official Financial News And Analysis by Octafx.com

[OctaFX_Farid]

OctaFX.Com - Euro, global shares gain as Greek deal seen closer

LONDON (Reuters) - The euro hit a three-week high on Friday after an unexpected rise in German business sentiment for November and on signs of progress in efforts to help Greece secure fresh funding.

Companies in Europe's powerhouse economy have turned slightly more optimistic about the outlook despite the euro zone crisis, breaking a six-month run of worsening sentiment, the Munich-based Ifo think-tank said.

"The unexpected rise in November's German Ifo survey provides some relief, but doesn't alter the big picture of near stagnation in the euro zone's growth engine," said Jonathan Loynes, chief European economist at Capital Economics.

The euro climbed to $1.2913 following the data and is on track to gain 1.2 percent against the dollar this week.

European equity markets showed less reaction as many investors chose to end one of the best weeks of 2012 so far by booking some of their profits.

The pan-European FTSEurofirst 300 index (.FTEU3) edged up 0.1 percent at 1,102.35 points, on course for its best week since May and the second biggest weekly gain of the year.

London's FTSE 100 (.FTSE), Paris's CAC-40 (.FCHI) and Frankfurt's DAX (.GDAXI) were between flat and 0.2 percent higher. (.EU) (.L)

GREEK OPTIMISM

The gains across European markets were supported by optimism that Greece will get the money needed to avoid bankruptcy when euro zone finance ministers, the International Monetary Fund and the European Central Bank meet again on Monday.

A Greek government official told Reuters the IMF and the European Union have narrowed their differences over the target for Greek debt reduction by 2020.

Agreement on a new debt target and how it can be reached is a key stumbling bock in agreeing the release of 44 billion euros ($57 billion) of funds from the bailout package Greece desperately needs to avoid bankruptcy.

"The market is getting a bit confident that a Greek deal will be struck. This will remove one of the near-term uncertainties in the euro zone," said Paul Robson, currency strategist at RBS.

Greek government bond yields, however, were 5 basis points higher at 16.49 percent, but a relatively small move for the volatile paper and still close to its lowest level since the country's debt was restructured in March.

"It's not the first time we have this type of news. The market knows there is a disagreement," said ING rate strategist Alessandro Giansanti. "Until there is an official statement, detailing what they want to do, especially in terms of a debt restructuring, we're not going to see so much of a reaction."

Ten-year German government bonds, a barometer of investor sentiment on the euro zone crisis were 2 basis points lower at 1.42 percent.

YEAR END OUTLOOK

The potential for a Greek deal and signs lawmakers in the United States will eventually agree steps to avoid a fiscal crisis there have been behind a strong rally in share markets around the world this week and have supported commodities.

"These two positive drivers should make for a strong month of December, which traditionally is a fairly good month anyway," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.

MSCI's world equity index <.MIWD00000PUS> was up 0.15 percent on Friday at 326.75 points, on course for a gain of nearly 3 percent this week. That will be its best weekly performance since mid-September.

U.S. stock index futures also point to modest gains when Wall Street trading resumes for a short post-Thanksgiving trading day. (.L)(.EU) (.N)

Earlier, MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> rose 0.7 percent for a weekly gain of 2.6 percent, its best week for two months.

Gold edged up 0.1 percent to $1,731.36 an ounce and looks set to post its second weekly rise in three, while three-month copper on the London Metal Exchange was up 0.18 percent a tonne at $7,729.

On the other hand Brent crude slipped towards $110 a barrel as the fragile ceasefire between Israel and Gaza eased supply concerns.

On Thursday Israel began withdrawing its army, which had been poised to invade the Gaza Strip in pursuit of militants firing rockets into Israel.

"Oil prices will probably be under pressure as long as the ceasefire holds," said Filip Petersson, a commodity strategist at SEB Commodity Research.

Nov 23, 2012

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[OctaFX_Farid]

OctaFX.Com - Forex: US Dollar Weakest on Friday; Euro Up After German Data, ECB Speak

ASIA/EUROPE FOREX NEWS WRAP

The final day of the three day liquidity drawdown has arrived, and price action on Friday has been moderately bullish for high beta currencies and risk-correlated assets. There’s been decent follow-through on yesterday’s advances by the Australian and New Zealand Dollars, as well as the Japanese Yen and the Euro, as the US Dollar is the worst performing currency across the board.

Mainly, there’s been some positive news flow out of Europe allowing for the continued rebound in risk-appetite, as any such headlines out of the United States are absent amid the Thanksgiving holiday.

On the data front, a German business confidence reading outperformed expectations, helping ease concerns that the Euro-zone’s largest economy was starting to slide towards recession; perhaps this pace has been stalled.

On the European news side, there have been a few more reports that Spain is inching towards a bailout agreement, which is bullish for the EUR/USD has it means the European Central Bank’s OMTs would be active, essentially placing a cap on short-term Spanish yields. ECB President Mario Draghi reminded market participants of this today, saying ‘if and when’ (paraphrasing) the OMTs need to be implemented, the ECB stands ready to go.

Furthermore, the developments on Greece have been frustrating yet hopeful, with another Euro-zone finance ministers’ meeting on November 26. Round the clock negotiations this week fell short of any major compromise, although it was agreed upon that Greece would receive another two years to fulfill its obligations; another round of elections resulting from brinksmanship could be a major setback.

Taking a look at European credit, peripheral bond yields are mostly higher, preventing the Euro from rallying further. The Italian 2-year note yield has decreased to 1.977% (-3.3-bps) while the Spanish 2-year note yield has increased to 2.983% (+1.0-bps). Similarly, the Italian 10-year note yield is unchanged at 4.771% while the Spanish 10-year note yield has increased to 5.648% (+2.3-bps); higher yields imply lower prices.

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Nov 23, 2012

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[OctaFX_Farid]

OctaFX.Com -FOREX Trading: US Dollar Support Probably at Slightly Lower Levels

As focused in FX Technical Weekly on Friday, the confluence of technical levels across multiple markets suggests that recent moves may extend for one or two days before markets reverse yet again.

The mid 1420s should produce a top in the S&P. The 61.8% retracement of the decline from the top comes in at 1424.20. The 100% extension of the rally from the low (1342.10-1390.90 from 1379.10) is at 1427.80. More importantly, 1424.90 is the April high and within the vicinity of pivots since August (circled). Weakness below 1388.90 would suggest that top is in place.

I’m on the lookout for a low and opportunity to turn bullish again near 9945 in the USDOLLAR.

The EURUSD has responded to the 61.8% retracement of the decline from 13172, trading sideways to open the week. Near term pattern suggests slightly higher prices in stair step fashion (4th and 5th waves) before exhaustion. Resistance extends to 13070.

The AUDUSD is little changed to begin the week. Expect the current move to extend slightly higher. 10550, the 9/14 reversal day close and 161.8% extension of 10287-10424, is a level that may produce the next top. I remain long from last week (10340 entry) but am looking to reverse the position near 10550.percent at 106.12 yen.[/b]

Nov 26, 2012

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[OctaFX_Farid]

OctaFX.Com - Forex Analysis: S&P 500 Chart Setup Hints US Dollar Support to Hold

THE TAKEAWAY: S&P 500 technical positioning warns of a turn lower ahead, hinting the safe-haven US Dollar may manage to hold up at support and position for recovery.

US DOLLAR TECHNICAL ANALYSIS– Prices broke below the 23.6% Fibonacci retracement at 9993 to challenge the bottom of a rising channel set from mid-September (now at 9970). A break below this boundary initially exposes the 38.2% level at 9945. Alternatively, a break back above 9993 aims for the November 16 high at 10071.

Daily Chart - Created Using FXCM Marketscope 2.0

S&P 500 TECHNICAL ANALYSIS – Prices are showing a Hanging Man candlestick below resistance at 1408.50, the 50% Fibonacci retracement. This barrier is reinforced by a falling trend line set from mid-October. A turn lower sees initial support at 1392.80, the 38.2% retracement, with a break below that aiming to challenge the 23.6% level at 1373.40. Alternatively, a push above resistance exposes the 1424.90-30.90 area.

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Nov 27, 2012

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OctaFX.Com - Forex News: Euro Fails to Maintain Greece Deal Gains

The Europe we saw at the beginning of today’s session was very different than the Europe of yesterday, at least from a trader’s perspective.

Per the overnight announcement in forex news sources, Euro-zone leaders came to an agreement on Greece that lowered interest rates, returned some of the money made off of previous loans, and setup the release of the next 34.4 billion Euro aid tranche in December. What we heard from European officials following the announcement was overwhelmingly positive. German Economy Minister Roesler said the Greek Deal is a positive sign for the Euro. EU’s Barroso welcomed the deal, while German FM Westerwelle said the aid plan is a good result that is based on reforms. German lawmakers will vote on the Greek plan on November 29.

However, the Euro rally following the news of the Greece deal couldn’t even sustain 1.3000 against the USD, as the key level quickly returned to providing resistance after being briefly broken. To see some of the criticisms of the deal, please look at DailyFX Currency Strategist Ilya Spivak’s Euro Open.

The other major piece of news was the appointment of Bank of Canada Governor Mark Carney as the new governor of the Bank of England starting in July. Current BoE Governor King said the UK chose a really outstanding candidate, and Carney is the first foreigner to be chosen for the position. Sterling rallied thirty points higher from 1.6000 following the announcement.

Current BoE Governor King was speaking today at an inflation report to the UK parliament. He said that the BoE outlook is for a slow economic recovery, and UK inflation to remain above target for some time. The UK GDP grew 1% in Q3 according to a second estimate released today. The BoE has previously said that the sudden growth was due to one time factors and the economy may slip back into negative growth during Q4.

Also today, the US Dollar rose a bit when Fed member Fisher said during a speech in Berlin that he advocates setting limits to QE as soon as the next meeting. Fisher said that the US’s biggest problem is unemployment and that inflation is under control in the US. He also said that he was never in favor of operation twist.

The Euro has now erased all of the gains following the Greece announcement and is trading slight above 1.2950 against the US Dollar in currency markets. Resistance could now be provided by the key 1.3000 line, and support could be provided at the recent support level of 1.2824.

EURUSD Daily: November 27, 2012

Nov 27, 2012

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OctaFX.Com - Forex Analysis: US Dollar Classic Technical Report 11.27.2012

Prices broke below the 23.6% Fibonacci retracement at 9993 to challenge the bottom of a rising channel set from mid-September (now at 9970). A break below this boundary initially exposes the 38.2% level at 9945.

Alternatively, a break back above 9993 aims for the November 16 high at 10071.

Nov 27, 2012

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OctaFX.Com - Forex Analysis: NZD/USD Classic Technical Report 11.27.2012

Prices are testing resistance at the underside of a previously broken rising channel set from late May (0.8264).A push above that targets a falling trend line at 0.8292. Initial support lines up in the 0.8051-82 area, with a drop below that exposing the 0.80 figure and the 50% Fibonacci retracement at 0.7962.

Daily Chart - Created Using FXCM Marketscope 2.0

Nov 27, 2012

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[OctaFX_Farid]

OctaFX.Com -Forex Analysis: Euro May Fall as Soft German CPI Drives ECB Easing Bets

The Euro may face further selling pressure as German inflation slows to the weakest in four months, driving ECB monetary easing expectations.

Talking Points

 

• Japanese Yen Gains as Asian Stocks Drop on Greece Deal Rethink, “Fiscal Cliff” Jitters
  
• Euro May See Selling Pressure as German CPI Drop Drives ECB Easing Expectations
  
• US Home Sales, Beige Book May Buoy Dollar vs. Yen, Drive Weakness vs. Comm Bloc
  

 

The Japanese Yen outperformed in overnight trade as a drop in Asian stocks drove demand for the regional safe-haven currency. The MSCI Asia Pacific benchmark index lost 0.5 percent, with the newswires citing ominous comments from the OECD warning a global recession could follow a failure to avert the US fiscal cliff as the catalyst.

A reconsideration of yesterday’s Eurogroup summit outcome likely added to negative cues. A knee-jerk reaction to the headline claiming a deal on Greece had been reached buoyed risk appetite yesterday but sentiment was quick to unravel as markets digested the details of the arrangement, as expected. Indeed, the Euro lagged its top counterparts in Asian hours.

Looking ahead, the preliminary set of November’s German CPI figures headlines the calendar. Expectations call for the headline inflation rate to drop to 1.9 percent, the lowest in four months. The outcome may weigh on the Euro as forex traders take softening price pressure to mean the ECB has added room for further easing amid signs of deepening recessionin the wake of deteriorating economic data (particularly the recent run of region-wide PMI figures).

Later in the day, the spotlight turns to the Federal Reserve Beige Book survey of regional economic conditions. Separately, US New Home Sales are expected to hit 390,000 in October, marking the highest reading since April 2010. Signs of firming recovery in the US may prove supportive yields and boost the US Dollar against the Japanese Yen while weighing on the greenback against the growth-geared commodity bloc currencies (Australian, Canadian and New Zealand Dollars).

Nov 28, 2012

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[OctaFX_Farid]

OctaFX.Com - Forex News: Euro Trading Steady Above 1.2900 Ahead of German Inflation

Now that more than 24 hours have passed since the Greece bailout agreement, most of the responding chatter has already been exhausted, and we have been left in today’s European session without a major fundamental story to guide trading. The major story currently affecting asset markets is the impending US fiscal cliff, and Harry Reid’s comments, that not much progress on a deal has been made, sent US equities lower in yesterday’s session.

Furthermore, despite the lack of an upcoming major market moving event, a lot of analysts are calling for a reversal of recent Euro gains, as EURUSD trading showed a false break of 1.3000 in yesterday’s session. DailyFX Currency Strategist Ilya Spivak said he continues to hold the pair short, and Chief Strategist John Kicklighter said in his daily market wrap-up that he initiated a EURJPY short.

The only European data release that could possibly affect trading is the German inflation for November; the average expectation among Bloomberg surveyed analysts is for a 1.9% annual rise in consumer prices.

Also, there has been some small amounts of chatter in today’s session about the Greece deal. ECB member Nowotny said that the agreement was the best of all alternative solutions. Nowotny said that there are no ideal solutions for Greece and that a debt cut is not on the table anymore. He also remarked that Greece has implemented massive reforms, but it is still not enough.

Additionally we heard a prediction from the Bank of Spain that data indicates that the Spanish GDP will continue to fall in Q4, and that ECB measures are starting to wear out. France Finance Minister Moscovici said that the French GDP will rise by 0.8% in 2013. In England, MPC member Bean said the Bank of England hasn’t shut the door on further quantitative easing and that uncertainty is limiting stimulus effectiveness.

The Euro is currently trading above 1.2900 against the US Dollar in forex markets. Resistance might continue to be provided by the key 1.3000 line, and support could be provided by a previous support line around 1.2824.

EURUSD Daily: November 28, 2012

Nov 28, 2012

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[OctaFX_Farid]

OctaFX.Com - Banks see decline in profits from currency trading, WSJ reports

The banking industry is seeing a significant decline in profits from currency trading, as once-lucrative businesses are eroded by electronic trading and the proliferation of new platforms, reports the Wall Street Journal.

Nov 28, 2012

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[OctaFX_Farid]

OctaFX.Com - Forex: Euro Looks Lower Amid Bets For Further Greek Aid- Eyes 1.2650

Talking Points

 

• Euro: Germany To Vote On Greek Deal, Schaeuble Sees Further Assistance
  
• British Pound: BoE Keeps Door Open For More QE Amid Ongoing Slack
  
• U.S. Dollar: Benefits From Risk Aversion, Fed’s Beige Book In Focus
  

 

Euro: Germany To Vote On Greek Deal, Schaeuble Sees Further Assistance

The EURUSD weakened to an overnight low of 1.2880 as German Finance Minister Wolfgang Schaeuble kept the door open to provide further support for Greece, but the reactionary approach in dealing with the debt crisis may continue to dampen the appeal of the single currency as the governments operating under the monetary union become increasingly reliant on external assistance.

As the Bundestag, Germany’s lower house, prepares to vote on the new aid package for Greece, Mr. Schaeuble showed a greater willingness to shore up the periphery country as long as the coalition government continues to meet all of its obligations, but we may see the EU put increased pressure on the European Central Bank (ECB) to ease monetary policy further as the debt crisis drags on the real economy.

The Bank of Spain warned that the extraordinary efforts taken by the ECB ‘has started to show some symptoms of wearing out’ as the periphery countries struggle to get their house in order, and we should see the Governing Council carry its easing cycle into the following year in order to tackle the deepening recession. As the ECB stands ready to implement the Outright Monetary Transactions (OMT), the weakening outlook for growth and inflation may prompt the central bank to target the benchmark interest rate in 2013, and we may get some hints for a rate cut at the December 6 meeting as the economic downturn threatens the outlook for price stability.

As the EURUSD carves out a lower top ahead of December, the reversal from 1.3007 should gather pace in the days ahead, and the pair looks poised to fall back towards the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50 as it searches for support.

British Pound: BoE Keeps Door Open For More QE Amid Ongoing Slack

The British Pound extended the decline from earlier this week, with the GBPUSD slipping to a low of 1.5961, but the recent weakness in the sterling may be short lived as the Bank of England (BoE) looks to carry its wait-and-see approach into the following year.

Although the BoE expects inflation to hold above the 2% target over the next two-years, board member Charles Bean argued that the Monetary Policy Committee (MPC) should keep the door open to expand its balance sheet further amid the persistent slack in the real economy. However, above-target inflation may become a pressing concern for the central bank as price growth has held above 2% since 2008, and we may see a growing number of MPC change their tune in 2013 as the U.K. emerges from the double-dip recession.

As the GBPUSD appears to be carves out a higher low in November, the rebound from 1.5822 may gather pace going into December, and we are still looking for a run at the 23.6% Fib from the 2009 low to high around 1.6190-1.6200 as the relative strength index breaks out of the bearish trend.

U.S. Dollar: Benefits From Risk Aversion, Fed’s Beige Book In Focus

The greenback extended the advance from the previous day, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) climbing to a high of 9,998, and the reserve currency may track higher throughout the North American trade as market participants scale back their appetite for risk.

As new home sales are expected to increase another 0.3% in October, the budding recovery in the housing market may spark a bullish reaction in the USDOLLAR, but we may see market volatility taper off ahead of the Fed’s Beige Book as market participants weigh the outlook for monetary policy. Indeed, the district banks should continue to highlight a more broad-based recovery in the world’s largest economy, and the report may sap bets for more easing as the recovery gradually gathers pace.

Nov 28, 2012

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[OctaFX_Farid]

OctaFX.Com -Forex Analysis: US Dollar Classic Technical Report 11.29.2012

Prices are stalling at the bottom of a rising channel set from mid-September (now at 9971). A break below this boundary initially exposes the 38.2% level at 9945. Near-term resistance lines up at 9993, the 23.6% Fibonacci retracement, with a push above that aiming to challenge the November 16 high at 10071.

Daily Chart - Created Using FXCM Marketscope 2.0

Nov 29, 2012

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[OctaFX_Farid]

OctaFX.Com - FOREX Technical Analysis: British Pound Slips in Early Week Trading

A EURJPY short was taken last night at 10640 (released via Twitter @JamieSaettele). 10642 is the 61.8% of the decline from 10712 at 10640. Price has extended slightly beyond this level but the stop is above the 11/26 high. Once (if) the market turns lower again, objectives are 10458 and 10375 (former is former resistance and 38.2% of rally from 10031 and latter is middle of former congestion and 50% level).

The USDJPY is little changed from yesterday. Near term structure has evolved to the point that the rally into 8221 may compose wave B within the A-B-C corrective decline from 8283. I remain of the mind that the 4th wave of one less degree at 8088-8158 will produce the next low. 8113/16, which the 4th wave terminus (triangle) and 11/15 JS Thrust close, is of specific interest.

The AUDJPY is the weakest of the Yen crosses today, although losses are minimal. Risk remains to the downside in the near term as long as the Sunday night high is in place. Levels of interest as eventual support are 8485 and 8414.

EURJPY – 240 Minute

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Nov 29, 2012

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[OctaFX_Farid]

OctaFx - Forex Analysis: New Zealand Dollar To Threaten Range As RBNZ Softens Dovish Tone

The New Zealand dollar pared the rebound from earlier this month after tagging a fresh high of 0.8266, but the recent weakness in the higher-yielding is likely to be short-lived as the Reserve Bank of New Zealand (RBNZ) preserves a neutral policy stance. Indeed, the economic data on tap for the following week may push the kiwi higher ahead of the interest rate decision as we’re expecting to see a small improvement in the terms of trade along with a marked increase in building activity, and a slew of positive developments may lead the NZDUSD to threaten the November high (0.8307) as it dampens speculation for a rate cut.

According to a Bloomberg News survey, all of the 16 economists polled see the RBNZ keeping the benchmark interest rate at 2.50%, and central bank Governor Graeme Wheeler may continue to tame expectations for additional monetary support amid the expansion in private sector credit. Although the central bank head continues to highlight the ongoing slack within the real economy, the rebuilding efforts from the Christchurch earthquake may start to fan fears of an asset bubble amid record-low borrowing costs, and Governor Wheeler may signal a need to raise the cash rate in 2013 amid rising home prices.

As the slowdown in global growth hampers the near-term outlook for the export-driven economy, the RBNZ remains poised to carry its wait-and-see approach into the following year, but we will be keeping a close eye on the policy statement as Mr. Wheeler warns of impending risks to the region. In turn, the fresh batch of central bank rhetoric may encourage a bullish forecast for the New Zealand dollar, and we may see the kiwi outperform against its major counterparts over the coming months amid the shift in the policy outlook.

As the 10, 20, 50, and 100 day moving averages continue to converge with one another, the formation suggests that the NZDUSD may continue to face range-bound prices over the near-term, but a less dovish statement from the RBNZ may trigger a move above 0.8300 – the 23.6% Fibonacci retracement from 2010 low to the 2001 high – as market participants curb bets for lower borrowing costs.

Dec 1, 2012

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[OctaFX_Farid]

OctaFX.Com - Analysis: Greek deal puts euro zone in slow recovery room

PARIS (Reuters) - The euro zone is in the recovery room now the danger of a Greek default has been averted for a couple of years, but it is not yet safe from a Japanese-style "lost decade".

The currency area's escape route hinges more on the pace of expansion in the United States and China, lifting the world economy, than on the policy mix in Europe, which will continue to favour austerity over growth in 2013.

At best, Ireland and Portugal could emerge slimmed down from their bailout programmes and regain capital market access by the end of the year, demonstrating that adherence to a tough fiscal adjustment plan can work.

But question marks hang over both. And Greece, like miracles, will take a little longer. And another debt writedown.

Gloomy forecasts from the OECD and private economists suggest the 17-nation euro currency area may stay in recession all next year, swelling the armies of unemployed and pushing efforts to reduce public deficits and debt mountains off track.

Political risks abound; possible social revolt against austerity policies in Greece, Spain or Portugal; a messy, inconclusive election outcome in Italy; and perhaps labor unrest against more modest structural reforms being mooted in France.

Monday's EU-IMF agreement to keep Greece afloat inside the euro zone, by reducing its debt now and hinting at official debt relief to come later, has removed the biggest risk of a financial shock that could re-ignite market panic and send the euro back into the emergency ward.

Market relief over the Greek deal, coupled with European Central Bank promises to do what it takes to preserve the euro, helped Italy sell its last 10-year bonds of 2012 on Thursday at the lowest yield for nearly two years.

French Finance Minister Pierre Moscovici called it "a turning point for the euro zone because it helps recreate stability and confidence. Greece's fate will no longer be a daily issue".

European Internal Market Commissioner Michel Barnier, using a soccer metaphor, said the peak of the debt crisis was over and "we are now at the start of the second half".

Some analysts are less convinced.

Mujtaba Rahman of Eurasia Group said the Greek fix "keeps the show on the road, but is no game changer".

GERMAN DELAY

The campaign for Germany's general election in September means that bolder steps towards writing off debt or sharing liabilities will have to wait until at least the end of next year. Public opposition to a "transfer union" in the euro zone's biggest economy and main paymaster remains high.

Yet no Eurosceptical party has emerged to capitalize on that mood, and the next Berlin government, whether a "grand coalition" of centre-right and centre-left, which seems the most likely, or another permutation, may be more open to such solutions.

The European Commission set out ambitious proposals for closer economic, fiscal and banking union last week, including a common euro zone fund to reward structural reforms, but most big changes will be on hold until after the German vote.

In the meantime, modest progress is likely on creating a single European banking supervisor, the first step towards a euro zone banking union, but without a joint deposit guarantee to deter capital flight and bank runs.

IMF Managing Director Christine Lagarde says swift implementation of a banking union with powers to supervise all banks in the euro area is now the top priority.

Germany will continue to press for stricter European control over budgets in euro zone states, but that will involve trade-offs with greater mutualisation of risk and treaty changes that might only come after the 2014 European Parliament elections.

Many EU officials and analysts expect that Spain, which has so far avoided a sovereign bailout, will have to request euro zone assistance early in the new year, when it needs to raise at least 230 billion euros ($300 billion) on capital markets.

That would trigger European Central Bank buying of its bonds, which might reassure investors and further reduce borrowing costs for Madrid and Italy initially.

But it would raise hackles in Germany, given the Bundesbank's continued opposition, prompting market speculation about the ECB's will and ability to sustain bond purchases.

Markus Huber, senior trader at ETXCapital, reckons that even though economic reforms and ECB reassurance have cut Italy's borrowing costs, an indecisive outcome of a general election due in April could send yields soaring again.

Rome is also at risk of contagion if Spanish Prime Minister Mariano Rajoy continues to dither and delay a euro zone credit line for Madrid, he said.

FRANCE RISK?

A more remote but much-talked-about risk is the possibility that financial markets could turn against France if President Francois Hollande's labor market and welfare financing reforms disappoint or meet militant street resistance.

France's borrowing costs are hovering close to historic lows despite its loss of the coveted AAA credit rating from Moody's this month after Standard & Poor's downgraded Paris in January.

Fitch Ratings, the only credit watchdog still to have France on AAA, said last week it could lower that grade if the country fails to meets its deficit reduction targets and its economy performs worse than forecast.

Yet many investors believe France, with a deep, liquid debt market, enjoys an implicit German guarantee and so buy French bonds as a proxy for the strong northern euro zone states that have less debt to issue.

French economist Jacques Delpla, co-author of a proposal for a limited issuance of common euro zone bonds, argues that euro states' debt will become more attractive in the next few years as other major economies try to inflate away their problems.

"The whole of the world except Europe is going to inflate away its debt - the United States, Britain, Japan," he told a conference of the European Council on Foreign Relations.

"Only euro zone debt will remain strong blue debt because the great German legacy is that we won't inflate. So part of our debt is going to default, and the rest will become the crown jewels of world debt."

In economic terms, the euro zone's adjustment should advance further next year, with German wages rising above inflation while "internal devaluations" in peripheral euro zone countries make their exports more competitive and narrow current account imbalances.

ECB President Mario Draghi, who expects most of the euro zone to start recovering in the second half of 2013, cautioned on Friday that the crisis was far from over and governments must consolidate their budgets and reduce current account imbalances.

Optimists such as the Lisbon Council, a Brussels-based pro-market think-tank, and Berenberg Bank say the euro zone is turning into a more balanced and potentially more dynamic economy thanks to market pressure and constant demand for structural reforms.

But the longer and deeper the recession in Spain, Italy and Portugal, the greater the risk of them being sucked into a vicious circle of falling revenues outpacing spending cuts which in turn depress demand and output, causing lower revenues.

At the gloomy end of the scale, economists from Citi said last week they expected continued recession in the euro area in 2013 and 2014 and prolonged weakness thereafter — with ongoing financial strains and, over the next few years, a Greek exit and a series of sovereign debt restructurings.

The euro's survival may no longer be in much doubt after the ECB stepped in and the Germans decided to keep Greece inside the currency area, but the euro zone faces at best a slow grind back up the hill.

Dec 2, 2012

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[OctaFX_Farid]

OctaFX.Com - Eurozone retail sales slump in October

Eurozone retail sales in unexpectedly big slump in October as investors await ECB meeting

LONDON (AP) -- Retail sales across the 17 European Union countries that use the euro slumped far more than anticipated in October, largely due to a huge drop in Germany, in a development that will put more pressure on the European Central Bank to cut borrowing rates soon.

Euro stat, the EU's statistics office, said Wednesday that euro-zone retail sales fell 1.2 percent in October from the previous month, double September's decline and substantially more than the 0.2 percent drop expected in the markets

The figures provide further evidence that households across the euro-zone remain gloomy over the economy and are reluctant to spend more than they have to — non-food sales were particularly weak during October.

The euro-zone is back in recession, officially defined as two straight quarters of falling output, and unemployment is up at a record high of 11.7 percent with 18.7 million people out of work.

"The prospects for consumer spending in the euro-zone look troubling in the near term at least given very low consumer confidence, high and rising unemployment, generally muted wage growth and tightening fiscal policy in many countries," said Howard Archer, chief European economist at IHS Global Insight.

While five of the countries at the epicenter of Europe's debt crisis — Greece, Cyprus, Spain, Portugal and Italy — are in recession, other economies, such as powerhouse Germany, are also now seeing demand wane. German retail sales fell a staggering monthly 2.8 percent, according to Eurostat.

Wednesday's figures come a day before the ECB meets to decide on whether to cut its main interest rate from the record low of 0.75 percent. Most economists think the ECB will wait before backing another cut, though the dire economic indicators recently have created some uncertainty over its decision. The euro fell on the latest figures, trading 0.1 percent lower on the day at $1.3093.

As well as announcing its latest interest rate decision, the ECB is also due to unveil its latest quarterly economic projections. They're not expected to show a recovery in the euro-zone economy before the second half of next year at the earliest as many governments continue to enact spending cuts and tax increases to lower debt.

A separate survey reinforced market expectations that the recession in the eurozone has continued into the fourth quarter. Though the monthly purchasing managers' index — a broad gauge of business activity — from financial information company Markit was revised up to 46.5 in November from the previous estimate of 45.8, the survey still points to recession — any reading below 50 points to a contraction in activity.

Dec 5, 2012

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[OctaFX_Farid]

OctaFX.Com - Forex News: Euro Fails to Hold 1.31 As Spanish Bond Auction Misses Target

Despite the failure to reach a final agreement on a joint banking supervisor in yesterday’s meeting of European finance ministers, the Euro still climbed higher in yesterday’s session and rose above 1.3100 in the first part of today’s trading. Risk sentiment seems to be higher as the move was mimicked by other risk-correlated currencies, and European equities opened higher in today’s trading. Part of the optimism may come from Asian markets, where the Shanghai Composite index climbed nearly 3% in today’s trading, following an announcement that economic policies will be kept stable in China.

There were only a few economic releases in today’s European session. The 10th straight decline in Euro-zone composite output was not as bad as initially estimated, and the rise in UK services activity disappointed expectations.

The bigger decline came when sales of Spanish 3, 7, and 10-year bonds disappointed a maximum target of 4.5 billion Euros by only raising 4.25 billion in the auction. Then, Euro-zone retail sales were reported to have declined 1.2% in October, the disappointing number kept EURUSD below 1.3100.

The Euro is currently trading at about 1.3085 against the US Dollar in forex markets. Resistance could be provided by a 2-month high at 1.3139, and support could be provided at 1.3026, by the 76.4% retracement of the drop from October’s high to November’s low.

Tomorrow could see a lot of movement in Euro trading. The ECB will announce the interest rate at 12:45 GMT, expectations are for the rate to be left at 0.75%. Also, an updated estimate of the Euro-zone GDP for Q3 will be released, the previous estimate saw a 0.1% decline.

EURUSD Daily: December 5, 2012

Dec 5, 2012

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[OctaFX_Farid]

OctaFx -ECB cuts growth outlook for eurozone, holds rates

European Central Bank cuts growth outlook for eurozone, leaves interest rates unchanged

FRANKFURT, Germany (AP) -- The European Central Bank underlined the gloomy prospects for the economy of the 17 European Union countries that use the euro, cutting its forecast for growth next year to minus 0.3 percent from plus 0.5 percent.

Even so, the bank left rates unchanged at its meeting Thursday, and ECB head Mario Draghi gave little sign the bank was willing to add more stimulus. He said the bank had already done much to lower borrowing costs in heavily indebted countries that are struggling to grow.

The bank's 22-member governing council kept the refinancing rate unchanged at 0.75 percent. The rate determines what private-sector banks are charged for borrowing from the ECB, and through that what rate the banks set for their businesses and consumer clients.

Draghi said current rates were "very accomodative" — meaning they are low enough to encourage growth. He also said that the ECB had already effectively lowered some interest rates with its plan announced in September to buy the bonds of indebted countries.

That plan — which would drive down borrowing costs for indebted governments that ask for help — had already led to drop of as much as 2 or 2 ½ percentage points in some countries borrowing costs, just on anticipation by bond investors.

"That is much more than you can achieve by a cut in the policy rate," Draghi said.

The eurozone's economy is in recession, having shrunk 0.1 percent in the third quarter after a 0.2 percent fall in the previous three months. A recession is often defined as two quarters of negative growth in a row. It is expected to contract again in the last three months of the year.

Draghi said the slump would continue into next year, with a gradual recovery later in 2013. The bank's minus 0.3 percent outlook is the midpoint of the forecast rate of between minus 0.9 percent and plus 0.3 percent.

Growth is being held back across the eurozone as governments slash spending and raise taxes to try to reduce levels of debt piled up from overspending in the case of Greece or real estate bubbles and banking crises in Spain and Ireland. Greece, Portugal, Ireland and tiny Cyprus have already needed bailouts, while Italy and Spain, the eurozone's third- and fourth-largest economies, teetered on the edge of needing help this summer.

A rate reduction in theory could stimulate the eurozone's economy by making it easier to borrow, spend and invest. But rates are already low, and borrowing remains weak. There are only a few early signs that previous rate cuts and stimulus measures are finally trickling through to the wider economy.

Draghi said that there had been a "wide discussion" on interest rates but that "in the end the consensus was to leave rates unchanged." Use of the term "consensus" suggests the council was not unanimous, but many analysts think the ECB could leave rates alone well into next year and might be done cutting.

Some analysts think the bank may now consider it has done enough to help the economy after a year of drastic measures. The most important was an offer in September to buy unlimited amounts of bonds issued by of Europe's heavily indebted countries. It also made €1 trillion ($1.3 trillion) in cheap, long-term loans to stabilize shaky banks last December and February, and cut rates a quarter point in July.

The bond purchase plan announced in September has helped stabilize the eurozone debt crisis. The purchases would aim to drive down bond interest rates, which would lower borrowing costs for indebted countries such as Spain and Italy and make it easier for them to manage their debt loads.

Although no bonds have been bought, the mere possibility has influenced the bond market. The interest yield on Spanish 10-year bonds is down to around 5.4 percent now, from 7.6 percent in July. Italy's costs to borrow for 10 years are now down to 4.4 percent, down from over 7 percent at the start of the year and close to the country's average for the past decade, But while governments are breathing easier, that hasn't restarted growth.

The ECB has tried to make sure that its crisis efforts are making it through to the eurozone's wider economy — but it is taking time to be felt and fear and reluctance remain. While some business confidence indicators are beginning to rise and the supply of money in the economy is increasing, consumer spending sagged 1.2 percent in October.

Dec 6, 2012

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[OctaFX_Farid]

OctaFX.Com - FOREX Technical Analysis: NZD/USD Slams into Short Term Channel and Reverses

Chart Prepared by Jamie Saettele, CMT

FOREXAnalysis: “Bigger picture, the NZDUSD appears quite bullish as the decline from 8355 is in 3 waves (corrective) and the rally from 8052 is in 5 waves. The question at this point is whether the decline from 8267 is complete or simply part of a larger correction that ends below 8170 and closer to the estimated 8125/35 support.”

The NZDUSD has headed straight up since 8170. Given the reaction at channel resistance today, there is the possibility that the advance from 8052 composes wave B of a triangle or flat that began on 9/28. That scenario is not viewed as probable as long as price is above 8170 however. A Fibonacci confluence and August 2011 high intersects with a channel at the end of December.

FOREXTrading Strategy: Weakness into 8240 would be worthy of bullish consideration against 8170.

Dec 7, 2012

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[OctaFX_Farid]

OctaFX.Com -Forex Analysis: British Pound Outlook Supported By BoE Policy- 1.6200 Remains Key

The British Pound continued to retrace the decline from back in September as the Bank of England (BoE) maintained its current policy stance in December, and the short-term rebound in the GBPUSD may gather pace over the remainder of the year as the central bank appears to be slowly moving away from its easing cycle.

Beyond the headline reading for U.K. Jobless Claims, which is expected to increase another 7.0K in November, we’re expecting to see average weekly earnings including bonuses increased for the third month in October, and another uptick in wage growth may become a growing concern for the Monetary Policy Committee (MPC) as inflation is expected to hold above the 2% target over the next two-years.

Indeed, the BoE kept the benchmark interest rate at 0.50% and maintains its asset purchase program at GBP 375B, and we may see the central bank adopt a more hawkish tone for monetary policy as the U.K. emerges from the double-dip recession. Former MPC dove Adam Posen argued that the central bank is ‘going to be on hold indefinitely’ as the central bank turns its attention to the stickiness in inflation, and the BoE may shift gears in the following year as it aims to preserve price stability.

Although the deepening recession in the Euro Zone – the U.K.’s largest trading partner – casts a weakened outlook for growth, we’ve seem consumer price growth hold above target since November 2009, and the committee may look to address the threat for inflation in an effort to preserve its credibility. As a BoE survey shows inflation expectations for the next 12-months increasing an annualized 3.5% following the 3.2% expansion in August, heightening price pressures in the U.K. should continue to prop up the British Pound as it pushes the BoE to scale back its willingness to expand its balance sheet further.

As the relative strength index on the GBPUSD struggles to maintain the upward trend carried over from the previous month, the pound-dollar may continue to consolidate ahead of the BoE Minutes due out on December 19, and the exchange rate may continue to bounce between 1.6000-1.6100 as market participants weigh the outlook for monetary policy.

Nevertheless, as the shift in the policy outlook fosters a bullish forecast for the British Pound, the rebound from 1.5822 may continue to gather pace over the near-term, but we would need a more meaningful move above 1.6200 – the 23.6% Fibonacci retracement from the 2009 low to high – to see the pair breakout of the downward trend carried over from 2011.

Dec 8, 2012

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[OctaFX_Farid]

OctaFx - Greece extends buyback offer to reach 30 billion-euro target

ATHENS/BRUSSELS (Reuters) - Greece extended its offer to buy back debt until Tuesday, seeking more bids from bondholders after falling short of a target to retire bonds worth 30 billion euros at a cost of just 10 billion euros.

The buyback is designed to provide for about half of a 40-billion euro debt relief package for Athens agreed last month by the European Union and International Monetary Fund.

Its success is crucial to ensuring Greece's debt is put back on sustainable footing and - more immediately - to unlocking badly-needed aid for the country.

Despite the initial lack of investor interest, the scheme is expected to ultimately hit its targets since Greek banks - whose own fate depends on a successful buyback - are expected to stump up the shortfall.

A total of 26.5 billion euros was tendered at an average price of 33.4 percent of face value when the offer expired on Friday, a senior euro zone official told Reuters.

That would mean Greece would still have 1.15 billion euros left over from the 10 billion euros it was allotted to spend to retire outstanding debt. Assuming the same average price, it could buy an extra 3.5 billion euros worth of bonds.

Greece's debt agency extended the offer to 7 a.m. EDT on Tuesday following Friday's deadline.

"The aim is to reach the 30 billion euro target on the face value of debt to be bought back," said a government official, who declined to be named, adding the aim was to use all of the 10 billion euros given by lenders for the buyback.

Euro zone finance ministers will meet on Thursday in Brussels to review the buyback operation and formally release the next disbursement of loans to Greece under its second international rescue program.

"We are confident that there is still scope for additional tenders by domestic and international investors to ensure a successful debt buyback," European Commission spokesman Simon O'Connor told a regular briefing in Brussels.

"EASILY COVERED"

A senior Greek banker who spoke on condition of anonymity said Athens aimed to use the additional day to get another 3 to 4 billion euros worth of bonds offered for exchange.

"This will be easily covered by Greek banks, if foreign bondholders do not offer more," the banker told Reuters.

Greek banks and insurers had tendered about 10 billion euros of bonds out of their total holdings of about 17 billion euros, the banker said. Nearly 63 billion euros of Greek debt held by private investors was eligible for the buyback.

Shortly before the previous Friday deadline expired, Greek banks got board approvals to offer as much as 100 percent of their bondholdings to make the buyback work.

Athens had offered better-than-expected terms for the buyback to entice investors, with price ranges at a premium over market prices.

But Greek lenders had been reluctant to sell back to the government all of their bondholdings, trying to limit the future profits and interest income on their bonds they will forego.

However, they are expected to step up now to ensure a successful buyback since they depend on the bailout funds that Athens stands to receive once it is completed. A big chunk of the 34.4 billion euros of aid due will be used to recapitalize them.

Athens badly needs the aid to revive its ailing economy, which is on track for a sixth year of recession due to austerity measures including spending cuts and tax hikes.

The EU and the IMF have been withholding rescue payments to Greece for six months because it had failed on pledges to shore up its finances, privatize and make its economy more competitive.

Greece and its international lenders had shied away from setting a binding target for the buyback, apart from saying that Athens would spend a maximum of 10 billion euros on it.

Under the scheme, Greece was expected to spend that amount to repurchase 30 billion euros of debt, shaving it by a net 20 billion euros. That would help slash Greece's debt to 124 percent of GDP by 2020, ensuring that the IMF stays on board in the country's rescue.

Greece set December 18 as the settlement date for offers on the 20 series of outstanding bonds it is buying back.

Athens' debt agency chief urged investors to tender their holdings, warning a similar deal may not come again.

"Future measures may not involve an opportunity to exit investments ... at the levels offered for this buyback," PDMA Chief Stelios Papadopoulos said in a statement.

Dec 10, 2012

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[OctaFX_Farid]

OctaFx - Forex Analysis: US Dollar, S&P 500 Charts Warn of Risk Aversion Ahead

THE TAKEAWAY: US Dollar and S&P 500 technical positioning hints the greenback is aiming to reverse higher on the back of haven demand as the equity benchmark turns downward.

US DOLLAR TECHNICAL ANALYSIS– Prices are resting at rising trend line support set from the mid-September bottom, with the outlines of a Flag chart formation hinting at bullish continuation. A Piercing Line candlestick pattern reinforces the case for an upside scenario. A break above Flag resistance at 9976 initially exposes the 23.6% Fibonacci expansion at 9995. Alternatively, a drop below the trend line (now at 9942) targets the Flag bottom at 9895.

Read more

Dec 12, 2012

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OctaFx - Forex Analysis: Forex Analysis: US Dollar Classic Technical Report 12.12.2012

Prices are resting at rising trend line support set from the mid-September bottom, with the outlines of a Flag chart formation hinting at bullish continuation. A Piercing Line candlestick pattern reinforces the case for an upside scenario.

A break above Flag resistance at 9976 initially exposes the 23.6% Fibonacci expansion at 9995. Alternatively, a drop below the trend line (now at 9942) targets the Flag bottom at 9895.

Dec 12, 2012

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[OctaFX_Farid]

OctaFx - Forex Analysis: Forex Analysis: Is Dollar Weakness After FOMC a Foregone Conclusion?

Forex markets are positioned for a US Dollar selloff as the Federal Reserve expands stimulus efforts but such an outcome is not as assured as it may seem.

Talking Points

 

• US Dollar to Rally vs. Majors if Fed Decides Against Unsterilized Bond-Buying
  
• British Pound to Look Past Jobless Claims Data on Static BOE Outlook, FOMC
  
• Japanese Yen Sinks as Asian Stocks Soar on Hopes for Fed Stimulus Expansion
  

 

Most major currencies were locked in narrow ranges in overnight trade as financial markets look ahead to the Federal Reserve monetary policy announcement to yield direction cues. At the heart of the decision will be the fate of the so-called Operation Twist program designed to re-target stimulus at lowering longer-term borrowing costs. This is done by swapping out short-term securities on the Fed’s balance sheet for long-dated ones at a pace of about $45 billion per month.

Twist is due to expire at year-end and the market consensus appears to be that it will be replaced with an equivalent-sized “unsterilized” bond-buying scheme.

This means that unlike its predecessor, the new effort will not be balance-sheet neutral. Such an outcome is likely to be treated as a meaningful move to the dovish side of the policy spectrum, broadly weighing on the US Dollar against its major counterparts.

Importantly, the recent run of supportive US economic data – most critically the service-sector ISM and NFP data points – as well as an upbeat Beige Book survey suggest the door is open for the FOMC to pursue a less aggressive course. A decision to introduce an unsterilized program smaller than $45 billion or opt for a Twist-like program that does not swell the balance sheet stands weigh heavily on risk appetite and send the greenback higher.

Besides the fate of Operation Twist, traders will likewise look toward revisions in the rate-setting committee’s economic forecasts as well as the tone of Bernanke’s quarterly press conference for additional guidance. Bleak cues on either front may cap US Dollar gains in the event that policymakers take a less dovish path than investors are looking for, opening the door for added easing to be unveiled in 2013. Alternatively, signs of optimism may trim the buck’s losses if the fully unsterilized approach is indeed adopted and aggressively amplify its gains if the committee eschews balance-sheet expansion for now.

On the economic data front, UK Jobless Claims headline the European docket. Expectations call for a 7,000 increase in November, marking a narrow improvement from the 10,100 rise in the prior month. The outcome is unlikely to yield a meaningful reaction from the British Pound, with BOE policy expectations firmly anchored and traders looking ahead to the Fed announcement before committing to a strong directional bias.

The Japanese Yen stood apart from the near-standstill across the FX space in Asian trading hours, sliding as much as 0.6 percent against its leading counterparts as regional stock exchanges pushed higher and dented haven demand. The MSCI Asia Pacific added 0.5 percent amid hopes the Federal Reserve will step up easing efforts.

Dec 12, 2012

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