CFD Markets News and Forecasts — 18-02-2011

A recent flurry of selling stole gains from the S&P 500 and the Nasdaq, but the two have started to recover. The Dow made only a modest move lower, so it continues to sport a solid gain.
The dollar was also hit with some recent selling. In turn, the greenback is now at a session low. Most of the dollar's drop is owed to strength in the euro, yen, and British pound, which are up 0.7%, 0.3%, and 0.5%, respectively, against the greenback.

Stocks are up with modest gains after a sluggish start, but overall action has been rather dull in the absence of data and any meaningful corporate announcements.
Still, the market lacked direction for the first hour.
For the second straight session energy stocks are out in front. The sector currently sports a 0.5% gain. Some of that has been helped by higher oil prices, which were most recently quoted with a 0.8% gain at $87.05 per barrel.

   

The euro reached a one-week high against the dollar after the European Central Bank Executive Board member Lorenzo Bini Smaghi said the bank may need to raise interest rates as global inflation pressures mount.
The shared currency was poised for the first weekly advance in almost a month.

Group of 20 finance ministers and central bankers opened a two-day summit in Paris today in an effort to agree on a common approach to global economic imbalances.
“As the economy gradually recovers and global inflationary pressures arise, the degree of accommodation of monetary policy has to be monitored and, if needed, corrected,” Bini Smaghi said.
The ECB policy maker’s comments suggested officials are becoming more concerned about inflation, which has already breached the central bank’s 2% limit and is at the fastest pace in more than two years. Companies face stronger input-price pressures, and forecasters in an ECB survey this month raised longer-term inflation expectations to 2%.
The greenback has declined this week as minutes from the Federal Reserve’s January meeting showed the central bank was dissatisfied with job growth and would continue monetary stimulus. Policy makers under Fed Chairman Ben S. Bernanke have held the benchmark interest rate at zero to 0.25% since December 2008, and have said it will remain low for “an extended period.”
The ECB has kept its key rate at 1% since May 2009, helping the euro region haul itself out of recession.
Sterling reached a two-week high against the dollar after data showed U.K. retail sales surged 1.9% last month, almost four times the amount forecast by economists.
Pressure on the Bank of England to raise its key rate from a record low of 0.5% increased this week after a Feb. 15 report showed inflation accelerated to double the central bank’s 2% target.

GBP/USD holds $1.6235 and is within striking distance of the morning high around $1.6245. Techs remind of resistance at $1.6270/97 area (an early Feb and early Nov high) but some trader warns of bearish risk ahead for the currency. BOE dove Tucker speaks in about an hour and that could drag the rate.

 

Resistance 3:$1.6460         
Resistance 2:$1.6280/00  
Resistance 1:$1.6240         
Current price: $1.6166

Support 2: $1.6040

 

GBP/USD $1.5875, $1.5900, $1.6000, $1.6300
EUR/JPY Y112.00, Y112.35. Y112.45
AUD/USD $0.9915 (крупный ), $1.0000, $1.0025, $1.0040, $1.0100
NZD/USD $0.7520 
USD/CHF chf0.9700, chf0.9850 
AUD/CAD C$0.9985
AUD/JPY Y83.75 (крупный), Y84.00
GBP/JPY Y133.60 
GBP/USD A$1.5900 
EUR/GBP stg 0.8360, stg0.8400

U.S. stocks were set to open little changed Friday as investors took a wait-and-see approach to the G-20 meeting of finance ministers underway in France.

There's no economic news today so the market will be focused on the G-20 meeting
U.S. stocks ended at fresh multi-year highs Thursday, as investors focused on an upbeat manufacturing report and looked past indications that inflation is heating up.

China's central bank will raise the reserve requirement ratio for the nation's banks by half a percentage point, marking the second increase so far this year. The government hiked the reserve requirement six times in 2010, as the nation attempts to combat inflation.
World markets:

Oil for April delivery edged up 36 cents to $89.20 a barrel.
Gold futures for April delivery rose $1.50 to $1,386.60 an ounce.
The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.59% from 3.57% late Thursday.

France G20 focus on imbalances 'extremely welcome'

• All global players pursuing own self interest;
  
• Global econ. will stay vulnerable to imbalance risks;
  
• World imbalance risks should be tackled at source;
  
• Talks should focus on speed of imbalance adjustment;
  
• Fx changes, other policies need to reduce imbalances;
  
• World recovery weak if no accord on imbalances;
  
• At worst imbalance accord failure means new crisis

The euro fell against most of its major peers as data showed producer prices in Germany rose faster than forecast, fueling concern that policy makers will have to raise interest rates, stifling the economic recovery.
The euro declined against the dollar and the yen ahead of German elections beginning on Feb. 20 that will test voter appetite for supporting weaker euro-region nations. Producer prices in Europe’s largest economy jumped 1.2 percent from December, twice the 0.6 percent median estimate of economists.
“The euro’s recent rebound is running out of steam,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. “The market is getting uncomfortable with inflation headlines although we think the ECB may not be able to do much given the problem in the peripheral countries. The elections will add further uncertainty to the debt crisis debate.”
The pound rose against the euro and the dollar amid speculation that inflation may soon force policy makers to raise interest rates.

The premium of ICE Brent of Nymex WTI in the April contracts remaining around $13.50. Some resistance seen at Tuesday's highs of $89.54 and $90.15. Crude currently trading around $89.15

GBP/USD $1.5875, $1.5900, $1.6000, $1.6300
EUR/JPY Y112.00, Y112.35. Y112.45
AUD/USD $0.9915 (large), $1.0000, $1.0025, $1.0040, $1.0100
NZD/USD $0.7520 
USD/CHF chf0.9700, chf0.9850 
AUD/CAD C$0.9985
AUD/JPY Y83.75 (large), Y84.00
GBP/JPY Y133.60 
GBP/USD A$1.5900 
EUR/GBP stg 0.8360, stg0.8400

• EMU inflation due commodities, should return to price stab trend;
• But if price stability not seen in wages, could have real inflation;
• EMU competitiveness pact seems to me very very good idea;
• Can't have radical divergence of unit labor costs in EMU;
• BOF surveys show France growth accelerating start 2011;
• Can expect France 2011 GDP nearer +2% than +1.6% consensus.

The dollar and the yen headed for weekly declines against most of their major counterparts before reports that economists said will show French business confidence rose and Italian industrial orders increased.

Yields on the U.S. two-year note fell as much as six basis points, or 0.06 percentage point, to 0.76%, the lowest intraday level since Feb 8. Ten-year note yields fell as much as seven basis points to 3.55%, the lowest since Feb. 4. 
Jobless claims rose to 410,000 in the week ended Feb. 12, exceeding the 400,000 median forecast, Labor Department data showed today in Washington.
The U.S. consumer price index increased 0.4% for a second month, exceeding the 0.3% median estimate of economists, another Labor Department report showed.
Federal Reserve officials differed last month over whether more signs of strength in the U.S. recovery would warrant reducing or slowing record monetary stimulus even as they affirmed disappointment with job growth, according to meeting minutes released yesterday. The Fed has held its key interest rate at zero to 0.25 percent since December 2008 and is buying $600 billion of Treasuries in its latest round of a tactic called quantitative easing.
The Swiss franc gained versus all of its 16 most-traded peers and the yen rose against most as Iranian state-run television said the nation will send two warships through the Suez Canal, adding to the refuge appeal of the currencies.