The U.S. Dollar showed slight fluctuations while remaining close to the highest rate in over four years against a number of currencies. The greenback strengthened on reports by the Organization for Economic Cooperation and Development which stated that the global economies will improve gradually throughout the next twenty-four months. However, the OECD warned that Japan may not be included among the countries that sustain growth. It did say that the devaluation of the Yen could bolster exports. The organization's think-tank anticipates global growth to be of 3.3 percent in 2014 and 3.7 percent in 2015. The greenback maintained its strength subsequent to reports by the U.S. Commerce Department showing that Gross Domestic Product expanded at an annual 3.9 percent in the months of July to September, surpassing estimates for growth of 3.3 percent. In other news, the S & P/Case-Shiller Home Price Index rose in September, but at the slowest rate in close to two years, dimming optimism in the real estate sector. The release indicated that the index climbed at a yearly pace of 4.9 percent from the prior year; and although the numbers were low, they beat estimates for a 4.7 percent hike. On a month over month basis, Property Prices stayed flat subsequent to August's 0.2 percent advance. Furthermore, the Conference Board stated that Consumer Confidence plunged in November to the least since June on concerns over the job outlook. The index which gauges consumer sentiment slipped from a modified 94.1 to 88.7, while experts predicted it would read at 96.0.And lastly, the Federal Reserve of Richmond revealed that Manufacturing surged last month, although less than estimated. The index jumped to a seasonally adjusted yearly 4 after coming in at 20 in September.
Gold Prices soared to the highest level in nearly three weeks as market traders assessed the amount of stimulus the central banks may engage in versus the timing for a rate hike in the U.S. Bullion for immediate delivery climbed 0.4 percent and traded at $1,202.20 an ounce during the morning hours in London; Futures for delivery in February traded at $1,202.30 an ounce on the Comex Division of the New York Mercantile Exchange.
In the Euro region, although the majority of economic announcements were positive, the Euro lost ground against the U.S. Dollar. Germany published Gross Domestic Product data which confirmed that the country averted falling into a recession in the third quarter. But Spain posted lower than anticipated Producer Price Inflation, and Italy saw a drop in Retail Sales. Jean-Claude Juncker revealed that he will introduce a 315 billion Euro plan aimed at reigning economic growth in the Euro-zone. The program will be known as the European Fund for Strategic Investment, and it will rely on financial maneuvering to boost private investing. This plan will be unveiled at the December policy meeting, and officials hope to get the green light to go ahead with it by at least the middle of 2015. The Euro rallied versus the Yen following positive releases out of Germany confirming that the E.U.'s biggest economy averted a recession.
The British Pound slipped against the greenback, although a vast number of trading experts anticipate that the Sterling could remain to the upside when the Bank of England decides to raise the borrowing costs. On the data front, Mortgage Loan Approvals plummeted to a seventeen-year low, and central bank officials anticipate that the U.K.'s Inflation levels may remain low for some time. In fact. Mark Carney the BOE's governor predicts that Inflation could dip below 1 percent in the months ahead. Policy makers say this will be short-lived as consumer prices could still move closer to the 2 percent target as salaries begin to go up.
The Yen regained its footing against the U.S. Dollar following a speech by the Bank of Japan's Governor, Haruhiko Kuroda, in which he intimated that consumer prices are likely to go up towards the 2 percent target, and predicts that this may come about by April of next year. But economists are worried about the depreciation of the Yen and believe that a further drop could bring "adverse effects" for small companies. A number of monetary authorities say that further bond purchasing could heighten the risks the economy already faces, and it may be seen as a measure for financing financial deficits. The Yen regained its footing on the opinion of Forex strategists who stated that the currency declined too quickly.
The South Pacific currencies depreciated against their U.S. counterpart on Tuesday. New Zealand's Dollar dropped as the Reserve Bank offered lackluster Inflation Expectations. And the Aussie dipped versus the greenback on comments by the Deputy Governor of the Reserve Bank of Australia, Philip Lowe who predicted troubles for the economy.
EUR/USD- Germany Economy Shows Growth
The EUR/USD slumped on Tuesday even though the macroeconomic fundamentals were mixed. Germany showed that it missed slipping into a recession by a narrow margin, and posted growth of 0.1 percent for the third quarter of 2014. The release came in a day after showing that Business Confidence improved remarkably, following six consecutive monthly drops. Other publications confirmed that Spain's Producer Price Inflation disappointed with a reading of -0.2 percent following September's posting of -0.3 percent. The numbers fell short of the expected -0.1 percent hike. French Business Sentiment went up more than anticipated in the months of July through September, reaching a yearly rate of 99, up from 98. And Italy showed that Retail Sales declined unexpectedly from -0.2 to -0.1 percent in October. The positive German metrics reflect an increase of consumption in the private sector, a factor that helped boost the GDP.
GBP/USD- Mortgage Loans Fall
The GBP/USD depreciated as reports by the British Banker's Association divulged that the number of Mortgage Loan Approvals went down dramatically, plunging to the lowest level in seventeen months. The number declined to 37,100 in October, after printing at 39,300 in the previous month. Economists had predicted that loan approvals would only dip to 38,500. The currency pair remained to the downside after Mark Carney, the Bank of England's governor suggested that the economy is still fragile and could confront a number of problems arising out of geopolitical tensions and a slowdown in global economic growth. Mr. Carney indicated that the economies of the euro-zone and Japan have deteriorated, and reiterated that the British Inflation rate could plunge below 1 percent in the near future.
USD/JPY- Kuroda Remains Positive
The USD/JPY eased on Tuesday, but hovered close to a seven-year high despite comments by Haruhiko Kuroda, the central bank's governor, who suggested that the depreciation of the Yen could have a negative effect on the already fragile economy. In a speech delivered on Tuesday, Mr. Kuroda said that the weakening of the Yen benefits exporters, but may hurt consumers and small entrepreneurs. He did however emphasize that the economy is still showing signs that it could reach the BOJ's 2 percent inflation target. The central bank released the last policy meeting minutes, which revealed that several of the monetary authorities are against increasing stimulus as it may be perceived as a step towards backing the government's deficit.
NZD/USD-RBNZ Discusses Inflation
The NZD/USD declined after metrics revealed that the country's Inflation Forecasts went down in the third quarter, while demand for the greenback continued to be supported by data showing growth in the U.S. The Reserve Bank of New Zealand indicated that expectations for Inflation slipped to 2.1 percent in July to September, after coming in at 2.2. in the second quarter. Analysts say that although the percentage came close to the global targets of 2 percent, the dip in the outlook resulted from significant declines in oil prices. With the U.S. markets preparing to close for the Thanksgiving holiday, and expectations that trading could be light in the days ahead, traders will monitor releases due out on Thursday and Friday to see if the NZD/USD establishes a new trend.
Today's Outlook
Today's economic calendar shows that the U.K. will report on GDP. The U.S. will issue Core Durable Goods Orders, Durable Goods Orders, the Core PCE Price Index, Initial and Continuing Jobless Claims, Personal Spending, Michigan Consumer Expectations, Michigan Consumer Sentiment, New Home Sales and Pending Home Sales. New Zealand will publish the Trade Balance. And Australia will provide data on Private New Capital Expenditure.