Fundamental News
Today’s highlights:
• CPI (MoM) + PPI Input (MoM) (GB; 09:30 GMT)
• German ZEW Economic Sentiment (Ger; 10:00 GMT)
• Treasury Secretary Lew Speaks (U.S; 13:15 GMT)
• Manufacturing Sales (MoM) (Can; 13:30 GMT)
• Core CPI (YoY) (U.S; 13:30 GMT)
• TIC Net Long-Term Transactions (U.S; 14:00 GMT)
U.S. industrial production rose by slightly less than expected in the month of August data showed on Monday. The Fed said industrial production increased by 0.4 percent in August after coming in unchanged in July. Economists had expected production to rise by about 0.5 percent. On the other hand, the New York Fed said its general business conditions index edged down to 6.3 in September from 8.2 in August but remains in positive territory. While a positive reading indicates continued growth in New York manufacturing activity, economists had expected the index to climb to 9.0.
Federal Reserve Vice Chairman Janet Yellen is President Barack Obama’s top candidate to lead the central bank even after her supporters helped force his initial favorite to withdraw, according to people familiar with the process. Lawrence H. Summers, Obama’s former economic adviser, removed his name from consideration rather than face what he said would be an “acrimonious” confirmation process. Summers was targeted by Yellen’s backers who said he was too lax on regulating Wall Street and that Yellen, another candidate mentioned by Obama, was a better choice.
Australia’s central bank repeated it retains the option of reducing interest rates and said a further drop in the currency would aid the economy as resource investment slows, minutes of the Sept. 3 meeting showed. “Members agreed that the bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them,” the Reserve Bank of Australia said in notes of the meeting, at which it left its benchmark rate at a record low, released in Sydney today. “Some further decline in the exchange rate would be helpful.”
The International Monetary Fund completed its first review of Cyprus’s performance under a three-year bailout program. The completion of the review enabled the disbursement of EUR 84.7 million. The latest disbursement took overall payment to EUR 169.4 million. The lender also approved the modifications for the September 2013 fiscal targets as requested by the authorities. Other news is that, the Eurozone final consumer price inflation remained unchanged from the preliminary estimate in August, data from Eurostat showed on Monday.
EUR/USD: The EUR/USD was trading nearly flat at 1.33391 at the time of writing as investors jumped on the sidelines before the key risk data in the Eurozone; the German ZEW Economic Sentiment and the ZEW Economic Sentiment (Forecast: 47.2 – Previous: 44.0). The ZEW Center for European Economic Research in Mannheim will probably say today its index of German investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 45 this month from 42 in August, according to the median forecast in a Bloomberg survey. If confirmed, that would be the highest since March and should be bullish for the Euro. Later in the American trading session, the U.S will release another key risk event; the Core CPI (YoY). U.S Consumer prices excluding food and fuel probably increased 1.8 percent in August from a year earlier, according to the median estimate of economists surveyed by Bloomberg. Meanwhile; the Treasury Secretary Lew will speak today and his speeches are often used to signal policy shifts to the public and to foreign governments. Investors should remain very prudent and adopt a wait and see strategy on the pair today. Investors should also keep an eye on the highlights on the decision on U.S. monetary policy from Federal Reserve officials, who start a two-day meeting today. The exit of Lawrence Summers from consideration to be the next Fed chairman fueled speculation the central bank will take a more gradual approach to scaling back bond purchases that tend to debase the U.S currency. The resistance level is at 1.33835 and the support level is at 1.32923.
GBP/USD: The GBP/USD was trading in the narrow range of 1.59132 and 1.58867 at the time of writing as investors are waiting for the CPI (MoM) and the PPI Input (MoM) in the UK to come on market to get some visibility. The CPI (MoM) is expected to improve to 0.5% from the previous reading of 0.0%, while PPI Input (MoM) is expected to slow to 0.2% compared to 1.1% registered previously. If better than expected data are released from the UK, it should be bullish for the GBP. Later in the day, the U.S will release the key risk event; the Core CPI (YoY). U.S Consumer prices excluding food and fuel probably increased 1.8 percent in August from a year earlier, according to the median estimate of economists surveyed by Bloomberg. Meanwhile; the Treasury Secretary Lew will speak today and his speeches are often used to signal policy shifts to the public and to foreign governments. Investors should remain very prudent and adopt a wait and see strategy on the pair today. Investors should also keep an eye on the highlights on the decision on U.S. monetary policy from Federal Reserve officials, who start a two-day meeting today and the data which will be released in the Eurozone as they are likely to affect sentiments for risky assets. The resistance level is at 1.59607 and the support level is at 1.58521.
Silver: The price silver was trading slightly higher at 21.881 at the time of writing on market correction following the dropped registered yesterday. Moreover, the commodity is finding some supports as investors weigh the outlook for U.S. stimulus with the Federal Reserve to commence its two-day policy meeting today. The Fed meets to consider whether to taper its $85 billion-a-month in bond buying. Purchases will probably be cut by $10 billion, according to a Bloomberg survey of economists. Former Treasury Secretary Lawrence Summers’ exit from the Fed chairman race fueled speculation the central bank will take a more gradual approach to taper stimulus. Investors should stay very cautious on the precious metal. The events likely to affect the markets in the European trading session are; the German ZEW Economic Sentiment and the ZEW Economic Sentiment, as they will affect the trend of the USD and at the time the dollar-priced commodities. While on the American trading session, the U.S will release the Core CPI (YoY). Meanwhile the Treasury Secretary Lew will speak. Investors should wait for data and news to come on market to get visibility. The resistance level is at 22.401 and the support level is at 21.350.
