IntelligentHQ Forex Week In Review In Association with OANDA Corporation
by Alfonso Esparza
Week in FX EUROPE Sept 9-14: EUR Bulls Squeeze Retail
The last two weeks have been good for Spain. So good in fact that they are taking their time in sending a formal bailout request to the ECB. Mario Draghi’s committment to the euro and unlimited bond-buying program made this week’s Spanish bond auction very successful with yields of 5.666%. This has helped Mariano Rajoy delay a bailout request, although there are also political factors to consider as the region of Galicia is holding elections on October 21st and the president’s party could suffer if the unpopular bailout request is made before elections. Greek PM Samaras meet with Italian PM Monti and they both came to the conclusion that the eurozone must be preserved. Samaras faces an uphill battle outside and inside Greece. The troika has not shown much flexibility to Samara’s requests. Greek coalition parties have not agreed on the details of the 11.5 billion euro austerity package. In a surprising move it seems the Greek consulate in London is up for sale as no stone will be left unturned to reach the needed cuts.
EUROPE Week in FX
Week in FX Americas Fed Debates as USD regains some ground
This week was the battle of the Fed member statements. In various interviews to the press different members of the press issued statements that make clear that they are not on the same page. Fisher and Bullard suggested, in separate interviews, that the Fed could adopt a single mandate tied to controlling inflation. This is a direct response to the topic which Kocherlakota from the Minnesota Fed. He argues that the central bank should keep rates low until the unemployment rate is around 5.5%. IMF Chief is more concerned about the impending US fiscal cliff and the potential impact to global growth if there is a standoff like last time.
AMERICAS Week in FX
Week in FX Asia Sept 9-14: FED is doing the PBoC a favour
The two biggest economies in the Asia are locked in social crisis that could have large economic impact. The Japan purchase of islands under contention from China has sparked mass protests and forced some Japanese companies to halt operations. Both stock indices have been affected negatively as the world continues to watch a symbiotic trade relationship being put in jeopardy by old wounds. China, as the buyer of $195 billion in goods and services, is Japan’s biggest customer while at the same time being Japan’s number four supplier, with exports worth $148 billion.
ASIA Week in FX
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Dean Popplewell has a wealth of forex experience: professional currency trader for 10 years, fixed income trader for four years, and head of the global trading desks at various financial institutions in Canada. Dean is OANDA’s resident currency analyst and has been writing OANDA’s daily forex blog since January 2007 as a way to share some of his forex experience with the OANDA community.