-USD-:
1.Global markets at the beginning of last week was quiet as Christmas was on the same week and investors are mostly on holiday, but the low volume helped capital markets rally without much pressure on Monday.
•USD moves only a little at beginning of last week as low volatility and low volume traded as investors headed for holiday.
2.On Wednesday US capital markets is little change. Both economic release US S&P/CS Composite20 and US S&P/CaseShiller Home Price Ind figures disappoint economist and investors as it was worse than expected.
•Both US S&P/CS Composite20 and US S&P/CaseShiller Home Price Ind report was disappointing, putting pressure on USD and dragged US capital markets throughout the trading session as investors worried that further reports will show a weaker housing markets, both economic releases are the early signal for weaker housing market.
3.Thursday’s US economic releases of US Durable goods order, US Durable ex transportation and US Initial jobless claims were worse than expected; only consumer confidence surprise investors and economist as figure released was better than expected but was unable to boost USD and US capital markets partly because of Goldman comments on major financial institution will have to write down more than expected on credit related securities.
•Consumer confidences better than expected figures was unable to boost neither US capital markets nor USD as both markets are weighted by earlier worse than expected economic releases and Goldman comments, causing investors to exit USD and US capital markets position ahead of next day economic releases.
4.Friday’s economic releases of US Chicago PMI, New home sales for November, New Home sales MoM basis and US Help wanted signals weaker than expected housing and employment markets, investors concern over a recession period are getting closer with weaker housing markets and retail sales survey/estimate showing weaker sales.
•Friday US capital markets was little change, supported by short covering as investors exits position ahead of weekend and coming New Year Holiday, some economist are saying that orders from overseas may help sustain growth in manufacturing even as US demand wanes as weaker USD attracts more buyers for goods manufactured in the US.
-JPY-:
1.US capital markets rallied on Monday as low volume helped US indexes rally without much pressure as remaining investor’s exits long position before holiday kicks in, providing temporary support for US capital markets.
•JPY didn’t react strongly on US indexes rally; instead, investors are more concern about long-term US economy and near term US economic releases, but not before JPY touched six weeks low against USD a week earlier.
2.US Wednesday economic aren’t favorable, instead it post worse than expected figures, dragging capital markets and USD, but JPY retrace from early session gain caused by profit takings as investors closes position ahead of next day US economic releases.
•Most BOJ board members is concern over instability of global capital markets as there are too many uncertainties regarding global economic development, particularly US. Japan Corp Service Price maintains at 1.4% matching economist forecast. JPY retrace from early session gain throughout US trading session but strengthens against USD.
3.Thursday Japan economic release, housing starts, annualized housing starts, Construction orders and small business confidence suggest that housing markets in Japan weakens and there is a report by Nikkei newspaper shows that retail investors are pulling out their investments trying to protect their capital, fearing that US economy slowdown will pull Japan’s economy performance along.
•JPY continue its rallies as investors predict that US economic releases later that night will post negative figures, dragging US capital markets and USD which later proves to be true where economic figure releases were worse than expected.
4.JPY continue its rally on Friday as Japan economic releases of Japan National CPI, CPI Ex fresh food, CPI Ex food and energy, Japan industrial production –MoM- YoY- , Japan large retailers sales and Japan retail trade -MoM-YoY- signals manufacturing sector remains healthy and CPI shows inflation are accelerating.
•Friday’s Japan economic releases signaling no slowdown in manufacturing and retail sector amid investor’s worries that US economy slowdown will affect Japan’s near term economy/sector performance.
USD, most US economic releases last week were worse than expected, particularly on Housing sector reports which was very disappointing, causing USD to erase part of earlier week gains. US capital markets and economic outlook was further dragged down by comments from major institution top executive, which are negative for the markets.
Although we see consumer confidence figure posted better than expected figure, but it was unable to weather housing related figures. Even retail doesn’t seems favorable, surveys, sales report and comments regarding retails sales are all on the downside, although as usual retail sales increased in November and December, but comparing to other years, 2007 year-end sales is still lower as consumer hurts by credit and housing markets cut down on spending.
There is still a lot of investors are concern that US is heading into recession, unless near future economic releases are favorable, US capital markets and USD will continue to suffer.
JPY, was mostly on the upside last week as US capital fall on economic releases and forecast. JPY strengthen most against USD as US economic releases aren’t favorable for USD and near term US economy outlook. JPY on early this week would be traded with low volatility and volume as investors are stepping sidelines on New Year Holiday and uncertainty over 2008 outlook.
Last week Japan’s economic releases were mostly favorable amid US negative releases and outlook. Manufacturing and retail sectors were strong and CPI shows inflation are slightly higher probably giving BOJ the opportunity and reason to raise rate, but there is still no clear hints regarding BOJ decision yet, monitor this week economic releases for further indication.
-Check out Admiral Markets daily analysis for updates-
Loh Chang Yuen,
Junior Strategist
All rights reserved: Admiral Markets Ltd
Weekly overview 24-28 Dec and analysis.
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