Morning Call

President Barack Obama announced on Wednesday that he has officially nominated Janet Yellen to be the next Chairman of the Federal Reserve. Current Chairman Ben Bernanke finishes his term on January 31st 2014, with the successor undertaking a tall order. Bernanke has focused on ultra-loose monetary policy to help boost the US economy with job creation being the catalyst to begin tapering. Yellen is seen by the market as Dovish and is expected that she will move forward in the same dire…

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Today we enter the second week of the US government shutdown as the political stalemate continues, and the debt ceiling limit approaches. It is estimated that the US will be unable to meet their bills on roughly the 17th October, at which point, if the debt ceiling has not been increased, the US would default on their debt. The current debt ceiling is currently capped at $16.699 trillion, which the current Democrat government is attempting to raise. The Republican Party, (primarily the…

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It may seem farfetched, but due to political deadlock in the US, the government has been unable to agree an increase to the debt ceiling, forcing the non-essential government employees to cease working. As the 3rd quarter begins, the US has been unable to agree an increase in the borrowing limit to fund the government’s expenditure. President Obama addressed the nation, making it clear than the government will not be held to ransom over Obamacare, and that these bills have been p…

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The US government is nearly out of time to agree the necessary new spending bill before the financial year ends at midnight today on the final day of the 3rd Quarter. There is currently a political stalemate between the current government, the Democrats and the opposition the Republicans. It is hoped that a deal can be agreed as like in April 2011, following an 11th hour budget deal a government shutdown was avoided. President Obama has repeatedly stated that he will not compromise ove…

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Sterling was given a boost in early trade as comments from the Governor of the Bank of England Mark Carney. The Governor had been making visits to cities in the North of England and was interviewed by local newspapers Thursday, as these comments reached traders on Friday morning Sterling jumped against the greenback by 80 cent to a session high of 1.6132. Quantitative Easing Analysts and market commentators have been quick to criticise to the timescale of policy tightenin…

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The euro has retraced some of the move upwards against the dollar from last week, when Bernanke surprised markets and didn’t taper the Feds bond-buying programme. Tuesdays IFO Business climate index data from the powerhouse of Europe (Germany) was the highest since March 2012, but was below analysts’ expectations. Technical Outlook The pair is currently testing the 14.6% Fib with the RSI pointing higher, which could see the euro push back up towards the 8-month high r…

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Australia’s main trading partner is China, who imports a significant percentage of their raw materials from the mining nation, fuelling economic growth. The concerns over a Chinese economic slowdown from its double digit growth are an important driver for the Aussie currency. The HSBC China Manufacturing Purchasing Managers Index rose to 51.2 in September compared with a final reading of 50.1 in August. HSBC chief China economist Qu Hongbin: "The HSBC Flash China…

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At the Wednesday announcement and the press conference the Federal Reserved surprised investors by holding the monthly stimulus at the current level of $85bn. The majority of analysts has expect the FOMC to vote to begin to taper at the September meeting, with the size being in dispute. The decision was released at 19:00 (London) with an accompanying statement followed by a press conference at 19:30 with Fed Chief, Ben Bernanke. The unchanged level of monthly bond-purchased had c…

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Will the FOMC announce that they are to begin tapering their monthly bond-purchases today or not? At some point they will have to beginning tightening monetary policy as the endless supply of artificially cheap money would have negative consequences for the US economy. The FOMC has been meeting for the last two days and at 19:00 (London) the outcome of the meeting will be announced to the markets. Speculation and front running of the expected tapering has engrossed traders for the last…

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Spot Gold Gold has been a favourite for traders recently, speculating as to when the Federal Reserve will begin to taper its monthly bond-purchases (QE). The tightening on monetary policy from the current level of $85 billion is expected to begin after this weeks (September 17-18) meeting. Analyst’s expectations are that the Fed will reduce its current level by $10-15 billion per month, from the current $85 billion of purchases. The precious metal has been seen as a hedge…

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The UK unemployment rate has been brought into investors focuses following Governor of the Bank of England Mark Carney’s Forward Guidance. He stated that the interest rates would be held at the record low of 0.50%, until the unemployment rate drops to 7% from the current 7.8%. The Bank of England’s forecasts that the unemployment rate will fall to 7% in 2016, though the markets are pricing an increase in interest rates in 2014. There are various caveats to the Forward Guida…

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Technical Outlook Level of resistance 1.3888 (23.6% Fib retracement line) Major support at 1.3104 (50.0% Fib) supporting Thursday trading RSI is mid-range, currently point down, but could support a retest high Macro Outlook The euro has traded upto a week high against the greenback during the Asian session, coming off during the European trading. Trading has been focused around the potential military strikes from a US/French coalition following the alleged use o…

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Technical Outlook Sterling has been bid in FX space in an upward channel for the last 2 weeks, within a bigger upward trend since the end of June. 1.5717 being the recent high was broken during the Asian session with the pair reaching 1.5732, the next level of resistance is likely to be 1.5751, which was the previous daily high on the 17th June. The RSI is relatively high (76.2) which could mean the pair is overbought in the short term, seeing some profit taking. Macr…

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At 13:30 (London) the Bureau of Labor Statistics will release the US employment report for August. Bank and broker estimates for US Non-Farm report for August: Morgan Stanley +190K Danske Bank +200K Lloyds TSB Bank +185K Standard Chartered Bank +200K Commerzbank AG +175K Wells Fargo & Co. +205K Credit Agricole CIB +160K Soc Gen +220K Moody’s +185K Goldman, Sachs & Co. +200K RBC Capital Markets +185K H…

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It is the first Friday of the month and that means it is the release of the pivotal US jobs report; Non-Farm Payrolls. The monthly release is a significant data point for the economy, as the Federal Reserve Chairman Ben Bernanke has reiterated at the FOMC meetings that the bond-buying programme (QE) will remain if unemployment remains above 7%. Bernanke also stated that they would hike interest rates from the current record low of 0.25%, last altered in 2008. ADP, Initial Jobless Claim…

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