Current Australian Dollar Performance

Wednesday showed the easing of Australian dollar slightly further after the country’s CB chief downed the currency in a testimony he gave before parliament.

Governor Glenn Stevens of the Reserve Bank of Australia warned last Wednesday that the market has undervalued the danger of an ailing Australian dollar and said it would be possible based on economic fundamentals if the current levels be maintained by the currency.

This was the statements he gave in his early testimony before the Australian parliament committee where he will answer several questions on monetary policy.

The Westpac-MI leading index due in Australia is at1030 (0030 GMT). In the last few readings, the index have been directing to sub-trend growth and more of the same is expected next month.

The Aussie dollar is weaker versus the stronger greenback, after its show of a promising US economic data.

Wednesday morning, the local currency was trading down from 93.29 US cents, to 93.03 cents on Tuesday.

Fed Policy Makers Averse to SEC Controls on Money Market

forex tradingEconomists of the Federal Reserve have cautioned against restrictions imposed by the Securities and Exchange Commission on the $2.6 trillion money market and mutual fund industries.

The Feds claim this will unintentionally encourage a rush by investors instead of controlling them.

The economists said the SEC’s plan will facilitate withdrawal fees and briefly obstruct investor exchanges. The imposition of fees or other costly measures can counteract strong incentives to investors in the middle of a crisis. Restraints on redemptions if liquidity becomes inadequate may jeopardize financial steadiness.

The Financial Stability Oversight Council, composed of prominent financial regulatory officials, declared it will scrutinize the effectiveness of new rules particularly inadvertent effects of

Meanwhile, the SEC admitted that runs on money funds can occur because of new policies although these may not take effect within the next two years.
However, the risks are eased partly because investors will get more information about the condition of funds.
SEC officials also claim that riskiest funds applicable to the big group of institutional investors must give up their permanent $1 share price and float in terms of value.
Money funds refer to cash-like instruments used by private individuals, companies and municipalities to secure cash.

Metals Update

Exchanging at 19.648, silver gained 13 points and was on its own left with a little direction and support. Copper recovered 3 points trading at 3.112 while London copper stayed firm on Tuesday bringing positive prospects for the U.S. economy. However, it was warned over China’s faltering property market, meanwhile a mightier dollar eroded a recovery from seven-week lows.

On Monday, homebuilding stocks in U.S. escalated by data in August reaching its highest level since January. A 234,000 tonne deficit in January to June from global zinc market was shown by a monthly bulletin from Lisbon-based International Lead and Zinc Study Group. The homebuilding stocks of U.S. went up on Monday, boosted by data showing its rising sentiments in August. Increase in copper futures was attributed by analyst to a stable global trend before Chinese data of China considered as the world’s largest users of industrial metals.

Gold gained was under $2 trading at 1301.20 following specific direction before data from US and the forthcoming Jackson Hole conference.  There is little change in bullion trading near the $1300 an ounce mark.

Australian Currency Advances as RBA Restates Secure Interest Rates

australian forexThe Australian note performed well on the trading floor following disclosure of the transcript of the Reserve Bank of Australia’s monthly board meeting.

It indicated a tentative outlook for the economy but hinted that rates will continue at a historic low 2.5 percent showing stability.

Meanwhile, the New Zealand dollar declined as producer prices fell during the second quarter fell and sooner than the central bank projection regarding inflation.

The NZD/USD currency pair traded at 0.8436. This was down 0.46 percent ahead of the Reserve Bank of New Zealand’s pronouncements on inflation possibilities for the third quarter.

Earlier, the one-year inflation expectation of the Reserve Bank of New Zealand was pegged at two percent as well as two-year outlook of 2.35 percent. The RBNZ says it will strive to maintain basic price increases between two and three percent.

The NZ Government reported that producer prices for the second quarter decreased by one percent as against a likely gain of less than one percent.

On the other hand, the US currency traded higher against many major currencies propped up by positive data from the country’s housing industry. The government hopes that diplomatic initiatives by both sides to end hostilities in the Ukraine will produce positive effects.

There have been talks between the foreign ministry officials of both nations. However, no resolution was reported as the movement of humanitarian aid to Ukraine from Russia carried on. This managed to allay fears in the international markets.

Prices of Russian Crude Oil Falter

The price of crude oil in Russia waned for eight consecutive trading days as a result of weak refining demand in the euro zone. It fell well below $100 per barrel for the first time in one year due to economic sanctions imposed by Western powers on this country.

The Russian government kept its budget at $114/ barrel as President Vladimir Putin is poised to increase social military expenditures in the midst of the Ukraine dispute. Relations between the West and Russia grew worse.
The restrictions are expected to affect new Russian oil projects which led to a fall in output during the last few months.

Oil prices worldwide continue to fall despite the fighting in Ukraine and Iraq because of poor demand from a feeble world economy and soaring oil supplies from the United States.
According to economic analysts, declining oil prices have affected the Russian stock market as well with its currency which is trading near all-time lows. The $2 trillion economy of Russia depends a lot on energy taxes for ½ of its budget earnings.

Crude in the Baltic traded below $98 per barrel. This was the lowest since May of last year.

Rupee in Forex Market

In Mumbai, Forex and money markets, as well as many of the other commodity markets, aside from oils & oilseeds, are closing on Monday as the nation is celebrating the Parsi New Year.

For the second week in a row last week, the rupee upped and closed up by 39 paise culminating at a two-week high of 60.76 versus the US dollar during the short week under study following the supported dollar that was selling by exporters and some banks within bullish local equities.

In the Forex market, the local unit started better the week at the amount of 61.09 per dollar from close of last weekend of the amount of 61.15 and down to 61.30 last Wednesday on fresh dollar demand coming from importers between retail inflation and slow growth of industrial production.

Later in the week, it jumped back to remain for the rest of the highest level of 60.76, presenting a rise of 39 paise, or 0.64%.

Last Thursday, the 45 paise achieved the best single day gain for the last three months despite wholesale inflation to five-month down in July.

Meanwhile, industrial production (IIP) of the country slowed down to 3.4% in June versus 5% in May. Meanwhile retail inflation, as measured by consumer price index (CPI) increased by 7.96% in July from 7.46 % in June, as per government data announced last Tuesday.

Resurgence of European Union Economy Flounders

european unionThe EU seemed to be inching closely to economic healing. However, the unstable recovery stopped during the second quarter of 2014 after last year’s paltry progress.

Media reports said growth was nil after recording a low of 0.2 percent during the first quarter.

Is the European Central Bank capable of turning things around with an additional monetary incentive? The governments of France and Italy are reportedly moving very slowly in making their respective economies business-friendly.

The Ukraine crisis has compounded the situation by frightening investors. This can result into a total recession, according to observers.

However, not many economists believe that the euro zone will go back into its third downturn in only six years. The sluggish recovery will persist and this is not good for a global economy.

One of the main reasons for this is Germany’s fall of 0.2 percent during the second semester compared to the same period of last year. Nonetheless, Europe’s largest economy is still the number one performer. It has a low rate of unemployment and carried out measures to reduce business tariffs and costs several years ago.

The festering economies of Italy and France are also among the culprits. France was dull for the period and Italy’s own economy was down by 0.2 percent.

The ECB can expect more pleas for the roll-out of additional incentives for the deteriorating economy and this could be done by quantitative easing.

 

Australian Mining Jobs To Disappear by 2019

australian mining industryBy the year 2018, employment in Australia’s mining industry is predicted to go down by 4.5% with more than 16,000 jobs expected to be closed as across the globe, exploration, metal ore and coal mining will shut down.

Australia’s Department of Employment made a study and forecasted an extremely fast reduction of mining companies affecting the106, 700 jobs what were opened in the sector over the past five years that a near double of mining openings.

Over the next five years, about 6,200 metal ore mining jobs could be gone; around 5,400 exploration positions would be lost and 5,100 country’s coal mines jobs are no longer needed over the next five years.

However, there is a projected increase of 300 in the employment in the mining construction of material at this time.

Report stated that since May 2012, growth of employment has been growing by only 4000, or 1.5% over the past 12 months until May 2014 as mineral prices have done down; construction activity has remained standstill as operating costs are well scrutinize.

In Western Australia, the downward trend is already visible as employment since 2012 has downed by 13,300 and in NSW by 7,300.

The 267 700 workers in the Australian mining sector equals 2.3% of the country’s total workforce. In the coal mining industry, there are 57,800 people, the employees of the iron ore mines total just over 30,000 while staff of the mining services employs 34,100.

EUR/USD Pair Update

The pair continues staying within a 1 cent range between 1.3335-40 and 1.3440, at a current price of 1.3390 – with barely a change from its NY last close, leading key risk events this week.

Founder at FXCharts Jim Langlands noted that despite the new speculation that Fed may start to raise rates, the present showing of US soft data suggests that Janet Yellen has any good reason to act soon that will preserve the dollar under some pressure. On Tuesday, use the US CPI; on Wednesday, use the FOMC Minutes and then on Friday, the Jackson Hole Economic Symposium; to find out more in the week to come and make Fed-watching the main game for the coming week.

Chief Analyst Valeria Bednarik at FXStreet said that technically, the hourly rates of the chart shows a bit of positive tone for price was above its moving averages despite indicators going to its positive territory southward. The downside is favored by technical readings in the 4 hours chart every time the momentum is crossing in midline south with a flat 20 SMA around 1.3370 acting as short term immediate support. At least in the short term, the roof of the range is set at 1.3440 with an advance over it to see current negative reversing tone.

Oil Sands Projects Faced with Possibilities of Cancellation

oil sands projectSome of the most expensive energy projects in the oil sands of Alberta can be terminated without higher prices of crude, based on a report by one London-based financial firm that concentrates on climate risks.

The Carbon Tracker study emphasized the 20 largest global projects that require the minimum oil price of $95 per barrel to be feasible economically.

Many ventures in the list should have prices of $110 for each barrel while a handful in the oil sands even calls for prices greater than $150.  All in all, these projects correspond to nearly $91 billion in capital expenditures within the next 10 years.

Analysts from the Comparative Tracking Index (CTI) said this analysis revealed the deteriorating cost milieu in the oil sector and the degree by which producers are going after volumes at the cost of returns.

It is expected that investors will want to know if it is still practical for oil firms to wager on high oil prices when they could are faced with the probability of returning money to shareholders.

Topping the list was Conoco Phillips’ oil sands operations including mutual endeavours with Cenovus Energy (Foster Creek and Christina Lake) as well as Total E&P Canada in Surmont.

The CTI is subsidized by American and European foundations. It claims to be a non-profit organization committed to concerns on environmental hazards.