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U.S. Review
A Mixed Bag for Q2
- Economic data this week was rather mixed, with positive signs out of the consumer, but faltering signs out of the industrial sector and housing in April.
- Retail sales increased 0.1 percent in April; however, the headline number understates the strength in sales. Declining prices at the pump drove nominal retail sales lower. Excluding sales at gasoline stations, retail sales were up 0.7 percent.
- Weak global growth is weighing on the industrial sector. Manufacturing output fell for the second consecutive month in April.
A Mixed Bag for Q2
From the data released this week that covered a range of sectors, we had hoped to gain a clear idea of what lays ahead. However, we are left wondering just how these spring months will shape up.
The consumer is ...
Highlights
FX return analysis
Gold hurtling towards 2013 lows
Fundamental focus: UK and Europe
BOJ to stand pat
Clarity needed from the Fed
FX return analysis
The USD was the star performer last week, gaining against all of its G10 counterparts. The dollar index broke above 84.10 - a key resistance level - to the highest level since mid-2010. Interestingly, the dollar pushed higher even though there were some soft economic data points from the US last week including weaker inflation and initial jobless claims. The key driver of the stronger buck appears to have been some hawkish comments from Fed speakers. San Francisco Fed speaker John Williams and Charles Plosser both said that QE could end by 2014. Although Williams and Plosser are not voting members of the Fed this year, their ...
Throughout the US session today we watch the major pairs narrow trade today as the market is close to close and the week is ending as a result of present technical movements and also the presence of mixed sentiments; fears and hopes, with most of the data this week coming out gloomy or below market forecasts while that today cheerful data was report.
In fact today we saw that the US leading indicators, which is an index designed to forecast economic changes in the upcoming period of time, rose cheerfully in April by 0.6 percent.
While that the University of Michigan Confidence preliminary reading rose cheerfully to 83.7 from 76.4; an indication that confidence regarding personal finances, business conditions and purchasing power gained some strength.
Accordingly the euro is presently ...
Title:
Greenback Still in Demand
Forex News and Events:
The risk sentiment deteriorated after the disappointing US data released across the week. The US dollar remains bid, yet the fading speculations on the hawkish Fed moderated the recent USD-bull. Euro and Sterling retraced gains, while the selling pressure on Aussie gathered curiosity.
Released this morning, Euro gave little reaction to 7% drop in construction output over the last year, while the Turkey’s upgrade to investment grade by Moody’s triggered an impressive TRY unwind to our surprise.
Yen Switched to Aussie?
The markets talk on the macro funds’ USDJPY demand which would have shifted to broad based Aussie sales. As the JPY sell-off persists, the Aussie weakness gains further pace. The trend and momentum indicators on Aussie are solidly bearish, while the ...
China and Japan led the gains in Asia on Friday amid stimulus hopes while volumes were lower-than-usual as markets in South Korea and Hong Kong are closed for holidays. The MSCI Asia Pacific Index slid 0.2% to 142.72 as of 15:40 in Tokyo.
In Japan Nikkei pared losses to close above 15,000 gaining 3% this week while Topix closed at the highest level since 2008 after news that Prime Minister Shinzo Abe will encourage the reviving of capital spending.
- Nikkei 225 closed 0.67% higher at 15138.12
- Topix closed 0.64% higher at 1253.24
“In the short-term, the Japanese market looks overbought, but in the long-term it’s not. We’re looking for the market to come off a little bit and go through a period of consolidation”, said Robert Aspin from Standard Chartered, Singapore.
In China the ...
Fundamental Analysis
EUR
"Deflation is perhaps becoming more of a risk than inflation for the eurozone, although it remains unlikely for now at least."
- HIS Global Insight analyst Howard Archer
Consumer prices hike in the 17-nation economy has slowed to the lowest level in more than three years, as fuel and telecommunications costs dropped substantially, the EU statistics office, Eurostat said Thursday.
Read more: FULL REPORT - Fundamental Analysis
Technical Analysis
EUR/USD
"U.S. bond prices gained sharply yesterday despite William's comments. Each market has its own interpretation now and there's no broad consensus on the Fed's stance yet."
- Bank of Tokyo-Mitsubishi UFJ (based on CNBC)
It looks like 1.2874/46 will be unable to withstand bearish pressure and thus will give in, ...
Sunrise Market Commentary
Rates: Global bonds finally react on weaker US data
It took some time, but finally bonds reacted positively to another batch of weaker US data. That may have ended the downward correction that started after the US May payrolls release. However, there is as of yet no reason to become overly bullish for bonds.
Currencies: Dollar ignores poor US eco data
The recent slide of EUR/USD slowed, but the pair failed to profit from a series of poor US eco data. Fed speakers, including governor Williams, continue the debate on the tapering of asset purchases. These expectation are putting a strong floor under the dollar. The trade-weighted dollar is still near the key 84.10 level
The Sunrise Headlines
US equities suffered first losses this week with S&P 0.5% lower. Whereas ...
Major pairs so far narrow traded within the US session as a result of technical movements after that the dollar plunged from an almost four-year high versus the yen after weaker-than-forecast reports on U.S. unemployment claims, housing and inflation damped bets the Federal Reserve will slow its bond purchases.
Accordingly the euro is presently narrow trading on the four and one-hour charts as a result of the current technical movements sending in fact the EUR/USD pair to trade up around $1.2903 while recording the highest level of $1.2928 and lowest level of $1.2845, knowing that the pair may incline but slightly as mixed signs are seen throughout the four-hour and one-hour momentum indicators. The trading range for today is among the key support at 1.2745 and key resistance at 1.2990.
...
The slew of economic data released this morning out of the US reinforced the need for ongoing Fed stimulus (for now) as reports raised concern regarding both of the Fed's mandates (price stability and full employment). Consumer prices fell by -0.4% m/m in April which was deeper than the expected -0.3% drop and even lower than the prior month's decline of -0.2%. This was the first back-to-back decline since 2008 and the April decline was the largest monthly drop since December 2008. The slump was due to a fall in energy prices as the core CPI reading which excludes more volatile components of food and energy rose slightly by +0.1% m/m (cons. +0.2%).
Weekly initial jobless claims jumped to 360k (cons. 330k) and the prior week's figures were revised higher to 328k from the previous 323k. The ...