Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Thursday November 17 2011

Inflationary pressures are declining in the US economy, a phenomenon that could lead the Fed to begin another round of quantitative easing (QE). For the fourth consecutive month headline inflation fell with the October numbers showing a -0.1% m/m contraction. Year-over-year CPI was up 3.5%. Core inflation was in-line with consensus forecasts, climbing by 0.1% in October and up 2.1% y/y. Leading the decline in prices were raw material costs while the cost of food rose only 0.1% for the smallest gain since the beginning of the year.

The decline of inflation is in-line with the most recent Fed forecasts, a topic Bernanke has stressed multiple times. Traders should focus on how the Fed will address a drop in US prices. As Bernanke said in a speech in Cleveland in late September, the Fed has the tools to act should the risk of falling prices become apparent. This would suggest another round of bond buying (QE3) to support the US economy. While this would likely be a negative for the USD, perhaps traders should look to the crude oil markets for a sign of what is to come.

Yesterday spot crude oil prices broke above $100 for the first time since July, adding more than 1/3rd of its value since the October low. During QE2 commodities and the commodity currencies such as the AUD and CAD were some of the strongest performers versus the USD. Dollar bulls should take note.

With yesterday’s BoE Inflation Report the UK central bank took one step closer towards additional quantitative easing. The report suggests near-term growth will be affected by both UK austerity measures and headwinds in the global economy. The central bank forecasts GDP to increase by only 1% throughout 2012. They also expect a reversal of inflationary pressures. CPI currently stands at 5.1% y/y while the BoE forecasts CPI to fall below the 3% target the central bank keeps to 1.3% in 2013.

With the depressing outlook for the UK economy the BoE is likely increasing market expectations for additional easing of UK monetary policy via bond purchase. This would likely weigh on sterling in the near-term. The GBP/USD has support at the October 18th low of 1.5630 with resistance coming in at the bottom of the late October-early November consolidation at 1.5860.

In its Monetary Policy Statement the Bank of Japan reduced its economic assessment of the Japanese economy but also spent a large amount of time devoted to the global economic environment. The interest rate was kept unchanged between 0-0.1%, in-line with consensus expectations.

The USD/JPY was stable yesterday, trading in a tight 30 pip range. However, the pair continues to drift lower towards its all-time low of 75.55. But first the pair will need to close below its 55-day moving average at 76.95. Initial resistance remains at Monday’s low of 76.80 with resistance at 77.50 from the mid-October consolidation, followed by the trend line from the 2007 high which comes in at 79.25.

Spot crude oil prices have peaked above the psychological barrier of $100 and have extended gains following the release of stronger than expected industrial production numbers and inflationary data that showed prices in the US declined more than forecasted. Crude oil prices have been on a tear since the end of October, rising over 33%

The quick appreciation in spot crude oil prices may be based on two assumptions; a recovering US economy and expectations of QE3 from the Fed. Yesterday data showed US industrial production in the month of October rose 0.7% on consensus forecasts of 0.4% growth. This comes on the heels of stronger retail sales data released on Tuesday.

Declining inflationary pressures in the US may also force the Fed to act to curb any threat of deflation. Data released on Wednesday showed consumer prices fell in October with CPI contracting by -0.1% m/m on forecasts for 0.0%. This follows Tuesday’s PPI numbers that showed producer prices declined by -0.3% in October.

As Bernanke said in a speech in Cleveland in late September, the Fed has the tools to act should the risk of falling prices become apparent. This would suggest another round of bond buying (QE3) to support the US economy. While this would likely be a negative for the USD, perhaps the gains in crude oil prices suggest markets are already pricing in QE3.

Jovi Overo

Beta 2 Forex News, Beta 2 Ltd, Jovi Overo November 9 2011

One can only guess of the sheer contempt and disregard for politicians when we see markets initially rally on the back of a resignation of a prime minister. We had Greece and now Italy.

Will a new captain shake his crew and get them earning again or will that capo regime falter, crash and get clipped?

Italian yields touched 7.8% on the 10 year bond, growth has been anaemic for years with averages of 0.7% since the start of the EMU and debt remains 120% of GDP. The lifeboat of the ESFS is inadequate to perform a rescue and in turn these are going to be very, VERY, testing times. The impact on Italian bonds is being overshadowed by the increase in margins from LCH which makes it even more costly to hold Italian debt.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Friday September 23 2011

The dollar rallied broadly on Thursday as mounting concerns about the global economy pushed investors to embrace safety while shunning riskier assets, with the euro tumbling to an eight-month low. By yesterday’s close, the dollar rose against the EUR, pushing the oft-traded currency pair to 1.3440. The dollar experienced similar behaviour against the GBP and closed at 1.5350.

The U.S. Federal Reserve said Wednesday it will shift its portfolio toward longer-term debt to bolster the economy, and investors’ unwound leveraged positions funded in dollars in response. The Fed’s program was intended to put more downward pressure on long-term interest rates. One important dollar-positive by-product of the Fed’s program is higher short-term rates. The Fed’s not increasing the money supply supported the dollar.

As for today, the calendar is lacking any major economic data releases for today’s trading. As such, traders will want to follow the movements of the major equity indices as the dollar has recently been trading in an inverse relationship to equities. Weakness in stocks could propel the EUR/USD to its next support line which rests at 1.3200.

The euro fell to a fresh eight month low against the dollar on Thursday a day after the Federal Reserve pointed to significant downside risks for the U.S. economy and stopped short of bold monetary easing. By yesterday’s close, the EUR fell against the USD, pushing the oft-traded currency pair to 1.3440. The EUR experienced similar behaviour against the JPY and closed at 103.00. The 16 nation currency did see some bullishness as well as it gained over 30 points against the GBP and closed at 0.8770.

Analysts questioned whether the move the Fed did make — shifting its portfolio toward longer-term debt would bolster the economy and unwound leveraged positions funded in dollars in response.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.

The Yen experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The JPY extended gains versus the EUR during yesterday trading session and closed at 103.00. The Japanese yen also saw bullishness against the USD as it jumped around 50 pips and closed at 76.30.

The JPY’s trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.

Crude oil prices fell more than 4% to 79.80 on Thursday as equity markets in Europe and Asia tumbled after the US Federal Reserve said the economic outlook remained grim, which overshadowed an unexpectedly steep drop in crude supplies in the world’s top oil consumer.

Oil prices had risen in earlier trade after government data showed US crude inventories last week dropped 7.3 million barrels, the biggest one-week drop since December, suggesting supplies were tighter than expected.

But the market turned bearish after the Fed said it would extend the maturity of its treasury holdings but didn’t unveil more aggressive measures to boost a US economy it said faces “significant downside risks”.

Jovi Overo

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Friday September 16 2011

The US dollar (USD) was seen moving lightly bearish late Thursday as investors sought the higher yielding assets from speculation on a minor market uptick following recent releases on inflation. A stronger-than-forecast uptick in US CPI data added to risk appetite for many investors, leading some to await today’s news before entering more strongly.

The downtick seen in the greenback was significantly milder than in other currencies, especially as its safe-haven appeal remains and the economy isn’t out of troubled water just yet. This may be partially due to the USD’s disconnection from some of the market turmoil, but it could also be from some optimistic data emerging from the economy lately.

Most significant on today’s calendar will be the US publication of its TIC Long-Term Purchases data and consumer confidence data. Should today’s news foreshadow a modest growth in the US investments, an assessment that does, however, seem less likely from data released these past few weeks, there is a possibility that more investment will get pushed towards the higher yielding abilities of the European currencies as investors seek to diversify their portfolios, which could also drop the USD in short-term trading.

The euro (EUR) was seen trading with largely mixed results yesterday as traders moved into and away from riskier assets across the region. Against the US dollar (USD) the euro was seen trading bullish in late trading as shifts away from the greenback, due to optimism about global inflation levels, caused several market participants to opt for other stores of value. The pair was last seen holding near 1.3500 in late trading Thursday.

The euro was recently seen dropping sharply against the USD following last week’s announcement regarding interest rates. Stuttering mildly ahead of the decision, there was an atmosphere of EUR avoidance in the market even prior to the statement by ECB President Jean-Claude Trichet. This week, however, the news appears to be favoring the EUR and today may not be much different, especially if the US TIC investment data beats forecasts.

With nearly every analyst failing to anticipate yesterday’s move, the market appeared set for some upheavals in value, with the EUR suddenly resurging and the greenback taking losses. For now, traders appear to be looking to a strengthening of the EUR through the remainder of the week.

The Japanese yen (JPY) was seen consolidating in an ascendant flat formation these past few days, as market reports showed modest declines across the boards. Despite recent reports on Japan’s shrinking housing sector, yesterday’s publication of Japanese bank lending and machinery orders showed a broadening contraction striking several sectors of the island economy.

 

Expectations for these reports were for modest growth from last month’s reading. The actual figures shrank below forecasts, however, leading to some odd downticks in JPY values amid an environment of risk aversion. National data on housing and manufacturing has somewhat halted the JPY’s ascent as many investors hesitate to move into the once-burgeoning JPY. This data, combined with the recent interventions by the BOJ, has so far caused the yen to weakly move bearish.

Crude Oil prices found support Thursday, moving towards $90 a barrel in late trading as sentiment appeared to shift in favour of a price increase following news that supply in the United States declined by 4 million barrels this week. With supply falling and manufacturing and industry in decline, the balance between supply and demand appear to be reaching agreement as the value of oil seems to be levelling out in recent trading, despite the recent swings in currency values.

As investors seek shelter from recent market uncertainty, the value of crude oil, which was seen holding steady all week, may see additional gains before today’s close. A sudden jump in dollar values due to a sudden return to risk aversion, as was expected following the recent interest rate announcements, could drive many investors into lower investments on physical assets; driving oil prices back downward by the middle of next week.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Thursday September 15 2011

The US dollar (USD) was still seen trading bullish Wednesday after retail sales reports out of the United States disappointed many investors and drove trades towards safe haven assets. A sudden wave of risk aversion seems to have helped the greenback surge this week and data so far has only reinforced this momentum.

Additionally pessimistic data was released from several other economies as well. Switzerland inflation at the producer level appears to be in decline, industrial production across the euro zone and in Japan is stagnating, and the Australian housing market is contracting. The only optimistic piece of data out yesterday was the employment reports from Great Britain which saw, not necessarily job growth, but a not-as-bad-as-expected rate of unemployment growth.

With another unusually intense news day ahead, traders are anxiously awaiting the large string of reports out of the US which should clear up the picture somewhat in regards to inflation, manufacturing, and industrial production. The Current Account will also be published, though its impact is not expected to be as high as the manufacturing reports out of New York and Philadelphia. Traders should look towards another bullish day on the dollar should news continue to disappoint.

The direction of the Swiss franc (CHF) has been sharply pressured into one of distinct bearishness among investors as the Swiss National Bank (SNB) rate decision approaches. Against the US dollar (USD) the franc has actually been trending mildly flat despite the greenback’s bullish moves against its other currency rivals. But the Swissie has seen some setbacks brought about by poor regional fundamentals and a general atmosphere of risk flight, particularly following the SNB’s move to peg the CHF to the value of the EUR at 1.20.

A mood of deep pessimism is growing in regards to the investment in Europe at the moment. Market bears still seem to be gnawing on the EUR’s strength, sapping its value as its peripheral members struggle with bond auctions and other financial woes. Switzerland was formerly in a position to capitalize on the flight to safety, but saw its exporting capability deeply gouged by an unremitting currency appreciation. The SNB move to peg the currency has so far done its job by keeping the CHF’s rise in check.

Sentiment in Switzerland appears to have turned negative this week as well, with many analysts and economists expecting moves towards safety by traders following the SNB’s rate statements. An attitude of dovishness has gained traction and investors are worried that a continuation of low rates, coupled with the possibility of a rate reduction in Europe in 2012, could diminish currency values as we get deeper into the third quarter.

The Australian dollar (AUD) is expected to be weighed down this week as market reports continue to show contraction across the boards. Piling atop recent reports on Australia’s shrinking housing sector, recent publications of Australian consumer and business confidence is starting to show a broadening contraction striking several sectors of Australia’s economy, as well as its psyche.

Expectations for these recent reports have been for modest growth, and in some instance, at best, zero movement. The week’s reporting has so far led many investors to pull away from the Australian dollar (AUD) in recent trading. National data on housing and employment has also driven many investors away from the once-burgeoning AUD. This data, combined with dismal housing starts figures and building approvals reports, has so far dragged the Aussie lower and looks to continue doing so this week.

Crude Oil prices gained mild support Wednesday as sentiment appeared to favour an uptick brought about by a sharp reduction in US stockpiles. The weekly report revealed yesterday that the US has shed roughly 6.7 million barrels from its reserves. This news has so far countered the notion of a sinking price of oil brought about by higher USD values and pushed oil into a bullish posture from supply shortfall speculations.

An expected dip in oil values due to this week’s risk sensitive environment, which saw the greenback climbing sharply, has so far not affected the price of physical assets in any clearly visible way. The stockpile report out Wednesday surprised many investors who had priced in a far milder decline in reserves. With this sentiment grabbing hold among many traders, oil prices could see resurgence above $90 a barrel in the near future.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Wednesday September 14 2011

The US dollar (USD) was seen trading mildly bullish Tuesday as investors weighed the impact bond auctions in Greece and Italy will have on the euro zone. A sudden wave of risk aversion last week seemed to have helped the greenback surge, and pessimism about sovereign debt in Europe is supporting this pressure. The EUR/USD seems to be floating closer to 1.33 as technical pressures also begin to mount.

Data on American economic optimism yesterday also signalled an uptick in outlook from the previous month, as reported by IBD/TIPP. The news has done little to the forex market, however, though it could ripple through longer-term analyses on US financial markets should further dips in industry be reported. Manufacturing has been forecast to slump moderately going into the third quarter as most indicators revealed decreased demand. How this will affect the greenback in the weeks ahead is so far undetermined.

As for today, there will be a heavy string of US economic releases, with most news focused on retail sales and the producer price index (PPI). Liquidity will likely be much higher in today’s afternoon trading as these reports get published. With consumer confidence, inflation, and retail sales in focus this week, the picture on future demand and growth levels is expected to become moderately clarified and this could weigh heavily on currency direction in the short- and mid-term.

The Great Britain pound (GBP) is expected to be seen trading with bullish results this week ahead of a slew of reports on the country’s manufacturing, housing, and service sectors. Against the US dollar (USD) the pound has actually been trending upwards despite the greenback’s bullish moves against its other currency rivals.

A mildly pessimistic sentiment towards investing in the euro at the moment has many investors on edge when considering regional investments. An embattled euro zone is sending financial ripples through its neighbours and some are concerned it could pull growth down across the entire continent. With yesterday’s inflationary data out of Britain, this doesn’t seem to be the case, at least for the island economy north of Western Europe. Housing data seemed a bit pessimistic, but consumer prices are indeed growing at a healthy rate in the UK.

Sentiment across the region may have turned negative, with many analysts and economists expecting moves towards safety by traders this week, but the GBP could see a solid weathering of this financial storm so long as data remains bullish. Great Britain appears positioned for a relatively better quarter than its southerly neighbours. The pound could see some bullish movement this week as a result of this overall sentiment.

The New Zealand dollar (NZD) was seen trading mildly higher versus most other currencies this morning as its value responded to recent challenges with relatively more optimism than some had anticipated. Data in New Zealand has been mixed lately with some indications that inflation is not rising as strongly as in other economies, but perhaps in a good way. Food prices fell 1.3% this month, which could produce bearish pressure on the NZD, but should prove to be a boon for consumers in times of economic stress.

The latest movements of the Kiwi are causing some concerns, however, as many speculators are anticipating a bearish turn following recent surges in risk aversion. With interest rate decisions out later this evening, investors are waiting to see what the Reserve Bank of New Zealand (RBNZ) will do. A strengthening Kiwi has benefits for the buying power of the island economy, though its dependence on exports makes a strong NZD unfavourable for longer-term growth in New Zealand’s economy.

Crude Oil prices held steady Tuesday as sentiment appeared to favour a mild uptick in global stocks following reports of monetary moves being made by several central banks. Data releases out of Europe and the US last week are still driving many investors back into safe-haven assets as many reports suggested a surprise downtick in growth among global industrial output and consumer spending.

An expected spike in dollar values due to this week’s risk sensitive environment has prevented many investors from taking positions on physical assets, creating a consolidation pattern on oil charts, but with the USD’s gains not materializing in large enough numbers early this week, sentiment appears to have the price of crude oil holding steady. Should Crude Oil sentiment continue to flatten this week, oil prices may reach a decision point which forces a wide swing later in the trading week.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Tuesday September 13 2011

The US dollar (USD) was seen trading only mildly bullish early Tuesday morning as investors remained pessimistic about growth in Europe and Asia. A sudden wave of risk aversion seemed to have lifted the greenback following a move by the Swiss National Bank (SNB) to peg the CHF to the value of the EUR at 1.20, and by central banks to stall any monetary moves.

Data on the American budget today may continue to indicate pessimism that could drive the greenback even higher. Recent news has done little to alter the current direction of the forex market, though news could hold values steady should they come in near forecasts. Inflation is forecast to hold steady in several nations this week, which could have the effect of lifting the value of riskier assets, though this will need further data to be confirmed.

As for today, there will be few US economic releases, with most news focused on British inflation. Liquidity will likely be higher in today’s early trading as these data points are published, though the impact of news on Great Britain alone may not be enough to force a surge in any direction on USD pairs and crosses. Inflation and consumer confidence are in focus this week and traders will want to pay attention to the latter in the case of mounting pessimism and its affect on dollar values.

The Great Britain pound (GBP) is expected to be seen trading with bullish results this week ahead of a slew of reports on the country’s inflation and housing sectors. Against the US dollar (USD) the pound has actually been trending upwards despite the greenback’s bullish moves against its other currency rivals.

Traders are looking for a way to balance a renewal of risk aversion with continued shakiness in global markets. A mildly pessimistic sentiment towards investing in global stocks at the moment has many investors on edge and looking for safety. An embattled euro zone, fending off market bears amid turmoil in its peripheral nations, also looks to be losing ground in financial markets as safe haven assets such as the Swiss franc (CHF) and Japanese yen (JPY) take losses due to recent moves by their central banks.

Sentiment across the euro zone has turned negative, with many analysts and economists expecting moves towards safety by traders this week. Great Britain, however, appears positioned for a relatively better quarter than its southerly neighbours. With major inflationary reports expected all week and most expecting bullish figures, the GBP is in a position to either continue its recent streak, or take heavy losses should inflation be shown in a downturn.

The Japanese yen (JPY) was seen trading mildly lower versus most other currencies this morning as its value as an international safe haven was being challenged by an air of impending intervention by the Bank of Japan (BOJ). Being linked to international risk sentiment, the yen has experienced an expected uptick during a period when shifts away higher yielding assets became prominent. The JPY has been experiencing several long strides lately from the various shifts into riskier assets.

 

The latest moves of the yen are causing some concerns, however, as many speculators are anticipating another round of intervention by the BOJ. With industrial production data out this week, traders are waiting to see what the BOJ will do in the face of a downturn. A strengthening yen has benefits for the buying power of the island economy, though its dependence on exports makes a strong yen unfavourable for longer-term growth in Japan’s current financial model. As the island currency remains bullish, the pressure begins to mount for the expected bank move to lower its currency strength.

Crude Oil prices held steady Monday as sentiment appeared to favour a mild downtick in global stocks following policies of monetary stagnation being executed by several central banks last week. Data releases out of Europe and the US are still driving many investors back into safe-haven assets as many reports suggested a surprise downtick in growth among global industrial output and consumer spending.

An expected jump in dollar values due to this week’s risk sensitive environment has helped many investors ram up their short-taking positions on physical assets, but with the USD’s gains levelling off this morning, sentiment appears to have the price of crude oil holding steady near $86 a barrel. Should Crude Oil sentiment continue to flatten this week, oil prices may reach a decision point which forces a wide swing by mid-week.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Friday September 9 2011

The Canadian dollar (CAD) was seen moving lightly bearish late Thursday as investors fled the higher yielding assets from speculation on a market downturn following recent releases on interest rates. A weaker-than-forecast uptick in US private sector employment Wednesday added to risk sensitivity for many investors, leading some to await today’s news before entering more strongly.

The Bank of Canada (BOC) also held rates steady this week, along with every other major economy announcing a rate decision, but talk was slightly more optimistic in the northern giant’s economy than elsewhere. The downtick seen in the Loonie was significantly milder than in other currencies. This may be partially due to the CAD’s disconnect from some of the market turmoil, but it could also be from some optimistic data emerging from the economy lately.

Most significant on today’s calendar will be the Canadian publication of its employment change data and unemployment rate. Should today’s news foreshadow a modest growth in the Canadian economy’s employment sector, an assessment that does, however, seem less likely from data released these past few weeks, there is a possibility that more investment will get pushed towards the higher yielding abilities of the European currencies as investors seek to diversify their portfolios, which could also support the CAD in short term trading.

The euro (EUR) was seen trading with largely mixed results yesterday as traders moved into and away from riskier assets across the region. Against the US dollar (USD) the euro was seen trading bearish in late trading as shifts away from the greenback, due to uncertainty about global employment levels, caused several market participants to opt for other stores of value. The pair was last seen holding near 1.3970 in late trading Thursday.

With nearly every analyst anticipating yesterday’s move, and the accompanied dovish statement by Trichet, the market followed suit with expectations and witnessed a quick plummet in EUR values. Several reports have begun to assume a possible rate reduction as early as mid-2012 by the ECB, though future economic growth will factor heavily in such a decision. For now, traders appear to be looking to a weakening of the EUR through the remainder of the week.

The Japanese yen (JPY) was seen consolidating in an ascendant flat formation these past few days, as market reports showed modest declines across the boards. Despite recent reports on Japan’s shrinking housing sector, yesterday’s publication of Japanese bank lending and machinery orders showed a broadening contraction striking several sectors of the island economy.

Expectations for these reports were for modest growth from last month’s reading. The actual figures shrank below forecasts, however, leading to some odd downticks in JPY values amid an environment of risk aversion. National data on housing and manufacturing has somewhat halted the JPY’s ascent as many investors hesitate to move into the once-burgeoning JPY. This data, combined with the recent interventions by the BOJ, has so far caused the yen to weakly move bearish.

Crude Oil prices found support Thursday, moving towards $89 a barrel in late trading as sentiment appeared to shift in favour of a price increase following news that supply in the United States declined by 4 million barrels this week. With supply falling and manufacturing and industry in decline, the balance between supply and demand appear to be reaching agreement as the value of oil seems to be levelling out in recent trading, despite the recent swings in currency values.

As investors seek shelter from recent market uncertainty, the value of crude oil, which was seen holding steady all week, may see additional gains before today’s close. A sudden jump in dollar values due to a sudden return to risk aversion, as was expected following the recent interest rate announcements, could drive many investors into lower investments on physical assets; driving oil prices back downward by the middle of next week.

Jovi Overo

Beta 2 Ltd, Jovi Overo, Beta 2 Ltd, Thursday September 8 2011

The US dollar (USD) was seen trading mildly bearish early Tuesday as investors balanced risk sentiment ahead of this week’s series of interest rate announcements. A sudden wave of risk appetite seemed to have dropped the greenback following a move by the Swiss National Bank (SNB) to peg the CHF to the value of the EUR at 1.20 on Tuesday. Wednesday, however, saw the greenback paring some of those earlier losses and consolidating near 1.4000 against the EUR in late trading.

Optimistic data from the Canadian manufacturing sector yesterday also signalled an uptick in output from the previous month in the North American region. The news has done little to the forex market; however, though it could ripple through longer-term analyses on capital markets should they come into play later on. Most traders seemed to be awaiting further rate decisions, however, prior to making any sizeable bets.

With today’s releases revolving around European and British interest rate decisions, most traders appear to be on edge. The consolidation trends witnessed as forming in the major crosses are part and parcel of this anxiety. Many are anticipating dovish sentiment to emerge from the euro zone following mixed fundamental signals and recent talks about Italy’s austerity budget and Greece’s sovereign debt crisis. The US will also release its trade balance, though that news is likely to be overshadowed by Europe’s news.

The direction of the British pound (GBP) is lacking uniformity among speculators as the Bank of England’s (BOE) rate decision approaches. Against the US dollar (USD) the pound has actually been trending upwards despite the greenback’s bullish moves against its other currency rivals. But the pound has seen some setbacks brought about by poor regional fundamentals and a general atmosphere of risk flight.

Traders are looking for a way to balance a renewal of risk aversion with continued shakiness in global markets. A mildly pessimistic sentiment towards investing in the US dollar at the moment has many investors on edge. An embattled euro zone, fending off market bears amid turmoil in its peripheral nations, Italy flaring up recently, also looks to be losing ground in financial markets. With today’s rate statements on tap, wide swings in value and intense volatility should be anticipated.

Sentiment in Britain appears to have turned negative this week, with many analysts and economists expecting moves towards safety by traders following the BOE’s rate statements. An attitude of dovishness has gained traction and investors are worried that a continuation of low rates, coupled with the possibility of a rate reduction in Europe in 2012, could diminish currency values as we get deeper into the third quarter.

The latest moves of the Japanese yen (JPY) are causing some concerns among investors as many speculators are anticipating another round of intervention by the Bank of Japan (BOJ). With interest rate decisions out yesterday morning, traders appeared to show zero surprise in the announcement that rates would be held near zero. A strengthening yen has benefits for the buying power of the island economy, though its dependence on exports makes a strong yen unfavourable for longer-term growth in Japan’s current financial model. As the island currency remains bullish, the pressure begins to mount for the expected bank move to lower its currency strength.

The yen was indeed seen trading mildly lower versus most other currencies this morning as its value as an international safe haven was being challenged by an air of impending intervention by the BOJ. Being linked to international risk sentiment, the yen has experienced an expected uptick during a period when shifts away higher yielding assets became prominent. The JPY has been experiencing several long strides lately from the various shifts into riskier assets.

Crude Oil prices held steady Wednesday as sentiment appeared to favour a mild uptick in global stocks following reports of monetary moves being made by several central banks. Data releases out of Europe and the US last week are still driving many investors back into safe-haven assets as many reports suggested a surprise downtick in growth among global industrial output and consumer spending.

An expected dip in dollar values due to this week’s risk sensitive environment has helped many investors ram up their long-taking positions on physical assets, but with the USD’s losses not materializing in large enough numbers, sentiment appears to have the price of crude oil holding steady. Should Crude Oil sentiment continue to flatten this week, oil prices may reach a decision point which forces a wide swing by mid-week.

Jovi Overo

 

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Wednesday September 7 2011

The US dollar (USD) was seen trading mildly bearish early Tuesday as investors returned to trading following Monday’s holiday break. A sudden wave of risk appetite seemed to have dropped the greenback following a move by the Swiss National Bank (SNB) to peg the CHF to the value of the EUR at 1.20. Heightened stability led to some losses on the USD’s value as traders sought higher yields.

Data from the American manufacturing sector yesterday also signalled an uptick in output from the previous month. The news has done little to the forex market, however, though it could ripple through longer-term analyses on US capital markets. Manufacturing was forecast to slump moderately going into the third quarter as most indicators revealed decreased demand.

As for today, there will be few US economic releases, with most news focused on the Bank of Canada’s (BOC) impending interest rate decision. Liquidity will likely be higher in today’s early trading as the Bank of Japan (BOJ) is also publishing its latest interest rate move, both of which are expected to make no change in monetary policies. Interest rates are in focus this week and traders would do well to follow their releases and subsequent bank statements.

The Great Britain pound (GBP) is expected to be seen trading with bullish results this week ahead of a slew of reports on the country’s manufacturing, housing, and service sectors. Against the US dollar (USD) the pound has actually been trending upwards despite the greenback’s bullish moves against its other currency rivals.

Traders are looking for a way to balance a renewal of risk aversion with continued shakiness in global markets. A mildly pessimistic sentiment towards investing in the US dollar at the moment has many investors on edge. An embattled euro zone, fending off market bears amid turmoil in its peripheral nations, also looks to be losing ground in financial markets as safe haven assets such as the Swiss franc (CHF) and Japanese yen (JPY) make gains; though the recent pegging of the Swissie to the euro at 1.20 may affect this attitude in days ahead.

Sentiment across the euro zone has turned negative, with many analysts and economists expecting moves towards safety by traders this week. Great Britain, however, appears positioned for a relatively better quarter than its southerly neighbours. With major interest rate decisions expected all week, the nation’s most poised for gains are those whose monetary policies are more stable, like Britain’s. The pound could see some bullish movement this week as a result.

The Japanese yen (JPY) was seen trading mildly lower versus most other currencies this morning as its value as an international safe haven was being challenged by an air of impending intervention by the Bank of Japan (BOJ). Being linked to international risk sentiment, the yen has experienced an expected uptick during a period when shifts away higher yielding assets became prominent. The JPY has been experiencing several long strides lately from the various shifts into riskier assets.

 

The latest moves of the yen are causing some concerns, however, as many speculators are anticipating another round of intervention by the BOJ. With interest rate decisions out this morning, traders are waiting to see what the BOJ will do. A strengthening yen has benefits for the buying power of the island economy, though its dependence on exports makes a strong yen unfavourable for longer-term growth in Japan’s current financial model. As the island currency remains bullish, the pressure begins to mount for the expected bank move to lower its currency strength.

Crude Oil prices held steady Tuesday as sentiment appeared to favour a mild uptick in global stocks following reports of monetary moves being made by several central banks. Data releases out of Europe and the US last week are still driving many investors back into safe-haven assets as many reports suggested a surprise downtick in growth among global industrial output and consumer spending.

An expected dip in dollar values due to this week’s risk sensitive environment has helped many investors ram up their long-taking positions on physical assets, but with the USD’s losses not materializing in large enough numbers, sentiment appears to have the price of crude oil holding steady. Should Crude Oil sentiment continue to flatten this week, oil prices may reach a decision point which forces a wide swing by mid-week.

Jovi Overo