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Dollar rebounds on Stronger Financial Earnings.
July 16, 2008 9:23 PM CEST
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G10 Advancers and Decliners vs USD |
 | Cad | -.05 | | | Nzd | -.11 | | | Jpy | -.15 | | | Gbp | -.36 | | | Aud | -.61 | | | Dkk | -.64 | | | Eur | -.65 | | | Chf | -.85 | | | Sek | -.99 | | | Nok | -1.09 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 12,760.80 | + 0.05 | | Hang Seng Index | 21,223.50 | + 0.23 | | Shanghai Index | 2,705.87 | - 2.65 | | DJIA futures | 11,162.75 | + 1.83 | | S&P 500 Index | 1,235.28 | + 1.68 | | NASDAQ 100 Index | 2,272.11 | + 2.55 | | SMI Futures | 6,583.49 | + 0.33 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 134.75 | - 2.88 | | Gold | 961.60 | - 1.63 | | Silver | 18.80 | - 0.61 | | VIX | 25.69 | - 9.99 | | USD Index | 71.98 | + 0.16 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Core CPI m/m | 0.2% | 0.2% | US/10:00 | | CPI m/m | 0.7% | 0.6% | US/13:30 |
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Currency Tech |
AUDUSD
R 3: 0.9923
R 2: 0.9895
R 1: 0.9849
CURRENT: 0.9776
S 1: 0.9708
S 2: 0.9664
S 3: 0.9597
EURJPY
R 3: 169.67
R 2: 168.94
R 1: 166.86
CURRENT: 165.76
S 1: 165.70
S 2: 164.76
S 3: 163.60
USDSGD
R 3: 1.3717
R 2: 1.3661
R 1: 1.3565
CURRENT: 1.3465
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300
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Market Brief |
The Usd rose slightly in the European session, based on some positive data out of the financial sector in the US. The EurUsd traded down to the 1.58 level, and the UsdJpy also fell a bit lower trading with a 104 handle. The GbpUsd hovered around the 2.00 price, but declined to 1.99 in the recent trading. Commodities are trading lower with oil at 137 and gold at 974, rumors spread yesterday that a major bank unwound a large position which contributed to the fall. Equity markets rose in the US, but extended losses in Europe due to inflation data in the Eurozone. Treasury yields rose across the curve, with the 10yr in particular wider by 9bps. The selloff is due to a reversal in US market sentiment, and quiet week ahead regarding economic news that would move bonds significantly.
Inflation was reported in line with expectations at 4.0%, while core inflation increased to 1.8% from 1.7%.
This inflationary data follows the steep decline in German confidence further lends to the issue of balancing growth and inflation. The ECB may take hike rates once more to get a handle on inflation, but it is unclear how it will affect the rest of the economy. The EurUsd fell from the 1.59 level it traded yesterday, and we expect to remain within a range of 1.57-1.59 in the near term. The UK unemployment rate came in better than expected at 5.2% vs. the consensus figure of 5.3%, but the claimant count rose to 15.5k from 10k. While unemployment fell on a percentage basis, it grew on a nominal basis, which is not positive for the UK economy. A deterioration in the labor market means that lower wages are most likely to follow, which will cause additional consumer pressure considering rising inflation. The cable has been resilient against the Usd trading slightly above 2.00, but we look for move lower around the 1.97-1.99 range in the near term.
The US financial markets saw some relief with positive earnings from the nation’s fifth largest bank Wells Fargo. Due to the recent concerns about the financial sector, positive earnings boosted the dollar from 1.59 to 1.58 against the Eur. The recent drop in oil prices is setting the stage for the dollar to rebound , but economic data will have to come in positive and consistent to really support a long term rally. CPI rose 1.1% vs. 0.7% expected, while industrial production rose 0.5% as opposed to the consensus figure of 0.0%. The Fed, may have some room to raise rates by the end of the year if we don’t see additional failures in the financial sector. A bank collapse or major crisis would make it very difficult for the Fed to move rates higher from current levels.
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Asian Session - Usd on Weak Footing
July 16, 2008 10:49 AM CEST
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G10 Advancers and Decliners vs USD |
| | JPY | 0.83 |  | | | CHF | 0.34 | | | | GBP | 0.27 | | | | DKK | 0.12 | | | | EUR | 0.11 | | | | NOK | 0.02 | | | NZD | -0.09 | | | CAD | -0.10 | | | AUD | -0.22 | | | SEK | -0.24 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 12,760.80 | + 0.04 | | Hang Seng Index | 21,191.84 | + 0.08 | | Shanghai Index | 2,705.87 | - 2.64 | | FTSE 100 Index | 5,183.50 | + 0.22 | | CAC 40 Index | 4,060.85 | - 0.01 | | SMI Index | 6,531.46 | - 0.46 | | DJIA futures | 10,941.00 | + 0.21 |
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World Markets |
Current Level |
% Change |
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| Gold | 138.93 | + 0.13 | | Silver | 18.90 | - 0.13 | | VIX | 28.54 | + 0.21 | | Crude wti | 138.93 | + 0.13 | | USD Index | 71.65 | - 0.31 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Average Earnings (May) (%3myy) | 3.7% | 3.8% | UK / 8.30 | | Unemployment Rate (Jun) | 2.6% | 2.5% | UK / 8.30 | | CPI (Jun Final) | +0.4%(+4.0 | (+4.0%)p | EZ / 9.00 | | Core CPI (Jun) | +1.8% | +1.7% | EZ / 9.00 | | Consumer Price Index (Jun) | +0.7%(+4.5 | +0.6%(+4.2 | US / 12.30 | | Core Consumer Price Index (Jun) | +0.2%(+2.3 | +0.2%(+2.3 | US / 12.30 | | Net Foreign Purchases of US Securities (May) | -- | +$60.6bn | US / 13.00 | | Industrial Production (Jun) | 0.1% | -0.2% | US / 13.15 | | Capacity Utilisation (Jun) | 79.4% | 79.4% | US / 13.15 | | NAHB Housing Market Index (Jul) | 18 | 18 | US / 17.00 | | Fed minutes for 24th-25th Jun meeting released | -- | -- | US / 18.00 |
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Currency Tech |
AUDUSD
R 3: 0.9923
R 2: 0.9895
R 1: 0.9849
CURRENT: 0.9776
S 1: 0.9708
S 2: 0.9664
S 3: 0.9597
EURJPY
R 3: 169.67
R 2: 168.94
R 1: 166.86
CURRENT: 165.76
S 1: 165.70
S 2: 164.76
S 3: 163.60
USDSGD
R 3: 1.3717
R 2: 1.3661
R 1: 1.3565
CURRENT: 1.3465
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300
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Market Brief |
Usd was range bound in Asian session as markets pause from dollar selling to evaluate current pricing. However we are anticipating another busy and volatile day. EurUsd bounced between the 1.5866 - 1.5932 while UsdJpy continued to slide from 105.12 to 104.27. With risk aversion reaching elevated levels, carry trades have suffered with EurJpy dropping to 165.80 and AudJpy falling to 101.77. With concerns over the credit market mounting, it is no surprise that VIX has climbed to 28.54 and fx implied vols are following. Currently, European equities are mixed but US index futures are pointing to the upside, due primarily to the sell off in crude, which is trading at wti 138.95bll.
The EurUsd reached an all time high yesterday, ahead of Bernanke's testimony, but was able to recover slightly as oil prices took a dive (on slowing global growth concerns). Interesting to note, Bernanke gave no indication that the Fed was going to follow the ECB and raise rates anytime soon. It seems after a brief period of stability the US might still slip into a recession in the second half of the year. With payrolls declining, housing prices tanking, equity markets falling, latest GSE crisis and energy prices elevated the down side risk to the US economy having become apparent once again. Given these risks should Trichet and the ECB come out with a more explicit hawkish comments on inflation we should see the EurUsd entrench itself above the 1.6000.
In Australia, Westpac leading index continued to drop, hitting 0.0% vs. the 0.4% prior reading. RBA Governor Stevens speech today was undecidedly dovish. Clarifying the fact that the RBA feels that the current interest rate level is sufficient to combat domestic inflation. Stating "It is understandable that pressure on underlying inflation, particularly from domestic sources, has also been somewhat greater. Monetary policy had to respond to that." The AudUsd fell to 0.9750 on the news but was able to rally back on Usd selling.
Given our statement above regarding Eurzone inflation, today's reading of second estimate of CPI inflation will be critical. We are expecting headline to rise to a new record high of 4.0% as rising energy price are having a clear effect on prices. Core should stay below the 2.0% price stability ceiling, however, should pressure on core increase we would expect the ECB to maintain their hawkish tone and fx market to push Eur higher.
US data will be covered in US report
14.00gmt - Fed Chairman Bernanke delivers semi-annual testimony on monetary policy and the economy before the House
18.00gmt - Fed's Hoenig speaks on "Monetary Policy and the Economic Outlook"
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ACM Advanced Currency Markets SA (hereinafter referred as ACM) is a professional financial intermediary, directly regulated by the Swiss Federal Department of Finance, Anti Money Laundering Control Authority. As forex specialist, ACM provides only currency trading via highly professional forex trading software. All customers are aware that this information or any part thereof has been prepared without taking account of your objectives, financial situation and/or needs. This information is not intended as personalized investment advice and does not constitute a recommendation. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. The analysis is based on the information which ACM finds reliable and accurate, but ACM does not assume any responsibility for any material nor for the transactions made on the basis of the information or the estimates of the analysis. ACM cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct, indirect and/or consequential loss arising from any use of this information, document or its content. All opinions and estimates constitute ACM analysis as of the data and are subject to change without notice. ACM does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. Past performance is not a reliable indicator of future performance.
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