Company News by ForexMart

RBA Kept the Rates at a Record Low Amid Positive Economic Outlook



The Reserve bank of Australia maintained the rates at a record low on Tuesday which gives a positive look on the domestic activity prior to the data, which demonstrates growth more than 3 percent in the previous quarter.

RBA governor Philip Lowe sees the economy is to be “performing well” despite the assumption of reduction in unemployment. The decision of RBA is in line with the expectations as they keep the cash rate at 1.50 percent that was last reduced on August 2016 as policymakers wait for a recovery of the growth, as well as, its inflation.

However, as the consumer prices remain rather calm which prompted the RBA to have a steady growth for the past two years and it seems that there is no rush for the policymakers to tighten the rates. The markets are not pricing the rates until 2020.

Lowe anticipated the unemployment to lessen and chances for inflation to return to targets, although this will be in a sluggish manner.

However, household consumption brings uncertainty on the outlook amid weaker income but debts remain high.

A few economists assume that the sluggish wage growth of 2 percent and careful spending of consumers may affect negatively the economy.

The GDP data to be released on Wednesday is anticipated to increase by 0.6 percent in the September quarter compared to the previous three months growth of 0.9 percent. Meanwhile, the annual growth is probably 3.3 percent compared to the former sluggish growth of 3.4 percent in the last quarter.

BoC Next Rate Hikes are Uncertain as Canadian Dollar Slumps to 18-month Low



The Bank of Canada maintained the interest rates on Wednesday which is already expected and signals gradual future rate hikes. It pushes the Canadian dollar as low as 18-month low that would affect market expectations on another rate hike next month.

The central bank has raised their rates five times since July 2017 amid the strengthening of the economy that requires monetary tightening in reaching the target 2.0 percent inflation.

Yet, there are downward revisions on growth data from Statistics Canada along with the recent macroeconomic developments. This may mean there is another possibility of non-inflationary growth which can also mean that the economy has not reached the limit as initially thought.

The possibility of a rate hike decreased from an estimated of 60 percent prior to the 36 percent based on the overnight index swaps market.

A higher change in the next move will lengthen the period that also lessens the possibility for a January rate hike, according to the senior rates strategist at TD Securities, Andrew Kelvin.

Overnight interest rate of the bank is at 1.75 percent that is lower than the “neutral” rate of 2.5-3.5 percent. Similarly, the monetary policy is not aggressive or accommodative.

The bank remarked that the “Governing Council continues to judge that the policy interest rate will need to rise into a neutral range to achieve the inflation target”. Inflation forecast will be lower in the next month than the former forecast as gasoline prices decline.

Yet, the Canadian economy is still in line with the anticipations for the third quarter but momentum will be lesser in the last quarter.

EU’s Investor Morale Plunged to a Four-year Low in December



Eurozone’s investor morale plunged to a four-year low in December given the trade conflict. Italy’s budget along with the Brexit plan between the EU and Britain resulted in a decline in sentiment, according to the survey on Monday.

Results from the Sextic research group shown a drop in investor sentiment index to -0.3 from 8.8 in November, which was the lowest level since December 2014 and the fourth straight monthly drop. The outcome has exceeded expectations to 8.1 decline.

Meanwhile, the sub-index at present situation declined to 20.0 from 29.3 in November compared to the forecast of -18.8 from -9.8 the previous month.

The Sentix managing director, Manfred Huebner, see that there is no optimism given the present global condition and recalling the 2008 financial crisis. The ECB is planning to end the billion-dollar government bond purchases as the economy declines at an average pace that puts pressure on politicians and central banks, he added.

Another index on investor morale in Germany shows a decrease to 7.2 from 15.6 in December which can be deemed as ‘loss of momentum’ with concerns on US tariffs weaker Chinese car sales.

Fed Raise Rates in December 2018 Reduces Hikes Next Year



The US Federal Reserve is anticipated to increase the interest rates on Wednesday but will reduce its rate hike forecast next year. At the same time, this signals the halting of the monetary policy ahead of time, amid the volatility in the financial market and rising concerns of a recession.

The central bank is scheduled to announce their decision on interest rates at 14.00 EST (19.00 GMT) after the last two-day policy meeting in 2018. An hour later, Fed chairman Jerome Powell is anticipated to give its speech on a press conference.

Investors expect for higher interest rates by a quarter of a percentage point, ranging between 2.25 percent and 2.50 percent, which would be the fourth rate hike this year and the ninth since tightening of policies since December 2015.

The monetary tightening of Fed is believed to push the US economy higher that has been moving sluggishly at an unsustainable rate. Yet, this would spike a concern on the White House recalling that the US president Donald Trump has been attacking the US central bank for the not performing well to boost the economy. On Tuesday, a warning was heard from President Trump saying to avoid “another mistake.”

Fed policymakers seem to be changing the previous forecast of three more rate hikes this year considering various factors such as the decline of oil, as well as the economic growth of both Europe and China. Moreover, there is the $1.5 trillion tax cut program from Trump administration, which is anticipated to contract.

Given the fresh economic forecast and the policy statement soon to be released may suggest two rate hikes according to economists. Traders even think that the Fed may not even be able to execute one hike at the very the least.

Britain Will Exit European Union on March After Losing Votes



According to Prime Minister Theresa May, Britain will leave the European Union on 29th of March 29th. This can only be reversed and accepted by the bloc if there is another agreement to extend the ‘Article 50’ negotiation. She mentioned after the proposed Brexit deal was rejected by a large difference in the number of votes.

Japan’s Manufacturing Sector Drops in January following Exports Decline

In anticipation of the next meeting of the European Central Bank (ECB), which will be held this Thursday, the euro will remain under pressure.



Export orders dropped at the fastest rate in Japan in over 2 years, resulting in a hampered growth of the manufacturing sector. Companies also reduced production, according to the preliminary business survey on Thursday.

Japan ranking third as the biggest economy is likely to have rising concerns about sluggish growth with the continuous China-US trade war. Possibility dropping to a recession increases for this year amid the cooling demand domestically and globally and another planned tax hike in October based on last week’s poll of Reuters.

The Manufacturing Purchasing Managers’ Index (PMI) by Flash Markit/Nikkei shows a decline to 50.0 in January on a seasonally adjusted basis from the final figure of 52.6 in December. The 50 mark separates improvement from a decline on a monthly basis.

With a steeper decline in export orders, manufacturer’s reduced production for the first time since July 2016. Over six years, the business confidence remained in a positive area.

The pessimistic outlook in the manufacturing sector promotes nearing growth period for two and a half year, according to an economist at IHS Markit, Joe Hayes.

New orders, being a top indicator of future trading, proposes a weakened activity in the coming months. Total new orders expected the decline to 46.1 from 49.1 in December, which was the steepest rate of decline since July 2016.

On Wednesday, the exports data of Japan was the biggest drop in more than two years.

Moreover, the rising concern in the Sino-US trade war affects the supply chain on both ends of the Pacific, especially electronics, considering Japan as export led industrialization that is sensitive to global demand changes.

The BOJ reduced the inflation forecast and sustained massive stimulus policy on Wednesday with rising pressure on the economy and putting at risk to yield sustainable growth. At the same time, the International Monetary Fund revised lower its global growth forecast. Similarly, China also showed the weakest growth in almost 30 years and presumed to further cool down this year.

BoE Governor Mark Carney Warns the Risk of Disturbing Global “Delicate Equilibrium”



Bank of England Governor Mark Carney expects a steady slower pace economic growth globally but concerns on trade war and rising protectionism can affect the “delicate equilibrium”.

He mentioned a jump on tighter monetary conditions, due to increasing policy rates, and trade tensions to be the reasons for the recent sluggish growth in the global economy.

An increasing debt in China and new barriers to global trade gives an important and “growing” risk to the outlook of the world economy with protection already giving a blow in the market, according to Carney in a speech on Tuesday.

He raised the question if the global expansion since 2010 starts to recede amid the “ confluence of the current broad-based slowdown and outstanding downside risks”. Although there are risks on declining world economic growth, considering both the policy procedure and uncertainty in “advanced economies” opens the chance for stability in the future with its “ new and modest trend.”. Notably, he said, “But this is a judgment, not a guarantee. The world is in a delicate equilibrium.”

Carney described that it is not easy not to triumph in a trade war in association with the words said by US president Trump saying, “good, and easy to win”. Nonetheless, he reckoned that everybody is looking for a “solution” that benefits all.

Britain leaving the EU is set on March 29 without a deal. The only chance for this to turn around is if Theresa May can persuade the bloc to amend a divorce deal in November and then win the approval of wary policymakers in Europe.

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You can register for the next competition which will take place from February 25, 2019 to March 1, 2019 (Terminal time). .

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You can register for the next competition which will take place from March 4, 2019 to March 8, 2019 (Terminal time). .

Note:

Registration for the next competition finishes 1 hour before the contest starts.

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