Daily Forex News February 25th 2013

Daily Forex News February 25th 2013FCTOFX: Sterling opened the week sharply lower in reaction to last week's downgrade by Moody's. Meanwhile the Japanese Yen also dived on talk of the Bank of Japan head nomination. The Australian Dollar was weighed down by weaker than expected manufacturing data from China whilst the Euro is steady awaiting election results in Italy. Markets will likely get exit polls later today while full results are expected by early Tuesday. The US Dollar and other major currencies are also relatively steady so far. We'll probably see focus remain on sterling and yen weakness today. In particular USD/JPY breached the recent high of 94.45 and is likely resuming the recent up trend to the 95 psychological level. EUR/GBP also breached last week's high of 0.8764 and is possibly heading towards the 0.88 level.

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Daily Forex News February 25th 2013Moody's downgraded the UK sovereign rating by 1 notch from AAA to AA1. The rating agency stated that the country's weak economic growth "poses an increasing challenge to the government's fiscal consolidation efforts". Moreover, Moody's indicated that while the country's "debt-servicing capacity remains very strong and very capable of withstanding further adverse economic and financial shocks, it does not at present possess the extraordinary resilience common to other AAA rated issuers". Chancellor of the Exchequer Osborne said in an article on Sunday that "Britain has a debt problem, built up over many years, and we have got to deal with it." And he warned that "if we don't deal with it, interest rates will soar, homes will be repossessed and businesses will go bust."


Daily Forex News February 25th 2013In Japan it's reported that prime minister Abe is close to nominating former Bank of Japan deputy governor and current Asian Development Bank president Kuroda as the next Bank of Japan governor. Compared to another candidate Muto: Kuroda is seen as a more aggressive as he advocated an inflation target more than a decade ago: pushed for a 3% target back in 2002. Though he said that the current 2% target is appropriate. It should also be noted that just earlier this month Kuroda emphasized the need to end deflation and he noted that the Bank of Japan has "really substantial room" for expanding stimulus and easing. Opposition Democratic Party of Japan said last week that it won't oppose to nominees whose name were reported in the press and thus it's likely that Kuroda will be confirmed.


Daily Forex News February 25th 2013In China the preliminary HSBC Purchasing Managers' manufacturing index unexpectedly dropped to 50.4 in February, down from 52.3 in January: worse than expectation of 52.2. HSBC noted that "the slower pace of manufacturing expansion partly reflects the impact of a week-long Chinese New Year holiday and partly the continued softness of external demand." But, "the Chinese economy is still on track for a gradual recovery." However some economists criticized that the sharp drop in the index couldn't be explained by the Chinese New Year effect.


Daily Forex News February 25th 2013Latest CFTC data showed that positions in Sterling and Canadian dollar continued to deteriorate in the week of February 19th. Euro net longs dropped slightly to 19,000 down from 24,100 and compared to February's high of 38,000. Sterling positions continued to deteriorate for the fifth week with net shorts rose to 23,400 up from 16,800. Yen net shorts rose slightly to 65,900 up from 61,300. Aussie net longs dropped further to 44,000 down from 54,100 and way off January's high of 97,000. Canadian dollar position deteriorated for the fifth week with net longs dropping to 19,400 down from 26,600 compared to the year's high of 66,700.


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Daily Forex News February 25th 2013