Sterling slipped down after Posey on speed QE!

It was a very nervous day for the pound, with a slight strengthening in the beginning to touch 1.59 after a very decent report, the retail sector from the CBI. However, comments Posey hit hard by the pound, dropping the cable to 1.5720, the time when the dollar was just beginning to weaken. Sterling was one of the weakest among the major currencies yesterday (except U.S.) - EUR / GBP touched 86.0, a four-month high. Euro remains in good shape, despite the ongoing suffering of Ireland, Portugal and others. Compared with the problematic dollar, the euro rose to a five-month peak in 1.36, thanks to the continued support of Asian central banks diversifying their reserves against the dollar. Since the beginning of the quarter the euro gained 11% against the dollar and 5% to the pound.



Posen has called for additional mitigation. Independent member of the Monetary Committee of the Bank of England Posen was a cat among the pigeons yesterday by suggesting "the need for further monetary easing, and that coordinated global quantitative easing (QE) will be more influential than individual actions. It was a very dovish speech, suggesting that additional QE must begin with the purchase of government gilts, but then may be extended for the purchase of private assets. Posen appealed not only to make additional purchases of government bonds (rejecting fears of currency depreciation), but also recommended the purchase of private assets, which looks like a high-speed QE. Radical, yes, and it was not surprising that sterling was so scared. I wonder, could he make such comments after controlling BOE King? Someone says it's not. It is noteworthy that later we saw the performance of the chief hawk in the Monetary Committee, Andrew Sentance, he said that there was no need for further QE.

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USD downtrend yesterday was again evident

Downtrend dollar, which has dominated the forex market this month, yesterday was again evident. This had several reasons - the index of consumer confidence from the Conference Board have been absolutely terrible (just confirmed the fact that the American economy needs a more flexible credit terms, including a weaker exchange rate), Richmond Fed Index was very weak, a U.S. consulting firm said on the Additional QE from the Fed, as an almost accomplished fact, and the Chinese official Yu (Yu) argued that the crisis of the dollar was inevitable due to the exceptionally high levels of debt. Atlanta Fed President Lockhart said that the debate surrounding the additional quantitative easing will soon intensify. After checking level 80 during the day and a little consolidation, the dollar index fell on the rise during the day and evening. At night, he fell to 78.83, a seven-month low. Later today the House of Representatives will discuss the so-called bill of the Chinese currency. Senator Schumer, who was one of those who promoted the current version of the bill, voted for that bill was passed by the Senate during the legislative session in mid-November. Interestingly, the People's Bank of China set the yuan's exchange rate at 6.6936 the night, the strongest level since then, as China announced in June the intention to let the currency more freely reflect market forces.



U.S. consumers are still shell-shocked. U.S. consumer confidence deteriorated again this month, as shown by the index of consumer sentiment from the Conference Board, fallen to just 48.5, well below expectations. The main driver of downward movement has become a component of expectations, as consumers are definitely about the future of employment. Separately, home prices remain weak, which showed growth of Case-Shiller index for 20 largest cities only 3,2% y / y in July.
U.S. household income is still falling. According to the U.S. Census Bureau, household income fell 3.0% last year to just over $ 50,000, the second consecutive year of decline.

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AUD: reaching the two-year high, Aussie back to 0.96

After reaching the two-year high in 0.9645 yesterday, the Australian came back to 0.9600 in early trading in London. This was facilitated by several factors. In the early WSJ suggested that any further quantitative easing Fed will be more hidden than in the first QE, which was more explicit and public. Then, yesterday, shares fell slightly, prompting record profits for vysokobetovym currencies. Finally, relations between China and Japan snapped to attention by threatening an escalation of trade tensions. It would be surprising if Australian started the correction in the coming days, after such good growth.

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JPY: night publication Tankan will be the focus

USD / JPY pair fluctuated within a very narrow range since the beginning of a new week, as traders were unwilling to take risks because of the fact that "the bushes" could leave the Bank of Japan with fresh interventions. This is a very short period of stability will not last, as the Ministry of Finance and the Bank of Japan will probably remember that buying interest against the yen may yet come to the end of the first fiscal half on Thursday. The dollar has stabilized after a sharp fall last week, which also gives some respite Tokyo. Nevertheless, the pair USD / JPY at around 84.20 is probably still below the value that would be like in Tokyo. Tonight publication Tankan will be the focus, a sharp drop in a double determination to MOF to prevent the further strengthening of the yen.

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Trading game - a risk to Australian

Foreign exchange market was remarkably peaceful so far this week, with very little movement of the major currency pairs. Downward pressure on the dollar, which we saw last week, before and after the Fed confirmed the possibility for further quantitative easing at the moment waned, though there is a suspicion that the downward trend will resume soon.




Euro, which has recently been quite brisk, despite fears of PIGS, traded above 1.35 yesterday, although he has since dropped to almost 1.3440 in early trading in London. For the pound was a nice time, when it reached a six-week peak of 1.5850. Concerns pound, due to the fall in property prices and the fact that measures tightening of public spending, George Osborne (George Osborne) will affect the economy. USD / JPY pair was completely smooth, as traders almost did not play in this direction, and the Bank of Japan is still "hiding in the bush." Vysokovolatilnye currency declined slightly from their best levels that were reached yesterday because of declining stocks, an Australian is at around 0.9575, down from yesterday's high of two years from 0.9600.

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The euro in advance pressed fears for the ratings

The single currency started the pressure in the morning on Tuesday on a number of factors. In the first place in the Spanish press reported on a possible reduction AAA status, given that Moody's began to analyze Spain at the end of June, and it should last three months. There is an excellent refutation of the efficient market hypothesis: they react as if the information had already come, and yet in reality there is not any confidence in the lower Moody's rating of Spain or not. In addition, we see quite sluggish consumption data in France, where consumer spending dropped by 1.6% in August and July were revised from 2.7% to -1.5%. Consumption dropped 5 of 6 months. In general, at this point is possible some correction euro, given the extent the recent growth. However, given the downward pressure on the currencies of U.S. and Asia, Europe can serve as a safety valve and it will support the euro in the background.

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