Daily Market Overview by IFC Markets

[Akriti]

US Dollar Index Steady Ahead of Minutes, Aussie Loses on Dovish RBA Minutes

Again during overnight we saw the US dollar index changing slightly by falling from 81.30 to 81.15. Recently there have been talks on who is going to be the Fed chairman with Larry Summers and current Vice Chairman Janet Yellen the most likely candidates. Chances are rising for the former adviser of Obama who previously expressed his concerns on inflation risks and sounded hawkish on the 6.5% unemployment threshold. As a result of that US 10 Year bond yields have been advancing to more than 2-year high at 2.88.
The Australian dollar against the greenback kept falling and was weighed additionally by RBA minutes of the August 6 meeting. RBA has also decided on that day to cut key rate to 2.50% from 2.75% and at its considerations for Monetary Policy said that “growth is below trend pace” and “inflation remained low”.

See more: http://www.ifcmarkets.com/en/market-overview/show/1487

[Akriti]

US Dollar Heavier on Cautious Trading Ahead of FOMC Minutes

The greenback eased against its major counterparties in yesterday evening trading ahead of FOMC meeting minutes tonight. The US dollar index drew a support line at 80.72 and then scaled back to 81.03 on short covering. US equities managed to close mostly in positive light, S&P 500 was up by 0.38%, Dow Jones dropped by 0.05% and NASDAQ advanced by 0.68%, with stocks underpinned by stronger than estimated earnings.
Asian equities were under pressure early in their session with Hang Seng and Shanghai composite being in negative territory. NIKKEI 225 was losing earlier as investors were cautious ahead of FOMC meeting as well as on reports that Japan’s government raised the Fukushima severity of the leak to Level 3 in an 8 level international scale.

See more: http://www.ifcmarkets.com/en/market-overview/show/1488

[Akriti]

US Dollar Rises on Minutes, Risk-on Amid Stronger CNY Manufacturing PMI

FOMC Minutes release of the meeting on the 30-31 July revealed that the members recognize labor improvement and that inflation could pose risks on financial stability. Also, the Commitee stated that is ready to change “the pace of its purchases to maintain appropriate policy accommodation”. That meeting was before unemployment rate drop to 7.4%, and that further increased expectations that the asset purchases would reduce in September meeting.
he US dollar strengthened after the release of FOMC minutes since the market participants were more convinced that the FED would slow down the pace of bond buying, likely to tighten its monetary policy for the first time since July 2007.

See more: http://www.ifcmarkets.com/en/market-overview/show/1489

[Akriti]

Yen Weakens as Risk Sentiment Improves Driving Yen Crosses Higher

The Japanese Yen weakened further against its major counterparts as stronger PMI data from China, Europe and US suggested that expansion prevails in global economy lifting risk appetite, thus investors abandoned the safety of the Yen. Furthermore, US 10 year treasury yields rose to new high at 2.89% indicating that investors move their money out of bond markets to riskier assets as asset tapering expectation is growing among market participants. All that underpinned US equities last night followed by NIKKEI 225 that close higher by 2.21%, helping USDJPY to breach resistance at 98.63 yesterday and surging earlier today to 99.10.

See more: http://www.ifcmarkets.com/en/market-overview/show/1490

[Akriti]

Steady Start of the Week with Major Currency Pairs in Sideways Trading

Currency market started the week steadily with most of the pairs fluctuating in sideways zones. The greenback has been barely changed on Monday morning with the US dollar index remaining around 81.33 while on Friday evening dropped sharply from 81.56 to 81.18 on disappointing housing data. US New Home Sales decreased to 394K in July, substantially more than expected and down from 455K the previous month. The latter could weigh further on the greenback however expectations that asset purchase facility would reduce on FED September 18 meeting, underpins the US dollar.
At the Jackson Hole Symposium academics referred to asset tapering saying that the FED should reduce the $45 bln monthly treasury purchase and continue the $40 bln monthly mortgage purchase. Treasury yields rose to record peak at 2.90% on speculation of cutting down asset purchases on September and as Lawrence Summers gains chances for Bernanke successor as FED Chairman.

See more: http://www.ifcmarkets.com/en/market-overview/show/1491

[Akriti]

US Dollar in Sideways, Aussie Negative Bias Resumes, German IFO Expected to Improve

The greenback did not move much from yesterday; it was volatile during Durable Goods Orders release on Monday but mainly the US dollar index remains in 81.44/8.18 short-term tight range. US Durable Goods Orders dropped by 7.3% in July, much more decline than anticipated at 3.0% while in June Orders rose by 3.9%. The US dollar index dipped suddenly from 81.44 to 81.24 but then quickly recovered back its losses and extended further into previously mentioned sideways zone.

There is much of discussion about asset tapering and recently the NABE survey indicated that only 10% of its responders expect that FED would begin lowering asset purchase program at the 3rd quarter of 2013 while 39% expect that in the 4th quarter of 2013. Thus, traders are cautious at their trading; we believe that the current market price for the US dollar incorporates asset tapering on Sep. 18. Should that expectations fade the greenback would lose value and perhaps could revisit support at 80.72.

See more: http://www.ifcmarkets.com/en/market-overview/show/1492

[Akriti]

Risk-off Shadows Currency Markets as War Concerns Accumulate over Syria

Currency markets have been moving by risk averse due to concerns over military strike of USA, France and UK against Syria. The Japanese Yen has been strengthening considered safer currency while Aussie and Sterling have been losing as riskier currencies, the Euro and the US dollar were mostly unchanged.

US equities closed with losses on Tuesday session with S&P 500 falling by 1.59% and the Dow Jones Industrial Average declining by 1.14%. Asian shares followed also weighed by possible attack to Syria with NIKKEI 225 closing lower by 1.51% and Hang Seng dipping by 1.48%. The USDJPY last night continued all the way to a new 2-weeks low at 96.87 and then made technical retracement back to 97.33 as oscillators went into oversold zones.

See more: http://www.ifcmarkets.com/en/market-overview/show/1493

[Akriti]

Risk Aversion Gets Milder With Global Equity Indices Rebounding, US Dollar Strengthens

Milder risk aversion has led the USDJPY to recover previous losses as the military strike to Syria is delaying. UN Security Council is not convinced about the use of chemical weapons with Russia and China opposing military action. US President Barack Obama did not decided on whether to launch a retaliatory strike with just his allies, UK and France sidestepping UN, while UK and France say that they are ready to go.
Last night, US indices bounced up on technical retracement as well as on calmer risk aversion, S&P 500 rose by 0.27%, Dow jones industrial Average gained 0.33% and NASDAQ closed up by 0.41%.

See more: http://www.ifcmarkets.com/en/market-overview/show/1494

[Akriti]

Greenback Gets Stronger, USDJPY Eases on Data and on Risk of Syria

The US dollar soared to 4-week high on growing expectations that the FED will reduce the amount of asset purchases per month as macro data have been positive in the recent sessions. Yesterday the US Bureau of Economic Analysis said that the GDP grew by 2.5% in the 2nd quarter, faster than earlier estimated at 1.7% and today is expected that the Consumer Spending will display increase in July as well. The US dollar index advanced to 82.03 which is the 161.8% of the correction from 81.68 to 81.08, thus we would expect some consolidation before the upside resumes, ahead of next resistance at 82.50.

The USDJPY eased lower to support at 98.06 firstly due to stronger CPI and Unemployment for Japan and on consolidating equities. The Japanese National CPI for July was in line with expectations rising by 0.7%, up compared to 0.2% in June, while National CPI excluding fresh food rose by 0.7%, higher than projected and up from previous month of 0.4% increase. Unemployment rate surprisingly dropped to 3.8% in July from 3.9% in June and lastly Industrial Production advanced by 3.2% in July up from -3.1% in June.

See more: http://www.ifcmarkets.com/en/market-overview/show/1495

[Akriti]

Aussie Strengthens as RBA Holds Key Rate at 2.5%, USDJPY Continues Upside

The RBA earlier today at its meeting decided as it was expected to maintain key rate at 2.50%. In its statement, the RBA reiterated that expects the mining investment to drop with the economy in a transition phase, growth is a bit below trend, unemployment rose slightly and inflation is under control. Moreover, RBA said that even though the Australian dollar depreciated still remains at high levels and its value could reduce further, helping growth. The AUDUSD rose above psychological level at 0.90 and was lastly seen at 0.9044. We consider that the currency pair is in 0.9232/0.8847 range trading pattern with longer term prevailing downtrend likely to drive prices lower eventually.

The USDJPY yesterday breached key cap at 99.14 and continued higher today underpinned by BOJ data that the monetary base growth pace increased to 42% from 38%.

See more: http://www.ifcmarkets.com/en/market-overview/show/1496