The Gross Domestic Product report detailing the progress over the third quarter of 2013 for the Japanese economy is set to be released tomorrow 13 November 2013. At this time, many experts believe that the report will likely show a significant drop in Japan’s GDP over the past three months.
Readers are reminded that the GDP report, while generally predictable due to the long period of data collection from a wide range of sources, can still have a considerable impact on the market since it is generally considered to be a primary economic report card for the health of the nation’s commerce.
Analysts note that Japan has struggled to work towards recovery under the Abenomics plan, headed by Prime Minister Abe. Among other strategies to promote growth, the government is attempting to raise inflation in the hopes of making Japanese products more appealing to the global markets.
Investors are advised that the already hard hit Yen will likely suffer further following the release of the report. As such, traders should proceed with caution in their investments with the Yen versus its rival currencies.
Speculation on US Stockpiles Reverse Recent WTI Gains
It was reported on 12 November 2013 that the price of crude oil had once again fallen off amidst speculation over state of the US stockpiles. The drop follows a short reprieve of two days of gains in trading for the fuel as investors expressed concerns that a major surplus could upset the current prices.
Analysts point to a number of factors that appear to be influencing the radical shifts in prices. The first is increased production from domestic US sources, which some experts have pointed to as weighing heavily on the market. On top of that, many now believe that some 500k barrels of crude may have been added to the American stockpiles, raising further the supply and depressing demand.
In addition, other experts have cited the recent talks with major oil exporter Iran as playing a role in the oil fluctuations. Readers are reminded that the US and others in the international community have put into place an oil embargo in an attempt to halt the Islamic Republic’s suspected nuclear weapons program. Fears over a military conflict with Iran that could affect oil production and export from the oil rich Persian Gulf area have in the past led to spikes in prices. While the most recent talks between the five permanent members of the United Nations Security Council plus Germany and Iran appear to have hit some difficulties, the fact that the International Atomic Energy Agency has signed a deal with Iran to gain access to a controversial nuclear research site has helped to ease the minds of many investors, who view this as progress towards stabilization.
Analysts believe that crude prices will likely continue to fall in the coming days and weeks as the markets attempt to adjust to the supply levels. While some experts had previously believed that the prices of crude had been artificially low, the most recent jump was also most likely premature. Should it be proven in an upcoming report that the US stockpiles are indeed as high as is believed, it will likely further depress prices. Moreover, the fall in prices at the WTI will likely affect the Canadian loonie as its economy is significantly linked to its oil production.
Yen and Aussie Slide as Losses Continue in Trading
According to reports from 12 November 2013, the Japanese Yen and Aussie have faced significant difficulties in trading against many of their rival currencies.
For its part, the Yen is said to have dropped to an eight week low against the US dollar. Analysts cite both the widening gap between the two countries on 30 year bond yields as well as the rise in Asian stocks. The gains made by Japan’s neighbors is important since the Yen is considered to be a regional haven asset. As the value of stocks rise in the less developed countries, investors will generally move to the higher paying assets, leaving the Yen behind.
In regards to the Aussie, analysts note that it has been battered by the British pound in the lead up to a number of economic health reports that many experts believe will show expanded growth in the UK. Moreover, recent polling data has shown that confidence levels by local business had fallen off considerably, further damaging the Aussie. Analysts note that according to the most recent employment figures, the economy there failed to add enough jobs to the workforce during the last month, adding more concern for investors.