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Friday, 29 August 2014

Dollar boosted by U.S. GDP report; euro sags on Ukraine

 

Packs of U.S. one hundred dollar bills are counted at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking

 

The dollar got a modest lift on Thursday from better-than-expected U.S. economic data and a worsening of the Ukraine crisis that weighed on the steadily declining euro.

Other safe-haven currencies also rose as Ukrainian President Petro Poroshenko said Russian forces had entered his country and the military conflict was intensifying after Russian-backed separatists swept into a key town in eastern Ukraine.

"It's an invasion in all but name," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York. "The situation now is lurching in a more worrisome direction."

The dollar index, which jumped in early U.S. trading after the U.S. government reported the American economy grew at an upwardly revised 4.2 percent during the second quarter, was last up 0.10 percent at 82.499.

The value of the dollar versus the basket of six major currencies has this week repeatedly set new 2014 highs amid a greenback rally that began in early July.

“The basic story is still in place of a solid rebound (in the economy) in the second quarter after a depressed first quarter," said Doug Handler, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. "These numbers will not change the Fed’s outlook."

The Commerce Department had initially estimated that U.S. gross domestic product expanded at a 4.0 percent annual rate in April, May and June. The 4.2 percent rate reflected upward revisions to business spending and exports and was the fastest pace since the third quarter of 2013.

A separate, Labor Department report showed the number of Americans filing new applications for jobless benefits slipped 1,000 to a seasonally adjusted 298,000 last week. It marked a second week of consecutive declines and underscored brightening labour market fundamentals.

Safe-haven currencies, the yen and the Swiss franc, rose in global currency markets. The dollar was last down about 0.1 percent against the yen at 103.70 yen and flat against the franc after hitting a low of 0.9127 francs.

The euro hit a 21-month low against the Swiss franc of 1.2052 francs per euro on trading platform EBS after the news from Ukraine and was last off 0.1 percent at 1.2061 francs.

Against the yen, the single currency fell to a two-week low of 136.41 yen per euro and was last at 136.72, down for the day by 0.2 percent. The euro was trading at $1.3179, down about 0.1 percent.

Selling of the euro, which traded at nearly $1.40 in May, has been driven over the last week by stepped-up speculation that European policymakers will quicken monetary loosening as a way to boost economic growth.

But on Thursday euro selling accelerated after Ukraine accused Russia of moving troops across its border.

Reference: Michael Connor  Reuters

Wednesday, 27 August 2014

Interview with top trader Paul Bratby

Here is a great interview with Paul Bratby, its well worth watching …



 

Reference:

http://www.ustream.tv/recorded/51928861

Tuesday, 26 August 2014

Euro, bond yields dip as looser ECB policy eyed

 

A man looks up as he is reflected on an electronic board displaying Japan's Nikkei average outside a brokerage in Tokyo August 11, 2014. REUTERS-Toru Hanai

 

The euro hit its lowest level against the dollar in nearly a year and euro zone government bond yields fell to record lows on Tuesday on expectations the European Central Bank might ease monetary policy as soon as next week.

The single currency fell as low as $1.3178 in Asian trade, its weakest since Sept. 9, before recovering slightly, in response to ECB chief Mario Draghi's comments last week that he was ready to use all available tools if euro zone inflation fell further. Draghi also called for fiscal policy to play a greater role in reviving the economy.

The next ECB policy meeting is on Sept. 4. Preliminary euro zone data due on Friday are forecast to show annual inflation was just 0.3 percent this month, down from 0.4 percent in July, well below the ECB's target of just under 2 percent.

"If it is confirmed over the next few weeks and months that inflation goes closer to zero, they (the ECB) will have to buy everything they can and inflate the balance sheet," said Frederik Ducrozet, senior euro zone economist at Credit Agricole. "There is no other option."

European shares rose, extending gain made on Monday in trained thinned by a UK market holiday. The FTSEurofirst 300 index was last up 0.4 percent at 1,371.34.

The prospect of looser ECB policy and possibly further stimulus helped lift shares in Asia and Wall Street. The S&P 500 topped 2,000 for the first time and on Monday looked set to open higher. S&P 500 EMini futures were up 0.2 percent.

Emerging-market stocks hit a three-year high on expectations of inflows if the ECB eases policy. However, Russian shares fell before talks in Belarus, where presidents Vladimir Putin of Russia and Petro Poroshenko of Ukraine were meeting in talks over conflict in eastern Ukraine.

The dollar index, which measures the greenback against a currency basket, hit a one-year high in New York before falling back to trade less than 0.1 percent lower.

The euro was last at $1.3196, up 0.1 percent on the day. The yen rose a similar amount at 103.90 to the dollar.


FIRMER YEN

The firmer yen took a toll on shares in Japanese exporters. The Nikkei index closed down 0.6 percent.

German government bond yields, which hit a record low of 0.926 percent on Monday before pulling back, fell 1.5 basis points on Tuesday to 0.94 percent. Two-year yields edged up but remained negative at -0.04 percent.

"Euro/dollar is vulnerable to testing new lows. A downtrend is easily formed given the opposite directions Fed and ECB monetary policies are seemingly headed," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo

French President Francois Hollande's call on Monday for a cabinet reshuffle, after leftist rebel ministers argued for a U-turn on economic policy, had also helped push yields and the euro lower. A new government was expected to be announced on Tuesday.

Yields on peripheral euro zone debt, which the ECB could buy to pump money into the region's lacklustre economy as part of an asset-purchase scheme known as quantitative easing, also fell. Italian and Spanish 10-year yields fell to new record lows.

U.S. Treasury yields fell in line with euro zone debt. Ten-year bonds dropped 1.4 bps to 2.38 percent.

Brent crude oil futures edged up towards $103 a barrel, although a glut of supply and weak economic data in major consumer countries curbed gains.

Gold rose 1 percent, though expectations of buoyant U.S. data later in the day capped gains. Spot gold last traded at $1,286.40 an ounce, off a high for the day of $1,290.80.

Reference: Nigel Stephenson

Wednesday, 20 August 2014

Bank of England Interest Rates

One of the most important pieces of fundamental news we have been expecting today is whether or not the Bank of England would increase interest rates or maintain them at the current rate which has been the same for about the last five years.

In short its stayed the same. Which is good news for homeowners and trade etc. The BBC published the following about an hour ago.

 

image

Chart at 15:10

Interest rates: Minutes show two Bank policymakers voted for rise

Two members of the Bank of England's Monetary Policy Committee (MPC) voted to raise interest rates in August, the first time in three years that policymakers have done so.

The minutes of the meeting on 6-7 August show Ian McCafferty and Martin Weale voted for a 0.25% rise to 0.75%.

It means the nine-member MPC voted 7-2 to hold interest rates at their historic low of 0.5%.

The pound jumped in expectation that rates may rise sooner than expected.

Sterling rose 0.20% against the US dollar to $1.66.

If follows official data on Tuesday which showed inflation fell to 1.6% in July.

It is the first time there has been a split on the MPC since July 2011. Interest rates have been unchanged since March 2009.

The minutes came a week after the Bank of England published its quarterly inflation report in which it halved its forecast for average wage growth, saying it now expects average salaries to rise by 1.25% this year.

 

 

 

 

Reference:

 

http://www.bbc.co.uk/news/business-28863492

Tuesday, 19 August 2014

Carney’s Comments Help Pound Gain Ground

 

pound-bills-fan-and-coins

The Great Britain pound rose today after Bank of England Governor Mark Carney said over the weekend that the central bank may start raising interest rates before actual wage growth kicks in.

Wages came to market participants’ attention after the BoE inflation report predicted that this year’s earnings growth will be half of the previous estimates. Yet Carney was less dovish in his interview to Sunday Times over the weekend than could be expected considering the latest economic developments. He said that policy makers are confident that real wages will be growing and they “don’t have to wait for the fact”.


GBP/USD rose 0.23 percent to 1.6731 as of 18:39 GMT today. EUR/GBP dropped from 0.8003 to 0.7986. GBP/JPY advanced from 171.20 to 171.56.

Reference: Vladimir Vyun

Thursday, 14 August 2014

Firmer FTSE outperforms weaker European rivals

 

A man walks through the lobby of the London Stock Exchange August 5, 2011.REUTERS/Suzanne Plunkett

Britain's top equity index edged up on Thursday, with traders saying the UK market was enjoying a "flight to quality" as investors sold the German and French markets following weak European economic data.

The blue-chip FTSE 100 index .FTSE crept up 0.1 percent, or 6.42 points, to 6,663.30 points in the first hour of trading.

Even though the gains were meagre, the FTSE nevertheless beat falls of 0.3 percent on Germany's DAX .GDAXI and of 0.4 percent on France's CAC .FCHI.

Data showed that Germany's economy shrank in the second quarter while France again saw no growth.

The UK economy is set to grow faster than any other major developed nation this year, according to the IMF.

"The euro zone is still deep in the mire, although the UK economy is still showing some strong signs," Alpari chief market analyst James Hughes said.

Among stocks leading the FTSE higher were property company British Land (BLND.L), which rose 1.6 percent after Bank of America Merrill Lynch raised its rating on the stock to "buy" from "neutral".

Some traders remained cautious, however.

The FTSE 100 hit a peak of 6,894.88 points in mid-May, which marked its highest level since December 1999, but has since retreated and is down 1.3 percent since the start of 2014 as conflict rages in Ukraine and the Middle East.

"I still feel fairly cautious about the market. I might buy into the FTSE if it falls to 6,500 points," Securequity sales trader Jawaid Afsar said.

Reference: Sudip Kar-Gupta

Monday, 11 August 2014

British Pound May Rise on Status-Quo Bank of England Inflation Report

 

British Pound May Rise on Status-Quo Bank of England Inflation Report

Fundamental Forecast for British Pound: Neutral

  • All Eyes Are on the BOE Quarterly Inflation Report in the Week Ahead
  • British Pound May Correct Higher Absent Major Dovish Rhetoric Shift
  • Help Identify Critical Turning Points for GBP/USD with DailyFX SSI

The outlook for monetary policy continues to be the dominant driver of British Pound price action. Indeed, the correlation between GBPUSD and the UK 2-year Gilt yield – a reflection of investors’ near- to medium-term interest rate outlook – is now at a formidable reading of 0.73 (on rolling 20-day studies).

Last week’s BOE announcement proved to be a non-event, with Governor Mark Carney and company leaving the setting of monetary policy unchanged and publishing no explanatory statement to lay out their reasoning going forward.

The week ahead ought to be more eventful as the central bank unveils its quarterly Inflation Report. The document and the press conference following its publication have served as the primary vehicle for officials to communicate major changes in their outlook for the economy and introduce changes into the policy mix.

A shift in strategy this time around is unlikely: February’s re-tooling of the “forward guidance” framework to focus on the loosely-defined objective of reducing spare capacity has arguably left enough space to maneuver for the rate-setting MPC committee such that it can adjust its posture without scrapping the policy regime entirely.

That means investors’ primary points of interest will be any updates to the BOE’s economic forecasts and the tone of its rhetoric. Needless to say, these will be evaluated in an attempt to gauge when the bank might feel comfortable raising interest rates.

The markets’ hawkish policy outlook moderated significantly in July, with GBPUSD marching lower alongside front-end yields to break its 2014 uptrend and finish last week with the weakest close in two months. As we argued a month ago, that makes sense. UK economic data outcomes have tended to underperform relative to consensus forecasts since February, suggesting that building a hawkish voting majority on the MPC will be a tall order in the near term.

With that in mind, Sterling has now fallen for five consecutive weeks. This suggests that the Inflation Report will probably need to deliver an outsized dovish surprise in to maintain momentum behind the down move. On the other hand, a status-quo outcome may paint the recent selloff as a bit one-sided, opening the door for a corrective bounce.

Reference:

By Ilya Spivak, Currency Strategist

http://www.dailyfx.com/forex/fundamental/forecast/weekly/gbp/2014/08/09/British-Pound-May-Rise-on-Status-Quo-Bank-of-England-Inflation-Report.html

Friday, 8 August 2014

World shares, dollar tumble as U.S. authorises air strikes in Iraq

 

Today

 

(Reuters) - World shares and the dollar tumbled on Friday and oil and gold jumped after U.S. President Barack Obama authorised targeted air strikes in Iraq, raising worries of another drawn-out conflict in the region.

It came as fighting also resumed in Gaza between Palestinian militants and Israel and with NATO's calls for Russia to "step back from the brink" of war in Ukraine still ringing in ears of volatile markets.

"Earlier this week, one Iraqi in the area cried to the world, 'There is no one coming to help'," said Obama, who has been reluctant to go back into Iraq having withdrawn in 2011. "Well, today America is coming to help."

Global share markets had already been heading for a second week of straight losses but the latest developments sparked a fresh sell-off. European stocks .FTEU3 opened down almost 1 percent after Asian markets .MIAPJ0000PUS had seen similar falls overnight. [.EU]

"Risk aversion reigns, risk aversion rules," said Kit Juckes, Head of Currency Strategy at Societe Generale in London.

"The prospect of air strikes in northern Iraq on top of the tensions in Ukraine and Gaza...across the board we have stocks weaker, bonds are stronger, the dollar is weaker and the yen is strongest of all."

Obama said in an address that he authorized targeted strikes to protect the besieged Yazidi minority and U.S. personnel in Iraq.

U.N. Secretary-General Ban Ki-moon and the United Nations Security Council on Thursday called for the international community to help Iraq's government and people as the country struggles against a sweeping advance by Islamist militants.

U.S. crude CLc1 soared more than a $1 to $98.45 a barrel and Brent LCOc1 rose to $106.39 on the jitters of a fresh conflict in one of the world's big oil producing countries.

The dollar DXY fell 0.4 percent to two-week low of 101.68 JPY= against the safe-haven yen, the yields on 10-year Treasuries US10YT=RR and German Bunds DE10YT=RR - global investors' tradition go-to assets in times of tension - dropped as low 2.375 and 1.026 percent respectively.

Gold XAU=, another major safe-haven, hit $1,318.80 an ounce, its highest since July 18, and was last up 0.4 percent on the day at $1,319.46.

"It seems only a short time ago that traders were talking corrections, but now it seems only a matter of time before we see technical bear market.

Reference:  Marc Jones  Reuters

Wednesday, 6 August 2014

Dixons Carphone to start trading tomorrow

Dixons Carphone will begin trading on the London Stock Exchange tomorrow

 

A new era in consumer electronics begins tomorrow when Carphone Warehouse and the owner of Currys and PC World join forces under a £3.9 billion merger. 

The new name of Dixons Carphone will begin trading on the London Stock Exchange and feature 3,000 stores from the businesses of Dixons Retail Group and Carphone Warehouse. 

Dixons Carphone will employ around 43,500 staff across Europe.

It aims to tap into the way technology will transform households by fusing the mobile phone and electrical goods sectors in what is called the "Internet of Things". 

The firm will look to adapt to a new world where smartphones, tablets and rapid internet speeds will mean appliances such as washing machines and fridges are controlled by the touch of a mobile device. 

Such a retail behemoth would be expected to have more power to stand up to online competition from electrical retail rivals such as AO World. 

Dixons chief executive Sebastian James will run the new group, while Carphone founder Charles Dunstone, will be its chairman.

When the merger was announced in May, Mr James said: "The ability to take what we have built in electrical retailing and add the profound expertise of Carphone Warehouse in connectivity would make us a leading force in retailing for a connected world." 

The merger is expected to deliver combined yearly savings of £80m although there will be restructuring costs of £55-60m and extra investment of £70-80m. 

Carphone Warehouse was founded by Charles Dunstone in 1989, and has around 2,000 stores, including more than 800 in the UK. Dixons, founded in the 1930s, has 943 stores in seven countries, including more than 500 in the UK. 

Carphone's high street presence is not seen as overlapping with Dixons's out-of-town stores by analysts, so the two sets of shop portfolios are seen as complementary.

The combination of the two FTSE 250 firms is likely to create a new FTSE 100-sized group, as well as merger savings to please investors. 

But analyst Louise Cooper said at the time of the merger deal that there was "likely to be much scepticism" about plans for better growth through putting the businesses together. "Two past their sell-by date retailers merging does not an Amazon make," she said. 

Dixons Retail Group has 28 Currys and PC World stores in Ireland, while Carphone Warehouse has 90 stores in Ireland.

Keywords:

 

 

 

 

 

 

Reference:

 

http://www.rte.ie/news/business/2014/0806/635464-dixons-carphone/

Tuesday, 5 August 2014

Trading rises in response to Russia tensions

 

Trading in Russian securities listed in Moscow and London – including shares in the country's biggest banks – rose strongly during July amid on-going tensions linked to the crisis in Ukraine.

The value of shares traded on The Moscow Exchange increased by 16% year-on-year to €16 billion during July, according to data from Thomson Reuters.

The London Stock Exchange saw a similar increase in trading on its international order book, which lists depository receipts from over 40 emerging markets, though activity is heavily concentrated on Russian names such as Gazprom, Sberbank, Lukoil and Rosneft.

Trading on the IOB increased by 8.3% year-on-year to $15.5 billion during July, according to LSE data.

The average daily value traded on the IOB during the month was $675 million, though on July 17 - the day Malaysia Airlines Flight 17 was shot down over Ukraine - trading spiked to $1.2 billion. For the remaining 10 trading days of July, the average daily value traded on the IOB was $760 billion.

Bats Chi-X Europe, a six-year-old rival stock exchange to the LSE, also saw an increase in activity. It offers trading in FTSE RIOB index shares, which include the 15 most-traded traded Russian names on the IOB. Trading in these names increased 10% to €48.3 million on Bats last month, according to its own data.

The exchange also last week temporarily suspended a smart order routing service it offers on behalf of clients in VTB and Sberbank depositary receipts, following the announcement of EU sanctions, according to a market notice.

Tim Bevan, a managing director for prime services sales at Russian broker BCS, said: “Volumes are definitely higher, there is increased activity. There hasn’t been a super dramatic sell out, however, and we aren’t back to the lows we saw when Russia when into Crimea."

Bevan added that activity was "largely being driven by the local market. International volumes seem to be a bit weaker, there are a lot of players sat on the side-lines".

Last week, the EU published tough sanctions targeting Russia’s energy, financial and defence sectors and restricted access to EU capital markets for Russian state-owned financial institutions. These were in addition to US sanctions introduced earlier this year on individuals and the companies they own.

The Moscow market has been jittery since the ousting of former Ukranian President Viktor Yanukovych. This morning, the Micex index, based on 50 stocks listed in Moscow, was 8.5% down on its level at the start of the year.

Reference: Tim Cave Financial Times

Monday, 4 August 2014

Sterling still wobbly despite weak U.S. jobs data

 

Sterling clawed back some ground against the dollar on Friday after U.S. data showed jobs growth slowing and unemployment rising in July, lessening the impetus for the Federal Reserve to raise interest rates any time soon.

At the end of a week in which figures showed the world's largest economy powering back in the second quarter, the latest U.S. data showed nonfarm payrolls increasing by a smaller than expected 209,000 last month, while unemployment crept up to 6.2 percent from 6.1 percent in June.

Sterling was dealt a blow earlier on Friday by data showing British manufacturing growing at its slowest rate in a year, dropping almost a cent on the day against the dollar and hitting a 2-1/2-week low against the euro.

Though it pared losses against the dollar after the soft U.S. data, the pound was still on track for a fourth consecutive week of losses, the weakest run since the start of 2013, shedding almost 1 percent over the past five days.

"There's probably some scope for some modest reversal on the dollar gains we've had, but I would emphasise the word modest," said Derek Halpenny, European head of markets research at the Bank of Tokyo-Mitsubishi in London.

"Generally the data is consistent with an improving labour market, and in that sense it keeps the potential there for the Fed to signal at some point over the coming months that rates might have to start moving sooner rather than later."

At 16:00 BST sterling was trading at $1.6833 (1.25 pounds), recovering from an earlier trough of $1.6812 but still down 0.3 percent on the day.

Some traders said that because the market already expected the Bank of England to be the first major central bank to raise interest rates since the financial crisis, it would need to see more evidence of the British economy's relative strength before sterling could go higher.

"We think the correction that is on-going will extend," said Alvin Tan, a currency strategist at Societe Generale. "The market is quite long sterling - a lot of good news is baked into sterling’s price at the moment, in terms of market expectations of growth and also about the pace of BoE tightening."

The pound had fallen almost 0.2 percent against the dollar on Thursday after figures showed British consumer confidence falling in July for the first time in six months, with other data showing that the housing market may be starting to cool.

The euro hit a one-month high of 79.85 pence having risen steadily since the U.S. data, putting it up almost 0.7 percent against the pound, its biggest daily gain since early March.

One dealer said there had been talk in the market of a large portfolio order going through to the benefit of the euro against sterling.

Euro zone data showed manufacturing growth failing to accelerate as much as expected, offering sterling some support against the euro. But any gains evaporated on the back of the weak British and U.S. data.

The trade-weighted sterling index fell to 88.2, its lowest in over a month.

British government bond yields showed little reaction to the manufacturing PMI but fell sharply immediately after the U.S. jobs data, with the 10-year gilt yield ending at 2.583 percent, down 2 basis points on the day.

Reference: Jemima Kellye

Reuters.

Sunday, 3 August 2014

Canada to clinch trade deal with EU in September

 

Canada and the European Union will release final details of their mammoth trade deal on Sept. 25 in Ottawa, ending a marathon 10 months of bargaining since Prime Minister Stephen Harper flew off to Brussels to sign the initial agreement in principle.

Multiple sources tell CBC News that the text of the full agreement will be made public by Harper and EU President José Manuel Barroso as part of a formal summit between the two sides.

The Comprehensive Economic Trade Agreement, or CETA, has been a priority for the Harper government, but talks dragged out over a series of issues ranging from the protection of intellectual property to the process for settling disputes between private companies and governments.

Just last week, news reports out of Europe suggested that Germany would refuse to sign the deal — a report later denied by Angela Merkel's government — over the so-called investor-state dispute mechanism, which is meant to set up an independent tribunal for companies to resolve trade disputes, rather than have them go through a country’s courts.

The deal would give Canada favoured access to Europe’s 500 million people and $17 trillion economy.

But there have been growing concerns in Canada with how long it was taking to resolve the final issues.

One industry observer compared to the discussions to the game of whack-a-mole: as soon as one issue was resolved another would pop up.

Harper-EU-trade

Prime Minister Stephen Harper and EU President Jose Manuel Barroso were excited over the signing of the interim free trade agreement last year. A final version is imminent, sources tell CBC. (Associated Press)

Former Quebec premier Jean Charest told CBC Radio’s The House that the longer the talks dragged out, the more likely that Canada's interests would be overtaken by the EU's trade negotiations with the United States.

"On these kinds of issues there has to be a sense of urgency,'' said Charest, who played a key role in promoting formal discussions between Canada and the EU while he was in office.

"We're not going to hold the attention of the Europeans eternally. They have a lot on their plate.

“Canada is not even two per cent of the world economy. We're important. We're good. We're interesting, but we need to seize the moment. and that's what these things are about.''

 

‘Progress being made’

Government officials declined to discuss the timing of the announcement, but noted ‘’excellent progress is being made’’ to complete the legal text of the agreement that is projected to boost the Canadian economy by $12 billion a year, and create almost 80,000 jobs.

But sources tell CBC News that the signing ceremony will be on Parliament Hill and include other EU leaders attending the summit as well as Canadian premiers.

It will follow also follow a trade mission to England in the first week of September, led by Harper and Trade Minister Ed Fast. They’ve invited Canadian business leaders along to promote economic ties and the pending removal of trade barriers on the vast majority of goods and services moving between Canada and Europe.

Sources say that Canadian officials have been pushing hard to finalize the deal, in part because Barroso's term as president comes to an end in October. His departure, as well as the turnover of others in the executive, could have meant further delays and uncertainty if nothing was signed by that point.

As it is, CETA will still have to be approved by the European Parliament and the 28 countries in the EU.

Still, sources say it will be a significant legacy for Barroso, as European leaders turn to the much larger trade deal being negotiated with the U.S.

For Canadian officials, those EU-U.S. talks represented both a distraction and a challenge, and there were worries about the impact those negotiations could have on Canadian interests.

 

BELGIUM/

Oxfam's activists mock U.S. President Barack Obama, German Chancellor Angela Merkel and Canadian Prime Minister Stephen. Harper during a protest over "Energy dependency and wealth inquality" last year. Anti-trade groups will likely want their say over the new Canada-EU agreement too. (Reuters)

"All of a sudden, a negotiation we were driving on our own steam, based on our interests, are part of a broader play between Europe and the United States,"  said Charest, who now works with the law firm McCarthy-Tetrault.

"That's not where we want to be.''

 

Significant barriers

Certainly the negotiations between Canada and the EU took longer than anyone thought. Quotas for pork and beef, patent protection for pharmaceuticals, and coordinating financial regulations proved to be significant barriers to resolve.

But for Canada, the potential benefits are enormous. It would give this country a second major tariff-free trading partner, while lessening Canada’s dependence on the U.S. market.

“The benefits of this agreement are clear for Canada and the European Union,’’ one department official wrote in an email. The EU’s annual imports alone are worth more than Canada’s GDP.

For Harper, successful completion of the negotiations has been an elusive, yet over-arching objective.

He flew off to Brussels the day after his government tabled its Throne Speech last October to sign the interim deal, calling it a historic win for Canada, and boasting on his Twitter feed that it would lead to “thousands of new jobs for Canadians, and a half-billion new customers for Canadian businesses.”

Since then, the talks have dragged on, and he`s had to shrug off repeated opposition demands to see both the text of the deal, and what Canada was giving up.

Those questions now look to be answered next month.

Reference:

http://www.cbc.ca/news/politics/canada-to-clinch-trade-deal-with-eu-in-september-1.2724350

By Chris Hall, CBC News

Pound Has Longest Losing Streak in 16 Months as Data Disappoints

 

The pound declined for a fourth week against the dollar, the longest losing streak in more than a year, as U.K. economic data from manufacturing output to consumer confidence was weaker than economists predicted.

Sterling dropped to the lowest level in seven weeks versus the dollar after data showed the U.S. economy grew more than analysts forecast and employers added more than 200,000 jobs for the sixth consecutive month, boosting expectations for higher Federal Reserve interest rates. Britain’s currency depreciated against the euro for the first week since the period ended July 11. U.K. government bonds were little changed.

“Sterling declined because of various data results that have been uniformly disappointing this week but not dire,” said Peter Frank, global head of Group-of-10 and Asia currency strategy at Banco Bilbao Vizcaya Argentaria SA in London. “We have a forecast for a mild underperformance of sterling in a short-to-medium term period where we think the market has got ahead of itself on how much growth there is likely to be in U.K. economy and what the reaction function will be of the Bank of England.”

The pound dropped 0.8 percent this week to $1.6832 as of 5:11 p.m. London time yesterday, when it reached $1.6814, the lowest since June 12. The fourth week of declines is the longest run since March 8, 2013. The U.K. currency weakened 0.9 percent to 79.80 pence per euro, the steepest weekly fall since the period ended Feb. 21.

BBVA forecasts the pound will depreciate to $1.65 by the end of September, Frank said.

Output Slows

A gauge of U.K. manufacturing slipped to 55.4 last month from a revised 57.2 in June, according to figures released by Markit Economics yesterday. The median forecast in a Bloomberg survey of analysts was for a reading of 57.2. An index of consumer sentiment fell to minus 2 in July from 1 in June, GfK said on July 31.

The U.S. economy grew at a 4 percent annualized rate in the second quarter, data showed on July 30. U.S. employers added 209,000 jobs last month after a revised 298,000 gain in June, a Labor Department report showed yesterday.

The benchmark 10-year gilt yielded 2.55 percent, compared with 2.57 percent on July 25. The rate dropped to 2.53 percent on July 29, the lowest since May 29. The price of the 2.25 percent bond maturing in September 2023 was 97.595.

Bank of England officials will keep the benchmark interest rate at a record-low 0.5 percent when they announce this month’s monetary policy decision on Aug. 7, according to all 47 economists surveyed by Bloomberg.

Gilts returned 4.7 percent this year through July 31, Bloomberg World Bond Indexes show. That compares with a 5.5 percent gain for German securities and 3.2 percent for Treasuries.

 

 

 

Reference:

http://www.bloomberg.com/news/2014-08-02/pound-has-longest-losing-streak-in-16-months-as-data-disappoints.html

 

By Eshe Nelson Aug 2, 2014 7:00 AM GMT