-USD-:
1.US capital markets rose on last Monday as investors speculate that global growth may withstand a slowing US economy, snapping a week long USD losing streak against JPY. On the same day US President Bush and Treasury secretary Henry Paulson said that US economic indicators are sending “mixed” signals and that they are considering whether a stimulus is needed.
•USD snap its 7 day losing streak against JPY on capital markets surge and investors are speculating that the President administrator might have a plan to introduce that will boost US economy and avoid a recession.
2.Last Tuesday economic releases is again a disappointment, with Pending home sales figure is weaker than expected, showing the number of Americans signing contracts to buy previously owned homes fell more than forecast in November. US Consumer credit posted higher than expected figure as Americans spend more amid economy slow down.
•US economic growth is slowing at the same time inflation was picking up according to consumer credit reports, prompting some economist to predict that US economy aren’t as bad as they look, because more consumer spending can supports a slowing economy.
3.US capital markets and USD strengthens amid Goldman joining Merrill Lynch and Morgan Stanley forecast a recession in the US as investors are convinced US consumer spending could withstand other sectors slowdown.
•USD continues its rally as investors are having better outlooks towards US economy and its currency.
4.ECB and BOE announced the central banks rate, which both central banks announced a rate hold and ECB President Trichet send out a message which clearly signals that ECB policy member’s main concern are growing inflation on the euro zone. USD slide further as Fed Bernanke said deeper rate cuts is necessary.
•Causing USD to slide against most currencies, particularly EUR, but remain steady against GBP as investor’s bets that BOE will cut its main rates when next meeting take place to boost UK money supply on slowing economy, particularly manufacturing sector.
5.US exports climbed 0.4% to $142.3 billion in November setting a record for a ninth consecutive month, as a weaker USD lures more buying interest on goods manufactured in the US, providing relieve to exporters and hopefully industries and service sector.
•USD recovers on last Friday from previous day losses as investor’s exits most position before weekends.
-JPY-:
1.JPY weakens against most currency early last week on US capital market surge.
•US capital market rose as investors are convince that global growth are able to withstand US slowing economy.
2.Last Tuesday JPY strengthens, recovers from early losses as US capital markets fell.
•US capital market fell on late trading session as AT&T CEO statements hints telecommunication sector is also affected by housing slump and Country wide Financial Corp dropped the most since black Monday, dragging overall US indexes lower.
3.JPY weakens further on last Wednesday on US capital markets late session surge.
•US Dow index almost close at day high causing JPY to weaken against most currencies as Dow was pushed by speculators amid Goldman supporting Merrill and Stanley views that US are probably sliding into recession.
4.ECB and BOE had their rates on hold amid Euro zone high inflation and UK slowing economy, JPY strengthens that day as global indexes fell, led by US capital markets.
•JPY strengthens against most currencies on capital markets slump, particularly USD and GBP as investors bet that BOE will cut rate when next meeting take place and USD weakened on Fed Bernanke comments which hints deeper rate cut.
-EUR-:
1.EUR is little change against most currency on early last week.
•EUR remains against USD early last week amid Germany economic releases shows Factory orders were higher than expected, but was pressured by Euro zone retail sales figure which posted weaker than expected figure.
2.EUR weakens against USD last Wednesday a day before ECB rate decision is announced
•EUR weakens against most currencies on last Wednesday on signs that Euro zone largest economy (Germany) is slowing, prompting investors to exits position before ECB rate is announced as investors fears ECB might surprise investors by cutting rates to spur euro zone slowing economy.
3.EUR strengthens against most currencies, particularly against USD and GBP after ECB decided to put the rates on hold amid slowing economy.
•EUR strengthens against most currencies, particularly USD and GBP after ECB president Trichet signaled the bank won't cut interest rates and may raise them to curb high inflation even as economic growth slows. Most investors bets that BOE will cut its main rate when next meeting take places as UK economy slows, USD slide further by mid trading session last Thursday as Fed Chairman Bernanke said that deeper cuts is necessary.
4.EUR retrace from previous day rally, but remain steady throughout US trading session.
•EUR retrace slightly from previous day rally as most investors sees Thursday rally was overbought and on investors selling pressure ahead of weekends.
-Crude oil-:
•Crude oil rose early last week after falling from 100USD mark earlier as investors speculate that US inventories fell from their lowest in three years and pressured by weather agencies forecast for higher than normal temperature through Jan 20 in the Northeast region.
•Crude oil rose as militants in Nigeria warned of an “imminent attack” in Africa's largest oil-producing nation, an attack that might “rock” the oil markets.
•Crude oil rose after storage reported larger than expected draw, but decline erasing previous session by mid session as reports also shows high refineries operating capacity and large increase in other petroleum products inventories.
•Crude oil slide further on last Thursday and Friday as more economic releases is pointing towards slowing economy, investors sold their “long” contracts on speculation that slowing economy will curb energy products consumption.
USD
Cross currency strength, weak economic releases and fading investor’s confidence on USD is the main factors that easily erased USD gain in one day (Last Thursday), ECB president Trichet and Fed Chairman Bernanke comments triggered panic selling on USD which are already very depressed lately.
We should see USD to be in range trading mode until any further major interruption that might snap its trend, foreseeable is only far better than expected economic releases, better than expected manufacturing and retail sector and plans that might able to prevent US economy from weaken further.
JPY
JPY keeping tracks of capital markets movement, particularly US capital markets has given JPY an advantage, with US capital markets falling and signs that global economy are slowing causing most investors to temporary reduced their carry trades.
Cross currency weakness, particularly GBP and USD had given JPY and upper hand on its rally. While we see most central banks is favoring an interest rate, except on euro zone where inflation is on 6 year high, BOJ might not follow other central banks cut even as global economic slows, most likely BOJ will have their rates on hold in the near term to help sustain economy while not fueling inflation with a rate cut.
EUR
EUR regain its losses earlier against USD after Thursday ECB President Trichet signaled the bank won't cut interest rates and may raise them to curb inflation which is already at 6 year high even as economic growth slows.
But bottom line is, EUR rose without fundamentals, Euro zone economy, like US, is in a very bad shape, we should see EUR eases its rally against USD in coming days as investor’s starts selling their position betted on strengthening EUR.
Crude oil
Crude oil rose early last week as investors speculated that storage report will post larger than expected inventories draw and Nigerian militant has warned an imminent attack that might probably disrupt crude oil supplies.
But crude oil fell by mid trading session after storage report is released, although crude oil inventories posted larger than expected draw, but the report also shows highest refineries operating capacity since August 2007 and increased in other petroleum products. Crude oil should be in range trading mode or slightly falls before Wednesday storage report, looking at recent data, storage report might be bearish for crude oil, provided if the report does not shows a significant crude oil inventories draw. If refineries operating capacity stays at a high level and other petroleum products keep its increasing trend we might see crude oil falls below the 90USD mark once again.
Loh Chang Yuen,
Junior Strategist
All rights reserved: Admiral Markets Ltd
Weekly overview and analysis. -Jan7 2007 - Jan13 2008 -
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