Posted by Finance Professional on July 12, 2009 under Forex Market News, Stock Market News |
Risk assets recovered last night, Alcoa beating expectations, and the IMF saying recovery was likely from Q1 2010, all helping. Some also attributed the optimism to the better weekly jobless number, despite its seasonal distortion. The S&P500′s +0.4% gain saves it from breaching the critical level of 879, but only just. Oil was stuck at $$60, but copper rebounded 3.1%. The US yield curve was pressured higher,10yr treasuries up 10bp, but 3mth Libor managed another 1.5bp decline to 0.51%. UK mortgage lender Bradford and Bingley’s failure was officially recognised as a credit event by ISDA. Westpac (NZ) announced a 5yr domestic NZD bond issue, government guaranteed, priced at swap + 60bp.
The US dollar fell throughout the London and NY sessions, losing 1.1% across a basket. The G8 meeting discussed currencies only with respect to avoiding competitive devaluations, but China did add the reserve currency system should be improved. EUR moved from 1.3900 to 1.4030. GBP moved from 1.6100 to 1.6350. The BoE kept rates and QE unchanged, inciting short covering of the currency and selling of gilts. USD/JPY stalled around 93, the MOF issuing a statement the currency is being watched.
AUD hardly budged during the bounce in risk, ranging between 0.7800 and 0.7860.
NZD spiked to 0.6340 but spent most of the evening around 0.6300. AUD/NZD stabilised between 1.2400 and 1.2450.
US initial jobless claims fell a very steep 52k to 565k last week, their lowest level since January this year. However it is likely that the fall in claims is due to a seasonality distortion caused by the usual annual auto sector layoffs for new model retooling not taking place this year because there have already been substantial layoffs in the industry due to the bankruptcies of GM and Chrysler. If this is the case, it means the dip in claims, which should be temporary, is a misleading signal of job market strength. In the previous week, continuing claims surged to a new cycle high, after a month or more of stalled claims. This is a clearer signal of ongoing job market weakness.
US wholesale inventories fell 0.8%, a slower pace of decline in May than in the previous five months, though the high price of petroleum products probably muted the downside (the value of stocks is measured in this report). Thus far in Q2, inventories are still likely to be a drag on GDP growth.
Fedspeak: The economy is deteriorating ‘more slowly’, says Fed Governor Duke. The government’s support for the financial system is having an impact on the markets, banks and the economy.
The Bank of England left both interest rates and the size of the quantitative easing program unchanged following this week’s policy meeting, but we are likely to see the QE program expanded by at least £25bn following the quarterly forecasting round in August. That would take the QE asset purchase program to £150bn (£112 spent so far). A further QE extension is possible but would require the consent of the Treasury, which should be forthcoming. Such a move would go some way towards unwinding current market expectations that BoE interest rate increases are likely in early 2010. On the data front, the trade deficit of £6.3bn in June was the narrowest since August 2006, thanks to a 4% fall in imports outpacing a 1% decline on the export side.
Canadian housing starts rose 8.0% in June, on top of a 10.8% rise in May. The strength was in single family starts in urban areas, though the annual pace of decline of starts remains weak at -33.9% yr (improved from -48.4% yr in February).
Outlook
NZD should remain under 0.6350 today, and tonight’s direction will be determined by US equities behaviour. Despite last night’s bounce, risk sentiment retains a slightly downbeat tone, and we favour the NZD below 0.60 over the next month or two.
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Posted by Finance Professional on under Forex Market News, Stock Market News |
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Posted by Finance Professional on July 9, 2009 under Forex Market News, Stock Market News |
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Posted by admin on July 6, 2009 under Forex Market News |
The US dollar should not be in the news as much this week as the focus for the American markets shifts to earnings. The dollar remained mostly range bound against the major currencies. The Euro/USD currency pair tested the top of its range of 1.42 at the beginning of the week and the bottom of the range around its support level of 1.3990. With the pair trading around the bottom of the range and technical indicators this pair is worth a look at having a long position.
The US dollar/Swiss Franc currency pair broke down to support of 1.072 early in the week. It bounced off that level and back up to just under 1.09 resistance level and hung around it late in the week. The rebound was in contrast to some of the technical indicators which makes it difficult to determine a short term trend. In addition it was rumored last week that the Swiss National was getting involved in the currency markets again and it is unclear the affect they may have on the Swiss Franc in relation to the US dollar and the Euro. The US Dollar/Swiss Franc currency pair is also having large trading swings around the exponential moving averages but should remain relatively range bound for the next week.
The British Pound/US Dollar currency pair in the beginning of July is trading between 1.63 and 1.67. The currency pair has been stuck in a pretty tight range for around a month. Some of the technical indicators are showing a trend that is moving to the downside and a breakdown of the support level at 1.6330 might be coming in the near future.
The US Dollar/Japanese Yen has been swinging wildly around its exponential moving averages and has had a very wide range over the past one to two weeks of 95.4 to 97. There is pretty clear short term resistance around the 97 level and support levels around 95.3.
The US Dollar/Canadian Dollar is still trading around the highs of its short term, several month range. Over the past 2 weeks the currency pair has bounce off of its near term resistance level of 1.165 two times. It has also hit its near term support level of 1.145 three times. After just bouncing off of the resistance level it should continue downward this week, however oil prices could either accelerate its move to the downside or make the pair rebound and breakout above its highs.
The Australian Dollar/US Dollar broke below short term support 0.7984, then traded straight down to 0.7900. While it rebounded back to 0.7958 the trend still looks bearish and overall downtrend should take it to 0.7785, the next support level. The Australian economy is also very dependant on natural resources like gold which was down nearly 1 percent last week.