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US Session: Traders Brace for Possible Stagflation as Rates Rise Faster than Economic Growth
June 08, 2009 8:11 PM CEST
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G10 Advancers and Decliners vs USD |
| | Gbp | 0.47 |  | | | Jpy | 0.30 | | | | Cad | 0.01 | |  | Dkk | -0.40 | | | Eur | -0.42 | | | Chf | -0.43 | | | Nok | -0.46 | | | Sek | -0.54 | | | Aud | -0.68 | | | Nzd | -1.28 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA Index | 8,655.36 | - 1.23 | | S&P 500 Index | 929.60 | - 1.12 | | NASDAQ 100 Index | 1,824.78 | - 1.33 | | Nikkei 225 Futures | 9,760.00 | + 0.92 | | Hang Seng Futures | 18,131.00 | - 2.84 | | FTSE futures | 4,395.50 | - 0.87 | | SMI Futures | 5,400.00 | - 0.19 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 68.39 | - 0.07 | | Gold | 951.75 | - 0.37 | | Silver | 14.97 | - 2.05 | | VIX | 30.72 | + 3.71 | | USD Index | 80.89 | + 0.27 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| No Major Events Scheduled | | | |
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Currency Tech |
AUDUSD
R 3: 0.8519
R 2: 0.8378
R 1: 0.8263
CURRENT: 0.7864
S 1: 0.7892
S 2: 0.7830
S 3: 0.7703
EURJPY
R 3: 144.61
R 2: 141.75
R 1: 139.75
CURRENT: 136.99
S 1: 135.30
S 2: 133.89
S 3: 131.49
USDSGD
R 3: 1.4803
R 2: 1.4748
R 1: 1.4666
CURRENT: 1.4607
S 1: 1.4425
S 2: 1.4386
S 3: 1.4336
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Market Brief |
The dollar moves higher against most of the major currencies after a drop in stocks stimulated
demand for the safety of the world’s main reserve currency, and investors raised bets the Federal
Reserve will increase interest rates by the end of the year after the Labor Department said June 5
that U.S. payrolls fell by 345,000 last month, the smallest decrease in eight months. The EurUsd
lost 105 pips from the last close to 1.3863 as S&P lowered its long-term sovereign credit rating
on the Republic of Ireland to AA from AA+ and said the outlook is negative. The UsdJpy
dropped slightly to 98.58 as Tokyo Shoko Research Ltd. said corporate bankruptcies in Japan
dropped 6.7 percent last month from a year earlier. Credit concerns looming in the global
markets resulting in a slight pullback in the risk rally. Equity markets declined in the U.S.,
Europe and Asia, with the Dow slipped 1%, the FTSE off 0.82%, and MSCI down 1.94%.
Commodities are lower across the board with oil hoverting around $68 bbl, while Gold fell to a
weekly low to $950oz in New York and London as the dollar strengthened with the Dollar Index
gained 1% today after jumping 1.7% on June 5, the most in more than four months.
While US debt is concerning for major investors like China, yield curves in Europe and Asia fail
to serve as a better alternative. The economic fundamentals may spook investors from investing
in Eurobonds or UK gilts. Ireland’s sovereign credit was downgraded from AA+ to AA and also
described to have a negative outlook by S&P. This is a reminder that financial markets have a
way to go, before we can place our bets on a full blown recovery. A rise in the Fed funds rate
would support dollar strength, but it is unclear if such a brazen move will actually occur.
Stagflation, a combination of inflation, high unemployment rate and stalled growth may soon
turn into a real threat, and rising long-term interest rates pushing mortgage rates higher may
force the Fed to engage in further quantitative easing methods in an attempt to keep “credit
cheap.”
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change.
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Asian Session: USD Buying Continues
June 08, 2009 10:29 AM CEST
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G10 Advancers and Decliners vs USD |
| JPY | -0.43 | | | EUR | -1.07 | | | DKK | -1.09 | | | CHF | -1.17 | | | CAD | -1.19 | | | GBP | -1.20 | | | SEK | -1.48 | | | NOK | -1.50 | | | AUD | -2.16 | | | NZD | -2.35 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 9,865.63 | + 0.99 | | Hang Seng Index | 18,328.36 | - 1.88 | | Shanghai Index | 2,768.34 | + 0.52 | | FTSE 100 Index | 4,395.38 | - 0.97 | | DAX Index | 5,009.61 | - 1.32 | | SMI Index | 5,378.52 | - 0.37 | | DJIA futures | 8,691.00 | - 0.81 |
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World Markets |
Current Level |
% Change |
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| Gold | 950.48 | - 0.50 | | Silver | 15.01 | - 1.80 | | VIX | 29.62 | - 1.85 | | Crude wti | 66.99 | - 2.11 | | USD Index | 81.12 | - 1.78 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| New manufacturing orders, % m/m (y/y) | 0.0 | 3.3,-33.1 | EUR / 10.00 | | Fed Governor Tarullo (FOMC voter) speaks on "Finan | -- | -- | EUR / 16.30 | | ECB’s Stark speaks on monetary policy | -- | -- | EUR / 17.35 | | RICS housing market survey, price balance | -52.0 | -59.9 | GBP / 23.01 | | BRC retail sales monitor, total sales, % y/y | -- | 6.3 | GBP / 23.01 |
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Currency Tech |
AUDUSD
R 3: 0.8519
R 2: 0.8378
R 1: 0.8263
CURRENT: 0.7864
S 1: 0.7892
S 2: 0.7830
S 3: 0.7703
EURJPY
R 3: 144.61
R 2: 141.75
R 1: 139.75
CURRENT: 136.99
S 1: 135.30
S 2: 133.89
S 3: 131.49
USDSGD
R 3: 1.4803
R 2: 1.4748
R 1: 1.4666
CURRENT: 1.4607
S 1: 1.4425
S 2: 1.4386
S 3: 1.4336
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Market Brief |
The Usd was stronger in the Asian session, as the mixed US data has given recovery bulls a moment of pause. The EurUsd traded down to 1.3890 from 1.4000, while the UsdJpy rose sharply to 98.80 from 98.20 (now trading above daily cloud covering). Commodity prices have also retreated, with copper and crude falling from yearly highs. And 2-year Treasury yields surged by 35bp to 1.29%, while 10-year Treasury yields rose by 13bp. Asian regional indexes were mixed, but European indexes are all trading lower. The big question is: was Friday’s stark reversal a sign of things to come or just a short term correction? The big story and one still being debated was Friday’s labor numbers, which showed that Non-Farm payrolls declined by 345k vs. 520k exp, yet unemployment rate rose to 9.4% vs. 9.2% exp. It’s important to note that the US bank stress tests worst case scenario was based on a 9.3% figure, which has already been breached. The lack of fresh data will keep FX markets guessing and we expect a continuation of Friday's trend in the short term.
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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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