News / Page 132

European Session – Euro and sterling rally, oil shows renewed weakness

Posted on February 1, 2016 at 3:59 pm GMT

PMI data for various countries were released today but had little impact on currencies as the broader fundamentals were the main market drivers. Risk appetite was off as focus was on China’s slowing economy after the nation’s official manufacturing PMI index fell to 49.4 in January from 49.7 in December, being stuck below 50 for the sixth month in-a-row. The figure was below estimates of 49.6. Eurozone final manufacturing PMI for January came in as expected at 52.3, showing no [..]

Personal spending flat in December as US consumers save more

Posted on February 1, 2016 at 3:43 pm GMT

Personal consumption expenditure was flat in December month-on-month, falling short of expectations of a 0.1% gain. The lacklustre spending data contrasts with a healthier monthly rise of 0.3% in personal income in December. The figure was slightly better-than-expectations of a 0.2% gain and suggests that US consumers are being cautious and saving more. The savings ratio increased to 5.5% from 5.3% during the period. There was however an upward revision to the previous month’s consumption figures, which was revised up to [..]

China manufacturing output remains sluggish in January

Posted on February 1, 2016 at 11:43 am GMT

PMI data out in China today pointed to continued contraction in manufacturing activity at the start of 2016. The official manufacturing PMI was stuck below 50 for the sixth month in-a-row, while the private Caixin survey showed some signs of bottoming out. The official manufacturing PMI index fell to 49.4 in January from 49.7 in December. The figure was below estimates of 49.6. A reading above 50 indicates a monthly expansion in activity. Export demand remained weak with new export [..]

Asian Session – China PMI disappoints again; dollar off highs

Posted on February 1, 2016 at 8:46 am GMT

The US dollar was slightly off Friday’s highs when it rose by 1% following the Bank of Japan’s surprise cut in interest rates to negative. The unexpected move lifted risk sentiment and increased the monetary divergence between the US and Europe/Japan, putting upside pressure on the greenback. Risk appetite eased slightly on Monday on mixed manufacturing PMI data from China. The dollar held above 121 yen in today’s Asian trading, while the euro was steady around 1.0845 dollars. The pound [..]

Technical Analysis – AUDUSD finds strong resistance at moving averages and Fibonacci level

Posted on February 1, 2016 at 7:42 am GMT

AUDUSD is being capped at a very strong resistance level where there is a confluence of moving averages and Fibonacci levels. This resistance level lies at 0.7140. It is the 23.6% Fibonacci retracement level of the downleg from 0.8162 to 0.6826. (May 2015 to January 2016 decline). Also this is where the 100 and 50 day moving averages converge. Therefore the rally that started from the January low of 0.6826 stopped at 0.7140 on Friday. There is now a reversal [..]

European Session – Dollar stronger despite soft US GDP, supported by post-BOJ wave of buying

Posted on January 29, 2016 at 3:58 pm GMT

The US dollar was broadly stronger today, especially against the European currencies but did not make as much headway versus the commodity currencies. The euro was only briefly supported by better-than-expected Eurozone inflation data and the currency was unable to hold the key $1.09 handle. It subsequently fell against the dollar to 1.0832 from 1.0925. The Eurozone headline inflation rate rose from 0.2% year-on-year in December to 0.4% in January, with the core rate ticking up to 1.0%. Despite the [..]

Week Ahead – RBA, Bank of England, US NFP and Chinese PMI on traders’ watchlist

Posted on January 29, 2016 at 3:44 pm GMT

The central banks theme will continue into next week as the Reserve Bank of Australia and the Bank of England meet. The closely watched manufacturing PMIs in China should give a fresh insight into the state of China’s struggling manufacturing sector. The all-important non-farm payrolls in the US will round up the week. Starting off the week on Monday are the January manufacturing PMI readings for China. The official manufacturing PMI is expected to show a marginal decline to 49.6 [..]

Bank of Japan cuts rates to negative in shock move

Posted on January 29, 2016 at 1:19 pm GMT

The Bank of Japan lived up to its reputation of surprising markets by adopting negative interest rates today in a bid to lift price levels in Japan. At its first policy meeting of the year, the Bank decided to introduce a negative interest rate of -0.1% on current accounts that financial institutions hold at the Bank, which effectively results in a 20bps reduction from the present rate of 0.1%. Only last week, the Bank’s governor, Haruhiko Kuroda had strongly opposed [..]

Oil rebound leads to recovery for risk, commodity currencies

Posted on January 29, 2016 at 12:29 pm GMT

One of the most interesting features of the previous week in foreign exchange was how the rebound in the price of oil provided fuel for a comeback by the beaten-down commodity and emerging market currencies. The Russian Rouble led the rebound, followed by the South African Rand, the Canadian Dollar, the Australian Dollar and the Norwegian Krona. The recovery in oil prices also helped risk assets recover as stocks managed to reduce their losses year-to-date. The oil price recovery was [..]

Asian Session – Yen tumbles after BoJ shocks with negative rates

Posted on January 29, 2016 at 9:05 am GMT

The Bank of Japan took markets by surprise on Friday by introducing negative interest rates and cutting its benchmark rate from 0.1% to -0.1%. The negative interest rate is to apply to current accounts that financial institutions hold at the central bank. The Bank signalled further easing by saying that “it will cut the interest rate further into negative territory” if necessary. The decision was split however with a 5-4 vote. The Bank slightly revised up its forecasts of GDP [..]

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