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European Session – Dollar firmer after strong US personal spending rises

Posted on January 31, 2014 at 2:55 pm GMT

Risk aversion dominated the currency markets on the last day of the month, causing volatility and buoying the safe haven yen, while the dollar was stronger against the euro and the pound. Month-end repositioning also played a role in directing currency flows. The euro had a rough week, falling down to 2-month lows after extending losses today on soft Eurozone inflation data. January’s headline number showed a surprise drop to 0.7 % year-on-year, debunking forecasts for a rise to 0.9%. [..]

Forex News – Eurozone inflation below 1% for 4th consecutive month

Posted on January 31, 2014 at 1:24 pm GMT

An unexpected drop in Eurozone CPI for January 31, 2014 raised fears of deflationary pressures in the region. According to data released on Friday from the EU’s statistics office, Eurostat, consumer prices fell to 0.7% year-on-year in January compared to 0.8 % in December. This was the lowest level since October, which was when inflation reached a near 4-year low. January’s drop in the rate of inflation surprised analysts who had forecast a slight acceleration to 0.9%. It is the [..]

Technical Analysis – S&P capped below key 1800 level

Posted on January 31, 2014 at 9:34 am GMT

S&P fell below the key 1800 level on January 24, 2014 after having risen above this for the first time ever on November 22, 2013. During the past week, there has been consolidation and prices have been testing support at 1765. This is a key support level as it also marks the 38% Fibonacci retracement of the up-leg from the October 9, 2013 low (1639.38) to the all-time high on January 2, 2014 (1845.75). The 100-day moving average is also [..]

Asian Session – Yen lifted as Japan’s inflation accelerates

Posted on January 31, 2014 at 7:47 am GMT

The yen was in focus today as it gained strength following some positive news out of Japan. The country’s core inflation rate accelerated more-than-expected to a 5-year high in December. This was good news for a country grappling deflation, which the Bank of Japan has fought in the past year with aggressive monetary policy. Japan’s core CPI (which excludes fresh food but includes energy costs), rose 1.3% in December compared to a year ago. The dollar was pushed lower by [..]

European Session – Euro tumbles on soft German CPI, dollar up after US GDP data

Posted on January 30, 2014 at 2:43 pm GMT

It was a busy day in the currency markets, with several data releases causing volatility. The main mood was risk-off as soft China PMI data today gave investors a fresh excuse to move out of risk. The euro was sold off early in the European session, falling below the key 1.36 level, kept under pressure by a firmer dollar. Despite the better German employment numbers which showed the number of jobless fell more than forecast by 28,000 to 2.93 million, [..]

Forex News – Fed carries on with taper

Posted on January 30, 2014 at 12:03 pm GMT

The Federal Reserve’s bond buying program which began in late 2008 is slowly being wound down. At the central bank’s first policy meeting of 2014, Fed policymakers unanimously voted in favor of continuing to taper its QE program, slashing it by another $10 billion beginning February 1st. This is the second cut in the $85 billion-a-month-bond purchase program, bringing it down to an overall $65 billion ($35 billion of Treasuries and $30 billion of Mortgage Backed Securities). Meanwhile, this was [..]

Technical Analysis – EURJPY testing key 139.00 support level

Posted on January 30, 2014 at 10:12 am GMT

There is a strong downward bias in EURJPY. The pair has been declining since hitting a more than 3-year high on December 27 2013, retracing almost 50% of the up-leg from the November 2013 low (131.18) to the December 2013 high (145.65). On Wednesday the EURJPY pair set a low of 139.02, the lowest level since early December 2013. This is close to the key psychological support level at 139.00 which has been tested today and this level remains pivotal [..]

Asian session – Yen strengthens after Fed taper, soft China PMI dampens risk appetite

Posted on January 30, 2014 at 7:49 am GMT

The Federal Reserve announced as expected its decision to continue winding down its stimulus program. Fed policy makers unanimously voted to cut the US central bank’s bond buying program by another $10 billion-a-month, to $65 billion. While the news of a reduction in QE would normally be positive for the dollar (since QE tends to have a weakening effect on a currency), the dollar did not strengthen much after the Fed announcement, partly because the markets had already priced in [..]

European Session – Euro tumbles on Noyer comments, yen strengthens on safe haven demand as EM concerns linger

Posted on January 29, 2014 at 2:34 pm GMT

News headlines were the key drivers in currency markets today, with knee-jerk reactions to any announcements or comments by officials, causing volatility. Focus was clearly still on emerging markets, even after the brief relief rally after the Turkish central bank rate hike. Risk appetite quickly faded and capital flight continued back into safe havens like the yen and out of the euro. The South African central bank also made a 0.5% rate hike to 5.50% but this move did little [..]

Forex News – Emerging Markets face market turbulence as Fed tapering progresses

Posted on January 29, 2014 at 1:50 pm GMT

One side-effect of the Federal Reserve’s super-easy monetary policies of the past 4 years or so, is that global markets have been flooded with extra liquidity. Many of the US dollars that the Fed has created found their way out of the United States and into a very diverse array of international assets. As investors looked for higher-yielding opportunities to replace their reduced income from U.S. fixed income investments, emerging market bonds were one obvious choice. This was initially a [..]

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