Daily Forex News February 4th 2013

Daily Forex News February 4th 2013FCTOFX: Asian equities opened the week broadly higher in response to positive job and manufacturing data from the US on Friday. Also supporting sentiments was Services PMI from China, which improved slightly from 56.1 to 56.2 January, hitting the highest level since August. Overall the Forex market is pretty steady throughout, with major pairs and crosses trapped in tight range. The markets experienced a strong rally in the euro and a steep selloff in the yen last week. There is no sign of a reversal in these trends and the main focus this week will be on how other major currencies will perform in reaction to a number of key events. That would include the Reserve Bank of Australia's meeting which should hint on the change of a rate cut in the first half. Employment data from Australia, New Zealand and Canada will also be closely watched.

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Daily Forex News February 4th 2013Next Bank of England governor and current Bank of Canada governor Mark Carney will appear before the UK parliament for a hearing. If he affirms his stance on tolerating inflation above the bank's target range of 2 to 3%, the market could start to price in additional easing from the Bank of England and trigger a further rally in Euro Sterling. The European Central Bank meeting will be watched but shouldn't trigger much reaction unless president Draghi expresses concerns on the recent strength in the Euro.


Daily Forex News February 4th 2013In Japan, Finance Minister Aso said over the weekend that , the weaker yen was a result of the "policies aimed at ending deflation", but "not the goal". He hit back at Europe's claim that the Bnak of Japan's move would contribute to a "currency war" and said that Japan "endured without complaining" when the yen was strong as a result of the global financial crisis back in 2008. Aso also noted that there is "no one in the government, the bureaucracy or the bank who has experience in anti-deflation policy" and Japan could only "learn from history". Aso said the government is now imitating the Depression era finance minister who told the bank of Japan to underwrite government debts to fund deficit spending, which was then increased by as much as 34%.


Daily Forex News February 4th 2013In the US, St. Louis Fed Bullard expressed his optimism that the US unemployment rate would drop to "low 7s" by year end and GDP would be at around 3%. And he claimed that should then be considered "substantial improvement" by the Fed in considering its policies. Regarding last week's job report, Bullard said that the three month average Non Farm Payroll growth of 200,000 is "an encouraging sign". He noted that the Fed might think about scaling back from the open-ended asset purchase if there is some "good data for a couple of months". And, if there is good signs "through the spring of the summer", the Fed could "throttle back just a bit" without declaring the end of the third round of quantitative easing.


Daily Forex News February 4th 2013Looking at the latest CFTC data for January 29th Euro net positions continued to improve for another week indicating accumulation is still in progress. Sharp deterioration was seen in Canadian dollar longs and Sterling longs. Meanwhile, yen net shorts rose again arguing that position adjustments might be over. Latest CFTC data showed Euro net longs rose for another week to 27,400 contracts on January 29th, compared to last week's 21,400. Yen net shorts rose again to 71,200, compared to last week's 64,000. Sterling net longs dropped for another week to 10,600, compared to last week's 17,900. It's been in steady decline after hitting the 2012 high of 37,300 back in December. Australia dollar net longs dropped to 85,300 but is trapped in range of 75,000 to 103,000 since December. Canadian dollar net longs dropped sharply to 35,100, compared to last week's 58,000: still in sharp decline since September's 111,900.


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Daily Forex News February 4th 2013

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Transcript of Daily Forex News February 4th 2013