U.S Government Closes, 2014 Fiscal Budget Fails, USDIDX Drops to Fresh 7-month Low U.S. government goes into shutdown mode because Republicans and Democrats failed to agree on spending bill for 2014. Thousands of workers would remain home and many government services would not operate and should that continued would hurt business and consumer confidence. Moreover, could have a multiplied effect on GDP with economists projecting that a 21-day close down like the previous one, 17-year ago, could reduce the growth by 0.9-1.4%. Almost two weeks ago the Fed decided to hold its asset purchases to support weak recovery until further evidence of a sustainable growth appear and now the lawmakers seem like they live in a different country, failing to agree to fund government operations. TheUS dollar index as of writing dipped below key support at 80.00, confirming its downtrend and moving to fresh 7-month lows, with next stop likely at 79.66. Elsewhere, the RBA decided to maintain its record low key rate at 2.50% as expected, saying that a below trend growth persists as the economy adjusts to weaker mining sector, unemployment rate increased and Australian currency is still high. AUDUSD pair jumped during the Asian session from support at 0.9284 to running level now at 0.9419, underpinned by stronger Aussie Retail Sales and further lifted by greenback’s weakness. In Japan, NIKKEI 225 was rising in contrary to other global equity indices as Prime Minister Shinzo Abe said that Sales Tax would increase as planned from 5% to 8%, driving the USDJPY pair higher to cap at 98.71. The latter, was interpreted by market participants as a forward move to counter fight surging debt. However, risk averse due to U.S. failing to approve a budget for 2014 fiscal year and lower than projected Chinese Manufacturing PMI induced USDJPY pair to give back more than half of its previous gains, heading back towards 97.49 and was lastly seen at 97.98. Eyes today would be on U.S budget talks, while decision deadline to take further measures to avoid hitting Debt Ceiling looming on Oct.17. Back to today’s news European PMIs fill the European session followed by US ISM Manufacturing PMI just before US open.
Nice to see here more information about Forex.Government schemes for Forex also discus here which was beneficial for us.
Thank you for the reply Dear Jonesmith. We do our best to provide everyone with beneficial information. Keep on following our posts.
BOJ Holds Monetary Stance, NFP Could Be Delayed, GBPUSD Waving Down U.S government shut down continues for a fourth day spreading fears that Democrats and Republicans would be unable to agree on looming Debt Ceiling as well. No agreement on 2014 fiscal budget is reducing growth by 0.2% per week according to Goldman Sachs while there is an additional pressure by declining reduction as federal workers are not paid. Indirectly though economy could be further hurt by falling confidence in business and consumption. The first signal of a damaged confidence came out yesterday by falling ISM Non-Manufacturing PMI to 54.4 in September, down from 58.6 in August and lower than expected at 57.2 and that increased pressure on the greenback which was losing against its most major currency pairs. The US dollar index is steady at recent low levels near 79.60. At the same time, US Jobless Claims came out at 308K for the previous week slightly higher than two weeks ago at 307K but less than expected at 315K although did not help much thegreenback. The U.S Labor Department said the previous Friday that it would not issue NFP if the government is down and that seems the most likely scenario for today's expected news. The Bank of Japan Earlier today at its monetary statement announced that is holding its monetary policy unchanged by targeting increase of its monetary base by 60-70 trillion yen per year. Additionally the central back reiterated that is aiming at a 2% price stability target. Earlier in the week Prime Minister Shinzo Abe increased retails sales tax from 5% to 8% to fight back rising debt levels. The Yencontinue to incline against the greenback with the USDJPY plummeting to 96.92 mainly due to uncertainty over U.S. shut down and debt ceiling. Lastly, the British pound against the US dollar started a downside development which was triggered by mildly weaker than projected Halifax HPI and Services PMI released yesterday. However, the macro data do not appear so bad for the UK economy to explain that sudden reversal in sentiment while the US dollar is weaker across the board. The GBPUSD therefore is likely to have entered in longer term corrective move, in the hourly timeframe formed a double top between 1.6251/1.6161 short term range which was downwardly breached last night, the pair was lastly seen at 1.6128. We would expect a deep corrective move since the pair has been in bullish structure sine beginnings of July. The EURGBP bias swung to upside as thesterling was losing momentum while Euro was gaining momentum with the cross pair advancing by 1.27% from 0.8334 to 0.8439.
U.S Debt Ceiling Talks Eyed, Risk Appetite Squeezed as U.S Fiscal Gridlock Continues The new week starts with U.S. Government remaining closed for one week now with talks between Democrats and Republicans intensifying during the weekend. Republican House Speaker John Boehner is accusing the government for not discussing while at the same time he sets preconditions over raising debt ceiling. U.S. shut down continuation impasse is now really spreading fear among market participants who see that the same gridlock could extend to debt ceiling issue with more serious effects over financial markets. John Boehner said during the weekend that there are not enough votes in the U.S. House of Representative to approve raising borrowing limit resolution without President Barack Obama giving something in return from health care law. Investors are now seriously considering the possibility of US government defaulting on its debt payments. U.S. Treasury Secretary Jack Lew said that would exhaust all extraordinary measures to keep debt below $16.7B but on October 17 United States will run out of the ability to borrow with only $30B in hand to meet obligations that can run to $60B per day. Asian stocks dropped due to risk-off on fiscal impasse in U.S and concerns for a potential default of the largest economy in the world. NIKKEI 225 declined by 1.22% to 13,853.32 , Hang Seng lost by 0.75% and S&P/ASX 200 slipped by 0.90%. The USDJPY is retreating as traders seek for safe place to put their money and thus increasing demand for the Japanese Yen, the pair opened with a negative trading gap at 97.29 and dipped below support at 96.92 to a new monthly low at 96.88. Risk appetite was further squeezed as the World Bank cut growth forecasts for China from 8.3% the forecasted in April to 7.5% for this year, for the 2014 China is expected to grew by 7.7% down from previous estimation of 8.0%.The World Bank also reduce its growth estimation for other East Asian developing economies as well. As a consequence USDCHF fell this morning from 0.9065 to 0.9027 amid demand for Swissy increases as investors risk appetite worsens. At the same time the AUDUSD formed a reversal pattern the previous week with negative developments during the weekend triggering downside to breach support at 0.9421 and to drop as low as 0.9390, the pair is likely to continue its bearish development asU.S. fiscal and debt ceiling impasse continues.
U.S Shut Down and Debt Ceiling Still Dominate Financial Markets Like the previous days U.S government remains closed down and there has been no progress regarding debt ceiling so the situation is the same, although as we approach October 17 and nothing changes risk appetite is further squeezed. Last night S&P 500 dropped by 0.85% and Dow Jones Industrial Average declined by 0.90% reflecting sentiment worsening. Still, Asian equities recovered today after yesterday’s losing trading with NIKKEI 225 advancing by 0.30% and Hang Seng gaining by 0.93%, despite disappointing Japanese Current Account and weaker Chinese HSBC Services PMI. Japan’s current account surplus stood at ¥161.5B for August while was estimated to be at ¥520.0B and was down from ¥577.3B the previous month. The Japanese Yen weakened against the US dollar and that backed the USDJPY to surge from 96.56 to 97.15. In addition to that prices bounced up amid short covering following recent sliding to fresh lows. The US dollar index yesterday was under heavy pressure and eventually drew support line at 79.86 as budget deadlock is entering new phase after House Speaker John Boehner said that it has “no clear votes for raising debt ceiling”. That is transmitting political impasse to U.S debt ceiling issue creating possibilities that U.S could default on its obligations. Market has not priced a U.S default as most of the economists are expecting that would be resolved by end of this week, also traders would grab on any development toward resolution. Obama said yesterday that he would accept a short-term raise in borrowing limit to avoid default and perhaps that’s why the US dollar recovered back many of its Monday losses rising back to 80.00. To close, we saw the GBPUSD climbing to resistance at 1.61 yesterday and earlier today retraced mildly at 1.6074 looking ahead for the MPC rate statement on Thursday, where no monetary changes are expected by Bank of England. The EURUSD is still fluctuating between 1.3591/1.3560 sideways zone with news coming from US being the main driver.
Yellen Next Fed Chairman Raises Risk Capped by U.S Political Impasse and IMF Outlook Cut As the political standoff that drove U.S government to closure and is now threatening the world with a U.S default continues, the Japanese Yen was weakening on Barack Obama’s decision to nominate Janet Yellen to succeed Ben Bernanke at Fed’s head next year. Janet Yellen is considered quite dovish and that interpreted by market that Fed is likely to remain accommodative for a longer period, boosting demand for riskier assets and thus setting pressure on the Yen. Nonetheless, Barack Obama repeated that would talk with House speaker John Boehner after the shutdown ends and the risk of default is eliminated, though Republicans insist on spending cuts and modifications on Obamacare law. Therefore, Yellen effect on US dollar demand is capped by political impasse, even though we still expect a last minute resolution. In addition, yesterday the IMF cut growth outlook for emerging markets by 0.5% for 2013, while advanced economies outlook was mostly unchanged. Global economy growth outlook therefore downgraded to 2.9% for 2013 compared to 3.2% in July report, weakening further market sentiment. Now concerning currency moves, the greenback against its major peers was on the upside advancing from support at 79.83 to as high as 80.18, recovering to a new high of the week. The US dollar increased its value mostly against safer currencies like theJapanese Yen and the Swissy. The USDJPY climbed on Wednesday morning from 96.82 to 97.46 or by 0.66% and the USDCHFsurged from 0.9015 to 0.9077, percentagewise both currency pairs had the same increase. As of typing though, the European markets opened in red color falling by around 0.25% weighing on the common currency, thesterling and the swiss franc, ahead of British Trade Balance and German Industrial Production releases today as well as BOE MPC Statement tomorrow. The EURUSD started its downside earlier today from 1.3603 and reached as low as 1.3523, technically is bearish, heading towards 1.3506. The GBPUSD also declined from 1.6122 to 1.6030 creating a double top in the hourly and giving back all of its yesterday gains. The USDCHF rose above 0.9077 and is now outperforming the USDJPY that remained below 97.46 on European equity session open.
Thanks to share this market information with us.Government policy information is good subject in this forum.
Greenback Appreciates on Yellen, FED Minutes and Hopes of Political Break Through The greenback was gaining ground across the board against its major counterparties after Janet Yellen was nominated as the next Fed Chairman, coupled by Fed Minutes of the 17-18 September meeting and eventually there are some chances for short term deal on debt limit to avoid default. The US dollar index advanced as high as 80.55 making its biggest corrective move after a month of declines. To further look into the key drivers of FX market, we firstly consider the greenback appreciated due to uncertainty ruled out about who would succeed Ben Bernanke, despite that Janet Yellen is perceived as a dove among market participants, Secondly, the release of the minutes showed that FOMC members talked a lot about moderating asset purchases, with some suggesting tapering by a small amount to signal that Fed moves cautiously. Other members suggested tapering treasury purchases only and keeping the pace of $40B MBS purchases per month to maintain support on housing sector, eventually FOMC members voted to hold the program unchanged. Only Esther L. George voted against holding asset purchases at $85B, supporting tapering. Lastly, it was revealed that most members expect asset tapering to begin in 2013, backing greenback. Thirdly, it appears that Democrats and Republicans could agree on a shot term increase for the debt ceiling, to give more time for talks about fiscal issues. At the same time Obama invited lawmakers to the White House to resolve government shutdown. Earlier on Thursday risk appetite recovered slightly on hopes for ending US political impasse with last night US stock indices turning positive before closing. Elsewhere, the EURUSD dipped to support at 1.3486 and is now recovering back to 1.3500, the GBPUSD softened to support at 1.5920 and remains steady slightly above that level ahead of BOE decision, no change is expected. The USDJPY breached resistance at 97.46 and climbed to 97.82 limited by falling trend line as recent stronger Japanese data improved risk sentiment and thus weakenedYen. Lastly, the Aussie against the US dollar dropped to 0.9388 as the greenback strengthened but earlier today release of unemployment rate unexpectedly falling to 5.6% supported the pair which was lastly seen approaching 0.9420.
Failure to Break Political Gridlock Raises Risk of US Default, Nearing Deadline of Oct. 17 Risk appetite is fading as US lawmakers failed to agree on Saturday on extending the upper limit of the US debt above $16.7T. Christine Lagarde, head of IMF warned for a “massive disruption” to the global financial markets and real economy if the borrowing limit is not raised before the 17th of October. On Friday, market participants saw White House meeting and talks over a short-term deal optimistically with global indices rising substantially however as talks failed during the weekend risk sentiment weighed. The S&P/ASX 200 declined by 0.44% while NIKKEI 225 is closed today on Health Sports Day. Moreover, the Senate and the House are still going to meet today on Columbus Day and US is on holiday, however hopes for resolution are weak amid Republicans have the majority of votes in the House and their conservatives are not willing to make any concessions to Barack Obama. The greenback lost against its major counterparties on FX market open this week but in overall we would expect demand for the US dollar to increase as the risk averse deepens before Oct.17. However, failure to raise debt limit until Oct.17 would bring decisions to downgrade US credit outlook by major credit rating agencies and perhaps biggest creditors of USA would attempt to sell US assets and abandon US dollar reserves, setting a great selling pressure on the US dollar. Earlier today the US dollar index plunged slightly near support at 80.21 and is currently consolidating there. The Japanese Yen strengthened mildly contra US dollar, with the USDJPY falling to support at 98.18 as investors are seeking a safer place for their money. At the same time despite falling Chinese exports by -0.3% while was expected to increase by 5.5%, decreasing Trade surplus to $15.21B for September from $28.50 the previous month, the Aussie opposed to US dollar dipped at 0.9432 at the open but then soared to 0.9472. TheAUDUSD holds well in 0.9485/0.9432 consolidation zone and we do not expect any break out today. Looking ahead, we do not expect much of volatility today due to low volume as Japan , USA and Canada are on bank holiday ahead of US earnings season beginning tomorrow. Eyes are again watching US lawmaker’s talks over US shut down and borrowing limit, we are concerned about failure to break through political deadlock and we are now expecting a last minute deal on Thursday. Moreover, as we start the 3rd week of US government shut down we are also now expecting a more than 0.3% negative effect on the annualized GDP.
Optimism Returns on Possible Debt Deal on Tuesday, Aussie Gains Hopes that US policymakers get closer to a political break through and that has improved market participants’ optimism leading risk appetite higher. US equities eventually closed in positive light after beginning in negative territory, with S&P 500 advancing by 0.41%, Dow Jones Industrial increasing by 0.42% and NASDAQ gaining by 0.62%. Asian shares followed as NIKKEI 225 was by 0.26% higher and Hang Seng climbed by 0.38%. Optimism among investors grew substantially yesterday after Harry Reid, a Senate Democrat majority leader and its Republican counterparty Mitch McConnel said that on Tuesday a bipartisan deal may be announced that would extend US debt ceiling and fund government budget. What is discussed for a short term solution is that federal government would be funded until January 15 2014 and borrowing limit would be increased until February 15. If that is the case then the real political impasse would just postponed for some months. The Aussie against the greenback was well underpinned after the announcement that a deal on debt limit negotiation may come on Tuesday. The latter was coupled by RBA minutes of the October 1st meeting sounding slightly more hawkish than traders estimated as RBA does seem willing to reduce further the key rate. The AUDUSD climbed above yesterday resistance at 0.9485 to a more than a 3-month peak at 0.9549, we expect that further improvement of the risk sentiment is likely to raise the exchange rate towards 0.9660. Elsewhere, the US dollar contra the Japanese Yen climbed from support at 98.08 to resistance at 98.68 underpinned by improved risk sentiment and is now getting softer. The same happened with the USDCHF, as the US policymakers said that they approach a deal for US debt ceiling the pair drew support line at 0.9065 and advanced to resistance at 0.9113. On the data front, UK consumer price index is eyed by market participants, likely to impact GBPUSD. The British pound against thegreenback has been fluctuating in 1.6016/1.5913 tight range in the recent term. In technical terms the pair formed a reversal pattern, thus chances are favoring downside.
All Eyes on Last Chance to Break Through US Political Impasse There has been no progress on Tuesday regarding US debt ceiling impasse, contrary to what investors were hoping. In addition, Fitch rating agency placed the United States triple A rating on watch negative. Earlier, Empire Manufacturing dropped to 1.5 for October, while was projected at 8.2 and was down compared to 6.3 figure in September, indicating New York manufacturers confidence has weakened after a more than a 2-week government shut down. However, hopes persist in financial markets that a deal would be concluded on the last day before 17 of October when US likely will not be able to borrow to meet its obligations. US stocks closed in red color as traders were disappointed by failure to reach an agreement on lifting borrowing limit and funding government that is closed for a third week now. The S&P 500 declined by 0.71% to 1,698, Dow Jones lost 133.25 points to end at 15,168 and NASDAQ dropped by 0.56%. Asian stocks followed the negative path further weighed by Fitch placing US to negative watch. Shanghai Composite was down by 2.10% and Hang Seng declined by 0.77% while NIKKEI 225 was up by 0.18% contrary to overall bias. The US dollar index trimmed during US session the most of its hardly gained ground on European session by falling from cap at 80.67 to 80.35. In general we saw the US dollar retreating against safer currencies like Japanese Yen and Swiss franc during the US session with the USDJPY returning to support at 98.08 and USDCHF falling back to 0.9120 after drawing a resistance line at 0.9170. We would expect a last minute deal to be sealed, otherwise we don’t want to think about the global financial implications. Last two weeks of shut down harmed US economy growth by more than 0.4% and thus FED is likely to keep unchanged asset purchases setting pressure on the greenback . Also, last minute lift of the debt limit may bring a US downgrade, therefore over the medium term we would expect a weaker US dollar. Concerning European currencies, the Euro contra the greenback took advantage of the disappointment over the US lawmakers’ failure to agree and recovered as high as 1.3534 before extending into a consolidation momentum. Moreover, the Euro was also underpinned by stronger than expected German ZEW economic sentiment indicator. The GBPUSD remains steady in 1.6016/1.5913 tight sideways zone ahead of employment data today.
Euro Remains Bullish Against USD, UK GDP Ahead The common currency maintained its ground overnight against the US dollar near resistance at 1.3821, pushing to continue it’s up trend. Euro-zone initial Manufacturing PMI reports for October were below expectations although still above previous readings while Services PMI has disappointed projections and failed previous month figures as well. Despite that the EURUSD remains mildly bullish, partly underpinned by positive quarterly Spanish GDP growth for the first time after 2-years. Furthermore, the greenback is still under selling pressure due to concerns over the 2013 US economic growth amid 16-day shutdown as well as on asset tapering moved to March 2014. Pressure intensified yesterday after US Jobless Claims stood at 350K the previous week above estimates of 343K, coupled by a weaker expansion than projected for Flash Manufacturing PMI. All that held the US dollar index at key support zone around 79 just a step away from 15-month low that could open the way for a new downside wave. In our opinion given the technical importance of the support area around 79 we would expect some consolidation there. During Asian session Japan released its inflation with the National CPI on annual terms rising to 1.1% up from 0.9% and beating estimates also at 0.9%, indicating that aggressive monetary policy is achieving its target and further easing steps are getting less likely. National CPI excluding food and energy stood at 0.0% up from previous at -0.1% and Tokyo CPI for October rose to 0.6% from previous month at 0.5%. As a result the Japanese yen strengthened with the USDJPY inching below 97.00 suggesting the downtrend persists, increasing chances for lower values like support at 96.55. Elsewhere, the USDCAD established a new positive structure by breaching recently created reversal pattern’s neckline at 1.0418, due to less hawkish monetary policy report by BoC still weighing on the Canadian dollar. The GBPUSD holds tight slightly below 1.6259 ready to advance to 10-month high by a trigger event. Looking ahead, eyes focus on German Ifo, British preliminary GDP and later on we expect Durable Goods Orders.
Given international market updates and chart recommendation is really nice. I have got lots of beneficial market news.
