Articles from December 2009



US Greenback ends the year on a high

As we enter the last full trading day of the year, the Greenback has strengthened and trades below 1.59. 
Yesterday’s US consumer confidence showed a figure of 52.90 against an expected 53.0, but still up on November’s figure of 50.6. On the back of this data the dollar moved over 1.60 but shifted back towards 1.59 levels soon after as thin market trading continued.
 
German consumer price index figures released yesterday afternoon added support to the euro as we saw an increase to 0.8% from an expected 0.7%, up on last years 0.3% and euro/GB Pound fell below 1.11 where it is trading this morning.   

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Thin market trading after Christmas reopening

The markets have today reopened after the Christmas break with little to report. 

The Euro/US Dollar is attempting to push back up over 1.44 and sustain this level, with cable struggling to hold above 1.60. USD/CAD has hit a 2 month low of  1.0373. 

 European data released this morning showed that French Gross domestic product remained at 0.3% (QoQ), as a result the euro did not budge.
 

Throughout the trading day so far the euro has remained pretty strong, helped by a slightly better than expected figure for Italian business confidence. The Pound has gained ever so slightly against the greenback. 
This afternoon we have US consumer confidence which is expected to show a figure of 53, against a previous figure of 49.50   

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Wise Money wishes you a Merry Christmas as FTSE 100 nears year high

The UK’s FTSE 100 stock exchange index has neared its year high in thin trading on Christmas Eve.

London’s index of leading shares was up 8.6 points – or 0.16pc – at 5381.24 at 9.10am, after closing up closed up 43.72 points – or 0.8pc – at 5372.38 on Thursday.

The index is up around 3pc this week and it 21pc since the start of 2009. It hit its year high of 5382.67 on November 16.
 

European bourses were also higher with Germany’s DAX and France’s CAC up 0.2pc and 0.1pc respectively.

Earlier, Asian markets shrugged off a lacklustre performance on Wall Street to move higher amid expectations China will maintain loose monetary policy.

China’s Shanghai Composite Index gain 79.63 points, or 2.6pc, to close at 3,153.41 and Hong Kong’s Hang Seng climbed 188.26, or 0.9pc, to 21,517.

Japan’s Nikkei 225 stock average rose to a fresh three-month high as the yen’s recent weakness lifted exporters amid thin Christmas season trade. The index gained 158.89 points, or 1.5pc, to 10,536.92, the highest finish since late September.

Most other markets gained, including Seoul’s Kospi, which added 1.3pc, and Taiwan’s Taiex, up 0.8pc. On Friday, markets around the world will be closed for the Christmas holiday though Japan and China will continue to trade.

A surprise 11.3pc fall in new US homes sales in November to their lowest level since March, confounding economists who had expected an increase, was offset by a 0.4pc rise in personal incomes in November — the fastest rate in four months — helped by higher wages. 

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Financial markets wind down for Christmas

Financial markets get more and more illiquid and technicals become more and more relevant. 
To that end, Euro/Dollar remains the driver for forex markets and the target is very much the 200 day moving average level of just below 1.4200. 
Given the current penchant for buying Dollars, this looks a better than evens bet today. The turn in the dollar to date comes from a better relative economic performance than other majors, rather than any concern that the global recovery will derailed. 
As such, we should not necessarily be seeing weakness in high yield commodity and emerging currencies. Certainly the renewed strength in the dollar may be discouraging funding carry trades out of the dollar, and renewing the case for funding out of the JPY or even the EUR, but it suggests a broad carry trade unwind is unlikely to last. 
The recent improvement in the US Dollar against other major currencies reflects the relative rise in US bond yields. 

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

UK GDP data revision disappoints

The financial markets remain very illiquid and so reasonably volatile. 
Equities had a strong day with oil perking up ahead of expected positive revisions to today’s GDP numbers from the US and the UK. 
In fact the UK GDP came in lower than forecast at -0.2%. This disappointed the markets and sterling fell against the major currencies and briefly dipped under the key 1.60 level against the USD.
The US figure should not be much different from the previous estimate of +2.8% leaving the afternoon session very subdued.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Warnings from both the Bank of England and the ECB

The warnings reflect that the Banks in their respective domains are likely to need to report further write downs and should therefore raise additional capital while the ‘going is good’. 
On the back of an already weak Euro, this caused a further dip in its value on opening this morning. Tough talk from ECB member Nowotny didn’t alleviate any European concerns. 
Having just sorted out problems in a few Banks in his own native Austria, he was less than accommodative in his remarks about indebted nations within the Eurozone. He said that there will be no carte blanche bail- out of countries suffering beneath the burden of massive borrowings with his comments assumed to be directed towards Greece and its ever increasing problems. 
His policy view though was very dovish, saying that there was no need to raise interest rates and that Governments shouldn’t be looking to exit banking support measures. 
Euro/Dollar though, dipped to 1.4280 on market opening and after bouncing, revisited this level again in early London trade. 
The next real support for the Euro looks to be at the current 200 day moving average, which is presently at about 1.4170, and with the SNB still sniffing around in Euro/Swiss at levels below 1.5000, it might be that this will be a move too far and that we will see a bounce for year end.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

The US Dollar rally continues

The US Dollar index- which measures the strength of the USD against a basket of currencies hit a 3 month high as the Dollar extended its recent rally. 
However the motivation for the rally shifted- previously the US Dollar gained on the back of recent positive economic data in the form of retail sales and payroll numbers. 
Yesterday it was more a case of good old fashioned risk aversion creating a demand for the safe haven US Dollar. A more upbeat statement from the FED may also have helped as they slowly turn more hawkish, however it was a clear case of risk off that drove the US dollar higher yesterday. 
The problem is that a weaker Dollar will have contributed to better economic data and now the USD is gaining we could see future economic feedback stuttering.

Looking at current levels EUR/USD has now fell back to 1.4380 and hit a low of 1.4304 a level not seen since September. The euro is still struggling on structural weaknesses within certain nations in the 16 nation zone. 

GB Pound/US Dollar also fell into 1.60 territory before creeping back to 1.62- a fall in BRC retail sales was not good news for the UK economy and this number on release caught the market off guard with sterling dropping sharply.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Fed keeps US interest rates on hold

Last night the Federal reserve kept their interest rates on hold.
Reports indicate we may not see a rate hike until late 2010 or even possibly 2011. The dollar has gained against most currencies on the back of this, and US Dollar/Japanese Yen tipped higher for the third consecutive day.

UK retail sales figures for November MoM came in this morning at -0.3% against an expected 0.5% rise, pushing sterling lower against a basket of currencies. 

Sterling has moved below 1.61 on the back of last nights Fed decision to keep interest rates on hold, boosted by the poor UK retail figures. Key support levels around 1.6083 should see the dollar move towards 1.59 regions.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Euro weakness continues

Since the beginning of December the euro has shed 500 points against the US Dollar.
Recent problems in Greece and Austria and further structural problems within the eurozone are zapping confidence. In a nutshell along with recent problems within Greece and Austria, you also have concern over Italy, Spain and Portugal and exposure in Eastern Europe.
Take this alongside a strong euro and expanding deficits and you have forward looking issues which are shaking investor confidence. To add to the woes of the euro, the USD has had a fine run in the last week being largely supported by stronger economic data.

Tonight we have the US interest rate meeting from the FOMC and based upon the recent turn of fortunes for the USD the market will be looking for a hawkish statement. The key levels should a more positive statement occur would be 90 on USD/JPY and 1.45 on EUR/USD for the USD to break through.

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

Euro even weaker than Sterling

The euro has again moved lower against the majors and in particular against the US Dollar moving down to 1.4523 overnight and overall down 500 points from recent highs. 
The cause of the downturn has been attributed to the recent jitters in Greece and more recently in Austria. 
The Greek prime minister commented yesterday that Greece does not have much time and must take tough decisions within the next three months- decisions that have been left for decades.  
In a very direct address he stated that “we must change or sink” and vowed that he will tax the bonuses of Greek bankers by 90%- move over Alistair Darling!

The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.