12 hours ago | October 24th, 2014 11:55:39 GMT

Forex: Strongest and weakest in the forex market for October 24th, 2014

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As New York traders enter for the day, they are faced with a very quite market. The % change of all the major currency pairs are close to the close from yesterday. The largest % change of any currency is 0.2% (the NZDUSD).  As a point in comparison, yesterday, the largest changing currency pair moved 1.34% – also the NZDUSD. Even the UK GDP failed to ignite much of a reaction.  Of course it came in as expected at 0.7% ; (  The EU Bank Stress tests will be released on Sunday.   The talk is 11 banks will fail. That is not confirmed but was bantered about in the press on Wednesday.

The Forex Winners and Losers (a snap shot) in trading for October 24th, 2014)

The Forex Winners and Losers (a snap shot) in trading for October 24th, 2014)

Not only are the changes minimal, but the ranges are also minimal. Looking at the current trading ranges, the high to low ranges are well bell the 22 day average. This is indicating a market that is non-trend like for the day.  The AUDUSD tried to gets something started but stalled. It has the largest trading range of the major pairs against the USD.

The low to high trading ranges are well below the averages.

The low to high trading ranges are well below the averages.

The Stock and Bond Markets

The stock markets are showing more weakness today after the sharp moves higher yesterday. The “Ebola in NY” headlines have put the brakes on some of the frothy-ness out of the market. The US 10 year bond yield moved up a touch from the same time yesterday (a basis point or 2), while the German Bund is down a basis point.

Stocks and Bonds. As snapshot.

Stocks and Bonds. As snapshot.

Stocks this week have showed nice gains over the last 5 trading days – especially in the US where a combination of earnings and a race to get back in after last weeks shift in allocation. The Nasdaq is up 5.58%. The S&P is up 4.73% and the Dow is up 3.48%.  Not a bad gain.

The Stock Market gains over the last 5 trading days.

The Stock Market gains over the last 5 trading days.

The Major Economic Releases

The New Home Sales is the only major economic release scheduled for the day in North America. The estimate is for a gain of 470K vs. the surprise 504K seen last month. Although the 504k was the highest since May 2008, the peak has been 1,389k (in July 2005).  In 2007, the high watermark was 891K.  So, activity remains well off of activity peaks seen in the go-go days of the housing boom.

This release, along with the stock market and any news on Ebola in NY, will be the focus.   Quiet? or do we pick up and extend ranges?  I don’t like Fridays.

New Home Sales to be released at 10 AM ET.

New Home Sales to be released at 10 AM ET.

1 Comment

12 hours ago | October 24th, 2014 11:51:45 GMT

Italy’s Padoan says he is surprised by reaction to EU budget letter

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  • says he published the letter to end speculation
  • says it’s reasonable for a govt to acknowledge a worse economic situation
  • says his govt measures will produce as many as 800,000 jobs

Italian fin min speaking in Naples about yesterday’s news on the EU’s concerns about 2015 budget targets

And that’s my lot for the week. Places to go, people to see, team to cheer on. Thanks for all your input and support as always. Very much appreciated by all of us here and I hope we’ve helped make/save you a few pips along the way

Have a great weekend out there

Padoan- wondering what the fuss is all about

Padoan- wondering what the fuss is all about

0 comments

12 hours ago | October 24th, 2014 11:38:26 GMT

Expect a grumpier Mike on Monday

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Just a quick reminder that the UK/European clocks go back this weekend which shuts off any light that Mike gets in the morning for about 6 months ;-)

The UK clock will be running at the same time as GMT and the data will then be an hour earlier from the US, in relative terms until they change the week after.

The clocks change the morning of the stress test results so those not in Europe may want to factor that in. 2.am Sunday morning is when they change officially.

4 Comments

13 hours ago | October 24th, 2014 11:16:41 GMT

Greece’s Samaras is looking for the bailout exit door

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If Greek PM Antonis Samaras has his way they could. According to MNI, on the sidelines of the EU summit this week he had a word in the ear of Jean Claude-Junker about turning unused bank recap cash into an additional credit line to help Greece exit the bailout.

One of the reasons for doing so is that Greece is still on the ESM drip and swapping that for this credit line would remove the tough ESM terms and surveillance.  He would like the facility to run for a year.

The market still doesn’t hold a lot of trust in Greece so I’m not sure they’ll like them trying to get themselves out of surveillance.

 

4 Comments

13 hours ago | October 24th, 2014 11:14:49 GMT

ForexLive European morning wrap: Pound the prime mover in an otherwise scrappy session

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Forex news from the European morning session 24 October 2014

News:

Data:

It’s been a scrappy end to the week but limited action and opportunity but we’ve had some decent movement for the pound after Q3 GDP first reading came in on expectation

The intial reaction was one of relief and we saw a rally on GBPUSD to 1.6057 from 1.6030 but then another sharp move through 1.6060 offers triggering stops to 1.6073 in a rush only to fail at the next tranche of offers from 1.6075. We’ve since been back to 1.6025 with EURGBP rallying to test 0.7900 having dipped to 0.7872 after the data. A smilar pattern was seen across pound pairs with most core pairs pinned in tight ranges

EURUSD had an early run up to 1.2665 before running out of steam and has been trading around 1.2645 while USDJPY had its own run to 108.25 from 107.95 before settling back around 108.15. USDCHF has been the usual slave to EURUSD moves and barely troubled the scorers

USDCAD had a dip to 1.1213 from 1.1232 and AUDUSD has been supported but still unable to challenge 0.8800 ahead of a large option expiry today while NZDUSD has been quiet between 0.7825-45.

So not an entirely inspiring session but still with opportunities nonetheless

0 comments

13 hours ago | October 24th, 2014 10:59:06 GMT

UK to go to war over ‘storm in a teacup’ EU budget demand

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I’ve refrained from jumping into the argument of the £1.7bn demanded by the EU, up to now ;-)

A UK government spokesman has said that we will be seeking a meeting with Europe over the demand and want it before the Dec 1 deadline for payment.

As you can imagine there are many over here going potty over this. The reality however makes for a different perspective and as usual it’s never as clear cut as it seems. It was my impression that not only were these budget changes known about and agreed, but we’ve been receivers of this rebate ourselves for many years.

The budget system is complicated (as is everything in Europe) and basically we get a percentage amount back (rebate) of the difference between what we put in and what we get back. For example, say our new budget obligations to the EU are £5bn but we receive back £2bn in subsidies. After that we then get a percentage back on the difference of £3bn (if anyone knows better then please feel free to correct me).

By the looks of things it’s just a recall of an overpayment of the rebate that’s changed due to the new EU GDP calculations.

Of course not many people will want to hear the stark truth of the matter so expect the political football to be kicked around about this and a lot of shouting from rooftops about how unfair it all is. Cameron and his cronies (from Netherlands, Greece, Cyprus, Italy and a few more) will be vociferous about how he’s going to fight it in the name of justice for the UK and other European countries affected, but I’ll bet you the cheque has already been written and is in his in-tray awaiting his signature.

For those that don’t know the workings of the UK, consider this a taste of how things are going to shape up ahead of general election next year.

12 Comments

14 hours ago | October 24th, 2014 10:28:57 GMT

UK’s Cameron demands emergency talks over the extra EU contribution

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BBC reporting that Cameron has demanded emergency talks with European finance ministers after the UK was told it must pay an extra £1.7bln.The move will add about a fifth to the UK’s net EU contribution of £8.6bln

PM Cameron interrupted a meeting of EU leaders in Brussels to “express dismay” at the demand for the UK to pay extra into the EU’s coffers on 1 December and told out-going president Barroso he had no idea of the impact it would have, Downing Street has stated.EU leaders discussed the issue for an hour in Brussels this morning with Cameron due to give a press conference later today.

Should be an interesting moment!

EU contrbution winners and losers

EU contribution winners and losers

10 Comments

14 hours ago | October 24th, 2014 09:41:27 GMT

Putin and Merkel hopeful of Ukraine gas deal at next round of talks

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The two leaders have been speaking on the phone and both have stressed the importance of a gas deal hopefully on Oct 29th

Gssing on about gas still but no solution/agreement as yet

Says the Kremlin

A hope was expressed that the next round of three-party consultations on Oct 29 in Brussels will be productive

Merkel and Putin gassing on again about gas

Merkel and Putin gassing on again about gas

6 Comments

15 hours ago | October 24th, 2014 09:31:45 GMT

UK GDP Q3 2014 review: The UK economy took two steps forward and one step back

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The fact that the data could have been worse is probably a small blessing as a bigger drop in growth would have really been worrying. The current slowdown we are in has been aptly reflected in the numbers. There is no great collapse in the economy and we’re a long long way from the dark ages during the crisis.UK GDP

UK GDP Q3 2014 y/y 24 10 2014

UK GDP Q3 2014 y/y 24 10 2014

There are warning signs though, and the shadow of Europe’s spiral pulling us down with them. I see the economy now going sideways for the rest of the year and probably into the early part of 2015. We’ve still got a strong economy, we’ve still got good jobs growth, and that means more wages (weak or not) going through the economy. The housing market is being addressed and slowly, but surely, the UK is finding a more sustainable footing.

With everything going on in the world and the low global growth environment we’re not going to be seeing boom times. If we manage growth between 2% and 3%+ for the foreseeable future then that’s going to be ok in my opinion.

What does it all mean for the pound?

You can tell by the price action that there is some relief but also still some trepidation that the economy has confirmed the slowdown. The market may still be pushing rate rises to later in 2015 but they’re still seeing one come. The only chance we will not get one is if GDP falls to 1% or less (or some big shock appears). At some point I’m going to start loading up on GBP for when the rate rise chatter starts again. The next six months are going to shape that trade. If the US economy starts to gain traction, particularly in manufacturing, then they will pull ahead in the race to raise and that will pressure GBP/USD. At the moment there’s just as much indecision over US rates as UK rates, but once the market gets a clue we’re going to see some big moves again.

So for now I’m still dollar bullish and will load up on USD/JPY if we get another decent dip or if we break 110. I’m not keen on shorting the pound against the dollar unless the big levels go (1.5850/800) and I’m still liking EUR/GBP shorts from higher levels.

From here the pound remains in range and playing the edges is the way to go short term. At the moment you can park yourself tightly between 1.60 and 1.61 with a wider range at 1.6180/6200 and 1.5950. A break of 1.63 or 1.5850 and we’ll get a decent move either way.

GBP/USD Weekly chart 24 10 2014

GBP/USD Weekly chart 24 10 2014

 

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