Market Snapshot 16.06.08

USD

Brief:
1.Today's US economic releases, -forecast- US Empire manufacturing -Jun- (-1.5) and US Total Net TIC flows -Apr- (No forecast figures).
2.Last Friday's US economic releases, -actual- US CPI -YoY-MoM- (4.2% - 0.6%), US CPI Ex-food and energy -YoY-MoM- (2.3% - 0.2%) and University of Michigan consumer confidence index (56.7).
3.Economists said ahead of reports this week that builders probably broke ground on fewer homes in May, signaling the residential real estate market remains the biggest risk to growth.
4.The dollar rose to 1 month high against the euro last Friday as Fed Chairman Ben S. Bernanke said economic risks have faded, raising speculation policy makers will increase borrowing costs this year to contain inflation.
5.USD extended its rally last Friday after a report showed US consumer prices rose 0.6% in May, more than forecast on record food and oil prices while the dollar remains steady last Friday amid University of Michigan preliminary index of consumer sentiment fell to 56.7 in June, lowest since 1980, from 59.8 in May.
6.US Treasury Secretary Henry Paulson last week said surging oil costs may postpone a rebound in the American economy, which still faces challenges from the housing slump and credit crunch.

On the upside:
•Cross currencies weakness. (JPY, CAD 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 comments signals a possible rate raise by next month..

To monitor:
•Today's US economic releases. (Important)
•Tomorrow's Euro-zone economic releases.
•Speculation on tomorrow's US economic releases.
•US indexes movement.
•Fed 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.Today's Japan economic releases, -forecast- Japan Tertiary industrial index -MoM- (0.6%) and Japan Machine tool orders -YoY- (No forecast figures).
2.The Japanese government downgraded its assessment of the economy for the first time in three months, saying that exports, production and corporate profits are waning, according to publication of monthly economic report.
3.JPY weakens against most currencies and fell to 7 months low against the euro as gains in Asian and European stock markets encouraged investors to add to holdings with carry trades.
4.JPY weakens against most currencies last Friday as US indexes rose amid a private survey showed US consumer confidence felled to the lowest since 1980.

On the upside:
•Commodities might fall.

On the downside:
•US stock markets might rise on economic optimism.

To monitor:
•Today's US economic releases. (Important)
•Today'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 13.10GMT price-


EUR

Brief:
1.Todays Euro-zone economic releases, -actual- Euro-Zone CPI -YoY-MoM- (3.7% - 0.6%) and Euro-zone CPI -Core- (1.7%).
2.Tomorrow's Euro-zone economic releases, -forecast- Italy Trade balance total -Apr- (-1250M Euros), Germany ZEW Survey -Current-Jun- (37.0), Germany ZEW Survey Economic sentiment -Jun- (-42.5), Euro-zone ZEW Survey Economic sentiment -Jun- (No forecast figures), Euro-zone Trade balance (-1.5B Euros) and Euro-zone Trade balance -Apr- (-0.5B Euros).
3.EUR strengthens today and rose to a 7 months high against the yen after a report showed European inflation accelerated to 3.7% in May, the highest in 16 years as food and energy costs soared.
4.EUR weakened to 1 month low against the dollar last Friday after a report showed US consumer price index rose more than estimated.

On the upside:
•Cross currency weakness. (JPY)
•Some recovery against the dollar.
•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)
•Weaker euro-zone economic growth outlook.

To monitor:
•Today's US economic releases. (Important)
•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:
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 13.10GMT price-


Crude oil

Brief:
1.Crude oil rose today after a drill rig fire cut North Sea production and dollar weakens after a report showed Euro-zone inflation rose to a 16 years high, weakening USD and made commodities an appealing currency hedge.
2.Crude oil felled last Friday as Saudi Arabian Oil Minister Ali al-Naimi said record prices are unjustified and the state oil company said the company will start pumping 500,000 barrel a day from its new field within the next month
3.Crude oil extended its decline as the dollar rose to a 1 month high against the euro after a government report showed US consumer price index rose more than estimated.
4.Nigerian President said in a statement last week after talks with French President in Paris that removal of Shell will calm down unrest by Ogoniland residents, but analysts claims the move might disrupt productions.

On the upside:
•Atlantic hurricane season.
•Heat wave.
•Possible supply disruption in Nigeria.

On the downside:
•Further selling pressure as dollar recovers.
•Record prices forced weaker consumption and drives inflation in the US.

To monitor:
•Today's US economic releases. (Important)
•Tomorrow's Euro-zone 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 $135 and high $135 (Today's US economic releases, 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 recover on early trading session. (Depends on economic releases)
•US capital market rises on early trading session. (Depends on economic releases)
•JPY weakens following US indexes movement.
•EUR retreats on early trading session.
•Crude oil weakens on early trading session.


16PM – 18PM GMT:

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


18PM – 22PM GMT:

•USD 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 weakens by late trading session.
•Crude oil falls by late trading session.

Loh Chang Yuen,

Junior Strategist

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