RBNZ

April 16, 2013 (Allthingsforex.com) – Finance ministers and central bankers from the 20 most-developed industrialized nations in the world will gather in Washington, DC on April 18 and 19.

Currency traders should pay close attention to any statements or agreements that could be made during the G20 meeting on the issues of “currency wars” and competitive currency devaluation.

The G20 did not directly criticize Japan at the last meeting. However, with the yen depreciating rapidly due to the unprecedented measures taken by the Bank of Japan, it would be interesting to see if the efforts of Japanese officials to weaken their currency will be criticized by their G20 colleagues this time around.

The JPY negative trend is still intact, but we could see some unwinding of short yen positions ahead of the meeting.

Included below is a G20 infographic by our friends at FXstreet.com:

g20: finance ministers and central bank governors' meeting

 


USA 

Apr. 6, 2013 (Allthingsforex.com) – In the aftermath of the Bank of Japan’s “shock and awe” decision to double down on its monthly asset purchases, the week ahead could offer reassurance of the Fed’s commitment to continue its aggressive monetary policy easing, while traders watch a sequence of important economic data from the U.S., the U.K. and the euro-zone and gauge economic conditions on both sides of the Atlantic.

In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

1.    JPY- Japan Current Account, an important measure of foreign trade, Sun., Apr. 7, 7:50 pm, ET.

For three consecutive months, the current account deficit in Japan has been on the rise and this alarming trend is expected to continue with the deficit forecast to expand above 400 billion yen in March following a jump to 364.8 billion yen in the previous month. The report could offer a clue for the one of the reasons behind the Bank of Japan’s decision to go all in and could give further impetus to yen selling on expectations that a rising account deficit could force the Japanese government and the Bank of Japan to consider even more aggressive measures to weaken the currency and to stimulate the economy.

2.    EUR- Germany Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Mon., Apr. 8, 6:00 am, ET.

After staying flat in January, industrial activity in the euro-zone’s largest economy is forecast to pick up the pace with an increase by 0.3% m/m in February.

3.    CHF- Swiss CPI- Consumer Price Index, the main measure of inflation preferred by the Swiss National Bank, Tues., Apr. 9, 3:15 am, ET.

Inflationary pressures in Switzerland are forecast to increase by 0.3% m/m in March for a second consecutive month, which could lift the overall yearly inflation reading. On the other hand, should the inflation gauge remain in deflation territory, the Swiss National Bank will be in no hurry to let go of the franc ceiling which was set at 1.20 per euro in September, 2011.

4.    GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Tues., Apr. 9, 4:30 am, ET.

The jump to a seven-month high in the Services PMI last week has somewhat eased the fears of a triple-dip recession in the U.K. and this report could do the same with industrial production forecast to increase by 0.3% m/m in February after dropping by 1.2% m/m in January. The GBP could attract more bids if the U.K. economic data continues to boost optimism and reduces the odds of additional easing by the Bank of England.

5.    USD- U.S. FOMC Meeting Minutes, a detailed report of the Fed’s latest meeting containing an outlook on monetary policy and the economy, Wed., Apr. 10, 2:00 pm, ET.

Series of weaker than expected reports from the U.S. have raised concerns that the economy may be losing momentum, increasing the probability that the Fed will not be in a rush to tighten monetary policy. The minutes could confirm these expectations by echoing the Fed’s decision to stay on the QE course until the unemployment rate drops below 6.5% or inflation rises above 2.5%. The USD could see pressures rising if the report reassures the markets that the Fed will continue full speed ahead with open-ended quantitative easing.

6.     AUD- Australia Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., Apr. 10, 9:30 pm, ET.

Following last month’s blockbuster jobs report which showed a record job creation of 71,500 new jobs, the Australian economy is expected to lose 7,200 jobs in March, while the unemployment rate remains unchanged at 5.4%. A weak employment report could raise the odds of a rate cut by the Reserve Bank of Australia and could weigh on the Australian dollar.

7.    USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., Apr. 11, 8:30 am, ET.

The U.S. jobless claims are forecast to pull back to 362K from last week’s unexpected jump to 385K. If this is the case, the spike could be dismissed as a one-off event. On the other hand, another surprising increase could trigger concerns that a new trend of rising claims for unemployment benefits could be in its early stages of development.

8.    EUR- Euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Fri., Apr. 12, 5:00 am, ET.

Identical to the German report, industrial activity in the Euro-zone is forecast to gain traction with a 0.2% m/m increase in February after dropping by 0.4% m/m in the previous month. The EUR could get a boost if the report instills optimism that the region’s economy may be on the path to recovery.

9.     USD- U.S. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Fri., Apr. 12, 8:30 am, ET.

Consumer spending in the U.S. is expected to register an increase for another month, but at a slower pace, with retail sales rising by 0.2% m/m in March, compared with 1.1% m/m in February.

10.    USD- U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Apr. 12, 9:55 am, ET.

The preliminary estimate of the U.S. consumer sentiment index is forecast to show a small improvement with a reading of 78.8 in April from 78.6 in the previous month. Following the dismal Non-Farm Payrolls last Friday, a surprising drop in consumer sentiment and a sequence of weaker U.S. economic data in the week ahead could elevate fears that conditions in the world’s largest economy may be deteriorating.

Capital controls in Cyprus will intensify the slump while severely damaging the credibility of the euro. The idea that the single currency would rival the US dollar as a secure store of wealth has taken a pasting as a result of the disastrous handling of Cyprus…



Powered by Guardian.co.ukThis article titled “Demolishing some myths about the single currency” was written by Larry Elliott, for guardian.co.uk on Wednesday 27th March 2013 22.29 UTC

The introduction of capital controls in Cyprus is a textbook example of shutting the stable door after the horse has bolted. Rich Russians and wealthy Cypriots knew the crisis was coming and have had the best part of a fortnight to spirit their money out of the country since it broke, even assuming they did not do so beforehand. The restrictions will intensify the slump Cyprus faces while not removing the risk of bank runs when branches finally open for businesson Thursday. What’s more, the controls severely damage the credibility of the euro.

That’s not to say the controls are unnecessary. Even with the severe restrictions announced in place, there is a possibility of bank runs. Without them, bank runs would be a certainty. Modern banking is essentially based on a sleight of hand under which banks have readily available funds that are only a fraction of their total deposits. If all the customers demand their money at once, as would be the case in Cyprus without controls, the banks go under.

The government in Nicosia insists capital controls will be removed within a week, but that looks as heroic an assumption as the idea that the economy will shrink by just 3.5% this year, the current EU forecast. Iceland introduced capital controls in 2008 and still has them in place. There will no doubt be pressure from Brussels on Cyprus to lift the controls as quickly as possible, but most analysts expect them to be in place for a minimum of six months.

As far as the real economy is concerned, Latvia – which had pegged its currency to the euro – suffered an 18% contraction of its economy following a banking collapse. And bank deposits were just 100% of GDP in Latvia; in Cyprus they were 800% of GDP before the crisis. To sum up, Cyprus is going to have a collapsing economy buttressed by capital controls, but unlike Iceland will not have the option of devaluation to make itself more competitive. Speculation that it will become the first country to leave the euro will not go away. Indeed, it will intensify the longer the capital controls are in place.

There are, of course, wider implications for Europe despite attempts over the last week to say that Cyprus is a special case. When the euro was created just over a decade ago it was supposed to embody certain principles. One of those principles was that a euro would be a euro anywhere inside the single currency zone. That has now been violated; a euro in Nicosia is not worth the same as a euro in Berlin.

A second trait of the single currency was that it was supposed to be a secure store of wealth. International investors would have confidence in it and it would rival the dollar as a global reserve currency. That idea has also taken a pasting as a result of the disastrous handling of Cyprus; the decision to make deposit holders pay a share of the bailout has been accompanied by a fall in the value of the euro against the dollar. That’s hardly surprising; savings in US banks are perceived as rock solid whereas those in eurozone banks are not.

A third core belief was that the euro would lead to economic convergence, with the weaker and poorer countries raising their performance to the level of the rich nations at the monetary union’s core. This has looked increasingly absurd against a backdrop of bailouts for Greece, Ireland and Portugal, and the chronic lack of competitiveness displayed by Italy, Spain and – more recently – France.

So Cyprus has put two myths to bed. One is the myth of convergence; the other is that the debt crisis is over. A new chapter has opened, that’s all.

guardian.co.uk © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

In the broadcast today: Will the EUR Damage Last beyond the Cyprus Debacle? As the Cyprus debacle continues to raise anxiety levels by creating uncertainty and a sense of distrust throughout the euro-area, we examine the damage that has been inflicted on the EUR and ponder its long term implications for the single currency, we analyze the bearish breakout in the EUR/USD currency pair, we note the resumptions of the downtrend in the GBP/USD pair, we keep an eye on the USD/JPY currency pair, we highlight the market’s reaction to the capital controls proposed by the government in Cyprus, the U.K. GDP, the Euro-zone Economic Sentiment, and the U.S. Pending Home Sales, we discuss new forecasts from Bank of New York-Mellon and Morgan Stanley, and prepare for the trading session ahead.

In the broadcast today: EUR and USD New Trading Week Outlook. With Cyprus expected to retain its center stage spot in the week ahead as the troubled country faces a deadline to come up with a solution to the crisis and with important economic reports scheduled for release from the U.S and the U.K., we explore the outlook for the EUR, the USD and the GBP, 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 latest trend developments in the EUR/USD currency pair, we take a close look at the price correction in the GBP/USD pair, we note the pullback in the USD/JPY currency pair, we highlight the market’s reaction to the Cyprus government’s Plan B, the U.K. Retail Sales, the Euro-zone Composite PMI, and the U.S. Jobless Claims and Existing Home Sales, we discuss new forecasts from Morgan Stanley and Bank of New York-Mellon, and prepare for the trading session ahead.

In the broadcast today: EUR and JPY Outlook ahead of Events in Italy and Japan. Ahead of tomorrow’s gathering of the Italian parliament and the Japanese upper house vote on the new Bank of Japan Governor, we examine the potential impact of these events on the EUR and the JPY and explore the outlook for the two currency majors, we analyze the bullish trend in the USD/JPY currency pair, we continue to monitor the range in the EUR/USD pair, we note the strengthening of the GBP vs USD, we highlight the market’s reaction to the statement by an ECB council member, the Swiss National Bank and the Reserve Bank of New Zealand Interest Rate Announcements, the Australian Employment report, the Japanese Industrial Production, and the U.S. Jobless Claims, we discuss new forecasts from Bank of New York-Mellon and UBS, and prepare for the trading session ahead.

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