Market plunges on Obama bank crackdown

from MoneyTrading.com.au

Stocks on Wall Street plunged overnight after US President Barack Obama announced plans to limit the size and power of American banks. In a very public swipe at Wall Street, Mr Obama blamed banks for sparking the worst economic crisis since the Great Depression and said common sense reforms were needed.

Wall Street gave an immediate –ve reaction to the plan, with the Dow Jones industrial index sinking 2 per cent as the president delivered his announcement.

Mr Obama says the financial system is far stronger today than it was a year ago, but is still operating under the same rules that led to its near-collapse. Now he wants to ban banks from proprietary trading operations, where a firm makes bets on financial markets with its own money.

"Banks will no longer be allowed to own, invest or sponsor hedge funds, private equity funds or proprietary trading operations for their own profit, unrelated to serving their own customers," he said. "These firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people."

The plan is the latest attempt by the White House to harness popular anger at massive Wall Street bonuses and tight credit markets as Congress heads to a crucial election year.

Australian Dollar Advances on China Growth

from MoneyTrading.com.au

The Australian dollar advanced after a government report showed China’s fourth-quarter growth rose at the fastest pace since 2007, damping concerns of a slowdown in Asia’s second-largest economy.

China’s economic expansion is bullish for the Australian dollar over the medium term and for commodity prices.

Australian Dollar Slides on Chinese Caution & US Housing Strength

from MoneyTrading.com.au

US Dollar has been strengthened by two drivers: (1) the credit downgrades of Greece and Spain (and potentially Ireland, all three European Union members) along with cautious Chinese Credit Approach and (2) the surprisingly strong U.S. economic data streaming substantiating the increased probability of the Fed staging an earlier withdraw of monetary stimulus than markets had expected.

We are looking for fundamentals to shape up the currency market direction in the immediate term.

Aussie Consumer sentiment jumps 5.6%: Likely increase of Interest Rates on 2nd Feb

from MoneyTrading.com.au

Three consecutive rate rises have done little to hurt consumers, with sentiment rising by 5.6% in January to 120.1 points, according to the latest Westpac-Melbourne Institute consumer sentiment survey.

The index rose from 113.8 points to 120.1 in January, with Westpac chief economist Bill Evans saying the result is above the level recorded in September before the Reserve Bank of Australia began to raise interest rates.

We expect to see another rate hike of 0.25% to be announced by the RBA on 2nd Feb.

Australian dollar - Consumer Confidence in focus

From MoneyTrading.com.au

The Australian dollar bounced back slightly against the U.S. dollar overnight, though technical factors and unease ahead of global economic data due later in the week could keep the lid on the commodity currencies.

We are looking forward to Australian consumer confidence data from Westpac and U.S. housing starts data on Wednesday for further direction.

A strong consumer confidence and weak (U.S.) building approvals could see the Aussie breaking above 0.9280 against USD.

Westpac Consumer Confidence is due at 10.30am

Australian dollar climbs on thin US holiday trade

from MoneyTrading.com.au

We are more focused on the release of China's gross domestic product data for the December 2009 quarter on Thursday, which would be a good gauge of the Chinese economy. China is Australia's largest export market. A solid robust pace of Chinese Economy will help underpin the Australian dollar.