US Currency And Stocks Heading Lower

Daily Forex Fundamentals | Written by Saxo Bank | Jul 22 08 07:01 GMT |

Wakeup Call: US Currency And Stocks Heading Lower A downward revision in the US leading indicators sent the USD lower across the board. US Stocks lower on weak figures from Apple and American Express. Overnight News Bullets SZ PPI MoM/YoY (Jun) out at 0.6%/4.5% vs. 0.5%/4.4% expected. Prior at 1.2% Hungary Base Rates out unchanged at 8.50% as expected. US Leading Indicators (Jun) out at -0.1% as expected. Prior at -0.2% (revised from +0.1%) JN All Industry Activity Index MoM (May) out at 0.4% as expected. Prior at 0.8%. JN Supermarket Sales YoY (Jun) out at -0.9% vs. -1.1% prior. Markets FX: The USD edged lower after the revision of the leading indicators, sending EURUSD back above 1.59, 1.5948 acting as immediate resistance. GBPUSD back above the 2.00 figure. Quiet overnight. Fixed Income: Bunds selling off, closing in on key support at 109.65, now yielding 4.698%. Treasuries supported by 200 day SMA at 113-16. JGBs selling off on inflation expectations. Stocks: Europe extending this week's gain, averaging around 0.6% y'day. Solid earnings from Bank of America sent the US in positive initially, but bad earnings and lower forecasts made the session close in red. Nikkei up 2.6% on strong commodities. Commodities: Oil rose 1.7% yesterday, but has come off overnight as the storm Dolly probably will miss production areas. Precious metals higher. O/N Data Heat map: EU US JP UK SZ AU CA NZ NO SE FR + Calendar Today's Highlights: Time (GMT) Region Release Consensus 08:45 UK BOE's King, Gieve, Jenkinson, Bailey to Tesity in Parliament 12:15 US Treasury's Paulson speaks about economy, markets 12:30 CA Retail Sales MoM (May) 0.6% 12:30 CA Retail Sales Less Autos (May) 0.7% 14:00 US Richmond Fed Manufact. Index (Jul) -9 14:00 US House Price Index (May) -0.8% 21:00 US ABC Consumer Confidence (Jul 20) -42 This and Next Week's Highlights: Date Region Release Jul 23 UK BOE Minutes Jul 23 E-Z Industrial New Orders Jul 23 CA Consumer Price Index Jul 23 US MBA Mortgage Applications, DOE/API Inventories, Beige Book Jul 23 NZ RBNZ Official Cash Rate Jul 23 JN Merchnds Trade Balance Jul 24 SW PPI, Unemployment Rate Jul 24 GE IFO Figures Jul 24 E-Z Euro-Zone Current Account, PMI Services, PMI Composite Jul 24 UK Retail Sales Jul 24 US Initial Jobless Claims, Existing Home Sales, EIA Nat Gas Change Jul 24 JN Tokyo CPI, Natl CPI What's going on? Treasuries fell for the fourth time in five days as Asian stocks gained and the U.S. prepared to auction $58 billion of notes this week, starting with a sale of Treasury Inflation Protected Securities today. American Express, Apple and Texas Instruments published their q2 earnings after the close of the US session. All results were below expectations and the shares fell drastically in the aftermarket. The Australian dollar traded near 25-year high after prices of commodities that the nation exports advanced following five days of declines. GBP-crosses have suffered after the bearish comments on the UK outlook from Blanchflower. Watch King, Gieve and Jenkinson's testimony at 8:45 GMT. FX EUR USD JPY GBP CHF AUD CAD NZD NOK SEK PLN - - (-) - FX Trading Strategies Pair Supp. Resis. Comments GBPUSD 1.99 2.0097 Despite strong US figures las week, the USD has remained on the offer giving scope for another round of USD-weakness. GBP-crosses look vulnerable after the bearish Blanchflower comments, however, we are technical buyers at 2.0042 bid, stop offer at 2.0020, targeting 2.0095. Equities Earnings Drawing a Blurry Picture - We Believe It Is Time For A New Wave Down Equities: We expect the European indices to open around 0.6% lower Tuesday. The US stock indices lost a little ground after the close in Europe, but S&P 500 futures are down 0.8% overnight. Commodity prices are being supported by crude oil, up 1%, silver, up 0.9% and gold and copper, both up 0.6%. We expect the mining companies BHP Billiton, Rio Tinto and the oil companies to be relative outperformers against the market. We still have an open position in Fred Olsen Energy, but we also expect majors like Royal Dutch Shell or BP to trade higher too. The airlines will drop due to higher fuel costs. Our favourite shorting stocks are Ryanair and British Airways. Heads up for Q2 earnings from Ericsson, Norsk Hydro, STMicroelectronics, Nordea, UPS and Lockheed Martin. Trading Strategy: Trade Idea (Equities - TrendSpotter - Sell DAX(DAX.I) The German Index has recovered almost 6% since testing the crucial 6000 level, we feel the comeback is overdone, and there is a good probability for a new wave down, we sell on the break of 6390, thus we place an order to sell at 6389 offer, with a stop bid at 6475 initially targeting support at 6250, if this is broken a new test of 6000 might be in order. DAX UKX CAC OMX KFX OBX SMI NDX DJI SPX NKY - - - - - - -