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Next Week News
The total number of building approvals issued in Australia was down a seasonally adjusted 1.5 percent on month in November, the Australian Bureau of Statistics said on Thursday - coming in at 16,396.
That missed forecasts for a decline of 1.0 percent following the 1.8 percent contraction in October.
On a yearly basis, approvals surged 22.2 percent - topping expectations for a jump of 21.1 percent following the 23.1 percent spike in the previous month.
The seasonally adjusted estimate of the value of total building approved fell 3.2 percent in November after rising for four months.
read more here
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1 Attachment(s)
AUDUSD M5 : 24 pips price movement by AUD - Building Approvals news event
Attachment 4649
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Central bank policy meetings are scheduled in the United States, Japan, Sweden, New Zealand, Russia, Brazil, Colombia, Mexico, Hungary and Israel. The Bank of Japan publishes its quarterly outlook on economic activity and prices on Friday, and the FOMC meeting is not one of those to be followed by a press conference.
European clocks are turned back an hour this weekend to restore standard time. This will shorten the interval between New York and D.C. on the one hand and Britain by an hour to four hours and relative to Continental Western Europe by five hours.
New Zealand observes Labor Day on Monday.
Euro area banking stress test results will be reported on October 26.
Some of the key data releases in the week are
- U.S. GDP, the quarterly employment cost index, personal income and spending, consumer confidence (both from the Conference Board and U. Michigan/Reuters), the Case Shiller house price index, pending home sales, durable goods orders, housing starts, the Chicago and Milwaukee regional manufacturing PMIs, and the Richmond and Dallas Fed manufacturing indices. Weekly data such as jobless insurance claims, chain store sales, mortgage applications, and energy inventories also will be watched.
- Japanese small business sentiment, consumer prices, unemployment and other labor statistics, industrial production, auto output, housing starts, construction orders, household spending, corporate service prices and retail sales.
- Euro area money and credit growth, consumer prices, index of leading economic indicators, unemployment and various measure of sentiment.
- Among Ezone members, German import prices, retail sales, unemployment, CPI and business sentiment; Spanish, Austrian and Belgian GDP; Austria’s manufacturing PMI, Italian, French, Greek, Irish, and Cypriot producer prices; Finnish and Portuguese consumer confidence and business sentiment; Spanish and Italian consumer prices; Greek retail sales; Dutch business sentiment; Cypriot industrial production; French consumer spending; and the Spanish and Dutch current accounts.
- British consumer confidence, distributive trade trends, money growth, mortgage applications, and the Nationwide home price index.
- Swedish trades, retail sales, producer prices and consumer confidence as well as the Swiss index of leading economic indicators.
- In the Nordic group, Iceland’s CPI, Danish unemployment, and Norwegian unemployment, retail sales and business sentiment.
- Canadian GDP and producer prices.
- Mexican trades and Brazilian producer prices from Latin America.
- Australian consumer confidence, import prices, money and credit growth, and new home sales.
- New Zealand business confidence, building permits, and money growth.
- South African unemployment, trade balance and producer prices.
- Other Asia: the Hong Kong trade balance, Malaysian and Singaporean producer prices, and South Korea’s PMI, industrial production, current account and consumer sentiment.
the source
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ECB's Draghi Signals Further Action
European Central Bank President Mario Draghi reiterated on Thursday that the central bank rate-setting body is unanimous in its commitment to use more tools and stands ready to take additional stimulus measures if needed. "Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconve
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1 Attachment(s)
BRICS anti-dollar alliance story and What to Make of It
Attachment 10832
The governor of the Russian Central Bank, Elvira Nabiullina met Vladimir Putin to report on the progress of the upcoming ruble-yuan swap deal with the People's Bank of China and the Kremlin used the meeting to let the world know about the technical details of its international anti-dollar alliance.
We've done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing," Elvira Nabiullina said casually and then dropped the bomb: "We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system]."
http://youtu.be/lXomHlVhvFU
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5 Attachment(s)
EUR/USD Rebound Vulnerable to Strong Non-Farm Payrolls (NFP) Report
- U.S. Non-Farm Payrolls (NFP) to Expand 200+K for Tenth Time in 2014.
- Jobless Rate to Hold at 5.8% for Second Consecutive Month.
Trading the News: U.S. Non-Farm Payrolls
The U.S. Non-Farm Payrolls (NFP) report may spark a bearish reaction in EUR/USD as market participants expected another 230K rise in employment paired with an uptick in wage growth.
What’s Expected:
Attachment 11178
Why Is This Event Important:
A batch of positive developments may spark another near-term rally in the greenback especially as a growing number of Fed officials show a greater willingness to normalize monetary policy in 2015.
Expectations: Bullish Argument/Scenario
Release |
Expected |
Actual |
Challenger Job Cuts (YoY) (NOV) |
-- |
-20.7% |
Durable Goods Orders (OCT) |
-0.6% |
0.4% |
Gross Domestic Product (Annualized) (QoQ) (3Q S) |
3.3% |
3.9% |
The decline in planned job cuts along with the pickup in economic activity may generate a strong employment report, and the dollar may continue to outperform against its major counterparts over the near to medium-term amid growing bets for higher borrowing-costs in the U.S.
Risk: Bearish Argument/Scenario
Release |
Expected |
Actual |
ISM Non-Manufacturing Employment (NOV) |
-- |
56.7 |
ADP Employment Change (NOV) |
222K |
208K |
ISM Manufacturing Employment (OCT) |
-- |
54.9 |
However, the employment report may disappoint amid the ongoing slack in the labor market, and the greenback may face a larger correction over the near-term as a weaker-than-expected NFP print drags on interest rate expectations.
How To Trade This Event Risk
Bullish USD Trade: Strong Job/Wage Growth Boosts Interest Rate Expectations
- Need red, five-minute candle following the release to consider a short trade on EUR/USD
- If market reaction favors a long dollar position, sell EUR/USD with two separate position
- Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit; set reasonable limit
Bearish USD Trade: NFP Report Falls Short of Market Forecasts
- Need green, five-minute candle to favor a long EUR/USD trade
- Implement same setup as the bullish dollar trade, just in the opposite direction
Potential Price Targets For The Release
EUR/USD Daily
Attachment 11179
- Will retain the approach to sell-bounces in EUR/USD as price & RSI preserve the bearish trend.
- Interim Resistance: 1.2600 pivot to 1.2610 (61.8% expansion)
- Interim Support: 1.2280 (100% expansion) to 1.2290 (38.2% expansion)
Impact that the U.S. Non-Farm Payrolls report has had on EUR/USD during the previous month
Period |
Data Released |
Estimate |
Actual |
Pips Change
(1 Hour post event ) |
Pips Change
(End of Day post event) |
OCT 2014 |
11/07/2014 13:30 GMT |
235K |
214K |
+21 |
+66 |
October 2014 U.S. Non-Farm Payrolls
EURUSD M5: 83 pips pips range price movement by USD - Non-Farm Employment Change news event
Attachment 11180
GBPUSD M5: 70 pips range price movement by USD - Non-Farm Employment Change news event
Attachment 11181
USDCAD M5: 99 pips price range movement by USD - Non-Farm Employment Change news event
Attachment 11182
U.S. Non-Farm Payrolls (NFPs) increased another 214K in October following a revised 256K expansion the month prior, marking the consecutive 9th month with an employment increase over 200K. Despite the weaker-than-expected print, the unemployment rate unexpectedly slipped to an annualized 5.8% from 5.9% during the same period to mark the lowest reading since August 2008. Moreover, the report continued to highlight anemic wage growth as Average Hourly Earnings held steady at 2.0%, and the subdued outlook for inflation may encourage the Fed to retain its highly accommodative policy stance for an extended period of time in an effort to foster a stronger recovery. The greenback largely struggled to hold its ground following the mixed print as EUR/USD held above the 1.2400 handle going into the European close, with the pair ending the day at 1.2453.
--- Written by David Song, Currency Analyst and Shuyang Ren
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1 Attachment(s)
China's Zombie Factories Provide Illusion of Work and Prosperity; Rebalancing Chinese Style
Attachment 11558
The Financial Times reports China Zombie Factories Kept Open to Give Illusion of Prosperity:
In the shadow of a group of enormous smokestacks and abandoned foundries, a peeling sign welcomes visitors to the Wenxi Steel Industrial Park.
Highsee stopped paying its 10,000 employees six months ago. Local officials estimate the plant supported indirectly the livelihood of about a quarter of Wenxi county’s population of 400,000. Highsee was the biggest privately owned steel mill in Shanxi, accounting for 60 per cent of Wenxi’s tax revenues. For those reasons, the local government was reluctant to allow the company to go out of business, even though it had been in serious financial difficulties for several years.
“By 2011 Highsee was already like a dead centipede that hadn’t yet frozen stiff with rigor mortis,” says one official who asks not to be named because he was not authorised to speak to foreign reporters. “More than half the plant shut down, but it was still producing steel even though its suppliers wouldn’t deliver anything without cash up front and it was drowning in debt.”
In the past month alone Chinese media have reported on at least nine large steel mills that appeared to be suspended in limbo after halting production but which are forbidden from going formally bankrupt.
“There are large numbers of companies across China that should go bankrupt but haven’t done so,” says Han Chuanhua, a bankruptcy lawyer at Zhongzi Law Office, a Beijing legal practice. “The government doesn’t want to see bankruptcy because as soon as companies go bust, unemployment spikes and tax revenues disappear. By stopping companies from going bankrupt, officials are able to maintain the illusion of local prosperity, economic growth and stable taxes.”
The outstanding volume of non-performing loans in the Chinese banking sector has increased 50 per cent since the beginning of 2013, according to estimates from ANZ, the Australian bank, but the sector-wide NPL ratio remains extremely low, at just over 1.2 per cent.
In private, however, senior Chinese financial officials admit the real ratio is almost certainly much higher, obscured by local governments trying to prop up companies.
read more here
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1 Attachment(s)
EURUSD: BNP say Greek deal unlikely by April 24, see a May deal to avoid default
Attachment 12834
BNP out with a piece on the Greek negotiations with the eurozone:
- Negotiations have ground to a halt
- The Greek government has until 20 April to present economic and fiscal reforms
- Eurogroup meeting of finance ministers on 24 April
- Recent comments by EU officials suggest an imminent deal to unlock the last tranche of Greece's bailout funds still looks unlikely
- The Eurogroup meeting on 11 May is now being touted as the date of a potential deal on Greece
- Greece facing about EUR 0.2bn in interest payments to the IMF on 1 May and a EUR 0.8bn IMF loan redemption on 12 May
- We continue to expect the Greeks to make a last-minute U-turn to secure a deal in the not-too distant future
"Greek Prime Minister Alexis Tsipras needs to strike a delicate balance between the political lines that his party, Syriza, will not cross (such as further cuts in pensions and the liberalisation of the labour market) and the demands of his European counterparts. It may be that his strategy is to reject eurozone demands until the very last minute to demonstrate to the far-left wing of his party that he did all he could, but he has to strike a deal to avoid default".
But ...
- it is impossible to rule out a worst-case scenario in which a deal is not reached ... Greece does not pay the IMF and the Greek government decides to hold a referendum on the terms of an EU bailout and/or membership of currency union
- If the outcome of a referendum were positive (ie, with the majority of Greeks agreeing to the terms of a bailout deal and/or a continuation of euro membership), this could potentially help Mr Tsipras to reshape Syriza, or form a coalition with pro-European, reform-friendly parties, such as Pasok or To Potami
- This would be positive for the country's future relationship with the EU, but the implications of capital controls for sentiment and growth would be negative, at least in the short term, creating new problems, such as even greater funding needs.
the source
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1 Attachment(s)
The Next Recession: Cause and Timing
We will have a recession within the next few years, which is an easy forecast. Ten years is the longest we’ve gone between one recession and another, and we’re already five years past the end of the last one.
The Federal Reserve’s unwinding of its stimulus is the most likely cause of the next recession. For a while Europe was the most troubling threat. Although risk still comes to use from Europe and the Middle East, the Fed is now the greatest concern.
In the recession and recovery, the Fed injected a tremendous amount of stimulus through its three rounds of quantitative easing, shown on the chart as the three episodes of strong growth.
Quantitative easing may have been better than nothing, but it certainly did not create a booming economy. However, it does set the stage for a possible boom-bust cycle in the coming years.
Attachment 12954
Banks in the United States are holding on to $1.6 trillion in cash and deposits at the Federal Reserve. Back in 2007 they were happy holding less than $500 billion. That extra $1.1 trillion sits idle, earning a measly 0.25 percent interest. Why don’t the banks put this money to work at a higher interest rate, by making loans to consumers and businesses? Because they don’t see enough applications from credit-worthy borrowers.
As I meet with bankers, though, I hear them say that they really would like to make more loans, and their credit standards are not tighter than historic norms. When I meet with small business owners and corporate CFOs, I hear them express caution. Consumers seem to be happy increasing their debt about in pace with their incomes, which is what they have been doing (aside from student loans).
As the economy improves, though, look for more borrowing. Businesses are feeling more optimistic and are likely to want to add capacity in the coming years. Consumers are more cheerful and may start to reach out for more loans. When demand from credit-worthy borrowers increases, the cash is ready to be lent out. Another trillion dollars of bank loans—in an $18 trillion economy—would get a boom going. As those loans are made and the borrowers start spending, more deposits will come into banks, enabling even more loans. In the jargon of economics it’s called multiple deposit expansion.
Such an increase in lending and spending would eventually be inflationary, so the Fed cannot let this go on too long. If the Fed drains stimulus out of the system, at just the right time and in just the right magnitude, then the economy will gently approach its potential output, and then grow right in pace with underlying potential. (Potential output grows with increases in the labor force and capital.)
So we have nothing to fear so long as the Fed acts at just the right time and in just the right magnitude.
the source
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1 Attachment(s)
Goldman Sachs forecast: Goldman's entire outlook for markets and the economy in one slide
Markets are recovering from Friday's big selloff, with stocks in Europe and the US rallying.
Attachment 13004
West Texas Intermediate crude prices are near year-to-date highs, while gold is falling.
In a recent note, Goldman economist Jan Hatzius said he sees US economic growth bouncing back in the second quarter after a below-trend first quarter.
As for what else the rest of the year holds, Goldman's chief equity strategist David Kostin included the following slide in his US Weekly Kickstart note, summing up the firm's outlook for every major market in 2015 and beyond.
"US macroeconomic data have disappointed expectations year-to-date. Q1 growth now looks likely to be significantly below trend. However, we think that the pattern of growth in 2015 will probably mirror that of last year, with weak growth starting off the year, followed by a bounce-back beginning in Q2."
Here are the five reasons why Hatzius believes economic growth will bounce back in Q2:
- The negative impacts of severe winter weather will finally thaw. Goldman estimates that weather-related weakness will shave up to 1% off Q1 GDP.
- Consumer spending will pick up. Consumers have saved most of their savings from lower gas prices; personal savings rose just as gas prices began to fall around last October. Hatzius wrote there’s no obvious reason why consumers will be reluctant to increase their spending, especially because wages are picking up and consumer sentiment is strong.
- Household formation is picking up, despite the disappointing housing starts report for March.
- The economic drag of the oil crash will be less in the second half of the year and by 2016, the energy sector should be making a modest positive addition to GDP.
- Government spending tends to be a drag on growth in Q4 and Q1, removing as much as 0.6% from GDP on average over the last five years. And so, that seasonal effect will be absent in Q2.
the source
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1 Attachment(s)
The FOMC according to Goldman Sachs: GS targets EUR/USD at 1.00 in 6-months and USD/JPY at 125 over the same end of period
Attachment 13186
1- In the 3 weeks leading up to the last FOMC meeting, the Dollar went parabolic, appreciating almost 5% versus the majors. Dollar strength was especially noticeable for EUR/$. It is well understood that the FOMC does not target the Dollar, merely taking the greenback as an input into its forecasts. But the parabolic rise in the USD into the meeting is certain to have been noticed, not least since the last vestige of forward guidance (the "patient" phrase) was scheduled to be dropped.
2- Going into the March 18 meeting - there was some risk that Dollar strength could run out of control. Perhaps as a result, the meeting took a dovish turn, with the dots and economic forecasts taking a sizeable shift down.
3- There is now a feeling that the Dollar story is over, because any further appreciation will just cause the Fed to shift in an even more dovish direction, delaying 'lift-off' further and further. GS' Jan Hatzius and team expect activity to bounce back sharply this quarter rising from a likely pace of 1.2% quarter-over-quarter in Q1 to 3.5% in Q2. We think this rebound will break the infinite loop the market currently expects and means that, however reluctantly, the Fed will likely do 'lift-off' later this year.
4- We think this means that the Dollar still has lots of room to strengthen, not least with market pricing for front-end interest rates as low as it currently is. We continue to forecast a 20% rise against the majors over the next three years.
5- Where does all this leave us going into tomorrow? The sharp pick-up in Fed speakers who have flagged the Dollar recently leaves little doubt in our minds that the Fed will do as little as possible to encourage Dollar bulls. We expect a purely "factual" statement, with our US economics team flagging small twists to the opening paragraph acknowledging the recent slow-down in payrolls and perhaps a firming in inflation.
6- This means that we see data, not the Fed, as the next key catalyst for the Dollar to resume its march higher, as it becomes clear that weak Q1 activity was once again an aberration. Surprises tomorrow could come in the form of language describing recent data weakness as "temporary", which would be seen as hawkish by the market. Language ruling out June for 'lift-off' would be seen as a dovish surprise.
GS targets EUR/USD at 1.00 in 6-months and USD/JPY at 125 over the same end of period
the source
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1 Attachment(s)
EURUSD Monthly Fundamental Forecast May 2015
The EUR/USD had a stellar month in April closing in the 1.12 level after the ECB kicked off its stimulus program and data started printing a bit better than in previous months. Greece continued being a thorn in everyone’s side. The euro is expected to trade flat or a bit weaker in April as US data should start to print a bit stronger. In Spain and Italy, the export-led recovery has boosted industrial production and is starting to spill over into the broader economy, while deflationary tailwinds and rising consumer confidence in France have coincided with higher household spending.
Efforts by France and Italy to push through much needed structural reforms, as well as the Greek government’s decision to reshuffle its negotiating team to broker an extension to its current bailout program also bode well for stronger consumer and business confidence and longer-term growth. Headline deflationary pressures in the euro zone have also eased from -0.6% y/y in January to the most recent release of 0% in April, underpinned by rising energy and food prices. This, combined with monetary stimulus, is forecast to gradually drive the headline print up to a year-end rate of 0.6% y/y in 2015 and 1.3% in 2016. The ECB intends to fully implement its roughly €1.1 trillion QE program and has no plans to alter its policy stance unless the higher inflation trend is firmly anchored. With euro zone inflation forecast to be in line with the ECB’s target of close to, but below, 2% by 2017, we believe that QE will run its full course through September 2016.
Attachment 13270
Soft economic data for Q1, still-low inflation prints, and overall USD strength were cited by the FOMC at its March meeting as the overall rationale for delaying interest rate hikes into the later part of 2015 and moderating the extent of hikes to be delivered. An April FOMC statement that pointed to a number of economic positives but failed to mention constructive stirrings on the inflation front didn’t change our view that the FOMC is likely to engage in so-called ‘liftoff’ at its September meeting. A hawkish interim surprise would require extraordinarily strong data between now and the June or July FOMC meetings – not our base case.
the source
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Fitch Affirms Ratings On Greece, The Netherlands; S&P Retains Italy's Rating
Fitch maintained the sovereign ratings of Greece, the Netherlands and Latvia and Standard & Poor's affirmed the ratings of Italy and Georgia. Elsewhere, Moody's affirmed Poland's ratings.
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1 Attachment(s)
Bank of Canada Overnight Rate and 44 pips price movement
2015-05-27 15:00 GMT (or 17:00 MQ MT5 time) | [CAD - Overnight Rate]
if actual > forecast (or previous data) = good for currency (for CAD in our case)
[CAD - Overnight Rate] = Interest rate at which major financial institutions borrow and lend overnight funds between themselves. Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future.
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Bank of Canada maintains overnight rate target at 3/4 per cent
"The Bank of Canada today announced that it is maintaining its target for the overnight rate at 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent.
Inflation in Canada continues to track the path outlined in the Bank’s April Monetary Policy Report (MPR). Total CPI inflation is near the bottom of the Bank's 1 to 3 per cent inflation control range, largely due to the transitory effects of sharply lower energy prices. Core inflation remains above 2 per cent, boosted by the pass-through effects of past depreciation of the Canadian dollar, as well as certain sector-specific factors. Seeing through the various temporary factors, the Bank estimates that the underlying trend of inflation is 1.6 to 1.8 per cent, consistent with persistent slack in the economy.
The outlook for the Canadian economy also remains largely in line with the April MPR. While a weak first quarter in the United States has raised questions about that economy’s underlying strength, the Bank expects a return to solid growth in the second quarter. This will help advance the rotation of demand in Canada toward more exports and business investment. Recent indicators suggest consumption in Canada is holding up relatively well, given the impact of lower oil prices on gross domestic income."
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USDCAD M5: 44 pips range price movement by USDCAD - Overnight Rate news event:
Attachment 13514
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1 Attachment(s)
XAUUSD: 407 pips price movement by USD - Core PCE Price Index news event
2015-06-01 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Core PCE Price Index]
if actual > forecast (or previous data) = good for currency (for USD in our case)
[USD - Core PCE Price Index] = Change in the price of goods and services purchased by consumers, excluding food and energy.
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"Personal income increased $59.4 billion, or 0.4 percent, and disposable personal income (DPI) increased $48.8 billion, or 0.4 percent, in April, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $2.6 billion, or less than 0.1 percent. In March, personal income increased $4.0 billion, or less than 0.1 percent, DPI increased $0.5 billion, or less than 0.1 percent, and PCE increased $65.6 billion, or 0.5 percent, based on revised estimates.
Real DPI increased 0.3 percent in April, in contrast to a decrease of 0.2 percent in March. Real PCE decreased less than 0.1 percent, in contrast to an increase of 0.4 percent."
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XAUUSD: 407 pips price movement by USD - Core PCE Price Index news event :
Attachment 13682
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1 Attachment(s)
World Bank Lifts Russia Economic Outlook On Oil Price Stabilization
Attachment 13687
Further stabilization of oil prices is likely to help lower inflation in Russia, allowing the central bank to reduce rates at a faster pace, the World Bank said Monday as it raised the economic outlook for the country.
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1 Attachment(s)
Greece - Noise, Chaos, Progress
Attachment 13727
The protracted negotiations between Greece and its creditors seemingly shifted into top gear this week as the cash-strapped country teeters on the verge of a default with a loan repayment to the International Monetary Fund due at the end of the week.
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1 Attachment(s)
OECD Cuts Global Growth Outlook
Attachment 13753
The Organisation for Economic Co-operation and Development on Wednesday lowered the global growth forecast for this year and next, citing the unexpected weakness in the first quarter.
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1 Attachment(s)
World Bank Lowers Global Growth Outlook; Urges Fed To Hold Off Rate Hike
Attachment 14055
The World Bank downgraded its global growth outlook, as developing countries face tough transition with high borrowing costs and lower commodity prices in 2015. The organization also urged the Federal Reserve to hold off raising rates until the next year, citing the risks it may pose to emerging markets.
"Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environment," said World Bank Group President Jim Yong Kim.
Japan's economic growth is seen at 1.1 percent compared to the 1.2 percent estimated previously. The Japanese economy is expected to grow 1.7 percent in 2016 and 1.2 percent in 2017.
In China, the carefully managed slowdown continues, with growth likely to moderate to a still robust 7.1 percent this year, the lender noted. In 2016 and 2017, growth is forecast to be 7 percent and 6.9 percent, respectively.
In India, which is an oil-importer, reforms have buoyed confidence and falling oil prices have reduced vulnerabilities, paving the way for the economy to grow by a robust 7.5 percent rate in 2015. The growth is expected to pick up further to 7.9 percent in 2016 and to 8 percent in 2017.
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Bank Of Greece Urges Deal With Creditors As 'Painful' Grexit Seen
Failure to reach an agreement with creditors can put Greece on the 'painful' path of an exit from the euro and spark an uncontrollable crisis, Greece's central bank warned. "The conclusion of a new agreement with our partners is of the utmost importance to fend off the immediate risks to the economy, reduce uncertainty and ensure a sustainable growth outlook for Greece," the Bank of Greece said.
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1 Attachment(s)
BNP Paribas - What USD Bulls Need Post-FOMC?
The Fed’s June statement and press conference failed to provide a catalyst for renewed USD gains and the currency has weakened in the aftermath of the meeting, notes BNP Paribas.
"Market participants seemed to focus on the shift lower in the Fed’s projection for the Fed funds rate, with the average “dot” for end 2015 falling to 57bp from 77bp. In her press conference, Chair Yellen noted that the conditions for justifying policy tightening were not yet in place and that, once tightening began, the pace of hikes would be very gradual," BNPP adds.
"However, we would emphasize that, according to the projections, a majority of FOMC members continue to anticipate at least two rate hikes before the end of 2015," BNPP argues.
"Moreover, the message from the Fed is clearly one of data dependency—if data continues to improve over the summer, markets will be forced to bring forward pricing for Fed hikes closer to our September forecast for lift-off," BNPP projects.
the source
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Greece & Credtiors To Play Last Cards
Greece and its creditors are sticking to their guns as they enter the final act of the drama surrounding the bailout negotiations, but optimism concerning materialization of a deal prevails even as the economic situation rapidly deteriorates. In some relief for Greece, the European Central Bank raised the the emergency liquidity assistance for Greek banks by EUR 3.3 billion on Friday.
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1 Attachment(s)
All Eyes On Brussels As Greece & Creditors Meet
Greece and its creditors are holding crucial talks in Brussels on Wednesday to reach an agreement over new reform proposals to be presented for approval at a meeting of Eurozone finance ministers later in the day that could unlock financial aid for the country and help it avoid a default and an eventual exit from the euro.
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1 Attachment(s)
Deutsche Bank - 4 Reasons To Stay Long USD/JPY Targeting 128
Deutsche Bank advises clients to stay long USD/JPY reiterating its view that USD/JPY should gradually trade up to 128 over the course of Q3. DB outlines the following 4 reasons behind this view.
1- "Japanese institutional investors continue to buy foreign assets, and not only on dips. Lifers in particular have ramped up purchases with limited sensitivity to the exchange rate. We think pensions, albeit more sensitive, have lifted their trailing dip-buying level closer to ¥122," DB argues.
2- "The trade surplus posted in March—the first in four years—proved shortlived, as the trade balance has shifted back into deficit. We expect recent deficits of ¥200bn to narrow only slowly," DB notes.
3- "Although speculative short positions in JPY remain heavier than before the recent move up to ¥125, a fresh widening of the rate differential should help break that level," DB adds,
4- "This is likely to be driven by US monetary policy expectations, but the Japanese leg could also help. Our baseline is that inflation well below the 2% target will induce the BoJ to maintain QQE at the current rate well beyond 2015," DB projects.
the source
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Eurocoin Indicator Rises For Seventh Month
The eurocoin indicator, which measures the current economic situation in the euro area, rose for the seventh consecutive month in June, a survey by the Bank of Italy and the Centre for Economic Policy Research showed Friday.
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1 Attachment(s)
Greek Parliament Approves Referendum On Bailout; Crisis Peaks After Talks Fail
The Greek Parliament early Sunday approved a referendum to be held on July 5 on the bailout terms demanded by a consortium of international creditors, with about 179 members voting in its favor.
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Gold, Silver and Greek Referendum
This is the interview about the problem in Greece and about the precious metals miners, and the positive (long term) outlook of that beaten down industry. This lead to gold and silver, and what is happening with the massive open interest on silver.
http://youtu.be/xtHmo0lwKp4
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Greece Chaos Continues After Default
Confusion refuses to die down in Europe even after crucial deadlines were missed and hapless Greeks stare into an uncertain future for their country, while other Europeans try to preserve the sanctity of the union and the euro.
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EU Awaits New Greek Proposals For Talks
EU leaders await proposals from Greece Prime Minister Alexis Tsipras after the public voted against conditions placed by creditors. European Council President Donald Tusk has convened a special Euro Summit on July 7 to discuss the situation after the referendum in Greece. Ahead of the Euro summit, German Chancellor Angela Merkel and French President Francois Hollande are set to hold talks in Pari
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1 Attachment(s)
IMF Lowers 2015 World Growth Outlook
The International Monetary Fund slashed the growth forecast for this year on Thursday, citing sluggish economic activity in the U.S. during the first quarter, and continued slowdown in the emerging market economies.
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Hopes Of Avoiding 'Grexit' Strengthen After New Greek Proposal
Hopes that Greece is set to remain in the euro area strengthened after the latest reform proposal submitted by the government was welcomed positively by several top European leaders, though Germany chose to tread cautiously. The Greek Parliament is set to discuss the proposal Friday evening and the vote outcome is expected early Saturday. Eurozone finance ministers are scheduled meet on Saturday.
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Eurozone Seals Deal To Avoid 'Grexit'
Eurozone leaders unanimously reached an agreement early Monday to start talks with Greece for a EUR 82-86 billion third bailout programme after hours of negotiations, empowering the country to battle a severe economic crisis and remain in the single currency bloc.
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Greece Prepares For Second Bailout Vote Today
The Greek parliament is preparing for another vote on the final bailout negotiations on Wednesday as Prime Minister Alexis Tsipras seeks to close the third bailout deal that will offer up to EUR 86 billion debt, after Greece repaid money due to the International Monetary Fund and the European Central Bank.
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Greece Steps Into Bailout Zone After Reforms Approval
Greece cleared another hurdle and stepped into the bailout zone after the government approved the second set of reform measures early Thursday local time, as Prime Minister Alexis Tsipras is seeking to close a deal that will offer up to EUR 86 billion debt even as the crisis struck country faces protests and violence.
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Russia Central Bank Slashes Key Rate As Expected
Russia's central bank cut its key interest rate for the fifth time this year, citing the prospect of significant cooling in the economy despite a moderate increase in inflation risks.
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U.S. Employment Climbs By Somewhat Less Than Expected In July
Job growth in the U.S. slowed for the second consecutive month in July, according to a report released by the Labor Department on Friday, although the report still showed a notable increase in employment.
EURUSD M5: 90 pips range price movement by USD - Non-Farm Employment Change news event :
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Rajan Says India Has Enough Reserves To Intervene To Check Rupee Volatility
India has sufficient foreign exchange reserves to intervene in the market to curb any possible volatility in the rupee, the Reserve Bank of India Governor Raghuram Rajan said Monday.
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Experts react to Black Monday - Markets believe Federal Reserve won't rise rates until 2016
Markets now believe Federal Reserve won't rise rates until 2016, and this is what experts are talking about:
Economists at Barclays - expectation of a Fed rate rise to the first half of next year: "Given the uncertainty around the current global outlook, the timing of the rate hike seems more uncertain than usual. Should this episode of financial market volatility prove transitory, the FOMC could raise rates in December. On the other hand, if the volatility proves durable or reveals greater than expected weakness in global activity, the FOMC may push the first rate hike beyond March."
Economists at Capital Economics - September rate hike: "There are no signs of any major downturn in the US economy, economic growth in China still appears to slowing rather than collapsing and emerging markets are not about to endure a repeat of the 1997/98 Asian crisis. The current bout of market turmoil, if it continues, might persuade the Fed to hold off on raising interest rates in September. Since that volatility doesn’t reflect any genuine economic slump, however, we wouldn’t be surprised if it proved short-lived leaving the way open for the Fed to begin raising rates at some point this year."
The International Monetary Fund (IMF) - delay raising rates until 2016: "The FOMC should defer its first increase in policy rates until there are greater signs of wage or price inflation than are currently evident. Based on staff’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would imply a gradual path of policy rate increases starting in the first half of 2016."
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What Fed Officials Are Saying About a September Rate Increase
"Federal Reserve officials made clear in recent days they have not agreed on when to start raising short-term interest rates, and the possibility of a September move remains on the table. The odds of a rate increase next month have appeared to diminish amid worries about China’s economic slowdown and turmoil in financial markets. Some officials want to see more economic data before deciding, while others think they’ve waited long enough. The most powerful decision maker, Chairwoman Janet Yellen, has not commented on the topic in the past few days. Here are some key quotes from those who have."
- Fed Vice Chairman Stanley Fischer: "I will not and indeed cannot tell you what decision the Fed will reach by Sept. 17."
- New York Fed President William Dudley: "At this moment, the decision to begin the normalization process at the September [Federal Open Market Committee] meeting seems less compelling to me than it did several weeks ago."
- St. Louis Fed President James Bullard: "I’m willing to respect the volatility in markets and see how it shakes out here. But just sitting here today, I’m not seeing how this is going to change the forecast and therefore I think the contours of monetary policy are about the same today as they were a couple weeks ago."
- Cleveland Fed President Loretta Mester: "I think the economy can support a modest increase in interest rates. I want to take the time I have between now and the September meeting to evaluate all the economic information that's come in, including the recent volatility in the markets and the reasons behind that. But it hasn't so far changed my basic outlook that the U.S. economy is solid and it could support an increase in interest rates."
- Kansas City Fed President Esther George: "In my own view, the normalization process needs to begin and the economy is performing in a way that I think it is prepared to take that."
- Atlanta Fed President Dennis Lockhart: "We are sort of anxious to get going, but given the events of the last several weeks, a risk factor has arisen” …“It has to be considered an open question whether we move now or wait a little while."
- Minneapolis Fed President Narayana Kocherlakota: "It’s definitely premature to be thinking about the removal of accommodation in the form of lifting off, at least based on my current outlook for inflation."
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G20: U.S. Urges China To Avoid Competitive Devaluation Of Currency
The United States pressed China to let its exchange rate be determined by market forces and refrain from competitive devaluation when G20 finance ministers and central bank chiefs from the world's top 20 economies gathered in Turkey.
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