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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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YouTradeFX Daily Market Analysis : 07/05/2012
Fundamental News
The new Euro-zone politics will dominate markets throughout this week, as anti-austerity political parties take hold in Europe. The confirmation of Hollande’s victory in France marks the end of the Merkel-Sarkozy dominance at the political heart of Europe. Investors are acutely aware of the new leader's distain for austerity measures and some elements of the EU's new fiscal treaty. Mr Hollande has vowed not to ratify the new EU treaty unless new growth promoting measures are added, which is going to significantly draw-out the process of fiscal integration, if not stop it altogether. While in Athens, both mainstream political parties saw a dramatic collapse in support with anti-austerity groups seizing the opportunity to bolster their support. The head of the Syriza party, ...
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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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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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The Weekly Bottom Line : 04/05/2012
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 ...
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When Will Volatility Pick Up
The Week Ahead
Highlights
When will volatility pick up
Digesting payrolls
Will there be more QE for the UK?
Data Watch
When will volatility pick up?
Volatility in US Treasuries is at its lowest level since 2007, so too is volatility in the FX options market for short-term EURUSD products and the Vix has fallen sharply since peaking in autumn 2011. Yet Europe's sovereign stresses remain as strong as ever, Spain and Italy are struggling to sell their sovereign debt to anyone bar their domestic banking sectors and election risks are enormous as Greece and France go to the polls on Sunday.
So why is volatility so low? The answer lies with central banks and fairly tight FX ranges. When central banks come in and pledge that interest rates will remain extremely low until 2014, ...
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Oil dives three percent, set for biggest 3-day rout since August
(Reuters) - Oil plunged more than 3 percent on Friday, with U.S. crude below $100 a barrel for the first time since February, as an abrupt slow-down in U.S. hiring soured economic sentiment weighed and technical triggers intensified selling.
Brent's nearly $4-a-barrel slide took three-day losses to more than 6 percent, the deepest sell-off since August, rattling traders who had been lulled by low volatility this year.
While a downbeat U.S. jobs report weighed, traders said a combination of less definitive factors -- from confusion over margin changes to the breach of Brent's 200-day moving average -- had compounded selling, reminding some dealers of the abrupt $10 collapse in prices on May 5 last year.
"We have broken through key technical levels here after a disappointing employment ...
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US Non-Farm Payroll Disappoints; USD Directionless, AUD Slides and JPY Gains
April's unemployment rate eased to 8.1%, but it was a mainly because of people leaving the workforce.
The Non-Farm Payroll data came out 115K, disappointing a 173K forecast which the market has been scaling back throughout the week. March data was revised from 120K to 154K. Although the data came out very weak, the market seems to have been prepared for this disappointment, and the reaction in the currency market was not clear at first.
Source for the charts from the Bureau of Labor Statistics: http://www.bls.gov/home.htm
2 straight months of weak employment data adds to probability of QE. This could be a reason the USD is being pressured, although risk aversion should boost the USD.So USD direction is not clear.
The clearer reaction is coming from the commodity currencies like the AUD ...
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Gold edges into positive territory after U.S. data
(Reuters) - Gold prices edged back into positive territory on Friday after a report showed the U.S. economy added fewer jobs than expected last month, fuelling speculation the Federal Reserve may turn to further monetary easing to boost growth.
The data, which is seen as a key gauge of the economic recovery, showed only 115,000 more jobs were created last month, against expectations for 170,000. The dollar, a key driver of gold prices, hit session lows after the numbers.
Spot gold was up 0.1 percent at $1,637.71 an ounce at 1314 GMT, off an earlier low of $1,626.50. U.S. gold futures for June delivery were up $3.10 an ounce at $1,637.90.
"The numbers were less than consensus, but beat some more bearish expectations," Societe Generale analyst Robin Bhar said.
"The $64 million question ...
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