Posts Tagged: rate hike

The continuous and still unsolved problems regarding the US debt limit have caused the nation’s currency to hit new all time low levels against competitive currencies such as the Swiss Franc, which has recently had a great evolution on the trading market. The Australian dollar is another currency which has managed to score new gains against the USD for the fifth day in a row today. This signals the fact that the issue related to the debt ceiling is of a really great importance and that the US authorities would better find a solution to it quickly if they do not want their currency to fall even more.

The world’s largest economy is now faced with the possibility of being downgraded to the default level, which would have major negative impacts upon the US economy. In this situation, traders no longer prefer the US Dollar as the safe-haven currency to turn to each time there is uncertainty on Read more »

After better than expected U.S. data, Asian Stock markets open higher today. NIKKEI started the day at 10,205.71, previous close was 10,071.14. HANG SENG opened at 22,784.50, previous close was 22,530.18. The Nikkei index traded at four month high today on hopes that the recent slowdown in economy is temporary. Fund manager at Chibagin Asset Management, Hiroaki Osakabe said “The Nikkei’s comeback is quite remarkable and faster than I had expected. Macroeconomic data from the U.S., which was really poor in mid- and late June has recovered quickly and that’s helping the Nikkei”. Investors think that if the U.S. jobs figures, which will be released today, don’t disappoint then the Nikkei may rally higher. Japan Ministry of Finance released its Current Account report today. According to the report, Japan’s current account surplus narrowed less than economists forecast in May. Japan’s current account surplus fell 51.7%. Data also showed that Japan’s exports fell in May and the trade balance Read more »

The Canadian Dollar lost territory against some of its major counterparts today based on the fact that China boosted the interest rates in order to stimulate the economic growth. This measure taken by the Chinese policy makers has had a major impact upon the growth-related currencies, causing them to loose ground. Moreover, this decision has also affected the market sentiment as it was correlated with the news regarding the downgrade of the Portugal’s rating to junk by Moody’s, phenomenon which has caused investors to loose the appetite for risk.

On the other hand, the Canadian Dollar did not find any real support in its macroeconomic data either. The Industrial Product Price Index has decreased by 0.2 percent during the month of May since the month of April. Also, the Raw Material Price Index has fallen by 5.2 percent in the same period. Nonetheless, there are also positive data, as the building permits have increased by 20.9 percent during Read more »

What has recently happened?

  • The US Dollar and the Japanese Yen have gained during the overnight trade as the Asian Stocks have followed the Wall Street lower
  • The Australian Dollar bears brunt of risk aversion based on the soft outlook for the interest rates

Critical levels:

EUR/USD 1.4600 1.4748
GBP/USD 1.6280 1.6474

The overnight trade brought us a reverse in the situation as the Euro and the Great Britain Pond have lost considerable territory against the US Dollar, falling down by as much as 0.2 or 0.3 percent due to the fact that the US Dollar managed to capitalize on broad-based risk aversion across all the financial markets.

Last night, the US Dollar and the Japanese Yen have performed very well, managing to add gains by Read more »

The Great Britain Pound, just as the Euro, managed to raise today based on the decision taken by the European Central Bank concerning Greece. The ECB’s plan of helping Greece deal with it’s financial problems and its decisions concerning the Greek bonds had immediate results on the UK currency. Moreover, the GBP also raised on the account of the increase of the house prices in the month of May.

Reports show that the Halifax house price index increased by 0.1 percent during the month of May. This comes after the previous decline by 0.4 percent which occurred in April. In the same time, the GBP also gained based on the fact that the Standard & Poor’s 500 Index grew by 0.5 percent and that the FTSE 100 Index has increased by 0.2 percent.

Due to the fact that the expectations concerning the interest rates of the Bank of England and the US Federal Reserve have recently downgraded at Read more »

The report of the ECB meeting has showed that the Europe Central Bank has taken the decision of supporting Greece during this difficult problem. The Greek bonds situation is now to find support from the ECB. This is the latest favorable decision which is to help Greece and thus improve the situation of the sovereign debt in the European Union.

The European Central Bank’s President, Jean-Claude Trichet, has recently announced the fact that the bank considered to take measures in order to encourage investors to purchase bonds which are to replace maturing securities. He also added the fact that the bank does not desire to impose losses on creditors. Afterward, he added the following: “That doesn’t mean that we are against the fact that the private sector, as has been asked a year ago when there was a first program for Greece, financial institutions in Europe were asked to maintain their level of outstanding credit. That is not Read more »

What has recently happened?

  • Euro: ECB maintains cautious outlook before the rate decision
  • British Pound: the reversal finally gathers pace, the 23.6 percent Fibonacci is in sight
  • US Dollar: manages to gain direction on safe-haven flows

It has been noticed today that the Euro has been struggling in order to maintain the gains made during the overnight trade. The new shift in the currency’s situation is related to the fact that the European Central Bank continues to maintain a cautious tone in what it concerns the rate decisions which are due out later this week. Vitor Constancio, the ECB Vice President, announced that the economic outlook for the Eurozone continues to remain weak. As he continued to speak in Italian, he insisted upon lecturing the nation on the fact that it needs increased coordination in order to find the proper way of dealing with the sovereign debt crisis. The Central Bank of Europe Read more »

What has recently happened?

  • The Canadian Dollar has been surging after the moment when the BoC Governor has offered a distant view of the rate hikes
  • The Canadian Dollar started to lose the ground which it has managed to gain based on the interest rate speculation

The Canadian Dollar has registered a decrease at the end of the previous week of trading based on the fact that the crude oil’s price has recently declined and on the fact that the US labor market has significantly decreased, managing to outstand the anticipations of any analyst and trader.

The crude oil, which is the most important export of the Canadian economy, has recently decreased by another 0.2 percent, gathering a fall of 0.4 percent over the entire trading week. Moreover, the unfavorable effect of the payrolls and of the increase of the unemployment claims in the United States is one of the major factors which have Read more »

This question is related to the reasons why the Federal Reserve raises rates. So, before finding out how the rate hike affects the Forex market, let’s see why it is used by the Federal Reserve. Grosso modo, this raise has to do with the fact that the Federal Reserve hopes to curb the economic growth as much as to manage to combat inflation, but not enough as to derail the economic expansion. This means that, every time that the Federal Reserve raises rates, the Federal Reserve is trying to balance the economic situation of a specific country. But, even when these adjustments are relatively small, such as the series of one-quarter point hikes rate escalations that were specific for the period between 2004 and 2006; these actions have a visible and immediate effect upon the financial markets, including the Forex market.

After this kind of decisions are announced, the tendency is that of the prices on the Read more »

Major events that took place during the night:

  • The Japanese Yen fell due to the Fed Outlook
  • The Australian Home Loans went down for the second month in a row, underpinning the Neutral RBA bets
  • The UK retail inflation decreased ahead of the BoE Rate Decision

Here are the critical levels of the most important currencies that undertook changes during the night:

EUR/USD 1.4183 1.4298
GBP/USD 1.6169 1.6500

This night allowed the Euro and the British Pound to gain territory as they have managed to grow by 0.4 and 0.3 against the USD. This is Read more »