Forex Previews

China mulls more fiscal stimulus to lift growth as yuan slides to 4½-year low

Posted on December 30, 2015 at 12:39 pm GMT

China’s government is considering expanding the country’s budget deficit in 2016 to around 3% of GDP (the highest in decades) as it continues its attempts to stimulate growth. Government advisors are recommending that fiscal policy be used more forcefully to counter the slowdown. Economic growth is expected to average 6.8% in 2015, the slowest since the height of the financial crisis in 2009, and to slow to around 6.5% in 2016. Authorities in China have already carried out a series [..]

Mixed data keeps hopes of further easing by Bank of Japan alive for 2016

Posted on December 29, 2015 at 11:13 am GMT

A batch of economic data released in Japan over the Western holiday period has reiterated expectations that the Bank of Japan may yet expand its stimulus program in 2016. The yen in recent weeks has stood firm against the US dollar despite the Fed’s first rate hike in almost a decade as expectations of looser monetary policy anytime soon were dampened following signs of accelerating growth in Asia’s second largest economy. However, unemployment, industrial output and consumer spending data released [..]

Forex Markets 2015/16: Annual Review & Outlook

Posted on December 24, 2015 at 9:52 am GMT

By all accounts, 2015 was the year of the dollar as the greenback surged against its major counterparts. The dollar was up around 10% versus a basket of trade-weighted currencies, with some of its strongest gains registered versus commodity currencies such as the Canadian dollar and the Australian dollar, while it also gained around 10% versus the euro on policy divergence. Interestingly, the dollar’s gains were not evenly distributed throughout the year as the dollar index surged to a fresh [..]

US durable goods orders unchanged but personal consumption rises

Posted on December 23, 2015 at 3:51 pm GMT

Data out of the US today was mixed but the dollar responded positively to the numbers, edging higher in late European trading. Personal consumption expenditure (PCE), which was inadvertently released late on Tuesday ahead of schedule, quickened to 0.3% month-on-month in November from a downwardly revised flat rate in October. The figure was in line with estimates. Personal income slowed slightly to 0.3% month-on-month from 0.4% the prior month. However, it beat expectations of a 0.2% rise. Wages and salaries [..]

Better-than-expected US GDP revision fails to lift dollar

Posted on December 22, 2015 at 3:19 pm GMT

US economic growth was revised slightly lower in the final estimate of third quarter GDP growth. The economy expanded by an annualized rate of 2.0% in the third quarter of the year against second estimates of 2.1% growth. The figure is ahead of forecasts of 1.9% expansion. The downward revision was primarily due to private inventory investment being revised lower. The third quarter growth is almost half the rate of that seen in the second quarter when the economy grew [..]

Central Bank officials’ statements from UK, Eurozone signal steady policy

Posted on December 21, 2015 at 3:47 pm GMT

In an otherwise quiet trading day which lacked much fundamental news, the focus was on some statements by European central bank officials. In the UK, Bank of England Monetary Policy Committee member Martin Weale stated that there was more “breathing space” in deciding when to raise interest rates as recent modest wage growth readings and commodity price falls could keep inflation down for longer. Coming from one of the MPC’s more hawkish members, such statements mean that the Bank of [..]

Week ahead – GDP revisions in UK, US, Japanese inflation and Xmas

Posted on December 18, 2015 at 1:45 pm GMT

Following the interest rate increase by the Federal Reserve on December 16, it looks like the year’s most important story has already been written. Looking ahead to what should be a relatively quiet week, there will be some economic news from the UK and the US in the form of revisions to GDP data. Furthermore, there will be some updates from Japan in terms of inflation and Bank of Japan minutes. Starting from the UK, final GDP numbers for the [..]

Strong UK retail sales unable to lift rates outlook as weak wage growth persists

Posted on December 17, 2015 at 12:04 pm GMT

Retail sales in the UK posted another strong month in November as British consumers took advantage of Black Friday deals. After a revised 0.5% drop in October, retail sales jumped by 1.7% month-on-month in November, beating estimates of a 0.5% gain by a wide margin. This matches September’s increase of the same amount and takes the year-on-year rate to 5.0%. Low inflation and cheaper fuel have raised households’ disposable incomes, leaving consumers with more cash in their pockets to spend [..]

Fed raises rates by 0.25% but dollar fluctuates on accommodative policy

Posted on December 16, 2015 at 9:20 pm GMT

The US Federal Reserve announced its first increase in the Fed funds rate since June 2006, raising the target range from 0-0.25% to 0.25-0.5%. The move, which was widely expected and carefully telegraphed by the Fed, signals the end of ultra-low interest rates that have been in place since the financial crisis. The decision was unanimous by the Federal Open Market Committee (FOMC) and comes after signs of division within the committee on the appropriate timing for lift-off following the [..]

Eurozone PMI points to strong fourth quarter on rising manufacturing activity

Posted on December 16, 2015 at 11:57 am GMT

Eurozone activity eased slightly in December as the services PMI registered a drop compared to November. But the flash reading remained well above 50, which separates expansion from contraction. Manufacturing saw a faster rise in output than services for the first time in over 12 months. The Markit flash estimate for manufacturing PMI rose to a 20-month high of 53.1 in December, up from 52.8 in November and above estimates it would stay unchanged. This wasn’t enough though to compensate [..]

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