Support for Scotland to remain in the United Kingdom last Friday, prompted the sterling to raise a two-week high against the U.S.dollar and two-year peak against the euro.
Just after the closing of the referendum vote, the pound was pushed more than 50% of the U.S. cent up to $1.6461 that was its highest since Sept. 4. According to the survey made by YouGov, the support for the independence of Scotland amounted to 46% of the electorate and the remaining 54% who preferred to stay in the United Kingdom.
A trader at a Japanese bank stated that the survey of the YouGov appears to bear a fairly huge sample size so it will not be that off the official result. The British pounds was last rated at $1.6435, going up 0.2% from late U.S. trade and extended its recovery from a low of 10-months at $1.6052 hit as of Sept. 10.
Reaching a new high of 1.6525, the GBP/USD ebbed to 1.6490 as of now, but this is not fixed as a positive momentum is garnering grip for every negative Scottish vote.
As traders booked profits after its climb ascent yesterday, silver dropped 79 points as copper made a descent of 17 points trading at 3.15. Metals were push to rally on Tuesday from PBOC stimulus measures from the PBOC that traders are booking profits today. USD experienced a knock last Tuesday following the statement of Jon Hilsenrath, a Fed watcher of Wall Street Journal that the CB would take enough time in stating its policy, as a qualifying move. Investors of metal are also waiting for the result of Thursday’s referendum on Scottish independence that they will use to measure its impact on the dollar. For the yes vote means a bullish for gold and a no vote would make it bearish, However, HSBC said that the uncertainty of investor for a yes vote would escalate gold demand.
Media reported that CB China inserted 500bn equivalent to $81bn into its system, in the ultimate try of authorities to vitalize its weakening flagging growth as the second largest economy of the world. This maneuver is considered by traders as a remedy to the slackening economy last month. The industrial output last August showed a 6.9% that was the lowest reading following the financial crisis. It also heralds the national holidays starting October 1 that makes an often tight liquidity. In London, copper marketed near a one-week high after China Central Bank was reported to strengthen its stimulus measures to boost the demand outlook in the biggest metals user.
The New Zealand currency has declined which reversed its rally yesterday.
The latest report published early today disclosed that the country’s existing account deficit broadened last quarter. This was the first regression this week after two successive sessions of profits.
The NZ’s current account balance showed a disparity of NZ$2 billion from June to August of 2014. The deficit went down from 2.7 to 2.5 percent of annual GDP.
The Kiwi rose along with its counterparts versus the US dollar when the week started. It indicated downward trends in July. Meanwhile, the RBNZ declared breather in the interest rate hike succession. It eroded support for the currency making it susceptible to any negative news.
The currency pair of NZD/USD waned from 0.8200 to 0.8175. On the other hand, NZD/JPY decreased from 87.84 to 87.61. EUR to NZD advanced from 1.5798 to 1.5844.
The United States Dollar Index was even at 84.23. The US will generate data on consumer prizes while the EU will divulge modified data on CPI.
The ECB is in the process of modifying a non-disclosure agreement with lending facilities going through its existing health assessment after less ½ of the institutions concurred with the conditions.
ECB officials said in a statement that it is collaborating with banks and deal with feedback about the NDA with an amended version which will be issued to different banks within the next few days.
The central bank is wary of disclosures that can jeopardize financial strength as it places more than 100 of the biggest banking institutions in the euro area to an annual asset appraisal and stress check.
Results of the evaluation will be publicized in mid-October before the ECB assumes financial supervision in the region the following month.
Although some 60 banks have signed an original secrecy accord, the ECB received complaint from lenders in the region regarding concerns that the terms will contravene national laws governing revelation of securities.
The European Central Bank asked banks to adhere secrecy without restrictions in time.
It plans to circulate results of bank books reviews and performances in an imaginary economic slump. This is known as the stress test. It is scheduled for October.
Banks will start discussing the effect of initial findings from the complete appraisal with the ECB in Frankfurt.
The ECB obliges lenders to maintain levels of high-quality capital known as CET1. This is eight percent in the asset examination and 5.5 percent in the adverse situation of the stress testing.
Expect the Canadian dollars to returning with exuberant confidence. USD/UCAD is currently trading around the rate of 1.0975 that is dipping sharply its high level earlier this week and completing a U-turn.
Analyze the 4 reasons of its fall:
1. Selling off of USD – Green bucks is sold off across the board together with the announcement on the stimulus from China plus the news that they will give more considerable time for intact interest rates .
2. Canadian manufacturing sales getting stronger – This is rising the 2.5% beat expectations of level 1.1% for the month of July. Given the revision of figure for June to the upside: from 0.6% to 0.9%.
3. Price bounce of oil - After its decline, the oil price of both Brent and WTI are bouncing. It maybe perhaps related to a brewing storm in the Atlantic.
4. Optimism of BOC – Governor of the Bank of Canada, Sttephen Poloz, stated that the economy of Canadian is starting to see early indications for export to recover that is the logical result that everyone is hoping to get under way.
Gold has gone up for the third successive succession while speculation was high that the Fed will keep interests at low levels when central bank officials end their meeting today.
The US Federal Reserve will come up with a declaration later while market stakeholders wait for indications. An increase reduces the attraction of gold which is classified as a non-interest asset.
The early hike has important implications for gold. This will possibly lead to lower prices.
Meanwhile, spot gold increased 0.1 percent up by $1,236.70 per ounce right after closing 0.2 percent during the previous market session.
Prices were not very far from the eight month low of $1,225.30 while the US currency became stronger and achieved a 14-month high in September.
Sentiments of market investors were shown in the movement of SPDR Exchange Traded Funds (Gold Trust). Fund holdings plunged to 784.22 tons.
Bullion investors are looking at the polls on Scottish independence to find out its impact on the currency.
The US dollar waned versus majority of other principal currencies. Government bonds rose as the Fed is set to start reviewing interest rates.
Meanwhile, majority of stocks in Asia declined while metals recovered.
US Central Bank officials convene to review policy with an unanticipated falling off in factory output. This mitigates assumptions that the schedule for interest rate increases can be accelerated.
The Reserve Bank of Australia announced it will monitor risks from increasing real property costs as policy makers said that there is stability in lower interest rates.
One of the main concerns is whether the US Federal Reserve will adjust its forward advice to point out that they are really inclined to increase interest rates soonest. However, the transition will not be easy once the US Central Bank tightens the rates particularly for Asian markets.
US dollar index is drawing back after reaching a 14-month peak yesterday. It is up 0.5 percent versus 16 of its major counterparts this month. Australia, Brazil and Norway are leading in terms of debility.
Yield on 10-year Treasury notes scaled 0.23 percentage points in September and seems to be heading for the most significant advance in 2014. On the other hand, Australian bonds expected in 10 years were recorded at 3.63 percent. This was behind three basis points from yesterday.
USD/CHF is presently gaining support from SMA 200 and is examining the SMA 100 inflection point. A positive aspect of the break is past the levels of .9350 and .9400 that are indicatives of a rush of buying momentum depending on the result of SNB’s rate decision this mid-week.
Keeping the franc feeble for the past few days are negative talks of deposit rates as SNB officials interjected that CB Swiss might imitate the footsteps of ECB and facilitates the monetary policy. Meanwhile, the close movement of EUR/CHF to the intervention levels of 1.2000 floors suggests that Chair Jord of SNB might try to jawbone the currency this week.
The support for Stochastic’s pickup buying pressure indicates that it just started to climb out of the oversold area. Limited to the major psychological level of .9400 rallies might depend as well on the outcome of the FOMC interest rate statement.
A HOMC hawkish statement indicates that by Q1 next year Fed start to consider hiking interest rates. Dollar could become bullish and push USD/CHF to a positive breakout. On one hand, a FOMC disappointing statement might be the way to a downside break coming from the range and a deeper withdrawal for the pair. The uptrend for USD/CHF is still complete though and the moving rates might be held by nearby support levels.
In as much as the support of 105.70/104.98 remains the USD/JPY outlook stays on the upside as the basis of weekly closing with a resistance coming at the levels of 108.20. There is a likely halt but it will have bigger bullish implication to the levels of 110.65.
A support from the downside comes at the levels of 105.70 coming ahead of the 104.98 levels and lowers the 104.95 levels turning the neutral outlook for retesting before the next rise the levels of 104.09/103.54 levels.
As long as the 105.70/104.98 support holds on a weekly closing basis, USD/JPY outlook remains on the upside moving towards the 108.20 levels and a possible higher move towards the levels of 110.65 levels and low on 105.70/104.98 levels with reverse risks to the levels of 104.09/103.54 levels before the next rise possible.
Australia’s currency dropped 0.4 percent to 90 US cents. It already declined 3.6 percent during the last five days. It is considered the worst performance in over one year.
The Kiwi declined 0.2 percent to 81.38 cents, after going down 2.1 percent the previous week. It reached its lowest point since February 4.
Meanwhile, emerging-market notes in Asia also weakened. The Korean won was down 0.5 percent to 1,040.65 for every one US dollar. Malaysia’s ringgit plunged 0.3 percent to 3.2070.
Asian stocks plummeted with United States index futures. Crude oil as well as copper slipped following the addition of factory and retail sales data.
The Asia Pacific Index (MSCI) deteriorated. It lost 0.3 percent in Sydney as Japanese markets were closed due to a holiday. Australia’s S&P along with ASX 200 Index dwindled 0.9 percent as the Aussie currency moved back for the sixth consecutive day.
On the other hand, futures from Standard & Poor’s 500 Index waned fell 0.4 percent after the stock measure dived 0.6 percent in the US last September 12. Crude oil also fell in the London and New York markets.
Growth of industrial output in China was very weak last month. China is the largest consumer of base metals worldwide and the number one trading partner of Australia.
This was the weakest in August dating back to the global financial meltdown. Data last September 13 also disclosed that growth of investments and retail sales was restrained.