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Asian Session - Bernankes Words Still Resonate
June 04, 2008 10:15 AM CEST
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G10 Advancers and Decliners vs USD |
| | AUD | 0.36 |  | | | JPY | 0.23 | | | | CHF | 0.08 | | | | SEK | 0.05 | | | | NOK | 0.01 | |  | DKK | -0.01 | | | EUR | -0.02 | | | NZD | -0.32 | | | GBP | -0.41 | | | CAD | -0.54 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 14,435.57 | + 1.59 | | Hang Seng Index | 24,351.46 | - 0.10 | | Shanghai Index | 3,369.91 | - 1.93 | | FTSE futures | 6,019.00 | - 0.77 | | CAC futures | 4,946.00 | - 0.11 | | SMI Futures | 7,558.00 | - 0.47 | | DJIA futures | 12,404.00 | + 0.01 |
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World Markets |
Current Level |
% Change |
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| Gold | 876.70 | - 0.43 | | Silver | 16.68 | - 0.56 | | VIX | 20.24 | + 2.06 | | Crude wti | 123.82 | - 0.39 | | USD Index | 73.37 | + 0.17 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| PMI Composite (May Final) | 51.1 | 51.1p | EZ / 9.00 | | PMI Services (May Final) | 50.6 | 50.6p | EZ / 9.00 | | CIPS/RBS Report on Services (May) | 50.5 | 50.4 | UK / 9.30 | | Retail Sales (Apr) | 0.2%(-0.8% | -0.4%(-1.6 | EZ / 10.00 | | BRC Shop Price Index (May) | -- | +0.1%(+1.2 | UK / 10.30 | | ADP Employment Change (May) | -30k | 10k | US / 13.15 | | Productivity (Q1 Final) %q/q Ann. | 2.5% | 2.2%p | US / 13.30 | | Unit Labour Costs (Q1 Final) %q/q Ann. | 2.0% | 2.2%p | US / 13.30 | | ISM Non-Manufacturing Index (May) | 51.0 | 52.0 | US / 15.00 |
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Currency Tech |
AUDUSD
R 3: 0.9655
R 2: 0.9639
R 1: 0.9614
CURRENT: 0.9567
S 1: 0.9503
S 2: 0.9430
S 3: 0.9392
EURJPY
R 3: 164.51
R 2: 164.21
R 1: 163.22
CURRENT: 162.11
S 1: 161.83
S 2: 161.60
S 3: 160.86
USDSGD
R 3: 1.3774
R 2: 1.3732
R 1: 1.3688
CURRENT: 1.3651
S 1: 1.3581
S 2: 1.3554
S 3: 1.3470
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Market Brief |
Usd was mixed in the Asian Session as traders continued to contemplate what lasting effect Bernanke's words would have on the market. EurUsd bounced around the 1.5412 – 1.5470 range, while in choppy trading UsdJpy moved back up to the 105.30 level. The resilient AudUsd, which broke below 0.9500 support after Bernankes statement, was able to rally to 0.9570 on the back of strong economic data. Carry trades were unable to hold gains, and emerging Asia slipped slightly against the greenback.
We are still seeing a slight reduction on risk. Precious metals and energy commodities are unwinding in a orderly fashion, while the VIX continues to inch upwards. Asian markets trading was mixed this morning. A stronger dollar helped Japanese and Korean exporters, but worries about large fundraising plans of Chinese companies hurt stocks in China and Hong Kong. Oil prices closed at their lowest level in three weeks, after the dollar firmed against its major rivals; the Jul '08 contract down $3.45 to $124.31. Gold ended with losses, closing at its weakest level in three sessions; the most active Aug '08 contract down $11.50 to $885.50. Jul '08 silver -7.5 ¢ at $16.835/oz.
Bernanke's comments yesterday cemented the fact that the Fed would be holding interest rates for the next few months, and was the catalyst for a massive buying of the Usd. In his statement broadcasted from Barcelona, Bernanke gave the greatest risk of the US economy as the upside risk to inflation which could continue higher on the back of elevated commodity prices and inflation expectations.
In a significant shift, Bernanke acknowledged for the first time that a weak Usd played a part in escalating inflationary pressures and commodity prices (but stopped short of advocating a "strong Usd"). While a move lower in rates can't be entirely ruled out, there would have to be a very severe economic downturn (such as crashing home prices and corresponding contraction of household consumption which the Chairman mentioned) to force the Fed to act.
Out of the Barcelona international monetary policy conference, BoJ Chairman Shirakawa warned that Japan would have a tough economic path ahead of it and would see near term economic weakness. Japanese firms cut capital spending less than expected in January through March from a year earlier, prompting views that economic growth for the quarter could be revised higher at a time when uncertainty hangs over the economy. Underscoring that view, capital spending excluding software rose from the previous quarter, but economists said weak corporate sales and profits still mean there is a downbeat outlook for the world's second-largest economy.
Australia's economy grew by more than expected in the first quarter, showing considerable resilience to high interest rates and surging living costs and added to the risk that interest rates may have to rise again. The income side of the economy was also strong as booming prices for Australia's resource exports fattened profits and wages. Australia Q1 GDP surprise to the upside by 0.6% q/q vs. 0.3% exp enabled the Aud to rally.
British consumer confidence fell further in May as people became even gloomier about the current state of the economy, a survey showed on Wednesday. The Nationwide consumer confidence index fell by 1 point to 69, continuing a decline that started in Sept. 2007 in the wake of the global credit crunch. "Consumer sentiment remained gloomy in May as consumers revised their views about the current economic situation," said Fionnuala Earley, Nationwide's chief economist.
In the Euro-Zone, retails sales probably fell further in April as national data released earlier already pointed lower. In the US, ISM non-manufacturing survey is expected to drop to around 51.0, reversing some of the increase seen in April. However, weakness in consumer confidence put risk firmly to the downside.
19.45gmt - Fed's Bernanke speaks on economic challenges.
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