European Economy | Written by CEP News | Jul 03 08 13:51 GMT |
(CEP News) Frankfurt - During the question and answer period following European Central Bank President Jean-Claude Trichet's monthly press conference, he acknowledged that economic growth in the second quarter of 2008 will likely not be as strong as the previous quarter. He also suggested that Q3 would not be very flattering as well.
Growth risks are on the downside, Trichet said.
However, Trichet also emphasized that the central bank's assessment of GDP growth is appropriate and that GDP growth remains dynamic over the medium term.
He also said the ECB has only one needle in its compass and that higher inflation expectations translate into higher interest rates.
Nevertheless, Trichet said there is no contradiction between the goals of price stability and economic growth.
By Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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Thursday, July 3, 2008
ECB's Trichet Says Decision to Raise Rates Was Unanimous
European Economy | Written by CEP News | Jul 03 08 13:36 GMT |
(CEP News) Frankfurt - During the Q&A period following European Central Bank President Jean-Claude Trichet's introductory remarks, Trichet stressed that the decision to raise rates was unanimous and that the central bank would do whatever was necessary to deliver on its mandate of price stability.
The primary concern of the euro zone citizens is inflation, Trichet said, adding that there was "absolutely no contradiction" between the ECB's mandate and what the people want.
Trichet pointed to increasing price stability risks and emphasized that the central bank's purpose was to deliver on price stability and anchor inflation expectations.
"Our message is the same since the very beginning," Trichet said.
The ECB president emphasized that the central bank needed to be credible in the delivery of its monetary policy and that confidence in the ECB was essential.
By Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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(CEP News) Frankfurt - During the Q&A period following European Central Bank President Jean-Claude Trichet's introductory remarks, Trichet stressed that the decision to raise rates was unanimous and that the central bank would do whatever was necessary to deliver on its mandate of price stability.
The primary concern of the euro zone citizens is inflation, Trichet said, adding that there was "absolutely no contradiction" between the ECB's mandate and what the people want.
Trichet pointed to increasing price stability risks and emphasized that the central bank's purpose was to deliver on price stability and anchor inflation expectations.
"Our message is the same since the very beginning," Trichet said.
The ECB president emphasized that the central bank needed to be credible in the delivery of its monetary policy and that confidence in the ECB was essential.
By Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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ECB's Trichet Points to Data Confirming Strong Money, Credit Growth
European Economy | Written by CEP News | Jul 03 08 13:20 GMT |
(CEP News) Frankfurt - Speaking at a press conference following the European Central Bank's interest rate decision, ECB President Jean-Claude Trichet pointed to data confirming that the underlying rate of money and credit growth remains strong.
Trichet noted that the growth rate of loans to non-financial corporations remained strong despite higher rates, but that household borrowing is slowing.
However, the availability of bank credit has not significantly been affected, he said.
Trichet also said that while annual M3 growth remains vigorous, the M3 figure overstated the true rate of monetary expansion.
By Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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(CEP News) Frankfurt - Speaking at a press conference following the European Central Bank's interest rate decision, ECB President Jean-Claude Trichet pointed to data confirming that the underlying rate of money and credit growth remains strong.
Trichet noted that the growth rate of loans to non-financial corporations remained strong despite higher rates, but that household borrowing is slowing.
However, the availability of bank credit has not significantly been affected, he said.
Trichet also said that while annual M3 growth remains vigorous, the M3 figure overstated the true rate of monetary expansion.
By Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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May U.S. ISM Non-Manufacturing Index Falls into Negative Zone at 48.2
US Economy | Written by CEP News | Jul 03 08 14:11 GMT |
(CEP News) - The services sector in the United States fell into contraction at 48.2 in June, against expectations that the index would see a third consecutive month of growth, according to the ISM Non-Manufacturing Index (NMI). Leading the decline was a record-low in employment, a record-high in prices paid, and a slowdown in new orders as well as production.
Economists had expected a reading of 51.0 in the headline.
The employment index hit a record-low at 43.8, down from 48.7, while prices surged to 84.5, another record-high, up from 77.0 in May. The NMI survey began in 1998.
New orders halted a three-month expansionary trend, falling to 48.6 in June from 53.6 in May.
The production/business activity halted a four-month expansionary trend by falling to 49.9, down from 53.6 in May.
Inventories fell back to 53.0 from a reading of 54.0 in the previous month.
Exports remained in growth but fell back to 52.0 following a rebound to 54.0 in the last report. Imports moved up to 50.5 from 48.0.
"Members' comments in June indicate that rising fuel, energy and commodity costs are negatively impacting their respective businesses. Respondents' comments are mixed on business conditions and the overall economy," said Anthony Nieves, chair of the Institute for Supply Management.
The percentage of respondents reporting higher prices is 72 percent, the percentage indicating no change in prices paid is 26 percent, and 2 percent of the respondents reported lower prices.
Taking Tuesday's manufacturing index into account, the ISM's manufacturing and non-manufacturing composite index remained unchanged from April at 48.4.
According to the ISM, a reading above 50 represents an expansionary situation while a score below 50 suggests a contractionary state.
The NMI is a nationwide survey of the services, construction and financial industries.
By Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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(CEP News) - The services sector in the United States fell into contraction at 48.2 in June, against expectations that the index would see a third consecutive month of growth, according to the ISM Non-Manufacturing Index (NMI). Leading the decline was a record-low in employment, a record-high in prices paid, and a slowdown in new orders as well as production.
Economists had expected a reading of 51.0 in the headline.
The employment index hit a record-low at 43.8, down from 48.7, while prices surged to 84.5, another record-high, up from 77.0 in May. The NMI survey began in 1998.
New orders halted a three-month expansionary trend, falling to 48.6 in June from 53.6 in May.
The production/business activity halted a four-month expansionary trend by falling to 49.9, down from 53.6 in May.
Inventories fell back to 53.0 from a reading of 54.0 in the previous month.
Exports remained in growth but fell back to 52.0 following a rebound to 54.0 in the last report. Imports moved up to 50.5 from 48.0.
"Members' comments in June indicate that rising fuel, energy and commodity costs are negatively impacting their respective businesses. Respondents' comments are mixed on business conditions and the overall economy," said Anthony Nieves, chair of the Institute for Supply Management.
The percentage of respondents reporting higher prices is 72 percent, the percentage indicating no change in prices paid is 26 percent, and 2 percent of the respondents reported lower prices.
Taking Tuesday's manufacturing index into account, the ISM's manufacturing and non-manufacturing composite index remained unchanged from April at 48.4.
According to the ISM, a reading above 50 represents an expansionary situation while a score below 50 suggests a contractionary state.
The NMI is a nationwide survey of the services, construction and financial industries.
By Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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U.S. Jobless Claims Add Emphasis to Weak Employment Situation Report in June
US Economy | Written by CEP News | Jul 03 08 13:47 GMT |
(CEP News) - Excluding the final week of March, initial jobless claims hit a cyclical high at 404k in the week ending June 28, marking the fourth week in a row above 380k to put the four-week average at 390k.
The report was overshadowed by the nonfarm payrolls report, which saw a sixth month of declines, and adds even more evidence of continued broad-based deterioration in the labour market, economists said.
"Claims will likely rise further over the next few months and, sooner or later, the increase in the pace of layoffs is going to be reflected in a knockout payroll number," said Ian Shepherdson, chief economist at HFE.
"This leaves the four-week average up by 21,500 from the end of May," added Abiel Reinhart, U.S. economist at JPMorgan Chase.
Paul Ashworth, senior U.S. economist at Capital Economics, said "the jump in initial jobless claims to 404,000 last week from 388,000 indicates that we may yet see much bigger declines in employment in H2."
Continuing claims fell to 3.116 million for the week ending June 21, following a four-year high in the previous week's report, while marking the eighth consecutive week that continuing claims have been above the 3 million threshold. The four-week moving average is now 3.110 million.
"The rate of increase in continuing claims has moderated, but it is much too early to say whether they are leveling off," Reinhart said.
In addition, Ashworth called the nonfarm payrolls report "a timely reminder that the US economy remains desperately weak," adding that "the outlook for Q4 is beginning to look very grim."
He also said the sixth month of declines, which add up to 438k net losses in 2008, "would seem to be a long enough period to satisfy the NBER's definition of a recession as a prolonged downturn."
By Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, ssussman@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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(CEP News) - Excluding the final week of March, initial jobless claims hit a cyclical high at 404k in the week ending June 28, marking the fourth week in a row above 380k to put the four-week average at 390k.
The report was overshadowed by the nonfarm payrolls report, which saw a sixth month of declines, and adds even more evidence of continued broad-based deterioration in the labour market, economists said.
"Claims will likely rise further over the next few months and, sooner or later, the increase in the pace of layoffs is going to be reflected in a knockout payroll number," said Ian Shepherdson, chief economist at HFE.
"This leaves the four-week average up by 21,500 from the end of May," added Abiel Reinhart, U.S. economist at JPMorgan Chase.
Paul Ashworth, senior U.S. economist at Capital Economics, said "the jump in initial jobless claims to 404,000 last week from 388,000 indicates that we may yet see much bigger declines in employment in H2."
Continuing claims fell to 3.116 million for the week ending June 21, following a four-year high in the previous week's report, while marking the eighth consecutive week that continuing claims have been above the 3 million threshold. The four-week moving average is now 3.110 million.
"The rate of increase in continuing claims has moderated, but it is much too early to say whether they are leveling off," Reinhart said.
In addition, Ashworth called the nonfarm payrolls report "a timely reminder that the US economy remains desperately weak," adding that "the outlook for Q4 is beginning to look very grim."
He also said the sixth month of declines, which add up to 438k net losses in 2008, "would seem to be a long enough period to satisfy the NBER's definition of a recession as a prolonged downturn."
By Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, ssussman@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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Overnight News Recap: EU & UK Services PMIs Fall, EU Retail Rises, Oil Hits $145
News Recap | Written by CEP News | Jul 03 08 10:48 GMT |
(CEP News) - Downward revision to euro zone services PMI and a falling index in the UK highlighted the overnight economic news as Eurostat released an upbeat retail sales report and oil hit yet another record high.
Ahead of the European Central Bank rate decisions and the nonfarm payrolls report in the United States, WTI crude oil surged to a new record of $145.82 per barrel. Earlier in the evening, India banned the export of corn effective immediately.
According to Eurostat, retail sales in the euro zone shot up 1.2% month-over-month in May, up from the 0.6% increase expected. April had seen retail sales fall 0.6% in monthly terms. Year-over-year, retail sales rose 0.2% following the 3.0% decline recorded in May. Economists had expected sales to fall by a further 0.7% in annualized terms. Meanwhile, April's figure was revised down from an initial reading of -2.9%.
According to data released by Markit Economics on Thursday, the euro zone services purchasing managers' index fell to 49.1 in June. Economists had expected the index to fall to 49.5, in line with preliminary estimates and down from May's 50.6 level. The euro zone composite PMI slipped to 49.3, down from both the 49.5 figure expected and May's 51.1 reading. June's services and composite PMI figures are the lowest recorded for the euro zone since June 2003.
Looking at various euro zone states, the German services PMI declined to 52.1 in June, against expectations for a 53.3 reading. May had recorded a services PMI figure of 53.8. In France, the services indicator fell to 50.1, its lowest reading since June 2003, following May's fall to 50.5. However, economists had forecast an even stronger decline to 49.2, in line with preliminary estimates.
The Italian services PMI also surprised to the upside, unexpectedly rebounding to 48.5 in June from the previous month's 48.1 reading. Economists had forecast a further decline to 47.7 for the month.
On Thursday, Markit Economics announced that Spanish purchasing managers' index for services fell to 36.7 in June, the lowest reading ever recorded for any euro zone PMI. June's decline deepened the fall recorded in the previous month when the index fell from 55.3 to 43.3.
According to Statistics Netherlands, the Dutch economy grew 0.4% in the first quarter of 2008 in quarterly terms. Economists had expected Q1's growth rate to stay at 0.2%, unchanged from the previous quarter. Year-over-year, the economy expanded 3.3%, up from the 3.1% rise expected. Q4 2007's had recorded a growth rate of 4.1%, revised up from 3.1%.
Statistics Netherlands also reported that the Dutch consumer price index dipped 0.2% in June on a monthly basis following the 0.4% rise observed in May. However, economists had expected a stronger fall of 0.3% for the month. In annualized terms, Dutch inflation accelerated to 2.6%, up from both the 2.5% rate expected and the previous month's 2.3% rise.
On Thursday, Market Economics reported that the UK purchasing managers' index for June slipped to 47.1 in June, its lowest level since October 2001. Economists had expected a more modest decline to 49.5 after slipping to 49.8 in May.
According to the UK Treasury Official, foreign exchange reserves in the UK advanced by $462 million in June compared to the previous month's $97 million decline in May.
According to the Bank of England, second quarter lenders in the UK have reported a further reduction in the availability of credit to households and firms with further tightening expected over the next three months. The survey also suggests that banks expect default rates to rise further in lending to both households and firms.
In a BBC radio interview aired on Thursday, Treasury Secretary Henry Paulson said that both the U.S. and the U.K. were "very focused on downturn", but added that there was "plenty we can do" about the situation. "There's no doubt that high headline inflation numbers are a real concern but core inflation is relatively contained and my biggest focus today is on the downside risks which are housing, oil prices and what is going on in the capital markets," Paulson said. He also emphasized that the housing market correction needed to run its course.
Also speaking with the BBC, UK Chancellor of the Exchequer Alistair Darling expressed concern over the current credit crunch and its impact on the economy. "The second thing that is concerning us is the inflation pressures that are coming from very high oil prices," Darling said. Darling emphasized that the increase of short-term oil production needed to be ensured and that the UK must look to reduce its dependency on foreign supplied energy.
On Thursday, the Swiss Federal Statistics Office reported that inflation in Switzerland slowed to 0.2% on a monthly basis in June. Economists had expected a deceleration in price growth to 0.3% following May's 0.8% growth rate. In annualized terms, the Swiss consumer price index grew at 2.9%, unchanged from the previous month. However, economists had predicted an acceleration in the inflation rate to 3.1% for June.
On Thursday, the Central Bank of Iceland's Board of Governors announced that the policy interest rate would remain at 15.5%.
On Thursday, Statistics Iceland reported that the Icelandic trade deficit increased to ISK 900 million in June, up from May's ISK 510 million deficit level. "According to preliminary figures for June 2008 the value of exported goods amounted to ISK 38,300 million fob and the value of imported goods amounted to ISK 39,200 million fob," the statistics agency elaborated in a press release.
With inflation at its highest level since the mid-1990s, Sweden's Riksbank announced on Thursday that it would raise its repo rate 25 basis points to 4.5%. "The main reason for the high inflation is that energy and food prices in the world market have increased so much. But increasingly high domestic resource utilization in recent years has also contributed to rising inflation," the central bank said in a press release.
The Australian Bureau of Statistics (ABS) announced the Australian balance on goods and services in seasonally adjusted terms was a deficit of A$965 million in May 2008, a turnaround of A$977 million on April 2008. The figure for April has been revised to a surplus of $A12 million.
According to a report by AiG, Australia's performance of services index declined further to a reading of 45.4 in June compared to the 49.7 reported in May.
The foreign purchase of Japanese stocks fell ¥516.3 billion in the week ending June 27 after rising ¥34.2 billion in the previous week. Buying of bonds declined ¥422.1 billion following the previous week's ¥1333.2 billion sell-off. Meanwhile, the Japanese bought ¥65.0 billion in foreign stocks following the ¥17.7 billion purchased in the prior week. The Japanese also bought ¥496.9 billion in foreign bonds following the previous week's ¥224.9 billion sell-off.
AU AiG Performance of Service Index June 45.4 vs. Prior: 49.7
JN Foreign Buying Japan Bonds W/E June 27 -¥422.1B vs. Revised -¥1333.2B Prior: -¥1312.6
JN Foreign Buying Japan Stocks W/E June 27 -¥516.3B vs. Prior: +¥34.2B
JN Japan Buying Foreign Stocks W/E June 27 +¥65.0B vs. Revised: +¥17.7B Prior: +¥16.3B
JN Japan Buying Foreign Bonds W/E June 27 +¥496.9B vs. Revised: -¥217.7B Prior: -¥224.9B
AU Trade Balance May -A$965M vs. Exp: -A$900M Revised: +A$12M Prior: -A$957M
AU Exports (M/M) May +1.5% vs. Revised: +10.1% Prior: +5.8%
AU Imports (M/M) May +6.0% vs. Revised: -1.9% Prior: -2.2%
IT PMI Services June 48.5 vs. Exp: 47.7 Prior: 48.1
FR PMI Services June Final 50.1 vs. Exp: 49.2 Final Prior: 49.2
DE PMI Services June Final 52.1 vs. Exp: 53.3 Prior: 53.3
EU PMI Services June Final 49.1 vs. Exp: 49.5 Prior: 49.5
EU PMI Composite June Final 49.3 vs. Exp: 49.5 Prior: 49.5
GB PMI Services June 47.1 vs. Exp: 49.7 Prior: 49.8
GB Bank of England Second Quarter Credit Conditions Survey
GB Official Reserves (Changes) June +$462M vs. Prior: -$97M
GB U.K. Bank of England Quarter credit Conditions Survey
EU Euro-Zone Retail Sales (M/M) May +1.2% vs. Exp: +0.6% Prior: -0.6%
EU Euro-Zone Retail Sales (Y/Y) May +0.2% Exp: -0.7% Revised: -3.0% Prior: -2.9%
By Erik Kevin Franco, efranco@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it and Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it with contributions from Tim Stackpool, tstackpool@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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(CEP News) - Downward revision to euro zone services PMI and a falling index in the UK highlighted the overnight economic news as Eurostat released an upbeat retail sales report and oil hit yet another record high.
Ahead of the European Central Bank rate decisions and the nonfarm payrolls report in the United States, WTI crude oil surged to a new record of $145.82 per barrel. Earlier in the evening, India banned the export of corn effective immediately.
According to Eurostat, retail sales in the euro zone shot up 1.2% month-over-month in May, up from the 0.6% increase expected. April had seen retail sales fall 0.6% in monthly terms. Year-over-year, retail sales rose 0.2% following the 3.0% decline recorded in May. Economists had expected sales to fall by a further 0.7% in annualized terms. Meanwhile, April's figure was revised down from an initial reading of -2.9%.
According to data released by Markit Economics on Thursday, the euro zone services purchasing managers' index fell to 49.1 in June. Economists had expected the index to fall to 49.5, in line with preliminary estimates and down from May's 50.6 level. The euro zone composite PMI slipped to 49.3, down from both the 49.5 figure expected and May's 51.1 reading. June's services and composite PMI figures are the lowest recorded for the euro zone since June 2003.
Looking at various euro zone states, the German services PMI declined to 52.1 in June, against expectations for a 53.3 reading. May had recorded a services PMI figure of 53.8. In France, the services indicator fell to 50.1, its lowest reading since June 2003, following May's fall to 50.5. However, economists had forecast an even stronger decline to 49.2, in line with preliminary estimates.
The Italian services PMI also surprised to the upside, unexpectedly rebounding to 48.5 in June from the previous month's 48.1 reading. Economists had forecast a further decline to 47.7 for the month.
On Thursday, Markit Economics announced that Spanish purchasing managers' index for services fell to 36.7 in June, the lowest reading ever recorded for any euro zone PMI. June's decline deepened the fall recorded in the previous month when the index fell from 55.3 to 43.3.
According to Statistics Netherlands, the Dutch economy grew 0.4% in the first quarter of 2008 in quarterly terms. Economists had expected Q1's growth rate to stay at 0.2%, unchanged from the previous quarter. Year-over-year, the economy expanded 3.3%, up from the 3.1% rise expected. Q4 2007's had recorded a growth rate of 4.1%, revised up from 3.1%.
Statistics Netherlands also reported that the Dutch consumer price index dipped 0.2% in June on a monthly basis following the 0.4% rise observed in May. However, economists had expected a stronger fall of 0.3% for the month. In annualized terms, Dutch inflation accelerated to 2.6%, up from both the 2.5% rate expected and the previous month's 2.3% rise.
On Thursday, Market Economics reported that the UK purchasing managers' index for June slipped to 47.1 in June, its lowest level since October 2001. Economists had expected a more modest decline to 49.5 after slipping to 49.8 in May.
According to the UK Treasury Official, foreign exchange reserves in the UK advanced by $462 million in June compared to the previous month's $97 million decline in May.
According to the Bank of England, second quarter lenders in the UK have reported a further reduction in the availability of credit to households and firms with further tightening expected over the next three months. The survey also suggests that banks expect default rates to rise further in lending to both households and firms.
In a BBC radio interview aired on Thursday, Treasury Secretary Henry Paulson said that both the U.S. and the U.K. were "very focused on downturn", but added that there was "plenty we can do" about the situation. "There's no doubt that high headline inflation numbers are a real concern but core inflation is relatively contained and my biggest focus today is on the downside risks which are housing, oil prices and what is going on in the capital markets," Paulson said. He also emphasized that the housing market correction needed to run its course.
Also speaking with the BBC, UK Chancellor of the Exchequer Alistair Darling expressed concern over the current credit crunch and its impact on the economy. "The second thing that is concerning us is the inflation pressures that are coming from very high oil prices," Darling said. Darling emphasized that the increase of short-term oil production needed to be ensured and that the UK must look to reduce its dependency on foreign supplied energy.
On Thursday, the Swiss Federal Statistics Office reported that inflation in Switzerland slowed to 0.2% on a monthly basis in June. Economists had expected a deceleration in price growth to 0.3% following May's 0.8% growth rate. In annualized terms, the Swiss consumer price index grew at 2.9%, unchanged from the previous month. However, economists had predicted an acceleration in the inflation rate to 3.1% for June.
On Thursday, the Central Bank of Iceland's Board of Governors announced that the policy interest rate would remain at 15.5%.
On Thursday, Statistics Iceland reported that the Icelandic trade deficit increased to ISK 900 million in June, up from May's ISK 510 million deficit level. "According to preliminary figures for June 2008 the value of exported goods amounted to ISK 38,300 million fob and the value of imported goods amounted to ISK 39,200 million fob," the statistics agency elaborated in a press release.
With inflation at its highest level since the mid-1990s, Sweden's Riksbank announced on Thursday that it would raise its repo rate 25 basis points to 4.5%. "The main reason for the high inflation is that energy and food prices in the world market have increased so much. But increasingly high domestic resource utilization in recent years has also contributed to rising inflation," the central bank said in a press release.
The Australian Bureau of Statistics (ABS) announced the Australian balance on goods and services in seasonally adjusted terms was a deficit of A$965 million in May 2008, a turnaround of A$977 million on April 2008. The figure for April has been revised to a surplus of $A12 million.
According to a report by AiG, Australia's performance of services index declined further to a reading of 45.4 in June compared to the 49.7 reported in May.
The foreign purchase of Japanese stocks fell ¥516.3 billion in the week ending June 27 after rising ¥34.2 billion in the previous week. Buying of bonds declined ¥422.1 billion following the previous week's ¥1333.2 billion sell-off. Meanwhile, the Japanese bought ¥65.0 billion in foreign stocks following the ¥17.7 billion purchased in the prior week. The Japanese also bought ¥496.9 billion in foreign bonds following the previous week's ¥224.9 billion sell-off.
AU AiG Performance of Service Index June 45.4 vs. Prior: 49.7
JN Foreign Buying Japan Bonds W/E June 27 -¥422.1B vs. Revised -¥1333.2B Prior: -¥1312.6
JN Foreign Buying Japan Stocks W/E June 27 -¥516.3B vs. Prior: +¥34.2B
JN Japan Buying Foreign Stocks W/E June 27 +¥65.0B vs. Revised: +¥17.7B Prior: +¥16.3B
JN Japan Buying Foreign Bonds W/E June 27 +¥496.9B vs. Revised: -¥217.7B Prior: -¥224.9B
AU Trade Balance May -A$965M vs. Exp: -A$900M Revised: +A$12M Prior: -A$957M
AU Exports (M/M) May +1.5% vs. Revised: +10.1% Prior: +5.8%
AU Imports (M/M) May +6.0% vs. Revised: -1.9% Prior: -2.2%
IT PMI Services June 48.5 vs. Exp: 47.7 Prior: 48.1
FR PMI Services June Final 50.1 vs. Exp: 49.2 Final Prior: 49.2
DE PMI Services June Final 52.1 vs. Exp: 53.3 Prior: 53.3
EU PMI Services June Final 49.1 vs. Exp: 49.5 Prior: 49.5
EU PMI Composite June Final 49.3 vs. Exp: 49.5 Prior: 49.5
GB PMI Services June 47.1 vs. Exp: 49.7 Prior: 49.8
GB Bank of England Second Quarter Credit Conditions Survey
GB Official Reserves (Changes) June +$462M vs. Prior: -$97M
GB U.K. Bank of England Quarter credit Conditions Survey
EU Euro-Zone Retail Sales (M/M) May +1.2% vs. Exp: +0.6% Prior: -0.6%
EU Euro-Zone Retail Sales (Y/Y) May +0.2% Exp: -0.7% Revised: -3.0% Prior: -2.9%
By Erik Kevin Franco, efranco@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it and Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it with contributions from Tim Stackpool, tstackpool@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
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Morning Market Recap: Euro Sells Off After ECB Says Has 'No Bias'
Market Updates | Written by CEP News | Jul 03 08 13:13 GMT |
(CEP News) - The euro is down more than a cent after the European Central Bank suggested it has "no bias" on rates after hiking the main refinancing rate by a quarter-point to 4.25%.
Markets had been anticipating further rate hikes later in the year but ECB President Jean-Claude Trichet said, "current rate stance will contribute to achieving our price stability objective" and "starting today, I have no bias."
Implied year-end rate expectations, using EONIA swaps, have fallen 15 basis point to 4.52%. The December Euribor contract is up 0.075 to 94.795. The euro is down 0.0139 to 1.5744 against the U.S. dollar, down 0.0038 to 1.6042 against the Canadian dollar, down 0.0027 to 0.7943 against the pound sterling and is higher by 0.01 to 168.23 against the yen.
In the United States, markets reacted favourably to the jobs report. Equities are poised for a strong open and the U.S. dollar is stronger. Treasuries were more skeptical as some of the details of the report were soft.
U.S. non-farm employment fell by 62k jobs, the Bureau of Labor Statistics said. That was virtually in-line with the -60k consensus estimate. Markets appeared to have a bias for a worse number after reports earlier in the week showed large drops in private and manufacturing payrolls.
At the same time as the payrolls report, U.S. jobless claims for the week ending June 28 rose to 404k from 384k the week before.
Bonds briefly rallied on the soft claims data but bonds sold off as stocks rallied in relief.
U.S. two-year yields are down 2.6 bps to 2.55%, with five-year yields down 2.1 bps to 3.28%, 10-year yields up 1.4 bps to 3.97% and 30-year yields up 3.2 bps to 4.53%. The Eurodollar September 08 contract is up 2.0 ticks to 97.09. The yield curve is steeper, with the 10/2-year spread up 4.4 bps to 142.35 bps.
Yields on two-year Canadian government bonds are down 0.8 bps to 3.23%, with five-year yields flat at 3.46%, 10-year yields flat at 3.76% and 30-year yields flat at 4.08%. The Canadian 10-year note is yielding 21.51 bps less than the U.S. 10-year note.
In Germany, returns on two-year German bonds are down 16.9 bps to 4.46%, with five-year yields down 11.8 bps to 4.56%, 10-year yields down 6.6 bps to 4.59% and 30-year yields down 4.1 bps to 4.81%.
Yields on UK two-year bonds are down 5.5 bps to 5.11%, with five-year yields down 5.2 bps to 5.07%, 10-year yields down 5.4 bps to 5.07% and 30-year yields down 3.3 bps to 4.66%.
U.S. equity market futures are higher with contracts on the Dow Jones Industrial Average up 63 points to 11,274, the S&P 500 up 9 points to 1,272 and the Nasdaq up 9 points to 1,834.
European stock markets are also higher, with the Eurostoxx up 25 points to 2,865, the UK FTSE 100 up 34 points to 5,460 and the German DAX up 44 points to 6,350.
Asian markets were lower, with the Japanese Nikkei closing down 21 points to 13,265 and the Hang Seng Index down 462 points to 21,243.
The Canadian dollar is down 0.0064 to 0.9815 against the U.S. dollar (1.0188 USD/CAD) and up 0.2630 to 104.8650 against the yen.
The U.S. dollar is up 0.9390 to 106.8500 against the yen and the Dollar Index is up 0.369 to 72.398.
The pound sterling is down 0.0108 to 1.9823 against the U.S. dollar and up 0.0023 to 2.0200 against the Canadian dollar.
WTI crude oil is up $0.33 to $143.90. The front month gold contract at the Chicago Board of Trade is down $13.70 to $932.20 per ounce.
All data taken at 9:10 a.m. EDT.
By Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
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(CEP News) - The euro is down more than a cent after the European Central Bank suggested it has "no bias" on rates after hiking the main refinancing rate by a quarter-point to 4.25%.
Markets had been anticipating further rate hikes later in the year but ECB President Jean-Claude Trichet said, "current rate stance will contribute to achieving our price stability objective" and "starting today, I have no bias."
Implied year-end rate expectations, using EONIA swaps, have fallen 15 basis point to 4.52%. The December Euribor contract is up 0.075 to 94.795. The euro is down 0.0139 to 1.5744 against the U.S. dollar, down 0.0038 to 1.6042 against the Canadian dollar, down 0.0027 to 0.7943 against the pound sterling and is higher by 0.01 to 168.23 against the yen.
In the United States, markets reacted favourably to the jobs report. Equities are poised for a strong open and the U.S. dollar is stronger. Treasuries were more skeptical as some of the details of the report were soft.
U.S. non-farm employment fell by 62k jobs, the Bureau of Labor Statistics said. That was virtually in-line with the -60k consensus estimate. Markets appeared to have a bias for a worse number after reports earlier in the week showed large drops in private and manufacturing payrolls.
At the same time as the payrolls report, U.S. jobless claims for the week ending June 28 rose to 404k from 384k the week before.
Bonds briefly rallied on the soft claims data but bonds sold off as stocks rallied in relief.
U.S. two-year yields are down 2.6 bps to 2.55%, with five-year yields down 2.1 bps to 3.28%, 10-year yields up 1.4 bps to 3.97% and 30-year yields up 3.2 bps to 4.53%. The Eurodollar September 08 contract is up 2.0 ticks to 97.09. The yield curve is steeper, with the 10/2-year spread up 4.4 bps to 142.35 bps.
Yields on two-year Canadian government bonds are down 0.8 bps to 3.23%, with five-year yields flat at 3.46%, 10-year yields flat at 3.76% and 30-year yields flat at 4.08%. The Canadian 10-year note is yielding 21.51 bps less than the U.S. 10-year note.
In Germany, returns on two-year German bonds are down 16.9 bps to 4.46%, with five-year yields down 11.8 bps to 4.56%, 10-year yields down 6.6 bps to 4.59% and 30-year yields down 4.1 bps to 4.81%.
Yields on UK two-year bonds are down 5.5 bps to 5.11%, with five-year yields down 5.2 bps to 5.07%, 10-year yields down 5.4 bps to 5.07% and 30-year yields down 3.3 bps to 4.66%.
U.S. equity market futures are higher with contracts on the Dow Jones Industrial Average up 63 points to 11,274, the S&P 500 up 9 points to 1,272 and the Nasdaq up 9 points to 1,834.
European stock markets are also higher, with the Eurostoxx up 25 points to 2,865, the UK FTSE 100 up 34 points to 5,460 and the German DAX up 44 points to 6,350.
Asian markets were lower, with the Japanese Nikkei closing down 21 points to 13,265 and the Hang Seng Index down 462 points to 21,243.
The Canadian dollar is down 0.0064 to 0.9815 against the U.S. dollar (1.0188 USD/CAD) and up 0.2630 to 104.8650 against the yen.
The U.S. dollar is up 0.9390 to 106.8500 against the yen and the Dollar Index is up 0.369 to 72.398.
The pound sterling is down 0.0108 to 1.9823 against the U.S. dollar and up 0.0023 to 2.0200 against the Canadian dollar.
WTI crude oil is up $0.33 to $143.90. The front month gold contract at the Chicago Board of Trade is down $13.70 to $932.20 per ounce.
All data taken at 9:10 a.m. EDT.
By Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
Read more...
Daily Forex Analysis
Daily Forex Technicals | Written by FOREXYARD | Jul 03 08 09:17 GMT |
* Non-Farm Payrolls On Tap As EUR/USD Test 1.60?
Economic News
USD
Yesterday the greenback saw mixed results against most of its currency rivals. The USD fell to a two-month low against the EUR after the ADP reported that Non-Farm Employment in the US will fall hard in June. The EUR/USD pair rose just above 60 points yesterday ending the trading day at 1.5859. Versus the JPY the USD fell to 106.05 from 106.68, and after gaining some ground versus the CHF in the early part of the day going as high as 102.30, the greenback ended up losing 100 points closing just above 101.30 .The dollar did pick up points yesterday as the GBP/USD pair fluctuated between 1.9926 and 1.9850 after a scare in the housing sector in the UK when housing shares fell broadly shaking prices and confidence.
The ADP report looks to be the real indicator of what today's movement will likely be, as the numbers show that there was a loss of 79k jobs in June, far more than the expected loss of 20k jobs. Last month's surprise report of 40k jobs created was also revised to show that only 25k new jobs were actually created. Also yesterday, the US Treasury Secretary Henry Paulson in a speech regarding global markets said that the current crisis was caused by bank compensation packages, which rewarded success but didn't punish failure. He pointed out the necessity for the government to let major financial institutions deal with issues on there own, without the immediate intervention of larger governing bodies in order to sustain a free market environment. His comments sparked even more volatility to yesterday's fluid Forex market. Today is a huge news day for the USD, headlined by Nonfarm Employment Change. The ISM Non-Manufacturing Composite and the Unemployment Rate will also be released today and should impact the USD as well. Nonfarm numbers are currently forecasted to have dropped by an extra 11K from May's mark of -49K. The move will mark the sixth consecutive month that this critical measurement of the US economy has fallen. ISM Non-Manufacturing Composite, which measures the activity level, new orders, employment and supplier deliveries of purchasing managers in the services sector, is being forecasted to see a reduction from 51.7 to 51.1 while the Unemployment rate is forecasted to improve slightly from 5.4% to 5.5%. The main impact should be caused by the Nonfarm Employment Change and ISM Non-Manufacturing Composite results will likely put the USD in a bearish trend as we head into the holiday weekend.
EUR
Yesterday the EUR continued its week long success as it gained against a basket of major currencies. The 15-nation currency rallied to its highest level against the greenback since late April hitting $1.5888 in late New York trading, up from the $1.5793 on Tuesday. Shortly following some poor data from the UK in the early morning session yesterday the Pound hit 23-day lows against the Euro. The bullish Euro trend began in the morning after another strong speech by ECB President Jean-Claude Trichet and continued to gain steam after weak ADP data for the American Economy. The single European currency was also fueled by better than expected Euro Zone producer prices which rose 1.2% compared to April and rose 7.1% annually.
Today, European news will likely be overshadowed by the importance of US data; however Forex traders should keep in mind several events, if mapping the EUR as a trading option. The inflation within the Euro-Zone has reached 4% due to increases inn Oil and food prices, and will likely add to more market speculation surrounding if and when the ECB will raise their interest. Senior ECB officials, including Trichet who remains the most hawkish of them all, have been hinting for some weeks that a rate rise is imminent; he himself warned that inflation could 'explode' if the ECB fails to act decisively. All likelihood is that the rate hike will happen today. A rate hike in the EUR, will send the EUR/USD pair even higher, which will in turn send the already record high of $144/per barrel of Crude Oil even higher. Today, along with the ECB Interest Rates at 11.45GMT, we can expect a press conference at 12.30 GMT where Trichet will discuss the rate decision. Expect the EUR to respond with bullish movement if rates are raised, as we could see the popular EUR/USD pair once again test 1.60.
JPY
The JPY saw mixed results against most of its major currency rivals. Vs. the greenback the Yen had a very volatile session as the pair tested bids around the 106.78 level and capped out at around 106.04. Against the EUR, the JPY was 168.20 down from 168.52 in the day prior.
Overall, the Yen rises broadly amid global stock rout. On Tuesday, the Japanese currency benefited from mounting risk aversion as heightened fears of further losses in the banking sector and global stocks prompted investors to sell dollars. However the JPY gains versus the dollar were limited as the balance now shifted to the Crude Oil's side. In stead of buying Yen, people now prefer the Crude as their safe heaven. Risk aversion in currency markets was also stoked by a slide in global stocks. The JPY tends to garner support in times of heightened risk aversion as investors reverse trades financed by borrowing the Japanese currency at low interest rates.
Today, there is no economic news expected to be released From Japan, however, we should see an active JPY trading in response to key U.S and Euro-zone data releases. The near term outlook for the JPY remains quite bullish as a U.S economic redemption is unlikely to occur anytime soon. Therefore, traders are advised to follow U.S data and Euro Zone news with extra precaution today as they will mark future's JPY behavior.
OIL
Yesterday, the Crude Oil rose to a record above $144 a barrel following an unexpected drop in the US Crude Oil Inventories. Oil has surged to records this year partly because investors have turned to commodities as a hedge against the falling dollar. Today's forecasted increase in European Interest Rates, may spur further commodity purchases, especially after the US stocks fell into a bear market. As a result, today we may see the Oil surpassing the $145 per barrel. Breaking this level will be important as the Crude should be reaching $150 within a very short period of time.
Technical News
EUR/USD
There is a very distinct bullish channel forming on the 4 hour chart, as the pair now floats at the middle of it. The Slow Stochastic on the 4 hour chart indicates that the pair should continue its bullish momentum. The Bollinger Bands on the Dailies also show there is still room for an additional upcoming bullish move.
GBP/USD
The 4 hour chart is showing that the cable is trading within a tight range and is now heading towards the bottom section of it. All oscillators are floating on neutral territory without a distinct price direction. Traders should wait for a clearer signal on the hourlies before entering the market on the pair.
USD/JPY
On the hourlies, the pair has made its bearish breach, and appears to have established a starting point for a relatively strong downtrend. The daily chart shows as well that a bearish formation is intact. A negative slope on the Slow Stochastic validates that notion. Going short seems to be a good choice.
USD/CHF
Since the beginning of today's trading session the pair went down a slippery slope, depreciating from 1.0165, down to 1.0131. The hourlies show that the pair has finished its bullish correction and is ready to continue its bearish trend. The Slow Stochastic on the 4 hour chart also supports that notion, indicating that bearish momentum hasn't reached its limit yet.
The Wild Card
Crude Oil
The ongoing bullish bonanza continues with no indication of a halt, as the Crude prices have breached the $144 a barrel yesterday. The Slow Stochastic on the daily chart indicates there is still plenty of room for further bullish movement. forex traders may use the strong bullish momentum and swing into the most lucrative trend currently in the Forex market.
Read more...
* Non-Farm Payrolls On Tap As EUR/USD Test 1.60?
Economic News
USD
Yesterday the greenback saw mixed results against most of its currency rivals. The USD fell to a two-month low against the EUR after the ADP reported that Non-Farm Employment in the US will fall hard in June. The EUR/USD pair rose just above 60 points yesterday ending the trading day at 1.5859. Versus the JPY the USD fell to 106.05 from 106.68, and after gaining some ground versus the CHF in the early part of the day going as high as 102.30, the greenback ended up losing 100 points closing just above 101.30 .The dollar did pick up points yesterday as the GBP/USD pair fluctuated between 1.9926 and 1.9850 after a scare in the housing sector in the UK when housing shares fell broadly shaking prices and confidence.
The ADP report looks to be the real indicator of what today's movement will likely be, as the numbers show that there was a loss of 79k jobs in June, far more than the expected loss of 20k jobs. Last month's surprise report of 40k jobs created was also revised to show that only 25k new jobs were actually created. Also yesterday, the US Treasury Secretary Henry Paulson in a speech regarding global markets said that the current crisis was caused by bank compensation packages, which rewarded success but didn't punish failure. He pointed out the necessity for the government to let major financial institutions deal with issues on there own, without the immediate intervention of larger governing bodies in order to sustain a free market environment. His comments sparked even more volatility to yesterday's fluid Forex market. Today is a huge news day for the USD, headlined by Nonfarm Employment Change. The ISM Non-Manufacturing Composite and the Unemployment Rate will also be released today and should impact the USD as well. Nonfarm numbers are currently forecasted to have dropped by an extra 11K from May's mark of -49K. The move will mark the sixth consecutive month that this critical measurement of the US economy has fallen. ISM Non-Manufacturing Composite, which measures the activity level, new orders, employment and supplier deliveries of purchasing managers in the services sector, is being forecasted to see a reduction from 51.7 to 51.1 while the Unemployment rate is forecasted to improve slightly from 5.4% to 5.5%. The main impact should be caused by the Nonfarm Employment Change and ISM Non-Manufacturing Composite results will likely put the USD in a bearish trend as we head into the holiday weekend.
EUR
Yesterday the EUR continued its week long success as it gained against a basket of major currencies. The 15-nation currency rallied to its highest level against the greenback since late April hitting $1.5888 in late New York trading, up from the $1.5793 on Tuesday. Shortly following some poor data from the UK in the early morning session yesterday the Pound hit 23-day lows against the Euro. The bullish Euro trend began in the morning after another strong speech by ECB President Jean-Claude Trichet and continued to gain steam after weak ADP data for the American Economy. The single European currency was also fueled by better than expected Euro Zone producer prices which rose 1.2% compared to April and rose 7.1% annually.
Today, European news will likely be overshadowed by the importance of US data; however Forex traders should keep in mind several events, if mapping the EUR as a trading option. The inflation within the Euro-Zone has reached 4% due to increases inn Oil and food prices, and will likely add to more market speculation surrounding if and when the ECB will raise their interest. Senior ECB officials, including Trichet who remains the most hawkish of them all, have been hinting for some weeks that a rate rise is imminent; he himself warned that inflation could 'explode' if the ECB fails to act decisively. All likelihood is that the rate hike will happen today. A rate hike in the EUR, will send the EUR/USD pair even higher, which will in turn send the already record high of $144/per barrel of Crude Oil even higher. Today, along with the ECB Interest Rates at 11.45GMT, we can expect a press conference at 12.30 GMT where Trichet will discuss the rate decision. Expect the EUR to respond with bullish movement if rates are raised, as we could see the popular EUR/USD pair once again test 1.60.
JPY
The JPY saw mixed results against most of its major currency rivals. Vs. the greenback the Yen had a very volatile session as the pair tested bids around the 106.78 level and capped out at around 106.04. Against the EUR, the JPY was 168.20 down from 168.52 in the day prior.
Overall, the Yen rises broadly amid global stock rout. On Tuesday, the Japanese currency benefited from mounting risk aversion as heightened fears of further losses in the banking sector and global stocks prompted investors to sell dollars. However the JPY gains versus the dollar were limited as the balance now shifted to the Crude Oil's side. In stead of buying Yen, people now prefer the Crude as their safe heaven. Risk aversion in currency markets was also stoked by a slide in global stocks. The JPY tends to garner support in times of heightened risk aversion as investors reverse trades financed by borrowing the Japanese currency at low interest rates.
Today, there is no economic news expected to be released From Japan, however, we should see an active JPY trading in response to key U.S and Euro-zone data releases. The near term outlook for the JPY remains quite bullish as a U.S economic redemption is unlikely to occur anytime soon. Therefore, traders are advised to follow U.S data and Euro Zone news with extra precaution today as they will mark future's JPY behavior.
OIL
Yesterday, the Crude Oil rose to a record above $144 a barrel following an unexpected drop in the US Crude Oil Inventories. Oil has surged to records this year partly because investors have turned to commodities as a hedge against the falling dollar. Today's forecasted increase in European Interest Rates, may spur further commodity purchases, especially after the US stocks fell into a bear market. As a result, today we may see the Oil surpassing the $145 per barrel. Breaking this level will be important as the Crude should be reaching $150 within a very short period of time.
Technical News
EUR/USD
There is a very distinct bullish channel forming on the 4 hour chart, as the pair now floats at the middle of it. The Slow Stochastic on the 4 hour chart indicates that the pair should continue its bullish momentum. The Bollinger Bands on the Dailies also show there is still room for an additional upcoming bullish move.
GBP/USD
The 4 hour chart is showing that the cable is trading within a tight range and is now heading towards the bottom section of it. All oscillators are floating on neutral territory without a distinct price direction. Traders should wait for a clearer signal on the hourlies before entering the market on the pair.
USD/JPY
On the hourlies, the pair has made its bearish breach, and appears to have established a starting point for a relatively strong downtrend. The daily chart shows as well that a bearish formation is intact. A negative slope on the Slow Stochastic validates that notion. Going short seems to be a good choice.
USD/CHF
Since the beginning of today's trading session the pair went down a slippery slope, depreciating from 1.0165, down to 1.0131. The hourlies show that the pair has finished its bullish correction and is ready to continue its bearish trend. The Slow Stochastic on the 4 hour chart also supports that notion, indicating that bearish momentum hasn't reached its limit yet.
The Wild Card
Crude Oil
The ongoing bullish bonanza continues with no indication of a halt, as the Crude prices have breached the $144 a barrel yesterday. The Slow Stochastic on the daily chart indicates there is still plenty of room for further bullish movement. forex traders may use the strong bullish momentum and swing into the most lucrative trend currently in the Forex market.
Read more...
Daily Report: The Day Finally Comes, ECB and NFP Watched
Market Overview | Written by ActionForex.com | Jul 03 08 07:55 GMT |
The highly anticipated day of ECB rate decision and Non-farm payroll finally comes. ECB is widely expected to raise rate by 25bps to 4.25% after Trichet's hint in last meeting and subsequent hawkish comments from ECB members. Considering that consumer inflation has now doubled ECB's target and reached 4% yoy in Jun, PPI also topped at above 7% yoy in May, part of the markets speculate that a one-off 25bps hike is simply note enough to bring inflation back down. Some speculates that ECB could give a one off aggressive hike of 50bps and stop there but this is the unlikely scenario. Indeed the focus is on whether Trichet, after delivering a 25bps hike, will hints that it's really a one-off hike as suggested by some ECB members, or will maintain the degree of hawkish tones and suggest there may be more in the near future.
Another major market mover today is the always important non-farm payroll report. Markets expect the job market in US continued to contract for the sixth consecutive month by -60k in Jun. Unemployment rate is expected to tick down from 5.5% to 5.4%. Leading indicators saw ADP employment fell -79k, challenger report showed 46.8% increase in layoffs, continuous claims hit highest level since Feb 04, employment component of ISM manufacturing index dived to 43.7. There isn't much room for an upside surprise today .
However, NFP will be released at the same time when ECB press conference starts at 1230GMT. So, expects much volatility at that hour and markets could flip flop as ECB press conference goes. Also, note that ISM non-manufacturing index will be released at 1400GMT today. Economists expect the index to stay expansionary at 51 in Jun. Hence, the volatility could extend further in the US session.
Before the above, Services PMIs in Eurozone and UK will be released, with Eurozone retail sales too, in European session. Released earlier, Swiss CPI was unchanged at 2.9% yoy in Jun. Australian trade balance turned deficit at -956M in May.
Read more...
The highly anticipated day of ECB rate decision and Non-farm payroll finally comes. ECB is widely expected to raise rate by 25bps to 4.25% after Trichet's hint in last meeting and subsequent hawkish comments from ECB members. Considering that consumer inflation has now doubled ECB's target and reached 4% yoy in Jun, PPI also topped at above 7% yoy in May, part of the markets speculate that a one-off 25bps hike is simply note enough to bring inflation back down. Some speculates that ECB could give a one off aggressive hike of 50bps and stop there but this is the unlikely scenario. Indeed the focus is on whether Trichet, after delivering a 25bps hike, will hints that it's really a one-off hike as suggested by some ECB members, or will maintain the degree of hawkish tones and suggest there may be more in the near future.
Another major market mover today is the always important non-farm payroll report. Markets expect the job market in US continued to contract for the sixth consecutive month by -60k in Jun. Unemployment rate is expected to tick down from 5.5% to 5.4%. Leading indicators saw ADP employment fell -79k, challenger report showed 46.8% increase in layoffs, continuous claims hit highest level since Feb 04, employment component of ISM manufacturing index dived to 43.7. There isn't much room for an upside surprise today .
However, NFP will be released at the same time when ECB press conference starts at 1230GMT. So, expects much volatility at that hour and markets could flip flop as ECB press conference goes. Also, note that ISM non-manufacturing index will be released at 1400GMT today. Economists expect the index to stay expansionary at 51 in Jun. Hence, the volatility could extend further in the US session.
Before the above, Services PMIs in Eurozone and UK will be released, with Eurozone retail sales too, in European session. Released earlier, Swiss CPI was unchanged at 2.9% yoy in Jun. Australian trade balance turned deficit at -956M in May.
EUR/USD Daily Outlook
Daily Pivots: (S1) 1.5810; (P) 1.5849; (R1) 1.5921
EUR/USD turns into sideway trading after reaching as high as 1.5890. Nevertheless, intraday bias remains on the upside as long as 1.5775 minor support holds. As discussed before, prior break of 1.5843 resistance is taken as the second signal that consolidation from 1.6019 has completed at 1.5302 already. Retest of 1.6019 record high should be seen. Break will confirm medium term up trend has resumed. On the downside, below 1.5775 will indicate that an intraday top is in place and bring pullback to 4 hours 55 EMA (now at 1.5720). But downside should be contained well above 1.5468 support and bring rally resumption.
In the bigger picture, a medium term top is in place at 1.6019 after meeting 1.6 psychological resistance. Above 1.5843 indicates that such consolidation has likely completed at 1.5302 already. Further decisive break of 1.6019 will confirm this case and bring rise to 61.8% projection of 1.4309 to 1.6019 from 1.5284 at 1.6341 first. On the downside, while another setback cannot be ruled out before completing the consolidation, downside should be contained above 1.5302 support. Break of this support level is needed to switch to the case that price actions from 1.6019 are developing into deep correction to test 1.4966 cluster support.
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 1:30 | AUD | Australia Trade balance (aud) May | -965M | -900M | -957M | +12M |
| 1:30 | AUD | Australia Export M/M May | 1.00% | N/A | 5.80% | |
| 1:30 | AUD | Australia Import M/M May | 6.00% | N/A | -2.20% | |
| 5:45 | CHF | Swiss CPI M/M Jun | 0.20% | 0.30% | 0.80% | |
| 5:45 | CHF | Swiss CPI Y/Y Jun | 2.90% | 3.10% | 2.90% | |
| 7:55 | EUR | Germany Services PMI Jun | 53.3 | 53.3 | ||
| 8:00 | EUR | Eurozone Services PMI Jun | 49.5 | 49.5 | ||
| 8:30 | GBP | U.K. Services PMI Jun | 49.5 | 49.8 | ||
| 9:00 | EUR | Eurozone Retail sales M/M May | 0.50% | -0.60% | -0.70% | |
| 9:00 | EUR | Eurozone Retail sales Y/Y May | -0.70% | -2.90% | -3.00% | |
| 11:45 | EUR | ECB rate decision Jul | 4.25% | 4.00% | ||
| 12:30 | EUR | ECB press conference | ||||
| 12:30 | USD | U.S. Jobless claims | N/A | 384K | ||
| 12:30 | USD | U.S. Non-farm payrolls Jun | -60.0K | -49.0K | ||
| 12:30 | USD | U.S. Unemployment rate Jun | 5.40% | 5.50% | ||
| 12:30 | USD | U.S. Avg. hourly earnings M/M Jun | 0.30% | 0.30% | ||
| 12:30 | USD | U.S. Avg. hourly earnings Y/Y Jun | 3.40% | 3.50% | ||
| 14:00 | USD | U.S. ISM non-manufacturing Jun | 51 | 51.7 |
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Dollar Trading Low As ECB Decision Looms
Daily Forex Fundamentals | Written by Finotec Group | Jul 03 08 09:10 GMT |
The dollar is trading near a two-month low against the euro as economists and traders forecast the European Central Bank will raise its main interest rate by a quarter- percentage point to 4.25% and U.S. payrolls are predicted to drop for a sixth month. The currency was also near a three-week low versus the yen on speculation an industry report today will show growth in U.S. services industries slowed for a second month. 'Bad news comes from the U.S. everyday,' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital Inc., a unit of the U.K.'s third-biggest bank. 'The ECB's rate hike today is a done deal and the ECB will remain hawkish. The euro may rise above $1.60 against the dollar today.'
The U.S Labor Department will probably report today that U.S. employers cut 60,000 jobs including government staff last month, according to the median forecast of 79 economists surveyed by Bloomberg. The dollar weakened 1.2 percent against the euro and 1 percent versus the yen on June 6, when the government reported that the U.S. lost 49,000 jobs in May. However losses in the dollar may be limited by speculation U.S. officials will verbally intervene to stem its decline and slow gains in oil prices before a Group of Eight summit. Leaders from Canada, France, Germany, Italy, Japan, Russia, the U.K. and the U.S. will meet in Hokkaido, Japan, from July 7.
The dollar dropped to $1.5891 per euro, the weakest level since April 24, now currently trading at $1.5871 as of 7:36 am, GMT, from $1.5882 yesterday. The U.S. currency fell to an all-time low of $1.6019 per euro on April 22. The dollar is currently trading at 105.99 yen as of 7:37 am, GMT from 105.91 in New York. The euro trading at 168.21 yen from 168.20.
The pound/sterling fell to a three-week low against the euro as Taylor Wimpey Plc, the U.K.'s largest homebuilder, had a record drop in London trading after failing to raise fresh funds from investors. 'Taylor Wimpey is regarded as a benchmark for the housing industry, so their plight is indicative of the difficulties facing the whole sector,' said Neil Jones, head of European hedge-fund sales at Mizuho Capital Markets in London. 'There's a high correlation between the performance of the housing market and that of the pound.' GBP/USD currently trading at 1.9899 as of 8:07 am, GMT.
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The dollar is trading near a two-month low against the euro as economists and traders forecast the European Central Bank will raise its main interest rate by a quarter- percentage point to 4.25% and U.S. payrolls are predicted to drop for a sixth month. The currency was also near a three-week low versus the yen on speculation an industry report today will show growth in U.S. services industries slowed for a second month. 'Bad news comes from the U.S. everyday,' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital Inc., a unit of the U.K.'s third-biggest bank. 'The ECB's rate hike today is a done deal and the ECB will remain hawkish. The euro may rise above $1.60 against the dollar today.'
The U.S Labor Department will probably report today that U.S. employers cut 60,000 jobs including government staff last month, according to the median forecast of 79 economists surveyed by Bloomberg. The dollar weakened 1.2 percent against the euro and 1 percent versus the yen on June 6, when the government reported that the U.S. lost 49,000 jobs in May. However losses in the dollar may be limited by speculation U.S. officials will verbally intervene to stem its decline and slow gains in oil prices before a Group of Eight summit. Leaders from Canada, France, Germany, Italy, Japan, Russia, the U.K. and the U.S. will meet in Hokkaido, Japan, from July 7.
The dollar dropped to $1.5891 per euro, the weakest level since April 24, now currently trading at $1.5871 as of 7:36 am, GMT, from $1.5882 yesterday. The U.S. currency fell to an all-time low of $1.6019 per euro on April 22. The dollar is currently trading at 105.99 yen as of 7:37 am, GMT from 105.91 in New York. The euro trading at 168.21 yen from 168.20.
The pound/sterling fell to a three-week low against the euro as Taylor Wimpey Plc, the U.K.'s largest homebuilder, had a record drop in London trading after failing to raise fresh funds from investors. 'Taylor Wimpey is regarded as a benchmark for the housing industry, so their plight is indicative of the difficulties facing the whole sector,' said Neil Jones, head of European hedge-fund sales at Mizuho Capital Markets in London. 'There's a high correlation between the performance of the housing market and that of the pound.' GBP/USD currently trading at 1.9899 as of 8:07 am, GMT.
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Forex Market Issues and Risks
Daily Forex Fundamentals | Written by AC-Markets | Jul 03 08 08:30 GMT |
Dollar dropped after ADP report ahead of early US jobs release
News and Events:
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Dollar dropped after ADP report ahead of early US jobs release
News and Events:
The Dollar dropped against the Euro on Wednesday after a report showed the US private sector shed more jobs than expected in June, which may diminish the likelihood of a rate increase by the Federal Reserve.
The ADP Employer Services data, which showed the largest drop since November 2002, is often seen as a precursor to the government's monthly report on the labor market (early release on Thursday). Poll of Economists expect another drop in non-farm payrolls last month.
Forex investors bought the Euro ahead of an expected interest rate hike by the European Central Bank on Thursday. The ECB is widely expected to lift its key lending rate by 25bp to 4.25%, and President Jean-Claude Trichet's news conference after the meeting may indicate further increases. Higher benchmark rates in Europe will boost the return of Euro-denominated assets and weight on the greenback. More fuel for ECB hawks came from euro zone producer prices, which were above forecast at 7.1%(YoY) in May, with euro zone headline inflation running at 4.%.
Yesterday, EurUsd was 0.58% higher at 1.5883, having earlier hit 1.5892 2-month high. EurJpy went up 0.33% at 168.21. UsdJpy edged lower to 105.89, down 0.26%, retracing from 106.78 intraday high. UsdChf dropped 0.67% to 1.0141. GbpUsd was 0.07% lower at 1.9928 in a volatile session.
US Treasury Secretary Henry Paulson said on Wednesday that the US economy faced a tough Q2 and Europe would not be immune to the impact. He also said high oil prices, further home price declines and capital markets turmoil will prolong the American economic slowdown, while Europe and Britain were also showing signs of slower growth.
Sterling fell broadly as tumbling UK housing shares and a profit warning from retailer Marks and Spencer cast a shadow over the slowing British economy. Charlie Bean, Bank of England deputy governor, said the British economy is facing its most challenging time since at least the early 1990s.
Euro and Dollar fell against a broadly stronger Australian Dollar, which jumped after Australian retail sales soundly beat expectations for May. AudUsd advanced 0.85% to 0.9629, near a 25-year 0.9669 peak set on Monday. At 7.25%, Australian interest rates are among the highest in the industrialized countries.
Today Key Issues:
- 05:45 CHF June CPI 0.3% vs 0.8% (MoM)
- 05:45 CHF June CPI 3.1% vs 2.9% (YoY)
- 08:30 GBP June PMI services 49.5 vs 49.8
- 09:00 CHF SNB releases Monetary Policy Report and Quarterly Bulletin
- 11:45 EUR ECB announces interest rates 4.25% vs 4%
- 12:30 USD June Nonfarm payrolls change -60k vs -49k
- 12:30 USD Initial Jobless Claims 385k vs 384k
- 14:00 USD June ISM Non-Manufacturing composite 51 vs 51.7
The Risk Today:
EurUsd Market broke up top of the current 1.5400-1.5800 trading range hitting 1.5892 high. Further advance would reopen the way up to 1.6000 Pivot point resistance ahead of key resistance 1.6200 market target. On the downtrend, weakness below 1.5400 will put the current 2-month uptrend on hold. This may open way down to 1.5000 key level. Support holds 1.5304 13th June low. Initial support holds 1.5760 pivot point.
GbpUsd Cable hit 2.0000 psychological level on Tuesday. But reversed gains and closed at 1.9943. On the upside, psychological 2.0000 level stays into focus. On the downside, a reversal below 1.9600 might bring again target on 1.9337 January low and 1.9105 (50% retracement of 1.7049 - 2.1162 advance). Initial support holds 1.9800 former range resistance. Strong support holds 1.9363 20th February and 14th May low.
UsdJpy Market broke down lower 3-month trendline at 106.30. Current 3-month uptrend failed to overtop 108.59 16th June high. More profit taking would bring the market lower than 105 and maybe back to 100 - 104 consolidation trading range. Initial support hold 105.86 Friday low. Renewed advance to mid-June 108.59 would put 110.10 strong resistance (Trendline) into focus and mid January double top ahead of 111.92 early January high.
UsdChf Market couldn't hold 1.0200 lower support last Friday. Strong support holds 1.0148 June 9th low. Initial support holds 1.0166 Friday low. Further weakness may open the way toward 0.9637 17th March low. June 13th 1.0541 high holds initial resistance. A return over 1.0200 would bring back consolidation 1.0200 - 1.0600 range.
| EURUSD | GBPUSD | USDJPY | USDCHF | ||||
| 1.6200 | T | 2.0100 | P | 111.92 | K | 1.1191 | K |
| 1.6000 | K | 1.9800 | S | 110.10 | T | 1.0625 | T |
| 1.5892 | M | 1.9967 | M | 108.39 | M | 1.0200 | M |
| 1.5880 | 1.9925 | 105.90 | 1.0148 | ||||
| 1.5760 | P | 1.9880 | S | 105.86 | S | 1.0000 | P |
| 1.5285 | S | 1.9337 | T | 104.44 | M | 0.9888 | S |
| 1.5000 | K | 1.9105 | K | 100.00 | P | 0.9637 | K |
| S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot | |||||||
Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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Technical Analysis Daily: GBP/USD
Daily Forex Technicals | Written by iFOREX.bg | Jul 03 08 08:44 GMT |
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GBP/USD 1.9885
GBP/USD Open 1.9944 High 1.9972 Low 1.9880 Close 1.9928
The British Pound continued consolidation against the US Dollar but also descended insignificantly yesterday from yesterday's top 1.9972, down to the bottom 1.9845, which are the the first resistance and support levels respectively for the currency couple today. If the negative trend continues, next support is expected at 1.9810, followed by 1.9750. In upward direction next resistance for today is expected at 2.0050, the break of which would lead to next target 2.0130.
Technical resistance levels: 1.9970 2.0050 2.0130
Technical support levels: 1.9880 1.9810 1.9750
Trading range: 1.9895 - 1.9835
Trend: Downward
Sell at 1.9885 SL 1.9915 TP 1.9845
iFOREX.bg Forecasts and Trading Signals
http://www.zifx.com
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Forex and Dow Jones Recommended Levels
Daily Forex Technicals | Written by FXtechtrade | Jul 03 08 08:39 GMT |
EUR/USD
Today's support: - 1.5843, 1.5825 and 1.5814(main), where correction is possible. Break would give 1.5793, where correction also may be. Then follows 1.5772. Break of the latter would result in 1.5747. If a strong impulse, we would see 1.5720. Continuation will give 1.5696.
Today's resistance: - 1.5895(main). Break would give 1.5916, where a correction is possible. Then goes 1.5933. Break of the latter would result in 1.5952. If a strong impulse, we'd see 1.5998. Continuation will give 1.6022.
USD/JPY
Today's support: - 105.94 and 105.72(main). Break would bring 105.53, where correction is possible. Then 105.24. If a strong impulse, we would see 105.05. Continuation would give 104.74 and 104.51.
Today's resistance: - 106.46 and 106.67(main), where a correction may happen. Break would bring 107.04, where also a correction may be. Then 107.33. If a strong impulse, we would see 107.56. Continuation will give 107.81.
DOW JONES INDEX
Today's support: - 11 296.40, 11 272.54 and 11 244.37(main), where a delay and correction may happen. Break of the latter will give 11 218.00, where correction also can be. Then follows 11 193.72. Be there a strong impulse, we would see 11 162.60. Continuation will bring 11 138.20.
Today's resistance: - 11 418.80 and 11 441.26(main), where a delay and correction may happen. Break would bring 11 463.66, where a correction may happen. Then follows 11 497.50, where a delay and correction could also be. Be there a strong impulse, we'd see 11 522.77. Continuation would bring 11 565.00 and 11 621.20.
FXtechtrade
http://www.fxtechtrade.com
Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.
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EUR/USD
Today's support: - 1.5843, 1.5825 and 1.5814(main), where correction is possible. Break would give 1.5793, where correction also may be. Then follows 1.5772. Break of the latter would result in 1.5747. If a strong impulse, we would see 1.5720. Continuation will give 1.5696.
Today's resistance: - 1.5895(main). Break would give 1.5916, where a correction is possible. Then goes 1.5933. Break of the latter would result in 1.5952. If a strong impulse, we'd see 1.5998. Continuation will give 1.6022.
USD/JPY
Today's support: - 105.94 and 105.72(main). Break would bring 105.53, where correction is possible. Then 105.24. If a strong impulse, we would see 105.05. Continuation would give 104.74 and 104.51.
Today's resistance: - 106.46 and 106.67(main), where a correction may happen. Break would bring 107.04, where also a correction may be. Then 107.33. If a strong impulse, we would see 107.56. Continuation will give 107.81.
DOW JONES INDEX
Today's support: - 11 296.40, 11 272.54 and 11 244.37(main), where a delay and correction may happen. Break of the latter will give 11 218.00, where correction also can be. Then follows 11 193.72. Be there a strong impulse, we would see 11 162.60. Continuation will bring 11 138.20.
Today's resistance: - 11 418.80 and 11 441.26(main), where a delay and correction may happen. Break would bring 11 463.66, where a correction may happen. Then follows 11 497.50, where a delay and correction could also be. Be there a strong impulse, we'd see 11 522.77. Continuation would bring 11 565.00 and 11 621.20.
FXtechtrade
http://www.fxtechtrade.com
Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.
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Pound Drops to 3-Week Low Against Euro Before Services Report
By Gavin Finch
July 3 (Bloomberg) -- The pound fell to a three-week low against the euro before an industry survey forecast to show U.K. services grew in June at the weakest pace in at least two years.
The British currency also declined before the European Central Bank announces its latest interest rate decision. The ECB will raise its main refinancing rate by a quarter-percentage point to 4 percent today, according to all but one of 58 economists a Bloomberg News survey.
``The pound is looking very weak versus the euro,'' said John Hardy, head of foreign exchange strategy in London at Saxo Bank A/S, a Copenhagen-based bank specializing in currencies, stocks, bonds and derivatives. ``The flurry of news out of the U.K. seems to show things getting worse by the day.''
Against the euro, the pound lost 0.2 percent to 79.84 pence by 9:24 p.m. in London, after dropping to 79.86 pence, the weakest since June 9. It fell 0.2 percent to $1.9883, from $1.9930 late yesterday.
An index based on replies from about 700 service companies surveyed by the Chartered Institute of Purchasing and Supply fell to 49.5 from 49.8 in May, according to the median forecast of 33 economists in a Bloomberg survey.
The ECB's rate decision is due at 1:45 p.m. in Frankfurt. President Jean-Claude Trichet will hold a press conference 45 minutes later.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
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July 3 (Bloomberg) -- The pound fell to a three-week low against the euro before an industry survey forecast to show U.K. services grew in June at the weakest pace in at least two years.
The British currency also declined before the European Central Bank announces its latest interest rate decision. The ECB will raise its main refinancing rate by a quarter-percentage point to 4 percent today, according to all but one of 58 economists a Bloomberg News survey.
``The pound is looking very weak versus the euro,'' said John Hardy, head of foreign exchange strategy in London at Saxo Bank A/S, a Copenhagen-based bank specializing in currencies, stocks, bonds and derivatives. ``The flurry of news out of the U.K. seems to show things getting worse by the day.''
Against the euro, the pound lost 0.2 percent to 79.84 pence by 9:24 p.m. in London, after dropping to 79.86 pence, the weakest since June 9. It fell 0.2 percent to $1.9883, from $1.9930 late yesterday.
An index based on replies from about 700 service companies surveyed by the Chartered Institute of Purchasing and Supply fell to 49.5 from 49.8 in May, according to the median forecast of 33 economists in a Bloomberg survey.
The ECB's rate decision is due at 1:45 p.m. in Frankfurt. President Jean-Claude Trichet will hold a press conference 45 minutes later.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
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Forex Technical Analysis
Daily Forex Technicals | Written by DeltaStock Inc. | Jul 03 08 08:11 GMT |
EUR/USD
Current level-1.5872
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EUR/USD
Current level-1.5872
The currency pair has set a local bottom at 1.5301 completing the slide from 1.5844. Technical indicators are neutral. Trading takes place above 50- day SMA, currently projected at 1.5609.
Yesterday's climb above the 1.5844 resistance showed, that the corrective phase since Friday's 1.5838 has ended at intraday's low at 1.5775 and the uptrend towards 1.6135 has been renewed. This early break beyond the mentioned resistance is a solid proof of the bullish sentiment out there in the market, based on the overall consensus for a 0.25% interest rate hike from the European Central Bank. We hold on to our mid-term target at 1.6135.
Today's strategy:Buy on dips to 1.5854, stop below 1.5831, intraday target above 1.5943.
| Resistance | Support | ||
| intraday | intraweek | intraday | intraweek |
| 1.5891 | 1.60-sentiment | 1.5778 | 1.5537 |
| 1.5963 | 1.6135 | 1.5712 | 1.5301 |
USD/JPY
Current level - 106.12
The pair is in a corrective uptrend from the 95.75 short-term bottom. Technical indicators are flat and the upmove is dynamically supported at 104.74. The inner structure of the rise is by all means a corrective one, so from a larger point of view the overall downtrend from 124.14 is not over yet.
The acceleration of the downtrend has denied the possibility, that a final spike high around 109.30 is still possible and it is clear, that a mid-term top is set at 108.59 and current slide is aiming at 102.63 and 100.06 later on. As expected the pair has reached 106.74 and it seems, that consolidation since 104.98 is already over, but still a break below 105.19 is needed to confirm. If correct, next short-term target is projected at 103.83 and 102.63 later on.
Today's strategy: Sell on a break below 115.19, stop above intraday high, target above 103.83.
| Resistance | Support | ||
| intraday | intraweek | intraday | intraweek |
| 106.24 | 108.66 | 105.19 | 104.75 |
| 106.71 | 109.51 | 104.75 | 100.82 |
GBP/USD
Current level- 1.9911
The pair is in a broad consolidation above 1.9338 and below 2.0397. Technical indicators are flat on the higher time-frames and trading is situated between the 50- and 200-day SMA, currently projected at 1.9685 and 1.9982.
As expected a local top was set at 2.0007 and a corrective phase is unfolding since, that should challenge 1.9801 before completion. The general uptrend from 1.9474 is intact, well supported at 1.9767, aiming at 2.0274 and 2.0397 later on.
Today's strategy : Sell at 1.9973, stop above 2.0007, target at 1.9843.
| Resistance | Support | ||
| intraday | intraweek | intraday | intraweek |
| 2.0007 | 2.0225 | 1.9845 | 1.9767 |
| 2.0028 | 2.0397 | 1.9791 | 1.9192 |
DeltaStock Inc. - Online Forex & Securities Broker
www.deltastock.com
RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice.
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Swiss Franc Extends Drop Versus Euro as Inflation Holds at 2.9%
By Lukanyo Mnyanda
July 3 (Bloomberg) -- The Swiss franc extended declines against the euro and dollar after a government report showed inflation accelerated less than economists forecast in June.
Swiss consumer prices rose 2.9 percent from a year earlier after increasing the same amount in May, the Federal Statistics Office in Neuchatel said today. That's the highest rate since October 1993. Economists forecast an acceleration to 3.1 percent, according to the median of 20 estimates in a Bloomberg News survey. From May, prices climbed 0.2 percent.
Against the euro, the franc fell to 1.6128 by 7:50 a.m. in Zurich, from 1.6103 yesterday. It also dropped to 1.0165 versus the dollar, from 1.0140.
To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
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July 3 (Bloomberg) -- The Swiss franc extended declines against the euro and dollar after a government report showed inflation accelerated less than economists forecast in June.
Swiss consumer prices rose 2.9 percent from a year earlier after increasing the same amount in May, the Federal Statistics Office in Neuchatel said today. That's the highest rate since October 1993. Economists forecast an acceleration to 3.1 percent, according to the median of 20 estimates in a Bloomberg News survey. From May, prices climbed 0.2 percent.
Against the euro, the franc fell to 1.6128 by 7:50 a.m. in Zurich, from 1.6103 yesterday. It also dropped to 1.0165 versus the dollar, from 1.0140.
To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
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Standard Chartered Cuts Asian Currency Forecasts on Slowdown
By Ron Harui
July 3 (Bloomberg) -- Standard Chartered Plc, the U.K. bank that makes more than 90 percent of its profit in emerging markets, cut its forecasts for five Asian currencies saying growth in the region is slowing.
The London-based bank lowered its one-year predictions for the Indian rupee, Pakistan rupee, Philippine peso, South Korean won and Thai baht in a research note sent to clients yesterday. All of the currencies weakened against the U.S. dollar last quarter on concern quicker inflation and a global slowdown will cool their economies.
``This Asian currency correction will continue into the first half of next year,'' Thomas Harr, a senior currency strategist at Standard Chartered in Singapore, said in a telephone interview confirming the contents of yesterday's report. ``A lot of the focus now on current-account deficits and inflation will have a knock-on effect on slowing growth.''
Pakistan's rupee, the worst-performer of Asia's 17 most- traded currencies in the past three months, may weaken to 70 per dollar by the end of June 2009, on a wider current-account deficit and quicker inflation, the report said. That forecast compares with a previous estimate of 69. The Philippine peso may fall to 47 in 12 months, versus an earlier prediction of 43, Standard Chartered said.
The Pakistan currency traded at 69.65 per dollar as of 11:52 a.m. in Karachi, according to data compiled by Bloomberg. The peso was at 45.290 versus the dollar, according to Tullet Prebon Plc.
Rupee, Baht, Won
Standard Chartered also lowered its end of June forecasts for the Indian rupee to 44.50 from 41.80, the Thai baht to 35.50 from 33.50, and the Korean won to 1,030 from 960.
The won was at 1,038.10 per dollar today, according to Seoul Money Brokerage Services Ltd. India's rupee fetched 43.2850 per dollar and the Thai baht traded at 33.37, Bloomberg data show.
Pakistan's rupee has weakened 8.2 percent in the past three months as the nation's economy has slowed and inflation accelerated to the fastest in 30 years. Standard & Poor's and Moody's Investors Service cut the nation's foreign-currency debt ratings in May, citing rising prices, political instability and cooling growth.
The peso is the second-worst performer of the 17 Asian currencies against the dollar in the last three months, losing 8.1 percent, on concern record oil prices will stoke inflation and slowing U.S. economic growth will widen the Asian nation's trade deficit.
``Currencies which are hit now in Asia are the ones where you have a combination of a current-account deficit, inflation getting out of control and a central bank not being hawkish enough,'' Harr said.
Rising food and oil prices pushed the inflation rate in the Philippines to a nine-year high of 9.6 percent in May and spurred the central bank to raise interest rates for the first time since October 2005 last month. The trade deficit widened to $531 million in April from $219 million a year earlier, the National Statistics Office said in Manila on June 25.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.
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July 3 (Bloomberg) -- Standard Chartered Plc, the U.K. bank that makes more than 90 percent of its profit in emerging markets, cut its forecasts for five Asian currencies saying growth in the region is slowing.
The London-based bank lowered its one-year predictions for the Indian rupee, Pakistan rupee, Philippine peso, South Korean won and Thai baht in a research note sent to clients yesterday. All of the currencies weakened against the U.S. dollar last quarter on concern quicker inflation and a global slowdown will cool their economies.
``This Asian currency correction will continue into the first half of next year,'' Thomas Harr, a senior currency strategist at Standard Chartered in Singapore, said in a telephone interview confirming the contents of yesterday's report. ``A lot of the focus now on current-account deficits and inflation will have a knock-on effect on slowing growth.''
Pakistan's rupee, the worst-performer of Asia's 17 most- traded currencies in the past three months, may weaken to 70 per dollar by the end of June 2009, on a wider current-account deficit and quicker inflation, the report said. That forecast compares with a previous estimate of 69. The Philippine peso may fall to 47 in 12 months, versus an earlier prediction of 43, Standard Chartered said.
The Pakistan currency traded at 69.65 per dollar as of 11:52 a.m. in Karachi, according to data compiled by Bloomberg. The peso was at 45.290 versus the dollar, according to Tullet Prebon Plc.
Rupee, Baht, Won
Standard Chartered also lowered its end of June forecasts for the Indian rupee to 44.50 from 41.80, the Thai baht to 35.50 from 33.50, and the Korean won to 1,030 from 960.
The won was at 1,038.10 per dollar today, according to Seoul Money Brokerage Services Ltd. India's rupee fetched 43.2850 per dollar and the Thai baht traded at 33.37, Bloomberg data show.
Pakistan's rupee has weakened 8.2 percent in the past three months as the nation's economy has slowed and inflation accelerated to the fastest in 30 years. Standard & Poor's and Moody's Investors Service cut the nation's foreign-currency debt ratings in May, citing rising prices, political instability and cooling growth.
The peso is the second-worst performer of the 17 Asian currencies against the dollar in the last three months, losing 8.1 percent, on concern record oil prices will stoke inflation and slowing U.S. economic growth will widen the Asian nation's trade deficit.
``Currencies which are hit now in Asia are the ones where you have a combination of a current-account deficit, inflation getting out of control and a central bank not being hawkish enough,'' Harr said.
Rising food and oil prices pushed the inflation rate in the Philippines to a nine-year high of 9.6 percent in May and spurred the central bank to raise interest rates for the first time since October 2005 last month. The trade deficit widened to $531 million in April from $219 million a year earlier, the National Statistics Office said in Manila on June 25.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.
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Dow Average's 21% Drop Into Bear Market May Signal More Losses
By Elizabeth Stanton
July 3 (Bloomberg) -- The Dow Jones Industrial Average's 21 percent retreat from a record may foreshadow more losses for the 112-year-old stock gauge, based on its performance in previous bear markets.
``I don't expect this to be the end,'' said Dean Gulis, part of a group that manages about $3 billion in Bloomfield Hills, Michigan, for Loomis Sayles & Co. ``Stocks have been trending down now for basically a year. They're going to keep struggling for a while.''
The Dow slipped into a bear market for the 12th time since 1962 yesterday, according to Westport, Connecticut-based research firm Birinyi Associates Inc. Prior declines averaged 29 percent and lasted 322 days, Birinyi data show. The biggest was a 45 percent drop over 694 days starting in January 1973.
The longest profit slump in six years and the first nationwide decrease in home prices since the Great Depression pushed U.S. equities to a nine-month tumble. Growth in gross domestic product is forecast to slow to 1.4 percent over the next 12 months from 2.2 percent while inflation quickens, according to data compiled by Bloomberg.
The Dow slipped to 11,215.51, led by General Motors Corp. and Alcoa Inc. The 30-stock gauge closed at a high of 14,164.53 on Oct. 9. Its drop outpaced the 19.4 percent slump in the Standard & Poor's 500 Index, which is within 10 points of a bear market.
Growing bank losses and rising oil prices left U.S. companies poised for a fourth-straight quarterly retreat in profits, the longest streak since 2001, according to data compiled by Bloomberg.
GM, Citigroup Plunge
General Motors plunged 74 percent in the past nine months for the Dow's biggest decline as crude oil's 79 percent surge to $143.74 a barrel hurt sales of pickup trucks and sport utility vehicles. Citigroup Inc., American International Group Inc. and Bank of America Corp. each tumbled more than 50 percent as losses and writedowns at the world's biggest financial institutions topped $400 billion following the collapse of the U.S. subprime mortgage market.
Profits at S&P 500 companies decreased 10.5 percent during the second quarter, according to a Bloomberg survey of analysts compiled June 27. Earnings at financial firms and consumer companies reliant on Americans' discretionary income slumped 56.5 percent and 19.9 percent, respectively.
Dow Weighting
The Dow includes five financial firms: New York-based AIG, American Express Co., Citigroup and JPMorgan Chase & Co. and Charlotte, North Carolina-based Bank of America. While General Electric Co., based in Fairfield, Connecticut, is classified as an industrial company, its financial unit accounted for more than half of its profit from continuing operations last year.
General Motors fell to $9.98 yesterday, the lowest price since 1954, according to Global Financial Data, based in Los Angeles. The Detroit-based company, battered by the slowest U.S. automotive market in 15 years, faces the possibility of bankruptcy and may need to raise as much as $15 billion, according to Merrill Lynch & Co. analyst John Murphy.
The Dow average is a ``GDP play,'' said Mark Freeman, who helps manage $8 billion at Westwood Holdings Group in Dallas. ``To the extent the market is concerned about growth, and growth is going to be very tepid for the foreseeable future, it makes sense that the Dow is going to lag in that environment.''
The Dow, owned by Rupert Murdoch's News Corp., is intended as a measure of ``established U.S. companies that are leaders in their industries,'' according to a February statement in which Bank of America and Chevron Corp. were named as replacements for Honeywell International Inc. and Altria Group Inc. Companies in the Dow average have a median market value of $103.7 billion, almost eight times that of the S&P 500.
Less Energy
Although financial shares, the year's biggest decliners, make up less of the Dow than the S&P 500, the Dow has a smaller weighting of energy stocks. That's the only industry among 10 in the S&P 500 to gain since Oct. 9, driven higher by records for oil, natural gas and coal. Financials account for 10.2 percent of the Dow and 14.4 percent of the S&P 500. For energy, it's 13.4 percent compared with 16 percent.
Gains by another 19th century measure, the Dow Jones Transportation Average, signal the market may rebound. Dow Theory, created by Wall Street Journal co-founder Charles Dow, holds that advances or declines by the Dow industrials must be matched by similar moves in the transportation average to ``confirm'' the broader market's direction. Divergences aren't sustainable, the theory holds.
The transportation average rose to a record on June 5. Although it then fell 15 percent, it remains 12 percent higher than its 2008 low set in January.
No Recession
Dow Theory is ``telling you we're not having a recession,'' said Ken Fisher, Woodside, California-based chief executive officer of Fisher Investments Inc., which manages $47 billion. ``We could have a bear market without having a recession, but that's not what people talk about.''
Ralph Shive is betting that the U.S. economy will contract.
``We're due for a recession -- it'll go in the books as one -- and a bear market,'' said Shive, South Bend, Indiana-based chief investment officer of 1st Source Corp. Investment Advisors, which manages $3 billion. ``While they're never fun, the thing to remember is that markets will bottom well before the economic news gets better.''
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
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Icahn's Activist Funds' Slim Returns Supply Cause to Deactivate
By Katherine Burton
July 3 (Bloomberg) -- Carl Icahn has hit the roughest patch of his hedge-fund career.
His $7.9 billion in hedge funds fell 7 percent between October and April, the biggest peak-to-trough loss since the funds opened in November 2004, according to investors. That compares with an average annual return on his investments of 53 percent from 1996 to mid-2004.
Icahn has lost money on cellular-phone maker Motorola Inc., his biggest investment. The 72-year-old billionaire also failed to persuade executives at Yahoo! Inc. and Biogen Idec Inc. to take his advice for boosting their stock prices.
While falling equity markets and the slowing economy are beyond Icahn's command, the setbacks at Yahoo and Biogen don't bode well for his future as an activist shareholder, said Brett Barth, a partner at New York-based BBR Partners, which has invested $1 billion in hedge funds for clients.
``When you have been unsuccessful as an activist, it emboldens companies to be combative,'' Barth said.
Icahn has so far come up short in his efforts to force Sunnyvale, California-based Yahoo, owner of the second-most- popular online search engine, to sell itself to Microsoft Corp. He also lost a proxy battle this month to elect his candidates to the board of Cambridge, Massachusetts-based Biogen, making a sale of the world's biggest maker of multiple sclerosis drugs less likely.
Icahn declined to comment on his investments and performance. The funds rose 6.3 percent during the past 17 months, compared with a 1.5 percent increase in the Standard & Poor's 500 Index.
Trailing Rivals
His funds trail activist investor Daniel Loeb's New York- based Third Point Offshore Fund, which gained 17.4 percent during the same period. Chris Hohn's TCI Fund Management LLP, which staged a proxy fight at railroad CSX Corp., returned 37 percent in the same period.
The mediocre returns are a comedown for Icahn, who has earned billions as a corporate raider, including the 1985 takeover of Trans World Airlines Inc. He made $893 million trying to break up RJR Nabisco Holdings Corp. in the 1990s.
Icahn generated a 53 percent annual return on invested capital from January 1996 to May 2004, according to documents used in 2004 to market his New York-based hedge funds. In 2006, the Icahn Fund rose about 29 percent, while the U.S. benchmark Standard & Poor's 500 Index advanced 13.6 percent.
Since then, Icahn has struggled. He paid about $2.3 billion, or roughly $13 a share, for his 7.6 percent stake in Schaumburg, Illinois-based Motorola, according to a filing in May with the U.S. Securities and Exchange Commission.
Motorola Seat
Icahn made an unsuccessful bid for a board seat last year. Motorola Chief Executive Officer Gregory Brown has bowed to pressure to spin off the handset unit and focus on television set-top boxes, two-way radios and wireless networking equipment. Motorola shares closed yesterday at $7.15 in New York Stock Exchange composite trading.
Icahn paid an average price of $18.46 for shares of real- estate developer WCI Communities Inc. in Bonita Springs, Florida, and his offer to buy the rest at $22 was rejected last year by management. He did win three board seats last August and was named chairman. WCI Communities fell 18 cents yesterday to $1.31.
His biggest success was BEA Systems Inc. this year. Icahn bought shares of the San Jose, California-based software company for $12.81 a share, on average, and then pressed BEA and bigger rival Oracle Corp. to merge. Oracle bought BEA in April at $19.38 a share, producing a return for Icahn of about 50 percent in less than a year.
`Lumpy Returns'
``All these activists are going to have lumpy returns,'' said Brad Alford, head of Alpha Capital Management LLC in Atlanta, which farms out money to hedge funds. He considers Icahn ``one of the best activists out there.''
When Icahn said he was buying Yahoo shares with the goal of getting the company to agree to a purchase by Microsoft, John Paulson's Paulson & Co., Boone Pickens's BP Capital LLC and Loeb's Third Point purchased shares too. Icahn remains locked in a proxy fight with the company.
Icahn hasn't publicly disclosed his costs for buying Biogen or Yahoo. Biogen shares have climbed to $58. He bought them in the second quarter, when they closed as low as $43.68. His campaign to take control of the drugmaker collapsed last month when he failed to win enough shareholder votes.
Icahn said in a Bloomberg Television interview on June 5 that his Yahoo investment was profitable. Since then, the shares have dropped 20 percent. The shares gained 3.4 percent yesterday on optimism that Microsoft may revive attempts to take over the Internet company.
To contact the reporter on this story: Katherine Burton in New York at kburton@bloomberg.net
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Aracruz, Ecopetrol, Telecom Argentina: Latin Equity Preview
By Paulo Winterstein and James Attwood
July 3 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares fell 2.9 percent to 4,491.80 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Argentina
Telecom Argentina SA (TECO2 AR): Argentina will prevent Telecom Italia SpA from exercising options to increase its stake in Sofora Comunicaciones SA, the holding company that controls Telecom Argentina, BAE newspaper said. The government also asked Telecom Italia to avoid ceding its stake in Sofora to a third company, the Buenos Aires-based newspaper reported yesterday, citing a resolution issued by Argentina's communication secretariat. Telecom Argentina, the nation's No. 2 telephone company, fell 0.7 percent to 9.14 pesos.
Brazil
Aracruz Celulose SA (ARCZ6 BS): The world's biggest maker of eucalyptus pulp was reiterated ``outperform'' by Fator Corretora analyst Lika Takahashi after it announced the purchase of Boise Cascade Ltda. assets, which includes 15,400 hectares (38,054 acres) of land in the south of Brazil. The acquisition, for $47.1 million, will help supply Aracruz's pulp mill in Guaiba at low transport cost because of the land's proximity to the mill, the analyst wrote. Aracruz advanced 1 centavo to 11.51 reais.
Porto Seguro SA (PSSA3 BS): Brazil's fourth-largest insurance company showed ``rebounding'' profit in May and is ``on track'' to report second-quarter net income of 100 million reais ($62 million), above Deutsche Bank AG analyst Mario Pierry's estimate of 86 million reais, according to a note e- mailed yesterday. Porto Seguro, rated ``hold'' at Deutsche Bank, fell 1.9 percent to 17.65 reais.
Colombia
Ecopetrol SA (ECOPETL CB): Colombia will impose a tax on oil production when prices exceed $90 a barrel, the country's oil minister said yesterday. The tax will apply only to new contracts, Hernan Martinez said in an interview with Bloomberg Television. The tax rate on additional income will rise to 50 percent when oil costs $180 a barrel, from 5 percent at $90 a barrel, Armando Zamora, executive director of the National Hydrocarbons Agency, told Bloomberg Television. Ecopetrol, the state oil company, rose 0.4 percent to 2,575 pesos.
Mexico
Desarrolladora Homex SAB (HOMEX* MM): Mexico's largest homebuilder took out a $200 million credit line with Grupo Financiero Inbursa SAB. The credit line will last five years and comes with an interest of the benchmark TIIE rate plus 1.35 percentage points, Homex said in a statement to the Mexico City stock exchange. Homex, which will use the funds to buy land and existing developments, added 0.7 percent to 101.30 pesos.
Peru
Southern Copper Corp. (PCU/C PE) and Cia. de Minas Buenaventura SA (BVN PE): Peru's government this week declared a national mine strike illegal, a Labor Ministry spokeswoman said. The ruling makes it possible for mining companies to fire employees who don't show up for work, ministry spokeswoman Rosa Arguedas said yesterday in a telephone interview. Southern Copper, the world's seventh-largest copper producer, fell 2.8 percent to $102.50. Buenaventura, the world's seventh-largest gold producer, lost 2.1 percent to $64.60.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
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July 3 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares fell 2.9 percent to 4,491.80 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Argentina
Telecom Argentina SA (TECO2 AR): Argentina will prevent Telecom Italia SpA from exercising options to increase its stake in Sofora Comunicaciones SA, the holding company that controls Telecom Argentina, BAE newspaper said. The government also asked Telecom Italia to avoid ceding its stake in Sofora to a third company, the Buenos Aires-based newspaper reported yesterday, citing a resolution issued by Argentina's communication secretariat. Telecom Argentina, the nation's No. 2 telephone company, fell 0.7 percent to 9.14 pesos.
Brazil
Aracruz Celulose SA (ARCZ6 BS): The world's biggest maker of eucalyptus pulp was reiterated ``outperform'' by Fator Corretora analyst Lika Takahashi after it announced the purchase of Boise Cascade Ltda. assets, which includes 15,400 hectares (38,054 acres) of land in the south of Brazil. The acquisition, for $47.1 million, will help supply Aracruz's pulp mill in Guaiba at low transport cost because of the land's proximity to the mill, the analyst wrote. Aracruz advanced 1 centavo to 11.51 reais.
Porto Seguro SA (PSSA3 BS): Brazil's fourth-largest insurance company showed ``rebounding'' profit in May and is ``on track'' to report second-quarter net income of 100 million reais ($62 million), above Deutsche Bank AG analyst Mario Pierry's estimate of 86 million reais, according to a note e- mailed yesterday. Porto Seguro, rated ``hold'' at Deutsche Bank, fell 1.9 percent to 17.65 reais.
Colombia
Ecopetrol SA (ECOPETL CB): Colombia will impose a tax on oil production when prices exceed $90 a barrel, the country's oil minister said yesterday. The tax will apply only to new contracts, Hernan Martinez said in an interview with Bloomberg Television. The tax rate on additional income will rise to 50 percent when oil costs $180 a barrel, from 5 percent at $90 a barrel, Armando Zamora, executive director of the National Hydrocarbons Agency, told Bloomberg Television. Ecopetrol, the state oil company, rose 0.4 percent to 2,575 pesos.
Mexico
Desarrolladora Homex SAB (HOMEX* MM): Mexico's largest homebuilder took out a $200 million credit line with Grupo Financiero Inbursa SAB. The credit line will last five years and comes with an interest of the benchmark TIIE rate plus 1.35 percentage points, Homex said in a statement to the Mexico City stock exchange. Homex, which will use the funds to buy land and existing developments, added 0.7 percent to 101.30 pesos.
Peru
Southern Copper Corp. (PCU/C PE) and Cia. de Minas Buenaventura SA (BVN PE): Peru's government this week declared a national mine strike illegal, a Labor Ministry spokeswoman said. The ruling makes it possible for mining companies to fire employees who don't show up for work, ministry spokeswoman Rosa Arguedas said yesterday in a telephone interview. Southern Copper, the world's seventh-largest copper producer, fell 2.8 percent to $102.50. Buenaventura, the world's seventh-largest gold producer, lost 2.1 percent to $64.60.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
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Stocks Fall in Europe, Asia; U.K.'s FTSE 100 Enters Bear Market
By Sarah Jones
July 3 (Bloomberg) -- Stocks dropped in Europe and Asia as oil topped $144 a barrel, damping earnings prospects for carmakers and airlines and stoking concern the global economy will slow further. The U.K.'s FTSE 100 Index fell into a bear market, and U.S. index futures advanced.
Daimler AG, Toyota Motor Corp. and Air France-KLM Group declined after oil rose to a record. ArcelorMittal and BHP Billiton Ltd. led commodity producers lower. Nvidia Corp., a maker of computer-graphics chips, tumbled 23 percent in Germany after cutting its sales forecast.
The MSCI World Index lost 0.4 percent to 1,369.82 at 9:15 a.m. in London as nine of the 10 industry groups fell. The index has fallen 18.6 percent from a record in October. U.S. stocks sank yesterday, sending the Dow Jones Industrial Average into a bear market.
``I'm concerned about the prospects for an economic slowdown'' and the negative impact on earnings, said Mark Bon, a London-based fund manager at Canada Life, which oversees about $15 billion. ``Sentiment is so poor. There does not appear to be any obvious catalyst to change that.''
Futures on the Standard & Poor's 500 Index added 0.2 percent as did futures on the Dow average. Europe's Dow Jones Stoxx 600 Index declined 1 percent, while the MSCI Asia Pacific Index slipped 0.9 percent.
The U.K.'s FTSE 100 dropped as low as 5358.50, extending its decline from last year's high to 20.4 percent after credit losses and the worst housing slump in 30 years dimmed the earnings outlook for banks and retailers.
Stocks fell in Japan for the 11th straight day, the longest losing streak in 54 years.
$11 Trillion Lost
Financial stocks have led declines that erased almost $11 trillion from equity markets worldwide this year. Credit-related losses topping $400 billion, record oil prices and accelerating inflation have stoked concern policy makers will have to raise borrowing costs as the global economy slows.
European Central Bank President Jean-Claude Trichet is poised to increase interest rates today to stem, according to a survey of economists. Central banks in Sweden and Indonesia lifted rates today.
Daimler, the world's second-largest maker of luxury cars, fell 1.8 percent to 37.50 euros. Toyota, which gets about half of its profit from North America, lost 0.8 percent to 4,900 yen. Hyundai Motor Co., South Korea's largest automaker, declined 2.3 percent to 71,800 won.
Crude oil for August delivery climbed as much as 0.7 percent to $144.57 today in New York after U.S. stockpiles dropped unexpectedly and Russian President Dmitry Medvedev said prices will climb to $150.
Air France, Europe's biggest airline, dropped 3 percent to 14.29 euros.
Air France Downgrade
Deutsche Bank AG downgraded Air France to ``sell'' from ``hold,'' saying it expects further consensus downgrades to earnings forecasts.
``Premium growth could turn negative forcing caution on the revenue outlook,'' London-based analyst Chris Reid wrote in a note to clients dated yesterday.
ArcelorMittal, the world's largest steelmaker, dropped 4.7 percent to 53.30 euros. BHP Billiton, the world's biggest mining company, lost 3.4 percent to 1,700 pence.
``Commodity stocks have done very well and people are nervous they may have seen their best,'' said Bon at Canada Life.
Nvidia, the second-biggest maker of computer-graphics chips, sank $4.18 to $13.85 in Germany after cutting its second- quarter sales forecast because of a drop in demand and increased competition.
UBS
UBS AG fell 2.6 percent to 20.08 pence. Citigroup Inc. said the bank may post additional writedowns and raise more capital, a day after Chairman Peter Kurer told a newspaper UBS won't need more funds.
The Swiss bank, which wrote down $38 billion over the past three quarters, still carries $83 billion of ``risk exposures that are likely to require further markdowns,'' London-based Citigroup analyst Jeremy Sigee said in a note today.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
Read more...
July 3 (Bloomberg) -- Stocks dropped in Europe and Asia as oil topped $144 a barrel, damping earnings prospects for carmakers and airlines and stoking concern the global economy will slow further. The U.K.'s FTSE 100 Index fell into a bear market, and U.S. index futures advanced.
Daimler AG, Toyota Motor Corp. and Air France-KLM Group declined after oil rose to a record. ArcelorMittal and BHP Billiton Ltd. led commodity producers lower. Nvidia Corp., a maker of computer-graphics chips, tumbled 23 percent in Germany after cutting its sales forecast.
The MSCI World Index lost 0.4 percent to 1,369.82 at 9:15 a.m. in London as nine of the 10 industry groups fell. The index has fallen 18.6 percent from a record in October. U.S. stocks sank yesterday, sending the Dow Jones Industrial Average into a bear market.
``I'm concerned about the prospects for an economic slowdown'' and the negative impact on earnings, said Mark Bon, a London-based fund manager at Canada Life, which oversees about $15 billion. ``Sentiment is so poor. There does not appear to be any obvious catalyst to change that.''
Futures on the Standard & Poor's 500 Index added 0.2 percent as did futures on the Dow average. Europe's Dow Jones Stoxx 600 Index declined 1 percent, while the MSCI Asia Pacific Index slipped 0.9 percent.
The U.K.'s FTSE 100 dropped as low as 5358.50, extending its decline from last year's high to 20.4 percent after credit losses and the worst housing slump in 30 years dimmed the earnings outlook for banks and retailers.
Stocks fell in Japan for the 11th straight day, the longest losing streak in 54 years.
$11 Trillion Lost
Financial stocks have led declines that erased almost $11 trillion from equity markets worldwide this year. Credit-related losses topping $400 billion, record oil prices and accelerating inflation have stoked concern policy makers will have to raise borrowing costs as the global economy slows.
European Central Bank President Jean-Claude Trichet is poised to increase interest rates today to stem, according to a survey of economists. Central banks in Sweden and Indonesia lifted rates today.
Daimler, the world's second-largest maker of luxury cars, fell 1.8 percent to 37.50 euros. Toyota, which gets about half of its profit from North America, lost 0.8 percent to 4,900 yen. Hyundai Motor Co., South Korea's largest automaker, declined 2.3 percent to 71,800 won.
Crude oil for August delivery climbed as much as 0.7 percent to $144.57 today in New York after U.S. stockpiles dropped unexpectedly and Russian President Dmitry Medvedev said prices will climb to $150.
Air France, Europe's biggest airline, dropped 3 percent to 14.29 euros.
Air France Downgrade
Deutsche Bank AG downgraded Air France to ``sell'' from ``hold,'' saying it expects further consensus downgrades to earnings forecasts.
``Premium growth could turn negative forcing caution on the revenue outlook,'' London-based analyst Chris Reid wrote in a note to clients dated yesterday.
ArcelorMittal, the world's largest steelmaker, dropped 4.7 percent to 53.30 euros. BHP Billiton, the world's biggest mining company, lost 3.4 percent to 1,700 pence.
``Commodity stocks have done very well and people are nervous they may have seen their best,'' said Bon at Canada Life.
Nvidia, the second-biggest maker of computer-graphics chips, sank $4.18 to $13.85 in Germany after cutting its second- quarter sales forecast because of a drop in demand and increased competition.
UBS
UBS AG fell 2.6 percent to 20.08 pence. Citigroup Inc. said the bank may post additional writedowns and raise more capital, a day after Chairman Peter Kurer told a newspaper UBS won't need more funds.
The Swiss bank, which wrote down $38 billion over the past three quarters, still carries $83 billion of ``risk exposures that are likely to require further markdowns,'' London-based Citigroup analyst Jeremy Sigee said in a note today.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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U.K.'s FTSE 100 Index Falls, Extends Drop From 2007 High to 20%
By Adam Haigh
July 3 (Bloomberg) -- The U.K.'s FTSE 100 Index extended its decline from last year's high to 20 percent, the common definition of a bear market, after credit losses and the worst housing slump in 30 years dimmed the earnings outlook for banks and retailers.
The measure of companies from Barclays Plc and HBOS Plc to Marks & Spencer Group Plc slid 1 percent to 5,371.30 as of 8:01 a.m. in London, bringing its retreat since June 15, 2007, to 20.2 percent.
Barclays, Britain's fourth-biggest bank, tumbled to the lowest since 1998 this year as the collapse of the U.S. subprime mortgage market spurred lenders to sell shares to replenish capital. Marks & Spencer, the U.K.'s largest clothing retailer, slid 57 percent as sales dropped the most since 2005 and record oil prices pushed consumer confidence down to a level last seen during the London riots 18 years ago.
``Banks and financial stocks have taken hits and caution remains with regard to further credit writedowns,'' said Richard Hunter, London-based head of U.K. equities at Hargreaves Lansdown Stockbrokers, a unit of Hargreaves Lansdown Plc, which oversees $21.5 billion. ``The U.K. economy is in a fairly parlous state with the oil and food prices at their highs.''
For related news:
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
Read more...
July 3 (Bloomberg) -- The U.K.'s FTSE 100 Index extended its decline from last year's high to 20 percent, the common definition of a bear market, after credit losses and the worst housing slump in 30 years dimmed the earnings outlook for banks and retailers.
The measure of companies from Barclays Plc and HBOS Plc to Marks & Spencer Group Plc slid 1 percent to 5,371.30 as of 8:01 a.m. in London, bringing its retreat since June 15, 2007, to 20.2 percent.
Barclays, Britain's fourth-biggest bank, tumbled to the lowest since 1998 this year as the collapse of the U.S. subprime mortgage market spurred lenders to sell shares to replenish capital. Marks & Spencer, the U.K.'s largest clothing retailer, slid 57 percent as sales dropped the most since 2005 and record oil prices pushed consumer confidence down to a level last seen during the London riots 18 years ago.
``Banks and financial stocks have taken hits and caution remains with regard to further credit writedowns,'' said Richard Hunter, London-based head of U.K. equities at Hargreaves Lansdown Stockbrokers, a unit of Hargreaves Lansdown Plc, which oversees $21.5 billion. ``The U.K. economy is in a fairly parlous state with the oil and food prices at their highs.''
For related news:
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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UBS May Post Writedowns, Raise Cash, Citigroup Says
By Stuart Kelly
July 3 (Bloomberg) -- UBS AG may post $6.9 billion of additional writedowns and seek to raise more capital, Citigroup Inc. said, a day after Chairman Peter Kurer told a newspaper the Swiss bank won't need more funds.
The Zurich-based company, which wrote down $38 billion over the past three quarters, still carries $83 billion of ``risk exposures that are likely to require further markdowns,'' London- based Citigroup analyst Jeremy Sigee said in a note today.
Sigee, who rates UBS a ``hold'' with a ``high risk'' caveat, estimates the company may post a loss of 4.5 billion Swiss francs ($4.4 billion), and announce writedowns of as much as 7 billion francs when it reports second-quarter earnings Aug. 12. JPMorgan Chase & Co. analysts yesterday said UBS may need to mark down its assets by a further 5.1 billion francs.
Sigee blamed a slump in financial markets for asset price declines, and said UBS may need to raise more capital, either from asset sales or from shareholders. Kurer, in remarks published by Swiss newspaper Finanz & Wirtschaft yesterday, said the bank won't need more funds.
UBS fell 62 centimes, or 3 percent, to 20 francs by 9:51 a.m. in Swiss trading, bringing declines this year to 57 percent.
Writedowns
Banks and securities firms have turned to investors for $322 billion to replenish reserves after $403 billion of writedowns and credit losses tied to the collapse of the U.S. subprime mortgage market. UBS trails only Citigroup in credit losses and capital raising after turning to investors for $29.5 billion since the credit crisis started a year ago.
Speculation financial firms would need more funds helped drive an index of European banking shares down 8.3 percent in the previous five days.
Kurer, who replaced Marcel Ospel as chairman in April, is leading a strategic review of all of the bank's businesses to make them better complement the wealth management unit, which he has called the ``core franchise.''
The bank plans to inform shareholders about results of the review at an extraordinary shareholders meeting on Oct. 2. The meeting was called to elect four new board members, as Kurer seeks to increase the level of financial expertise on the board after criticism from shareholders including former UBS President Luqman Arnold.
UBS is also facing a U.S. probe into whether the Swiss bank helped affluent customers evade American taxes. A federal judge this week granted a request from prosecutors to let the Internal Revenue Service issue a summons to UBS for information about clients with secret accounts at the bank.
Kurer, in remarks made to Finanz & Wirtschaft that were confirmed by spokeswoman Sabine Woessner, said the bank takes the situation at its U.S. business ``most seriously.''
To contact the reporter for this story: Stuart Kelly in Sydney skelly22@bloomberg.net
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July 3 (Bloomberg) -- UBS AG may post $6.9 billion of additional writedowns and seek to raise more capital, Citigroup Inc. said, a day after Chairman Peter Kurer told a newspaper the Swiss bank won't need more funds.
The Zurich-based company, which wrote down $38 billion over the past three quarters, still carries $83 billion of ``risk exposures that are likely to require further markdowns,'' London- based Citigroup analyst Jeremy Sigee said in a note today.
Sigee, who rates UBS a ``hold'' with a ``high risk'' caveat, estimates the company may post a loss of 4.5 billion Swiss francs ($4.4 billion), and announce writedowns of as much as 7 billion francs when it reports second-quarter earnings Aug. 12. JPMorgan Chase & Co. analysts yesterday said UBS may need to mark down its assets by a further 5.1 billion francs.
Sigee blamed a slump in financial markets for asset price declines, and said UBS may need to raise more capital, either from asset sales or from shareholders. Kurer, in remarks published by Swiss newspaper Finanz & Wirtschaft yesterday, said the bank won't need more funds.
UBS fell 62 centimes, or 3 percent, to 20 francs by 9:51 a.m. in Swiss trading, bringing declines this year to 57 percent.
Writedowns
Banks and securities firms have turned to investors for $322 billion to replenish reserves after $403 billion of writedowns and credit losses tied to the collapse of the U.S. subprime mortgage market. UBS trails only Citigroup in credit losses and capital raising after turning to investors for $29.5 billion since the credit crisis started a year ago.
Speculation financial firms would need more funds helped drive an index of European banking shares down 8.3 percent in the previous five days.
Kurer, who replaced Marcel Ospel as chairman in April, is leading a strategic review of all of the bank's businesses to make them better complement the wealth management unit, which he has called the ``core franchise.''
The bank plans to inform shareholders about results of the review at an extraordinary shareholders meeting on Oct. 2. The meeting was called to elect four new board members, as Kurer seeks to increase the level of financial expertise on the board after criticism from shareholders including former UBS President Luqman Arnold.
UBS is also facing a U.S. probe into whether the Swiss bank helped affluent customers evade American taxes. A federal judge this week granted a request from prosecutors to let the Internal Revenue Service issue a summons to UBS for information about clients with secret accounts at the bank.
Kurer, in remarks made to Finanz & Wirtschaft that were confirmed by spokeswoman Sabine Woessner, said the bank takes the situation at its U.S. business ``most seriously.''
To contact the reporter for this story: Stuart Kelly in Sydney skelly22@bloomberg.net
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Citigroup Says Buy Volkswagen Puts Ahead of Carmaker Share Drop
By Gareth Gore
July 3 (Bloomberg) -- Citigroup Inc. told clients to buy put options in Volkswagen AG on speculation a ``massive change'' in demand as a result of the record oil price will lead to further declines in shares of Europe's biggest carmaker.
The brokerage advised buying put options expiring in December at a strike price of 160 euros, saying the price of the contracts is low compared with the carmaker's main rivals. That is 10 percent lower than yesterday's closing price.
``Faith in auto earnings numbers has collapsed over fears of a consumer recession'' and high fuel costs, London-based analyst John Lawson wrote in a note to clients. ``Volkswagen options are lower priced, which favors buying puts to express our negative stance.''
Clients will realize returns of as much as 550 percent if shares fall to the brokerage's 122 euro target price, the analyst wrote. The shares have gained 13 percent this year even as the benchmark DAX Index has lost 23 percent.
Put options give buyers the right -- but not the obligation -- to sell shares at a set price on an agreed date.
Volkswagen shares lost 1.09 euros, or 0.6 percent, to 177.29 at 9:30 a.m. today in Frankfurt.
To contact the reporter on this story: Gareth Gore in Madrid ggore1@bloomberg.net.
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July 3 (Bloomberg) -- Citigroup Inc. told clients to buy put options in Volkswagen AG on speculation a ``massive change'' in demand as a result of the record oil price will lead to further declines in shares of Europe's biggest carmaker.
The brokerage advised buying put options expiring in December at a strike price of 160 euros, saying the price of the contracts is low compared with the carmaker's main rivals. That is 10 percent lower than yesterday's closing price.
``Faith in auto earnings numbers has collapsed over fears of a consumer recession'' and high fuel costs, London-based analyst John Lawson wrote in a note to clients. ``Volkswagen options are lower priced, which favors buying puts to express our negative stance.''
Clients will realize returns of as much as 550 percent if shares fall to the brokerage's 122 euro target price, the analyst wrote. The shares have gained 13 percent this year even as the benchmark DAX Index has lost 23 percent.
Put options give buyers the right -- but not the obligation -- to sell shares at a set price on an agreed date.
Volkswagen shares lost 1.09 euros, or 0.6 percent, to 177.29 at 9:30 a.m. today in Frankfurt.
To contact the reporter on this story: Gareth Gore in Madrid ggore1@bloomberg.net.
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Nikkei Tops China, India After Longest Rout Since '65
By Masaki Kondo and Makiko Kitamura
July 3 (Bloomberg) -- The Nikkei 225 Stock Average's longest losing streak in 43 years belies its top performance among Asia's biggest equity markets as investors bet the end of deflation will lift the economy and spur demand for equities.
The Nikkei fell yesterday for the 10th straight day, the longest stretch since March 1965, according to the Nikkei Inc. Web site. The index's 8.1 percent drop since June 18 pushed losses to 13 percent this year, less than the 22 percent slump in Hong Kong's Hang Seng Index, 33 percent drop in India's Sensitive Index and 49 percent plunge in China's CSI 300 Index.
Japanese stocks avoided the region's biggest losses as investors betconsumers in the world's second-largest economy will spend more of their $7 trillion in savings accounts before price increases accelerate. Japan's inflation rate is less than a fifth of China and India, where record commodity costs may force central banks to raise interest rates and slow economic growth.
``Inflation would be good because it would drive institutions and individuals that are very heavily weighted to cash and bonds back into the equities and properties,'' said Marc Faber, founder and managing director of Marc Faber Ltd. in Hong Kong and publisher of the Gloom, Boom & Doom Report.
The Nikkei's longest losing streak was a 15-day stretch in 1954, according to Nikkei, which compiles the index. It would have had a 10-day drop in September-October 1974 if not for a gain during Saturday trading, which has since been discontinued.
The Nikkei opened lower today, and was down 9.19, or 0.1 percent, to 13,277.18 as of the midday trading break.
Growth Outlook
Japanese companies that rely on emerging markets have posted some of the biggest declines in the past 10 days, said Mitsushige Akino, who manages $557 million at Ichiyoshi Investment Management Co. in Tokyo.
Suzuki Motor Corp., which counts India as its biggest market, dropped 20 percent on increasing concern inflation will curb spending. Komatsu Ltd., which increased sales to China by 62 percent last year, plummeted 15 percent. Suzuki is located in Hamamatsu, Japan, while Komatsu is based in Tokyo.
Wholesale prices in India accelerated to 11.42 percent in the week to June 14, the fastest pace in 13 years, which may prompt the Reserve Bank of India to raise the benchmark interest rate, already at a six-year high.
China's inflation surged to an 8.7 percent rate in February, the highest since 1996 and may prompt the central bank to raise its key interest rates this week for the first time in 2008, according to economists surveyed by Bloomberg News.
2008 Gainers
Mitsubishi UFJ Nicos Co., a credit card unit of Japan's biggest bank by market value, and Fast Retailing Co., the operator of Japan's Uniqlo casual clothing store chain, were among the best stocks to own this year in the Nikkei. Mitsubishi UFJ Nicos, located in Tokyo, rose 37 percent to yesterday, while Yamaguchi City, Japan-based Fast Retailing added 23 percent.
Japanese stocks may rally as consumers spend more and shift money into higher-yielding assets, according to Faber.
``Japan in particular is well-placed as a safe-harbor investment destination,'' said Ed Rogers, chief executive officer of Tokyo-based Rogers Investment Advisors Y.K., which manages about $12 million. ``Japan is far less volatile than China and India.''
Core consumer prices, which exclude fresh food, rose for an eighth straight month in May, climbing to a decade-high of 1.5 percent. In the previous 10 years, prices in Japan fell at least one month in every year, according to data compiled by Bloomberg. The rate of inflation is still the lowest of any country in the world, the data show.
Inflation Concern
The Nikkei may rise to 14,050 by the end of the year, according to the median forecast of economists surveyed by Bloomberg between June 16 and June 20. That would be a gain of 5.7 percent from yesterday's closing price.
The 50 percent jump in crude oil prices to a record this year has helped GS Yuasa Corp. and Sanyo Electric Co., which make batteries for hybrid and electric cars. GS Yuasa, located in Kyoto, rose 85 percent, while Osaka-based Sanyo Electric gained 52 percent.
``Inflation is a major topic globally and environmental issues are directly related,'' said Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo. ``Japan will demonstrate its new weapon, environmental technology. We could see money rush into Japan.''
To contact the reporter on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net.
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