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US Dec labour report, something for everyone, but weak wages dominate – ING

 

 

FXStreet (Barcelona) - Rob Carnell of ING, notes that the US NFP print came in at 252k, better than consensus, but hourly earnings dropped to 1.7% from previous 1.9%, further sharing that the strong unemployment rate and payroll numbers might provide the necessary ammunition for a Fed rate hike.

 

Key Quotes

 

“There was, as is often the case, something for everyone in the latest US labour report for December. Non-farm payrolls were slightly stronger than the consensus at 252K (240K consensus) though with substantial upward revisions to the previous months’ data, it does now look as if the payrolls trend is beginning to lift a little.”

 

“There was, in addition, a bigger than anticipated decline in the unemployment rate, which fell 0.2pp to 5.6%, helped by a 111K bounce in the household survey of employment and a drop in labour force participation.”

 

“But hourly earnings were a real disappointment. Just when it looks as if the US is about to see a step up in the wages figures, not only do you get a weak figure (-0.2%mom) but large revisions to past data, and the wages growth rate has plunged back to 1.7%YoY from 1.9% (2.1% unrevised last month).”

 

“If you want to raise rates, these numbers provide the ammunition you need in terms of payrolls and the unemployment rate. Historically, the Fed always thought full employment was at about a 5.3% rate. So we are insignificantly higher than that now. The rate of payrolls jobs growth is also lending weight to the “hikers” arguments.”

 

“Against this, with even less wage inflation than was apparent last month, the doves can argue that the unemployment figures are biased and giving a misleading steer, and argue against any near-term increase in rates.” 

 

 


 

 

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CNB might not devalue the Koruna more – KBC

 

 

FXStreet (Barcelona) - The KBC Bank Research Team expects CNB to refrain from any more devaluation of the Koruna in the event of another fall in demand and inflation, meanwhile it might wait for further euro data and ECB’s action.

 

Key Quotes

 

“Our baseline scenario still envisages that the CNB will not eventually resort to more devaluation and, in the event of another unexpected fall in demand and inflation, as a first step the Bank Board would rather be another extension of its commitment to intervene against the koruna.”

 

“It is also possible that the CNB Board will be satisfied with weakening the koruna through verbal communication as was recently delivered by CNB’s vice‐governor Tomšík in his commentary for the Czech business daily.”

 

“In the meantime, the CNB might wait and watch for more macroeconomic data from both the Czech Republic and the euro area and for another ECB’s policy action.” 

 


 

 

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Consensus on US Job growth met, but big earnings disappointment - BBH

 

 

 

FXStreet (Guatemala) - Analysts at Brown Brothers Harriman explained that the US created 252k new jobs in December, while the October-November series was revised up by 50k. 

 

Key Quotes:


"The participation rate ticked down to match the cyclical low seen last September of 62.7% (from an upwardly revised 62.9% in November). This was behind the decline in the unemployment rate to 5.6%". 

 

"Hourly earnings were an important disappointment. Not only did they fall by 0.2% m/m in December, but the 0.4% rise in November (that was seen as a preliminary sign that the improvement in the labor market was finally seeing upward pressure on wages) was halved to 0.2%. The year-over-year rate slumped to 1.7%, the lowest since October 2012. This will become problematic for the Fed if it persists. As the FOMC minutes suggested, if the labor market continues to improve, which includes broader measures than simply the unemployment rate such as earnings, the Fed could still raise rates even if there is no further progress toward the inflation target". 

 

"The manufacturing sector added 17k jobs, and construction added 48k. These points to a healthy increase in industrial output in December. Business services, leisure, and health care continue to post strong jobs growth. Recent data suggests the US economy may have grown around 3% in Q4". 

 

"The US dollar traded higher across the board in response to the employment figures that we would read a bit more cautiously. The move in the December Eurodollar futures implying the lowest yield since mid-December is more in line with our cautious assessment than the knee-jerk gains in the dollar". 

 

 

 


 

 

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Fed member Voting right rotations - Danske

 

 

 

FXStreet (Guatemala) - Analysts at Danske Bank noted the rotations of Fed member voting tights.

 

Key Quotes:

 

"With the upcoming rotation of voting rights at the January FOMC meeting, Evans (dove) and Lacker (hawk) will become voting members, while Kocherlakota (dove) will lose his voting right". 

 

 

 

 


 

 

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GBP/JPY to test 180.90 before further sell-off resumes – FXStreet

 

 

 

FXStreet (Barcelona) - FXStreet Editor and Analyst, Omkar Godbole, shares that soft Yen and recovering UK Gilt Yields might support gains in GBP/JPY, anticipating the pair to test 180.90 before further sell-off resumes.

 

Key Quotes

 

“The GBP/JPY pair fell to a 2-month low today after the data in the UK showed CPI in December at 0.5% year-on-year, which is well below the estimate of 0.7% and down from the November’s print of 1.0%.”

 

“The cable weakened to a three-day low of 1.5076 following the weak data, although losses have been recovered since the Gilt yields in the UK recovered post the release of the data”

 

“The recovery in the UK Gilt yields, along with relative weakness in the Yen on recovery in Treasury yields is likely to support gains in the GBP/JPY pair.”

 

“Technically, the GBT/JPY pair is oversold on daily charts as indicated by the RSI. Plus a technical buying is likely to set-in since the pair has recovered after dipping below the support at 178.70.”

 

“We can also see a positive price-RSI divergence on the 4-hour chart.”

 

“Thus, the pair is likely to test 180.90 (100-DMA) levels before resuming further sell-off.” 

 

 

 

 


 

 

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UK CPI falls, Swedish CPI boosts the krona – BBH

 

 

 

FXStreet (Barcelona) - The BBH Team note that two inflation reports and two trade reports dominate today's macro-economic developments, with UK CPI falling below consensus (0.7%) to 0.5%YoY, and Swedish CPI remaining firm at 0.2% MoM, boosting the Swedish krona.

 

Key Quotes

 

“The UK reported a 0.5% year-over-year increase in CPI. This was below the 0.7% consensus and is half the pace seen in November.”

 

“BOE Governor Carney has to write a letter to Chancellor of the Exchequer Osborne to explain the undershoot. Energy and food prices are the key drivers.”

 

“We note that the core rate actually ticked up from 1.2% to 1.3%. The December short-sterling futures firmed to test the contract high set last April at 99.32 (implied yield 68 bp) as the market all but gives up on the idea of a rate hike this year.”

 

“Sweden also reported December CPI figures. It was surprisingly firm at 0.2% on the month. The market had expected a 0.1% decline. The year-over-year rate did slip into more negative territory (-0.3% from -0.2%) but was not as low as had been feared/expected (-0.5%). The underlying rate did tick up to 0.2% from 0.0%, but caution is advised here. The underlying rate is calculating using a fixed mortgage interest rate rather than excluding food and energy.”

 

“The Swedish krona rallied on the news and is the strongest of the major currencies today, gaining 1% against the US dollar.”

 

“The Riksbank meets on February 12, and an adoption of aggressive action seems somewhat less likely now. It may still adjust its forward guidance, pushing out the timing of the first rate hike and perhaps lengthening some repo operations, but negative rates or bond purchases seems unlikely.” 

 

 

 

 

 


 

 

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Slump in Copper not enough to trigger deep production cuts

 

 

 

FXStreet (Mumbai) - With the London Copper trading below USD 6000 for the first time since October 2009, a tenth of world’s top miners are likely to suffer losses despite which the production cuts may not be significant. 

 

The metal’s 16% slide since July is the biggest since 2003. As per Robert Edwards, managing consultant for mining costs at consultancy CRU, “the pain would be more acute and unsustainable at USD 5,000 per tonne. At that point “tangible cutbacks” can be expected.”

 

However, some incremental projects have been affected reports Reuters. Antofagasta will shutter its small Michilla operation in Chile this year because it has become uneconomic. 

 

Moreover, a prolonged low price may force to scale back their production. As per Bruce Allway, analyst at GFMS, owned by Thomson Reuters, “If, as we expect, copper prices remain under pressure in coming months, other producers at the upper end of the cost curve may opt to follow suit. “

 

 

 

 


 

 

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Silver flirts with USD 17/Oz level

 

 

 

FXStreet (Mumbai) - Silver prices extended gains in line with Gold prices, after having breached the 100-DMA located at USD 16.56 to trade at USD 17/Oz levels. 

 

The metal struggled near the 50-DMA for six consecutive sessions before rising well above the same during the European session today. The rise in Silver is more or less in line with the gains witnessed in the yellow metal. However, being utilized in industries, gains in Silver may be capped due to gloomy outlook of the global economy. Nevertheless, prices are likely to remain well supported due to its semi safe haven status. A correction in the US dollar coupled with continued risk aversion in the equities may push Silver prices to December 2014 high of USD 17.33/Oz levels. 

 

Silver Technical Levels

 

The immediate resistance is seen at 17.03, above which prices could test 17.33(Dec 2014 high). Meanwhile, support is seen at 16.78 and 16.56 (100-DMA) levels. 

 

 

 


 

 

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UAE oil minister: Sudden rise in oil unlikely – KBC

 

 

 

FXStreet (Barcelona) - The KBC Bank Team notes UAE’s oil minister commented that it could take year to adjust oil production and that a sudden rise in oil prices is unlikely.

 

Key Quotes

 

“The oil price slumped by more than 5% yesterday. Today in early trading, Brent is even seen at 45.8 USD/bbl.”

 

“Regarding news, Suhail Al Mazrouei (a UAE oil minister) reiterated today that the OPEC will stick to its strategy and will keep its production unchanged. He also said that it could take years to adjust oil production to appropriate levels and that it was unlikely we would see a sudden rise in oil prices.”

 

“Though we acknowledge risks related to the June OPEC meeting, we also do not expect the cartel will change its policy.”

 

“All in all, Mazourei’s comments are in line with our view that there may be only a handful of reasons for oil price to go up significantly in the short-term.”

 

“On the other hand we still see current prices are too low from the longer term perspective. As usual this view is of course based on many additional assumptions such as on steady growth of oil demand.” 

 

 

 

 


 

 

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US small business optimism rises in December

 

 

 

FXStreet (London) - The US Small Business Optimism Index rose to 100.4 in December, beating expectations of a rise to 98.5, according to the National Federation of Independent Businesses.

 

According to the survey carried out by the NFIB 16 percent of employers think it is a good time to expand and the percentage of employers anticipating job creation rose to 15 percent.

 

Employers with jobs not able to fill rose to 25 percent. Firms seeing easier credit conditions rose to -5 percent. Firms expecting positive earnings trends rose to -15 percent. Firms expecting compensation to grow rose to 25 percent.

 

However, Percentage of firms expecting a better economy fell to 12 percent. 

 

 

 

 


 

 

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GBP/JPY makes another run at 180.00 levels

 

 

 

FXStreet (Mumbai) - The GBP/JPY pair made another attempt at 180.00, the level which it failed to take out twice since the yesterday’s US session. 

 

The gains in the US stock markets coupled with the recovery in the US Treasury yields pushed the USD/JPY pair 0.30% higher at 118.71 levels. The 10-year yield has recovered losses to trade almost one basis points higher for the day at 1.919%. Meanwhile, the DJIA advanced 1.59% to trade at 17,921.50 levels, while the S&P futures are up 1.31% at 2048.95 levels. Sustained strength in the equities and the Treasury yields may see GBP/JPY rising above 180.00 levels. 

 

GBP/JPY Technical Levels

 

The immediate resistance is seen at 180.07, above which the pair may re-test 180.52 levels. Meanwhile, support is seen at 179.14 and 178.46 levels. 

 

 

 

 


 

 

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JOLTS: Job openings rose to 4.97 million in November

 

 

 

FXStreet (London) - There were 5.0 million job openings on the last business day of November, little changed from 4.8 million in October, the U.S. Bureau of Labor Statistics reported today. Hires (5.0 million) were little changed and separations (4.6 million) declined in November. Within separations, the quits rate (1.9 percent) was unchanged and the layoffs and discharges rate (1.2 percent) was little changed.

 

According to the BLS report, there were 5.0 million job openings on the last business day of November. The job openings rate was 3.4 percent. The number of job openings was little changed for total private and increased for government in November. Job openings increased for non-durable goods manufacturing and for state and local government. The number of job openings was little changed in all four regions.

 

There were 5.0 million hires in November, little changed from October. The hires rate in November was 3.6 percent. The number of hires was little changed for total private and government. Hires decreased over the month in professional and business services and in the West region. 

 

 

 

 


 

 

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JOLTS: Job openings rose to 4.97 million in November

 

 

 

FXStreet (London) - There were 5.0 million job openings on the last business day of November, little changed from 4.8 million in October, the U.S. Bureau of Labor Statistics reported today. Hires (5.0 million) were little changed and separations (4.6 million) declined in November. Within separations, the quits rate (1.9 percent) was unchanged and the layoffs and discharges rate (1.2 percent) was little changed.

 

According to the BLS report, there were 5.0 million job openings on the last business day of November. The job openings rate was 3.4 percent. The number of job openings was little changed for total private and increased for government in November. Job openings increased for non-durable goods manufacturing and for state and local government. The number of job openings was little changed in all four regions.

 

There were 5.0 million hires in November, little changed from October. The hires rate in November was 3.6 percent. The number of hires was little changed for total private and government. Hires decreased over the month in professional and business services and in the West region. 

 

 

 

 


 

 

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Gold erases gains

 

 

 

FXStreet (Mumbai) - The strength in the US equity markets coupled with recovery in the US Treasury prices has pushed Gold prices to the previous session’s close at USD 1232.80/Oz levels. 

 

The yellow metal declined from a high of USD 1244.30 hit earlier today to trade just 0.10% up for the day at USD 1234/Oz levels. The haven demand for the yellow metal declined as equity markets in the US posted solid gains. The DJIA currently trades 1.42% higher at 17,891.50, while the S&P futures trade 1.285 higher at 2048.45 levels. Meanwhile, the US 10-yr Treasury yields have recovered losses to trade 2.1 basis points higher at 1.933%. The strength in the Treasury yields has pushed the USD index up by 0.32%. 

 

The yellow metal may fall into the red, if the equity markets extend rally, thereby pulling up the Treasury yields. 

 

Gold Technical Levels

 

The metal has an immediate resistance located at 1238.3, above which gains could be extended to 1244.87 (200-DMA) levels. Meanwhile, support is seen at 1230.00 and 1224.42 (5-DMA) levels. 

  

 

 

 

 


 

 

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Forex is such a stress full business so we need someone supports in order to grow and get stable into this but without that we will fell on our face. I am happy that finally some company has started this. I am using your analysis service regularly and very happy and satisfied with my results and the best thing is that I am no longer in stress over trading, so thanks to OctaFX group for giving us opportunity to use their analysis.

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Yen surges on weak US retail sales - MP

 

 

FXStreet (Barcelona) - Kenny Fisher, Currency Analyst at MarketPulse, notes that USD/JPY responded sharply to the weak US retail numbers, as the pair has fallen about 120 points so far.

 

Key Quotes

 

“USD/JPY has sustained sharp losses on Wednesday. In the European session, the pair is trading in the mid-116 range. The yen has taken advantage of awful US retail numbers. Core Retail Sales fell by 1.0%, while Retail Sales dropped 0.9%.”

 

“In Japan, today’s highlight is Core Machinery Orders, with the markets expecting a strong gain of 4.8.”

 

“USD/JPY has posted losses in the Asian and European sessions, braking below two support levels.”

 

“116.69 is a weak resistance line. 117.94 is stronger. 115.56 is a strong support level.”

 

“Current range: 115.56 to 116.69”  

  

 

 

 

 


 

 

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US engine spluttering? - ING

 

 

FXStreet (Guatemala) - Rob Carnell, analyst at ING Bank noted commented further on the recent retails sales disappointments from the US.

 

Key Quotes:

 

"While these retail sales figures are a little worrying, and follow a substantial shift back in the market’s implied tightening by the Fed this year from late last year, we are reserving judgment on what this means. It is not unusual for US data to wobble like this."

 

"However, if we do not see a strong recovery in the January figures, it will be time to review whether the US economy is as strong as the 3Q14 figures suggested, and whether extrapolating that strength into 2015 is such a good idea."

 

"More worryingly, with the US about the only beacon of growth globally, if even this engine is spluttering, then a more substantial market correction than we have already seen may well be on the cards."  

  

 

 

 

 


 

 

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EUR/GBP consolidates near 6-year lows

 

 

FXStreet (Córdoba) - EUR/GBP is falling for a sixth day in a row on Wednesday, having scored a fresh 8-month low during the European session, weighed by growing speculation of QE after an adviser to European Court of Justice said the ECB can legally buy large quantities of sovereign bonds.

 

EUR/GBP dropped its its lowest level in over 6 years at 0.7732 before recovering some ground and settling in a range within a touching distance of lows. At time of writing, the pair is trading at 0.7740, recording a 0.31% loss on the day.

 

EUR/GBP technical levels

 

As for technical levels, EUR/GBP could find immediate supports at 0.7732 (Jan 14 low), 0.7693 (Oct 20 2008 low) and 0.7664 (Mar 14 2008 low). On the flip side, resistances are seen at 0.7780 (daily high) and 0.7800 (psychological level).   

  

 

 

 

 


 

 

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Crude gains on weak US dollar

 

 

FXStreet (Mumbai) - Crude prices in the US gained strength as the USD weakened sharply post the release of the dismal Advance retail sales data in the US. 

 

WTI Crude for February delivery traded 0.37% higher at USD 46.06/barrel. Prices gained 1% at one point of time as the US dollar weakened across the board. The USD index dropped to 91.81, before recovering to trade 0.25% lower for the day at 92.21. 

 

Meanwhile, Crude trimmed gains after the data showed oil supplies in the US rose more than expected. The US Energy information Administration (EIA) said in its weekly report that oil inventories rose by 5.4 million barrels in the week ended January 9, compared to expectations for an increase of 0.5 million barrels. The bearish supply report is likely to cap gains arising out of weakness in the US dollar. 

 

WTI Crude Technical Levels

 

The immediate resistance is seen at 46.79, above which gains could be extended to 47.41 levels. Meanwhile, support is seen at 45.98 and 45.23 levels on the hourly chart.  

  

 

 

 

 


 

 

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S&P 500 VIX futures rise to three-month high

 

 

FXStreet (Mumbai) - The sharp fall in the equity markets triggered by panic sell-off in commodities today pushed the S&P 500 VIX futures to 21.93, a level last seen in mid-October 2014.

 

The VIX futures currently trade 4.47% higher at 21.08 levels, compared to the previous session’s close at 20.18 levels. On Technical grounds, the VIX futures have breached the resistance seen at 20.55. A rise above technical resistance indicates a high possibility of further sell-off in equity markets. Moreover, the VIX futures have slowly gained from the low of 13.40 hit on Dec. 5 on concerns of rout in Crude prices and renewed concerns of 'Grexit' that hit markets at the year end. 

 

S&P 500 VIX Technical Levels

 

The immediate resistance is seen at 21.92, above which gains could be extended to 22.69 (Oct. 15 high). Meanwhile, support is seen at 20.55 (Jan. 6 high) and 20.00 levels.   

  

 

 

 

 


 

 

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USD/JPY continues on a southernly journey

 

 

FXStreet (Guatemala) - USD/JPY is currently trading at 116.87 with a high of 117.98 and a low of 116.07 and down 0.82% on the day.

 

USD/JPY has been on the offer again and lost yet another handle. The pair's downtrend has been exacerbated by the poor performance in US data in respect of the retails sales. US retail sales dropped 0.9% in December, vs -0.1% consensus. Excluding auto sales it fell 1.0% against 0% expected.

 

USD/JPY now moves into the 116 territory and brings the December low's back in as a very viable target for the bears at 115.56. With plenty of focus on slowing global growth factors and risk associated with political uncertainty in various countries, volatility is likely to remain the theme and risk-off scenarios will support the Yen at times along a bumpy ride. That ride however is expected to return the major back into the 120's on the basis of a stronger dollar in 2015 and the divergence between the two opposing Central Banks. However, there is still room to the downside as Karen Jones, chief analyst at Commerzbank noted, "We note that the daily Elliot wave count is suggesting that we are likely to see a retracement towards 113.80/111.40.".   

  

 

 

 

 


 

 

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Inflation and monetary policy trends in EM - BBH

 

 

FXStreet (Guatemala) - Analysts at Brown Brothers Harriman explained that while low DM bond yields have captured the attention of the markets, they note that EM bond yields have also fallen significantly. 

 

Key Quotes:

 

"US 10-year yields near 1.80% are new cycle lows, while most EM 10-year local currency yields are at the low end of recent (3-month) trading ranges". 

 

"Mexico is near 5.6%, for example, while India is near 7.75%. South Africa and Turkey too are right at the low end of recent ranges. Notable exceptions are Brazil (at 12.1%, just below the middle of its 3-month trading range) and the Philippines (at 4.3%, near the top of that range)".

 

"The same holds true for EM dollar-denominated debt (see report: Broad Trends in EM Bonds). Here, the notable exceptions are Russia and Venezuela".

 

"What’s driving this rally? Pretty much the same factors driving the DM rally: lower commodity prices coupled with slow global growth, which are feeding into global deflationary impulses. Most central banks are grappling with inflation that is below target".

 

"As a result, we think most EM central banks will swing dovish in 2015".   

  

 

 

 

 


 

 

Jan 14,2015

OctaFX.Com News Updates

 

 

 


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