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FXStreet reports that economist at UOB Group Lee Sue Ann assesses the latest BoE event. “At its first meeting for the year, the Bank of England (BOE)’s monetary policy committee (MPC) judged that the existing stance of monetary policy remains appropriate. teletrade.ru »
FXStreet reports that economist at UOB Group Lee Sue Ann assesses the latest BoE event. “At its first meeting for the year, the Bank of England (BOE)’s monetary policy committee (MPC) judged that the existing stance of monetary policy remains appropriate. teletrade.ru »
The U.S. Treasury market rallied modestly today in a curve-steepening trade as the S&P 500 lost 0.41% to 2,168.2. Reuters reported that six members of the European Central Bank's Governing Council told the news agency that only modest tweaks to the ECB's asset purchase program are likely despite sluggish growth in the euro area. Treasuries and eurozone sovereign debt were little-changed after the news. A panel of Regional Fed Presidents Mester, Kaplan, and Lockhart yielded few statements of sign ru.cbonds.info »
Dmitry Churin, Head of Research, Eavex Capital: Quotes for Ukrainian sovereign Eurobonds rose moderately last week amid an improving domestic political situation that saw a new coalition finally formed after 2 months of wrangling and uncertainty. The shortest outstanding issue, Ukraine-19s, gained 0.4% to close at 94.3/95.0 (9.8%/9.5%), while benchmark 10-year Ukraine-26s were little-changed at 89.0/89.8 (9.4%/9.3%). Investors had a positive attitude toward the appointment of 38-year-old former ru.cbonds.info »
BERENBERG BANK: STRONG CONFIDENCE IN BRITISH BUSINESSES SUGGEST THAT THE UK ECONOMY HAS ENOUGH MOMENTUM TO END THE YEAR STRONGLY news.instaforex.com »
The ongoing strength of the British private sector, as indicated by the latest purchasing managers' surveys, points to a sharp pick-up in GDP growth in the third quarter, Capital Economics Chief UK Economist Vicky Redwood said Thursday.
Capital Economics forecasts that economic growth in the third quarter would comfortably match or exceeded the 0.7 percent growth recorded in the second quarter.
However, muted employment growth and subdued price pressures, as evidenced by the PMI surveys, suggest that the strong economic growth is unlikely to translate into a rapid fall in the unemployment rate, a pick-up in price pressures, or a near-term rise in official interest rates, the firm said.
According to Redwood, while retail sales and industrial production look set to beat the growth seen in the second quarter, the sharp widening of the trade deficit in July suggests that net trade will struggle to contribute to growth as it did in the June quarter.
Further, data from the three PMI surveys, comprising manufacturing, construction and services, suggest that the fourth quarter is starting on a strong note too, the economist said.
Survey data compiled by Markit Economics today showed that the purchasing managers' index for the UK service sector stayed well above the neutral mark in September, signaling stable growth momentum in the sector. At 60.3, the index was little changed from August's reading of 60.5.
The movement of the index over the third quarter as a whole shows that services output increased at a faster rate of 1.5 percent than 0.6 percent in the second quarter.
The Australian dollar advanced against other major currencies in Asian deals on Monday, as sentiment improved after the U.S. and Russia reached deal to remove Syria's chemical weapons and Lawrence Summers pulled out from race to Fed's top post.
Summers on Sunday notified President Barack Obama that he was withdrawing his name from consideration to replace Fed Chairman Ben Bernanke when the latter's term expires at the end of January.
"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the administration or ultimately, the interests of the nation's ongoing economic recovery," Summers wrote.
Vice Chair Janet Yellen, who favor a slower reduction of asset purchases, now becomes the clear-cut favorite for the job.
Over the weekend, the U.S. and Russia agreed on a deal to eliminate Syria's chemical weapons by mid-2014.
The framework deal requires Syria to furnish full details of its stockpile within a week. The U.S said that non-compliance, including unauthorized transfer, or any use of chemical weapons by anyone in Syria, the UN Security Council should impose measures under Chapter VII of the UN Charter.
The aussie appreciated to 0.9390 against the greenback, highest since June 19. The next resistance for the aussie-greenback pair lies at the 0.95 level. The pair was worth 0.9244 at yesterday's close.
The aussie that ended Friday's trading at 1.1369 against the NZ dollar advanced to a 4-day high of 1.1419. The aussie may face resistance around the 1.15 level.
New Zealand house sales dipped 3.4 percent to 6,548 in August, compared to the previous month, the Real Estate Institute of New Zealand said today. That follows the 0.5 percent contraction in July.
The aussie advanced to a 4-day high of 92.76 against the yen, up by 1.2 percent from last week's multi-day low of 91.69. On the upside, the aussie may probably seek resistance at the 93.6 level.
The aussie spiked up to more than 2-month high of 0.9680 against the loonie, which is up from Friday's closing quote of 0.9569. The aussie is likely to test resistance at the 0.98 level.
The aussie reached 1.4236 against the euro, a level unseen since July 24 and an increase of 1 percent from last week's close of 1.4381. The next upside target for the aussie lies at the 1.41 level.
Looking ahead, Eurozone final inflation for August is due in the European session.
The U.S. industrial production and Canada existing home sales for August are set for release in the New York session.
Germany's industrial production recovered at a faster-than-expected pace in June, suggesting that the sector has likely emerged from a recent phase of lackluster activity. The strong pick up shows that the economic recovery that started in the beginning of the year has gathered momentum.
Production at German factories increased a seasonally adjusted 2.4 percent month-on-month in June, more than offsetting the previous month's revised 0.8 percent decrease, a report from the Federal Ministry of Economics and Technology showed Wednesday. Economists had forecast output to rise 0.3 percent, following May's originally recorded 1 percent fall.
Among industrial sub-sectors, output of capital goods climbed 4.1 percent and consumer goods production advanced 1.1 percent, contributing significantly to the overall upturn in activity. The intermediate goods sector recorded a 0.6 percent gain.
Production, excluding the construction sector, rose 2.2 percent sequentially during the month. Construction output rose 1.6 percent, and energy production was higher by 5 percent than in May.
Compared to June 2012, industrial production advanced a working-day adjusted 2 percent, after recording a 1.2 percent decrease in May, which was revised down from a 1 percent contraction. Production was forecast to fall 0.3 percent year-on-year.
During the May-June period, industrial output moved up 1.3 percent from preceding two months ended April. There was a 0.5 percent year-on-year growth in output during the period.
According to the report, that sentiment indicators for the German industrial sector suggest that the current positive trend in production will continue in the coming months.
Today's outcome corroborates the government data, which came out yesterday, showing that new orders in the German manufacturing sector grew at the fastest pace in eight months in June, driven mainly by strong demand for big-ticket items.
In a sign that German factory sector has overcome its weakness, a recent survey compiled by Markit Economics showed that the manufacturing purchasing managers' index climbed to an 18-month high in July, supported by rising volumes of new work and higher production levels.
Reinforcing the upbeat outlook for the German industrial sector, survey data released by the Ifo Institute last month revealed that confidence among entrepreneurs rose for a third consecutive month in July.
The recent improvement in Germany's job market is also reflective of the upturn in industrial activity. In June, a statement from the Federal labor agency showed that the number of unemployed in the country declined for a second consecutive month in July.
The Bundesbank last month said it expects Germany's economic growth to weaken in the third quarter, following the second quarter's recovery. Earlier, the bank had lowered its growth outlook for this year to 0.3 percent from 0.4 percent. The economy is seen growing 1.5 percent in 2014.
Quotes from RBC Capital Markets:
-EUR: The ECB's Draghi spoke in London, repeating that the risks to growth are still on the downside but he sees a fragile and gradual recovery. He reminded that exit from exceptional monetary policy remains distant and that "we stand ready to act again when needed" but there are limits to what monetary policy can achieve. He says policy will remain accommodative for the foreseeable future. Elsewhere, the FT and La Repubblica quote a report by the Italian Treasury detailing the country's debt transactions for H1 2012 and suggesting the restructuring of eight derivatives contracts with foreign banks during that period could lead to up to EUR8bn in losses for Italy.
-The FT says the restructuring allowed the Tsy to stagger payments to foreign banks (on derivatives with a total notional value of EUR31.7bn) but the Italian govt had to accept more disadvantageous terms in some cases. The Italian Tsy has issued a statement in response saying the contracts were used to hedge against exchange rate/interest rate risks at the time of Italy's entry to the Euro, and carried a cost which is "justified by the need to protect against serious risks". Italian spreads are tighter on the day, largely ignoring the derivatives story in favour of the short-covering mood.
news.instaforex.com »
UK's economy remains vulnerable to risks despite recent economic data indicating a strong pick up in activity, Bank of England policymaker Paul Fisher said Wednesday. He cautioned that growth will likely remain weak in the near term and the economy will take a longer time to recover than the United States.
Dismissing the recent positive economic data as insignificant, BoE's head of markets noted that it is imperative to keep monetary policy loose for a long period to achieve growth that is in line with trend.
Fisher said that the macroeconomic outlook in the U.K. is not as good as in the U.S, where inventors had belatedly realized that a recovery is possible.
Addressing a gathering of business persons, Fisher said that house prices in the U.K. are too high and urged lenders to pass on their lower funding costs on to clients. Terming the government's Funding for Lending scheme a success, he called for actions conducive to increase the number of transactions in order to raise demand.
In an interview given to The Times earlier the policymaker reserved his comment on his stance on BoE governor Mervyn King's proposal to split the Royal Bank of Scotland (RBS) into a "good" bank and a "bad" bank. He said that it is possible to privatize the RBS if a two-year program is prepared for the same.
An indicator of Eurozone's private sector activity improved more than expected in May, renewing hopes that the economy is inching towards a recovery. Nonetheless, the indicator remained in negative territory, signaling sharp deterioration in overall business activity.
The composite output index, which measures the performance of the both manufacturing and service sectors, rose to a three-month high of 47.7 in May from 46.9 in April, flash results of a survey by Markit Economics showed Thursday.
Readings below 50 indicates contraction in activity. Economists had predicted an increase in the index to 47.2.
New orders across the private sector fell sharply again in May and for the twenty-second successive month. The rate of decline was unchanged from that seen in April, Markit said.
The modest improvement in May raises hopes that overall Eurozone economic activity is inching towards stabilization, said Howard Archer, Chief European and UK Economist at IHS Global Insight.
"It is worrying to see that the decline in new orders was unchanged at a significant level in May, so a seventh successive quarter of Eurozone GDP decline, albeit modest, remains very possible in the second quarter," Archer said.
The purchasing managers' index, a gauge of activity in the manufacturing sector, rose to 47.8 from April's score of 46.7. This was forecast to rise to 47. The manufacturing output index rose to a four-month high of 48.2 from 46.5 in April.
The services activity index edged up to 47.5 in May from 47 in the previous month, while expectations were for a modest increase to 47.2.
Eurozone's economic downturn eased in the first quarter with the gross domestic product falling at a slower pace of 0.2 percent quarter-on-quarter.
In May, the European Commission cut its economic forecast for euro area and said the economy will contract 0.4 percent in 2013. The economy is expected to start recovering from its record-long recession in 2014.
"May's euro-zone PMI survey adds to the recent run of slightly more encouraging news from the region, but there is little sign that the region is about to emerge from recession," said Ben May, an economist at Capital Economics.
Earlier in the month, the European Central Bank reduced the main refinancing rate by 25 basis points to a record low 0.50 percent to support the economy. ECB Chief Mario Draghi has said that the monetary policy will remain accommodative "as long as needed."
Markit said that the employment at Eurozone's private sector firms fell for the seventeenth consecutive month, with the rate of job losses rising to the highest since February.
The survey found strong divergences between the region's two largest economies. Business activity declined for a second successive month in Germany, but the downturn was only very marginal. Meanwhile, a steep rate of decline in French activity was reported in May.
ECONOMISTS: INVESTORS ARE CONCERNED THAT WEAKNESS IN YEN AGAINST WON WILL UNDERMINE S. KOREAN EXPORTERS news.instaforex.com »
Confidence among Australian consumers rose to its highest level in more than two years in March with the effects of the past interest rate cuts by the Reserve Bank becoming more visible.
A survey by Westpac and the Melbourne Institute showed Wednesday that the consumer sentiment index rose 2 percent in March to 110.5 from 108.3 in February. This is the highest level of the index since December 2010.
"This is a strong result," Westpac's Chief Economist Bill Evans said. It is the fifth consecutive month that the index has registered above 100, he noted.
Evans said that in recent months, the accumulation of the cuts appeared to be genuinely boosting confidence. Since October last year, the confidence index has increased 11.5 percent.
The Reserve Bank of Australia kept the cash rate unchanged at 3 percent in February and March, but said there is scope to ease policy further, if necessary, to support demand.
The central bank has reduced cash rate six times since it started its easing cycle in November 2011.
Also, "equity markets and the associated signals that global economic prospects are improving are the other key driver of this improved confidence," Evans said.
Data released by the Australian Bureau of Statistics on Wednesday showed that home loans declined unexpectedly in January. The number of dwelling commitments for owner occupied housing fell 1.5 percent month-on-month to 44,383.
Economists had forecast an increase of 0.5 percent following 2.1 percent fall in December. Lending has now declined for four consecutive months. Meanwhile, investment lending rose 4.4 percent from the previous month.
Australia's retail sales unexpectedly declined in November amid sharp reduction in sales at department stores and in household goods category, the latest figures from the Australian Bureau of Statistics showed Wednesday.
Retail sales fell 0.1 percent month-on-month to A$21.5 billion on a seasonally adjusted basis in November against expectations for a 0.3 percent growth. This followed a flat reading in October.
Sales of household goods declined 0.9 percent month-on-month in November and trade at department stores slipped 0.4 percent. There was zero growth in food retailing and 0.6 percent drop in clothing, footwear and personal accessory retailing.
Retail sales in Australia continue to disappoint, following on from a soft report in October, Tom Kennedy, an economist at J. P. Morgan Australia, said. "What little strength that we have seen in the retail report over the past few months has largely been generated by food retailing, which is likely being driven by an increase in prices, rather than a surge in demand."
The economists said real consumption has been very soft during the final three months of the year.
Separately, the statistical office reported that job vacancies in Australia fell to 166,800 in September-November from 179,200 in the three months through August after adjusting for seasonal variations. This was the lowest level since May 2010.
In a report today, the Housing Industry Association (HIA) said that new home sales posted a second consecutive monthly improvement in November driven by higher demand for detached houses.
Home sales rose 4.7 percent in November. However, HIA said that sales still remained at quite low levels. In the three months to November, the volume of sales was 15.7 percent lower than in the same period in 2011.
The Federal Reserve felt that the fiscal cliff drama had an adverse impact on the economy late in 2012, according to the minutes of the central bank's most recent policy making meeting.
Minutes from the December meeting showed that voting members were concerned about the Fed's ballooning balance sheet. However, the Fed continued to believe that its asset purchase plan would need to remain in place to see the U.S. economy through a potential rough patch.
Some members of the rate-setting Federal Open Market Committee thought asset buying would be warranted though most of 2013.
The Fed offered a mixed assessment of the sluggish economic recovery, noting some improvement in employment and the housing market.
"The information reviewed at the December 11-12 meeting indicated that economic activity continued to increase at a moderate pace in recent months. Employment expanded further, and the unemployment rate declined slightly, on balance, from September to November but was still elevated," the minutes said.
