Tag Archives: FOMC

Will The Fed Jolt The Markets 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: US Industrial Production @ 13.15 GMT

WHAT WE’RE WATCHING TODAY

Will The Fed Jolt The Markets This Week?

The Federal Reserve is expected to announce another $10 billion monthly reduction in quantitative easing in this week’s FOMC statement with the focus being on the Fed’s economic assessment, which could end up realigning investor expectations about when the Fed is likely to hike rates. In its last statement, the FOMC noted that growth in economic activity had picked up after having slowed sharply during the winter, but added that the labour market indicators were mixed and the unemployment rate remained elevated. However, the outlook has improved with the last two employment reports showing monthly non-farm payrolls growth of 282,000 and 217,000. And after a severely weak first quarter, several economists are looking forward to Q2 GDP growth around 4 percent. While the Fed is unlikely to alter its tapering plans or tweak its forward guidance, its new economic projections could still prompt speculation that the first interest rate hike may come earlier than mid-2015. Analysts are concerned that these new Fed jitters could crop up just as the market is running into geopolitical concerns surrounding the situation in Iraq and its impact on crude oil.

Asia Stocks Lower As Yen Gains On Iraq Conflict

Japanese stocks fell today as concerns over Iraq resulted in a stronger yen. The escalating conflict in Iraq continued to pressure market sentiment, pushing the cost of oil higher and sending investors toward the yen, Asia’s safe-haven currency. The yen edged a touch higher in Asian trade, with the U.S. dollar last at ¥101.84, compared with ¥102.04 on Friday. The stronger yen translated into falls for the Nikkei Average which was last down 0.7%. Australia’s S&P/ASX 200 lost 0.2%, as mining stocks dropped amid declining prices for spot iron ore, which fell 0.7% on Friday to a 21-month low. Concerns over the use of iron to finance deals and allegations of fraud involving commodities stored in China continue to rattle the market. In China, markets were mixed with Hong Kong’s Hang Seng Index down 0.2% and the Shanghai Composite was flat. Trading got off to a quiet start today, ahead of the U.S. Federal Reserve’s upcoming policy meeting. Scheduled to conclude on Wednesday, the meeting will provide a monetary-policy update for the world’s largest economy.

Russia/Ukraine Gas Deadline Passes As Talks Fail

A deadline for Ukraine to pay Russia its gas bill passed today after talks between the two sides failed to reach agreement. Russia will now switch to an advance payment system for supplying its eastern European neighbor, meaning that gas resources which also supply parts of wider Europe could potentially be shut off at any point. Russia has previously said that Kiev owes $1.95 billion for gas that has already been delivered. Under previous President Viktor Yanukovych, Ukraine had been paying a reduced price for the amount of gas that it was buying from Russia. However, after fierce street battles, a change of government in Kiev and the annexation of Crimea by Russia, Moscow ramped up the prices it charged to Ukraine. After several rounds of talks, with a representative from the European Union trying to help both sides reach a compromise, no clear solution has been found.

That sums up today’s highlights! Stay in touch throughout the day via our social media channels for all the latest market updates. We hope you have a profitable day on the markets.

Dollar Holds Biggest Advance in Seven Months

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

Main Trading Event Of The Day: USD Unemployment Claims @ 12.30 GMT; USD Existing Home Sales @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

Dollar Holds Biggest Advance in Seven Months

The dollar held its biggest gain in seven months after Federal Reserve policy makers signaled that they’ll probably raise interest rates by the middle of next year. The dollar was trading at $1.3836 per euro after climbing 0.7 percent yesterday to $1.3833. The Federal Open Market Committee discarded a jobless-rate threshold for considering when to increase borrowing costs and said it will look at a wider range of data. Policy makers also reduced monthly bond-buying by $10 billion to $55 billion and added that it will slow purchases in further measured steps. Fed Chair Janet Yellen indicated a period of around 6 months between the end of the stimulus and the first rate increase. The rally in the U.S. dollar on the notion that U.S. interest rates could rise sooner rather than later may just be getting started, according to strategists and the outlook for the pace of policy tightening is faster than markets have priced in. The Fed’s announcement confirms the view that the rising-dollar trend will accelerate in the six-month to one-year term and that as long as upcoming U.S. economic data confirms the Fed’s confidence that recent weakness in data is related to unusually cold weather, the dollar should head higher. If data disappoints, that could trigger the dollar to unwind some of the gains, but data is expected to start improving and that means the dollar gains should be built on.

Gold Hovers Near 3-Week Low While Stocks End Lower On Fed

Gold hovered near three-week lows on Thursday as the U.S. dollar jumped on expectations the Federal Reserve could end its bond-buying programme later this year, tarnishing the metal’s safe haven appeal as a hedge against inflation. Although concerns about the Ukraine crisis could lend support, the bullion market was suffering from a lack of physical buying from top gold consumer China following a sharp drop in its currency. The market may recover and rally from here but analysts believe the upside will be limited and that gold could still fall back to about $1,300 an ounce. Sentiment was mixed following the move by the Fed to reduce bond-buying which could overshadow the impact from tensions in Ukraine.

Meanwhile, stocks eased off session lows but still finished firmly in the red on Wednesday after Federal Reserve Chair Janet Yellen suggested interest rate hikes would happen about six months after quantitative easing ends. The Dow Jones Industrial Average slumped 114.02 points to close at 16,222.17, initially tumbling nearly 200 points after Yellen’s rate hike comment. The blue-chip index had been trading in a lackluster 50-point range prior to the decision. The S&P 500 declined 11.48 points to finish at 1,860.77 while the Nasdaq fell 25.71 points to end at 4,307.60.

U.S. Existing Home Sales & New Claims For Unemployment Expected To Drop

Pending home sales have reportedly been weaker lately, with a 0.1% increase in January only just offsetting the 5.8% decline in December, suggesting limited momentum for completed sales. With fewer pending contracts in the pipeline, the pace of existing home sales is likely to have remained soft in February. Total housing inventory was up in January, although the number of homes for sale was still low, indicating that constraints on the supply side are also likely to continue to hold back the sales pace.

The number of new claims for unemployment benefits unexpectedly dropped 9,000 last week to a seasonally adjusted 315,000, the best reading since November. Economists expected a rise in claims to a level of 334,000. The four-week average fell 6,250 to 330,500, the lowest since early December with improved weather conditions apparently having contributed to the improvement in the job data. The number of people still receiving benefits after an initial week of aid fell 48,000 to 2.86 million in the week ended March 1, the lowest level since December. A small rise to 327,000 is forecasted.

That sums up today’s highlights! Stay in touch for all the latest financial news. Find us on Facebook, Twitter, Google+ and LinkedIn.

We hope you have a profitable day on the markets!

Misjudging the Fed’s Tapering: The Importance of Fundamental Analysis

We always stress the importance of fundamental analysis on our main website and informative videos we produce for our traders and followers, but today’s news illustrates the importance of this aspect of binary options trading in a grand real-life paradigm of immense proportions.

One of the major market moving events of 2013 had been the Fed’s decision to taper its Quantitative Easing programme. The decision, as you probably remember, was preceded my rumours and false alarms and vague language of “more growth” and “stability” in the U.S. economy that kept investors and traders on their speculating toes.

When the decision finally did come last month, at the end of the December FOMC meeting, not everyone expected it, not even the “ol’ boys” of trading. Money manager Bill Gross, known as the “Bond King” misjudged the Fed’s intentions to begin scaling back the economic stimulus in 2013, causing the Pimco Total Return Fund (PTTRX) to decline the most in twenty years.
And the billionaire was not the only to commit the error. The biggest funds at Pacific Investment Management Co. also followed in the same footsteps including in offerings of non-traditional bonds that have been especially designed to protect investors from interest-rate fluctuations.

This is not to argue that you should heed the advice of professional traders and money managers. What we rather like to emphasize is that one should always follow the financial and world evens closely and come to his own conclusions and predicted aided by the advice of experts, but without blindly following them.

Fed Decision to Cut Stimulus Boosts European Stocks

The Federal Reserve’s decision earlier this month to begin tapering its economic stimulus boosted European shares for a second day, sending them well on their way from their biggest weekly advance since April. U.S. stock-index futures and Asian shares show little movement.

Goldman Sachs Group Inc. advised buying shares of Telenet Group Holding NV sending the stock on 2.5 percent jump. BAE Sysptems Plc lost 3.6 percent following the announcement that the United Arab Emirates ended talks to purchase its combat planes.

“European equities are set to edge higher on the open,” wrote Jonathan Sudaria, a trader at Capital Spreads in London, in an e-mail. “The post FOMC rally still has some momentum but only a muted move higher is expected today.”

After the Fed announced on Wednesday that it would decrease the amount of its economic stimulus by $20 billion, the Stoxx 600 gained 1.7 percent yesterday, recording its greatest two-day gain since June.

EU and US Indices Drop in Anticipation of Fed Meeting

The two-day Federal Reserved meeting scheduled for this month begins tomorrow and its advent has driven European and U.S. equity futures down along with silver. A slower-than-anticipated growth in Chinese manufacturing has sent Asian stocks near a three-month low as the yen strengthened.

Euro Stoxx 50 Index futures dropped 0.2 percent while Standard & Poor’s 500 Index contracts slipped 0.4 percent. The MSCI Asia Pacific Index fell 0.6 percent and Japan’s Topix lost 1.3 percent as the yen gained against all 16 of its major trading peers. Gold and silver declined by at least 0.2 percent and natural gas lost 1.4 percent. Only Brent cruse gained 0.4 percent with rebels refusing to open the ports of Libya.

With the U.S. economy and the job market showing signs of improvement and following the bipartisan budget passed by lawmakers, economists foresee a greater possibility that the Fed will start tapering stimulus soon. Today’s reports may show increased manufacturing in both the U.S. and the euro region.

THe market has been anticipating the tapering for a while down and some consider that the Chinese economy will drop its pace even more, reaching more sustainable levels.

Gold Breaks Its Fall Despite Forecasts of Stimulus Tapering

Speculation that the Federal Reserve may decrease its economic stimulus as early as next week didn’t seem to be doing gold any favours; however, the safe-heaven’s decline halted after just two days as the five-month low prices may be luring investors back towards it.

Bullion to be delivered immediately increased as much as 0.4 percent in Singapore today, while yesterday prices had fallen 2.1 percent, the most since 2nd December. When data last week came in positive for U.S. payrolls in November, gold touched $1,210.61 on 6th December, the lowest since 5th July.

The precious metal is set for its first annual lost in 13 years with a decline of 27 percent this year as investors anticipate Fed cuts on improving U.S. economy. The FOMC meeting is scheduled for next week, 17-18 December, and 34 percent of the economist that participated in a Bloomberg survey expect the cuts to begin next month. On a poll conducted on the 8th November, only 17 percent thought so.

Gold for February delivery increased 0.3 percent after its greatest fall in 10 weeks yesterday. The volume of trading remained at similar levels to the 100-day average

FOMC Meetings Rekindle Hopes of QE Tapering “in Coming Months”

The highly-anticipated minutes of the Federal Open Market Committee’s meeting of 29-30 October were released yesterday at 7 p.m. GMT in Washington impact the U.S. dollar positively in the foreign currency exchange markets as the report appears to confirm inspector speculation that the Fed will taper its $85 billion economic stimulus “in coming months.”

Home and Retail Sales data for October released earlier in the day showed improvement in the U.S. economy for October and the minutes state that the members of the FOMC “generally expected that the data would prove consistent with the committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.”

Despite the ambiguity of the minutes’ key term “in the coming months,” stock and bonds fell at increased speculation that the Fed’s asset purchasing may slow soon than expected. The Standard & Poor’s 500 Index slid 0.4 percent to 1,781.37, as the profit on 10-year Treasury increased by 0.09 percent to 2.8 percent.

Economists reading the minute have interpreted the extensive discussion of the committee’s members on future guidance as another sing that the Quantitative Easing is drawing closer.

A great part of the minutes also focuses on ways to better clarify their plans for keeping interest rates near zero, but no definitive decision has been recorded.

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