We Should Meet More Often!
The high volatility on the currency market on Thursday was due to investors' strong anxieties regarding the European Union summit that is scheduled for October 23. The EUR/USD pair managed to rise to 1.3850 yesterday, after which it fell 200 points and then again climbed to 1.3800. The British pound acted similarly €" the GBP/USD pair rose to 1.5850, fell to 1.5680, and then again rose above 1.5800.
Information yesterday was very contradictory: in the first half of the day, news came out that the European stabilization fund will be expanded and divided into two parts (a temporary and a permanent segment), and that the right to buy aftermarket bonds from European countries would also be given. Also being discussed is the possibility of using a borrowing fund and eliminating the ceiling on anti-crisis spending.
After these positive rumors on the market, then came news of the disagreements between the heads of Europe (France and Germany), who are still not able to agree on the details of a plan to resolve the debt crisis. Rumors surfaced that the EU summit might be postponed due to the futility of holding it on a weekend. Investors have switched to buying up dollars and Swiss francs, which has again become popular, just as it always has in times where the National Bank of Switzerland keeps mum for so long.
However, some happier news did come along €" the EU Financial Services Commissioner Michele Barnes reported that a possible ban on assigning sovereign credit ratings in certain circumstances is under consideration. It may be prohibited to assign a rating to a country if it is receiving financial aid from the IMF or EU. However, Barnes said that work on ratings agency reforms is still not complete.
Nevertheless, European politicians have apparently decided that they are not running away from problems again and are therefore not rescheduling the summits. On the contrary, they decided that the more often they meet, the more productive and happier they are. Therefore, today at around 4:00PM (Moscow Time), the EU ministers of finance will meet in Brussels, where they will try to €lay the groundwork€ for Sunday's summit. Yesterday, due to announcements by France and Germany that the EU requires more time to prepare a €global and forward-looking€ agreement, it was decided to conduct yet another summit on October 26. News of this stirred up activity on the markets near the end of the day.
Also at the end of the day yesterday, risk asset markets were supported by positive macroeconomic statistics from the other side of the ocean: the Federal Reserve Bank of Philadelphia's manufacturing activity index rose to 8.7 versus a predicted 9.6, which signifies a significant improvement in this sector.
At 1:00AM (Moscow Time) today, Microsoft reported for the first quarter of the 2012 fiscal year and fully lived up to analysts' expectations: net earnings per share (EPS) were 68 cents.
Turning away from Europe, RoyalMaxBrokers analysts are focusing their attention on the publication of Canada's main inflation indicator, scheduled for 3:00PM (Moscow Time), as well as corporate reports from General Electric, Verizon Communications Inc, and, everyone's favorite, McDonald's, which are to be published at 2:30PM, 3:30PM, and 3:58PM (Moscow Time), respectively.
In trading on the COMEX, the most actively traded gold futures for December delivery dropped $34.10 in price, or 2.1%, to $1612.90/oz., the lowest closing level since September 26.
Starting from Monday, gold has been falling in price all week. The main reason for the drop in trading on Thursday was again the situation in the Euro zone: investors fear that the measures necessary for restoring financial stability in Europe won't be decided upon at the October 23 summit in Brussels, which will in turn lead to a drop in the price of risk assets and force investors to sell gold to cover their losses on other markets. Still, the current price of gold looks attractive from a fundamental point of view.
Silver dropped in price even more than gold. Silver futures for December delivery fell 3.2% during trading to reach $30.281/oz.
In trading on the New York commodities exchange, quotes on light sweet crude oil futures for November delivery dropped 81 cents to $85.30 per barrel, while December futures dropped 22 cents to $86.07 per barrel. Brent oil futures for December delivery on the ICE rose 1.3% in price, or by $1.37, to $109.76 per barrel. Oil quotes were reacting to the uncertain situation in the Euro zone and to anxieties on US demand for energy resources. In general, oil prices have been in a sideways trend recently since both positive and negative information has been entering the market.
RoyalMaxBrokers analysts report that they did not see any perceptible effect on the price of oil following the arrest and subsequent death from injuries of Libyan leader Muammar Gaddafi.
Information yesterday was very contradictory: in the first half of the day, news came out that the European stabilization fund will be expanded and divided into two parts (a temporary and a permanent segment), and that the right to buy aftermarket bonds from European countries would also be given. Also being discussed is the possibility of using a borrowing fund and eliminating the ceiling on anti-crisis spending.
After these positive rumors on the market, then came news of the disagreements between the heads of Europe (France and Germany), who are still not able to agree on the details of a plan to resolve the debt crisis. Rumors surfaced that the EU summit might be postponed due to the futility of holding it on a weekend. Investors have switched to buying up dollars and Swiss francs, which has again become popular, just as it always has in times where the National Bank of Switzerland keeps mum for so long.
However, some happier news did come along €" the EU Financial Services Commissioner Michele Barnes reported that a possible ban on assigning sovereign credit ratings in certain circumstances is under consideration. It may be prohibited to assign a rating to a country if it is receiving financial aid from the IMF or EU. However, Barnes said that work on ratings agency reforms is still not complete.
Nevertheless, European politicians have apparently decided that they are not running away from problems again and are therefore not rescheduling the summits. On the contrary, they decided that the more often they meet, the more productive and happier they are. Therefore, today at around 4:00PM (Moscow Time), the EU ministers of finance will meet in Brussels, where they will try to €lay the groundwork€ for Sunday's summit. Yesterday, due to announcements by France and Germany that the EU requires more time to prepare a €global and forward-looking€ agreement, it was decided to conduct yet another summit on October 26. News of this stirred up activity on the markets near the end of the day.
Also at the end of the day yesterday, risk asset markets were supported by positive macroeconomic statistics from the other side of the ocean: the Federal Reserve Bank of Philadelphia's manufacturing activity index rose to 8.7 versus a predicted 9.6, which signifies a significant improvement in this sector.
At 1:00AM (Moscow Time) today, Microsoft reported for the first quarter of the 2012 fiscal year and fully lived up to analysts' expectations: net earnings per share (EPS) were 68 cents.
Turning away from Europe, RoyalMaxBrokers analysts are focusing their attention on the publication of Canada's main inflation indicator, scheduled for 3:00PM (Moscow Time), as well as corporate reports from General Electric, Verizon Communications Inc, and, everyone's favorite, McDonald's, which are to be published at 2:30PM, 3:30PM, and 3:58PM (Moscow Time), respectively.
In trading on the COMEX, the most actively traded gold futures for December delivery dropped $34.10 in price, or 2.1%, to $1612.90/oz., the lowest closing level since September 26.
Starting from Monday, gold has been falling in price all week. The main reason for the drop in trading on Thursday was again the situation in the Euro zone: investors fear that the measures necessary for restoring financial stability in Europe won't be decided upon at the October 23 summit in Brussels, which will in turn lead to a drop in the price of risk assets and force investors to sell gold to cover their losses on other markets. Still, the current price of gold looks attractive from a fundamental point of view.
Silver dropped in price even more than gold. Silver futures for December delivery fell 3.2% during trading to reach $30.281/oz.
In trading on the New York commodities exchange, quotes on light sweet crude oil futures for November delivery dropped 81 cents to $85.30 per barrel, while December futures dropped 22 cents to $86.07 per barrel. Brent oil futures for December delivery on the ICE rose 1.3% in price, or by $1.37, to $109.76 per barrel. Oil quotes were reacting to the uncertain situation in the Euro zone and to anxieties on US demand for energy resources. In general, oil prices have been in a sideways trend recently since both positive and negative information has been entering the market.
RoyalMaxBrokers analysts report that they did not see any perceptible effect on the price of oil following the arrest and subsequent death from injuries of Libyan leader Muammar Gaddafi.