Euro Falls on Draghi Stimulus Speech; Aussie Gains on China Cuts

The euro dropped the most in 12 weeks against the yen as European Central Bank President Mario Draghi said policy makers would broaden asset purchases if the inflation outlook for the region slowed.

Among the shared currency’s 16 major peers, only Switzerland’s franc fell, dropping amid speculation the nation’s central bank is intervening to defend a 1.20-per-euro cap. The yen strengthened, paring a fifth straight weekly drop, after Japan’s Finance Minister Taro Aso said the currency had depreciated too rapidly. Australia and New Zealand’s dollars climbed after China cut interest rates for the first time since 2012.

“The ECB is going to be delivering something more substantial at its meeting in December and his comments have been very much in line in confirming our view,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “People haven’t got as much of this trade on as they really want, which is why we’ve been seeing such a big reaction in the price to his comments.”

The euro weakened 1.3 percent to 146.32 yen at 10:17 a.m. New York time, reaching the steepest decline since Aug. 27. The shared currency dropped 0.9 percent to $1.2427. The yen advanced 0.4 percent to 117.75 per dollar, halting a six-day drop.

bloomberg

Click on the logo to read the full article on Bloomberg.

Read More

China cuts rates & drives lend-borrow spread to 16-year lows

China’s decision to cut its benchmark interest rates for the first time in two and a half years reflects the recent deterioration in economic data. With GDP and inflation both at four-year lows, Chinese authorities cannot content themselves solely by reducing the required reserve ratio on banks as wasthe practice in 2011-2012.   The impact of China’s move is a classic play of boosting global equitiescommodities and their currencies, reinforcing investors’ preferred play of shorting EUR and GBP vs the Canadian dollar. Yen weakness returns to the fray alongside the rebound in equities, proving that any USD/JPY pullback is a temporary opportunity to admit bulls into the December-Abe party.

–        China cut its one-year deposit rate by 0.25 % to 2.75% and its lending rate by 0.4 % to 5.6%, which means the spread between both rates is now at 2.85%, the lowest in 16 years.

–        Thursday’s flurry of manufacturing and services surveys from the US, China and Eurozone confirms the status quo in the currency markets; a cooling off in the pace of US manufacturing expansion, despite remaining the highest rate in the G7 –, while both Germany and China eked out an expansion, albeit at a slower pace, as did the pan-Eurozone measure of both sectors. France remained in contraction territory.

China-rates-Nov-21-530x298

Click on the logo to read the full article on CityIndex.

city index

Click on the logo to read the full article on City Index

Autor: Ashraf Laidi.

laidi

Read More

Oil lower as producers scramble to find support for prices

Both Brent and WTI fell back overnight on the Japanese growth news but they’ve been held up by growing chatter of productions cuts by OPEC producers. Officials from producing countries are going to be scurrying about meeting each other ahead of the main OPEC meeting at the end of the month, in an effort to stabilise prices.

They’ve got a big battle on their hands with the Saudis who want to try and protect their market share. Here’s a couple of graphs that justify their fears of losing out to the US.

OPEC-share-of-production-since-2000

forexlive petit

Read the full article on ForexLive by clicking here.

Author: Ryan Littlestone

Read More

Keystone XL and lower oil: careful what you wish for

Oil traders are watching today’s vote at the US House of Representatives on the long-awaited bill approving the Keystone XL oil pipeline, transporting crude oil from western Canada to the US Gulf Coast. 

The chorus in favour of alternative energy sources has grown loud, to the extent that the resulting decline in energy prices is hurting producers and exporting nations. Loonie traders have seen the currency fall 7% as oil lost a third of its value. 

This month’s mid-term elections sweep by the Republican Party of both the House and Senate boosted hopes for big oil that the long-delayed pipeline could finally win approval from US lawmakers. The US Senate is expected to hold its own vote on the Keystone XL in December.

One month ago, it was widely perceived that the pro-business, pro-oil Republicans will successfully pass the bill in both chambers of Congress, forcing President Barack Obama to accept it. The environmentally-friendly Obama administration has stalled making a decision on authorising the pipeline since 2008, when TransCanada, the pipeline owner first submitted its request for a permit.

Keystone XL: not so fast

Yet, if the Democrat-controlled Senate (until year-end) does vote on the bill in December, the Republican supporters of the pipeline will hope for sufficient Democrat votes to obtain overall majority. A small majority (less than two-thirds) at the Senate may still be vulnerable to a Presidential veto, while a majority of greater than two-thirds is unlikely.

Keystone XL would carry bitumen oil from the oil sands of Alberta to Nebraska juncture, where it will connect with other pipelines in the Midwest of the US and Gulf of Mexico. But the risk of pipeline shortages between Alberta and the US has further escalated amid the 30% plunge in oil prices, which makes it difficult to cover the escalating costs of new pipelines, particularly development of oil sands projects.

The International Energy Agency warned yesterday that a prolonged decline in oil prices could hit investment in new supplies, reinforcing the world’s dependence on MidEast oil.

city index

Read the full article on City Index by clicking here.

Author: Ashraf Laidi.

Read More

Supports & Resistances

EURGBP

Currently trying to chew through offers into 0.7910. What a difference a day makes eh?

Sellers 0.7900-10 (stops above) 0.7925-30 0.7950 0.7965 0.7985 0.8000

Buyers 0.7885 0.7870 0.7850 0.7820-25 0.7810 0.7800-0.7795 (stops below) 0.7780-85 0.7750

GBPUSD

Currently 1.5778 off Asian lows of 1.5759 protected by demand into 1.5700-50 target and capped by EURGBP demand

Sellers  1.5785-90 1.5800 1.5830 1.5850 (stops above) 1.5880 1.5900-10 1.5925 1.5950

Buyers   1.5760 1.5750 1.5725-35 1.5700-10 (stops below) 1.5685 1.5665 1.5650

EURUSD

Currently enjoying some love at 1.2460 but tempered by euro pairs finding some sell interest after good demand so far

Sellers  1.2475-85 1.2500-10 (stops above) 1.2525-30 1.2550-55 1.2580-85 1.2600

Buyers 1.2440 1.2425-35 1.2400 1.2385 1.2355-60 1.2350 (barrier option- stops below) 1.2325-35 1.2300

USDJPY

Currently 115.60 in retreat from the highs above 115.80 with 116.00-10 still providing good resistance, but there’s bids in the dips

Sellers  115.85-95 116.00-10 (stops above) 116.20 116.30 116.45-50

Buyers 115.40-50 115.20 115.00 114.85 114.65 114.50 114.25-30 114.00

Read More