31 MAY 2013: NEW RALLY IN CURRENCY MARKET – EURO PREVAILS OVER DOLLAR

All conditions were created for a rally of EUR/USD: reports from the Eurozone were better than forecast, and at the same time for the USA – worse than predicted. The result didn't keep itself waiting for long, the pair could go above the strong resistance level at 1.30, although it reached a maximum on 1.3061 and finished the trading session around 1.3040. It is quite interesting actually, that the data from the USA were not as dire as predicted, and the Eurozone in general was not presenting something really satisfying or exceptional. The conclusion comes by itself – the overbought USD gives power to the Euro.

So, GDP (Gross Domestic Product) of the USA in 1 quarter was reconsidered to fall from 2,5% to 2,4%, and the number of the unemployed who have submitted an application for receiving a grant, grew to 354 thousand. It is absolutely not enough to frighten Bernanke, but it is quite enough to provoke investors to close long positions on USD on tops. This also gave support to the British Pound and GBP/USD from the level of opening at 1.5129 pair reached a maximum of 1.5219, having finished the trading session around 1.52.

After disappointments with the labor market in Germany, today it is worth looking at the data on retails in the country. Usually there is direct correlation: there is no income – there are no expenses, however analysts predict the indicator’s growth, so tension in the market increases. If sales volumes will really increase, it will give additional support for further strengthening of EUR/USD to the next resistance levels on 1.3070 and 1.3110.

In relation to Japan today, it is worth acknowledging the statement of IMF (International Monetary Fund), in which it completely supported the current monetary policy of the country, and stated extensive prospects of its further realization.  Furthermore, the problem with growth of profitability of state bonds is considered to be completely controllable. Asian stock markets started the day positively, however, by this time, buyers confidence had already evaporated. Japanese Nikkei slightly restores yesterday's losses, while the Hong Kong’s Hang Seng again looks worse than its"colleagues".

Prices for precious metals are stable, with Gold on 1417.08$ and Silver on 22.74$. Prices for oil are slightly down, with Brent on 102.07$ per barrel and WTI on 93.47$. Today the next meeting of representatives of member countries of OPEC becomes a key event of the day in the oil market. Questions on the current quotas of production, and also the increase in production of oil in the USA will be discussed. America now produces record volumes of oil, thereby reducing the dependence from former exporters.

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30 MAY 2013: JAPANESE NIKKEI INDEX IS AGAIN AN OUTSIDER

After couple of days of moderate growth, the decrease at the Asian stock markets was resumed. Support to sellers is given by the Yen growth, though in the debt market - profitability of 10 year bonds, was a little far away from maximum levels previously reached. The reason for this, could be the speech from the chairman of the Central Bank, Haruhiko Kuroda, who declared intention to decrease volatility in the debt market, and also decrease interest rates by means of a monetary easing program in the long-term prospective. As a result, Japanese Nikkei lost -5.14% and USD/JPY decreased to 100.72 this morning.

The Eurozone prepared an unpleasant surprise yesterday- data on the labor market which showed growth of the number of the unemployed by 21 thousand against the expected 4 thousand. However, it couldn't roll EUR/USD, which, towards the end of the day,returned to the day’s maximum levels, having reached 1,2977 and having rolled away to 1,2940 by the close.

There are some statistics which could influence further development of the EUR/USD pair. We are not expecting any changes of GDP (Gross Domestic Product) of the USA, but the number of the unemployed who have submitted applications for receiving a grant, is interesting, especially in the light of Rosengren's statements yesterday from FRS, in which he noted that it is possible to reduce the volume of the buying up of bonds, if the indicators from the labor market and on the economy, will, in general, be stable for few more months. The lower the unemployment figures will be,the higher chances EUR/USD will have to return to testing of support on 1,2850.

Prices of oil following the results of the last trading session showed negative dynamics. Besides a noticeable decrease in the developed stock markets, deterioration of forecasts on the development of the economy of the two largest consumers of raw materials - the USA and the People's Republic of China, became one of negative factors. Also, according to yesterday's data from the American institute of oil (API) stocks of oil increased by 4,4 million barrels. As for gasoline, the volume of stocks grew by 1,94 million barrels. Today, price for Brent is 102,36$ and price for WTI is 92.87$.

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29 MAY 2013: USD RALLIES ON STRONG DATA

US Dollar rallied against the Euro and Japanese Yen on strong consumer confidence, home prices accelerating to the highest levels seen in seven years. EURO/USD fell to 1.2874 while USD/JPY plunged to 102.58. Dow Jones jumped 92 points to 15.395 while the technology index Nasdaq added 0.62 %. The yield on US 10 years treasuries, simultaneously, reached a one year high.

After three losing sessions, global equity markets performed strongly. The Japanese Nikkei were up 1.3 % on Tuesday after a two day dramatic 10 percent plunge. All the European stock exchanges rose, UK being the strongest, with a 1.83 % increase. English and US markets were closed on Monday due to Memorial Day.

The equity rally came as central bankers in Germany and Japan confirmed their willingness to continue monetary easing. A German member of the European Central Bank (ECB) stated that the loose monetary policies would last for as long as it takes to get the Western European economy back on track. A representative from Bank of Japan issued a similar statement.

These strong statements will probably encourage more risk taking in higher yield assets financed through so called carry trading; cheap loans in Japanese Yen. While increased consumer confidence and higher home prices strengthen the USD, looser ECB monetary policies will lead to a weaker EURO/USD. A fall below the long traded interval,1.28 – 1.32, seems likely.

Japanese Yen is probably going to fall further as the short lived Yen rally indicates. The weakness in the Yen is there to be continued. Currency analysts are predicting within three months 106 Yen to the Dollar, and expect a further plunge to 109 within six months. Bottom levels are as low as 120 – 125 Yen a Dollar and seem likely in 2014.

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28 MAY 2013: JAPANESE STOCKS FALL AS YEN SOARS

The Japanese stock market continued to fall another 3,25 %, after Friday’s dramatic 7,32 % fall. The US dollar simultaneously witnessed its worst week against the JPY in one year, dropping from 103.50 to 101.09 Yen a Dollar on Friday.The Yen traded even lower yesterday, dipping below 101 at one point.

Western European equity markets have recovered from the downward shock at the end of last week. The French index jumped 0.97 % during yesterday’s trade, and Germany’s Frankfurt index added another 0.85 %. Nordic equities were strong while the British FYTSE lost 0.64 %. Developing markets also recovered with India jumping 2.47 %.

The Australian Dollar continues to fall, and trades just above 96 against the USD, on news that China has no intentions to stimulate growth at the expense of environment. The fall in the Chinese PMI last week had a further negative effect. Australia is dependent on coal export and Chinese growth. For Australia, its alarming that China is said to cut down on coal and encourage gas and solar energy to fight pollution.

The Euro/USD is strengthened and close to break through both the 21 and 50 days moving averages, helped by lower yields on Italian and Spanish bonds. The recent sharp downturn in USD/JPY is seen by analysts as a correction after huge amount of speculative Dollars gambled on a lower Yen. The strength of the yen is, however, temporary, and the weakness in the Japanese currency is bound to continue.

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27 MAY 2013: INVESTORS LOSE OUT DUE TO BAD TIMING

Stocks took a breather last week after signs of cooling in China, and what some investors saw as a possible change in FED policies. The Nikkei, which has soared since last November on hopes of economic revival, was the hardest hit with Thursday’s 7,32 % fall. Other Asian and European markets dropped as well, but not so dramatically, raising questions whether the bull market has come to an end.

Some investors blame FED-chairman, Ben Bernanke for the turmoil. Others point to a seeming difference between Bernanke and the board’s published minutes for late April. Investors might, however, blame themselves for unrealistic expectations and their gamble on a change in FED’s policies.

Investors have different motives in their bet for a change. Some are appalled by FED’s money printing and that there is no predicted hyperinflation. Others hoped that Bernanke’s monetary experiments would be abandoned. Such abandonment would have meant that President Obama’s entire economic policy had failed. The third and biggest group of Wall Street investors simply blame themselves for missing out on the stock rally. The general indexes have beaten the hedge funds three times since January.

No wonder many of them are frustrated. Fat bonuses this year might hang on their own wishful thinking for a quick change. Change depends, however, on objective analysis, and a correct reading of Bernanke’s careful wording. In his testimony last week, Bernanke repeated word for word what he stated since last September.

FED will continue to buy 85 billion of bonds monthly till the 6,5 % target for unemployment and a steady growth is established. The US economy is not quite there yet. It might well take another 8 – 12 months. The grunting from dissatisfied FED board members is not something new.Their hopes for a change in policies have been reflected in the last eight FED minutes.

There will, of course, be a change. But the timing will be decided by economic data and FED’s consideration. Investors lost billions of dollars last week on a wrong bet on the timing for a change. By now, they have hopefully swallowed their anger and are ready to meet markets which are hopefully back on track, ready for rallies and continued new highs.
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24 MAY 2013: SERIOUS MELTDOWN IN GLOBAL EQUITIES

Dubious signals from the US Federal Reserve, FED, on continued monetary easing, and disappointing Chinese PMI numbers (a barometer on business leaders optimism), led to a serious meltdown in global equity markets yesterday. The Japanese Nikkei plunged 7,32 % with more modest losses in Europe, where London and Frankfurt indexes lost 2 %.

While FED’s Ben Bernanke testimony to Congress, warned against a premature end to the bond buying program, FED’s April minutes pointed to a split between those who want a quick termination of the program and those siding with Bernanke.  Monetary easing has been the driving force behind the last months steep increases in equities.

It is natural to see the steep plunge in Japan as a result of a doubling in stock prices over the last half year and the latest aggressive stimulus policies. Globally, there have been increased worries among investors as to whether equity markets, running ahead of fundamentals, are creating a dangerous bubble.  With news of an end to monetary easing and problems in China this created risk aversion and a sell off.

The fall in the US-indexes were modest following the onslaught in other markets. The last published jobless claims at 340,000, are 5000 fewer than expected.  There is still a long shot to the 6,5 % unemployment target set by FED, but fewer jobless claims would give the proponents of an early end to the bond buying programs new arguments.  

Oil prices which have kept surprisingly steady over the last month, decreased more than two dollars a barrel.

EUR/USD got support from higher than expected PMI indexes. As a result, EUR/USD from level of opening - 1,2855 was rolled away to a maximum of 1,2956 and this morning we can see pair traded on a level of 1.2932. GBP/USD behaved more frostily against volatility of both currency pairs and share indexes. Having reached quite strong support on 1,50 the previous trading day, pair showed moderate correction. The most important question of today is- whether the Yen finished it's decline? Taking into consideration all the factors, pair can quite roll down to the area of 100.00.

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23 MAY 2013: BERNANKE TAKES USD TO NEW HIGHS

The head of the federal Reserve, FED, Ben Bernanke’s statement to Congress caused markets to fluctuate wildly yesterday. Bernanke’s comments initially had a positive impact on the stock markets when he stated that it would have unpredictable consequences for the US economy if FED’s bond buying program was terminated within the near future.

The bond buying program has boosted the US and global  stock markets, but has so far failed to create new employment. FED has earlier stated that the bond buying of USD 800 billion collar will end when the unemployment has reached 6,5 %. It now stands at 7,6 %. This statement was initially seen by markets as a continuation of the bond buying that has boosted global equity markets.

At the same time Bernanke indicated that the termination of the bond buying might be on the immediate cards.. These comments were supported by the minutes from the April/May FED board meeting opening for a termination of the bond buying within the near future. This resulted in a steep fall in US stock indexes. Dow Jones fell from 16 464 down to 15 307 with equal immediate drops in S&P and Nasdaq.

The USD  jumped to 103,73 Yen a Dollar. The DXY, a basket of currencies against USD, raised to a record high of 84,27, Euro/USD jumped to 1.2854  as Swiss Franc weakened both towards Dollar and Euro. The Australian dollar trades at its lowest level in a year.  Precious metals have  fluctuated wildly through the New York session with gold trading between USD 1369 and 1416.  Silver reached USD 23,20 to fall back to 22,27.  Oil prices remain steady.

Bernanke’s statement boosted global stock markets. Dow Jones immediately increased to a record high of 15 464 with equal jumps in European equities.

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22 MAY 2013: BERNANKE HOLDS THE KEY TO THE STRENGTH OF THE USD

Global markets traded steadily yesterday building up to the publishing of the Federal Reserve’s minutes from the last BOD meeting in April/May, and Ben Bernanke’s statement to Congress later today.  After a small correction on Tuesday, the USD continues to strengthen and is up close to record high against a basket of currencies, DXY.

As proven over the last few weeks, the overall trend in the USD is pointing up towards all currency pairs in spite of a day or two of declines.  This trend is supported by three main factors;  the forecast for the US is better than for any other economy, Europe is ridden with recession and Japan is concentrating its efforts on increasing the inflation to the 2 % target.

The upswing in the US economy is mainly due to its monetary easing and FED's loose monetary policies. FED representatives have, over the last few days, indicated that the bond buying program will soon come to an end. If Bernanke “sneezes” today and states the same as his local FED representatives have done, it would mean a further strengthening of the USD.

A weaker Euro and Yen over the last few hours seem to indicate that this is what markets expect.  After the Japanese Economy minister talked the Yen up earlier in the week,  he seems to have been reprimanded by superiors, and the Yen continues its free fall. The International Monetary Fund, IMF, in a report today, urged Swiss authorities to weaken the Franc by unwinding its currency reserve funds. The Franc has already depreciated 3,7 % towards the Euro in 2013.

Precious metals continue to fluctuate, wildly searching for direction.  The large increases in gold and silver throughout Asia and early European trade was quickly eaten by new steep falls. Oil prices keep steady. Smaller than expected English inflation strengthened GBP and gave the markets hopes for loser monetary policies, meaning more money printed by the Bank of England.

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Gold Rebounds As USD Weakens

Gold and Silver rebounded strongly yesterday after the onslaught at the end of last week, and in Asia on Monday morning. Both the precious metals fell nearly 5 %. Gold trades at USD 1387 an ounce in Asia, 35 dollars up from the lows 24 hours ago.  Silver trades at USD 22,70 rebounding from a low of 21.00 and reached USD 23, at the start of the Asian trading session. The cautious comments from representatives from the US Federal Reserve (FED) regarding the bond-buying stimulus, have weakened the USD.


In a statement on Monday, the President of the Federal Reserve in Chicago followed up last week’s comments from another regional FED president, that the bond-buying program might end abruptly in the autumn if, by then, the FED was sure that the labour market was on solid footing. Earlier, the FED put a 6,5 % unemployment statistic as the critical mark.  The last published data showed a 7,6 % unemployment statistic.  The aggressive monetary easing policies now also followed by Japan, has given global stock markets a strong boost.


US-stocks ended flat on Monday with indexes hovering near record levels.  Concerns about a stop in bond-buying and a correction are influencing markets.  Energy stocks and primarily solar companies soared. Dow Jones saw an intraday high at 15 391. S&P reached 1 672. Both indexes are up 17 % since January 1st.  Investors are split between nervousness for a strong correction due to the sharpness and length of the rally, and those who are afraid to miss a continued rally.


European shares set a new five-year high for the fourth straight session on Monday, after positive indicators from The United States and Japan pointed to an improving global economic outlook.  European blue chip stocks (Financial Times Eurofirst 300 index) was up one percent, which is the highest level seen since mid 2008. The positive US consumer sentiment data from Friday, the highest level seen in almost six years, is seen as especially encouraging. EasyJet and Ryan Air were among the biggest gainers.


The Japanese Yen tumbled yesterday after comments from its Minister of Economy, warning that the currency might have weakened enough. USD/JPY fell to 102 after Friday’s high on 103,22,  but has rebounded to 102,22. Oil prices are keeping steady. Brent crude trades at USD 104,83 a barrel. FED Chairman Ben Bernanke’s statement to Congress on Wednesday will be crucial for the further development in currencies and global equity markets.

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10 MAY 2013: YEN BREAKS THROUGH 100

After flirting with the 100 yen to a dollar mark for weeks USD finally smashed through this psychological important hurdle indicating further weakness in the Japanese yen. USD/JPY traded as low as 101.20 early Friday, down two percent from Thursday’s 98,75, the lowest level seen in four and a half years. The record low represents a victory for Prime Minister Shinzo Abe’s “Abenomics” and his deliberate efforts to weaken the yen and strengthen economic growth through monetary easing.

In an effort to counter the weaker yen and boost its own competitiveness both Australia and South Korea have during this week cut their interest rates, sparking what seems as a currency war among Asian trading partners. Both countries cited their strong currencies as one of the reasons for their 0,5% cuts. A South Korean finance ministry official said Friday that Seoul was worried about the pace of the yen’s decline. The yen has depreciated 25% since the decline started in October/November.

Japan economy minister Akira Amari reiterated as Japan did during the recent G-20 meeting, that Tokyo has no intention to manipulate currency levels. Analysts expect a further fall in yen as dollar/yen finally have gotten over the psychological hurdle of 100. A continued downward pressure on the currency was underscored by data published on Friday showing that Japanese investors finally have reversed their relentless selling of foreign bonds. Japanese investors have over the last 12 weeks been net sellers of foreign bonds.

The Nikkei index soared to a four and half year high, up 6,5% only this week. The US dollar was buoyed by new strong jobless claims. The last weekly report published yesterday confirm the stronger than expected monthly nonfarm payrolls for April when jobless claims fell to its lowest level in five years. Signs of a steady US recovery has already could fuel speculation that the Federal Reserve (FED) might scale back its aggressive quantitative easing.

After reaching 99,95 in early April the USD has stalled one month against the yen. EURO/JPY simultaneously rose to 131,91, its highest since January 2010. There is no major changes in oil prices, copper and other commodities. Gold fell back from its high on USD 1474 and has recovered to 1462 in early Asian trading.

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09 MAY 2013: STOCKS RALLY AS MAJOR CURRENCIES LOSE DIRECTION

Global equity markets continue to rally as major currencies have lost a clear direction. Encouraging global data and Wall Street’s extended record rally, took Asian shares to a new two-year peak Thursday morning. Australia presented strong unemployment numbers. While 50 100 new jobs were added in April, the South Korean central bank made a surprise 0,5% interest cut lowering the interest rate to 2,5%. These steps further cemented the positive mood in global markets.

Lower interest rates and central banks increased money printing have created spare liquidity which moves into stocks. The Japanese monetary easing brought the Nikkei index within striking distance of a five-years highs outperforming its global peers. Stocks remain the favored asset class among investors as monetary easing depresses return on bonds. Unclear prospects regarding the world economic growth weigh negatively on commodity prices. Commodities trade without any clear direction with precious metals temporarily falling out of favor with investors.

In contrast to the clear uptrend in global equities major currencies have lost direction. This is the case with Japanese yen, JPY, which depreciated continuously since November last year and depreciated and lost 20 – 25% against most currencies. The last weeks USD/JPY has traded in the interval between 97 – 99 yen a dollar unable to make a major breakthrough and jump above the psychological 100 level.

Investors which made huge profits betting on big cash currency positions earlier this year go into equities which regardless of economic fundamental outlooks are strongly buoyed by monetary easing. As long as central banks keep their accommodative stance the uptrend in stocks would continue. Stocks were also helped by the upbeat US unemployment figures last Friday, Chinese trading data and more promising prospects for the German industry.

In spite of the economic outlook for the Euro zone continues to be dismal, the Euro remains resilient. Euro/USD trades at 1.3160. The economic problems in Europe are indeed serious, but traders have recently burnt their fingers on going short on Euro and stay away. The Euro seems to have discounted eventual bad news, and the balance of payment and real interest rates are no lower than anywhere else. There is no clear conviction among traders as to the timing of Euro weakness. In this financial climate oil prices are keeping up steady. Brent is hovering around USD 104 a barrel. Gold price which fell to USD 1449 on Tuesday, has picked up and trades at 1474.

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08 MAY 2013: ASIAN SHARES RISE ON CHINESE TRADE DATA

The positive sentiment in global equity markets received a new boost on better than expected Chinese trade data. Asian shares rose to their highest level in two years after China reported a 14,7% export increase in April. Imports were up 16.8% with a trade surplus of USD 18,16 Billion for the month. The Chinese data comes on top of new Wall Street highs with Dow Jones closing above 15 000. In Germany industrial orders showed unexpected strength last week and pulled the Dax index into record territory.

The Australian Reserve Bank became yesterday the last central bank to cut interest rate creating an opening for parity between Australian and US dollars. Share prices are helped by decreased bond returns. The cut in interest rates play into the hands of equities. The Asian Pacific MSCI-index rose 0,8% and reached the highest level since August 2011. Global market sentiments were helped by strong quarterly results by one of the world leading banks, HSBC, and a profit jump for the US Disney. Cut in the labor seems to be the driving force behind HSBC’s result.

The Chinese trading numbers are likely to ease recent concerns about weakness in the recovery in the world second-largest economy. Doubts remain, however, over real demand in China, and the accuracy of their figures. Oil and commodity prices are trading firmer after the Chinese data. A successful bond trade in Portugal supported the upbeat mood and strengthened the Euro. Euro/USD is steady at 1.3080. There is still no breakthrough in USD/JPY which sticks to the 99 yen a dollar level. USD/British sterling, GBP is trading at 1.5479 slightly down from yesterday.

Gold continues to be under pressure. Gold lost one percent during yesterday’s trade. It has recovered to 1455. Gold backed exchange traded funds fell to their weakest level since 2009 indicating that investors money is leaving gold for booming stock markets. This suggests that the super cycle of commodities might be over and that tough times might lie ahead especially for metals. Analysts see that commodity prices in the future probably may be more determined by normal supply and demand balances than by speculative money flows.

Gold traders take an opposite opinion. The present equity boom is driven by low interest rates and central banks money printing. This will create inflationary pressure and challenges for the market system as witnessed by the financial crisis in the autumn of 2008. In such an environment investors will still use gold and precious metals as a hedge. Gold bulls, therefore, stress that a rebound to the USD 1700 level is most likely also in a shorter term perspective.

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07 MAY 2013: BULLISH STOCK MARKETS SET FOR NEW RECORDS

US and Asian stocks reached new record highs as the Japan’s Nikkei average soared 2,8 % on Tuesday morning.  For the first time since June 2008 the Nikkei broke above 14 000 as the market played catch-up from an extended holiday. The strong US jobs data eased concern over the health of Japan’s biggest export market. Japanese exporters as Toyota, Honda and Sony led the rally jumping more than 3 %.

In the US the S& P led by Apple and financials pushed further above 1600. The S & P has gained 13,4 % since the beginning of the year.  Decent earnings together monetary easing and low interests rates have helped the stock markets to new records. As long as the world’s leading central banks are providing markets with liquidity  the stock  rally is most likely going to continue at least in the short term.

Asia is today focusing on Australia where markets are waiting for the Central Bank of Australia’s decision on interest rate. Analysts are split on whether the interest rate would be lowered by a quarter point to a record low of 2,75 %. A jump in stock prices are then predicted. Australian stocks fall 0,4 % prior to the central bank’s verdict.  The Asian Pacific, MSCI-index, was as the Korean Kospi slightly down after big upward jumps on Monday.

In the currency market the Euro is on the defensive Euro/USD trading at 1.3077.  The head of the European Central Bank (ECB), Mario Draghi, stated yesterday that ECB is watching economic data and is ready to take further action if needed. The upcoming German elections in September make changes in the austerity policies unlikely in spite of Germany being under pressure from other EU-members.

While gold, USD 1465,  is losing ground on continued outflows in holdings at the world’s largest gold backed exchange traded funds, SPDR Gold Trust, crude and copper are steady.  Brent crude continues to trade above USD 105 a barrel.

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06 MAY 2013: US JOB REPORT EASES FEARS

The US stock markets reached new highs on Friday. The S&P 500 index smashed through the 1600 mark for the first time in history. All 30 companies on the Dow Jones Industrial Average rose as that benchmark crossed 15 000 for the first time after better than expected jobs reports. Non-farm payrolls increased with 165 000 jobs in April. Analysts forecast was 140 000. The unemployment rate fell to 7,5%, the lowest level since December 2008. Asian stocks spurred higher Monday morning on the US job data.

The better than expected jobs report eased fears about the health of the world’s largest economy which remains on a path of modest, but resilient growth. The Federal Reserve (FED) indicated last week that it is prepared to increase the USD 185 Billion –a-month pace of its third round of quantitative easing. The new figures mean there is little chance for such an increase. The job creation in April was heavily weighted towards the service sector. The production side with construction was shedding 6000 jobs. There is also a dip in average weekly hours from 34,6 to 34,4.

The US job data follow central banks meetings last week. While the US FED expressed readiness to increase monetary easing, the European Central Bank (ECB) informed that if necessary it would consider taking deposit rates negative. The mere fact that the key central banks aired such an opportunity was enough to sustain the rally in stocks, bonds and credit demonstrated by the new records on Wall Street and the positive sentiments in Asia this morning. Decreasing rates meaning that stocks are the most attractive alternative investment.

Oil prices have also been given a boost by the US jobs reports. New York crude (NYMEX) is for the first time in weeks trading above USD 96 a barrel. Brent crude is at 104,50. Copper is in the limelight after a 6,5% rally to USD 7 270 on Friday. Copper has fallen nearly 20 percent in the past three months on worries of a slowing world economy. Japanese yen is falling against the dollar trading at 99,08 yen to a dollar. Euro/USD is at 1.3122.
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03 MAY 2013: ECB RATE CUTS SUPPORT SHARES

EUR/USD lost more than 100 points after the European Central Bank (ECB) decided to cut interest rate with 0,25 % to a historical low of 0,50. The Euro fell immediately on the announcement and  trades at 1.3074. The decision received cheers from  stock markets which rallied in early Asian trade on Friday. In the US Wall street was helped by a sharp fall in last week’s jobless claims which fell to its lowest level in five years.

The smaller number of Americans seeking jobless benefits claims was seen as a sign of a healing job market in spite of the presentation a ray of weak economic data lately. US stocks were also helped by a narrowing trade gap in March.  The fact that both imports and exports fell,  indicate, however, weaker demand, and tells of weakening growth momentum both in the US and globally.

Initial claims for state unemployment benefits dropped with 18 000 last week to seasonally adjusted 324 000. The claims report runs counter to a number of signals of  economic activity softening in  March and April. The data has no direct bearing on the Labour Department’s monthly employment report which is expected later today. It suggests, however, that employers are feeling less pressure to lay off workers even if they have cut back on hiring.

Oil, copper and gold prices traded higher with Brent crude up 2 % to 102,65. The US stock rally was led by tech shares.  Facebook delivered better than expected and rose 5 %. The ECB decision to cut rates for the first time in 10 months helped market sentiment and bolstered the content of the Federal Reserve (FED) statement Wednesday. FED will continue to buy bonds to keep interest low and spur growth. If necessary FED kept the door open for stepping up the purchases. Also the ECB kept options for  further action to stimulate the economy.
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02 MAY 2013: ECB INTEREST CUT SEEMS LIKELY TODAY

Growing doubts over the health of global economies pushed Asian stocks lower on Thursday after disappointing US economic data pushed Wall street down. Dow Jones industrial fell 0,92 % adding to doubts over the strength of the world’s biggest economy. Slow Chinese demand puts new question marks on China’s economic recovery. The European Central Bank (ECB) is meeting later today. ECB is expected to cut interest rates down to a low of 0,5 % in an effort to take the Euro zone out of recession.

The Asian Pacific MSCI-index fell 0,5 percent with Australian shares leading the decline. Miners dragged the AXJO index down 0,8 % on fears of lesser Chinese appetite for commodities. The Chinese PMI (Purchasing Managers index)fell in April, but the upward trend continues. It is, however, fragile and has lost momentum due to signs of pausing in the US economy. Market sentiments are split between growth prospect worries and support for sustained monetary stimulus.

There are also worries that a weaker US economic growth may prompt profit taking in Asian equities.  Asia has strongly outperformed earlier this year,  USD/JPY is trading steady at 97,24 unable to break through the psychological important 100 level.  Some analysts expect that yen is going to continue to depreciate after a short breathier.  A US trading at 110 yen towards a dollar is perceived.

The dollar has recovered from lows against a basket of six major currencies, DXY, but stayed at lowest levels since late February. The dollar weakness lifted the euro to a two month high of USD 1,3243 on Wednesday. It trades steady around 1.3178 in the opening sessions in Asia. Weak credit demand in the euro zone shall most likely lead to further contraction in the region. This points along with disappointing German PMI in April towards an interest rate cut when ERCB meets later today.

Growing unemployment in the Southern European periphery of Europe and slower growth in Germany, have led to a renewed debate on the austerity measures carried through by The ECB and EU-commission with Germany as the driving national engine. A leading critics of the austerity measures, the economic Nobel laureate, Paul Krugman, says  in a recent article that the austerities is far from any sound economics and purely dictated by leading bankers and politicians political prejudices. The results are catastrophic for the economy as well as human beings.  

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