Tag Archives: ECB Easing

ECB: Market-Watchers Look to Draghi for Clarity

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: U.S. Non-Farm Payrolls @ 12.30 GMT

WHAT WE’RE WATCHING TODAY

ECB: Market-Watchers Look to Draghi for Clarity

A month after the ECB president, Mario Draghi introduced a varying range of fixes for the euro area’s faltering recovery, market-watchers are in disagreement about how long interest rates will stay near zero and remain unclear on the details of plans to boost lending. Draghi may use today’s appearance in Frankfurt as an opportunity to clarify the situation. As the Federal Reserve and the Bank of England work their way out of crisis-era support for their economies, the ECB continues to steer against the risk of a relapse. Draghi’s guidance on how he expects rates to develop over the next two to four years, if he decides to give any, will be crucial in bolstering investors’ optimism that the worst is truly over, while reassuring them that protection won’t be removed before they’re ready.

The euro is currently trading below $1.37, roughly where it was when the ECB met on June 5 but down from over $1.39 before the ECB flagged the cut in May. The ECB is keeping a close eye on the euro to gauge its impact on already low inflation. Euro zone inflation stood at 0.5 percent in June, well below the ECB’s medium-term target of just under 2 percent. Should the outlook for inflation deteriorate, Mario Draghi has said that the ECB would consider quantitative easing to keep borrowing costs low and boost spending.

Asia Stocks Fall Along With Gold; Dollar Gains Before Data

Asian Stocks fell from a six-year high, while precious metals dropped as the U.S. dollar gained versus its major peers before today’s jobs reports and a euro-area monetary-policy decision. The MSCI Asia Pacific Index slipped 0.2 percent while Standard & Poor’s 500 Index futures lost 0.1 percent. The Aussie slid 0.7 percent, trading at 93.78 U.S., cents after Reserve Bank of Australia Governor Glenn Stevens said investors are underestimating the chance of currency losses. Oil in New York fell for a sixth day, its longest slump since May 2012. Australia’s currency also slid as the country’s central bank governor said it was overvalued. The Aussie is more than just a few cents overvalued and the risk of a significant fall is being underestimated according to Stevens.

The U.S. Non-Farm Payrolls report comes after yesterday’s ADP data showed U.S. employment rose in June by the most since 2012, with more workers hired than economists projected. The European Central Bank meets today after enacting unprecedented stimulus last month, while in Asia, data on services industries is due.

Watch For Google’s Streaming Music Service…

With its Songza deal, Google could end up dominating other streaming music services if it becomes the default option on Android mobile devices due to Android’s dominance among mobile devices and Songza’s ability to curate and recommend new music to its users. Android devices make up nearly 62 percent of the U.S. market for smartphones, according to research as of May 2014. With the Songza move, Google pitches itself against Spotify, Pandora and Rdio as well as Apple, which acquired Beats Music and its streaming service, and Amazon, which recently launched a streaming music service for its Prime customers. The deal could be a win for Google’s advertising business. Keep an eye on Google stocks…

That sums up today’s highlights. It’s Non-Farm Payrolls day today so a busy day on the markets. Don’t forget you can stay regularly updated on events by visiting our Facebook, Twitter, Google+ and LinkedIn pages.

We hope you have a profitable day on the markets!

UK House Price Growth May Finally Be Slowing

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: CAD CPI @ 12.30 GMT

WHAT WE’RE WATCHING TODAY

UK House Price Growth May Finally Be Slowing

The pace of house price growth in the U.K. may finally be slowing, amid concerns about interest rates rising sooner than expected. Home-owner sentiment about what will happen to the value of their house fell in June for the first time in six months, according to recent housing data. This may increase hopes of a soft landing for the property market. There have been fears in recent months of a bubble building, particularly in London. House prices in the U.K. were 9.9 percent higher in April compared with the same month 2013, but in London, they leapt by 18.7 percent over the year, according to data from Britain’s Office for National Statistics. The index was measured between June 11 and 16. On June 12, Bank of England Governor Mark Carney rattled the markets by suggesting interest rates would rise sooner than thought. Those predicting a soft landing pointed out that for most of the U.K., there has not been a recovery in house prices comparable to that in London.

Lagarde: ECB Should Consider QE

IMF Managing Director, Christine Lagarde has expressed that the European Central Bank should contemplate quantitative easing measures by way of purchasing of sovereign bonds, if inflation in the single currency bloc remains low for an extended period of time. Eurozone consumer prices rose by just 0.5 percent year-on-year in May, down from 0.7 percent in April and well short of the ECB’s target of close to 2 percent. The ECB has so far resisted embarking on a quantitative easing program, but has said it stands ready do so if needed. Earlier this month, the central bank revealed new measures to stimulate the economy including taking an unprecedented step on of imposing a negative interest rate on banks for their deposits which essentially means charging lenders to park money with it. Lagarde also pointed to three major risks currently facing the global economy; job creation, a sovereign and corporate debt overhang and geopolitical tensions which, she said “is creating massive uncertainty, and massive uncertainty is not conducive to investment decisions”.

Gold Gains And Moves Further Above $1,300

Gold held strong above the $1,300 level today, maintaining its upward momentum amid escalating violence in Iraq, along with the promise of steady interest rates. Gold for August delivery was up $1.50 to $1,315.60 an ounce. A day earlier, gold exploded for a 3.3% rally to reach its highest point since April 14. Analysts believe gold is destined to stay in a fairly tight range over the short term, with a bias to the upside. The metal should enjoy a degree of underlying support from geopolitical headlines which still remain of concern as they have the ability to seriously destabilise the markets, especially if they result in a further spike in oil prices.

That sums up today’s highlights! Remember that we are constantly updating our social media pages with all the latest market news so keep checking in! We hope you have a profitable day on the markets.

Fed May Raise Rates Faster Than Expected

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 Core CPI @ 12.30 GMT

WHAT WE’RE WATCHING TODAY

Fed Expected To Raise Rates Faster Than Expected

Economists expect the Federal Reserve to raise its benchmark interest rate faster than market expectations. Investors are assuming a slower pace of rate increases than the Fed itself, and may be overlooking recent reports showing the world’s largest economy is gaining strength after contracting in the first quarter. In March, officials predicted the fed funds rate, now between zero and 0.25 percent, would rise to 1 percent at the end of next year and 2.25 percent at the end of 2016. Fed officials may have underestimated the strength of the economy. Unemployment stood at 6.3 percent in May, at the top end of the range most officials forecast for the fourth quarter. Similarly, the personal consumption expenditures price index - the Fed’s preferred gauge of inflation, rose 1.6 percent for the 12 months ending April, a rate most officials expected at the end of the year. Officials will release a new set of quarterly forecasts for unemployment, inflation, economic growth and the benchmark federal funds rate at the conclusion of their meeting tomorrow.

The Tide Turns Against The Euro

The euro tumbled following monetary easing from the European Central Bank earlier this month and analysts anticipate further currency weakness. Market positioning data released on Friday showed that net short positions in the euro/dollar i.e. a bet on the euro falling, have risen to their highest level since late May 2013. Europe’s single currency has declined just over 3 percent from a 2 1/2 year high hit in early June, undermined by the ECB’s decision to impose a negative interest rate on banks for their deposits and cut its main lending rate in a bid to lift inflation and a weak economy. Currency analysts say the ECB’s monetary easing has fueled the use of the euro for carry trades - borrowing money in a currency that is backed by low interest rates to fund investments in higher-yielding assets. It seems, therefore, that the tide is turning against the once-resilient euro. Recent data shows that weekly market positioning data speculators have increased bullish bets on the greenback to their highest level in almost four months.

Iraq Violence Lifts Gold’s Safe-Haven Appeal

Gold steadied below a three-week high on today as escalating tensions in Iraq attracted some safe-haven bids. Bullion initially rallied after the United States said it could launch air strikes to support the Iraqi government after a rampage by Sunni Islamist insurgents. Investors often turn to gold or other precious metals as a safe haven in times of political or financial uncertainty but so far this year, gold has failed to maintain gains despite heightened geopolitical tensions. Gold’s initial gains were also boosted by developments in Ukraine. Traders warned this Wednesday’s Federal Reserve policy meeting could bring caution to any rally in gold as markets watch for any signals on when the U.S. central bank might begin raising interest rates.

That sums up today’s highlights! Don’t forget to keep a check on all the market events of the day via our Facebook, Twitter, Google+, and LinkedIn. We hope you have a profitable day on the markets.

RBNZ Expected To Hike Official Cash Rate

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: NZD Official Cash Rate @ 21.00 GMT

WHAT WE’RE WATCHING TODAY

RBNZ Expected To Hike Official Cash Rate

The Reserve Bank of New Zealand is widely expected to lift the official cash rate a further 25 bps when it meets today. However, there is less consensus on the indications the bank may provide about the timing and pace of future hikes. The RBNZ began lifting the OCR from historically low rates in March to the current 3.00% and at the time signaled regular increases at six weekly intervals through September. Since then the balance of factors has shifted. While dairy prices have declined and the pace of gains in house prices has slowed, the exchange rate has remained steady, migration has soared, and economic data have surprised to the upside. The net balance doesn’t change expectations for a hike on Thursday but economists differ on whether this raises the odds of a hold in July and the number of OCR hikes that are likely this year. Expectations range from another 25 basis hike by December, following the likely Thursday hike, to three more hikes that will take the OCR to 4.00%.The money market is expecting a total of two hikes by December. Reserve Bank governor Graeme Wheeler will release the bank’s decision today @ 21.00 hours GMT. The bank’s statement will include an updated set of economic forecasts in the quarterly Monetary Policy Statement.

Euro Under Pressure In Asia As Stocks Sit On Gains

The euro came under fire today as the European Central Bank’s embrace of negative interest rates encouraged flows out of the Eurozone, while Asian shares consolidated near recent highs. In contrast the dollar found support in a run of improving U.S. economic data which has increased speculation that the Federal Reserve might sound less dovish on policy when it meets next week. The euro fell to $1.3524 and further away from a $1.3668 peak scored at the start of the week. It also hit a seven-month trough on the higher-yielding Australian dollar and to near its lowest against the pound since late 2007.Action in equity markets was more muted with many indices already having come a long way. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.2 percent from a three-year peak. Japan’s Nikkei edged up 0.3 percent aided by MSCI’s decision to remove South Korea and Taiwan indexes from its review list for reclassification to developed markets, keeping them in the emerging markets classification. Moves were minor on Wall Street with the Dow up 0.02 percent, while the S&P 500 down 0.02 percent.

Google Buying Satellite Company For $500 Million

Google is buying Skybox Imaging, a 5 year old startup, in a deal that could serve as a launching pad for the company to send its own fleet of satellites to take aerial pictures and provide online access to remote areas of the world. The $500 million acquisition will initially provide Google with the means to improve the quality and immediacy of the satellite imagery used in its digital maps. Google plans to use Skybox’s satellite already in orbit to supplement the material that it licenses from more than 1,000 sources, including other satellite companies. Eventually, though, Google hopes to build more satellites that could be used to beam Internet access to points around the world.

That sums up today’s highlights! Check into our Facebook, Twitter and Google+ pages for regular updates on all the tradable events of the day. We hope you have a profitable day on the markets.

ECB Set To Cut Rates Driving Banks Into Lending

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

WHAT WE’RE WATCHING TODAY

ECB Set To Cut Rates Driving Banks Into Lending

The European Central Bank is set to impose negative interest rates on its overnight depositors, seeking to push banks into lending and to prevent the euro zone falling into deflation as experienced in Japan. At today’s meeting, ECB policymakers are also expected to launch a loan program for banks with strings attached to make sure the money actually gets out into the euro zone economy. Even though the risks are limited of the euro zone entering a spiral of falling prices, slowing growth and consumption, the ECB is increasingly concerned that continuously low inflation and weak bank lending could upset the recovery. The economy grew just 0.2 percent in the first quarter, and euro zone annual inflation unexpectedly slowed to 0.5 percent in May, putting additional pressure on the central bank to step in. A broad stimulus package may be in the making that is likely to consist of a cut in interest rates which would push the deposit rate for the first time into negative territory and the offer of longer-term loans linked to further lending. Large-scale asset purchases remain a distant prospect. Cutting the deposit rate below zero would see the ECB charge banks for parking their excess money at the central bank, a step it hopes will prompt them to lend out the money instead. The euro has fallen about 4 U.S. cents against the dollar since the ECB’s May meeting, hitting $1.3586 last Thursday. Before taking any decision, the Governing Council will look at the June update of its quarterly staff projections. In March, they showed it would take 2-1/2 years for inflation to get near the ECB’s target of below but close to 2 percent. A deteriorating outlook will be seen as triggering action although a move to deploy so-called quantitative easing remains some way off.

Nikkei Touches Two-Month High. Is it Just The Start?

The Nikkei touched a two-month high this week, a sign of lessening concerns about Japan’s economy, according to analysts who remain bullish on Japanese stocks. Stocks powered higher on Thursday, to reach 15,141 soon after open, its highest level since April 3. Last year, plans to boost Japan’s economy through aggressive easing, fiscal stimulus and structural reform saw the Nikkei rise 55 percent, while the yen depreciated 21 percent against the U.S. dollar boosting exporter stocks. However, the Nikkei fell 8.2 percent during the first quarter of 2014 amid concerns about the impact of a consumption tax hike to 8 percent from 5 percent in April. Companies were afraid that Japan’s economy would lurch back into the dangerous deflationary spiral that the last tax hike prompted in the 1990s but the economy has proved resilient, and Japan’s core consumer prices jumped 3.2 per cent in April from a year earlier, the fastest gain since February 1991. Meanwhile, investors have also turned more positive on progress on structural reforms. This week Japan’s corporate tax rate was cut, one of the structural reforms investors were worried might not come to fruition. Japan’s corporate tax rate currently sits at around 35.6 percent, among the highest in industrialised nations. The release this week of a draft of the government’s growth strategy has also powered stocks higher.

WTI Falls for Second Day Amid Record U.S. Supply

West Texas Intermediate fell for a second day as crude stockpiles remained near record-high levels amid declining fuel demand in the U.S., the world’s biggest oil consumer. Futures dropped as much as 0.4 percent in New York. Crude supplies shrank by 3.43 million barrels to 389.5 million last week. They were at 399.4 million through April 25, the most since the Energy Department’s statistical arm started publishing weekly data in 1982. There is still concern that the market is oversupplied. WTI for July delivery declined as much as 45 cents to $102.19 a barrel in electronic trading on the New York Mercantile Exchange and was at $102.34. Brent for July settlement decreased as much as 40 cents, or 0.4 percent, to $108 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $5.98 to WTI.

That sums up today’s highlights! Keep checking in regularly via our social media channels for all the latest trading updates and news. We hope you have a profitable day on the markets.

What Will Apple Reveal This Week?

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: GB Manufacturing PMI @ 08.30 & U.S. ISM Manufacturing PMI @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

What Will Apple Reveal This Week?

Apple’s Worldwide Developer Conference starts today amid speculation about what the company is planning to reveal. Rumours are that Apple’s lineup this year will be the best in 25 years. Although consumers will likely have to wait until later this year for big product announcements, industry experts say that the company may roll out some new features in its software at the conference. The focus is expected to be on two big themes; health and connecting the home. For Apple, it’s all about having all the devices connected and getting people even more locked into their ecosystem and adding value to devices that users already have. The company’s competitors, including Google, which recently bought the smart thermostat company Nest, are all making plays in this space and time is ticking for Apple to do the same. Presently, it is a fragmented experience and the plan is to start connecting things together which Apple will do by using the iPhone. Related to improving Apple’s home experience, the company may also implement voice-enabled Siri capabilities in Apple TV which would help the company compete with Amazon’s Fire TV. In addition, there are rumours of the next iPhone and iPad having larger screens and that the updated operating system will enable split-screen capabilities on the iPad. This would help it compete with the growing number of tablets flooding the enterprise space. A revealing week ahead for Apple watchers, traders will be watching the markets for movements in the price of Apple stocks.

ECB Expectations Pressure Euro

The euro came under pressure today as the market braced for further stimulus measures from the European Central Bank this week. Hopes for policy action at Thursday’s ECB policy review have been high since ECB president Mario Draghi said in Portugal last week that the central bank must be prepared to take action if risks surrounding persistently low inflation emerge. The ECB is thus preparing a package of policy options for its meeting that includes cuts in all its interest rates. In the markets, the focus is shifting to what the Governing Council could do to ‘surprise’ the markets, such as signaling that more aggressive unconventional quantitative easing measures could be forthcoming. Analysts point out that if the ECB does not surprise markets, there could be some cautious profit taking on the EUR, and add that risks for EUR could be on the downside over the medium term. The euro edged down slightly to $1.3627, and remained not far from a three-month low of $1.3586 touched on Thursday.

Gold Falls In Longest Losing Streak In 7 Months

Gold fell for a fifth straight session today in its longest losing streak since November, affected by stronger global equities and weak physical demand in Asia. Spot gold had eased 0.2 percent to $1,247.89 an ounce, not too far from a 4-month low of $1,241.99 hit on Friday. The five-day fall is the metal’s longest losing run since October/November when it dropped for seven straight days. The technical outlook for gold is not looking very good and there is a strong chance it will fall to $1,230 and possibly all the way $1,200. Physical markets haven’t reacted very much to last week’s drop but if prices fall to $1,200, there could be some action. Physical buying failed to pick up as consumers expect gold prices to fall even further. Other data also showed that hedge funds and money managers cut their bullish bets in gold futures and options in the latest week to their lowest level in nearly four months, another sign of waning investor interest in the metal amid higher equities. An early or quick gold turnaround is not expected as the market may not have bottomed yet.

That sums up today’s highlights! It’s a busy week on the market so ensure you’re up-to-date with all the latest news via our Facebook, Twitter, LinkedIn and Google+ pages. We hope you have a profitable day on the markets.

Will Fed Minutes Spark More Market Volatility?

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: U.S. FOMC Meeting Minutes @ 17.30 GMT

WHAT WE’RE WATCHING TODAY

Will Fed Minutes Spark More Market Volatility?

Fed watchers are not expecting much in the way of market-moving news from today’s minutes following the Fed’s last meeting Wednesday, but there’s a chance they could be spiced up with some new information on the Fed’s post-bond buying strategy. New York Fed President William Dudley gave some clues about what could show up in the Fed minutes. He said stopping the Fed’s reinvestment of mortgage securities before it raises rates may not be the best strategy, though the FOMC agreed to it in June, 2011. Previously, it was expected the Fed could allow reinvestments to end before rate hikes. For bond traders, Dudley’s comments about keeping easy policy in place and not having a definite timing for liftoff, or raising rates, helped put a bid in bonds. Though players in both markets said there was not much new in the remarks that would justify big moves. Fed watchers expect to see both the hawks and doves represented in the meeting minutes with some cautious words on the labour market.

The Dow fell 137.55 points, to close at 16,374, and the S&P 500 fell 12 points, to finish at 1,872. What appeared to be a change in tone on Monday for the Nasdaq faded quickly as it skidded by 0.7 percent, to 4,096.

BOJ Holds Off Easing Amid Signs Japan Weathering Tax Rise

Japan’s central bank held off boosting stimulus and raised its view of business investment as the economy shows signs of weathering the impact of the first sales-tax increase since 1997. The Bank of Japan will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen ($691 billion) per year, in line with forecasts. While an economic contraction is projected for this quarter, companies’ plans to boost investment are adding to signs that growth may bounce back. Governor Haruhiko Kuroda is chasing a 2 percent inflation target, with economists forecasting that more monetary loosening will be needed by the end of the year to achieve the goal. Japan’s trade deficit shrank in April as imports rose the least in 16 months after the sales-tax increase. Overseas shipments increased 5.1 percent from a year earlier.

Are ECB Easing Measures Around The Corner?

Expectations the ECB will surprise the market with a package of easing measures next month has pushed the euro lower, but some analysts are worried that the proposed negative deposit rate could backfire. The deposit rate is already at zero. Many analysts expect a 10 basis-point cut in the rate, meaning the ECB would effectively charge banks for parking their money at the central bank rather than lending it. It is argued that a negative rate could be self-defeating, as while central banks haven’t used it broadly, the experience in Denmark, one of the few countries to implement it, was unsuccessful. The ECB is considering broader easing measures as Europe’s economic recovery has been held back in part by a strong euro keeping inflation at worryingly low levels and damping exports. Annual inflation in the 18-member euro zone picked up slightly in April to 0.7 percent, but remains way off the ECB’s target of close to 2 percent. Risk aversion has made banks unwilling to lend, which has also weighed on the economy. Many including Deutsche Bank are not convinced by the merits of a negative deposit rate, particularly given that it is unclear what this move is trying to achieve, except for the indirect effect of a weaker currency, which could be a clear positive.

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

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