Fundamental News: July 11, 2013
The market saw tremendous volatility for a few hours when Bernanke’s speech and the US FOMC Meeting Minutes crossed the newswires. Fed Chairman Bernanke sees accommodative US monetary policy is suitable for the “foreseeable future.” The minutes suggested that there is no immediate need to end the QE stimulus. Around half of the Federal Reserve board prefer to end the bond purchases within this year, and many sees labor market gains is required before tapering the stimulus.
Earlier today, Japan’s Cabinet Office made public the latest Core Machinery Orders data. Orders surged in 10.5 percent in May, surprising analysts who expected a 1.9 percent rise after it fell 8.8 percent during the previous month. Orders from non-manufacturers beat those for manufacturers, 25.4 percent versus only 3.8 percent. March registered the first double-digit gain for this year (14.2 percent).
In Australia, Melbourne Institue’s Survey of Consumer Inflationary Expectations showed a slight advance of 2.6 percent in June, following a 2.3 percent reading in the previous two months. Meanwhile, Australian Bureau of Statistics revealed that local employment increased by 10,300 to 11,668,300 in June, with Participation Rate at 65.3 percent. The jobless also increased to 699,700 with Unemployment Rate at 5.7 percent (highest since October 2009).
BOJ Chief Kuroda, in his press conference and Monetary Policy Statement today, kept monetary policy unchanged. He said the local economy is resuming recovery and expects Consumer Price Index and Gross Domestic Product to advance in line with BOJ’s forecasts back in April. He also expressed optimism in Japan’s overall employment, domestic demand, and China’s growth.
Soon, the US Labor Department will reveal the latest Unemployment Claims data, followed by the US Federal Budget Balance data later in the afternoon.
Gold gapped up early today following Bernanke’s speech and the FOMC minutes, and this brought price just a few dollars below the coveted $1,300 level. Currently, gold has stabilized around the $1,280s, but we could still see further easing later.
Oil continued higher for a fifth straight day to reach $106.50 today, but made a quick U-turn which saw price trade through $105 shortly thereafter. Bulls might have difficulty absorbing sales at this point, so we could expect lower, and more normal, prices soon. Keep an eye on the $100-$103.50 area.