official Financial News And Analysis by Octafx.com

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A look at the unemployment rates in the eurozone

A glance at the various rates of unemployment across the 17-nation eurozone

Eurostat, the EU's statistics office, estimates that unemployment across the 17-country eurozone rose to 10.8 percent in February, a new record since the euro launched in 1999.

Here's how the countries compare:

Spain 23.6 percent

Greece 21.0 percent+

Portugal 15.0 percent

Ireland 14.7 percent

Slovakia 14.0 percent

Estonia 11.7 percent+

France 10.0 percent

Cyprus 9.7 percent

Italy 9.3 percent

Slovenia 8.7 percent

Finland 7.4 percent

Belgium 7.2 percent

Malta 6.8 percent

Germany 5.7 percent

Luxembourg 5.2 percent

Netherlands 4.9 percent

Austria 4.2 percent

Apr 02, 2012 16:40

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OctaFX.Com - IMF chief against any breakup of Eurozone

IMF managing director does not want to see weaker European countries split from Eurozone

WASHINGTON (AP) -- The managing director of the International Monetary Fund says her global lending organization wants the Eurozone to stay together, not be broken up by the departure of some of its weaker nations.

Christine Lagarde told the annual meeting of The Associated Press that the IMF has no agenda "to breakup that zone."

There has been talk that Greece, one of the 17 nations that use the euro, might at some point leave. Lagarde was asked if such countries, even Spain and Italy, might be better off outside the zone.

"To your question, I think the answer is no," she said.

Apr 03, 2012 16:07

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OctaFX.Com -Dollar dips versus euro ahead of Fed minutes, ECB

NEW YORK (Reuters) - The dollar slipped against the euro ahead of the release of U.S. Federal Reserve meeting minutes on Tuesday, though investors were reluctant to make big bets a day ahead of the European Central Bank meeting.

At least for the next few hours, the market focus in pre-Easter trade remains the Fed's meeting minutes from March which may provide clues on U.S. policymakers' inclination to take further steps to ease policy, which would weigh on the dollar.

For now, the minutes are expected to suggest a standby approach, with the Fed likely to warn that premature tightening would be risky, while keeping an open-minded, but uncommitted view on further easing.

Fed officials on Monday signaled little appetite for further monetary steps to stimulate U.S. growth in an economy that is gradually strengthening. However, Fed Chairman Ben Bernanke said last week that more stimulus would remain an option.

The ECB policy meeting is on Wednesday with analysts saying a hawkish message from the bank on the need to get back to concentrating on quelling inflation instead of helping Europe's economy and financial system out of crisis may give the euro a brief boost.

"We get a peek at the Fed minutes but (are) not expecting any surprises there," said John Doyle, currency strategist at Tempus Consulting in Washington. "After that we are holding for the Europeans."

The euro was last trading up 0.1 percent at $1.3337, with the session low at $1.3298 and the session peak at $1.3367.

Analysts said the gains in the shared currency came after investors failed to push the unit below $1.3300 and hold it there, forcing anyone betting against the euro

to step back in to buy to prevent further losses.

ON HOLD

To be sure, many investors are still looking to sell the euro as concerns grew about a fragile outlook for the euro zone and high debt levels in Spain. Italian and Spanish debt yields rose on Tuesday amid concerns about the euro zone's ability to keep budget deficits under control.

Spain's public debt ratio is expected to hit 79.8 percent of gross domestic product in 2012, a document detailing the country's 2012 budget showed on Tuesday.

Since the euro's mid- to late-March rally from $1.3000 to just below $1.34 fizzled out, the currency has stayed in a relatively tight $1.3250-$1.3400 range. Many analysts expect it to move lower if it breaks below that area.

The euro was last little changed against the Swiss franc at 1.2031 francs, but still near a two-month low as traders pushed the shared currency closer to the 1.20 franc floor set by the Swiss National Bank last year.

YEN SWINGS

Against the yen, the dollar was last up 0.1 percent at 82.18 yen, recovering from a drop to a low at 81.54 yen, its weakest since March 9.

Analysts said the broader trend for the yen to weaken remains intact following the Bank of Japan's unexpected easing of monetary policy in February. Speculation that the Fed could tighten its own policy faster than previously expected - and raise the return for holding dollars - have also weighed on the Japanese currency.

"People have been buying into the idea that the yen could weaken and perhaps we have seen the strongest period for the yen," said Dag Muller, technical analyst at SEB in Stockholm. "But in the near term, the yen could succumb to more of a correction from short-term exaggerated levels."

The Australian dollar was down 0.4 percent at US$1.0366, cutting earlier gains, after the Reserve Bank of Australia kept interest rates unchanged at 4.25 percent and suggested a bias toward easing.

Apr 03, 2012 16:19

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OctaFX.Com -Dollar rises against euro ahead of Fed minutes

Dollar rises against euro as traders await Federal Reserve minutes of March meeting

NEW YORK (AP) -- The dollar is rising against the euro before the release of the Federal Reserve's minutes from its March meeting.Traders are waiting to see whether the Fed is optimistic about the economy.

The Fed said in a statement after the meeting that it expects the job market to improve. The statement boosted the dollar.

But last week, Fed Chairman Ben Bernanke warned that the job market is still weak, pushing the dollar lower against the euro. Traders had interpreted the comments to mean that the Fed will keep short-term interest rates near zero. Lower interest rates tend to weigh on a currency by reducing the returns investors get from holding it.

Apr 03, 2012 16:43

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OctaFX.Com - The Basics Of Currency Trading

The investment markets can quickly take the money of investors who believe that trading is easy. Trading in any investment market is exceedingly difficult, but success first comes with education and practice. So, what is currency trading and is it right for you?

SEE: Top 7 Questions About Currency Trading Answered.

The currency market, or forex (FX), is the largest investment market in the world. Each day, it accounts for roughly $1.5 trillion of daily trading compared to only $25 billion of daily volume on the New York Stock Exchange (NYSE). The market may be large, but until recently the volume came from professional traders, but as currency trading platforms have improved more retail traders have found forex to be suitable for their investment goals.

How Does It Work?

Currency trading is a 24-hour market that is only closed from Friday evening to Sunday evening, but the 24-hour trading sessions are misleading. There are three sessions that include the European, Asian and United States trading sessions. Although there is some overlap in the sessions, the main currencies in each market are traded mostly during those market hours. This means that certain currency pairs will have more volume during certain sessions. Traders who stay with pairs based on the dollar will find the most volume in the U.S. trading session.

Currency is traded in various sized lots. The micro lot is 1,000 units of a currency. If your account is funded in U.S. dollars, a micro lot represents $1,000 of your base currency, the dollar. A mini lot is 10,000 units of your base currency and a standard lot is 100,000 units.

Pairs and Pips

All currency trading is done in pairs. Unlike the stock market, where you can buy or sell a single stock, you have to buy one currency and sell another currency in the forex market. Next, nearly all currencies are priced out to the fourth decimal point. A pip or percentage in point, is the smallest increment of trade. One pip typically equals 1/100 of 1%.

Retail or beginning traders often trade currency in micro lots, because one pip in a micro lot represents only a 10 cents move in the price. This makes losses easier to manage if a trade doesn't produce the intended results. In a mini lot, one pip equals $1 and that same one pip in a standard lot equals $10. Some currencies move as much as 100 pips or more in a single trading session making the potential losses to the small investor much more manageable by trading in micro or mini lots.

Far Less Products

The majority of the volume in currency trading is confined to only 18 currency pairs compared to the thousands of stocks that are available in the global equity markets. Although there are other traded pairs outside of the 18, the eight currencies most often traded are the U.S. dollar (USD), Canadian dollar (CAD), euro (EUR), British pound (GBP), Swiss franc (CHF), New Zealand dollar (NZD), Australian dollar (AUD) and the Japanese yen (JPY). Although nobody would say that currency trading is easy, having far less trading options makes trade and portfolio management an easier task.

What Moves Currency?

An increasing amount of stock traders are taking interest in the currency markets because many of the forces that move the stock market also move the currency market. One of the largest is supply and demand. When the world needs more dollars, the value of the dollar increases and when there are too many circulating, the price drops.

Other factors like interest rates, new economic data from the largest countries and geopolitical tensions, are just a few of the events that may affect currency prices.

The Bottom Line

Much like anything in the investing market, learning about currency trading is easy but finding the winning trading strategies takes a lot of practice. Most forex brokers will allow you to open a free virtual account that allows you to trade with virtual money until you find strategies that work for you.

Apr 05, 2012 15:43

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OctaFX.Com - Dollar rises to 3-week high against euro

Dollar rises to 3-week high against euro on fears about Europe's debt crisis

NEW YORK (AP) -- Growing fears about Europe's debt crisis pushed the dollar to a three-week high against the euro Thursday. The euro also fell against the Swiss franc, dropping below a ceiling set by the Swiss National Bank last year.

The yield on Spain's benchmark 10-year bond jumped to 5.74 percent Thursday, its highest point since November. A month ago, the rate was below 4.9 percent. Rising yields are a sign that investors are less confident in the country's finances.

The higher the yield on a country's bonds, the more expensive it becomes to borrow money. Greece, Portugal and Ireland needed a bailout after their borrowing rates rose above 7 percent.

Concerns about Spain's finances rose this week after weak demand at its bond auction Wednesday.

The euro fell to $1.3057 in afternoon trading Thursday from $1.3139 late Wednesday. The euro fell as low as $1.3034, its lowest point since March 15.

The Swiss franc briefly rose against the euro Thursday above the 1.20 level that the Swiss National Bank capped it at in September. The Swiss franc is considered a safe-haven currency and tends to rise when traders are worried about the global economy. Last year, the Swiss franc rose so much that the SNB said it would spend whatever it would take to stop the euro from falling below 1.20 francs. On Thursday, it fell to 1.1993 francs before quickly moved recovering.

The SNB wants to limit the franc's strength to protect Swiss companies. Last year, exporters were hurt as the value of the franc increased. A strong franc hurts exporters by making their goods more expensive for foreign buyers.

In other trading, the dollar rose to 0.9206 Swiss franc from 0.9161 Swiss franc. The British pound fell to $1.5820 from $1.5889.

The dollar fell to 82.35 Japanese yen from 82.58 yen and to 99.37 Canadian cents from 99.64 Canadian cents.

Apr 05, 2012 15:46

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OctaFX.Com -Euro dips, bonds rise on euro zone worries

NEW YORK (Reuters) -

The euro hit a three-week low against the dollar and bonds edged higher on Thursday as Spain's debt burden fueled worries about further problems for euro zone economies and curtailed investors' appetite for riskier assets.

Global stocks dipped, while energy and gold prices climbed.

A poor Spanish bond auction on Wednesday added to worries that the impact of the European Central Bank's one trillion euro injection of cheap three-year funds into the banking system may be coming to an abrupt halt.

Spanish 10-year government bond yields rose as high as 5.86 percent on Thursday, dragging Italian rates in their wake as investors fled to the relative safety of German and U.S. debt.

The moves follow two days of losses in stocks and other markets following the release Tuesday of minutes from the last Federal Reserve meeting, which suggested the Fed was less keen to launch further economic stimulus.

"The whole European situation seems to be reheating ... and there is more safe-haven type buying," said Sean Murphy, a Treasuries trader at Societe Generale in New York.

The worries added a safety bid for bonds, with the benchmark 10-year U.S. Treasury note up 13/32, with the yield at 2.1752 percent.

Against the dollar, the euro was down 0.7 percent at$1.3052, having hit a three-week low of $1.3038. It also hit its lowest in four weeks against the yen at 106.86 yen before recovering slightly to trade at 107.23 yen, down 1 percent.

Spain's cost of borrowing on markets over 10 years jumped 30 basis points on Wednesday after borrowing costs rose at its bond auction. The yield premium over German benchmarks is now 411 basis points, its highest since late November before the ECB flooded the market with three-year funds.

STOCKS DIP, COMMODITIES GAIN

The MSCI world equity index (.MIWD00000PUS) was last down 0.2 percent, while U.S. stocks were also slightly lower.

Traders cautioned that some of the moves may be exaggerated by thin trading ahead of an extended Easter weekend, and while global stock markets lost more than 1 percent of their value on Wednesday, they remain up almost 10 percent this year.

The Dow Jones industrial average (DJI:^DJI - News) was down 45.75 points, or 0.35 percent, at 13,029.00. The Standard & Poor's 500 Index (MXP:^GSPC - News) was down 3.54 points, or 0.25 percent, at 1,395.42. The Nasdaq Composite Index (NAS:^COMP) was up 6.84 points, or 0.22 percent, at 3,074.93.

For U.S. stocks, offsetting some concern about the euro zone was data showing the number of Americans lining up for new jobless benefits fell to the lowest in nearly four years last week.

Analysts said the claims data and a report on private-sector jobs earlier this week may bode well for the U.S. government's widely watched monthly employment report, which is due Friday.

The U.S. outlook was in sharp contrast with Europe where separate reports showed German industrial output fell more than expected in February and British factory output suffered its biggest monthly fall in almost a year

Spain's IBEX 35 index (MCE:^IBEX - News) touched a 7-month low as concerns mounted about Spain's ability to meet its budget targets, while Europe's FTSEurofirst 300 index (.FTEU3) ended up 0.1 percent.

Banking stocks, many of which have large exposure to the region's lower-rated sovereign debt, edged lower.

UniCredit (CRDI.MI) and Commerzbank (CBKG.DE), which both have exposure to euro zone peripheral debt, were also hard hit, down 3.1 percent and 1.9 percent respectively.

Bucking the softer global trend, non-banking financial sector firms led Chinese shares to their biggest single-day gain since early February, after Premier Wen Jiabao said the monopoly formed by the country's big banks needed to be broken to get money flowing to cash-starved companies.

GOLD, ENERGY CLIMB

Spot gold was up 0.6 percent at $1,628.34 an ounce. Weaker prices tempted some buyers but gains were capped by a stronger dollar and fading hopes of a fresh round of U.S. stimulus.

Market watchers said some hedge funds might have reduced gold holdings due to stronger U.S. economic data and easing of fears about European debt.

"A lot of the gold trade by hedge funds was specifically tied to a new round of Fed stimulus," said Jeffrey Sica, chief investment officer of SICA Wealth Management with more than $1 billion in assets.

In the other market, U.S. crude was up $1.62 at $103.09 per barrel, while Brent crude was up $1.13 at $123.47.

Apr 05, 2012 15:53

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OctaFX.Com -Dollar drops as payrolls data keep Fed action alive

NEW YORK (Reuters) - The U.S. dollar dropped broadly on Friday in thin holiday trade after disappointing U.S. jobs market data kept the prospect of more Federal Reserve monetary policy support alive.

The dollar fell against the euro for the first time in five days after data showed U.S. payrolls rose far less than expected in March.

The report offset sentiment earlier in the week that followed the release of Fed minutes from its last policy meeting that had market participants downplaying expectations of adding more monetary stimulus.

"Clearly a disappointing (payrolls) number. Across the board it's kind of an underwhelming number," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The euro hit a high of $1.3112 after the report, rebounding from a three week low of $1.3033 reached n Thursday. It last traded at $1.3094, up 0.2 percent.

The dollar fell as low as 81.29 and last traded at 81.56, down 0.9 percent on the day, according to Reuters data.

"At the very least it will keep the door open to additional policy easing more so than before the number was released. In that respect it's definitely a negative for the dollar," Esiner said. "The extent of dollar losses is going to depend on how the market views this number, as an outlier or maybe evidence that the jobs growth is stalling."

Apr 06, 2012 06:33

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OctaFX.Com -Japanese Yen Surges against U.S. Dollar Following Dismal Jobs Report

Over the past few weeks, concerns arose over a potentially disappointing March jobs report for the U.S. economy in light of warm weather and impending seasonal adjustments. Those concerns were vindicated on Friday, reigniting a plummet in yields supporting the U.S. Dollar.

European Session Summary

Data was sparse in the overnight alongside quiet trading conditions, as most major European equity markets were closed on Friday due to a religious holiday over the weekend. U.S. equity markets were closed as well for the holiday, but one of the most important releases for the U.S. economy was released regardless; and the nonfarm payrolls report for March sparked immense volatility.

The U.S. economy added 120K jobs in March, exactly half of the revised February figure at 240K. Similarly, the unemployment rate dropped to 8.2 percent from 8.2 percent in March. Many economists and policymakers have been discussing the potential claw back in this month’s jobs report considering that the winter months were unseasonably warm across much of the United States. Why does weather affect NFPs? Warmer conditions are conducive to work outside, in particular construction projects, and work in that sector has surged in recent months.

Where does this leave the U.S. economy? The Federal Reserve’s minutes from their March 13 policy meeting indicated that officials are leaning away from another round of easing due to the progress the U.S. economy has made. In the intermeeting period, Federal Reserve Chairman Ben Bernanke noted that more stimulus could be warranted should the labor market continue to struggle. On the other hand, New York Fed President William Dudley has stated that a moderation in jobs growth is to be expected, given the favorable weather conditions the past few months.

Is there scope for more easing now? It depends. On one hand, officials are concerned with the lack of progress made by the labor market and are willing to extend efforts to foster growth. On the other, it’s clear that a pullback in jobs growth was anticipated, so it might mean that Fed officials hold their ground. With numerous policymakers due to speak next week, most notably Chairman Bernanke on two separate occasions, speculation on the third installment of quantitative easing will increase once again.

 

 

 

Overall, the Japanese Yen was the best performing major currency, gaining 0.99 percent against the U.S. Dollar. The Euro and the commodity currencies were hit the hardest by the jobs report, with the Canadian Dollar leading losses, depreciating by 0.28 percent. But for the Yen, however, all of the other majors were trading within 1/3 of a percent against the U.S. Dollar.

Apr 06, 2012 13:45

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OctaFX.Com - Dollar falls after US jobs report

Dollar falls against euro, pound, yen after US jobs report

NEW YORK (AP) -- The dollar fell against most major currencies in light trading Friday following a weak U.S. jobs report.

The Labor Department said the U.S. economy added 120,000 jobs in March, down from more than 200,000 in each of the previous three months. Economists expected 210,000 jobs to be added last month.

The unemployment rate fell to 8.2 percent, the lowest since January 2009, but that was mainly due to more people giving up on finding work.

The euro was trading at $1.3095 late Friday $1.3060 late Thursday.

Currency trading is light because many traders are off for Good Friday. The U.S. stock market is closed and U.S. government bond trading closed at noon Eastern.

In other trading, the British pound rose to $1.5885 from $1.5828. The dollar fell to 81.59 Japanese yen from 82.36 yen and to 0.9172 Swiss franc from 0.9201 Swiss franc.

The dollar rose to 99.71 Canadian cent from 99.38 Canadian cents.

Apr 06, 2012 16:46

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[OctaFX_Farid]

OctaFx - EUR/USD Classical Technical Report 04.11

EUR/USD: The latest round of setbacks have stalled ahead of some key multi-week support by 1.3000 and from here, we still can not rule out risks for a shorter-term bounce back towards the 1.3200-1.3300 area, before considering bearish resumption. Ultimately, any rallies towards 1.3300 should be very well capped, while a break and close back under 1.3000, would accelerate declines.

Apr 11, 2012 06:12

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OctaFX.Com -Dollar extends gains vs. yen, hits session high

 

 

 

NEW YORK (Reuters) - The dollar extended gains against the yen on Wednesday, bouncing from a six-week low hit earlier in the global session.

The dollar hit a high of 81.09 yen and last traded at 81.06, up 0.5 percent on the day, according to Reuters data.

In the overnight session the dollar dropped to 80.57, its lowest since February 29.

Apr 11, 2012 06:29

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OctaFX.Com - Gold pauses after rally, focus on euro zone

 

 

 

LONDON (Reuters) - Gold steadied on Wednesday, after rising for four days straight, as the intensifying euro zone debt crisis threatened to undermine the euro and offset any potential safe-haven demand for the metal.

The euro rose on Wednesday but has come under pressure in the past week as the debt crisis has reignited. The focus is now on Spain, where the head of the central bank said on Tuesday commercial banks would need more capital if the economy continues to deteriorate.

Benchmark 10-year Spanish yields touched 6 percent for the first time since early December on Wednesday, having risen by more than two-thirds of a percentage point in the past week alone, while peripheral banking stocks have been pummeled.

Spot gold was last down 0.1 percent on the day at $1,659.00 an ounce by 1:25 p.m. EDT (1525 GMT), while U.S. June futures were down 0.1 percent at $1,659.90 an ounce.

Gold in euros was last down 0.5 percent at 1,261.72 euros an ounce, having touched two-week highs the previous day above 1,271.00 euros.

"The broader macro environment still remains positive. In the near term, the floor will be set by a combination of how strong investment demand is and how responsive the physical market is" Suki Cooper, an analyst at Barclays Capital, said.

Investment in gold has cooled somewhat. Speculators have cut their ownership of U.S. gold futures by more than a quarter since late February, although holdings of the metal in exchange-traded funds remain near record highs above 70 million ounces.

"Gold has found more support recently, but it doesn't have all of the catalysts in place to be driven substantially higher yet," Cooper said.

EURO TIES STRENGTHEN

The correlation between gold and the euro/dollar exchange rate strengthened on Wednesday to reach its most positive since early January, above 65 percent. That means the gold price is more likely to move in tandem with the single European currency than it was just six weeks ago.

"We think gold will be in a range of $1,600 to around $1,690 or $1,700, which is a fairly wide range. But I think it will be difficult for gold to break out of that range," Standard Bank analyst Walter de Wet said.

"What we are seeing is growing interest to buy in the physical market below $1,630. Should we drop below $1,600, the demand will be pretty strong," he said.

Metals consultancy GFMS, a unit of Thomson Reuters, said in its annual outlook for the gold market that a record high price above $2,000 an ounce next year could mark the peak of the precious metal's bull run of more than decade as monetary policy in major economies starts to tighten.

Gold prices for now are likely to drive above $2,000 as concerns over the euro zone debt crisis persist and the idea of more U.S. monetary easing gains support, GFMS Chairman Philip Klapwijk told Reuters.

In Europe, Italian one-year borrowing costs rose for the first time since November at a sale of short-dated paper on Wednesday, reflecting fresh doubts in the market about the more indebted euro zone nations and nerves ahead of a larger three-year sale on Thursday.

On the demand side, Hong Kong's gold exports to China rose 20 percent in February on the month as appetite for the precious metal remains strong in China, which is expected to overtake India as the world's top gold consumer this year.

Some suspected the number could include purchases from the public sector, as the market was largely quiet during a post-Lunar New Year holiday slump in February.

"On the public level, China's central bank will continue to accumulate gold, which is easier than liberalizing their capital account and currency," said Jeremy Friesen, a commodity strategist at Societe Generale, adding that building gold reserves would help China's push to turn the renminbi into a global currency.

Accommodative monetary policy will remain an incentive for private investors to buy into gold, he added.

Silver fell 0.3 percent to $31.69 an ounce, pushing the number of ounces of the metal needed to buy one ounce of gold up to 52.5 from 50 just one week ago, reflecting gold's relative outperformance.

Platinum and palladium eased, with platinum down 0.4 percent at $1,585.74 an ounce and palladium off 0.5 percent at $633.22 an ounce.

Data earlier in the day that showed car sales in China had cooled in March following sharp gains in February weighed on palladium.

Palladium is used mainly in catalytic converters in engines of vehicles powered by gasoline. China is now the world's largest car market and is chiefly gasoline-driven.

Apr 11, 2012 12:06

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OctaFX.Com - Euro Weakens as ECB Monthly Report Warns of Inflation Risk

The ECB’s monthly statement released today largely echoed ECB Chief Draghi’s remarks from April 4th. The central bank mentioned economic recovery but warned of inflation…

THE TAKEAWAY: ECB monthly report sends mixed messages -> Inflation risks seen, but central expects inflation to align itself to forecasts -> Euro drops ahead of release but stabilizes as markets digest

The moderate economic recovery seen recently is subject to downside risks as inflation threatens to devalue the Euro, the European Central Bank’s monthly report for April said today. The statements were in line with ECB chief Draghi’s policy speech earlier in the month.

The Euro sank ahead of the ECB’s release but stabilized later on as markets digested the mixed messages.

 

 

 

The ECB’s Governing Council said it plans to keep interest rates unchanged, and mentioned that it expects price developments to remain stable. The report mentioned a “moderate recovery” seen in the beginning of 2012, but warned that inflationary risks remain a factor in price action. Inflation fears have returned to the fore in Germany as property prices rise and monetary policy remains too loose.

However, the ECB also said it has the tools to combat inflation in the short and long term. The report pointed out that CPI is expected to stay above 2% this year but in the medium-term will slow to the ECB’s price stability target.

Apr 12, 2012 08:26

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OctaFX.Com - Euro, shares nervous ahead of Italian debt sale

LONDON (Reuters) - The euro dipped against the dollar and European shares inched higher on Thursday as nervousness grew ahead of an Italian debt sale that will gauge whether concerns over Spain are spreading to other debt-laden euro zone nations.

Data on industrial production across the euro area, which is likely to show it contracted by 0.3 percent in February, could also reignite fears that weak growth at a time of government austerity measures is undermining efforts to repair the region's finances.

Ahead of the Italian auction the euro fell to a low of $1.3102 before recovering to be steady at $1.1315, below a one-week high of $1.3158 struck on Wednesday, and within the $1.3030-$1.3165 range trodden in the past week.

"Should the Italian auction disappoint, we could see the euro reverse some of its gains," said Ankita Dudani, G-10 currency strategist at RBS Global Banking, who expects the bond sale to go through without much of a hitch.

Yields on 10-year Italian bonds were down 3.5 basis points to 5.506 percent in early trading, narrowing the spread over the less risky equivalent German bonds to 381 basis points and indicating fixed income investors are less worried about buying the debt.

Spanish 10-year bond yields were 2.7 basis points lower at 5.85 percent, with traders saying a disappointing Italian auction may be just the push needed for the yields to go back to around the 6 percent seen at the start of the week.

The turmoil in Spain's bond market that pushed the yields up has calmed down substantially following comments on Wednesday from European Central Bank executive board member Benoit Coeure, who hinted that the central bank might be willing to buy the debt from the market.

German Bund futures were slightly higher at 139.89, with 10-year cash yields steady at a near-record low 1.69 percent.

Italy's borrowing costs are expected to rise by about a full percentage point from a month ago at its 5 billion euro auction of new three-year bonds later, after the rate it pays for one-year money more than doubled at an auction on Wednesday.

STOCKS RECOVERY EXTENDS

European equity markets were slightly higher ahead of the Italian bond auction, adding to the previous session's tentative recovery following a week-long slide.

The FTSEurofirst 300 index (.FTEU3) of top European shares rose was up 1.83 points, or 0.2 percent, at 1,035.63. The Euro STOXX 50 (.STOXX50E) index of Europe's blue chip companies gained 0.2 percent to 2,389.45, having suffered a 4.5 percent decline over the last five days that all but eradicated the year-to-date gains.

Globally, the MSCI world equity index (.MIWD00000PUS) was up 0.2 percent 322.85 after a good start to the U.S. corporate reporting season lifted Wall Street stocks and a strong Australian employment report encouraged the rebound in Asia.

The U.S. dollar was slightly softer against a basket of currencies (.DXY) following comments by the No. 2 official at the U.S. central bank, Janet Yellen, who said on Wednesday the Federal Reserve's ultra-easy monetary policy was appropriate, given high unemployment and the headwinds facing the economy.

Oil markets were all mostly steady, despite oil sheen spotted near Royal Dutch Shell (RDSa.L) platforms in the central Gulf of Mexico overnight.

Brent crude was up 31 cents at $120.49 a barrel after touching a low of $119.93 in early trade. U.S. oil was up 37 cents at $103.07, adding to $1.68 a barrel gains made on Wednesday.

Apr 12, 2012 08:55

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[OctaFX_Farid]

OctaFX.Com - EUR/USD Unmoved Following Positive Euro Industrial Production Data

THE TAKEAWAY: Eurozone industrial production rises 0.5% during February, beats analysts’ expectations -> Weak production in Germany outweighed by 13% increase in the Netherlands -> EUR/USD stays at the same level following the report

Eurozone industrial production rose by 0.5% for the month of February, led by France and the Netherlands. The actual production beat average estimates of a 0.2% decline. However, the numbers were 1.8% lower than February of the previous year, as expected by analysts.

The numbers can be seen as a sign of economic stabilization for the Eurozone; and a drop in industrial production in Germany and Spain was offset by improved production in France and the Netherlands. The weak German numbers that were released last week were not fully represented in today’s numbers as the slump in construction output was not included in the Eurozone survey.

EUR/USD did not react strongly to the better than expected data. The pair rose and fell following the release, but later settled back down to initial levels.

Apr 12, 2012 15:50

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[OctaFX_Farid]

OctaFx - Euro down as Spain yields, China GDP worry

NEW YORK (Reuters) - Higher Spanish borrowing costs dragged the euro down on Friday, pulling the single currency to a second straight weekly loss against the dollar and the yen as the European debt crisis and slower-than-expected Chinese growth worried investors.

News that Spain's banks are virtually locked out of credit markets and relied heavily on cheap loans from the European Central Bank in March spooked investors, who then drove the cost of credit default swaps on Spanish debt to a record high.

The Spanish debt concerns stoked worries from earlier in the session, when data showed China's economy grew less than expected in the first quarter.

"The euro zone situation is slowly flaring up again, and that can have some people second-guessing how many euros they want to hold," said Sean Incremona, an economist at 4cast Ltd in New York.

"In the bigger picture, price action this week has been pretty inconsequential," he added. "We're pretty close to where it left off last week after the payroll action," when U.S. jobs data disappointed and the dollar sold off on views the U.S. Federal Reserve could ease policy further.

The single currency has been mostly range bound in recent weeks as investors look for a reason for large moves.

The euro fell 0.8 percent to $1.3080 on Friday, eroding what had previously been a slight advance for the week versus the dollar. The single currency was more recently off 0.16 percent against the greenback for the week.

Against the yen the euro was off 0.67 percent at 105.90 yen, for a fall of 0.815 percent this week.

The dollar's gains were broad-based, with the greenback rising 0.91 percent against the traditional safe-haven Swiss franc to 0.9192 francs. Against the yen, the dollar was up 0.09 percent at 80.95 yen.

"We are seeing the traditional reaction in that stocks are selling off, core bond markets are rallying, the dollar is rallying and commodities are getting hit," said George Davis, chief technical analyst at RBC Capital Markets in Toronto.

Investors could stay more pessimistic over the next few weeks, he said.

Uncertainty about the euro, however, has fallen as reflected in the options market, with three-month risk reversals in the euro/dollar still biased for euro puts, trading at -2.075 vols on Thursday, but improving from -3.5 vols in mid-February.

AUSSIE PRESSURED

The Australian dollar, which reacts strongly to Chinese data because Australia's commodity-driver economy relies heavily on Chinese demand, fell to as low as US$1.0352.

The Aussie had gained 1.2 percent on Thursday on a surprisingly strong local jobs report and solid bank lending data from China.

"We view yesterday's strong Australian employment and Chinese loan data as more important than the overnight Chinese Q1 GDP release and hence see the overnight sell-off in AUD as providing good levels to go long," Nomura analyst Geoff Kendrick said in a note.

Apr 13, 2012 12:50

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[OctaFX_Farid]

OctaFX.Com - Gold eases below $1,670/oz as dollar recovers

LONDON (Reuters) - Gold prices slipped below $1,670 an ounce on Friday, pausing in their biggest one-week rally since late February as the dollar firmed against key currencies, with the euro falling out of favor due to worries over Spain's financial health.

Nominally higher risk assets, like stocks and commodities, also came under pressure after Chinese growth data released overnight failed to meet expectations.

Spot gold was down 0.4 percent at $1,668.66 an ounce at 1453 GMT, while U.S. gold futures for June delivery fell $10.20 an ounce to $1,670.40.

The metal is still on track to rise 2.4 percent this week after a soft U.S. jobs report last Friday stoked expectations for new quantitative easing measures. Ultra-loose U.S. monetary policy was a key driver of record gold prices last year.

However, a rebound in the dollar on Friday took the wind out of the precious metal's sails.

"Especially in the United States, the investment climate is very neutral towards gold at this stage. People really need to see a policy catalyst before they come back aggressively," Standard Bank analyst Walter de Wet said.

"On the physical side, from the end of this month there is really no seasonal demand coming until August," he added. "It is going to be difficult to break much higher if we don't have this physical buying supporting any investment demand coming through for the next two or three months."

The dollar was up 0.4 percent against the euro as Spanish bond yields rose on data showing the country's banks were relying heavily on ECB lending, and after Chinese growth data disappointed traders. (FRX/)

The single currency hit a session low after a report showed U.S. consumer sentiment slipped in early April.

A report released on Friday showed China's economy grew at its weakest pace in nearly three years in the first quarter, with annual rate of expansion easing to 8.1 percent from 8.9 percent in the previous three months.

European shares were on track for a fourth straight week of losses as renewed concerns about the rising cost of borrowing in some highly indebted euro zone countries dampening sentiment, while safe-haven German bund futures rose. (.EU) (GVD/EUR)

Gold is expected to remain closely tied to the dollar on Friday. A stronger dollar tends to weigh on gold, as it makes dollar-priced commodities more expensive for other currency holders, and curbs the metal's appeal as an alternative asset.

STRUGGLE FOR MOMENTUM

Gold is on track to rise nearly 7 percent this year but has struggled to gain momentum after a strong showing in January as expectations for a further round on monetary easing fluctuate.

A Reuters poll released Friday showed analysts are turning more cautious towards gold, with heady forecasts of $2,000 an ounce receding fast as the economy stabilizes. (PREC/POLL)

While the precious metal remains on course to rally through this year and into 2013, just one analyst of 33 polled expected it to average more than $2,000 an ounce this year, against five analyst of 45 in a similar poll in January.

"The last six months has seen an increase in correlation between gold and other risk assets," Schroders Private Banking head of asset allocation Robert Farago said on Friday. "While this is not readily explainable and therefore may be somewhat coincidental, it does reduce the metal's attraction as a portfolio diversifier."

"I am not convinced that a deflationary environment will prove favorable in the short term," he added. "This would produce a liquidity squeeze and gold may well prove a source of funds since almost all investors are sitting on profits."

Physical buying in Asia's bullion market slowed to a trickle on Friday, as higher prices pushed traders to the sidelines, but a gold-buying festival in India in late April is likely to help bring in some demand from the world's top consumer of the metal.

Silver was down 0.9 percent at $32.02 an ounce, spot platinum was down 0.5 percent at $1,590.75 an ounce and spot palladium was down 0.2 percent at $647.75 an ounce.

CME Group, the biggest operator of U.S. futures exchanges, said it will cut margins for COMEX silver futures for the second time since February in an attempt to boost liquidity after a narrow price range tempered trading interest.

Apr 13, 2012 15:19

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[OctaFX_Farid]

Eurozone March inflation revised up to 2.7 percent

Eurozone inflation in March revised up to 2.7 percent; increase was unexpected

BRUSSELS (AP) -- Inflation in the 17 countries that use the euro was higher than predicted in March, largely because of higher energy and transport costs, official figures showed Tuesday.

Eurostat, the EU's statistics office, said eurozone consumer prices in the year to March rose by 2.7 percent, up from the initial prediction of 2.6 percent. March's rate was the same as the previous month's and indicates that price pressures remain despite mounting fears that the eurozone as a whole will fall back into recession.

The surprise increase in inflation has reined in expectations that the European Central Bank will cut interest rates again any time soon. The bank, which is tasked with keeping inflation just below 2 percent, last cut borrowing costs in December, taking its main rate down to the joint-record low of 1 percent.

With oil prices remaining elevated, analysts said inflation could well remain above target for a while yet, even though Europe's dim growth prospects could weigh on consumer demand and wage increases.

Gustavo Bagattini, European economist at RBC Capital Markets, said he expects inflation to start declining in the second quarter of the year but won't average anything below 2.5 percent.

"This is consistent with our 2012 average forecast of 2.4 percent, which is in line with the ECB's forecast, meaning that the governing council will continue to have to accept a higher rate of inflation temporarily," Bagattini said.

The euro pushed ahead after the figures from $1.3145 to a day's high of $1.3173.

Apr 17, 2012 09:06

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OctaFX.Com - Canadian Dollar Soars on Hawkish BoC Comments

Currencies and equities are trading slightly higher this morning thanks to better than expected economic data from Europe and a relatively healthy Spanish bond auction. The EUR/USD is taking its cue from Spanish bond yields and the steep decline back below 6 percent encouraged investors to dip their toes back into euros. For the time being the 1.30 level continues to hold in the EUR/USD and even though we believe this level will be taken out eventually, a further rise in Spanish bond yields would be needed for that to happen. Mixed U.S. housing market numbers failed to have a lasting impact on the dollar. Housing starts fell for the second month in a row by 5.8 percent. This was the steepest slide in nearly a year and drove starts to a 5 month low. Building permits on the other hand continued to rise by 4.5 percent. Unlike starts, permits have gradually increased for the past 3 months and are now at its highest level since September 2008. The discrepancy between starts and permits is good news because it represents a tremendous amount of backlog and once the recovery gains momentum, housing starts will rise quickly because permits have already been attained by builders.

Meanwhile up North, the Bank of Canada is gearing up for a rate hike. According to the BoC, "removing stimulus may become appropriate." Unlike other parts of the world crippled by high debt levels and slowing growth, Canada has benefitted significantly from the improvement in the U.S. economy and the rise in oil prices. Business and consumer confidence in Canada improved to the point where the BoC felt comfortable enough to raise its 2012 growth forecast to 2.4 from 2 percent and its 2013 forecast from 2.4 to 2.8 percent. Most of Canadian growth is expected to come from domestic demand. Last month, Canada experienced its strongest pace of job growth since 2008 and this improvement in the labor market will translate into stronger consumption. In terms of external factors, the BoC is looking at it from a glass half full point of view - they expect Europe to rise from recession in the second half of the year and they view the U.S. economy has slightly stronger. If not for Europe's troubles, the BoC would have probably raised interest rates today. However don't interpret the BoC comments to mean that a rapid series of consecutive rate hikes will follow. The central bank will raise interest rates gradually to avoid over tightening in what can still be characterized as uncertain global economic conditions. The hawkish comments from the Bank of Canada drove USD/CAD to 0.99 and it should only be a matter of time before USD/CAD slips to a fresh 7 month low.

Apr 17, 2012 09:10

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OctaFX.Com -Spanish bill sale, German ZEW support euro

LONDON (Reuters) - The euro rose against the dollar on Tuesday after Spanish bill sales went through smoothly and a survey showed a rise in German analyst and investor sentiment, easing some of the market's concerns over euro zone debt.

However, analysts said Spain's precarious fiscal position would remain a worry and the most important test would come with an auction of Spanish 10-year debt on Thursday, which could put the euro back under pressure.

Spanish 10-year government bond yields dipped below 6 percent after jumping on Monday on fears its deficit and weak economy may force it to seek international help. Analysts said these concerns would limit the euro's gains with most investors still bearish about the common currency.

"We shouldn't read too much into the Spanish bill auction or into the ZEW data - the German Ifo survey (on Friday) and Spanish 10-year auction will be more important,"

said Gavin Friend, currency strategist at nabCapital.

"The target for the euro is $1.32/$1.3225 but I don't see it much above there."

He said the euro would face further tests with the G20 and IMF meeting at the end of this week and the first round of the French presidential election on April 22.

The euro was last flat on the day at $1.3135, having earlier surpassed Monday's high to hit $1.3173, with traders saying stop-loss buy orders were triggered on the breaks above $1.3150-60. They said a U.S. bank and Swiss investors had bought euros.

More gains would see it target the 55-day moving average at $1.3204, with the euro also supported by the German ZEW survey which showed analyst sentiment in Europe's largest economy rising unexpectedly in April to its highest level since June 2010.

The common currency hit a low of $1.2995 on Monday before rebounding as investors who had earlier initiated bearish bets reversed those positions. Analysts said the bounce above $1.30 suggested that level was an important support that could be difficult to breach. Once below there, however, traders could focus on a move towards the January low of $1.2624.

"I think we'll see a test of $1.30 within the next week," said Niels Christensen, currency strategist at Nordea in Copenhagen, adding concerns about Spain's elevated debt, shrinking economy and high unemployment would keep the euro weak.

ANOTHER SPAIN TEST

Investors were relieved as Spain sold 3.2 billion euros of 12 and 18-month bills, although at much higher yields compared with a month ago. Thursday will see a far bigger test when Spain sells 10-year and two-year bonds.

Compounding Spain's fiscal woes, its banks borrowed a record 316.3 billion euros from the European Central Bank in March, almost double February's total, as they remained all but excluded from wholesale credit markets.

The euro was up 0.3 percent at 106.0 yen, recovering from a trough of 104.63 yen on Monday, a level not seen since mid-February.

The euro and other riskier currencies could be helped further if U.S. housing data and industrial output for March, due at 8:30 a.m. EDT (1230 GMT) and 1315 GMT come in on the stronger side of expectations.

The dollar rose 0.3 percent against the safe-haven yen to 80.64 yen, above a seven-week low of 80.29 hit on Monday.

The higher-yielding Australian dollar edged up 0.2 percent at $1.0370 as stock markets recovered. It cut earlier losses after Reserve Bank of Australia policy meeting minutes showed it would consider cutting interest rates in May if data confirmed a benign inflation outlook.

Apr 17, 2012 10:52

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OctaFX.Com - Canadian Dollar Surges as Hawkish BoC Raises Rate Hike Expectations

Although the key rate was kept on hold at 1.00 percent, an increasingly hawkish Bank of Canada has sent the Canadian Dollar surging early in the North American trading session. The shift in rhetoric has boosted rate hike expectations, improving the yield outlook for the world’s tenth largest economy.

The Bank of Canada left key interest rate on hold at 1.00 percent for the thirteenth consecutive meeting today, but the real story lies within the central bank’s statement accompanying the release. The BoC said that higher rates “may become appropriate” in the future as actual economic growth and price pressures have exceeded economists’ forecasts.

Governor Mark Carney said that “In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.” Governor Carney went on to say that “The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.” Market participants have taken this as a sign that the BoC will move to raise rates in the coming months, with the Credit Suisse Overnight Index Swaps now showing that 18.0-basis points are being priced in over the next 12-months (from 0.9-bps ahead of the meeting).

 

USDCAD 1-min Chart: April 17, 2012

 

 

Charts Created using Marketscope – Prepared by Christopher Vecchio

On the more hawkish than expected tone, as market participants have started to price in higher rates in the future, the Canadian Dollar has soared across the board, but most notably against the Euro and the Japanese Yen. The EURCAD has dropped over 95-pips on the rate decision (UPDATE: as of 14:28 GMT, the EURCAD was down over 110-pips post-rate decision). Similarly, the CADJPY jumped over 65-pips (UPDATE: as of 14:28 GMT, the CADJPY was up over 75-pips post-rate decision).

The USDCAD also traded lower, falling over 60-pips immediately (UPDATE: as of 14:28 GMT, the USDCAD was down over 70-pips post-rate decision).

Apr 17, 2012 14:28

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[OctaFX_Farid]

OctaFx -Euro falls for 3rd day on nagging funding worries

NEW YORK (Reuters) - The euro fell for a third straight session against the U.S. dollar on Thursday despite a decent Spanish bond sale as investors remained skeptical about funding issues in the euro zone.

The euro also tracked the rise in credit default swaps and the widening of yield spreads between the safe-haven German bunds and peripheral fixed income debt, suggesting growing nervousness about liquidity in the financial system and sustainability of the region's debt.

"This is all emblematic of the fact that the market remains very nervous about the state of credit in the euro zone," said Boris Schlossberg, director of FX research at GFT Forex in Jersey City.

"Despite the fact that we had a decent Spanish bond auction, there is just basic skepticism not only about the sovereign debt market but also the health of the overall banking system, particularly in Spain."

Spain's Treasury issued 2.5 billion euros in two- and 10-year bonds, at the top end of the targeted amount. Yields on the key 10-year bond were higher, however, reflecting fears that Spain may miss budget deficit targets and about its banking sector.

The euro dropped 0.2 percent to $1.3087 after hitting a session low of $1.3068, reversing gains that took the single currency to $1.3164 following the Spanish auction.

Traders said they were inclined to sell into any euro rallies, with the rise in Spanish and Italian yields undermining any optimism from the auction. Market talk of a French downgrade also undermined sentiment towards the common currency.

The euro also modestly sold off after a report showed that U.S. initial jobless claims were weaker than expected, which slightly dampened risk appetite.

The euro held above strong chart support at $1.30. But an escalation of concerns about Spain's high level of debt, at a time when the economy is faltering, would put the euro back under pressure, potentially taking it towards the 2012 low of $1.2624.

"The market has come to realize that positive bond auctions are not Spain's salvation," said Neil Mellor, currency strategist at Bank of New York Mellon, adding it was only a matter of time before the euro broke below $1.30.

"There are too many negative elements in the euro zone. If $1.30 breaks, we have only got minor levels of support until the January lows. We cannot preclude a sudden move lower."

Many in the market said the euro would head lower in the medium term given the risks that budget and debt problems in Spain will worsen and uncertainty over the outcome of the French presidential election, which polls suggest will result in a leadership change.

Traders cited talk of hedge funds betting the euro will fall to $1.25 soon after the French poll concludes early next month.

The safe-haven Japanese yen, meanwhile, fell, as equities gained and after Bank of Japan Governor Masaaki Shirakawa stressed the central bank's commitment to powerful monetary easing.

The dollar rose 0.3 percent to 81.510 yen, triggering reported stop loss buy orders around 81.60 yen, with traders earlier citing flows related to the launch of a large investment trust by a Japanese investment bank.

The euro was up 0.1 percent at 106.79 yen, although resistance came in around its 50-day moving average at 107.44 yen.

The higher-yielding Australian dollar was steady against the U.S. dollar at US$1.0356.

Apr 19, 2012 10:53

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[OctaFX_Farid]

OctaFX.Com -EUR/USD Classical Technical Report 04.19

 

 

 

EUR/USD: The latest round of setbacks have stalled ahead of some key multi-week support by 1.3000 and from here we still can not rule out risks for additional consolidation above 1.3000, before considering bearish resumption. Ultimately, any rallies towards 1.3300 should be well capped, while a break and daily close back under 1.3000 would accelerate declines to the early 2012 lows at 1.2660.

Apr 19, 2012 06:26

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[OctaFX_Farid]

OctaFx -AUD/USD Classical Technical Report 04.20

 

 

 

AUD/USD: Our bearish outlook in this market is being reaffirmed with the latest pullback from the mid-1.0400’s and we continue to project deeper setbacks over the coming days and weeks back below parity. A fresh lower top now looks to be carving by 1.0465 but only back above 1.0640 would delay and give reason for concern. From here, look for a break and close back below 1.0300 to open the next downside extension towards 1.0000 over the coming sessions.

Apr 20, 2012 06:44

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OctaFX.Com -EUR/USD Classical Technical Report 04.20

 

 

 

EUR/USD: The latest round of setbacks have stalled ahead of some key multi-week support by 1.3000 and from here we still can not rule out risks for additional consolidation above 1.3000, before considering bearish resumption. Ultimately, any rallies towards 1.3300 should be well capped, while a break and daily close back under 1.3000 would accelerate declines to the early 2012 lows at 1.2660.

Apr 20, 2012 06:51

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http://www.octafx.com/?refid=154' rel="external nofollow">

 

OctaFx - Germany sees upswing amid eurozone turmoil

Ifo index of business optimism indicates Germany economy is picking up speed after slow period

FRANKFURT, Germany (AP) -- A key index of business optimism on Friday reinforced what an increasing number of economists are saying: Germany is beginning to see an upswing — even as the rest of the 17-country eurozone struggles with economic and financial turmoil over too much debt.

The Ifo institute survey of business executives published Friday edged up to 109.9 points from 109.8 the month before, beating market expectations of a slight decline. That follows an unexpected fifth straight monthly rise Wednesday in the ZEW index, which measures the outlook among investment professionals.

Both are leading indicators, suggesting where the economy might be headed in the next six months. Economists say these and other data mean Germany may now have avoided a recession and this year will easily outpacing the eurozone as a whole, which is expected to shrink 0.3 percent this year.

Leading economic institutes this week raised their forecast for 2012 to 0.9 percent from a 0.8 percent prediction last fall, and predicted 2 percent growth next year. Some economists now think the economy grew in the first quarter as well, avoiding a second straight quarter of contraction after a slight 0.2 dip in the fourth quarter of last year. Two quarters of falling output is a technical definition of recession.

Both parts of the Ifo index — estimates of current conditions and expectations for the next six months — were up. Sentiment rose among both industrial firms, which are often oriented toward exports in Germany, and retailers, which depend on domestic demand. Economists say Germany's low unemployment rate of 5.7 percent is giving workers the confidence they need to spend money in stores.

"The German economy is showing itself to be resilient," said Ifo institute head Hans-Werner Sinn.

Germany is motoring ahead even as fears worsen about the eurozone debt crisis. Spain and Italy are seeing higher costs to borrow money on bond markets and roll over their debt loads, while their economic growth is sagging. Their troubles — which could mean big losses for shaky banks if governments can't pay — hold out a threat to the European and global economies.

High borrowing costs and fears of default have already pushed Greece, Ireland and Portugal to seek bailout loans from other eurozone countries. Greece additionally had to ask creditors to write down €107 billion in debt that it could not pay.

Germany is reaping the benefits of efforts begun in the early 2000s to cut labor costs for businesses — a reform effort that has now been taken up by Spain and Italy but which may need years to bring them higher growth. It is benefiting from its traditional strengths as an exporter of cars and machinery, and growth has been boosted by the recovery in the United States and strong growth in emerging markets such as China.

Ironically, in some ways the debt crisis has given Germany some help.

Because of the country's reputation for stability, investors are willing to buy its bonds as safe places to put their money. That means rock-bottom borrowing costs for the government, in contrast to the heavy risk premiums paid by Italy and Spain to borrow — costs that threaten to undermine their budgets and create a self-fulfilling default spiral.

A two-year bond sold Wednesday cost the German treasury only 0.14 percent interest yield, and a 10-year bond issue from April 11 yielded only 1.77 percent. With inflation at 2.3 percent, Germany's creditors are accepting no return on their lending or even paying for the privilege of lending it money. Rates are also low because the European Central Bank has reduced its benchmark to a lowest-ever 1 percent.

German economists say those rock-bottom rates are helping lower borrowing costs for companies as well, spurring business investment that is helping fuel the recovery.

Additionally, the crisis has kept the euro's exchange rate weaker than it otherwise would be, boosting exports. The eight economic institutes who produce a twice-yearly forecast for the government says that means German goods are cheaper in foreign markets than they have been for 30 years.

The institutes warned however against complacency. They say their economy remains threatened by any wider disaster in the eurozone because 43 percent of its exports go to other eurozone countries — and 20 percent to the five crisis-hit countries, Spain, Italy, Greece, Ireland and Portugal.

That means a substantial 12.3 percent of Germany's economy is based on trade with the eurozone — suggesting that a financial disaster among neighbors could easily spoil Germany's improving mood.

Apr 20, 2012 14:09

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[OctaFX_Farid]

OctaFx - Stronger U.S. data lift shares, dollar

OctaFx - Stronger U.S. data lift shares, dollar

NEW YORK (Reuters) - U.S. stocks and the dollar rallied on Tuesday after data showed U.S. manufacturing grew in April at the strongest pace in 10 months, soothing recent worries about the economy.

Safe-haven Treasuries prices fell, while gold retreated from two-week highs as the data dampened speculation the Federal Reserve would adopt fresh monetary easing measures to boost growth.

The S&P 500 and Nasdaq Composite indexes soared 1 percent after the Institute for Supply Management said its index of national factory activity rose to 54.8 from 53.4 in March, exceeding expectations of 53.0.

"The American economy is not as weak as some may perceive, and although it has stagnated a bit here, the American economy is doing very well," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

"The fly in the soup is Europe. You have to keep an eye on these bond markets, and as long as Spain and Italy stay below six percent in terms of bond yields, that is a green light to buy stocks."

The Dow Jones industrial average (DJI:^DJI) was up 116.02 points, or 0.88 percent, at 13,329.65. The Standard & Poor's 500 Index (MXP:^SPX) was up 16.37 points, or 1.17 percent, at 1,414.28. The Nasdaq Composite Index (NAS:^COMP) was up 36.61 points, or 1.20 percent, at 3,082.97.

The MSCI world equity index (.MIWD00000PUS) gained 0.5 percent to 330.35. Trading was limited with many markets in Asia and Europe closed for the May Day holiday.

World stocks posted a loss of about 1.5 percent last month as worries about global growth resurfaced after data showed the U.S. economy cooled in the first quarter and the euro zone recession was deepening.

The weakness has also spread to other countries as the British manufacturing sector barely grew in April, hit by the economic slowdown in the euro zone, while Canada said its economy unexpectedly shrank in February.

Adding to bullish sentiment were signs of recovery in Chinese manufacturing. China's Purchasing Managers' Index rose to a 13-month high in April, suggesting the world's second-largest economy has found a footing and may be recovering from a first-quarter trough.

AUSSIE TUMBLES

The Australian dollar fell nearly 1 percent against its U.S. counterpart after the Reserve Bank of Australia slashed rates by a deeper-than-expected 50 basis points. Domestic government bond yields hit 60-year lows.

The dollar rose 0.5 percent to 80.18 yen, rebounding from a low of 79.62, its weakest point since February. The stronger yen hit Japan's export-related equities, sending the Nikkei index (NIK:^9452) down 1.8 percent to a 2-1/2-month closing low.

The euro slipped 0.1 percent to $1.3225, off an earlier one-month high of $1.3283.

Light volumes were expected before Thursday's European Central Bank meeting, Friday's U.S. non-farm payrolls report and weekend elections in Greece and France.

Brent crude rose 32 cents to $119.79 a barrel while U.S. crude rallied $1.10 to $105.97.

Gold inched up to a two-week high and last traded around $1,664 an ounce.

The benchmark 10-year U.S. Treasury note was down 9/32, with the yield at 1.9488 percent. Benchmark yields, however, are still hovering at their lowest levels in nearly three months.

May 01, 2012 13:57

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[OctaFX_Farid]

OctaFx - Dollar gains vs euro, yen as U.S. data allays fears

OctaFX.Com -Dollar gains vs euro, yen as U.S. data allays fears

NEW YORK (Reuters) - The dollar rebounded from a one-month low against the euro and a 2-1/2-month trough versus the yen on Tuesday after a key barometer of the U.S. manufacturing sector showed unexpected strength last month, assuaging concerns the economy was slowing.

The Institute for Supply Management's factory data bucked the trend of other recent data that suggested the economy was losing steam, prompting traders to rebuild long dollar bets that had grown stale as the economy's outlook weakened.

"The view on the economy has swung from optimism to pessimism of late and this could bring us back to the middle," said Nick Bennenbroek, head of FX strategy for North America at Wells Fargo in New York. "ISM suggests there's no real reason to get too concerned about the path of the U.S. economy at this point."

The ISM data, which showed the strongest rate of growth in 10 months, also downplayed recent speculation that the Federal Reserve will embark on a third round of bond buying to bolster the economy, lifting the appeal of the dollar.

In afternoon New York trading, the euro fell 0.2 percent against the dollar to $1.3218, retreating from a four-week high at $1.3283 hit earlier in the day.

"Once the euro rally lost momentum that led to massive interest in June euro $1.32 and $1.30 puts," said Matthew Schilling, a commodities brokers at RJO futures in Chicago.

"Those puts are showing the highest volume that I have seen in a while."

Investors who buy these puts expect the euro to fall below $1.30 or $1.32 before they expire on June 8.

Trade was thin, however, with many of Europe's trading centers closed for the May Day holiday. Light volume was expected before Thursday's European Central Bank meeting, Friday's U.S. non-farm payrolls report and weekend elections in Greece and France.

Against the yen, the dollar recovered from a more than two-month low, rising to a session high at 80.29 yen. It was last at 80.24 yen, up 0.6 percent.

Front-end volatility in dollar/yen remained under pressure despite the dollar hitting multi-month lows. On Tuesday, one- month volatility was at 8.35 percent, falling as low as 7.76.

Volatility curves in dollar/yen, however, are positively sloping, with back-month options still higher than short-dated ones - usually reflecting expectations of some stress. Ultimately, however, analysts said long-end volatility should decline as well because it has become expensive for investors to be on such a constant state of alert, given time decay.

The Australian dollar, meanwhile, was the day's biggest mover, falling sharply after the Reserve Bank of Australia slashed rates by a deeper-than-expected 50 basis points.

The Aussie fell 0.9 percent to US$1.0334 and slid to a three-month low near 82 yen.

"The RBA move means we no longer see a cut in June, but data in the coming months will be of particular focus in the wake of this rather unprecedented cut," TD Securities said in a research note.

May 01, 2012 15:09

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OctaFx - Euro clouded by Greece and Spain worry

LONDON (Reuters) - The euro fell close to a recent three-month low versus the dollar on Wednesday and the safe haven yen rose broadly amid worries over the impact on the euro zone stemming from political turmoil in Greece and the fragility of Spain's banking sector.

The euro remained under widespread pressure after the leader of Greece's Left Coalition party said on Tuesday that the country's commitment to a European Union/International Monetary Fund rescue deal had become null and void.

Greece's two main pro-bailout parties failed to win a majority in weekend elections, leaving questions over the country's ability to avert bankruptcy and stay in the euro.

Added to instability in Greece, French President-elect Francois Hollande has advocated an approach to tackling the debt crisis centered more on growth, which may create tensions with Germany's insistence on fiscal austerity.

Wednesday's moves suggest the political uncertainty is causing a broader retreat from risky assets. The New Zealand and Australian dollars, both sensitive to shifts in investor risk appetite, hit four-month lows versus the U.S. dollar.

"We still think the euro will head lower with $1.2950 the level to break in the near-term," said Lauren Rosborough, Senior FX strategist at Societe Generale, who have a medium-term target of $1.2500.

The euro fell 0.2 percent to $1.2980, closing in on a three-month low near $1.2955 touched on Monday. Technical analysts said the euro had found support on Monday around the 61.8 percent retracement of the it's 2012 rally at $1.2953.

The euro could fall towards $1.28-$1.29 over the next few weeks, although its drop is expected to be gradual given many investors are already short of the common currency, market players said.

Options traders said the euro may receive some support because of potential demand for euros related to option barriers at $1.2950 and below. The existence of such barriers means options traders might step in to buy the euro if the currency dips close to those levels.

Overall however the path for the euro was likely to be down. Added to the threat of a Greek exit from the euro, the bleak outlook for Spain's troubled banking sector continued to spook bond investors, pushing yields on Spanish 10-year bonds back above six percent on Wednesday. (GVD/EUR)

"In the next four weeks we should know who is controlling Greece, whether or not it runs out of money or chooses to adhere to its bailout terms and how the Spanish government plans to sort out its banking sector," said Kathleen Brooks, Research Director at FOREX.com.

"There are high levels of market risk associated with all of these events, which we believe is euro negative."

YEN IN DEMAND

A souring in investor appetite for risk gave broad support to the low-yielding yen which tends to rise when investors look to park their money in safer assets.

The euro was down 0.5 percent at 103.35 yen, while the Japanese currency climbed to a two-and-a-half month high versus the dollar of 79.61 yen on trading platform EBS.

The dollar itself remained supported against a basket of currencies by its own status as a safe haven, with the dollar index (.DXY) up 0.2 percent at 79.943.

The Australian dollar was down 0.5 percent to $1.0066, having touched a low of $1.0052 at one point, the lowest level in more than four months. The New Zealand dollar also touched a four-month low at $0.7842.

The Australian dollar fell below 80.20 yen at one point, the lowest level since January.

Implied option volatilities on Aussie/yen soared to a one-month high above 13 percent as market players scrambled to protect themselves against further declines in the Australian dollar.

May 09, 2012 11:02

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OctaFX.Com -Merkel says euro zone must stick to reform pledges

BERLIN (Reuters) - German Chancellor Angela Merkel reaffirmed on Wednesday that the euro zone must stick to previously agreed reforms on budget discipline.

Merkel is facing increased calls in the crisis-stricken euro zone to ease up on tough fiscal measures that have deepened a recession in peripheral countries such as Greece and to make reviving economic growth a bigger political priority.

"We both concur that in the euro zone we must stick to the program and the rules that have been agreed," Merkel told a joint news conference with Slovenia's Prime Minister Janez Jansa.

Echoing Merkel's tough line, Jansa said: "There is no 'either-or' when it comes to stability or economic growth. ... Such growth should not lead to higher public debts, which would not be good for future generations."

Slovenia is a member of the euro zone.

May 09, 2012 12:01

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OctaFx -Greek contagion fears send euro, shares lower

LONDON (Reuters) - Fears that a Greek exit from the euro zone will worsen the debt crisis facing other European nations gripped financial markets on Wednesday, sending shares and other riskier assets lower as investors shifted funds into safe havens like the U.S. dollar.

The euro dipped below $1.27 to a four-month low, the main index of top European shares, the FTSE Eurofirst 300 (.FTEU3), touched its lowest level for 2012, while U.S. stock futures pointed to a weak day on Wall Street.

The probability that Greece will leave the single currency rose markedly after political leaders in Athens failed on Tuesday to form a government, forcing another round of elections. Opinion polls show this is likely to be won by leftist parties opposed to the country's bailout deal.

In response, markets have moved to price in a Greek exit from the 17-member bloc, but are uncertain about the impact this will have on the rest of the region, while big investors have largely retreated to the sidelines, adding to the volatility.

"The idea that you can contain the spillover, the contagion, into the likes of Portugal, the likes of Spain, I just don't see that as being feasible," said James Ashley, senior European economist at RBC Capital Markets.

Peripheral euro zone sovereign bonds have taken the brunt of the selling pressure as some investors withdraw to safe havens like German government debt. Price moves were most pronounced in the market for insuring bonds against a potential default.

The Italian five-year Credit Default Swap (CDS) was 16 basis point (bpts) higher at 510 bpts in European morning trade, while the Spanish 5-year CDS widened 4.5 bpts to hit an all time peak of 546 bpts.

In the cash market moves were less dramatic, with 10-year Spanish bond yields easing to 6.35 percent after making big gains on Tuesday. The Italian equivalent debt was little changed at 6.01 percent.

The yield spread of all major emerging sovereign bonds over safer U.S. Treasuries however widened to be near 3-1/2-month highs of 386 basis points.

"The re-weighted probability of Greece leaving EMU has led to a sharp widening of government bond spreads, suggesting that long-term capital is leaving the periphery of Europe," Morgan Stanley said in a note to clients.

There were also signs in Athens that the prospect of a rapid devaluation of any new currency if the country leaves the euro was concerning ordinary Greeks.

Central bank head George Provopoulos told political leaders savers had withdrawn at least 700 million euros ($894 million) from the nation's banks on Monday.

The euro dropped to $1.2681 against the dollar putting it on track to test the January low of $1.2624, below which would mark the euro's lowest level since August 2010.

"The bias is still for a lower euro and a $1.26 target for mid-year looks pretty appropriate" said Jeremy Stretch, head of currency strategy at CIBC.

The dollar rose to its highest in four months against a basket of currencies (.DXY), while the euro also hit a three-month low versus the yen.

GROWTH IMPACT

The potential for a "disorderly" outcome, either directly from Greece leaving the euro or as related contagion worsens the already stagnant euro zone economy, has sent tremors through world equity and commodity markets.

Emerging market stocks as measured by the MSCIEF index (.MSCIEF) plunged 2.58 percent, with the index close to erasing all its year-to-date gains on its way to posting its biggest one-day loss in six months.

Weakness in Asian share markets sparked by the Greek crisis have already pushed MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> down 3.3 percent to a four-month low.

MSCI's global equity index <.MIWD00000PUS> was down 0.9 percent to 304.95 and is now up less than 2 percent for the year to date.

European shares were hit by a broad-based sell-off, with the FTSEurofirst 300 index (.FTEU3) down 0.7 percent to 990.54 points, having also dropped 0.7 percent on Tuesday.

Spain's IBEX 35 (.IBEX) fell 0.5 percent while Italy's FTSE MIB (.FTMIB) weakened by 1.7 percent.

Oil prices slid along with world shares and industrial commodities like copper in the general move away from riskier assets, but its fall was accentuated by a surprise build in U.S. crude inventories.

Brent crude was down $1.21 at $111.03 a barrel and U.S. oil was down $1.52 to $92.46 a barrel.

Brent crude oil fell to $110.82 cents a barrel and gold extended its losses to be down $13.34 at $1,530.76 an ounce, its weakest level since late December.

Gold gained nothing from flows into safe havens and fell for a fourth straight day to its lowest since late December as investors sold the precious metal to profit from the strength in the U.S. dollar.

Spot gold was down 0.6 percent at $1,534.54 an ounce, having dropped by nearly 3.8 percent in the last four days - its longest stretch of consecutive losses in nearly five months.

May 16, 2012 07:31

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OctaFx - Euro knocked by Greece worries, more losses likely

LONDON (Reuters) - The euro fell to a four-month low against the dollar on Wednesday and risked more losses on the prospect of prolonged political instability in Greece that could result in the country exiting the euro.

With Greece announcing fresh elections next month and investors concerned about the knock-on effects of a Greek euro exit for economies like Spain and Italy, investors fled the euro and sought the perceived safety of the dollar and the yen.

The dollar rose to its highest in four months against a basket of currencies, while the euro also hit a three-month low versus the yen.

The euro dropped to $1.2681 against the dollar on EBS trading platform, which left it on track to test the January low of $1.2624, below which would mark the euro's lowest level since August 2010.

However, it recovered to last trade at $1.2710, with traders wary of investors taking profit on hefty short euro positions which could send it temporarily higher. So far this month, the common currency has lost more than 4 percent of its value.

"There is a degree of magnetic attraction to the January low, but we may see a little squeeze higher before that," said Jeremy Stretch, head of currency strategy at CIBC.

"The bias is still for a lower euro and a $1.26 target for mid-year looks pretty appropriate".

The euro also fell to 101.904 yen before recovering to 102.18 yen.

Traders cited euro buying by hedge funds and institutional investors, but they said the broader trend for euro weakness remained intact.

Greek political leaders will meet on Wednesday to form a caretaker government to lead the country into its second election, likely in mid-June, after the failure of last-ditch negotiations to form a technocrat government.

"The uncertainty around the political situation in Greece continues to undermine risk appetite, which is affecting a range of currencies," said Paul Robson, currency strategist at RBS.

"There is uncertainty around the willingness of the euro zone paymasters to keep a country in the euro if it doesn't like fiscal austerity. It seems unlikely that Greece can back out of austerity and stay in the euro."

STERLING FALLS

Sterling underperformed other currencies after the Bank of England issued a weaker growth outlook in its quarterly inflation report while governor Mervyn King warned the turmoil in the euro zone posed a risk to the UK economy.

This helped the euro recover from a 3-1/2 year low against the UK pound, which also fell to a four-week low versus the dollar of $1.5889.

The dollar was broadly stronger as Greece worries left investors inclined to shun riskier currencies, with the dollar index (.DXY) rising to 81.573, its highest since mid-January.

It also performed well against the yen, rising to a two-week high of 80.45, roughly one yen above the 2-1/2 month low of 79.428 yen hit last week, and hit a four-month high against the Swiss franc of 0.9471 francs.

Risk aversion and worries about slowing global growth weighed on higher-yielding currencies like the Australian and New Zealand dollars, which fell to five-month lows against the U.S. dollar.

May 16, 2012 08:50

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