Saturday, August 1, 2009
Rupee Up by 13 Paise Against Dollar
The Indian rupee strengthened by 13 paise in early trade today on expectations of fund inflows and weakness in the US currency against other Asian currencies.At the Interbank Foreign Exchange (Forex) market, the domestic unit appreciated by 13 paise to 48.21 a dollar. The rupee yesterday closed higher by 7 paise at 48.34/35 a dollar.Dealers said hopes of increased capital inflows by foreign funds in line with better trends in the other Asian equity markets and dollar's weakness against other currencies mainly supported the Indian rupee.However, sustained dollar demand from oil refiners for month-end requirements capped rupee's gains, they added.
NEW YORK (MarketWatch) -- Gold futures rose 2% Friday to end above $950 an ounce, as the U.S. dollar weakened after the release of U.S. gross-domestic
(RTTNews) - The euro edged higher against its lower-yielding rivals as a better-than-expected GDP report in the U.S. fueled hopes of an economic recovery.
The European currency added to recent gains against both the dollar and yen amid higher risk appeal. On the other hand, the euro hovered near a monthly low against the sterling.
On the economic front in the Eurozone, consumer price inflation stayed negative for the second month in July with the latest decline being the biggest on record, extending support to a low interest rate regime. Unemployment reached the highest level since June 1999 as more employers cut headcount in June.
The euro climbed above 1.4250 in mid-day trading against the dollar, moving within a cent of its 2009 high. The European currency slipped to a two-week low of 1.4006 earlier this week.
The U.S. Commerce Department revealed gross domestic product fell 1% in the second quarter. Economists had expected GDP to fall at a 1.5 percent pace. This follows a 6.4-percent contraction in the first quarter.
The euro was choppy against the sterling and moved near its overnight levels around 0.8530 in the early afternoon. The European currency lingered near a monthly low from yesterday.
The euro edged to a three-day high of 135.54 against the Japanese yen, extending the mild rally that began on Wednesday. If the European currency reaches above 136.08 it will reach a monthly high.
In Japan, the seasonally adjusted headline Nomura/JMMA Purchasing Managers' Index or PMI rose to 50.4 in July from 48.2 in the previous month, the first improvement for seventeen months. A PMI reading above 50 indicates expansion in the sector.
On the economic front in the Eurozone, a flash estimate from the European Union statistics office, Eurostat, revealed a 0.6% annual fall in consumer prices in July compared to a 0.1% drop in June. The decline in July was the biggest on record. Prices also dropped more than the expected 0.4%.
Inflation turned negative for the first time in June. The European Central Bank aims at inflation rates below, but close to 2% over the medium term.
Friday, the European Commission approved EUR100 million to Serbia as general budget support to help with the stabilization of the country and ease the economic and social consequences of the crisis.
The European currency added to recent gains against both the dollar and yen amid higher risk appeal. On the other hand, the euro hovered near a monthly low against the sterling.
On the economic front in the Eurozone, consumer price inflation stayed negative for the second month in July with the latest decline being the biggest on record, extending support to a low interest rate regime. Unemployment reached the highest level since June 1999 as more employers cut headcount in June.
The euro climbed above 1.4250 in mid-day trading against the dollar, moving within a cent of its 2009 high. The European currency slipped to a two-week low of 1.4006 earlier this week.
The U.S. Commerce Department revealed gross domestic product fell 1% in the second quarter. Economists had expected GDP to fall at a 1.5 percent pace. This follows a 6.4-percent contraction in the first quarter.
The euro was choppy against the sterling and moved near its overnight levels around 0.8530 in the early afternoon. The European currency lingered near a monthly low from yesterday.
The euro edged to a three-day high of 135.54 against the Japanese yen, extending the mild rally that began on Wednesday. If the European currency reaches above 136.08 it will reach a monthly high.
In Japan, the seasonally adjusted headline Nomura/JMMA Purchasing Managers' Index or PMI rose to 50.4 in July from 48.2 in the previous month, the first improvement for seventeen months. A PMI reading above 50 indicates expansion in the sector.
On the economic front in the Eurozone, a flash estimate from the European Union statistics office, Eurostat, revealed a 0.6% annual fall in consumer prices in July compared to a 0.1% drop in June. The decline in July was the biggest on record. Prices also dropped more than the expected 0.4%.
Inflation turned negative for the first time in June. The European Central Bank aims at inflation rates below, but close to 2% over the medium term.
Friday, the European Commission approved EUR100 million to Serbia as general budget support to help with the stabilization of the country and ease the economic and social consequences of the crisis.
Gold rises as dollar weakens after U.S. GDP data
NEW YORK (MarketWatch) -- Gold futures rose 2% Friday to end above $950 an ounce, as the U.S. dollar weakened after the release of U.S. gross-domestic-product data, raising gold's appeal as an alternative investment.
U.S. gross domestic product fell at a 1% annualized rate in the second quarter, smaller than economists had expected, the Commerce Department reported. The dollar remained lower against most of its rivals after the GDP data.
August gold futures rose $18.80, or 2%, to $953.70 an ounce on the Comex division of the New York Mercantile Exchange. It rose as high as $958.10 earlier but also fell to $932. The contract ended the week almost unchanged. Gold rose 2.8% in July.
U.S. gross domestic product fell at a 1% annualized rate in the second quarter, smaller than economists had expected, the Commerce Department reported. The dollar remained lower against most of its rivals after the GDP data.
August gold futures rose $18.80, or 2%, to $953.70 an ounce on the Comex division of the New York Mercantile Exchange. It rose as high as $958.10 earlier but also fell to $932. The contract ended the week almost unchanged. Gold rose 2.8% in July.
This is article is released weekdays under the heading "Daily Fundamentals" at 5pm EST on www.dailyfx.com
(RTTNews) - The dollar plummeted across the board versus major counterparts on Friday as traders expressed increased risk appetite after a report showed that the US economy contracted less than analysts were predicting.
The report fueled hopes that the world's biggest economy could lead the world out of the worst recession in decades, and sooner than once feared.
Traders had been hedging of late, refusing to go all-in on the prospect of a global recovery beginning by year's end. However, with stocks on the rise and a number of key indicators showing a faint pulse in the housing and labor markets, the dollar could be in for some big losses to higher-yielding counterparts.
Its already been a rough month for the dollar versus resource-linked currencies, and the euro and sterling joined the buck-bashing party on Friday.
The dollar tumbled to 1.4270 versus the euro, giving back all of its gains from earlier in the week. With the loss, the dollar moved within a penny of its 2009 lows.
The dollar plunged from a month-long trading range versus the sterling, slipping to a 4-week low of 1.6732 before finding support. Back in June, the dollar hit a 2009 low of 1.6744.
Even the yen battered the dollar on Friday. The buck slipped to 94.58 by mid-day after challenging a monthly high near 96 in the previous session.
Versus the loonie, the dollar dropped to C$1.0762, coming within a hair of Monday's 10-month low of C$1.0749. The U.S. economy continued to shrink in the second quarter, according to new government statistics released Friday, although the pace of contraction slowed by more than economists had been expecting.
The U.S. Commerce Department revealed that Gross Domestic Product, a closely watched measure of broad economic performance, fell at a pace of 1 percent for the second quarter. Economists had expected GDP to fall at a 1.5 percent rate.
And while the Institute for Supply Management - Chicago released a report on Friday showing a continued contraction in manufacturing activity in the month of July, the pace of contraction slowed by a little more than economists had been expecting.
North of the border, Canadian real gross domestic product (GDP) decreased 0.5% in May, a faster rate of decline than in the previous three months, according to data released Friday by Statistics Canada.
Economist were looking for GDP to fall 0.3% in May.
The report fueled hopes that the world's biggest economy could lead the world out of the worst recession in decades, and sooner than once feared.
Traders had been hedging of late, refusing to go all-in on the prospect of a global recovery beginning by year's end. However, with stocks on the rise and a number of key indicators showing a faint pulse in the housing and labor markets, the dollar could be in for some big losses to higher-yielding counterparts.
Its already been a rough month for the dollar versus resource-linked currencies, and the euro and sterling joined the buck-bashing party on Friday.
The dollar tumbled to 1.4270 versus the euro, giving back all of its gains from earlier in the week. With the loss, the dollar moved within a penny of its 2009 lows.
The dollar plunged from a month-long trading range versus the sterling, slipping to a 4-week low of 1.6732 before finding support. Back in June, the dollar hit a 2009 low of 1.6744.
Even the yen battered the dollar on Friday. The buck slipped to 94.58 by mid-day after challenging a monthly high near 96 in the previous session.
Versus the loonie, the dollar dropped to C$1.0762, coming within a hair of Monday's 10-month low of C$1.0749. The U.S. economy continued to shrink in the second quarter, according to new government statistics released Friday, although the pace of contraction slowed by more than economists had been expecting.
The U.S. Commerce Department revealed that Gross Domestic Product, a closely watched measure of broad economic performance, fell at a pace of 1 percent for the second quarter. Economists had expected GDP to fall at a 1.5 percent rate.
And while the Institute for Supply Management - Chicago released a report on Friday showing a continued contraction in manufacturing activity in the month of July, the pace of contraction slowed by a little more than economists had been expecting.
North of the border, Canadian real gross domestic product (GDP) decreased 0.5% in May, a faster rate of decline than in the previous three months, according to data released Friday by Statistics Canada.
Economist were looking for GDP to fall 0.3% in May.
Until Dollar Traders Take in the NFPs, the RBA, ECB and BoE will Guide the Market
This is article is released weekdays under the heading "Daily Fundamentals" at 5pm EST on www.dailyfx.comThere is a lot of data scheduled over the coming week; and much of it holds the kind of market moving impact that could trigger breakouts. This is fortunate for those that love volatility; because many of the majors are resting on major anti-dollar support levels. All these individual releases aside though, the dollar will be put on the spot light immediately upon the open of Monday's session in the Far East.
U.S. DOLLAR TANKS AS GDP REPORT SHOWS LESS CONTRACTION
The U.S. Dollar was hit hard on Friday. Traders aggressively sold the Dollar after the government reported a lower than estimated decline in 2nd Quarter GDP. Today’s number suggests that the U.S. economy is closer to a recovery. This triggered greater demand for higher yielding, higher risk assets.
The GBP USD was the big gainer today. A spike through 1.6585 turned the main trend to up on the daily chart and triggered a breakout rally. Currently this currency pair is in a position to challenge the June high at 1.6743. In addition to the weaker U.S. GDP number, traders are anticipating a change in the Bank of England’s asset buyback policy at next week’s central bank meeting.
Stronger appetite for risk also triggered a breakout rally in the EUR USD. For most of this week, this currency pair had been working on a possible weekly closing price reversal. Today’s rally exceeded a key retracement zone and also put this market higher for the week. The current upside momentum indicates that this market may be poised to test the high for the year at 1.4337 next week.
Weaker equity markets, and a report showing that the U.S. economy contracted less than estimated, put selling pressure on the USD JPY. This currency pair broke minor support at 94.95 to 94.72 during the day and never looked back. Downside momentum is building which could threaten the uptrend if 94.01 is violated.
The USD CAD tested the low for the week at 1.0748 and closed in a position to take it out next week. Today’s strong rally in the Canadian Dollar was triggered by signs of a recovery in the U.S. economy and higher crude oil. A break next week in the equity markets could limit losses to the downside.
Increased demand for higher yielding assets helped rally the AUD USD to a new high for the year. This move is likely to continue unless the equity markets begin a sizeable correction. It all depends on whether traders decide to follow the economic data or the movement in the U.S. equity markets.
The NZD USD recovered nicely following yesterday’s sell-off. Today’s upside reaction was due to a better than expected U.S. GDP Report. This market is either going to break out to the upside or form a secondary lower top. It all depends on which set of fundamentals traders decide to follow. Longer-term New Zealand Dollar traders may be focusing on bearish comments from the Reserve Bank of New Zealand which suggested that the central bank is not through cutting interest rates. Shorter-term traders may be concentrating on the possible improvement in the U.S. economy leading to greater demand for higher yielding assets.
Please do not hesitate to contact us at 1-800-971-2440, with any questions.
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from Brewer FX, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
The GBP USD was the big gainer today. A spike through 1.6585 turned the main trend to up on the daily chart and triggered a breakout rally. Currently this currency pair is in a position to challenge the June high at 1.6743. In addition to the weaker U.S. GDP number, traders are anticipating a change in the Bank of England’s asset buyback policy at next week’s central bank meeting.
Stronger appetite for risk also triggered a breakout rally in the EUR USD. For most of this week, this currency pair had been working on a possible weekly closing price reversal. Today’s rally exceeded a key retracement zone and also put this market higher for the week. The current upside momentum indicates that this market may be poised to test the high for the year at 1.4337 next week.
Weaker equity markets, and a report showing that the U.S. economy contracted less than estimated, put selling pressure on the USD JPY. This currency pair broke minor support at 94.95 to 94.72 during the day and never looked back. Downside momentum is building which could threaten the uptrend if 94.01 is violated.
The USD CAD tested the low for the week at 1.0748 and closed in a position to take it out next week. Today’s strong rally in the Canadian Dollar was triggered by signs of a recovery in the U.S. economy and higher crude oil. A break next week in the equity markets could limit losses to the downside.
Increased demand for higher yielding assets helped rally the AUD USD to a new high for the year. This move is likely to continue unless the equity markets begin a sizeable correction. It all depends on whether traders decide to follow the economic data or the movement in the U.S. equity markets.
The NZD USD recovered nicely following yesterday’s sell-off. Today’s upside reaction was due to a better than expected U.S. GDP Report. This market is either going to break out to the upside or form a secondary lower top. It all depends on which set of fundamentals traders decide to follow. Longer-term New Zealand Dollar traders may be focusing on bearish comments from the Reserve Bank of New Zealand which suggested that the central bank is not through cutting interest rates. Shorter-term traders may be concentrating on the possible improvement in the U.S. economy leading to greater demand for higher yielding assets.
Please do not hesitate to contact us at 1-800-971-2440, with any questions.
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from Brewer FX, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
31-07-2009 16:55 Interbank dollar drops by weekend
The National Bank appeared in the market with auction sale of the euro at 11 UAH/EUR. On July 30, interbank also closed with currency quotations down to 8.005-8.052 UAH/USD and 11.257-11.326 UAH/EUR. The NBU appeared in the market with a rate of 7.73-7.75 UAH/USD. Friday's average purchase rate of the cash US dollar at Ukrainian banks, compared to Thursday's, reduced by UAH 0.0346 to UAH 7.9466. The sale rate of the US dollar fell by UAH 0.0388 to UAH 8.1248. The average purchase rate of the euro reduced by UAH 0.0403 to UAH 11.1862, and sale rate by UAH 0.0676 to UAH 11.5172. The National Bank strengthened the official hryvnia for July 31 to 7.698 UAH/USD and 10.817999 UAH/EUR.
Market Wire Update
The markets sold the dollar and bought oil on Friday in a month-end move that ripped into the market as the European session closed. Equity trade did not back things, and that creates a question mark in regard to it's sustainability. The move is about as parabolic as it gets, and is highly unlikely to hold for too long. However to reverse it will need lower equities, and oil markets to back off 68.50. The IMF seemed to spark things with a call that questioned bond values, and tied in with a U.S. GDP release that was not as poor as expected.
The market reacted, but the lack of equity follow-through now leaves a huge question as to how this can hold. The administration will be delighted with the weaker dollar, the overseas central banks however will be less than happy with such a severe move. The dollar index hit 78.00, a 12 month low area, and a price point that previously has been very well protected by the international markets.
Dollar Swing Point: Short-dollar trends on the majors, but dramatically Oversold dollar reads, and way outside the daily trading ranges. These pairs will reverse the moment equity markets drop lower. Equities have not backed these moves at all, and that is a red flag.
Dollar Drivers. Long Trends, Long Momentum: Red Flag. The global dollar drivers are in neutral momentum reads, and outside of oil and gold, have not shown anything that suggests they will be backing the market holding these extended looking dollar index reads.
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Written by TheLFB Trade Team, © 2007-2009 LFB Services, LLC. All rights reserved.
TheLFB Risk Disclaimer
The market reacted, but the lack of equity follow-through now leaves a huge question as to how this can hold. The administration will be delighted with the weaker dollar, the overseas central banks however will be less than happy with such a severe move. The dollar index hit 78.00, a 12 month low area, and a price point that previously has been very well protected by the international markets.
Dollar Swing Point: Short-dollar trends on the majors, but dramatically Oversold dollar reads, and way outside the daily trading ranges. These pairs will reverse the moment equity markets drop lower. Equities have not backed these moves at all, and that is a red flag.
Dollar Drivers. Long Trends, Long Momentum: Red Flag. The global dollar drivers are in neutral momentum reads, and outside of oil and gold, have not shown anything that suggests they will be backing the market holding these extended looking dollar index reads.
Trader membership information
For a forex proprietary news feed for your site, contact us.
Written by TheLFB Trade Team, © 2007-2009 LFB Services, LLC. All rights reserved.
TheLFB Risk Disclaimer
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ECB: What is Next?
Despite the unstable economic environment, the worst might be over in the United States and in Europe. As a result, rates should remain on hold for some time and then climb again along with the economic expansion. The U.S. dollar is moving away from the lows of the past days, but the medium term trend remains bearish for now.
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U.S.: The economic picture improving The economic picture is improving in the United States, as both housing and consumes appear to be designing a bottom at current levels. With about half USD 300 billion of long Treasuries and USD 1.45 trillion of Agency debt still to be bought out, the Federal Reserve will keep rates steady for now. However, rates should then rise, once the economy growth will become more incisive. During his testimony on Capitol Hill, Mr. Bernanke anticipated an increase in unemployment and announced that the Fed is holding less U.S. Treasures than before the financial crisis started. In effect, the job market remains weak, although the pace of decline is slowing. In May, non-farm payroll slid by 345,000 (-500,000 expected) versus April’s fall of 504,000 and March’s -652,000. The decline was broad-based with the auto industry registering about 20% of the losses. The unemployment rate is now 9.4% from 8.9% in April. Personal income increased 0.5% month on month in April, while personal spending declined 0.1%. On a yearly basis, personal income is up 0.7% and personal spending is down 1.5%.
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U.S.: The economic picture improving The economic picture is improving in the United States, as both housing and consumes appear to be designing a bottom at current levels. With about half USD 300 billion of long Treasuries and USD 1.45 trillion of Agency debt still to be bought out, the Federal Reserve will keep rates steady for now. However, rates should then rise, once the economy growth will become more incisive. During his testimony on Capitol Hill, Mr. Bernanke anticipated an increase in unemployment and announced that the Fed is holding less U.S. Treasures than before the financial crisis started. In effect, the job market remains weak, although the pace of decline is slowing. In May, non-farm payroll slid by 345,000 (-500,000 expected) versus April’s fall of 504,000 and March’s -652,000. The decline was broad-based with the auto industry registering about 20% of the losses. The unemployment rate is now 9.4% from 8.9% in April. Personal income increased 0.5% month on month in April, while personal spending declined 0.1%. On a yearly basis, personal income is up 0.7% and personal spending is down 1.5%.
Focus on the Fed Decision of Next Week
Global markets are waiting for the Federal Reserve meeting of next week. Rates should remain on hold for the coming months and eventually rise along with the economic growth. In the mean time, the U.S. dollar’s rebound might continue over the short term.
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Awaiting for the Fed’s meetingThe state of the U.S. economy is slowing improving, as the all the twelve Federal Reserve District Banks indicated in the periodic “Beige Book” report that growth remains subdued, albeit the decline appears to be moderating. Consumers are still cautious about what item to buy, but home sales are increasing and prices should again rise in the coming months. In effect, in May, retail sales climbed by 0.5%, after having declined 0.2% in April. Sales of autos and parts showed a 0.5% increase for the first time since January. However, on a yearly basis, retail sales are still down 11.1% from 9.2% in April. The job market is weak, although the pace of decline is slowing. Initial jobless touched the lowest level since January. They fell to 601,000 for the week ending June 6th from 625,000 registered the previous week.
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Awaiting for the Fed’s meetingThe state of the U.S. economy is slowing improving, as the all the twelve Federal Reserve District Banks indicated in the periodic “Beige Book” report that growth remains subdued, albeit the decline appears to be moderating. Consumers are still cautious about what item to buy, but home sales are increasing and prices should again rise in the coming months. In effect, in May, retail sales climbed by 0.5%, after having declined 0.2% in April. Sales of autos and parts showed a 0.5% increase for the first time since January. However, on a yearly basis, retail sales are still down 11.1% from 9.2% in April. The job market is weak, although the pace of decline is slowing. Initial jobless touched the lowest level since January. They fell to 601,000 for the week ending June 6th from 625,000 registered the previous week.
Fed’s Decision On Target
The U.S. dollar is still moving laterally against major currencies and a strong breakout from current levels would possibly mark the trend for the next months. Rates should remain unchanged in the U.S., but quantitative easing is still in the cards.
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U.S.: quantitative easing will be implemented?The U.S. dollar is still looking for the line of least resistance, albeit important support levels against the Euro and the British Pound will be met this week. In reality, a strong breakout from current prices would possibly mark the trend for the next months, while the Federal Reserve is meeting this week in Washington D.C. Rates should remain very accommodative, CPI core rates printed 1.8% in May from 1.9% in April, but quantitative easing remains a possibility. In effect, after having bottomed at the beginning of 2009, interest rates yields have increased consistently. The short/medium term trend is bullish over the medium/long term. In fact, the financial markets might already anticipate the next scenario which will be characterized by higher raw material prices. In May, the Conference Board’s Index, which forecasts the possible performance of the U.S. economy over 3/6 months period, increased 1.2 % (1.0% expected) month-on-month from April’s 1.1%.
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U.S.: quantitative easing will be implemented?The U.S. dollar is still looking for the line of least resistance, albeit important support levels against the Euro and the British Pound will be met this week. In reality, a strong breakout from current prices would possibly mark the trend for the next months, while the Federal Reserve is meeting this week in Washington D.C. Rates should remain very accommodative, CPI core rates printed 1.8% in May from 1.9% in April, but quantitative easing remains a possibility. In effect, after having bottomed at the beginning of 2009, interest rates yields have increased consistently. The short/medium term trend is bullish over the medium/long term. In fact, the financial markets might already anticipate the next scenario which will be characterized by higher raw material prices. In May, the Conference Board’s Index, which forecasts the possible performance of the U.S. economy over 3/6 months period, increased 1.2 % (1.0% expected) month-on-month from April’s 1.1%.
The U.S. Dollar Under Pressure
A tentative breakout is possible over the short/medium term for major currencies against the U.S. dollar, as the state of the economy in the United States remains week, albeit improving.
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The U.S. economy, improving but to out of the woods yetAs expected, the Fed left rates unchanged last week. In the final speech, FOMC confirmed that the ¡§pace of contraction is slowing¡¨, albeit the economic growth will remain subdued for some more time. The Fed will keep on buying securities at the appropriate time and for the required amount, while rates should remain accommodative for the coming months. In effect, the domestic product should decline in the second quarter as well, after having declined -5.5% in the final estimate of the first quarter. However, inventories are contracting and they could support growth in the final part of the year, or at the beginning of the next, along with an increase of consumes. In May, durable goods orders increased 1.8% month-on-month (-0.8% expected) and the personal consumer expenditure (PCE) rose 0.3% supported by the 1.4% move in personal income. Nevertheless, the increase in social security payments, which was one of the various measures introduced in the Obama fiscal stimulus package, was decisive in May¡¦s jump.
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The U.S. economy, improving but to out of the woods yetAs expected, the Fed left rates unchanged last week. In the final speech, FOMC confirmed that the ¡§pace of contraction is slowing¡¨, albeit the economic growth will remain subdued for some more time. The Fed will keep on buying securities at the appropriate time and for the required amount, while rates should remain accommodative for the coming months. In effect, the domestic product should decline in the second quarter as well, after having declined -5.5% in the final estimate of the first quarter. However, inventories are contracting and they could support growth in the final part of the year, or at the beginning of the next, along with an increase of consumes. In May, durable goods orders increased 1.8% month-on-month (-0.8% expected) and the personal consumer expenditure (PCE) rose 0.3% supported by the 1.4% move in personal income. Nevertheless, the increase in social security payments, which was one of the various measures introduced in the Obama fiscal stimulus package, was decisive in May¡¦s jump.
U.S: A Mild Recovery Ahead
A tepid recovery is expected by year-end in the United States and in Europe, as unemployment remains high and consumes slow. The U.S. dollar has found important support lines at current levels. A rebound is possible over the short term, although the longer term picture should remain bearish.
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U.S.: Unemployment is now the big challengeThe economic recovery is unfolding tepidly in the United States, albeit some improvements are expected by year end, as the government¡¦s program of about USD 1 billion to support the auto industry will be fully operative. Nevertheless, the large contraction in consumes would again increase savings, about 7% of the disposable income in May, while the jobless rate could stay near the highs for the first part of 2010. In June, payroll employment declined 467,000 (-370,000 expected) from May¡¦s down move of -322,000 and April¡¦s -519,000. As a result the unemployment rate rose to 9.50% from 9.40% the previous month. The decline covered most of the sectors with the goods producing industry loosing 223,000 jobs and the service industry giving up 244,000 positions. The average hourly earning dropped to 2.7% in June from 3.0% in May. The data was just a confirmation of the June ADP employment report, based upon private sector numbers from 500,000 firms, which showed a loss of 473,000 jobs (-400,000 expected) from May¡¦s ¡V 485,000 and April -518,000.
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U.S.: Unemployment is now the big challengeThe economic recovery is unfolding tepidly in the United States, albeit some improvements are expected by year end, as the government¡¦s program of about USD 1 billion to support the auto industry will be fully operative. Nevertheless, the large contraction in consumes would again increase savings, about 7% of the disposable income in May, while the jobless rate could stay near the highs for the first part of 2010. In June, payroll employment declined 467,000 (-370,000 expected) from May¡¦s down move of -322,000 and April¡¦s -519,000. As a result the unemployment rate rose to 9.50% from 9.40% the previous month. The decline covered most of the sectors with the goods producing industry loosing 223,000 jobs and the service industry giving up 244,000 positions. The average hourly earning dropped to 2.7% in June from 3.0% in May. The data was just a confirmation of the June ADP employment report, based upon private sector numbers from 500,000 firms, which showed a loss of 473,000 jobs (-400,000 expected) from May¡¦s ¡V 485,000 and April -518,000.
Europe: Business Sentiment Growing
The global economic recovery remains fragment and uneven for now, as China is expected to grow above 8.0% in the coming months. In the Euro zone, some nations are reacting better than others, albeit unemployment might target higher levels in future.
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Awaiting for China economics¡¦ tractionTangible signs of a global economic recovery, as well as the huge budget deficit in the United States, could weight on the U.S. dollar in the coming months. The International Monetary Fund (IMF) increased global growth prospective to 2.5% in 2010 from 2.00%, but expects the rebound to be bumpy and uneven. China should lead the way with growth reaching 8.5%, while in the United States the up move could be only 0.8%. Nonetheless, the magnitude of next rebound remains unclear. Current economic scenario, characterized by interest rates bottoming, was last seen only in 1947 and 1900. In effect, during the G8 meeting of last week, members talked about additional government intervention, as the global economy remains weak with some signs of stabilization. Germany, at the contrary, is concerned that spending will increase debt and run inflation. However, all members agreed that it is too early to remove the enormous fiscal stimulus package. Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.
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Awaiting for China economics¡¦ tractionTangible signs of a global economic recovery, as well as the huge budget deficit in the United States, could weight on the U.S. dollar in the coming months. The International Monetary Fund (IMF) increased global growth prospective to 2.5% in 2010 from 2.00%, but expects the rebound to be bumpy and uneven. China should lead the way with growth reaching 8.5%, while in the United States the up move could be only 0.8%. Nonetheless, the magnitude of next rebound remains unclear. Current economic scenario, characterized by interest rates bottoming, was last seen only in 1947 and 1900. In effect, during the G8 meeting of last week, members talked about additional government intervention, as the global economy remains weak with some signs of stabilization. Germany, at the contrary, is concerned that spending will increase debt and run inflation. However, all members agreed that it is too early to remove the enormous fiscal stimulus package. Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.
USD: Breakout or Failure?
The U.S. dollar is at key support lines against major currencies and the short/medium/long term trend remains bearish. However, a breakout failure from current levels could signal a short (medium term) rebound for the green back.
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U.S: Recession is over or not?During his testimony in front of the house panel last week, president Bernanke confirmed a tentative stabilization for the U.S. economy at these levels, although rates should remain low for the next months as well. In reality, the huge consumer and business debit will require years to be repaid. Private sector spending has fallen to record lows and savings have increased. The average duration of the unemployment rate in the United States is at a record high, while tax incomes have declined sharply for the government agencies. The decrease of spending by the private sector has been only marginally substituted by the various government interventions and the trend should continue in the years to come. Unemployment remains the weakest spot, as jobless claims rose to 554,000 in the week of July 18th from 524,000 the previous week. The housing market is at the contrary designing an interesting bottom, albeit prices are still declining. For the third consecutive month, home sales rose 3.6% in June (+1.3% expected) to 4.84 million. The increase was broad-based with condos rising 14% and single-family homes moving up 2.4%. Unsold home inventories declined instead to 9.4 months from the all-time high of 11.3 months registered in March of 2008. In effect, the worst might be over for the real estate market, if history repeats itself. Since1963 important bottoms occurred every 8/9 years: 1967, 1975, 1983, 1991, 2000, 2008/9 (?).
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U.S: Recession is over or not?During his testimony in front of the house panel last week, president Bernanke confirmed a tentative stabilization for the U.S. economy at these levels, although rates should remain low for the next months as well. In reality, the huge consumer and business debit will require years to be repaid. Private sector spending has fallen to record lows and savings have increased. The average duration of the unemployment rate in the United States is at a record high, while tax incomes have declined sharply for the government agencies. The decrease of spending by the private sector has been only marginally substituted by the various government interventions and the trend should continue in the years to come. Unemployment remains the weakest spot, as jobless claims rose to 554,000 in the week of July 18th from 524,000 the previous week. The housing market is at the contrary designing an interesting bottom, albeit prices are still declining. For the third consecutive month, home sales rose 3.6% in June (+1.3% expected) to 4.84 million. The increase was broad-based with condos rising 14% and single-family homes moving up 2.4%. Unsold home inventories declined instead to 9.4 months from the all-time high of 11.3 months registered in March of 2008. In effect, the worst might be over for the real estate market, if history repeats itself. Since1963 important bottoms occurred every 8/9 years: 1967, 1975, 1983, 1991, 2000, 2008/9 (?).
USD Advances as Equities Tumble
The dollar advanced against the pound and the euro, rising to session highs by afternoon trading amid further losses in the US equity bourses. The Dow Jones, Nasdaq and S&P 500 were all lower by more than 1.2% as questions over the prospects for a global economic recovery continue to linger. Crude oil extended its losses and remaining mired beneath the $70 per barrel level, tumbling to $62.38 per barrel.Safe haven flows continued to dictate direction in the foreign exchange market with the Australian dollar, euro and sterling tracking equities lower. Risk aversion will be the key driver of forex flows over the coming weeks as traders digest incoming economic reports to gauge the prospects for an economic rebound.
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Euro Relinquishes Gains This article contains the following sections:
Euro Relinquishes Ga
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Euro Relinquishes Gains This article contains the following sections:
Euro Relinquishes Ga
JPY Advances on Safe Haven Gains
The dollar was mixed in the New York session; firmer against the euro toward the 1.39-region and weaker versus the yen near the 94-figure. The dearth of US economic data out today will keep the focus on stocks, which were marginally higher in early Wednesday trading as earnings season kicks off in earnest.
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Euro Drifts LowerThe euro tumbled against the yen and dollar overnight, falling to 130.44 and 1.3861, respectively. The equity markets are still the key drivers of foreign exchange movements with lingering questions over the global economic recovery and bouts of heightened risk aversion dictating sentiment. This article contains the following sections:
Euro Drifts Lower
Yen posts Safe-Haven Gains
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Euro Drifts LowerThe euro tumbled against the yen and dollar overnight, falling to 130.44 and 1.3861, respectively. The equity markets are still the key drivers of foreign exchange movements with lingering questions over the global economic recovery and bouts of heightened risk aversion dictating sentiment. This article contains the following sections:
Euro Drifts Lower
Yen posts Safe-Haven Gains
GBP Surges as BoE Unchanged
The dollar lost ground against the euro and the sterling, relinquishing its gain from the previous session to fall to 1.4071 and 1.6379, respectively. The data released earlier included weekly jobless claims, wholesale sales and wholesale inventories. Weekly jobless claims improved to 565k, down from 614k a week earlier. The May wholesale inventories declined by less than estimated at -0.8% and improving from the April reading of -1.4%.
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Pound Bounces on BoEThe British pound rallied sharply in London trading, prompted by the results of the Bank of England’s monetary policy decision and sending cable above the 1.63-level. The BoE left interest rates unchanged at 0.5% and announced that it would maintain its current asset purchase plan at 125 billion pounds. The Bank said it would “review the scale of the program again at its August meeting, alongside its latest inflation projections”. This article contains the following sections:
Pound Bounces on BoE
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Pound Bounces on BoEThe British pound rallied sharply in London trading, prompted by the results of the Bank of England’s monetary policy decision and sending cable above the 1.63-level. The BoE left interest rates unchanged at 0.5% and announced that it would maintain its current asset purchase plan at 125 billion pounds. The Bank said it would “review the scale of the program again at its August meeting, alongside its latest inflation projections”. This article contains the following sections:
Pound Bounces on BoE
USD Drifts Lower, Eyes Bank Earnings
The greenback was mixed in the New York session as the US equity bourses dipped into negative territory in morning trading. With earnings season kicking off in earnest this week, the equity market is seen setting the tone for foreign exchange movements, as traders will likely push the dollar and yen higher on any dips in stocks. The financial sector will dominate the headlines as key earnings reports are due out from Goldman Sachs (Tuesday), JP Morgan Chase (Thursday), Citigroup and Bank of America (Friday). Recent US economic reports have raised doubts over an imminent US economic recovery, thereby prompting a pullback in stocks and shifting the focus to corporate earnings. As a result, the greenback has continued to benefit from heightened risk aversion and will likely remained locked in a range over the coming weeks amid patchy US data. The calendar for the coming week consist of June retail sales, PPI, real earnings, CPI, NY Fed manufacturing, industrial production, weekly jobless claims, July Philadelphia Fed manufacturing survey, June housing starts, building permits, and the July NAHB housing market index. The headline retail sales figure is estimated to slip to 0.4% in June, versus 0.5% from May, while the core retail sales reading is estimated to remain unchanged at 0.5%. This article contains the following sections:
Euro Edges Higher
Euro Edges Higher
USD Holds Steady on Data
The greenback recovered from earlier session lows against the majors at the start of Tuesday trading, pushing the euro off from above the 1.40-level to 1.3940 and the pound beneath the 1.63-figure.US economic reports released earlier in the session were mixed, with both retail sales and producer prices higher than expected for June. The headline retail sales figure edged up by 0.6% and beating estimates for a decline to 0.4% from 0.5% in May. The excluding autos reading missed forecasts for an unchanged number at 0.5%, instead declining to 0.3%. The June producer price index was sharply higher than expected, posting a monthly increase of 1.8%, compared with consensus estimates for an increase to 0.9% from 0.2% and lower by 4.6% on an annualized basis versus a 5.0% decline previously. The core PPI figures revealed a monthly increase of 0.5%, versus a 0.1% decline a month earlier and a 3.3% jump on an annualized basis compared with 3.0% a year prior.Although the highly anticipated earnings report from Goldman Sachs beat consensus estimates, the equity market had largely priced in strong earnings and drifted into negative territory at the open. The Dow Jones, Nasdaq and the S&P 500 were lower by nearly 0.4%. Declining equities pushed the dollar off its session lows, recovering from the 1.40-level to 1.3950 against the euro. Crude oil continued to hover near the $60 per barrel level. This article contains the following sections:
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Greenback Drifts Lower on Shift to Risk
The dollar fell against the majors at the start of the week, sliding to a 6-week low against the euro at 1.4248 and a one-month low versus the Canadian dollar at 1.1023. The greenback came under pressure amid gains in the US stock market, which was prompted by news that troubled lender CIT would be bailed out by bond holders and thus avert bankruptcy. The economic calendar saw the release of the June leading economic indicators, which declined by less than expected to 0.7%, beating calls for a decline to 0.5% versus 1.2% in May. The data slated for release this week will see May home prices, weekly jobless claims, June home sales and the July University of Michigan consumer sentiment survey. The major fx pairs are likely to remain confined within range in the upcoming week with only a handful of reports slated for release. The key highlight will be Fed Chairman Bernanke’s Congressional testimony, which begins on Tuesday. Markets will be looking to Bernanke’s comments to Congress on how the FOMC will begin to rein in quantitative easing in order to quell nascent inflationary fears. This article contains the following sections:
Loonie Jumps to One-Month High
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Loonie Jumps to One-Month High
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USD Edges up as Stocks Drift
The greenback recovered from its earlier losses against the majors as the US equity bourses slipped into negative territory by afternoon trading. The dollar bounced off its near 2-month lows versus the euro near the 1.43-level and recovered slightly after touching a new 10-month low against the Canadian dollar at 1.0781. The June new home sales report blew away consensus estimates, posting its largest advance in 8-years, increasing to 384,000 units and up 11% on the month. The data reinforced sentiment that the US economy is beginning to bottom out. The reports slated for release during the week include the Richmond Fed manufacturing survey, the Conference Board’s consumer confidence survey, durable goods orders, weekly jobless claims, Q2 GDP and the July Chicago PMI. Forecasts for this week’s reports predominantly reveal improving fundamentals, which are likely to be positive for stocks and detrimental to the dollar.
Global Equity Slump Props USD
Risk aversion propped the dollar higher against the majors in Wednesday trading amid a retreat in the global equity markets – with Shanghai’s Composite Index plummeting by 5% overnight. Commodities also slumped with gold falling to its lowest level in 2-weeks just above the $927 per ounce level and crude oil sliding to below $64 per barrel. The greenback pushed the euro toward the 1.40-figure and the Swiss franc around the 1.09-handle. US economic reports released this morning saw durable goods orders decline sharply in June, posting a monthly decline of 2.5% versus a downwardly revised increase of 1.3% from May. The excluding transports durable goods orders improved to 1.1% compared with a downwardly revised 0.8% increase a month prior. The Fed’s Beige Book revealed the pace of economic decline had moderated or stabilized at a low level in most districts adding that the manufacturing sector remained subdued but slightly more positive than in the past. The Fed said there was still slack in the labor markets, with most sectors reducing jobs or holding steady and net employment falling. Meanwhile, NY Fed President Dudley expressed optimism over the economy, saying he expects moderate growth in the second half of this year, albeit considerably slower than in past recoveries. Dudley said “the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation”, suggesting that the Fed will likely maintain low interest rates for some time to come. Lastly, he said that “if the recovery does, in fact, turn out to be lackluster, the unemployment rate is likely to remain elevated and capacity utilization rates unusually low” in the near-term. This article contains the following sections:
Euro Tumbles to 1.40 You need to be logged in to Forexnews to view the remainder of this article. Please login with your username and password at the top left corner of the site, or Request Free username and password to receive full access.
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