User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Friday February 27, 2009 - 16:49:20 GMT
BHF-Bank - www.bhf-bank.com

Share This Story:
| | Email

FX Briefing - ECB: Half-hearted interest rate cut

FX Briefing 27 February 2009

Highlights

·        Japanese slide accelerates, yen drops

·        ISM and US payroll data continue to deteriorate

·        ECB set to cut interest rates to 1.5%

·         

ECB: Half-hearted interest rate cut

EUR-USD rallied initially, but relinquished its gains again later in the week. At the beginning of the week, the euro shot up towards 1.30 on rumours about the possible nationalisation of US banks. However, after equity markets collapsed – on Monday afternoon, the Dax fell below 4000 it tumbled to around 1.28. Finally, on Friday, EUR-USD dropped below 1.27, thus ending the week at about the same level as the previous week. After dropping sharply in the last few weeks, most eastern European currencies recovered again somewhat. The central banks of Poland, the Czech Republic, Hungary and Romania issued a joint statement criticizing the recent selloff as exaggerated and announcing that they were prepared to take coordinated action. This seemed to have some impact on market participants.

 

Whereas the euro held its ground quite well this week, the Japanese yen (and all the other Asian currencies) remained under significant pressure. The extremely weak trade balance figures for January and the fact that industrial production declined again by 10% month-on-month confirmed fears that the downturn in economic activity would actually accelerate in the first quarter. Against this backdrop, USD-JPY rose temporarily to 98.71, only to slip back to around 97.30 on profit-taking and rumours of exporters’ dollar sales.

 

The relative strength of the euro cannot be put down to economic data alone. The European figures were mixed. The EU Commission’s Economic Sentiment Indicator for the Eurozone continued its downward trend and is now at 65.4% of its long-term average. The outlook for the industrial sector seems to be particularly gloomy, whereas a few of the consumer and retail trade indicators were slightly more upbeat: French consumer spending in January, for example, as well as the ifo business climate index for the retail trade for February and the German GfK consumer climate.

 

Over the last few months, bad US data have tended to have an impact on the euro too. And there were plenty of them: consumer confidence plummeted to a new record low, new and existing home sales collapsed by over 10% and over 5% respectively in January. Durable goods orders fell by 5.2% in January, and the previous month was revised down to –4.6%. Even excluding transportation, the decline in the last two months comes to about 8%. Moreover, initial jobless claims rose to 667,000, the highest level for 27 years. Thus it looks very much as though the ISM Survey and the labour market report, both due to be published next week, will be very weak. Fed Chairman Ben Bernanke‘s Monetary Policy Report to the Congress was the only glimmer of hope. Mr Bernanke expressed the hope (which had already been formulated in the minutes of last week) that the economy could stabilise towards the middle of the year. However, this prediction was hedged around with numerous “ifs” and “buts”.

 

Maybe the fact that the euro was relatively robust this week can be taken as a sign of cautious optimism. But, given that equity markets plummeted to new record lows this week, that is not all that plausible. In our view, the euro is more likely to have been boosted by the weakness of the yen and the calming down (presumably only temporarily) of the eastern European currencies. In addition to the US data (ISM, labour market report), market participants will be focusing primarily on the ECB governing council meeting.

 

Markets are expecting interest rates to be cut by 50 bp to 1.50% on Thursday, and ECB representatives have basically supported this notion. It is also relatively clear that the ECB will acknowledge that there is further scope for interest rate cuts. Bundesbank president Axel Weber, for instance, stated last week that he sees a refinancing rate of 1% as the lowest limit. There is scope down to that level.

 

It is not clear, however, how the ECB will explain its decision. We suspect that the governing

council could, yet again, succumb to the temptation of raising hopes of an economic recovery

during the course of the year, warning about medium-term inflation risks and philosophising

about exit strategies from the expansive monetary policy. We are assuming that the growth projection for 2009 will be around –1.8%, which suggests that a recovery is expected in the second half of the year. ECB staff’s inflation projections could be around 0.8% for 2009 and 1.6% for 2010; this would be more or less in line with the medium-term stability target. With this relatively mild scenario in mind, the ECB could decide to thwart expectations of further interest rate cuts.

 

A hawkish ECB could strengthen the euro initially, as the European yield curve could steepen

and the interest rate advantage over the USA increase. However, during the course of the financial and economic crisis, the ECB’s signals have become less significant: markets have now got used to the ECB being behind the curve. This would limit the positive impact on the euro. Furthermore, there is the worry that procrastination could exacerbate the problem.

 

Stephan Rieke +49 69 718-4114

Economics Department

+49 69 718-3642

volkswirtschaft@bhf-bank.com

Foreign Exchange Trading

devisenhandel@bhf-bank.com

Jörg Isselmann

+49 69 718-2695

Matthias Grabbe / Klaus Näfken

+49 69 718-2688

 

<i>This report has been prepared by BHF-BANK Aktiengesellschaft on behalf of itself and its affiliated companies (together "BHF-BANK Group") solely for the information of its clients. The information and opinions in this document are based on sources believed to be reliable and acting in good faith, but no representation or warranty, express or implied, is made by any member of the BHF-BANK Group as to their accuracy, completeness or correctness. Opinions and recommendations are given in good faith but without legal responsibility and are subject to change without notice. The information does not constitute advice or personal recommendation, for which the duty of suitability would be owed, but may facilitate your own investment decision. Moreover, you should seek your own advice as to the suitability of an investment matter mentioned herein. Investors are reminded that the price of securities and the income from them can go down as well as up and that the past performance of an investment or a market is not necessarily indicative for future results. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete, and this document is not, and should not be construed as, an offer to sell or solicitation of any offer to buy the securities mentioned in it. BHF-BANK Group and its officers and employees may have a long or short position or engage in transactions in any of the securities mentioned in this document, or in any related securities. This publication must not be distributed in the United States.

© 2007 BHF-BANK Aktiengesellschaft

All rights reserved. Please mention source when quoting from it.



 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 18 December 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Mon 18 Dec
10:00 EZ- final HICP
Tue 19 Dec
09:00 DE- IFO Survey
13:30 US- Housing Starts/Permits
13:30 US- Current Account
Wed 20 Dec
15:00 US- Existing Homes Sales
15:30 US- EIA Crude
Thu 21 Dec
03:00 JP- BOJ Decision
13:30 CA- CPI & Retail Sales
13:30 US Weely Jobless
13:30 US- GDP
Fri 22 Dec
09:30 US- GB- GDP
13:30 US- core PCE Deflator & Presonal Income
15:00 US- New Homes Sales
15:00 US- final University of Michigan
17:00 US- early Closes
Mon 25 Dec
00:00 Christmas Holidays

Forex Trading Outlook


Potential Trading Opportunities

  • POTENTIAL PRICE RISK: Medium Mon--10:00 GMT-- EZ- final November HICP. flash data are rarely changed.


  • POTENTIAL PRICE RISK: HIGH- Medium Tue --09:00 GMT-- DE- IFO Survey. Key report but usually not a market-mover
  • POTENTIAL PRICE RISK: HIGH- Medium- Tue --13:30 GMT-- US- Housing Starts and Permits. Leading indicators of activity

  • POTENTIAL PRICE RISK: HIGH-Medium- Wed --15:00-- US- Existing Homes Sales. Top Housing statistic
  • POTENTIAL PRICE RISK: Medium- Wed --15:30-- US- EIA Crude

John M. Bland, MBA
co-founding Partner, Global-View.com EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

 
Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map


Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105