The Morning Briefing is prepared daily at the start of the European Trading session by RTFX’s trading desk. It presents a roundup of the major news headlines occurring within the global economy that may affect the forex market. This news bulletin also includes a view of our forex calendar for the day, highs and lows achieved in the previous sessions from the forex market, global indices and commodities and brief commentary about the economic headlines.
Morning Briefing for Tuesday, 31 Jul 2012 (Updated 08:53:10 CET)Hopes of more Central Bank stimulus continues to lead markets
MORNING BRIEFING: Hopes of more Central Bank stimulus continues to lead markets
United States: President Obama calls for decisive action to stop euro from forecast dissolution by taking “decisive steps”.
Global markets: Asian stocks rise on speculation of more easing by the FED and the ECB
Euro zone: Draghi to meet with Bundesbank’s Weidmann in next few days to discuss bond purchasing
Forex: Euro stays in tight range between 1.2230 and 1.2400
Rates in Asia and Indexes:
EURUSD: 1.2250– 1.2289.
USDCHF: 0.9774 – 0.9804.
GBPUSD: 1.5704 - 1.5730.
EURJPY: 95.74 – 96.13.
USDJPY: 78.1 – 78.23.
DowJones : 13073 -0.02%
NASDAQ: 2'945.84 -0.41%
S & P 500: 1'385.30 -0.05%
Nikkei: 8’689.38 +0.62%
Shanghai: 2'136.44 -0.23.%
Gold: $ 1'576.00 -0.09%
Crude Oil: $ 89.81 +0.03%
Yesterday in Europe, all the benchmark indexes closed in green territory, confident that the ECB may add stimulus. At the moment, the markets are really focused on central bank actions rather than the economic environment. Investors are buying on expectations that the US and Europe may ease monetary policy.
US stocks consolidated their previous gains before reports this week that may show the country’s jobless rate remained above 8 percent and consumer confidence fell in July. Obama called for decisive action to stop the euro from forecast dissolution by taking “decisive steps”.
Long term interest rates are very close to their historical record lows. Speculation that the Federal Reserve will add to monetary stimulus to boost the economy are weighing on Treasury yields.
Overnight in Asia, shares extended gains on anticipation the Federal Reserve and the European Central Bank may signal moves to stimulate amid signs of a global economic slowdown, boosting the earnings outlook for exporters.
There is also optimism that China may boost its infrastructure investment as it seeks to keep growth around 10% by year.
Shares also gained as Japan’s jobless rate unexpectedly declined in June to 4.3 percent, beating analyst expectations that unemployment would remain flat at 4.4 percent.
The Federal Open Market Committee will announce a policy decision tomorrow, and the European Central Bank will convene on August 2nd. US Treasury Secretary Timothy Geithner and German Finance Minister Wolfgang Schaeuble backed a commitment by European leaders to do everything needed to defend the euro area while failing to mention its weakest link, Greece.
On the currency front, the dollar fell against 15 of its 16 major peers amid speculation the Federal Reserve policy makers may signal additional stimulus when they conclude a two-day meeting that starts today. The market is pricing actually QE3 in the future.
The Aussie hit its highest level in four months after a report today showing the nation’s building approvals decreased by less than economists expected.
Demand for the euro was supported after ECB President Mario Draghi pledged last week to do whatever it takes to preserve the single currency, suggesting policy makers may intervene in bond markets.
Further ECB interest-rate cuts and long-term loans to banks could be also up for discussion.
Technically, EUR/USD evolves actually in tight range between 1.2230 and 1.2400.
Today at 4pm we will have the US consumer confidence index which may certainly spark an important move in the market.
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