-USD-:
1.USD strengthened against most currencies last Monday as investor’s fear that the US is near a recession.
•USD strengthens as cross currencies weakened particularly against EUR while US is on national holiday. Global markets slumped on concern US are sliding into recession.
2.USD weakened against most currencies last Tuesday as Fed cut its benchmark rate by 0.75% in an emergency meeting.
•USD felled the most in 2 months against EUR after Fed cuts its benchmark rate by 0.75% in an emergency meeting, surprising a lot of investors and capital markets rose after the announcement. But capital markets remains in negative territory as investors fear that President Bush stimulus plan and Fed interest rate cut are unable to save US from a recession.
3.USD felled on late trading session, erasing early gains last Wednesday amid US capital late trading session surge.
•USD erases gain as investors speculate Fed will be more aggressive in rate cuts and New York State’s insurance regulators met that day with US banks to discuss raising new capital for bond insurers, heightening investors concern US will slid into recession
4.USD weakened against most currencies, led by EUR/USD on weaker housing market outlook.
•USD weakened against EUR as some ECB members dismisses any speculation on a rate cut amid slowing economy and economic releases shows sales of existing home in US felled more than forecasted in December, capping the biggest annual slump in 25 years.
-JPY-:
1.JPY strengthened against most currencies last Monday amid US trading session closed on holiday, European and Asian capital markets falls.
•JPY touched 5 months high against EUR on capital markets worst downfall in years as investors sell off stocks on weaker economy outlook and fears that US are sliding into recession.
2.JPY weakened against most currencies erasing earlier gains after Fed announced an emergency rate cut of 0.75%.
•JPY weakened against most currencies, particularly against GBP and EUR, erasing earlier gains on European markets fall. BOJ hold its benchmark rate at 0.50% amid slowing economy and government cut its growth forecast for 2008 fiscal year to 1.3% from 2.1%.
3.JPY weakened, erasing early trading session gains on US capital markets late trading session surge.
•JPY weakened as US capital markets surge by late trading session on news that New York State’s insurance regulators met that day with US banks to discuss raising new capital for bond insurer.
4.JPY weakened against most currencies last Thursday on capital market surge.
•Capital market rose as President Bush administration and House lawmakers announced an economic stimulus package intended to boost US economy, investors brought stocks after the announcement, pushing capital markets.
-EUR-:
1.EUR weakened against most currencies, particularly against USD and JPY on investors selling pressure as Europe stock markets declined.
•EUR slides, touching 5 months low against JPY as investors pared carry trades on capital markets slumped. ECB council member Nout Wellink said economic growth in the 15-nation euro region may slow more than policy makers expected, increased investors selling across Europe capital markets and EUR it self.
2.EUR strengthened the most in 2 months against USD last Tuesday and recovers from previous losses.
•EUR strengthened against USD after Fed cut its benchmark rate by 0.75% in an emergency meeting, triggered a mass selling on the dollar. Investors also speculate other central banks will follow Fed rate cut to prevent a major economy slowdown.
3.EUR strengthened against most currencies on buying interest and on cross currency weakness.
•EUR strengthened against most currencies last Wednesday after ECB President Trichet said he’s committed to fighting inflation, attempting to quash speculation he’ll follow the US Fed in cutting interest rates after stocks plunged,
4.EUR strengthened on ECB member’s comments and cross currency weaknesses.
•EUR strengthened as some ECB members dismissed any rate cut speculation amid high inflation and slowing economy in the euro zone. Italian consumer confidence felled to the lowest in two years in January according to economic releases.
-Crude Oil-:
•Crude oil declined last Monday as global capital markets felled on investors concern over US sliding into recession will curb demand for energy products. Crude oil traded steadily around 88USD a 1 month low amid US national holiday, there were mixed message among OPEC oil minister comments regarding crude oil price and supply.
•Crude oil rose last Tuesday after Fed cuts its benchmark by 0.75% on an emergency meeting. Crude oil is further supported by short-covering as investors exits position before February contracts expires, some investors speculate Fed interest rate cut and President Bush stimulus proposal will not be able to prevent an recession.
•Crude oil decline and touched a 3 months low before next day storage report which analyst estimate will show crude oil inventories rose. Crude oil also falls as investors are unconvinced that a Fed rate cut and President Bush administration stimulus package would be able to save US from a possible recession.
•Crude oil surge, snapping previous downtrend amid higher than expected crude inventories build after President Bush administration and House lawmakers announced an economic stimulus. Minister from Qatar, UAE and Iraq said OPEC doesn’t need to Increase oil production when it meets this week (Feb 1) because supply is adequate, further supported crude oil rally for that day.
USD
Seems like investors are still unconvinced that the stimulus package and the emergency rate cut is adequate to save US from a possible recession. Most economists predicted that next FOMC meeting would result in another rate cut of 0.50%, which from my side of view it is highly possible.
This week economic releases is crucial for USD near future, economic releases include –Very important- new home sales, consumer confidence, GDP growth, FOMC rate decision, PCE Deflator and Unemployment rate, It’s a must monitor for these economic releases, actual or forecast/speculation is equally important, expect for a very volatile USD movement this week.
JPY
JPY volatility increased on uncertainty in global capital markets. Last week capital markets was in chaos as most investors liquidized their holdings on negative US economy outlook.
Not only US economy growth doesn’t seem positive, Japan and Euro-zone economies are slowing too, affected by US economy slowdown. BOJ hold its benchmark rate last week amid rising inflation to prevent economy to slow further affected by US slowdown. This week movers for JPY should be US economic releases, outlooks and cross currency movement, particularly EUR and USD.
EUR
Big news for EUR, ECB members dismissed any rate cut speculation amid slowing economy as euro inflation rate is at 6 years high. When Fed cut its rate on an emergency meeting last Tuesday, most investors expect other central banks to follow to prevent a global economy meltdown.
Instead ECB members quickly dismiss any possible rate cuts on concern a rate cut would further fuel inflation which is already a great concern for ECB members. This week, like JPY, events from US is the main focus, expect a volatile EUR caused by cross currency movement.
Crude oil
Crude oil was volatile last week, but traded within range last week on mixed signal. Investors are still undecided whether President Bush administration stimulus package and an aggressive rate cut would able to save US from a major economy slowdown, sustaining energy products demand.
We should see crude oil reacts according to economic releases, Fed rate decisions and economy outlook. But be very careful as OPEC meeting this week (Feb 1) may change its trend in the near-term. I see crude oil to be trading in range between $88-92$, but stay alert as any major interruption could pull crude oil out of the mentioned price range.
Loh Chang Yuen,
Junior Strategist
All rights reserved: Admiral Markets Ltd
Weekly overview and analysis. -Jan21 2008 - Jan27 2008 -
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