What is the Euro Zone Bank Stress test all about?

The European Central Bank (ECB) together with The European Banking Authority (EBA) had failed 25 banks in the recent Euro Zone Bank stress test.  The reason behind this assessment is to evaluate the performance of the banks adverse economic conditions  and the ability to withstandtimes of economic stress.

 

The 25 who failed were among the 123 lenders  who took part in the assessment. This means that these 25 banks are very vulnerable to credit risks and are least likely to survive in adverse economic conditions.Italy, Europe’s fourth-largest economy suffered the worst count where 9 of the country’s 21 banks examined failed the test. For now, the banks that failed the stress tests have nine months to secure funds to cover their deficits.

 

However none of Europe’s largest banks were found lacking. No French, German or Spanish institutions were required to raise more capital.  With a better result as compared to 2011, these may be the reason why Euro was seen trading higher on Monday.

FOREX-Yen hits 7-year low after BOJ expands stimulus

* BOJ's surprise easing hits yen

* Euro also lower against dollar, awaits inflation

* Dollar index near four-year highs, strong Q3 GDP growth helps

By Anirban Nag

 

LONDON, Oct 31 (Reuters) - The yen tumbled to its lowest level in nearly seven years against the dollar on Friday, putting it on track for its biggest losses in more than a year, after the Bank of Japan shocked markets by unexpectedly easing policy further.

 

In a pre-emptive move to combat risks of deflation, the BoJ launched another round of quantitative easing. It raised its monetary base target to an annual increase of 80 trillion yen ($724.5 billion) from 60-70 trillion yen and tripled its purchase of risk assets such as exchange traded funds (ETFs) and real estate investment trusts (REITs).

 

While some in the market had expected some easing, most had thought any additional easing was months away as Governor Haruhiko Kuroda had voiced optimism over the Japanese economic outlook even after soft data.

 

As a result, the dollar surged past its Oct. 1 high of 110.09 yen, rising as far as 111.53 yen, its highest level since January 2008. It has gained 2 percent on the day, on course for its biggest gain since April last year.

"It is a bit of a Halloween shocker for the markets," said Jeremy Stretch, head of currency strategy at CIBC World Markets. "Along with the reallocation by the pension fund, it is a double whammy for the yen."

 

A Japanese government panel overseeing the Government Pension Investment Fund (GPIF) approved plans for the fund to raise its holding of foreign stocks to 25 percent of its portfolio from 12 percent, sources said on Friday.

 

Gareth Berry, a currency analyst with UBS, said both these measures are likely to propel dollar/yen higher, taking the pair closer to their three-month forecast of 115 yen.

 

"We doubt it would escape investor attention that, with the BoJ buying at a faster pace with near-immediate effect, an early start to GPIF diversification could be more likely," he wrote in a note.

PRESSURE ON THE ECB TO ACT

Analysts said the surprise move by the BoJ is likely to put more pressure on the European Central Bank to ease policy as well. Both central banks want to boost inflation, and cheapening their currencies by flooding markets through massive asset purchases is one of the ways to encourage growth and bolster prices.

 

Data on Thursday showed annual inflation in Germany unexpectedly slowed in October, while Spanish consumer prices fell, suggesting the risk of deflation in the euro zone has not yet abated.

 

Euro zone inflation data is due at 1000 GMT, and forecasts are for an annual 0.4 percent reading, up from 0.3 percent in September. The ECB has been grappling with low inflation for much of this year and has lowered rates to near zero and talked the euro lower to ward off disinflation.

 

"With oil prices falling, there is always a risk of an undershoot. And with the Federal Reserve closing the liquidity tap, the onus is now on the other major central banks like the ECB to keep it open," said CIBC's Stretch.

 

While the euro jumped to a one-month high against the yen , it fell against the dollar towards recent two-year lows. It was last trading 0.4 percent lower at $1.2565, with bears targeting the Oct. 3 low of $1.2500.

 

That drop came as German retail sales posted their biggest monthly decline in more than seven years in September, data showed on Friday.

 

The dollar index climbed as far as 86.736 - a high last seen on Oct. 6, approaching a four-year high - as the greenback also benefited from upbeat U.S. growth figures published on Thursday.

 

U.S. gross domestic product grew at an annual pace of 3.5 percent in the third quarter, beating a forecast of 3.0 percent.

 

(Additional reporting by Shinichi Saoshiro and Hideyuki Sano; Editing by Sonya Hepinstall)

Economic Insight - Solid job gains and a lower unemployment rate’ ends QE3 overnight.

The Federal Reserve said the U.S. labour market has strengthened enough to withstand an end to its unprecedented asset-purchase program and downplayed risks posed by declining inflation.

 

The statement said “solid job gains and a lower unemployment rate” since its last gathering in September, further adding “underutilization of labour resources is gradually diminishing,” modifying earlier language that referred to “significant underutilization.” Stocks and Treasuries declined while the dollar strengthened as the Fed raised its assessment of an economy that has generated a monthly average of more than 200,000 jobs this year, driving unemployment down to a six-year low.

 

While saying inflation in the near term will probably be held down by lower energy prices, Fed officials repeated language from their September statement that “the likelihood of inflation running persistently below 2% has diminished somewhat.”

 

The personal consumption expenditures index, the central bank’s preferred price gauge, increased 1.5% in August and hasn’t exceeded the Fed’s 2% target since March 2012.

 

The Federal Open Market Committee (FOMC) repeated it will consider a wide range of information in deciding when to raise the federal funds rate, which has been held near zero since December 2008. Most Fed officials expect to raise the rate next year, according to projections released last month.

 

The Fed said rates could rise sooner than currently anticipated if it makes faster progress toward its goals of full employment and stable prices. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

 

In New Zealand, its central bank signalled it will keep interest rates on hold for an extended period as inflation slows and the currency remains unjustifiably high.

 

Lower commodity prices and increased global financial market volatility have taken some pressure off the New Zealand dollar,” Wheeler said. “However, its current level remains unjustified and unsustainable and continues to constrain growth in the tradable sector.

 

Wheeler’s description of the exchange rate mirrored language the central bank used before it intervened in August. The RBNZ sold a net NZ$521 million that month, the most since 2007. It updates September currency sales later today.

 

The RBNZ raised the benchmark rate four times between March and July, becoming the first developed-world central bank to raise rates this year. The consumers’ price index rose 1% in the third quarter from a year earlier. That was less than the 1.3% pace projected by the RBNZ in its September statement.

 

Weak global inflation, falling oil prices and the high currency are keeping price growth modest, Wheeler said in today’s statement. House prices are rising at a slower rate and wage increases are subdued.

 

Growth in the New Zealand economy has been faster than trends elsewhere in 2014, adding to demands on capacity and reducing unemployment. Growth has been stoked by construction, high immigration and rates that remain low by historic standards, he said.

 

 

Forex News – Dollar Touches 3-Week High as Fed Ends Asset Purchases on Labor

The dollar touched a three-week high against the yen after the Federal Reserve confirmed it will end its bond-purchase program amid improved conditions in the labor market.

 

The greenback held its biggest gain in almost four weeks against major peers as traders pushed up odds for an interest-rate increase next year even as the Federal Open Market Committee maintained its pledge to keep borrowing costs low for a “considerable time.” The New Zealand dollar fell after the Reserve Bank signaled it will keep rates on hold for an extended period.

 

“The Fed was more hawkish than investors had expected on both jobs and inflation,” said Masato Yanagiya, head of foreign exchange and money trading at Sumitomo Mitsui Banking Corp. in New York. “The reaction in currency markets was to buy the dollar.”

 

The dollar traded at 108.95 yen at 9:15 a.m. in Tokyo, after touching 109.01 yen, the highest since Oct. 7. It was little changed at $1.2624 per euro after climbing 0.8 percent yesterday. Japan’s currency was at 137.53 per euro from 137.56.

Dollar surges as Fed ends QE on hawkish note

LONDON (Reuters) - The dollar surged to a three-week high, bond yields rose and gold fell on Thursday after the U.S. Federal Reserve ended its six-year quantitative easing bond-buying program.

 

The decision was widely expected, but a relatively hawkish tone to the accompanying statement was not. It prompted financial markets to rethink the growing consensus that the Fed's first interest rate hike would be late in 2015.

 

Stock market reaction was more mixed. Asian shares mostly fell, following a slight decline on Wall Street overnight. European bourses opened higher on Thursday, helped by encouraging corporate earnings, but quickly turned negative.

 

The biggest moves were in currency and bond markets. The dollar rose sharply against all its major counterparts, and the two-year U.S. bond yield posted its biggest one-day rise in almost four years.

 

"Relatively hawkish comments about the labor market caused the dollar to spike strongly as the market readjusted for the next move from the Fed, which senior analyst at FXpro in London.

 

In a statement on Wednesday after a two-day meeting, the Fed retained its basic guidance that overnight borrowing costs would remain near zero for a "considerable time".

 

But it dropped a characterization of the U.S. labor market slack as "significant" in a show of confidence in the economy's prospects, which markets perceived as a slightly hawkish turn.[ID:nL1N0SO24I]

In early European trade the dollar index, a broad measure of the greenback's trade-weighted value, was up 0.5 percent above 86.4 (.DXY).

 

The dollar was up a third of a percent against the yen, above 109 yen (JPY=), and the euro was down half a percent at $1.2575 (EUR=).

 

The dollar benefited as U.S. Treasury yields surged, with the benchmark 10-year Treasury note yield climbing to a three-week high of 2.362 percent. In early European trade on Thursday it was hovering around 2.33 percent.

 

The two-year yield, which is more sensitive to interest rate moves, was above 50 basis points, double the level it was only two weeks ago. It jumped almost 10 basis points immediately after the Fed's statement on Wednesday.

 

European equity markets initially welcomed the Fed's statement as a sign the U.S. economy is in good shape, rather than taking fright at the prospect of interest rates perhaps rising sooner than had been expected.

 

But at 0930 GMT the EuroFirst 300 index of leading shares was down 0.1 percent at 1317 points (.FTEU3). Germany's DAX (.GDAXI) was down 0.4 percent and France's CAC40 (.FCHI) was down 0.1 percent, shrugging off upbeat corporate updates from Alcatel Lucent (ALUA.PA), Technip (TECF.PA) and Renault (RENA.PA).

 

Britain's FTSE 100 was down 0.5 percent (.FTSE), and U.S. futures pointed to Wall Street opening around 0.2 percent lower.

 

British bank Barclays (BARC.L) set aside 500 million pounds ($800 million) for potential fines resulting from a global foreign exchange investigation. Its shares were up 1 percent, however, after the bank reported a 15 percent rise in third- quarter profit. [ID:nL5N0SP18X]

 

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent, while Japan's Nikkei (.N225) bucked the trend in Asia and rose 0.7 percent, as investors took heart from the significantly weaker yen.

 

Gold fell to a three-week low just above $1,200 an ounce (XAU=), pressured by the strong dollar. Oil also fell, with U.S. and Brent crude futures down almost 1 percent to $81.40 and $86.42 a barrel, respectively (CLc1) (LCOc1).

 

Brazil surprised markets late on Wednesday by hiking interest rates, a bold move that signals President Dilma Rousseff may make market-friendly policy changes after her narrow re-election victory on Sunday. [ID:nL1N0SO0TA]

 

The rate hike could give the Brazilian real (BRL=) a further lift. It had fallen to a nine-year low against the dollar on Monday after Rousseff defeated market-friendly challenger Aecio Neves, but it recovered ground as some of the pessimism faded.

 

Source: Yahoo (30 Oct 2014)

ECB Started A Minor Asset Purchasing Program

 

The European Central Bank said it settled 1.704 billion euros ($2.2 billion) of covered-bond purchases last week as it started its latest effort to revive the euro-area economy.

 

They began purchases on Oct. 20, returning to the market for a third time in six years as part of a renewed attempt to stave off deflation and pump life into a moribund recovery.

 

Investors have been closely watching the ECB’s first week of asset buying to gauge how quickly President Mario Draghi plans to fulfill his pledge of expanding the institution’s balance sheet by as much as 1 trillion euros. Even though the ECB will add asset-backed securities to the purchase plan this year, stimulus may not be enough to revive the region’s economy.

 

With the economy stuttering and inflation forecast to have stayed below 1 percent for a 13th month in October, Draghi is under pressure to do more. While central banks from the U.S. to Japan used large-scale asset purchases to bolster their balance sheets and kick-start lending, the ECB has so far refrained from such a step.

Forex News – Dollar Holds Three-Day Decline Before Fed Interest-Rate Decision

The dollar held a three-day decline as signs of an uneven U.S. economic recovery caused investors to adjust their outlooks for interest rates next year before the Federal Reserve sets monetary policy today.

 

The U.S. currency was near a one-week low versus a basket of major counterparts after data yesterday showed orders for durable goods unexpectedly declined. The Fed said in September that it would conclude quantitative easing this month if the economy keeps improving. Traders have pushed back bets on when the Federal Open Market Committee will raise interest rates. South Korea’s won rose to a one-month high.

 

“The end of QE is all but certain, but the question is how the Fed views the mixed economic data,” said Kazuo Shirai, a trader at Union Bank NA in Los Angeles. “If the statement retains the phrase that rates will stay low for a ‘considerable time,’ the immediate reaction may be to sell the dollar.”

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, was little changed at 1,063.31 as of 10:47 a.m. in Tokyo, after touching 1,062.65 yesterday, the lowest level since Oct. 21.

 

The dollar fetched $1.2735 per euro from $1.2734 in New York, after declining 0.7 percent in the previous three days. It was little changed at 108.15 yen. Japan’s currency was unchanged at 137.73 per euro.

 

The won gained 0.2 percent to 1,047.05 per dollar, after earlier touching 1,045.58, the strongest level since Sept. 26, according to prices compiled by Bloomberg.

 

Bookings for goods meant to last at least three years decreased 1.3 percent after falling 18.3 percent in August, a U.S. Commerce Department report showed yesterday in Washington.

 

Bloomberg’s dollar index is headed for a 0.7 percent drop in October, its first losing month since June, as traders cut bets on an early Fed rate gain. The odds of rates going up by October 2015 are at 50 percent, from 85 percent on Sept. 30. Policy makers have kept their key rate at zero to 0.25 percent since December 2008.

 

Source: Bloomberg (29 Oct 2014)

Forex News – Dollar Holds Two-Day Drop as Fed Seen Keeping Record-Low Rates

The dollar held a two-day decline versus the euro on bets U.S. policy makers meeting this week will say they intend to keep interest rates at a record low for an extended period even as they end bond buying.

 

A gauge of the U.S. currency headed for its first monthly loss since June as traders cut the probability the central bank will raise borrowing costs by October 2015 to a 49 percent chance from 85 percent odds at the end of last month. The Fed starts a two-day meeting today. The yen fell against all except two of its 16 major peers before the Bank of Japan sets policy this week with some economists predicting an expansion of monetary stimulus.

 

“The key is going to be the tone of the Fed’s statement, and I think the tone will be extremely cautious,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York. “In the near term, the dollar is going to be heavy.”

 

The dollar weakened 0.1 percent to $1.2709 per euro at 11:05 a.m. in Tokyo after declining 0.4 percent during the previous two days. The U.S. currency was little changed at 107.87 yen after declining to 108.38 yen yesterday, the weakest since Oct. 8. The yen fell 0.1 percent to 137.09 per euro.

 

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, was little changed at 1,066.35. It has dropped 0.4 percent this month.

 

The Federal Open Market Committee indicated at its September meeting that it planned to end its quantitative-easing programs this month. Policy makers have kept their key interest rate at zero to 0.25 percent since December 2008.

 

Source: Bloomberg (28 Oct 2014)

Most Banks Pass EU’s Stress Test

Here’s the bad news – the European Central Bank (ECB) failed 25 of 130 lenders in its assessment of the quality of bank balance sheets and their ability to withstand times of economic stress.

 

Now for the good news – none of Europe’s largest banks were found lacking. No French, German or Spanish institutions were required to raise more capital.

 

The European Banking Authority (EBA) had put 123 banks in 22 countries through the stress test, which was carried out by the ECB and national supervisors. It provided the so-called fully loaded capital ratio for the first time. The ECB also released the results of its Comprehensive Assessment in Frankfurt yesterday as it prepares to assume oversight of euro-area banks on 4^th November.

 

To pass in the EBA’s baseline three-year scenario, which followed European Commission economic forecasts, a bank’s ratio of common equity Tier 1 to risk-weighted assets had to remain above 8 percent. In the “worst case scenario” which included a hypothetical recession and bond-market collapse, the pass mark was 5.5 percent. The results are based on banks’ balance sheets at the end of 2013.

 

A total of 25 lenders failed the European Banking Authority’s stress test with a capital shortfall of 24.6 billion euros. Deutsche Bank AG, Germany’s largest lender and the world’s largest Forex trader, is poised to pass the stress tests. The lender’s common equity Tier 1 ratio is expected to stand at about 8.8 percent under the severe stress scenario and at about 12.6 percent in the baseline scenario.

 

The EU overhauled its banking laws last year, toughening the capital requirements banks must meet to operate in the bloc. The legislation, known as the Capital Requirements Regulation, lists a range of instruments that banks will be forced to remove from their calculations of core capital in the years ahead.

 

These include goodwill, an intangible asset that arises when a company is acquired for a price above book value, as well as defined benefit pension fund assets and some kinds of deferred tax assets. Most of the phasing out must be completed by 2019.

 

In China, Song Quoqing, an academic member of the People’s Bank of China (PBOC) monetary policy advisory committee, said at a forum in Beijing last week that China’s economic growth will slow to 7.2 percent in the 4^th quarter of 2014. This is lower than the reported 7.3 percent growth for the 3^rd quarter, which was already the lowest in five years.

 

Ironically, the two main reasons that fueled China’s rise to become the world’s second largest economy – exports and property – will be the main cause of China’s slowing growth for the next few quarters.

Top News This Week

New Zealand: Official Cash Rate. Thursday, 30^th October, 4am.             
I expect figures to remain at 3.5%.

USA: Advance GDP q/q. Thursday, 30^th October, 8.30pm.            
I expect figures to come in below 3.3% (previous figure was 4.6%).

Trade Call

Short EUR/USD at 1.2675

On the H1 chart, EUR/USD is moving in a range after a 200 pip drop from 21^st October. I expect the euro to head up slightly due to the “good news” of the EU stress test. Good in a sense that although 25 lenders failed the test, none of the big banks require more capital.

 

This is also the week where the Federal Reserve is expected to remove the final stimulus of USD15 billion. If that happens, EUR/USD will start to fall as traders start to focus on the Fed’s interest rate hike. An entry is taken at 1.2675 once prices start falling, and a 45 pip stop loss is placed slightly above the conversion level. We will have two targets on this trade, exiting the first position at 1.2630 and the second one at 1.2585.

 

Entry Price = 1.2675
Stop Loss = 1.2720
1st Profit = 1.2630
2nd Profit = 1.2585

 

Sources: (As written on BTInvest, 27 October 2014.)

 

Note: The information in this article has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This article is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this information.

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Forex News – Yen Rises First Time in 7 Days on Report of New York Ebola Case

The yen strengthened for the first time in seven days against the dollar after a media report that a patient in New York City tested positive for Ebola, boosting demand for haven assets.

 

Japan’s currency advanced at least 0.2 percent versus all of its 16 major counterparts after the New York Times said a further test will be conducted to confirm the initial finding without saying where it got its information. U.S. Treasuries gained, while futures on the Standard & Poor’s 500 Index extended declines.

 

“We’re seeing a fall in equity futures and dollar-yen on fears of a potential pandemic,” said Greg Gibbs, the head of Asia-Pacific markets strategy at Royal Bank of Scotland Group Plc in Singapore.

 

“There is a bubbling fear percolating in the background. Ebola is certainly on the market’s radar.”

 

The yen rose 0.3 percent to 108 per dollar at 10:03 a.m. in Tokyo after sliding to 108.35 yesterday, the weakest level since Oct. 8. Japan’s currency climbed 0.2 percent to 136.71 per euro. The dollar was little changed at $1.2657 per euro.

Source: Bloomberg (24 Oct 2014)

Forex News – Gundlach With Pimco See Dollar Extending Best Rally Since 2008

The U.S. dollar is poised to extend its steepest rally in six years, according to two of the world’s biggest bond investors.

 

Jeffrey Gundlach at DoubleLine Capital LP and Scott Mather of Pacific Investment Management Co. both said they’re bullish. The New Zealand dollar led declines against the greenback today, dropping 1 percent after a report showed inflation in the South Pacific nation slowed.

 

“The dollar is the place to be,” Gundlach said yesterday at ETF.com’s Inside Fixed Income Conference in Newport Beach, California. It’s a “no-brainer” for Germans and Spaniards to put their money into U.S. Treasury securities, he said.

 

The kiwi tumbled to 78.51 U.S. cents as of 11:38 a.m. in Tokyo from 79.29 yesterday, heading for the biggest decline since Oct. 3. New Zealand’s consumer price index rose 1 percent in the third quarter from a year earlier, slowing from 1.6 percent in the previous period and prompting speculation policy makers will delay raising interest rates.

 

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 other currencies, has gained 4.8 percent in 2014, headed for its biggest annual advance since 2008. The U.S. currency advanced 0.1 percent versus the euro to $1.2638.

 

Source: Bloomberg (23 Oct 2014)

Forex News – Aussie Advances After Chinese Factory Output Outpaces Estimates

Australia’s dollar strengthened for a second day after China’s factory output increased more in September than analysts forecast.

 

The Aussie advanced against all except one of its 16 major counterparts after a separate Chinese report showed economic growth slowed less last quarter than predicted. China is Australia’s largest trading partner. The U.S. dollar snapped a three-day gain versus the yen as traders speculated a slowdown in global growth will convince the Federal Reserve to delay raising interest rates.

 

The Chinese data “is certainly a relief,” said Chris Weston, chief market strategist in Melbourne at IG Australia, a unit of IG Group Holdings Plc. With investors focused on a slowdown in global growth, a disappointing number “would have added more misery and we probably would have seen the markets snap back a little bit,” he said.

 

Australia’s dollar rose 0.2 percent to 88.03 U.S. cents at 11:21 a.m. in Tokyo after gaining 0.5 percent yesterday. The greenback fell 0.1 percent to 106.87 yen, and was little changed at $1.2797 per euro. The euro fell 0.1 percent to 136.74 yen.

 

The Bloomberg Dollar Spot Index, which measures the U.S. currency against a basket of 10 counterparts, was little changed at 1,061.81 after falling 0.2 percent yesterday.

 

China’s gross domestic product grew 7.3 percent in the third quarter from a year earlier, outpacing the 7.2 percent median estimate of economists surveyed by Bloomberg News. Industrial production rose 8 percent in September from a year ago, compared with a 7.5 percent expansion predicted in a separate Bloomberg survey.

 

Source: Bloomberg (21 Oct 2014)

Markets Swing as Global Growth Falters

In the month of October alone, more than USD3.2 trillion was wiped off from the value of world shares as the International Monetary Fund (IMF) cut its outlook for global growth in 2015.

 

The main areas of weakness extend from Europe to China. Even the Ebola threat in Africa has added to the panic selling in world markets. The risk-off sentiment spurred the fastest purchases of gold held through exchange-traded prodict (ETPs) since July this year.

 

The gain in the net-long position in New York gold futures and options snapped the longest run of reductions since 2010, causing prices to rise for a second week as global equities retreated to an eight-month low. Short holdings betting on a decline shrank 1.7 percent. Spot gold touched USD1,249.52 an ounce last week.

Japan

The Topix slipped 5.3 percent last week to leave it down 13 percent from a six-year high reached in September. The main reason for the drop was caused by news that Japan’s USD1.2 trillion Government Pension Investment Fund, or GPIF, will boost its holdings of foreign bonds and stocks to a combined level of about 30 percent from 23 percent, while reducing domestic notes to 40 percent from the current 60 percent. GPIF is currently the largest pension fund in the world.

China

China’s top Communist Party officials will gather in Beijing this week for their fourth plenum, with an update on gross domestic product for Asia’s largest economy due tomorrow. According to the median estimate of 47 economists compiled by Bloomberg, China’s economy probably grew 7.2 percent in the third quarter from a year earlier. That would be a retreat from the 7.5 percent expansion recorded for the second quarter and the slowest pace of growth since 2009.

 

China’s central bank is said to plan the injection of about 200 billion yuan into some national and regional lenders to help them prepare for year-end liquidity needs. The injection comes after the central bank provided 500 billion yuan of liquidity to China’s five biggest banks last month.

Europe

The European Union’s (EU) 28 leaders will meet for a 2 day summit in Brussels this week, as snapshots of the crisis that emerged in Greece five years back seem to reappear. Last week, yields on 10-year bonds from Greece, which has been considering ending its bailout program early, jumped to 8.656 per cent from 7.854 per cent. Stock markets in Europe have also fallen by more than 3 percent, contributing to the global stock market rout of more than USD3 trillion so far this month. The economy of the 18-nation euro area stagnated in the second quarter and inflation, at 0.3 percent last month, isn’t seen returning to the European Central Bank’s target of 2 percent before 2017. With the apparent slack in Europe, traders are expecting the European Central Bank (ECB) to start asset purchases within the next few days to support the economy.

 

While the Federal Reserve is on track to end its bond buying program this month amid the improving US economy, there is a slim chance that the remaining USD15 billion will not be totally removed after St Louis Fed Bank President James Bullard said that policy makers should consider delaying the end of this quantitative easing round given the global slowdown.

Should that happen, watch for the US dollar to weaken.

Top News This Week

Canada: Core retail sales m/m. Wednesday, 22^nd October, 8.30pm.            

I expect figures to come in at 0.3% (previous figure was -0.6%).

 

China: HSBC Flash Manufacturing PMI. Thursday, 23^rd October, 9.45am.           

I expect figures to remain at 50.2.

Trade Call

 

Long AUD/JPY at 93.73

On the H1 chart, AUD/JPY started a downtrend on 9^th October and moved in excess of 400 pips. Today’s price action shows that the pair has broken out of the range and continues to climb with upward momentum. With a possible return to risk this week coupled with the weakening of the yen, I expect the AUD/JPY to continue to head up.

 

An entry is taken at 93.73 once prices retrace, and a 50 pip stop loss is placed just below the previous low. We will have two targets on this trade, exiting the first position at 94.23 and the second one at 94.73.

 

Entry Price = 93.73
Stop Loss = 93.23
1st Profit = 94.23
2nd Profit = 94.73

 

Source: BTInvest (20 October 2014)

Economic Insight - China To Release GDP Next Week

 

U.S. U3 unemployment rate (yellow) & U.S. PCE YoY

Source: Bloomberg

 

 

China may ease the policy further to protect the growth target

Fewer infrastructure development and slowing housing market do not eliminate a shocking number to the south. Its proxy Industrial Production slumped to 6.9% in Aug, and aggregate financing is low in 3Q. Although Trade balance could provide some support, we still expect 7.3% for the 3Q growth results next week.

 

Chinese borrowing costs is poised to drop below the central bank’s savings benchmark for the first time since 2012 as speculation mounts that interest rates will be cut.

 

The one-year swap, a fixed payment to receive the floating seven-day repurchase rate, has fallen 2.13% points so far in 2014 and ended yesterday at 3.09%, near the official 12-month deposit rate of 3%. The last time when contracts were lower than the benchmark was in 2012, when the People’s Bank of China (PBOC) reduced savings and loan costs twice.

 

Asia’s largest economy is forecasted to report third-quarter growth of 7.2% next week, the least since 2009, after data for September showed overall financing missed estimates and inflation eased to the slowest since 2010. While the central bank lowered the rate on the 14-day repurchase agreements this week, a cut in the benchmark is the most direct way to shrink financing costs.

 

China’s benchmark one-year lending rate has been 6% since July 2012, when it was cut for a second time that year. The central bank allowed commercial lenders the freedom to set their own loan costs last year, while the deposit rate remains capped at 1.1 times the PBOC’s 3 % targeted level.

 

Aggregate financing came in at 1.05 trillion yuan last month, missing the 1.15 trillion yuan median estimate in a Bloomberg survey and below last year’s monthly average of 1.44 trillion yuan. Data earlier this week showed consumer prices climbed 1.6% in September, the slowest pace in 4.5 years.

The PBOC cut the interest rate on 14-day repo contracts to 3.4 % this week, compared with 3.5% on October 9 and 3.7% on September 16. The seven-day repurchase rate averaged 3.05% this month, the lowest since May 2012.

 

New yuan loans plunged to the least since 2009 in July as the benchmark money-market rate rebounded to an average 3.84% after exports and manufacturing showed signs of a recovery in the previous month. This time, the central bank may allow funding conditions to remain ample for a while.

 

PBOC Governor Zhou Xiaochuan last weekend reiterated the need for “prudent” monetary policy amid “steady” economic expansion. China prefers reform to economic stimulus, Premier Li Keqiang said last week, while adding that the nation should ensure that its 2014 economic goals are met.

 

While total financing fell short of expectations, it was still up from 957 billion yuan in August. Money supply grew 12.9%, accelerating from 12.8%. The yuan strengthened 0.05% to 6.1231 versus the dollar in Shanghai yesterday.

 

The central bank has so far opted for targeted measures to bolster growth, including RRR cuts for smaller banks and a 500 billion yuan provision for the nation’s five largest banks. Debt ballooned after the government rolled out a stimulus campaign amid the 2008 financial crisis, while shadow banking, which encompasses off-balance-sheet lending including trusts, also expanded beyond policy makers’ direct control.



Forex News – Dollar Poised for Weekly Drop on Growth Caution; Kiwi Fluctuates

The dollar was poised for a weekly drop against 11 of its 16 major peers as traders weighed whether slowing global growth will curb momentum in the U.S. economy.

The greenback stemmed this week’s losses before data forecast to show an increase in housing starts and building permits in the world’s largest economy. Traders have pushed back expectations on when the Federal Reserve will increase interest rates, driving Treasury yields lower. New Zealand’s dollar fell as much as 1 percent before paring losses after its central bank erroneously republished September comments saying the currency’s level was unjustified and unsustainable.

“The market’s bullish U.S. dollar view has capitulated slightly,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. “Currency markets are pricing in a little bit more in terms of economic growth, whereas the rates markets are pricing a cautious FOMC,” he said referring to the Federal Open Market Committee.

The dollar traded at 106.34 yen at 9:19 a.m. in Tokyo from 106.33 yesterday, poised for a 1.2 percent weekly drop. It was unchanged today at $1.2809 per euro, down 1.4 percent since Oct. 10. New Zealand’s currency was little changed at 79.52 U.S. cents, set for a 1.7 percent gain on the week, the most since the period ended June 13.

JPMorgan Chase & Co.’s Global FX Volatility Index rose to as much as 8.56 percent this week, the most since Feb. 6. It has climbed from 5.28 percent in July, the lowest on record.

Speculation the U.S. central bank will raise rates next year had led to a record rally in the U.S. currency. The advance started to reverse last week after minutes of the Sept. 16-17 FOMC meeting showed participants said expansion “might be slower than they expected if foreign economic growth came in weaker than anticipated.”

Source: Bloomberg(17 Oct 2014)

Forex News – Dollar at Risk of Further Yen Slide for JPMorgan; Aussie Weakens

The dollar has a high risk of falling versus the yen and adding to its biggest slide in six months, according to JPMorgan Chase & Co., with global markets roiled by concerns that growth and inflation are slowing.

The Bloomberg Dollar Spot Index declined for a second day as traders pushed back expectations for a U.S. interest-rate increase to December 2015, after earlier this month seeing a rise as likely to come in July. Australia’s dollar fell on speculation yesterday’s 1.3 percent advance was unwarranted. China has shown “some renewed willingness” to let the yuan strengthen, the U.S. Treasury Department said in a report. South Korea’s won rose.

“There’s a general unease across markets,” said Naohiro Nomoto, an associate for foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “People seem to be dropping their long dollar-yen positions, and taking a watch-and-wait attitude,” he said referring to wagers on gains in the U.S. currency.

The dollar was little changed at 106.07 yen as of 11:30 a.m. in Tokyo after dropping 1.1 percent yesterday, the biggest loss since April 8. The greenback traded at $1.2828 per euro after weakening 1.4 percent yesterday to $1.2838. Japan’s currency was at 136.04 per euro from 135.99.

The Bloomberg dollar index slid 0.1 percent to 1,060.33, after yesterday’s 0.7 percent decline, which was the steepest drop since Oct. 6. Hedge funds and other large speculators had raised their net bullish dollar bets versus eight of its major peers to a record 313,878 contracts as of Oct. 7, according to data from the Washington-based Commodity Futures Trading Commission.

Source: Bloomberg (16 Oct 2014)

Forex News – Dollar Rises on Prospects U.S. Economic Growth to Outpace Peers

The dollar gained versus its peers for a second day amid speculation the U.S. economy, the world’s largest, will outpace other Group-of-10 nations.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, rose before the Federal Reserve releases its Beige Book on economic conditions. The euro fell ahead of a speech today by European Central Bank President Mario Draghi amid concerns Germany is slipping toward recession. The pound touched an 11-month low after a report showed U.K. inflation fell to levels unseen in five years.

“The U.S. is in a much better place compared to its peers,” said Stan Shamu, a markets strategist in Melbourne at IG Australia, a unit of IG Group Holdings Plc. “The U.S. dollar will ultimately benefit.”

The Bloomberg dollar index rose 0.1 percent to 1,069.31 as of 11:29 a.m. in Tokyo from yesterday, when it advanced 0.3 percent. The dollar gained 0.2 percent to $1.2638 per euro, adding to a 0.7 percent rally yesterday, the most since Oct. 3. The greenback was little changed at 107.08 yen. The euro fell 0.1 percent to 135.35 yen.

The U.S. economy will expand 2.2 percent this year and 3 percent in 2015, according to Bloomberg News surveys. The euro area will grow 0.8 percent and 1.3 percent, while Japan will gain 1 percent in 2014 and 1.2 percent, the surveys predict.

Source: Bloomberg (15 Oct 2014)

Forex News – Dollar Strengthens From One-Month Low Versus Yen as Aussie Gains

The dollar strengthened from a one-month low against the yen on speculation its longest losing streak since July was unwarranted given U.S. economic growth is likely to outpace Japan’s.

The greenback rose for the third time in four days versus the euro as analysts predict European data today will show industrial production slumped in August. The yen fell against most of its 16 major counterparts as U.S. stock futures rallied, damping demand for Japan’s haven assets. Australia’s dollar gained for a second day after China’s central bank cut an interest rate it pays lenders on repurchase agreements, signaling possible monetary easing.

“Dollar-yen doesn’t tend to sell off too much in Asia, where there tend to be buyers on dips, and that’s what we’re seeing,” said Tim Kelleher, head of institutional foreign-exchange sales at ASB Bank Ltd. in Auckland. “There’s strong resistance around 107.50 yen on the day, so the dollar is unlikely to rise too much.”

The dollar rose 0.2 percent to 107.09 yen at 6:47 a.m. in London after earlier sliding to 106.76, the weakest since Sept. 11. The currency had dropped for the past three days in the longest losing streak since the period ended July 8. The U.S. currency gained 0.2 percent to $1.2724 per euro. The yen was little changed at 136.25 per euro.

The dollar breached the lower boundary of its 20-day Bollinger Band against the yen yesterday, indicating it may be poised for a bullish reversal. The band identifies possible turning points in an asset’s direction.

Source: Bloomberg (14 Oct 2014)

Forex News – Yen Set for Weekly Gains as Global Growth Concerns Deepen

The yen headed for its first weekly advance versus the dollar since August as stock declines and signs of a global slowdown boosted demand for haven assets.

Japan’s currency was set for gains against most of its 16 major peers this week as investors pushed back bets for when the Federal Reserve will raise interest rates. The euro was poised for a third weekly decline against the yen after European Central Bank President Mario Draghi pledged to expand stimulus measures if needed. Australia’s dollar fell for a second day, while the South Korean won gained.

“People have decided that the reason the Fed might be lower for longer on rates is because the global economy is slowing and equities have dumped on that,” said Ray Attrill, the global co-head of currency strategy at National Australia Bank Ltd. in Sydney. “The yen will continue to draw safe-haven support.”

The yen traded at 107.81 per dollar as of 11:24 a.m. in Tokyo from 107.84 yesterday, when it touched 107.53, the strongest since Sept. 17. Japan’s currency was poised for a 1.8 percent weekly gain, the biggest since the period ended March 14. It was little changed at 136.97 per euro. The 18-nation currency rose 0.1 percent to $1.2704.

The Australian dollar weakened 0.1 percent to 87.72 U.S. cents from the New York close. The MSCI Asia Pacific Index of shares declined 1.2 percent, following a 1.2 percent drop in the MSCI World Index yesterday.

Source: Bloomberg (10 Oct 2014)

Forex News – Dollar Reaches Two-Week Low as Traders Push Back Rate Gain Bets

The dollar fell to a two-week low against the euro as investors pushed back bets for when the Federal Reserve will increase interest rates.

Australia’s currency erased an earlier decline as traders treated data showing employers unexpectedly cut payrolls last month with caution following changes to labor-market figures by the statistics bureau yesterday. The euro was near the strongest in three weeks versus the pound before European Central Bank President Mario Draghi speaks in Washington and the Bank of England announces a policy decision.

“The Fed may not raise rates as early as expected,” said Masafumi Yamamoto, a former central-bank analyst who is now President at Praevidentia Strategy Ltd. in Tokyo. “Those who got a little ahead of themselves on Fed policy are reducing dollar long positions.” A long position is a bet that an asset will rise.

The dollar was little changed at $1.2732 per euro as of 10:48 a.m. in Tokyo after depreciating to $1.2755, the weakest level since Sept. 26. The U.S. currency was also little changed, at 108.17 yen. The euro advanced 0.1 percent to 137.72 yen.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, was unchanged at 1,062.13 after dropping 1.5 percent during the previous three days.

A number of Federal Open Market Committee participants said expansion “might be slower than they expected if foreign economic growth came in weaker than anticipated,” according to minutes of their Sept. 16-17 meeting released yesterday.

Source: Bloomberg (09 Oct 2014)

Forex News – Risk Reversals Signal Yen Strength as Officials Warn on Weakness

Options markets signal a further rally in the yen from a six-year low as Japanese officials raise concerns about potential damage from a weak currency.

The premium for one-month options to buy the yen against the dollar versus those to sell rose to 70 basis points today, the most since May 19, according to data compiled by Bloomberg on 25-delta risk reversals. The premium for one-week options climbed to 107.5 basis points, the most since Feb. 6.

The yen completed yesterday its biggest two-day gain since February after Bank of Japan Governor Haruhiko Kuroda said the central bank will closely monitor the exchange rate and Prime Minister Shinzo Abe said its weakness is hurting small companies and households. It traded at 108.48 per dollar at 2:16 p.m. in Tokyo after reaching 110.09 per dollar on Oct. 1, a level unseen since August 2008.

“Risk reversals are showing the potential for a further retracement of the dollar’s excessive gains,” said Shusuke Yamada, a Tokyo-based currency strategist at Bank of America Merrill Lynch. Amid a growing chorus of voices against too much yen weakness, “it’s easy for the yen to strengthen,” he said.

The yen slumped 5.1 percent versus the dollar in September, its worst monthly performance since January 2013, as the BOJ pressed on with its unprecedented monetary easing, while the Federal Reserve withdrew stimulus.

The yen will end the year at 109 per dollar, according to the median estimate of analysts surveyed by Bloomberg News. Bank of America Merrill Lynch forecasts 108.

“The yen is a bit undervalued, so it’s natural to expect a correction,” Yamada said. “It would be normal for it to strengthen to 107 or 106 per dollar considering the size of its recent decline.”

Source: Bloomberg (08 Oct 2014)

骨刺

朋友們，如果誰家有親人朋友生骨刺，喝這個最好，千萬不要去開刀哦。因為我朋友也是得過這樣的病，醫生說是神經線壓到必須要開刀，好彩他沒開刀，剛好去新加坡遇到一個老安哥，介紹他服這種草藥，他喝了四天就好了，在也沒有痛了。

骨刺藥方

川知母 一錢

生甘草 一錢

正天麻 一錢半

川木瓜 一錢半

牛七 一錢半

龜板 一錢半

白朮 一錢半

歸尾 一錢半

黃岑 一錢

黃柏 一錢

獨活 一錢

蒼朮 二錢

薏仁 三錢

桂尖 三錢

白芍 三錢

開始喝的時候，一包煮2次，煮第1次，3碗水，剩八分水，倒起來了。在放2碗水，煮剩八分水，這就可以了。可以連續喝，也可以一包葯煮2次。記得，喝了葯，不可喝中國茶，不要吃冷涼，比如~白蘿蔔，白菜等等。每天喝，喝到有感覺不痛了，就不要喝了，一天一包葯。如果好了，每個月吃1~2次。

先開大火煮滾了，然後開小火慢慢煮，煲剩八分水就可以了。

要用瓦鍋煲，也可以用電子砂煲，不要用鋼鍋。

註：「孕婦」不可以喝這葯。

請轉發，功德無量！希望可以幫助到有需要的人。

此文僅供參考，謝謝！