Daily Market Analysis by Vinson Financials

[VinsonFinancialsFX]

Financial News November 19, 2015

Daily Economic Outlook: 19th November, 2015

Market will focus on the U.K. October retail sales report. The Headline sales volumes inched up by 1.9% m/m in September. Although the increase was partly added to firm spending related to the Rugby World Cup, other categories also performed strongly, says Lloyds Bank.

The bank expects flat headline sales for the month. The retail indicators for October indicate that annual growth is likely to have eased back significantly.

Today's publication of the October ECB meeting minutes will draw attention of the analysts as the ECB is expected to deliver further policy stimulus in the coming months. At the press conference, President Draghi gave a strong indication that more policy easing is on the table for the next meeting on 3rd December. Ahead of the minutes, comments from ECB council members Weidmann, Coeure and Praet will be closely observed.

In the United States, the Philadelphia Fed survey for November and weekly initial jobless claims will be in focus.

Feds rate hike likely next year

Several FOMC members raised nonstandard reasons for rate hike in December. Analysts suspect pushing the hike into 2016 may increase uncertainty in financial markets.

Members are also seemed to differ over the possibility of inflation level returning to the target level of 2%, and they assume the performance of labor market is not sustainable.

They believe that the PCE inflation will remain below 2% through the end of 2016.

The ongoing global financial and economic developments also drew FOMC's attention. Most of the participants argue the downside risks arising from abroad seem to ease economy is secure now.

"We believe that divisions within the committee and the soft path of inflation we expect early next year will lead to a lower policy path in 2016 than the committee expects; we forecast it will hike only three times in 2016", say Barclays.

Market Review November 19, 2015

After last night’s FOMC minutes the EURUSD moved above 1.0700 level as a result of some profit taking but drop in early European session as the risk appetite increased returned. Fed officials comments hinted that a rate hike could be right around the corner. Furthermore some analyst based on bonds futures pricing predict two hikes during the following months.

USD price action was also pushed by the Bank of Japan that kept monetary policy steady something that was widely expected, despite the country's recent slip into a technical recession. Traders also monitor the ECB minutes release, later today, of its latest policy meeting that may hint what the central bank might do in December.

Additionally last night New Zealand PPI inputs rose 1.6% q/q in Q3 the same thime PPI output rose 1.3% q/q. In Japan Trade Balance came in at -0.2T., Swiss trade balance released at 4.16 billion. Eurozone Current Account announced at 29.4 bilion. Other important releases expect ECB monetary policy meeting for today will be the UK retail sales and Canada wholesale sales. Also we have US Unemployment Claims and Philly Fed Manufacturing Index that may move the market.

Data releases to monitor:

GBP: Retail Sales m/m, CBI Industrial Order Expectations

EUR: ECB Monetary Policy Meeting Accounts

USD: Unemployment Claims, Philly Fed Manufacturing Index, CB Leading Index m/m, Natural Gas Storage

CAD: Wholesale Sales m/m

Trade Idea of the Day

EUR/JPY

Currently the pair is trading at 131.55. Traders must monitor the 133.37 resistance level and the support level 130.65 for possible breakouts. A possible scenario would be a movement towards the 131.44 support level, where a break may lead to the 131.15 level and possible below to the 130.80 area. An alternative scenario could be a movement towards the 131.94 resistance level, where a break may lead to the 132.30.

[VinsonFinancialsFX]

Financial News November 20, 2015

Euro area November consumer confidence may improve

The European Commission's consumer confidence indicator is scheduled to publish today. The indicator is calculated based on the questions regarding the general economic situation, savings and households' financial situation, expectations of unemployment over the next 12 months.

Other business surveys observe an improvement in the job market of the economy both in terms of wages as well as employment. Lower oil prices continue to prevail in the market , therefore, purchasing power for consumers is seemed to be increased.

"We expect the number for consumer confidence to improve from -7.7 to -6.9 for November. The rest of the EC confidence indicators, along with the flash PMI estimates, will be released next week" says Societe Generale in a research note.

Market Review November 20, 2015

Asian Session was rather quiet while the lack of important announcements pushed the market to move sideways. All these despite the ‘’confirmation’’ of a rate hike in December by FED, this signals that traders are looking beyond December into next year and the outlook for Fed's rate path is still rather unclear something that can confirm form bonds futures pricing.

On the data front New Zealand’s Credit Card Spending y/y announce at 7.8% that boosted a little the country’s currency. China also release CB Leading Index m/m at 0.6%. Germany released PPI in early European session at -0.4% missing the forecast of -0.2% causing EUR/USD to drop below the 1.0690. UK will release public sector net borrowing. Additionally today the Canadian data will attract investors interest since includes retail sales and CPI. Furthermore Eurozone will also release consumer confidence.

Data releases to monitor:

GBP: Public Sector Net Borrowing

EUR: Consumer Confidence, German Buba President Weidmann Speaks

USD: FOMC Member Dudley Speaks

CAD: Core CPI m/m, Core Retail Sales m/m, CPI m/m, Retail Sales m/m

Trade Idea of the Day

USD/CAD

Currently the pair is trading at 1.3329. Traders must monitor the 1.3370 resistance level and the support level 1.3245 for possible breakouts. A possible scenario would be a movement towards the 1.3340 resistance level, where a break may lead above the 1.3370 level. An alternative scenario could be a movement towards the 1.3292 support level, where a break may lead to the 1.3245.

[VinsonFinancialsFX]

Financial News November 23, 2015

EUR/USD's further downside likely as December approaches

Markets were further prepared for more policy easing from ECB last week. ECB's President Mario Draghi emphasized his "whatever it takes" commitment again, that it has necessary measures to reach back to the inflation target and start with strong inflation anticipations.

EUR/USD is likely to relatively depreciate towards December, as ECB meeting comes closer, any higher side would be seen as a chance to restart post meeting EUR/USD short positions.

"We continue to expect an extension of the current QE program and a 10bp deposit rate cut to -30bp. Yet, with EONIA forwards pricing more than a 10bp cut in December we see a risk for EUR/USD to squeeze higher should the ECB disappoint", anticipates Barclays.

An unwinding of recent rebound in inflation expectations would be unlikely by ECB and it is also unlikely to squeeze EUR higher, this might tighten the financial conditions through the interest rates and FX channels.

Market Review November 23, 2015

The week started form where the previous one ended. USD open higher as supported by rate hike expectations since the economic data support this and the EUR is pressured by expectations of further stimulus by ECB in December. Draghi noted that the central bank is ready to act swiftly to boost inflation in Eurozone he also hinted there could be changes to the asset purchase program and deposit rate. ECB president had made it clear in the last post meeting press conference that policy makers will re-examine the current stimulus program in the upcoming meeting.

On the data front New Zealand’s Visitor Arrivals m/m announced at 0.2%. In Europe French Flash Manufacturing PMI came in at 50.8 while French Flash Services PMI at 51.3. German Flash Manufacturing PMI came in at 52.6 German Flash Services PMI at 55.6. Eurozone Flash Manufacturing PMI data came in at 52.8 and Flash Services PMI at 54.6. From US we expect the Flash Manufacturing PMI to be announced at 54 and Existing Home Sales at 5.39 million. Furthermore today Eurogroup meeting is held traders are advice to be alert for any announcement.

Data releases to monitor:

EUR: Eurogroup Meetings

USD: Flash Manufacturing PMI, Existing Home Sales

Trade Idea of the Day

CAD/JPY

Currently the pair is trading at 91.93. Traders must monitor the 93.10 resistance level and the support level 91.75 for possible breakouts. A possible scenario would be a movement towards the 91.75 support level, where a break may lead to the 91.40 area. An alternative scenario could be a movement above the 92.05 resistance level, where a break may lead to the 92.55.

[VinsonFinancialsFX]

Financial News November 24, 2015

Daily Economic Outlook: 24th November, 2015

The German IFO survey, Bank of England MPC testimonies and the second estimate of US Q3 GDP will draw market attention today. The BoE Governor Carney and Chief Economist Haldane will confirm to the Treasury Select Committee, along with external MPC members Forbes and Vlieghe.

The November Inflation Report was more dovish than expected. The annual CPI inflation was expected to remain below 1% until the second half of next year and coming to target only in late 2017, based on market-implied interest rates, estimates Lloyds Bank.

The U.S. Q3 GDP second estimate is likely to be revised up to around 2% on a qoq annualized basis. The detail should confirm that underlying domestic activity posted a robust growth to warrant a potential rise in policy rates in December. Consumer confidence and the Richmond Fed survey are also expected to release.

A moderate improvement in the German IFO headline index is expected at 108.4, says Lloyds Bank. However, despite the expected increase, the implied pace of growth would be observed as insufficient by the ECB to enable it to meet its inflation mandate.

Market Review November 24, 2015

European Central Bank executive board member Sabine Lautenschläger said on Monday that she does not see a need for the central bank to boost up its stimulus measures, suggesting that if the ECB presses forward with more easy-money policies in December, it will do so without the support of its influential German contingent.

"For me it is clear: At the moment I see no reason for further monetary policy measures, especially not an expansion of the asset-purchase program," Ms. Lautenschläger said in prepared remarks for a conference in Munich.

Her comments come just days after ECB President Mario Draghi sent a strong signal that the ECB was ready to expand its bond-purchase program and reduce its deposit rate further into negative territory at the December policy meeting.

"If we conclude that the balance of risks to our medium-term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate," he said last Friday. EUR/USD remained near the 1.0640 area, with the next support seen at the 1.0592 level.

Released during the Asian session this morning, Japan’s Flash Manufacturing PMI came in at 52.8 beating the estimated 52.1 and causing insignificant impact on the on the USD/JPY, which is currently trading near the 122.62 area.

Released during the early European session, German Final GDP showed that the German economy have grown by 0.3% in the third quarter, as predicted in an earlier estimate.

The key events for the day would be the German Ifo Business Climate, the United Kingdom Inflation Report Hearings, the United States Prelim GDP, CB Consumer Confidence and RBA Gov Stevens speech.

Data releases to monitor:

CHF: Employment Level.

GBP: Inflation Report Hearings, CBI Realized Sales.

USD: Prelim GDP, Goods Trade Balance, Prelim GDP Price Index, S&P/CS Composite-20 HPI, CB Consumer Confidence, Richmond Manufacturing Index.

EUR: German Ifo Business Climate, Belgian NBB Business Climate.

CAD: Gov Council Member Patterson speech.

AUD: RBA Gov Stevens speech.

Trade Idea of the Day

USD/CAD

Currently the pair is trading at 1.3327. Traders must monitor the 1.3435 resistance level and the support level 1.3246 for possible breakouts. A possible scenario would be a movement towards the 1.3290 support level, where a break may lead to the 1.3260 area. An alternative scenario could be a movement towards the 1.3363 resistance level, where a break may lead to the 1.3400 area.

[VinsonFinancialsFX]

Financial News November 25, 2015

Daily Economic Outlook: 25th November, 2015

PCE deflator data of the U.S. will draw markets' attention today. The Fed's preferred measure of inflation, is likely to increase to 1.4% on the 'core' rate in October, says Lloyds Bank.

This will boost the Fed confidence that inflation is returning to its target level.

The Chancellor's Autumn Statement in U.K. is likely to provide the day's domestic focus. The Autumn Statement provides a scope for a mid-year adjustment.

"Although we expect the Chancellor to claw his way back to the balanced budget objective for 2019/20 - and the OBR to still project a surplus in the final year of the projections in 2020/21 - we look for a cumulative increase in borrowing of around £40bn over the 5-year forecast horizon. The overshoot for 2015/16 should still be sufficiently modest, however, to avoid any meaningful change for the planned gilt issuance in this fiscal year", argues Lloyds Bank.

Market Review November 25, 2015

Reserve Bank governor Glenn Stevens signalled yesterday, at a business economists forecasting conference in Sydney, that interest rates will stay on hold at next Tuesday's meeting saying the case for leaving them steady was one he "happened to agree with". The RBA had not cut rates even though the economy was growing more slowly than it could and inflation was low. RBA governor also added, “I'm more than content to lower it if that actually helps, but is that the best thing to do at any particular time?” Stevens asked, while replying to a question on the cash rate. In addition, he said, “We've got Christmas. We should just chill out, come back and see what the data says.” The Australian dollar surged to one month high after RBA governor hints no rate cut plan in 2015, AUD/USD rose sharply to the 0.7282 area and currently is trading near the 0.7265 area.

Elsewhere, the BoJ minutes of October 30 noted that some members of the Bank of Japan's (BOJ) policy board believe that an output gap was one reason the country was taking longer to meet inflation targets, minutes of the central bank's latest meeting showed Wednesday. Concerns about the output gap were not shared by the majority, but they highlighted a lingering worry that the delay in Japan meeting the BOJ's 2 percent target meant that its quantitative easing had been ineffective. An output gap is the difference between what an economy is producing and what it could produce if operating at its most efficient. A negative output gap - when a economy is producing less than it could at optimum - indicates weak demand, which in turn can mean low inflation pressure. USD/JPY dropped slightly today and currently is trading near the 122.35 area.

Released during the Asian session this morning, Japan’s SPPI rose 0.5% missing the estimated 0.6% while Australian Construction Work Done declined by -3.6% versus the estimated -1.8%.

The key events for the day would be the United Kingdom Autumn Forecast Statement and BBA Mortgage Approvals, the United States Core Durable Goods Orders, Unemployment Claims and New Zealand’s Trade Balance.

Data releases to monitor:

NZD: Trade Balance.

GBP: BBA Mortgage Approvals, Autumn Forecast Statement.

USD: Core Durable Goods Orders, Unemployment Claims, Core PCE Price Index, Durable Goods Orders, Personal Spending, Personal Income, HPI, Flash Services PMI, New Home Sales, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations, Crude Oil Inventories, Natural Gas Storage.

EUR: Italian Retail Sales, German 10-y Bond Auction.

AUD: RBA Assist Gov Debelle Speech.

Trade Idea of the Day

USD/CHF

Currently the pair is trading at 1.0164. Traders must monitor the 1.0225 resistance level and the support level 1.0091 for possible breakouts. A possible scenario would be a movement towards the 1.0142 support level, where a break may lead to the 1.0115 area. An alternative scenario could be a movement towards the 1.0196 resistance level, where a break may lead to the 1.0215 area.

[VinsonFinancialsFX]

Financial News November 26, 2015

Daily Economic Outlook: 26th November, 2015

Japan's October CPI and labor market data will draw market attention today. In the last policy meeting, BoJ did not make any change on broad assessment of inflation expectations. The headline CPI is priced to stay in negative territory at -0.1% y/y for October, foresees Lloyds Bank.

It also anticipates some modest policy easing by BoJ in October to 0.8% from 0.9%.

In the euro area, ECB's easing in credit conditions supports the economic activity of the region. In the past couple of months, a weaker pace is observed in the growth of annual money supply in the euro area. The consumer spending in German is supported by solid consumer confidence.

"Since hitting a thirteen year high in June, the GfK measure of German consumer confidence has weakened in recent months and a further easing is expected in the reading for December. However, it still remains elevated and points to the prospect of further gains in German consumer activity", added Lloyds Bank.

Market Review November 26, 2015

Australian business investment plunged during the third quarter, the Australian Bureau of Statistics figures showed today. In the three months to September, capital expenditure fell a staggering 9.2%. It came as a huge shock to most economists as many were expecting a decline of just 2.9%. More specifically, total investment amounted to just $31.4 billion in Q3, while business spending declined by 20% compared to last year. The latest economic figures from Australia will put pressure on the Reserve Bank to cut interest rates again, which contradicts with the latest comments of the RBA governor Glenn Stevens who suggested to ‘chill out’ on prospects for interest rate cuts. The Australian dollar wiped out some of yesterday’s gains against the US Dollar and fell to the 0.7220 area, after reaching to the 0.7282 area.

Reuters news agency reported yesterday that Euro zone central bank officials are considering options such as whether to stagger charges on banks hoarding cash or to buy more debt ahead of the next European Central Bank meeting. Furthermore, some ECB officials said that “even buying rebounded loans at risk of non-payment has been discussed in preparatory meetings, although such a radical step is highly unlikely for now”. The meeting of the ECB's monetary policy committee next Tuesday (December 3) is firmly in focus, with expectations that the central bank could introduce more stimulus measures to revive inflation and boost growth in the region. The Euro dropped to a more than seven-month low of $1.0565 on Wednesday as speculation mounted over what form the stimulus might take.

The day is expected to be quiet, as the US banks will be closed in observance of Thanksgiving Day. The key events for the day would be the ECB M3 Money Supply, GfK German Consumer Climate and Private Loans.

Data releases to monitor:

EUR: M3 Money Supply, Private Loans, GfK German Consumer Climate.

CAD: Corporate Profits.

Trade Idea of the Day

GBP/JPY

Currently the pair is trading at 185.09. Traders must monitor the 187.00 resistance level and the support level 183.85 for possible breakouts. A possible scenario would be a movement towards the 184.90 support level, where a break may lead above the 184.30 area. An alternative scenario could be a movement towards the 186.00 resistance level, where a break may lead to the 186.00.

[VinsonFinancialsFX]

Financial News November 27, 2015

2016 global macro economic outlook

In 2015, global macro economic outlook was mostly dominated by the hike aniticipations from Fed and global growth. There were obstacles in US growth in the beginning of the year, in Q2 and early Q3 there was increase in Euro area's sovereign debt concerns, with August's Chinese currency volatiltiy.

The inflaxion point likely remains in place for the next year.

According to RBC Capital Markets,

Global growth and global headline inflation should stabilize and start picking up,

Fed hikes will highlight central bank policy divergence,

USD has room for further gains, even after the first Fed hike,

RMB is likely to weaken through the year

EM corporate debt/leverage will remain a concern.

Market Review November 27, 2015

The Asian session was busy with economic releases from Japan. More specifically, National CPI core stayed unchanged at -0.1%, while Tokyo CPI core improved more than expected to 0.0. Furthermore, household spending dropped sharply by -2.4% in October. Nonetheless, unemployment rate dropped to 3.1% in October, hitting the lowest level in 20 years. USD/JPY is currently trading near the 122.30 area with the next support seen at the 122.25 level.

Released from the United Kingdom during the session,. Gfk index of consumer confidence fell unexpectedly last month. In a report, GfK NOP said that U.K. Gfk Consumer confidence fell to a seasonally adjusted 1, from 2 in the preceding month.

Released during the early European session, German Import Prices declined -0.3% versus the estimated -0.1% while French Consumer Spending declined by -0.7% versus the estimated rise of 0.2%. Furthermore, Spanish Flash CPI declined by -0.3% versus the estimated -0.5%. EUR/USD rose slightly despite the negative economic data and currently is trading near the 1.0625 area.

The key events for the day would be the United Kingdom Second Estimate GDP, Prelim Business Investment and Index of Services.

Additional economic releases are the Italian 10-y Bond Auction, GfK German Consumer Climate and the Canadian Raw Materials Price Index (RMPI).

Data releases to monitor:

EUR: Italian 10-y Bond Auction, GfK German Consumer Climate.

GBP: Second Estimate GDP, Prelim Business Investment, Index of Services.

CAD: RMPI, IPPI.

Trade Idea of the Day

USD/CAD

Currently the pair is trading at 1.3319 Traders must monitor the 1.3435 resistance level and the support level 1.3246 for possible breakouts. A possible scenario would be a movement towards the 1.3340 resistance level, where a break may lead to the 1.3375 area. An alternative scenario could be a movement towards the 1.3291 support level, where a break may lead to the 1.3260 area.

[VinsonFinancialsFX]

Financial News November 30, 2015

EUR/CHF likely moves upside ahead of ECB's December meeting

The KOF leading growth indicator in Switzerland, GDP and CPI inflation will slightly impact and the import data will only be of second importance despite expectations for a stabilization in inflation and growth.

The Swiss Franc will likely trade largely after the ECB meeting. Latest ECB meeting rhetoric has risen market expectations for additional stimulus from SNB, which causes CHF depreciation.

Swiss National Bank might not pre-empt the ECB, but however respond at its December meeting with its "nuclear" option, causing material CHF depreciation.

"We see EUR/CHF higher post the SNB meeting and expect the SNB to actively intervene post ECB should EURCHF depreciate. We remain long USDCHF spot and look for material further upside", says Barclays in a research note.

Market Review November 30, 2015

The Asian session was busy with economic releases from Japan and Australia. Released from Japan, Retail Sales rose 1.8% beating the estimated 0.9%, while Prelim Industrial Production rose 1.4% versus the estimated 1.9% and Housing Starts declined -2.5% versus the estimated rise of 2.5%. USD/JPY is currently trading near the 122.80 area with the next resistance seen at the 123.05 level. Released from Australia, MI Inflation Gauge showed a 0.1% rise versus the previous of 0.0%, Company Operating Profits rose 1.3% beating the estimated 1.1% and Private Sector Credit rose 0.7% versus the estimated 0.6%. AUD was strong in November as RBA maintained a neutral stage and supported by strong job data. However, the AUD is vulnerable to any weak Chinese data such as Chinese PMI data. AUD/USD is currently trading near the 0.7200 area with the next support seen at the 0.7158 level.

Released during the early European session, German Retail Sales dropped -0.4% missing the estimated 0.3%. The Euro remained weak thru the previous week and today, and seems that would continue heading south. The focus this week would be on the ECB Meeting on Thursday, where the European Central Bank is widely expected to announce additional easing measures. Some of these measures may include further reduction in the deposit rate and expansion of the asset purchase program. EUR/USD remained near the 1.0590 area with the next support seen at the 1.0565 level.

Elsewhere, KOF Economic Barometer came in at 97.9 versus the estimated 100.3. The USD/CHF pair currently trades at 1.0301, which was last seen in August 2010. Furthermore, Gold (XAU/USD) hit fresh five-year low by reaching to the 1052.63 level on Friday.

The key events for the day would be the United Kingdom Net Lending to Individuals, M4 Money Supply and Mortgage Approvals.

Additional economic releases are the United States Chicago PMI, Pending Home Sales and the Canadian Current Account.

Data releases to monitor:

EUR: Italian Prelim CPI.

GBP: Net Lending to Individuals, M4 Money Supply, Mortgage Approvals.

CAD: Current Account.

USD: Chicago PMI, Pending Home Sales.

NZD: Overseas Trade Index.

Trade Idea of the Day

NZD/USD

Currently the pair is trading at 0.6555. Traders must monitor the 0.6603 resistance level and the support level 0.6492 for possible breakouts. A possible scenario would be a movement towards the 0.6579 resistance level, where a break may lead to the 0.6600 area. An alternative scenario could be a movement towards the 0.6518 support level, where a break may lead to the 0.6500 area.

[VinsonFinancialsFX]

Financial News December 1, 2015

Daily Economic Outlook: 1st December, 2015

The manufacturing PMIs for November will in focus. The eurozone numbers are expected to remain steady. First estimate of the U.K. and the U.S. (ISM) will be released.

Financial Stability Report of Bank of England will draw markets' attention.

The central bank is also expected to publish the UK bank stress tests at the time of releasing financial report, which will indicate new macroprudential policy actions.

"At the margin, the focus on macroprudential measures - including possible separate action to cool buy-to-let lending - would lessen the urgency to begin a tightening of monetary policy", says Lloyds Bank.

Market Review December 1, 2015

The Reserve Bank of Australia left the cash rate at 2 per cent for the seventh month in a row, but kept the possibility open for a further cut in 2016. The decision to hold was widely expected and the AUD/USD pair climbed to the 0.7275 area. In the accompanying statement, the RBA said the low inflation outlook "left scope for further easing of policy, should that be appropriate to lend support to demand". Furthermore, the central bank said that will just "continue to assess the outlook" and acknowledged that there is "a large decline in capital spending in the mining sector". Meanwhile, RBA maintained that the economy will have "moderate expansion" and there was "gradual improvement in conditions in non-mining sectors over the past year."

Released from Australia during the Asian session, Building Approvals rose 3.9% beating the estimated decline of -2.4% while Current Account came in at -18.1B versus the estimated -16.6B. Released from Japan, Capital Spending rose 11.2% beating the estimated 2.3%. USD/JPY remained within tight range and near the 122.90 area.

Released during the early European session, Swiss GDP unexpectedly stagnated in the third quarter. More specifically, output remained unchanged in the three months through September, after increasing of 0.2 percent in the prior period. The momentum was held back by weak performance in the energy, construction and financial sector. Released also from Switzerland, Retail Sales dropped -0.8% missing the estimated 0.4%. Also released during the session, Spanish Manufacturing PMI came in at 53.1 beating the estimated 51.9.

Elsewhere, the United Kingdom banks passed the stress tests, but RBS and Standard Chartered were the weakest. More specifically, Royal Bank of Scotland and Standard Chartered scraped through the country's bank stress tests after taking steps to improve their capital ratios during the testing process. The Bank of England, which ran the tests, said it planned to make banks hold as much as GBP 10 Billion in extra capital as the credit cycle begins to normalize.

The key events for the day would be the United Kingdom Manufacturing PMI, the Eurozone Unemployment Rate, New Zealand’s GDT Price Index and the United States ISM Manufacturing PMI.

Data releases to monitor:

EUR: Italian Manufacturing PMI, French Final Manufacturing PMI, German Unemployment Change, German Final Manufacturing PMI, Final Manufacturing PMI, Italian Monthly Unemployment Rate, Italian Quarterly Unemployment Rate, Unemployment Rate.

GBP: Manufacturing PMI.

CAD: GDP, RBC Manufacturing PMI.

USD: Final Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, ISM Manufacturing Prices, Total Vehicle Sales, FOMC Member Evans speech.

NZD: GDT Price Index.

Trade Idea of the Day

CAD/JPY

Currently the pair is trading at 92.14. Traders must monitor the 92.61 resistance level and the support level 91.62 for possible breakouts. A possible scenario would be a movement towards the 91.85 support level, where a break may lead to the 91.65 area. An alternative scenario could be a movement towards the 92.40 resistance level, where a break may lead to the 92.60 area.

[VinsonFinancialsFX]

Financial News December 2, 2015

NZD likely to weaken in near future

The New Zealand dollar is likely to be under pressure over the coming year. It is expected to fall to around 62c against the US dollar by June 2016, estimates Westpac.

This is because of following factors.

The RBNZ is expected to deliver another rate cut next week. The economy is expected to face low inflation rate in near future that will cause the Reserve Bank to cut interest rates next year. As a result, the NZ dollar will face downward pressure.

At the same time, the economy will face pressure due to change in global interest rates, especially US interest rates. The Fed is expected to hike interest rate in this month; thereby US dollar will be stronger against other currencies including the NZD.

"Overall we think NZ export commodity prices will remain under pressure over the next year or so. While dairy prices in particular are likely to rise in response to sharply lower NZ dairy production as the El Nino weather pattern weighs on pasture growth and milk supply, we think Chinese consumer demand could remain muted over the year ahead with the Chinese economy forecast to slow further in 2016", forecasts Westpac.

Market Review December 2, 2015

The Australian dollar rose sharply against the US Dollar during the Asian session as Australian GDP grew 0.9% beating the expectation of 0.7%.The positive data came due to a rebound in mining exports following a weather-related contraction in exports the previous quarter. This compared with analysts’ forecasts of a 0.8 per cent gain in gross domestic product in the third quarter and a revised figure of 0.3 per cent growth in the three months to end June. Moreover, Reserve Bank governor Glenn Stevens has described the 0.9 per cent rise in gross domestic product in the September quarter as "not a bad outcome" and added "Let's not overplay the significance but the economy is growing." Governor Stevens reiterated once again that the “outlook will continue its moderate growth." AUD/USD climbed to the 0.7340 area and currently is trading near the 0.7320 area.

Released during the early European session, Spanish Unemployment Change came in at -27.1K beating the estimated -10.3K and causing slight impact on the common currency. EUR/USD climbed to the 1.0625 area after dipping to the 1.0555 area as the week started.

Elsewhere, the International Monetary Fund has added the Chinese renminbi to the world’s basket of reserve currencies, an acknowledgment of China’s economic importance. In a statement, the IMF said that its executive board decided that starting October 1, 2016, the Chinese currency, which is more commonly known as the Yuan, will be freely usable, and join the U.S. dollar, the Euro, the Japanese yen, and the British pound in the basket of currencies that make up the Special Drawing Right.

The key events for the day would be the United Kingdom Construction PMI, the BOC Rate Statement and Overnight Rate, the United States ADP Non-Farm Employment Change and Fed Chair Yellen speech.

Data releases to monitor:

EUR: CPI Flash Estimate, Core CPI Flash Estimate, PPI.

GBP: Construction PMI.

CAD: BOC Rate Statement, Overnight Rate.

USD: FOMC Member Lockhart speech, ADP Non-Farm Employment Change, Fed Chair Yellen Speech, Revised Nonfarm Productivity, Revised Unit Labour Costs, Crude Oil Inventories, Beige Book, FOMC Member Williams speech.

Trade Idea of the Day

EUR/GBP

Currently the pair is trading at 0.7055. Traders must monitor the 0.7080 resistance level and the support level 0.7002 for possible breakouts. A possible scenario would be a movement towards the 0.7065 resistance level, where a break may lead to the 0.7100 area. An alternative scenario could be a movement towards the 0.7030 support level, where a break may lead to the 0.7005 area.

[VinsonFinancialsFX]

Financial News December 3, 2015

ECB likely to cut deposit rate at todays meeting

The ECB has given a hint of adjusting its asset purchase program along three tools, such as time commitment, pace, and composition. A change in time and pace may be expected, but it is a less effective toll to influence exchange rate.

Since the euro area experiencing lower core inflation outlook, the ECB will choose a monetary tool that will help the Bank to correct the inflation outlook.

"The ECB could cut the deposit rate by 10bp and provide the market with forward guidance of further cuts. Another option would be to cut 20bp and signal its willingness to cut more if needed", argues Barclays.

Market Review December 3, 2015

The economic data from Australia was once again in focus during the Asian session. More specifically, Australia released its Trade Balance, which came in at -3.31B missing the estimated -2.61B, HIA New Home Sales declined -3.0% versus the previous of -4.0% and AIG Services Index came in at 48.2 versus the previous of 48.9. AUD/USD remained near the 0.7320 area with the next resistance seen at the 0.7342 level.

Released during the early European session, Spanish Services PMI came in at 56.7 beating the estimated 56.2 and causing insignificant impact on the EUR/USD, which returned to the 1.0570 area.

Elsewhere, Federal Reserve Chairwoman Janet Yellen indicated yesterday that she is ready to raise short-term interest rates this month barring a surprise that shakes her confidence in the economy. Moreover, she stated that she sees dissension within her ranks, which could complicate her moves toward ending seven years of near-zero rates. “I don’t need unanimity. I think we have to tolerate some dissent,” Ms. Yellen said in answer to a question after delivering a speech on the economic outlook. “I wouldn’t try to stifle dissents, and I would even expect some at critical junctures.” Furthermore, she anticipated "continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labour market slack and a rise in inflation to our 2 per cent objective."

In another place, the BoC stayed neutral as it left the overnight rate target unchanged at 0.5% the Bank Rate unchanged at 0.75% and the deposit rate at 0.25%. The Canadian dollar stayed in established range against the US Dollar. The pair is currently trading near the 1.3315 area with the next support seen at the 1.3280 level.

The key events for the day would be the ECB rate decision and press conference, where the Central Bank is expected to announce expansion of policy easing. Furthermore, there are also talks that ECB would further lower the deposit rate, which currently stands negative at -0.2%.

Additional economic releases would be the United States Unemployment Claims and Fed Chair Yellen testimony.

Data releases to monitor:

EUR: Italian Services PMI, French Final Services PMI, German Final Services PMI, Final Services PMI, Retail Sales, Spanish 10-y Bond Auction, French 10-y Bond Auction, Minimum Bid Rate, ECB Press Conference.

GBP: Services PMI.

USD: Unemployment Claims, Final Services PMI, Fed Chair Yellen Testimony, ISM Non-Manufacturing PMI, Factory Orders, Natural Gas Storage, FOMC Member Fischer speech.

Trade Idea of the Day

GBP/CAD

Currently the pair is trading at 1.9893. Traders must monitor the 1.9999 resistance level and the support level 1.9775 for possible breakouts. A possible scenario would be a movement towards the 1.9830 support area and further downward movement to 1.9775 level. An alternative scenario could be a movement near the 1.999 resistance level, where a break may lead to the 2.0075.

[VinsonFinancialsFX]

Financial News December 4, 2015

ECB may hold current policy rates in near future

The ECB declared a deposit rate cut of 10 base points to -0.3% and kept all other rates unchanged. The Bank extended its asset purchase program for further 6 month and decided to reinvest the principal payments on the securities purchased under the program.

Analysts support the central bank's decision because weakening currency too much will have a negative impact on the economy.

"Today's deposit rate cut looks to have been the "final one" under the conventional policy pillar. We expect policy rates to remain at their current levels in the foreseeable future", says Rabobanks in a research note on Thursday.

Market Review December 4, 2015

The European Central Bank stepped up yesterday its efforts to boost the Eurozone’s weak economy but the size of the stimulus disappointed the markets, driving up the euro against the dollar to as high as 1.0980 level after dipping to the 1.0517 area earlier in the day. Moreover, ECB cut the deposit rate to a record low of -0.30% and vowed to print money for as long as it takes to defeat deflation, pushing its radical stimulus measures to extremes never seen before in any major region in modern history. In addition, Mario Draghi, the ECB’s president, said the bank will keep buying EUR 60bn of bonds each month as far out as March 2017 or “beyond if necessary”. It is effectively an open-ended pledge. “Abundant liquidity will continue for a long, long time,” he said. ECB actions came despite signs that economic growth in the Eurozone is picking up, and ignores intense protests from German-led hawks that quantitative easing at this late stage is doing more harm than good.

Elsewhere, Federal Reserve chair, Janet Yellen, has strongly indicated during her testimony to the Congress yesterday that Federal Reserve policymakers are likely to vote to raise US interest rates in two weeks, barring any major shocks to the global economy. Moreover, she noted that unemployment had lowered to 5%, economic growth was continuing well and she was confident that inflation would return to the Fed’s 2% target. “I currently judge that US economic growth is likely to be sufficient over the next year or two to result in further improvement in the labour market,” she said. “Ongoing gains in the labour market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2%.”

Released during the Asian session this morning, Australian Retail Sales rose 0.5% versus the estimated 0.4%, Japanese Average Cash Earnings rose 0.7% beating the estimated 0.7% and Consumer Confidence in Japan came in at 42.6 beating the estimated 41.8.

Released during the early European session, German Factory Orders rose 1.8% beating the estimated 1.3%, while Swiss Consumer Price Index (CPI) declined -0.1% versus the estimated 0.0%.

The key events for the day would be the United States Non-Farm payroll, Average Hourly Earnings and Unemployment Rate. The data will be critical, as it is the last bunch of important economic data before the Fed’s rate decision on December 16.

Data releases to monitor:

EUR: Retail PMI.

CAD: Employment Change, Trade Balance, Unemployment Rate, Labour Productivity, Ivey PMI.

USD: Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate, Trade Balance.

Trade Idea of the Day

USD/CAD

Currently the pair is trading at 1.3351. Traders must monitor the 1.3407 resistance level and the support level 1.3283 for possible breakouts. A possible scenario would be a movement towards the 1.3380 resistance level, where a break may lead to the 1.3405 area. An alternative scenario could be a movement towards the 1.3330 support level, where a break may lead to the 1.3300 area.

[VinsonFinancialsFX]

Financial News December 9, 2015

Daily Economic Outlook: 9th December 2015

The Bank of England will draw domestic markets' attention as November Financial Policy Committee meeting of the Bank is scheduled today. The minutes of the meeting will provide the view of the Bank on risks to the UK's financial system amid slowdown in emerging markets and current account deficit of the economy, which remains close to a record high.

In euro area, German's trade balance data for October are scheduled to release. The figures will be watched closely as they will indicate the growth outlook of the economy in Q4.

"Today's speeches by the ECB Council members Lautenschlaeger, Nowotny and Hansson may shed some light on last week's surprisingly tepid ECB policy loosening, while the RBNZ are expected to trim the cash rate by 25bp to 2.5% later tonight", says Lloyds Bank.

Market Review December 9, 2015

Consumer confidence has slipped after two cheerful months, according to the latest Westpac Melbourne Institute sentiment index, as the cooling housing market, talk of a rise in the GST (Goods and Services Tax) and worries about family finances began to display their impact. Westpac Consumer Sentiment index declined -0.8% this month, from 101.7 points in November to 100.8 points, seasonally adjusted. Released also from Australia during the Asian session, Home Loans eased 0.5% versus the estimated -1.0%. AUD/USD is currently trading near the 0.7225 area with the next support seen at the 0.7185 level.

Released from Japan during the Asian session this morning, Core Machinery Orders unexpectedly rose 10.7% in October, posting a second straight month of gains, in a sign of a delayed pickup in business investment. Moreover, Prelim Machine Tool Orders declined -17.9% compared to the previous of -22.9% and BOJ M2 Money Stock rose 3.3% missing the estimated 3.5%. The Japanese Yen seems to be gaining against the US Dollar as the USD/JPY pair fell to the 122.70 area.

Elsewhere, Switzerland's unemployment rate held steady for yet another month in November. More specifically, Unemployment Rate rose 3.4% as widely expected and in line with the previous data. Released from Germany during the early European session, Trade Balance came in at 20.8B beating the estimated 19.2B. EUR/USD rose to the 1.0915 area after breaking the 1.0900 level.

The key events for the day would be the RBNZ Rate Statement, Official Cash Rate and Press Conference.

Additional economic releases would be the FPC Meeting Minutes and Crude Oil Inventories.

Data releases to monitor:

GBP: FPC Meeting Minutes.

USD: Wholesale Inventories, Crude Oil Inventories, 10-y Bond Auction.

NZD: Official Cash Rate, RBNZ Rate Statement, RBNZ Monetary Policy Statement, RBNZ Press Conference.

Trade Idea of the Day

GBP/USD

Currently the pair is trading at 1.5037. Traders must monitor the 1.5158 resistance level and the support level 1.4894 for possible breakouts. A possible scenario would be a movement towards the 1.5100 resistance level, where a break may lead to the 1.5135 area. An alternative scenario could be a movement towards the 1.4995 support level, where a break may lead to the 1.4950 area.

[VinsonFinancialsFX]

Financial News December 11, 2015

Checking on FED rate hike probabilities

US Federal Reserve will be meeting on December 15th-16th, to decide on whether to hike rates or not. Market pricing of rate hike has somewhat softened after reaching as high as 84%.

However hike expectations over next year for subsequent have firmed somewhat.

Let's look at the market pricing of hikes over next few meetings.

Current FED interest rate is at 0 - 0.25%.

December, 2015 meeting - Market is attaching 28% probability that rates will remain 0 - 0.25% and 72% probability that rates will move to 0.25-0.5%.

January, 2016 meeting - Market is attaching 23% probability that rates will remain 0 - 0.25% , 65% probability that rates will move to 0.25-0.5% and 12% probability that rates will be at 0.5-0.75%.

March, 2016 meeting - Market is attaching 11% probability that rates will remain 0 - 0.25% , 38% probability that rates will move to 0.25-0.5%, 39% probability that rates will be at 0.5-0.75% and 6% probability that rates will be at 0.75-1%

April, 2016 meeting - Market is attaching 9% probability that rates will remain 0 - 0.25% , 38% probability that rates will move to 0.25-0.5%, 40% probability that rates will be at 0.5-0.75%, 12% probability that rates will be at 0.75-1% and 1% probability that rates will be at 1-1.25%.

June, 2016 meeting - Market is attaching 6% probability that rates will remain 0 - 0.25% , 28% probability that rates will move to 0.25-0.5%, 39% probability that rates will be at 0.5-0.75%, 21% probability that rates will be at 0.75-1% and 5% probability that rates will be at 1-1.25%.

Market Review December 11, 2015

Asian session pasted without any major events and unexpected moves after yesterday central banks day both BOE and SNB behave as forecasted and kept the rates unchanged. Oppose to Fed and ECB monetary policy the BOE showed more calm regarding any changes in monetary policy and reiterated yesterday that it remains in no rush to change interest rates. Furthermore, the UK policymakers said they would not match an expected rate hike by the FED next week, stressing there was “no mechanical link” with its thinking. GBP after the BOE comments weakened against the USD however, analysts commented that GBPUSD pair still looks bullish in the medium term.

SNB also kept the rate unchanged and the official report states that the target range for the three-month Libor remains between –1.25% and –0.25%, and the interest rate on sight deposits with the SNB is unchanged at –0.75%. The negative interest rate and the interest rate differential with other currencies make the Swiss franc less attractive, and continue to help weaken it however analysts say that the CHF is still significantly overvalued. Moreover, the SNB will remain active in the foreign exchange market in order to influence the exchange rate situation, as necessary.

Looking ahead the US Retails Sales will be the highlight of the day where is forecasted to be at 0.2%. Furthermore ECB Targeted LTROmay move the market. In economic releases so far we had the German CPI final at 0.15. From China M2 Money Supply y/y at 13.7% and New Loans at 709 billion.

Data releases to monitor:

GBP: Construction Output m/m, Consumer Inflation Expectations, MPC Member Weale Speaks

EUR: Targeted LTRO, Italian Quarterly Unemployment Rate

USD: Core Retail Sales m/m, Retail Sales m/m, PPI m/m, Core PPI m/m

Trade Idea of the Day

EUR/USD

Currently the pair is trading at 1.0965. Traders must monitor the 1.1096 resistance level and the support level 1.0795 for possible breakouts. A possible scenario would be a movement towards the 1.0940 support level, where a break may lead to 1.0910 level and possible to 1.0860. An alternative scenario could be a movement towards the 1.0980 resistance level, where a break may lead to the 1.1030.

[VinsonFinancialsFX]

Financial News December 14, 2015

EUR/USD likely to be at 0.95 by end-2016

European Central bank's rhetoric might at the December meeting might come at a long-term cost to EUR , while EUR/USD was forecasted higher last week.

"We continue to forecast EUR/USD at 0.95 by end-2016", says Barclays in a research note.

The year 2016 looks prepared for higher volatility in EUR/USD. While the Greek crisis has abated, there is a new escalation of tensions around most of highly-indebted EA countries are still a key risk as there is mounting up opposition to rising immigration and fiscal austerity.

After the ECB meeting, the longer term inflation expectations in the market also dropped, with most recent flash estimate of HICP inflation disappointing significantly, which should be confirmed at 0.9% yoy, while previously it was at 1.1% yoy.

Currently EUR is trading at 1.0965 against US dollar.

Market Review December 14, 2015

The Asian session this morning was rather quiet despite the long awaited anticipated event from the FOMC on Wednesday. Released during the session, Japan's December tankan survey showed big manufacturers index +12 beating the estimated +11, while Tankan Non-Manufacturing Index came in at +25 beating the estimated +23. Moreover, Japanese Revised Industrial Production rose 1.4%, as expected by economists and Tertiary Industry Activity rose 0.9% versus the estimated 0.5%. USD/JPY is currently trading near the 121.30 area with the next support seen at the 120.56 level.

The United States Federal Reserve is expected to start raising interest rates on Wednesday, in the first such move since 2006. The anticipated economic move has been described as “momentous” and a hugely significant milestone of progress in the repairing of the US economy since the damage done by the Great Recession. Furthermore, Janet Yellen, the Fed’s chair, had signalled that the central bank could raise interest rates from their record low of 0.25% in September, however the downturn in the Chinese economy and the resulting turmoil in financial markets, persuaded the Fed to change their mind and keep the current interest rates. The FOMC are due to hold their December policy meeting on Tuesday and Wednesday this week, the scene has been carefully set for the first increase in US interest rates for almost a decade.

Elsewhere, late on Friday, the China Foreign Exchange Trade System (CFETS), a sub-institutional organization of the People's Bank of China (PBOC), introduced a new exchange rate index that will see the Yuan (CNY), or renminbi, valued against a basket of 13 trade-weighted currencies. Furthermore, it is not clear if the PBOC will ever formally tie the Yuan to this gauge but CFETS did say the basket includes both G3 and Asian currencies. The Chinese government believes that "the bilateral renminbi-USD exchange rate is not considered a good indicator of the international parity of tradable goods". Introduction of the index would help gauge renminbi’s performance against a basket of trade-weighted currencies as "a basket of currencies can better capture the competitiveness of a country's goods and services, and better enable the exchange rate to adjust".

The key events for the day would be the Eurostat Industrial Production, ECB President Draghi speech and MPC Member Shafik speech.

Data releases to monitor:

GBP: MPC Member Shafik speech.

EUR: Industrial Production, ECB President Draghi speech.

Trade Idea of the Day

EUR/GBP

Currently the pair is trading at 0.7229. Traders must monitor the 0.7279 resistance level and the support level 0.7163 for possible breakouts. A possible scenario would be a movement towards the 0.7254 resistance level, where a break may lead to the 0.7275 area. An alternative scenario could be a movement towards the 0.7207 support level, where a break may lead to the 0.7175 area.

[VinsonFinancialsFX]

Financial News December 15, 2015

Fed's second rate hike likely in April, 2016

The FOMC meeting on policy decission is scheduled tomorrow. The Fed is expected to hike rate for first time after almost 10 years. Looking forward, analysts foresee a series of rate hikes next two years.

Some economic indicators hint the economy will rebound in Q4. Moreover, WTI crude oil is currently trading 10 dollars below FOMC target at USD36 per barrel.Further fall in oil prices will mire the EMs in crisis as corporate debt and bankrupties in the commodity sector. The FOMC is expected to take a cautious monetary majors.

"We expect the second and third hikes to take place in April and September next year, respectively (every third meeting). The fourth hike is likely to come in December. In 2017, we expect a hike every other meeting (March, June, September and December)", argues Danske Bank.

Market Review December 15, 2015

The Reserve Bank of Australia released during the Asian session this morning its December meeting minutes. In the text, the central bank suggested that the central bank is in no hurry to cut interest rates. Furthermore, RBA said that recent flow of domestic data had generally been positive. In addition, output growth is expected to strengthen gradually over the next two years. Core inflation rates remained stable, but generally below the central bank’s target. The RBA said that the Australian Dollar is adjusting to significant declines in key commodity prices and boosting demand for domestic production. The central bank reiterated that the outlook for inflation might afford "some scope for a further easing of monetary policy". Moreover, the board will continue to assess the outlook and judge whether or not the current state of monetary policy is most effective for sustaining growth. Overall, the meeting minutes likely further weighed on RBA rate cut bets. The document appeared to justify the central bank’s relatively neutral monetary policy tone. Released also from Australia during the session, House Price Index (HPI) rose 2.0% versus the estimated 2.1% while New Motor Vehicle Sales rose 1.0% compared to the previous -3.7% decline. AUD/USD rose slightly, reaching as high as the 0.7283 level and currently is trading near the 0.7245 area.

Released during the early European session, Switzerland’s Producer Price Index (PPI) rose 0.4% beating the estimated 0.1%.

The economic calendar for the day is rather busy with economic releases from the United Kingdom the United States, New Zealand, Canada and the Eurozone. The key events would be the United Kingdom inflation data, German ZEW Economic Sentiment, Canadian Manufacturing Sales, New Zealand’s GDT Price Index and the United States CPI and Core CPI.

Data releases to monitor:

GBP: CPI, MPC Member Haldane speech, PPI Input, RPI, Core CPI, HPI, PPI Output, BOE Quarterly Bulletin, CB Leading Index.

EUR: German ZEW Economic Sentiment, ZEW Economic Sentiment, Employment Change.

CAD: Manufacturing Sales, BOC Gov Poloz speech.

USD: CPI, Core CPI, Empire State Manufacturing Index, NAHB Housing Market Index, TIC Long-Term Purchases.

NZD: GDT Price Index, Current Account.

Trade Idea of the Day

GBP/AUD

Currently the pair is trading at 2.0903. Traders must monitor the 2.1213 resistance level and the support level 2.0554 for possible breakouts. A possible scenario would be a movement towards the 2.0805 support level, where a break may lead to the 2.0690 area. An alternative scenario could be a movement towards the 2.0962 resistance level, where a break may lead to the 2.1072 area.

[VinsonFinancialsFX]

Financial News December 16, 2015

Unemployment report to set mood for Pound heading into FOMC

Since Bank of England (BOE) published its inflation report, suggesting no hike required from BOE in 2016, to keep inflation in check, pound has been struggling. After last week's dovish monetary policy statement, it's even struggling to clear 1.52 resistance area.

Last night, stronger Dollar ahead of FOMC, just pushed pound few pips away from 1.5 support area.

ILO unemployment reading to publish around 9:30 GMT today.

- As of now unemployment rate in UK stands at 5.3% and median estimate says it will remain so in today's reading.

- Once again major focus will be on earnings growth,since BOE policymakers in several instances announced they will be looking at wage growth component and current rate is not sufficient to generate targeted inflation. This component has gained sharply since last year, however slowed down somewhat in recent reading. In three months to September, average earnings excluding bonus rose by 2.5%, lower than 2.9% seen in July.

- Today market is expecting slowdown further in earnings growth at 2.3% excluding bonus but to grow 2.5% including it.

Impact -

- Data, coming as expected, may not be very bullish for Pound as Bank of England (BOE) mentioned that current wage growth is not sufficient to give a rise in inflation.

- However any wage growth below 2.3% likely to sour sentiment.

- With better report, expect Pound to have better sentiment heading into FOMC.

Market Review December 16, 2015

Janet Yellen, the chair of the Federal Reserve, has clearly signalled that the United States central bank is preparing to “normalise” policy, at its final meeting before the end of the year. Furthermore, the latest inflation data, published on Tuesday, which was in line with expectations at 0%, seems that has removed any final obstacles to a hike. Currently, the market has almost fully priced in a Fed funds rate hike of 25 Bps. Anything other than this should be a huge surprise and will possibly trigger great volatility in the financial markets. Moreover, if the FOMC don’t take action at a time when there is almost universal market expectation for a rate hike, Federal Reserve credibility will likely have never sunk to a lower level. In addition, if Janet Yellen and her colleagues highlight the remaining threats on the US economy, the rate hike will be viewed as a “dovish hike”, suggesting policymakers are more worried about growth than inflation, and reassuring markets that have become dependent on central bank support. The dollar came off a near one-week high versus the other major currencies today, but its losses were limited as the market counted down the hours to a likely hike in U.S. interest rates.

Released during the Asian session, MI Leading Index declined -0.2% compared to the previous rise of 0.1%, while Japan’s Flash Manufacturing PMI came in at 52.5 versus the previous of 52.6. USD/JPY rose to the 121.90 area after dipping to the 120.35 area yesterday.

Released during the early European session, French Flash Manufacturing PMI came in at 51.6 beating the estimated 50.6 and French Flash Services PMI came in at 50.0 versus the estimated 50.7. In addition, German Flash Manufacturing PMI came in at 53.0 versus the expectations of 52, while German Flash Services PMI came in at 55.4 versus the estimated 55.5. EUR/USD is currently trading near the 1.0935 area with the next support seen at the 1.0904 level.

The key events for the day would be the Federal Funds Rate decision, the FOMC Statement and Press Conference.

Additional economic releases would be the United Kingdom Average Earnings Index, Claimant Count Change and Unemployment Rate. New Zealand GDP and the Eurozone inflation report.

View our full economic calendar for a daily roundup of major economic events.

Data releases to monitor:

GBP: Average Earnings Index, Claimant Count Change, Unemployment Rate.

EUR: Flash Manufacturing PMI, Flash Services PMI, Final CPI, Final Core CPI, Trade Balance.

CAD: Foreign Securities Purchases.

USD: Federal Funds Rate, FOMC Press Conference, FOMC Statement, FOMC Economic Projections, FOMC Press Conference, Crude Oil Inventories, Flash Manufacturing PMI, Industrial Production, Capacity Utilization Rate, Housing Starts, Building Permits.

NZD: GDP.

CHF: SNB Quarterly Bulletin, ZEW Economic Expectations.

Trade Idea of the Day

EUR/JPY

Currently the pair is trading at 133.31. Traders must monitor the 134.21 resistance level and the support level 132.43 for possible breakouts. A possible scenario would be a movement towards the 133.53 resistance level, where a break may lead to the 133.90 area. An alternative scenario could be a movement towards the 132.85 support level, where a break may lead to the 132.55 area.

[VinsonFinancialsFX]

Financial News December 17, 2015

Four rate hikes by Fed likely next year

After almost a decade the Fed initiated its monetary tightening policy with 25 base point rate hikes yesterday. The labor market showed a sign of improvement and economic growth rate on track.

The unemployment rate started falling; experts believe that the unemployment rate will be below target level during 2016 - 18.

With the expansion of labor market and stronger US dollar, the inflation rate is expected to increase further. The annual core CPI inflation was recorded at 2.0% year on year in November.

"We anticipate that the Committee will increase the Fed Funds Rate four times in 2016 and another four times in 2017. Key to this view will be continued momentum in the labour market and a firming in global growth; both are necessary to mitigate downside risks to the outlook" says Westpac in a research note.

Fed rate hike a temporary gain for Asia local markets

After almost a decade, the Fed initiated its monetary tightening policy with a 25 base point rate hike yesterday, as expected. The Fed Chair Yellen indicated that the central bank is on the path of policy tightening, and it will increase its policy rate gradually.

The FX, equity, and bond markets started reacting to the rate hike. The EM local currency and bond markets are positively reacted to the rate hike, and similar reaction is foreseen in EM Asia in the near future.

"The improvement in risk appetite following the Fed hike also helped EM currencies to absorb the hike easily. In the near term as trading winds down for the year and flows thin, there may be further respite for EM Asia currencies, but we do not expect this to persist into 2016", states Barclays in a research note to its client.

Market Review December 17, 2015

The Federal Reserve voted unanimously yesterday to raise interest rates by a quarter point (25Bps), marking the first increase in more than nine years. The bank raised its fed funds rate to a range of 0.25% to 0.50%, ending an unprecedented seven-year run of near-zero interest rates. The vote was 10-0. The board of directors also raised the discount rate to 1% from 0.75%. Moreover, the Fed said it will "carefully monitor" actual inflation in light of 'current shortfall." Furthermore, the FOMC stated in its statement "Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate." In addition, the Federal Open Market Committee said that interest rates are only likely to increase in a "gradual" manner, ending up at a long-run target of 3.5%.

At a press conference following the announcement of the rate hike, Janet Yellen said that people should know that the Fed’s decision “reflects our confidence in the economy.” While economic conditions vary across regions and across industries, “we see an economy that is on a path of sustainable improvement,” Yellen went on. “I hope they take it as a signal that conditions will continue to strengthen, and jobs prospects will be good.” While she pointed out that the Fed will not rush into further hikes, and that it would monitor closely what was happening to the inflation rate. Moreover, Fed Chair Yellen dismissed concerns about the economy slipping back into recession. “I feel confident about the fundamentals driving the economy,” she said. She pointed to a healthy employment picture by mentioning that 2.3 million new jobs were created this year and strong growth in household demand, particularly for new cars and trucks. There is always the possibility that a negative shock will hit the economy, Yellen conceded, but she said that she did not see anything to be overly concerned about at the moment. After the Fed decision, US stocks surged sharply, with the DJIA rising 224 pts to close at 17749 and the S&P 500 rising to the 2077 level. On the other hand, EUR/USD spiked up to the 1.1010 area before dropping to the 0.0830 area.

Elsewhere, the Hong Kong Monetary Authority raised its base rate for the first time in nine years, following the U.S. Federal Reserve’s lead overnight, and flagged the risk of rising capital outflows from the city. The key rate was raised to 0.75% from 0.50% the Hong Kong Monetary Authority said as Hong Kong’s currency is pegged to the U.S. dollar, which typically means that Hong Kong’s monetary policy moves in line with the Fed.

Released during the Asian session today, Japan’s Trade Balance came in at 0.00T versus thee estimated -0.21T causing insignificant impact on the USD/JPY, which is currently trading near the 122.40 area.

The key events for the day would be the German Ifo Business Climate, ECB Economic Bulletin, the United Kingdom Retail Sales and the United States Unemployment Claims and Philly Fed Manufacturing Index.

Data releases to monitor:

GBP: Retail Sales, CBI Industrial Order Expectations.

EUR: German Ifo Business Climate, ECB Economic Bulletin, Italian Trade Balance.

USD: Philly Fed Manufacturing Index, Unemployment Claims, Current Account, CB Leading Index, Natural Gas Storage.

Trade Idea of the Day

EUR/AUD

Currently the pair is trading at 1.5098. Traders must monitor the 1.5340 resistance level and the support level 1.4950 for possible breakouts. A possible scenario would be a movement towards the 1.5042 support level, where a break may lead to the 1.4990 area. An alternative scenario could be a movement towards the 1.5146 resistance level, where a break may lead to the 1.5210 area.

[VinsonFinancialsFX]

Financial News December 18, 2015

Daily Economic Outlook: 18th December 2015

The market experts are still busy in assessing impact of the Fed's first rate hike in almost 10 years. Therefore, other indicators may not get much importance from market.

In the United States, US Markit services PMI survey for December and Kansas City Fed manufacturing survey for December are due today.

Richmond Fed President Lacker expected to speak on the 2016 economic outlook at the Charlotte Chamber of Commerce will be watched closely.

In euro area, no major indicators are scheduled to release today except November inflation and current account figure for October.

Market Review December 18, 2015

The Bank of Japan surprised the markets today by voting 6-3 to increase purchases of exchange-traded funds (ETFs) and lengthening the maturity of bonds it purchases to encourage investment in the economy. The BOJ announced that under the new program, it will purchase ETFs at an annual pace of 300 billion yen composed of stocks issued by firms "proactively" investing in physical and human capital. The plan will start with purchases of ETFs tracking the JPX-Nikkei Index 400, which screens for factors including corporate governance and investor-focused management. The new ETF purchase program will begin in April 2016 and is in addition to the current ETF purchase program of around 3 trillion yen annually. Moreover, the BOJ held rates steady and said it will stick to its plan to increase the monetary base by 80 trillion yen a year, as expected. USD/JPY spiked up to the 123.57 level before dropping to the 121.80 area, where is currently trading.

Elsewhere, Business confidence in New Zealand has improved to its highest level in eight months, according to ANZ Bank's latest business sentiment survey. More specifically, a net 23 percent of respondents in December expected the economy to improve over the coming year, compared with 14.6 percent the month before. Companies were also more upbeat about their own business outlook, with a net 34.4 percent expecting an improvement in their activity over the coming year, from 32 percent in November.

The economic calendar for the day would be rather empty with the key events to be the Canadian Consumer Price Index, Core CPI and the United States Flash Services PMI.

Data releases to monitor:

CAD: Core CPI, CPI, Wholesale Sales.

EUR: Current Account.

USD: Flash Services PMI, FOMC Member Lacker speech.

Trade Idea of the Day

GBP/AUD

Currently the pair is trading at 2.0859. Traders must monitor the 2.1213 resistance level and the support level 2.0673 for possible breakouts. A possible scenario would be a movement towards the 2.0943 resistance level, where a break may lead to the 2.1037 area. An alternative scenario could be a movement towards the 2.0802 support level, where a break may lead to the 2.0725 area.

[VinsonFinancialsFX]

Financial News December 21, 2015

FxWirePro: GBP/USD outlook focus for 2016

Pound is declining steadily against Dollar before and also after rate hike from US Federal Reserve of 25 basis points. Before Bank of England (BOE) published its weaker inflation outlook and started producing dovish monetary policy statement, Pound was expected to be the key contender to take the baton from Dollar, while BOE takes it from FED.

Now the popular expectations have shifted and economist are now expecting another few firings from FED, before BOE finally takes over.

Focus will be on inflation statistics as well as wage growth for this year. So far there is only one hawk in BOE board, Ian McCafferty, which we expect to grow by another two till September. Unless situation worsens over China, BOE could be very close to a hike by end of year, which could come into focus post June.

Trade idea -

We have long remained focused to the downside for the pair. Our call to sell GBP/USD @1.52 and 1.54 still active, with stop loss around 1.58 and targeting 1.425 area. Interim targets are 1.49 and 1.475. First one is reached.

In this post, we would like to add another interim target of 1.45-1.445 area.

Market Review December 21, 2015

The Financial markets seem to be getting into the holiday spirit, as no significant market movement was noticed despite Federal Reserve decision last week to lift the interest rates.

Elsewhere, anti-austerity party Podemos and liberal Ciudadanos made big gains as the conservative Popular Party (PP) lost its majority. Spain seems that is heading for political uncertainty after the general election produced a deeply fragmented parliament with little chance of a stable government majority over the next four years. Spain’s next government will be handled a country in the midst of a strong but incomplete economic recovery, with the national output set to grow by more than three per cent in 2016, and unemployment falling steadily over the past two years. Moreover, the jobless rate, at more than 22 per cent, remains one of the highest in the western world, and concern is mounting over inequality and a lack of well-paid, stable jobs. Furthermore, the country has also been shaken by corruption scandals, and by tensions between the government in Madrid and the independence-minded region of Catalonia.

Released during the Asian session, RBNZ Credit Card Spending rose 8.5% versus the previous of 7.8%, while Japanese All Industries Activity rose 1.0% beating the estimated 0.9%. USD/JPY remained near the 121.40 area while NZD/USD near the 0.6740 area.

Released during the early European session, German Producer Price Index (PPI) declined -0.2%, which was in line with the economists’ expectation.

The economic calendar for the day would be rather light with few economic releases. The key events for the day would be German Buba Monthly Report, Eurostat Consumer Confidence and the United Kingdom CBI Realized Sales.

Data releases to monitor:

EUR: German Buba Monthly Report, Consumer Confidence.

GBP: CBI Realized Sales.

Trade Idea of the Day

NZD/USD

Currently the pair is trading at 0.6744. Traders must monitor the 0.6840 resistance level and the support level 0.6635 for possible breakouts. A possible scenario would be a movement towards the 0.6740 support level, where a break may lead to 0.6715 level and possible to 0.6680. An alternative scenario could be a bounce upwards after testing the 0.6740 support towards the 0.6775 resistance level, where a break may lead to the 0.6800.

[VinsonFinancialsFX]

Financial News December 22, 2015

Firmer USD likely to continue through 2016

After almost a decade, the U.S. Fed decided to hike its bank rate in mid of December. The economy is back on track, as growth rate picked up, and labor market has improved.

On the other hand, the economy is expected to face higher inflationary pressure in near future.

The central bank is expected to deliver four more hikes next year, and thereby capital inflows will intensify. This will inturn strengthen the US dollar in the currency market.

"Every Fed tightening cycle is different and how USD trades depends on the path of rates relative to expectations, the path of rates in the rest of the world, and the reasons why the Fed is hiking, amongst other things. In the current cycle, these factors generally argue for USD strength extending into 2016. We think the forward curve significantly understates the extent to which rates will rise through 2016 and this is against a background where most other central banks are on hold or easing", states RBC Capital Markets.

Market Review December 22, 2015

British consumer morale in December edged up from a six-month low in November, while households remain more worried about the economy than they were at the end of last year. Moreover, GfK said that its monthly consumer sentiment indicator rose to +2 in December from +1 in November, marginally stronger than a median forecast of +1. Furthermore, the Royal Institution of Chartered Surveyors (Rics) states that the lack of housing supply will drive prices up faster than household pay rises with an average 6% rise across the country and 8% in East Anglia. The rise in house prices was also supported by low interest rates and stable economic growth.

Released during the early European session, Swiss Trade Balance came in at 3.14bln versus the estimated 3.82bln, German Import Prices declined -0.2% missing the estimated 0.2% rise and GfK German Consumer Climate came in at 9.4 beating the estimated 9.3. The financial markets are generally quiet this week as we approach the holiday season.

The key events for the day are the United States Final GDP and Existing Home Sales, the United Kingdom Public Sector Net Borrowing and New Zealand’s Trade Balance.

Data releases to monitor:

EUR: German Buba Monthly Report, Consumer Confidence.

GBP: CBI Realized Sales.

Trade Idea of the Day

EUR/USD

Currently the pair is trading at 1.0921. Traders must monitor the 1.1059 resistance level and the support level 1.0802 for possible breakouts. A possible scenario would be a movement towards the 1.0960 resistance level, where a break may lead to the 1.1000 area. An alternative scenario could be a movement towards the 1.0862 support level, where a break may lead to the 1.0830 area.

[VinsonFinancialsFX]

Financial News December 23, 2015

Key extracts from OPECs World Oil Report

Oil producing nations' cartel OPEC has revised its demand estimate in its latest World Oil Outlook, however has warned over declining investments. OPEC demand projections are still higher than those projected by International Energy Agency (IEA).

Saudi Arabia, also, few days back warned on declining investments posing challenge to future energy security.

According to OPEC, from here till 2040, every year $400 billion investments are required to keep supply in line with rising demand. According to the cartel, demand is likely to come from emerging market economies, namely China and India. Overall global demand is likely to increase by 18 million barrels/day by 2040 to 109.8 million barrels per day. This figure, is however 1.3million barrels/day lower from previous projections, probably taking into account recent climate accord in Paris. Figure is still higher from IEA projections of 103.5 million barrels/day.

In the medium term however it feels, oil demand to rise from current 92.8 million barrels/day in 2015 to 97.4 million barrels/day by 2020.

On the supply side, the organization expects non-OPEC production to rise to 61.5 million barrels/day by 2025 but decline to 59.7 million barrels/day by 2040. On the other hand it expects OPEC production to rise by 10 million barrels/day by 2040.

On the price front it now expects price to reach $70/barrel by 2020 and $95/barrel by 2040.

Oil is currently trading at $36.8/barrel.

Market Review December 23, 2015

The Asian session this morning was rather quiet with insignificant market movement and very few economic data. During the session, the United States Bureau of Economic Analysis released a report, which shows that consumer spending rose in November by 0.3%, that is in line with the expectations. The US Dollar seems to be paring back some of last week's gains against other major currencies such as the Euro and the Swiss Franc, which are the strongest major currencies for the month. For instance, EUR/USD remained near the 1.0930 area after reaching to the 1.0983 level yesterday, while the months’ highest was seen at the 1.1059 level until the moment.

Released during the early European session, French Consumer Spending declined -1.1% missing the estimated 0.2%.

The economic calendar is rather heavy today despite the fact that minor or perhaps muted reactions are expected in the market as the financial markets are in holiday mood.

The key events for the day would be the United Kingdom Current Account and Final GDP, the Canadian Core Retail Sales, GDP and Retail Sales and finally, the United States Core Durable Goods Orders, New Home Sales and Personal Income reports.

Additional economic releases would be the United Kingdom Index of Services, the United States Revised UoM Consumer Sentiment and the Canadian Retail Sales.

Data releases to monitor:

EUR: Italian Retail Sales.

GBP: Current Account, Final GDP, Index of Services, Revised Business Investment.

USD: Core Durable Goods Orders, Core PCE Price Index, Durable Goods Orders, Personal Income, New Home Sales, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations, Crude Oil Inventories.

CAD: Core Retail Sales, GDP, Retail Sales.

CHF: KOF Economic Barometer.

Trade Idea of the Day

EUR/JPY

Currently the pair is trading at 132.23. Traders must monitor the 133.78 resistance level and the support level 131.01 for possible breakouts. A possible scenario would be a movement towards the 131.67 support level, where a break may lead to the 131.25 area. An alternative scenario could be a movement towards the 132.72 resistance level, where a break may lead to the 133.20 area.

[VinsonFinancialsFX]

Financial News December 28, 2015

US household consumption likely to drive growth in 2016

University of Michigan index of consumer sentiment December final estimate was up to 92.6, slightly over expectations of 92.0.

Current conditions were up to 108.1, the highest since June. The consumer expectations were revised upwards a tick to 82.7, below November print but still over October.

Both were led by concerns related to personal finances, the current personal finances index climbed to 113 and expected personal finances went up to 124.

"Buying conditions for durables now stand at 167 (previous: 154), the highest since 2005 and consistent with continued strength in motor vehicle sales. Sentiment now stands in line with its average pace of improvement over the course of the recovery, and we expect household consumption will continue to drive growth in 2016", says Barclays in a research note.

Market Review December 28, 2015

The financial markets remain quiet with insignificant market movement as another holiday week begin. Released during the Asian session this morning, Japan's factory output fell for the first time in three months in November and retail sales slumped, suggesting that a clear recovery in the world's third-largest economy will be postponed until early in 2016. While manufacturers expect to increase output in coming months, the weak data casts doubt on the Bank of Japan's view that an expected pick-up in exports and consumption will help jump-start growth and accelerate inflation toward its 2% target. Industrial output fell 1.0% t in November from the previous month, more than a median market forecast for a 0.4 percent decline, data by the trade ministry showed on Monday. Moreover, retail sales fell 1.0% in November from a year earlier, more than a median forecast for a 0.1 percent drop. The USD/JPY pair remained near the 120.55 area, after dropping to the 120.15 area in the previous week.

The economic calendar is rather empty for the day and rather light for the whole week as the holiday spirit is dominating the markets. The key events for the week would be the United States CB Consumer Confidence and Unemployment Claims.

View our full economic calendar for a daily roundup of major economic events.

Data releases to monitor:

CAD: Bank Holiday (Boxing Day).

GBP: Bank Holiday (Boxing Day).

Trade Idea of the Day

EUR/CAD

Currently the pair is trading at 1.5182. Traders must monitor the 1.5318 resistance level and the support level 1.4955 for possible breakouts. A possible scenario would be a movement towards the 1.5241 resistance level, where a break may lead to the 1.5275 area. An alternative scenario could be a movement towards the 1.5137 support level, where a break may lead to the 1.5095 area.