Tag Archives: European Central BAnk

Euro Declines Before German Sentiment & Elections

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. New Home Sales @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

Euro Declines Before German Sentiment & Elections

The euro was set for a three-week decline today before data that may show German business confidence fell and prompt the European Central Bank to boost stimulus as soon as next month. The Euro approached a three-month low versus its U.S. peer amid concern that euro-skeptic parties will gain ground in elections for the European Union Parliament. The dollar remained higher against most major counterparts before a U.S. report due today that may indicate an increase in new home sales last month. The euro bought $1.3651 from $1.3656 after touching $1.3635 on May 21, the weakest since Feb. 13 and fetched 138.81 yen from 138.93.The dollar was little changed at 101.72 yen after climbing 0.4 percent yesterday. The euro has fallen 0.3 percent since May 16, extending a 1.3 percent decline in the previous two weeks.

U.S. Stocks End Higher For Second Day

U.S. stocks rose modestly yesterday, extending the prior day’s rally, as investors weighed varied economic reports a day after the Federal Reserve signaled interest rates would remain low for the foreseeable future. Yesterday’s data included the Markit Economics preliminary index of U.S. manufacturing, which rose to 56.2 this month from 55.4 in April. Other reports had sales of previously owned homes rising last month, the Conference Board’s index of leading economic indicators gaining in April and more Americans than estimated filing claims for jobless benefits last week. After a 43-point fall and 32-point gain, the Dow Jones Industrial Average rose 10.02 points, or nearly 0.1 percent, to 16,543.08. After rising within 2 points of its record close, the S&P 500 added 4.46 points, or 0.2 percent, to 1,892.49 while the dollar gained against the currencies of major U.S. trading partners.

Gold Trades Below $1,300 As Palladium Continues To Rise

Gold traded below $1,300 an ounce this week as investors assessed the health of the U.S. economy and the impact on monetary stimulus. Platinum and palladium were poised for a second week of gains. Bullion for immediate delivery traded at $1,294.13 an ounce today after climbing 0.2 percent yesterday, following data that showed U.S. jobless claims rose more than forecast. Gold has advanced 7.7 percent this year partly on tension in Ukraine and concern that the U.S. economic recovery may be fragile. U.S. data continues to be mixed which keeps gold in a tight trading range.

That sums up today’s highlights! All the latest trading updates can be found on our Facebook, Google+, Twitter and LinkedIn pages - stay in touch!

We hope you have a profitable day on the markets.

Just A Minute!

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

Main Trading Events Of The Day: Several today including ECB Press Conference @ 13.30; USD Trade Balance & Unemployment Claims @ 13.30 GMT

Earnings Reports: General Motors Co; Earnings per share forecast: 88 cents. LinkedIn Corp; Earnings per share forecast: 38 cents.

WHAT WE’RE WATCHING TODAY

European Central Banks Set To Meet As Asian Stocks Rebound

A busy day on the markets with monetary policy decisions expected later in the day from the European Central Bank and Bank of England. While analysts don’t expect any action from either bank, focus will be on hints about future policy direction. Asian equities rebounded on the back of upbeat earnings reports and as investors went bargain hunting after recent selling, but caution prevailed ahead of Friday’s U.S. jobs report. U.S. indices ended little changed yesterday as investors reacted to a mixed bag of economic data. Attention now turns to Friday’s important U.S. payrolls report with traders hoping for a rebound after December’s disappointing reading. Another weak report could dent investor sentiment, which has been hurt by the turmoil in emerging markets, slowing Chinese growth and a reduction in U.S. stimulus.

Gold Retreats Again as Silver Extends Advance

Gold retreats once again, falling from the highest in over a week as gains in equities and emerging-market currencies slowed demand for alternative investments. Silver extended an advance to head for the longest rally since December. Bullion for immediate delivery traded at $1,255.67 an ounce from $1,257.92 yesterday, when prices reached $1,274.74, the highest since Jan 27. Silver rose 0.1 percent to $19.9136 an ounce, a fifth day of gains capping the longest winning run since the period to Dec. 27. Gold advanced 3.2 percent in January, the first monthly gain since August 2013 as the MSCI All-Country World Index of equities sank 4.1 percent on concern that a rout in emerging markets would worsen. Silver yesterday jumped 2 percent, the most since Jan. 10 helping send its ratio to gold to the lowest in almost two weeks today.

Twitter Investors Twitchy Over User Growth Figures

Twitter yesterday reported its slowest pace of user growth in recent company history, lowering investors’ hopes that it can sustain its rapid pace of expansion and wiping out nearly a fifth of the company’s value in after-hours trading. Although Twitter posted better-than-expected fourth-quarter revenue of $243 million in its first results as a public company, investors were unnerved by the weak user growth, as well as a severe decline in timeline views. Some analysts warned that its valuation looked increasingly bloated. On a more positive note, the efficacy of its advertising business model which places ads inside users’ timelines every time they refresh appeared to steadily improve. Overall, the actual numbers are strong in terms of fundamentals, just not as strong as some people were hoping for.

That sums up today’s highlights. Remember to watch for those important earnings announcements later today. Keep in touch with us via Facebook, Google+ & Twitter for breaking news, educational information, trader tips and more. Trade only with the experts! We hope you have a profitable day on the markets.

Can Mario Draghi Celebrate Euro Victory Yet?

If there’s one man that can celebrate a fresh start in the new year, that certainly seems to be Mario Draghi.

The European Central Bank president had taken a bold stance during a London speech in July 2012 when he declared that he would do “whatever it takes” to save the Euro. Despite disbelief and opposition, even from within Euro-zone member states such as, most notably, Germany, Draghi seems to have proven himself good for his word.

The crisis that brought the purpose of the euro into questions and had many questioning its survival, appears to have been dissipated. Draghi has been praised even by some of his harshest critics, such as Nobel-laureate Paul Krugman and economist Nouriel Roubini for revitalizing the euro.

Krugman, in fact, admitted that “Draghi did the most of it,” and said it was “pretty clear that the ECB has been decisive in alleviating the European situation.”

So where can positive results be seen? Ireland put bonds for sale this week for the time after exiting the IMF’s support programme of three years. Portugal and maybe even Greece are expected to be able to follow suit soon enough. In Spain, moreover, yields on 10-year government debt fell the most since 2009. The Stoxx Euro 600 Index climbed to its highest peak in nearly five years, while the euro advanced the most against the dollar in nearly three years.

Reduced budget cuts and increased retail sales data this week seem to signal the beginning of the end for the longest recession in the short history of the euro. And just to prove wrong anyone who predicted that the euro would spit up now, Latvia joined the currency moving it from a 17- to an 18-nation shared currency.

EU Trying to Patch Up Holes in Virtual Wallets

Be warned that there’s a hole in that e-wallet of yours! Will EU regulation comes in to patch things up?

The European Banking authority issue a report today advising consumers to take the dangers of cybermoney more seriously with digital thefts having exceeded $1 million and traders being entirely unprotected in a case of a virtual currency collapse.

Bitcoin and other virtual currencies have come under close scrutiny lately with both favourable and not-so-favourable treatment by national banking authorities. While the U.S. senate added bitcoin under the umbrella of traded currencies, the central bank of China prohibited that financial institutions deal in Bitcoins, while in Germany two suspects were arrested for fraud in an investigation regarding the illegal issuing of Bitcoins worth 700,000 euros ($963,000).

The EBA noted in a statement published on its website: “Should the popularity of a particular virtual currency go down, for example if another virtual currency becomes more popular, then it is quite possible for their value to drop sharply and permanently.”

The virtual currency Bitcoin emerged in 2008 and exist as software under the control of no government or central bank. The identity of the programmer or group of programmers that designed the currency, going under the name Satoshi Nakamoto, is still unknown.

The price of Bitcoins exceeded $1,000 when the U.S. law enforcement and securities agencies proposed in a Senate hearing last month that it be considered a legitimate means of exchange. Investors anticipated that the positive publicity would widen the use of digital money.

Nevertheless, prices have since dropped to around $866 on Bitstamp, a Slovenia-based online exchange. According to Bitstamp, it would cost around $10.5 to purchase all the Bitcoins currently in circulation.

The EBA, the 28-nation executive apparatus of the European Union, would have to approve of virtual currencies first in order for regualtion to go ahead. Michael Barnier, the financial services commissioner of the EU, however, said to Bloomberg that they “support the EBA warning to consumers on the risks associated with virtual currencies.”

Furthermore, the EBA noted that people who have virtual currencies in their possession may be have to pay value-added or capital tax gains.

“We recommend that, if you buy virtual currencies, you should be fully aware and understand their specific characteristics,” the report said.

Euro on a Seven-Day Advance Before Draghi’s Speech Today

The euro has returned to old glories, albeit perhaps momentarily, as it sustains a week-long rally against the dollar matching its best performance since April 2011 before the speech of European Central Bank President Mario Draghi speaks in the European Union parliament today.

Data scheduled for today are expected to show an upturn in the industrial production of the euro-area and positive sentiment kept the currency trading near a six-week high. U.S. data, however, are also expected to show growth and the greenback ended a two-day decline against the yes as investors consider the possible impact of next week’s Federal Reserve meeting.

The euro remained fairly stable at $1.3784 yesterday and touched $1.3877, its strongest level since 29th October. The seven-day advanced matched its longest streak since an eight-day gain in April 2011.

The ECB refrained form changing interest-rates targets this month and President Draghi, who speaks at the European Parliament today, noted two days ago that it’s “crucial” for “other actors” to support the central bank’s monetary policy actions by effecting appropriate changes at the regional and national level for a sustainable recovery.

“The ECB, like all central banks, should not try to do what they cannot do and one of these is to supplement governments for structural reform action or repair broken banking systems,” he said in Rome.

Economic Events Shaping Up Currencies

Global economic events have affected major currencies around the globe as investors look to central banks and the employment market to gauge the health of national economies amidst last months talks and predictions regarding the future of easy monetary policy around the globe.

The Bank of England will announce its monthly official bank rate at 12:00 noon GMT, followed by the European Central Bank at 12:45 p.m. GMT. Both currencies gained today, with the euro lingering just below 0.3 percent of its highest level in a month as European official are not expected to cut interest rates, and the British Pound hitting its highest level since 2011 with data showing the construction industry expanding at the fastest pace in six years. As concerns about disinflation have abated since November, the ECB no longer appears under pressure to cut interest rates.

Down Under things turned out differently, and the Australian dollar slid when this morning’s data slowed that the country’s economy grew less than forecast in the third quarter. Australia’s growth slowed its annual pace to 2.3 percent in the three months through September.

In the U.S. reports are expected to show a boost in hiring and services numbers sending the dollar on the rebound against the yen after its greatest fall in almost a month.

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.

Central Banks Easing The Way To The Bottom

The way out of the global financial crisis that set its talons into the global economy in 2008 has proven quite precipitous as nations race-not so as to be the first to climb out of it, as one might have expected, but to be the first to hit rock bottom, apparently.

The European Central Bank shocked the financial world last Thursday when it cut its refinancing rate to a record low of 0.25 percent amidst equally shocking low inflation rate, despite the euro’s climb to its highest level since 2011 in the preceding weeks. The rate cut that caused the euro to drop 1 percent against the US dollar in the very day is expected to restrain the euro at decidedly lower levels in the near future.

The ECB’s move, however, was not an isolated incident, but only one skirmish in the more general shock-therapy strategy central bankers across the globe seem to have adopted over the last year. On 11th September, the day of the ECB rate-cut announcement, Czech policy makers advised they would be weakening the koruna, intervening in the foreign exchange market for the first time in over a decade. New Zealand has also dropped hints about delaying rate increases in order to moderate the strength of its dollar, while Australia considered its currency to be lingering at “uncomfortably high” levels. And all this just in the current month.

Last month, the US put all major currencies through a roller-coaster ride as speculators tried to predict the future of the U.S. government’s quantitative easing programme and the limit of the country’s debt ceiling. Policy makers suspended governmental operations for over a fortnight with the Federal Reserve finally deciding not to begin curtailing its economic stimulus until further signs of growth in the economy.

Last spring, economists anticipated that the Bank of Japan would ease its cash flow, but none expected the $1.4 trillion monetary mega-stimulus that it scheduled for release over a span of less than two years.

Amidst this new era of “currency war,” as the competitive currency devaluation was termed by Brazil’s Finance Minister in 2010, and with inflation preventing further investments by its agonisingly slow pace, the International Monetary Fund has spoken about the prospect of downgrading the global economy to urge central bankers to refrain from weakening currencies as a means for boosting competitiveness.

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.

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