Forex Currencies Differences Trigger Potential Trades - November 25, 2013
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US Consumer Confidence Report Due Out Tomorrow
The Consumer Confidence report for the month of November 2013 is set to be released tomorrow Tuesday 26 November 2013. At this time, many experts assess that this report will show increased levels of confidence among American consumers.
Analysts believe that the jump in confidence by the public may stem from the increase in the number of jobs added during the previous month which shot up considerably to above average levels of progress. While it should be noted that the rate of unemployment is still deemed to be undesirably high, the news of a return to adding large numbers of jobs may have led consumers to feel more secure in their employment prospects. Readers are reminded that job stability is a key factor in the level of consumer confidence since they are less likely to be active consumers if they believe that their source of income is not secure.
Analysts point out that increased levels of consumer confidence are of particular importance in the lead up to the Christmas shopping season which will begin in earnest following the Thanksgiving holiday on Thursday. This period of shopping makes up a significant portion of the retail industry`s annual income, which is a major driver of the economy since consumer spending accounts for nearly two thirds of American economic activity.
Interim Iranian Nuclear Deal Hits Gold and Oil Hard
It was reported on 24 November 2013 that the five permanent members of the United Nations Security Council plus Germany (P5+1) and Iran had succeeded in signing an interim deal concerning the Islamic Republic?s nuclear program that has been a source of global tension in recent years. While this deal to either cease or reduce activity on the part of the Iranians in their nuclear activities is only a short lived six month arrangement, many are hopeful that it will lead to a more lasting commitment and a reduction in animosity.
Readers are reminded that the tensions over Iran`s nuclear program have led to a series of harsh sanctions against the country, as well as threats to the world`s oil supply. Iran is both a large producer of crude, and an influential actor in the oil rich Persian Gulf. In line with the sanctions, Iran has basically been unable to sell its oil to the world, simultaneously artificially reducing supply as well as hurting their economy which is heavily dependent on the sale of oil. Moreover, as Iran is able to threaten sea passage for oil tankers through the narrow Straits of Hormuz, which accounts for nearly 17% of global supply. In addition, they possess the capability to threaten other oil producing countries such as Iraq and Saudi Arabia.
The signing of the deal has helped to lower tensions that the progress of the nuclear program could mushroom into a larger regional conflict, and in the eyes of many experts, has helped to ensure the constant flow of oil out of the region. Thus by lowering the tensions, it has helped to further depress prices which have already been low with estimated high levels of US stockpiles.
Also being affected by the apparent calm is gold. As the precious metal is often viewed as a haven asset during tough times for the dollar, the lowered perception that the US will enter into a conflict with Iran in the coming months has reduced the need by investors to search for alternative trading options, meaning that they will continue to return to the US dollar.
Traders are advised to watch for further changes in the USD, gold and oil in the coming weeks as the deal is implemented.
Euro Rises Against The Yen
Following a series of setbacks to its recovery, it was reported on 25 November 2013 that the Euro had succeeded in achieving gains against the Japanese Yen. According to the reports, the European currency reached its highest point in this trading in nearly four years.
Analysts note that these gains follow recent reports of a slowdown in the European recovery that had been a source of growth for the Euro. Many economists had suspected that the growth in the economy had begun to falter, even among the larger economies such as France and Germany. However, a recent report out of Germany shows that consumers have higher than expected levels of confidence that provided the bump necessary to move past the Yen. It should be noted that major economies such as Germany have been instrumental in helping to move the Eurozone out of the recession. Germany is a significant manufacturer, and its GDP is a major factor in that of the overall Eurozone.
Analysts believe that this boost for the Euro is also significant in that it could help to prevent further rate cuts by the European Central Bank, like those that occurred in recent weeks. While increased consumer confidence has helped the situation, readers are also reminded that the fact that weaker countries such as Spain having regained some level of stability has also served to improve the Euro`s standing.