FX Overnight Briefing

Daily Forex Fundamentals | Written by Jyske Bank | Jul 25 08 04:26 GMT |

Financial News - US & Far East U.S. equities fell EUR fell after German IFO data Japan consumer inflation hits another decade-high U.S. banks primary borrowings from FED biggest ever Today's Main Events GBP GDP USD Durable Goods Orders USD University of Michigan Confidence USD New Home Sales American Time Zone: U.S. equities fell U.S. stocks fell for the first time in three days, led by banks and brokerages, after home sales decreased more than forecast and investor Bill Gross predicted the housing slump will cost financial firms USD 1 trillion. Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. tumbled and shares of builders posted their biggest drop ever as an industry report showed sales of previously owned homes fell to the lowest level in a decade. Ford Motor Co., the world's thirdlargest carmaker, slid the most since September 2001 after reporting a loss twice as big as analysts estimated, while McDonald's Corp. declined as Deutsche Bank AG cut its rating on the shares. EUR fell after German IFO data The euro fell to the lowest level of 1.5628 against the dollar in more than two weeks as a drop in business confidence in Germany reduced speculation that the European Central Bank will raise interest rates again this year. The yen rose against the dollar and the euro as a decline in U.S. stocks prompted investors to pare holdings of higher yielding assets financed by loans in Japan. Oil price higher Crude oil rose from a seven-week low of USD 123,52 to close at USD 125,70 as some traders purchased contracts on speculation prices fell too far in the past two weeks. Far East Time Zone: Japan consumer inflation hits another decade-high Japan's core annual inflation accelerated to a new decade-high in June on continued rises in energy costs, adding to the Bank of Japan's policy dilemma as it juggles the risks of inflation and slowing economic growth. Still, many economists expect the central bank to keep interest rates on hold as it is thought to be more concerned about the damage soaring oil and food prices may have on corporate profits and personal consumption. The core consumer price index (CPI), which excludes volatile fresh food prices but include oil prices, rose 1.9 % in June from a year earlier, data showed on Friday, matching a consensus forecast. It was the biggest annual climb in inflation since a 2.0 % rise in January 1998 and marked a jump from the 1.5 % annual increase logged in May. Nikkei fell 1.5 % in morning trade The Nikkei stock average slid 1.5 % on Friday as Mizuho Financial Group and other banks fell after their U.S. peers lost ground on poor housing data, while profit-taking also weighed after Japanese share gains this week. Honda Motor Corp and other blue-chip exporters slid as well, with industrial robot maker Fanuc Ltd leading the market lower after a brokerage warned about its profitability in the second quarter. A drop in U.S. home sales and higher oil prices fuelled fears about the economy in the United States, with financial stocks hit especially hard -- an impact that Tokyo market players said was inescapable, though not the only factor behind the Nikkei's fall. The benchmark Nikkei had shed 199.87 points to 13,403.44, while the broader Topix was down 1.8 % at 1,309.06. U.S. banks primary borrowings from FED biggest ever U.S. banks' direct primary credit borrowing from the Federal Reserve rose to the highest level ever in the latest week, reflecting the growing need of the banking sector to rely on the central bank for cheap funding, analysts said. Banks primary credit borrowings averaged USD 16.38 billion per day in the latest week, a record high and up from USD 13.92 billion the previous week, Federal Reserve data showed on Thursday. On the day of July 23, banks' primary credit borrowings rose to USD 17.68 billion, the highest borrowing since September 12th 2001 when banks borrowed USD 45.5 billion in a single day. Banks' overall discount window borrowings averaged USD 16.51 billion per day in the week ended July 23rd, up from an average USD 14.30 billion per day the week before. 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.