Forex Crunch The Pound Will Not Rise without Orders from King |
- The Pound Will Not Rise without Orders from King
- Forex Daily Outlook – January 20th 2010
- USD/CAD Rises on Unchanged Policy
| The Pound Will Not Rise without Orders from King Posted: 20 Jan 2010 02:17 AM PST
The number of unemployed people fell again in Britain, quite impressively. This doesn’t seem enough for the Pound. The key is in the hands of Mervyn King, which sees the dark side of the economy. Claimant Count Change, the earliest and most important indicator for British employment, fell by 15,200 jobs in December. This is the second month in a row that the number of unemployed people drop in Britain. Also the Unemployment Rate, a figure that relates to November, dropped back to 7.8%. The big turnaround was last month, when it was reported that 6,300 were relived of unemployment. This number was revised to 10,800 this time – even better. And now, a drop of 3,300 people was predicted, and the number was almost 5 times more. This looks like a positive trend in British employment. But the Pound didn’t budge. It initially rose from 1.63 to 1.6325, no big excitement, and afterwards fell back to 1.6295, at the time of writing. Also against the Euro, the Sterling didn’t move after yesterday’s sharp EUR/GBP move. Yesterday we saw rising inflation in Britain, and today another strong improvement in employment. Both key figures mean stronger economic activity. This should eventually trigger a rate hike. A rate hike will push the Pound higher. Despite these numbers, no rate hike is in the horizon. Mervyn King made a public appearance yesterday and cooled down such expectations. He said there’s no danger of inflation and focused on the problems of the economy, especially on the big government deficit:
His speech hurt the Pound immediately, and has an impact today, as strong employment numbers can’t support a rise of the currency. Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| Forex Daily Outlook – January 20th 2010 Posted: 19 Jan 2010 02:00 PM PST
Another busy day is awaiting us: American Building Permits and British employment numbers are the highlights. Let’s see what’s up for today. Note the journey down of EUR/GBP, which moves by strong British figures and weak European ones.
German PPI starts the day with an expected rise of 0.2%. Producer prices aren’t rising like consumer prices. A strong rise is needed to help the Euro that is currently struggling on all fronts. For more on the Euro, read the EUR/USD forecast. British figures British employment has turned around last month with a drop in the number of unemployed people. This number, the Claimant Count Change is expected to show another drop, this time of 3,300 people. The accompanying figure relates to November, but is still important: the Unemployment Rate. Currently at 7.9%, it’s predicted to edge up to 8%. Looking at past releases, the rate will probably fall. British MPC Meeting Minutes will reveal the internal talks in the last rate decision. There was no change in the rate nor in the QE program. Hints about future policy could be seen there. Later in the day, External BOE MPC Member Adam Posen will speak. He might relate to inflation which is lifting its head and pushing the Pound higher. For more on GBP/USD, read the British Pound forecast. Moving to Canada, CPI is predicted to drop by 0.1% after rising nicely last month. Also Core CPI is predicted to show a drop in prices – 0.2%. The Canadian dollar suffered from the rate decision yesterday, that provided no change in policy. Also note Canadian Manufacturing Sales which are predicted to rise once again, this time by 1.6%. For more USD/CAD technicals, read the Canadian dollar forecast. In the US, two housing sector figures are due: Building Permits are expected to remain unchanged at 590K and Housing Starts are predicted to edge up from 570K to 580K. A jump in one of these figures will boost the dollar. Producer prices aren’t expected to move. Both PPI and Core PPI will probably rise by 0.1% after jumping last month. In New Zealand, Retail Sales are expected to rise by 0.6%, double last month’s 0.3% rise. Kiwi traders, also note the Core Retail Sales which are expected to rise by 0.3%. That’s it for today. Happy forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| USD/CAD Rises on Unchanged Policy Posted: 19 Jan 2010 06:07 AM PST
The Bank of Canada left the interest rate unchanged and more importantly – left the forecast unchanged. Without an upcoming rate hike, the Canadian dollar loses ground to the greenback. Mark Carney likes clear messages. In the headline provided with the rate statement he “reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010″. This unchanged policy comes on top of improving conditions, and is a disappointment. USD/CAD rose from 1.03 to 1.0340 after the decision, but still remains in the range mentioned in the Canadian dollar forecast. After stronger inflation numbers and improving employment conditions, Carney probably wanted to cool down the Canadian dollar. The strength of the loonie weighs on the Canadian dollar, by not announcing a shift in policy. Is preparing a surprise rate hike? Probably not. His policy is rather transparent and clear. This stands out as Bernanke usually offers confused messages. USD/CAD is still in the 1.02-1.04 range. Another thing that pushes the greenback higher is American TIC Long-Term Purchases which posted a huge surprise: 126.8 billion, compared to about 30 billion. Earlier this week, Canadian Foreign Securities Purchases showed a rise to 10.5 billion, almost double the early expectations to remain stable. This good figure shows that foreigners put their trust in Canada’s economy. USD/CAD went lower and stopped at 1.0250. Hours before the rate decision, USD/CAD went back up, as the dollar made gains across the board. This upwards move eased as also the Canadian Leading Index surprised with a strong rise of 1.5%, more than this 1.1% that was predicted. This came 30 minutes before the rate decision. Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
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