Market Snapshot 12.06.08

USD

Brief:
1.Today's US economic releases, -forecast- US Import price index -YoY-MoM- (17.2% - 2.4%), Advance retail sales -May- (0.5%), Retail Sales less autos -May- (0.7), Initial jobless claims (366k) and US Business inventories -Apr- (0.3%).
2.USD strengthens as Economists said before reports today that sales at US retailers probably rose in May as Americans started spending tax rebate checks and record gas prices inflated service station receipts
3.USD weakens against the euro yesterday on selling pressure as investors takes profit before today's retail sales report.
4.USD weakens before US trading session yesterday after ECB council member Athanasios Orphanides said more interest rate increases may be needed after July.
5.Fed said economic growth was generally weak in April and May as consumer spending slowed, while manufacturers in several regions passed on higher raw materials costs to their customers according to Beige Book economic survey.

On the upside:
•Cross currencies weakness. (JPY and GBP)
•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 supports President Trichet suggestion to increases its rate next month to cool inflation.

To monitor:
•Today's US economic releases. (Important)
•Speculation on tomorrow's economic releases figures.
•Tomorrow's Euro-zone economic releases.
•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 13.15GMT price-


JPY

Brief:
1.Todays Bank of Japan rate decision -forecast- (0.50%).
2.Tomorrow's Japan economic releases, -forecast- Japan Industrial production -MoM- (-0.3%) and Households confidence -May- (34.5).
3.JPY strengthens against most currencies today as Asian and European capital markets fell as crude oil surge more than $5 yesterday, stokes inflation concerns.
4.JPY strengthened against most currencies yesterday as US indexes falls as banks and transportation companies plunged on speculation faster inflation will force the Fed to raise interest rates.
5.Japan's 1^st quarter economy grew 4.0%, more than expected after figures showed businesses spent more than estimated amid global economy slows.

On the upside:
•US stock might continue its decline if crude oil continues its rally.

On the downside:
•US stock markets might rise, led by retailers if today's US retail sales report show positive recovery.

To monitor:
•Today's US economic releases.
•Today BOJ rate decision.
•Tomorrow's Japan economic releases.
•Tomorrow's Euro-zone economic releases.
•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 13.15GMT price-


EUR

Brief:
1.Today's Euro-zone economic releases, -actual- France NFP -QoQ- (0.4%) and Euro-zone Industrial production -MoM- (0.9).
2.Tomorrow's Euro-zone economic releases, -forecast- Germany CPI -YoY-MoM- (3.0% - 0.6%), Germany CPI EU-Harmonized -YoY-MoM- (3.0%- 0.6%), BOF Business sentiment -May- (100), Italy CPI -YoY-MoM- (3.6% - 0.5%) and Italy CPI EU-Harmonized -YoY-MoM- (3.7% - 0.6%).
3.EUR weakens against the dollar amid European industrial production unexpectedly rose in April, as the dollar rose after economists said before reports today that sales at US retailers probably rose in May as Americans started spending tax rebate checks.
4.EUR rose against the dollar yesterday on short-covering as investors' exits position on profit taking after recent gain and before today's US retail sales report.
5.EUR snapped its downtrend against the dollar yesterday after ECB council member Athanasios Orphanides said more interest rate increases may be needed after July
6.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.

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

On the downside:
•Cross currency strength. (USD -Rally resumes on retail sales report-)
•Weaker euro-zone economic growth outlook.

To monitor:
•Today's US economic releases. (Important)
•Tomorrow's Euro-zone economic releases.
•Speculation on tomorrow's US 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:
Short: EUR/USD – EUR/NZD – EUR/AUD – EUR/GBP –
Long: - EUR/JPY - EUR/CHF – EUR/CAD -
Possible main pairs are: – EUR/JPY – EUR/GBP - EUR/USD – EUR/CAD -

-According to 13.15GMT price-


Crude oil

Brief:
1.Crude oil fell today as the rising US dollar reduced the appeal of commodities as a hedge against the currency.
2.Crude oil rose yesterday after storage report showed US crude oil inventories felled more than expected last week, raising concern supply may fall short during the summer driving season.
3.Crude oil extended its rally yesterday after as the dollar declined, snapping its 2 days rally against the euro and US indexes falls speculation that faster inflation will force Fed to raise interest rates.
4.US Energy Department storage report showed crude oil inventories decreased 4.6Million barrels from last week, gasoline inventories increased by 1.0Million barrels while distillate inventories increased by 2.3Million barrels.
5.Refineries operated at 88.6% of its maximum capacity, down 1.1% from previous week, and US crude oil imports averaged at about 9.7Million barrels per day last week, down 98k barrels per day from the previous week.
6.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.
•Heat wave.

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

To monitor:
•Today's US economic releases.
•Tomorrow's Euro-zone economic releases.
•Speculation on tomorrow's US economic releases.
•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 mid $133 and high $133 (Today's US economic releases, USD movement and US indexes movement)
-Exit all positions before market closes-

-According to 13.15GMT price-


Time lapse prediction: (according to current situation)


14PM – 16PM GMT:

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


16PM – 18PM GMT:

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


18PM – 22PM GMT:

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

Loh Chang Yuen,

Junior Strategist

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