FX Overnight Briefing "Financial News - US & Far East"

Financial News - US & Far East

Daily Forex Fundamentals | Written by Jyske Bank | Jul 21 08 04:03 GMT |

Most U.S. stocks declined FED's Stern said FED can not wait Paulson: Economy to take time BOE's Blanchflower: U.K. economy 'going into recession' Today's Main Events USD Leading Indicators American Time Zone: Most U.S. stocks declined Most U.S. stocks fell, led by technology shares, as disappointing results at Google Inc. and Microsoft Corp. overshadowed Citigroup Inc.'s smaller-than-estimated loss, extending the yearlong earnings slump. Google posted the steepest drop since the most-used Internet search engine went public in 2004 and Microsoft declined the most in two years after their profit reports raised concern the slowing economy has reduced demand for computer-related products. Citigroup surged the most in the Dow Jones Industrial Average. Schlumberger Ltd. led a rally in energy shares as record oil boosted earnings. FED's Stern said FED can not wait Most currencies traded in a narrow range in the US market on a day with no economic events at all and few news. Minneapolis FED President Gary Stern said in an interview with Bloomberg that FED can not wait until financial and housing market stabilize before raising interest rates. Besides that he expressed a minor concern of the prospects for inflation. US short term interest rates fell on the hawkish comments from Stern, driving up the chances for rate hikes later this year. Far East Time Zone: Paulson: Economy to take time The U.S. economy needs months to recover from its slowdown, but the banking system remains sound despite a home mortgage crisis that could cause more problems, Treasury Secretary Henry Paulson said. Paulson also said on Sunday morning news programs he was optimistic Congress would approve the Bush administration's request for authority to shore up the troubled mortgage giants Fannie Mae and Freddie Mac. The treasury secretary has been trying to reassure nervous financial markets and is scheduled to deliver an important speech on markets and the economy in New York on Tuesday. High energy prices would prolong the slowdown, but the key to recovery was stabilizing the housing market, Paulson said. He added that U.S. banking problems were manageable despite this month's highly publicized failure of mortgage lender IndyMac bank. The July 11th takeover of the bank by Federal regulators marked the third-largest bank failure in U.S. history. The lines of frustrated depositors outside its doors provided a stark illustration of the U.S. home financing crisis. Australia producer prices up Australian producer prices rose by much less than expected last quarter, helped by a drop in import costs for some goods which may lessen the risk of a high reading for consumer prices this week. Domestic prices at the final stage of production climbed 1.4 % in the quarter, while import prices fell 1.0 %. The increases were driven by rises in the cost of construction, fuel and energy. BOE's Blanchflower: UK economy 'going in to recession' The British economy is heading into recession and interest rates should fall to "well below" their current 5 %, Bank of England policymaker David Blanchflower was quoted as saying in a newspaper interview. The arch-dove was quoted as saying in Monday's edition of the Guardian newspaper that the economy would probably shrink for as much as a year and policy-makers had to act now to bring down borrowing costs. The Bank of England has held interest rates at 5 % for the last three months after cutting them in April despite signs of a sharply slowing economy because inflation has nearly doubled the central bank's 2 % target. Blanchflower was the lone voice calling for a cut in interest rates in May and June. Minutes of this month's meeting will be published on Wednesday, but Blanchflower looks sure to have repeated his call for lower rates 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.