Forex NEWS by RTT in partnership with InstaForex

[IFX Darika]

The dollar came under further pressure versus the euro and continued its trek toward parity against the surging loonie Monday morning in New York.

Rising global stocks and speculation that the economy is on the mend have fueled increased appetite for riskier higher yielding currencies.

Traders were looking ahead to a fairly busy week on the economic front, kicked off by the Commerce Department's new home sales report for June.

The consensus estimate for the report coming at 10 AM ET this morning calls for an increase in new homes sales to 352,000.

New home sales declined 0.6% in May from the previous month to a seasonally adjusted annual rate of 342,000.

The dollar remained on the defensive versus the euro, dropping to an 8-week low of 1.4296, just shy of its lows from last December. A move to 1.4340 would take the dollar to its lowest level since the last week of 2008.

There was no relief for the dollar versus the scorching-hot loonie. Amid growing evidence that the Canadian economy is in much better shape than its neighbor to the south, the dollar dropped to C$1.0780, its lowest level since September 2008.

The dollar extended its run of choppy trading versus the sterling, easing to 1.6500 after seeing some modest strength late last week.

Versus the yen, the dollar firmed up slightly to 95.20, staying near a monthly high of 95.28.

In economic news from around the globe, German consumer confidence for August improved strongly, suggesting a recovery in the economy that is hit hard by recession.

According to the latest consumer climate survey from the market research firm GfK, the forward-looking consumer sentiment index rose to 3.5 points for August.

Monday, the quarterly report from the Bank of England said the continued asset purchases in the second quarter were accompanied by signs of improvement in the corporate credit markets.

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[IFX Darika]

The International Monetary Fund welcomed Indonesia's fiscal stimulus plan for 2009, underscoring timely and efficient implementation of the spending program. The Washington-based agency urged Indonesia to maintain some of the stimulus measures next year.

The Executive Board of IMF noted that private consumption supported by the fiscal stimulus package helped to maintain positive economic growth. However, another round of global risk aversion could adversely affect nation's external liquidity, demand and growth prospects. To withstand these risks, the authorities should strive to achieve the appropriate policy mix and promptly adjust it as needed to preserve macroeconomic and financial stability.

The board assessed that the current level of the real effective exchange rate is broadly in line with fundamentals and that reserves are at a comfortable level. Some others believed that the current level of reserves and the various contingency arrangements should provide an adequate cushion.

Regarding inflation, the fund said, "Strong commitment to the medium-term inflation targets, as well as publication of inflation forecasts, would help guide inflation expectations and enhance policy credibility."

News are provided by InstaForex.

[IFX Darika]

The public's trust in business has stabilized and is recovering significantly in some of the world's largest markets, results of a survey conducted by Edelman, a leading independent public relations firm, showed Thursday.

Edelman's previous survey, conducted in January, showed a devastating loss in trust in the private sector.

The mid-year survey was conducted among 1,675 informed public in six countries - the U.S., the U.K., France, Germany, India, and China.

The survey found that India and China are the most positive about business. At 75%, India recorded the highest level of trust in business of any of the six countries surveyed. China followed with 60% saying they trust business to do what is right.

"The private sector is perceived as enabling an economic growth that has led to healthier living standards. The survey numbers reflect a high degree of national pride in the accomplishments of business," said Alan VanderMolen, president, Asia Pacific, Edelman.

In the U.S., 48% of informed public trust business to do what is right, up from a low of 36% in January. The figure for France rose to 41% from 30%.

"Trust in business is on the way back, but we're still in the middle of the game," said Richard Edelman, president and CEO, Edelman.

The public's trust in government rose the most in India, an increase of 13 points to 55% followed by the U.S., where the trust barometer rose 12 points to 42%.

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[IFX Darika]

German retail sales dropped unexpectedly in June despite rising consumer confidence and low price level as recession continued to put pressure on consumer spending.

According to a provisional report from the Federal Statistical Office, retail sales for June recorded a surprise monthly decrease of 1.8% in real terms, following a revised 1.3% drop in May. Economists were looking for a 0.3% rise.

Year-on-year, sales slipped 1.6% in June, smaller than a revised 3.7% fall seen in May. The annual decline was also unexpected as economists were looking for an increase of 0.9%.

For the January to June period, retail turnover dropped 2.1% in real terms compared to the corresponding period of the previous year. Sales were down nominally by 2.3%.

In nominal terms, retail sales dipped 2% year-on-year and 1.6% from the prior month in June.

Simon Junker, Commerzbank analyst said in a note that German retail sales proved to be stable despite severe recession, probably because of the still stable labor market and the low price level. The crisis has reached retail too, supporting the judgment that the largest Eurozone economy shrunk again in the second quarter, albeit only moderately, he said.

According to the analyst, the German economy would possibly pick up in the months ahead, though retail may not benefit very much in the coming months. At most, the favorable price trend could strengthen purchasing power and support sales. However, rising unemployment would dent retail sales again.

German unemployment decreased in July, which was the first decline since October 2008. Meanwhile, the jobless rate stood at 8.3%, unchanged from June.

Consumer confidence and business climate in the economy showed improvements in recent months as a result of Chancellor Angela Merkel's spending plan. Merkel is seeking a second-term in office in September elections.

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[IFX Darika]

Thursday, Fitch Ratings maintained the stable outlook on Malaysia's local banks' credit ratings, despite very weak macro economic indicators.

The firm said the probability of capital impairment for Malaysian banks still appeared fairly low, despite the extremely stressed macro economic conditions and the reasonably-stressed assumptions simulated by the agency. Fitch said this in the context of its report titled "Stress Test on Malaysian Banks", where it attempts to simulate a fairly-stressed scenario for Malaysian banks.

The firm also noted that although banks' earnings were likely to be lower in 2009 and 2010 compared with 2008, they appeared adequate to fully absorb the credit costs associated with asset quality deterioration. This means their loss absorption capacity would likely remain adequate and financial strength largely intact, Fitch said.

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[IFX Darika]

The pace of deterioration in the U.K. job market is slowing as private sector demand for staff began to stabilize following a surge of redundancies earlier in the year, results of the latest quarterly CIPD/KPMG labor market outlook survey revealed Monday.

The survey of more than 900 employers in all sectors of the economy found that not only are far fewer employers expecting to make staff redundant but the scale of planned redundancies has also reduced. However, signs of improved employer optimism in the private sector are offset by mounting pessimism in the public sector.

"When it comes to the immediate jobs outlook, the best that can be said is that things are getting worse more slowly," John Philpott, chief economist at the CIPD said. But, he warned that "It is far too soon to rule out another avalanche of private sector redundancies later in the year." According to the survey, employment will keep falling and unemployment is still on course to top 3 million in 2010. Due to a fall in expected redundancies, the private sector unemployment would be less compared to the public sector.

The balance of private firms cutting over those recruiting fell to minus 2 from minus 30 recorded in the spring. By contrast, in the public sector the negative balance has increased from minus 3 to minus 28.

Moreover, the survey found that the pay outlook has worsened, with only 15% of respondents planning to conduct a pay review this quarter, compared to 32% in the previous quarter.

Andrew Smith, chief economist at KPMG said, "This conservative approach indicates that business remains unconvinced that current economic green shoots will lead to sustainable healthy growth in the near term."

Average pay increase expectations have dropped below the rate of inflation to 1.7%. Smith said this will result in a reduction in real earnings and could stifle any consumer led recovery.

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[IFX Darika]

Wednesday, the yen extended its yesterday's uptrend against other major currencies as Asian stocks tumbled today and prompted investors to further liquidate yen short positions ahead of a policy statement from the U.S. Federal Reserve later in the day.

Asian shares plunged today after losses on Wall Street and as investors locked in profits as they waited to hear what the U.S. Federal Reserve would say about prospects for recovery in the world's largest economy.

Japan's Nikkei 225 was down 1.17%, South Korea's Kospi Composite fell 0.87%, Hong Kong's Hang Seng was 1.93% lower while China's Shanghai Composite slipped 2.93% and Taiwan's main index dropped 0.15%.

The Fed will conclude its two-day policy meeting and release a statement around 2:15 pm ET today, with investors looking to its assessment of the economy and whether it unwinds some of the unconventional easing measures currently in place.

There is mounting speculation that Fed might grow more optimistic about a recovery after a better-than-expected jobs report for July.

The U.S. Labor Department report showed that non-farm payroll employment fell by 247,000 jobs in July following a revised decrease of 443,000 jobs in June. Economists had been expecting employment to fall by 325,000 jobs compared to the drop of 467,000 jobs originally reported for the previous month. The Labor Department also said that the unemployment rate unexpectedly edged down to 9.4% in July from 9.5%, recording a decrease for the first time since April 2008.

The Fed has kept its target rate for overnight loans between banks in a range from zero to 0.25 percent since December. The Federal Open Market Committee will keep rates unchanged today, analysts expect. The central bank has bought $252.761 billion of U.S. Treasuries since it announced a six-month plan in March to purchase $300 million of Treasuries to help keep borrowing low.

Japan's corporate goods price index fell at a record pace in July, adding to concerns that deflation in the world's second largest economy is accelerating.

The Bank of Japan's CGPI data, which tracks prices of domestically produced and used goods traded among companies, plunged 8.5% in July from a year earlier, breaking the record 6.7% drop set in the previous month. Moreover, this was the seventh consecutive month of decline.

Today's results will likely heighten fears of persistent price falls in Japan, as overall economic activity has yet to show signs of a full-fledged recovery.

Still, BOJ Governor Masaaki Shirakawa said at a regular press conference on Tuesday that the BOJ doesn't expect Japan to fall into a deflationary spiral now, though "it may take time for falls in prices to end."

On a monthly basis, the domestic CGPI rose 0.4% in July, following the 0.3 percent decline in the previous month.

Meanwhile, a final report from the Ministry of Economy, Trade and Industry showed that Japan's industrial production growth in June came in at 2.3% on a monthly basis, revised down from 2.4% estimated initially. From the previous year, production plunged 23.5%.

The yen that closed yesterday's trading at 96.01 against the dollar strengthened to a 5-day high of 95.35 during Asian deals on Wednesday. The next upside target level for the yen is seen at 94.7.

The yen plunged to near an 8-week low of 97.80 against the dollar on August 07 as the dollar gained 2% on that day following better-than-expected U.S. jobs data.

But the yen is showing strength this week on encouraging economic reports from Japan. Reports showed this week that Japan's current account surplus and the machinery orders rose more than expected in June. Thus far, the yen has advanced 2.5% against the dollar.

In Asian trading on Wednesday, the yen rose to a 9-day high of 134.91 against the euro. This may be compared to yesterday's closing value of 135.84. On the upside, 133 level is seen as the next target for the Japanese currency.

After hitting a 2-month low of 138.73 against the euro on Friday, the yen has appreciated 3% thus far.</p>

<p>The yen jumped to a 12-day high of 157.29 against the pound in Asian deals on Wednesday. If the yen edges up further, it may likely target the 154.2 level. The pound-yen pair was worth 158.21 at yesterday's close.

Thus far this week, the yen has depreciated 3% against the pound.

During Asian deals on Wednesday, the yen soared to a 12-day high of 88.16 against the Swiss franc. The next target level for the Japanese currency is seen at 87.1. At yesterday's close, the franc-yen pair was quoted at 88.78.

The yen that slumped to near an 8-week low of 90.74 against the franc on Friday has gained 3% since then.

In Asian deals on Wednesday , the yen jumped to a 13-day high of 78.47 against the Aussie and an 8-day high of 63.33 against the NZ dollar. The next upside target level for the yen is seen at 77.0 against the aussie and 63.0 against the kiwi. The aussie-yen pair closed trading at 79.63 and the kiwi-yen pair at 64.09 on Tuesday.

Consumer confidence in Australia rose to a near two-year high in August, as reported today by Westpac Bank and the Melbourne Institute. The group said its index of consumer sentiment was up 2.7 percent compared to July, reaching its highest level since October 2007. The index has increased 27.8 percent since May, making it the sharpest three-month gain since the survey's inception in 1975.

Against the Canadian dollar, the yen surged up to a 2-week high of 86.53 in Asian trading on Wednesday. On the upside, 86.3 is seen as the next target level for the Japanese currency. At yesterday's close, the loonie-yen pair was quoted at 87.15.

The loonie declined as oil steadied below $70 a barrel today after four consecutive days of losses as the market waited for a second set of U.S. inventory data and kept an eye on the outcome of the U.S. Federal Reserve's two-day meeting.

U.S. light crude for September delivery rose 9 cents to $69.54 a barrel in Asian deals, having lost $1.15 on Tuesday on Wall Street losses and after the Energy Information Administration (EIA) revised lower its global oil demand forecast. London Brent crude fell 6 cents to $72.40.

Looking ahead, the French July CPI and June current account, Italian final July CPI, Euro-zone June industrial production, U.K. labor market reports as well as the Bank of England's quarterly inflation report are expected to influence trading in the upcoming session.

From the U.S., the trade balance report for June is due at 8:30 am ET.

At the same time, the Canadian June trade balance and new housing price index reports are scheduled for release.

News are provided by InstaForex.

[IFX Darika]

The US dollar that showed signs of recovery against most of its major rivals immediately following the release of the S&P/Case-Shiller home price index for June lost ground shortly. As of 9:10 am ET, the greenback drifted lower to 1.0571 against the Swiss franc, 1.6447 versus the pound and 1.4362 against the euro.

The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 15.4 percent in June compared to a revised 17 percent drop in May. Economists had expected prices to fall 16.4 percent compared to the same month a year ago.

News are provided by InstaForex.

[alessio09]

The EUR extended gains versus the GBP on Wednesday, to trade above $0.8775 amid a wide sell-off in the GBP. The EUR performed the same versus CHF as the pair inclined from 1.5185 to 1.5220 by the end of trades. The EUR saw bearishness as well against the USD as it lost over 50 pips and closed session at 1.4249.

[IFX Darika]

House prices in the UK rose for the fourth consecutive month in August, increasing by 1.6% month-on-month on a seasonally adjusted basis, the Nationwide building society said Thursday. Economists had forecast house prices to grow only 0.5% after a revised increase of 1.4% in July.

Compared to the previous year, house prices fell 2.7% in August, much slower than the 6.2% decline seen in July. The average price of a typical UK property stood at GBP 160,224, up from GBP 158,871 in July.

Over the first eight months of 2009, the seasonally adjusted index of house prices has risen by 3.2%, though relative to the October 2007 peak it is down by 14.4%, the Nationwide said.

News are provided by InstaForex.