Market Snapshot 11.06.08

USD

Brief:
1.USD strengthened against most currencies today, extending its rally on buying interest as Fed Chairman Bernanke on Monday said economic risks have faded.
2.Yesterday's US economic releases, -actual- US Trade balance -Apr- (-$60.9B) and ABC Consumer confidence (-45).
3.USD rose to the biggest 2 days gain against the euro since 2005 on buying interest as Fed Chairman Bernanke said economic risks have faded, spurring traders to boost wagers interest rates will rise amid rising inflation on higher food and oil price.
4.USD extended its rally yesterday as US indexes stabilized on crude oil drop and trader bets that the Fed will raise its 2 overnight rate between banks by at least a 0.25% at its Aug 5 meeting
5.Economists said before reports tomorrow that sales at US retailers probably rose in May as Americans started spending tax rebate checks and record gas prices inflated service station receipts.

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

On the downside:
•News that might suggests Fed would have to cut/hold its rates as economy slows.
•ECB members might further back President Trichet suggestion to increases its rate next month to cool inflation.

To monitor:
•Today's Fed members' statements/comments.
•Speculation on tomorrow's retail sales figures.
•US indexes movement.
•ECB members statements/comments.
•News/statements related to Major institution.
•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:
Short: AUD/USD - NZD/USD - GBP/USD – EUR/USD –
Long: USD/JPY - USD/CHF - USD/CAD –
Possible main pairs are: – EUR/USD - USD/JPY – GBP/USD – NZD/USD – USD/CAD -

-According to 13.10GMT price-


JPY

Brief:
1.Tomorrow's Bank of Japan rate decision -forecast- (0.50%).
2.Today's Japan economic releases, -actual- Japan CGPI -YoY-MoM- (4.7% - 1.1%), Trade balance -Apr- (634.7B Yen), Japan Adjusted current account total -Apr- (1510.7B Yen), Japan GDP Annualized -1Q- (4.0%), Nominal GDP -QoQ- (0.5%) and GDP Deflator -YoY- (-1.5%).
3.Japan's 1^st quarter economy grew 4.0%, more than expected after figures showed businesses spent more than estimated amid global economy slows.
4.Japan's current account surplus narrowed more than economists expected in April as surging oil prices pushed up the import bill.
5.JPY falls to a 3 months low against the dollar yesterday as US indexes stabilized after as crude oil falls and Fed Chairman Bernanke said economic risks have faded.

On the upside:
•Crude oil might led commodities further retreat recent gains.

On the downside:
•Recovering stock markets.

To monitor:
•Today's Fed members speeches.
•Tomorrow's BOJ rate decision.
•US indexes movement.
•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 13.10GMT price-


EUR

Brief:
1.Today's Euro-zone economic releases, -actual- France Current account -Apr- (-3.0B Euros) France CPI -YoY-MoM- (3.3% - 0.5%) and France CPI EU-Harmonized -YoY-MoM- (3.7% - 0.6%).
2.Tomorrow's Euro-zone economic releases, -forecast- France NFP -QoQ- (0.3%).
3.EUR snapped a 2 days decline against the dollar today on growing speculation the ECB will raise interest rates next month amid France consumer price index accelerates more than expected in May.
4.ECB board member Juergen Stark damped speculation of a series of interest rate increases, saying policy makers have signaled only that they may raise borrowing costs in July.
5.EUR had it biggest 2 days decline since 2005 yesterday on selling pressure as traders bet that the Fed would increase its overnight rate by atleast 0.25% on 5^th August meeting.
6.EUR weakens against the dollar yesterday after a report showed Germany wholesale prices jumped 1.4% May, the most in 26 years, increasing the inflation pressure in the region and France industrial production rose 1.4% in April from a drop in the previous month.

On the upside:
•Cross currency weakness. (JPY and CAD)
•Other ECB members might signals that they supports ECB's President Trichet idea of a rate raise next month.

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

To monitor:
•Today's US Fed members' speeches.
•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:
Short: EUR/USD – EUR/NZD – EUR/AUD – EUR/GBP –
Long: - EUR/JPY - EUR/CHF – EUR/CAD - (Light)
Possible main pairs are: – EUR/JPY – EUR/GBP - EUR/USD – EUR/CAD - (Light)

-According to 13.10GMT price-


Crude oil

Brief:
1.Crude oil rose today on speculation US inventories dropped by 1.5Million barrels last week, raising concern supply may fall short during the summer driving season.
2.Crude oil felled more than $3 yesterday as the dollar climbed against the euro and yen, curbing the appeal of commodities.
3.CFTC said an interagency task force has been formed to evaluate developments in commodity markets, including the role of speculators
4.OPEC members, consuming nations and oil trading banks Goldman Sachs and Morgan Stanley will be invited to a meeting, to be held in Saudi Arabia, on June 22 to discuss record prices.

On the upside:
•Atlantic hurricane season.
•Light rebound after recent losses. (Depends on storage report)

On the downside:
•Further selling pressure as dollar recovers.
•OPEC production increase speculation
•Record prices curbs consumption.

To monitor:
•Storage report. (10.35AM EST)
•Today's Fed members' speeches.
•OPEC member's comments.
•USD movement.
•Weather report.
•Atlantic ocean hurricane activities.
•US indexes movement.
•Forecast on near term US economic releases and economic growth.
•Fed or its member’s statements/comments.


Trade suggestion:
“Short” Crude oil around high $133 and low $134 (Today's storage report, USD movement and US indexes movement)
-Exit all positions before market closes-

-According to 13.10GMT price-


Time lapse prediction: (according to current situation)


14PM – 16PM GMT:

•USD remains on early trading session.
•US capital market remains or slightly rises on early trading session.
•JPY remains or slightly weakens following US indexes movement.
•EUR remains or slightly weakens on early trading session.
•Crude oil weakens on early trading session. (Depends on storage report)


16PM – 18PM GMT:

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


18PM – 22PM GMT:

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

Loh Chang Yuen,

Junior Strategist

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