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Fundamental News: June 20, 2013

Federal Reserve’s Ben Bernanke expressed yesterday, in their latest FOMC press conference, that the Fed may initiate unwinding its $85 billion monthly bond purchase program later this current year, citing US economic improvements. The FOMC noted improvements have been seen in the labor and housing market, as well as in household spending and business fixed investment. However, the committee concurred that the unemployment rate remains high, but expects it to decline as the economy advances at a moderate pace. The Federal Funds rate was maintained at less than 0.25 percent, as expected.


Today, Statistics New Zealand declared that Gross Domestic Product has advanced at a slower pace during the first quarter of this year, gaining 0.3 percent compared to a 1.5 percent climb in the previous quarter. The latest gain was led by the design and services and construction industries.


China’s HSBC Flash Manufacturing PMI contracted this month, declining for the third straight month after reaching 51.7 last March. The decline was pointed to interbank borrowing costs which jumped the most in seven years.


In Europe, PMI was also reported. France, Germany, and the Euro-area’s Flash Manufacturing PMI and Flash Services PMI stood at 48.3 and 46.5, 48.7 and 51.3, and 48.7 and 48.6, respectively.


In Switzerland, Libor rate remained at less than 0.25 percent, as the declared by the SNB earlier.


Meanwhile, UK Retail Sales surprised to the upside, gaining 2.1 percent in May, much stronger than the 0.8 percent median forecast by analysts surveyed.


Soon, the market will witness the release of US Unemployment Claims, US Flash Manufacturing PMI, US Existing Home Sales, and US Philly Fed Manufacturing Index.


Commodities News


Gold finally made a big move in a single direction, inspired by the volatility in the markets brought about by Bernanke’s comments last night. Price punctured through $1300 level, bringing price into fresh territory. This now exposes the $1,200-50 area. Buyers should be careful now.


Following Gold’s price action, oil also plunged today, after reaching a high just above the $99 level yesterday. Downside risks point to $94-$95. A quick recovery back to the $98s would negate the current decline.

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