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What Gives? EURO Is Locked, Cable Is Horrible and Yen Not Wanted
Yen and more selling of it about sums it up for another relative dull overnight forex session perforated with a few CNY band-widening rumors. Well, it was dull until the release of disappointing UK data continued their economy's dismal uninterrupted economic run. USDJPY traded to 96.70, a three and a half year high, in response to dovish comments from Kikuo Iwata, nominee for BoJ deputy governor and on reports that BoJ Governor nominee Kuroda will hit the ground running, and launch easing steps as soon as next week.
Market reports suggest that an unscheduled Bank of Japan policy meeting may take place immediately after the new BoJ governor takes office on March 20th. This move would obviously allow time for BoJ staff to ...
HIGHLIGHTS OF THE WEEK
United States
It was a great week for U.S. equity markets, Reacting to positive economic data, the Dow-Jones reached a new record high, erasing the losses caused in the aftermath of the recession.
The biggest data release came at the end of the week and it did not disappoint. U.S. payrolls added an additional 236k jobs, well ahead of expectations for 165k.
Sustaining this pace of job growth is likely to be more difficult as sequestration hits the economy in the months ahead. However, by the second half of the year, with ongoing support from housing activity, job gains in excess of 200k should become the norm.
Canada
The Canadian economy created 50,000 jobs in February; the unemployment rate held steady at 7.0%.
After a sharp drop in January, housing starts bounced ...
The Vietnamese dong, which is on of the least valued currency (in terms of monetary units) in the world (after the currencies of Iran and Somalia), was little changed over the week, closing at 20,825 per US dollar. The currency has some bullish domestic factors, which may support the dong, but experiences negative influences as well. Conflicting fundamentals result in sideways movement of the currency.
The World Bank said that rapid credit growth and other signs of financial problems in Vietnam hint at coming economic crisis and urged initiation of a reform of the banking system. The nation’s lawmakers confirmed that the government is ready to start a reform, but the impact of the last global crisis can make it difficult to overcome the challenges that the Vietnamese economy is facing. ...
Has the EUR the Green Light to Pass "Go"?
The end of another week and month has global capital markets proceeding with caution this Friday, and especially so ahead of the German vote to approve the latest Greek ‘Band-Aid’ solution. The proposed Greek debt buy-back operation should also be considered another candidate for market concern. Early next week, the Euro-finance ministers propose to finalize Greek aid-affairs. The market expects further details of their debt buy-back operation to be published. This buy-back of government bonds is Greece’s latest attempt in cutting their debt burden. Their government is expected to pay between 30 to 35 cents on the EUR for their own issued product. No matter what, investors should expect the uncertainty around the percentage take-up of the reverse ...
HIGHLIGHTS OF THE WEEK
United States
- Capping off a week focused on the economy, U.S. nonfarm payrolls showed a gain of 114K jobs in the month of September. Revisions added 86K to the total, bringing total payroll employment up 200K.
- In contrast to the payrolls report, the household survey, which is used to calculate the unemployment rate, showed a huge gain of 873K jobs. As a result, the unemployment rate fell by a whopping 0.3 percentage points to 7.8%, the lowest since President Obama was inaugurated in January 2009.
- Strengthening ISM reports suggest that payroll growth should improve in the all-important final jobs report before the November 6th election.
Canada
- This week's calendar was pretty sparse data-release-wise, with the exception of today when markets were ...
Growing caution about how quickly the ECB could act on Draghi's pledge to intervene in markets to fight the euro zone debt crisis after Bundesbank reiterates opposition to the SMP
Economic Data
(RU) Russia Narrow Money Supply Narrow w/e July 23rd (RUB): 7.25T v 7.22T prior
(FI) Finland July Business Confidence: -6 v -6 prior; Consumer Confidence: 0.1 v 5.8 prior
(FI) Finland Q2 House Prices Q/Q: 0.5 v 1.5% prior; Y/Y: 0.6 v 1.1% prior
(FR) France July Consumer Confidence Indicator: 87 v 90e
(DE) Germany July CPI Saxony M/M: 0.4% v -0.1% prior; Y/Y: 1.8% v 1.7% prior
(ES) Spain Q2 Unemployment Rate:24.6% v 24.7%e, highest on record
(CH) Swiss July KOF Swiss Leading Indicator: 1.43 v 1.20e
(SE) Sweden Jun Retail Sales M/M: -0.4% v +0.2%e; Y/Y: 0.9% v 1.5%e
(DE) Germany July CPI ...
Sunrise Market Commentary
- Fixed Income: Disappointing payrolls push Bund and Note future above key resistance
- Risk off sentiment got more momentum after US payrolls disappointed. German (and US) yields fell moderately, but German 2-year yield closed in negative territory for first time ever. Semi core EMU bonds outperformed the Bund smartly, but Spain and Italy were again hard hit again. Technicals for Bund and T Note future are again bullish.
- Currencies: euro hitting new 2012 low against the dollar and sterling
- On Friday, the euro was again hammered after Thursday’s post ECB sell-off. This time, the reason for the sell-off came from outside Europe as the US payrolls raised investor uncertainty on global growth. EUR/USD dropped below the 1.2288 year low. EUR/GBP ...
The Weekly Bottom Line
HIGHLIGHTS OF THE WEEK
United States
- U.S. job creation may have weakened in the last few months, but the grounds for sustaining stronger employment growth are more fertile now than have been since the economic recovery began. Europe's labor market, by contrast, is likely to deteriorate further before it gets better.
- Europe's (nonfinancial) corporate sector is highly leveraged. As balance sheet adjustments are made, Europe risks further decreases in investment, higher layoffs, and lower economic growth. These effects are compounded by deleveraging in the public sector.
- U.S. corporations, by contrast, are more profitable and liquid than they have ever been. At some point some of these funds will be unleashed towards new investment, creating a positive ...
(Reuters) - Gold fell sharply on Friday, driven by a rising dollar after data showed the economy created more jobs than expected over the last three months, lessening prospects the Federal Reserve will keep interest rates low for an extended period.
Employers added 227,000 jobs to their payrolls last month, the Labor Department said on Friday, while the unemployment rate held at a three-year low of 8.3 percent - even as more people returned to the labor force. It also revised numbers higher for December and January.
The dollar rallied by nearly 1 percent against a basket of currencies .DXY, upping the pressure on gold, which tends to slide in the face of a strong U.S. currency as this makes it more profitable for non-U.S. investors to sell their bullion holdings in exchange for their own ...