Feb
29th
Market Wrap - 29th February
By Michael Hewson CMC Markets
Today's announcement by the ECB that 800
banks borrowed up to €530bn in the latest
tranche of three year loans saw a rather tepid reaction from
markets today.
The Italian market outperformed in Europe with Italian stocks up the most, while Italian bond yields have also fallen back sharply. Given that Italian banks tapped the facility for around €100bn, it's not too hard to see why.
The rest of Europe's markets have seen a more measured reaction given that the sum borrowed came in pretty much in line with expectations. It's been better economic news out of the U.S. that has seen stocks try to gain in the afternoon session.
The next worry though remains with Portuguese bond yields which have surged as the risk of the country becoming the next shoe to drop in this crisis, gets ever larger.
While this extra capital looks set to underpin markets further, at some point fundamentals need to reflect the economic backdrop in place in Europe, which apart from Germany isn't great, and the fact that markets have already rallied significantly from the announcement of the first LTRO in December.
The best performing UK sector is the more defensive utilities sector with Centrica (CNA LN) and Scottish and Southern (SSE LN) leading the gainers. ITV (ITV LN) is the best performer after the terrestrial broadcaster beat profit forecasts despite a tough trading environment. British Airways owner International Consolidated Airlines Group (IAG LN) is also doing well after reporting a five-fold increase in pre-tax profit in the year ended December 31st, from €84m to €503m, despite a 29% increase in fuel costs.
Standard Chartered Bank (STAN LN) has followed HSBC's results earlier this week by reporting better than expected numbers for 2011. Indian energy company Essar Energy (ESSR LN) continued its recent see-saw price moves, dropping sharply after a broker downgrade.
U.S. markets opened higher today after U.S. Q4 GDP was revised slightly higher, back to 3% from the earlier 2.8% reading, while Chicago PMI data for February came in above expectations of 61 at 64, with the employment component hitting its highest level since 1984. This has consolidated the Dow's position above the 13,000 level and closes in on the 2008 highs at 13,137. In earnings news, retailer Costco saw Q2 earnings rise 13% posting profits of $0.90c a share, above expectations of $0.87c a share. The Nasdaq Composite also continued its recent good run hitting the 3,000 level for the first time in since December 2000.
Despite this better news, markets remain cautious ahead of Fed Chairman Ben Bernanke's testimony to the monetary policy committee as the recent economic data continues to confound the Fed Chairman's recent downbeat view.
The Euro has been absolutely caned against the high yielding currencies today after this morning's LTRO, down substantially against the New Zealand, Canadian and Australian dollar. It has also lost ground against the Pound after economic data showed better than expected consumer credit and mortgage approvals data for February.
Against the U.S. dollar, the Euro has traded in a fairly tight range, between 1.3400/1.3500, Rising Portuguese bond yields have also raised concerns that the beleaguered country could well be next in line for a bailout after the ECB was said once again to be buying Portuguese bonds in an attempt to keep a lid on yields.
The Pound has continued its recent more positive tone, holding above its 200 day MA at 1.5905 and looking set to head towards the 1.6080 area.
The U.S. dollar from being fairly flat on the day, caught a late bid tone on the back of Bernanke's comments about the inflationary effect of higher gas prices.
Gold prices from being initially bid slipped back sharply from their session highs after comments from Fed chairman Bernanke suggested that the Fed wasn't looking at further QE in the near term.
Oil prices on the other hand have remained underpinned on the back of the more positive US data, with Brent prices set to post their best month since last October.
WTI prices slipped back from their highs in the afternoon after U.S. inventories came in above expectations at 4.16m barrels, well above last week's 1.6m barrels.
The Italian market outperformed in Europe with Italian stocks up the most, while Italian bond yields have also fallen back sharply. Given that Italian banks tapped the facility for around €100bn, it's not too hard to see why.
The rest of Europe's markets have seen a more measured reaction given that the sum borrowed came in pretty much in line with expectations. It's been better economic news out of the U.S. that has seen stocks try to gain in the afternoon session.
The next worry though remains with Portuguese bond yields which have surged as the risk of the country becoming the next shoe to drop in this crisis, gets ever larger.
While this extra capital looks set to underpin markets further, at some point fundamentals need to reflect the economic backdrop in place in Europe, which apart from Germany isn't great, and the fact that markets have already rallied significantly from the announcement of the first LTRO in December.
The best performing UK sector is the more defensive utilities sector with Centrica (CNA LN) and Scottish and Southern (SSE LN) leading the gainers. ITV (ITV LN) is the best performer after the terrestrial broadcaster beat profit forecasts despite a tough trading environment. British Airways owner International Consolidated Airlines Group (IAG LN) is also doing well after reporting a five-fold increase in pre-tax profit in the year ended December 31st, from €84m to €503m, despite a 29% increase in fuel costs.
Standard Chartered Bank (STAN LN) has followed HSBC's results earlier this week by reporting better than expected numbers for 2011. Indian energy company Essar Energy (ESSR LN) continued its recent see-saw price moves, dropping sharply after a broker downgrade.
U.S. markets opened higher today after U.S. Q4 GDP was revised slightly higher, back to 3% from the earlier 2.8% reading, while Chicago PMI data for February came in above expectations of 61 at 64, with the employment component hitting its highest level since 1984. This has consolidated the Dow's position above the 13,000 level and closes in on the 2008 highs at 13,137. In earnings news, retailer Costco saw Q2 earnings rise 13% posting profits of $0.90c a share, above expectations of $0.87c a share. The Nasdaq Composite also continued its recent good run hitting the 3,000 level for the first time in since December 2000.
Despite this better news, markets remain cautious ahead of Fed Chairman Ben Bernanke's testimony to the monetary policy committee as the recent economic data continues to confound the Fed Chairman's recent downbeat view.
The Euro has been absolutely caned against the high yielding currencies today after this morning's LTRO, down substantially against the New Zealand, Canadian and Australian dollar. It has also lost ground against the Pound after economic data showed better than expected consumer credit and mortgage approvals data for February.
Against the U.S. dollar, the Euro has traded in a fairly tight range, between 1.3400/1.3500, Rising Portuguese bond yields have also raised concerns that the beleaguered country could well be next in line for a bailout after the ECB was said once again to be buying Portuguese bonds in an attempt to keep a lid on yields.
The Pound has continued its recent more positive tone, holding above its 200 day MA at 1.5905 and looking set to head towards the 1.6080 area.
The U.S. dollar from being fairly flat on the day, caught a late bid tone on the back of Bernanke's comments about the inflationary effect of higher gas prices.
Gold prices from being initially bid slipped back sharply from their session highs after comments from Fed chairman Bernanke suggested that the Fed wasn't looking at further QE in the near term.
Oil prices on the other hand have remained underpinned on the back of the more positive US data, with Brent prices set to post their best month since last October.
WTI prices slipped back from their highs in the afternoon after U.S. inventories came in above expectations at 4.16m barrels, well above last week's 1.6m barrels.
Feb
29th
Gold Falls 3% in an Hour Following Bernanke Comments, Iran Trading with Universal Currency Gold, Next Target for Silver is Septe
By Ben Traynor (Bullion Vault)
Wholesale Gold Bullion prices dropped 3.2% to
$1727 per ounce in less than an hour Wednesday afternoon in London,
after US Federal Reserve chairman Ben Bernanke appeared before
Congress.
Higher gasoline prices are "likely to push up inflation temporarily while reducing consumers' purchasing power," Bernanke told the House Financial Services Committee.
Bernanke's comments "eased speculation the central bank is moving closer to providing more monetary stimulus," news agency Bloomberg reports.
The Fed chairman added however that the Fed's policymakers judge "that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives" of the Fed's mandate, namely price stability and employment.
Earlier in the day, gold prices hovered around $1785 an ounce Wednesday morning London time, while stocks and commodities were also broadly flat following the European Central Bank's latest attempt to boost the liquidity held by the continent's banks.
Silver bullion meantime hit $37.36 per ounce, its highest level since last September, though they too fell following Bernanke's comments.
"The next target [for silver] is $39.78, the September 2011 high," says the latest technical analysis from gold bullion dealing bank Scotia Mocatta.
Wednesday's London Fix price for silver was $37.23 per ounce – a 10.8% monthly gain over the January 31 fixing. By this fix-to-fix measure, the Dollar silver price has seen its biggest calendar month percentage gain since October. Sterling and Euro silver prices have both recorded their biggest calendar month gains since last July.
Gold meantime touched $1790 per ounce for the first time since November during Wednesday's Asian trade. At Wednesday lunchtime, before Bernanke's testimony, spot gold in Dollars looked to be headed for a monthly gain of 2.8%.
A total of 800 European banks borrowed €529.53 billion from the ECB's three year longer term refinancing operation, the ECB announced Wednesday. This compares with 523 banks who borrowed €489.19 billion at the last 3-Year LTRO in December.
In addition to the increased amount of borrowing, analysts estimate that a greater proportion will be so-called new liquidity – as opposed to existing debt that has been rolled over.
"The number of banks participating...signals that a lot more small banks looked for the money and it is likely they will pass it on to the economy," reckons Laurent Fransolet, London-based head of fixed income strategy at Barclays Capital.
"So the impact may be bigger than with the first one."
However, "there is a big difference between stopping the rot and starting a recovery," says this morning's note from Standard bank currency analysts Steve Barrow and Jeremy Stevens.
"It is always possible that Eurozone politicians shy away from the tough fiscal and institutional decisions that will be required to end this crisis, if they feel that the ECB's cash is doing the job for them."
The Euro fell slightly against the Dollar immediately following the LTRO, though it recovered much of the loss by lunchtime. European stock markets barely moved, although yields on 10-Year Portuguese government bonds did start rising immediately following the news, hitting their highest level in nearly three weeks at 13.6%.
The amount borrowed by banks at the LTRO "was pretty much in line with expectations," says Tom Kendall, precious metals analyst at Credit Suisse.
"Neither gold nor [the] Euro...have done very much on the back of it after an initial reaction, as it's [already] in the price."
In London meantime, the International Swaps and Derivatives Association agreed Tuesday to adjudicate on whether or not the ongoing restructuring of privately-held Greek debt constitutes a credit event – and thus whether it should trigger payments on credit default swaps.
ISDA's Determinations Committee will meet tomorrow. If it agrees a credit event has occurred, it could trigger $3.2 billion of CDS payments, the Wall Street Journal reports.
Ireland's government announced Tuesday that it will hold a referendum on the so-called fiscal compact agreed last December by European Union members – with the exception of Britain and the Czech Republic.
Irish prime minister Enda Kenny is expected to sign the treaty when European leaders meet later this week, before trying to persuade Irish voters to approve it. Even if Ireland votes 'No', however, the treaty could still be adopted as it only needs the approval of 12 countries.
Here in the UK, seasonally adjusted M4 – the broadest measure of UK money supply – rose 1.6% in January, though the year-on-year change was a fall of 1.8%. M4 excluding intermediate 'other financial corporations' – which the bank uses to gauge the effectiveness of its quantitative easing program – saw a 1.9% s.a. monthly gain, and a 2.9% gain year-on-year.
UK mortgage approvals meantime rose to their highest level since December 2009 last month.
"It is evident that mortgage approvals are currently being lifted by first-time buyers rushing to complete before the stamp duty concession ends in March," says Howard Archer, economist at consultancy HIS Global Insight in London.
"Even so, mortgage approvals remain low compared to long-term norms."
India's economy grew at an annual rate of 6.1% in the last three months of 2011 – the slowest rate since the fourth quarter of 2008 – according to official data published Wednesday.
"India's economy was battered from all angles through the second half of 2011," says Glenn Levine, economist at Moody's Analytics, an arm of the ratings agency.
"[It was hit by] rising interest rates, falling stock prices, a plunging Rupee and weaker global demand."
India has long been the world's biggest gold consumer. In Q4, however, its gold bullion consumption was less than that of China – 173 tonnes compared to 191 tonnes, according to the latest World Gold Council data.
Sanction-hit Iran meantime will accept gold bullion as well as Dollars as payment from trading partners, the country's official Islamic Republic News Agency reports.
"This is a confirmation of gold's status as a store of value, a universal currency," says Michael Cuggino, president and portfolio manager at San Francisco-based asset managers Permanent Portfolio, which manages around $15 billion in assets.
Earlier this month, traders reported that Iran was paying for wheat with gold.
Ben Traynor
BullionVault
(c) BullionVault 2011
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it
Higher gasoline prices are "likely to push up inflation temporarily while reducing consumers' purchasing power," Bernanke told the House Financial Services Committee.
Bernanke's comments "eased speculation the central bank is moving closer to providing more monetary stimulus," news agency Bloomberg reports.
The Fed chairman added however that the Fed's policymakers judge "that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives" of the Fed's mandate, namely price stability and employment.
Earlier in the day, gold prices hovered around $1785 an ounce Wednesday morning London time, while stocks and commodities were also broadly flat following the European Central Bank's latest attempt to boost the liquidity held by the continent's banks.
Silver bullion meantime hit $37.36 per ounce, its highest level since last September, though they too fell following Bernanke's comments.
"The next target [for silver] is $39.78, the September 2011 high," says the latest technical analysis from gold bullion dealing bank Scotia Mocatta.
Wednesday's London Fix price for silver was $37.23 per ounce – a 10.8% monthly gain over the January 31 fixing. By this fix-to-fix measure, the Dollar silver price has seen its biggest calendar month percentage gain since October. Sterling and Euro silver prices have both recorded their biggest calendar month gains since last July.
Gold meantime touched $1790 per ounce for the first time since November during Wednesday's Asian trade. At Wednesday lunchtime, before Bernanke's testimony, spot gold in Dollars looked to be headed for a monthly gain of 2.8%.
A total of 800 European banks borrowed €529.53 billion from the ECB's three year longer term refinancing operation, the ECB announced Wednesday. This compares with 523 banks who borrowed €489.19 billion at the last 3-Year LTRO in December.
In addition to the increased amount of borrowing, analysts estimate that a greater proportion will be so-called new liquidity – as opposed to existing debt that has been rolled over.
"The number of banks participating...signals that a lot more small banks looked for the money and it is likely they will pass it on to the economy," reckons Laurent Fransolet, London-based head of fixed income strategy at Barclays Capital.
"So the impact may be bigger than with the first one."
However, "there is a big difference between stopping the rot and starting a recovery," says this morning's note from Standard bank currency analysts Steve Barrow and Jeremy Stevens.
"It is always possible that Eurozone politicians shy away from the tough fiscal and institutional decisions that will be required to end this crisis, if they feel that the ECB's cash is doing the job for them."
The Euro fell slightly against the Dollar immediately following the LTRO, though it recovered much of the loss by lunchtime. European stock markets barely moved, although yields on 10-Year Portuguese government bonds did start rising immediately following the news, hitting their highest level in nearly three weeks at 13.6%.
The amount borrowed by banks at the LTRO "was pretty much in line with expectations," says Tom Kendall, precious metals analyst at Credit Suisse.
"Neither gold nor [the] Euro...have done very much on the back of it after an initial reaction, as it's [already] in the price."
In London meantime, the International Swaps and Derivatives Association agreed Tuesday to adjudicate on whether or not the ongoing restructuring of privately-held Greek debt constitutes a credit event – and thus whether it should trigger payments on credit default swaps.
ISDA's Determinations Committee will meet tomorrow. If it agrees a credit event has occurred, it could trigger $3.2 billion of CDS payments, the Wall Street Journal reports.
Ireland's government announced Tuesday that it will hold a referendum on the so-called fiscal compact agreed last December by European Union members – with the exception of Britain and the Czech Republic.
Irish prime minister Enda Kenny is expected to sign the treaty when European leaders meet later this week, before trying to persuade Irish voters to approve it. Even if Ireland votes 'No', however, the treaty could still be adopted as it only needs the approval of 12 countries.
Here in the UK, seasonally adjusted M4 – the broadest measure of UK money supply – rose 1.6% in January, though the year-on-year change was a fall of 1.8%. M4 excluding intermediate 'other financial corporations' – which the bank uses to gauge the effectiveness of its quantitative easing program – saw a 1.9% s.a. monthly gain, and a 2.9% gain year-on-year.
UK mortgage approvals meantime rose to their highest level since December 2009 last month.
"It is evident that mortgage approvals are currently being lifted by first-time buyers rushing to complete before the stamp duty concession ends in March," says Howard Archer, economist at consultancy HIS Global Insight in London.
"Even so, mortgage approvals remain low compared to long-term norms."
India's economy grew at an annual rate of 6.1% in the last three months of 2011 – the slowest rate since the fourth quarter of 2008 – according to official data published Wednesday.
"India's economy was battered from all angles through the second half of 2011," says Glenn Levine, economist at Moody's Analytics, an arm of the ratings agency.
"[It was hit by] rising interest rates, falling stock prices, a plunging Rupee and weaker global demand."
India has long been the world's biggest gold consumer. In Q4, however, its gold bullion consumption was less than that of China – 173 tonnes compared to 191 tonnes, according to the latest World Gold Council data.
Sanction-hit Iran meantime will accept gold bullion as well as Dollars as payment from trading partners, the country's official Islamic Republic News Agency reports.
"This is a confirmation of gold's status as a store of value, a universal currency," says Michael Cuggino, president and portfolio manager at San Francisco-based asset managers Permanent Portfolio, which manages around $15 billion in assets.
Earlier this month, traders reported that Iran was paying for wheat with gold.
Ben Traynor
BullionVault
(c) BullionVault 2011
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it
Feb
29th
Pre-Market and FX Commentary - 29th February
By Michael Hewson CMC Markets
In December the ECB changed the game somewhat when they announced
three year money at extremely low interest rates would be made
available to any banks who wanted it in an attempt to avert a
funding crunch, in an attempt to drive sovereign bond yields back
lower, and relieve a blockage in the European banking system’s
credit channels.
European banks didn’t need asking twice as they pounced en masse and hoovered up €489bn of loans with 523 banks taking part.
The equity market rally since then, as well as falling bond yields, suggests that those actions had the required effect, and expectations surrounding today’s latest LTRO results are likely to be slanted towards a similar take up, in the manner of an addict getting his latest fix.
The key questions today will be how big this LTRO will be, and how will it affect the markets because there is certainly no evidence that the extra money is finding its way into the European economy. If the LTRO has a low take-up this could well be seen as a positive in that banks haven’t felt the need to use the facility, while a similar figure to the first one could well be broadly neutral.
In any case it remains hard to gauge given that if banks are given what looks tantamount a pass to some free money, they’ll take it whether they need it or not.
Early evidence from the first LTRO suggests that a lot of banks are parking the money at the ECB, though some Spanish and Italian banks are playing the carry trade by buying up more of their government’s sovereign debt, hence the drop in yields, and the ECB has certainly been less active with its SMP program as this latest LTRO comes into view, though its balance sheet has ballooned in size.
Germany’s unemployment rate is expected to remain constant at 6.7%, a 22 year low, with a net reduction in claims of 5k, as the unemployment numbers in Europe’s largest economy continue to move in the opposite direction to the rest of Europe.
In the UK the latest consumer credit figures could well surprise to the upside given the recent recovery in the retail sales numbers on the high street, in the past couple of months. Expectations are for a rise of £200m, up from a decline in December of £400m, while mortgage approvals are also expected to rise to 54k from 52.9k. This mornings February Gfk consumer confidence numbers rather strangely given the recent recovery in retail sales don’t point to an improved mood on the part of the UK consumer, coming in unchanged from January’s -29 reading.
In the U.S. the latest Q4 GDP numbers are expected to be confirmed at 2.8%, while the key event is likely to be Fed Chairman Bernanke’s semi-annual testimony to the monetary policy committee. Anyone looking for clues about further policy stimulus is likely to be disappointed with the Chairman unlikely to deviate from the tone of his previous public statements this year. Further easing is likely to remain extremely difficult ahead of the election and is unlikely to happen, though Bernanke’s tone is likely to continue to keep the market guessing.
Economic activity in the Fed regions will also come under scrutiny when the Fed releases its Beige book of economic activity over the past month.
EURUSD – yesterday’s slide lower once again caught a few bids below the 1.3400 level before rebounding, but it continues to be capped by the 1.3480/90 area for now. Above the 1.3490 level negates Monday’s mildly bearish candle pattern and argues 1.3630. Any move lower needs to hold above support between 1.3300 and 1.3320 which had until recently been a solid top, for a bounce back towards this week’s highs. Only a move back below here argues for a move back down to 1.3180, and then the 1.3000 level.
GBPUSD – the 200 day MA at 1.5905 continues to act as the key pivot to the next movement up or down. This remains the key barrier to any further gains and it needs a daily close beyond here to target a move towards 1.6080. Also the previous reaction high remains a key level at 1.5935/40. Pullbacks should fund support around 1.5820 and 1.5720 while the 55 day MA at 1.5620 remains a key support along with the February lows at 1.5645.
EURGBP –the 0.8500 level continues to hold on the upside as the single currency starts to tread water near its recent range highs. If we get through 0.8500 then a spill over to 0.8550 cannot be ruled out which is 38.2% retracement of the 0.9085/0.8220 down move. The recent range highs in January at 0.8420/30 should act as significant support on the downside Only a move below the 0.8400 level and previous highs opens up a retest of the old pivot at 0.8340, while a move below that retargets the 0.8270/80 range lows.
USDJPY – the U.S. dollar while it has slipped back continues to hold above 80.00 after the 8 month high at 81.62 seen earlier this week. The 82.85 area remains the next target being the 38.2% retracement of the entire down move from the 95.00 highs to the all time lows at 75.30. We could get a pullback to 79.20 without damaging the current upward momentum but we need to see a close above the weekly Ichimoku cloud resistance at 81.00 to reinforce the case for further gains. Below 79.20 argues for a deeper move towards the 78.20 level, and undermines the bullish scenario.
European banks didn’t need asking twice as they pounced en masse and hoovered up €489bn of loans with 523 banks taking part.
The equity market rally since then, as well as falling bond yields, suggests that those actions had the required effect, and expectations surrounding today’s latest LTRO results are likely to be slanted towards a similar take up, in the manner of an addict getting his latest fix.
The key questions today will be how big this LTRO will be, and how will it affect the markets because there is certainly no evidence that the extra money is finding its way into the European economy. If the LTRO has a low take-up this could well be seen as a positive in that banks haven’t felt the need to use the facility, while a similar figure to the first one could well be broadly neutral.
In any case it remains hard to gauge given that if banks are given what looks tantamount a pass to some free money, they’ll take it whether they need it or not.
Early evidence from the first LTRO suggests that a lot of banks are parking the money at the ECB, though some Spanish and Italian banks are playing the carry trade by buying up more of their government’s sovereign debt, hence the drop in yields, and the ECB has certainly been less active with its SMP program as this latest LTRO comes into view, though its balance sheet has ballooned in size.
Germany’s unemployment rate is expected to remain constant at 6.7%, a 22 year low, with a net reduction in claims of 5k, as the unemployment numbers in Europe’s largest economy continue to move in the opposite direction to the rest of Europe.
In the UK the latest consumer credit figures could well surprise to the upside given the recent recovery in the retail sales numbers on the high street, in the past couple of months. Expectations are for a rise of £200m, up from a decline in December of £400m, while mortgage approvals are also expected to rise to 54k from 52.9k. This mornings February Gfk consumer confidence numbers rather strangely given the recent recovery in retail sales don’t point to an improved mood on the part of the UK consumer, coming in unchanged from January’s -29 reading.
In the U.S. the latest Q4 GDP numbers are expected to be confirmed at 2.8%, while the key event is likely to be Fed Chairman Bernanke’s semi-annual testimony to the monetary policy committee. Anyone looking for clues about further policy stimulus is likely to be disappointed with the Chairman unlikely to deviate from the tone of his previous public statements this year. Further easing is likely to remain extremely difficult ahead of the election and is unlikely to happen, though Bernanke’s tone is likely to continue to keep the market guessing.
Economic activity in the Fed regions will also come under scrutiny when the Fed releases its Beige book of economic activity over the past month.
EURUSD – yesterday’s slide lower once again caught a few bids below the 1.3400 level before rebounding, but it continues to be capped by the 1.3480/90 area for now. Above the 1.3490 level negates Monday’s mildly bearish candle pattern and argues 1.3630. Any move lower needs to hold above support between 1.3300 and 1.3320 which had until recently been a solid top, for a bounce back towards this week’s highs. Only a move back below here argues for a move back down to 1.3180, and then the 1.3000 level.
GBPUSD – the 200 day MA at 1.5905 continues to act as the key pivot to the next movement up or down. This remains the key barrier to any further gains and it needs a daily close beyond here to target a move towards 1.6080. Also the previous reaction high remains a key level at 1.5935/40. Pullbacks should fund support around 1.5820 and 1.5720 while the 55 day MA at 1.5620 remains a key support along with the February lows at 1.5645.
EURGBP –the 0.8500 level continues to hold on the upside as the single currency starts to tread water near its recent range highs. If we get through 0.8500 then a spill over to 0.8550 cannot be ruled out which is 38.2% retracement of the 0.9085/0.8220 down move. The recent range highs in January at 0.8420/30 should act as significant support on the downside Only a move below the 0.8400 level and previous highs opens up a retest of the old pivot at 0.8340, while a move below that retargets the 0.8270/80 range lows.
USDJPY – the U.S. dollar while it has slipped back continues to hold above 80.00 after the 8 month high at 81.62 seen earlier this week. The 82.85 area remains the next target being the 38.2% retracement of the entire down move from the 95.00 highs to the all time lows at 75.30. We could get a pullback to 79.20 without damaging the current upward momentum but we need to see a close above the weekly Ichimoku cloud resistance at 81.00 to reinforce the case for further gains. Below 79.20 argues for a deeper move towards the 78.20 level, and undermines the bullish scenario.
Feb
28th
Market Wrap - 28th February
By Michael Hewson CMC Markets
European markets have traded in a fairly benign fashion today. This
comes despite some rather mixed economic data, last night’s
Greece downgrade and an announcement by Ireland
that the new fiscal compact would require a referendum.
Attention seems to be focussed on tomorrow’s announcement of the latest LTRO from the ECB, with high expectations of a significant take-up.
The best performing sector has been the technology sector. Sage Group (SGE LN) and ARM Holdings (ARM LN) have pushed higher, as Apple shares hit record highs in New York. Interesting to note that the best performing share was yesterday’s worst performing one, with Essar Energy (ESSR LN) bouncing back.
The worst performer has been automotive engineer GKN (GKN LN) despite hiking its dividend by 20% and announcing an increase in profits, though tough trading conditions in its aerospace division did act as a drag. Weir Group (WEIR LN) was also a drag dropping ahead of its results later this week.
U.S. markets opened near the flat line after U.S. durable goods for January slumped 4%, well below expectations of a 1% decline. Demand for all manner of goods slid back sharply, marking the biggest one month drop in three years. Auto orders did rise but they were the only bright spot. Consumer confidence data for February made up for the bad news by coming in well above expectations at 70.8, contrasting with January’s larger than expected monthly fall. Housing prices also disappointed with the Case-Shiller Index falling 1.1% in December.
Apple shares continue their upwards momentum hitting new all-time highs ahead of next week’s iPad3 launch in New York.
The Norwegian Krone has continued its recent positive momentum despite speculation that the central bank could cut interest rates to dampen speculative inflows. Room for manoeuvre would appear to be limited, however, given the potential bubble in Norway’s housing market.
The Euro has had a fairly positive bias for most of the day after mixed economic data and a successful Italian bond auction, while news that Ireland looks set to call a referendum on the new fiscal compact, sent it sharply lower before recovering.
The Pound has had a rather indifferent day despite CBI retail sales numbers for January coming in well above expectations, at -2, in line with the official figures that we saw earlier this month.
Oil prices have continued their slightly softer tone today; however, downside has been somewhat limited as economic data has remained mixed.
Gold and silver prices have also jumped sharply as speculation rises that tomorrow’s LTRO from the ECB will prompt another liquidity spike and further currency debasement.
Copper prices have risen sharply ahead of some key China manufacturing data later this week
Attention seems to be focussed on tomorrow’s announcement of the latest LTRO from the ECB, with high expectations of a significant take-up.
The best performing sector has been the technology sector. Sage Group (SGE LN) and ARM Holdings (ARM LN) have pushed higher, as Apple shares hit record highs in New York. Interesting to note that the best performing share was yesterday’s worst performing one, with Essar Energy (ESSR LN) bouncing back.
The worst performer has been automotive engineer GKN (GKN LN) despite hiking its dividend by 20% and announcing an increase in profits, though tough trading conditions in its aerospace division did act as a drag. Weir Group (WEIR LN) was also a drag dropping ahead of its results later this week.
U.S. markets opened near the flat line after U.S. durable goods for January slumped 4%, well below expectations of a 1% decline. Demand for all manner of goods slid back sharply, marking the biggest one month drop in three years. Auto orders did rise but they were the only bright spot. Consumer confidence data for February made up for the bad news by coming in well above expectations at 70.8, contrasting with January’s larger than expected monthly fall. Housing prices also disappointed with the Case-Shiller Index falling 1.1% in December.
Apple shares continue their upwards momentum hitting new all-time highs ahead of next week’s iPad3 launch in New York.
The Norwegian Krone has continued its recent positive momentum despite speculation that the central bank could cut interest rates to dampen speculative inflows. Room for manoeuvre would appear to be limited, however, given the potential bubble in Norway’s housing market.
The Euro has had a fairly positive bias for most of the day after mixed economic data and a successful Italian bond auction, while news that Ireland looks set to call a referendum on the new fiscal compact, sent it sharply lower before recovering.
The Pound has had a rather indifferent day despite CBI retail sales numbers for January coming in well above expectations, at -2, in line with the official figures that we saw earlier this month.
Oil prices have continued their slightly softer tone today; however, downside has been somewhat limited as economic data has remained mixed.
Gold and silver prices have also jumped sharply as speculation rises that tomorrow’s LTRO from the ECB will prompt another liquidity spike and further currency debasement.
Copper prices have risen sharply ahead of some key China manufacturing data later this week
Feb
28th
Silver Hits 5-Month High with Gold In Consolidation Period
By Ben Traynor (Bullion Vault)
Spot market gold prices climbed to $1781 an ounce
Tuesday lunchtime in London – 0.3% off last week's high – while
stock markets gained along with the Euro, as European leaders
postponed a decision on whether to increase the size of the single
currency's bailout fund.
Commodities were mixed, while longer-dated UK and German government bonds ticked higher.
Silver prices meantime moved above $36 per ounce for the first time since last September.
"Flow wise it has been a quiet day," said one Hong Kong bullion dealer this morning. "Silver seems to be the most firm amongst all [the precious metals]"
Gold prices "may be entering a period of consolidation," says a note from HSBC. "The inability of the market to clear the November 8 high of $1803 an ounce is leading to light profit-taking."
"$1800 will be a key resistance level for the time being," adds Li Ning, analyst at CIFCO Futures in Shaghai.
"[Though] as long as central banks around the world lean towards further easing, gold will rise further."
European leaders have postponed a decision on whether to increase the size of the €500 billion European Stability mechanism – the Eurozone's permanent bailout mechanism due to be launched in July. Eurozone leaders were expected to announce a decision on Friday afternoon, following the weekend's G20 meeting at which international policymakers urged Europe to do more.
"There is no need now for a debate on increasing the [ESM's] capacity," said German chancellor Angela Merkel on Monday, ahead of the German parliament's vote on whether to approve last week's Greek bailout deal.
The Bundestag yesterday voted to ratify the bailout agreement – although 17 members of Merkel's coalition government opposed the decision.
In her comments on Monday, Merkel cited falling borrowing costs for Italy and Spain as one reason the Eurozone does not require a larger bailout mechanism.
Yields on Italian and Spanish government debt traded on the open market have fallen steadily since the end of last year. They have remained low despite the ECB conducting no bond purchases over the past fortnight. The ECB set up its Securities Market Programme in 2010 to support distressed government bond prices on the open market, extending the SMP to Italy and Spain last August.
On Tuesday, Italy's government saw its borrowing costs fall further when it sold €6.25 billion of 5-Year and 10-Year bonds. The average yield on 10-Year bonds was 5.5% – down from 6.08% at the last 10-Year auction on January 30 and its lowest level since last September.
Spanish and Italian banks bought record amounts of their own governments' debt in January, the Financial Times reports, citing European Central Bank data published Monday. Banks from Spain and Italy were among the heaviest borrowers at the ECB's three-year longer term refinancing operation in December, which saw €489 billion borrowed by the continent's financial institutions.
The ECB's second 3-Year LTRO begins today, with several analysts forecasting similar levels of borrowing will be announced tomorrow.
"Investors are positioning for a huge pick-up in the LTRO, especially from the Italian and Spanish banks," says Alessandro Giansanti, senior rates strategist at ING Groep in Amsterdam.
"In the short term, the LTRO operation should be risk- and Euro-supportive," adds Jeremy Stretch, London-based head of currency strategy at Canadian Imperial Bank of Commerce.
"The liquidity that the operations have injected into the market has reduced some of the solvency fears, particularly in the European banking market, and that's provided a much better risk environment."
However, "the markets are well aware of what the ECB is going to do," argues Daniel Brebner, head of metals research at Deutsche Bank.
"I don't think it is likely to act as a further catalyst for strengthening gold prices...in the near term, I'm more inclined to sell into this strength."
ECB Governing Council member and governor of Austria's central bank Ewald Nowotny said on Monday that the LTRO should not be viewed as a regular feature of ECB policy.
"If number one was a success and number two was a success, that doesn't mean there has to be number three," he said.
Greece meantime was placed in 'selective default' by ratings agency Standard & Poor's Tuesday, as the restructuring of its debts held by private sector creditors continued.
Representatives of private sector creditors have agreed to take haircuts equivalent to an estimated 75% of the value of their Greek bonds. So-called collective action clauses, applied retroactively, have compelled all private sector bondholders to go along with the agreement.
"[This] constitutes the launch of what we consider to be a distressed debt restructuring," said S&P. "We believe the retroactive insertion of CACs will diminish bondholders' bargaining power in an upcoming debt exchange."
Despite its move, S&P says it will likely raise Greece's rating again once the restructuring is complete.
Gold investment demand helped jewelry sales in China rise 42% in 2011, China Daily reports, citing data from China's National Bureau of Statistics.
"China's jewelry sector has become a hot spot fueled by surging investment demand for gold and precious stones," it quotes Jiang Wenwei, senior analyst with US consultancy Frost and Sullivan.
"While the future for the stock market and housing sector still looks gloomy, more investors purchased gold to maintain or increase its value."
Ben Traynor
BullionVault
(c) BullionVault 2011
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it
Commodities were mixed, while longer-dated UK and German government bonds ticked higher.
Silver prices meantime moved above $36 per ounce for the first time since last September.
"Flow wise it has been a quiet day," said one Hong Kong bullion dealer this morning. "Silver seems to be the most firm amongst all [the precious metals]"
Gold prices "may be entering a period of consolidation," says a note from HSBC. "The inability of the market to clear the November 8 high of $1803 an ounce is leading to light profit-taking."
"$1800 will be a key resistance level for the time being," adds Li Ning, analyst at CIFCO Futures in Shaghai.
"[Though] as long as central banks around the world lean towards further easing, gold will rise further."
European leaders have postponed a decision on whether to increase the size of the €500 billion European Stability mechanism – the Eurozone's permanent bailout mechanism due to be launched in July. Eurozone leaders were expected to announce a decision on Friday afternoon, following the weekend's G20 meeting at which international policymakers urged Europe to do more.
"There is no need now for a debate on increasing the [ESM's] capacity," said German chancellor Angela Merkel on Monday, ahead of the German parliament's vote on whether to approve last week's Greek bailout deal.
The Bundestag yesterday voted to ratify the bailout agreement – although 17 members of Merkel's coalition government opposed the decision.
In her comments on Monday, Merkel cited falling borrowing costs for Italy and Spain as one reason the Eurozone does not require a larger bailout mechanism.
Yields on Italian and Spanish government debt traded on the open market have fallen steadily since the end of last year. They have remained low despite the ECB conducting no bond purchases over the past fortnight. The ECB set up its Securities Market Programme in 2010 to support distressed government bond prices on the open market, extending the SMP to Italy and Spain last August.
On Tuesday, Italy's government saw its borrowing costs fall further when it sold €6.25 billion of 5-Year and 10-Year bonds. The average yield on 10-Year bonds was 5.5% – down from 6.08% at the last 10-Year auction on January 30 and its lowest level since last September.
Spanish and Italian banks bought record amounts of their own governments' debt in January, the Financial Times reports, citing European Central Bank data published Monday. Banks from Spain and Italy were among the heaviest borrowers at the ECB's three-year longer term refinancing operation in December, which saw €489 billion borrowed by the continent's financial institutions.
The ECB's second 3-Year LTRO begins today, with several analysts forecasting similar levels of borrowing will be announced tomorrow.
"Investors are positioning for a huge pick-up in the LTRO, especially from the Italian and Spanish banks," says Alessandro Giansanti, senior rates strategist at ING Groep in Amsterdam.
"In the short term, the LTRO operation should be risk- and Euro-supportive," adds Jeremy Stretch, London-based head of currency strategy at Canadian Imperial Bank of Commerce.
"The liquidity that the operations have injected into the market has reduced some of the solvency fears, particularly in the European banking market, and that's provided a much better risk environment."
However, "the markets are well aware of what the ECB is going to do," argues Daniel Brebner, head of metals research at Deutsche Bank.
"I don't think it is likely to act as a further catalyst for strengthening gold prices...in the near term, I'm more inclined to sell into this strength."
ECB Governing Council member and governor of Austria's central bank Ewald Nowotny said on Monday that the LTRO should not be viewed as a regular feature of ECB policy.
"If number one was a success and number two was a success, that doesn't mean there has to be number three," he said.
Greece meantime was placed in 'selective default' by ratings agency Standard & Poor's Tuesday, as the restructuring of its debts held by private sector creditors continued.
Representatives of private sector creditors have agreed to take haircuts equivalent to an estimated 75% of the value of their Greek bonds. So-called collective action clauses, applied retroactively, have compelled all private sector bondholders to go along with the agreement.
"[This] constitutes the launch of what we consider to be a distressed debt restructuring," said S&P. "We believe the retroactive insertion of CACs will diminish bondholders' bargaining power in an upcoming debt exchange."
Despite its move, S&P says it will likely raise Greece's rating again once the restructuring is complete.
Gold investment demand helped jewelry sales in China rise 42% in 2011, China Daily reports, citing data from China's National Bureau of Statistics.
"China's jewelry sector has become a hot spot fueled by surging investment demand for gold and precious stones," it quotes Jiang Wenwei, senior analyst with US consultancy Frost and Sullivan.
"While the future for the stock market and housing sector still looks gloomy, more investors purchased gold to maintain or increase its value."
Ben Traynor
BullionVault
(c) BullionVault 2011
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it
Feb
28th
Pre-Market and FX Commentary - 28th February
By Michael Hewson CMC Markets
Greece made history yesterday as the first ever
Eurozone nation to be officially rated as defaulting on its debts,
after ratings agency Standard and Poor’s put the
country on a “SD” rating, (selective default) in
the wake of the insertion of the collection action clauses, in the
latest bond swap package.
The market’s reaction was one of complete indifference, such is the reality of life in this latest, but not unexpected twist in what has become the almost everyday routine of the European debt crisis.
Standard and Poor’s also put the rating of the bailout fund the EFSF on a negative outlook, in line with its ratings on France and Austria.
The German parliament also voted through the latest Greece bailout package with Angela Merkel warning of doom and gloom if the bill wasn’t passed. The old line of “if the euro fails then the EU fails” was given its customary airing by the German leader while she also pushed back on G20 and IMF demands to boost the new bailout fund, saying it was not necessary.
Even though this bailout made it through the German parliament it is becoming very apparent that the German public is losing faith in the current bailout policy, and politicians worried about re-election could well start to reflect this mood. As such the scope for further bailout cash could well be much more difficult to attain as public opinion swings against further taxpayer cash for other European countries.
After the success of the German vote it is the turn of the Finnish parliament to debate the bailout package followed by a vote tomorrow.
In economic data due out this morning there is the latest German inflation numbers with CPI for February expected to slip back slightly from 2.3% to 2.2%, while German Gfk consumer confidence for March is expected to pick up slightly from 5.9 to 6.
One other key outlier is an expected decision by the Irish Attorney General on whether an Irish referendum is required on the new EU fiscal compact, which if in the affirmative could well be introduce an uncertain new element into the current crisis.
Portugal is also due to publish its latest financial health check from the troika who have been assessing the country’s progress under its €78bn bailout plan.
Italy is also due to sell €6.25bn of 5 and 10 year new bonds with yields set to fall again, this time below the 6% level helped in no small part by the ECB’s LTRO program, though the effects have been more marked at the shorter end, though the 10 year is still expected to yield around 5.7%.
In the UK the latest CBI reported sales numbers for February are due out and will be of particular interest in light of January’s blow out official retail sales numbers, which caught out pretty much every analyst in the UK. Expectations are for an improvement in line with last week’s CBU data with an improvement from -22 in January to -12.
In the U.S. the latest durable goods numbers for January are expected to improve slightly from December’s 3% fall but are still expected to decline 1%. Investors will also be hoping for a pick up in consumer confidence for February, after January’s unexpected fall to 61.1 caught the market unawares, with an improvement to 63 expected.
EURUSD – yesterday’s slide lower by the single currency could signal the end of the current rally with a tweezers top at 1.3480 and a potential dark cloud cover daily candle reversal. Above 1.3490 negates the pattern and argues 1.3630. Any move lower needs to hold above support between 1.3300 and 1.3320 which had until recently been a solid top, for a bounce back towards this week’s highs. Only a move back below here argues for a move back down to 1.3180, and then the 1.3000 level.
GBPUSD – another failure at the 200 day MA at 1.5905 has seen the cable slide back lower again. This remains the key barrier to any further gains and it needs a close beyond here to target a move towards 1.6080. Also the previous reaction high remains a key level at 1.5935. Pullbacks should fund support around 1.5820 and 1.5720 while the 55 day MA at 1.5620 remains a key support along with the February lows at 1.5645.
EURGBP –the 0.8500 level continues to hold back the current rebound as the single currency starts to lose some momentum. If we get through 0.8500 then a spill over to 0.8550 cannot be ruled out which is 38.2% retracement of the 0.9085/0.8220 down move. The recent range highs at 0.8420/30 should now act as significant support on the downside Only a move below the 0.8400 level and previous highs opens up a retest of the old pivot at 0.8340, while a move below that retargets the 0.8270/80 range lows
USDJPY – the U.S. dollar after making an 8 month high at 81.62 slipped back sharply touching 80.05 before rebounding. The 82.85 area remains the next target being the 38.2% retracement of the entire down move from the 95.00 highs to the all time lows at 75.30. We could get a pullback to 79.20 without damaging the current upward momentum but we need to see a close above the weekly Ichimoku cloud resistance at 81.00 to reinforce the case for further gains. Below 79.20 argues for a deeper move towards the 78.20 level, and undermines the bullish scenario.
The market’s reaction was one of complete indifference, such is the reality of life in this latest, but not unexpected twist in what has become the almost everyday routine of the European debt crisis.
Standard and Poor’s also put the rating of the bailout fund the EFSF on a negative outlook, in line with its ratings on France and Austria.
The German parliament also voted through the latest Greece bailout package with Angela Merkel warning of doom and gloom if the bill wasn’t passed. The old line of “if the euro fails then the EU fails” was given its customary airing by the German leader while she also pushed back on G20 and IMF demands to boost the new bailout fund, saying it was not necessary.
Even though this bailout made it through the German parliament it is becoming very apparent that the German public is losing faith in the current bailout policy, and politicians worried about re-election could well start to reflect this mood. As such the scope for further bailout cash could well be much more difficult to attain as public opinion swings against further taxpayer cash for other European countries.
After the success of the German vote it is the turn of the Finnish parliament to debate the bailout package followed by a vote tomorrow.
In economic data due out this morning there is the latest German inflation numbers with CPI for February expected to slip back slightly from 2.3% to 2.2%, while German Gfk consumer confidence for March is expected to pick up slightly from 5.9 to 6.
One other key outlier is an expected decision by the Irish Attorney General on whether an Irish referendum is required on the new EU fiscal compact, which if in the affirmative could well be introduce an uncertain new element into the current crisis.
Portugal is also due to publish its latest financial health check from the troika who have been assessing the country’s progress under its €78bn bailout plan.
Italy is also due to sell €6.25bn of 5 and 10 year new bonds with yields set to fall again, this time below the 6% level helped in no small part by the ECB’s LTRO program, though the effects have been more marked at the shorter end, though the 10 year is still expected to yield around 5.7%.
In the UK the latest CBI reported sales numbers for February are due out and will be of particular interest in light of January’s blow out official retail sales numbers, which caught out pretty much every analyst in the UK. Expectations are for an improvement in line with last week’s CBU data with an improvement from -22 in January to -12.
In the U.S. the latest durable goods numbers for January are expected to improve slightly from December’s 3% fall but are still expected to decline 1%. Investors will also be hoping for a pick up in consumer confidence for February, after January’s unexpected fall to 61.1 caught the market unawares, with an improvement to 63 expected.
EURUSD – yesterday’s slide lower by the single currency could signal the end of the current rally with a tweezers top at 1.3480 and a potential dark cloud cover daily candle reversal. Above 1.3490 negates the pattern and argues 1.3630. Any move lower needs to hold above support between 1.3300 and 1.3320 which had until recently been a solid top, for a bounce back towards this week’s highs. Only a move back below here argues for a move back down to 1.3180, and then the 1.3000 level.
GBPUSD – another failure at the 200 day MA at 1.5905 has seen the cable slide back lower again. This remains the key barrier to any further gains and it needs a close beyond here to target a move towards 1.6080. Also the previous reaction high remains a key level at 1.5935. Pullbacks should fund support around 1.5820 and 1.5720 while the 55 day MA at 1.5620 remains a key support along with the February lows at 1.5645.
EURGBP –the 0.8500 level continues to hold back the current rebound as the single currency starts to lose some momentum. If we get through 0.8500 then a spill over to 0.8550 cannot be ruled out which is 38.2% retracement of the 0.9085/0.8220 down move. The recent range highs at 0.8420/30 should now act as significant support on the downside Only a move below the 0.8400 level and previous highs opens up a retest of the old pivot at 0.8340, while a move below that retargets the 0.8270/80 range lows
USDJPY – the U.S. dollar after making an 8 month high at 81.62 slipped back sharply touching 80.05 before rebounding. The 82.85 area remains the next target being the 38.2% retracement of the entire down move from the 95.00 highs to the all time lows at 75.30. We could get a pullback to 79.20 without damaging the current upward momentum but we need to see a close above the weekly Ichimoku cloud resistance at 81.00 to reinforce the case for further gains. Below 79.20 argues for a deeper move towards the 78.20 level, and undermines the bullish scenario.
Feb
27th
Market Wrap - 27th February
By Michael Hewson CMC Markets
European markets have slipped back today as markets reacted with
disappointment to the weekend outcome of the latest G20
summit. Concerns about rising oil prices acting as a brake
on economic growth have also prompted some profit taking on the
recent rises in equity prices.
The financial sector has been the biggest faller despite HSBC (HSBA LN) reporting a 15% rise in annual profits confirming its place at the top of the global banking tree.
The key drag - as was the case with other banks who have reported in the past week - was in the investment banking division, which saw a fall in profits, largely as a result of events in Europe. The bank is the biggest faller in the sector as investors take profits on gains of over 20% since its November lows.
Other fallers today include Indian energy giant Essar Energy (ESSR LN), which saw earnings come in below expectations as the shares hit their lowest levels since its IPO in 2010. Hargreaves Lansdown (HL. LN) also took a hit on the back of a “reduce” rating from Oriel Securities.
On the plus side, BP (BP. LN) is amongst the gainers after litigation proceedings were delayed a week as the company looks to arrive at a compromise deal for compensation over the Gulf of Mexico oil spill.
Business supplies distributor Bunzl (BNZL LN) is also enjoying its day in the sun, the shares hitting record highs, after profits came in ahead of expectations.
U.S. markets followed Europe’s lead and opened lower as high oil prices start to raise concerns of demand destruction on a currently fragile global economic recovery.
German Chancellor Angela Merkel also pushed back against IMF demands that Europe put up more money towards the new bailout fund ahead of a vote in the German Bundestag on the Greek bailout. The failure of G20 policymakers to agree some form of consensus on new steps to deal with the Eurozone crisis, while not surprising, has seen investors adopt a safety first attitude.
In earnings news, home improvement retailer Lowe’s reported Q4 earnings of $0.26c a share, above expectations of $0.24c.
In economic data, U.S. pending home sales for January rose 2%, up from December’s -1.9% fall.
The Japanese yen is the biggest gainer today as it looks to post its best day in over a month after hitting a low of 81.61, its weakest level for eight months. The recent easing policy of the Bank of Japan seems to have done the trick in arresting the recent rise in the yen.
The U.S. dollar has also pulled back some ground after the weakness of recent days as the single currency has slid back despite some much better than expected auction results from Italy, Belgium and Germany.
The biggest fallers have been the Scandinavian currencies of the Norwegian and Swedish krone.
Concerns about demand destruction have seen oil prices reverse sharply today, despite geopolitical concerns in Iran continuing to underpin prices. Brent prices have risen from $111 at the beginning of February to be over 10% higher against the U.S. dollar, while also rising over 10% against the pound, and up 9% against the euro.
Comments by IMF chief Christine Lagarde about the effect of higher oil prices on global growth have also helped curtail recent gains.
Copper prices have continued their recent sideways trading range over concerns about future demand from a faltering Chinese economy.
Gold and silver prices have also stuttered against a rebounding U.S. dollar, with silver prices sliding back from trend line resistance at $35.25 from the 2011 highs at $49.28.
The financial sector has been the biggest faller despite HSBC (HSBA LN) reporting a 15% rise in annual profits confirming its place at the top of the global banking tree.
The key drag - as was the case with other banks who have reported in the past week - was in the investment banking division, which saw a fall in profits, largely as a result of events in Europe. The bank is the biggest faller in the sector as investors take profits on gains of over 20% since its November lows.
Other fallers today include Indian energy giant Essar Energy (ESSR LN), which saw earnings come in below expectations as the shares hit their lowest levels since its IPO in 2010. Hargreaves Lansdown (HL. LN) also took a hit on the back of a “reduce” rating from Oriel Securities.
On the plus side, BP (BP. LN) is amongst the gainers after litigation proceedings were delayed a week as the company looks to arrive at a compromise deal for compensation over the Gulf of Mexico oil spill.
Business supplies distributor Bunzl (BNZL LN) is also enjoying its day in the sun, the shares hitting record highs, after profits came in ahead of expectations.
U.S. markets followed Europe’s lead and opened lower as high oil prices start to raise concerns of demand destruction on a currently fragile global economic recovery.
German Chancellor Angela Merkel also pushed back against IMF demands that Europe put up more money towards the new bailout fund ahead of a vote in the German Bundestag on the Greek bailout. The failure of G20 policymakers to agree some form of consensus on new steps to deal with the Eurozone crisis, while not surprising, has seen investors adopt a safety first attitude.
In earnings news, home improvement retailer Lowe’s reported Q4 earnings of $0.26c a share, above expectations of $0.24c.
In economic data, U.S. pending home sales for January rose 2%, up from December’s -1.9% fall.
The Japanese yen is the biggest gainer today as it looks to post its best day in over a month after hitting a low of 81.61, its weakest level for eight months. The recent easing policy of the Bank of Japan seems to have done the trick in arresting the recent rise in the yen.
The U.S. dollar has also pulled back some ground after the weakness of recent days as the single currency has slid back despite some much better than expected auction results from Italy, Belgium and Germany.
The biggest fallers have been the Scandinavian currencies of the Norwegian and Swedish krone.
Concerns about demand destruction have seen oil prices reverse sharply today, despite geopolitical concerns in Iran continuing to underpin prices. Brent prices have risen from $111 at the beginning of February to be over 10% higher against the U.S. dollar, while also rising over 10% against the pound, and up 9% against the euro.
Comments by IMF chief Christine Lagarde about the effect of higher oil prices on global growth have also helped curtail recent gains.
Copper prices have continued their recent sideways trading range over concerns about future demand from a faltering Chinese economy.
Gold and silver prices have also stuttered against a rebounding U.S. dollar, with silver prices sliding back from trend line resistance at $35.25 from the 2011 highs at $49.28.
Feb
27th
Precious Metals Under Pressure as Investors and Traders Take Breather
By Ben Traynor (Bullion Vault)
U.S. dollar prices for buying gold dropped to
$1764 an ounce Monday morning London time – a 0.5% fall from
Friday's close – while stocks, commodities and the
Euro all lost ground.
Germany's DAX index was down 1.1% by lunchtime, after G20 finance ministers over the weekend said Germany must do more towards solving the Eurozone crisis.
Prices for buying silver meantime dropped to $35.07 per ounce – a 1.1% fall on last week's close.
"Precious metals are a bit under pressure this morning," one Hong Kong bullion dealer noted, adding though that "there seems to be some decent size interest in silver".
Prices for buying gold "are taking a breather," agrees Barclays Capital, "after rallying to levels last seen over three months ago."
"There is nothing to say that gold should directionally pull back," says David Wilson, metals research and strategy director at Citigroup.
"But if it got to a lot of investors' targets, whether that was around the $1780 an ounce level we saw last week, they will take some money and wait for it to pull back before re-entering."
"Gold...is likely to bounce between $1760 and $1780," reckons Nick Trevethan, senior commodity strategist at ANZ bank in Singapore.
"The G20 added to the risk anxiety...but the eventual breakout will be towards the upside."
Eurozone leaders must do more to boost the single currency bloc's "firewall" against debt crisis contagion before asking for more International Monetary Fund assistance, according to several non-Eurozone finance ministers who met in Mexico over the weekend for a G20 meeting.
"We have to see the color of the Eurozone's money first," said UK chancellor George Osborne.
"There is broad agreement," added US Treasury secretary Timothy Geithner, "that the IMF cannot substitute for the absence of a stronger European firewall and the IMF cannot move forward without more clarity on Europe's own plans."
The Eurozone "doesn't really need any outside money," reckons Jim O'Neill, chairman of Goldman Sachs Asset Management.
"It needs [its] own policy makers, especially Germany, to show leadership."
Germany has repeatedly expressed its opposition to increasing the size of the €500 billion European Stability Mechanism which is due to become operational in July.
"We see no need to increase the upper limit of the ESM," an official close to chancellor Angela Merkel's government told newswire Reuters.
European leaders are expected to discuss the ESM at a summit this Thursday, while G20 leaders will reconvene in April to continue working towards a $2 trillion crisis-fighting package.
Germany's parliament is due to vote today on last week's Greek bailout agreement, with German finance minister Wolfgang Schaeuble noting last week that "it is possibly not the last time that the Bundestag will have to consider financial assistance for Greece".
"Don't go any further along this crazy path," urged German tabloid Bild on Monday, adding that that "[the] billions for Greece [should] stop".
At least 12 members of Merkel's coalition government are planning to rebel and vote against last week's deal, Reuters reports. If 20 or more were to rebel, Merkel would need to rely on opposition support to ratify the €130 billion second bailout deal.
Many European banks who borrowed from the European Central Bank at December's 3-Year longer term refinancing operation are using the money to refinance maturing debt rather than fund new loans to businesses, news agency Bloomberg reports.
"This will ease credit flows but won't stop the great deleveraging," says Huw van Steenis, head of EMEA banks and financials research at Morgan Stanley.
Banks borrowed €489 billion from the ECB at December's LTRO, which also saw the ECB relax its restrictions on the collateral banks can post against their borrowing. A second LTRO scheduled to begin tomorrow is expected to see a similar level of borrowing.
"Providing money so cheaply, for so long, against what is now effectively any collateral whatever, leaves the ECB in a position no central bank would choose to be in," says a note from London-based analysts at UBS.
"It cannot control the credit risk coming onto its books...worse, the success of its interventions risks encouraging politicians to avoid making necessary but difficult decisions."
"This buys time for banks," adds Stewart Robertson, London-based chief European economist at Aviva Investors, "but does it really provide them with an incentive to sort out their books? The worry is it doesn't."
Sweden's central bank on Monday denied buying gold in January, after IMF data suggested it added 18.3 tonnes to its reserves. A spokeswoman for the Riksbanks said its reserves remained unchanged at 125.7 tonnes.
Over in New York, meantime the difference between bullish and bearish contracts for buying gold held by Comex futures and options traders – the so-called speculative net long – rose by nearly 10% over the week ended last Tuesday to hit its highest level since mid-November, latest data from the Commodity Futures Trading Commission show.
"Large spec futures accounted for the lion's share of the rise...with much of the rise coming on the 21st, as the US returned from holiday and sentiment turned bullish," said a note out Sunday from precious metals consultancy VM Group
The volume of gold bullion held to back shares in the world's largest gold ETF, the SPDR Gold Trust (ticker: GLD), edge up 0.2% to 1284.6 tonnes over the course of last week to Friday.
Over the same period the world's largest Silver ETF, the iShares Silver Trust (SLV), saw its silver bullion holdings rise 1.2% to 9692.96 tonnes.
Ben Traynor
BullionVault
(c) BullionVault 2011
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it
Germany's DAX index was down 1.1% by lunchtime, after G20 finance ministers over the weekend said Germany must do more towards solving the Eurozone crisis.
Prices for buying silver meantime dropped to $35.07 per ounce – a 1.1% fall on last week's close.
"Precious metals are a bit under pressure this morning," one Hong Kong bullion dealer noted, adding though that "there seems to be some decent size interest in silver".
Prices for buying gold "are taking a breather," agrees Barclays Capital, "after rallying to levels last seen over three months ago."
"There is nothing to say that gold should directionally pull back," says David Wilson, metals research and strategy director at Citigroup.
"But if it got to a lot of investors' targets, whether that was around the $1780 an ounce level we saw last week, they will take some money and wait for it to pull back before re-entering."
"Gold...is likely to bounce between $1760 and $1780," reckons Nick Trevethan, senior commodity strategist at ANZ bank in Singapore.
"The G20 added to the risk anxiety...but the eventual breakout will be towards the upside."
Eurozone leaders must do more to boost the single currency bloc's "firewall" against debt crisis contagion before asking for more International Monetary Fund assistance, according to several non-Eurozone finance ministers who met in Mexico over the weekend for a G20 meeting.
"We have to see the color of the Eurozone's money first," said UK chancellor George Osborne.
"There is broad agreement," added US Treasury secretary Timothy Geithner, "that the IMF cannot substitute for the absence of a stronger European firewall and the IMF cannot move forward without more clarity on Europe's own plans."
The Eurozone "doesn't really need any outside money," reckons Jim O'Neill, chairman of Goldman Sachs Asset Management.
"It needs [its] own policy makers, especially Germany, to show leadership."
Germany has repeatedly expressed its opposition to increasing the size of the €500 billion European Stability Mechanism which is due to become operational in July.
"We see no need to increase the upper limit of the ESM," an official close to chancellor Angela Merkel's government told newswire Reuters.
European leaders are expected to discuss the ESM at a summit this Thursday, while G20 leaders will reconvene in April to continue working towards a $2 trillion crisis-fighting package.
Germany's parliament is due to vote today on last week's Greek bailout agreement, with German finance minister Wolfgang Schaeuble noting last week that "it is possibly not the last time that the Bundestag will have to consider financial assistance for Greece".
"Don't go any further along this crazy path," urged German tabloid Bild on Monday, adding that that "[the] billions for Greece [should] stop".
At least 12 members of Merkel's coalition government are planning to rebel and vote against last week's deal, Reuters reports. If 20 or more were to rebel, Merkel would need to rely on opposition support to ratify the €130 billion second bailout deal.
Many European banks who borrowed from the European Central Bank at December's 3-Year longer term refinancing operation are using the money to refinance maturing debt rather than fund new loans to businesses, news agency Bloomberg reports.
"This will ease credit flows but won't stop the great deleveraging," says Huw van Steenis, head of EMEA banks and financials research at Morgan Stanley.
Banks borrowed €489 billion from the ECB at December's LTRO, which also saw the ECB relax its restrictions on the collateral banks can post against their borrowing. A second LTRO scheduled to begin tomorrow is expected to see a similar level of borrowing.
"Providing money so cheaply, for so long, against what is now effectively any collateral whatever, leaves the ECB in a position no central bank would choose to be in," says a note from London-based analysts at UBS.
"It cannot control the credit risk coming onto its books...worse, the success of its interventions risks encouraging politicians to avoid making necessary but difficult decisions."
"This buys time for banks," adds Stewart Robertson, London-based chief European economist at Aviva Investors, "but does it really provide them with an incentive to sort out their books? The worry is it doesn't."
Sweden's central bank on Monday denied buying gold in January, after IMF data suggested it added 18.3 tonnes to its reserves. A spokeswoman for the Riksbanks said its reserves remained unchanged at 125.7 tonnes.
Over in New York, meantime the difference between bullish and bearish contracts for buying gold held by Comex futures and options traders – the so-called speculative net long – rose by nearly 10% over the week ended last Tuesday to hit its highest level since mid-November, latest data from the Commodity Futures Trading Commission show.
"Large spec futures accounted for the lion's share of the rise...with much of the rise coming on the 21st, as the US returned from holiday and sentiment turned bullish," said a note out Sunday from precious metals consultancy VM Group
The volume of gold bullion held to back shares in the world's largest gold ETF, the SPDR Gold Trust (ticker: GLD), edge up 0.2% to 1284.6 tonnes over the course of last week to Friday.
Over the same period the world's largest Silver ETF, the iShares Silver Trust (SLV), saw its silver bullion holdings rise 1.2% to 9692.96 tonnes.
Ben Traynor
BullionVault
(c) BullionVault 2011
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it
Feb
27th
Pre-Market and FX Commentary - 27th February
By Michael Hewson CMC Markets
This weekend’s G20 meeting in Mexico saw countries
lining up to turn the heat up on Germany to relax its opposition to
the proposed increase of the €500bn limit on the new bailout fund,
the ESM, as well as the combining of it and the remaining €250bn in
the EFSF.
There does appear to be some signs of that pressure starting to distil into a softening of this stance; after German finance minister Schaeuble said that such a move might be considered when Europe meets later this week in Brussels, after the latest vote on the Greek bailout in the German parliament.
It would appear that any offers of new IMF money appear to hinge on Europe doing more in its own right to deal with the problems on its own doorstep. The IMF has already hinted that its own contribution to the Greek bailout cannot be taken for granted if Germany continues to prevaricate about increasing the size of the firewall.
The U.S. in particular as the IMF’s biggest contributor remains implacably opposed to making further funds available to the IMF until European countries in particular; take further steps to inject more money, to boost the new firewall.
U.S. Treasury Secretary Timothy Geithner in particular urged stronger action from EU policymakers to increase the size of a firewall, completely ignoring the fact that his own central bank’s easy monetary policy is exacerbating problems in Europe as well as elsewhere in the world, keeping the US dollar near historic lows.
Germany’s reluctance to countenance such a move is underscored by today’s vote in the Bundestag which looks set to approve the Greek bailout, though concerns are now being voiced at senior government level about whether Greece should stay in the euro, with the German interior minister questioning whether Greece would be better off leaving the euro.
Greece meanwhile has set an 8th March deadline for its so called voluntary €206bn debt swap which it launched on Friday, giving banks and hedge funds a couple of weeks to mull over, with at least a participation rate of 75% needed. The offer, if accepted will cut the value of the debt by €106bn.
The recent surge in the price of oil is also a concern as it hits record highs against the pound and the euro, on the back of heightened tension in the Middle East, as well as a weak U.S. dollar. This surge in prices has raised concerns that it could choke off the recent improvement in U.S. economic data, as well as make economic conditions in Europe worse than they already are, especially in the periphery, where Greece, Spain and Italy remain particular vulnerable to the Iranian oil embargo.
EURUSD – the single currency continues to outperform moving and closing above 1.3440 which is the 50% retracement of the 1.4245/1.2625 down move, and now opens up the possibility of a deeper move towards the 61.8% level at 1.3630. Any pullbacks should now find support between 1.3300 and 1.3320 which had until recently been a solid top. Only a move back below here argues for a move back down to 1.3180, and then the 1.3000 level.
GBPUSD – last weeks cable rally once again ran into a wall at the 200 day MA now at 1.5910. A close beyond here has the potential to target a move towards 1.6080. Also the previous reaction high remains a key level at 1.5935. Pullbacks should fund support around 1.5820 and 1.5720 while the 55 day MA at 1.5620 remains a key support along with the February lows at 1.5645.
EURGBP –the 0.8500 level managed to hold back the current rebound as the single currency starts to lose some momentum. If we get through 0.8500 then a spill over to 0.8550 cannot be ruled out which is 38.2% retracement of the 0.9085/0.8220 down move. The recent range highs at 0.8420/30 should now act as significant support on the downside Only a move below the 0.8400 level and previous highs opens up a retest of the old pivot at 0.8340, while a move below that retargets the 0.8270/80 range lows
USDJPY – the U.S. dollar continues its relentless push higher towards the 82.85 area in the near term, which is a 38.2% retracement of the entire down move from the 95.00 highs to the all time lows at 75.30. The lack of any significant pullback augurs well for longer term gains, especially the weekly close above weekly Ichimoku cloud resistance for the first time since 2007. To be more confident about further gains it would be preferable to see a second weekly close above this resistance at the 81.00 level. In the last 25 years when the yen has closed above its weekly cloud it has gone on to post at least a 1000 point move higher in the ensuing months. Below 79.20 argues for a deeper move towards the 78.20 level, but the recent resilience in 10 year U.S. bond yields continues to bode well for further gains.
There does appear to be some signs of that pressure starting to distil into a softening of this stance; after German finance minister Schaeuble said that such a move might be considered when Europe meets later this week in Brussels, after the latest vote on the Greek bailout in the German parliament.
It would appear that any offers of new IMF money appear to hinge on Europe doing more in its own right to deal with the problems on its own doorstep. The IMF has already hinted that its own contribution to the Greek bailout cannot be taken for granted if Germany continues to prevaricate about increasing the size of the firewall.
The U.S. in particular as the IMF’s biggest contributor remains implacably opposed to making further funds available to the IMF until European countries in particular; take further steps to inject more money, to boost the new firewall.
U.S. Treasury Secretary Timothy Geithner in particular urged stronger action from EU policymakers to increase the size of a firewall, completely ignoring the fact that his own central bank’s easy monetary policy is exacerbating problems in Europe as well as elsewhere in the world, keeping the US dollar near historic lows.
Germany’s reluctance to countenance such a move is underscored by today’s vote in the Bundestag which looks set to approve the Greek bailout, though concerns are now being voiced at senior government level about whether Greece should stay in the euro, with the German interior minister questioning whether Greece would be better off leaving the euro.
Greece meanwhile has set an 8th March deadline for its so called voluntary €206bn debt swap which it launched on Friday, giving banks and hedge funds a couple of weeks to mull over, with at least a participation rate of 75% needed. The offer, if accepted will cut the value of the debt by €106bn.
The recent surge in the price of oil is also a concern as it hits record highs against the pound and the euro, on the back of heightened tension in the Middle East, as well as a weak U.S. dollar. This surge in prices has raised concerns that it could choke off the recent improvement in U.S. economic data, as well as make economic conditions in Europe worse than they already are, especially in the periphery, where Greece, Spain and Italy remain particular vulnerable to the Iranian oil embargo.
EURUSD – the single currency continues to outperform moving and closing above 1.3440 which is the 50% retracement of the 1.4245/1.2625 down move, and now opens up the possibility of a deeper move towards the 61.8% level at 1.3630. Any pullbacks should now find support between 1.3300 and 1.3320 which had until recently been a solid top. Only a move back below here argues for a move back down to 1.3180, and then the 1.3000 level.
GBPUSD – last weeks cable rally once again ran into a wall at the 200 day MA now at 1.5910. A close beyond here has the potential to target a move towards 1.6080. Also the previous reaction high remains a key level at 1.5935. Pullbacks should fund support around 1.5820 and 1.5720 while the 55 day MA at 1.5620 remains a key support along with the February lows at 1.5645.
EURGBP –the 0.8500 level managed to hold back the current rebound as the single currency starts to lose some momentum. If we get through 0.8500 then a spill over to 0.8550 cannot be ruled out which is 38.2% retracement of the 0.9085/0.8220 down move. The recent range highs at 0.8420/30 should now act as significant support on the downside Only a move below the 0.8400 level and previous highs opens up a retest of the old pivot at 0.8340, while a move below that retargets the 0.8270/80 range lows
USDJPY – the U.S. dollar continues its relentless push higher towards the 82.85 area in the near term, which is a 38.2% retracement of the entire down move from the 95.00 highs to the all time lows at 75.30. The lack of any significant pullback augurs well for longer term gains, especially the weekly close above weekly Ichimoku cloud resistance for the first time since 2007. To be more confident about further gains it would be preferable to see a second weekly close above this resistance at the 81.00 level. In the last 25 years when the yen has closed above its weekly cloud it has gone on to post at least a 1000 point move higher in the ensuing months. Below 79.20 argues for a deeper move towards the 78.20 level, but the recent resilience in 10 year U.S. bond yields continues to bode well for further gains.
Feb
24th
Market Wrap - 24th February
By Michael Hewson CMC Markets
Today, European markets have risen fairly strongly ahead of the
weekend, and on the back of some fairly positive from European
companies. However, the FTSE100 has lagged behind as it struggles
anywhere above the 5,950 level.
Caution appears to be the watchword ahead of this weekend's G20 meeting and residual concerns about events in Greece with doubts about the Greek bailout remain a worry.
The best performing sector has been the industrials with Weir Group (WEIR LN) leading the gainers after the company raised its offer to buy Australian equipment supplier Ludowici. GKN (GKN LN) is also higher after having its price target raised by UBS.
It's been a bit of a mixed bag for the UK market with Lloyds (LLOY LN) acting as a drag on the banking sector after posting a £3.5bn loss primarily on the back of the PPI mis-selling scandal, and near the bottom of the FTSE. On the downside, telecommunications has been the poorest performing sector with Vodafone (VOD LN) lower on the day. Broker downgrades dragged consumer goods giant Reckitt Benckiser's (RB. LN) price down as well, and in the process Unilever (ULVR LN) has followed suit.
U.S. markets opened higher but the Dow continues to flit around the 13,000 level without actually being able to significantly break away from it. Housing market data was a little disappointing with new home sales for January missing expectations, dropping 0.9%, however Michigan confidence numbers beat expectations, coming in above expectations at 75.
The U.S. dollar has continued to sink against the Euro today, with the single currency hitting its highest levels since early December, after German GDP revisions showed higher capital investment in the fourth quarter, while the declines in both imports and exports were revised lower
The Pound has also outperformed despite this morning's GDP figures being somewhat disappointing from an annual perspective. Even though the quarterly number was left unchanged at -0.2% the annual adjustment was revised lower from 0.8% to 0.7%.
The best performers have been the commodity currencies, specifically from an oil perspective with the Norwegian krone continuing to rise, along with the Swedish krone.
The Japanese yen has continued to slide against the U.S. dollar after finding its feet above the 80.00 level.
Silver has continued its march higher after breaking above its 200 day MA for the first time since September last year, while Gold continues to struggle much above the $1,780 level.
Oil prices in sterling and euro terms have slid back from the recent all-time highs but remain significantly higher on the week, as geopolitical concerns continue to keep a floor under prices.
Brent prices against the U.S. dollar continue to rise, trading around $124, and there is a concern that if they continue to do so we could well see margins start to become adversely affected and see the recovery in equity markets slam into a wall as prices eat into profits.
Caution appears to be the watchword ahead of this weekend's G20 meeting and residual concerns about events in Greece with doubts about the Greek bailout remain a worry.
The best performing sector has been the industrials with Weir Group (WEIR LN) leading the gainers after the company raised its offer to buy Australian equipment supplier Ludowici. GKN (GKN LN) is also higher after having its price target raised by UBS.
It's been a bit of a mixed bag for the UK market with Lloyds (LLOY LN) acting as a drag on the banking sector after posting a £3.5bn loss primarily on the back of the PPI mis-selling scandal, and near the bottom of the FTSE. On the downside, telecommunications has been the poorest performing sector with Vodafone (VOD LN) lower on the day. Broker downgrades dragged consumer goods giant Reckitt Benckiser's (RB. LN) price down as well, and in the process Unilever (ULVR LN) has followed suit.
U.S. markets opened higher but the Dow continues to flit around the 13,000 level without actually being able to significantly break away from it. Housing market data was a little disappointing with new home sales for January missing expectations, dropping 0.9%, however Michigan confidence numbers beat expectations, coming in above expectations at 75.
The U.S. dollar has continued to sink against the Euro today, with the single currency hitting its highest levels since early December, after German GDP revisions showed higher capital investment in the fourth quarter, while the declines in both imports and exports were revised lower
The Pound has also outperformed despite this morning's GDP figures being somewhat disappointing from an annual perspective. Even though the quarterly number was left unchanged at -0.2% the annual adjustment was revised lower from 0.8% to 0.7%.
The best performers have been the commodity currencies, specifically from an oil perspective with the Norwegian krone continuing to rise, along with the Swedish krone.
The Japanese yen has continued to slide against the U.S. dollar after finding its feet above the 80.00 level.
Silver has continued its march higher after breaking above its 200 day MA for the first time since September last year, while Gold continues to struggle much above the $1,780 level.
Oil prices in sterling and euro terms have slid back from the recent all-time highs but remain significantly higher on the week, as geopolitical concerns continue to keep a floor under prices.
Brent prices against the U.S. dollar continue to rise, trading around $124, and there is a concern that if they continue to do so we could well see margins start to become adversely affected and see the recovery in equity markets slam into a wall as prices eat into profits.
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