Archive - May, 2013

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Japan's stocks entering a correction, dropping more than 10% from their peak -Bloomberg Each $1 in credit firepower added the equivalent of 17 cents in GDP, down from 29 cents last year and 83 cents in 2007 (China) -Bloomberg The Government must continue with its deficit reduction plan if it wants to turn the UK’s economy around and establish the recovery, the influential Organisation for Economic Co-operation and Development (OECD) said yesterday Euro area data,…

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Trading through the European and US session on Monday was very quiet as there were public holidays in the US and UK, leading to limited volatility and lower trade volumes. The majority of FX crosses traded in relatively tight ranges with limited macro data to give direction. The Aussie dollar has weakened against the Greenback over the last 6 weeks; analysts have been vocal for a prolonged period that the Aussie has been overvalued. The AUD strength has been fuelled by the commodities…

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Ben Bernanke took centre stage yesterday, as he read a prepared text stating that that he sees no benefit in tapering of QE, pushing Gold up around $30 to over $1400/oz, with the expectation of prolonged money printing. After the prepared text, Ben Bernake held a Q&A session, which he subsequently stated that if employment and US data continued to improve then over the “next few meetings” the Fed could begin to taper. These comments led to a whipsaw in markets, as traders rev…

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Bank of England Minutes of the MPC Meeting Held on 8 and 9 May 2013: http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1305.pdf Above is the link to the Bank of England website, for the full PDF release. The link is hosted on an external website, which Abshire-Smith do not take responsibility for its content or any liabilities.…

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The Bank of England releases their minutes from the previous MPC meeting at 9:30am, the immediate headline will be how the members voted on the interest rate and asset purchases. Investors will then look for a change in stance or hints regarding the future policy; interest rates have been held at a historic low since 2009. The current does of ultra-loose monetary policy will need to be withdrawn at some point in the not too distance future, though analysts believe that the next Governor Mark…

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There is a growing concern that the UK government’s flagship scheme to help first time buyers access the housing market will fuel a property bubble. On Monday according to data released by Rightmove, theaverage house price in London is now above £500,000 for the first time. Low borrowing rates, demand outstripping supply and buy-to-let rental yields have all fuelled the surge. Analysts are highlighting that the Chancellors scheme to help many individuals access the property marke…

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The Ernst & Young Item Club said persistently high inflation had knocked almost 3 percentage points off the economy over the past three years and was set to remain above the Bank of England's 2 per cent target "for the foreseeable future" - The Independent The Conservative party over the weekend has come under attack following a national paper printing comments said to have been made by a senior Tory official stating grassroots party members were “swivel-eyed lo…

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The London Stock Exchange now makes more money from its by-product 'data' than from its core capital markets business - CityAM SNB will cap Franc as long as deflation risks persist - Bloomberg Yen remains weak, with many strategists recommend buying on dips, currently trading above 102Y Gold trades below $1400/oz Following the preliminary GDP figures, Japan’s Economy Minister Amari said the effects of Abenomics are beginning to appear EURUSD the ye…

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On Tuesday as the FTSE 100 closed at a 5 and half year high, as the potential takeover of utility company Severn Trent. Equity indices in Europe and the US have powered higher, fuelled by investors search for a return. The prolonged period of record low yields on government paper, and the cost of debt financing has led to an increase in M&A activity. The dollar has been strong across the board, reaching multi-week and month highs against all of the majors. The depreciation in the Y…

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Articles in the press are highlighting the recent data from the UK and how the economy is starting to show signs of the long awaited recovery: The CBI predicts that the UK GDP will grow by 1% this year and 2% next. The ONS now believes that the UK avoided the publicised and heavily criticised “double-dip” recession The Telegraph reported on Monday that Governor of the Bank of England Mervyn King might revise their growth forecast higher before he steps down in…

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Social media is becoming an important tool for many in the financial markets, highlighted by Bloomberg integrating Twitter feeds into Bloomberg terminals.Information, news, articles are shared almost instantly with followers, traders and investors are utilising the tool as the information is the lifeblood of the markets. Stories, opinions and events drive price changes; it is not social media that impacts price action, but the facts and rumours that are shared. Financial News (www.eFin…

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The Bank of England is to make its monthly interest rate announcement alongside any further changes to the asset purchase facility at 12pm. The consensus is that the central bank will refrain from making any changes from the current course of quantitative easing (£375bn) and interest rates on hold at a record low 0.50%. There are expectations that the MPC will wait until Mark Carey becomes governor before increase the current level of asset purchases. Recent macro data from the UK has…

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Global equities markets soared yesterday with some bourses printing all-time highs. To those outside of the investment community the equity rally seems in contrast to economic news. -FTSE 100 closed at 6,557.30 the highest level since December 2007 -DAX closed at 8,181.87 an all-time high -Dow Jones Industrial Average rallied to close above the psychological 15,000 level for the first time The rally has been fuelled by cheap money, from the historically low borrowing…

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The two main macro releases of the day will be UK PMI services at 9:30am (London), and the US employment report, Non-Farm Payrolls (NFP). The recent economic releases from the UK have shown signs of potential growth, and a better than expected services PMI this morning, is likely to put a bid into sterling in the FX markets. It is the first Friday of the month, which means that it is ‘Non-Farm Friday.’ The US employment report will be released at 13:30pm (London)and as alwa…

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European Central Bank Meeting Thursday 2nd May 2013 The European Central Bank (ECB) as expected has cut interest rates by 25bps to 0.50%. -44 of the 70 economists surveyed expected the ECB to cut by 25bps -1 economist predicted a 50bps cut -Standard Chartered, CitiGroup, Credit Suisse, Commerzbank, JPMorgan, Goldman Sachs, Barclays and Deutsche all expected the ECB to cut rates by 25bps The macro data coming from the Eurozone has been mixed, with a two tiered No…

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