Intraday Market Thoughts

Central Banks Preview & Latest Premium Trades w/ Silver Charts

by Kyle Morrison
Aug 22, 2011 6:52

Currency concerns dominate central banks with Bank of Japan eyed regarding yen rise. Swiss National Bank also in focus despite recent CHF weakness, ECB set to continue bond buying, while Fed eyed as Jackson Hole looms. Gold rises and oil weakens. Ashraf's latest 8 Premium trades, including extensive charts for silver.

Last weeks new high in the Japanese yen has prompted further speculation that could see the Bank of Japan embark on further stimulus measures to try and weaken the yen, certainly the brief drop below 76.00 against the US dollar prompted some very rapid short-covering suggesting markets remain nervous about the prospect of intervention. Finance Minister Noda has stated that the government will take decisive action if needed in FX markets maintaining that he is concerned about the currency's continued appreciation.

The Swiss National Bank is expected to continue its recent attempts to weaken the Swiss franc, though the best they can probably hope for is to slow it down, given that the Japanese have been trying for years to weaken the yen without too much success.

The ECB is also expected to continue to buy Italian and Spanish bonds in an attempt to keep the borrowing costs down for these vulnerable countries, but it is not being helped by continued fragmented leadership from Europes leaders. On Friday Olli Rehn said that the EU may look at drafting legislation for a euro bond, while Belgium and Italian ministers called for the implementation of such a measure. Angela Merkel, on the other hand remained strongly opposed stating that euro bonds would require European Union treaty changes that would take years and would probably be illegal under the German constitution.

The disappointing economic data in the US last week has prompted fears of a significant slowdown in the US economy and even fears of a double-dip recession, with further downgrades in the growth forecasts for the US economy late on Friday when Goldman Sachs downgraded its forecasts for the third time in a month, for 2011 and 2012. Following on as it did from downgrades from Morgan Stanley, JP Morgan and Citigroup, attention is switching to this Fridays Jackson Hole Symposium with some market participants hoping for further stimulus measures from the Fed. This could well be wishful thinking with inflation rising and last weeks shocking fall in Philadelphia Fed activity, the odds of QE3 are starting to look very slim indeed.

There is also growing political opposition within the US which could well make Bernankes job a lot harder in that respect, not to mention opposition within the FOMC.

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Gold prices continue to hit record highs against the US dollar as investors continue to speculate about this weeks meeting at Jackson Hole and events in Europe. Oil prices could well show further weakness as recent events in Libya continue to unfold.


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