Author: Bestloans

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Global stocks wilt as Fed shift sparks stampede into bonds

Both US and European stocks closed largely flat upon releases of a series of mixed economic data. In the US, strong pending homes sales were offset by disappointing Chicago Fed manufacturing PMI. In the Eurozone, the region-wide flash inflation reading for June came in line with expectations while Italian CPI indicated disinflationary pressures remain. Commodities were also mixed.

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Mixed Data Failed to Give Direction

Today in Asia, financial markets gained, carrying forward Friday’s positive sentiment. Meanwhile, Chinese data impressed with exports growth accelerating in November and easing inflation lessened tightening fears. For the coming week, Fed Presidents Lacker, Bullard and Fisher will speak.

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Chinese Data Eased Tightening Bias

Oil prices weakened as P5+1 and Iran reached a deal to curb the Middle East country’s nuclear activities. As stated in the fact sheet published by the White House, the steps to be carried out over the coming 6 months to halt the progress of Iran’s nuclear program include “significant limits on Iran’s nuclear program and begins to address our most urgent concerns including Iran’s enrichment capabilities; its existing stockpiles of enriched uranium; the number and capabilities of its centrifuges; and its ability to produce weapons-grade plutonium using the Arak reactor”.

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Oil Prices Dropped as P5+1 and Iran Reached a Deal

Oil prices rallied as US data impressed. The front-month contract for WTI crude oil rose to November’s high of 95.63 before settling at 95.44, up +2.26% while the Brent crude contract gained +1.87%. Notably, gasoline prices jumped more than 3% on rising demand.

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Oil Rallied on Strong US Data, Gasoline Jumped 3% on Demand

Brent oil futures are set to end the week firmly over $108 a barrel as crude oil prices for both European Brent and US WTI rise, in part over concerns that oil supplies may have some trouble making it through the Suez Canal, which is controlled by Egypt.

Latest Brent Oil Price

In London, Brent crude oil futures for August 2013 delivery was trading at $108.20 a barrel, 14:40 GMT today on the ICE Futures Exchange.

Egyptian Oil Route Concerns

Oil prices are rising despite an announcement from Egypt that political tension there is not a threat to supply lines in the country. Interim Egyptian Prime Minister Hazem el-Beblawi said today that the Suez Canal would remain open, enabling oil supplies to pass through, and that next week he would name a new Egyptian Cabinet.

Demonstrations in Cairo today by supporters of ousted president Mohammed Morsi are highlighting the instability of the political situation in Egypt, which controls the Suez Canal, a crucial transport route for oil and gas shipments from the Middle East.

“Egypt pretty much remains in focus, and traders seem to have priced in a further escalation of the current unrest,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

Meanwhile, the US government and the UN both raised concerns about Egypt’s decision to issue arrest warrants for the leader of the Muslim Brotherhood to which Mr Morsi belongs and nine senior figures of the movement.

“The only way this is going to work successfully… is if all parties are encouraged and allowed to participate and that’s why we’ve made clear that arbitrary arrests are not anything that we can support.” White House spokesman Jay Carney said.

The Brotherhood believes it is the victim of a brutal military crackdown, evoking memories of when it was suppressed under longtime autocratic leader Hosni Mubarak, who was toppled in a popular uprising in 2011.

But many of its opponents blame Islamists for the violence, and some have little sympathy for demonstrators who died, underlining how deep the fissures in Egyptian society are.

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Brent crude at $108 as oil prices rise on concerns over Suez Canal & Egypt

Gold price continued to recover on Tuesday with the benchmark Comex contract rising to as high as 1258. While the overall picture remains benign, China’s headline CPI in June has raised the need for inflation hedge. Headline inflation rose to +2.7% y/y in June, up from +2.1% a month ago. The reading on monthly basis stayed flat, indicating the improvement from a year ago was driven mainly by the price weakness last year. The low non-food inflation signaled that the output gap continued to grow.

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Gold Recovered Further as Chinese Inflation Data Triggered Inflation Hedge

Financial markets continued to be directed political instability in Europe and the MENA region. In Egypt, protesters attempted to topple President Mursi, the first democratically elected leader in the country, as he has “failed to meet the demands of the Egyptian people”.

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Political Instability Sent Oil Higher

The euro currency is back under the spotlight this weekend after an emergency bank levy grab in Cyprus has local savers mulling over whether to transfer their money out of the island’s shores.

On Friday, the Cypriot government agreed to seize up to 10 percent of the savings from all Cypriot bank accounts and use the money to bailout the island’s crisis hit banking system. The move has sparked panic, alarm and protests in Cyprus over the weekend as crowds desperately tried to withdraw their money at cash machines. There are also possibilities that this latest drama could spill over to Greece in the coming days as both economies are closely interlinked and both share the euro as their currency.

The Euro – Money Transfer Restrictions

Restrictions have been imposed to stop individuals emptying their savings accounts or moving their money out of Cyprus following the bank levy deal made by the Cypriot government, which has the full backing of the EU and the IMF. Monday 18th March is a national bank holiday in Cyprus, so savers will have to wait until Tuesday until they can consider making a money transfer out of the country.

The levy on bank deposits will come into force on Tuesday 19th March. The emergency levy will be 9.9 percent for deposits over 100,000 euro, and 6.75 percent for lower sums. Depositors have been advised that they will receive bank equity as compensation.

The Cypriot government has also taken steps to prevent electronic international money transfers over this weekend, to stop attempts to avoid escaping paying the levy or bank tax.

Sharon Bowles MEP, who chairs the European Parliament’s economic and monetary affairs committee, said she was appalled by the Cyprus bailout deal. “This grabbing of ordinary depositors’ money is billed as a tax, so as to try and circumvent the EU’s deposit guarantee laws. It robs smaller investors of the protection they were promised. If this were a bank, they would be in court for mis-selling,” she commented.

Euro Back Under Threat?

So what does this mean for the euro which makes up for 17 of the EU state currencies?

Cyprus adopted the euro currency on 1st January 2008 and although the country makes up only 0.2 percent of the GDP of the EU, the worrying part of this latest “money grab” in many minds will be “is this the first of many?” or “which country could be next?”

This new deposit tax for Cyprus is likely to prove unpopular with the country’s 1 million citizens. It will also affect the many Russian non residents who hold €18 billion euros in Cyprus’s banks.

This could also have an effect on the wider market as uncertainty creeps back into the legitimacy of the shared euro zone currency. Many currency dealers could be on “sell mode” next week for the euro, but in this new world of ever changing fortunes, we will have to wait and see what comes up.

Bank v Non Bank Money Transfers

Private foreign exchange specialists can typically save individuals up to three percent of the value of their international money transfers, compared to mainstream banks. View the live chart below for an example with the main UK high street banks:

If you are considering a cross currency international money transfer and if you want to save money, then beat the banks (including the banks in Cyprus) choose Currencies Direct to transfer your funds overseas.

Currencies Direct is one of Europe’s leading non-bank providers of currency exchange and international payment services. As a minimum, if you do decide to take your money away from Cyprus, you can at least get back some of the percentage lost by being smart and avoiding a large commission fee and a poor exchange rate when you send your funds away. And yes, they can also send money from Cyprus back to Russia…

So, if you’re one of the people affected by the latest events in Cyprus, if you need to make a transfer then check out Currencies Direct services on their website click here

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This article was written by: JR @ liveoilprices.co.uk

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Euro back under threat as savers mull money transfers away from Cyprus

Brent crude oil eased after the rally last week. Yet the near-term outlook remains firm as China’s exports data indicated strong oil demand amid better economic outlook. It is expected that supply to the country would remain tight. The risk is that the government might adopt tightening policy should the rise of property prices exceed control.

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Brent Remained Firm on Improvement in Chinese Oil Demand