Dollar Loses Ground Against Other Major Currencies

Trading 10 oct 2019 Commentaire »

The U.S. dollar suffered one of its biggest setbacks in about five weeks on Thursday as traders looked to pick up riskier currencies amid optimism the high-level negotiations between U.S. and China will result in a partial trade deal between the world's two largest economies.

Also, with the Federal Reserve's minutes hinting at more monetary easing in the foreseeable future, the dollar found the going quite tough against most major currencies.

The dollar index, which dropped to 98.62, was last seen moving around 98.70, down 0.44% from previous close.

Against the euro, the dollar was down more than 0.3% at 1.1006, compared to previous close of 1.0970. Earlier in the day, the euro rose to $1.1035, a near three-week high.

The minutes from the European Central Bank's September policy meeting showed opposition from several policy makers about restarting the quantitative easing program.

There was disagreement on the size and instruments included in the stimulus package. But all members agreed on the need to act in response to the continued shortfall of inflation and that a clear majority of members supported the proposed measures.

While a few members expressed a readiness to lower the deposit facility rate by 20 basis points, other members opposed a reduction of 10 basis points on concerns about its possible adverse side effects.

Against pound sterling, the dollar weakened by nearly 2% to 1.2445. In economic news, The UK economy expanded in three months to August for the second consecutive time suggesting that it is on the course to avoid a recession ahead of Brexit.

The Japanese yen was down 0.35% at 107.86 a dollar, as against 107.48 on Wednesday evening.

The dollar shed about 0.5% against the Aussie, with the AUD-USD pair changing hands at 0.6760.

Against the loonie, the dollar was down more than 0.25% at 1.3295, while against Swiss franc, it edged up marginally to 0.9967.

In U.S. economic news, data from the Labor Department said the consumer price index was unchanged in September after inching up by 0.1% in August. Economists had expected another 0.1% uptick.

Excluding food and energy prices, core consumer prices crept up by 0.1% in September after rising by 0.3% for three straight months. Core prices had been expected to rise by 0.2%.

Another report from the Labor Department said initial jobless claims dropped to 210,000 in the week ended October 5th, a decrease of 10,000 from the previous week's revised level of 220,000.

Economists had expected jobless claims to come in unchanged compared to the 219,000 originally reported for the previous week.

On the trade front, U.S. President Donald Trump revealed he plans to meet with Chinese Vice Premier Liu He as part of high-level U.S.-China trade talks.

"Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House," Trump tweeted.

Meanwhile, Liu told Chinese state-run media Xinhua the Chinese delegation has come to the talks with "great sincerity and is willing to make serious exchanges with the U.S. on issues of common concern."


The material has been provided by InstaForex Company - www.instaforex.com

Optimism About Trade Talks Leads To Notable Drop By Treasuries

Trading 10 oct 2019 Commentaire »

With traders continue to express optimism about U.S.-China trade talks, treasuries moved significantly lower during trading on Thursday.

Bond prices slid firmly into negative territory in morning trading and remained firmly in the red throughout the afternoon. Subsequently, the yield on the benchmark ten-near note, which moves opposite of its price, jumped by 6.9 basis points to 1.658 percent.

The drop by treasuries came as traders moved into riskier assets after President Donald Trump revealed he plans to meet with Chinese Vice Premier Liu He as part of high-level U.S.-China trade talks.

"Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House," Trump tweeted.

The tweet from Trump offset concerns generated by earlier reports suggesting Liu could leave Washington earlier than originally planned.

Adding to the optimism about the talks, Liu told Chinese state-run media Xinhua the Chinese delegation has come to the talks with "great sincerity and is willing to make serious exchanges with the U.S. on issues of common concern."

"On the basis of equality and mutual respect, China is willing to reach consensus with the U.S. through this round of consultations on issues of mutual concern to prevent further escalation and spread of friction," Liu said.

Traders are likely to remain focused on reports regarding the highly anticipated negotiations and any signs of progress or lack thereof.

As a result of the focus on the trade talks, traders largely shrugged off a usually closely watched report from the Labor Department showing U.S. consumer prices were essentially flat in the month of September.

The Labor Department said its consumer price index was unchanged in September after inching up by 0.1 percent in August. Economists had expected another 0.1 percent uptick.

Consumer prices came in unchanged as higher prices for shelter and food were offset by declines in prices for energy and used cars and trucks.

Excluding food and energy prices, core consumer prices crept up by 0.1 percent in September after rising by 0.3 percent for three straight months. Core prices had been expected to rise by 0.2 percent.

"The muted gain in core consumer prices in September underlines that even after the introduction of additional tariffs on Chinese imports, inflationary pressures are still well-contained," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

"With wage growth leveling off and unit labor costs growth stable, we don't think core inflation will rise further from here," he added. "As a result, the Fed will remain focused on the incoming activity data, which we expect to prompt one more 25bp rate cut by year-end."

A separate report released by the Labor Department showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended October 5th.

Meanwhile, the Treasury Department revealed its auction of $16 billion worth of thirty-year bonds attracted average demand.

The thirty-year bond auction drew a high yield of 2.170 percent and a bid-to-cover ratio of 2.25, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.24.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Earlier this week, the Treasury revealed its auction of $38 billion worth of three-year notes attracted modestly below average demand, while its auction of $24 billion worth of ten-year notes attracted slightly above average demand.

News out of the trade talks is likely to remain in the spotlight on Thursday, overshadowing reports on import and export prices and consumer sentiment.


The material has been provided by InstaForex Company - www.instaforex.com

Oil Futures End Sharply Higher As OPEC Hints At Output Cuts

Trading 10 oct 2019 Commentaire »

Crude oil prices moved higher on Thursday as OPEC said that it has all options in place to balance oil markets and that it would take a decision in December regarding supply.

Oil prices were also supported by slightly easing concerns about the outlook for energy demand thanks to rising optimism about high-level U.S.-China trade negotiations.

West Texas Intermediate Crude oil futures for November ended up $0.96, or about 1.8%, at $53.55 a barrel, the highest settlement since October 1.

On Wednesday, WTI crude oil futures for November edged down $0.04 to $52.59 a barrel after having advanced to a high of $53.74 a barrel.

OPEC's Secretary General Mohammad Barkindo said the meeting between OPEC and allies, including Russia would take decisions that will set the path of heightened and sustained stability for 2020.

Saudi Arabia has said that its oil output dropped by 660,000 barrels per day in September following the devastating attacks on its energy facilities. Meanwhile, OPEC has lowered its forecast for non-OPEC supply growth for 2020.

Crude oil's rise was also due to reports that Russia and Saudi Arabia will sign more than $2 billion of deals and discuss the OPEC+ oil output agreement during President Vladimir Putin's first visit to the kingdom in more than a decade next week.

The recent data from U.S. Energy Information Administration that showed crude inventories rose for a fourth straight week limited oil's gains. The data said crude oil inventories in the U.S. increased by 2.9 million barrels in the week ended October 4.


The material has been provided by InstaForex Company - www.instaforex.com

Gold Settles Notably Lower As Equities Rise On Trade Talks Hopes

Trading 10 oct 2019 Commentaire »

Gold prices drifted lower on Thursday as riskier assets such as equities gained in strength amid rising optimism about progress in U.S.-China trade negotiations.

The dollar lost ground amid speculation the Federal Reserve will cut interest rates further.

Gold futures for December ended down $11.90, or about 0.8%, at $1,500.90 an ounce, after dropping to a low of $1,496.20 in mid morning trades.

On Wednesday, gold futures for December ended up $8.90, or 0.6%, at $1,512.80 an ounce.

Silver futures for December ended down $0.208, at $17.602 an ounce, while Copper futures for December settled at $2.6135 per pound, gaining $0.0455 for the session.

In trade news, U.S. President Donald Trump revealed he plans to meet with Chinese Vice Premier Liu He as part of high-level U.S.-China trade talks.

"Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House," Trump tweeted.

Meanwhile, Liu told Chinese state-run media Xinhua the Chinese delegation has come to the talks with "great sincerity and is willing to make serious exchanges with the U.S. on issues of common concern."

"On the basis of equality and mutual respect, China is willing to reach consensus with the U.S. through this round of consultations on issues of mutual concern to prevent further escalation and spread of friction," Liu said.

Earlier, a report in the South China Morning Post said the deputy-level trade talks did not progress any significantly and that the Chinese delegation might leave the U.S. a day earlier.

However, the White House has reportedly said that Chinese Vice Premier Liu He is still scheduled to leave only on Friday evening.

In economic news, data from the Labor Department said the consumer price index was unchanged in September after inching up by 0.1% in August. Economists had expected another 0.1% uptick.

Excluding food and energy prices, core consumer prices crept up by 0.1% in September after rising by 0.3% for three straight months. Core prices had been expected to rise by 0.2%.

Another report from the Labor Department said initial jobless claims dropped to 210,000 in the week ended October 5th, a decrease of 10,000 from the previous week's revised level of 220,000.

Economists had expected jobless claims to come in unchanged compared to the 219,000 originally reported for the previous week.


The material has been provided by InstaForex Company - www.instaforex.com

Thirty-Year Bond Auction Attracts Average Demand

Trading 10 oct 2019 Commentaire »

After announcing the results of its auctions of three-year and ten-year notes earlier this week, the Treasury Department revealed Thursday that its auction of $16 billion worth of thirty-year bonds attracted average demand.

The thirty-year bond auction drew a high yield of 2.170 percent and a bid-to-cover ratio of 2.25.

The Treasury also sold $16 billion worth of thirty-year bonds last month, drawing a high yield of 2.270 percent and a bid-to-cover ratio of 2.22.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.24.

Earlier this week, the Treasury revealed its auction of $38 billion worth of three-year notes attracted modestly below average demand, while its auction of $24 billion worth of ten-year notes attracted slightly above average demand.


The material has been provided by InstaForex Company - www.instaforex.com

Euro Higher As ECB Minutes Show Clash On QE Program

Trading 10 oct 2019 Commentaire »

The euro was higher against its major counterparts in the European session on Thursday, after minutes from the European Central Bank's September policy meeting showed opposition from several policy makers about restarting the quantitative easing program.

A number of policymakers assessed the need for renewed net asset purchases as not sufficiently strong, either because they deemed them to be a less efficient instrument or due to an apprehension that it should be deployed as an instrument of last resort in the event of more severe contingencies and which was not warranted in the light of the current outlook, the minutes of the September 11-12 Governing Council meeting showed.

There was disagreement on the size and instruments included in the stimulus package.

Observation was made that an open-ended announcement of renewed net asset purchases could give rise to demands by market participants for higher monthly purchase amounts, at least in the absence of convincing evidence of an improving inflation outlook, the minutes showed.

But all members agreed on the need to act in response to the continued shortfall of inflation and that a clear majority of members supported the proposed measures.

While a few members expressed a readiness to lower the deposit facility rate by 20 basis points, other members opposed a reduction of 10 basis points on concerns about its possible adverse side effects.

Data from Destatis showed that Germany's exports declined the most in four months, while imports recovered at a faster than expected pace.

Exports fell by more-than-expected 1.8 percent month-on-month in August, reversing a 0.8 percent rise in July. Exports were forecast to fall 1 percent.

The euro strengthened against its major counterparts in the Asian session, excepting the pound.

The euro hovered at nearly a 3-week high of 1.1034 versus the greenback, from Wednesday's closing value of 1.0971. Next immediate resistance for the euro is seen around the 1.12 level.

Data from the Labor Department showed that U.S. consumer prices were essentially flat in September.

The Labor Department said its consumer price index was unchanged in September after inching up by 0.1 percent in August. Economists had expected another 0.1 percent uptick.

The single currency that ended Wednesday's trading at 1.0926 against the franc climbed to a 6-day high of 1.0956. The euro is seen facing resistance around the 1.13 level.

Extending early rally, the euro climbed to 118.66 against the yen, its strongest level since September 23. On the upside, 122.00 is likely seen as the next resistance level for the euro.

Data from the Bank of Japan showed that Japan producer prices were flat on month in September - matching forecasts following the 0.3 percent decline in August.

On a yearly basis, producer prices were down 1.1 percent - again in line with expectations after sliding 0.9 percent in the previous month.

The euro appreciated to 0.9019 versus the pound, a level unseen since September 5. The currency is likely to locate resistance around the 0.92 level.

Data from the Office for National Statistics showed that the UK economy expanded in three months to August for the second consecutive time suggesting that it is on the course to avoid a recession ahead of Brexit.

Rolling three-month gross domestic product growth increased to 0.3 percent from 0.1 percent in three months to July. This was also faster than the expected 0.1 percent rise.

The euro climbed to a 3-week high of 1.4690 against the loonie and held steady thereafter. Should the euro rises further, 1.49 is possibly seen as its next resistance level.

The euro rose back to 1.7461 against the kiwi, heading towards a weekly high of 1.7497 set in the Asian session. The next possible resistance for the euro is seen around the 1.78 level.

The euro was trading at 1.6322 against the aussie. This may be compared to a 1-1/2-month high of 1.6370 it touched at 7:00 pm ET. The pair had ended yesterday's trading session at 1.6313.

Data from the Australian Bureau of Statistics showed that Australia home loans rose a seasonally adjusted 3.2 percent on month in August - coming in at 33,468.

That exceeded expectations for an increase of 2.3 percent following the upwardly revised 4.3 percent increase in July.


The material has been provided by InstaForex Company - www.instaforex.com

U.S. Consumer Prices Unexpectedly Unchanged In September

Trading 10 oct 2019 Commentaire »

Consumer prices in the U.S. were essentially flat in the month of September, according to a report released by the Labor Department on Thursday, with higher prices for shelter and food offset by declines in prices for energy and used cars and trucks.

The Labor Department said its consumer price index was unchanged in September after inching up by 0.1 percent in August. Economists had expected another 0.1 percent uptick.

Energy prices extended the steep drop seen in the previous month, tumbling by 1.4 percent in September after plunging by 1.9 percent in August. Gasoline prices led the way lower once again.

Meanwhile, the report said food prices inched up by 0.1 percent in September after coming in unchanged for three straight months.

The uptick in food prices came as five of the six major grocery store food group indexes increased over the month.

Excluding food and energy prices, core consumer prices crept up by 0.1 percent in September after rising by 0.3 percent for three straight months. Core prices had been expected to rise by 0.2 percent.

The Labor Department said prices for shelter continued to rise, climbing by 0.3 percent in September following a 0.2 percent increase in August.

Prices for medical care, household furnishings and operations, and motor vehicle insurance also rose, while prices for used cars and trucks plummeted by 1.6 percent. Prices for apparel also fell.

Compared to the same month a year ago, consumer prices in September were up by 1.7 percent, unchanged from the previous month. The annual rate of core price growth was also unchanged at 2.4 percent.

"The muted gain in core consumer prices in September underlines that even after the introduction of additional tariffs on Chinese imports, inflationary pressures are still well-contained," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

"With wage growth leveling off and unit labor costs growth stable, we don't think core inflation will rise further from here," he added. "As a result, the Fed will remain focused on the incoming activity data, which we expect to prompt one more 25bp rate cut by year-end."

On Tuesday, the Labor Department released a separate report showing an unexpected decrease in producer prices in the month of September.

The Labor Department said its producer price index for final demand fell by 0.3 percent in September after inching up by 0.1 percent in August. The drop surprised economists, who had expected another 0.1 percent uptick.

The unexpected decrease in producer prices came amid another steep drop in energy prices, which plunged by 2.5 percent in September, matching the nosedive seen in the previous month.

However, excluding the continued plunge in energy prices as well as a modest increase in food prices, core producer prices also slid by 0.3 percent in September after climbing by 0.3 percent in August. Economists had expected core prices to rise by 0.2 percent.

The drop in core prices came as the index for final demand services fell by 0.2 percent in September following a 0.3 percent increase in August.

Compared to the same month a year ago, producer prices in September were up by 1.4 percent, reflecting a notable slowdown from the 1.8 percent growth in August.

The annual rate of core producer price growth also slowed considerably to 2.0 percent in September from 2.3 percent in August.


The material has been provided by InstaForex Company - www.instaforex.com

U.S. Weekly Jobless Claims Unexpectedly Drop To 210,000

Trading 10 oct 2019 Commentaire »

A report released by the Labor Department on Thursday showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended October 5th.

The report said initial jobless claims dropped to 210,000, a decrease of 10,000 from the previous week's revised level of 220,000.

Economists had expected jobless claims to come in unchanged compared to the 219,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average crept up to 213,750, an increase of 1,000 from the previous week's revised average of 212,750.

The report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also rose by 29,000 to 1.684 million in the week ended September 28th.

The four-week moving average of continuing claims also edged up to 1,665,000, an increase of 2,500 from the previous week's revised average of 1,662,500.

A separate report released by the Labor Department last Friday showed the unemployment rate fell to a nearly fifty-year low in September despite weaker than expected job growth during the month.

The report said non-farm payroll employment rose by 136,000 jobs in September compared to economist estimates for an increase of about 145,000 jobs.

Meanwhile, the Labor Department said the unemployment rate fell to 3.5 percent in September from 3.7 percent in August. Economists had expected to unemployment rate to remain unchanged.

With the unexpected decrease, the unemployment rate dropped to its lowest level since hitting a matching rate in December of 1969.


The material has been provided by InstaForex Company - www.instaforex.com

U.S. Consumer Prices Unchanged In September

Trading 10 oct 2019 Commentaire »

Consumer prices in the U.S. were essentially flat in the month of September, according to a report released by the Labor Department on Thursday, with higher prices for shelter and food offset by declines in prices for energy and used cars and trucks.

The Labor Department said its consumer price index was unchanged in September after inching up by 0.1 percent in August. Economists had expected another 0.1 percent uptick.

Excluding food and energy prices, core consumer prices crept up by 0.1 percent in September after rising by 0.3 percent for three straight months. Core prices had been expected to rise by 0.2 percent.


The material has been provided by InstaForex Company - www.instaforex.com

ECB Minutes: All Members Agreed On Need To Act

Trading 10 oct 2019 Commentaire »

The European Central Bank policymakers agreed on the need to act amid weakening economic outlook but a number of reservations were expressed about the elements of policy package, the minutes of the September 11-12 Governing Council meeting showed Thursday.

ECB Chief Mario Draghi said all members agreed on the need to act in response to the continued shortfall of inflation?and that a clear majority of members supported the proposed measures.?

The Governing Council reiterated the need for a highly accommodative stance of monetary policy for a prolonged period of time and that it continued to stand ready to adjust all of its instruments, as appropriate.

However, there was disagreement on the size and instruments included in the stimulus package.

At the final policy session of Draghi as central bank chief, the council took a host of stimulus measures. The bank slashed the deposit rate by 10 basis points to -0.50 percent and decided to restart its asset purchase programme.

It was cautioned that the Governing Council should not try to accommodate market expectations but should base its decisions on its own assessment, the minutes revealed.

A few members expressed a readiness to consider lowering the rate on the deposit facility by 20 basis points at the meeting if the package excluded net asset purchases.

A number of members assessed the case for renewed net asset purchases as not sufficiently strong as they considered it as an instrument of last resort which should only be deployed in the event of more severe contingencies and which was not warranted in the light of the current outlook.

The minutes said concern was expressed that not delivering sufficient stimulus, including through the APP, might trigger a reversal of the current favorable financial conditions.

"A majority of members went along with the proposed introduction of a two-tier system for reserve remuneration as part of the overall policy package," the minutes said.

A number of reservations were expressed about the monetary policy justification for a two-tier system. It was argued that, at the current juncture, monetary policy transmission channels seemed to be functioning well.


The material has been provided by InstaForex Company - www.instaforex.com