Weekly Market Commentary
4th March 2012
Provided by TA Knowledge
Welcome to the Weekly Market Commentary from DGCX, providing you with a snapshot of what's happening in the energy, precious metal and currency futures markets.
The commentary and analysis included in the DGCX Weekly newsletter is provided by TA Knowledge, a leading UK-based provider of news and intelligence.
Please note that the observations and views expressed in this newsletter do not reflect the views of DGCX and are solely the view of the writer (TA Knowledge).
Economic Data Overview
Gold fell sharply last week as a lack of physical demand to sustain the well-established gains of recent months was undermined by the fact that the mention of a QE3 program was to be omitted by Ben Bernanke in statements. Gold bulls want low US bond yields and a weak dollar. The prospect of continued low interest rates and but no further new bond purchases had the impact of capping bond markets and supporting the dollar.
European leaders have signed a growth agenda and a deficit control treaty. "We're not out of the economic crisis yet but we are turning the page of the financial crisis," French President said this week, after the latest summit on the European crisis. The private debt issue which asks institutions to take a 70% haircut on Greek debt has yet to be agreed. A further Greek related issue is the news that credit default swaps will not be triggered by this move. This had the impact of allowing investors to move funds out of safe haven markets like treasuries and gold.
European Finance ministers will hold a conference call on March 9 to gauge the take-up of the debt swap offer. Failure to accept could lead to even bigger losses for European banks. This week's ECB debt tenders had a take-up of an estimated 215 billion euro as banks continue to repair balance sheets with cheap ECB funds. This type of easing within the financial system helps European banks but may do very little to filter credit through the broader economic system. There is an increased consensus in the market that due to the continued debt tenders being issued by the ECB, interest rates in Europe will stay at 1% through this year.
The problem of generating growth in economies which are already crippled, by imposing further austerity measures also showed signs of breaking this week. Spain independently increased their budget deficit target from 4.4% to 5.8% of GDP and told reports it was a sovereign decision made by Spain upon which they did not consult with European authorities ..Read more