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US Session - Mixed Economic Data Sustains Dollar Weakness
July 01, 2008 5:56 PM CEST
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G10 Advancers and Decliners vs USD |
| | SEK | 0.60 |  | | | NOK | 0.42 | | | | JPY | 0.34 | | | | DKK | 0.27 | | | | EUR | 0.27 | | | | CHF | 0.20 | | | | GBP | 0.10 | |  | AUD | -0.38 | | | NZD | -0.51 | | | CAD | -0.53 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 13,463.20 | - 0.13 | | Hang Seng Index | 22,102.01 | + 0.27 | | FTSE 100 Index | 5,496.90 | - 2.29 | | CAC 40 Index | 4,342.58 | - 2.08 | | DJIA Index | 11,322.25 | - 0.24 | | NASDAQ 100 Index | 2,290.90 | - 0.09 | | S&P 500 Index | 1,277.51 | - 0.19 |
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World Markets |
Current Level |
% Change |
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| Gold | 943.46 | + 1.95 | | Silver | 18.01 | + 3.44 | | VIX | 24.13 | + 0.75 | | Crude wti | 142.52 | + 1.80 | | USD Index | 72.49 | + 0.04 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| No additional Release | -- | -- | -- |
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Currency Tech |
AUDUSD
R 3: 0.9828
R 2: 0.9700
R 1: 0.9670
CURRENT: 0.9533
S 1: 0.9536
S 2: 0.9491
S 3: 0.9448
EURJPY
R 3: 170.00
R 2: 169.50
R 1: 168.60
CURRENT: 166.97
S 1: 166.10
S 2: 166.00
S 3: 165.52
USDMXN
R 3: 10.4700
R 2: 10.4690
R 1: 10.3880
CURRENT: 10.3818
S 1: 10.2640
S 2: 10.2500
S 3: 10.2000
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Market Brief |
The dollar continued its downtrend in European session due to weakness in the US financial markets. The EurUsd broke resistance touching the 1.58 level overnight, while the UsdJpy traded down to 105.5. The GbpUsd is trading with a 1.99 handle, looking to move through the 2.00 level. Equity markets traded lower in both the US and Europe, while commodities pushed higher with oil at 142, and gold at 928. Increased risk aversion is seen in the tightening yields of treasuries as investors look for stable assets to invest in.
There was positive economic data reported in the Eurozone. German retail sales came in stronger than expected at 1.3% vs. the consensus figure of 0.8%. Although unemployment improved in Germany, it actually rose in the eurozone overall to 7.2% vs. 7.1% expected. The Eur continues to show strength against other G10 currencies, and we shouldn’t expect to see any dramatic changes in the near-term considering the market has priced in a .25bps hike. Economic weakness persists in the UK as manufacturing PMI fell to 45.8 vs. 49.8 expected. Housing prices continue to fall to unprecedented levels, even though the actual number came in slightly higher than expected at -0.9% as opposed to the estimate of 1.1%. With that said, the cable showed little movement in reaction to the recent data. Traders are still trying to get better clarity of how severe the slowdown is in the US and the UK, which will probably cause the cable to remain rangebound for the time being.
US financial markets are embattled with inflationary pressure and limited growth. There were some pockets of light in US economic news, with a rise in the ISM index as well as construction spending. The ISM index increased to 50.2 vs. 48.6 expected, while construction spending also came in better than estimates at -0.4% vs. -0.5%. Stabilization in the housing sector and rising oil prices will be necessary for us to see a significant growth, and the foundation to build a fundamental case for sustained dollar strength.
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Asian Session - Jpy Gains
July 01, 2008 9:48 AM CEST
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G10 Advancers and Decliners vs USD |
| | GBP | 0.37 | | | | JPY | 0.25 | | | | SEK | 0.24 | | | | NOK | 0.09 | | | | DKK | 0.08 | | | | EUR | 0.07 | | | | NZD | 0.05 | | | | CHF | 0.01 | | | CAD | -0.08 | | | AUD | -0.19 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 13,463.20 | - 0.13 | | Hang Seng Index | 22,102.01 | + 0.27 | | Shanghai Index | 2,651.61 | - 3.08 | | FTSE futures | 5,607.50 | - 0.69 | | CAC futures | 4,413.00 | - 0.69 | | SMI Futures | 6,937.00 | - 0.60 | | DJIA futures | 11,338.00 | - 0.01 |
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World Markets |
Current Level |
% Change |
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| Gold | 927.48 | + 0.23 | | Silver | 17.49 | + 0.43 | | VIX | 23.95 | + 2.17 | | Crude wti | 141.02 | + 0.72 | | USD Index | 72.46 | - 0.01 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| CIPS/RBS Report on Manufacturing (Jun) | 49.8 | 50.0 | UK / 8.30 | | Unemployment Rate (May) | 7.1% | 7.1% | EZ / 9.00 | | ISM Manufacturing Index (Jun) | 48.6 | 49.6 | US / 14.00 | | Construction Spending (May) | -0.6% | -0.4% | US / 14.00 |
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Currency Tech |
AUDUSD
R 3: 0.9825
R 2: 0.9700
R 1: 0.9690
CURRENT: 0.9551
S 1: 0.9554
S 2: 0.9543
S 3: 0.9490
EURJPY
R 3: 170.00
R 2: 169.45
R 1: 168.60
CURRENT: 166.78
S 1: 166.10
S 2: 166.00
S 3: 165.50
USDSGD
R 3: 1.3850
R 2: 1.3828
R 1: 1.3730
CURRENT: 1.3620
S 1: 1.3560
S 2: 1.3505
S 3: 1.3470
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Market Brief |
Usd was slightly weaker in the Asian session as a better then expected Tankan survey caused a wave of Jpy buying. UsdJpy continued its 4 day downward trend falling from 106.40 to 105.70 while EurUsd was range bound bouncing around the 1.5740 / 70 levels. Carry trades came under pressure as risk appetite waned and Jpy strengthened with EurJpy falling from 167.35 to 1.6655 and AudJpy diving to 100.87. The Usd / Oil relationship remains tight with WTI trading up to $143.66bll while EurUsd traded to a high 1.5836. The current environment defined by higher energy prices, rising risk aversion, a hawkish ECB (and supporting inflation data coming in at 4.0% yesterday) and deteriorating US domestic economy will keep the Usd bearish in the near term.
Yesterday US stock markets started the week with a yawn, with the S&P500 closing the day up 0.1%, while the NASDAQ closed lower by 1.0%. On a quiet day, crude prices hit new intra-day records of nearly $144 which caused more selling amongst consumer stocks. Six of the ten sectors moved higher, with four lower. Asian stock markets are slightly lower this morning with the Nikkei down 0.1%, the Hang Seng is closed today and the MSCI A-P lower by 0.2%. Financial stocks were lower, following a decline in Japanese business confidence, while Chinese manufacturing growth was reported to have slowed. In the wake of the activity in the Asian session, European futures are trading lower and we are looking for a negative open.
The BoJ Tankan survey for Q2 came in slightly better then expected in all areas except overall show deterioration. The large manufacturing index reached 5 (3 was expected), large non-manufacturing index reached 10 (8 was expected), and the large all-industry CAPEX was 2.4% (2.0% was expected). While some of the intraday Jpy buying can be attributed to the superficial positive data, we still believe macro conditions will define price activity in the near term.
In Australia, the RBA held rates at 7.25% which was widely expected. There was two real areas of interest in their statement. First was admission by the Central Bank that domestic growth was slowing saying "the most recent flow of information has given additional support to that assessment". Second was the acknowledgment that “some tentative signs of an easing in labor market conditions". In addition, the RBA mentioned the role of higher energy prices that fuels global inflation and putts pressure on domestic growth. We believe it’s too early to begin selling Aud in anticipation of monetary easing as the macro environment will continue to support the Aud.
In the European session, markets will be watching Euro zone unemployment which should show further evidence of weakness in the labor markets. While April reading was unchanged at 7.10% the actually number of people without jobs has increased. In the UK headline PMI is expect to fall below the 50 threshold for the first time in 3 years.
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