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US Session-The Dollar Holds On Despite a Slight Rise in Oil
July 24, 2008 10:00 PM CEST
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G10 Advancers and Decliners vs USD |
| | Jpy | 0.60 |  | | | Chf | 0.23 | |  | Eur | -0.14 | | | Dkk | -0.14 | | | Sek | -0.21 | | | Cad | -0.34 | | | Aud | -0.36 | | | Nok | -0.43 | | | Gbp | -0.67 | | | Nzd | -0.99 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA futures | 11,470.00 | - 1.23 | | S&P 500 Index | 1,267.80 | - 1.14 | | NASDAQ 100 Index | 1,839.00 | - 0.54 | | FTSE 100 Index | 5,359.00 | - 1.95 | | CAC 40 Index | 4,352.00 | - 1.45 | | DAX Index | 6,456.00 | - 1.97 | | SMI Futures | 7,060.00 | - 0.07 |
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World Markets |
Current Level |
% Change |
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| Gold | 921.80 | + 0.10 | | Silver | 17.21 | - 0.89 | | VIX | 22.36 | + 4.93 | | Crude wti | 124.70 | + 0.23 | | USD Index | 72.94 | + 0.18 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Existing Home Sales | -1.0% | 2.0% | US/22:00 |
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Currency Tech |
AUDUSD
R 3: 0.9818
R 2: 0.9794
R 1: 0.9738
CURRENT: 0.9593
S 1: 0.9597
S 2: 0.9565
S 3: 0.9477
EURJPY
R 3: 171.81
R 2: 171.07
R 1: 169.97
CURRENT: 168.93
S 1: 168.25
S 2: 166.01
S 3: 165.33
USDSGD
R 3: 1.3826
R 2: 1.3717
R 1: 1.3661
CURRENT: 1.3621
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300
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Market Brief |
The Usd carried its gains into the European session trading higher against most of the G10. The EurUsd continued to slide trading with a 1.56 handle, while the UsdJpy remains between the mid and high 107 price. The GbpUsd traded through the 1.99 level to 1.98, based on negative economic data out of the UK. Equity markets traded lower in the US and Europe based on deteriorating economic conditions in both regions. Bonds picked up steam, as the 2yr treasury yield tightened by 21bps in an abrupt move by traders to counter downside risks in other asset classes in the financial markets. Commodities started to recover today with oil higher at 125, and gold up as well at 925.
German IFO numbers dropped to its lowest level since 2005 at 97.5 vs. a consensus figure of 100. The downward trend in Eurozone economic growth is a serious issue for the ECB. It will be a difficult task for the ECB in devising a plan to address both inflation and growth pressure. The EurUsd continued to slide on the negative data out of Germany and the recent decline in oil prices, which provided additional strength to the dollar. In the UK, retail sales fell 3.9% vs. 2.5% expected, this is the largest decline since the data has been recorded. The cable fell over 100 pips due to the negative data, and our expectations for trading in the near-term are between 1.98 and 2.00. There is speculation that some of the Central banks in the G10 are expected to move into a softening cycle sooner than expected, giving way to further dollar strength.
The Usd continues to trade positively in light of a sharp drop in US equities and a minor move to the upside in oil. Jobless claims rose by 34k to 406k, which was worse than the consensus figure of 379k. The rise in jobless claims is more evidence that US economy is still in a down cycle with a little signs of a recovery in the near future. Existing home sales fell 2.6% vs. 1.0% est. which did little to move the dollar, but makes it increasingly difficult for the Fed to hike rates without further damaging growth.
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Asian Session - RBNZ Cuts Rates
July 24, 2008 9:19 AM CEST
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G10 Advancers and Decliners vs USD |
| | CAD | 0.02 | | | | JPY | 0.01 | | | NOK | -0.02 | | | CHF | -0.07 | | | SEK | -0.11 | | | DKK | -0.13 | | | EUR | -0.14 | | | AUD | -0.34 | | | GBP | -0.35 | | | NZD | -1.26 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 13,603.31 | + 2.18 | | Hang Seng Index | 23,336.25 | + 0.87 | | Shanghai Index | 2,910.29 | + 2.55 | | FTSE futures | 5,465.50 | + 1.69 | | CAC futures | 4,438.00 | + 0.49 | | SMI Futures | 7,065.00 | + 2.06 | | DJIA futures | 11,611.00 | - 0.01 |
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World Markets |
Current Level |
% Change |
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| Gold | 926.79 | + 0.64 | | Silver | 17.50 | + 0.77 | | VIX | 21.31 | + 0.61 | | Crude wti | 124.91 | + 0.37 | | USD Index | 72.79 | - 0.02 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| IFO Business Climate Index (Jul) | 100.1 | 101.3 | GE / 8.00 | | Current Account (May) s.a | -- | -€0.3bn | EZ / 8.00 | | PMI Services (Jul Prov.) | 48.8 | 49.1 | EZ / 8.00 | | PMI Manufacturing (Jul Prov.) | 48.7 | 49.2 | EZ / 8.00 | | PMI Composite (Jul Prov.) | 49.0 | 49.3 | EZ / 8.00 | | Retail Sales (Jun) | -2.6%(4.4) | 3.5%(8.1%) | UK / 8.30 | | US Existing Home Sales (Jun) | 4,940k | 4,990,k | US / 14.00 |
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Currency Tech |
AUDUSD
R 3: 0.9818
R 2: 0.9794
R 1: 0.9738
CURRENT: 0.9593
S 1: 0.9597
S 2: 0.9565
S 3: 0.9477
EURJPY
R 3: 171.81
R 2: 171.07
R 1: 169.97
CURRENT: 168.93
S 1: 168.25
S 2: 166.01
S 3: 165.33
USDSGD
R 3: 1.3826
R 2: 1.3717
R 1: 1.3661
CURRENT: 1.3621
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300
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Market Brief |
The Usd continued its strong run in Asian session as oil continued to sell-off to 6 week lows. The EurUsd fell to 1.5670 in early Asia. It attempted a weak rally above 1.5700 before slipping back to near session lows. The UsdJpy is pressuring the 108.00 resistance and NzdUsd collapsed on the RBNZ rate decision, trading down to 0.7418 (the last remaining support stands at 0.7385). The Usd buying had neutralizing effect on carry trades, with the EurJpy trading between 169.10 - 169..43 and the TryJpy jumping between 89.500 - 90.000. However, with risk appetite clearly increasing (VIX & 1m Implied Vols down), we expect carry trades to take full advantage. Asian Equity markets are stronger following the US equity indexes higher, as traders place bets that the worst of the markets weakness has passed.
In a surprise move, the RBNZ cut rates by 25bp to 8.00%, as a slight majority of economist were expecting the move to occur in September. The NzdUsd fell sharply on the news, from 0.7520 to 0.7430. The statement noted that "monetary policy has been tight for some time and is now restraining activity and medium-term inflation pressures." In addition, the RBNZ stated "providing inflation continues to improve and there is no excessive exchange rate depreciation, we would expect to lower the OCR further".. How far rates could fall would just be conjecture, but given past “neutral” policy around 6.25% we should expect both rates and the Nzd to come down significantly.
In Japan, the trade data showed the first y/y decline in export in 5 years. Overall exports dropped 1.7%, well below estimates. The decline was concentrated primarily to developed countries, but the pace of increase also fell noticeable in emerging Asia . BoJ's Mizuno hinted that the government may pronounce that Japan is currently in a recession and the BoJ is less concerned about inflation than downside economic risks. While the Jpy is trading on global risk appetite, speculation on Japan’s weak fundamentals must wait.
In the Eurozone, the German IFO index will start the European session. IFO is expected to continue its downtrend, but is still coming from a very elevated level. It’s hard to image, with steep falls in June business climate index and recent worrying market developments, that we would see anything but a decline. The Euro zone PMI could surprise to the downside, given the dreaded combination of rising prices pressure and soft economic activity.
In the UK, the retail sales will have the markets attention. After a significant increase in May’s figures, this release is looking gloomy at best. Surveys suggests the UK is heading for a sharp downward correction (and may impressive figure revised lower). We would expect, given the Gbp overbought condition, to continue to see pressure on the Gbp.
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