Daily Afternoon Report 22/11/2012

  The euro was trading close to a three-week high against the U.S. dollar on Thursday, as improved manufacturing data from China and the euro zone and hopes for a deal on an aid payment for Greece supported demand for the single currency.

  After the data of German Flash Manufacturing PMI were released the single currency found support. Germany’s manufacturing purchasing managers’ index rose to 46.8 in November, up from 46.0 in October and better than forecasts for a reading of 45.9. Germany’s services PMI came in at 48.0, below expectations for a reading of 48.5. The euro zone’s manufacturing PMI rose to 46.2 this month from 45.4 in October, above expectations for a reading of 45.6. The euro zone’s services PMI declined to 45.7, from 46.0 in October, compared to expectations for a reading of 46.1.

  The euro was also supported after German Chancellor Angela Merkel said an agreement to unlock a delayed bailout installment for Greece was still possible when euro zone finance ministers resume talks on Monday. Today Spain successful auctioned EUR3.38 billion of three and five-year bonds at lower yields than previously, easing pressure on Madrid to seek a bailout.

The data came after a report earlier showed that China’s preliminary HSBC manufacturing PMI rose to 50.4 in November, up from a final reading of 49.5 in October. The data eased concerns over a slowdown in the world’s largest economy.

  Trade volumes are expected to remain low on Thursday, with US markets closed for the Thanksgiving holiday.

Daily Morning Report 22/11/2012 | Forex Trading

In latest news, the China HSBC Flash Manufacturing Purchasing Managers Index hit 50.4 for November, a 13-month high and up from a final October reading of 49.5. As a result, the dollar was sent dipping as investors sold the unit to invest in stocks and higher-yielding asset classes. Renewed hopes that Greece will soon tap bailout funds sent the U.S. Dollar falling as well.

In Brussels, Eurozone finance ministers and representatives from the International Monetary Fund failed to agree to disburse aid to Greece earlier this week. European governments support giving Greece a two-year extension to trim the country's debt burdens to 120% of GDP, though the IMF did not agree.

Meanwhile, the IMF opposed the two-year extension and says policymakers should stick with plans for Greece to bring debt burdens down to 120% by 2020 — and not 2022 — but has said European countries should take a hit on Greek loans, which has run into opposition in Europe.

Still, the euro gained on hopes that all sides will strike a deal at a follow-up meeting on Monday and free EUR31.5 billion earmarked for the crisis-ridden country.

Later Thursday, European Union leaders will hold the first day of a two-day summit in Brussels to discuss the debt crisis and plans for greater fiscal and monetary integration across the region, while, the Eurozone is to release preliminary data on manufacturing and service-sector activity, leading indicators of economic strength. Germany and France are also to release individual reports.

U.S. markets will be closed on Thursday for the Thanksgiving holidays.

Daily Afternoon Report 21/11/2012 | Forex Trading Analysis

The euro was unchanged against the U.S. dollar on Wednesday, as optimism that an agreement on a delayed bailout payment for Greece is close. The euro fell against the greenback earlier after talks between euro zone finance ministers and the International Monetary Fund concluded on Tuesday without reaching a deal on unlocking Greece’s bailout package, amid disagreements on how best to reduce the country’s debt to sustainable levels. Jean-Claude Juncker said that a deal was close, but he didn’t know when Athens would receive its next aid installment. The talks are set to continue next Monday. The pair showed reaction after the US Department of Labor announced the number of individuals filing for initial jobless benefits last week declined to a seasonally adjusted 410,000, in line with expectations. Jobless claims for the preceding week were revised up to 451,000 from a previously reported 439,000. Volumes are falling lower due to US Thanksgiving holiday on Thursday.

Daily Morning Report 21/11/2012 | Forex Trading Analysis

The dollar strengthened against the world's major global currencies on Wednesday as investors remained camped out in the safe-haven currency awaiting word of progress over the U.S. fiscal cliff.

Investors were on edge due to uncertainty over the U.S. fiscal cliff, a combination of expiring tax breaks and inbound spending cuts converging at the same time after the end of this year. Earlier, Federal Reserve Chairman Ben Bernanke urged the White House and Congress to find a way to steer the U.S. economy away from the cliff, which fueled demand for the dollar.

The euro continued to weaken on reaction to a Moody's decision to downgrade France's sovereign ratings to Aa1 from Aaa. Meanwhile, in Europe, eurozone policymakers opened a meeting to discuss Greece's finances, with a EUR31.5 billion tranche of aid pending approval.

Eurozone finance ministers and senior International Monetary Fund officials ended a nearly 12-hour meeting with no agreement on how to bring Greece’s debt down to a sustainable level, and they failed to approve an overdue tranche of bailout loan money for the country despite a looming threat of bankruptcy.  The failure to approve immediate payment of a long-overdue E31.5 billion loan tranche to Greece came despite official acknowledgement from Jean-Claude Juncker, who chairs the Eurozone finance ministers’ group, that Greece had met all the conditions demanded of it. The 17 Eurozone finance ministers, together with the heads of the European Central Bank, International Monetary Fund and the EU’s Economic and Monetary Affairs Commissioner, Olli Rehn, discussed a package of options to reduce Greece’s national debt to 120% of GDP by 2020 – the benchmark for sustainability upheld by the IMF.

Elsewhere in the U.S., housing starts rose 3.6% in October to a seasonally adjusted annual rate of 894,000, the biggest gain in four years. The number of building permits issued in October fell 2.7% to a seasonally adjusted 866,000. Both figures beat expectations.

In other news, the Bank of Japan met earlier and left benchmark interest rates unchanged at 0.10%. The monetary authority also made no changes to the country's JPY91 trillion asset purchasing plan, though the yen weakened to a 7-month low against the greenback on Wednesday amid building market sentiment that looser policies are on the way after December's elections.

Japanese opposition leader Shinzo Abe may become the country's next prime minister during Dec. 16 elections. Abe has said he favors more aggressive monetary stimulus measures to jolt the Japanese economy.

Later Wednesday, the U.S. will release weekly government reports on initial jobless claims and crude oil inventories.  In addition, the University of Michigan is to release revised data on consumer sentiment and inflation expectations.

Daily Afternoon Report 20/11/2012 | Forex Trading Analysis

After another rally spiking to 1.2830 as the NY session opened, the EURUSD eased back to the 1.2800 psychological level. Fed's Lacker is in favour that the US Congress limits the central bank's credit policy and is against linking the policy to the unemployment rate. Also, Reuters reported that Italy may veto the EU budget if it goes against the country’s interests. The pair is currently trading sideways at 1.2800 after the release of weaker US building permits and better than expected housing starts.

Later Bernanke (FED) will speak and might