Treasuries Close Roughly Flat Following Choppy Trading Day

Trading 20 fév 2019 Commentaire »

After failing to sustain an early move to the upside, treasuries showed a lack of direction over the course of the trading session on Wednesday.

Bond prices spent the day bouncing back and forth across the unchanged line before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.654 percent.

The choppy trading came as the minutes of the latest Federal Reserve meeting provided further insight into the central bank's decision to change the forward guidance language and indicate a patient approach to raising interest rates.

The minutes described the Fed's discussions regarding changing the language in its statement from referencing "further gradual increases" in rates to a sentence indicating patience.

Meeting participants pointed to a variety of considerations that supported a patient approach to monetary policy as an appropriate step in managing various risks and uncertainties in the outlook.

The Fed said additional data would help policymakers gauge the trajectory of business and consumer sentiment, whether the recent softness in core and total inflation and inflation compensation would persist, and the effect of the tightening of financial conditions on aggregate demand.

Information arriving in coming months could also shed light on the economic impact of the prolonged government shutdown as well as the results of budget negotiations occurring in the wake of the shutdown, including the possible implications for the path of fiscal policy, the Fed said.

"A patient approach would have the added benefit of giving policymakers an opportunity to judge the response of economic activity and inflation to the recent steps taken to normalize the stance of monetary policy," the minutes said.

The minutes said a patient posture would also allow time for a clearer picture of the international trade policy situation and the state of the global economy to emerge.

In light of a range of uncertainties associated with global economic and financial developments, the Fed also decided that it was not useful to express a judgment about the balance of risks.

However, many participants observed that if recent uncertainty eases, the Fed would need to reassess the characterization of monetary policy as "patient" and might then use different statement language.

The minutes of the January meeting also showed officials discussed a plan to end the reduction of bonds on the Fed's balance sheet before the end of 2019

"Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year," the Fed said.

The central bank added, "Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve's balance sheet."

Traders also seemed reluctant to make significant moves as they wait for developments regarding the latest round of trade talks between the U.S. and China.

Officials from the U.S. and China are meeting in Washington this week as the world's two largest economies attempt to reach a long-term trade deal.

The U.S. and China currently face an early March deadline to strike an agreement, although President Donald Trump has suggested the deadline could be postponed.

A slew of economic data is likely to attract attention on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, durable goods orders, and existing home sales.


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Oil Prices Rebound To 2019 Highs

Trading 20 fév 2019 Commentaire »

Oil prices recovered from early weakness Wednesday after surging U.S. output and concerns over slowing global growth overshadowed investor optimism over OPEC-led supply cuts as well as the U.S. sanctions against Iran and Venezuela.

But prices rebounded later in the day as Brent crude soared 63 cents or 0.95 percent to a fresh 2019 high of $67.08 dollars per barrel.

U.S. West Texas Intermediate (WTI) crude oil surged 77 cents or 1.36 percent to $57.22 - also high for this year.

U.S. crude production jumped by more than 2 million bpd in 2018 to a record 11.9 million bpd amid booming shale oil production, the Energy Information Administration said Tuesday.

Output is expected to keep rising while the global economy witnesses a synchronized slowdown in growth, according to BNP Paribas.


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Gold Prices Continue To Advance

Trading 20 fév 2019 Commentaire »

Gold prices extended fresh 10-month highs on Wednesday and the dollar sagged on lower U.S. yields ahead of the Federal Reserve's policy meeting minutes due later today for clues on the outlook for interest rates and its balance sheet.

New York Fed President John Williams on Tuesday said that he sees no need to raise interest rates again unless growth or inflation surprise to the upside.

Spot gold climbed $3.85 or 0.29 percent at $1,345.60 per ounce after hitting of $1,339.33 an ounce in the previous session.

The dollar retreated before Fed policy minutes while the Chinese yuan hit a three-week high on hopes for a U.S.-China trade deal.

Higher-level talks with Chinese Vice Premier Liu are planned later this week while a Xi-Trump meeting is likely next month to strike a deal or secure a memorandum of understanding.


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Fed Minutes Provide Insight Into Decision To Adopt Patient Approach

Trading 20 fév 2019 Commentaire »

Investors were provided with further insight into the Federal Reserve's decision to change the forward guidance language and indicate a patient approach to raising interest rates in the minutes of the central bank's January monetary policy meeting.

The minutes released Wednesday described the Fed's discussions regarding changing the language in its statement from referencing "further gradual increases" in rates to a sentence indicating patience.

Meeting participants pointed to a variety of considerations that supported a patient approach to monetary policy as an appropriate step in managing various risks and uncertainties in the outlook.

The Fed said additional data would help policymakers gauge the trajectory of business and consumer sentiment, whether the recent softness in core and total inflation and inflation compensation would persist, and the effect of the tightening of financial conditions on aggregate demand.

Information arriving in coming months could also shed light on the economic impact of the prolonged government shutdown as well as the results of budget negotiations occurring in the wake of the shutdown, including the possible implications for the path of fiscal policy, the Fed said.

"A patient approach would have the added benefit of giving policymakers an opportunity to judge the response of economic activity and inflation to the recent steps taken to normalize the stance of monetary policy," the minutes said.

The minutes said a patient posture would also allow time for a clearer picture of the international trade policy situation and the state of the global economy to emerge.

In light of a range of uncertainties associated with global economic and financial developments, the Fed also decided that it was not useful to express a judgment about the balance of risks.

However, many participants observed that if recent uncertainty eases, the Fed would need to reassess the characterization of monetary policy as "patient" and might then use different statement language.

The minutes of the January meeting also showed officials discussed a plan to end the reduction of bonds on the Fed's balance sheet before the end of 2019

"Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year," the Fed said.

The central bank added, "Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve's balance sheet."


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Euro and Swedish Krona are in serious trouble

Trading 20 fév 2019 Commentaire »

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The Swedish Krona cannot recover after a recent fall. Recall - after the weak inflation data and plans of the local Central Bank forced investors to sell the currency. The euro, in turn, was hit by low volumes of industrial orders in Italy. Krona rose last week after the Central Bank of Sweden, despite growing caution, said it would stick to its rate increase plan in the second half of 2019. However, the next piece of data on the reduction of inflation in January sent the currency down by more than 1 percent, to a two-year low against the dollar. The forecast of the crown every day becomes more and more alarming. For the EUR / SEK pair, the range from 10.75 to 11.00 should not be excluded later, in 2019.

The euro, which has already fallen due to the fact that investors have shifted the focus from progress in US-Chinese trade negotiations to the weakness of the European economy, fell even more after data showed that industrial orders in Italy lost 5.3 percent in December. The euro, despite a vigorous Monday, is going through a difficult week. It is necessary to wait for the forecasts of the EU Commission, although there will be already well-known information for all - the lost momentum of the economy and weak inflationary pressure. The euro is likely to fall below $ 1.13, but not below $ 1.12.

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Belgium Consumer Confidence Weakens For Fourth Month

Trading 20 fév 2019 Commentaire »

Belgium's consumer confidence weakened for a fourth consecutive month in February, driven by a sharp deterioration in households' savings expectations, survey data from the National Bank of Belgium showed on Wednesday.

The consumer confidence index dropped to -7 from -6 in January. The measure has been falling since November.

The measure reflecting households' expectations on savings in the next 12 months tumbled to -8 from -3.

Households' view regarding the unemployment situation in the coming year also worsened and the index rose to 6 from 5.

Consumers were slightly less pessimistic regarding the future economic situation in the country with the relevant index rising to -12 from -13.

The index showing the expectations on their future financial situation was unchanged at -3.


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*Belgium Feb Consumer Confidence -7 Vs. -6 In January

Trading 20 fév 2019 Commentaire »

Belgium Feb Consumer Confidence -7 Vs. -6 In January


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Denmark Consumer Confidence Weakens In February

Trading 20 fév 2019 Commentaire »

Denmark's consumer confidence weakened in February, survey data from Statistics Denmark showed on Wednesday.

The consumer confidence index fell to 3.3 in February from 3.9 in January.

The index measuring consumers' view regarding the past economic situation in Denmark weakened to 6.4 from 7.7.

Meanwhile, their own financial situation for the next twelve months fell in January to 12.0 from 12.2 in February.

Households' judgment about the general economic situation of the country over the next year rose slightly to 0.5 from minus 1.3 percent.


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Euro Falls After ECB Praet Suggests LTRO Discussion In March

Trading 20 fév 2019 Commentaire »

The euro declined against its major counterparts in the European session on Wednesday, after the European Central Bank's chief economist Peter Praet suggested that a new round of Targeted Long-Term Refinancing Operation will be discussed as soon as the meeting in March.

Speaking in Frankfurt, Praet indicated that "the discussion will come very soon in the Governing Council," although it is unlikely to take decisions at that time.

Praet added that discussion of the criteria of any new loans was "a complicated thing, because it depends on the amount of stimulus you want to bring or not to bring."

The new long-term funding would offer an insurance policy to banks, which had been hurt by recent slowdown and began to feed through to businesses, he told.

Figures from the Federal Statistical Office showed that Germany's producer price inflation eased for a second straight month to its lowest level in eight months in January.

The producer price index rose 2.6 percent year-on-year in January, following a 2.7 percent in December. Economists were looking for 2.20 percent inflation.

European stocks held steady as hopes for a Sino-U.S. trade deal continued to build and British Prime Minister Theresa May ditched a radical Brexiter plan to save her EU exit deal.

Investors await the minutes of the Federal Reserve's January policy meeting for clues on policymakers' thinking on interest rates and its balance sheet reduction policy.

The euro rose against its major opponents in the Asian session, barring the pound.

The euro retreated to 125.49 against the Japanese yen, from more than a 2-week high of 125.94 hit at 8:45 pm ET. The euro is seen finding support around the 122.00 level.

Data from the Ministry of Finance showed that Japan logged a merchandise trade deficit of 1,452.2 billion yen in January.

That missed expectations for a shortfall of 1,029.5 billion yen following the 56.7 billion yen deficit in December.

Pulling away from an early session's high of 1.1358 against the greenback, the euro edged down to 1.1325. The euro is likely to challenge support around the 1.12 area.

The euro dropped to 1.1340 versus the Swiss franc, after having risen to 1.1366 at 4:15 am ET. If the euro falls further, 1.12 is likely seen as its next support level.

The single currency pared gains to 0.8686 against the pound, from a high of 0.8714 seen at 6:00 am ET. The euro is poised to find support around the 0.85 area.

The euro slipped to a 5-day low of 1.4933 against the loonie, reversing from a high of 1.4994 touched at 8:00 pm ET. Next key support for the euro is seen around the 1.47 region.

The European currency slightly eased back to 1.6507 against the kiwi, off an early high of 1.6536. On the downside, 1.63 is possibly seen the next support level for the euro.

On the flip side, the euro bounced off to 1.5865 against the aussie, from an early session's low of 1.5816. The next key resistance for the euro is seen around the 1.60 mark.

Data from the Australian Bureau of Statistics showed that Australia wage prices rose a seasonally adjusted 0.5 percent on quarter in the fourth quarter of 2018.

That was shy of expectations for an increase of 0.6 percent, which would have been unchanged.

Looking ahead, at 10:00 am ET, Eurozone flash consumer sentiment index for February is due.

The Fed will release minutes from the January 29-30 meeting at 2 pm ET.


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Poland Industrial Production Grows More Than Forecast

Trading 20 fév 2019 Commentaire »

Poland's industrial production expanded at a faster-than-expected pace in January, figures from Statistics Poland showed on Wednesday.

Industrial production surged 6.1 percent year-over-year in January, exceeding economists' forecast for an increase of 3.7 percent. In December, producer grew 2.8 percent.

Among components, electricity, gas steam and air conditioning supply grew 15.1 percent annually in January, followed by water supply and related services that rose 7.2 percent.

Manufacturing output rose 5.3 percent annually in January and mining and quarrying production grew 0.8 percent.

On a monthly basis, industrial production rose 7.4 percent in January, faster than the expected rise of 5 percent. In December, output fell 11.5 percent.

Another report from the statistical office showed that industrial producer prices rose 2.2 percent annually in January, after a 2.1 percent rise in December. Economists had forecast a 2.1 percent increase.

Month-on-month, producer prices edged up 0.2 percent in January, after a 1.0 percent decline in the previous month. Economists had expected a modest gain of 0.1 percent.


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