October 2013

In the trading room today: Is the EUR Rally Coming to an End? In the aftermath of the less dovish Fed statement and following a sequence of disappointing economic data from the euro-zone this morning, we examine the factors behind the weakness of the EUR and ponder if we may be witnessing the end of the multi-month rally of the single currency, we analyze the bearish breakout in the EUR/USD currency pair, we take a look at the GBP/USD pair, we keep an eye on the range in the USD/JPY pair, we highlight the market’s reaction to the FOMC and the Bank of Japan interest rate announcements, the Euro-zone HICP and Unemployment Rate, we discuss new forecasts from Barclays and UBS, and prepare for the trading session ahead.


USA 

In the trading room today: Will the Fed Trigger Additional USD Weakness? A few hours ahead of the Federal Open Markets Committee monetary policy announcement, we explore the scenarios for the outcome of the Fed meeting and examine the potential impact of the U.S. central bank’s decision on the future fate of the U.S. dollar, we analyze the latest trend developments in the EUR/USD currency pair, we keep an eye on the pullback in the GBP/USD pair, we note the strengthening of the USD vs JPY, we highlight the market’s reaction to the Spanish GDP, the U.S. CPI and ADP Employment report, we discuss new forecasts from Bank of America and Royal Bank of Canada, and prepare for the trading session ahead.

In the trading room today: USD Outlook ahead of the FOMC Meeting. With the Federal Open Markets Committee meeting guaranteed to take the center stage in the week ahead, we examine the prospects of a change in the existing monetary policy of the Fed and explore the outlook for the USD against the EUR, the GBP and other currency majors, we list the Top 10 spotlight economic events that will move the markets next week, we examine the consensus forecasts for the upcoming economic data, we analyze the resilience of the EUR vs USD, we take a look at the GBP/USD pair following this morning’s positive U.K. economic data, we keep an eye on the USD/JPY currency pair, we highlight the market’s reaction to the German Ifo Business Climate Index, the U.K. GDP and the U.S. Consumer Sentiment, we discuss new forecasts from Bank of Tokyo-Mitsubishi and PIMCO, and prepare for the trading session ahead.

In the trading room today: Can Softer Data and ECB Talk Cap the EUR Gains? As the EUR continues its rally against the USD following the bullish breakout earlier in the week, we examine today’s weaker than expected economic reports from the euro-zone and ponder if softer data coupled with the talk of more easing by the ECB could keep the euro gains in check, we analyze the latest trend developments in the EUR/USD currency pair, we take a look at the pullback in the GBP/USD pair, we note a support level for the USD vs JPY, we highlight the market’s reaction to the Euro-zone Manufacturing and Services PMI and the U.S. Jobless Claims, we discuss new forecasts from Goldman Sachs, Morgan Stanley and Citigroup, and prepare for the trading session ahead.

Minutes of latest monetary policy committee meeting signal interest rates could rise sooner than 2016. Bank of England policymakers have been surprised at how rapidly growth has picked up and unemployment has fallen since the spring…

 


Powered by Guardian.co.ukThis article titled “Growing evidence of ‘robust recovery’ in UK economy, says Bank of England” was written by Heather Stewart, for theguardian.com on Wednesday 23rd October 2013 10.34 UTC

Bank of England policymakers have been surprised at how rapidly growth has picked up and unemployment has fallen since the spring, raising the prospect of an earlier-than-expected rise in interest rates.

The Bank’s nine-member monetary policy committee voted unanimously to leave policy unchanged earlier this month; but minutes of their meeting showed that a strong increase in employment, and upbeat readings from business surveys, had prompted them to upgrade their expectations for growth.

Discussing the upbeat jobs data released this month, the minutes said: “It now therefore seemed probable that unemployment would be lower, and output growth faster, in the second half of 2013 than expected at the time of the August Inflation Report.”

They described the latest news as pointing to a “robust recovery in activity” in the UK – though they also warn about the lack of the kind of rebalancing in the economy, towards trade and away from consumer spending, that the coalition was hoping for. “There is a risk that the recovery in the United Kingdom might be less well balanced between exports and domestic consumption than was ultimately needed.”

One of the Bank’s first decisions after its governor, Mark Carney, joined in July was to issue “forward guidance”, promising to keep interest rates unchanged until the unemployment rate falls to 7%, barring a surge in inflation.

When the policy was unveiled in August, Carney said he expected unemployment to remain above 7% at least until 2016; but a slew of data, including a fall in the unemployment rate to 7.7% in the three months to July, had raised doubts in markets about whether the Bank would wait so long before deciding to act. Wednesday’s minutes suggest the MPC may be coming round to the idea that the 7% threshold could be reached sooner, though the committee stressed that “it was too early to draw a strong inference about future prospects from the latest data”.

Simon Wells, UK economist at HSBC, said: “We expect the MPC to bring forward the timing of unemployment hitting the 7% threshold by around two quarters when it revises its forecasts in November.”

Discussions among MPC members also highlighted the growing strength of Britain’s housing market, which they expect to boost the economy. “Overall, indicators pointed to continued house price rises. This would increase the collateral available to both households and small businesses, which could provide some further support to activity,” the minutes say.

In the latest indication of a revival in the property market, the British Bankers Association announced on Wednesday that the number of mortgages approved by UK banks to fund house purchases reached 42,990 in September, its highest level in almost four years and well above the previous six-month average of 42,990.

The BBA data, which covers the run-up to the launch of Help to Buy mortgage guarantee scheme, shows that activity in the housing market continued to gain momentum over the summer, with house purchase loans showing the biggest increase month-on-month.

The BBA said its members approved new loans worth a total of £10.5bn in September, up from £9.9bn in August and above the six-month average of £9bn. Of this, £6.7bn was for house purchases and £3.5bn for remortgages. The remainder was other secured borrowing.

The BBA statistics director, David Dooks, said: “September’s figures build on the growing picture of improved consumer confidence, with stronger gross mortgage lending, rising house purchase approvals and increased consumer credit.”

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