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Analysis: Deeper metals price falls needed to spark closures
(Reuters) - A rout in commodity markets has pushed prices of aluminum, zinc and nickel down to levels where many high-cost producers are starting to suffer, although the pain threshold may have to increase before widespread closures help balance markets.
High cash premiums in aluminum and zinc along with recent weakening in commodity currencies are providing a cushion to some producers, who otherwise might be forced to halt loss-making output in markets burdened with surpluses.
"It becomes a question of how long you can hold your breath under water, if you can hold breath just a moment longer, then it may be your rival who makes the cuts," said Nick Moore, head of commodity research at RBS in London.
"If they don't cut, then prices will be the grim reaper. They will go down to a level ...
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Another Day, Another New Correction Low For EUR/USD
Sunrise Market Commentary
- Fixed Income: Hunt for yield
- Following horrible French and German PMI readings, core bonds set new highs. The German 10-yr yield set an all time low at 1.35% and this initiated for the first time a “hunt for yield” trade into Belgian, Austrian and French bonds. The trade was most visible at the longer end of the curve, resulting in a bull flattening.
- Currencies: Another day, another new correction low for EUR/USD
- On Thursday, the decline of EUR/USD was extended. However, given the flood of negative news, the damage could have been worse. EUR/GBP struggles to hold above the 0.8000 barrier. Today, the calendar is thin. However, one can expect investors to stay cautious going into a long weekend. This is no help for the euro
The Sunrise ...
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Fed's Dudley eyes costs of more policy easing
(Reuters) - The Federal Reserve would not want to ease policy more - including another round of quantitative easing (QE) - if U.S. economic growth continues to eat into "slack" in the economy including unused labor, an influential Fed official said on Thursday.
New York Fed President William Dudley, a permanent voter on the Fed's policy committee who is closely aligned with Chairman Ben Bernanke, did not tilt his hand on what, if any, steps he wants the central bank to take at its next policy-setting meeting in June. But he sketched out what could lead to more easing - and even tightening - of the Fed's ultra easy policy stance.
"As long as the U.S. economy continues to grow sufficiently fast to cut into the nation's unused economic resources at a meaningful pace, I think the benefits ...
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PMI Deterioration Could Trigger ECB Cut
PMI Deterioration Could Trigger ECB Cut
- We believe deteriorating PMIs could trigger a move from the ECB. We now expect the ECB to lower interest rates at the June meeting. We expect a one-off rate cut of 25bp - leaving the refi rate at 0.75%. Deposit rates are likely to be left unchanged while the marginal lending rate is expected to be lowered 50bp to 1.25%.
- If market sentiment worsens on Greek or Spanish concerns, this could trigger additional non-standard measures such as longer maturity LTROs. This is not our main scenario though as we continue to expect a viable solution in Greece.
- The euro area composite PMI dropped from 46.7 in April to 45.9 in May driven by a drop in manufacturing PMI. The German Ifo also gave in and dropped in May.
Details and outlook
The euro ...
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Asian Market Update : 24/05/2012
EU leaders call on Greece to work harder, June meeting to provide more details on measures; China flash PMI contracts again Thu, 24 May 2012 1:41 AM EST
Economic Data
(CN) CHINA MAY HSBC FLASH MANUFACTURING PMI: 48.7 V 49.3 PRIOR FINAL (7th consecutive contraction)
(NZ) NEW ZEALAND APR TRADE BALANCE (NZ$): 355M V 400ME (11-month high); TRADE BALANCE YTD: -541M V -651ME
(NZ) NEW ZEALAND ANNUAL BUDGET RELEASE: AFFIRMS TARGET OF RETURNING BUDGET TO SURPLUS IN 2015
(AU) AUSTRALIA Q1 CBAHIA HOUSE AFFORDABILITY: 61.8 V 58.5 PRIOR
(JP) JAPAN BOJ MONTHLY ECONOMIC REPORT: Increasingly Evident Japan Economy Is Shifting To Pickup
(KR) SOUTH KOREA Q1 HOUSEHOLD CREDIT Y/Y: +7.0% V 7.8% PRIOR (lowest level since Sept 2009)
(VN) Vietnam May CPI m/m: 0.2% v 0.1% prior; y/y: 8.3% v 8.9%e
(JP) ...
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European Market Update : 23/05/2012
Euro hits fresh 2012 lows ahead of informal summit; More reports of an ECB contingency plan in the works
Economic Data
(GR) Greece Mar Current Account: -€2.1B v €1.1B prior
(NL) Netherlands Mar Consumer Spending Y/Y: % v -1.3% prior
(SE) Sweden Apr Unemployment Rate: % v 7.8%e
(EU) Euro Zone Apr Current Account: +€7.5B v -€5.6B prior; Current Account Seasonally Adj: +€7.5B v -€1.2B prior
(IT) Italy May Consumer Confidence: 86.5 v 89.5e (lowest reading on record after series began in 1996))
(ZA) South Africa Apr CPI (all items) M/M: 0.4% v 0.5%e; Y/Y: % v 6.2%e
(TW) Taiwan Apr Industrial Production Y/Y: -2.3% v -1.7%e; Commercial Sales Y/Y: -2.4% v -0.9% prior
(UK) Apr Retail Sales Ex Auto Fuel M/M: -1.0% v -0.7%e; Y/Y: -0.3% v +0.7%e
(UK) Apr Retail Sales with Auto Fuel M/M: -0.8% ...
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Gold slips in line with euro ahead of EU meeting
(Reuters) - Gold fell towards $1,550 an ounce in Europe, pressured by concerns that a European Union meeting later on Wednesday would fail to significantly ease worries over the euro zone debt crisis which lifted the dollar to a 21-month high against the euro.
The dollar, along with German bond futures, benefited from a flight from riskier assets, including stocks and commodities such as copper and oil.
Spot gold was down 0.1 percent at $1,555.50 an ounce at 0930 GMT while U.S. gold futures for June delivery were down $20.60 an ounce at $1,556.00.
"Gold is acting more as a risky asset, and everything is tumbling this morning ahead of this informal finance ministers meeting, where nothing good is really expected," Societe Generale analyst Robin Bhar said.
"It is not inconceivable that ...
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Windsor Brokers - Short Term Technical Analysis for Majors (07:00 GMT)
EUR/USD
The pair comes under increased pressure after recovery attempt stalled just above 1.2800 and renewed risk-off sentiment pushed the price lower to fully retrace recent 1.2641/1.2823 corrective leg. Negative studies keep our short-term target at 1.2622 in focus, with consolidative/corrective action above 1.2641, seen on overextended hourly studies. Immediate resistance lies at 1.2680/1.2900 zone, while only lift above 1.2730/50 would provide near-term relief.
Res: 1.2780, 1.2800, 1.2811, 1.2823
Sup: 1.2657, 1.2641, 1.2622, 1.2622
GBP/USD
Cable flirts with recent low at 1.5731, as mild corrective attempt didn’t show much of action and gains being capped at 1.5840. Reversal to the lows, along with negative short and longer-term studies and yesterday’s close below 200 day MA, ...
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Dukascopy Morning Forex Overview : 23/05/2012
Fundamental Analysis
EUR
"The rally is mostly technically driven after we became quite oversold last week."
- Raimund Saxinger, a fund manager at Trust Investment GmbH
European stocks rose by the most in a month on Tuesday. The Stoxx Europe 600 Index gained 1.91 per cent to 244.76. Germany’s DAX Index edged higher 1.65 per cent and France’s CAC 40 Index added 1.88 per cent. The U.K.’s FTSE 100 Index rose 1.86 per cent to 5,403.28
USD
"People are becoming more confident about job prospects and about taking on mortgages."
- Millan Mulraine, a senior U.S. strategist at TD Securities Inc.
U.S. existing home sales rose in April to an annual rate of 4.62 million from 4.47 million in March, said the National Association of Realtors.
GBP
"These figures give the Monetary Policy Committee ...
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