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Market Drivers - Currencies : 07/05/2012
Today's Comment
From the point of view of the financial markets, the elections in France and Greece on Sunday had the worst possible outcomes. In France, the winner was Hollande who in his political presentations emphasised that he will ensure new negotiations of the fiscal compact adopted recently by the EU. All other things being equal, this will result in instability in the financial markets and hence lead to a demand for safe-haven currencies and selling of EUR.
In Greece, the preliminary result indicates that the voters have given two major parties that were in power until now a serious beating. The result is that the Greek parliament is so divided that it is difficult to see how it is possible to form a new government. The outcome of the elections over the weekend will contribute ...
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Euro Testing Key Support Levels
Sunrise Market Commentary
- Fixed Income Weak US payrolls push core bonds higher again
- On Friday, it was weaker US payrolls that helped core bonds eke out more gains, but non-core bonds held up quite well. Spreads even narrowed in the intra-EMU bond markets. We fear that this won't be the case today, as French and Greek election results inject uncertainty into markets.
- Currencies: Euro testing key support levels
- On Friday, trading in the major euro cross rate was rather calm, but the pressure remained to the downside. The US payrolls were unable to change this pattern. This morning, EUR/USD is testing the key 1.2974 support while EUR/GBP is trading south of the 0.8068 level. A sustained break below these levels would raise a red alert for the single currency.
The ...
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Dukascopy Morning Forex Overview : 07/05/2012
Fundamental Analysis
EUR
"The U.S. labor-market report will further erode investor confidence"
- Markus Allenspach, head of bond research at Julius Baer Group Ltd.
European stocks extended weekly losses, after a report showed U.S. companies added fewer jobs than expected in April. The Stoxx Europe 600 Index erased 1.76 per cent to 253.00. Germany’s DAX Index tumbled 1.99 per cent and France’s CAC 40 Index contracted 1.90 per cent. The U.K.’s FTSE 100 Index lost 1.93 per cent to 5,655.06.
USD
"We’re still very much on the recovery path, but we’ve got a huge amount of ground to make up in the labor market"
- Scott Brown, chief economist at Raymond James & Associates Inc.
The number of Americans, who have found a job in the private sector in April, tumbled to 115,000 from 154,000 the ...
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Brent falls below $113 on global demand worries
(Reuters) - Brent crude fell below $113 a barrel on Monday, striking its lowest level since late January, on growing worries about global energy demand after weak U.S. jobs data and European elections that could threaten efforts to fix the euro zone debt crisis.
Oil prices, which have fallen for four straight sessions, suffered a sell off on Friday after data showing U.S. nonfarm hiring slowed for the second month in a row in April, fueling fears of falling energy demand in the world's top oil consumer.
This was compounded by weekend elections in France and Greece that raised concerns over their ability to carry out further austerity measures seen as key to tackle the region's debt crisis.
Since Friday, U.S. crude has lost more than 6 percent, while Brent has dropped over 4 percent.
" ...
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French, Greek Elections Set to Impact Euro
A disappointing US jobs report resulted in the safe-haven US dollar sliding against the Japanese yen while rallying against riskier currencies like the AUD and EUR to close out last week's trading session. Turning to today, elections held in France and Greece over the weekend are forecasted to generate significant market volatility. Any indication that Greece could back away from recent austerity measures as a result of the election could result in the euro extending its current bearish trend.
Economic News
USD - US Jobs Report Causes USD/JPY to Tumble
Last Friday's US Non-Farm Payrolls figure came in at 115K, well below the forecasted 173K. The news represented the third month in a row of declining hiring in the US, and resulted in renewed speculation that the Fed may initiate a new ...
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Oil extends slide after French, Greek polls
(Reuters) - Oil fell sharply on Monday, extending steep losses from the previous session, after elections in France and Greece raised concerns over their ability to carry out further austerity measures and renewed worries about the euro zone debt crisis.
The bad news from Europe came after data showing U.S. nonfarm hiring slowed for the second month in a row in April, which fueled a sell-off in oil markets on Friday on fears of falling energy demand at the world's top oil consumer.
Since Friday, U.S. crude has lost more than 6 percent, while Brent has dropped over 4 percent.
"There are great fears that the new government in Greece will end austerity measures and that will lead to a disorderly default, and that has led to a sell-off across all risk markets," said Ben Le Brun, a market ...
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Forex Exchange Morning Report
Market wrap
A disappointing US payrolls report hurt sentiment, pushing equities, risky currencies, commodities and interest rates lower. Only 115,000 jobs were added in April versus 160,000 expected. There were, however, positive back revisions and the unemployment rate fell from 8.2% to 8.1%, initially causing some confusion in markets before judgement was passed it was a weak outcome. Also reported was lower Eurozone manufacturing activity, adding to the negative market tone. The S&P500 closed down 1.6% and the CRB commodities index fell 1.4%. US 10yr treasury yields closed 5bp lower at 1.88%, earlier making a 3 Feb low at 1.87%. Australian 3yr bond yields fell 6bp. A few hours ago, results from European elections were announced. France has a new (socialist) president, and Greece's two ...
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Gold rises as jobs data renews Fed easing hopes
(Reuters) - Gold rose on Friday as investors selling crude oil and equities bought the metal after a weak U.S. nonfarm payroll report boosted bullion's investment appeal on talk that a weaker economy might prompt further monetary easing by the Federal Reserve.
Bullion still finished down 0.6 percent for the week. Gold has dropped $150 from a peak in late February after a strong run of U.S. data cast serious doubts over whether the Federal Reserve would launch a third round of government bond purchases, or quantitative easing, also known as QE3.
Fed Chairman Ben Bernanke "had said QE3 is going to be dependent on the incoming data. Next time when he speaks he's going to reemphasize that the Fed is willing to do more," said Axel Merk, chief investment officer of Merk Funds with about $650 ...
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Weekly Economic and Financial Commentary : 04/05/2012
U.S. Review
Modest Growth on a Broadening Base
- The underlying tone of the recent economic reports remains consistent with modest economic growth. Consumer spending ended the first quarter on a solid note and spending is now on track to grow at a 2 percent pace in the second quarter.
- Reports from the regional manufacturing surveys showed some weakness but the National ISM report came in stronger than expected. The nonmanufacturing survey, however, came in below expectations.
- Nonfarm employment rose by 115,000 jobs in April and the unemployment rate fell 0.1 percent to 8.1 percent.
Modest Growth on a Broadening Base
This week's ISM report came in better than expected, rising 1.4 points to 54.8 in April, which greatly relieves fears built up from the weaker factory orders ...
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