Weekly Forex Fundamental Reports Fundamental analysis refers to the study of the core underlying elements that influence the economy of a particular entity. It is a method of study that attempts to predict price action and market trends by analyzing economic indicators, government policy and societal factors (to name just a few elements) within a business cycle framework. For forex traders, the fundamentals are everything that makes a country tick. From interest rates and central bank policy to natural disasters, the fundamentals are a dynamic mix of distinct plans, erratic behaviors and unforeseen events. Therefore, it is best to get a handle on the most influential contributors to this diverse mix than it is to formulate a comprehensive list of all "The Forex Fundamentals."
Fundamental analysis can be used to forecast economic conditions very effectively. But it may not necessarily forecast exact market prices. Forecasting models in forex fundamental analysis are as numerous and varied as the traders and market buffs that create them. Two people can look at the exact same data and come up with two completely different conclusions about how the market will be influenced by it. Therefore is it important that before casting yourself into a particular mold regarding any aspect of market analysis, you study the fundamentals and see how they best fit your trading style and expectations.
This section provides weekly fundamental analysis reports written by selected external contributors around the globe, updated round the clock.
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Weekly Forex Fundamentals |
Written by FX Solutions |
Feb 08 10 14:57 GMT |
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The euro is just over a decade old. In its short existence it has been embraced by every level of the international currency markets. Central banks, national treasuries, sovereign funds and multi-national corporations store their wealth and trust its central bank custodians to maintain value. Institutional and retails traders have made it the highest volume currency after the ubiquitous US Dollar. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Feb 08 10 11:57 GMT |
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After having increased by a total of 3% in October and November, retail sales dropped by 0.3% mom in December, as car sales fell slightly despite industry reports of another rise. However, in January, the announced drop in domestic vehicle sales could actually translate into higher car sales in the retail sales report because of a much more favourable seasonal adjustment component. The increase in gasoline prices could have lifted nominal retail sales noticeably too. Moreover, employment in the retail sector rose significantly, which also suggests an increase in sales. We expect retail sales to have gone up by at least 0.5% mom in December. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Feb 08 10 09:03 GMT |
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Following on from last week's decision by the MPC to halt its programme of quantitative easing, attention will shift to the detail of its quarterly Inflation Report (published on Wednesday), which would have been a key input into the MPC's deliberations. Key themes arising from the statement accompanying the policy decision announcement was that the Committee thought recent monetary policy initiatives would continue to “impart a substantial monetary stimulus” to the economy, although it acknowledged that should the recovery falter, it could restart the programme of asset purchases. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Feb 06 10 18:41 GMT |
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On 12 February, Destatis (the German Federal Statistical Office) is publishing its “flash release” on German Q4 GDP; a detailed breakdown of the components will follow on 24 February. As already suggested by Destatis, German GDP growth will probably have remained unchanged quarter-on-quarter in Q4 2009. Italian GDP could have stagnated in Q4 too, as industrial production decreased in that period. However, French and overall EMU GDP are likely to have risen in Q4. |
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Weekly Forex Fundamentals |
Written by Wachovia Corporation |
Feb 06 10 18:30 GMT |
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Only in our foggy memories do past economic recoveries appear clear and obvious to the trained mind. Since our minds are still in training the current recovery appears uneven, unbalanced and uncertain. The theme of the Gross Domestic Product (GDP) report and recent data is one of uneven recovery. We learned that consumer spending was positive but modest relative to trend, and investment spending was improving but construction spending was weak. This week we saw personal income up for the sixth straight month and consumer spending up for the third straight month. Sustained gains to be sure, but the pace of those gains was far below the prior recovery. |
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Weekly Forex Fundamentals |
Written by TD Bank Financial Group |
Feb 06 10 15:12 GMT |
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This week could be summed up in one word - jobs. Jobs and how to create them were a focus of President Obama's budget released on Monday and stayed in the limelight through Friday with the release of the January jobs report. While there have been a number of hopeful signs that job growth is just around the corner (for more see our report, U.S. Won't Have a Jobless Recovery), we didn't quite make it there in January, and U.S. payrolls fell by 20,000 in the month. Nonetheless, despite the (marginally) negative number, the details of the jobs report were actually very positive. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Feb 06 10 11:14 GMT |
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Sterling suffered from heavy selling pressure all week, despite the BoE announcing a pause in quantitative easing. Sterling lost ground against all G-10 currencies and broke below key support versus the USD (1.57008). Risk aversion trades continued with equity markets falling for the third consecutive week while sovereign CDS spreads widened further, particularly in peripheral eurozone countries. EUR/USD fell below 1.37 for the first time since May. |
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Weekly Forex Fundamentals |
Written by Forex.com |
Feb 06 10 06:24 GMT |
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As we suggested in last week's report, risky assets swooned further this past week, with stocks, commodities, gold, oil and carry trades (JPY-crosses like AUD/JPY, EUR/JPY, and CAD/JPY) all seeing steep losses, while the USD surged higher as traders sought refuge. But a sharp rebound on Friday in those markets strongly suggests a medium-term bottom has been found. The price action on Friday generated 'hammers' on many of those markets daily candlestick charts (a bullish reversal signal after a decline), and price declines had clearly become excessive. We look to see risk trades recover next week on bargain hunting and optimists re-loading for the much awaited global recovery, but ultimately we favor using corrections in risk trades as a selling opportunity. |
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Weekly Forex Fundamentals |
Written by Trade The News |
Feb 06 10 06:18 GMT |
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FX markets also remained fixated on the peripheral members of the European Union as concerns grew over possible spillover effects from Greek debt problems. Various European officials expressed optimism that member states would be able to tame burgeoning budget deficits over the medium term and reiterated that EU spending rules would be honored, but credibility eluded the European peripherals, keeping risk aversion sentiment high. Risk appetite was not entirely absent during the week, with a certain degree of optimism in evidence ahead of the BoE and ECB rate decisions, although the overall feeling has been that players are re-pricing the prospects for a global economic recovery. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Feb 05 10 16:07 GMT |
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In the first half of the week, EUR-USD strengthened initially, rising about 1 US cent to just over 1.40. From Wednesday afternoon on, however, the euro began to tumble again. Towards the end of the week, it dropped to around 1.37. Debt problems in Greece and some other eurozone member states continue to be the main reason for the euro's weakness. Neither the EU Commission's officially approval of the Greek stability programme announced on Wednesday, nor ECB president Jean-Claude Trichet's remarks after the ECB governing council meeting on Thursday succeeded in allaying market participants' fears. On the contrary: towards the end of the week, yield spreads on government bonds of some European countries over German Bunds widened (at different levels). Portugal and Spain are in the main line of fire, but even the yield spreads on French government bonds have widened by about 10 to 36 points. |
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Weekly Forex Fundamentals |
Written by Danske Bank |
Feb 05 10 15:58 GMT |
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This week Greece announced austerity measures backed by the EU to prevent a public budget meltdown. We welcome this news and hope it will help calm tensions in Club Med sovereign debt markets. However, the markets remain shaky and this morning spreads shot out again. Can the Greeks deliver? And what about Portugal and Spain? Are their budget paths sustainable? |
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Weekly Forex Fundamentals |
Written by Mizuho Corporate Bank |
Feb 05 10 15:36 GMT |
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Stock markets will probably gather downside momentum, particularly if this week's potential 'shooting star' candles hold. This will exacerbate worries surrounding the financial system generally, and the banking system in particular. Expect more sheltering in top quality Treasuries, with yield curves flattening as short dates move towards zero. While we cannot rule out another big push for the US dollar, we feel its strengthening bout is almost over and we shall be looking for reversal patterns, preferably a dramatic one in the Euro. Other currencies must confirm allowing commodities to start trying to form interim bases. |
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Weekly Forex Fundamentals |
Written by FX Solutions |
Feb 01 10 15:43 GMT |
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“We are cooperating with those who have more serious problems”, Joaquin Almunia European Union Economic and Monetary Affairs Commissioner said on Friday “We are all in the same boat”. Truer words were never spoken. Sovereign debt is not a Greek problem, (though it is the Greek problem); it is not a European Monetary Union (EMU) problem. The explosion of deficit spending and debt is a European Union problem. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Feb 01 10 10:36 GMT |
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The December labour market report was disappointing, because, instead of remaining stable, nonfarm payrolls dropped by 85k. Construction jobs in particular took a heavy hit, possibly due to the unfavourable weather conditions. But according to the graph, the upturn in temporary jobs could foreshadow a rise in nonfarm payrolls in January. Given that jobless claims are still relatively high and would actually point to ongoing job cuts, we expect only a moderate increase of 10k. The ADP report, two days prior to the official labour market data, could still show a decline in private jobs of about 40k, as ADP uses jobless claims for the finetuning of its estimate. The unemployment rate could nevertheless have remained at 10.0%, as job creation must surpass the increase in the labour force to lower the rate. Furthermore, the return of formerly discouraged workers to the labour market could actually push the unemployment rate up. Average hourly earnings are predicted to have increased by 0.2% mom again. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Feb 01 10 04:28 GMT |
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In the period since March 2009, the Bank of England's Asset Purchase Facility (APF) has bought £200bn of UK fixed income securities, £198 of gilts and £2bn of corporate bonds. This programme of asset purchases has now come to an end. Will the central bank renew it this week by asking the Treasury for permission to purchase more and get the balance sheet to do so or will it suspend the programme, arguing that its job is done? Chart a shows that the gilts purchased by the Bank of England amounted to more than the net amount issued by the Debt Management Office (DMO), and not far off the gross amount of £225bn. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Feb 01 10 04:21 GMT |
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The MPC makes its announcement on whether or not to extend the Bank of England's Asset Purchase Facility (APF) this Thursday. Since the quantitative easing programme was implemented in March last year, changes to the size of the APF have only been made in quarterly Inflation Report months when a comprehensive assessment is conducted. Financial markets therefore see this week's decision as pivotal. Since the MPC's November assessment, GDP has been significantly weaker than expected, with 0.1% growth in Q4 four times smaller than the expectation implied by the Inflation Report projection. |
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Weekly Forex Fundamentals |
Written by Trade The News |
Jan 29 10 23:10 GMT |
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Australia's headline Q4 CPI figures topped estimates by a decimal point at 2.1% y/y and core levels printed in line at 3.2% - still above the central bank target band of 2-3%. The quarterly inflation data, seen as a 'make-or-break' event for next week's RBA decision, solidified analyst expectations for a fourth consecutive 25bp hike on Monday evening, as overnight swaps showed the likelihood of tightening rising to 75% from around 65%. PM Rudd spoke after the CPI release, warning that interest rates may increase. Several analyst reports also suggested confirmation of RBA tightening by the CPI data, including BofA/Merrill Lynch, who said the CPI is 'just enough' above consensus to confirm the hike. |
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Weekly Forex Fundamentals |
Written by Forex.com |
Jan 29 10 23:06 GMT |
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Last week we expressed caution that the risk sell-off that has characterized the month of January was at a tipping point. That point has been broken to the downside and we are now expecting a further unwinding of long risk positions, which should see stocks, commodities and the JPY-crosses (EUR/JPY, AUD/JPY, etc) extend recent declines more aggressively. The USD is likely to be the primary beneficiary of a further risk sell-off, gaining ground on both better US data and on safe haven appeal as risk aversion increases. |
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Weekly Forex Fundamentals |
Written by Wachovia Corporation |
Jan 29 10 23:00 GMT |
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Better economic times are ahead. That, at least, is the view from the Federal Open Market Committee and we would agree that the economic outlook continues to improve. Economic activity 'continued to strengthen' according to the FOMC statement. Household spending continues to expand but with the drag of income, wealth and credit constraints. The story here though is the upgraded outlook by the FOMC for business spending on equipment and software. Orders and shipments reports have improved in recent months and that is consistent with increased capital spending. In the latest GDP release, real spending on equipment and software was up a solid 13.3 percent at an annual rate in the fourth quarter of 2009. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Jan 29 10 22:34 GMT |
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The euro stayed under downward pressure all week, losing ground against all G10 currencies but the Norwegian krone as pessimism broadened following talk of a possible bailout of Greece by the EU. Risk aversion plays also favoured outflows from high yield and emerging market currencies and helped the US dollar index to strengthen to a 5-month high above 79.0. EUR/USD fell below 1.39 for the first time since July 14 last year. Sterling rose against the euro to 1.1625 before profit taking set in, with participants squaring up ahead of the BoE meeting next week. |
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Weekly Forex Fundamentals |
Written by TD Bank Financial Group |
Jan 29 10 20:37 GMT |
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First the bad news: 2009 was the worst year for the U.S. economy in more than half a century - U.S. real GDP contracted by 2.4%, its largest annual decline in the post-war period. Now, the good news: the year ended a whole lot better than it started. Real GDP in the fourth quarter expanded by 5.7% (annualized) - the second quarter to see positive growth and the first to see anything resembling a typical post-recession bounce. Similar to past business cycles, growth was predominantly due to a slower pace of inventory liquidation, which contributed 3.4 percentage points to the rise in real GDP. |
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Weekly Forex Fundamentals |
Written by Mizuho Corporate Bank |
Jan 29 10 16:31 GMT |
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Stock markets sold off again, so that many formed 'bearish engulfing' monthly candles. These should mark an important top to the rallies that started around March 2009 and the question now is which ones will lead on the way down, and at what speeds. So far Dubai, Mumbai and Spain are in pole position with losses of about 10%, Hong Kong and Shanghai not far behind at 8.5%, several testing their 200-day moving averages. |
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Weekly Forex Fundamentals |
Written by Danske Bank |
Jan 29 10 16:25 GMT |
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There is a heavy calendar in the US next week with the employment report and the ISM indices taking centre stage. We expect the improvement in the manufacturing ISM to continue for the next 2-4 months before reaching its peak and look for an increase to 57 in January. The gap between demand and production has not yet closed and the inventory demand balances in both hard and soft data remain supportive for higher levels. The non-manufacturing ISM index has lagged its manufacturing counterpart as the service sector has not been able to benefit from a strong rebound in global demand to the same extent. We expect this pattern to continue and look for only a modest increase in the index. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Jan 29 10 16:06 GMT |
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After having soared in November, German industrial new orders and output in the German producing sector are expected to have suffered a setback in December. However, they are unlikely to have decreased, as most of the correlated indicators improved |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Jan 29 10 14:49 GMT |
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This week the euro slipped below 1.40 against the dollar again for the first time in six months. The Greek debt crisis is continuing to weigh on the single currency. But market participants were also unsettled by the outlook on Japan's sovereign debt being revised to negative and the US central bank gradually moving away from the ultra-loose monetary policy. The dollar was therefore the most sought after currency this week, not only against the euro but against the yen as well. |
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Weekly Forex Fundamentals |
Written by FX Solutions |
Jan 25 10 14:55 GMT |
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Two of the most cited economic indicators over the past year have been first time jobless claims and continuing jobless claims. Both have declined by a third since their respective peaks in the spring and summer of last year. In one five day period in March 2009 674,000 newly unemployed workers filed for compensation. By January 15th the number of new filers had fallen to 482,000. Continuing claims in June were 6.904 millions, by the first week of January they had dropped to 4.617 millions. From these two statistics it would seem that not only are fewer people are being laid off but that many fewer require extended government support. The first assumption is true, the second is false. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Jan 25 10 11:24 GMT |
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GDP growth in Q3 was revised down from the initial 3.5% to 2.2% in the third estimate, largely because of a smaller contribution from inventories. However, in Q4 the GDP growth rate could have accelerated to about 4.5% qoq, with inventories being responsible for more than half of the growth. Apart from that we expect personal consumption to have made a much smaller contribution than in Q3, when the Car Allowance Rebate System had a favourable impact. Government spending is likely to have remained strong, but corporate investment will have been held back by the weakness in non-residential construction, and the modest performance of the NAHB index and housing starts indicates that the recovery in residential investment has stalled. Net exports could have contributed negatively again, albeit only slightly due to the global recovery. The PCE core deflator will probably have risen marginally to 1.3% in Q4, still close to the lower end of the Fed's comfort zone. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Jan 25 10 08:26 GMT |
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Financial markets will have to wait until Friday for the data highlight of the week in the US. The advance estimate of Q4 2009 GDP is expected to show economic activity picked up sharply, after belatedly returning to positive territory in Q3. We look for annualised GDP growth of 5%, underpinned by consumer spending and a strong contribution from inventories. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Jan 24 10 08:32 GMT |
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The ifo business climate for Germany will probably have remained unchanged in January. The US ISM manufacturing index has risen, but the German ZEW economic sentiment has deteriorated. German yield spreads widened until early January, only to narrow slightly again thereafter, just like long-term interest rates, whereas short-term rates have decreased. The DAX went up too initially, but has now fallen somewhat. However, the same applies to crude oil prices. Since early December, the euro has depreciated on average. The German GfK consumer confidence for February could have continued to deteriorate. |
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Weekly Forex Fundamentals |
Written by Wachovia Corporation |
Jan 24 10 08:28 GMT |
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Political upheaval in Washington with the election of Republican Scott Brown to the Senate turned conventional wisdom on healthcare reform and financial sector reform on its head this week. Regulatory risk has risen against the banking industry as the Obama Administration tries to score political points off of popular anger over bank bailouts and executive compensation and bonuses. At the same time, the economic data released this week pointed to weaker expansion as the first quarter gets underway. |
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Weekly Forex Fundamentals |
Written by TD Bank Financial Group |
Jan 23 10 06:20 GMT |
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It was a light week of U.S. economic data, but there was plenty of news to rattle financial markets. In just two days, U.S. equity indices retraced a month's worth of gains. This owed to a combination of concerns that global growth will be impacted as China attempts to cool its economy and proposals outlining more stringent bank regulation in the United States. All major U.S. stock indexes fell below levels not seen since mid-December, so investors returned to the safety of Treasuries, with yields falling to a one-month low. Markets also turned to the U.S. dollar for comfort, and, after depreciating over much of January, the U.S. dollar soared against most major world currencies by week end. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Jan 23 10 05:48 GMT |
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After a strong start to the week, sterling gave up much of last week's gains versus the dollar. Against the other G-10 currencies, however, sterling outperformed, registering gains of 2.5% versus the New Zealand dollar and 1.66% versus the Canadian dollar. EUR/GBP continued its descent, hitting a fivemonth low of 0.8651 following continued concerns over public finances in Greece and strong UK CPI data early in the week. The USD took another leg higher as equities moved lower during the course of the week on concern over the impact of Chinese tightening measures on global growth, banking sector reform proposals by the US government and weaker Q4 US corporate earnings. The Brazilian real dropped a further 2.4% versus the dollar and 1.7% versus sterling. |
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Weekly Forex Fundamentals |
Written by Forex.com |
Jan 23 10 05:32 GMT |
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In last week's update we cautioned that risk was in retreat, and that more downside was likely to develop. This past week saw risky assets (stocks, commodities, and JPY-crosses) slide further as new Chinese lending restrictions undermined the outlook for the global recovery generally, and for commodities especially. Softer ZEW surveys and European debt concerns centered on Greece continued to drag on the EUR, and there were some signs of deficit contagion spreading to other nations as well (see more below). |
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Weekly Forex Fundamentals |
Written by Trade The News |
Jan 23 10 05:29 GMT |
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Dollar- and yen-related pairs are benefiting at the expense of European and commodity components thanks to freshly risk averse traders. China's signal that it would enact curbs on lending and speculation about which emerging market nation would be the next to head for the policy exit only lessened appetite for risk. European officials continue to stress that Greece needs to deal with its fiscal problems on its own, while in the US the administration's latest financial industry proposals were seen as fresh headwinds for growth. |
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Weekly Forex Fundamentals |
Written by Danske Bank |
Jan 22 10 16:28 GMT |
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The main US event next week is the FOMC meeting. In line with the market we expect no changes to policy measures. In the statement the growth and inflation sections will probably only see incremental changes. If anything, we believe that the assessment of housing could be downscaled a bit. Focus will be on the wording of the forward looking part of the statement. While it is still too early for the FOMC to start fiddling with the 'extended period' language, the section describing the purchase programmes could see some changes. Recently it has been debated how much mortgage rates will jump when the Fed stops purchasing mortgage bonds. Hence, it will be interesting to see if the Fed applies a more open-ended language on this issue. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Jan 22 10 16:11 GMT |
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The dollar remained firm for the most part this week. EUR-USD fell to a 6-month low of 1.4029 on Thursday, before recovering again somewhat on Friday to around 1.41. The movement is mainly a result of inherent weakness in the eurozone. A disappointing ZEW index, guarded comments on the economy from ECB members, and the constant discussions among market participants about Greece's debt crisis and its potential consequences for the currency union and the EU are all spreading doom and gloom. |
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Weekly Forex Fundamentals |
Written by Mizuho Corporate Bank |
Jan 22 10 16:08 GMT |
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Stock markets sold off, some for a second consecutive week, the Hang Seng losing 4.25% and testing its 200-day moving average, Brazil’s Bovespa –5.0% and Athens off 6.00%. Most others, while dropping less, are also close to 50-day moving averages though Egypt and Turkey managed to rally a little. In the usual rush from so-called risky assets investors bought yen and US dollars, Kiwi hardest hit at $0.7090, sold commodities (partly linked with Mr. Obama’s plans – see below) and bought Treasuries. Once again money market futures are trading at new record highs, most expensive the March10 Fed Funds future at 99.860, closely followed by EuroSwiss at 99.730, and yields on one-month US TBills a mere one basis point. And the authorities wonder why more individuals are tempted to speculate, either in financial instruments, dodgy investment schemes or the lottery. |
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Weekly Forex Fundamentals |
Written by FX Solutions |
Jan 18 10 14:58 GMT |
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Will the European Monetary Union countries be able to return to the budgetary discipline of the Stability and Growth Pact? Can they bring their future national finances into line with the treaty limits on deficits and debt? They cannot and will not. The 1997 Stability and Growth pact was based on the Maastricht Treaty and was the operational precursor to the euro launch in 1999. It will now join the Kellogg-Briand Pact, the Locarno Treaties and other international agreements that have attempted to control the natural inclinations of governments and failed. But unlike those anti-war and disarmament treaties from the 1920s, whose goals disappeared along with the treaties in the conflicts and wars that followed, the Stability and Growth Pact will disappear but its chief goal and the great achievement of European unity, the euro, will live on. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Jan 18 10 11:17 GMT |
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Leading indicators went up sharply by 0.9% mom in November - the eighth consecutive increase. We expect leading indicators to have risen markedly again in December, by about 0.7% mom. The steeper yield curve will have been the main contributor to the rise, followed by the drop in jobless claims. Stock prices, consumer expectations and supplier deliveries will also have had a significantly positive impact. The annual rate is likely to have improved further to 6.8%, which would be the highest since summer 2004. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Jan 18 10 04:30 GMT |
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The key focus in the UK this week is likely to stem from the minutes of the MPC's January meeting. It is expected that the headline votes for an unchanged Bank Rate of 0.5% and for an unchanged Asset Purchase Facility (of £200bn) were unanimous. However, the detail may shed some more light on the diverging views for further a further extension to quantitative easing that appear to be emerging. The UK data calendar kicks off on Tuesday, with December CPI/RPI readings. We have pencilled in an unchanged CPI in the month, pushing the annual rate of inflation up to 2.3% from 1.9% in November. If realised, that would mean inflation averaged 1.9% in Q4, in line with the MPC's November Inflation Report projection. The December claimant count (Wednesday) is expected to post a second consecutive monthly decline, staying on message with the REC jobs report, but headline average earnings growth will continue to look anaemic, with just 1.6% annual growth expected over the three months to November. December retail sales data are published Thursday. Survey data lead us to forecast a 0.5% increase in December sales volumes. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Jan 16 10 05:46 GMT |
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The German ZEW economic sentiment is likely to have improved in January, just like the ifo business expectations and the US ISM manufacturing index. German yield spreads widened initially, but have now narrowed again slightly, just like long-term interest rates, whereas short-term rates have decreased. After having depreciated initially, the euro has now appreciated somewhat. The DAX has continued going up. However, crude oil prices went up temporarily, only to fall slightly again. |
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Weekly Forex Fundamentals |
Written by Wachovia Corporation |
Jan 16 10 05:42 GMT |
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Businesses and consumers remain exceptionally cautious and will not likely be phased by a blowout real GDP number for the fourth quarter. We have recently raised our estimate for fourth quarter real GDP growth to a 5.6 percent annual rate. A substantial slowdown in the rate of inventory liquidations will account for the overwhelming majority of that gain. Final demand remains exceptionally weak and, while the worst of the layoffs appear to have passed, there is little sign hiring is set to pick up. Three major reports, the National Federation of Independent Businesses (NFIB) Small Business Optimism Index, the BLS Job Openings and Labor Turnover (JOLTS) report, and the Fed's Beige Book reiterated this point this past week. |
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Weekly Forex Fundamentals |
Written by TD Bank Financial Group |
Jan 16 10 05:18 GMT |
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Treasury yields fell across the curve this week as the latest economic snapshot conveyed a picture of tepid U.S. recovery, still-benign underlying inflation pressures and a Fed that is poised to remain on the sidelines for quite some time to come. A successful 30-year auction on Thursday - which showed strong appetite for U.S. debt despite the country's fiscal challenges - added support to the rally. By week's end, the 10-year Treasury yield had moved into the 3.65-3.70% range, the lowest level in a month. The decline in U.S. yields had mixed implications for other markets, helping equity prices to sustain their recent upward drift this week, but prompting carry trades that pulled down the U.S. dollar. And while crude oil has tended to be a beneficiary of a falling greenback, another bearish U.S. weekly inventory report was the over-riding factor that pulled the price of crude back below US$80 per barrel. |
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Weekly Forex Fundamentals |
Written by Lloyds TSB |
Jan 16 10 05:08 GMT |
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Sterling ended among the best performers of G10 currencies this week, logging gains of 1.6% vs the Swiss franc, the Norwegian Krone and the euro. €/£ tumbled to a 4-month low of 0.8810 (£/€ 1.1350) after concerns flared up over the deterioration of public finances in Greece, and BoE MPC member Sentance hinted that he could vote for a pause in QE in February. The USD was under pressure for most of the week but managed to recoup some losses on Friday when a 1% drop in US equities triggered safe-haven flows and profit taking in high yield and commodity currencies. The Brazilian real dropped 2.6% vs the USD and 3.9% vs sterling. GBP/ZAR firmed 2.1% as gold retreated below $1,130. |
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Weekly Forex Fundamentals |
Written by Forex.com |
Jan 16 10 04:47 GMT |
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A confluence of factors has emerged that has negatively impacted the so-called 'risk' trade (long stocks, commodities, gold, and JPY-crosses), which ultimately is a bet on the speed and strength of the global recovery. The starting point would seem to be last Friday's disappointing US employment report, which was the first reminder of the long and bumpy road ahead for the world's largest economy. |
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Weekly Forex Fundamentals |
Written by Trade The News |
Jan 16 10 04:44 GMT |
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In currency trading, the greenback began the week on a soft note in the aftermath of the prior week's US payroll data and China's strong December trade reading. The euphoric sentiment that characterized early January continued to wane as the dollar suffers from the double whammy of lower yields in two-year instruments and dented prospects for economic recovery. At this point the themes that hampered the greenback throughout 2009 seem likely to resurface as skepticism regarding US finances grows. In Europe, the ECB maintained its key main refinancing rate at 1.0%, as expected. Verbal intervention from German Economy Minister Bruederle didn't help euro sentiment after he commented that Germany was not experiencing a self-sustaining economic recovery. |
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Weekly Forex Fundamentals |
Written by Danske Bank |
Jan 15 10 16:06 GMT |
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Greece got a lot of attention this week. First the European Commission published a very critical report on the quality of Greek statistics, then the Greek finance minister announced ambitious targets for the stability programme, but did not give much detail on how to achieve them and finally we had an ECB Governing Council meeting where Trichet said that Greece leaving the euro was an “absurd hypothesis”, but also that the ECB will not change its collateral framework for one country. Spreads widened during the week to around 275bp for Greek 10-year government bonds. |
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Weekly Forex Fundamentals |
Written by BHF-BANK |
Jan 15 10 15:53 GMT |
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At the end of last week, after the release of weaker-than-expected US jobs data for December, EUR-USD had strengthened from 1.43 to about 1.45. After hovering around this level for most of the week, it finally dropped to 1.44. The yen, which had suffered a setback last week after comments made by the new finance minister, firmed to around 91 against the dollar. |
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Weekly Forex Fundamentals |
Written by Mizuho Corporate Bank |
Jan 15 10 15:45 GMT |
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Momentum is building in a number of different markets as the unwinding of some December's excesses gathers pace. This should continue and investors must keep in mind that the banking sector and economic recovery are very shaky indeed. While we may not officially be in recession, Joe Public is understandably not in a good or rosy mood. Taxed to the hilt and employment prospects bleak, there is little room for manoeuvre regardless of low interest rates. These, we think, will be with us for a very long time. |
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Weekly Forex Fundamentals |
Written by FX Solutions |
Jan 12 10 14:42 GMT |
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Obscured in the gloom of Friday’s Non Farm Payrolls was an even more downbeat assessment of the state of the United States economy. The American consumer remains in recession. This critical judgment comes directly from America’s households. Consumer credit contracted by $17.5 billon in November. That is the tenth straight month that Americans have decided to pay down debt and it is the longest negative run in the 66 year history of the series. Not only did consumers choose repayment over consumption but it was the largest monthly drawdown on record. Corporate profitability may be exciting Wall Street but with unemployment at a generational peak there is no optimism for the American worker and consumer. |
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