Dollar dips in Easter holiday trade, jobs data overhang

Posted by Forexsq 115 days ago (
img The dollar cut early losses on Monday but continued to feel the carry-over effects of a disappointing U.S. jobs report from Friday that throws into question the timing for a U.S. interest rate increase.

Expectations the U.S. Federal Reserve will raise interest rates sometime later this year has fuelled the dollar's rally since mid-2014. Higher U.S. interest rates will put dollar-denominated assets at a yield advantage versus other currencies such as the euro and yen where interest rates are being kept low.

Friday's closely watched employment data showed U.S. non-farm payrolls rose by 126,000 in March, the smallest gain since December 2013 and well under the 245,000 economists had forecast. On the brighter side, average hourly earnings increased 0.3 percent.

European markets remained closed on Monday for the Easter holiday, limiting trading volumes.

"The market is underweight dollars and looking for opportunities to buy dollars because even with the weak NFP number last mon

Bitcoin and Market Crashes

Posted by Forexsq 115 days ago (
img Predicting big market crashes is a difficult business, many would say impossible. If enough investors believe a cataclysm is coming, their selling will simply make it happen sooner -- a dynamic that would quickly render any convincing forecasting method obsolete.

Nonetheless, a pair of physicists -- drawing inspiration from the market for bitcoin, no less -- might be on to something.

Jonathan Donier and Jean-Philippe Bouchaud, both of whom work at Paris-based hedge fund Capital Fund Management, started from an obvious idea: It would be easy to foresee big crashes if you could monitor the actual thoughts and expectations of all investors. With that kind of superhuman knowledge, you could get an early warning of emerging imbalances between pessimists and optimists, between likely sellers and buyers. Such imbalances set the groundwork for a crash -- specifically, when the number of potential buyers gets very small.

Of course, no one has access to such mental information. Yet Don

Dollar Drop Signals World’s Best Forecaster to Start Buying

Posted by Forexsq 114 days ago (
img It’s time for investors who bailed on the dollar in the past few weeks to get back in, says the most-accurate currencies forecaster.

The greenback has tumbled 4.3 percent versus the euro since touching a 12-year high last month amid speculation the Federal Reserve will delay raising interest rates, in part because the dollar’s strength is hurting U.S. economic growth. That concern is overblown, according to ING Groep NV, which topped Bloomberg’s rankings of foreign-exchange analysts for the second quarter in a row.

“The market is now pricing in a very subdued pace of the tightening cycle -- we disagree,” Petr Krpata, a foreign-exchange strategist at ING in London, said on April 1 by phone. “We just see the latest correction as a perfect opportunity to get into the trade again.”

Even with the recent reversal, the dollar has rallied between 3.7 percent and 29 percent against all of its major peers since mid-2014 as the Fed’s plans to raise interest rates attracted cash to the U

Aussie jumps more than 1 percent as RBA keeps rates unchanged

Posted by Forexsq 114 days ago (
img The Australian dollar gained more than 1 percent against the U.S. dollar, on track for its biggest daily rise in more than two weeks, after the Reserve Bank of Australia surprised many investors by refraining from cutting interest rates.

The Aussie rose to $0.7711, its highest in a week, from around $0.76 before the decision and extending its recovery from a six-year trough of $0.7534 set on Thursday.

A fall in iron ore prices, Australia's single biggest export earner, and a currency that is still seen to be above fair value had left many convinced that the RBA would cut rates either this month or next.

The RBA policy board noted that while the Aussie had fallen against a strong greenback, the decline against a basket of currencies had been less and a lower exchange rate was needed to help the economy.

"Should the Aussie appreciate notably today or over the next few days we would have to come to the conclusion that the market has misunderstood the RBA's intention (in refra

Here Are the Suspicious Moves in the Australian Dollar That Set Off an Investigation

Posted by Forexsq 114 days ago (
img The Australian dollar is up today after the Reserve Bank of Australia announced interest rates would remain unchanged, surprising most traders who were expecting a cut. However, regulators noticed that the spike actually began before the announcement was officially released. Even more bizarre, it's the third month in a row that the aussie has made a sharp move just moments before a monetary policy decision was made public.

As you can see of this chart of the minute before and after the 2:30 p.m. local release (22:30 U.S. Eastern Time) on February 3, the Australian Dollar Spot fell about 0.6 percent in the final seconds before the announcement was made.

Securities regulators in Australia say they will investigate the situation to see why this keeps happening. However, the fact that the moves happened right before the announcement doesn't necessarily mean someone is getting the information early. Sean Keane, an Auckland-based analyst at Triple T Consulting, told Bloomberg News tha

Why the Fed needs Europe's permission to hike rates

Posted by Forexsq 114 days ago (
img The market is sending signals that the Federal Reserve may not make much headway raising interest rates during the next two years—even if central bankers are intent on doing so, Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, said on Tuesday.

The Fed will not be able to raise its federal funds rate above 1.5 percent by the end of 2017, Golub said. If it tries to do so, the dollar will start to rise, putting pressure on the economy and causing the central bank to retreat.

"I would love to see the Fed be able to move toward 2 percent, but with free money in Europe, it's very hard for them to get tighter," he told CNBC's "Squawk Box." "Are we asking the permission of the Europeans for our central bank policies? I'm not sure, but the market's saying [we are]."

The Fed faces the challenge of raising rates at a time when European central bankers are suppressing rates by purchasing large amounts of bonds. That monetary policy disparity is expected to send invest

Bitcoin alternative in 'pyramid scheme' storm

Posted by Forexsq 114 days ago (
img The founders of a new digital currency, known as LEOCoin, have hit back at reports published over the weekend linking them with a suspected pyramid scheme back in 2012.

Last week, U.K.-based Learning Enterprises Organisation (LEO) unveiled a trading platform in Hong Kong for its cryptocurrency called LEOCoin, which the company is promoting as an alternative to more popular digital currencies like bitcoin.

At a London launch the previous week, LEO boasted that it had already promoted the product to its current client base, claiming it meant over 100,000 entrepreneurs were already actively using the cryptocurrency in anticipation of its official trading debut, with around 30,000 merchants already signed up.

It also claimed this made it the "second largest digital currency" in the world, second to bitcoin, but has been slammed by reports on industry websites in the last week. Joel Dalais, a virtual currency entrepreneur and the director of bitcoin exchange IBWT, said on cryptoco

Stocks higher with Dow briefly up 100 points; oil, dollar eyed

Posted by Forexsq 114 days ago (
img U.S. stocks traded higher on Tuesday as investors eyed weaker oil prices and renewed dollar strength ahead of the unofficial beginning of earnings season on Wednesday.

"It's a very light day today in terms of economic news," said Peter Cardillo, chief market economist at Rockwell Global Capital. "The market's going nowhere. It's not breaking into new territory and it's not falling apart. I think investors should be cautious and defensive."

Stocks have remained in a range, with the S&P 500 roughly between 2,051 and 2,100.

"Yesterday had the characteristics of a shakeout, but we are not convinced that the pullback has fully matured yet," BTIG chief technical strategist Katie Stockton said in a note. "A breakout above intraday resistance near 2,080 by the S&P futures (2,089 for the SPX) would be an "all-clear" signal, in our view."

Equities extended gains in late morning trade with the Dow Jones industrial average briefly adding 100 points.

Healthcare led S&P 500 gains, wh

Fed should not raise rates until late 2016: Kocherlakota

Posted by Forexsq 114 days ago (
img Minneapolis Fed President Narayana Kocherlakota on Tuesday laid out a case for waiting until the second half of 2016 to start raising interest rates, and to then raise them gradually to just 2 percent by the end of 2017.

It was the first time the dovish policymaker detailed his preferred path for "late and slow" rate hikes. His remarks afterwards to reporters suggest he is increasingly worried that market expectations for nearer-term rate rises, fueled by comments from many of Kocherlakota's Fed colleagues, could knock the wind out of the economic recovery.

"That conversation (about raising rates) in and of itself is a tightening of policy," Kocherlakota said. "I do worry about the ongoing conversation about tightening monetary policy being a drag on economic performance both in terms of growth and in terms of employment outcomes."

Most Fed policymakers, including Fed Chair Janet Yellen, believe the Fed will need to start raising rates this year as the labor market improves a

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Posted by Forexsq 79 days ago (
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Euro-Area Bonds Climb as Coeure Says ECB to Expedite Purchases

Posted by Forexsq 72 days ago (
img Euro-area government bonds advanced as European Central Bank policy makers reasserted their commitment to the asset-purchase program that pushed yields across the region to record lows earlier this year.

Benchmark German 10-year yields dropped to the lowest level in a week after Executive Board member Benoit Coeure said on Monday the ECB will increase the pace of purchases under its quantitative-easing program in May and June. The central bank is ready to extend its bond-buying plan if needed, Governing Council member Christian Noyer said separately in Paris on Tuesday.

“The ECB is signaling its determination to maintain the bond-purchase program and accelerate the process before the summer due to liquidity concerns,” said Nick Stamenkovic, a fixed-income strategist at broker RIA Capital Markets Ltd. in Edinburgh. “This is supportive for European government bonds.”

Germany’s 10-year bund yield fell nine basis points, or 0.09 percentage point, to 0.56 percent at 9:32 a.m. Lond

Greek 'No' effect on Stocks and Forex market

Posted by Forexsq 24 days ago (
img Shares fell, the euro stumbled and yields on weaker euro zone economies' bonds rose after Greece overwhelmingly voted against conditions for a rescue package, but there was no rout and contagion was limited.

U.S. stock index futures ESc1 SPc1 indicated Wall Street would follow European and Asian share markets lower but there have been several worse days this year for markets vulnerable to events in Greece.

Analysts attributed the relatively muted reaction to expectations the European Central Bank would act to limit any damage. The ECB's governing council is holding a conference call on Monday to decide how long to keep Greek banks afloat.

"The market is, rightly or wrongly, taking a great deal of credence of the fact that the ECB has many more defense mechanisms in place than it did in 2011-12," said Andrew Milligan, head of global strategy at Standard Life Investments.

"Some of the measures we've seen already could be seen as a subtle signal by the ECB that it is ready to

Fed Says Labor Market Improves as It Moves Toward Rate Rise

Posted by Forexsq 1 day 3 hours ago (
img Federal Reserve policy makers said the labor market and housing have improved, moving closer to ending an unprecedented period of near-zero interest rates without providing a clear signal on the timing of liftoff.

“The labor market continued to improve, with solid job gains and declining unemployment,” the Federal Open Market Committee said in a statement Wednesday in Washington. It said that “underutilization of labor resources has diminished,” dropping the modifier “somewhat” to describe the change.

Chair Janet Yellen is guiding the Fed toward its first rate increase in almost a decade as the nation approaches full employment. She has said the Fed is likely to tighten this year if the economy continues to improve as she expects, with market speculation focused on a move as soon as September.

“The housing sector has shown additional improvement,” the Fed said. “Business fixed investment and net exports stayed soft.” It dropped language saying energy prices appeared to have s

Euro Falls Near $1, but European Goods Remain Pricey

Posted by Forexsq 115 days ago (Editorial)
img Americans hunting for a bargain on a new Beemer, bottle of Chateau Margaux or Hermes handbag thanks to the sliding euro should put away their gold cards. European luxury goods sold in the U.S. still carry luxurious price tags.

The European currency has fallen 10 percent against the dollar this year. In theory, car dealerships, department stores and other companies that sell goods from Europe could pass on the savings to their American customers, said Ira Kalish, chief global economist at Deloitte, the consulting and accounting firm.

"But what would be the point of doing that?" Kalish asked. Demand for anything made in Europe is so strong that they have little trouble moving merchandise. "From their perspective, it's better to leave the price unchanged and pocket the profit."

The euro has been in a long tailspin. Last April, it was trading just shy of $1.40. Since then, it sank as low as $1.04 in March before bouncing back to $1.10 on Monday.

In other words, you used to hav

Aussie on tenterhooks ahead of RBA meeting

Posted by Forexsq 115 days ago (
img With the Australian dollar trading around the Reserve Bank of Australia's (RBA) preferred level of $0.75, will the central bank hold off on cutting rates at Tuesday's meeting?

According to Mitul Kotecha, head of FX strategy, Asia-Pacific at Barclays, the RBA is likely to pull the rate cut trigger sooner rather than later given the recent collapse in iron ore prices – a key export for Australia.

"It's interesting, the RBA had said they were comfortable with the Aussie dollar at $0.75, but the reality [is] now commodity prices, [such as] iron ore, have fallen even further. They probably want to see[the Australian dollar] even lower now," Kotecha told CNBC.

Last week, iron ore prices fell below $50 a tonne for the first time in a decade on concerns over a supply glut and soft Chinese demand. Iron ore accounts for close to one-fifth of the value of Australia's total exports.

"I think $0.75 is gone, I think it's probably in the region of towards $0.70 if anything," Kotecha said

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