Tag Archives: U.S. Interest Rates

Coming Up…U.S. Non-Farm Payrolls

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

U.S. Job Growth May Be Slowing But Expected To Remain Solid In July

With NFP data due today, U.S. job growth is likely to have cooled slightly in July but should retain enough momentum to suggest the economy remains solid. Non-farm payrolls are expected to have increased by 233,000, a pull back from June’s 288,000 job gain and the monthly average of 272,000 jobs added in the second quarter. It would still, however, mark the sixth straight month that employment has expanded by more than 200,000 jobs, a stretch not seen since 1997. The unemployment rate likely held at a six year-low of 6.1 percent, but could surprise on the downside after surveys showed Americans becoming more upbeat about jobs. The economy grew at a 4.0 percent annual pace in the second quarter after shrinking at a 2.1 percent rate in the first three months of year. While restocking by businesses lifted the figure, growth is seen remaining sturdy for the rest of 2014. The Labor Department will release its employment report, which is closely watched by financial markets around the globe, at 12:30 GMT today. It is set to muster even more attention in the months ahead, as investors seek to gauge when the Federal Reserve is likely to raise benchmark interest rates from near zero, where they have been since December 2008. Fed officials on Wednesday acknowledged that labour market conditions were improving, but that significant slack remained, signaling patience on the rate front. Most economists look for the first increase in the second quarter of next year.The Labour Department will release its employment report, which is closely watched by financial markets around the globe, at 12:30 GMT today.

Dollar Pauses Near Highs Ahead Of Employment Data

Dollar bulls took a step back today ahead of a closely watched jobs report that has the potential to make or break a rally that saw the dollar post its best monthly performance in over a year. The dollar index was steady at 81.449 .DXY having risen 2.1 percent in July to a 10-1/2 month peak of 81.573. The dollar bought 102.78 yen after peaking at a four-month high of 103.15. The question now is whether this is the beginning of a continuing uptrend, one that has frustrated dollar bulls for much of this year or just another false start. The U.S. jobs report due today could provide a clue. With the Federal Reserve not providing any real hints as to when interest rates will rise, markets are looking more and more to economic data to make their own bets. The euro, meanwhile, traded at $1.3389 EUR steadying near a nine-month trough of $1.3366 plumbed earlier in the week. Working against the common currency was data that showed annual inflation in the euro zone fell in July to its lowest since the height of the financial crisis in 2009. This should keep the risk of deflation on policymakers’ radar, although it is unlikely to spur the European Central Bank into immediate policy action when it meets next week.

Market Volatility? Keep Calm And Carry On…

Equity markets have entered a period of increased volatility amid growing uncertainty over the timing of the Federal Reserve’s first rate hike but the message from analysts to retail investors is to keep calm and carry on. The short-term spikes in volatility we have been experiencing could lead to a couple of down days and although volatility is trending higher, it does not mean the equity market will go down. The CBOE Volatility Index, which shows the market’s expectation of 30-day volatility, spiked 27 percent to 16.95 on Thursday, its highest level since April 11, but below the historical average of 20. The move came as the Dow Jones Industrial Average sank 1.9 percent, erasing its gains for the year, and the S&P 500 dropped 2 percent. The U.S. economy expanded at an impressive 4 percent annual rate in the second quarter as activity picked up broadly after shrinking at a revised 2.1 percent pace in the first three months of the year. Furthermore, there are more signs of an improving labour market. With the economy getting stronger, this has fuelled concerns that the Fed may hike rates sooner rather than later.

That sums up today’s highlights! Keep tuned in for all the latest trading news via our social platform and don’t forget to watch closely for today’s NFP data!

We hope you have a profitable day on the markets.

Dollar Holds Gains In Advance Of Yellen Testimony

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 Fed Chair Yellen Testifies @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

Dollar Holds Gains In Advance Of Yellen Testimony

The dollar remained higher against the yen following its biggest one-day advance in a week as Federal Reserve Chair Janet Yellen is due to testify before U.S. lawmakers. A gauge of the U.S. currency advanced surrounding bets that Yellen will provide additional clues as to when the central bank will raise interest rates for the first time since 2006. The yen was little changed as the Bank of Japan maintained record monetary stimulus.

Yellen is likely to emphasise the need to keep interest rates near zero for a considerable period even after a report this month showed unemployment fell to an almost six-year low. She may also say that while the jobless rate has fallen faster than the Fed expected, the presence of part-time and discouraged workers and long-term unemployed represents a reservoir of potential supply and accounts for wages not growing rapidly at all, which will probably justify the message that the Federal Reserve is in no rush to begin to raise interest rates. Regarding the inflation outlook, while unemployment fell to 6.1 percent last month and inflation has risen closer to the Fed’s 2 percent target, analysts believe there is still too much uncertainty for her to change the tone materially.

The dollar rose 0.1 percent to 101.59 yen at 1:52 p.m. after strengthening 0.2 percent yesterday, the most since July 3. The U.S. currency was unchanged at $1.3619 per euro. The yen traded at 138.37 per euro from 138.28 yesterday. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 of its major counterparts, climbed less than 0.1 percent to 1,007.13.

Gold Retains Sharp Losses Trading Close To 4-Week Low

Gold was trading near its lowest level in almost four weeks on Tuesday, as sharp overnight losses triggered by profit-taking and stronger global equities dented the metal’s safe-haven appeal. Spot gold was little changed at $1,306.75 an ounce after sliding more than 2 percent on Monday - its biggest daily drop since December. Gold touched a low of $1,302.90 in the previous session, its weakest since June 19. Gold had climbed to a near four-month high of $1,345 last week as financial troubles at Portugal’s top bank rekindled fears of another euro zone banking crisis, although those fears have now subsided. Investors will be monitoring Federal Reserve Chair Janet Yellen’s testimony in a U.S. Senate committee later today for signs of when the U.S. central bank would begin increasing interest rates. They will also be watching developments in the Middle East and Ukraine for any escalation in violence that would create fresh safe-haven demand for gold amid reports that Moscow is once more building up its troops on its joint Ukraine border.

European Shares Set For Pullback; Yellen In Focus

European shares are on track for a slightly lower open today, pulling back slightly from yesterday’s gains as investors remain cautious before earnings season and Federal Reserve Chair Janet Yellen’s testimony today. The FTSE is called down 5 points at 6,741 while the German Dax is seen lower by 8 points at 9,775. Stocks in Europe saw healthy gains in the previous session as earnings from U.S. bank Citigroup and merger activity surrounding pharma firm Shire sent bourses higher. However, investors look set to hold off before any more buying with a number of data due on Tuesday. June inflation data is out for the U.K., while Germany also receives its widely watched ZEW economic index. Central bank policy makers are also set for meetings today. In addition to Yellen’s two-day testimony, Bank of England Governor Mark Carney is due in front of U.K. lawmakers for a financial stability discussion. Both appearances will be an opportunity for investors to gauge the future direction of monetary policy in each country with both expected to start raising benchmark interest rates in the not-too-distant future. Elsewhere, U.K. Prime Minister David Cameron is expected to announce wide-ranging changes to the lineup of its decision-making body called the Cabinet. Foreign Secretary William Hague is currently the biggest name set to be given a new role in the reshuffle.

That sums up today’s highlights! It’s a busy day on the financial markets so remember to keep posted via our Facebook, Twitter, Google+ and LinkedIn pages. We hope you have a profitable day on the markets.

U.S: Markets Watch for Faster Interest Rate Increases

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 Economic Projections @ 18.00 GMT

WHAT WE’RE WATCHING TODAY

U.S Fed Economic Projections: Markets Watch for Faster Interest Rate Increases

The largest increase in core consumer inflation in almost three years has added fuel to market speculation that it will move faster to raise interest rates. The consumer price index climbed 0.4 percent in May from a month earlier, higher than expected and the biggest increase since February 2013. The annual increase was 2.1 percent, following April’s 2 percent year over year gain. Core CPI was up 0.3 percent, the biggest increase since August 2011. It is widely expected the Fed will announce that it will continue paring back its bond-buying program by another $10 billion, while emphasising that it sees the economy improving, but not sufficiently enough. Even if the Fed gives inflation a nod, the CPI is not its choice metric. While CPI has climbed over the Fed’s target of 2 percent inflation, the Fed also watches the PCE, the personal consumption expenditures price index.

Fed officials are also expected to cut their forecast for GDP, after a negative reading on first quarter GDP and their views of the unemployment rate, which was forecast at 6.1 to 6.3 percent by the fourth quarter, as it is already at 6.3 percent. This has led to the speculation the Fed could also show that the views of some officials have changed on when it will raise the Fed funds rate for the first time. Currently, the market believes the first move will be later in 2015, but expectations could change to earlier in the year if individual officials change their forecasts, and that could create volatility. U.S. FOMC Economic Projections today @ 18.00 GMT.

Shares Set To Rise As All Eyes On The Fed

European stocks were seen nudging higher on Wednesday, reflecting gains on Wall Street, although the rise was seen limited as investors wait for the U.S. Federal Reserve to conclude its policy meeting. The Fed is expected to cut another $10 billion from its monthly bond purchases, while investors will be watching for any comments on when the Fed would begin to raise interest rates and its outlook for the economy. Data released on Tuesday showed a surprisingly high reading for U.S. inflation, which sparked speculation of a hawkish tilt to the Fed’s policy outlook. Market watchers expect Britain’s FTSE 100 to open 12 points higher, or up 0.2 percent and Germany’s DAX to open around 17 points higher, or up 0.2 percent.

Disappointing Trade Data Casts A Shadow Over Japan

Official data reveals that Japan’s exports and imports declined in May, fuelling concerns about the outlook for the world’s third biggest economy, as it weathers an increase in the country’s consumption tax. May exports fell 2.7 percent from a year earlier, the first annual decline in 15 months, much worse than analyst expectations. Imports fell 3.6 percent on-year, compared with expectations for a 1.7 percent rise, bringing the trade balance to a deficit of 909 billion yen ($8.9 billion) in May. It remains to be seen whether Abenomics, the term used by analysts and commenters use to describe the economic policies of Japan’s Prime Minister Shinzo Abe, can stimulate domestic spending sufficiently to offset weak export demand. Part of that policy has been huge monetary stimulus to help weaken the yen and end deflation. Although the yen weakened about 22 percent against the dollar in 2013, its impact on exports has faded while the currency has strengthened almost 3 percent this year. The breakdown of the trade data showed that exports to Asia and the U.S. fell in May.

Japan raised its consumption tax in April for the first time in 17 years, with the tax rising to 8 percent from 5 percent. While consumers stepped up their spending ahead of the tax hike a slowdown in consumption after that is now weighing on economic activity. Japan’s markets showed little immediate reaction to the trade data. The benchmark Nikkei stock index rose 0.3 percent in early trade while the yen was little changed around 102.2 per dollar.

That sums up today’s highlights! Don’t forget, you can stay in touch via Facebook, Twitter, Google+ and LinkedIn for all the latest market updates. 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.

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