Tag Archives: Dollar

Will Today’s FOMC Minutes Move The Markets?

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: USD FOMC Meeting Minutes @ 18.00 GMT

WHAT WE’RE WATCHING TODAY

Will Today’s FOMC Minutes Move The Markets?

The Fed is due to release minutes of its March 18-19 meeting today at which it reduced the monthly pace of bond buying by $10 billion to $55 billion. Whether they reveal anything new or just nuance, the minutes from the Fed’s last meeting will be a major highlight of the trading week. Traders are watching to see if the minutes take on a more hawkish tone, particularly after Fed Chair Janet Yellen said that the Fed could start raising short-term interest rates about six months after ending its bond-buying program, expected in the fall. The Fed dropped part of its statement that linked raising rates to an unemployment threshold of 6.5 percent. Unemployment was at 6.7 percent in March. FOMC minutes are known to move markets even when they really provide little new information.

The dollar was at $1.3708 per euro today after strengthening 0.3 percent last week to $1.3705. The yen added 0.2 percent to 103.08 per dollar, extending a 0.6 percent advance on April 4. It gained 0.2 percent to 141.30 per euro, following a 0.7 percent jump at the end of last week to 141.54. Stocks rose slightly Tuesday, with the Dow gaining 10 to 16,256 and the S&P 500 up 6 at 1,851. The Nasdaq rose 33 points or 0.8 percent, to 4,112.

FOMC Meeting Minutes @ 18.00 GMT

Dollar Down, Yen Up As BOJ Dampens Stimulus Hopes

The dollar hovered at three-week lows against major currencies today, having broken decisively lower as the yen squeezed higher and the euro gained a tailwind. The moves were sparked partly by yesterday’s comments from Bank of Japan Governor Haruhiko Kuroda who said there was no need for additional stimulus to escape years of debilitating deflation whilst adding that the world’s third-largest economy can ride out the impact of a sales tax rise. Recent remarks from European Central Bank officials have also suggested no urgency for any immediate policy action. The dollar fell more than 1 percent against the yen in its biggest one-day drop in over seven months to 101.55. It has since drifted back up to 101.91. The euro climbed as far as $1.3812, pulling further away from Friday’s trough of $1.3672. The dollar also slid on a raft of emerging market currencies where investors have been wagering massively on dollar strength that has not materialised, forcing a bailout of long positions. In contrast, the Japanese currency gained ground on the euro, the Australian dollar and many other currencies as well, as investors rushed to cover bearish positions.

China Commodity Demand Not Peaking

China’s economic deceleration has shaken commodity markets, however, according to the International Monetary Fund, its demand for commodities is a long way off peaking and does not mean that its rebalancing away from an investment-led economic model will lead to a decline in consumption of commodities. Observing growth trajectories in China, South Korea and Japan, the fund found that China’s per capita gross domestic product would need to double before that started to happen. Instead, the IMF points out that the composition of Chinese demand for commodities is likely to shift. As Beijing moves to shut down unprofitable steel factories, growth in demand for iron ore and copper should moderate. China is still importing iron ore at record levels but these imports are expected to grow at a slower pace from now on. Concerns over China demand partly explain why iron prices have fallen 12% since the start of 2014. By comparison, the fund said, Chinese demand for high-grade metals like aluminum is likely to prove more resilient in years ahead. The fund also anticipates other commodities will do well as incomes in China rise: high-protein foods and zinc. Losers could include rice, copper and eventually coal.

That sums up today’s highlights! We hope you have a profitable day on the markets.

Dollar Rises on Anticipation of FOMC Minutes Release

The Fed is playing a central role again this week in the global currency exchange as traders await the release of the minutes of the December FOMC minutes to gauge how the Fed really stands towards the $10-billion stimulus reduction it decided to implement.

The anticipation alone of the release and speculation as to the content of the minutes has sent the U.S. dollar climbing near a five-year five against the Japanese yen. Economists and traders expect that the stimulus reduction will continue a steady course over the next year with gradual decreases after each new FOMC meeting. According to San Fransisco Fed President John Williams, who is not currently a voting member of the committee, they bond-purchasing programme may well end this year.

A forecast by Bloomberg News survey, sees the Fed cutting the stimulus package by $10 billion dollars after each one of the next seven FOMC meetings, thus ending the programme by December 2014.

Yen Slides on Lower Commodity Demand

With global hesitation to reduce economic stimulus and gains in stocks, demands for assets has dampened sending the yen spinning down against the dollar.

Yesterday marked the first break through the 100-lever point for the yen after two months of relative strength and the currency is expected to record weekly declines against all its major peers amidst data of slowing growth and ahead of the Bank of Japan’s meeting next week. The dollar itself, however, is set to fall against the euro for the first time this month as Janet Yellen, the nominee chairman for the Federal Reserve, stated that more signs of economic strength were needed before tapering begins.

The yen slid 0.2 percent to 100.20 per dollar and touched 100.31, its lowest level since 11th September. The Japanese currency fell 1.2 percent against the dollar in the third consecutive week of losses, and 1.8 percent versus the euro, marking the greatest five-day slide since July.

Will Bitcoin Continue To Rise?

It’s hard to believe that the current price of bitcoin is now an astonishing $390. It seems like it’s the game we should have been playing these last few years - like Kristopher Koch did, the Norwegian student who bought 5,000 bitcoins for $27 in 2009 as part of his thesis. He forgot all about them and only found them last month. Now he’s rich: 5,000 times $390 is $1,950,000! Unfortunately, most of us missed the boat then! But is it too late now? Should we be buying bitcoin in the hope it will continue rising? People find it hard enough to value gold, but how do you value bitcoin? It has a limited supply in its favour (there are about 12 million so far, and an upper limit of 21 million). Couldn’t someone find a way of replicating them? Apparently not, but these days, you never know. Assuming bitcoin is here to stay, there are two bigger issues. The first is that bitcoin is meant to be a medium of exchange but they’re rising in value so fast, it’s tempting to spend your pounds or dollars instead! This is a form of Gresham’s Law at work; bad money driving out the good.

Clearly, this is one of the issues with being an independent currency in a world where central banks are hell-bent on devaluing their own paper. It cannot be entirely coincidental that bitcoin’s recent surge in value coincides with the European Central Bank cutting a key interest rate from 0.5% to 0.25%. If bitcoin is to become useful as a more mainstream medium of exchange, its value has to fall or stabilise at the very least. This goes against its astronomic rise continuing forever. Another concern is that that governments may come after it. They may not be able to crush the crypto-currency concept now that it’s out there but they may well be able to keep a hold on it with regulation. Surely there’s no way that governments are going to relinquish control over one of the key things that gives them their legitimacy and power – the monopoly over currency issuance?

So will bitcoin continue to rise? As it’s a ‘bit’ of an unknown at present, it’s probably best to play safe and maybe accumulate a few, but only with speculative funds you can afford to lose.

Brewed Awakening As Coffee Prices Fall

Arabica coffee fell to the lowest in almost five years in New York on ample supplies from Brazil and Colombia, the biggest growers of the beans favoured by Starbucks Corp. Brazil’s crop will be a record for a year in which trees enter the lower-yielding half of a two-year cycle, broker INTL FCStone Inc. said yesterday. Conditions for the development of next year’s harvest appear to be “good,” it said. Farmers in Colombia will reap 10.6 million to 10.8 million bags in 2013, exceeding a target of 10 million bags, the Colombian Coffee Growers Federation said. Central America started harvesting last month. A bag weighs 132 pounds.“The global coffee harvest kicked into high gear in Colombia, Central America and Brazil,” FCStone said. “The Brazilian ‘off-year’ crop is expected to come in a new record high and is one of the reasons prices are struggling.” Arabica for December delivery fell 0.3 percent to $1.034 a pound by 5:57 a.m. on ICE Futures U.S. in New York after dropping earlier today to $1.031, the lowest for a most-active contract since Dec. 5, 2008. Prices are probably heading for $1, FCStone said. Robusta coffee for January delivery fell 1 percent to $1,468 a metric ton on NYSE Liffe in London. Futures traded in New York declined 28 percent this year, making the beans the third-worst performer in the Standard & Poor’s gauge of 24 raw materials, after corn and silver. Consumers ought to benefit from low price but coffee is a labour-intensive crop and picking is still largely done by hand. Additionally, wages in Brazil and Colombia are rising fast and production costs are above prices, so for the best coffee there’s probably no chance of a cheap shot. Irrespective of price, we’ll still be having our morning coffee!

Euro Down the Drain

The euro fell to the lowest lever in a fortnight against the dollar and the yen as signs of economic weakness in the euro region incited speculation the European Central Bank will cut interest rates.

As data forecast to show that manufacturing decreased in France, one of the eurozone’s largest economies, the euro extended its biggest drop in more that a year against the USD as data showed yesterday that manufacturing expanded in the U.S. Reports yesterday indicated a slowing inflation in the euro region as unemployment reached record-high levels.

The euro dropped 0.3 percent to $1.3548 this morning after reaching $1.3540, its weakest point since 17th October. Yesterday the currency sank 1.11 percent, the most since June 2012. The 17-country currency slipped 0.7 percent to 132.73 yen after touching 132.61, the lowest since 11th October.

The European Union’s statistics office reported yesterday that the euro area’s annual consumer-price declined to 0.7 percent last month, the least since November 2009, from 1.1 percent in September.
Other data showed yesterday that unemployment in the eurozone reached a record 12.2 percent in September.

The European Central Bank said there’s a “subdued outlook” for price growth in the region, and October marks the ninth consecutive month the rate has remained below the 2 percent ceiling. The next meeting of European policy makers will take place on 7th November.

Forecasts published yesterday anticipate the ECB will cut its refinancing rate to 0.25 percent in December from the currennt 0.5 percent. The below-than-forecast CPI numbers have raised concerned over the outlook for inflation in the region and the ECV’s response.

Bullion Declining As Fed Hints At Recovery

Gold declined for a third day, trimming its monthly gain, as the U.S. Federal Reserve spoke of willingness to scale back its monetary stimulus, should economy improve. Silver platinum, and palladium have also experienced drops.

Gold for immediate delivery fell as much as 0.7 percent to $1,335.30 an ounce. Prices, however, are still up 0.5 percent this month after the 16-day U.S. shutdown hurt the country’s economy and investors anticipate that the Fed won’t slow down the pace of asset purchases until next year.

More specifically the central bank announced yesterday that it will maintain its $85 billion monthly bond purchases, while noting that it could see signs of “underlying strength” in the economy.

Dollar Rising Against Euro Sign of Recovery?

The U.S. dollar kept rising for the fourth day against the euro before the release of U.S. Unemployment Claims, which is forecast to have decreased, today at 1:30 p.m. GMT.

The U.S. currency, however, is still set for monthly declines against most major peers as the Federal Reserve decision to continue its $85-billion bond-buying programme released yesterday underlines the toll the partial government shutdown earlier this month took on the economy.

The dollar inched up 0.2 percent to $1.3709 yesterday, after having gained 0.5 percent in the previous three sessions. Overall for the month, the greenback was set for a 1.3 percent fall against the euro.

Whether the signs of recovery can hold up in these turbulent times will be revealed in the first-time applications for jobless benefits which is expected to have decreased to 341,000 in the week ended 26th October from 350,000 the week before.

Fed Meeting to Boost or Burst the Dollar?

The U.S. dollar has reached a one-week high against many major currencies ahead of the Fed’s official decision regarding the economic stimulus as investors seem to be abandoning their bearish tendencies towards the currency.

Following the the 16-day government shutdown earlier this month that resulted in a decision to raise the nation’s debt ceiling and the anticipated decision that the Fed would therefore extend its quantitative easing programme into at least the first quarter of next year, investors eagerly sold their greenbacks pushing the currency’s value into a deep low.

Although the dollar weakened after every single Fed meeting this year, with the exception of June’s meetings, the market seemed more positive toward the dollar this week. With investors having already reacted to the anticipated continuation of the economic stimulus, no further surprises are expected from this 29-30 October Fed meeting, the result of which will be announced at 6 p.m. GMT today.

Only last Friday the dollar had plunged to a nine-month low with its index recording 78.998, but on Wednesday it shot up to 79.692, its highest point since 22nd October. Yesterday the currency closed at 79.648, recording a 0.1 percent rise from its previous position.

Some analysts, moreover, believe that the rise the dollar experienced the last few days has been driven by investors closing short positions they had opened earlier this month, rather than a real change of sentiment in the market.

Gold Lingers At Five-Week High

After the release of U.S. economic data backing the maintenance of the stimulus by the Federal Reserve, gold remained near its highest level in five weeks, before the central bank policy makers meet later today to discuss recovery.

The precious metal rose 0.6 percent to $1,360.76 an ounce, traded at $1,354.12 at 2:46 p.m. in Singapore. Prices climbed to $1,361.93 yesterday, the highest since 20th September. Holdings in the SPDR Gold Trust, the biggest gold-backed exchange-traded product, remained steady at 872.02 metric tons yesterday.

Gold gained in October following the 16-day U.S. government as lawmakers warred over the U.S. budget and debt ceiling, and which may have impeded growth in the nation’s economy.

Gold trading has been low as investors seem to be waiting for the Fed’s official decision regarding quantitative easing and the stimulus reduction plan.

After a 12-year gain, gold dropped 19 percent in 2013 on expectations that the Fed would reduce its $85 billion in monthly body buying as the economy strengthened. The unexpected decision of Fed policy makers to continue providing the economic stimulus at the same levels in their September meeting, has lured investors back to the safe-haven commodity

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