Forex Info Center

Sweden: Riksbank going nuts over inflation

The Riksbank is clearly much more worried about inflation than financial markets or analysts appear to be. The Riksbank has stated it will deliver hikes in September (4) and October (23). The main reason of course being higher inflation on oil/fuel and food, etc. The oil price is expected to remain around USD140/bl until 2011. The most interesting aspect, in our view, is that the Riksbank has repositioned itself (again) as an 'inflationnutter'. Indeed, if our forecasts are correct, with higher

US: Continued moderate job losses

Overview: In June the employment report continued to print moderate job losses consistent with a nearly stagnant, but not recessionary, US economy. The economy shed 62,000 jobs (DB -50,000, Consensus - 60,000) in June and on top of this the employment figures for the previous months were revised down by 52,000. Hence, the report included a total loss of jobs of 114,000 persons. Moreover, the unemployment rate failed to move lower keeping its level of 5.5% in June. Wage moderation continues.

ECB: rate hike but remarkably cautious

Overview: The ECB raised rates on 3 July by 25 bp to 4.25%, which came as no surprise. As we expected, there was a much more balanced approach in both the introductory statement and the question and answer session than there was in June; the committee used milder language in order to ensure it did not feed expectations of more rate changes. Details: This time the ECB expressed much more concern about the growth picture by reintroducing references to downside risks to growth, omitting upside

Weekly Review and Outlook - EUR/USD Pullback on Trichet, Fedspeaks ahead

Action Insight Weekly Review and Outlook EUR/USD Pullback on Trichet, Fedspeaks ahead Dollar staged a strong rebound last week, helped by ECB Trichet downplaying the chance of another rate hike from ECB after raising rates by 25bps to 4.25% on Thursday. But the biggest winner was indeed the Aussie which with respective crosses topping the top movers chart even though RBA was on hold and sounded slightly dovish. Also, the rebound in dollar is viewed as a profit taking correction ahead of a long

USDCHF rebounded from 1.0111

Being contained by the support of the price channel, USDCHF rebounded from 1.0111. The pair might be forming a cycle bottom on daily chart. Further rise to test 1.0539 previous high resistance is still possible in next several days, a break of this level will confirm the cycle bottom and signal resumption of long term up trend. For long term analysis, USDCHF formed a long term cycle top at 1.0623 on weekly chart. Consolidation in a range between 0.9634 and 1.0623 is expected. Up trend will

Gold Cools After Hitting Target

Gold has hit our target of 940.29, and has since cooled a bit to 931.70. Now support is waiting at 928.06, 922.25, 917.58, and 908.25. If price manages to break above 940.29, then the next targets are currently waiting at 960.10, then 992.14.

Live Webinar

I will be holding a live webinar at 12:00 GMT about the backtesting trading systems. You can join through the following link: http://www.fxstreet.com/live/sessions/session.aspx?id=48ceb250-2de6-4cbd-a837-4ef303ec0965 If you want more details on how to attend webinars at FXstreet.com, please go to: http://www.fxstreet.com/forum/showthread.php?t=129 See you all there I hope!

07/06/2008 - The post ECB/NFP dollar rally looks overdone

* The post ECB/NFP dollar rally looks overdone
* ECB hikes as expected, but was it a one and done?
* US employment data were much worse than expected
* Key data and events to watch next week

In one fell swoop the greenback managed to reverse what was shaping up to be a terrible week, on the back of an NFP number that was seen as in line with expectations and an ECB seemingly on hold following the 25 bps increase. EUR/USD opened the week near 1.5790 and looked poised to break through 1.5800 in earnest, a level it had not closed above since late April. Even the 1.6000 area seemed within reach as EUR/USD crossed above 1.5900 just ahead of the simultaneous ECB press statement/US NFP release. It was not to be, however, as the NFP report was deemed to be in line with consensus (we argue it was worse below) while Trichet was interpreted as telling the market that the ECB is on hold. EUR/USD shot down quickly following Trichet's comments and was sitting more than 200 pips lower at 1.5690 just hours later. Given other market developments we believe this move was likely overdone. Full text »

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07/06/2008 - The post ECB/NFP dollar rally looks overdone

* The post ECB/NFP dollar rally looks overdone
* ECB hikes as expected, but was it a one and done?
* US employment data were much worse than expected
* Key data and events to watch next week

Is there a top in place on the EUR/USD? What of the AUD/USD

EUR/USD As one of my mentors ‘Zoltan Vass’ would say; Believe what you see! Once again we have seen another volatile reaction after important economic news. And this was the strongest reaction so far. It is also important to note (as Zoltan pointed out to me) that this reaction is quite a contrary move to the news that preceded such a strong rejection. How to trade this For now it is best to look for selling opportunities. Thursday’s move produced a strong Engulfing Bearish candle and all

Can FDI be sustained in CEE?

Integration into the EU has supported large capital flows into new EU member states. Foreign direct investments (FDI) have hence increased rapidly, and have to a large extent financed large C/A deficits. In the coming years we, however, see large risks that these flows could decline in most countries in CEE, SEE and in the Ukraine and Kazakhstan. Below we present some arguments for this view. First, historical FDI in the EU8+2 has to a large extent reflected privatisation revenues, and since

Europe Session Performance

The credibility game intensifies

Tougher times for policymakers • In the June edition of Emerging Markets Briefer we made the argument that in todays world of slowing global growth, rising inflation and an ongoing credit crisis, it is extremely important that economic policies be credible. We still believe this theme is extremely important, and market developments in the past month clearly underline this fact. • With the global economic and financial environment worsening, policymakers will be tested to a much greater degree

A very exciting week!

This has been a very exciting week on financial markets, with lots of significant macroeconomic data being published; most importantly the always awaited payrolls and the ECB’s decision with regard to interest rates. The week started of slowly with a minor increase on the EURUSD market, which additionally grew in strength after the publishing of the ADP nonfarm employment change which presented a decrease of 79,000 work places against an expected decrease by 20,000. This negative data drove

A tough situation

Global equities markets are in a tough situation. Declining indices and session finishing in red are not the best advertisement for stocks recently. The mood of investors is not good and it seems that this situation can last for some time. This past week was no different. Declines were not spectacular but steady. The American economy is far from recovering, and investors are starting to get worried. The Dow Jones Industrial Average declined by 1.25% to 11,287 while the S&P 500 dropped by

Less fear of more hikes

Macro outlook • Inflation fears and financial fears are still battling for the leaders jersey in the financial markets. Financial fears have been in the lead in recent weeks: equities have tumbled and credit spreads have widened as risk appetite has waned. This has boosted demand for government bonds. Short yields have fallen in both the US and in Euroland since the start of June. However, inflation fears could easily regain the lead if oil prices continue to rise. Hence, uncertainty is high.

FX forecast update: To catch a rising tide

Here are our latest thoughts on the G10 currency markets: • Difficult waters to navigate. The best performing currency during the past month has been CZK (up by 4% vs EUR), followed by HUF (2%) and PLN (0.8%). The worst have been ISK, PHP and NZD (down 5-6%). The performance split between ISK and HUF, which can be seen as both belonging to a group of high-yielding currencies backed by fragile fundamentals, clearly illustrates how difficult currency markets have been to navigate in the past

Fed to start normalizing its monetary

Impulses. Once again, the US economy is proving to be more “resilient“ than anticipated. At just over 1½%, we expect that GDP growth in Q2 2008 was even stronger than at the beginning of this year (+1%). The main catalyst was, however, the federal tax rebate checks (p. 5-7). Fed. This boost to purchasing power should also be felt in the current quarter. At the same time, inflationary pressures are still increasing. But the Fed cannot yet scale back its massive monetary policy stimulus as

Markets Lower in Thin Volume as US Goes on Holiday

ECONOMIC DATA ·FR May Central Government Balance: -€50.1B v -€45.0B prior ·SP May Industrial Output WDA: -5.5% v -0.8%e || Prior revised from -0.2% to 0. 2% ·SP May Industrial Output NSA: -7.3% v 11.3% prior || Prior revised from 11.3% to 11.8% ·GE May Factory Orders: M/M -0.9% v 0. 8%e || Prior revised from -1.8% to -1.7% |||| Y/Y -2.0% v 2.0%e || Prior revised from 15.0% to 15.2% SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ·The ECB's Mersch said overnight that an ECB rate hike will not

We have reached the end of a varied and volatile FX week

Good morning from wonderful Hamburg and welcome to the Varengold Daily FX Report. We have reached the end of a varied and volatile FX week. The ECB rate decision and the job data had intensive influence on the market. However, we expect calm Friday, because US markets will be closed in observance of the US Independence Day. Market review The USD rallied on Thursday against a basket of currencies after payroll data suggested the US job market and economy are not as grim as many investors had