Market Snapshot 05.06.08

USD

Brief:
1.Today's US economic releases, -forecast- US Initial jobless claims (370k) and US ICSC Chain store sales -YoY- (No forecast figures)
2.Yesterday's US economic releases, -actual- ADP Employment change -May- (40k), US Non-Farm Productivity (2.6%), Unit Labor cost (2.2%) and ISM Non-Manufacturing composite -May- (51.7).
3.USD is little change against the euro yesterday after ISM index of non-manufacturing businesses fell less than expected to 51.7 from 52 in April.
4.USD is steady against the euro yesterday on selling pressure as investors takes profit after recent gains amid a report showed US non-manufacturing businesses fell less than expected and a private survey by ADP indicated companies unexpectedly added 40k jobs in May.

On the upside:
•Cross currencies weakness. (JPY and CAD)

On the downside:
•Some selling pressure after recent gain.
•ECB members might threaten to raise its benchmark rate in future after today's decision to hold its rate as inflation accelerates.


To monitor:
•Speculations on tomorrow's US economic releases.
•Tomorrow's Euro-zone economic releases.
•ECB members statements/comments.
•News/statements related to Major institution..
•Fed member’s comments/statements.
•Other Central bank member’s statements/comments.
•Cross currency strength and weakness. (GBP, EUR, AUD, NZD, CAD and JPY –Main-)


Suggested pairs of the day: (Light)
Short: AUD/USD - NZD/USD - GBP/USD – EUR/USD –
Long: USD/JPY - USD/CHF - USD/CAD –
Possible main pairs are: – EUR/USD - USD/JPY – AUD/USD – GBP/USD – NZD/USD - USD/CAD


-According to 13.15GMT price-

JPY

Brief:
1.JPY strengthens today as Asian and European markets fell led by energy producers as commodities felled and Lehman Brothers Holdings cut its rating on Japaneses banks on rising credit cost.
2.US Dow index felled yesterday amid a government official said Lehman Brothers Holdings isn't under pressure from the Fed and SEC to boost capital.
3.JPY slightly weakens against the dollar yesterday as the currency strengthened after a report showed US non-manufacturing businesses fell less than expected.
4.US stocks falls yesterday amid a private survey by ADP indicated companies, excluding civil service, unexpectedly added 40k jobs in May

On the upside:
•Many analysts fear that commodities rally is near an end which may reduce the appeal for carry trades.

On the downside:
•Cross currency strength. (USD and GBP)
•Weaker outlook on Japan’s economic growth.


To monitor:
•Speculations on tomorrow's US economic releases.
•Tomorrow's Euro-zone economic releases.
•ECB members statements/comments.
•Major corporate earnings reports.
•News related to major institution.
•Central bank member’s statements/comments.
•Economist comments on US/Japan economy, economic releases or sector growth.


Suggested pairs of the day:
Long: USD/JPY - GBP/JPY – AUD/JPY– NZD/JPY– EUR/JPY –
Possible main pairs are: –GBP/JPY – EUR/JPY – AUD/JPY - USD/JPY -

-According to 13.15GMT price-


EUR

Brief:
1.Today's Euro-zone economic releases, -actual- France ILO Unemployment rate -1Q- (7.5%), Italy PMI -Services- (49.5), Germany Factory orders -MoM- (-1.8%) and ECB Rate decision (4.00%).
2.Tomorrow's Euro-zone economic releases, -forecast- France Trade balance -Apr- (-4.0B euros), France Central government budget balance -Apr- (-40B Euros) and Germany Industrial production -MoM- (0.2%).
3.EUR weakens amid ECB kept interest rates at a 6 years high today to fight inflation even as the euro-region economy cools while Germany manufacturing orders unexpectedly declined 1.8% in April, adding to evidence that growth in Europe's largest economy is slowing.
4.EUR slightly weakens the dollar yesterday after a report showed US non-manufacturing businesses fell less than expected and a private survey by ADP indicates companies, excluding government, unexpectedly added 40k jobs in May.
5.EUR recovers from earlier losses amid a report showed European retail sales unexpectedly declined in April by 0.6%, much more than economists forecast on short-covering as investors exit positions on profit taking.

On the upside:
•Cross currency weakness. (JPY and CAD)
•Some recovery after recent retreat.
•ECB member's might signals a rate raise possibilities in near future as inflation accelerates.

On the downside:
•Cross currency strength. (USD and GBP)
•Weaker euro-zone economic growth outlook.


To monitor:
•Speculations on tomorrow's US economic releases.
•Tomorrow's Euro-zone economic releases.
•ECB member statements/comments.
•US stock indexes movement.
•News related to major corporate.
•Fed members statement/comments.
•Cross currency movement. –Main- (USD)
•Other central banks member’s statements/comments.


Suggested pairs of the day: (Light)
Short: EUR/USD – EUR/NZD – EUR/AUD – EUR/GBP –
Long: - EUR/JPY - EUR/CHF – EUR/CAD
Possible main pairs are: – EUR/AUD – EUR/JPY – EUR/GBP - EUR/USD – EUR/CAD -

-According to 13.15GMT price-


Crude oil

Brief:
1.Crude oil is traded little changed today, near its lowest in 3 weeks as the dollar strengthens and on signs global demand for gasoline is slowing and stockpiles are increasing.
2.Crude oil felled more than $2 a barrel and gasoline dropped the most in two months yesterday on a larger than expected US fuel supply gain and signs demand will weaken because of increasing prices.
3.Crude oil felled yesterday amid Energy Department storage report showed crude oil inventories felled by 4.8Million barrels on week ended May 30, on selling pressure on signs demand will weaken because of increasing prices and weaker demand in Asia region as few Asian nation begin to reduce subsidies.
4.Crude oil inventories decreased by 4.8Million barrels, gasoline inventories increased by 2.9Million barrels while distillate inventories increased by 2.3Million barrels.
5.Crude oil imports averaged 9.8Million barrels per day last week, up 827k barrels per day from the previous week and refineries operated at 89.7% of their maximum capacity, up 1.8% from the previous week.
6.Commodities markets falls this week as the CFTC will grant fewer exemptions to speculative position limits related to agricultural index trading and plans to provide more detail on trader holdings starting next month in an e-mailed statement this Tuesday..

On the upside:
•Atlantic hurricane season.
•Some recovery after recent fall on short-covering as investors exit position ahead of weekends.

On the downside:
•Selling pressure as the dollar continue its rally against the euro and as stock markets recovers.

To monitor:
•Speculations on tomorrow's US economic releases.
•Weather report.
•Atlantic ocean hurricane activities.
•USD movement.
•US indexes movement.
•Forecast on near term US economic releases and economic growth.
•Fed or its member’s statements/comments.


Trade suggestion: (Light)
“Long” Crude oil around low $122 and mid $122 (Today's US economic releases, USD movement and US indexes movement)
-Exit all positions before market closes-

-According to 13.15GM price-


Time lapse prediction: (according to current situation)


14PM – 16PM GMT:

•USD remains or slightly strengthens on early trading session.
•US capital market rises on early trading session.
•JPY retreats following US indexes movement.
•EUR remains or slightly weakens on early trading session.
•Crude oil remains or slightly rises on early trading session.


16PM – 18PM GMT:

•USD strengthens on mid trading session.
•US capital markets remains or slightly rises during mid trading session.
•JPY weakens following US capital markets movement.
•EUR weakens on mid trading session.
•Crude oil remains or slightly weakens by mid trading session.


18PM – 22PM GMT:

•USD remains or slightly retreats by late trading session.
•US capital markets surge by late trading session.
•JPY weakens further following US capital markets movement.
•EUR remains or slightly strengthens by late trading session.
•Crude oil remains or slightly rises by late trading session.

Loh Chang Yuen,

Junior Strategist

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