FOREX News Today

European Outlook: Asian stock markets headed south, as stronger than expected GDP data out of Japan cast doubt over hopes of further easing and a delay to the sales tax hike, which added to US rate hike bets. FTSE 100 futures are also down. Positive leads then for European bond markets, which already moved higher yesterday, although the 10-year Bund future lost some of its gains in after hour trade. Today’s data calendar brings the final reading of Eurozone April CPI, expected to be confirmed at -0.2% y/y, and UK  labour market data. The April claimant count rate is seen steady at 2.1% and the ILO unemployment rate for March unchanged at 5.1% y/y. Earnings growth could show a slight deceleration in the rate excluding bonuses.

Japan’s GDP grew 1.7% in Q1: This following the downward revised 1.7% drop in Q4 (was -1.1%). The magnitude of the increase in Q1 easily outpaced projections (we saw +0.5%), but did follow a hefty downward revision to Q4. While the return to growth dodged a technical recession, the detail suggest underlying momentum is lacking in the economy, despite years of Abenomics and aggressive easing from the BoJ. Notably, an extra day in February due to leap year boosted consumption relative to the previous quarter. Private consumption grew 0.5% (q/q, sa) in Q1 after contracting a revised 0.8% in Q4 (was -0.9%). Business spending took a disappointing turn, falling 1.4% (q/q, sa) in Q1 after a revised 1.2% gain in Q4 (was +1.5%). The yen is steady, with USDJPY at 109.20.

Fedspeak: Fed’s Williams and Lockhart both noted June is a live meeting, in their comments at a Politico event. Both are doves, but have been noting the potential for further normalization this year, consistent with the FOMC’s projections of 2 25 bp hikes. Lockhart said it’s too early to draw conclusions about Q2 growth, but he wouldn’t take June off the table. Like several of his colleagues, he warns that the markets are more pessimistic than he is. Neither are voters this year. Fed moderate Kaplan said that the Fed should hike rates “in the not too distant future,” while he sees the household sector in good shape and forecasts a 2% rise in 2016 GDP, though still some slack in the labor force.

Main Macro Events Today

• EMU CPI: We expect the headline rate to be confirmed at -0.2% (median same). The decline back into negative territory last month was partly due to special factors with the earlier timing of Easter meaning that holiday related prices, which picked up over Easter, fell back again in April. This distorts the annual rate somewhat and goes some way to explain the swings over the March/April period. In any case, the ECB has already reacted pre-emptively with the March set of easing measures and is now firmly in wait and see mode and focused on implementing what has already been announced, so that any revision won’t change the immediate rate outlook.

• FOMC Minutes: Published at 21:00 GMT and should make interesting reading as a number of officials want interest rate hikes as early as June or July, whereas the market is discounting this heavily with only 23% of investors expecting a hike in either month. As ever the words that are used and indeed not used will be scrutinized closely.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FOREX News Today

Oil prices firmed over 3% to hit a peak of $48.16 bbl (at the time of writing), with gold prices hitting a high of $1,290. Oil was supported by a Goldman Sachs report that the oil market had shifted from a supply glut to a deficit earlier than expected. Oil prices in general markets have been supported over last few trading days by news of decreasing US production and output disruptions in Canada and Nigeria. The production cuts are helping to rebalance the global oil market awash with unwanted crude oil and pushing up prices almost 12% since the market rallied from my Buy Area published in the May 5^th analysis on oil.

A known gold bull John Paulson reduced his investments on the yellow metal while George Soros and other large investment funds increased their holdings in the metal for the first time in years. This was shown by filings on Monday. Reuters reports that New York-based hedge fund Paulson & Co, led by John Paulson, cut its investment in SPDR Gold Trust, the world’s biggest gold exchanged-traded fund (ETF), by 17 percent to 4.8 million shares,  according to US Securities and Exchange Commission filings.

RBA’s May cut was driven by “broad-based” softening in inflation, even as the growth outlook remained largely steady, according to the meeting minutes. They had considered waiting for more information, but of course decided to cut 0.25% to 1.75%. Recall that the CPI fell in Q1, marking the first drop since 2008. Core CPI growth moderated to the slowest pace on record. And labour costs have been soft. The RBA’s target band for underlying inflation is 2-3%, but they lowered it to 1-2% for 2016 in the forecasts released May 6. In our view, another rate cut is likely in June or August.

US NAHB homebuilder sentiment was flat at 58 in May, holding at that relatively firm level for a fourth consecutive month. The current single family sales index was also unchanged at 63 after dipping 2 points to that level in April. The future sales index rose 3 points to 65 after inching up 1 point to 62 last month. The index of prospective buyer traffic was steady at 44. Builders cited the regulatory environment and low inventories as sources of restraint, according to the report, while low mortgage rates and a solid job market underpins.

Main Macro Events Today

• UK Inflation April CPI: is expected unchanged at 0.5% y/y (median same) while core CPI is seen ebbing back to 1.4% y/y from 1.5% in March. This would closely fit BoE projections. PPI output prices are seen at -0.7% (median -0.8%) after -0.9% in March. However, with the BoE having stressed last week that economic and financial indicators are likely to be “less informative than usual” in light of the uncertainties being thrown up by approaching referendum on EU membership, the figures may not carry the usual potential to impact sterling markets.

• US Industrial Production: April industrial production should reveal a 0.3% increase on the month after dropping by 0.6% in both March and February. The capacity utilization rate should rise to 75.0% from 74.8% in March and 75.3% in February. Mining employment in the April report extended the run of recent weakness that the collapse in oil prices has driven and could lend some downside risk to the release.

• US CPI The April CPI: should reveal a 0.4% (median 0.4%) headline increase while the core rises by 0.2% (median 0.2%). This follows respective March figures which had the headline up 0.1% and the core up 0.1% as well. The declines in gasoline prices over the winter have weighed on price report headlines but we have seen some rebound in oil prices this spring which should begin to bring an end to this effect.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.