuters, MarketWatch, Wall Street Journal, Chicago Tribune, Chicago Sun Times, Toronto Star and Nikkei press. In analyzing the markets, he draws from 29 years of Foreign Exchange Research as a Foreign Exchange Analyst. Please note that Forex trading (OTC Trading) involves substantial risk of loss, and may not be suitable for everyone. This report is provided by Easy- Forex® for informative purposes only. In no way it is a recommendation by Easy-Forex® for you to engage in any trade. It is your sole responsibility and you will have no claims with regards to this report against Easy-Forex®. If you do not agree to this, you are strongly advised not to use this report. Hence, Easy-Forex® shall not be held responsible for any outcome of trading decisions, in regards with this report or similar reports. | |
Rehashing Two Key Points
| Daily Forex Fundamentals | Written by Black Swan Capital | Aug 25 09 12:27 GMT | | |
Currency CurrentsKey News
Quotable"Pleasure cannot be shared; like Pain, it can only be experienced or inflicted, and when we give pleasure to our Lovers or bestow Charity upon the Needy, we do so, not to gratify the object of our Benevolence, but only ourselves. For the Truth is that we are kind for the same reason as we are cruel, in order that we may enhance the sense of our own Power." Aldous Huxley FX Trading - Rehashing Two Key PointsQuickly, a brief market update before I revisit two components vital to global recovery, as we see it. Yesterday the European currencies struggled while the commodity dollars firmed up ... that is until US stocks began rolling over late in the session to ultimately finish the day flat. The dollar strengthened. The US dollar was stronger early this morning, giving it back now, while the British pound is the weakest of the pack. Many analysts noted the particularly dismal day that gold had yesterday after finishing last week on a strong note. Gold is trying to bounce back this morning. S&P 500 futures have pushed lower this morning but have fought back to even things out, bidding up a bit going into the open. Overall, the price action is rather subdued thus far as we await the Case-Shiller Home Price Index at 9 am eastern ... and then consumer confidence at 10 am. Which brings me to ... All Wet Without the Consumer Frankly, and if you've been reading our stuff for a while you know, we've been fairly surprised at the sustained risk appetite and periods of optimism that have so steadily driven equity markets higher ... and kept the US dollar smothered. There's simply been a disconnect between our global fundamental analysis and market sentiment. Of course, varying time frames is a challenge in and of itself. But still, we wonder how much recovery can happen without the US consumer. Consumption in the US has for some time made up an overwhelming portion of US GDP. And even though consumers have taken a hiatus, US GDP numbers are still as heavily dependent upon the consumer come out of hiding. And there's the rub, as they say - US consumers have taken on a mindset of savings and debt reduction. Certainly, with all the better-than-expected data that seems to be surfacing throughout the economy and driving risk appetite these days, consumer statistics cannot be included in such bright-eyed indicators. A recent blog post I came across sums up some very key points quite well. An excerpt:
"Everyone privately thinks this is an asset bubble driven purely by liquidity." The above is attributed to an executive at a Chinese investment bank. He seems to be on point. And it is likely the reason for the recent double digit percent declines in Chinese equities over the last few weeks. This comes as no surprise to us - we've seen stimulus measures and excessive lending to be misdirected and misused. And after an extreme rise in stocks, more investors are beginning to awaken to the same idea. What has come as sort of a surprise is the global market reaction to China's stock market. For two reasons:
Interestingly enough, I pointed out to Jack yesterday investors' feeling that emerging markets are becoming less risky, i.e. investors are willing to put up money for smaller potential yield on their capital. From Bloomberg:
So in the face of leaking optimism over China's stock market strength and potentially over economic growth, investors in emerging markets have not blinked. It's possible that global investors are turning their heads from China and focusing on whatever green shoots they can dig up elsewhere. But I wouldn't be surprised to see global markets cave in to China if share prices don't soon stabilize. As far as the US dollar goes, we've yet to be validated on our long-term global macro forecast; risk appetite has kept the buck suppressed. But it could pay off royally to be open to potentially major US dollar strength in the coming days and weeks ahead. Black Swan Capital | |
Daily Report: Yen Rises As China Stocks Ended Three Days Rebound, Sterling Soft
Japanese yen and dollar to a lesser extent are lifted as China stocks ended the three days rebound and dropped nearly 2.5% today. In addition, yen is supported by the sharp reversal in treasury yield yesterday, which saw yield on 10 year note rose sharply to 3.61% before closing down by -0.06% at 3.494%. The development in yen crosses argues that three wave corrective rise since last week was over, considering that GBP/JPY is now back pressing last week's low of 153.43. We'd anticipate some more strength in yen going forward today which might also give the greenback some support.
One of the important factors that could change the above anticipated development is the release of Conference Board Consumer Confidence from US, which is expected to improve to 48 in August. The index bottomed at 25.3 in Feb, then surged to 54.8 before stabilizing below 50. Stabilization between last month's low of 46.6 and May's high of 54.8 will be welcomed by the markets but any surprise that swing the reading beyond this range will likely rock the sentiments of investors.
In most cases, Sterling will continue to be the weaker major currency and might extend recent loses. EUR/GBP has already taken the lead by breaking through key near term resistance yesterday and edged higher to 0.8734 today and remains firm there. GBP/JPY is back pressing last week's low of 153.43 and might be resuming recent fall too. GBP/USD had the weakness rebound last week and has taken out an intraday pattern support of 1.6375 in early European session and might be heading to retest 1.6274 low too.
Economic data released today saw Germany GDP finalized 0.3% growth in Q2. Swiss employment level was basically unchanged at 3.95M level. US S&P/Case-Shiller Composite-20 is expected to drop less by -16.4% yoy in June. House price index in US is expected to rise slightly by 0.4% mom in June.
Dollar index's recovery from 77.76 continues today with 4 hours MACD staying above signal line. While some more upside might be seen, short term outlook remains bearish as long as 78.67 minor resistance holds. The current fall from 79.51 is possibly resuming whole decline from March high of 89.62 and might extend further to 77.43 and below. Nevertheless, strong support is expected above 75.89 key medium term level that finally bring reversal to conclude whole fall from 89.62 as well as medium term consolidation from 88.46. Break of 78.67 will be an important sign of stabilization and turn short term outlook neutral while break of 79.51 will revive the case that the index has already bottomed out at 77.43 already.
GBP/JPY Daily Outlook
Daily Pivots: (S1) 154.41; (P) 155.61; (R1) 156.41; More
GBP/JPY was once again limited by 4 hours 55 EMA and weakened again and is now back pressing 154.34 low. Break there will confirm that whole fall from 164.05 has resumed and should target key support level of 146.75 next. On the upside, while consolidation from 153.43 might still continue and another rise cannot be ruled out, it should be limited below 160.34 resistance and bring fall resumption.
In the bigger picture, as discussed before, rise from 118.81 is treated as correction to the larger down trend from 07 high of 251.90 only. We're slightly favoring the case that such correction has completed at 163.05 already with bearish divergence conditions in daily MACD and RSI. Firm break of 146.75 support will confirm and will turn outlook bearish for 118.81 low and beyond. On the upside, in case of another rise, upside is expected to be limited by 50% retracement of 215.87 to 118.81 at 167.34 to conclude such correction and bring reversal finally.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 3:00 | NZD | RBNZ 2-Yr Inflation Expectation Q3 | 2.30% | -- | 2.20% | |
| 6:00 | CHF | UBS Consumption Indicator Jul | 0.77 | -- | 0.96 | 0.95 |
| 6:00 | EUR | German GDP Q/Q Q2 F | 0.30% | 0.30% | 0.30% | |
| 7:15 | CHF | Employment Level Q2 | 3.95M | 3.956M | 3.957M | |
| 13:00 | USD | S&P/Case-Shiller Composite-20 Y/Y Jun | -16.40% | -17.10% | ||
| 14:00 | USD | Consumer Confidence Aug | 48 | 46.6 | ||
| 14:00 | USD | House Price Index M/M Jun | 0.40% | 0.90% | ||
| 14:00 | USD | House Price Index Y/Y Jun | -- | -19.07% |
FX Drifts, Focus on Central Banks
With little economic data released at the start of the week, the focus in the currency market has shifted to Central Bank rhetoric, with the key highlights attributed to commentary from Fed Chairman Ben Bernanke and ECB President Jean-Claude Trichet. Speaking from the Fed’s annual symposium in Jackson Hole, Wyoming, Bernanke offered an optimistic assessment over the economic outlook saying, “economic activity appears to be leveling out, both in the US and abroad, and the prospects for a return to growth in the near-term appear good”. His upbeat outlook spurred on gains in the equity and commodities markets, while pushing the dollar slightly lower against the majors.
Meanwhile, ECB President Trichet sounded a cautious tone over the economic outlook for the Eurozone, suggesting that interest rates will likely remain low for a protracted length of time. He said, “We see signs confirming that the real economy is starting to get out of the period of freefall”, yet it “does not mean at all that we do not have a very bump road ahead of us”.
Nonetheless, the major currency pairs continue to drift in a lackluster manner as the summer doldrums have confined foreign exchange to rangebound trading. We remain biased for further dollar weakness in the coming weeks as economic data from the US continue to gradually improve and support the equity markets.
Euro Drifts Lower
The euro was confined within range at the start of the week in a lackluster session, with the single currency drifting slightly lower against the greenback overnight. The economic data released saw June industrial orders, which posted a steep improvement, up 3.1% versus a 0.2% decline in the previous month and improving to -25.1% from -30.1%.
In the coming session, data slated for release include Germany’s import prices and Germany’s Q2 GDP. Growth in the Eurozone’s largest economy is seen expanding by 0.3% versus the previous quarter and contracting by 5.9% from the previous year.
EURUSD holds steady just beneath the 1.43-level with interim resistance seen at 1.4330, followed by 1.4360 and 1.44. Subsequent ceilings are eyed at 1.4440, backed by 1.4470 and 1.45. Support is seen at 1.4280, followed by 1.4230 and 1.42. Additional floors will emerge at 1.4150, followed by 1.41 and 1.4070.
taken from forexnews.com