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Sunday, April 29, 2012

UK Pound Gains as BOE Prepares to Wind Down Stimulus

UK pound is seeing gains again today, heading to highs not seen for 19 months against the euro. Sterling is also up against the US dollar as Forex traders look for signs that the BOE is ready to raise rates. With no more quantitative easing in the immediate future, pound is getting a boost, even though the general market tenor is one of risk aversion.

The Bank of England recently released the minutes of its last Monetary Policy Committee meeting, and they show that the BOE is ready to roll back its stimulus efforts. Adam Posen, who has been asking for more stimulus in meetings, noticeably didn’t in the last meeting. Additionally, it appears that the BOE policymakers discussed inflation, and concerns about keeping it under control.

While this doesn’t mean that the next BOE meeting will result in an interest rate hike, it does indicate that quantitative easing is no longer deemed necessary by monetary leaders in Great Britain. The result is helping the UK pound on the currency market, since it seems to indicate that at some point a rate hike will be in order, and that further efforts to weaken the sterling in the name of economic stimulus aren’t on the table.

At 14:38 GMT EUR/GBP is down to 0.8186 from the open at 0.8191. GBP/uSD is higher at 1.6054, up from the open at 1.6023.

Aussie Mostly Soft as Week Draws to a Close

Australian dollar is mostly softer as the week draws to a close. Aussie has been weakened this week by risk aversion and concerns about what’s happening in the eurozone. Also, recently, the news out of China has been somewhat disappointing, and that has been weighing on the Aussie as well, since the Chinese economy is a major support to the Australian economy.

Aussie is higher against the US dollar today, gaining as a measure of risk appetite returns to the markets. US stocks are showing signs of recovery as earnings news spurs bulls forward. Additionally, the high demand for sovereign debt in the eurozone (even though yields are a bit high) is helping to allay some fears for the 17-nation currency region.
Australian dollar is finding some support against currencies like the dollar and the yen today. However, Aussie is lower against the euro and the pound. The mixed performance is to be somewhat expected, though, as European currencies make a comeback. Against the dollar and the yen, the Aussie’s superior interest rate and high return potential is helping.
At 15:30 GMT AUD/USD is higher at 1.0354, up from the open at 1.0344. EUR/AUD is up to 1.2726 from the open at 1.2705. GBP/AUD is up to 1.5538 from the open at 1.5520. AUD/JPY is higher at 84.64, up from the open at 84.43.

US Dollar Pulls Back as Risk Appetite Returns

Risk appetite is making a comeback in the markets today, and that is sending the US dollar mostly lower. The dollar index is losing ground, and the greenback is lower against many of the majors, especially the European currencies. With better earnings news out of the United States, and with better news in the eurozone, Forex traders are ready for a little risk.

US dollar is pulling back as Forex traders look for better returns, mostly with European currencies and the Down Under currencies. Greenback is down against the euro and the pound right now as the better news results in a return to risk appetite. In the United States, earnings news is driving the markets. Solid earnings data and forecasts for the rest of 2012 have stocks gaining and risk appetite on the rise. This, in term, means a lower US dollar.

On top of that, the euro is getting help from the latest German Ifo data. The business sentiment survey from the Ifo shows that confidence is better than expected. Even though there are concerns about a eurozone recession, it appears that there are still those that are confident in once next. Also helping European currencies is the fact that the IMF has secured Russian funding.

At 14:21 GMT EUR/USD is up to 1.3208 from the open at 1.3137. GBP/USD is up to 1.6132 from the open at 1.6052. USD/JPY is up to 81.6705 from the open at 81.6050.

Australian Dollar Sinks on Falling PPI

The euro was down today on concerns about the outcome of the presidential elections in France. The report that showed the manufacturing index falling to the lowest level in almost three years also had its negative impact on the currency.
Socialist Francois Hollande won the first round of elections, while incumbent President Nicolas Sarkozy was the second. The anti-euro far-right National Front, led by Marine Le Pen, was third, showing that resentment against the eurozone is growing in France.
Markit Economics reported that the eurozone manufacturing Purchasing Managers’ Index slipped from 47.7 in March to 46.0 in April. Such low level was last seen in July 2009. Traders hoped that the index would rise to 48.1.
EUR/USD was down from 1.3182 to 1.3149 and EUR/JPY slid from 107.47 to 106.59 as of 10:22 GMT today.

.Australian Dollar Sinks on Falling PPI

The Australian dollar slumped today as the unexpected decline of producer prices in the first quarter of this year led to speculation that Australia’s central bank will decrease its interest rates on the next monetary policy meeting.

The government report showed today that Australia’s Producer Price Index fell 0.3 percent in the first quarter of 2012 from the previous three months. The report frustrated analysts who anticipated the index to accelerate from 0.3 percent in the fourth quarter of 2011 to 0.5 percent in the March quarter of this year. The decline of the PPI made economists speculate that the Reserve Bank of Australia will cut interest rates during its next monetary meeting in May. In fact, some forecasters say that the potential decrease of the rates in May can be followed by a cut in June.

AUD/USD went down from 1.0368 to 1.0289 and AUD/JPY fell from 84.50 to 83.45 as of 11:09 GMT today.

US dollar is gaining today on the Forex market as traders look for safe haven. Uncertainty is causing problems, and that is prompting traders to look to capital preservation and stability. Greenback is backed by the most stable taxpayer base in the world, so it’s no surprise that it is on the rise today. For the most part, US dollar is higher as traders express uncertainty about what is happening in Europe. European manufacturing contracted in April, as shown by the preliminary composite PMI for the eurozone. The news triggered concerns about eurozone economic growth and resulted in euro selling against the US dollar. Also not helping matters is the possibility of an early general election in the Netherlands (due to budget disagreements) and a runoff in France, with Nicolas Sarkozy in second place. With all this uncertainty, Forex traders are turning to low beta currencies like the US dollar and the Japanese yen. Dollar is gaining the upper hand as traders recognize that the economy is in better shape than the eurozone economy, and as all eyes remain on the eurozone sovereign debt situation. At 14:12 GMT EUR/USD is down to 1.3121 from the open at 1.3185. GBP/USD is down to 1.6093 from the open at 1.6124. USD/JPY is also lower as the yen gains the upper hand: 81.1560 down from the open at 81.5165.

US dollar is gaining today on the Forex market as traders look for safe haven. Uncertainty is causing problems, and that is prompting traders to look to capital preservation and stability. Greenback is backed by the most stable taxpayer base in the world, so it’s no surprise that it is on the rise today.

For the most part, US dollar is higher as traders express uncertainty about what is happening in Europe. European manufacturing contracted in April, as shown by the preliminary composite PMI for the eurozone. The news triggered concerns about eurozone economic growth and resulted in euro selling against the US dollar. Also not helping matters is the possibility of an early general election in the Netherlands (due to budget disagreements) and a runoff in France, with Nicolas Sarkozy in second place.

With all this uncertainty, Forex traders are turning to low beta currencies like the US dollar and the Japanese yen. Dollar is gaining the upper hand as traders recognize that the economy is in better shape than the eurozone economy, and as all eyes remain on the eurozone sovereign debt situation.

At 14:12 GMT EUR/USD is down to 1.3121 from the open at 1.3185. GBP/USD is down to 1.6093 from the open at 1.6124. USD/JPY is also lower as the yen gains the upper hand: 81.1560 down from the open at 81.5165.

US Dollar Gains on Safe Haven Demand

Traders Shun Risk on French Elections, Loonie Weakens.

The Canadian dollar fell against the US dollar and the Japanese yen today on concerns about the French elections. The currency trimmed its losses, but remains below the opening price for now. The loonie rose versus the euro.

Risk aversion prevails in the Forex market today as the presidential elections in France make investors concerned about the futures of the eurozone. There are also plenty of other reasons to worry about Europe, but France is currently on the forefront of news headlines. The Standard & Poor’s 500 Index was down 1 percent. Other growth-related assets also suffered.

Not all is bad for the Canadian currency. The Bank of Canada maintained interest rates unchanged last week, but the statement was surprisingly hawkish. An interest rate hike is expected next month and such expectations are likely to support the loonie in the immediate future.

USD/CAD was up from 0.9917 to 0.9978 before trading at 0.9938 as of 15:51 GMT today. CAD/JPY dropped from 82.08 to 81.60, following the fall to 81.20. EUR/CAD slipped from 1.3071 to 1.3048, erasing the earlier advance to 1.3121.

Pound Goes Higher vs. Euro as Future of Europe Still Uncertain

The Great Britain pound rose against the euro and erased its losses versus the US dollar as fears of Europe’s troubles drove investors to the relative safety of the UK currency. The sterling retreated a little against the greenback today and continued to fall versus the Japanese yen.

The elections in France spooked Forex traders and made them search for a refuge. The possibility of early elections in Netherlands added to concerns. Some of market participants found haven in Britain’s currency.

The United Kingdom has its share of problems that may affect the pound negatively in the future. On the other hand, Britain’s economy looks to be improving somewhat. Analysts predict that gross domestic product rose 0.1 percent in the first quarter of this year. That’s not fast growth, but still is better than the decline by 0.3 percent in the previous three months.

GBP/USD was at 1.6121 as of 00:43 GMT today after rising from 1.6120 to 1.6131 yesterday. EUR/GBP traded at about 0.8158, following yesterday’s slump from 0.8176 to 0.8158. At the same time, GBP/JPY fell from 130.92 to 130.84.

Traders Sell Won in Favor of Dollar on European Politics

The South Korean won fell today as concerns about the political situation in Europe caused traders to sell riskier assets of Asian nations in favor of safer ones, including the US dollar.

Current French President Nicolas Sarkozy lost the first round of presidential elections, while the anti-euro National Front had unexpectedly high support of voters. Dutch Prime Minister Mark Rutte offered to step down yesterday as his attempts to implement austerity measures were met with resistance. Forex traders are buying the dollar as a shelter against the European problems, while riskier currencies find less demand. The tension between North and South Koreas doesn’t help the won either.

USD/KRW rose from 1,139.6000 to 1,140.9000 as of 8:47 GMT today, while the intraday high was 1,142.5000.

Pound Goes Higher vs. Euro as Future of Europe Still Uncertain

Traders Sell Won in Favor of Dollar on European Politics

GBP/USD Higher as Consumer Confidence Improves

The Great Britain pound rose today against the US dollar after a report showed that confidence of Britons unexpectedly improved last month, muting speculations about quantitative easing from the Bank of England. The currency was down against the Japanese yen.

Nationwide Building Society reported that the index of consumer confidence rose to 53 in March from 44 in February. The median forecast was 42. The report warned that the improvement of sentiment may be short-lived. Nevertheless, analysts started to speculate that the BoE would refrain from stimulating the economy. Tomorrow’s report from GfK is also expected to show an improvement of confidence.

GBP/USD climbed from 1.6162 to 1.6207 before trading at 1.6184 as of 11:45 GMT today. GBP/JPY fell from 131.47 to 130.96.

Euro Rangebound in Forex Trading

Euro is mostly rangebound today, making small gains against the US dollar, after a Dutch bond auction proved reasonably successful. The euro has been struggling lately due to concerns about the political stability of eurozone countries, as well as continued worries about Spain.

Earlier, a bond auction in the Netherlands was deemed a success. There had been some questions about the bond auction, since the resignation of Prime Minister Mark Rutte and the collapse of the Dutch government. With politicians unable to agree on budgetary measures, the government is at an impasse and an early general election looks like it will be called.

The bond auction out of the Netherlands, though, is steadying the euro somewhat in Forex trading. It appears that the Netherlands is likely to maintain its AAA rating — one of the few eurozone countries that still has such a rating. However, the euro is far from out of the woods.

Concerns about Spain, as well as worries about other countries with sovereign debt problems, are still extent. And, of course, there is uncertainty in France, where Nicolas Sarkozy appears to be losing the presidential race.

At 13:07 GMT EUR/USD has started to break higher at 1.3166, up from the open at 1.3157. EUR/JPY is lower at 106.7410, down from the open at 106.8145. EUR/GBP remains at the same level as the open, at 0.8158.

Japanese Yen Mixed Today

Japanese yen is mixed today as Forex traders look for direction. There is a lot to think about today, in terms of news and forecasts, and currencies are part of the confusion. Yen has slipped against the euro after choppy trading, but is higher against the pound and the dollar.

Japanese yen is down against the euro, which is gaining ground on the enthusiasm surrounding a solid Dutch bond auction — in spite of the recent resignation of Mark Rutte and the collapse of the government in the Netherlands. However, yen is higher against the dollar and the pound as Forex traders and others show a measure of caution.

US stocks continue to gain cautiously, and European stocks remain mixed. There is a lack of direction in the financial markets today, and that is translating to the currency market. It is uncertain, however, how much longer the yen will remain higher against the dollar. The recent strength of the yen has Japanese lawmakers concerned, and pressure is building for the Bank of Japan to take matters into its own hands and intervene to weaken the yen.

At 14:06 GMT USD/JPY is lower at 81.0785, down from the open at 81.1900. EUR/JPY is higher at 107.0030, up from the open at 106.8145. GBP/JPY is lower at 130.8140, down from the open at 130.9550.

Aussie Goes Down as CPI Growth Below Expectations

The Australian dollar fell today as a government report showed that nation’s consumer prices rose in the last quarter far slower that was anticipated by market analysts, triggering speculation about an interest rate cut.

Australia’s Consumer Price Index rose 0.1 percent in the first quarter of 2012, while much bigger growth by 0.7 percent was predicted by economists. The trimmed mean CPI (core CPI) increase 0.3 percent, while forecasters said that it would stay at 0.6 percent as in the the fourth quarter of 2011. The slowing inflation added incentive for the Reserve Bank of Australia will reduce interest rates. The problems in Europe also reduce demand for the Aussie, as well as other currencies with higher yield.

AUD/USD fell from 1.0321 to 1.0310 as of 14:35 GMT today, following the drop to 1.0246 — the lowest level since April 11. AUD/JPY was down from 83.76 to 82.85 before trading at 73.68

Rand Gains for Second Day on European Bonds & US Corporate Profits

The South African rand gained today for the second day after yields on European bonds fell, easing nervousness about Europe’s troubles, and as US corporate profits were above forecasts.

Falling yields for Spanish, Italian and Dutch bonds gave investors hope that Europe may yet emerge from its financial crisis. Apple reported that it almost doubled its profit in the second fiscal quarter as demand for iPhone grew in China. All in all, market sentiment was good today and that allowed riskier currency of South Africa to advance.

USD/ZAR fell from 7.7910 to 7.7590 as of 8:49 GMT today, while the daily low of 7.7480 was the lowest since April 4.

Pound Falls as GDP ShrinksThe Great Britain pound fell today after a government report showed that the UK economy unexpectedly declined in the first quarter of this year, reducing appeal of the nation’s currency. Britain’s gross domestic product dropped 0.2 percent in the first quarter of 2012, following the drop by 0.3 percent in the previous quarter. Traders were frustrated as analysts predicted a 0.1 percent increase. Gross value added grew 0.2 percent in February on an annual basis, while an advance by 0.6 percent was predicted. The worse-than-expected data added incentive for the Bank of England to ease its monetary policy and reduced demand for the pound. Improving sentiment about the situation in Europe was also negative for the UK currency. GBP/USD was down from 1.6142 to 1.6085 and GBP/JPY dropped from 131.23 to 130.57 as of 9:21 GMT today.

The Great Britain pound fell today after a government report showed that the UK economy unexpectedly declined in the first quarter of this year, reducing appeal of the nation’s currency.

Britain’s gross domestic product dropped 0.2 percent in the first quarter of 2012, following the drop by 0.3 percent in the previous quarter. Traders were frustrated as analysts predicted a 0.1 percent increase. Gross value added grew 0.2 percent in February on an annual basis, while an advance by 0.6 percent was predicted. The worse-than-expected data added incentive for the Bank of England to ease its monetary policy and reduced demand for the pound. Improving sentiment about the situation in Europe was also negative for the UK currency.

GBP/USD was down from 1.6142 to 1.6085 and GBP/JPY dropped from 131.23 to 130.57 as of 9:21 GMT today.

US Dollar Mostly Weaker on Improved Sentiment

US dollar is mostly weaker as improved sentiment helps boost other currencies today. Concerns about the global economy, and about Europe, are fading a little bit, and that is helping other currencies against the US dollar. Greenback is not needed as a safe haven, and that is resulting in gains for a few other currencies.

An interest rate decision is expected from the Federal Reserve today. Many expect that the benchmark Fed Funds rate will remain steadily near zero. However, what Forex traders will really be considering is the policy statement from Fed chair Ben Bernanke. Many expect that Bernanke will continue to talk about the softer global economy, but

that he will also present a more hawkish stance on raising interest rates.

While many expect that US interest rates will remain low for quite some time in the future, many expect that the Fed will raise rates before the end of 2013. Many will be listening to Bernanke’s policy statements to get an idea of what’s coming, and figure out what can be expected going forward. Many expect, though, to hear news that is likely to put downward pressure on the US dollar.

At 13:06 GMT EUR/USD is up to 1.3211 from the open at 1.3197. GBP/USD is down to 1.6118 from the open at 1.6145. USD/JPY is down to 81.2925 from the open at 81.3145. USD/CAD is down to 0.9850 from the open at 0.9870.

Canadian Dollar Receives Boost on Better News

Canadian dollar is getting a boost today, thanks to better sentiment in the financial markets. Loonie is heading higher on better earnings news, as well as reduced fears about what’s next for the eurozone.

Loonie is heading higher today, thanks to a jolt from Apple. AAPL earnings are helping market sentiment, as well as adding to a growing list of companies whose Quarter 1 earnings beat expectations. The good news is helping many high beta currencies, including the Canadian dollar.

Also helping sentiment and boosting the loonie is the reduced fear about what’s next for the eurozone. A German bond auction saw weak demand, and many are assuming that’s because investors aren’t looking for safe, low-yielding investments. In the search for better yields, investors are turning to higher beta currencies.

Canadian dollar is higher against the US dollar as safe haven demand fades. Additionally, loonie is up against the UK pound, which is taking a hit on the news that the British economy is moving into recession. Add higher oil prices to the mix, and the Canadian dollar has sufficient support for now.

at 13:46 GMT USD/CAD is lower at 0.9828, down from the open at 0.9882. GBP/CAD is down to 1.5847, which is lower than the open at 1.5935.