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US Session-Dollar Strengthens on Decline in Oil
July 22, 2008 6:55 PM CEST
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G10 Advancers and Decliners vs USD |
 | Nzd | -0.34 | | | Gbp | -0.64 | | | Aud | -0.73 | | | Jpy | -0.74 | | | Dkk | -0.93 | | | Eur | -0.93 | | | Nok | -0.94 | | | Sek | -1.08 | | | Cad | -1.09 | | | Chf | -1.36 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA Index | 13,184.96 | + 2.98 | | S&P 500 Index | 1,259.86 | - 0.01 | | NASDAQ 100 Index | 2,275.09 | - 0.20 | | FTSE 100 Index | 5,364.10 | - 0.74 | | CAC 40 Index | 4,327.26 | + 0.00 | | DAX Index | 6,442.79 | + 0.28 | | SMI Index | 6,922.25 | + 0.93 |
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World Markets |
Current Level |
% Change |
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| Gold | 946.84 | - 1.94 | | Silver | 18.00 | - 2.31 | | VIX | 22.61 | - 1.91 | | Crude wti | 126.34 | - 3.59 | | USD Index | 72.43 | + 0.61 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Richmond Fed manufac. | -9 | -12 | US / 14.00 |
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Currency Tech |
AUDUSD
R 3: 0.9895
R 2: 0.9849
R 1: 0.9818
CURRENT: 0.9760
S 1: 0.9675
S 2: 0.9664
S 3: 0.9597
EURJPY
R 3: 171.07
R 2: 170.00
R 1: 169.92
CURRENT: 169.61
S 1: 168.25
S 2: 166.01
S 3: 165.33
USDSGD
R 3: 1.3717
R 2: 1.3661
R 1: 1.3565
CURRENT: 1.3519
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300
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Market Brief |
The Usd traded lower overnight but rallied on a steep drop in oil prices during the European session. The EurUsd fell to the low 1.58 price, while the UsdJpy rose sharply to 107. The GbpUsd saw resistance at the 2.00 level moving back down to the low 1.99 area based on dollar strength. Equity markets fell in Europe, but saw modest gains in the US. Oil is the central theme in among the commodities sector as it traded lower to 125, in addition gold fell to 958. The selloff in US bonds continued today, with yields on treasuries wider by 11bps on the 2yr. European govt. bonds were mixed as investors are trying to get a clearer picture of where the economy is heading in both the UK and Eurozone.
Italian consumer confidence came in at 95.8 as opposed to the consensus figure of 99.10, which is its lowest level in nearly 15 years. In addition, the “Future Climate Sub Index” fell to 88.4 from 97.6; further solidifying bearishness on the Eurozone economy. The market will pay close attention to German IFO numbers (consumer confidence) which are scheduled to be released later this week. The EurUsd should trade more sensitively to oil prices and corporate earnings until trading volume picks up towards the end of the year, we maintain are projected range of 1.57-1.60 in the near-term. BoE Governor Mervyn King stated that banking reform is much needed to prevent situations like the fall of Northern Rock which occurred last year. He emphasized that the Financial Services Authority should be responsible for keeping banks in compliance, not the central bank. The UK is trying to move away from intervention, similar to the recent rhetoric out of the Fed in the US. The cable continues to see resistance at 2.00 and support around the 1.99 level, trading should continue in this fashion absent any major events in monetary policy.
The US financial markets were hit with a record loss from Wachovia of 8.9 billion dollars and a pessimistic earnings outlook from American Express. The dollar experienced losses early in the trading session, but bounced back on weaker oil prices. The markets will remain volatile until year-end, when volume picks up again. Price movements in the currency markets should remain highly correlated to the commodities and credit sectors. Dollar weakness will also weigh heavily on economic data; the OFHEO housing price index came in slightly better at -0.3% vs. -0.8% expected. Although the data was stronger than anticipated, expectations are still negative which confirms the overall outlook on the US economy.
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Asian Session - Dog Days of Summer
July 22, 2008 9:03 AM CEST
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G10 Advancers and Decliners vs USD |
| | CHF | 0.47 |  | | | NOK | 0.30 | | | | DKK | 0.29 | | | | EUR | 0.27 | | | | JPY | 0.25 | | | | GBP | 0.25 | | | | SEK | 0.21 | | | | NZD | 0.15 | | | | AUD | 0.14 | | | | CAD | 0.11 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 13,184.96 | + 2.97 | | Hang Seng Index | 22,641.61 | + 0.48 | | Shanghai Index | 2,850.94 | - 0.36 | | FTSE futures | 5,399.00 | + 0.53 | | DAX futures | 6,434.50 | - 0.64 | | SMI Futures | 6,868.00 | + 0.54 | | DJIA futures | 11,383.00 | - 0.71 |
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World Markets |
Current Level |
% Change |
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| Gold | 971.79 | + 0.64 | | Silver | 18.59 | + 0.92 | | VIX | 23.04 | - 4.15 | | Crude wti | 130.86 | - 0.13 | | USD Index | 71.87 | - 0.16 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Retail sales less autos, % m/m (may) | 0.6 | 1.1 | CA / 12.30 | | House price index, % m/m | -- | -0.8 (-4.6 | US / 14.00 | | Richmond Fed manufac. | -9 | -12 | US / 14.00 | | Fed discount rate minutes published | -- | -- | US / 18.00 | | Retail Sales | 3.5% | 7.3% | MX / 19.30 |
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Currency Tech |
AUDUSD
R 3: 0.9895
R 2: 0.9849
R 1: 0.9818
CURRENT: 0.9760
S 1: 0.9675
S 2: 0.9664
S 3: 0.9597
EURJPY
R 3: 171.07
R 2: 170.00
R 1: 169.92
CURRENT: 169.61
S 1: 168.25
S 2: 166.01
S 3: 165.33
USDSGD
R 3: 1.3717
R 2: 1.3661
R 1: 1.3565
CURRENT: 1.3519
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300
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Market Brief |
Usd was slightly weaker in Asian session on light trading and higher oil prices. EurUsd traded up to 1.5930 from 1.5832 while UsdJpy slipped from 106.93 to 106.32. The GbpUsd continued to outperform despite mounting bearish sentiment climbing above the 2.000 handle to 2.0039. AudUsd consolidated around the 0.9750 level while Nok is beginning to regain its forward momentum, with UsdNok pushing lower to 5.0550. Crude prices paired back gains made in US session, with wti $130.50bbl which had pressured US equities lower on the day. Asian stock indexes are trading lower, with the exception of the Nikkei which is up 2.56%. European stock futures are looking to buck downward the trend and are all currently trading higher. VIX continues to decline, as risk appetite increased helping push yield slightly lower.
Japan’s All industry Index came in line with expectations at 0.4% m/m but lower than the prior 0.85 reading. Supermarket Sales jumped 0.9% vs. -1.1% prior reading.
With a light economic calendar this week, the market will be extra sensitive to comments from policy makers. Today’s comments from ECB members Bini-Smaghi and Liebscher sounded less hawkish than usual and downplayed the risk to economic growth. However, Bini admitted that the European recovery might take longer than forecast while the ECB’s July 3rd hike is beginning to take effect producing “visual benefits”. In regard to US officials, despite the potential of hawkish sounding rhetoric we don’t believe the Fed has the maneuverability to tighten without some signals of stability in housing sector, financial markets and perhaps most importantly, labor markets. Should the FX markets react to a hawkish comment, we would see this as an opportunity to sell Usd.
No major events or data scheduled for release in the UK or Europe .
12.30gmt - Fed's Plosser speaks on economic outlook
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