FX & Money Markets Daily: IMF Posts A Dark Picture

Daily Forex Fundamentals | Written by Jyske Bank | Jul 29 08 06:11 GMT |

Today's Comment Majors & Scandies Overall, currencies traded in narrow ranges during yesterday's trading. The New York and Asian session did not change this picture drastically, which mean that since we went home yesterday, we have not missed out on any action. The International Monetary Fund (IMF) published yesterday their Global Financial Stability Report with three main points: Banks under renewed stress, making raising capital hard; increased likelihood of spillovers into real economy, and; resilience of emerging markets now being tested. In addition, the IMF is warning that the worsening credit conditions may prolong the economic slowdown. The dark pictures posted by the IMF called on the market pessimists and short term interest rates fell in the Eurozone, the US, and in the UK. The 90-day Eurodollar futures contracts rallied the most, but longer term rates fell in the US as well. Today can very well be a day with a slightly negative undertone due to the messages from the IMF yesterday. The CaseShiller Home Prices Index is due this afternoon and it is measuring the house prices in the major cities. Our economists are forecasting a renew fall in the index, which is due 4 pm. Consumer confidence from Conference Board in the US is also due in the afternoon and this is probably where the market will have its focus today. Our economists are also forecasting a slight fall in the consumer confidence for July. Emerging Markets An uneventful day lead to most EM currencies trading almost flat against the EUR yesterday. The exception was once again ISK down 1.3 % against EUR. The currency is clearly affected by the market being nervous up to 2Q earnings announcements from the Icelandic financial sector this week starting today with Landsbanki. Yesterday also saw the beginning of the final hearings in the case against the AK Party in Turkey but TRY managed to close marginally firmer against EUR. A date for the verdict has not been set, and any day during this or next week seems possible. Once again there are no important events on the EM agenda, and it seems we could be up for another quiet day. Today's key events 09:30 Retail Sales, SEK 10:00 Consumer Prices, DEM 12:00 CBI Retail Sector, GBP 15:00 CaseShiller Home Price Index, USD 01:50 Industrial Production, JPY Jyske Core Positions - Recommendations Jyske Markets - FX Research http://www.jyskebank.dk/finansnyt The analysis is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor for transactions made on the basis of the information or the estimates of the analysis. The estimates and recommendation of the analysis may be changed without notice. The analysis is for personal use of Jyske Bank's customers and may not be copied.