GBP/USD Pair Update

Tumbling 13 points, the GBP/USD is trading at 1.6154; meanwhile, the US dollar is gaining momentum far ahead from housing the US data due later in the NA session. Yesterday saw the pound giving back some of its gains. The sterling went up versus the green bucks last Monday; while traders were buying it following their sharp lose last week, setting its near-term direction to be determined by data growth of UK.

The third-quarter domestic of product numbers last Friday provided the currency some support; as this currency has been plagued by increasing suspicion on the reliability of Britain’s economic recovery in facing the degenerating outlook in Europe.

Judging by other surveys already released; the retail sales numbers, maybe supportive of the milder growth outlook that has led investors to expect a first increased in interest rates for the 2nd half of next year.

It is the most significant loss of sterling within eight months versus the euro for last week following back the re-pricing of expectations on rates

ECB to Purchase Italian Bonds

ECBThe ECB acquired covered bonds from Italy under its program of purchasing assets.

Debt from Intesa San Paolo SPA Banking Group in Turin was part of the acquisitions.

The ECB purchased short-dated currency notes from France at BNP Paribas SA as well as Societe Generale SA. It also got securities (Spain) from other lending facilities yesterday.

The ECB got involved in the 2.6 trillion-euro bond market after the central bank president divulged plans to shore up access of private corporations and households to such financing. The ECB also included asset-backed securities in said program. Central Bank President Mario Draghi seeks to increase the bank’s balance sheet by up to 1 trillion euro to hold off deflation in the euro region.

It is widely believed that these bond purchases are designed to utilize quantitative easing in the EU and augment the ECB’s own balance sheet. These purchases are not complicated compared to acquiring government bonds.

The governing council of the European Central Bank is not thinking about purchasing corporate bonds, according to anonymous officials of the institution. The spokesperson of the ECB did not make any reaction to this claim.

The standard profit on euro-denominated covered bonds went down two basis points which was 0.54 percent. It approached a record low of 0.49 percent which was set last October 15.

 

AUD/USD Pair

AUD/USD was trading at 0.8810, and went up 0.29%,; while USD/JPY tandem was changing hands at 106.83, and went down 0.11%; finally, the EUR/USD team was trading at 1.2799, and declined at 0.01%.

China reported that the 3rd quarter GDP went up to 7.3% meeting their expectation this year; while September’s industrial output climbed at 8.0% for the year, over the forecasted 7.5% and gaining 12% annual retail sales in the same month way above the11.8% seen.

Versus the other major currencies, the dollar overnight traded largely lower in the midst of a tightening range of trading as investors priced that a possible softer Asian and European economies could lessen the recovery of the U.S. .

Meanwhile, many investors have valued a brisk trading global economy; anxiety over the U.S. may sense some aftermath allowing the green bucks to sap on Monday.

The new stimulus program launched by ECB on Monday covered purchasing bonds in its effort to escalate liquidity in the region.

However, USD weakened versus the euro on matters that although next week will see the Fed Reserve ending its monthly bond-buying program; expected rate hikes may follow in 2015 that they expect once to calm the economies of Asia and Europe so it would not critically affect the U.S. recovery.

The index for the green bucks, tracking the performance of the USD against a crate of six other major currencies, ascended 0.04% at 85.08.

China’s Economic Growth

chinaThe economic growth of China surpassed projections of estimates during the previous quarter as demand for exports accelerated and services spread out reinforcing the government’s case to stay away from broader stimulus measures.

According to the Chinese Government’s Statistics Bureau, the nation’s GDP increased 7.3 percent from July to September compared to the past year.

This beat the 7.2 percent median estimate but the expansion was still the slowest dating back to the first three months of 2009.

Government has slackened restrictions in home-purchase while China’s central bank infused liquidity to lenders as they strive to control property- generated deceleration. The government also gave up comprehensive interest rate reductions and suggested that it will endure a weaker expansion. This left the economy going towards the slowest growth for one whole year since 1990.

Reasonable exports and growing domestic demand checked the overall slowdown.

Industrial production increased eight percent in September as against the 7.5 percent median valuation of analysts and the 6.9 percent average in August. However, it was the slowest in over five years. Retail industry sales went up 11.6 percent.

Stocks dropped in China and Hong Kong because of speculation that enhanced growth will cut back prospects for big-scale stimulus. The Yuan and Australian dollar strengthened for the second successive day.

The People’s Bank of China has evaded reduction of standard interest rates or reserve requirements of banks to promote growth. It also lowered interest rates for lenders with regards to 14-day agreements for re-purchase for the second time this month.