By Mark Deen
July 2 (Bloomberg) -- French Finance Minister Christine Lagarde pressed Europe Union partners to speed up efforts to contain counterparty risk in derivatives trades, saying the region is falling behind the U.S. in the area.
France wants countries using the euro to have local derivatives clearinghouses that can access liquidity at the European Central Bank, and is seeking the creation of a data base of derivatives trades.
“Europe is falling behind in this area,” Lagarde said today in a speech to executives gathered at the Europlace conference in Paris. “I’m asking the European Commission to propose directives to harmonize the rules on clearinghouses to guarantee their solidity and reliability across Europe.”
The proposals, already under consideration by the EU, are an attempt to cut risk in the $592 trillion over-the-counter derivatives market after the collapse of banks such as Lehman Brothers Holdings Inc. The plan is similar to one released by U.S. President Barack Obama last month that would require standardized over-the-counter derivatives to be guaranteed by clearinghouses.
Banks holding derivatives on their balance sheets should also get an incentive to register them with clearinghouses in the form of lower capital requirements, the French finance ministry said.
Reducing Risk
Some clearinghouses operate as central counterparties for every buy and sell order executed on an exchange, reducing the risk that a trader defaults on his obligation in a deal. Capitalized by its members, a clearinghouse allows regulators to assess market positions and prices. Customers pay fees for clearing, or post-trade processing services, which include verifying that a buyer has the funds to execute a trade.
U.S. Treasury Secretary Timothy Geithner sent proposals last month to congressional leaders laying out his plan to police over-the-counter derivatives trading, the unregulated market where swaps based on interest rates, currencies, commodities and a company’s ability to pay back debt are exchanged.
Lagarde, who meets with her counterparts from the other 26 EU nations next week, also said today she wants them to toughen regulatory proposals by barring hedge funds registered in non- cooperative offshore financial centers from receiving an EU seal of approval.
On accounting standards, she said that rules on marking to market need to be overhauled as soon as possible to prevent them from amplifying economic booms and busts, and that central banks and governments should be part of the bodies that set such rules because they concern financial stability.
Cross-Boarder Risk
The EU also needs to standardize legal protection for savers so that investors from one country aren’t at risk of buying financial products in a neighboring state with looser oversight, she said.
“I asked for these initiatives to be taken quickly,” Lagarde said, speaking to the conference in a prerecorded video speech because she is part of a delegation of French officials who traveled to Iraq today.
Lagarde also reiterated the French government’s forecast for a return to growth in its economy next year with an expansion of 0.5 percent.
“It will be growth well below potential but a return to growth all the same,” she said, according to a text of the speech released by her office.
To contact the reporters on this story: Mark Deen in Paris at markdeen@bloomberg.net
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Thursday, July 2, 2009
Goodhart, Crockett Say Authorities Must Deliver New Bank Tools
By Caroline Binham
July 2 (Bloomberg) -- Banking authorities around the world need to make good on pledges to enhance monitoring of financial threats and introduce tools to prevent further crises, former central bank policy makers said.
While governments and regulators agree on the need for so- called macro-prudential oversight and instruments, little meaningful action has followed, researchers including former Bank of England policy maker Charles Goodhart and former Bank for International Settlements General Manager Andrew Crockett said in their “Geneva Report” today.
Governments, regulators and central banks are revamping rules to prevent a repeat of the worst financial crisis since the Great Depression. While plans exist at national, regional and global levels for greater oversight, there is disagreement on who will do it and what tools to use. The U.S. released a report suggesting regulatory overhaul last month.
“Policy makers initially embraced the idea with enthusiasm,” the authors said in a statement. “Yet despite much talk of the need for macro-prudential regulation and its cousin, systemic risk regulation, it is hard to find any detailed macro-prudential regulation in the U.S. administration’s recent white paper.”
President Barack Obama last month proposed a systemic-risk council for the U.S., giving the Federal Reserve responsibility to identify and regulate companies too big to fail. Federal Deposit Insurance Corp. Chairman Sheila Bair has said her agency also needs to be involved in the monitoring of system-wide risk.
‘Soap Opera’
Macro oversight and micro-prudential regulation, or supervision of individual banks, must be done by separate agencies, Goodhart and Crockett said. Central banks should be tasked with systemic oversight while regulators should do institution-specific supervision, it said.
In the U.K., Gordon Brown’s government is deciding whether the Bank of England or the Financial Services Authority should lead systemic oversight. Media reports on the debate resemble a “soap opera,” FSA Chairman Adair Turner said two days ago. He described macro-prudential oversight as “the great cliché of this crisis.”
Turner has proposed that the central bank should chair an oversight committee and have majority membership of it, with the FSA contributing both analysis and reports. He has also said that the FSA should also have a statutory role for financial stability as the bank was given this year.
European Union leaders have backed plans for a European Systemic Risk Board of central bankers and regulators to share information and monitor hazards that cut across borders and industries.
EU Disagreement
European “authorities have yet to convince member governments that macro does not mean national, despite the existence of a monetary union,” said the authors, who include Markus Brunnermeier and Hyun Song Shin of Princeton University and Intelligence Capital Ltd. Chairman Avinash Persaud.
The Geneva Report endorses macro rules including counter- cyclical capital requirements. This means banks are forced to hoard capital in good times to draw down upon in bad.
Spain already has these rules in a practice known as dynamic provisioning. The U.K. told banks in January that it would move to a similar system. The extra buffer doesn’t count toward minimum ratios of shareholder equity.
The Geneva Report’s draft version was released in January. In a speech in February, Andrew Haldane, the Bank of England’s executive director for financial stability, endorsed the report’s recommendations for more use of bank stress tests to take account of spillover effects from other institutions during a crisis.
To contact the reporter on this story: Caroline Binham in London at cbinham@bloomberg.net
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Bank of England’s Miles Says Rapid Return to Growth Unlikely
By Brian Swint
July 2 (Bloomberg) -- Bank of England policy maker David Miles said the U.K. economy probably won’t make a “rapid” return to growth after the financial crisis.
“Whilst a return to growth does seem plausible and policy is gaining traction in the economy, the idea that we will return to rapid growth that will be sustained over several years seems pretty unlikely,” Miles told Parliament’s Treasury Committee in London today.
The U.K. economy contracted 2.4 percent in the first quarter, the most in five decades, and Miles said that the availability of credit is still “a real issue” as the banking system “remains on life support.” Banks expect losses from defaults to rise and construction activity unexpectedly contracted at a faster pace in June, other reports showed today.
An appreciation of the pound, which has risen 12 percent against the dollar this year, may also jeopardize the economy’s recovery, Miles said.
“Despite the recent strength in sterling, over the last 18 months we’ve seen a substantial depreciation,” Miles said. “Should there be dramatic changes in the exchange rate, an appreciation of sterling, that would short-circuit that very helpful adjustment mechanism which would otherwise help.”
The pound traded at $1.6362 today, compared with $1.4548 at the start of the year. That’s still down from the record $2.1162 reached in November 2007.
Purchase Program
The U.K. central bank voted unanimously in June to maintain the program to spend 125 billion pounds ($205 billion) of newly created money on government and corporate debt and to keep the benchmark interest rate at a three-century low of 0.5 percent.
It’s “difficult” to assess yet whether the policy is working to improve the flow of credit and bolster the economy, policy maker Timothy Besley said in a speech in London today, though there is some evidence that funding conditions in corporate bond markets have improved, he said.
U.K. banks expect to increase credit to households and companies in the next three months and demand for mortgages has increased, the Bank of England said in its quarterly credit conditions survey today.
Besley said there’s “no sense in which there’s a specific timing discussion” on when to end so-called quantitative easing. Both he and Miles said that at some point the Bank of England would have to start raising interest rates and selling the bonds it has purchased.
The next interest-rate decision is July 9.
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.
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Europe Unemployment Rate Rises to Highest in a Decade
By Emma Ross-Thomas
July 2 (Bloomberg) -- Europe’s unemployment rate rose to the highest in a decade in May as airlines, banks and builders cut jobs to survive a recession that’s led to soaring losses and fueled bankruptcies.
Unemployment in the 16-member euro region increased to 9.5 percent from a revised 9.3 percent in April, the European Union statistics office in Luxembourg said today. That’s the highest since May 1999 and exceeded the median forecast of 9.4 percent from a Bloomberg survey of 29 economists. A separate report showed European producer prices fell by a record 5.8 percent in May from a year earlier.
Even as Europe’s economy shows signs of recovery from the worst recession since World War II, unemployment will continue to climb, according to forecasts from the European Commission and the Organization for Economic Cooperation and Development. ING Groep NV, the largest Dutch financial-services company, said yesterday it would eliminate a further 800 jobs in addition to 7,000 already announced.
“The downturn could exact a very heavy price on the euro area for some time,” said Colin Ellis, economist at Daiwa Securities SMBC Europe Ltd. “We have not seen the worst in the labor market yet.”
Air France-KLM Group Chief Executive Officer Pierre-Henri Gourgeon said on June 19 that he expects to extend job cuts at the company. In Germany, Europe’s largest economy, company insolvencies led to 254,000 job losses in the first half of the year, according to debt collection agency Creditreform e.V.
Prices Fall
The annual drop in producer prices in May was the biggest since the data was first compiled in 1981 and exceeded the 5.6 percent median forecast of 21 economists in a Bloomberg survey. From the previous month, prices fell 0.2 percent.
Prices at the consumer level in the euro area recorded their first annual decline in June, according to data this week, and the European Central Bank has said inflation will probably remain negative for a few months before rising later in the year. The ECB, which has cut its benchmark interest rate to a record low of 1 percent, will probably leave the rate unchanged at a meeting today, according to a survey of economists.
‘Bolder Policy’
Around 3.4 million people have joined unemployment lines in the euro area in the past 12 months, and Jennifer McKeown, an economist at Capital Economics Ltd. in London, said it “will not be long before the downturn starts to hit wage growth.”
“With producer-price inflation falling to a new record low, consumer-price inflation looks set to remain under intense downward pressure,” she said. “While the ECB seems unlikely to cut interest rates or announce new unconventional measures today, bolder policy support might be needed in future.”
ECB President Jean-Claude Trichet said June 4 that the worst of the recession may have passed. Business confidence in Germany rose to a seven-month high in June and the contraction in manufacturing and services is easing, reports last month showed.
Still, the euro-region economy will shrink 4.8 percent this year and stagnate in 2010, the OECD forecast on June 24. That will push unemployment to 12 percent next year, it said. The EU sees unemployment reaching 11.5 percent in 2010, with the highest rates expected in Spain and Ireland.
Spanish unemployment rose to 18.7 percent in May, the highest in the 27-nation EU, today’s report showed, while the jobless rate in Ireland increased to 11.7 percent.
To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net
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U.S. Initial Jobless Claims Fell to 614,000 Last Week
By Bob Willis
July 2 (Bloomberg) -- The number of Americans filing claims for unemployment benefits last week fell in line with forecasts, indicating firings remain elevated.
Initial jobless claims dropped by 16,000 to 614,000 in the week ended June 27, from a revised 630,000 the week before, the Labor Department said today in Washington. A separate report from Labor today showed the unemployment rate climbed to 9.5 percent, the highest since 1983, in June from 9.4 percent.
Companies may be approaching the staffing levels they are seeking to ride out the recession after slashing about 6.5 million jobs since the recession began in December 2007, the most of any downturn since World War II. Labor’s payroll report today showed the economy lost 467,000 jobs in June, more than expected.
“Conditions will only gradually improve over the second half of the year,” Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “Initial claims remain stubbornly high and need to fall more quickly to make us more comfortable that the moderation in monthly job losses is sustainable.”
Stock-index futures slumped and Treasuries rose as the payrolls report added to concerns that the weak labor market will prolong the recession. Contracts on the Standard & Poor’s 500 Index fell 1.2 percent to 907.8 as of 8:55 a.m. in New York. The benchmark 10-year note yielded 3.5 percent, down 4 basis points from yesterday.
Economists forecast claims would fall to 615,000, according to the median of 38 estimates in a Bloomberg News survey, from a previously reported 627,000 a week earlier.
Benefit Rolls
The number of people collecting unemployment insurance decreased by 53,000 in the prior week, to 6.7 million.
The four-week moving average of initial claims, a less volatile measure, fell to 615,250 from 618,000.
The jobless rate among people eligible for benefits slipped to 5 percent in the week ended June 20 from 5.1 percent.
Twenty-two states and territories reported an increase in new claims for the week ended June 20, while 31 had a decrease.
Economists surveyed by Bloomberg last month forecast the unemployment rate to rise to 10 percent by the end of the year, constraining any recovery in consumer spending. Still, the economists forecast the economy will grow in the second half of this year after contracting in the previous six months.
To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.netShobhana Chandra in Washington schandra1@bloomberg.net
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Payrolls Fall More Than Forecast, Unemployment Rises
By Shobhana Chandra
July 2 (Bloomberg) -- Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.
The payroll decline was more than forecast and followed a 322,000 drop in May, according to Labor Department figures released today in Washington. The jobless rate jumped to 9.5 percent, the highest since August 1983, from 9.4 percent.
Unemployment is projected to keep rising for the rest of the year just as the income boost from the stimulus package fades, undermining prospects for a sustained rebound in household purchases, analysts said. As companies from General Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs will restrain growth.
“This will be another jobless recovery,” said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. “We may get positive economic growth driven largely by federal spending, but people on the street will say, ‘Where are the jobs?’”
Stocks slid after the report, with the Standard & Poor’s 500 Index dropping 2.2 percent to 903.43 at 10:16 a.m. in New York. Treasuries rose, sending yields on benchmark 10-year notes to 3.512 percent from 3.538 percent late yesterday.
Unemployment Claims
The number of Americans filing claims for unemployment benefits last week fell in line with forecasts, Labor also said, indicating firings remain elevated. Initial jobless claims dropped by 16,000 to 614,000 in the week ended June 27, from a revised 630,000 the week before.
Revisions added 8,000 to payroll figures previously reported for May and April.
A separate report today from the Commerce Department showed that orders placed at U.S. factories climbed for a third time in four months in May on rising demand for aircraft, machinery and computers. Bookings gained 1.2 percent, the most since June 2008, after a 0.5 percent increase in April.
Payrolls were forecast to drop 365,000 after a 345,000 decrease initially reported for May, according to the median of 79 economists surveyed by Bloomberg News. Estimates ranged from declines of 150,000 to 500,000. Job losses peaked at 741,000 in January, the most since 1949.
The jobless rate was projected to climb to 9.6 percent from 9.4 percent. Forecasts ranged from 9.3 percent to 9.7 percent. By the end of the year, unemployment will reach 10 percent, according to the median forecast of economists surveyed last month.
6.5 Million Jobs
The world’s largest economy has lost about 6.5 million jobs since the recession began in December 2007. That’s the biggest drop in any post-World War II economic slump.
Today’s jobs report showed factory payrolls fell by 136,000 after decreasing 156,000 the prior month. Economists forecast a drop of 150,000. The drop included a decline of 26,500 jobs in auto manufacturing and parts industries.
More firings are in the works following the bankruptcies of GM and Chrysler LLC as shutdowns ripple through auto-parts makers and car dealers.
Payrolls at builders fell 79,000 after decreasing 48,000.
Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 244,000 workers after falling 107,000. Retail payrolls decreased by 21,000 after a 17,600 drop. Financial firms reduced payrolls by 27,000, after a 30,000 drop the prior month.
Government payrolls decreased by 52,000, the biggest decline since July 2007, after dropping 10,000 the prior month.
Temporary Workers
The decrease reflects the layoff of workers hired on a temporary basis to prepare for the 2010 census. The U.S. Census Bureau has said it will hire more than 1.4 million people over the next year to conduct the population count that happens once every 10 years.
Unemployment will “remain painfully high for several more years,” Federal Reserve Bank of San Francisco President Janet Yellen said this week. “I expect that we will turn the growth corner sometime later this year, but I am not optimistic that the economy will spring back to normal any time soon.”
Tax cuts and Social Security payments under the stimulus plan propped up incomes last quarter, supporting household purchases. Consumer spending rose in May as earnings climbed 1.4 percent, the most in a year.
Still, the wealth destruction caused by the housing and stock-market slumps prompted Americans to rebuild nest eggs. The savings rate in May surged to a 15-year high.
Household Purchases
Household purchases, which account for about 70 percent of the economy, dropped at a 0.6 percent annual rate last quarter before growing again in the second half of the year, according to the median forecast of economists surveyed by Bloomberg in early June. Purchases rose at a 1.4 percent pace in the first three months of 2009.
The auto industry isn’t alone in trimming jobs. Kimberly- Clark, the maker of Huggies diapers and Kleenex tissues, plans to cut 1,600 jobs worldwide by year-end. About 800 salaried employees will leave Deere & Co., the world’s largest maker of agricultural equipment, under a voluntary program.
“These actions, while difficult, are necessary to help us emerge from this demanding economic environment,” Kimberly- Clark’s Chairman and Chief Executive Officer Tom Falk said in a June 25 statement. The company’s net income has declined for six straight quarters.
3M Co., the maker of Post-it Notes and Scotch Tape, reduced positions and offered early retirement to workers, while Dow Chemical Co., the largest U.S. chemical maker, is cutting jobs following the acquisition of Rohm & Haas Co.
Government, Services
Service providers and government agencies are also looking to lower costs. Gannett Co., the largest U.S. newspaper publisher, yesterday announced it will eliminate about 1,400 jobs by July 9. California Governor Arnold Schwarzenegger said he’ll force state workers to take a third unpaid day off every month to conserve cash and will order lawmakers into an emergency session to tackle the state’s growing budget deficit.
Today’s report also showed the average work week fell to 33 hours, the lowest level since records began in 1964, from 33.1 hours in May. Average weekly hours worked by production workers rose to 39.5 hours from 39.4 hours, while overtime held at 2.8 hours. That brought the average weekly earnings down to $611.49 from $613.34.
Workers’ average hourly wages held at $18.53 for a second month. Hourly earnings were 2.7 percent higher than June 2008, the smallest gain since September 2005. Economists surveyed by Bloomberg had forecast a 0.1 percent increase from the prior month and a 2.9 percent gain for the 12-month period.
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
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Trichet Says Current ECB Interest Rates ‘Appropriate’
By Jana Randow and Gabi Thesing
July 2 (Bloomberg) -- European Central Bank President Jean- Claude Trichet signaled the ECB has no immediate plans to cut interest rates again and said the euro region’s economy will start to recover in the middle of 2010.
“The current rates are appropriate,” Trichet said at a press conference in Luxembourg after the ECB left its benchmark rate at a record low of 1 percent. “After a phase of stabilization, a phase of recovery is expected around mid- 2010.” Inflation pressures will be “dampened,” he said.
The ECB has reduced its main rate by 325 basis points since October to fight Europe’s worst recession since World War II. The Frankfurt-based central bank also flooded the banking system with hundreds of billions of euros last week and will start buying 60 billion euros ($84 billion) of covered bonds on July 6 to free credit and encourage lending.
“Economic activity is likely to remain weak but should decline less strongly than was the case in the first quarter,” Trichet said. Last week’s operation “is expected to strengthen further the liquidity position of banks and to support the normalization of money markets.”
The euro was little changed after Trichet’s comments and traded at $1.4030 at 3 p.m. in Luxembourg.
The ECB may keep its benchmark rate at the current level until the fourth quarter of 2010, a Bloomberg survey of economist showed before the decision. Trichet said today’s decision by the 22-member Governing Council was unanimous and refused to rule out further reductions if necessary.
Recession
There are signs that the worst of the recession may be over. The contraction in Europe’s services and manufacturing industries is slowing and confidence in the economic outlook rose to a seven-month high in June.
Still, the ECB predicts the euro-region economy will contract about 4.6 percent this year and 0.3 percent next. Unemployment will rise to 11.5 percent in 2010, the European Commission forecast on May 4. The jobless rate was 9.5 percent in May.
Trichet also said the ECB will make sure that recent stimulus measures don’t boost inflation.
“Once the macroeconomic environment improves, the Governing Council will ensure that the measures taken are quickly unwound and that the liquidity provided is absorbed,” he said. “Hence, any threat to price stability over the medium to longer term can be effectively countered in a timely fashion.”
To contact the reporters on this story: Jana Randow in Frankfurt jrandow@bloomberg.net; Gabi Thesing in Frankfurt gthesing@bloomberg.net.
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FX Thoughts for the Day
| Daily Forex Technicals | Written by Kshitij Consultancy Services | Jul 02 09 12:45 GMT | | |
USD-CHF @ 1.0838/42...May move up towards 1.10 R: 1.0849-53 / 1.0882 / 1.1025 Dollar-Swiss is testing the Resistance region mentioned in the morning. If successful, it could move up towards 1.10 during the US session or by the end of the week. If it finds Resistance near 1.1025 and comes off, the range of 1.0650-1.1025 would continue to hold over the next few days. Besides the braiding and flattening MAs on the 4H chart continue to provide the pair the pivot on which it could cling onto even as it oscillates to and fro around this MAs region (1.0812-1.0838). Cable GBP-USD @ 1.6389/94...Important Support at 1.6260 R: 1.6430-60 / 1.6502 / 1.6578 Cable has bounced from the low of 1.6329 and is likely to move further up. A rise past 1.6460 might take the pair further up towards 1.6600. On the downside, it has important Support near 1.6260-40 (where 1.6260 is the 200-MA on the 4H chart). A break past this which does not look likely may take the pair down towards 1.6163-35. The Projected Max Low for the Day is at 1.6250 which might be honoured. Limit Buy Order: Buy GBP 10K at 1.6260, SL 1.6185, TP 1.6500 Aussie AUD-USD @ 0.8017/22...Testing important Support R: 0.8060-69 / 0.8150-69 / 0.8247 Aussie is testing an important Support region of 0.8004-0.8032. A break here might be contained at the 200-MA on the 4H chart at 0.7975 which should be a good opportunity to go Long. However, considering the fact the pair is moving in a downward moving channel on the 4H chart, a break of this Support is also not unlikely. Hence a break of 0.7975 might open the gates for further downside towards 0.7850. But we would prefer a rise towards 0.8150 over the course of US session or by tomorrow. Earlier we got Stopped out at Cost, the Long entered at 0.8015. Kshitij Consultancy Service Legal disclaimer and risk disclosure These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved. | |
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Currency Technical Report
| Daily Forex Technicals | Written by FX Greece | Jul 02 09 10:46 GMT | | |
EUR/USDResistance: 1.4130-50 / 1.4180-00 / 1.4230-50/ 1.4350-80 Comment: Euro rose yesterday, breaching resistance at 1,4130-50 and formed a top at 1,4200. The sideways formation is still valid and we need a daily close and a clear break of 1,4150-00 in order to confirm an uptrend. Until that happens, we will be skeptical regarding the rise resumption as resistance at the upper part of the sideways formation is being tested. Important intraday support should be found at 1,4045-60 and 1,4000. A downward break will cancel all upward expectations and lead to 1,3900 or even 1,3750-00 area, which is the base of the formation. On the upside, next important resistance emerges at 1,4230-50, followed by 1,4340… STRATEGY We remain bearish, trying sell orders at the reactions towards previous tops and stops above 1,4200. We keep our positions small due to important announcements that are due to release today… *The above mentioned strategy refers to orders that we may follow for personal accounts, depending on the market analysis and the potential reach of resistance and support levels. We do not encourage buy or sell orders, as its effective use is based on correct risk management and the ability of position readjustment depending on current conditions
DISCLAIMER
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Forex Technical Analysis
| Daily Forex Technicals | Written by DeltaStock Inc. | Jul 02 09 10:39 GMT | | |||||||||||||||||||||||||||||||||||||||||||||||||
EUR/USDCurrent level-1.4103 EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.3064 and 1.3524. After breaking above 1.4103 resistance, the pair peaked at 1.4201 and current bias is negative. A clear break below 1.4001 will target directly 1.3890, en route to 1.3721
USD/JPYCurrent level - 96.67 A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 98.13 and 97.75. A consolidation unfolds below yesterday's high at 96.98 and it precedes the final upswing to 97.40-60 zone. The intraday bias is neutral
GBP/USDCurrent level- 1.6393 The pair is in an uptrend, after bottoming at 1.3506. Trading is situated above the 50- and 200-day SMA, currently projected at 1.4778 and 1.5510.
DeltaStock Inc. - Online Forex & Securities Broker 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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Bigger-than-Expected Drop in U.S. Payroll Employment in June
| Daily Forex Fundamentals | Written by RBC Financial Group | Jul 02 09 14:03 GMT | | |
| Payroll employment fell 467,000 in June, a bigger slide relative to the 365,000 drop expected within financial markets going into the report. This was up from May's surprisingly small drop of 322,000 (revised from the previously estimated -345,000) although still down from April's decline of 519,000. The household survey contained slightly less negative news about labour markets with the unemployment rate rising only 0.1 percentage point to 9.5% compared to expectations of an increase to 9.6%. The weakness in employment was relatively broadly based with declines in employment in both the goods-producing sector (223,000) and in the service-producing sector (244,000). The decline in the former largely reflected weakness in both manufacturing (-136,000) and construction (-79,000). Most of the major services categories fell in the month, led by a 118,000 drop in the professional and business component. Weakness in the labour markets was also conveyed by the drop in the overall workweek in June to 33.0 hours from 33.1 hours in May. As a result, the index of aggregate weekly hours, which shows the combined effect of both employment and hours worked, fell a sizeable 0.8% in June following a 0.3% drop in May. For the second quarter, this measure of labour supply fell an annualized 7.9% relative to the 8.9% drop in the first quarter. This implies only a modest improvement from the very weak conditions at the start of the year. Weakening employment is still putting downward pressure on the average hourly earning measure, the key wage measure in the report, which was unchanged in the month. This contributed to the year-over-year rate dropping to 2.7% in June from 3.0% in May. Today's report still suggests that weakness in labour market conditions are easing. The cumulative decline in employment from April to June of 1,308,000 is a marked slowing from the comparable figure for the first quarter of 2,074,000. However, with the economy still paring jobs and reducing hours worked, there continues to be the risk of a negative feedback loop kicking in. To counter this, fiscal and monetary policies expected to remain accommodative. Thus, today's report is unlikely to alter the Fed's current policy stance of maintaining Fed funds within a still very accommodative range of 0% to 0.25% “for an extended period.” RBC Financial Group The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities. | |
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