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Extra Forex Markets Research by rahul.khanna

GBP is likely to gain further after unemployment rate fell to a 6-1/2 year low. Every aspect of the data was positive, with unemployment rate falling to 5.7% in December (consensus 5.8%), job creation of 103K in last quarter 2014 (consensus 50k), and the employment rate is 73.2%, last seen during December 2004 to February 2005 (and has never been higher since comparable records began). Next key data release will be Friday when retail sales come out, which in our view is likely to be above consensus, in which case a further lift to GBP is likely.

EURUSD and GBPUSD are quite ...

EUR is likely to weaken due to Grexit becoming a very likely scenario after Greece's Prime Minister Alexis Tsipras has stated that Greece will not seek a bailout extension, which runs out on 28 February. Amidst all of this we see upside for USD and JPY on risk off trade. Also given the situation, things are likely to get worse before they get better

The biggest challenge to Greece will come from Germany who sees this as the first attempt of descent from among the ailing nations. What Greece wants is not freebies but instead a ...

Manufacturing growth slowed across Asia and Europe in November, shifting focus on policy makers, especially at the European Central Bank, who have failed to prop up growth. German, France & Italy have all reported declining factory activity.

Manufacturing PMI (Euro zone) numbers have dropped to 50.1, lowest seen in over 18 months, with the numbers so close to 50 below, any help from ECB will be welcomed. Focus will shift onto the ECB meeting this week; we have heard conflicting remarks from various ECB members and more rhetoric by ...

Japan's easing program will make or break the third-largest economy in the world. Crucial points are that apart from a weak yen and high liquidity there is not much else to cheer on at the moment. The economy has shrunk rapidly over the last two quarters and the average Japanese citizen is feeling the heat of a high tax, low growth, and a high inflation environment. The wealthy on the other hand could not have been happier as the Nikkei continues to rally.

The common man in Japan may have little to cheer as wage ...

The BOJ has accelerated the JPY's fall by surprising the market, earlier by announcing above expected QE and recently by hinting delays in raising sales tax. Idea is to get people spending, and cost push inflation is the path Japan is taking. Abe however, ...

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All three currencies we recommended (13 October) to be affected badly – RUB, NOK and CAD weakened as oil took a hit. We take a fresh look. (Previous article here)

US economic data has been relatively decent and we see FED stopping its bond purchases, bringing an end to its QE program. Fed will still have a balance sheet of $4.48 trillion going forward and that will keep yields low than they would otherwise be.

Policy makers are likely to express concern on inflation and danger it poses on economic performance. Hence, Fed is likely to keep the language saying target rate to stay near zero for a “considerable time” and “significant underutilization” in labour market. ...

ECB inaction will lead to either a liquidity crisis or slow growth for the rest of the decade, one indication of such a possibility is the dropping 5y5y forward inflation swap yields which broke below 2% in August/September and has only recently stabilised on ...

I would like to use USD Index chart to paint a picture of how behaviour of market participants can ebb and flow. Most common feature is the herd behaviour (increasingly due to greater role of the retail traders) to overestimate news impact by following a base ...

Oil price adds to woes of deteriorating global economy, commodities bloc already suffering the brunt of slowing global demand. However, currencies to be worst affected going forward will be RUB, CAD & ...

Commodity bloc currencies have declined versus USD since July, but the fall has been fairly sharp since 4th September, with AUD, NZD having dropped almost 6%, well above others currencies. CAD has been an exception falling only 2.5% despite commodity markets ...

USD is rallying sharply since the start of July. S&P 500 Equity Index and U.S. 2-year yields have both had a fall, but despite this, scope exists for a further upside as market factors in a rate rise mid 2015. However, disappointing data over the coming days may be the likely trigger contrarian seeks, for a correction in USD before upside resumes.

Emerging market currencies sell-off accelerated from the start of September as liquidity continues to drain up with QE coming to an end in October along with positive data for US. We will ...

We see a weaker EUR, once more details of the (extent of) QE become apparent in October. Until then, EUR will go into a sideways range as most of the QE expectation is already reflected in the rates. EURUSD is one pair we see weakening from late this year to early 2015 to around 1.2500, given the divergent policy between US and Euro-zone- US is winding up its QE program in October while ECB will start its QE.

Firstly, lets clarify the definition of QE. Draghi said “QE is an outright purchase of assets … rather than accepting ...

Slight pause in USD strength ahead of FOMC meeting and Janet Yellen press conference, which will set the tone for US interest rate path & USD.

Emerging markets have declined since late August against USD. While emerging currencies like ...

EUR will continue to plummet as long as Draghi doesn't provide a "concrete policy", however, that might not be until a few months. The ECB meeting next week in September will be crucial, in terms of assessing: likelihood/timeline for QE. Draghi wouldn't mind a weaker EUR, infact will try to push it lower, but the problem for ECB is that private lending by banks to businesses are 1.6% lower than an year ago, with most of the money flowing in to stocks & bonds. If TLTRO doesn't change this trend, we have no reason to believe that inflation will pick up, now at 0.3%, a ...

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