Thread: Forex News from InstaForex

Thursday, the Bank of England is set to announce its interest rate decision. The central bank is widely expected to leave the interest rate untouched at a record low of 0.5% and to continue its GBP 175 billion asset purchase programme.

At 2.45am ET, the French statistical office INSEE is scheduled to issue industrial production data. Month-on-month, industrial production is forecast to rise 0.4% in July and manufacturing output growth is seen at 0.5%.

Thereafter, the Hungarian CPI and Turkish GDP reports are due. Economists forecast Hungarian annual inflation to rise to 5.8% in August from 5.1% in July. The Turkish economy is forecast to shrink 8% annually in the second quarter.

Half an hour later, consumer prices details are due from Denmark and Sweden. Sweden consumer prices are forecast to drop 1% annually in August compared to a 0.9% fall in July. Meanwhile, Danish annual inflation is expected to rise to 1.1% in August from 1% in July.

At 4.00am ET, the European Central Bank is set to issue monthly bulletin. In the meantime, Norwegian CPI and PPI reports are also due.

At 5.00am ET, a final report for the second quarter GDP is due from the Italian statistical office.

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The dollar was stable Monday morning in New York following last week's brutal losses, as traders geared up for a busy week on the economic front.

Increased risk aversion has driven the dollar to its lowest level of the year versus a basket of major currencies, but renewed concerns about the sustainability of the economic recovery could give the buck a boost in the coming days.

Monday's economic calendar is fairly light, with President Obama giving a speech on the economy and financial regulation in New York.

However, later in the week, traders will be flooded with a spate of economic data, which could help them gain more clarity on the economy's course.

The Commerce Department's retail sales report for August, the results of the New York Federal Reserve's and Philadelphia Federal Reserve's manufacturing surveys for September and the Federal Reserve's industrial production report for August may be closely watched.

The dollar rose sharply versus the sterling, jumping almost 2 cents to 1.6550 from a monthly low set late last week.

The buck also firmed up versus the euro, holding near 1.4550. Last week, the dollar hit a 2009 low of 1.4634 as stocks continued to improve.

The European Commission kept its economic outlook unchanged from May's spring forecast. Gross domestic product or GDP is expected to fall 4% this year in both the Eurozone and in the EU.

The dollar pared some of its recent losses versus the yen, improving to 90.90 from a February low of 90.18. With the advance, the dollar stayed away from a 13-year low of 87.08 set back in January.

Meanwhile, the buck hit a weekly high of C$1.0900 versus the loonie. Early in August, the dollar hit a yearly low of C$1.0630, but has since managed to stabilize.

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The U.S. Census Bureau will release a report on housing starts for August at 8:30 am ET. Economists estimate housing starts of 580,000 for the month.

At the same time, the Labor Department is due to release its customary jobless claims report for the week ended September 12th. Economists expect a modest increase in claims to 555,000.

The US dollar stabilized against most of its major opponents ahead of the reports. As of now, the greenback is quoted at 91.4 against the yen, 1.653 per pound, 1.032 versus the Swiss franc and 1.472 against the euro.

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During early deals on Monday, the US dollar and the Japanese yen edged down against their major counterparts as a rise in Asian and European stock prices reduced demand for currencies perceived as safe havens.

The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.

The dollar slipped to a 6-day low against the European currency, 13-day low versus the British pound, 4-day low against the Swiss franc, while edged higher to a 6-day high against the Japanese yen.

During early European deals on Monday, the US dollar rose to new multi-day highs against its major counterparts as a fall in most Asian and European stocks boosted demand for the safe haven greenback.

The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.

Most of the stock markets were modestly lower today as investors look to this week's Federal Reserve meeting for more clues about the strength of the U.S. Recovery.

Early in Europe, Britain's FTSE 100 lost 0.4 percent, Germany's DAX fell 0.8 percent and France's CAC-40 dropped 0.3 percent.

In Hong Kong, the Hang Seng fell 150.60 points, or 0.7 percent, at 21,472.85 in back-and-forth trade, while South Korea's Kospi lost 0.3 percent to 1,695.50. China's Shanghai benchmark was up 0.2 percent at 2,967.01 and Australia's benchmark shed 0.3 percent.

Japanese financial markets are closed today for public holidays. Financial markets in India, Indonesia, Malaysia, Philippines and Singapore were also closed Monday for holidays.

World markets posted more gains last week as U.S. Federal Reserve Chairman Ben Bernanke said recession in the world's largest economy was "likely over."

This week, investors will watch closely what the Fed has to say about the economy and the scale of the recovery after a two-day meeting that wraps up Wednesday.

At its August meeting, the FOMC decided along the expected lines and maintained the fed funds futures rate unchanged. In its post-meeting policy statement, the Fed noted that economic activity is leveling out, an improvement from its previous opinion that the pace of contraction is slowing. There weren't any major changes to the references the committee made towards other measures.

Regarding its Treasury securities purchasing program, the central bank said the committee would gradually slow the pace of these transactions. The central bank anticipates the full amount of $300 billion to be purchased by the end of October. The FOMC reiterated its commitment to retain interest rates at exceptionally low levels for an extended period.

Against the European currency, the US dollar edged higher during early deals on Monday. At 2:35 am ET, the dollar reached a 6-day high of 1.4639 against the euro, compared to 1.4704 hit late New York Friday. The next upside target level for the dollar is seen around 1.437.

The US currency that closed Friday's North American session at 1.6246 against the British pound rose to a 19-day high of 1.6137 at 2:35 am ET Monday. The pound-dollar pair is currently trading at 1.6168 with 1.603 seen as the next target level.

British house prices increased in September on rising confidence and dwindling stock of property, results of a closely watched survey showed Monday.

Average asking prices were up 0.6% in September from August as autumn sellers raised price expectations, the property website Rightmove reported. House prices had declined 2.2% in August after rising 0.6% in July.

Meanwhile, the latest Quarterly Bulletin from the Bank of England showed today that sustainable rebalancing in the UK and the global economy depend on structural forces, including the extent to which consumers in deficit nations remain restrained and domestic demand in surplus countries pick up.

Against the Swiss franc, the greenback traded higher during Monday's early deals. At 5:15 am ET, the dollar-franc pair climbed to a 4-day high of 1.0357, compared to Friday's closing value of 1.0305. If the pair gains further, 1.055 is seen as the next target level.

The Swiss National Bank said today in a report that the M3 money supply increased 7.7% year-on-year in August, unchanged from the previous month. A year ago, the M3 money supply was up 2.5%. The M2 money supply climbed 41.8% on an annual basis in August, faster than the 41.3% growth in the previous month.

The dollar that closed Friday's New York deals at 91.46 against the Japanese yen advanced to 92.21 at 5:15 am ET. This set a 11-day high for the dollar. On the upside, 93.4 is seen as the next target level for the dollar-yen pair.

The Conference Board is scheduled to release a report on the U.S. leading index for August at 10 AM ET. The consensus estimate calls for a 0.7% increase in the leading indicators index for the month.

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Singapore's consumer price index dropped 0.3% year-on-year in August, slower than than a 0.5% fall in the preceding month, a report by Statistics Singapore said Wednesday. Economists expected a 0.4% fall.

Housing costs fell 1.6%, due to lower electricity and gas tariffs and cheaper liquefied petroleum gas (LPG). Transport and communication costs fell 0.4%, mainly due to cheaper petrol prices. Excluding accommodation costs, the consumer price index declined 0.9%.

Month-on-month, consumer prices were up 0.4%, owing to higher costs of transport and communication, clothing and footwear, as also housing and stationery items. Excluding accommodation costs, consumer prices were up 0.5%. Meanwhile, after adjusting for seasonal effects, consumer prices were up 0.4% on a monthly basis in August.

In the first eight months, consumer prices rose 0.5% compared to last year.

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Tuesday, Malaysian Prime Minister Najib Razak said the government intends to reduce operating expenditure and to broaden its tax base. However, the reduction in expenditure would not affect the efficiency of the government, said Najib.

The government's pump priming measure is currently costing a billion ringgit a month. The government is set to present its 2010 budget next month.

Najib, who is also the finance minister, told reporters that the government is mindful of the need to rein in the fiscal deficit. The government expects the budget deficit to fall to 7.6% of GDP this year.

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Financial professionals hold the view that the U.S. economy remains in a recession, despite signs of stability in recent months, a survey said Tuesday. The survey was conducted amongst attendees of the 2009 annual conference of the Association for Financial Professionals on October 5.

Around 20% of respondents assessed that the recession will end before of the year, while 69% expect the recession to continue well into 2010. Nearly 22% expect company payrolls to shrink further, while just 14% anticipate their organization to resume hiring over the next six months.

Only 21% of financial professionals said their organization will increase capital spending in the months ahead. Majority of survey respondents expect to either maintain or further cut capital spending over the coming six months.


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The dollar touched a fresh yearly low versus the euro on Tuesday, even after European Central Bank President Jean-Claude Trichet and finance ministers of the sixteen Eurozone countries expressed "worries" about forex movements and voiced support for a strong U.S. dollar.

Its been a brutal stretch for the dollar of late, particularly against the euro. Amid expectations that the interest rate gap between the US and other industrialized nations will widen rapidly once the economic recovery takes hold, the dollar has fallen almost 25 cents from its 2009 highs against the euro, set back in March.

Late Monday night, the dollar dropped to 1.4993, its lowest level in more than fourteen months. The pair was little changed from that mark approaching 8 am ET.

The dollar barely budged versus most other majors ahead of data on US housing starts and producer prices. The Bank of Canada's interest rate decision may also be in focus.

While most economists expect the BoC to maintain its current overnight call rate, Australia, another resource-based economy, surprisingly hiked its key interest rate earlier this month.

Earnings news will also garner attention as participants continue to look for signs that corporations are able to grow revenues.

The dollar was stuck in the mud versus the loonie ahead of the BoC decision, inching slightly higher to C$1.0320. A surprise from central bankers in Ottawa could drive the dollar to parity with the loonie.

Against the sterling the dollar extended its 6-week low, touching 1.6446. With the loss, the buck moved further away from last week's 5-month high near 1.5700.

Choppy trading kept the dollar above the 90 mark versus the yen. Speculation that Japanese officials may intervene to weaken the yen has helped the dollar rebound after testing a 1995 low of 87.08.

Japan's leading index stood at 83.2 in August, down from the initial estimate of 83.3, the Cabinet Office reported Tuesday. However, the leading index improved for the sixth month in a row. In July, the reading was 82.5.

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Thursday, the International Monetary Fund raised Asia's economic outlook saying that the region is rapidly rebounding from the depth of the global crisis.

In its latest regional economic outlook, the Washington-based IMF said it expects Asia's gross domestic product to grow 2.8% this year and by 5.8% next year. In May, the lender had forecast Asia's growth to decelerate to 1.3% in 2009 before rebounding to 4.3% in 2010. The new forecasts are short of the 6.7% average growth recorded over the past decade.

"The primary driver of Asia's recovery has been a progressive return towards normalcy following the abrupt collapse in global trade and finance at the end of 2008," the IMF report said. According to the report, the other key driver of Asia's recovery has been the region's rapid and forceful policy response.

"The "green shoots" of recovery appear more firmly rooted in Asia than in other regions," the report said. "Now Asia is leading as the world pulls out of recession."

While raising its world economic outlook on October 1, the IMF said the world economy is expected to grow 3.1% next year, more than the 2.5% growth forecast in July. The lender expects the Japanese economy to contract 5.4% this year and to grow by 1.7% next year. Australia's growth is forecast to touch 0.7% this year and 2% next year. New Zealand's economy is predicted to shrink 2.2% in 2009 and to expand by 2.2% next year.

China is likely to log the fastest growth in the region, 8.5% this year and 9% in 2010. India is set to follow, with growth projected at 5.4% in 2009 and at 6.4% next year. Meanwhile, South Korea's economy is predicted to shrink 1% before expanding by 3.6% next year.

At the same time, the IMF today revised its outlook for Singapore to show a 4.3% expansion in 2010 after a 1.7%contraction this year. In its world economic outlook, the organization had forecast Singapore GDP to rise 4.1% in 2010 after falling 3.3% this year.

The IMF said Asian policymakers consequently face two major challenges - to maintain policy stimulus until the recovery becomes self-sustaining and to devise a way to return to sustained, rapid growth in a new global environment. It also said Asia will need to be willing to live with smaller current account surpluses and more flexible exchange rate management. Moreover, it said output in the large G7 economies is forecast to grow by 1.3% next year, recouping only half the contraction estimated for 2009, because private demand in these countries remains constrained by the legacy of the crisis.

Asia's V-shaped recovery may be the sharpest on record and may turn into a square-root-shaped recovery soon, DBS Bank economist David Carbon said in a note on Wednesday. "That is, a sharp drop, a sharp rise, and then a palpable turn sideways." The DBS economist expects growth to be back to "normal" for most of the countries in the region by the first quarter of 2010.

Carbon also expects key central banks in the region to hike rates in the first quarter. The bank forecasts India to hike rates as early as January and South Korea in the first quarter. China is expected to start pushing rates up in the second quarter as well as allow its currency to appreciate against the U. S. dollar.

Earlier in the month, Australia became the first G-20 central bank to raise key interest rate after the global financial crisis. India's central bank became the second in the group to start exiting from an easy monetary policy, though it retained key interest rates.

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