Asian market stocks increased after the US economy exceeded forecasts together with the report that Japan’s $1.2 trillion Government Pension Investment Fund will augment equity holdings.
MSCI (Asia Pacific Index) went up 0.4 percent to 140.82 in Tokyo prior to opening of markets in Hong Kong and China. The gauge moved forward 2.4 percent this week. This was the first one after the other weekly gains since last August.
American economy grew at more-than-projected yearly rate of 3.5 percent last quarter which was the strongest in 10 years.
Other figures showed that fewer Americans applied for jobless benefits during the previous month compared to any other time in over 14 years.
The TOPIX Index of Japan gained a respectable 1.1 percent. The country’s public pension fund, which is the biggest worldwide, will upgrade allocation targets for both domestic and foreign stocks to 25 percent while reducing local debt by 35 percent, according to media reports.
The S&P ASX 200 Index of Australia’s increased 0.5 percent while KOSPI Index of South Korea increased 0.2 percent. The New Zealand (NZX 50) Index added another 0.5 percent.
Shares in the euro region wavered as the BBVA Spanish banking group balanced optimism earlier than the announcement made by the United States Federal Reserve. The bank reported a low profit at 4.1 percent from January to September of 2014. This was not the expected figure which let down investors and market analysts.
Stocks were the largest pull on the European STOXX index for banking. It dropped 3.1 percent since the European Central Bank published the results of stress tests.]
Traders were looking forward to the restoration of optimism among weak lenders and initiate a rally because of said checks. Yet, bullish bets have not made any positive impact since the tests showed hidden losses and loans that were not performing from banks in Italy.
For example, shares of the Banca Monte Dei Paschi Di Siena dropped 8.2 percent after it traded repeatedly. The bank is staring at a capital shortfall of 2.1 billion. The Thomson Reuters Index for banks in Italy waned 4.4 percent.
FTS Euro First Index for top Euro Area shares closed at 0.2 percent with 1,319.34 points. It grew during the previous seven points.
The traders today were kept on their toes by Feds: as scheduled, the QE programs of the Central Bank of US has ended and they were able to preserve substantial time wording on low rates; however, astonishment came from updating the perspective of the employment sector by the announcement that underutilization is declining. The green buck is escalating, stocks exhibited a fierce but momentary kneejerk, and US Yields rose following the news that decreased the period ahead of a potential rate hike.
Going to the EUR/USD, the pair is trading at a fresh low for the week with a handful pips over 1.2620 for it just lost about 100 pips in less than an hour. The one-hour chart presented the price breaking completely to all of its moving averages while the indicators where turning southward to a negative territory.
Meanwhile, the 4 hours chart presented an almost similar picture prior to the closing of the US. Favoring more declines, pullbacks of the intermediate had been going very shallow and seems to favor more declines in the forthcoming sessions going to the lows of 1.2500 as posted earlier this month.
Support levels are shown as: (1) 1.2620; (2) 1.2580; and (3) 1.2550; meanwhile resistance levels appear as: (1) 1.2660; (2) 1.2700; and (3) 1.2745.
Re-elected Brazilian President Dilma Rousseff increased primary rates for the first time after almost seven months as she vowed to combat inflation robustly during her second term.
The Central Bank of Brazil voted 5 to 3 to boost the SELIC, which is the central bank’s method of performing market operations in the implementation of market policies. This was ¼ point to 11.25 percent.
Central Bank President Alexandre Tombini stated that the move will decrease the cost of ensuring better inflation viewpoint for 2015 and 2016. An economist projected correctly said increase while others were expecting the rate to remain the same for the fourth successive meeting.
The central bank has begun a tightening cycle which is good for the market. It will also help re-establish buoyancy among market investors. Rousseff promised to deal with challenges facing the second-biggest emerging market.
She should breathe life into economic growth and slow down inflation that jeopardizes investment grade status of Brazil.
The Sao Paolo Stock Exchange dropped 2.5 percent after increasing 3.6 percent yesterday and slumped 6.2 percent last October 27.
Since the re-election of the President, markets fluctuated as investors were still deciding whether she will fire Finance Minister Guido Mantega. They were expecting a replacement that can help suppress increases in consumer prices. The Brazilian real dropped 1.9 percent and has dropped by 4.1 percent this year.
Inflation this month surged to 0.48 percent from 0.39 percent one month before. The annual was pegged at 6.62 percent. The central bank looks at a yearly inflation of 4.5 percent. This is more or less two percentage points.
Bank of America Merrill Lynch reported that if ever black money alleged to be hidden in Swiss Banks could be uncovered; it could add around 30 billion USD to the country reserves in Forex.
This came from the global financial services provider, although there may not be any immediate impact on Forex involving the legal issues, however, it is an addition of over US $30-35 billion to the reserves of Forex over time.
BofA-ML who has been working on the estimated capital flight amounting to about US $200 billion, made the recent research study.
According to BofA-ML study, Australian National University’s Duc Nguyen Truong and Raghbendra Jha and calculated a total capital flight of over US $186 billion within the years from 1998-2012.
BofA-ML stated in their research note last Wednesday that even if only half of this is amount will be uncovered, it could boost US $30-35 billion for Forex reserves over time.
Last Wednesday, the government submitted the list containing 627 names of account holders with the HSBC bank. Geneva in connection with the black money case before the SC asked the Special Investigation Team to analyze the list and take appropriate legal action.
Chief Justice HL Dattu, who is heading the bench, did not open the sealed envelope with the names of the institutions submitted by the government and said that it will only be unsealed by the Chairman and Vice-Chairman of the Supreme Court-appointed SIT.
NASDAQ, the biggest stock exchange in the United States, will proceed with plans to clear FOREX tools in the Euro Area while local regulators firm up obligatory policies for trading off exchange securities.
NASDAQ has already requested regulators in Europe to approve an assortment of options and non-deliverable forwards (NDFs) and options, according to two people familiar with the application.
This shows that the currency market continues to evolve fast because of G-20 reforms for international financial markets. These are meant to check risks and upgrade against universal flaws.
It is a test case since this is the first time that a clearing house was allowed to do such thing under new policies. Authorities in the European Union are looking at clearing facilities and approved at least 13 sites. The first was NASDAQ. However, it was permitted only to deal with equity, interest rates as well as commodity derivatives.
Policy makers are considering additional varieties of derivatives. These are supported by collateral and traded by way of clearing houses. The FOREX market has always been conducted in confidence between banking institutions. There is limited insurance involving counterparties to support their trades.
NASDAQ has discussed this for over a year with banks and institutional investors. These are NASDAQ’s primary clients. Market participants concentrated on preparations to handle interest rate and exchanges of credit default prior to the European mandate in 2015.
Global regulators were not quick to come up with directives for clearing FX derivatives due to possible effects on the most liquid market in the world.
As it formed a rising Forex trend channel within an hour in the Forex chart, CAD/JPY accomplished both higher highs and higher lows. The market sees bullish divergence can be seen, while stochastic was creating lower lows.
MACD is also showing an elevation in the buying momentum while the indicator appears to be ascending. This could be a boom for the CAD/JPY tandem to bounce from the present level of 96.00 to revert back to the upper channel of a minor psychological resistance of 97.50.
The SMA of 100 SMA is simultaneously staying as support following its crossing above the SMA of 200 that indicated an ongoing uptrend. However, an interruption that is lower than the channel support is a test for the longer-term SMA 200. A lowering of this area confirms that the climb is done and that more losses are along the way.
Major event risks are not expected for today’s Forex trend setup; however, the report of the retail sales for Japan presented a stronger than expected results within the Asian session. For the rest of the day, this is supporting the yen; however, the bias differences in monetary policy of both banks of Canada and Japan has kept the tandem afloat.
Just remember that recently, the BOC acknowledged the presence of inflation in Canada while the BOJ stated its concerns that Japanese economy might not adequately meet the inflation target and that they are required to give more leeway in their policy.
Stocks have gone up in US markets which led to a higher Dow Jones (Industrial Average). Private companies bared stronger revenues while policy makers of the United States Central Bank are scheduled to meet.
The index of Standard & Poor’s 500 increased 0.6 percent (1,972.55) at the New York Stock Exchange. The yardstick rose during the last seven days. Dow moved forward at an average of 67.23 points (0.4 percent) to 16,885.17. Meanwhile, NASDAQ Composite Index added another 0.7 percent.
S&P 500 increased nearly six percent since October 15. This was due to the better-than-anticipated revenues as well as symptoms of a growing economic system.
The Federal Reserve is preparing to terminate bond acquisitions while equities benchmark is two percent behind a record.
Policy makers have started their policy meeting after six weeks of instability in world financial markets. The Fed is expected to concentrate on a healthy outlook for the country and end its bond purchase program.
Observers expect officials to announce rates will remain low for the intervening time.
Data showed orders for durable commodities dropping unexpectedly last month. Demand for equipment and computers also declined.
As it consolidated some of Thursday’s decline, Spot Gold was closed lower Friday. Due to its lowered closing, it prepared the ground for a continuous decline as it opened yesterday with the start of US session trading. Signalling sideways that in the near term, it is possible to reduce prices, RSI and the Stochastics are neutral to bearish. Under the 20-Day MA crossing, closes will confirm that a short term top is in.
Should Spot Gold continues its rally for the month, this month’s rally, the next target Northside, 50% of Fibo retracement level is the decline crossing for July-October. The resiliency of gold at this point is going to more gains, at the same time, it is suggesting that the recovery of the stock market is short-lived. In other respect; safe haven need for asset would have surely been reduced. The increasing price of gold goes side-by-side with increasing Bullish speculation.
Within this week to the 14th of October, net long positions climbed by 12,333 contracts. At the rate of 42,196, net Length was at their highest level in 5 wks. in In answer to the declining equity markets, the inflows of ETF have risen.
Starting late September, India has a great demand for spot gold during the wedding session that recorded an increase of 176% increase in Gold imports from August to US at $2-B from about US$756-M.
The Russian Central Bank announced it held 113.64 billion rubles or $2.72 billion worth of foreign exchange interventions to resuscitate the currency.
It released intercession data with a time interval. The ruble continues to decline on plunging oil prices and extensive risk aversion due to its role in the Ukraine crisis.
The Standard & Poor’s ratings showed that the sovereign rating of the country was just a rung higher than junk status. A downgrade may ensue if additional prohibitions are meted on Moscow.
S&P asserted the country’s long as well as short-term FOREX sovereign ratings at BBB-/A-3. The agency announced that another reduction is bound to happen if the monetary policies and exchange rate flexibility of the country deteriorates.
It says that a negative outlook will continue to happen in Russia.
This point of view shows that S&P will lower its ratings on Russia during the next year and nine months if external and fiscal shields go down faster than expected.
Economic analysts and Russian officials believe that a decrease in ratings was not likely to occur stating that macroeconomic basics match up with investment-level ratings.
Markets were quite anxious regarding said possibility. Bond yields as well as Credit Default Swap insurance costs were near recent highs last week.
The ruble was 22 percent versus the dollar since the start of 2014.