Whats really moving the market today?

Longer term issues possibly-- Focus on previous IMF report on replacing USD as reserve currency...The IMF said Special Drawing rights or SDRs could help stabilize the global financial system.

The G8 plan to be issued Friday isn't expected to detail specific contributions The US will put in place a clear and credible medium-term fiscal consolidation framework," The draft said European countries will continue to address their government debt woes "with determination."

And another slice of market rumour whipsaw pie Fed discussing QE3.

Happy trading.

This is a follow-up to the previous post with a chart attached. The settings used on those indicators work well on the daily TF, not so much on the lower TFs (you'd have to find a way to filter out some of the signals on a lower TF).

Which one of those indicators really moved the market yesterday?

You realize I can't tell you that. It's a secret.

But still, you're giving out some hints. I'll take it as a puzzle.

waste of time.

say it or not. games are for children.

I'll show you mine if you show me yours

Inspectors find that Greece missed all targets - report

(Reuters) - Greece has missed all fiscal targets agreed under its bailout plan, a mission from an international inspection team found, putting further funding for Athens at risk, according to a German magazine.

LINK

Oh Spiegel how many pips thoust has brought me. It should be interesting to see how next week will play out.

Regards,
xXTrizzleXx

Greece denies missed fiscal targets, EU bickers

(Reuters) - Greece's hopes of averting default dimmed on Saturday as fears grew the country may have missed fiscal targets set by its lenders while euro zone policymakers bickered on how to respond to the deepening crisis.

Papaconstantinou vs Spiegel

Who will win?

BOJ Calls Japan Fiscal State 'Very Serious'


Lots of news on Japan debt after Fitch cuts outlook to NEGATIVE.

http://online.wsj.com/article/SB1000...328216964.html

For my daily trading the market is moved by my system of oscillators. I follow it and give thank you if it bless me with the green mana

Spiegel, of course. The review was supposed to be finished a week ago, but they delayed it in the hopes of finding something good or in the absence of that, at least get a deal done with the opposition party (or parties, doesn't really matter if there's one or two, it's all Greek to me) to get things going in the right direction in time for the next review. Greece is going to default soon, there's no getting around that.

XX, I was going to wait until tomorrow to publish this news piece myself, but since you've already gone ahead, here is the story that should be read alongside the Reuters piece.

IFR - Greek CDS uncertainty fuels dumping
Uncertainty over whether credit default swaps referencing Greece may trigger when the country restructures its debt has led some desks to reportedly dump Greek credit protection they fear could be rendered useless. The article goes on for quite a few more paragraphs and all of it is important. I'm not going to paste everything here so click here to read the full story.

-----------------------

Should things start unraveling then it's time to start watching the VIX, LIBOR-OIS and TED spreads again.If the shit really hits the fan and European banks go into liquidation mode look out for new dollar swap lines via the FED and a crash in emerging markets (Europe has a huge exposure to emerging markets).

---Week 22, 2011---


Most of the information this week comes from Danske. I'm not sure whether there was a general lack of newsworthy stories out there or whether I overlooked them, but compared to previous weeks we have a lot less reading to do. Suits me.

Market movers ahead

 

1. It’s time for US ISM and non-farm payrolls. We look for disappointment on both.
2. The ECB meeting on Thursday will attract plenty of attention. We believe Jean-Claude Trichet will say “strong vigilance” and thereby signal a July hike.
3. Euro Flash CPI should stay unchanged at 2.8%.
4. Chinese PMI to signal further slowing.
5. Industrial production and PMI in Japan will give more indication of the pace ofrecovery following the hit from the earthquake.

Global update

 

1. The growth scare is here to stay for a while, as lingering effects of higher oil prices and the Japanese earthquake will continue over the summer.
2. ECB and EU politicians continue to fight over the right strategy on Greece.
3. Euro PMI data signals some slowing but the Ifo business survey continues to point to a very strong German economy.
4. PMI and import data confirms slower growth in China as tightening measures take hold.

EUROPE

IMF says reports on Greece missing fiscal targets untrue
(Reuters) - The International Monetary Fund on Sunday dismissed reports that an international inspection team had found that Greece has missed all its fiscal targets. "Recent media reports claiming knowledge of the findings of the review mission are untrue," an IMF spokeswoman said in an e-mailed statement. "Our discussions with the authorities continue, are making good progress and are expected to conclude soon," she said.
bug: Your discussions are making good progress? What about implementing the reforms and austerity measures intended to cut spending to a level that at least attempts to match public revenues? What a strange way to tell a reporter that everything is going down the tubes, but the Greeks are all making verbal commitments so everything is fine. The Greeks have lied about the whole thing since the start. There's no reason to start trusting them now.

Minister says Ireland may need new bailout
(Reuters) - Ireland may need an extension of its existing EU-IMF bailout or a second rescue programme as it is unlikely it will be able to return to the debt markets next year, a government minister was reported as saying on Sunday.
Transport Minister Leo Varadkar is the first cabinet member to cast doubt in public about the government's aim of returning to bond markets next year. "I think it's very unlikely we'll be able to go back next year. I think it might take a bit longer ... 2013 might be possible but who knows?" Varadkar was quoted in The Sunday Times newspaper as saying.


Danske:
ECB
The ECB Governing Council on Thursday 9 June is the big event in the euro area. We expect Jean Claude Trichet to use the “strong vigilance” code words to signal that a 0.25% rate hike is scheduled for July. The message from Governing Council members in recent speeches is that there is less need for accommodative monetary and that the ECB will act if inflation remains high. The staff’s macroeconomic projections will show upward revisions for both growth and inflation, which will underpin the case for further rate hikes even though the OECD argues that the ECB should take a pause. It is also time for a rendezvous on full allotment. The euro area banking sector is still having a hard time – in particular in periphery countries – and the recent bank lending survey showed that banks are continuing to tighten credit standards, so we expect the ECB to continue with full allotment at least until the December meeting.

Elections in Portugal
The general elections in Portugal on 5 June are likely to be a close call. The Socialists led by caretaker Prime Minister, Jose Socrates, have recovered in the polls since the government fell in March and now stand just behind the centre-right opposition. The new government will have limited room for manoeuvre as substantial fiscal tightening is a precondition for receiving aid from the EU and IMF.

Greece
The IMF is expected to finalise its fourth review of the Greek economy under the stand-by arrangement next week. It is likely to show that Greece is having difficulties keeping up the planned reform momentum, but the IMF will nevertheless pay the next EUR12bn tranche for Greece due next month. If not, it would not only be seen as a Greek failure, but also as the IMF failing after the DSK scandal.
bug: Obviously this expectation by Danske doesn't take into account the Troika review which according to Spiegel will be very grim indeed.

EZ inflation
Euro area flash inflation on Tuesday is expected to show that inflation remains at 2.8% in May despite the recent decline in oil prices. The German unemployment rate released on the same day is set to decline to 7.0% for May while the euro area unemployment rate remains at 9.9% for April. Final PMIs for manufacturing (Wednesday) and services (Friday) will confirm a decline in growth indicators across Europe. German industrial production and trade data on 8 June will get some extra attention following the mixed signals from the weakening of PMI and the all-time high Ifo current conditions. The day after we will get revised Greek national account data for Q1. There is a risk that the somewhat odd 0.8% q/q Greek GDP growth in Q1 will be revised substantially down.

UNITED STATES

US markets are closed on Monday due to Memorial Day.

Debt auctions:
Tuesday - 3 month Bill, 6 month Bill
Wednesday - 4 week Bill, 52 week Bill
bug: Watch out for those plummeting yields! The economy is showing signs of weakness and with the supply of new bonds smaller than normal due to the debt ceiling being reached we could see some pressure on US yields helping drive the dollar even lower. We already saw that last week, this week should be no exception.

Danske:
ISM
In the US, ISM manufacturing and non-farm payrolls are due for release next week. ISM manufacturing for May is set to decline following weak regional business surveys. We expect ISM to drop more than expected to 57.8 (consensus: 58.0) from 60.4 in April. Apart from weaker regional surveys, ISM manufacturing is also at a much higher level than is reflected in the hard data for industrial production. And the effect of the Japanese earthquake may start to hit more seriously now (before rebounding again in the coming months). Ahead of ISM manufacturing, Chicago PMI will be released ahead of ISM and we expect a decline to 62.0 in May (consensus 63.0) from 67.6 in April.

Employment
Non-farm payrolls will be very interesting this month. The increasing trend in jobless claims has pointed to job creation stalling somewhat. Although it may be distorted by auto shutdowns etc., this could also affect the payrolls data. ISM-service employment has also weakened recently pointing to weaker service job growth. We look for a sub-consensus rise in payrolls of 180,000 (consensus: 200,000) following the 244,000 increase in April. Overall this is still decent job growth but any disappointment could add to growth fears. A few hours after the payrolls data, the ISM non-manufacturing index will be released. This will be quite interesting as it dropped significantly in April. We look for a small rebound to 54.0 from 52.8 in April (consensus: 54.5).

JAPAN

Danske:
In Japan, data released next week should give us a clearer view of the impact from the earthquake on the Japanese economy not least on how fast the Japanese economy will recover from the sharp short term contraction. The most important data is industrial production released on Tuesday. They are particularly important because in addition to industrial production for April, production plans for May and June will also be released. While production plans suggested that industrial production should recover 3.9% m/m in April, a 6.9% m/m drop in exports in April suggests actual industrial production could be considerably weaker and we expect it to have been broadly flat in April. However, productions plans for May and June should indicate a strong recovery in production in the coming months. For that reason we also expect the Markit/JMMA manufacturing PMI to improve from 45.7 in April to 47.5 in May.

GLOBAL & COMMODITIES

Danske:
China
In China the most important release is the NBS manufacturing PMI for May. The flash estimate for China’s HSBC manufacturing PMI has already been released and showed a slight decline in May to 51.1 from 51.8 in the previous month. There is considerable seasonality in the NBS manufacturing PMI and seasonality tends to depress NBS PMI in May. For that reason, we believe we should be prepared for a relatively sharp decline in NBS PMI from 52.9 to 51.0 in May.

I'm sorry but how does that help the rest of us reading this thread? You're a newbie and you want to increase your post count past 10, I get it. But could you please do it in the rookie section somewhere at the very least? Thanks.

Although there are scores of traders who have burned their fingers trying to short Japanese sovereign debt it seems like things may be starting to move in the text-book economic direction. An aging population that is beginning to retire and draw down on their pensions, a natural disaster and a massive nuclear meltdown (according to latest reports it's now even worse than Chernobyl in terms of contamination, but you won't hear that on CNN or even Japanese news, see Spiegel story on why that is so), rising commodity prices and finally, an uptick in inflation amidst two quarters of negative GDP growth.

LOL

Thanks for the heads-up! You never seem to be short of useful information. It horribly reminds of Chess, where Greece's King is in a vulnerable corner of the board, and the Queen and Rooks are coming to get it...there aren't many moves left...

Quote

Disliked

IMF says reports on Greece missing fiscal targets untrue

Looks like we have Papaconstantinou and the IMF (spokeswoman) in one corner, and the Spiegel in the other. Whose integrity will be the first to fold?

Regards,
xXTrizzleXx

All very interesting and your research is appreciated. However the question us amateurs want answered is what effect is this going to have on the forex market? Is the yen going to get weaker against Euro or GBP for instance?

Rgds

jmtini,
If we assume that textbook economics apply we would see the yen weaken in the short run. The net effect shouldn't be too big, because foreigners own only a marginal amount of Japanese government debt and because Japan is a capital exporting country. The yen is still considered a safe haven currency (it has benefited a great deal from foreigners looking to preserve their purchasing power, the same goes for CHF) and it would take a lot more than an outlook downgrade to reverse the flow of funds into Japan.

By the way, the Spiegel story I mentioned on Japan's nuclear industry is available here.

My pleasure.

As far as comparisons go I think the whole situation is very similar to what happened in Europe after World War I. In this comparison, the Greek government is the Bank of England with Montagu Norman at the helm who desperately tried to hold on to the gold standard bringing on a horrible deflation*, massive unemployment and a flight of capital (mostly into the US and France). They did this just to save face and prove themselves that they could maintain their old peg. Likewise, the Greeks are trying to save face telling everyone this crisis is just temporary and there was nothing wrong with spending too much. In the end the BOE had to devalue. Likewise, the Greeks will have to learn how to live within their means.

------
*Britain suspended the gold standard during the war, which led to inflating prices. After the gold standard was reinstated they didn't adjust it for inflation, which meant prices had to adjust downward (internal devaluation).

-----------MORE NEWS-------------

I forgot to mention this yesterday, but due to the holidays in the US there will be no coverage from Gerry or Jamie on forexlive today. Also, tomorrow is the last day of May, which means there is bound to be some end of month rebalancing (see Q&A at forexlive for more).

Europe/Greece Deal Would See EU Intervene in Economy: Press
SINGAPORE (MNI) – Negotiations are continuing on a deal that would see new loans for Greece and European intervention in tax collection and sales of state assets, the Financial Times reported, citing people involved in the talks. The paper said the deal would also include more austerity measures and incentives designed to have private holders of Greek debt voluntarily extend repayments. The paper said the new deal would result in the International Monetary Fund and Eurozone countries lending an additional E30 billion to E35 billion to the E110 billion promised in the bail-out package last year. Another E60 bln to E70 bln that is needed could be raised apart from the loans, the paper quoted officials as saying. (LINK)

Heya bug,

Regarding the textbook economics definition, are you implying that those effects you listed above such as inflation, an aging population etc. would push yields upwards to compensate? (ie. Depressing bond prices?)

If so, then shouldn't rising yields be bullish for the Yen as investors seek to take advantage of the higher yields, in a similar manner to how rising US yields tend to bullishly influence the USD/JPY rate? I originally viewed it in the same light as you, but my inability to reconcile it with how rising US yields affect the spot rate forces me to look at it that way.

Thanks,
xXTrizzleXx

Do you have some kind of visual data for that? It would be interesting to see the relationship between them. Something like the debt exposure chart i attached.

thanks

nice diagram
you can clearly see who owns the europe!

do you have a debt diagram betwen Germany,France & GB?