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Action Insight: Special Reports

Action Insight is the most popular section of the site, read by traders around the world. Our team of analysts work around the clock, analyzing the markets from technical and fundamental perspectives in providing the reports in this section to you.



The Week Ahead: Details about ECB's ABS Purchases Expected Print E-mail
Special Reports | Written by ActionForex.com | Sep 29 14 13:49 GMT
The focus of this week is ECB meeting due Thursday and US' employment report due Friday. For the former, investors await more details about the ABS purchase scheme announced in September while the latter would probably show further improvement in the job market. Investors would also pay close attention to China's official PMI, following upside surprise from the preliminary HSBC PMI released last week, and UK's 2Q14 GDP growth report. Earlier on Monday, RBNZ confirmed currency intervention by selling a net NZD521M, the largest amount since July 2007. Kiwi slumped.
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Japanese Yen May Weaken Further Should BOJ Extend Monetary Base Print E-mail
Special Reports | Written by ActionForex.com | Sep 25 14 12:16 GMT
Japanese yen resumed weakness after a briefly rebound against the US dollar after Prime Minister Shinzo Abe voiced concerns over the pace of yen's depreciation. He warned of the impact of the weaker yen on small businesses and regional economies. His comments were echoed by Akira Amari, minister for economic revitalization, that “sharp fluctuations” JPY is “not good” for the economy. While he refrained from saying which level is appropriate, he indicated that “the current pace is not desirable”. USDJPY reached 109.49, the highest level in 2008, last Friday. The pair had been trading within a range of 101-103 since the beginning of the year before breaching the upper bound in mid-August. We believe the rally has been driven by a series of factors including the buildup long position by speculations, buying of the greenback by Japanese institutional investors as well as the exit from short position with the stop loss level triggered.
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China To Continue To Add Stimulus Despite Finance Minister's Hawkish Comments Print E-mail
Special Reports | Written by ActionForex.com | Sep 23 14 09:30 GMT
Comments that Chinese Finance Minister Lou Jiwei made at the G20 meeting damped market sentiment. Despite signs of slowdown, Lou indicated that "China will not make major policy adjustments due to changes in any one economic indicator'. Investors were concerned that the restraint from adding stimulus to the market would add further downside surprise to the growth outlook of the world's second largest economy. That said, we continue to expect the government to lower interest rates and inject liquidity to the market to stimulate growth.
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The Aftermath of Scottish Referendum Print E-mail
Special Reports | Written by ActionForex.com | Sep 20 14 03:08 GMT
The dust is settled in the Scottish referendum with 55% voted "No" to independence while 45% voted "Yes". Yet, the story does not end here. Westminster has made promises of further devolution for Scotland with new powers over tax, spending and welfare to be agreed by November, and draft legislation published by January. There would be considerable changes in constitutions and thus the "no" vote is not equivalent to "no change" in the UK. The focus now is returned to the economic and monetary outlook. We expect to see a mixed picture in GBPUSD whilst EURGBP would meet further selling pressure.
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SNB Strengthened Stance To Interfere EURCHF If Inflation Deteriorates Further Print E-mail
Special Reports | Written by ActionForex.com | Sep 18 14 11:24 GMT
The SNB intensified the stance that it would use all possible means to combat deflation, as the central bank revised lower the growth and inflation outlook in the September meeting. Policymakers announced to defend the 1.2 floor of EURCHF, noting that 'given a worsening of the environment, the key remains the minimum exchange rate'. In the meantime, the central bank also left the target range for the three-month Libor unchanged at 0.0–0.25%.However, EURCHF weakened after the statement as the market had anticipated that the central bank would accelerate easing measures and there had been rumors that the SNB would adopt negative rates.
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FOMC Left 'Considerable Time' Language But Generally Viewed As More Hawkish Print E-mail
Special Reports | Written by ActionForex.com | Sep 18 14 02:54 GMT
Market reactions suggested that investors viewed the September FOMC meeting as a hawkish one although the Fed retained the language that 'it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends'. Treasury yields and the US dollar climbed higher as fed funds 'dot plot' moved higher. Meanwhile, the Fed continued QE tapering and announced a further US$10B reduction in asset purchases. On the accompanying statement, it is stated clearly that the asset purchase program would end at its next meeting.
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BOE Minutes Show Another Month Of 7-2 Split Of Monetary Decision Print E-mail
Special Reports | Written by ActionForex.com | Sep 17 14 09:49 GMT
The BOE minutes for the September meeting showed a 7-2 vote to keep the Bank rate unchanged at 0.5% and the asset purchase program at 375B pound. Same as the August meeting, Martin Weale and Ian McCafferty dissented the policy decision and voted for a +25-bps hike to 0.75%. The staff revised higher their forecast for 3Q14 growth to +0.9%, whilst noting downside risks in 4Q14. The central bank only touched the September 18 Scottish referendum briefly, noting the uncertainty of the outcome has raised the volatility in the foreign exchange market.
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FOMC Meeting And Scottish Referendum Key Market Movers Print E-mail
Special Reports | Written by ActionForex.com | Sep 15 14 07:58 GMT
We have a busy week ahead with the focus clearly on the FOMC meeting and Scottish referendum. While the Fed's move in September is widely expected, the monetary policy outlook is what investors mostly concerned about. A more hawkish statement would intensify speculations that the first rate hike would come earlier than expected. The Scottish referendum would be a highly uncertain event as various polls have shown that it would be very tight race. During the week, the RBA minutes for the September meeting would be released on Tuesday. On Wednesday, the BOE minutes would be released with investors focusing on whether there were more members dissenting on maintaining the status quo.
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RBNZ Paused In Rate Hike, Probably Until Next Year Print E-mail
Special Reports | Written by ActionForex.com | Sep 11 14 03:39 GMT
The RBNZ delayed the rate hike schedule in September amidst lower inflation forecasts. The central bank left the OCR unchanged at 3.5%, following rate hikes over the past 4 consecutive meetings. Governor Graeme Wheeler indicated that 'it is prudent to undertake a period of monitoring and assessment before considering further policy adjustment'. The RBNZ appeared deliberatively vague in communicate the timing of the next rate hike, noting that it expects 'some further policy tightening will be necessary to keep future average inflation near the 2% target mid-point and ensure that the economic expansion can be sustained'. Overall, the policy statement appears more dovish than expected on reduced inflationary pressure.
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Pound Got Pounded - Scottish Independence Referendum Creates Huge Uncertainty In UK's Prospect Print E-mail
Special Reports | Written by ActionForex.com | Sep 09 14 04:26 GMT
The major event in the UK this month is undoubtedly Scotland's independence referendum on September 18. The latest polling result from YouGov shows that, excluding undecided voters, 'Yes' vote (51%) surpassed 'No' vote (49%) for the first time on September 6 on the question 'Should Scotland be an independent country?'. GBPUSD slumped more than -1.5% to 1.607 (as of September 9), the lowest level since November 2013, following the -1.6% selloff last week. The uncertain outlook, economic, fiscal, monetary, political, etc, in the continuing UK (rest of UK, rUK) after Scotland goes independent has been unnerving investors. Worse still, it appears that the British government has not prepared any contingency plan for the case of a breakup, although the BOE indicated that it has plans to provide emergency lending to Scottish banks in the case of deposit flight. The Scottish Government proposes that the Independence Day will be on March 24, 2016. That will ensure that the Scottish parliament elections would take place on May 5 2016 and there would be sufficient time for negotiation of various issues after the September 18 referendum. We believe the issues concerning investors the most are the currency and debt allocation/fiscal issues in rUK. These are the areas that this article would focus on.
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The Week Ahead - Sterling To Remain Pressured Ahead Of Scottish Referendum Print E-mail
Special Reports | Written by ActionForex.com | Sep 08 14 06:00 GMT
While investors might want to take breather following the busy calendar last week, US dataflow might worth attention as we are counting down to the September 17 FOMC meeting. Meanwhile, with polls showing the jump in support to Scottish independence, the pound would be closely watched. Indeed, the pound has plunged to the lowest level since November 2013 against the US dollar while weakened against the euro despite ECB president Draghi's announcement of QE last week. The RBNZ meeting due Thursday would be a non-event while BOJ minutes would unlikely catch much attention. In China, inflation data would be due on Thursday.
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ECB Announces QE - ABS and Covered Bond Purchases Print E-mail
Special Reports | Written by ActionForex.com | Sep 04 14 15:25 GMT
To our, as well as the market's, surprise, ECB President Mario Draghi announced that the ECB would start purchasing asset-backed securities and covered bonds in October. The act aims to increase liquidity to the financial system and stimulate growth. The ECB announced to cut the main refi rate by -10 bps to 0.15%. Correspondingly, it also lowered the bank overnight deposit rate to -0.2% and the marginal lending rate to 0.3%. The euro slumped against the Us dollar and the pound as the so-called QE is eventually embarked.
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BOC Left Policy Rate Unchanged. Appeared More Positive On Growth Outlook Print E-mail
Special Reports | Written by ActionForex.com | Sep 04 14 03:22 GMT
The BOC kept its powder dry and left the overnight rate unchanged at 1% for the 32nd consecutive meeting. The tone in the policy statement remained neutral but sounded more positive over the exports and housing sectors. The global economic outlook was more balanced with the view that growth in the US was more than offsetting the negative impact of the situation in Ukraine on the recovery in Europe. On the monetary policy outlook, the central bank reiterated that 'its timing and direction will depend on how new information influences the outlook and assessment of risks'.
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RBA Kept The Powder Dry, Judging Spare Capacity Would Keep Unemployment Rate Elevated Print E-mail
Special Reports | Written by ActionForex.com | Sep 02 14 08:08 GMT
The RBA left the cash rate unchanged at 2.5% for the 13th month in September. While standing on the sideline, policymakers stressed that the monetary policy remained 'accommodative' as interest rates, which had been low, had continued to 'edge lower' as 'competition to lend has increased'. On economic developments, the central indicated that the spare capacity remaining in job market remained would keep the unemployment rate elevated for sometimes. Policymakers also warned of china's property market and strength in the Australian dollar. Domestic economy is expected to grow a little below trend over the year ahead.
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The Week Ahead - ECB in Focus but QE Unlikely Print E-mail
Special Reports | Written by ActionForex.com | Sep 01 14 09:03 GMT
We have a busy calendar as September starts. While the focus is undoubtedly Thursday's ECB meeting, we do not expect QE would be announced although further rate hike cannot be ruled out. The BOE minutes for the August meeting unveiled that 2 members voted to increase the policy rate by +25 bps. Yet, it remains uncertain whether their views would be shared by more members given recent softness of economic data in the country. In Asia, we will have RBA meeting and BOJ meeting on Tuesday and Wednesday respectively. In North America, the BOC meeting would be due Wednesday and few insights are expected. The US' employment report due Friday should show a modest drop of unemployment rate to 6.1% in august. On the dataflow, manufacturing and services PMI would be due throughout the week.
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Dovish Draghi Does Not Mean ECB Would Act Further In September Print E-mail
Special Reports | Written by ActionForex.com | Aug 27 14 06:31 GMT
Selloff of the euro continues after ECB president Mario Draghi's speech last week signaled a change in the central bank rhetoric, fueling speculations that the central bank would push forward its QE schedule. While raising concerns over the worsening inflation expectations in the medium term, the president also focused on unemployment. He also urged for actions on 'both sides of the economy, suggesting deepening of fiscal coordination and speeding up structural reforms, in accompaniment with accommodative monetary policy. Despite Draghi's dovish comments, we doubt how many of the members shared his views. Meanwhile, with the TLTROs and ABS purchased not yet started, we do not see high possibility that the ECB would accelerate QE measures in coming months.
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Yellen's Speech Was Balanced, Yet Dovish Print E-mail
Special Reports | Written by ActionForex.com | Aug 25 14 03:11 GMT
Fed Chair Janet Yellen delivered a balanced speech regarding the US labor market and monetary policy in the Jackson Hole symposium. She acknowledged that recent labor market data have performed better than the Fed's forecasts and discussed the cyclical and structural factors contributing to the current employment situation. Yellen judged that cyclical factors remained prominent as significant underutilization remains. Therefore, policymakers should stay patient to the gradual move toward the exit. Overall, the comments have not changed the dovish stance of the Fed and have not done much to alter the central bank's monetary policy outlook.
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FOMC Minutes Appeared Hawkish As Members Discussed Exit Principles In Details Print E-mail
Special Reports | Written by ActionForex.com | Aug 21 14 04:58 GMT
The FOMC minutes for the July meeting unveiled that policymakers had detailed discussion of the exit strategy. The Fed has also planned to officially update their exit principles later this year. We expect to see the update in September. On the economic outlook, the member acknowledged the improvement in the job market. Yet, they remained divided over whether the unemployment rate served as an accurate indicator of the labor market conditions. The staff revised potential growth lower and inflation higher while expecting inflation to stay below the Fed's mandate for several years. The staff also lowered the unemployment rate forecast in response to the faster decline in the unemployment rate.
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BOE Split, Two Members Opted to Hike Rate in August Print E-mail
Special Reports | Written by ActionForex.com | Aug 20 14 11:05 GMT
Surprisingly, two MPC members voted for raising the BOE’s Bank rate to 0.75% from 0.5% earlier this month, the minutes for the August meeting showed. The dissents, Martin Weale and Ian McCafferty, indicated that 'economic circumstances were sufficient to justify an immediate rise in Bank Rate'. They were not concerned that rate hike would undermine the economic recovery. Rather, they believed that an early rise could help the central bank keep future increases smooth and gradual. The more hawkish minutes have raised speculations of a rate hike in the UK by the end of this year.
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RBA Saw Uncertainties in Economy, Left Interest Rates Low for Some Time Print E-mail
Special Reports | Written by ActionForex.com | Aug 19 14 05:31 GMT
The RBA minutes for the August meeting confirmed the central bank's guidance that interest rates would stay low for a considerable period of time. The minutes also unveiled that policymakers continued to see significant uncertainties in the economic outlook, as well as a 'notable degree spare capacity in the labor market'. While the Statement on Monetary Policy showed downward revisions of staff's forecast on growth, the members did not see the outlook was 'materially different' and considered 'the implications for the forecasts of the usual assumptions that the cash rate and the exchange rate remained at their current levels and noted that the no-change assumption for the cash rate was consistent with market expectations over the near term'.
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