Canadian Dollar Strengthens To New Multi-Day Highs Against Majors
Tuesday during early deals, the Canadian dollar strengthened to new multi-day highs against its European, US, Australian and Japanese counterparts as crude oil prices rose toward $69 a barrel, snapping two-days of fall.
U.S. light crude for July delivery rose 93 cents to $69.02 a barrel by 4:55 am ET, just off a session high of $69.37. London Brent crude gained 94 cents to $68.82.
The Canadian dollar edged up to a 6-day high against the Aussie, an 8-day high against the euro and a 4-day high against the yen and the dollar. The Canadian currency appreciated 9% against the greenback, 2.4% against the euro and 5% against the yen in May, as stocks advanced and commodities rallied, led by energy, as the slumping greenback boosted demand for raw materials as a hedge against inflation. Raw materials account for more than half of Canada's export revenue.
During early deals on Monday, the Canadian dollar jumped to 1.1083 against the U.S. currency. This set a 4-day high for the loonie. On the upside, 1.079 is seen as the next target level for the Canadian dollar. The greenback-loonie pair was worth 1.1161 at Monday's close.
Canada's currency, called the loonie, depreciated 3% against the U.S. dollar in the first quarter of 2009, which ended on March 31, compared to a 13% loss in the fourth quarter of 2008 ending December 31.
But the Canadian dollar is showing strength since the beginning of second quarter this year as the crude oil prices rebounded and investors stepped out of havens into higher-yielding assets such as stocks amid signs the global economic slump is moderating. Thus far, the loonie has appreciated 17% against the greenback.
The Canadian dollar, which closed Monday's trading at 88.31 against the yen rose to a 4-day high of 88.65 during early deals on Tuesday. The next upside target for the loonie-yen pair is seen at the 91.0 level.
After hitting a new multi-year low of 68.44 against the yen on January 21, the Canadian dollar rebounded and extended its uptrend in the subsequent months. Since then, the loonie-yen pair advanced 23% to hit a new multi-month high of 89.20 on June 03.
The Canadian dollar rose to a 6-day high of 1.5412 against the euro in early deals on Tuesday. This may be compared to Monday's close of 0.8811. If the Canadian dollar climbs further, it may likely target the 0.872 level.
The Federal Statistical Office said Germany's trade surplus declined to EUR 9.4 billion in April from EUR 11.3 billion in the previous month. The surplus stood above the expected level of EUR 9.3 billion. Upon calendar and seasonal adjustment, the foreign trade surplus totaled EUR 9 billion.
According to provisional results of the Deutsche Bundesbank, the current account balance showed a surplus of EUR 5.8 billion in April, much smaller than the EUR 15.4 billion in April 2008.
The Canadian dollar that was worth 0.8811 against the Aussie at yesterday's New York session close, rose to a 5-day high of 0.8787 by about 5:20 am ET Tuesday. If the loonie climbs further, 0.872 is seen as the next upside target level.
Pound climbs to 5-day high against yen and franc
Extending its recent rally, the UK's sterling rallied strongly higher against its major rivals on Tuesday morning in Asia. The pound rose to a 5-day high of 158.6 against the Japanese yen and 1.7548 against the Swiss franc by 8:00 pm ET. The pound also ticked up to 1.6102 against the US dollar and 0.8656 against the euro during this time.
Traders mulled reports showing the average asking price for houses in Great Britain came in at -44.1 in May, the Royal Institute of Chartered Surveyors said today, posting an 18-month index high. The score beat analyst expectations for -50.0 following the revised -58.7 in April for the highest reading since November 2007.
At the same time, the British Retail Consortium report showed today that same-store sales in May were down 0.8 percent on year. Overall sales, including those from newly opened stores, were up 0.8 percent on year.
The next upside target levels for the pound are seen at 1.773 against the franc, 161 versus the yen, 1.61 against the buck and 0.865 against the euro. At Monday's North American session, the pound closed deals at 0.8663 against the euro, 1.7525 versus the franc, 1.6053 against the greenback and 158.14 against the yen.
Japanese yen bounces back against European majors
During early European deals on Thursday, the Japanese yen reversed its Asian session's downtrend against the European currency, the British pound and the Swiss franc. Meanwhile, the yen extended its gains against the US dollar.
The yen edged down earlier in Asian deals after a report showed that Japan's economy shrank in the first quarter at its fastest pace since World War Two.
The gross domestic product in Japan contracted by 3.8 percent in the first quarter compared to the previous three months, the Cabinet Office said today in its final report. That was slightly better than the record preliminary reading of -4.0 percent, at which analysts expected GDP to hold steady. GDP saw a 3.8 percent quarterly decline in Q4 of 2008.
On an annualized basis, GDP was down 14.2 percent versus expectations for a 14.9 percent decline after the -15.2 percent preliminary reading. Capex came in at -8.9 percent compared to the original 10.4 percent decline.
The Japanese yen extended its Asian session gains against the US dollar during early European deals on Thursday. At 3:10 am ET, the yen reached a high of 97.67 against the greenback, compared to 98.13 hit late New York Wednesday. The next upside target level for the Japanese currency is seen around 96.9.
The Japanese yen that closed Wednesday's North American session at 137.23 against the European currency declined to 137.71 at 2:15 am ET Thursday Thereafter, the yen reversed its direction and is currently trading at 136.80 against the euro with 134.3 seen as the next target level.
Against the British pound, the Japanese unit gained ground after hitting a low 160.98 at 2:15 am ET Thursday. The yen is presently trading at 160.05 versus the pound, compared to Wednesday's closing value of 160.56. On the upside, 155.6 is seen as the next target level for the Japanese yen.
The Japanese currency that touched a low of 91.09 against the Swiss franc during today's Asian deals strengthened thereafter. At 3:25 am ET, the yen climbed to 90.44 against the franc. This may be compared to Wednesday's closing value of 90.85. If the Japanese yen gains further, 89.6 is seen as the next target level.
At 4.00 am ET, the European Central Bank is slated to issue its monthly bulletin.
Half an hour later, Inflation Attitude survey is due from the Bank of England. According to the quarterly survey released on March 12, median expectations of the rate of inflation over the coming year were 2.1%, the lowest out turn since May 2005.
From U.S., the retail sales for May, business inventories for April and the weekly jobless claims report are expected.
Atlanta Federal Reserve Bank President Dennis Lockhart is due to deliver a speech on the economy before National Association of Securities Professionals annual conference in Atlanta at 1:05 PM Eastern Time.
Dollar Choppy Versus Other Majors Wednesday
The dollar firmed up in choppy trading versus other major currencies Wednesday, but most of its gains came prior to the release of the Federal Reserve's Beige Book, which said that economic conditions remained weak or deteriorated further during the period from mid-April through May.
After coming under pressure over the last two days versus the euro and sterling amid increased risk appetite, the dollar steadied as a rally in stocks faded, causing traders to seek safer ground in the world's reserve currency.
The dollar spent most of the afternoon between 1.3900 and 1.4000, staying away from a 5-month low of 1.4338 set a week ago. Versus the sterling, the dollar managed to hold its ground near 1.6350, having slipped more than 5 cents over the previous two sessions. 8 days ago, the buck dropped to a 6-month low of 1.6662, culminating a dismal one-month run to the downside.
Russian Central Bank rattled currency traders today by saying it may cut its U.S. treasury investments in favor of International Monetary Fund bonds.
Also Wednesday, official data showed that the German annual inflation rate reached the lowest level since 1987 on easing energy and food prices. French industrial production dropped faster than expected in April due to widespread contraction in all industrial sub-sectors, especially in the manufacture of petroleum products.
Out of the euro area, British manufacturing output recorded growth for the second straight month in April signaling that the economy is on the road to a gradual recovery.
The dollar crept higher versus the yen, rising back above 98 to challenge a 4-week high of 98.87, set Monday morning. Wednesday saw some key statistical data releases from major Asian economies. Official reports showed that orders for Japanese machinery dropped to the lowest level in more than two decades and in China, consumer prices fell for the fourth straight month.
Back in the US, the Fed's Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Federal Reserve districts, said manufacturing activity declined or remained at a low level across most districts.
However, the Fed said that several districts also reported that the outlook by manufacturers has improved somewhat.
With the value of exports falling by more than the value of imports in the month of April, the Commerce Department released a report Wednesday morning showing that the U.S. trade deficit for the month came in modestly wider than in March.
The report showed that the trade deficit widened to $29.2 billion in April from a revised $28.5 billion in March. Economists had expected the deficit to widen to $29.0 billion from the $27.6 billion originally reported for the previous month.
Thanks for the interest reviews. Keep on Insta!
US Dollar Edges Up Against Majors.
Friday, the dollar edged up against its major counterparts on hopes of an economic recovery as data showed yesterday that the retail sales in U.S. rose in May for the first time in three months and the number of people filing first-time unemployment claims dropped last week to the lowest level in more than four months.
The dollar also gained ahead of the G8 finance ministers meeting later in the day where the ministers are expected to discuss the exit policies.
Trading will be subdued as investors may focus on the comments that may come out of the Group of eight ministers meeting. Its is expected that U.S treasury secretary may say U.S favors a strong dollar.
The U.S. Labor Department revealed Thursday that initial jobless claims, a closely-watched gauge of layoffs, came in at 601,000 for the week ended at June 6th. This was down 24,000 from the previous week's revised level of 625,000.
Another report released by the Commerce Department said that retail sales showed a notable increase in the month of May, although the increase was due in large part to an increase in gasoline prices that drove up sales at gas stations.
The report showed that retail sales rose 0.5 percent in May following a revised 0.2 percent decrease in April. Economists had expected sales to increased by 0.5 percent compared to the 0.4 percent decrease originally reported for the previous month.
Today at 8:30 am ET, the export & import price indexes for April, are due out from U.S. At 10 am ET, the Reuters/University of Michigan's preliminary report on the consumer sentiment index for June is scheduled to be released. Consumer confidence is expected to remain almost flat in the month, with economists forecasting a value of 68.6, little change from the previous month's 68.7.
The dollar that was worth 1.4110 against the euro and 1.6593 against the pound at yesterday's New York session close hit highs of 1.4034 and 1.6448, respectively during today's early trading. The next upside target levels for the dollar is seen at 1.391 against the European currency and 1.624 against the pound.
From the euro-area, the Euro zone industrial production dropped a seasonally adjusted 1.9% month-on-month in April, compared with a 1.4% fall in March, revised from 2% drop reported initially. Economists were looking for a decline of 0.4%.
Year-on-year, industrial production declined 21.6% in April, after falling 19.3% in March, revised from 20.2% drop estimated initially. Economists had predicted a decrease of 19.8%.
Additionally, the French statistical office INSEE said consumer price index or CPI dropped 0.3% year-over-year in May, compared with a 0.1% increase in the previous month. This was the first decrease since 1957. Economists were looking for a decline of 0.2%.
The dollar edged higher against its Swiss counterpart during Friday's early trading. At about 5:15 am ET, the dollar-franc pair hit as high as 1.0766, compared to yesterday's closing value of 1.0704. If the dollar rises further, 1.095 is seen as the next target level.
The greenback strengthened in early dealings versus the yen and hit as high as 98.26 by 5:40 am ET. This may be compared with yesterday's closing value of 97.65. The immediate resistance level for the pair is seen around the 98.8 level.
Japan's Ministry of Economy, Trade and Industry said today that the industrial production grew 5.9% month-on-month in April, revised up from the preliminary estimate of 5.2%. On a yearly basis, production plunged 30.7% in April.
Japan's consumer confidence improved to 36.3 in May from 33.2 logged in the previous month, a monthly survey from the Cabinet Office revealed. The indicator stood above the expected reading of 34.
Thanks for these useful infos.
May God Bless Instaforex.
We are glad to provide our clients the most actual and interesting information! More news you can get from our web-site daily using this link: http://instaforex.com/forex-news.php?lang=en.
Switzerland Cuts Economic Outlook, Govt. Announces New Stimulus Measures.
Wednesday, the Swiss government lowered its economic outlook for 2009 and lunched new set of measures to address the recession.
The State Secretariat for Economic Affairs or SECO said gross domestic product or GDP may fall 2.7% this year and by 0.4% next year. It was down from its previous forecast of a 2.2% contraction for this year and a slight recovery of 0.1% for 2010.
Consumer prices are forecast to decline 0.5% this year and may increase 0.9% in the coming year. In the March report, the government had forecast a 0.2% fall for this year and a rise of 1% for the next year.
Further, the forecast for the jobless rate in 2009 is kept untouched at 3.8%, while revised to 5.5% from 5.2% for the next year.
On the same day, the government announced new stimulus measures worth 400 million Swiss francs to fight rising unemployment. It brought overall measures of the third economic package to 750 million francs. The new measures include temporary employment in non-profit organizations, subsidies for training programmes and internships in government institutions.
The government also approved 200 million francs last month in subsidies for health insurance and 150 million francs in tax reductions.
Dollar Fades Versus Majors After Obama Unveils Financial Reforms
The dollar tailed off versus other major currencies on Wednesday after President Barack Obama laid out a "sweeping" agenda for regulatory reform of the financial system.
Among reforms, Obama proposed granting the Federal Reserve the authority to scrutinize firms that are large enough to pose a "systemic risk" to the financial markets.
While the dollar came under some pressure following the announcement, on the whole its been a week a stabilization for the world's reserve currency. Although the buck has drifted lower against the yen, it has managed to consolidate recent gains versus the euro and sterling after a tough April and May.
The dollar slipped to a fresh 2-week low of 95.50 versus the yen, having only been above the century mark in 2009 for a few days in April.
Wednesday, the Bank of Japan and the Cabinet office raised their economic assessment for the second straight month as some of the leading indicators suggested that the worst of the recession is over.
The dollar eased about a penny to 1.3950 versus the euro, moving away from a 4-week high near 1.3750 set last week. Versus the sterling, the dollar remained choppy near 1.6400, staying near a 6-month low of 1.6662 set early in June.
In economic news from the US, consumer prices showed a modest increase in the month of May, according to a report released by the Labor Department on Wednesday, with the mild price growth coming in below the expectations of economists.
The report showed that consumer prices edged up 0.1 percent in May after coming in unchanged in April. Economists had been expecting a somewhat more substantial increase in prices of about 0.3 percent.
Elsewhere, the eurozone's trade surplus in April improved from March as well as from the year-ago period, a report from the Eurostat showed Wednesday.
The trade surplus increased to EUR2.7 billion in April from a revised surplus of EUR1.8 billion in March, and a EUR2.2 billion surplus last year. For March, the trade surplus was initially reported as EUR0.4 billion.
Meanwhile, the number of Britons claiming jobless benefits reached the highest level since July 1997, although the increase was less than expected, official data showed Wednesday.
The claimant count was 1.54 million in May, up 39,300 over the previous month, the Office fConsumer prices showed a modest increase in the month of May, according to a report released by the Labor Department on Wednesday, with the mild price growth coming in below the expectations of economists.
IMF May Raise Global Growth Forecast For 2010, Official Says
The International Monetary Fund or IMF may raise its 2010 growth outlook for the world economy in the coming weeks, reflecting some improvements in global economic conditions, IMF's First Deputy Managing Director John Lipsky said Friday. He called for forceful policies to tackle the financial sector stress and continued international collaboration to ensure signs of economic improvement lead to a sustained global recovery.
In a keynote address to Turkish Industrialists' and Businessmen's Association in Bodrum, Lipsky said, "Financial conditions have improved, confidence is recovering gradually, and indicators of future production and demand have firmed. Reflecting these developments, I expect that in the coming weeks we will revise our growth projections modestly upward, mainly with regard to 2010."
However, he warned that given the worldwide increase in unemployment, it is far too early to conclude that the goal of restoring global growth has been accomplished.
While noting that recent indicators have signaled a slowdown in economic contraction, Lipsky said the timing and pace of the global economic recovery remains uncertain.
In April, the IMF had forecast that the global economy will contract by 1.3% in 2009, the deepest recession since the World War II. The economy is then expected to grow by 1.9% in 2010. The IMF is due to announce its updated forecasts for the world economy on July 7.
However, Lipsky said, "Even the upbeat indicators widely cited as representing "green shoots" still point to a global recovery that would be sluggish by historic standards."
He said activity in the advanced economies will revive only gradually over the course of 2010, weighed down by financial deleveraging, limited credit growth, weak household income growth and declining household net worth. Emerging economies are unlikely to return to trend growth while advanced economies are still underperforming. As a result, output gaps and unemployment rates in most economies likely will continue rising through 2010, Lipsky said.
In this context, he said, it should be clear that in most cases, continued strong policy actions will be needed during the remainder of this year and into 2010 in order to insure that economic activity begins a sustained improvement.
He stressed that robust growth will not be achieved until continuing financial sector problems are addressed forcefully. He noted that recent bank stress tests in major advanced economies, especially in the United States and the United Kingdom, have represented a significant step toward rebuilding market confidence and attracting new private capital.
Euro Slides To Multi-day Lows Against Most Majors
The European common currency lost ground against its major rivals on Monday morning in Asia. The euro slumped to multi-day lows against most of them.
Traders are looking forward to the seasonally adjusted Italian industrial orders report for April and the German IFO business climate report for June in the upcoming session.
The euro fell to a 5-day low of 0.8444 against the pound around 9:10 pm ET and the pair is presently worth near 0.845. If the euro slips further, support is seen at the 0.843 level. At Friday's close, the euro-pound pair was quoted at 0.8458.
Latest report from the property website Rightmove showed that the average property asking price in the U.K. eased 0.4% month-over-month in June to 226,436 pounds. Annually, the asking price fell a steeper 5.5%.
Retreating from last week's winning streak, the euro fell to a 4-day low of 133.19 against the Japanese yen by 9:50 pm ET. The euro-yen pair that closed Friday's trading at 134.34 is presently quoted at 133.56 and the next downside target for the pair is seen at the 132.3 level.
The yen gained across the board after the Ministry of Economy, Trade and Industry report showed today that Japan's tertiary industry activity index rose 2.2% month-over-month in April following an upwardly revised 2.8% decline in the previous month. Economists had expected 2.3% growth for the month.
The euro also slipped to a 4-day low of 1.5056 against the Swiss franc around 5:35 pm ET. This may be compared to last week's close of 1.5079. On the downside, the euro-franc pair may likely target the 1.504 level.
Pulling back from Friday's weekly high of 1.4013, the euro declined to 1.3887 against the US dollar by 9:25 pm ET. The euro-buck pair that closed last week's deals at 1.3958 is presently trading at 1.3915.
With little first-tier economic data to consider, attention will likely turn to US Federal Reserve's interest rate decision on Wednesday. Analysts expect the FOMC will retain its base rate at 0.25 percent.
World Bank Lowers Global GDP Forecast; Sees Huge Fall In Intl Capital Flows
The World Bank reduced its global GDP estimate as well as the outlook for most other economies and warned of a large decline in international capital flows amidst financial market fragility and recession.
The Washington-based lender now forecasts the world economy to shrink 2.9% this year, larger than its earlier prediction of a 1.7% decrease. In a report released on June 11, the lender had predicted the economy to shrink close to 3% in 2009. Global GDP is forecast to rebound with 2% growth next year and 3.2% by 2011.
The World Bank expects developing economies to grow 1.2% this year, following a 5.9% growth in 2008. The growth estimate for 2009 is much lower than the 2.1% expansion estimated in March. Following a slow growth in 2009, the bank sees a higher 4.4% growth in 2010 and 5.7% in 2011, albeit subdued relative to the strong performance before the current crisis.
When China and India are excluded, GDP in the remaining developing countries is projected to drop 1.6%, leading to continued job losses and throwing more people into poverty. China's GDP growth is seen at 7.2%, while Indian output growth is projected to be 5.1%. In 2010, India is expected to record 8% growth.
According to the latest Global Development Finance 2009 report, net private capital inflows to developing countries dropped to US$707 billion in 2008 amidst global economic recession and financial market fragility. Further, international capital flows are estimated to drop again in 2009 to US$363 billion.
Justin Lin, World Bank Chief Economist and Senior Vice President, Development Economics said, "The need to restructure the banking system, combined with emerging limits to expansionary policies in high-income countries, will prevent a global rebound from gaining traction."
Policy measures adopted by a number of large economies helped to avoid systemic collapse. The lender stressed the importance of concerted global action while the crisis is underway. The bank said as the world is entering an era of slower growth, it requires tighter and more effective oversight of the financial system.
High income nations like OECD countries are estimated to shrink 4.2% in 2009, while the decline in the U.S. is seen at 3% and that in Japan at 6.8%.
The World Bank also lowered its growth forecast for East Asia and the Pacific region from its initial growth forecast of 5.3%. The World Bank noted that this region experienced the full brunt of the crisis due to its close trade links with high income nations and as well as declining investment. The region is now estimated to grow 5% this year, with recovery across the region expected to start in the second half of 2009 and into 2010. But, the turnaround is set to be gradual as the regional GDP is projected to rise 6.6% in 2010 and 7.8% by 2011.
The World Bank said Europe and Central Asia was the most adversely affected region by recent developments. Huge current account deficits and domestic overheating resulted in the reversal of capital flows. For this region, the lender sees 4.7% contraction in 2009, while it is expected to expand around 1.6% next year. The bank revised down the estimate for 2009 from a 2% fall predicted in late March.
Meanwhile, South Asia experienced a significant decrease in capital inflows and a a falloff in investment growth. An annual growth of 4.6% is estimated for the region, down from 6.1% in 2008. In 2010, output is predicted to grow 7% and 7.8% in 2011.
The Middle East and North Africa region growth is predicted to halve to 3.1% this year. Though this region is less directly affected by the credit crunch than other regions, local equity property markets came under immense pressure. The economy is set to expand 3.8% in 2010 and 4.6% in 2011.
At the same time, the Sub-Saharan Africa was adversely influenced by reduced external demand, plunging export prices, weaker remittances, tourism revenues and lower capital inflows. Growth is estimated to slow sharply this year to 1%, down from an average growth of 5.7% in the last three years.
why news not update so long?
Euro Shows Mixed Trading Against Majors
Friday, the European currency climbed to a 2-day high against the US dollar and the Japanese yen. On the other hand, the euro pared its Asian session gains against the British pound, while showed choppy trading versus the Swiss franc.
In economic news from Europe, Germany's Federal Statistical Office said in a report that the import price index dropped 10.4% year-over-year in May, compared to the 8.6% fall in the previous month. This was the highest price decline since February 1987. Economists were looking for a decline of 10.3%. On a monthly basis, import prices remained unchanged in May, after falling 0.8% in April. Economists had predicted an increase of 0.3%.
Meanwhile, the French statistical office INSEE said in a report that the consumer confidence stood at minus 37 in June, up from minus 40 in May. Economists had expected a reading of minus 39 for June.
Also, the French statistical office INSEE confirmed a 1.2% sequential contraction for its economy in the first quarter. At the same time, the statistical agency revised the figure for the fourth quarter to show a fall of 1.4% from a 1.5% contraction reported initially.
A report by France's Ministry of Labor and Employment showed today that the number of unemployed persons increased by 1.5% or 36,400 in May from the preceding month. Year-on-year, the number of unemployed persons increased by 26.4%. During the month, there were 2,543,100 unemployed persons.
Against the US dollar, the European currency edged higher during early deals on Friday. At 6:45 am ET, the euro-dollar pair reached a 2-day high of 1.4092, compared to 1.3989 hit late New York Thursday. If the pair gains further, 1.424 is seen as the next target level.
The single currency lost ground after hitting a high of 0.8573 against the British pound at 1:15 am ET Friday. The euro-pound pair is currently trading at 0.8539 with 0.843 seen as the next target level. The pair closed Thursday's North American session at 0.8548.
The 16-nation currency largely bounced between 1.532 and 1.529 against the Swiss franc during today's early deals. The euro-franc pair is now worth 1.5307, compared to Thursday's closing value of 1.5304.
KOF economic think tank said its economic barometer for Switzerland rose to minus 1.65 in June from May's revised reading of minus 1.85. Meanwhile, economists had expected the indicator to rise to minus 1.75.
Against the Japanese yen, the euro traded higher during Friday's early deals. At 2:40 am ET, the euro-yen pair hit a 2-day high of 134.96, compared to yesterday's closing value of 134.26. The next upside target level for the pair is seen around 137.2.
Japan's consumer prices dropped sharply in May compared to the year-ago period, mainly due to lower prices for utilities, transport and communication, official data showed today.
Data released by the Ministry of Internal Affairs and Communications said consumer prices fell 1.1% year-on-year in May, coming in line with economists' estimate, after a 0.1% drop in the previous month. Consumer prices declined for the fourth consecutive month in May.
Japan's index of all industry activity dropped 9.9% year-on-year in April, slower than a 11.9% fall in the preceding month, the Ministry of Economy, Trade and Industry said today. The index has been declining on an annual basis continuously since March 2008.
Traders are now likely to focus on the North American session, in which the U.S. Bureau of Economic Analysis is due to release its personal income & outlays report for May at 8:30 am ET. Economists estimate the report to show that personal income rose 0.2% and the personal spending increased 0.4% in the month.
At 10:00 am ET, the Reuters/University of Michigan's final report on the consumer sentiment index for June is scheduled to be released. Consumer confidence is expected to rise in the month, with economists forecasting an increase in the index to 69 from the previous month's reading of 68.7.
oh, updated! that is good.
US Dollar Ticks Up Following May Personal Income Report
The greenback, which slumped to multi-day lows against most majors just before the release of the US Commerce Department report on personal income, started trending higher following the report. As of now, the dollar is trading at 95.42 against the Japanese yen, 1.0847 versus the Swiss franc, 1.6491 against the pound and 1.4083 against the euro.
The report showed that personal income jumped 1.4 percent in May following an upwardly revised 0.7 percent increase in April. Economists had expected income to rise 0.3 percent compared to the 0.5 percent growth originally reported for the previous month.
Additionally, the Commerce Department also said that personal spending rose 0.3 percent in May after coming in unchanged in the previous month. The moderate increase in spending came in line with economist estimates.
U.K. House Prices Rise For Second Straight Month.
Tuesday, the Nationwide Building Society said house prices in the U.K. rose 0.9% in June from the prior month, following a 1.3% increase in May. On a yearly basis, house prices were down 9.3% versus May's 11.3% decline. The price of a typical house totaled GBP 156,442 in June.
Martin Gahbauer, Nationwide's Chief Economist said, "If the pattern of price movements seen in the first half of the year is repeated over the second half, then prices could show only a small single digit fall for 2009 as a whole."
In the second quarter, all regions see moderation in annual rate of price decline. For U.K. as a whole, house prices rose 1.1% between first and second quarter. House prices were down 11.7% annually, slower than the 16.5% fall seen in the first quarter.
Dollar And Yen Plunge On Improving Risk Appetite
Tuesday in Asia, the U.S. dollar and the Japanese yen plummeted against their key counterparts as hopes of an economic recovery increased risk appetite to buy higher-yielding assets.
The dollar and the yen are viewed as safe-haven currencies and tend to attract buying when worries about the global economy and financial markets flare up, but can come under pressure when such concerns recede.
Asian stock markets are broadly higher today, taking their cue from gains on Wall Street with energy stocks buoyed by a continued rise in crude oil prices.
Japan's Nikkei 225 was up 1.9%, Australia's S&P/ASX 200 was 1.5% higher, Korea's Kospi Composite Index was up 0.8%, Hong Kong's Hang Seng was up 1.4%, China's Shanghai Composite was 0.1% higher and Taiwan shares were up 0.9%.
Japan's Nikkei average rose 1.9 percent today, and briefly it hit 10,000 as surging crude prices boosted trading houses such as Mitsubishi Corp., which deal in oil, amid growing optimism that economic recession may be easing.
The 225-issue Nikkei Stock Average gained 184.57 points, or 1.89 percent, from Monday to 9,968.04 in the morning session after briefly touching 10,000.30. The benchmark index last topped the 10,000 line on June 15, logging an intraday high of 10,126.55.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 14.32 points, or 1.56 percent, to 929.64.
Stock market gains are fueling risk appetite in the currency markets, sending the euro, aussie and kiwi higher.
Sentiment in Japan was helped by news that household spending in May rose 0.3% on year, up for the first time in 15 months, and beating expectations for a 1.5% decline.
But that was tempered by the release of the May jobless rate, which rose to 5.2%, the highest since September 2003, from 5.0% in April. Analysts had expected an increase of 5.1% for May.
The job-to-applicant ratio came in at a record low of 0.44, compared to forecasts for 0.45 after the 0.46 level in April.
But the number of employed persons rose from 63.22 million in April to 63.42 million in May. The job participation rate was 60.5 percent, up from 60.4 percent a month earlier.
The Organization for Economic Cooperation and Development last week forecast Japan's jobless rate will rise to an unprecedented 5.8 percent in 2010.
In Asian trading on Tuesday, the yen fell to a 2-week low of 159.97 against the pound. This may be compared to yesterday's close of 159.15. If the yen weakens further, it may likely target the 162.6 level.
The yen has declined 4% against the pound after it reached a 3-week high of 154.13 on June 23.
The yen tumbled to a 15-day low of 135.97 against the euro during Asian deals on Tuesday. The next downside target level for the Japanese currency is seen at 138. At yesterday's close, the euro-yen pair was quoted at 135.32.
The euro gained 1% against the yen yesterday after a report showed that the Euro-zone economic sentiment rose more than expected in June.
The economic sentiment indicator rose to 73.3 from an upwardly revised reading of 70.2 recorded in May. Meanwhile, economists had expected the index to rise to 71 from May's initially reported reading of 69.3.
Against the Swiss franc, the yen slipped to a 6-day low of 89.14 in Asian deals on Tuesday. On the downside, 89.8 is seen as the next target level for the yen. The franc-yen pair was worth 88.80 at Monday's New York session close.
After hitting a 1-month high of 86.89 against the franc on June 24, the yen has been declining and it has lost more than 2% thus far.
The dollar also weakened today on optimism the global slump is waning, reducing the currency's appeal as a refuge.
During Asian deals on Tuesday, the dollar plunged to 1.6663 against the pound. This set the lowest level for the dollar since June 03. If the dollar slides further, it may likely target a new multi-month low of 1.70. The pound-dollar pair closed yesterday's trading at 1.6567.
The pound rose as U.K. consumers became much more upbeat about the economy's prospects over the next 12 months in June, boosting the overall measure of confidence for the fourth time in five months.
Consumers seem to believe that the measures taken by the government and the Bank of England to support the economy are likely to work, and indicating that they in turn won't cut back on spending as sharply as many economists had expected.
Polling firm GfK NOP said today that the headline measure of consumer confidence rose to -25 in June from -27 in the previous month. The index was in line with economists' expectations. At the same time, the index came in better than the minus 34 registered in June last year.
The dollar plummeted to a 7-month low of 1.6666 against the pound on June 03. Although the dollar gained thereafter, it pulled back again after reaching a 12-day high of 1.5805 on June 08.
However, the pound-dollar pair largely bounced between 1.6212 and 1.6623 for the past two weeks, but the pair moved off the range today.
The dollar slumped to a 4-day low of 1.0802 against the Swiss franc and a 6-day low of 1.4133 against the euro in Asian deals on Tuesday. If the dollar drops further, it may likely target 1.065 against the franc and 1.418 against the euro. The euro-dollar pair closed trading at 1.4089 and the dollar-franc pair at 1.0823 on Monday.
Extending yesterday's 1% gain, the dollar surged up against the yen in today's early Asian deals and reached a 5-day high of 96.33 at 8:05 pm ET. But the dollar fell thereafter and the pair is currently trading at 95.69, down from yesterday's New York session close of 96.06. The near term support level for the U.S. currency is seen at 95.1.
Traders are now likely to focus on the European session, in which the Swiss May UBS consumption indicator, French May PPI, German June unemployment rate, Euro-zone M3 money supply for May and CPI for June, Italian CPI for June and PPI for May, U.K. final first quarter GDP estimate and current account reports are expected.
From the U.S., the S&PCase-Shiller home price index for April and the consumer confidence report for June are due in the North American session.
German May Retail Sales Decline Further
Wednesday, Germany's Federal Statistical Office announced that the retail sales in real terms dropped 2.9% year-over-year in May, compared with a 0.3% fall in April, revised from 0.8% decline reported initially. Economists were looking for a decline of 1.5%. A year earlier, retail sales were up 1.4%.
Month-on-month, retail sales increased 0.4% in May, after rising 0.5% in April. Economists had expected an increase of 0.5%.
For the first five months of the year, retail sales grew 2.3% compared to the same period of the previous year.
In nominal terms, retail sales dipped 3.2% year-on-year in May, compared with a 0.4% fall in April, revised from 0.9% drop estimated initially. On a monthly basis, retail sales were up 0.5%, after rising 0.9% in April. During the January to May period, retail sales were up 2.4% over a year ago.
Greenback Declines Against Majors
The US dollar that edged slightly higher against its major rivals immediately after the ADP employment report lost ground shortly. As of 8:30 am ET, the greenback drifted lower to 96.67 against the Japanese yen, 1.0795 against the Swiss franc, 1.6494 against the pound and 1.4123 against the euro.
The ADP report showed that non-farm private employment fell by 473,000 jobs in June following a revised decrease of 485,000 jobs in May. Economists had expected a decrease of 394,000 jobs compared to the loss of 532,000 jobs originally reported for the previous month.
Eurozone Retail Sales Fall Further In May.
Retail sales in the Eurozone declined 3.3% year-on-year in May, faster than a revised 2.5% drop in the preceding month, the Eurostat said Friday. Economists expected sales to fall 2.7%.
Excluding automotive fuel, retail sales dipped 2.7% in May compared to a 1.8% fall in April.
Month-on-month, retail sales were down 0.4% in May, reversing a 0.1% rise in the preceding month. Economists expected a drop of 0.1%. Retail sales excluding automotive fuel declined 0.4% compared to a 0.1% growth in April.
Greenback Falls Versus Euro, Sterling Thursday Morning
The dollar pulled back versus the euro and sterling but managed to stabilize against the resurgent yen Thursday morning in New York, as traders looked ahead to weekly jobless claims figures.
Yesterday, The Group of Eight largest industrialized nations meeting in L'Aquila released a statement recognizing serious downside risks to the global economy.
Still, stock futures on Wall Street crept ahead Thursday morning on Wall Street, fueling renewed risk appetite. Alcoa kicked off earnings season with a better than expected result.
The dollar gave back some of its recent gains versus the euro and sterling. Versus the euro, the dollar dropped to 1.3980, falling more than a penny from its 3-week high of 1.3832.
The dollar plunged versus the sterling, dropping to 1.6260 from a monthly high of 1.5982.
Thursday, the Bank of England retained its key interest rate and decided to continue with its asset purchase scheme totaling GBP 125 billion by utilizing central bank reserves.
At the end of the two-day rate setting meeting, the Monetary Policy Committee decided to hold the Bank Rate at 0.5% as expected. The rate now stands at the lowest since the central bank was established in 1694.
The dollar steadied versus the yen,, holding near 93 after plummeting to a 5-month low of 91.79.
Despite nagging rumors that G8 leaders would discuss an alternative to the dollar as the world's de facto reserve currency, there was no mention of a new international currency in the statement released following the first day of meetings in Italy.
A Labor Department report on the number of first time claimants for unemployment benefits is likely to be in the radar, given the linkage jobs and wage growth has got with consumer spending. Economists expect the report to reveal a decline in claims in the recent reporting week. Additionally, the results of the Treasury auction of $11 billion worth of 30-year bonds may also be closely watched.
Spain Consumer Prices Drop Further In June.
Consumer prices in Spain fell 1% year-on-year in June, faster than a 0.9% drop in the preceding month, the National Statistics Institute said Friday. This came in line in with economists' expectations.
On a monthly basis, consumer prices climbed 0.4% in May, after remaining flat in the preceding month. Moreover, the rise matched economists' expectations.
Meanwhile, the harmonized index of consumer prices decreased 1% annually in June compared to a 0.9% fall in May. The decline matched the first estimate made on June 29, and also came in line with economists' expectations.
On a monthly basis, the HICP was up 0.5%, after being flat in May. Economists expected the prices to rise 0.4%.
Dollar Strengthens Against European Majors
Friday morning in Asia, the U.S. dollar advanced against the currencies of Europe, U.K. and Switzerland. On the other hand, the dollar pared its recent gains against the Japanese yen.
Leaders of the world's biggest developed and emerging nations avoided a debate over the dollar's role in the global economy as they agreed not to devalue their currencies to promote their exports.
With officials from Brazil, India, China and Russia pushing consideration of alternative reserve currencies, their joint statement's language on foreign exchange echoed an agreement at an April summit of the Group of 20.
The leaders agreed to "refrain from competitive devaluations of our currencies," according to the statement released after their meeting yesterday at the G-8 summit in L'Aquila, Italy. They also agreed to "promote a stable and well-functioning international monetary system."
The global financial crisis and the surge in U.S. borrowing have prompted Russian President Dmitry Medvedev to advocate diversification away from the dollar. Russia and its counterparts have yet to come up with a viable alternative.
The dollar that closed yesterday's trading at 1.4025 against the euro rose to 1.3969 during early Asian deals on Friday. The near term resistance level for the U.S. currency is seen at 1.389.
A report from the U.S. Labor Department showed yesterday that first-time claims for unemployment benefits decreased substantially in the week ended July 4th.
The report showed that jobless claims fell to 565,000 from the previous week's revised figure of 617,000. Economists had been expecting a more modest decrease to 603,000 from the 614,000 originally reported for the previous week.
In early Asian trading on Friday, the dollar climbed to 1.6273 against the pound. This may be compared to yesterday's close of 1.6339. On the upside, 1.61 is seen as the next target level for the dollar.
Against the Swiss franc, the dollar gained in early Asian deals on Friday. At 10:45 pm ET, the dollar-franc pair reached 1.0830, up from yesterday's 1.0783. If the pair advances further, it may likely target the 1.092 level.
The dollar strengthened to 93.20 against the yen at 7:50 pm ET Thursday. Thereafter, the dollar-yen pair slipped and it is presently trading near yesterday's close of 92.99. The next downside target level for the pair is seen at 91.8.
An index measuring the prices of domestic corporate goods fell 6.6 percent on year in June, the Bank of Japan said today, marking the fastest pace of decline on record.
Analysts had been expecting a fall of 6.4 percent on year following the revised 5.5 percent decline in May. On a monthly basis, the prices for corporate goods eased 0.3 percent versus expectations for a 0.1 percent decline. The May reading was revised from -0.4 percent to -0.5 percent.
The industrial production reports from France and Italy as well as the French current account-all for the month of May are scheduled for release in the European session today.
From the U.S., the trade balance for May, import and export price indexes for June and the Reuters/University of Michigan's preliminary consumer confidence report for July are expected in the New York session.
Singapore Dollar Mixed In Trading Against Majors.
Monday in Asia, the Singapore dollar showed mixed trading against its major counterparts. While the Singapore dollar weakened against the US and Hong Kong dollars, it gained against the pound and the euro. The Singapore dollar thus rose to a 4-day high against the pound.
During Asian deals on Monday, the Singapore dollar declined against the Hong Kong dollar. At 1:05 am ET, the pair touched 5.2923, down from Friday's close of 5.2996. The next target level for the Singapore dollar is seen at 5.287.
After a brief uptrend, the Singapore dollar slipped against the U.S. currency during Asian deals on Monday. The pair moved from 1.4598 to 1.4648 by about 1:05 am ET. If the Singapore dollar drops further, it may likely target the 1.466 level. At last week's close, the pair was quoted at 1.4623.
In Asian trading on Monday, the Singapore dollar rose to 2.0371 against the euro. This may be compared to last week's close of 2.0382. The near term resistance level for the Singapore dollar is seen at 2.030.
The Singapore dollar that closed Friday's trading at 2.3711 against the pound climbed to a 4-day high of 2.3575 in Asian deals on Monday. On the upside, 2.341 is seen as the next target level for the Singapore dollar.
New Car Registrations In Europe Rise For First Time In 14 Months.
Wednesday, the European Automobile Manufacturer's Association said Europe's new passenger car registrations in June rose for the first time in fourteen months, reflecting effects of incentive schemes implemented in more than 10 EU Member States.
New passenger car registrations rose 2.4% year-on-year in June after falling 4.9% in May. A year ago, registrations were down 7.9% in June.
During the first half of 2009, new car registrations dropped 11% compared to the same period in 2008, with a total of 7,425,762 new cars registered compared to 8,346,828 the year before.
French CPI Logs Y-o-Y Fall For Second Month.
Thursday, the French statistical office INSEE reported that the consumer price index dropped 0.5% year-on-year in June, after recording the first annual fall since 1957 in May. Prices were down 0.3% from last year in May. Economists were looking for a year-on-year decline of 0.4% for June.
Month-on-month, consumer prices rose 0.1% in June, after climbing 0.2% in the previous month. Economists expected a 0.3% increase in consumer prices.
The CPI excluding tobacco edged up 0.1% month-on-month, while it fell 0.5% from a year ago.
The harmonized CPI or the HICP declined 0.6% year-on-year in June, doubling the 0.3% fall recorded in the previous month. Economists were looking for a 0.5% drop. From May, the index moved up 0.1%. Euro area annual inflation turned negative for the first time on record in June. Prices in the 16-nation bloc fell 0.1% year-on-year.
Following the decline in consumer prices in May, Economy Minister Christine Lagarde said the French economy did not enter into deflation and the temporary decline in prices would support consumption given the rise in unemployment. However, most economists expect the headline inflation to remain negative in the coming months.
British Pound Slumps Against Majors
During early European deals on Friday, the British pound edged down against its major counterparts despite a rise in Britain's leading share index. The pound thus declined to a 2-day low against the US dollar and the Japanese yen, 4-day low versus the European currency and a 3-day low against the Swiss franc.
European stocks extended their upward trend today in anticipation of strong earnings from U.S. banks Citigroup and Bank of America and industrial bellwether General Electric after better-than-expected earnings from IBM and Google buoyed investor confidence.
By 3:14 am ET, the FTSE 100 .FTSE index was up 22.23 points at 4,384.07.
Against the US dollar, the British pound traded down during early deals on Friday. At 3:10 am ET, the pound-dollar pair touched a 2-day low of 1.6305, compared to 1.6440 hit late New York Thursday. If the pair falls further, 1.603 is seen as the next target level.
The British pound that closed Thursday's North American session at 0.8610 against the European currency declined to 0.8641 at 3:05 am ET Friday. This set a 4-day low for the pound. The next downside target level for the sterling is seen around 0.886.
Against the Swiss franc, the British currency edged down during Friday's early deals. At 3:10 am ET, the pound-franc pair slipped to a 3-day low of 1.7591, compared to Thursday's closing value of 1.7645. The pair is currently trading at 1.7606 with 1.704 seen as the next target level.
U.K.'s sterling that closed Thursday's New York deals at 154.44 against the Japanese yen dropped to a 2-day low of 152.59 at 3:10 am ET Friday. On the downside, 149.9 is seen as the next target level for the pair.
Today, the Cabinet Office of Japan in a final report revised down the leading index for May to 76.9 from 77 reported on July 6. Economists expected the index to come in at 76.8. In April, the index stood at 76.2.
At the same time, the coincident index was revised up to 87.1 from 86.9 estimated initially, and came in higher than the reading of 86 in April. The lagging index was also revised up, to 84.1 from 84, but was down from 86.3 in the preceding month.
In the upcoming hours, Italian industrial orders, Euro-zone trade balance and construction output reports- all for the month of May are due for release.
Across the Atlantic, the US Census Bureau will release its housing starts and building permits data for June at 8:30 am ET. Analysts foresee the housing starts to drop 530,000 in June from 532,000 in the previous month, while the number of new building permits to rise 524,000 from 518,000 in May.
US Dollar Falls Against European Majors; Hits 3-day High Against Japanese Yen.
During early deals on Thursday, the US dollar showed weakness against the European currency, the British pound and the Swiss franc as a rise in Asian stock prices reduced demand for currencies perceived as safe havens. The dollar thus slipped to a 2-day low against the euro and the pound.
The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.
On the other hand, the US currency rose to a 3-day high against the Japanese yen due to across the broad weakening of the latter.
Yesterday, Federal Reserve Chairman Ben Bernanke redelivered his address regarding monetary policy before the Senate Banking Committee while also fielding questions regarding the current and near-term economic outlook.
In his prepared remarks, Bernanke reiterated that the U.S. economy is showing signs of stabilization, although he noted that the economy is still in a fragile state, with unemployment high and consumer spending shaky.
Questioning the Fed chief, Sen. Chris Dodd, D-Conn., the chairman of the Senate Banking Committee, noted that while some signs of economic recovery have been seen on Wall Street, the benefits have yet to make it to Main Street.
Dodd noted that although big banks that received government bailouts are now posting profits, consumer and small business lending remains sluggish, with many Americans still concerned about reports of executive bonuses at the same time layoffs are being made.
Bernanke conceded that unemployment is "the most pressing issue" facing the Fed, but he noted that there are steps that Congress could take to ease the situation, similar to the already-passed extension of unemployment benefits.
He said one serious concern was that the long-term unemployed might see their job skills atrophy, leaving them unqualified for work once the economy recovers. Extending job training programs might be one response Congress should consider, the Fed chief said.
Against the European currency, the US dollar edged down during early deals on Thursday. At 2:30 am ET, the dollar touched a 2-day low of 1.4267 against the euro, compared to 1.4221 hit late New York Wednesday. The next downside target level for the dollar is seen around 1.433.
The US currency that closed Wednesday's North American session at 1.6490 against the British pound declined to 1.6519 at 2:05 am ET Thursday. This set a 2-day low for the dollar. The pound-dollar pair is currently trading at 1.6509 with 1.672 seen as the next target level.
Against the Swiss franc, the greenback edged down during Thursday's early deals. At 2:05 am ET, the dollar-franc pair slipped to 1.0642, compared to Wednesday's closing value of 1.0634. If the pair falls further, 1.049 is seen as the next target level.
The US dollar that closed Wednesday's New York deals at 93.68 against the Japanese yen rose to a 3-day high of 94.43 at 2:10 am ET Thursday. On the upside, 95.0 is seen as the next target level for the dollar-yen pair.
The Japanese yen declined after a report showed today that Japan's trade surplus rose less than expected.
Japan posted a merchandise trade surplus of 508 billion yen in June, the Ministry of Finance said today. That was well shy of analyst expectations for a surplus of 610 billion yen, but significantly higher than the 299.8 billion yen surplus in May.
Merchandise imports fell 41.9 percent on year, versus forecasts for a 42 percent annual decline after the 42.4 percent annual decline in the previous month. Merchandise exports were off 35.7 percent on year, in line with forecasts for a 35.1 percent decline after the 40.9 percent annual contraction a month earlier.
The adjusted merchandise trade balance came in at 438.2 billion yen. Analysts had expected a surplus of 480.8 billion yen after showing a 222.4 billion yen surplus in May.
In the upcoming hours, the French July business confidence indicator, Euro-zone May current account, Italian May retail sales and the UK June retail sales are due for release.
Across the Atlantic, the Labor Department is due to release its customary weekly jobless claims report for the week ended July 18th at 8:30 AM ET.
The National Association of Realtors is scheduled to release its report on existing home sales for June at 10 AM ET . Economists estimate existing home sales of 4.80 million for the month.
East Asian Economies In Transition Phase From Recession To Recovery: ADB
Thursday, in its July issue of the Asia Economic Monitor, the Asia Development Bank noted that the East Asian Economies had already entered the transistion from recession to recovery, although the economic growth was continuing to slow this year.
"Emerging East Asia could see a V-shaped recovery, with growth dipping sharply in 2009 before regaining last year's pace in 2010," Jong-Wha Lee, ADB Chief Economist and Head of the Office of Regional Economic Integration said.
However, the report cautioned saying that given the tentative nature of the expected recovery, it was critical for authorities to continue to follow measures which would support domestic demand and growth. "Monetary and fiscal policies in the region need to remain accommodative until the recovery gains substantial traction", the ADB said.
"Emerging East Asia should reinforce cooperation in enhancing financial stability by accelerating regional initiatives, and actively participate in designing the new global financial architecture", it added.
Moreover, the ADB pointed out that deep recessions in the U.S,Europe and Japan would continue to hurt emerging Easing Asian economies, particularly the smaller one that were highly reliant on exports. However, larger economies like China, that had implemented major fiscal packages were begining to see some results from the stimulus packages.
Dollar Nearing December 2008 Lows Versus Euro
The dollar came under further pressure versus the euro and continued its trek toward parity against the surging loonie Monday morning in New York.
Rising global stocks and speculation that the economy is on the mend have fueled increased appetite for riskier higher yielding currencies.
Traders were looking ahead to a fairly busy week on the economic front, kicked off by the Commerce Department's new home sales report for June.
The consensus estimate for the report coming at 10 AM ET this morning calls for an increase in new homes sales to 352,000.
New home sales declined 0.6% in May from the previous month to a seasonally adjusted annual rate of 342,000.
The dollar remained on the defensive versus the euro, dropping to an 8-week low of 1.4296, just shy of its lows from last December. A move to 1.4340 would take the dollar to its lowest level since the last week of 2008.
There was no relief for the dollar versus the scorching-hot loonie. Amid growing evidence that the Canadian economy is in much better shape than its neighbor to the south, the dollar dropped to C$1.0780, its lowest level since September 2008.
The dollar extended its run of choppy trading versus the sterling, easing to 1.6500 after seeing some modest strength late last week.
Versus the yen, the dollar firmed up slightly to 95.20, staying near a monthly high of 95.28.
In economic news from around the globe, German consumer confidence for August improved strongly, suggesting a recovery in the economy that is hit hard by recession.
According to the latest consumer climate survey from the market research firm GfK, the forward-looking consumer sentiment index rose to 3.5 points for August.
Monday, the quarterly report from the Bank of England said the continued asset purchases in the second quarter were accompanied by signs of improvement in the corporate credit markets.
US Dollar Steady Ahead Of May S&P/Case-Shiller Home Price Report.
The S&P/Case-Shiller home price index, which tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S., is scheduled to be released at 9:00 AM ET. Economists expect a 17.8% year-over-year decline in the 20-city composite house price index for May.
The US dollar held steady against its major opponents ahead of the report. As of 8:55 am ET, the greenback was worth 1.4234 against the euro, 94.66 versus the yen, 1.0698 against the franc and 1.65 per pound.
IMF Advises Indonesia To Continue Stimulus Measures In 2010
The International Monetary Fund welcomed Indonesia's fiscal stimulus plan for 2009, underscoring timely and efficient implementation of the spending program. The Washington-based agency urged Indonesia to maintain some of the stimulus measures next year.
The Executive Board of IMF noted that private consumption supported by the fiscal stimulus package helped to maintain positive economic growth. However, another round of global risk aversion could adversely affect nation's external liquidity, demand and growth prospects. To withstand these risks, the authorities should strive to achieve the appropriate policy mix and promptly adjust it as needed to preserve macroeconomic and financial stability.
The board assessed that the current level of the real effective exchange rate is broadly in line with fundamentals and that reserves are at a comfortable level. Some others believed that the current level of reserves and the various contingency arrangements should provide an adequate cushion.
Regarding inflation, the fund said, "Strong commitment to the medium-term inflation targets, as well as publication of inflation forecasts, would help guide inflation expectations and enhance policy credibility."
Eurozone Economic Sentiment Rises For Fourth Straight Month In July.
Eurozone economic sentiment improved for the fourth consecutive month in July, a monthly survey from the European Commission showed Thursday. The index stood at 76, up from a revised reading of 73.2 recorded in the prior month. Economists were expecting the indicator to climb to 75. However, the level is still far below the long-term average.
Industrial and services confidence improved 2 points each to minus 30 and minus 18, respectively. Consumer confidence also climbed 2 points to minus 23 in July. At the same time, construction remained at the June level of minus 33. Confidence amongst retailers moved up by 4 points to minus 13.
Separately, the EU said the business climate indicator for the euro area increased to minus 2.71 in July from minus 2.92. But the level is still very low, even when compared to the previous historical lows of 1993.
Trust In Business Recovering In World Markets: Survey
The public's trust in business has stabilized and is recovering significantly in some of the world's largest markets, results of a survey conducted by Edelman, a leading independent public relations firm, showed Thursday.
Edelman's previous survey, conducted in January, showed a devastating loss in trust in the private sector.
The mid-year survey was conducted among 1,675 informed public in six countries - the U.S., the U.K., France, Germany, India, and China.
The survey found that India and China are the most positive about business. At 75%, India recorded the highest level of trust in business of any of the six countries surveyed. China followed with 60% saying they trust business to do what is right.
"The private sector is perceived as enabling an economic growth that has led to healthier living standards. The survey numbers reflect a high degree of national pride in the accomplishments of business," said Alan VanderMolen, president, Asia Pacific, Edelman.
In the U.S., 48% of informed public trust business to do what is right, up from a low of 36% in January. The figure for France rose to 41% from 30%.
"Trust in business is on the way back, but we're still in the middle of the game," said Richard Edelman, president and CEO, Edelman.
The public's trust in government rose the most in India, an increase of 13 points to 55% followed by the U.S., where the trust barometer rose 12 points to 42%.
German Retail Sales Fall Unexpectedly In June
German retail sales dropped unexpectedly in June despite rising consumer confidence and low price level as recession continued to put pressure on consumer spending.
According to a provisional report from the Federal Statistical Office, retail sales for June recorded a surprise monthly decrease of 1.8% in real terms, following a revised 1.3% drop in May. Economists were looking for a 0.3% rise.
Year-on-year, sales slipped 1.6% in June, smaller than a revised 3.7% fall seen in May. The annual decline was also unexpected as economists were looking for an increase of 0.9%.
For the January to June period, retail turnover dropped 2.1% in real terms compared to the corresponding period of the previous year. Sales were down nominally by 2.3%.
In nominal terms, retail sales dipped 2% year-on-year and 1.6% from the prior month in June.
Simon Junker, Commerzbank analyst said in a note that German retail sales proved to be stable despite severe recession, probably because of the still stable labor market and the low price level. The crisis has reached retail too, supporting the judgment that the largest Eurozone economy shrunk again in the second quarter, albeit only moderately, he said.
According to the analyst, the German economy would possibly pick up in the months ahead, though retail may not benefit very much in the coming months. At most, the favorable price trend could strengthen purchasing power and support sales. However, rising unemployment would dent retail sales again.
German unemployment decreased in July, which was the first decline since October 2008. Meanwhile, the jobless rate stood at 8.3%, unchanged from June.
Consumer confidence and business climate in the economy showed improvements in recent months as a result of Chancellor Angela Merkel's spending plan. Merkel is seeking a second-term in office in September elections.
Dollar Shows Mixed Trading Against Majors.
Tuesday in Asia, the U.S. dollar showed mixed trading against its major counterparts. While the dollar recovered from a new multi-month low against the pound, it remained higher against the euro and the franc. On the other hand, the dollar eased from a 4-day high against the yen.
Data showed yesterday that the U.S. manufacturing sector continued to shrink in July but at a slower pace than in June. The Institute for Supply Management said its index of national factory activity rose to 48.9 in July from 44.8 in June, beating economists' expectations. A reading below 50 indicates contraction.
Meanwhile, a report from the U.S. Commerce Department revealed that construction spending rose 0.3% percent in June following a revised 0.8% slide in May. Economists were expecting a decline of 0.5% for the month.
The dollar strengthened against the pound after hitting a new multi-month low of 1.7005 at 9:35 pm ET Monday. At present, the pound-dollar pair is trading near yesterday's North American session close of 1.6933 with 1.682 seen as the next target level.
During Asian deals on Tuesday, the dollar edged up against the currencies of Europe and Switzerland. Currently, the dollar is worth 1.0626 against the franc and 1.4379 against the euro, compared to yesterday's close of 1.6933 and 1.4419, respectively. If the dollar climbs further, it may likely target 1.074 against the franc and 1.421 against the euro.
The dollar jumped to a 4-day high of 95.48 against the yen at 9:45 pm ET Monday. Thereafter, the dollar-yen pair weakened and it is now worth 95.08, down from yesterday's close of 95.28. The next likely target for the U.S. currency is seen at 94.6.
The monetary base in Japan was up 6.1 percent on year in July to 93.209 trillion yen, following the 6.4 percent annual expansion in June, the Bank of Japan said today. Seasonally adjusted, the monetary base fell 6.9 percent on year to 93.918 trillion yen.
The Swiss July CPI, U.K. July construction PMI and the Euro-zone June PPI are expected in the upcoming European session.
Across the Atlantic, the U.S. Bureau of Economic Analysis is due to release its personal income & outlays report for June at 8:30 am ET. Economists estimate the report to show that personal income declined 1% and the personal spending increased 0.3% in the month.
At 10:00 am ET, the National Association of Realtors is due to release its pending home sales report. Economists estimate a 0.3% increase in the pending home sales index for June.
Indonesian Central Bank Lowers Key Rate By 25 Bps.
Wednesday, the Indonesian central bank decided to lower its key interest rate by 25 basis points as expected for the ninth straight month. The Bank Indonesia reduced its benchmark rate to 6.5% from 6.75%. The decision came in line with economists' expectations.
The central bank said rising domestic demand and high commodity prices may cause inflationary pressure next year. The bank added that monetary policy would be directed to be more anticipative of the potential inflation increase.
Fitch Maintains Stable Outlook For Malaysian Banks' Credit Ratings
Thursday, Fitch Ratings maintained the stable outlook on Malaysia's local banks' credit ratings, despite very weak macro economic indicators.
The firm said the probability of capital impairment for Malaysian banks still appeared fairly low, despite the extremely stressed macro economic conditions and the reasonably-stressed assumptions simulated by the agency. Fitch said this in the context of its report titled "Stress Test on Malaysian Banks", where it attempts to simulate a fairly-stressed scenario for Malaysian banks.
The firm also noted that although banks' earnings were likely to be lower in 2009 and 2010 compared with 2008, they appeared adequate to fully absorb the credit costs associated with asset quality deterioration. This means their loss absorption capacity would likely remain adequate and financial strength largely intact, Fitch said.
Swiss Jobless Rate Rises In July.
Switzerland's unadjusted jobless rate rose to 3.7% in July from 3.6% in June, the State Secretariat For Economic Affairs said Friday. That was in line with economists' expectations.
There were 145,364 unemployed in the country in July, up 5,111 from June and 53,201 from the same month of the previous year.
Youth unemployment rose 3,229 from June to 25,693 and the number of job seekers grew 5,147 to 204,137. There were 14,370 vacancies in July, down 485 month-on-month.
The seasonally adjusted rate of unemployment also increased in July, to 3.9% from 3.8% recorded in June. That was also in line with economists' prediction.
Pace Of Deterioration In U.K. Job Market Slowing: CIPD/KPMG Survey
The pace of deterioration in the U.K. job market is slowing as private sector demand for staff began to stabilize following a surge of redundancies earlier in the year, results of the latest quarterly CIPD/KPMG labor market outlook survey revealed Monday.
The survey of more than 900 employers in all sectors of the economy found that not only are far fewer employers expecting to make staff redundant but the scale of planned redundancies has also reduced. However, signs of improved employer optimism in the private sector are offset by mounting pessimism in the public sector.
"When it comes to the immediate jobs outlook, the best that can be said is that things are getting worse more slowly," John Philpott, chief economist at the CIPD said. But, he warned that "It is far too soon to rule out another avalanche of private sector redundancies later in the year." According to the survey, employment will keep falling and unemployment is still on course to top 3 million in 2010. Due to a fall in expected redundancies, the private sector unemployment would be less compared to the public sector.
The balance of private firms cutting over those recruiting fell to minus 2 from minus 30 recorded in the spring. By contrast, in the public sector the negative balance has increased from minus 3 to minus 28.
Moreover, the survey found that the pay outlook has worsened, with only 15% of respondents planning to conduct a pay review this quarter, compared to 32% in the previous quarter.
Andrew Smith, chief economist at KPMG said, "This conservative approach indicates that business remains unconvinced that current economic green shoots will lead to sustainable healthy growth in the near term."
Average pay increase expectations have dropped below the rate of inflation to 1.7%. Smith said this will result in a reduction in real earnings and could stifle any consumer led recovery.
Yen Extends Uptrend As Asian Stocks Drop
Wednesday, the yen extended its yesterday's uptrend against other major currencies as Asian stocks tumbled today and prompted investors to further liquidate yen short positions ahead of a policy statement from the U.S. Federal Reserve later in the day.
Asian shares plunged today after losses on Wall Street and as investors locked in profits as they waited to hear what the U.S. Federal Reserve would say about prospects for recovery in the world's largest economy.
Japan's Nikkei 225 was down 1.17%, South Korea's Kospi Composite fell 0.87%, Hong Kong's Hang Seng was 1.93% lower while China's Shanghai Composite slipped 2.93% and Taiwan's main index dropped 0.15%.
The Fed will conclude its two-day policy meeting and release a statement around 2:15 pm ET today, with investors looking to its assessment of the economy and whether it unwinds some of the unconventional easing measures currently in place.
There is mounting speculation that Fed might grow more optimistic about a recovery after a better-than-expected jobs report for July.
The U.S. Labor Department report showed that non-farm payroll employment fell by 247,000 jobs in July following a revised decrease of 443,000 jobs in June. Economists had been expecting employment to fall by 325,000 jobs compared to the drop of 467,000 jobs originally reported for the previous month. The Labor Department also said that the unemployment rate unexpectedly edged down to 9.4% in July from 9.5%, recording a decrease for the first time since April 2008.
The Fed has kept its target rate for overnight loans between banks in a range from zero to 0.25 percent since December. The Federal Open Market Committee will keep rates unchanged today, analysts expect. The central bank has bought $252.761 billion of U.S. Treasuries since it announced a six-month plan in March to purchase $300 million of Treasuries to help keep borrowing low.
Japan's corporate goods price index fell at a record pace in July, adding to concerns that deflation in the world's second largest economy is accelerating.
The Bank of Japan's CGPI data, which tracks prices of domestically produced and used goods traded among companies, plunged 8.5% in July from a year earlier, breaking the record 6.7% drop set in the previous month. Moreover, this was the seventh consecutive month of decline.
Today's results will likely heighten fears of persistent price falls in Japan, as overall economic activity has yet to show signs of a full-fledged recovery.
Still, BOJ Governor Masaaki Shirakawa said at a regular press conference on Tuesday that the BOJ doesn't expect Japan to fall into a deflationary spiral now, though "it may take time for falls in prices to end."
On a monthly basis, the domestic CGPI rose 0.4% in July, following the 0.3 percent decline in the previous month.
Meanwhile, a final report from the Ministry of Economy, Trade and Industry showed that Japan's industrial production growth in June came in at 2.3% on a monthly basis, revised down from 2.4% estimated initially. From the previous year, production plunged 23.5%.
The yen that closed yesterday's trading at 96.01 against the dollar strengthened to a 5-day high of 95.35 during Asian deals on Wednesday. The next upside target level for the yen is seen at 94.7.
The yen plunged to near an 8-week low of 97.80 against the dollar on August 07 as the dollar gained 2% on that day following better-than-expected U.S. jobs data.
But the yen is showing strength this week on encouraging economic reports from Japan. Reports showed this week that Japan's current account surplus and the machinery orders rose more than expected in June. Thus far, the yen has advanced 2.5% against the dollar.
In Asian trading on Wednesday, the yen rose to a 9-day high of 134.91 against the euro. This may be compared to yesterday's closing value of 135.84. On the upside, 133 level is seen as the next target for the Japanese currency.
After hitting a 2-month low of 138.73 against the euro on Friday, the yen has appreciated 3% thus far.</p>
<p>The yen jumped to a 12-day high of 157.29 against the pound in Asian deals on Wednesday. If the yen edges up further, it may likely target the 154.2 level. The pound-yen pair was worth 158.21 at yesterday's close.
Thus far this week, the yen has depreciated 3% against the pound.
During Asian deals on Wednesday, the yen soared to a 12-day high of 88.16 against the Swiss franc. The next target level for the Japanese currency is seen at 87.1. At yesterday's close, the franc-yen pair was quoted at 88.78.
The yen that slumped to near an 8-week low of 90.74 against the franc on Friday has gained 3% since then.
In Asian deals on Wednesday , the yen jumped to a 13-day high of 78.47 against the Aussie and an 8-day high of 63.33 against the NZ dollar. The next upside target level for the yen is seen at 77.0 against the aussie and 63.0 against the kiwi. The aussie-yen pair closed trading at 79.63 and the kiwi-yen pair at 64.09 on Tuesday.
Consumer confidence in Australia rose to a near two-year high in August, as reported today by Westpac Bank and the Melbourne Institute. The group said its index of consumer sentiment was up 2.7 percent compared to July, reaching its highest level since October 2007. The index has increased 27.8 percent since May, making it the sharpest three-month gain since the survey's inception in 1975.
Against the Canadian dollar, the yen surged up to a 2-week high of 86.53 in Asian trading on Wednesday. On the upside, 86.3 is seen as the next target level for the Japanese currency. At yesterday's close, the loonie-yen pair was quoted at 87.15.
The loonie declined as oil steadied below $70 a barrel today after four consecutive days of losses as the market waited for a second set of U.S. inventory data and kept an eye on the outcome of the U.S. Federal Reserve's two-day meeting.
U.S. light crude for September delivery rose 9 cents to $69.54 a barrel in Asian deals, having lost $1.15 on Tuesday on Wall Street losses and after the Energy Information Administration (EIA) revised lower its global oil demand forecast. London Brent crude fell 6 cents to $72.40.
Looking ahead, the French July CPI and June current account, Italian final July CPI, Euro-zone June industrial production, U.K. labor market reports as well as the Bank of England's quarterly inflation report are expected to influence trading in the upcoming session.
From the U.S., the trade balance report for June is due at 8:30 am ET.
At the same time, the Canadian June trade balance and new housing price index reports are scheduled for release.
Dollar Declines Against European Majors
The US dollar that showed signs of recovery against most of its major rivals immediately following the release of the S&P/Case-Shiller home price index for June lost ground shortly. As of 9:10 am ET, the greenback drifted lower to 1.0571 against the Swiss franc, 1.6447 versus the pound and 1.4362 against the euro.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 15.4 percent in June compared to a revised 17 percent drop in May. Economists had expected prices to fall 16.4 percent compared to the same month a year ago.
Dollar Rises To New 6-week High Against Pound, 5-day High Against Franc.
The US dollar that staged a rebound in early European trading against its European major rivals extended its rally thereafter.
The greenback rose to a new 6-week high of 1.624 against the pound and a 5-day high of 1.0655 against the Swiss franc by 7:30 am ET, compared to yesterday's closing values of 1.6354 and 1.0618, respectively. Next target levels for the pound-buck pair and dollar-franc pair are seen at 1.62 and 1.07, respectively.
Hovering near yesterday's 4-day high, the dollar advanced to 1.4263 against the European single unit by 7:40 am ET and the pair is likely to find target around the 1.42 resistance level. The euro-buck pair was worth 1.4299 at Tuesday's close.
UK House Prices Rise For Fourth Month In August - Nationwide
House prices in the UK rose for the fourth consecutive month in August, increasing by 1.6% month-on-month on a seasonally adjusted basis, the Nationwide building society said Thursday. Economists had forecast house prices to grow only 0.5% after a revised increase of 1.4% in July.
Compared to the previous year, house prices fell 2.7% in August, much slower than the 6.2% decline seen in July. The average price of a typical UK property stood at GBP 160,224, up from GBP 158,871 in July.
Over the first eight months of 2009, the seasonally adjusted index of house prices has risen by 3.2%, though relative to the October 2007 peak it is down by 14.4%, the Nationwide said.
European Currency Falls From 4-day High Against Dollar And Yen.
During early European deals on Tuesday, the European currency declined from a 4-day high against the US dollar and the Japanese yen. The euro also edged down versus the Swiss franc, while rose to a 5-day high against the British pound.
In economic news from Europe, a key indicator for Eurozone manufacturing activity increased to a 14-month high in August, rising more than initially estimated, a report by Markit Economics said today. However, the sector continued to contract, though at a slower pace. The final Markit Manufacturing Purchasing Managers' Index or PMI climbed to 48.2 in August from 46.3 in July. The index also stood above the flash estimate of 47.9. The final reading came in above the flash for the fifth month running.
Eurostat said in a report that Eurozone jobless rate stood at 9.5% in July, up from 9.4% in the previous month. This was the highest jobless rate since May 1999. The jobless rate came in line with economists' expectations. A year ago, the jobless rate was 7.5%.
German retail sales recorded a monthly growth in July after declining in the previous two months, official data showed today. Retail turnover rose by a real 0.7% month-on-month in July after falling 1.3% in June, provisional results from the Federal Statistical Office showed today. Retail sales growth matched expectations. Annually, retail sales slipped 1%, slightly slower than the expected decline of 1.2%.
Against the US dollar, the European currency lost ground after hitting a 4-day high of 1.4379 at 2:00 am ET Tuesday. The euro-dollar pair is currently trading at 1.4327 with 1.415 seen as the next target level.
The single currency that closed Monday's North American session at 0.8803 against the British pound slipped to a 5-day low of 0.8774 at 3:40 am ET Tuesday. Thereafter, the euro-pound pair reversed its direction and is presently trading at a 5-day high of 0.8838. The next upside target level for the European currency is seen around 0.893.
The numbers of loan approvals for house purchase in the UK stood at 50,123 in July, up from 47,891 in June, the Bank of England reported today. Economists were expecting a level of 50,100 for July.
Against the Swiss franc, the 16-nation currency edged down during early deals on Tuesday. At 5:05 am ET, the euro-franc pair declined to 1.5156, compared to 1.5181 hit late New York Monday. If the pair falls further, 1.513 is seen as the next target level.
The Swiss economy contracted less than expected in the second quarter as investment rebounded and the pace of decline in exports eased, official data showed today.
Gross domestic product or GDP fell 0.3% sequentially in the second quarter, the State Secretariat for Economic Affairs or SECO said. Economists had forecast GDP to fall 1% in the second quarter after a revised decline of 0.9% in the first quarter. GDP fell for the fourth straight quarter.
Switzerland's Purchasing Managers' Index rose to 50.2 in August from 44.3 in July, a survey from the SVME Association of Purchasing and Materials Management and Credit Suisse showed Tuesday. The indicator also stood above the expected level of 46.9.
The euro that reached a 4-day high of 134.17 against the Japanese yen at 3:15 am ET Tuesday weakened thereafter. Currently, the euro-yen pair is quoted at 133.53, compared to Monday's closing value of 133.49. On the downside, 132.2 is seen as the next target level for the pair.
From the U.S., the ISM manufacturing index for August and the pending home sales and construction spending reports for July have been slated for release in North American session.
Doing Business In China Getting Harder, European Business Lobby Says
European businesses feel doing business in China is getting harder, a report from the European Union Chamber of Commerce in China showed Wednesday.
In its business position paper 2009/2010, the business lobby said European businesses have observed a slowdown after China made strict regulations over the past twelve months, with some sectors reporting that the situation has actually gotten worse as industrial-policy interventions and foreign investment restrictions have increased.
The European Chamber urged China to open up its markets and to make fundamental reforms to maintain the attractiveness of China as an investment destination for European businesses. Such moves will also help China to build a sustainable economic recovery.
"European businesses believe that the current economic crisis provides a prime opportunity for China to restructure the economy and build a transparent and fair business environment for all companies, both domestic and foreign."
The European Chamber believes that China can play a proactive role in easing trade tensions by arresting the regression in the reform process observed in many industries and adopting measures to build a level playing field for all businesses in China.
"Such moves would also serve to boost investment and domestic consumption, and in turn enable the Chinese economy to achieve its latent potential."
"Over the past year, the European Chamber has noted a gradual slowdown - and in some cases a partial reversal - in the economic opening up process," said Joerg Wuttke President of the European Chamber.
However, China's experience in the last three decades has clearly proved that it is precisely in periods of crisis that increased opening and reform has bred the greatest success.
"We are convinced that this is an ideal moment for China to adopt a new and bolder cycle of reforms, a move that would ensure that China maximizes its growth potential over the next five to ten years," Wuttke said.
The European Chamber will be presenting its paper to government and regulatory agencies in China, to the European Commission and EU member state governments, and to a wide range of business organizations and companies in China and Europe.
Swedish Krona Soars To 10-day High Against Dollar.
The Swedish krona gained ground against its US counterpart in early trading on Thursday following the Central Banks of both the Sweden and Europe decided to leave their key interest rates unchanged, as expected.
The Executive Board of the Riksbank maintained the repo rate at a record low of 0.25% and the rate is expected to remain at this low level until autumn 2010. The central bank said the interest rate needs to be low over a long period of time to support a stable recovery and to attain the 2% inflation target.
The central bank is of the view that supplementary measures are required to ensure the intended effect of monetary policy. So, the Executive Board decided to offer further loans of SEK 100 billion to the banks at a fixed interest rate and with a maturity of around one year. This could help in lowering interest rates on loans given to companies and households, the Riksbank added.
The central bank further raised the economic outlook and forecasts recovery in the next year. Now, the economy is estimated to shrink 4.9% this year, better than the 5.4% fall estimated previously. The 2010 GDP growth is seen at 1.9% compared to the 1.4% expansion estimated previously.
The Swedish krona that slumped to a 6-day low of 1.4467 against the greenback on Wednesday has gained around 0.65 percent to touch an 11-day high of 1.4439 by 7:45 am ET. The pair moved sideways thereafter and is currently quoted at 1.4383.
The Swedish krona ended its Wednesday's trading higher at 1.4424 against the buck. If the domestic currency gains further, resistance is likely to be seen around the 1.432 level.
Also, the European Central Bank held its key interest rate at a record low level of 1%. The decision was in line with economists' expectations.
you moved? i hardly found you
ifx tatyana, you write very useful article! i trade USDCZK, your news gives me weighty help.
Crude Oil Slips Slightly, Remains Near $68
Crude oil prices saw little change for a second straight session on Thursday, remaining near the $68 per barrel mark. Traders looked ahead to the jobs report on Friday
Light sweet crude for October fell to $67.96, down nine cents on the session. Prices touched as high as $69.40 after earlier hitting as low as $67.66.
The Labor Department's non-farm payroll report is expected at 8:30 a.m. ET tomorrow. Jobs are expected to drop by 225,000 jobs in August, compared to a drop of 247,000 in July. The unemployment rate is expected to inch up to 9.5%, compared to 9.4% a month earlier.
In economic news, the Labor Department reported jobless claims edged down to 570,000 from the previous week's revised figure of 574,000. Economists had been expecting jobless claims to slip to 564,000 from the 570,000 originally reported for the previous week. The Labor Department's monthly employment situation report is due tomorrow.
Later, the Institute for Supply Management said its index of activity in the service sector rose to 48.4 in August from 46.4 in July, with a reading below 50 indicating a contraction in the sector. Economists had been expecting a slightly lower reading of 48.0.
On Wednesday, the Energy Department revealed U.S. commercial crude oil inventories decreased by 400,000 barrels in the week ended August 28 to reach 43.4 million barrels. Experts were looking for a drop of about 1.9 million barrels. Total motor gasoline inventories decreased by 3.0 million barrels last week.
US Dollar And Japanese Yen Falls As Stocks Rise
During early deals on Monday, the US dollar and the Japanese yen edged down against their major counterparts as a rise in Asian and European stock prices reduced demand for currencies perceived as safe havens.
The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.
The dollar slipped to a 6-day low against the European currency, 13-day low versus the British pound, 4-day low against the Swiss franc, while edged higher to a 6-day high against the Japanese yen.
Against the European currency, the US dollar edged down during early deals on Monday. At 3:05 am ET, the dollar touched a 6-day low of 1.4363 against the euro, compared to 1.4312 hit late New York Friday. The next downside target level for the US currency is seen around 1.445.
The Sentix investor confidence indicator for the Eurozone rose to minus 14.61 in September from minus 17 in August. Economists had forecast a reading of minus 13.7. Among the sub-indicators, the current situation index moved to minus 32.75 from minus 39, while the expectations index fell to 5.50 in September from 8 in August.
The US currency that closed Friday's North American session at 1.6399 against the British pound slipped to a 13-day low of 1.6445 at 3:35 am ET Monday. The pound-dollar pair is currently trading at 1.6419 with 1.660 seen as the next target level.
Against the Swiss franc, the greenback traded down during Monday's early deals. At 3:05 am ET, the dollar-franc pair declined to a 4-day low of 1.0558, compared to Friday's closing value of 1.0603. If the pair falls further, 1.054 is seen as the next target level for the pair.
The US dollar gained ground after hitting a low of 92.95 against the Japanese yen during today's early Asian deals. At 4:15 am ET, the dollar-yen pair climbed to a 6-day high of 93.31. On the upside, 93.6 is seen as the next target level for the pair. The pair closed Friday's New York deals at 93.01.
The Japanese yen showed weakness against its major counterparts during today's early deals.
The Japanese currency edged down to a 10-day low of 153.29 against the British pound and a 6-day low of 133.89 versus the European currency during today's early deals. If the Japanese yen falls further, 154.1 against the pound and 134.5 versus the euro are seen as the next target levels. The yen closed Friday's deals at 152.53 against the pound and 133.11 against the euro.
Against the Swiss franc, the Japanese unit showed weakness during today's deals. At 4:15 am ET, the yen slipped to a 6-day low of 88.32 against the franc, compared to Friday's closing value of 87.76. The next downside target level for the Japanese yen is seen around 88.6.
The U.S. financial markets are closed today in observance of the Labor Day holiday.
Trichet: Global Economy Probably Out Of Freefall
The global economy is probably out of freefall and stabilizing faster than previously expected, European Central Bank President Jean-Claude Trichet said Monday.
"We are probably in large part of the global economy out of the period of free-fall," he said at the end of a discussion held at the Bank for International Settlements, Basel, Switzerland.
Trichet, who chairs the oversight body of the Basel Committee on Banking Supervision, said the outlook for the global economy had brightened and the recovery would be faster than anticipated.
"We have to remain prudent and cautious and it's not excluded we will have a bumpy road. Uncertainties are big," Trichet said. He stated that the current situation still requires "caution, prudence and alertness."
Further, Trichet pointed out that protectionism and imbalances in the world economy are the two main risks to a recovery.
"Authorities and the private sector will not be forgiven if we again have to cope with a situation as dramatic as the one we have had to cope with in September last year," Trichet warned.
He also noted that reforms are necessary to strengthen the financial system to avoid further risks.
Late on Sunday, leading central bank governors and banking regulators agreed on a new set of measures to strengthen supervision of the global banking system. With the new rules in force, banks would be required to earmark major part of their profits as reserve to use in tough times.
European Economics Preview: BoE Expected To Retain Key Rate
Thursday, the Bank of England is set to announce its interest rate decision. The central bank is widely expected to leave the interest rate untouched at a record low of 0.5% and to continue its GBP 175 billion asset purchase programme.
At 2.45am ET, the French statistical office INSEE is scheduled to issue industrial production data. Month-on-month, industrial production is forecast to rise 0.4% in July and manufacturing output growth is seen at 0.5%.
Thereafter, the Hungarian CPI and Turkish GDP reports are due. Economists forecast Hungarian annual inflation to rise to 5.8% in August from 5.1% in July. The Turkish economy is forecast to shrink 8% annually in the second quarter.
Half an hour later, consumer prices details are due from Denmark and Sweden. Sweden consumer prices are forecast to drop 1% annually in August compared to a 0.9% fall in July. Meanwhile, Danish annual inflation is expected to rise to 1.1% in August from 1% in July.
At 4.00am ET, the European Central Bank is set to issue monthly bulletin. In the meantime, Norwegian CPI and PPI reports are also due.
At 5.00am ET, a final report for the second quarter GDP is due from the Italian statistical office.
British Pound Climbs To 1-month High Against US Dollar
During early European deals on Friday, the British pound extended its Asian session's 1-month high against the US dollar on the back of strong equities.
Britain's top share index gained 0.5 percent in early deals today, moving back above the 5,000 level, led by strength in heavyweight oils, miners and banks, supported by gains on Wall Street and in Asia.
By 6:07 am ET, the FTSE 100 index .FTSE was 34.26 points higher at 5,022.12, having closed 16.62 points, or 0.3 percent lower on Thursday at 4,987.68.
The benchmark index closed above 5,000 for the first time since late September 2008 on Wednesday.
The pound also climbed to a 4-day high against the European currency, while declined to a 3-day low versus the Japanese yen.
The pound also rose after a report showed today that producer price index in the United Kingdom has improved in August from July.
The Office for National Statistics said UK output prices were down 0.4% in August, smaller than July's 1.3% annual decline and 0.5% fall expected by economists. Month-on-month, output prices rose 0.2% in August, the same as in July. The expected growth rate was 0.3%.
Core output prices that excludes food, beverages, tobacco and petroleum climbed 0.2% on a monthly basis and 0.7% annually in August.
Against the US dollar, the British pound edged higher during early deals on Friday. At 2:05 am ET, the pound-dollar pair reached a 1-month high of 1.6744, compared to 1.6653 hit late New York Thursday. The next upside target level for the pair is seen around 1.72.
The dollar is under selling pressure today as the better-than-expected US employment data released yesterday helped boost market participants sentiment about US economic prospects, prompting them to invest in other higher-yielding currencies at the expense of the dollar.
A slew of Chinese economic data released in the morning, including better-than-expected industrial production, added to improved investor sentiment.
U.K.'s sterling that closed Thursday's North American session at 0.8760 against the European currency climbed to a 4-day high of 0.8726 at 5:00 am ET Friday. If the pound gains further, 0.867 is seen as the next target level.
Italy's industrial production rose 1% month-on-month in July, statistical office Istat said today. Economists had expected an increase of 0.4%. In June, industrial output fell 0.6%, revised up from a 1.2% decline reported originally. Against the Swiss franc, the British currency showed strength during Friday's early deals. At 5:00 am ET, the pound-franc pair hit a high of 1.7366, compared to Thursday's closing value of 1.7298. On the upside, 1.741 is seen as the next target level for the pound.
The sterling that closed Thursday's New York deals at 152.79 against the Japanese yen declined to a 3-day low of 151.47 at 3:40 am ET Friday. The pound-yen pair is currently trading at 151.91 with 149.9 is seen as the next target level.
Japan's economy grew in the April-to-June quarter, but not by as much as originally reported, a government report showed today.
Japan's gross domestic product increased 0.6 percent from the preceding quarter or 2.3 percent in annualized terms. The growth reported by the Cabinet office was below the preliminary estimate of 0.9 percent on-quarter growth and 3.7 percent annualized growth.
Capital spending was downwardly revised to 4.8 percent on quarter from the initial report of a 4.3 percent decline.
Elsewhere, a monthly survey from the Cabinet Office showed that Japanese consumer confidence rose to 40.4 in August from 39.7 in July. The index also stood above the expected reading of 40.2.
From the U.S., the Department of Commerce will release its import and export price reports for August at 8:30 am ET.
At 10:00 am ET, the Commerce Department is due to release its wholesale inventories report. Economists expect wholesale inventories at the end of July to show a 0.1% decline.
The preliminary reading of the University of Michigan's consumer sentiment index for September is due to be released at the same time. The report is expected to show that the consumer sentiment index rose to 67.5 in the month.
Greenback Pares Recent Losses Monday Morning
The dollar was stable Monday morning in New York following last week's brutal losses, as traders geared up for a busy week on the economic front.
Increased risk aversion has driven the dollar to its lowest level of the year versus a basket of major currencies, but renewed concerns about the sustainability of the economic recovery could give the buck a boost in the coming days.
Monday's economic calendar is fairly light, with President Obama giving a speech on the economy and financial regulation in New York.
However, later in the week, traders will be flooded with a spate of economic data, which could help them gain more clarity on the economy's course.
The Commerce Department's retail sales report for August, the results of the New York Federal Reserve's and Philadelphia Federal Reserve's manufacturing surveys for September and the Federal Reserve's industrial production report for August may be closely watched.
The dollar rose sharply versus the sterling, jumping almost 2 cents to 1.6550 from a monthly low set late last week.
The buck also firmed up versus the euro, holding near 1.4550. Last week, the dollar hit a 2009 low of 1.4634 as stocks continued to improve.
The European Commission kept its economic outlook unchanged from May's spring forecast. Gross domestic product or GDP is expected to fall 4% this year in both the Eurozone and in the EU.
The dollar pared some of its recent losses versus the yen, improving to 90.90 from a February low of 90.18. With the advance, the dollar stayed away from a 13-year low of 87.08 set back in January.
Meanwhile, the buck hit a weekly high of C$1.0900 versus the loonie. Early in August, the dollar hit a yearly low of C$1.0630, but has since managed to stabilize.
US Dollar Stable Ahead Of August Housing Starts, Weekly Jobless Claims Reports
The U.S. Census Bureau will release a report on housing starts for August at 8:30 am ET. Economists estimate housing starts of 580,000 for the month.
At the same time, the Labor Department is due to release its customary jobless claims report for the week ended September 12th. Economists expect a modest increase in claims to 555,000.
The US dollar stabilized against most of its major opponents ahead of the reports. As of now, the greenback is quoted at 91.4 against the yen, 1.653 per pound, 1.032 versus the Swiss franc and 1.472 against the euro.
US Dollar Soars To New Multi-day Highs Against Majors
During early European deals on Monday, the US dollar rose to new multi-day highs against its major counterparts as a fall in most Asian and European stocks boosted demand for the safe haven greenback.
The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.
Most of the stock markets were modestly lower today as investors look to this week's Federal Reserve meeting for more clues about the strength of the U.S. Recovery.
Early in Europe, Britain's FTSE 100 lost 0.4 percent, Germany's DAX fell 0.8 percent and France's CAC-40 dropped 0.3 percent.
In Hong Kong, the Hang Seng fell 150.60 points, or 0.7 percent, at 21,472.85 in back-and-forth trade, while South Korea's Kospi lost 0.3 percent to 1,695.50. China's Shanghai benchmark was up 0.2 percent at 2,967.01 and Australia's benchmark shed 0.3 percent.
Japanese financial markets are closed today for public holidays. Financial markets in India, Indonesia, Malaysia, Philippines and Singapore were also closed Monday for holidays.
World markets posted more gains last week as U.S. Federal Reserve Chairman Ben Bernanke said recession in the world's largest economy was "likely over."
This week, investors will watch closely what the Fed has to say about the economy and the scale of the recovery after a two-day meeting that wraps up Wednesday.
At its August meeting, the FOMC decided along the expected lines and maintained the fed funds futures rate unchanged. In its post-meeting policy statement, the Fed noted that economic activity is leveling out, an improvement from its previous opinion that the pace of contraction is slowing. There weren't any major changes to the references the committee made towards other measures.
Regarding its Treasury securities purchasing program, the central bank said the committee would gradually slow the pace of these transactions. The central bank anticipates the full amount of $300 billion to be purchased by the end of October. The FOMC reiterated its commitment to retain interest rates at exceptionally low levels for an extended period.
Against the European currency, the US dollar edged higher during early deals on Monday. At 2:35 am ET, the dollar reached a 6-day high of 1.4639 against the euro, compared to 1.4704 hit late New York Friday. The next upside target level for the dollar is seen around 1.437.
The US currency that closed Friday's North American session at 1.6246 against the British pound rose to a 19-day high of 1.6137 at 2:35 am ET Monday. The pound-dollar pair is currently trading at 1.6168 with 1.603 seen as the next target level.
British house prices increased in September on rising confidence and dwindling stock of property, results of a closely watched survey showed Monday.
Average asking prices were up 0.6% in September from August as autumn sellers raised price expectations, the property website Rightmove reported. House prices had declined 2.2% in August after rising 0.6% in July.
Meanwhile, the latest Quarterly Bulletin from the Bank of England showed today that sustainable rebalancing in the UK and the global economy depend on structural forces, including the extent to which consumers in deficit nations remain restrained and domestic demand in surplus countries pick up.
Against the Swiss franc, the greenback traded higher during Monday's early deals. At 5:15 am ET, the dollar-franc pair climbed to a 4-day high of 1.0357, compared to Friday's closing value of 1.0305. If the pair gains further, 1.055 is seen as the next target level.
The Swiss National Bank said today in a report that the M3 money supply increased 7.7% year-on-year in August, unchanged from the previous month. A year ago, the M3 money supply was up 2.5%. The M2 money supply climbed 41.8% on an annual basis in August, faster than the 41.3% growth in the previous month.
The dollar that closed Friday's New York deals at 91.46 against the Japanese yen advanced to 92.21 at 5:15 am ET. This set a 11-day high for the dollar. On the upside, 93.4 is seen as the next target level for the dollar-yen pair.
The Conference Board is scheduled to release a report on the U.S. leading index for August at 10 AM ET. The consensus estimate calls for a 0.7% increase in the leading indicators index for the month.
SECO Upgrades Swiss GDP Outlook; Sees Sluggish Recovery
Tuesday, the State Secretariat for Economic Affairs raised Switzerland's economic outlook, while forecasting the recovery to remain sluggish next year.
The expert group of the Federal Government expects the economy to shrink 1.7% during 2009, better than the 2.7% decline estimated in June, the agency said. With the global economy running out of steam again in the course of 2010, the government expects the economy to post a moderate growth of 0.4% next year compared to the previous forecast for a 0.4% fall.
While making the assessment, the expert group assumed that the current strong global economic upswing dynamics will loose a great deal of its momentum in 2010 with fiscal impulses fading out. But, cyclical upswing dynamics would continue for a longer period following the previous sharp drop in demand.
Recession in Switzerland was relatively mild compared to international scale due to a stable domestic demand which partly offset losses in the export industry and the finance sector. Strongest negative impulses on GDP came from a sharp decline in the value added in the financial sector.
With momentum picking up slowly, the prospects for the labor market remain bleak. Employment is likely to fall in the coming quarters and would not start to increase before late 2010. The jobless rate is set to rise to an annual average of 5.2% next year from this year's 3.8%.
Regarding consumer prices, SECO expects the phase of negative consumer price development to halt within the coming few months as the price decreasing effects resulting from crude oil prices will disappear in the coming months. Consumer prices are expected to rise 0.9% in 2010.
On September 17, the Swiss National Bank kept its key interest rate unchanged at 0.25% for the second rate-setting session in a row. Also, the bank revised its economic outlook for 2009 citing improvements in the global economy and at home. It now expects the economy to shrink between 1.5% and 2% this year.
The revisions of SECO and the central bank were in contrast to the assessment of the Zurich-based KOF. The think-tank sees a contraction of 3.3% in 2009, worse than its March's forecast of a 2.4% shrinkage. For 2010, the research institute expects a GDP decline of 0.6%, while it had predicted a 0.3% contraction in March.
Elsewhere, the Federal Customs Administration reported a decline in the Switzerland's trade surplus for August. The surplus stood at CHF 1.79 billion, down from CHF 2.21 billion in July.
British Pound Climbs To New Multi-day Highs Against Franc And Yen
The British currency advanced further against its Swiss and Japanese counterparts in New York morning trading on Wednesday. At 9:45 am ET, the pound climbed to new multi-day highs of 1.6851 against the franc and 150.41 versus the yen, which may be compared to yesterday's closing values of 1.6753 and 149.08, respectively. Currently, the sterling is trading near 1.6832 against the franc and 150.10 versus the yen.
US Dollar Higher Against Most Majors
Wednesday morning in New York, the greenback firmed up against most of its major counterparts. The greenback advanced to 91.55 against the Japanese yen, 1.0264 versus the Swiss franc and 1.4755 against the euro by 10:00 am ET. The greenback that closed yesterday's deals at 91.11 against the yen, 1.0239 versus the Swiss franc and 1.4792 against the euro is presently worth 91.42, 1.0251 and 1.4773, respectively.
Singapore Consumer Prices Fall Further In August
Singapore's consumer price index dropped 0.3% year-on-year in August, slower than than a 0.5% fall in the preceding month, a report by Statistics Singapore said Wednesday. Economists expected a 0.4% fall.
Housing costs fell 1.6%, due to lower electricity and gas tariffs and cheaper liquefied petroleum gas (LPG). Transport and communication costs fell 0.4%, mainly due to cheaper petrol prices. Excluding accommodation costs, the consumer price index declined 0.9%.
Month-on-month, consumer prices were up 0.4%, owing to higher costs of transport and communication, clothing and footwear, as also housing and stationery items. Excluding accommodation costs, consumer prices were up 0.5%. Meanwhile, after adjusting for seasonal effects, consumer prices were up 0.4% on a monthly basis in August.
In the first eight months, consumer prices rose 0.5% compared to last year.
Weekly Jobless Claims Show Unexpected Decrease
Thursday morning, the Labor Department released its report on initial jobless claims in the week ended September 19th, showing that first-time claims for unemployment benefits unexpectedly decreased compared to the previous week.
The report showed that jobless claims fell to 530,000 from the previous week's revised figure of 551,000. Economists had been expecting jobless claims to edge up to 550,000 from the 545,000 originally reported for the previous week.
With the unexpected decrease, jobless claims fell to their lowest level since mid-July, when seasonal issues in the auto sector skewed the data artificially lower. Excluding the July data, jobless claims were at their lowest level since early January.
Additionally, the Labor Department said that the less volatile four-week moving average edged down to 553,500 from the previous week's revised average of 564,500.
Continuing claims, which measure the number of people receiving ongoing unemployment help, also declined in the week ended September 12th, the latest week for which the government has data.
While continuing claims fell to 6.138 million from the preceding week's revised level of 6.261 million, Peter Boockvar, equity strategist for Miller Tabak, noted that evidence still suggests that the decrease has more to do with people not finding new jobs and exhausting their benefits.
Boockvar pointed to another increase in the number of people claiming Emergency Unemployment Compensation (EUC), which rose to a new record high of 3.224 million in the week ended September 5th, an increase of 82 thousand from the prior week.
The report also showed that those that are receiving extended benefits past the EUC rose by about 3 thousand to 438,000.
Boockvar said, "This is evidence that many people that are falling out of the Continuing Claims category is not because they found a new job but because they've exhausted their initial 26 weeks of benefits."
"So the trend continues, a slowdown in the pace of firing but a reluctance on the part of businesses to hire," he added.
Next Friday, the Labor Department is due to release its report on employment in the month of September. Economists expect the report to show a continued slowdown in the pace of job losses.
While non-farm payroll employment is expected to fall by about 188,000 jobs in September following a decrease of 216,000 jobs in October, the unemployment rate is expected to edge up to a new twenty-six year high of 9.8 percent.
Brazil IPCA Inflation Eases In September - IBGE
Thursday, Brazil's statistical office IBGE announced that the national index of consumer price large, IPCA - 15 rose 0.19% month-on-month in September, slower than the 0.23% increase in the previous month. Economists' were looking for an increase of 0.17%.
Food and beverages prices increased 0.13% in September, after falling 0.28% in August. At the same time, prices for clothing increased 0.31%.
Year-on-year, consumer prices increased 4.27% in September, slower than the 4.34% growth in August.
Pound Climbs To Multi-day Highs Against Majors.
Extending its early European session rally, the UK currency advanced further against its major counterparts ahead of the North American session on Tuesday.
The pound jumped to a 5-day high of 0.9106 against the euro and 1.6617 versus the Swiss franc by 8:00 am ET, compared to 0.9207 and 1.6408, respectively hit late New York Monday.
The pound also advanced to a 4-day high of 1.5992 against the US dollar and 143.85 versus the Japanese yen around this time, compared to yesterday's closing values of 1.5887 and 142.44, respectively.
As of now, the sterling is trading at 143.65 against the yen, 1.597 versus the greenback, 1.6597 versus the Swiss franc and 0.9116 against the euro.
Malaysia Trying To Broaden Tax Base: PM
Tuesday, Malaysian Prime Minister Najib Razak said the government intends to reduce operating expenditure and to broaden its tax base. However, the reduction in expenditure would not affect the efficiency of the government, said Najib.
The government's pump priming measure is currently costing a billion ringgit a month. The government is set to present its 2010 budget next month.
Najib, who is also the finance minister, told reporters that the government is mindful of the need to rein in the fiscal deficit. The government expects the budget deficit to fall to 7.6% of GDP this year.
Euro Mixed In Trading Against Majors Amid French PPI Report
Following the release of the French August PPI report, the euro showed mixed trading against its major counterparts. While the euro fell against the pound and the yen, it rose versus the franc. Against the dollar, the euro was little changed during this time.
Currently, the euro is worth 0.9095 against the pound, 1.4618 against the dollar, 131.20 against the yen and 1.5114 against the franc.
Unemployment Hits 26-Year High As Job Losses Soar In September.
Job losses in September were sharper higher than economists had expected, driving the unemployment rate to its highest level in 26 years and pushing the number of people out of work above 15 million.
The U.S. Labor Department revealed Friday that non-farm payrolls dropped 263,000 in September. Economists had expected a decline of 170,000 jobs, though some disappointing employment news over the last few days raised doubt about whether the result could meet expectations.
The report included revised data for the last couple months as well, showing that payrolls dropped by 201,000 in August and 304,000 in July.
The unemployment rate for September came in at 9.8% compared to 9.7% in the previous month. This represented the highest unemployment rate since mid-1983.
September saw the number of unemployed rise to 15.14 million, compared to 14.93 million in August. There were about 7.6 million unemployed at the end of 2007, when the recession officially began.
The construction sector lost 64,000 jobs in September, while manufacturing lost 51,000. There was a 38,000-job decline in retail. Professional and business payrolls slipped 8,000 and job in the leisure and hospitality sector declined by 9,000.
There were losses on the government payroll as well, with a decline of 53,000 for September.
Education and health jobs were up slightly in the month, edging higher by 3,000.
The average work week dipped to 33 hours after coming in at 33.1 in August. Average hourly earnings ticked up to $18.67 from $18.66.
Earlier this week, payroll processor ADP released its figures for private-sector employment. The report came in worse than expected, with payrolls dropping 254,000.
This was followed on Thursday by a disappointing report on weekly jobless claims. A Labor Department report showed that the number of people filing first-time unemployment claims climbed 17,000 last week to 551,000. Economists were looking for a reading around 535,000.
German Construction Sector Drops In September.
Germany's construction sector activity dropped for a nineteenth straight month in September, a report by the Markit Economics said on Tuesday.
The seasonally adjusted Construction Purchasing Managers' Index or PMI rose to 43.8% from 43.6 in August. The PMI reading above 50 indicates expansion, while a reading below 50 signals contraction.
In September, the construction companies were again pessimistic about the twelve-month outlook for activity, the Markit said.
UK Sept. Output Prices Rise Unexpectedly.
Friday, the Office for National Statistics said UK's output prices rose 0.4% in September from the previous year, reversing a fall of 0.3% in August. Consensus forecast was for a 0.1% fall.
Reflecting price rises in petroleum and other manufactured products, output prices climbed 0.5% month-on-month, larger than the 0.3% increase seen in August and 0.1% expected by economists.
The input price index for materials and fuels purchased by manufacturing industry fell 6.5% annually in September, following a 7.7% drop in August. On a monthly basis, input prices slipped 0.5% in September. Economists were expecting an annual 6.8% fall and a monthly drop of 0.8%.
Euro Eases From 14-month High Against Dollar.
In European deals on Thursday, the euro eased from a 14-month high against the dollar amid a report that showed Euro-zone's annual CPI fell in September. The euro also plummeted to a 6-day low against the pound and an 8-day low against the franc.
But the euro strengthened to a fresh 3-week high against the yen due to across the board weakening of the latter.
The Eurostat said in a final report that Eurozone's consumer price index or CPI dropped 0.3% year-on-year in September, after falling 0.2% in August. The statistical office confirmed its preliminary estimate for inflation.
The core inflation, which excludes food and energy prices, remained at 1.2% in September, slower than the 1.3% growth the previous month.
On a monthly basis, the CPI remained unchanged in September, while core inflation stood at 0.2%.
The euro, which closed yesterday's trading at 0.9346 against the pound slipped to a 6-day low of 0.9196 in early deals on Thursday. The next downside target level for the euro-pound pair is seen at 0.908.
The pound rose on speculation the Bank of England policy makers may pause their asset-purchase program in the near future as the economy shows signs of recovering from the recession.
In an interview to the Financial Times newspaper, Paul Fisher, Bank of England's executive director for markets said he feels more confident now that the asset purchase programme is having the scale and speed of impact that was hoped for when the programme was started.
"But we are still only seven months into the programme from when it started with the first purchases, so it is still very early days," he told the newspaper. According to him, the increase in unemployment is still "pretty dreadful". But it is just not as bad as it could have been, given a 6% fall in output. And that may be one of the aspects of the asset purchase scheme working, he said.
During early trading on Thursday, the euro declined to an 8-day low of 1.5131 against the Swiss franc. This may be compared to Wednesday's close of 1.5150. If the euro-franc pair drops further, it may test support around the 1.509 level.
The franc advanced as Switzerland's ZEW economic expectations index continued to rise in October. The economic expectations index for Switzerland increased to 65 in October from 58 points in the previous month, results of a survey conducted by the Centre for European Economic Research and Credit Suisse revealed today.
The euro weakened against the dollar after reaching a 14-month high of 1.4969 at 2:10 am ET Thursday. Presently, the euro-dollar pair is trading at 1.4913, down from yesterday's close of 1.4930. The near term support for the pair is seen at 1.487.
In early deals on Thursday, the euro surged up to a new 3-week high of 134.32 against the yen. On the upside, 135.5 is seen as the next target level for the European currency. At yesterday's close, the euro-yen pair was quoted at 133.50.
The Bank of Japan upgraded its economic assessment for the second consecutive month, the latest Monthly Report of Recent Economic and Financial Developments showed today.
The BoJ said the Japan economy has started to pick up compared to its last month's view that economic conditions are showing signs of recovery. Looking forward, the central bank said economic conditions are likely to improve gradually. Last month, the BoJ said economic conditions are likely to start improving in the near future.
In the upcoming North American session, the U.S. consumer price index for September, weekly jobless claims report for the week ended October 10th and the results of the New York Federal Reserve's empire state manufacturing survey for October are scheduled for release.
The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10:00 am ET.
Dollar Edges Lower Versus Euro, Sterling
The dollar touched a fresh yearly low versus the euro on Tuesday, even after European Central Bank President Jean-Claude Trichet and finance ministers of the sixteen Eurozone countries expressed "worries" about forex movements and voiced support for a strong U.S. dollar.
Its been a brutal stretch for the dollar of late, particularly against the euro. Amid expectations that the interest rate gap between the US and other industrialized nations will widen rapidly once the economic recovery takes hold, the dollar has fallen almost 25 cents from its 2009 highs against the euro, set back in March.
Late Monday night, the dollar dropped to 1.4993, its lowest level in more than fourteen months. The pair was little changed from that mark approaching 8 am ET.
The dollar barely budged versus most other majors ahead of data on US housing starts and producer prices. The Bank of Canada's interest rate decision may also be in focus.
While most economists expect the BoC to maintain its current overnight call rate, Australia, another resource-based economy, surprisingly hiked its key interest rate earlier this month.
Earnings news will also garner attention as participants continue to look for signs that corporations are able to grow revenues.
The dollar was stuck in the mud versus the loonie ahead of the BoC decision, inching slightly higher to C$1.0320. A surprise from central bankers in Ottawa could drive the dollar to parity with the loonie.
Against the sterling the dollar extended its 6-week low, touching 1.6446. With the loss, the buck moved further away from last week's 5-month high near 1.5700.
Choppy trading kept the dollar above the 90 mark versus the yen. Speculation that Japanese officials may intervene to weaken the yen has helped the dollar rebound after testing a 1995 low of 87.08.
Japan's leading index stood at 83.2 in August, down from the initial estimate of 83.3, the Cabinet Office reported Tuesday. However, the leading index improved for the sixth month in a row. In July, the reading was 82.5.
Japan's Vehicle Production Drops Further In September.
Japan's vehicle production dropped 21.6% in September from a year earlier to 830,140 units, the Japan Automobile Manufacturers Association said Thursday. This represents the 12th consecutive month of decline in production.
At the same time, motorcycle production slipped 61% on a yearly basis to 45,646 units, reflecting the 25th consecutive month of decline.
Domestic sales of automobiles stood at 477,818 vehicles, up 0.2% from last year. However, exports dropped 35.7% to 396,163 units. Moreover, factory shipments of motorcycles stood at 40,512 units, down 28.4% from last year. Exports of motorcycles dipped 65.5% to 30,406 units.
For the first half of the fiscal year 2009, automobile production fell 33.5%, while motorcycle production declined 47.7% during the same period.
IMF Upgrades Asia's Growth Outlook
Thursday, the International Monetary Fund raised Asia's economic outlook saying that the region is rapidly rebounding from the depth of the global crisis.
In its latest regional economic outlook, the Washington-based IMF said it expects Asia's gross domestic product to grow 2.8% this year and by 5.8% next year. In May, the lender had forecast Asia's growth to decelerate to 1.3% in 2009 before rebounding to 4.3% in 2010. The new forecasts are short of the 6.7% average growth recorded over the past decade.
"The primary driver of Asia's recovery has been a progressive return towards normalcy following the abrupt collapse in global trade and finance at the end of 2008," the IMF report said. According to the report, the other key driver of Asia's recovery has been the region's rapid and forceful policy response.
"The "green shoots" of recovery appear more firmly rooted in Asia than in other regions," the report said. "Now Asia is leading as the world pulls out of recession."
While raising its world economic outlook on October 1, the IMF said the world economy is expected to grow 3.1% next year, more than the 2.5% growth forecast in July. The lender expects the Japanese economy to contract 5.4% this year and to grow by 1.7% next year. Australia's growth is forecast to touch 0.7% this year and 2% next year. New Zealand's economy is predicted to shrink 2.2% in 2009 and to expand by 2.2% next year.
China is likely to log the fastest growth in the region, 8.5% this year and 9% in 2010. India is set to follow, with growth projected at 5.4% in 2009 and at 6.4% next year. Meanwhile, South Korea's economy is predicted to shrink 1% before expanding by 3.6% next year.
At the same time, the IMF today revised its outlook for Singapore to show a 4.3% expansion in 2010 after a 1.7%contraction this year. In its world economic outlook, the organization had forecast Singapore GDP to rise 4.1% in 2010 after falling 3.3% this year.
The IMF said Asian policymakers consequently face two major challenges - to maintain policy stimulus until the recovery becomes self-sustaining and to devise a way to return to sustained, rapid growth in a new global environment. It also said Asia will need to be willing to live with smaller current account surpluses and more flexible exchange rate management. Moreover, it said output in the large G7 economies is forecast to grow by 1.3% next year, recouping only half the contraction estimated for 2009, because private demand in these countries remains constrained by the legacy of the crisis.
Asia's V-shaped recovery may be the sharpest on record and may turn into a square-root-shaped recovery soon, DBS Bank economist David Carbon said in a note on Wednesday. "That is, a sharp drop, a sharp rise, and then a palpable turn sideways." The DBS economist expects growth to be back to "normal" for most of the countries in the region by the first quarter of 2010.
Carbon also expects key central banks in the region to hike rates in the first quarter. The bank forecasts India to hike rates as early as January and South Korea in the first quarter. China is expected to start pushing rates up in the second quarter as well as allow its currency to appreciate against the U. S. dollar.
Earlier in the month, Australia became the first G-20 central bank to raise key interest rate after the global financial crisis. India's central bank became the second in the group to start exiting from an easy monetary policy, though it retained key interest rates.
Dollar Fighting Back Versus Euro As Focus Turns To Fed
The dollar surged ahead versus the euro Tuesday morning in New York as the Federal Reserve prepared to meet amid growing anxiety that the economic growth seen over the summer may not be sustainable without continued support measures.
With the US consumer still on edge as unemployment approaches 10 percent, many analysts are pointing out that while the third quarter figures on the economy are somewhat encouraging, organic growth is unlikely until the jobs situation improves.
The safe haven dollar has managed recover versus the euro over the past week, prompting the rally in global equities to run out of steam.
The dollar jumped to a monthly high of 1.4623, rising more than a penny even as traders considered news that the European Commission expects the euro area economy to emerge from recession in the second half of 2009.
However, the economy is set to contract 4% for 2009 as a whole.
Joaquin Almunia, Commissioner for Economic and Monetary Affairs said, "The EU economy is coming out of recession. This owes much to the ambitious measures taken by governments, central banks and the EU that have not only prevented a systemic meltdown but have kick-started the recovery. However, the road ahead is a challenging one."
The dollar firmed up a bit versus the yen, moving back above the 90 mark. The pair has been choppy over the past few weeks, with the buck finding a measure of support after testing a 1995 low in October.
Meanwhile, the dollar was steady versus its Australian counterpart even after the RBA raised its interest rate for the second straight session. The dollar rose to .8920 versus the aussie, but leveled off to .8965 approaching 8 am ET.
In October, Australia became the first G-20 member nation to hike its benchmark interest rate since the onset of the financial crisis in late 2008.
The dollar hit a weekly high versus the sterling, rising to 1.6260 before hitting resistance. On a longer term basis, the pair has been moving between 1.5700 and 1.6700 for months.
All eyes will be on Washington, DC tomorrow as the Fed wraps up its latest policy meeting. While Ben Bernanke and company are universally expected to maintain the key interest rate near zero, traders will be paying close attention to the accompanying statement, looking to see whether rates will be left alone "for some time to come," as the central bank has recently assured.
Looking at today's economic calendar, the government is releasing September factory orders at 10 am ET. Economists are looking for a September gain of 1 percent.
Swiss Franc Soars To 19-day High Against US Dollar
The Swiss currency inched higher against most of its major opponents in early trading on Wednesday. The Swiss franc thus rose to a 19-day high against the US dollar, 8-day high against the pound and a 1-week high against the yen.
The Swiss franc soared to an 8-day high of 1.6692 against the pound by 6:00 am ET, up 1.7 percent from Monday's fresh 7-week low of 1.6981. On the upside, the alpine currency is likely to find resistance near the 1.667 level. The pound-franc pair that closed yesterday's deals at 1.6874 is presently quoted at 1.6738.
The pound declined following the Bank of England's latest quarterly Inflation Report revealed that British consumer prices are likely to stay below their 2 percent target at around 1.6 percent over the next two years, but would rise sharply above 2% in the short term.
Further, the BoE said the recovery in output is likely, driven by the considerable stimulus from the past easing in monetary and fiscal policy and the depreciation of sterling. "But constraints on the supply of bank credit and concerns over balance sheets will weigh on spending."
Earlier in the session, data released by the Office for National Statistics showed that the number of people claiming jobseeker's allowance in the UK increased by 12,900 to reach 1.64 million in October. This was the smallest monthly increase since April 2008, however, the total number was the highest since April 1997.
Against the European common unit, the Swiss franc stayed closer to yesterday's 2-day high of 1.51 in the Asian session and lacked a clear direction in the succeeding trading hours. The euro-franc pair is presently worth near Tuesday's closing value of 1.5106.
The Swiss franc bounced back from its Asian session's 2-day low of 88.64 against the Japanese yen in early trading on Wednesday. The franc thus rose to a weekly high of 89.67 around 6:15 am ET and a move above the 90.0 resistance may push the pair to its highest level in more than 2 weeks. The franc-yen pair, which closed yesterday's deals at 89.19, is presently trading at 89.52.
In Japan, core machinery orders increased in September by 10.5 percent over August, according to a government report released in the morning. The increase topped economists forecasts of a 2.9 percent increase. Compared to one year earlier, core machinery orders were down 22 percent.
The Swiss franc rose to a 19-day high of 1.0038 against the US dollar by 6:10 am ET and a further rally may push the domestic unit to break through its October 23rd high of 1.0035. This will lead the Swiss franc to touch its highest level in nearly 16 months. The greenback-franc pair is presently trading at 1.0045, compared to 1.0076 hit late New York Tuesday.
The US economic calendar is empty today, as all government institutions will be closed for Veterans Day. Nonetheless, traders may look to refine their positions ahead of Thursday's weekly jobs report.
Thank you Darika!
You are welcome. Hope, our news help you to make right decision in your trades.
darika, you now read news in the television.. i saw in youtube http://www.youtube.com/user/instafx congrats from me!
European Economics Preview: Eurozone Economy Forecast To Exit Recession.
Quarterly national account data from Germany, France and the Eurozone are due on Friday, headlining a hectic day for European economic news.
At 2:00 am ET, Germany's Federal Statistical Office is set to release third quarter GDP data. On a sequential basis, the economy is forecast to expand 0.8% in the third quarter, compared to the 0.3% growth in the previous quarter. The gross domestic product is expected to contract 4.8% on an annual basis, slower than the 5.9% decrease reported in the last quarter.
In the meantime, the GDP indicator for the month of September is due from Statistics Finland. In August, the GDP indicator had contracted 8.4% on a yearly basis. The statistical office is also slated to release consumer price data for October at the same time. Economists expect consumer prices to fall 0.8% year-on-year, following the 1% decrease in September. Manufacturing new orders data for September is also due at the same time.
At 2:45 am ET, consumer price figures are due from the French statistical office INSEE. The consumer price index is forecast to fall 0.2% annually in October, slower than the 0.4% decline in the previous month. The monthly inflation rate is seen at 0.1%. EU harmonized consumer prices are expected to fall 0.2% on a yearly basis but to rise 0.1% month-on-month in October.
Also due at the same time, is wage growth data from France. The wage growth rate is seen at 0.5% sequentially in the third quarter, after the 0.4% increase in the preceding quarter.
At 2:50 am ET, the French quarterly national accounts report is due. The French economy is tipped to expand 0.6% sequentially in the third quarter, faster than the 0.3% growth in the second quarter. On a yearly basis, the GDP is expected to shrink 1.9% following the 2.8% contraction in the last quarter.
At 3:00 am ET, third quarter's GDP results are due from the Czech Statistical Office. Economists expect the Czech economy to contract 4.7% annually, slower than the 5.5% decrease in the previous quarter. Retail sales figures for September are also due at the same time from the statistical office. Year-on-year, sales are expected to plunge 6%, faster than the 3.5% drop in the previous month.
Simultaneously, consumer price inflation figures are due from Spain's National Institute of Statistics. Economists expect the CPI to fall 0.6% year-on-year in October, compared to September's 1% fall. On a monthly basis, consumer prices are expected to rise 0.7%. Harmonized consumer prices, meanwhile, are forecast to remain unchanged from preliminary estimates at 0.6% annual decline.
Elsewhere, the Hungarian Central Statistical Office is scheduled to issue GDP data for the third quarter. The Hungarian economy is forecast to contract 6.6% annually, after the 7.5% shrinkage in the previous quarter. Also due at the same time from the statistical office, is final industrial production data for September.
Shortly later at 3:15 am ET, Switzerland's Federal Statistical Office is slated to release producer and import price data for October. Producer and import prices are tipped to fall 4.1% year-on-year in October, slower than the 4.9% decrease in the preceding month. The monthly producer and import price inflation rate is seen at 0.1%.
At 3:30 am ET, third quarter GDP results are due from the Netherlands' Central Bureau of Statistics. The Dutch economy is tipped to exit recession by expanding 0.3% sequentially in the third quarter, compared to the 1.1% decrease in the previous month. Year-on-year, the economy is expected to shrink 4.5%. Also due at the same time from the statistical office, are retail sales and trade balance statistics for September.
Meanwhile, the Statistics Sweden is scheduled to issue the third quarter industry capacity rate. The capacity utilization rate stood at 77% in the second quarter.
Half an hour later, gross domestic product data is due from the Italian statistical office ISTAT. The Italian economy is tipped to expand 0.8% sequentially in the third quarter, following the 0.5% decrease in the previous quarter. On a year-over-year basis, the GDP is expected to contract 4.5%, slower than the 6% fall in the second quarter. The Statistics Austria is also expected to release third quarter GDP results at the same time.
At 5:00 am ET, the Eurozone's third quarter GDP figures are due. The Eurozone economy is widely expected to exit recession and is forecast to expand 0.5% sequentially in the third quarter, rebounding from the 0.2% shrinkage in the last quarter. On a yearly basis, the GDP is expected to fall 3.9%, following the 4.8% drop in the second quarter.
Afterwards at 8:00 am ET, consumer price inflation figures are due from the Polish statistical office. The consumer price inflation rate is expected to ease to 3.2% year-on-year in October from 3.4% in September. Simultaneously, money supply data for October is due from the Polish central bank. Month-on-month, M3 money supply is forecast to grow 1.1%, compared to the 0.9% increase in the previous month.
interesting review as always. keep on, Ms. Tatyana
by the way, why don't you take part in miss instaforex asia contest? you would shoot down all girls with your beauty
Japanese Yen Slides Against Majors
Retracing its Asian session rally, the Japanese yen edged down across the board on Friday morning in New York.
The yen drifted lower to 87.0 versus the greenback around 10:00 am ET from its Asian session's fresh 14-year high of 84.84.
Against its European major rivals, the yen pulled back from its Asian session's multi-month highs in early New York deals.
The yen slipped to 143.24 against the pound, 86.22 versus the Swiss franc and 129.96 against the euro around 10:10 am ET from Asian session's lows of 139.37, 84.3 and 126.92, respectively.
The Japanese unit also retreated from its early Asian session's multi-month highs against the commodity-linked currencies.
The domestic currency declined to 81.7 against the Canadian dollar, 61.95 versus the New Zealand dollar and 78.96 against the Australian dollar around 10:00 am ET from its Asian session highs of 79.96, 59.96 and 76.61, respectively.
Japanese Consumer Prices Fall Further, Unemployment Drops Unexpectedly
Consumer prices in Japan continued to fall at a rapid pace in October, official data showed on Friday, giving credence to the deflationary concerns of the government. However, a surprise decline in unemployment, along with household spending data put more of a positive, yet momentary, spin on things for the beleaguered economy.
Core consumer prices, which exclude fresh food from the price basket, dropped 2.2% in October from a year earlier, but slower than a 2.3% fall in the previous month, the Ministry of Internal Affairs and Communication reported. Economists had expected a 2.4% decline. General consumer prices dropped 2.5% year-on-year in October, after a 2.2% fall in prices in each of the three preceding months.
On November 20, the Cabinet Office declared that the economy is in deflation, the first official announcement of deflation since mid-2006. In its monthly economic report for November, the government said, "Recent price developments show that the Japanese economy is in a mild deflationary phase." The report said the economy is picking up, but faces difficult situation such as a high unemployment rate.
Last week, the Organisation for Economic Co-operation and Development warned against lingering deflation in the economy and said an increase in the central bank's bond purchases would help in battling deflation. According to the Bank of Japan's forecast in October, the CPI excluding fresh food, would fall 1.5% in fiscal 2009 and would drop 0.8% in fiscal 2010 and a 0.4% decline in fiscal 2011.
On a monthly basis, overall consumer prices dropped 0.4%, and excluding fresh food, prices fell 0.1%.
BNP Paribas economist Azusa Kato said that the slowing in the rate of decline in the core CPI was simply the result of a 'technical error', namely the waning base effect from surging petroleum product prices through August of last year. Excluding this, price deflation actually broadened in October, he pointed out.
Meanwhile, the CPI in the Tokyo area dropped 2.2% on year in November and fell 0.2% on a monthly basis. The core CPI fell 1.9% on a yearly basis, but slower than a 2.3% decline anticipated by economists. Month-on-month, core consumer prices were down 0.1%.
"Despite the economic recovery that has been driven by fiscal stimulus and rising exports to emerging economies, downward pressures on prices have hardly abated and the supply-demand gap remains quite large," Kato said. Even after the disappearance of techinical factors around February, BNP Paribas expects that a minus inflation rate of more than -1% should take root for a while, as deflationary expectations are taking hold at the consumer and corporate level.
On a more encouraging note for the economy, unemployment levels continued to fall against expectations. The unemployment rate stood at a seasonally adjusted 5.1% in October, down from 5.3% in the previous month, the Ministry of Internal Affairs & Communications reported. Economists had expected the unemployment rate to rise to 5.4%. The jobless rate declined for the third consecutive month.
The total number of unemployed persons declined to 3.36 million from 3.52 million. At the same time, the number of employed persons decreased to 62.44 million from 62.64 million in the prior month, while total labor force strength slid to 65.82 million from 66.19 million.
In other news, real household spending in Japan grew 1.6% year-on-year in October following the 1% increase in the previous month. Economists had expected real household spending to rise 0.7%.
Household spending excluding that on housing, purchase of vehicles, money gifts and remittance climbed 0.7%. Spending on medical care surged 11.4% annually in October, while spending on transportation & communication rose 4.7%. On the other hand, household spending on education declined 4.6%.
Spending among workers' households increased 0.6% from the previous year, the same rate of growth as in the preceding month. In nominal terms, total household spending dropped 1.3%.
Retail sales figures for October were also released on Friday, with sales falling 0.9% year-on-year to JPY 10.83 trillion in October, slower than the 1.3% decline in the preceding month. Economists had expected sales to drop 1.6%. This marks the fourteenth straight month in which retail sales have fallen on an annual basis.
"The outlook for consumption is not bright," BNP Paribas economist Hiroshi Shiraishi said. "Employee income, the key to consumption, is unlikely to improve anytime soon as businesses continue to cut costs in order to cope with chronically low operating rates." BNP Paribas expects GDP-based consumption, which increased at a solid pace in the second and third quarters to start to lose momentum from the final quarter of the year.
Dollar Rebounds On Strong Jobs Report
With the latest monthly jobs report from the US government suggesting the labor market is on the mend, the dollar remained surged the euro but remained mixed against other major currencies Friday morning.
U.S. employers cut a far fewer-than-expected 11,000 jobs in November, the smallest decline since the start of the recession in December 2007. Economists expected job losses to slow down notably to a 125,000 rate.
The brighter jobs picture may put pressure on the Federal Reserve to articulate an exit strategy from measures designed to stimulate the economy.
The dollar held rose to 1.4960 versus the euro, moving away from its 16-month low of 1.5143 set in November.
Meanwhile, the buck pared its early losses versus the sterling, improving to 1.6570.
Against the yen, the buck skyrocketed to 89.80, extending a move away from last week's 1995 low of 84.80.
North of the border, official data showed that Canadian employment rose by 79,000 in November, bringing the unemployment rate down 0.1 percentage points to 8.5%. The dollar dropped to C$1.0460 from an overnight high near C$1.0600.
Looking at the US economic calendar, the Commerce Department's report on factory orders and comments from Federal Reserve officials Charles Plosser and James Bullard may also impact trading in the aftermath of the jobs data.
Philippine Consumer Prices Continue To Rise In November
Philippines' consumer price inflation picked up in November driven by higher food, beverage and tobacco prices, official data showed on Friday.
The National Statistics Office said that consumer prices in the Philippines grew 2.8% year-on-year in November, faster than the 1.6% rise in the previous month. The headline inflation rate came in line with economists' expectations. Excluding selected food and energy items, the core inflation rate remained unchanged from October at 2.7%.
The latest increase in consumer prices was attributed to an acceleration in the inflation rate of the heavily weighted food, beverages & tobacco index, up 4.8% in November compared to the 3.7% increase in October. Prices of clothing increased 2.1%, while services prices and prices of miscellaneous items increased 0.2% and 1.9%, respectively. On the other hand, the fuel, light & water index slid 1.1%, slower than the 3.6% fall in the preceding month.
The annual inflation rate in the National Capital Region (NCR) grew 2% in November, adding to the 1.1% increase in October. This was brought about by the higher prices of clothing and slower rate of decline in the prices of fuel, light & water and services, the statistical office said.
In Areas Outside the National Capital Region (AONCR), consumer prices were up 3.1% on year, faster than the 1.9% increase in the prior month. This was mainly due to increases in the food, beverages & tobacco index, fuel, light & water index, and services index. Among the regions, annual inflation rate was highest in Cagayan Valley at 5.6%, while the lowest rate continued to prevail in Central Visayas at 1.7%.
On a monthly basis, consumer prices increased 0.6% on a national level in November, in line with expectations, and adding to the 0.6% growth in October.
The Philippine economy consolidated growth in the third quarter, rising 0.8% year-on-year, the same growth rate as in the second quarter. This compares to the 4.6% growth seen in the third quarter of last year.
Moody's Says U.S. And U.K. May Test Boundaries Of Triple-A Credit Ratings
Moody's Investors Service released a report Tuesday suggesting that the U.S. and the U.K. may test the boundaries of their Triple-A credit ratings.
According to the report, the U.S. and the U.K. may test the boundaries because their public finances have been worsening in the wake of the global crisis.
Among the challenges that will be faced by the U.S. and the U.K., the report said, will be "the pace and sustainability of economic growth and future interest rate trends, both of which affect the countries' ability to manage the significant debt burdens they have assumed as a result of the crisis."
Still, the report did note that the agency "does not see an immediate threat to the ratings of any of the 17 nations it currently rates Aaa."
"The next year or two will show whether growth potential has been structurally eroded or whether a robust yet sustainable recovery is possible," said Pierre Cailleteau, the Managing Director of Moody's Sovereign Risk group and lead author of the report. He added, "Next year, Aaa governments with stretched balance sheets will find themselves under pressure to announce credible fiscal plans and - if markets start losing patience - to start implementing them. This will complicate the recovery and test political cohesion."
The report showed that three of the four largest Aaa-rated countries covered in the report - the U.S., Germany and France - showed third quarter growth, while the fourth - the U.K. - showed a decline in growth.
In addition, the report said that, despite some struggles, the 17 Aaa-rated countries retain the characteristics necessary for a Aaa-rating.
Both the U.S. and the U.K. have "resilient" Aaa ratings as opposed to the stronger "resistant" ratings given to other countries like Germany, France, Canada, Switzerland, Luxembourg and New Zealand.
Despite being given weaker ratings, however, the U.S. and the U.K. have "adequate reaction capacity" to face the upcoming challenges, the report added.
Of the U.S. and the U.K., Cailleteau said, "While resistant, they are clearly not immune. Debt may increase, but not to the extent of stretching affordability beyond a level consistent with a Aaa status."
Canadian Dollar Advances Against US Dollar
The Canadian dollar advanced against the US dollar during Wednesday's early trading as oil climbed above $73 today, buoyed by industry data that showed a big drop in U.S. crude stocks.
Saudi Oil Minister Ali al-Naimi's comment also contributed to the positive mood. The minister assured that Gulf economies are strong despite anxieties over financial strains in the region, which helped easing fears about Dubai's debt problems. Against other currencies, the Canadian currency declined during this time period.
The American Petroleum Institute reported that crude inventories in U.S. fell 5.8 million barrels last week.
U.S. crude for January delivery rose 64 cents to $73.26 a barrel by 1:11 am ET, after falling $1.31 on Tuesday. NYMEX crude, which hit its lowest level since late November at $72.43 the previous session, has lost 7.3 percent since prices last rose on December 1. London Brent crude gained 47 cents to $75.66.
At 10:30 am ET today, the Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended December 4th.
The loonie edged up against the US dollar during Wednesday's early trading. The Canadian currency hit as high as 1.0602 against the dollar, with 1.043 seen as the next upside target level. The dollar-loonie pair closed yesterday's deals at 1.0640.
From U.S., the Commerce Department is due to release its wholesale inventories report at 10 am ET. Economists expect wholesale inventories at the end of November to show a 0.5% decline.
The Canadian dollar weakened against the currencies of Japan and Australia during today's early trading. The loonie that was worth 0.9617 against the Aussie and 83.17 against the Japanese unit at Tuesday's New York session close, fell to 0.9643 and an 8-day low of 82.35 by 3:55 am ET. If the Canadian currency drops further, 81.27 is seen as the next support level against the yen and 0.978 level against the Aussie.
A government report showed that Japan's gross domestic product expanded by just 0.3 percent in the third quarter of 2009 compared to the previous three months. That was well below analyst expectations for a 0.7 percent quarterly increase following the 1.2 percent expansion in last month's preliminary report.
On an annual basis, GDP was up 1.3 percent - again missing expectations for a 2.8 percent increase after the preliminary report showed a 4.8 percent jump.
The Canadian dollar that largely showed choppy trading against the euro during Wednesday's Asian trading, edged down during early European trading. The local dollar touched a 2-day low of 1.5677 versus the euro, compared to 1.5644 hit late Tuesday in New York. On the downside, 1.593 is seen as the next support level.
Yesterday, the Bank of Canada maintained its key interest rate at a record low of 0.25 percent and reiterated that it expects to leave the rate at its current level until the end of the second quarter of 2010.
Hungarian Forint Plummets To 5-week Low Against US Dollar
The Hungarian forint reached a 5-week low of 188.24 against the US dollar by 9:40 am ET Wednesday, compared to 186.31 hit late New York Tuesday. The dollar-forint pair is presently worth 188.0 with 192.3 seen as the next target level.
The forint declined as the Hungarian GDP dropped a seasonally adjusted 1.8% sequentially in the third quarter, confirming the preliminary report. In the second quarter, the GDP was down 1.9%.
Year-on-year, the GDP fell 7.1% in the third quarter, compared to the 7.4% decline in the previous quarter. The third quarter GDP was revised from 7.2% decline reported initially.
November Retail Sales Show Much Stronger Than Expected Growth
Retail sales increased by much more than expected in the month of November, according to a report released by the Commerce Department on Friday, with the report likely to ease some of the recent concerns about the outlook for holiday shopping.
The report showed that retail sales jumped by 1.3 percent in November following a revised 1.1 percent increase in October. Economists had been expecting sales to increase by a more modest 0.6 percent compared to the 1.4 percent growth originally reported for the previous month.
With the stronger than expected monthly sales growth, retail sales for November were up by 1.9 percent compared to the same month a year ago.
Excluding a 1.6 percent increase in sales by motor vehicle and parts dealers, retail sales still rose 1.2 percent in November after coming in unchanged in the previous month. The increase in ex-auto sales far exceeded economist estimates of 0.4 percent growth.
While the increase in ex-auto sales was partly due to a 6.0 percent jump in sales by gas stations, sales still increased by 0.6 percent excluding both auto and gasoline sales.
The sales growth was broad based, with only clothing and accessories stores and furniture and home furnishings stores reporting lower sales.
Electronics and appliance stores reported a notable 2.8 percent increase in sales, while building material and supplies dealers and online retailers also reported strong sales growth.
Commenting on the data, Lindsey Piegza, an economist at FTN Financial, said, "The American consumer is incredibly resilient. Despite labor market woes, the consumer was able to make a considerable move back into the market place."
"This holiday shopping season could make for a Merry Christmas after all," Piegza added.
At the same time, Peter Boockvar, equity strategist for Miller Tabak, noted that the Commerce Department report includes just 25 percent of hard data with the rest estimated, adding that we still have the key month of December to determine overall holiday sales.
In other economic news, the Labor Department revealed that import prices rose 1.7 percent in November, largely due to a spike in fuel prices. November's increase came after a 0.8 percent increase in October and a 0.2 percent advance in September.
Excluding a 7.3 percent increase in prices for fuel imports, import prices increased by a much more modest 0.4 percent in November, matching the increase seen in the previous month.
The report also showed that export prices increased by 0.8 percent in November after rising by 0.2 percent in October. Excluding a 3.7 percent increase in prices of agricultural exports, export prices still rose by 0.7 percent.
UK Employment Situation Better Than Forecast: BoE
UK employment has not dropped as much as forecast despite the severe recession in the economy, the Bank of England said on Monday.
In the foreword to the central bank's latest Quarterly Bulletin, Bank of England chief economist Spencer Dale said, "A marked feature of the response of our economy to the current recession is that employment to date has not fallen by as much as we might have feared given the falls in output."
Dale noted that the development may partly reflect the greater degree of wage flexibility that has been apparent in this recession compared to that in earlier downturns. "A substantial element of the workforce appears to have been able to protect their jobs by accepting slower wage growth." Further, average pay settlements fell sharply over the past year and many companies have imposed pay freezes.
Citing an annual survey of households' financial situation carried out for the central bank by NMG Financial Services Consulting, Dale said a net balance of households had experienced a decline in the income they had available after paying tax, housing costs, bills and loan payments. "However, despite the severe recession, the proportion of households who reported difficulties keeping up with bills and credit commitments had fallen slightly compared to last year's survey." This was partly due to the effects of the reduction in interest rates on borrowers' loan repayments.
More than half of all mortgagors in the survey reported a fall in their monthly mortgage payments, he noted. Further, nearly a quarter of respondents reported that they had increased or planned to increase the amount of money they save.
The rise in sterling export prices will create an incentive for rebalancing within the UK economy and resources may be reallocated towards the traded sector, Dale said. "Over time, UK export prices are likely to decline, as export contracts are renewed and new firms are attracted into the UK export sector, causing the UK terms of trade to decline."
European Currency Plunges To 2 1/2- Month Low Against US Dollar
During early deals on Tuesday, the European currency plunged to a 2 1/2-month low against the US dollar and traded near a 1-month low versus the British pound ahead of the German and Euro-Zone ZEW economic sentiment survey results.
At 5:00 am ET, the Centre for European Economic Research or ZEW is expected to release economic sentiment survey results for Germany. The economic sentiment indicator for Germany is seen at 50 in December, down from 51.1 in the previous month. The current conditions index is expected to rise to minus 60.1 from minus 65.6. Meanwhile, the economic sentiment indicator for the Eurozone is seen at 49.9 in December compared to 51.8 in November.
While, the euro pared its Asian session's gains against the Japanese yen it edged higher against the Swiss franc.
Against the US dollar, the European currency traded down during early deals on Tuesday. At 4:25 am ET, the euro-dollar pair declined to 1.4548, compared to 1.4658 hit late New York Monday. This set the lowest mark for the pair since October 2, 2009. The next downside target level for the pair is seen around 1.437.
The 16-nation currency that closed Monday's North American session at 0.8988 against the British pound plunged to a 26-day low of 0.8946 at 3:50 am ET Tuesday. If the euro-pound pair falls further, 0.889 is seen as the next target level.
House prices in the United Kingdom rose for the fourth straight month in November, a barometer of sentiment in the residential property market showed today.
The house price balance index from the Royal Institution of Chartered Surveyors (RICS) increased to 35 points in November from 34 points in October. Economists had expected a reading of 39 points. The survey subtracts the percentage of surveyors reporting falling prices from those reporting rising prices.
Against the Swiss franc, the single currency edged higher during Tuesday's early deals. At 1:30 am ET, the euro-franc pair reached a high of 1.5135, compared to Monday's closing value of 1.5123. On the upside, 1.515 is seen as the next target level for the pair.
Switzerland's State Secretariat for Economic Affairs announced today its latest economic forecasts. Experts now see a 1.6% decline in gross domestic product this year, slightly less than the 1.7% fall forecast in September. Meanwhile, the growth forecast for 2010 was hiked to 0.7% from 0.4%. The Swiss economy, which emerged from recession in the third quarter, is expected to grow 2% in 2011.
The euro lost ground after hitting a high of 130.41 against the yen at 12:00 am ET Tuesday. Currently, the euro-yen pair is trading at 129.86 with 129.1 seen as the next target level. The pair closed Monday's New York deals at 129.92.
Across the Atlantic, the U.S. PPI and industrial production reports for November, NAHB housing market index and the results of the New York Federal Reserve's empire state manufacturing survey for December and the Treasury Department's report on the flows of financial instruments into and out of the U.S. for October have been slated for release.
Dollar Eases Versus Euro, Sterling Ahead Of Fed Rate Call
The dollar tailed off versus other majors Wednesday morning in New York as traders braced for the latest interest rate decision from the Federal Reserve.
While the Fed is universally expected to hold its key rate near zero to avoid snuffing out the fragile economic expansion witnessed in the past quarter, all eyes will be on its accompanying statement for hints about when an exit strategy may be implemented.
The Fed will likely suggest that US economic recovery is picking up steam it, but that it plans to maintain its record low benchmark rate near zero for "an extended period."
The dollar fell sharply versus the sterling in early dealing, losing more than a penny to 1.6350. The pair has been in flux for the past few months, moving in a range between 1.6000 and 1.7000 for most of that time.
The dollar eased slightly versus the euro, sliding to 1.4570 from a 2-month high near 1.4500. Three weeks ago, the dollar hit a 16-month low of 1.5140, but has since been firming up on concerns about the health of the euro area economy and the fiscal stability of some member nations.
Eurozone's manufacturing purchasing managers' index climbed to a 21-month high in December, the latest survey from Markit Economics showed on Wednesday.
Meanwhile, the dollar barely budged versus the yen, holding just below the 90 mark. Against the loonie, the buck stayed near C$1.0600.
The Fed's rate call will likely overshadow a trio of important data points. The Labor Department will release the consumer price index details for November at 8.30 a.m ET. Economists expect that the headline consumer price index to rise 0.4% for the month and core CPI to be higher by 0.1% for the month.
Traders will also focus on a report on housing starts and building permits for November, slated for release by the Commerce Department at 8.30 a.m. ET. Economists estimate housing starts of 574,000 for November, after reporting 529,000 in the previous month.
The weekly energy inventory report for the week ended December 11 is slated for release by the Energy Information Administration at 10.30 a.m. ET.
Pound Spikes Down Against Majors.
The British pound staged a sharp fall against its major counterparts at 2:00 am ET Thursday. The pound-dollar pair thus declined to a 2-day low of 1.6217, compared to 1.6336 hit late New York Wednesday. The next downside target level for the pair is seen around 1.621.
Meanwhile, the British currency is currently trading at 0.8885 against the euro and 1.6971 versus the franc, compared to today's early Asian session's new multi-week highs of 0.8854 and 1.7030 respectively. This may be compared to yesterday's closing values of 0.8898 against the European currency and 1.6970 versus the Swiss franc.
Against the Japanese yen, the pound is now quoted at 145.86, compared to Wednesday's closing value of 146.67.
German Ifo Business Confidence Improves
Latest Ifo survey results showed on Friday that German business confidence continued to improve in December.
Business confidence improved further to 94.7 in December, the Munich-based Ifo Institute for Economic Research said. The index stood above prior month's 93.9 and the expected 94.5.
The current conditions index stood at 90.5, up from 89.1 in the previous month. Consensus forecast was for a reading of 90. Meanwhile, expectations rose to 99.1 in December from 98.9. Economists were looking for a reading of 99.
ING's Carsten Brzeski said though the real economy is still lagging but the three-month average of the Ifo predicts good news for industrial production in the months ahead. Going forward, the economist expects exports to remain the main growth driver and the economy to benefit when the full impact of the government's stimulus package unfolds next year. He is not ruling out a positive impact from consumer spending either.
"Of course, this will not be enough to undo the crisis immediately. Low capacity utilisation and increasing unemployment will remain a painful reminder of the severity of the crisis."
Capital Economics' Jennifer McKeown said the Ifo survey gave further evidence that the economy continues to recover, but the rate of improvement will be fairly gradual. The current conditions index, which is below its long-term average, confirmed that conditions are still thought to be considerably weaker than 'normal', the economist noted.
"Although sentiment is now rising far more modestly than during the summer, the index points to a further sharp slowdown in the annual rate of economic contraction."
"On the bright side, the further increase in sentiment in the manufacturing sector is an encouraging sign that Germany's exporters are bearing up well against the strong currency, although it remains at a low level."
Commerzbank's J?rg Kr?mer said the view that the strong growth in the second half of 2009 is unlikely to continue smoothly into 2010 as companies hardly revised up their expectations. However, the much more positive view on current business situation suggests that the German economy has grown nearly as sharply in the fourth quarter of 2009 as in the excellent third quarter.
"The strong fall in order intake in October was probably just a one-off."
Danske Bank's Frank ?land Hansen said the current level of Ifo expectations signals a strong rebound in industrial production. The improvement in retail is very comforting, the economist noted, as private consumption is expected to kick in as a more sustainable driver of growth.
"There is a risk of a double dip if consumption fails to pick up early next year. If other confidence indicators than ZEW begin to fall back there is reason to be worried."
Britons To Spend GBP1.37 Bln On Christmas Eve
Many of the UK consumers have left their Christmas shopping to the last minute rush, as up to 13.3 million people are likely to shop on Christmas Eve, a survey from Sainsbury's Credit Cards said on Thursday.
The survey showed that 19% of adults plan to do some of their shopping on Christmas Eve, spending around GBP 1.37 billion. This equals GBP 57 million an hour or GBP 951,000 per minute. Overall, around 7% of people's festive spending is set to take place on Christmas Eve. But, 1.53 million people intend to do between 91% and 100% of their festive shopping then.
Additionally, the survey found that around 2.1 million people intend to put half or more of their last-minute Christmas shopping on their credit cards. Nearly 18% of the last minute shopping, worth GBP246 million, is likely to be placed on credit cards.
Aussie Advances To New Multi-day Highs Against Most Majors
The Australian dollar advanced to a new multi-day highs against the currencies of Japan, US, Europe and New Zealand as a surge in local stocks encouraged investors to bet on higher-yielding currencies.
On the equity front, the Australian market ended in the positive territory today having reopened after 4 holidays, taking cues from Wall Street where the major averages ended higher in yesterday's trading session.
The benchmark S&P/ASX200 Index advanced 54.20 points, or 1.13% to close at 4,845, while the All-Ordinaries Index ended at 4,857, representing a gain of 53.40 points, or 1.11%.
During early trading on Tuesday, the Australian dollar rose to an 8-day high of 1.6133 against the euro. This may be compared with yesterday's closing value of 1.6216. On the upside, 1.608 is seen as the next target level.
The Aussie showed strength against the Japanese yen during Tuesday's early trading. At about 4:05 am ET, the Aussie-yen pair reached an 18-day high of 81.98, with 82.8 seen as the next upside target level. At Monday's New York session close, the pair was quoted at 81.30.
In early trading on Tuesday, the Australian dollar advanced to an 12-day high of 0.8952 against the US currency. The next upside target level for the aussie-greenback pair is seen at 0.901. The Aussie-dollar pair closed Monday's deals at 0.8872.
From U.S., the S&P/Case-Shiller home price index, is scheduled to be released at 9 am. Economists expect a 7.30% year-over-year decline in the 20-city composite house price index for October following a 9.36% drop in the previous month.
The Conference Board is scheduled to release its consumer confidence report for December at about 10 am ET. The report, is expected to show that the consumer confidence index rose to 53 in December.
The Australian currency edged up against the New Zealand dollar during early Asian deals on Tuesday. At 1:55 am ET, the aussie advanced to a 6-day high of 1.2566 against the kiwi, compared to 1.2537 hit late New York Wednesday. The next upside target level for the Aussie-kiwi pair is seen around 1.262. As of now, the pair is trading at 1.2558.
The Australian dollar also traded up against its Canadian counterpart during this time period and hit as high as 0.9323 by 4:10 am ET. This may be compared with yesterday's closing value of 0.9254. On the upside, 0.951 is seen as the next resistance level.
Ladies! Happy New Year to you Hope, in the next year your reviews will be useful as always!
Thanks a lot.You are always welcome!
Thank you so much! InstaForex Company also wishes you Happy New Year!
Dollar Rises To 3-day High Against Yen
The dollar that fell to 92.12 against the yen at 1:25 am ET Thursday rose sharply around 1:45 am ET. As of now, the dollar-yen pair is trading at a 3-day high of 92.98 with 93.2 seen as the next target level.
Meanwhile, the dollar also extended its Asian session's uptrend against the currencies of Europe, Switzerland and U.K. At present, the dollar is worth 1.4346 per euro, 1.5920 against the pound and 1.0333 against the franc.
IEA Keeps 2010 Global Oil Demand Unchanged.
Friday, the International Energy Agency kept its global oil demand forecast for the current year unchanged from its previous forecast in December. The estimate for the previous year was also kept unchanged.
In its latest Oil Market Report, the Paris-based IEA said oil demand would be 86.3 mb/day in 2010, up from 84.9 mb/day estimated for 2009. The agency said growth is driven by non-OECD countries, most notably in Asia. Oil demand recovery in the OECD will likely remain sluggish, despite the recent cold weather, it added.
Moreover, the report showed that crude oil prices surged to 15-month highs in early January on very cold winter weather in much of the northern hemisphere and escalating geopolitical tensions in key oil producing countries. At their peak, prices had jumped by around $10-12/bbl from December lows. Prices have since eased, last trading in a $78-80/bbl range.
OPEC-12 crude output rose 75 kb/day to 29.1 mb/day in December, resulting in effective spare capacity of 5.4 mb/day. Further, the agency said global supply rose 270 kb/day in December to 86.2 mb/day, on both higher OPEC and non-OPEC output.
Euro Mixed Against Majors Amid German PPI.
The German PPI for December was released at 2:00 am ET. Amid the report, the euro showed mixed trading against other major currencies. While the euro gained against the franc, it fell against the dollar and the yen. Against the pound, the euro was little changed.
As of now, the euro is worth 1.4203 against the greenback, 129.43 versus the yen, 1.4744 versus the Swiss franc and 0.8709 versus the pound.
European Economics Preview: U.K. Public Sector Finance Data Due
The United Kingdom is scheduled to release public sector finance and money supply data on Thursday. The Flash Purchasing Managers' Index reports for major Eurozone economies are also due.
At 3:00 am ET, the Swiss central bank is scheduled to release money supply data for December. M3 money supply had increased 7.6% annually in November.
The release of the Flash Purchasing Managers' Index reports for major Eurozone economies is set to start at 3.00 am ET. The first one expected to hit the wires is the Flash French PMI for both manufacturing and service sectors. The manufacturing PMI is forecast to remain unchanged at 54.7 in January, while the services PMI is expected to rise to 59 from 58.7.
Thereafter, Flash German PMI data is due at 3.30am ET. Economists expect manufacturing PMI to climb to 52.9 from 52.7, while the services PMI is seen at 53, up from 52.7.
In the meantime, the Statistics Denmark is expected to release consumer sentiment data for January. The index is seen at minus 0.8, up from minus 3.6 in the preceding month.
Consumer sentiment data is also due from the Dutch statistical office, along with unemployment figures. Economists expect the jobless rate to edge up to 5.4% in the October to December period.
At 4:00 am ET, Eurozone's PMI report is also due. The manufacturing PMI is expected to stand at 51.9 compared to 51.6 in December, while the services PMI is forecast to rise to 53.8 from 53.7.
The U.K.'s money supply data is due from the Bank of England at 4:30 am ET. M4 money supply is forecast to rise by 8.9% on a yearly basis and by 0.9% on a monthly basis. The U.K.'s public finance report is also due at the same time. Public sector net cash requirement is seen at GBP 25.5 billion compared to GBP 14.7 billion in November.
Afterwards at 6:00 am ET, the Confederation of British Industry is set to release January's Distributive Trade Survey results.
Fitch Upgrades Russia's Ratings Outlook
Friday, Fitch Ratings revised the Russian Federation's ratings outlook to stable from negative. The agency affirmed its long-term foreign and local currency Issuer Default Ratings or IDRs at 'BBB'. Fitch also affirmed short-term foreign currency IDR at 'F3' and the country ceiling at 'BBB+'.
"The revision of Russia's outlook to stable reflects our greater confidence in economic and financial stability in Russia," said Edward Parker, Head of Emerging Europe in Fitch's Sovereigns team. The rating agency assessed that downside risks to the banking sector lessened somewhat due to the stabilization of the economy and banks' increasing loss absorption capacity.
Parker said that the increase in oil prices, recovery in net private sector capital inflows and economic activity, decline in inflation and a lower than expected 2009 budget deficit outturn also supported the decision to raise the rating outlook.
Eurozone Industrial New Orders Grow More Than Initially Estimated
Monday, Eurozone statistical office Eurostat revised industrial new orders data after Germany's Federal Ministry of Economics and Technology revised the country's new order data on January 22 to show better growth figures.
According to the revised report, Eurozone industrial new orders rose 2.7% month-on-month in November after a revised fall of 2.1% in October. The most striking improvement was the slowdown in annual decline to just 0.5% from October's 14.5% fall.
In an earlier release published on January 22, the Eurostat said industrial new orders rose 1.6% month-on-month in November, taking the annual decline to 1.5%. On the same day, official report showed that new orders to German industries grew 2.8% month-on-month in November, a revision from just 0.2% rise reported on January 7. It follows a 1.9% decline in October. November's annual growth was revised to 4.5% from 1.8% rise initially published.
Today's report showed that new orders for intermediate goods increased by 2.3% in the euro area and those for capital goods rose by 1.1%. Orders for durable consumer goods gained 0.6% and those for non-durable consumer goods grew by 0.8%.
Industrial new orders for EU27 rose 2.6%, a revision from 1.8% growth reported initially. It follows a revised 2.1% decline in October. Annually, the decline in November was 1.2%, revised from 2% fall previously reported and follows a revised 14.2% drop in October.
Among the member states for which data were available, total manufacturing orders rose in fifteen and fell in eight. The highest increases were registered in Austria, Estonia and Greece, while the largest decreases were in Hungary, Ireland and Bulgaria.
Bank Of Japan Holds Key Interest Rate As Expected
The policy board of the Bank of Japan on Tuesday unanimously decided to retain the overnight call rate at 0.10%, in line with market expectations. The last change in the rate was a 0.10% cut in interest rates at the December 2008 meeting.
In an accompanying statement, the central bank said, "Japan's economy is picking up mainly due to various policy measures taken at home and abroad, although there is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand. In the conduct of monetary policy, the bank will aim to maintain the extremely accommodative financial environment.
"The bank recognizes that it is a critical challenge for Japan's economy to overcome deflation and return to a sustainable growth path with price stability. To this end, the bank will continue to consistently make contributions as central bank."
The Bank of Japan's baseline scenario projects the pace of improvement in the economy to remain moderate until around the middle of fiscal 2010. Thereafter, the bank expects export-driven growth in the corporate sector to spill over to the household sector, and predicts the economic growth rate to gradually rise.
ECB Chief Trichet Backs U.S. Bank Reforms
European Central Bank President Jean-Claude Trichet on Tuesday voiced his backing to U.S. President Barack Obama's banking reforms but stressed the need for international coordination in tackling the issue.
In an interview with The Wall Street Journal, Trichet said the reform proposals were "relevant and interesting" and that the ECB was examining them with great care.
"They go in the same direction of our own position, namely ensuring that the banking sector focuses on financing the real economy, which is its key role," said Trichet.
Obama unveiled plans last week to limit the size of banks, saying they would "never again" get so big that taxpayers have to bail them out in the event of their failure.
The central bank chief also called on U.S. authorities to confirm Ben Bernanke for another term as Federal Reserve Chairman, saying that he held the American in "very great esteem".
Turning attention to Greece's fiscal problems, Trichet expressed confidence in Athens' ability to manage the crisis to bring its budget deficit below 3% of gross domestic product in 2012.
Greenback Mixed Ahead Of Jobless Claims
The dollar remained mixed versus other major currencies Thursday morning in New York, holding yesterday's gains versus the euro and yen while ceded a bit of ground against the sterling and loonie.
Traders were looking ahead to key data on the jobs situation and manufacturing sector, following Wednesday's decision by the Federal Reserve to maintain its key lending rate near zero.
The Labor Department is due to release its customary jobless claims report for the week ended January 23rd at 8:30 AM ET. Economists expect a decline in claims to 450,000. Lingering weakness in the jobs market compelled the Fed to reiterate it will keep rates at record low levels for an extended period yesterday.
The Commerce Department is set to release its durable goods orders report, which gives the value of orders placed for goods designed to last for more than 3 years, at 8:30 AM ET. Economists look forward to a 2% increase in durable goods orders for December.
The dollar leveled off versus the euro after hitting a fresh 5-month high of 1.3935 last night. Against the yen, the buck was steady at Y90.25, an improvement from a monthly low near Y89 set earlier in the week.
The number of unemployed in Germany rose in January, ending declines in past six consecutive months, as heavy snowfall and freezing temperatures hurt the country's labor market.
The seasonally adjusted number of unemployed increased by 6,000 month-on-month to 3.43 million in January. But, the increase was less than the expected 15,000. The rise in January follows a drop of 3,000 in the previous month.
Eurozone economic sentiment rose for the tenth successive month, a survey conducted by the European Commission showed Thursday. The economic confidence index stood at 95.7 in January, up from a revised reading of 94.1 in the previous month. The expected reading was 92.3.
Meanwhile, retail sales in Japan fell 0.3 percent on year in December, the Ministry of Economy, Trade and Industry said on Thursday. That missed forecasts for a 0.3 percent annual gain after the revised 1.1 percent contraction in November.
The dollar continued to show a lack of direction versus the sterling, easing to 1.6265. The pair has bounced back and forth between 1.6100 and 1.6300 for the past week.
With commodity prices stabilizing this morning, the dollar gave back some of its recent gains versus its Canadian counterpart, slipping a Canadian penny from yesterday's monthly high near C$1.0680.
ECB's Bini Smaghi: Banks Must Use Profits To Build Capital
Banks should use their profits, obtained by the interventions by the policymakers, to raise their capital, instead of rewarding banks' managers and shareholders, European Central Bank Executive Board member Lorenzo Bini Smaghi said Friday.
Speaking in a seminar at the Ernst & Young Business School in Milan, Bini Smaghi said there is now a broad consensus that the period leading up to the crisis was characterized by excessive credit growth. In order to revert to a more balanced and sustainable management of credit, while safeguarding the role that credit plays in stimulating growth, new rules, regulations and incentives for financial market participants are needed.
"We must find a new equilibrium in which the financial system truly supports the real economy," he said. "If we fail to reach the new equilibrium in due course we will have wasted not only the crisis but also the resources of taxpayers that have been used to save the system. This can only backfire on the system," he added. Further, he said the recommendation for banks to rebuild their capital bases under Basel 3 regulations is weighing on banks' lending decisions. "This dynamic is worrying," the central banker said. "It indicates that the banking system is interpreting the new regulations restrictively for credit."
Bini Smaghi said this approach is undesirable and out of line with the objectives so far followed by the economic policy authorities of supporting the financial system.
Dollar Mixed Ahead Of Key Housing Figures
The dollar was mixed on Tuesday amid a modest increase in risk appetite as US stocks looked to rise for a second day.
Traders were turning their attention to today's pending home sales figures, looking for signals that the housing market is gradually improving following the worst downturn in decades.
The National Association of Realtors will release its pending home sales data at 10 AM ET. The index is expected to show a rise of 1.1% for December
At the same time, Treasury Secretary Timothy Geithner is due to testify before the Senate Finance Committee on the fiscal year 2011 budget. Also, Paul Volcker, the Chair of the President's Economic Recovery Advisory Board, will testify on regulations to limit high-risk bank activities before the Senate Banking Committee in Washington.
Still, activity on the currency markets may be slightly muted ahead of this week's pivotal jobs data.
The ADP National Employment report, which sheds light on non-farm private employment, is scheduled to be released on Wednesday. Two days later, the Labor Department is scheduled to release its monthly employment report. Economists estimate that the U.S. economy added 13,000 jobs in January and expect the unemployment rate to remain unchanged at 10%.
This morning's biggest move came against the aussie after the Reserve Bank of Australia maintaned the overnight cash rate, its key interest rate, at 3.75%.
The decision was not anticipated, with markets widely expecting a fourth successive 25 basis points hike. On the news, the buck jumped to a monthly high of .8779 before drifting slightly lower.
The dollar eased to 1.3975 versus the euro, extending its move away from last weekend's 6-month peak near 1.3850.
Eurozone producer prices continued to decline in December on an annual basis, suggesting that underlying inflationary pressures remain muted in the region. The European Central Bank is seen having room to maintain its record low interest rate of one percent until prices show signs of rising.
The producer prices index, or PPI, fell 2.9% year-on-year in December after a 4.4% drop in November, data released by Eurostat showed Tuesday.
The dollar was little changed at 1.5940 versus the sterling, staying within a penny of yesterday's monthly high near 1.5850.
Tuesday, the latest Purchasing Managers' Index survey for the British construction sector showed that the headline index rose unexpectedly in January. But the index continued to stay below the neutral level of 50 suggesting a weaker pace of activity at the start of 2010.
The dollar also held its ground versus the yen, hovering at 90.70 approaching mid-morning.
However, the dollar was on the defensive versus the commodities-backed loonie, as metals and energy prices rebounded from steep recent losses. The buck slipped to C$1.0580 against its Canadian counterpart.
Greece PM Outlines Deficit Cutting Measures
Greek Prime Minister George Papandreou announced on Tuesday, tough measures to cut the country's soaring budget deficit. His austerity measures include a freeze on salaries and an increase in tax on fuel. He also hinted a rise in the retirement age.
In a televised address Papandreou said, "We must act swiftly and decisively." He urged various political parties to support the national effort. It is the time to take bold decisions here in Greece, as other European Union members have done, he said.
Today, the European Commission is expected to adopt its Opinion on the Stability Programme of Greece and also the decisions and recommendations to ensure that the budget deficit of the country is corrected. The nation is under immense pressure to bring its budget deficit below 3%, the threshold set by the Maastricht Treaty. The government is now targeting to bring its deficit, estimated at 12.7% of gross domestic product, with the EU's 3% limit by the end of 2012.
European Commission President Jose Manuel Barroso said a successful correction of the huge deficit is not only important for Greece but for the euro area and the EU as a whole. He said the adjustment "looks feasible but subject to risks." According to economists at Capital Economics, while the immediate pressure on the public finances may not be as intense as it seems, Greece still faces an enormous task in meeting its short-term financing requirements. A less than favorable judgement in European Commission's assessment of Greece's Stability Plan would intensify the pressure on the nation to announce much more decisive measures to improve its fiscal position.
Following the downgrade action taken by Fitch Ratings on December 8, the Standard & Poor's lowered Greece's long-term sovereign credit rating to 'BBB+' from 'A-' on December 17. On December 22, Moody's cut the government bond ratings to A2 from A1, reflecting the government's very limited short-term liquidity risks on the one hand, and its medium- to long-term solvency risks on the other.
Trichet Repeats Eurozone Recovery Would Be Uneven
The recovery process in the Eurozone economy is likely to be uneven, European Central Bank President Jean-Claude Trichet said Thursday, after the central bank retained key interest rate at a record low of 1%.
In his introductory statement, Trichet said this outlook remains subject to uncertainty. The outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term, he added.
He noted that the the euro area has been benefiting from a turn in the inventory cycle and a recovery in exports, as well as from the significant macroeconomic stimulus under way and the measures adopted to restore the functioning of the financial system.
But, he asserted that these stimuli will unwind over time, while activity is likely to be adversely affected by the ongoing process of balance sheet adjustment in the financial and non-financial sectors, both inside and outside the euro area. Additionally, low capacity utilization rates are likely to dampen investment, and unemployment in the euro area is expected to increase somewhat further, thereby lowering consumption growth.
On prices, the central banker said inflation is expected to be around 1% in the near term and to remain moderate over the policy-relevant horizon. Trichet also said inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council's aim of keeping inflation rates below, but close to, 2% over the medium term.
He repeatedly urged banks to use the improved funding conditions to strengthen their capital bases further and, where necessary, take full advantage of government support measures for recapitalization.
Further, he pointed out that many euro area countries are faced with large, sharply rising fiscal imbalances. "It is of paramount importance that the stability programme of each euro area country clearly defines the fiscal exit and consolidation strategies for the period ahead," Trichet said. He urged countries to focus more on expenditure reforms.
Malaysia Dec. Trade Surplus Widens
Friday, the Department of Statistics Malaysia announced that the trade surplus stood at MYR 12.1 billion in December, up from MYR 8.88 billion in November. This was the 146th consecutive month of trade surplus since November 1997. Economists expected a trade surplus of MYR 9.35 billion for December.
Exports increased 9.2% month-on-month to MYR 54.67 billion in December from MYR 50.07 billion in November. This was the highest monthly exports for 2009. At the same time, imports climbed 3.4% to MYR 42.58 billion.
On an annual basis, exports increased 18.7% in December, compared to the 3.3% fall in the previous month. Economists were looking for an increase of 12.5%. Meanwhile, imports grew 23.3% in December, faster than the 2.3% increase in November. Economists expected an increase of 21.5%.
In the fourth quarter, exports grew 10.6% sequentially to MYR 159 billion, while imports rose 8% to MYR126.55 billion. Year-on-year, exports and imports increased by 5.1% and 6.7%, respectively.
German Exports Rise For First Time Since 2008
German exports rose on an annual basis for the first time in fourteen months in December, data released by the Federal Statistical Office showed Tuesday. However, the year 2009 saw exports falling the most since 1950.
As global demand started picking up amid the economic recovery, German exports rose 3.4% year-on-year in December. That was the first rise since October 2008 and followed a 3.6% decline in November.
"Today's numbers highlight once again that the German economy can almost always rely on a helping hand from the export sector," said Carsten Brzeski, senior economist at ING Bank. "The road might be bumpy but it is the road to recovery and not a dead-end street."
On a monthly basis, exports continued to rise for a fourth month, with 3% rise in December. That was in contrast to a 0.1% drop economists had expected. In November, overseas sales grew 1.1%.
According to Commerzbank analyst Simon Junker, the trend in foreign trade is still clearly upwards and contributed positively to economic growth in the fourth quarter. In the coming months, the analyst expects exports to climb again, although the dynamics should slow down.
Suggesting that domestic demand is likely to recover in the near future, the pace of decline in imports slowed to 6.5% annually from 15.1% in November. Moreover, imports rose 4.5% month-on-month, the first rise in three months.
Colin Ellis, an economist at Daiwa Capital Markets Europe, said today's data could reflect some normalization in imports. The economist sees the German economic recovery to be disproportionately dependent on exports during 2010 amid subdued consumer spending.
The trade surplus in December was EUR 13.5 billion, down from EUR 17.2 billion excess in November. Provisional results of the Deutsche Bundesbank showed a current account surplus of EUR 20.6 billion for December, up from EUR 17.8 billion surplus in the previous month.
Further, Destatis reported that Germany exported commodities to the value of EUR 803.2 billion in 2009, down 18.4% over 2008. Similarly, imports dropped 17.2% to EUR 667.1 billion. The statistical office said it was the biggest decline recorded in foreign trade in relation to both imports and exports since 1950.
The foreign trade balance showed a surplus of EUR 136.1 billion in 2009, narrower than the EUR 178.3 billion in the previous year. The current account surplus during the period was EUR 119.4 billion, smaller than EUR 165.2 billion surplus logged in 2008.
"As regards the world's top exporting nations, Germany as the largest exporter was overtaken by China in 2009," Destatis said. Citing information from the Chinese Ministry of Commerce, Destatis said Chinese exports amounted to US$1,201.7 billion, while German exports totaled US$1,121.3 billion in 2009.
Also on Tuesday, the statistical office confirmed January's consumer price inflation at 0.8%, slightly down from 0.9% recorded in December.
Euro Declines Against Most Majors
The euro lost ground against most of its major counterparts during European session on Thursday.
Against the British currency, the euro slipped to 0.8759 at 9:00 am ET, down from a new multi-week high of 0.8844 hit at 4:15 am ET. The current quote for the euro-pound pair is 0.8761, compared to yesterday's close of 0.8811.
The euro traded in a tight range against the Swiss franc. As of now, the euro-franc pair is trading near yesterday's close of 1.4666.
The euro lost ground against the U.S. dollar. At 9:00 am ET, the euro fell to 1.3653 against the U.S. currency. As of now, the euro is worth 1.3669 against the U.S. dollar. The euro-greenback pair closed yesterday's trading at 1.3734.
The euro showed a downtrend against the Japanese currency as well. At 9:10 am ET, the euro declined to 122.49 versus the yen. At present, the euro is trading at 122.72 versus the yen, compared to yesterday's close of 123.61.
Dollar Hits Fresh Highs Versus Slumping Euro
Risk averse traders continued to flock to the relative safety of the dollar on Friday, with the world's de facto reserve currency enjoying a solid bid amid growing speculation the steam has run out of the global recovery.
The buck hit a fresh 9-month high again the euro, which has been hammered amid concerns that Greek debt problems will spread to other fragile economies without meaningful intervention on the part of more stable euro area nations.
However, with the eurozone struggling with anemic economic growth, major economies may be hesitant to drastically boost spending in order to prevent the Greek contagion.
European officials offered vague promises to support Greece on Thursday, and are expected to detail an aid package sometime next week.
Meanwhile, encouraging US retails sales data was overshadowed by news that China is engineering a soft slowdown of its economy.
A report from the Commerce Department on Friday showed that retail sales increased by 0.5 percent in January following a revised 0.1 percent decrease in December.
Adding to worries about the sustainability of the global recovery, China, now the engine of global growth, hiked its reserve requirement on banks in order to stem lending.
Even with the Dow taking back most of a 160 point drop in early dealing, the dollar sustained most of its gains against the euro.
The dollar rose to 1.3531 versus the euro, its highest level since last May, then backed off a penny to 1.3650.
At the same time, the buck extended this week's run of choppy trading versus the sterling, bouncing back and forth near 1.5600. The buck touched an 8-month high of 1.5533 a week ago, but has since risen no further.
The dollar also remained directionless against the yen, hanging around the Y90 mark.
The eurozone continued to lag behind the global economic recovery in the fourth quarter of 2009. Gross domestic product across the eurozone grew by only 0.1% in the fourth quarter compared to the previous three-month period.
The German economy, Europe's largest, unexpectedly stagnated in the fourth quarter as final consumption expenditure and investment failed to support growth.
Better-than-forecast French growth figures may have prevented the eurozone economy from sliding back into contraction mode.
Greece, saw its output shrink by 0.8% in the fourth quarter, casting doubts about the Greek public's willingness to accept cost cutting measures aimed at getting the nation's debt under control.
Euro Mixed Against Majors
The euro traded mixed against other major currencies during early European deals on Monday. The euro pared its recent gains against the pound and the franc, but declined against the yen. However, the euro recovered its recent losses against the U.S. dollar.
European stocks rose today in early trade, with banks and commodity stocks taking the lead as investors awaited the euro zone finance ministers meeting.
In early deals, Germany's DAX climbed 0.5%, France's CAC-40 index jumped 0.8% and U.K.'s FTSE 100 index rose 0.7%.
The euro pared its recent gains against the pound during early European session on Monday. The euro slipped to 0.8673 at 4:00 am ET, moving down from 0.8705 hit earlier. Presently, The euro-pound pair is trading near Fridays' New York session close of 0.8674.
The euro lost some its late Asian session gains versus the Swiss currency during early European deals on Monday. Moving down from a high of 1.4681 touched at 12:55 am ET, the euro reached a low of 1.4655 at 4:30 am ET. As of now, the euro is trading at 1.4656 against the franc, compared to Friday's New York session close of 1.4666.
On Monday, against the yen, the euro extended its Asian session's downtrend during early European deals. At 4:30 am ET, the euro fell to 122.43 against the yen. The current quote for the euro-yen pair is 122.45, compared to Friday's close of 122.67.
The euro recovered its recent losses against the U.S. dollar during early European deals on Monday. The euro drifted higher to 1.3610 at 4:15 am ET, moving up from 1.3594 hit earlier. As of now, the euro is worth 1.3608 against the greenback, compared to Friday's close of 1.3623.
The U.S. financial markets are closed today in observance of Presidents Day.
ECB's Quaden: No Plans To Raise Key Rate
The European Central Bank currently has no plans to raise interest rates as there is no imminent risks of inflation and it would withdraw emergency support measures gradually, Governing Council member Guy Quaden said Wednesday.
There is "no reason to raise interest rates at the moment," Quaden said in Brussels. "We don't see any risks for the moment."
The central bank has kept its interest rate at a record low of 1% since May 2009 to support the economy in battling a severe downturn. The bank also injected billions of euros to maintain liquidity in the region's banking system.
With regard to wiping out emergency measures, Quaden, who also heads the National Bank of Belgium, said a gradual approach would be the best. He noted that a delayed withdrawal may bring negative consequences. According to the central banker, the Eurozone recovery is fragile as it was led by huge fiscal stimuli and unemployment would keep rising as firms continue to suffer.
Dollar On Pause Near 9-Month Highs
The dollar was little changed versus other major currencies Monday morning in New York, holding onto most of its strong recent gains versus the struggling euro.
The buck hit new 9-month highs last week amid speculation the Federal Reserve may be getting set to tighten monetary policy following a surprise move to raise the discount lending rate to banks.</p>
With Europe mired in debt problems and experience sluggish growth, the dollar has surged over the past few months.
The buck was at 1.3590 versus the euro this morning, having touched as high as 1.3440 last week.
Against the sterling, the dollar was steady at 1.5456, pulling back a penny from Friday's highest mark since last May.
At the same time, the dollar drifted slightly lower versus the yen, easing to 91.20 from a monthly high above 92.
With no major economic data on tap for the day, traders will focus on Fed Chairman Ben Bernanke's appearance before the House Financial Services Committee.
Later this week, the markets will be treated to preliminary fourth quarter growth figures, as well as data on housing and employment.
In economic news from overseas, Greece will meet its very ambitious deficit-reduction goals and the country's government is prepared to take additional measures, Greek central bank governor George Provopoulos said in an interview with Bloomberg.
Euro Eases From Multi-day Highs Against Most Majors
In early European deals on Monday, the euro eased from an early Asian session's multi-day highs against the dollar, the yen and the pound as investors remain concerned about sovereign debt problems.
Research firm DBS said today that the euro's direction this week depends on two key events, namely the Greek bond issue and the Federal Reserve Chairman Ben Bernanke's testimony.
Early this week, Greece is expected to announce details on its plan to issue 10-year bonds, while Bernanke is expected to deliver his semi-annual congressional testimony on February 24 and 25.
The firm is of the view that the euro will resume its depreciation if the Greek bond issue causes widening of Greek credit default swap and if Bernanke relays more optimism about recovery, while also showing patience on rate hikes.
The euro that rose to an 11-day high of 0.8819 against the pound in early Asian deals on Monday showed choppy trading in late Asian deals but fell during the early European session. As of now, the euro-pound pair is worth 0.8795, down from Friday's close of 0.8805.
Against the franc, the euro declined to 1.4649 at 4:25 am ET, from an early Asian session high of 1.4668. As of now, the euro-franc pair is trading near Friday's close of 1.4649.
Monday morning in Asia, the euro strengthened to an 18-day high against the Japanese currency, but pared gains during late trading and extended its slide in early European deals. At 4:30 am ET, the euro-yen pair was worth 124.71, compared to Friday's close of 124.67.
Moving down from an Asian session's multi-day high of 1.3665 against the U.S. dollar, the euro touched a low of 1.3618 at 4:35 am ET. At present, the euro-dollar pair is trading at 1.3617, compared Friday's close of 1.3587.
Looking ahead, San Francisco Federal Reserve President Janet Yellen is scheduled to speak at the University of San Diego at 10:30 am ET.
Meanwhile, the Federal Reserve Chairman Ben Bernanke is scheduled to appear before the House Financial Services Committee hearing on "Prospects for Employment Growth: Is Additional Stimulus Needed?" at 11 am ET.
Australia Better Prepared To Accommodate Mining Boom, Battellino Says
Reserve Bank of Australia deputy governor Ric Battellino said on Tuesday that the country was better prepared to deal with a mining boom than in the past because of its floating exchange rate and tighter monetary and fiscal policy frameworks.
But the rapid emergence of China and India means the current mining surge could be a lot longer than previous booms, he said.
In a speech to the Sydney Institute, Battellino said the current boom began in 2005 before being held back by the global financial crisis and that now, the dynamics of a boom are starting to reappear.
"History tells us that mining booms are periods of significant economic change and that they can pose complex challenges for policy makers," said Battellino.
"Key among these is the need to ensure flexibility in the economy and maintain disciplined macroeconomic policies in order to contain the inflationary forces generated by the boom."
Battellino did not elaborate on the outlook for monetary policy, with the RBA's March rate setting meeting fast approaching.
"In the 30 years since the previous boom, the Australian economy has developed in ways that should make it better able to accommodate the surge in mining activity that is currently under way," said Battellino.
The central banker said the floating exchange rate is a key difference from the past while goods and labor markets are more flexible, and monetary and fiscal policy frameworks are more "soundly based".
"This gives grounds for confidence that we can do better this time, but the task will not be without challenges," Battellino said.
Australia was the first major economy to raise interest rates in the aftermath of the global financial crisis.
The country's economy has been shielded from the worst of the worldwide recession, thanks to continuing strong demand from China for its abundant mineral resources and active stimulus measures implemented on the domestic front.
Euro Mixed Against Majors Following Economic Reports
During early European deals on Wednesday, the euro showed mixed trading against other major currencies amid various economic reports, which include German final GDP for the fourth quarter, GfK consumer confidence index for March, Italy's retail sales and the Euro-zone industrial new orders for December.
While the euro gained against the dollar and the pound, it recovers recent losses against the yen. On the other hand, the euro showed choppy trading against the franc.
German gross domestic product was flat in the three months through December period, the Federal Statistical Office said, confirming preliminary estimates. The stall in German growth follows two quarters of expansion in Europe's largest economy.
Meanwhile, market research group GfK said today that consumer confidence among Germans is likely to decline going into March, as worries over unemployment weigh on consumers. The forward-looking consumer sentiment indicator, based on a survey of about 2,000 Germans, fell to 3.2 in March from an upwardly revised 3.3 in February. This was better than consensus forecasts for a reading of 3.
At 5:25 am ET, the euro reached 0.8786 against the pound, up from yesterday's close of 0.8758. As of now, the euro-pound pair is worth 0.878.
The euro showed range-bound trading against the Swiss currency. The euro bounced between 1.4638 and 1.4650. The euro-franc pair is now trading near Tuesday's close of 1.4643.
The euro staged a recovery against the Japanese yen. Moving up from a low of 121.64 hit at 4:00 am ET, the euro soared to 122.16 at 5:10 am ET. The current quote for the euro-yen pair is 122.12, up from yesterday's close of 121.88.
Against the U.S. dollar, the euro that bounced between 1.351 and 1.355 moved off the range around 5:10 am ET. The euro-greenback pair, which closed yesterday's deals at 1.3511, is now worth 1.3564.
From the U.S., the new home sales report for the month of January is slated for release at 10:00 am ET.
Investors also remain cautious as the Federal Reserve Chairman Ben Bernanke is set to deliver his semiannual report on the economy today and tomorrow. He is expected to shed light on how soon key U.S. rates may start to rise, after the surprise increase last week in the rate the Fed charges banks for emergency loans.
U.K. Q4 GDP Grows Better Than Estimated
The British economy recovered from recession at a quicker than estimated pace in the fourth quarter mainly due to an upward revision in service sector output. Still, the outlook remains uncertain.
The quarterly growth was revised up to 0.3% from 0.1%, the Office for National Statistics reported Friday. Economists were expecting a sequential increase of 0.2%. The growth follows six quarters of contraction, which made it the longest recession since records began in 1955. In the second and third quarters, the economy had contracted 0.6% and 0.3%, respectively.
Jonathan Loynes, an economist at Capital Economics said, "The upward revision to GDP growth is clearly welcome." But the recovery is very fragile and the outlook is very weak, he said.
Output of production and services industries contributed to the upward revision in the fourth quarter. The volume of output in the production industries climbed 0.4%, within which manufacturing rose 0.8%. Output of the service industries increased 0.5%. By contrast, construction output dipped 1%.
Household spending rose 0.4% quarter-on-quarter and government final consumption expenditure increased 1.2%. Meanwhile, gross fixed capital formation fell 3.1% and inventories continued to decline, down GBP 2.8 billion on the quarter.
Loynes noted that the breakdown of growth by expenditure components brought little encouragement regarding the sustainability of the recovery over the coming quarters. Although household spending posted a quarterly increase, some of this is likely to have reflected the bringing forward of spending ahead of the rise in value added tax and the effects of the car scrappage scheme, he said.
Further, the trade deficit in real terms widened to GBP 8.3 billion in the fourth quarter from GBP 7.7 billion in the previous quarter. Exports of goods and services climbed 3.7% and increase in imports was 4.1%.
ING Bank NV's James Knightley said although the GDP number is encouraging, the first quarter of 2010 started poorly with retail sales plunging and lending data stalling. As such, the expected momentum into 2010 may be falling, the economist said. He expects some of the weakness to be weather related, but election uncertainty and the implications for taxes and public sector employment is likely to keep sentiment and activity subdued.
Annually, GDP was down 3.3% in the fourth quarter, revised from 3.2% fall estimated initially. The consensus forecast was for a 3.1% fall.
According to Daiwa Capital Markets Europe's Colin Ellis, GDP in the first quarter of this year could be weak, especially given the bad weather in January. The economist reckoned that April's preliminary GDP data for first quarter of 2010 could show a weakening in economic growth, rather than a strengthening.
Capital Economics' Loynes forecast the economy to expand around 1% this year. With a major fiscal squeeze looming, a further loosening of monetary policy may yet be required to prevent the recovery from petering out altogether.
Japan Unemployment Rate 4.9% In January
Japan's unemployment rate came in at a seasonally adjusted 4.9 percent in January, the Ministry of Internal Affairs and Communications said on Tuesday, beating expectations for a steady performance after showing 5.1 percent in December.
The number of employed persons in January was 62.13 million, a decrease of 790 thousand or 1.3 percent from the previous year.
The number of unemployed persons in January was 3.23 million, an increase of 460 thousand or 16.6 percent from the previous year.
Commenting on the data at a regularly scheduled press conference, Japanese Finance Minister Naoto Kan said the numbers show that the labor market is "improving somewhat."
The job-to-applicant ratio was unchanged at 0.46, falling shy of expectations for a mark of 0.47.
Also, household spending was weaker than expected in January, adding just 1.7 percent on year versus expectations for a 2.5 percent gain after climbing an annual 2.1 percent in December.
The propensity to consume was up 1.7 points on year to 88.8 percent.
Also on Tuesday, the Bank of Japan said that the monetary base in Japan was up 2.2 percent on year in February to 95.69 trillion yen, after adding an annual 4.9 percent in January.
Banknotes in circulation were up 0.1 percent, while coins in circulation shed 0.7 percent.
The current account balance jumped an annual 15.3 percent to 1.48 trillion yen, including a 15.7 percent surge in reserve balances.
Seasonally adjusted, the monetary base was down 16.8 percent to 94.97 trillion yen.
Dollar Mixed As Economic Picture Remains Murky
The dollar briefly touched a fresh 9-month high versus the euro and kept most of its dramatic recent gains against the sterling Tuesday morning in New York, with markets waiting for further clues about the condition of the US economy.
A string of lackluster economic data released over the past few weeks has fueled concerns that the robust growth seen in the fourth quarter of 2009 was a temporary result of massive government spending.
However, the economies in Europe remain even more distressed, making the dollar an attractive alternative to the euro and sterling.
An overnight surge brought the dollar to 1.3434 versus the euro, its highest level since last May. However, the buck quickly turned back to trade at 1.3550.
Tuesday, a flash report from the Eurostat showed that consumer price inflation in the euro area stood at 0.9% in February, down from 1% in January.
The dollar consolidated its gains against the sterling, holding near 1.4950. Yesterday, the dollar skyrocketed to 1.4790 amid concerns about the British economy.
U.K. construction activity contracted in February, a survey conducted by the Markit Economics showed Tuesday. The seasonally adjusted CIPS/Markit Construction Purchasing Managers' Index fell slightly to 48.5 in February from 48.6 in January.
David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply said, "While the UK economy slowly pulls into recovery mode, the construction sector has now been confined in recession territory for two years and is still very fragile."
Elsewhere, Japanese Finance Minister Naoto Kan said the government will not demand the Bank of Japan to purchase bonds directly from the government.
The dollar saw little movement against the yen, staying near 89 for a fourth day.
Conversely, the dollar remained under heavy pressure against its Canadian counterpart, hitting 7-week low of C$1.0340.
The Bank of Canada will make its interest rate announcement this morning. Economists expect the target for the key overnight rate to remain unchanged at 0.25 per cent.
Individual automakers are scheduled to release their monthly U.S. sales results for February. The data will reveal the unit sales of domestically produced cars and light duty trucks, including sports utility vehicles and mini-vans, during the month.
China Targeting 8% GDP Growth This Year: PM
China's Prime Minister Wen Jiabao said Friday his country was seeking an 8% annual growth in gross domestic product (GDP), an inflation rate of about 3% and a basically stable Yuan currency for 2010, the year in which China is set to overtake Japan to become the world's second-largest economy.
In his annual "state of the Union" address to the opening session of the National People's Congress (NPC), China's top legislature, he also said that Beijing would maintain an appropriately flexible monetary stance and an active fiscal policy.
Expressing satisfaction over the country escaping, relatively unscathed, from the global financial crisis, Wen warned the nearly 3,000 delegates against complacency, and vowed to reverse the widening income gap between the rich and the poor as the country continued its economic advance.
"We must not interpret the economic turnaround as a fundamental improvement in the economic situation," he said, adding: "There is insufficient internal impetus driving economic growth."
Asserting that China needed to concentrate on restructuring the economy, Wen said: "This is a crucial year for.accelerating the transformation of the pattern of economic development."
After property prices peaked in 21 months in January, he set a target of 7.5 trillion yuan (?750 billion USD 1128 billion) for lending.
However, the premier did not announce any roll-back in the massive 4.0 trillion yuan (?400 billion USD 602 billion) stimulus package that spurred a rebound and helped to ensure the economy grow by 8.7 per cent last year.
The premier unveiled increases of 8.8 per cent on social spending and 12.8 per cent on rural outlays, as he pledged to expand pensions, raise health-and-social-security outlays to avert instability in the economy.
Wen warned of the latent risk in China's banks, and promised to crack down on property-speculation. He also cited excess capacity in manufacturing and weak support for the rural income growth. He urged Chinese firms to improve their ability to innovate and produce high-tech and high-quality products.
In his wide-ranging speech to the rubber-stamp parliament, the premier dwelt on high areas of concern among his 1.3 billion fellow-citizens: soaring house prices, jobs, inflation and corruption. He said: "Everything we do, we do to ensure that the people live a happier life with more dignity."
After the recent ethnic riots in Tibet and the Muslim far western Xinjiang province, the premier lay emphasis on the need to ensure minorities felt a "sense of citizenship", saying: "The Chinese nation's life, strength and hope lie in promoting solidarity, (and) achieving common progress of our ethnic groups."
Wen's speech came a day after Beijing announced an increase of 7.5 per cent in its defense budget for 2010, a reduction of 50 per cent compared to last year's planned growth of 14.9 per cent--the slowest pace of expansion in more than a decade.
Li Zhaoxing, spokesman for the annual session of the National People's Congress (NPC), told a press conference Thursday in Beijing that the planned defense budget was 532.115 billion yuan (about USD 78 billion), an increase of about 37 billion yuan from last year's figure.
This marks the first time that China's defense budget growth rate rose less than 10 per cent after more than 20 years of double-digit increases.
Defense-spending would account for 6.4 per cent of the country's total fiscal expenditure in 2010, the same as last year, he said, adding, as a proportion of the GDP, China was still spending less than many other countries, including the United States.
China's defense expenditure in recent years accounted for about 1.4 per cent of its GDP, he said, noting that ratio was four per cent for the United States, and more than two per cent for the United Kingdom, France and Russia.
Taking into account China's large population, its vast territory, and its long coastline, the country's defense budget was "comparatively low," Li said. But he pointed out that the figures were tentative until the budget plan was approved at the NPC annual session due to open Friday in Beijing.
The spokesman said the increased budget would be mainly used to support military reforms and improve its capability to deal with various security threats and complete diversified tasks. A part of the money would be used to raise the living standards of servicemen, he added.
Li also claimed that China was increasing transparency on its expenditure on defense after Washington repeatedly urged Beijing to be more open about its rapidly-rising military-spending. As a part of this exercise, he said his country was submitting defense budgets to the NPC annual sessions for approval, issuing white papers every two years on its national defense, and establishing a spokesperson system and websites for its Defense Ministry.
Asserting that the only purpose of China's military strength was to safeguard the country's sovereignty and territorial integrity, the NPC spokesman added Beijing had always taken the path of peaceful development in line with its national defense policy.
any news about swiss franc? cpi had to be released today..
Greek PM Calls For U.S. To Help Regulate Speculators
Greece Prime Minister George Papandreou will meet with U.S. President Barack Obama in Washington on Tuesday, where he will appeal for assistance in regulating the currency traders and hedge funds that have bet against Greek debt.
Greece recently announced measures to resolve its debt issues, hoping to attract aid from its European neighbors.
While Papandreou did not come to Washington looking for a hand out, he stressed the U.S. must play a vital role in stopping "unprincipled speculators" from aggravating the Greek debt problems, doing damage to already frail global financial markets.
A number of European leaders are pointing to speculators as the main reason that Greek financing costs have skyrocketed. For its part, profligate Greece has run up a deficit that is 12.7% of GDP, far beyond the 3% limit set by euro area nations.
"Unprincipled speculators are making billions every day by betting on a Greek default," said Papandreou, after meeting with Secretary of State Hillary Clinton on Monday.
"That is why Europe and America must say 'enough is enough' to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system - not to mention the human consequences of lost jobs, foreclosed homes, and decimated pensions," he added.
Papandreou stressed that speculation does not allow Greece to borrow at the same rates other European Union countries and the Eurozone countries borrow at, a situation that is unsustainable within a common currency.
"We're not asking for money," Papandreou insisted. "We're not asking for bailouts. We're simply saying what we want to be is equal partners, as we have taken these measures on the market to be able to get what others also can get, which is basically normal rates of borrowing."
Secretary Clinton commended the prime minister for "moving quickly to put in place changes that are called for given the economic consequences of the fiscal situation that he inherited."
"What I think Greece is looking for...is that the United States, working in the G-20, will make some of the changes in regulatory regimes governing some of these financial instruments that have been used to the detriment not only of Greece, but of other countries, including our own."
Prior to remarking on the Greek debt crisis, Clinton congratulated Iraq on holding parliamentary elections. In a lighter moment, she quipped that Greece, as the birthplace of democracy, should get a royalty any time there's a democratic election anywhere in the world.
"It would help my deficit, too," Papandreou joked.
Papandreou will meet today with President Obama and Treasury Secretary Timothy F. Geithner.
0.9%?? oh damage!
anyway, thank you for update miss Tatyana.
You are very welcome. Follow the freshest news at http://instaforex.com/forex-news.php
First-Time Jobless Claims Show Modest Decrease, Continuing Claims Rise
While the Labor Department released a report Thursday morning showing a modest decrease in first-time claims for unemployment benefits in the week ended March 6th, the report also showed an increase in continuing claims.
The report showed that initial jobless claims edged down to 462,000 from the previous week's revised figure of 468,000. Economists had expected jobless claims to slip to 460,000 from the 469,000 originally reported for the previous week.
Peter Boockvar, equity strategist for Miller Tabak, said, "Due to the noise around the snow storms, it's best to look at the 4-week average, which smoothes out the data."
The less volatile four-week moving average rose to 475,500 from the previous week's revised average of 470,500. With the increase, the moving average reached its highest level since late November of 2009.
Additionally, the Labor Department said that continuing claims, a reading on the number of people receiving ongoing unemployment help, rose to 4.558 million in the week ended February 27th from the preceding week's revised level of 4.521 million.
With the increase, continuing claims bounced off the more than one-year low set in the previous week, which was the lowest level since claims came in at 4.487 million in the week ended January 3rd, 2009.
On the other hand, the report also showed that those receiving emergency unemployment compensation fell by almost 160 thousand in the week ended February 20th to 5.528 million. Those receiving extended benefits also fell by about 15 thousand in the week.
Boockvar said, "We hope this category begins to fall due to recipients finding new jobs rather than from exhaustion of benefits, but the hiring outlook still remains uncertain."
Last Friday, the Labor Department released a report showing that payroll employment showed a relatively modest decrease in the month of February, despite the impact of severe winter weather.
The report showed that non-farm payroll employment fell by 36,000 jobs in February following a revised decrease of 26,000 jobs in January. Economists had expected a more substantial loss of about 68,000 jobs compared to the loss of 20,000 jobs originally reported for the previous month.
While the Labor Department acknowledged that the data was impacted by the severe snowstorms in early February, it said it is not possible to precisely quantify the net impact of the storms.
The Labor Department also said that the unemployment rate in February remained unchanged from the previous month at 9.7 percent. The unemployment rate had been expected to tick up to 9.8 percent.
China Inflation Picks Up To 2.7% In February
China's consumer price inflation rate accelerated more than expected in February, increasing the pressure on its central bank to raise interest rates amid fears the economy may be overheating.
Consumer prices increased 2.7% year-on-year in February, the National Bureau of Statistics said, exceeding expectations for a 2.5% increase following the 1.5% growth in the previous month.
The rise in prices was mainly driven by a 6.2% surge in food prices. Non-food prices climbed 1%.On a monthly basis, the consumer price index rose 1.2% in February.
In the first two months of the year, consumer prices increased 2.1% compared with the same period a year ago. Economists look for the combined inflation data for the first two months as it smoothes the distortion caused by the Chinese New Year holiday.
The pickup in the inflation rate adds to worries that China's economy may be expanding too quickly.
However, a spokesman for the statistical office said inflation will ease in March as weather conditions improve, bringing down food prices.
Figures released today by the People's Bank of China showed that bank lending was down sharply in February, as the government seeks to rein in runaway growth in the economy.
Chinese banks extended CNY 700.1 billion in new local-currency loans in February, down from the CNY 1.39 trillion lent in January.
M2 money supply - the broadest measure of money supply in the country - surged up 25.5% year-on-year in February, slower than the 26% increase in the previous month.
Separately, the statistical bureau said that producer prices surged 5.4% annually in February. The growth exceeded expectations for a 5.1% increase and follows the 4.3% growth in the previous month.
Industrial production in China increased 12.8% year-on-year in February. This came below forecasts for a 19.5% increase.
In the first two months of the year, industrial production increased 20.7% compared to the same period a year ago.
The statistical bureau also announced that retail sales were up 22.1% annually in February, also exceeding expectations for a 18.7% gain. In the first two months, retail sales were up 17.9%.
Meanwhile, urban investments in fixed assets in the first two months of 2010 increased 26.6%, above expectations for 25.6% growth.
A separate real estate report from the statistical office showed that property prices in 70 major cities across the country were up 10.7% year-on-year in February, faster than the 9.5% increase in the previous month.
Housing prices were up 13% year-on-year in February, faster than the 11.3% increase in January, the statistical office said.
Property sales in the first two months of the year soared 70.2% compared to the same period a year ago.
Euro Gains On Dollar Despite Specter Of Deflation
The euro was mixed on Tuesday, firming up against the dollar despite concerns about deflation in the Euro zone.
Eurozone core inflation dropped to an all-time low in February, suggesting that deflationary pressures persist in the 16-nation economy.
Core inflation, which excludes energy, food, alcohol and tobacco, stood at 0.8% in February, down from 0.9% in January, data released by the Eurostat showed Tuesday. That was in line with the consensus forecast and was the lowest rate since comparable data was compiled in 1990.
However, this morning's economic news will likely be overshadowed by the Federal Reserve's latest statement on interest rates, which is expected at around 2:15 pm ET.
While the Fed is expected to keep interest rates near zero, the accompanying statement will garner significant attention for subtle changes the central bank's assessment of the US economy and timeline for future rate hikes.
Yesterday, European finance ministers worked out a strategy for emergency loans to Greece, in case the country's $6.6 billion tax hikes and wage cut plans fail. Standard & Poor's affirmed the nation's credit ratings.
The euro rose to 1.3740 versus the dollar, staying away from a 9-month low of 1.3434 set earlier this month.
The euro slipped to .9054 versus the sterling, but remained within hailing distance of its 2010 highs above .9150.
In news from the US, new residential construction showed a notable decrease in the month of February, according to a report released by the Commerce Department on Tuesday. Analysts say the data was impacted by unusually bad winter weather in the Northeast.
The report showed that housing starts fell 5.9 percent to an annual rate of 575,000 in February from the revised January estimate of 611,000.
Latvia Will Adopt Euro In 2014
The Latvian government has said the baltic country will officially adopt the euro on January 1, 2014.
The Latvian Cabinet of Ministers said the country must meet several criteria of the Maastricht Treaty before adopting the common currency.
The country's budget deficit must below 3% of the gross domestic product and total government debt must not exceed 60% of GDP.
After the common currency is adopted, both the lat and the euro will be in circulation within Latvia in order to ensure a smooth transition.
In order to quicken the process, change will only be given in euros during the transition period, the government said.
Philadelphia-Area Manufacturing Shows Continued Signs Of Growth
Manufacturing activity in the mid-Atlantic region is continuing to show signs of growth in the month of March, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of activity in the manufacturing sector rising by more than expected.
The Philly Fed said its index of regional manufacturing activity rose to 18.9 in March from 17.6 in February, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase by the index to a reading of 18.0.
While the headline index showed a continued improvement in activity in the sector, the new orders index fell to 9.3 in March from 22.7 in February and the shipments index slipped to 13.6 from 19.7 in the previous month.
At the same time, the report showed an acceleration in the pace of employment growth in the sector, as the number of employees index rose to 8.4 in March from 7.4 in February. With the increase, the index rose to its highest level since October of 2007.
The Philly Fed said firms' responses continued to suggest that labor market conditions have been stabilizing in recent months.
On the other hand, the inventories index fell to a negative 11.0 in March from a positive 3.2 in February, indicating another contraction in inventories.
The report also showed that the prices paid index rose to 38.6 in March from 32.4 in February, while the prices received index fell to a negative 0.4 from a positive 3.7 in the previous month.
Looking ahead, the future general activity index remained positive for the 15th consecutive month, rising to 52.0 in March from 35.8 in February.
The Philly Fed added that the percentage of firms expecting employment to increase over the next six months exceeded the percentage expecting declines for the eleventh consecutive month.
Earlier this week, the New York Fed released its report on regional manufacturing activity, showing that conditions for New York manufacturers continued to improve at a steady pace in March.
The New York Fed said its index of regional manufacturing activity edged down to 22.9 in March from 24.9 in February, but a positive reading still indicates growth in the sector. Economists had expected the index to slip to a reading of 22.0.
Euro Finds Support After US Housing Data
The euro steadied versus the dollar on Tuesday even after Germany indicated that aid to Greece will not be discussed at this week's European Union meeting in Brussels.
With Greece in limbo despite measures designed to get its spiraling debt under control, the euro has struggled to fight back from February's notable losses against the dollar.
The euro was under pressure in early dealing, but pared its losses after another round of lackluster data on the US housing market.
Existing home sales saw a modest decrease in the month of February, according to a report released by the National Association of Realtors on Tuesday, with modest gains in the Northeast and Midwest offset by softer sales in the South and West.
The report showed that existing home sales edged down by 0.6 percent to a seasonally adjusted annual rate of 5.02 million units in February from a 5.05 million unit rate in January
Across the Atlantic, European consumer confidence was more or less unchanged in March, a flash estimate from the European Commission showed.
"March's eurozone consumer confidence figures confirm that consumer sentiment remains weak by historical standards and that a household spending recovery some way off," said Ben May, European economist at Capital Economics. "With wage growth slowing and tighter fiscal policy on the way, prospects do not look much better for the remainder of the year," he added.
The euro slipped to 1.3480 versus the dollar in early dealing, coming close to a 9-month low of 1.3434 set earlier in March.
Versus the yen, the euro was steady after losing ground in the previous few sessions. The euro was stuck near 122, having touched a yearly low near 120 back in February.
Meanwhile, the euro leveled off near .90 versus the sterling, having seen choppy movement over the past few days.
U.K. Recovery Stronger Than Estimated
The British economy emerged from recession in the fourth quarter more strongly than initially estimated. The outlook for the economy is fundamentally weak and the prospect of a sluggish and fragile recovery remains.
The economy expanded 0.4% sequentially in the fourth quarter, better than the previous estimate of 0.3%, according to the latest report from the Office for National Statistics. On February 26, the statistical office had first revised fourth quarter growth to 0.3% from 0.1%. Economists had expected the ONS to confirm the 0.3% growth figure today.
The fourth quarter growth follows six quarters of contraction, which made it the longest recession since records began in 1955. Gross domestic product dropped 0.3% in the third quarter and 0.7% in the second quarter.
There are good reasons not to get too excited, said Jonathan Loynes, Capital Economics' chief European economist. The economy is operating a long way below its potential or trend level.
David Kern, chief economist at the British Chambers of Commerce, also shared the same view. He said, "It is clear that the UK recovery is still frail, vulnerable, and businesses are facing serious pressures." A double-dip recession is still a potential threat that must be avoided at all costs. Given the dangers still facing the economy, policy must remain expansionary, he added.
The household saving ratio was 7% in the latest quarter, compared with 8.4% in the previous quarter. Real household disposable income fell 1%, following a 0.6% increase in third quarter.
Further falls in the savings ratio will be needed if spending is not to decline, ING Bank NV's Mark Cliffe said. The decline in the saving ratio reflected higher borrowing as the housing market staged a modest rebound. However, households may have to scale back their purchases of assets as banks are likely to be less willing to lend and consumers less willing to borrow than in previous cycles.
On the production side, construction output was down 0.9% sequentially, compared with the 1.8% increase in the previous quarter. Output of production industries was unrevised at 0.4% after recording a 1% fall in the third quarter with manufacturing output growing 0.8%. Output in the service industries also remained unrevised at 0.5%. Agricultural output dipped 1.5%.
On an annual basis, economic contraction for the fourth quarter was lowered to 3.1% from 3.3%. GDP in volume terms fell 4.9% for 2009 as a whole, the largest fall on record, compared with a rise of 0.5% in 2008. Overall output declined by 6.2% during this recession.
ONS data showed a 0.4% sequential rise in household expenditure. Spending remained 2.1% lower than the fourth quarter of 2008. Government spending moved up 1% taking the annual growth to 2.2%. Meanwhile, gross fixed capital formation recorded a 2.7% quarterly fall and plunged 14% annually. Inventories continued to decline, down 2.6 billion pounds on the quarter.
According to Capital Economics' Loynes, the further upward revision to growth came primarily from an even bigger positive contribution from inventories. It is very unlikely that this component will have such a positive effect in the quarters ahead, the economist said.
Again, with income set to be squeezed further by high inflation and rising taxes this year, spending will possibly remain under pressure. Capital Economics forecast the U.K. economy to grow by just around 1% in 2010.
Last week, the Chancellor of the Exchequer Alistair Darling in his 2010 budget statement said the economy is expected to grow 3% to 3.5% in 2011, in line with the Bank of England estimate. The government maintained its growth estimate at 1%-1.5% for 2010.
ONS data also showed that the trade deficit in real terms increased to 8.3 billion pounds in the fourth quarter of 2009. Exports of goods and services rose 3.8% whilst imports were up 4.7%. The improvement in global demand conditions as well as a fall in pound had only a limited impact on the external sector, noted Loynes.
In a separate communique, the ONS revealed the current account balance recorded a deficit of 1.7 billion pounds in the fourth quarter. This compares with a revised deficit of 5.9 billion pounds in the third quarter. Economists had forecast a 5.1 billion pounds deficit for the final quarter. In 2009, the current account was in deficit by 18.4 billion pounds, compared with a deficit of 22 billion pounds in 2008.
Dollar Drifts Lower As Fitch Maintains Greece Rating
The dollar was slightly weaker versus other majors Tuesday morning after ratings agency Fitch said Europe's aid deal for Greece was a net positive for the debt-ridden nation.
The Dow continued its push toward 11,000 on Monday, but stocks appear poised for a lackluster start to today's session.
Traders were looking ahead to the day's economic news from the US.
The S&P/Case-Shiller home price index for January will be released by 9.00 a.m. ET. Economists expect the index, which tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S., to decline 0.6% year-over-year, following the 3.1 % decline in the previous month.
At 10.00 a.m. ET, the Conference Board will release the readings of the Consumer Confidence Index for March. Economists expected the index to increase to 51.0 from 46.0 reported for the previous month.
Yesterday, official data showed that consumer spending rose in February, signaling that shoppers are becoming less shy about making purchases.
The dollar eased to 1.3520 versus the euro, more than two cents from a 10-month peak of 1.3267 set last week.
Despite saying last week's deal between the European Union and IMF to backstop Greek debt was positive, Fitch will keep its negative outlook on Greece's BBB+ debt rating.
"The (EU) statement was positive for Greece's credit profile by enhancing its near-term financing options and flexibility as well as reaffirming the support of euro area member states for economic and fiscal reform in Greece," Fitch said in a statement.
"Nonetheless, the rating outlook remains negative because of continued uncertainty over the medium-term economic and fiscal adjustment, as well as the continuing lack of clarity over the fiscal financing strategy."
Germany's import prices rose at a faster annual pace in February led by higher energy prices, the Federal Statistical Office said Tuesday.
Import prices rose 2.6% year-on-year in February, faster than the 1.4% rise in January. Prices increased for a second straight month after a 1% decline in December. Economists were looking for an increase of 2% for February.
The buck also drifted lower versus the sterling, hitting 1.5070 after testing a 9-month high of 1.4782 last week.
U.K. house prices rose sharply in March, reversing February's surprise dip, a report from Nationwide Building Society showed on Tuesday.
At the same time, the dollar remained stuck in neutral versus the yen, hovering near last week's 2-month high of 92.94.
An index measuring industrial production in Japan was down a seasonally adjusted 0.9 percent in February compared to the previous month, the Ministry of Economy, Trade and Industry said on Tuesday.
US Weekly Jobless Claims Show Another Modest Decrease
First-time claims for unemployment benefits showed another modest decrease in the week ended March 27th, according to a report released by the Labor Department on Thursday, with jobless claims falling to their lowest level since early February.
The report showed that initial jobless claims fell to 439,000 from the previous week's revised figure of 445,000. Economists had been expecting claims to edge down to 440,000 from the 442,000 originally reported for the previous week.
With the modest decrease, jobless claims extended a recent downward trend after seeing a brief rebound in mid-February. The drop pulled jobless claims down to their lowest level since a matching number in the week ended February 6th.
The Labor Department also said that the less volatile four-week moving average edged down to 447,250 from the previous week's revised average of 454,000. With the drop, the four-week moving average fell to its lowest level since September of 2008.
Additionally, the report showed that continuing claims, a reading on the number of people receiving ongoing unemployment help, fell to 4.662 million in the week ended March 20th from the preceding week's revised level of 4.668 million.
The decrease dragged continuing claims down to their lowest level since coming in at 4.589 million in December of 2008.
At the same time, the report also showed that those receiving emergency unemployment compensation increased by about 267 thousand in the week ended March 13th, although those receiving extended benefits edged down by about 3 thousand for the week.
Peter Boockvar, equity strategist for Miller Tabak, said, "The best conclusion from the data remains the same and that is businesses have dramatically tempered the rate of firing but still seem reluctant to aggressively add to their payrolls."
Employment data is likely to remain in focus on Friday, with the Labor Department due to release its monthly employment report, despite the Good Friday holiday. Economists expect the report to show that employment increased by about 190,000 jobs in March.
Payroll processor Automatic Data Processing, Inc. (ADP) released a report on Wednesday showing an unexpected drop in private sector employment in the month of March, although the drop still marked the smallest since employment began falling in February of 2008.
The report showed that non-farm private employment fell by 23,000 jobs in March following a revised decrease of 24,000 jobs in February. The loss of jobs surprised economists, who had expected an increase of about 40,000 jobs compared to loss of 20,000 jobs originally reported for the previous month.
However, ADP noted that its data for February was not restrained by the effects of inclement weather, and subsequently the data for March did not include a weather-related rebound. The company also noted that its March data does not include any federal hiring for the 2010 Census.
Greece Looking To Bypass IMF Involvement In Deficit Crisis - Reports
The Greek government wants to amend the EU aid deal to avert severe fiscal measures the International Monetary Fund may recommend, the Market News International reported.
At the end of March, Eurozone leaders had reached an agreement to help Greece, with the participation of the IMF if the country fails to meet its funding needs.
Greek Prime Minister George Papandreou reportedly wants to alter the plan to bypass an IMF contribution. He fears that the measures the IMF would probably advocate, may cause social and political unrest.
Elsewhere on Tuesday, the Financial Times reported that Germany is at odds with other Eurozone countries over the rate of interest to be charged on the aid to the debt-ridden Greece if Athens calls on the emergency loans package.
According to the report, most Eurozone nations are prepared to offer loans at 4%-4.5%, but Germany says Athens should pay 6%-6.5%.
New 50% Tax Rate For U.K. High Earners Comes Into Force
U.K.'s top earners will be forced pay more tax as the rise in the tax rate to 50% from 45% takes effect from today. The new rate will affect 300,000 people in the country, who earn above GBP 150,000 per annum. The increase in the tax rate was intended to boost the country's public finances.
Most business groups responded against the move. The Institute of Directors said the proposal is superficially attractive, but it is foolish when dug deeper. The think tank argued that this policy will not help people by bringing in more tax revenue from high-income people. Nor can it be justified by reference to considerations of fairness.
"Increasing the top rate of income tax to 50% will raise little or no money, but it will send out a very bad message - both domestically and overseas," the IoD said.
Listing out the reasons why the policy should be abandoned, the IoD said one cannot compute the effect of a tax rise simply by applying the increase in the rate to the income that is currently subject to U.K. taxation. Moreover, it is very difficult to predict the effects of rate changes, mainly because of uncertainty about the effects on incomes, and also partly because of uncertainty about the future distribution of incomes.
Subject to these uncertainties, the IoD concluded that the revenue-maximising rate on incomes over GBP 150,000 might well be the current 40% rate, rather than the proposed 50%.
With the new tax rate in force, it is feared that companies may shift their operations to more business-friendly nations, which may hurt the U.K.'s government revenue.
Other changes coming into force today include a rise in child tax credits and an increase in the tax-free allowance that can be put in to individual savings accounts.
Franc Shows Mixed Trading Against Majors
The franc showed mixed trading versus other major currencies during early North American session on Monday. The franc rose to a multi-day high against the pound, eased from a 6-day high against the yen and a 10-day high against the dollar and recovered from near a 4-week low versus the euro.
Against the Japanese currency, the Swiss franc eased slightly from a 6-day high of 88.37 hit at 7:05 am ET. Currently, the franc-yen pair is worth 88.25, compared to 87.42 hit at last week's close.
The franc rose to a 5-day high of 1.6281 versus the pound at 8:45 am ET, compared to 1.6396 hit at last week's close. As of now, the franc is quoted at 1.6301 against the pound.
The franc that rose to a 10-day high of 1.0553 against the dollar around 1:00 am ET eased thereafter. The franc is now trading at 1.0590 against the dollar. This level may be compared last week's close of 1.0661.
The franc, which slipped to near a 4-week low of 1.4468 against the 16-nation currency at 2:25 am ET reversed its direction shortly thereafter. Currently, the franc is trading at 1.439 versus the euro, compared to previous week's close of 1.4388.
In the upcoming hours, the U.S. monthly budget statement for March has been slated for release.
IMF Boosts Lending Capacity To $550 Billion
The International Monetary Fund took a major step on Monday towards a more than ten-fold increase in the size of its primary credit facility to $550 billion and also reformed the fund's standing credit arrangement into a more flexible and effective tool of crisis management.
It responds to the call by the leaders of the G20 nations to increase the financing available to the fund, by expanding the IMF's New Arrangements to Borrow or NAB, which currently stands at about $50 billion.
The NAB is supplementary to the IMF's quota-based resources and is only called upon to forestall or cope with an impairment of the international monetary system.
Thirteen new countries, including the likes of China, India, Russia and Brazil, will now contribute to the lender's NAB, in addition to the 26 predominantly developed nations.
"The expansion and enlargement of the NAB borrowing arrangements provides a very strong multilateral foundation for the fund's efforts in crisis prevention and resolution, as an essential back-stop to the fund's quota resources," said IMF managing director Dominique Strauss-Kahn.
"This will help ensure that the fund has access to adequate resources to help members that are vulnerable to financial crises."
Philly Fed Index Indicates 8th Straight Month Of Growth In April
Thursday morning, the Federal Reserve Bank of Philadelphia released its report on regional manufacturing activity in the month of April, showing that the expansion in the manufacturing sector is continuing for the eighth consecutive month.
The Philly Fed said its index of activity in the manufacturing sector rose to 20.2 in April from 18.9 in March, with a positive reading indicating growth in the sector. With the increase, the index came in slightly above economist estimates for a reading of 20.0.
A faster pace of new orders growth contributed to the improvement in the sector, as the new orders index rose to 13.9 in April from 9.3 in March.
On the other hand, the shipments index slipped to 5.6 in April from 13.6 in the previous month, although it remained positive.
The report also showed a notable increase by the inventories increase, which rose to a positive 2.0 in April from a negative 11.0 in March, indicating a turnaround in inventories. The inventories index has now recorded positive readings in two of the last three months.
The Philly Fed also said that firms' responses continue to suggest that labor market conditions are improving, although the number of employees index slipped to 7.3 in April from 8.3 in March.
With regard to inflation, the report showed that the prices paid index rose to 42.7 in April from 38.6 in March, while the prices received index edged up to a positive 1.0 in April from a negative 0.4 in the previous month.
Looking ahead, the future general activity index fell to 44.2 in April from 52.0 in March, but it remained positive for the sixteenth consecutive month.
"Bottom line," said Peter Boockvar, equity strategist for Miller Tabak, "manufacturing remains the key source of strength in this recovery and today's data confirms that."
Earlier in the day, a report released by the New York Federal Reserve showed that conditions for New York State manufacturers improved at a rapid pace in April, with the regional index of activity in the sector rising by much more than economists had expected.
The New York Fed said its general business conditions index jumped to 31.9 in April from 22.9 in March, with a positive reading indicating growth in the manufacturing sector. Economists had been expecting a much more modest increase to a reading of 24.0.
S&P Lowers 2010 Italy Growth Forecast
Standard & Poor's lowered its 2010 growth forecast for Italy on Tuesday citing feeble demand, weak capital spending and export prospects.
The rating agency cut the growth forecast to 0.5% from a previous 0.7%, reports said. Looking ahead, S&P forecast the economy to grow 1% next year, which is half of what is seen for the Eurozone as a whole.
Feeble consumer demand on the back of falling earnings, anemic capital spending because of damaged corporate profitability and export prospects penalized by weak competitiveness are holding the economy in check, the rating agency was quoted as saying in a report that made no reference to ratings. S&P expects any return to growth in 2010 to be modest.
The Italian economy contracted 0.3% sequentially in the fourth quarter following the 0.5% growth in the third quarter, when the economy ended five quarters of negative GDP. The statistical office is due to release the preliminary estimate of first quarter GDP on May 12.
Interim forecast from the European Commission showed 0.4% growth for the Italian economy in the first three months of this year. The Paris-based Organisation for Economic Co-operation and Development said in an interim assessment recently that the economy likely grew 1.2% in the first three months of the year. The economy is forecast to expand 0.5% in the second quarter.
German FinMin: Expects To Get Greek Aid Bill Passed By May 19
Germany's Finance Minister Wolfgang Schaeuble said on Monday that the German parliament is expected to approve a bill on financial aid for Greece before May 19, when the debt-ridden country holds next debt auction.
After a meeting with parliamentary leaders, the minister said German lawmakers have signaled their basic willingness to get the bill approved to defend the stability of the euro.
He said the bill will be presented before the parliament only when Greece concludes its talks with the European Commission, the European Central Bank and the International Monetary Fund. Schaeuble expects Athens to reach in a conclusion this weekend.
Eurozone members have pledged to provide up to EUR 30 billion loan for Greece, of which Germany's contribution would be EUR 8.4 billion, the largest. Meanwhile, France pledged to provide EUR 6.3 billion from its 2010 fiscal budget. IMF's contribution is expected to be between EUR 10 billion to EUR 15 billion.
Elsewhere, German Chancellor Angela Merkel said her country is ready to provide financial assistance to Greece, if Athens takes "tough measures" for next several years to cut budget deficit.
On Sunday, Greek Finance Minister George Papaconstantinou said his country is soon expected to conclude negotiations with the IMF.
IMF Managing Director Dominique Strauss-Kahn said the Fund, the European partners, and everyone involved in the financing effort recognizes the need for speed to activate the rescue package and talks will be ended in time to meet Greece's needs.
Japan's Labor Cash Earnings Post First Rise In 22 Months
The average monthly total cash earnings per regular employee in Japan rose 0.8% year-over-year to JPY 275,637 in March, data from the Ministry of Health, Labor and Welfare showed Friday. That was the first annual increase in twenty-two months. In February, earnings fell by a revised 0.6%.
Overtime pay growth accelerated to 11.7% from February's 8.1% as overtime work increased in factories.
Adjusted for inflation, the average total earnings grew 2.1% year-on-year following an increase of 0.6% in February. Earnings grew for the third successive month.
On a quarterly basis, the downturn in wage eased in the first quarter. Total cash earnings in the first quarter fell just 0.1% annually, compared to the 4.1% drop in the final quarter of 2009.
BNP Paribas economist Azusa Kato said the slowdown in quarterly wage fall was due to the narrowed negative margin on scheduled earnings and rebound of non-scheduled earnings to positive growth. "Consumption is picking up due to more than just fiscal stimulus, as household sentiment is improving because the worst seems to be over for both employment employee wages," the economist said.
Asia-Pacific Nations Should Employ Capital Controls
Asia-Pacific nations should employ capital controls to moderate short-term capital inflows that created asset bubbles and inflationary pressures in the region's developing countries, a UN agency said Thursday.
The United Nations Economic and Social Commission for Asia and the Pacific, or ESCAP, also urged governments to increase their social spending to consolidate the region's stronger-than-anticipated economic rebound.
"Governments must embrace this opportunity to secure the gains of the economic rebound by investing in social programs that directly benefit people hardest hit by the crisis," Noeleen Heyzer, UN Under-Secretary-General and Executive Secretary of the ESCAP said.
The Economic and Social Survey of Asia and the Pacific 2010, an annual publication of ESCAP, points out that while monetary tightening may be necessary to rein in inflationary pressures, policy makers must be cautious about withdrawing fiscal stimulus packages, as an early exit would disrupt the fledgling recovery process.
According to the Survey, even at the height of this crisis, Asia and the Pacific was still the fastest growing region in the world, supported mostly by fiscal stimulus packages adopted by the region's biggest economies. The Survey finds that the outlook for 2010 has improved significantly, with Asia-Pacific region's developing economies forecast to grow by 7%, led by China 9.5%, and India 8.3%.
The Survey states that the governments have to re-balance the region with greater regional consumption through increased intra-regional trade, accelerating the development of an Asia-Pacific consumer market.
The Survey also recommends that Asia and the Pacific increase efforts to create a more integrated and sustained regional market, benefiting both national economies and a larger consumer class.
Increased social spending directly supports income security for households by providing food security, education and access to health care, reducing the need by poorer families to maintain precautionary savings to protect against adversity. These families will then able to contribute more to local economies and invest more in their own development, the survey stated.
Moderate And Uneven Recovery Taking Shape Across Europe: IMF
Europe is bracing for a moderate and uneven recovery, supported by the rebound in global trade and policy stimulus, the International Monetary Fund said Tuesday.
Growth in the region is expected to pick up during 2010-11, but the traditional drivers of recovery are likely to be weaker than usual, the Washington-based global lender said in its latest regional economic outlook for Europe.
However, in the near term, growth will continue to benefit from exports, fiscal support and an upswing in inventories. Improvements in investor and consumer confidence should raise domestic demand.
Nevertheless, with unemployment expected to increase, and with lingering difficulties in the banking sector likely to restrain credit supply, consumption and investment will remain lackluster, IMF added.
Confirming its earlier prediction, the IMF said the Eurozone economy would grow 1% this year and 1.5% in 2011. Risks to this outlook is broadly balanced, it added.
Further, the Fund said emerging Europe will face a key challenge of attracting and harnessing healthy capital inflows to restore economic growth.
Dollar Strengthens To Near 1-1/2-year High Against Euro
In early European deals on Friday, the U.S. dollar registered strong gains against other major currencies as traders seek refuge in safe-haven currencies on the back of a decline in stock markets on debt crisis in Europe. The dollar rose to near a 1-1/2-year high against the euro, near 1-year high against the franc and more than a 1-year high against the pound.
On the flip side, the dollar pared recent gains against the yen due to across the board rallying of the Japanese currency.
In the upcoming hours, traders will be focusing on economic reports such as the U.S. advance retail sales, capacity utilization, industrial production reports- all for April, University of Michigan's preliminary consumer confidence index for May and the business inventories for March.
Friday in early European deals, the U.S. dollar inched higher against the euro. The dollar rose to near a 1-1/2- year high of 1.2434 against the euro at 5:55 am ET, from a low of 1.2577 hit at 3:00 am ET. On the upside, the dollar may target around the 1.233 level. At present, the greenback is trading at 1.244 against the euro, compared to yesterday's close of 1.2534.
Rising from a low of 1.1155 hit at 1:35 am ET, the dollar rose to near a 1-year high of 1.1268 against the franc at 5:55 am ET. The dollar-franc pair, which was worth 1.1179 at yesterday's close, is now worth 1.1244. On the upside, 1.197 is seen as the target level for the US currency.
The dollar rose to more than a 1-year high of 1.4507 against the pound at 6:00 am ET. As of now, the dollar is trading at 1.4507, compared to yesterday's close of 1.4612. If the dollar gains further, it may target the 1.400 level.
The dollar pared its recent gains against the Japanese currency. Moving down from a high of 93.10 against the yen hit at 2:40 am ET, the dollar fell to a 3-day low of 92.27 at 5:40 am ET. If the dollar weakens further, it may target around the 88.00 level. Currently, the dollar is trading at 92.37 against the yen.
Markets Are Really Out Of Control, German FinMin Tells FT
Financial markets are really out of control and there is an urgent need for effective regulation, German Finance Minister Wolfgang Schauble said in an interview to the Financial Times newspaper.
"I'm convinced the markets are really out of control," Schauble said in the interview published on Thursday. "That is why we need really effective regulation, in the sense of creating a properly functioning market mechanism."
Markets would not function properly if the risks and rewards are "completely unbalanced", the minister said. He also pointed out the need for transparency and standardization of products. "We need transparency for all market participants," he said.
Further, Schauble said over-the counter transactions must be regulated and attention must be paid to the ratio of financial transactions to the real exchange of goods and services. "They bear no relationship to each other," the minister said.
"We need new financial instruments to cope with the huge financial tasks that we face," Schauble said. "But, forgive my saying so, minimum profits of 25 per cent are simply unimaginable in the real economy. It isn't healthy."
According to the German finance minister, it is "very likely" that there would be no agreement on the adoption of a global financial transaction tax at the G20 summit in Canada in June. However, efforts would be made to see if such a tax can be implemented at a European level, he told the daily.
Late Tuesday, Germany's financial regulator BaFin banned short selling of debt securities by euro zone countries as well as shares of 10 large German financial institutions and insurance companies. Regulator also banned naked short-selling of Credit Default Swaps. The move took markets by surprise.
Germany has "a role as a locomotive", Schauble said, yet it will keep trying to reduce deficit and boost employment. Eurozone members with largest budget and trade deficits need more fundamental structural reforms to make themselves more competitive, he said. "Spain, for example, must solve its labor market problem."
Global Recovery Seen Gathering Pace
The global economic recovery is building steam led by strong growth in Asia although considerable risks remain, the Organization for Economic Cooperation and Development says. Its latest economic outlook report projected gross domestic product across OECD countries to rise by 2.7% this year and by 2.8% in 2011. In its last forecast in November, the OECD region was forecast to rise by 1.9% in 2010. The global economy is predicted to grow 4.6% this year.
In the U.S., activity is projected to rise by 3.2% this year and by a further 3.2% in 2011. Euro area growth is forecast at 1.2% this year and 1.8% next while, in Japan, GDP is expected to expand by 3% in 2010 and by 2% in 2011. The U.S. unemployment rate is expected to average 9.7% in 2010 before falling to 8.9% in 2011. The eurozone unemployment rate is forecast to average 10.1% both this year and the next.
"This is a crucial time for the world economy," said OECD secretary-general Angel Gurria. "Coordinated international efforts prevented the recession from becoming more severe but we continue to face huge challenges. Many OECD countries need to reconcile support to a still fragile recovery with the need to move to a more sustainable fiscal path."
Trichet Concerned About Bad Fiscal Policy, Not Weak Euro
The financial stability of the euro area amid bad fiscal policy in certain member countries is the key issue the currency bloc is currently facing and not the value of the euro, the European Central Bank President Jean-Claude Trichet said Monday.
"The euro is a very credible currency which keeps its value," Trichet said, according to the text of an interview with French daily Le Monde, which was published on the ECB website. "The issue is that of financial stability within the euro area on account of bad fiscal policy in certain countries, in particular Greece."
"It is imperative that this be corrected," the policy maker said, adding that fiscal policies in large countries such as Germany, France and Italy were also not exceptions. He blamed fiscally challenged economies for terribly neglecting close multilateral surveillance, which was fundamental according to the stability and growth pact.
When asked about the prevailing nervousness in financial markets, despite a massive rescue plan, Trichet said investors would take some time to regain confidence and sentiment would be restored gradually. "The measures are so significant in terms of both their nature and their scale that there is no doubt that they will have a positive effect on the markets," he said.
The ECB chief said the mechanism to stabilize markets is taking place properly. He noted that the speed at which parliamentary decisions were taken in countries facing fiscal problems was "remarkable". Trichet ruled out Eurozone debt restructuring programme saying that it is substantially low compared to that of the U.S., Japan and the U.K.
The policy maker also denied any Anglo-Saxon conspiracy against the euro. "I simply believe that some international investors struggle to understand Europe and its decision-making mechanisms," he said. "They have difficulty in gauging the historical size of the European construction and in anticipating the capacity of Europeans to take decisions that are just as important as those taken a few days ago."
Further, he called for the establishment of the equivalent of a fiscal union in the euro area in terms of monitoring and supervising the implementation of policies on public finances. He expressed confidence that a quantum leap would be possible if Europe exploit everything the treaties, seen as the starting point of the fiscal union, permit and greatly improve the secondary legislation from Brussels.
Regarding the euro, Trichet said it is a credible currency which inspires confidence, the most important ingredient for the consolidation of Europe's economic recovery. Since its introduction eleven and a half years ago, average annual inflation has been below but close to 2%, in line with the ECB's definition of price stability. The euro's capacity to maintain its value is absolutely essential for the confidence of investors both inside and outside the euro area, he asserted.
With regard to economy, Trichet said recent data suggest economic growth in the second quarter would be slightly higher than expected. However, he urged caution as the region's future growth depends on the ECB policy makers' ability to strengthen confidence as quickly as possible.
Trichet repeated that the ECB is completely independent of governments and pressure groups of any kind. He reaffirmed that the interventions were aimed to enable certain markets to function more normally and that all the liquidity injected through these interventions will be absorbed.
Also on Monday, speaking at the 38th economic conference of Austria's central bank, Trichet said the ECB is not printing money. He reiterated the bank's commitment to preserve its primary objective of maintaining price stability.
IMF: Finnish Growth Prospects Face Challenges
Aging population and recent loss of competitiveness due to international turbulence pose increased challenges to Finland's growth prospects and fiscal sustainability, the International Monetary Fund said Monday.
In its article IV consultation concluding statement, the IMF said the global crisis hit the Finnish economy hard given its extensive trade linkages and export characteristics. The IMF executives to Finland project 1.25% economic growth this year and around 2% in 2011.
It noted that a structural adjustment of 0.5%-0.75% of GDP in 2011 would be appropriate for Finland as it would bring the budget deficit within the stability growth pact ceiling and not jeopardize the recovery.
Further, the international lender said Finland's banking sector has weathered the crisis well, thanks to healthy capital buffers and prudent management. However, it warned that the sector faces increased risks to profitability and asset quality. Recent international market turbulence in the wake of the Greek crisis adds some uncertainty to the outlook for the financial sector and the overall economy.
Japan Current Account Surplus Widens In April
Japan's current account surplus increased in April from the previous year mainly due to a larger surplus in the trade gap, an official report showed on Tuesday. Separate data released today showed that during May, bank lending in Japan recorded the sharpest annual fall in nearly five years.
The Ministry of Finance said the current account surplus surged 88% year-on-year to JPY 1.24 trillion from JPY 660.6 billion in the previous year. The surplus, however, came in slightly below economists' expectations for a JPY 1.30 trillion surplus and was well below March's surplus of JPY 2.53 trillion.
A trade surplus of JPY 859.1 billion was recorded in April compared to the JPY 167.1 billion surplus a year ago. This was driven by growth in exports outpacing that of imports. Exports surged 42.7% annually to JPY 5.58 trillion, while imports grew 26.1% to JPY 4.72 trillion.
The surplus in the goods & services account stood at JPY 433.6 billion, in contrast to the JPY 260.9 billion deficit in the previous year. At the same time, the deficit in the current transfers account narrowed slightly to JPY 137.6 billion from JPY 138.4 billion in the previous year.
The income account surplus decreased to JPY 946 billion in April from JPY 1.06 trillion a year ago. The deficit in the services account was broadly unchanged at JPY 425.5 billion.
Meanwhile, the surplus in the capital & financial account decreased to JPY 49.3 billion from JPY 275.8 billion in the previous year. The financial account surplus shrank to JPY 72.8 billion from JPY 293.4 billion a year ago. This was largely due to other investment deficit rising to JPY 6.38 trillion from JPY 2.57 trillion last year.
Separately, the Bank of Japan announced that bank lending was down 2.1% year-on-year in May, marking its sharpest decline since August 2005. Standing now at JPY 396.12 trillion, it follows a revised 1.9% contraction in April.
Including trusts, bank lending was down 2% to JPY 458.75 trillion following the 1.8% decline in the previous month. By themselves, lending from trusts was down 1.3% annually in May to JPY 62.6 trillion.
The central bank also revealed that M2 money supply climbed 3.1% annually to JPY 777.2 trillion in May, slightly higher than forecasts for a 2.8% increase following the 2.9% gain in April. The M3 money stock was up 2.3% to JPY 775.1 trillion, exceeding expectations for a 2.1% increase following the 2.2% gain in the previous month. The L money stock climbed 2% annually to JPY 1.46 trillion.
Japan's new Prime Minister Naoto Kan is naming his cabinet today and he is due to be formally sworn in by Emperor Akihito. Deputy Finance Minister Yoshihiko Noda has been named as the new Finance Minister, a post left vacant by Kan. Noda is thought to favor spending cuts and fiscal consolidation to rein in Japan's large public debt level, which is the highest in the industrialized world.
Kan was elected prime minister by lawmakers on Friday, two days after the resignation of Yukio Hatoyama. The former prime minister stepped down over a broken election pledge to move a controversial U.S. military base out of the island of Okinawa.
Eurozone Industrial Production Growth Exceeds Expectations
Eurozone industrial production rose more than expected in April, giving a good start to the second quarter and offering hope that industry will make strong contribution to economic growth despite the region's fiscal woes.
The seasonally adjusted industrial output rose 0.8% on a monthly basis in April, slightly slower than March's revised increase of 1.5%, figures released by Eurostat showed Monday. But, production grew more than the expected 0.6% rise.
On an annual basis, industrial production rose 9.5%, the biggest increase since the series started in 1991. That was also above the expected growth of 8.6%. It followed a revised 7.7% increase recorded in April.
"April's Eurozone industrial production figures suggest that the recovery in the sector continues at a decent pace, despite the fiscal crisis in the region," said Jonathan Loynes at Capital Economics. The economist noted that today's figure will give a solid start to the second quarter and underlines expectations that industry will lead growth. However, Loynes expressed doubt on whether the recovery in the euro area industrial sector will help the weakest economies in the region to cope with the coming fiscal squeeze.
Details of data showed that production of intermediate goods grew by 2.2% month-on-month and that of capital goods rose by 1.1%. Durable consumer goods output fell by 0.1% and production of energy declined by 0.9%. Production of non-durable consumer goods dropped by 1.2%.
Eurozone industrial sector is benefiting from recent improvement in global economic activity and the weak euro. "The manufacturing sector has been the leading light of the Eurozone economy so far in 2010, benefiting from improved domestic and, especially, export demand as well as inventory rebuilding," IHS Global Insight economist Howard Archer said.
However, the recent weakening in the Eurozone manufacturing sector as suggested by the purchasing managers' index indicates that the Eurozone debt crisis has started denting on economic activity. The index in May fell to a three-month low as output and new order growth slowed sharply.
Industrial production in EU27 rose at a slower pace of 0.5% month-on-month compared with 1.4% increase in March. Among the member states for which data were available, industrial production rose in twelve and fell in nine. The highest increases were registered in Lithuania, Estonia and Denmark, while Ireland, Portugal and Greece recorded largest decreases. On an annual basis, production in EU27 grew 7.8%.
Existing Home Sales Show Unexpected Drop But Remain At Elevated Levels
Existing home sales showed an unexpected decrease in the month of May, according to a report released by the National Association of Realtors on Tuesday, with higher sales in the West and the South more than offset by a notable drop in sales in the Northeast.
The report showed that existing home sales fell 2.2 percent to an annual rate of 5.66 million units in May from an upwardly revised 5.79 million unit rate in April. Economists had expected sales to rise to a 6.10 million unit rate from the 5.77 million unit rate originally reported for the previous month.
While existing home sales fell on a monthly basis, NAR said that sales remain at elevated levels amid buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates.
NAR noted that existing home sales in May are still up 19.2 compared to the 4.75 million unit rate reported for the same month a year ago.
Lawrence Yun, NAR chief economist, said, "We are witnessing the ongoing effects of the home buyer tax credit, which we'll also see in June real estate closings."
"However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales." he added.
Yun noted that many potential sales are also being delayed by an interruption in the National Flood Insurance Program, particularly in Florida and Louisiana
Subsequently, NAR said its supports Senate amendments to extend the home buyer tax credit closing deadline through September 30 and to renew the flood insurance program.
As mentioned above, the unexpected drop in existing home sales was largely due to a 18.3 percent drop in sales in the Northeast.
Existing home sales in the West and the South increased by 4.9 percent and 0.5 percent, respectively, while sales in the Midwest were unchanged.
The report also showed that the national median existing-home price was $179,600 in May, up 2.7 percent compared to the same month last year. Distressed homes slipped to 31 percent of sales in May compared with 33 percent in April, NAR added.
NAR President Vicki Cox Golder said, "With distressed sales at roughly the same level as a year ago, the gain in home prices is a hopeful sign that the market is in a good position to stand on its own without further government stimulus."
"Very affordable mortgage interest rates and stabilizing home prices are encouraging home buyers who were on the sidelines during most of the boom and bust cycle," she added.
Additionally, NAR said that total housing inventories fell 3.4 percent to 3.89 million existing homes available for sale at the end of May. This represents 8.3 months of supply at the current sales pace, compared with 8.4 months of supply in April.
Eurozone Leading Index Drops First Time In 14 Months: Conference Board
The leading economic index for the euro area declined in May for the first time in more than a year, the Conference Board said Monday.
The index fell 0.5% in May to 109.7, following a 0.8% increase in April. At the same time, the Conference Board Coincident Economic Index, a measure of current economic activity, increased 0.1% in May after falling 0.2% in April. This was the sixth increase for the last seven months, the group said.
Negative contributions to the leading index, that came from stock prices, Markit manufacturing purchasing managers index and the economic sentiment index, were high enough to offset the continued large positive contribution from yield spread, the think tank pointed out. "The first fall of the LEI for the Euro Area in fourteen months suggests that the rebound in economic growth may have peaked during the second quarter, said Jean-Claude Manini, senior economist at the the Conference Board.
"However, it is too soon to say that the recent improvement in the economy will subside strongly in the near term," Manini said. "Employment may suffer from a wait-and-see attitude during the second half of 2010, but the effects of deficit reduction measures will be primarily felt in 2011."
The group noted that despite the decrease, the leading index for the Euro area is still 14.9% higher than its March trough. European sovereign debt crisis along with fiscal consolidation plans had weighed on Eurozone economic sentiment in May. The LEI aggregates eight economic indicators that measure activity in the Euroarea as a whole.
Greenback And Yen Strengthens On Weak Asian Stocks
The US dollar and the Japanese yen gained ground against their major opponents on Tuesday morning in Asia as a decline in most Asian stocks prompted traders to seek safe-haven currencies.
The yen and the dollar are viewed as safe haven currencies and they often rally when the stock markets slide and conversely lose ground when the stock market's appetite for risk is more robust.
Asian stock markets declined on renewed concerns over the global economic recovery. As of 9:50 pm ET, Japan's benchmark Nikkei 225 stock index dropped 1.46 percent, South Korea's Kospi declined 1.2 percent, Australia's S&P/ASX 200 was down 0.30 percent, New Zealand's NZSE-50 fell 0.39 percent and Taiwan's weighted average fell 0.16 percent.
The yen advanced to a 5-day high of 131.92 against the pound and 109.18 against the euro by 8:45 pm ET and the next likely resistance levels are seen at 131.20 and 109.10, respectively. The Japanese currency is currently quoted at 109.50 against the euro and 132.44 versus the pound.
The yen also climbed to a 5-day high of 72.76 against the Australian dollar, 81.92 against the Canadian dollar and 59.76 against the NZ dollar at this time and if the domestic unit strengthens further, likely resistance levels are seen at 71.90, 81.60 and 59.50, respectively. The yen is currently quoted at 59.9 against the kiwi, 82.20 versus the loonie and 73.14 against the aussie.
The Reserve Bank of Australia is set to conclude its monetary policy meeting today and then announce its decision on interest rates at 12:30 am ET. Analysts are expecting the bank to keep rates on hold at the current level of 4.50 percent.
The Japanese yen rose to a 4-day high of 87.43 against the US dollar and 82.03 against the Swiss franc around 8:45 pm ET. The yen is presently worth 87.55 against the greenback and 82.33 versus the Swiss franc with 87.0 and 81.80, respectively seen as the next likely target levels.
The greenback rose to a 5-day high of 1.2482 against the euro and 1.5084 against the pound before reversing its direction around 8:55 pm ET. If the greenback strengthens further, likely resistance levels are seen at 1.2240 against the euro and 1.4860 against the pound.
The US currency reversed its course after edging higher to 1.0669 against the Swiss franc at this time. The greenback-franc pair is presently quoted at 1.0640.
Looking ahead, Japan will provide preliminary May numbers for its leading and coincident indexes at 1:00 am ET. The leading index is expected to come in at 98.9, down from 101.7 in April. The coincident is forecast to show a score of 101.2, down barely from 101.3 in the previous month.
Switzerland is set to release its consumer price index for June at 3:15 am ET. The CPI is expected to rise 0.9% on year, while a 0.1 percent decline is expected on the month.
Canadian building permits for May and the US ISM non-manufacturing composite index for June are expected in the New York session.
Canadian Dollar Weakens Against Greenback And Yen
During early European deals on Wednesday, the Canadian dollar edged down against its US and Japanese counterparts despite a rise in oil price.
Meanwhile, the loonie pared some of its Asian session gains against the euro and the aussie.
Oil prices climbed today as traders look to weekly crude supply data for signs of recovering U.S. demand.
U.S. crude for August advanced as much as 40 cents to $72.38 a barrel on Wednesday and was up 15 cents at $72.13 at 1:38 am ET, after touching $71.09 on Tuesday, its lowest intra-day price since June 8, and peaking at $73.86. ICE Brent for August rose 16 cents to $71.61.
The American Petroleum Institute will publish weekly inventory data at 4:30 pm ET today, followed by government statistics from the Energy Information Administration (EIA) on Thursday at 11 am ET. Both reports come a day later than usual because of the independence day holiday on July 5.
Most Asian and European stocks plunged today as weak U.S. data renewed concerns about the strength of the global economic recovery
Activity in the U.S. service sector expanded for the sixth consecutive month in June, according to a report released yesterday by the Institute for Supply Management, although the pace of growth in the sector slowed by much more than economists had anticipated.
The ISM said its index of activity in the service sector fell to 53.8 in June from 55.4 in May, but a reading above 50 indicates continued growth in the sector. Economists had expected the index to show a much more modest decrease to a reading of 55.0.
In Asia, Japan's Nikkei 225 index fell 0.6%, Hong Kong's Hang Seng slipped 1.2%, South Korea's Kospi declined 0.55%, Taiwan's main index plunged 0.2%.
Australia's S&P 200 index and the All Ordinaries index slipped 0.5% each.
In Europe, Germany's DAX fell 0.6% in early deals, France's CAC 40 index plunged 1.2% and U.K.'s FTSE 10 index lost 0.9%.
The Canadian dollar slipped against the US currency in early European deals on Wednesday. At present, the loonie is worth 1.0580 against the greenback, compared to yesterday's close of 1.0544. The near term support for the Canadian dollar is seen around the 1.068 level.
During early European deals on Wednesday, the Canadian dollar declined against the Japanese yen. The loonie-yen pair is currently worth 82.43, down from yesterday's closing value of 83.02. If the loonie weakens further, it may likely target the 82.0 level.
During early European deals on Wednesday, the Canadian dollar pared the gains it made in Asian deals against the currencies of Europe and Australia. As of now, the loonie is worth 1.3304 per euro and 0.8962 against the aussie, compared to early highs of 1.3279 and 0.8942, respectively. The next downside target level for the loonie is seen at 0.901 against the aussie and 1.337 against the euro. The euro-loonie pair closed trading at 1.3310 and the aussie-loonie pair at 0.9006 on Tuesday.
Looking ahead, the Euro-zone final first quarter GDP and the German factory orders for May are expected in the upcoming hours.
Canada's Ivey PMI for June is slated for release at 10:00 am ET.
There are no significant economic reports scheduled for release from the U.S. today.
Pound Mixed Against Majors
During early European deals on Monday, the British pound showed mixed trading against other currencies. While the pound fell to new multi-day lows against the dollar and the yen, it recovered from a new multi-month low against the franc and an 11-day low against the euro.
The U.K. revised first quarter GDP report released at 4:30 am ET weakened the pound against all majors. But the pound recouped its losses against the euro and the franc shortly.
The U.K. economy expanded 0.3% sequentially in the first quarter, the Office for National Statistics showed. The first quarter growth figure was unchanged from the estimate published in May, but smaller than the 0.4% growth seen in the fourth quarter of 2009.
The pound declined to an 11-day low of 1.4951 against the US dollar at 4:35 am ET Monday. Since then, the pound-dollar pair has been moving sideways and is currently worth 1.4970. If the pound weakens further, it may likely target the 1.488 level. At last week's close, the pair was quoted at 1.5071.
The pound that strengthened against the yen in early Asian deals on Monday pared its gains in the latter part of the session and extended its slide in early European trading. The pound-yen pair that closed last week's trading at 133.58 fell to a 5-day low of 132.62 by about 5:00 am ET. On the downside, 131.3 is seen as the next support level for the UK currency. The pair is currently worth 132.80.
The British pound that fell to a new multi-month low of 1.5839 against the Swiss franc at 2:40 am ET Monday recovered thereafter. As of now, the pound-franc pair is worth 1.5980, up from last week's close of 1.5909. If the pound advances further, it may target the 1.606 level.
The pound rose against the euro after touching an 11-day low of 0.8421 at 4:35 am ET Monday. The euro-pound pair is presently trading near last week's close of 0.8394. The next upside target level for the pound is seen at 0.8335.
Looking ahead, finance ministers from the 16 euro area countries are scheduled to begin a meeting today, where stress tests being conducted on the region's lenders are likely to be high on the agenda.
Also, traders will be looking to second quarter company earnings report this week for clues about the strength of the U.S. economy.
U.S. Trade Balance Shows Biggest Deficit Since November 2008
Imports in the month of May rose at a slightly faster pace than exports, according to a report released by the Commerce Department on Tuesday, with the report subsequently showing an unexpected increase in the size of the U.S. trade deficit.
The Commerce Department said that the trade deficit widened to $42.3 billion in May from $40.3 billion in April. The wider trade deficit came as a surprise to economists, who had expected the trade deficit to narrow to $39.4 billion.
With the unexpected increase, the size of the trade deficit reached its highest level since coming in at $43.8 billion in November of 2008.
Peter Boockvar, equity strategist at Miller Tabak, said, "The higher than expected trade figure may cut Q2 GDP estimates by up to 0.3 of a percentage point."
"With the U.S. economy becoming less dependent on the U.S. consumer, we must make things the rest of the world wants and improving and growing our export sector is a vital component of the future economic health of our country," he added.
The wider deficit reflected a notable increase in the value of imports, which rose by 2.9 percent to $194.5 billion in May from $189.0 billion in April. The increase lifted the value of imports to the highest level since October of 2008.
Nonetheless, the jump in the value of imports was partly offset by a 2.4 percent increase in the value of exports, which rose to $152.3 billion in May from $148.7 billion in May. Exports rose to their highest level since September of 2008.
The report also showed that the goods deficit widened to $54.5 billion in May from $52.5 billion in April, while the services surplus was virtually unchanged at $12.2 billion.
Additionally, the Commerce Department said that the politically-sensitive trade deficit with China widened to $22.3 billion in May from $19.3 billion in April.
No Let Up In Sight As Dollar Falls Further
The dollar continued to decline Thursday morning as improving growth prospects in Asia and Europe made counterparts in those regions more attractive.
At the same time, a recent string of troubling economic data from the US has fueled concerns that the domestic recovery is petering out.
Yesterday's disappointing retail sales report confirmed that consumers are anxious amid lingering problems in the labor and housing markets.
JP Morgan Chase has joined the growing line of companies to have reported better than expected earnings results this week, propping up stock futures and generating risk appetite.
Higher-yielding currencies like the euro tend to benefit from increased capacity for risk.
The dollar dropped to a fresh 2-month low versus the euro, extending its big July losses. The buck slipped to 1.2825, moving a full ten cents from June's 4-year high of 1.1805.
The eurozone economy is likely to grow at a "moderate and uneven" pace while inflationary pressures in the 16-nation bloc remain contained, the European Central Bank says.
In its latest monthly bulletin, the ECB said the risks to the euro area's economic outlook are "broadly balanced, in an environment of high uncertainty."
There was no relief for the dollar against the sterling. The buck fell to 1.5363, its lowest since late April.
Against the yen, the dollar pulled back to 87.84. Late in June, the dollar hit a 2010 low of 86.95.
The Bank of Japan has sharply revised up its fiscal 2010 growth forecast for the country's economy, citing the acceleration of growth in emerging economies.
A plethora of key economic data will keep traders on their toes throughout Thursday's session.
At 8:30 am ET, the Labor Department will release its weekly jobless claims report, with economists forecasting a modest drop in claims to 450,000 in the recent reporting week from the 454,000 for the previous week.
The Labor Department is also due to release its producer price index for June at 8:30 am ET. The recent dip in oil prices is expected to act as a drag on the headline number, with economists expecting a 0.1% drop in the producer price index. At the same time, the core producer price index is likely to show 0.1% growth.
IMF, Afghanistan Agree On US$125 Mln Economic Programme
The International Monetary Fund on Tuesday said it reached in an agreement with Afghanistan on a new three-year economic program that could be supported by US$125 million financial aid.
"The main goals of the program are to move Afghanistan towards financial sustainability, ensure that the money spent is well used, and build capacity for policy implementation," said Masood Ahmed, IMF Director of the Middle East and Central Asia Department said. The program will complement the broader development agenda that bilateral and multilateral partners will be supporting and will include a package of technical assistance from the IMF, he added.
Enrique Gelbard, IMF mission chief for Afghanistan said despite serious constraints, Afghanistan has been making progress under its economic program. Growth has been strong, inflation has been controlled, and tax collection has grown significantly since 2009.
He noted that Afghanistan government is committed to consolidating these achievements under its new program, which contains policies to keep inflation low, strengthen banking supervision and regulation, achieve sustained increases in fiscal revenues, ensure transparency in the mining sector, and improve efficiency in the budget process and public spending while protecting the poor.
The agreement reached with the Afghanistan authorities is subject to approval by IMF management and the Executive Board. Consideration of the program by the Executive Board is expected in late August.
China And Singapore Announce Bilateral Currency Swap Deal
The People's Bank of China and the Monetary Authority of Singapore on Friday agreed to a bilateral currency swap arrangement.
The swap arrangement will provide Chinese Yuan liquidity of up to CNY 150 billion and Singapore dollar liquidity of up to S$30 billion. The agreement has a maturity of three years and can be extended by agreement between the two sides.
The agreement intended to promote trade and direct investment for economic development between two nations, was announced at the 7th Joint Council for Bilateral Cooperation Meeting held in Beijing. "The bilateral currency swap arrangement is a key pillar of co-operation between the PBoC and the MAS to strengthen regional economic resilience and financial stability," MAS said in a statement.
Yen Tumbles To Fresh Multi-week Lows Against Some Majors
Tuesday during early European deals, the yen plummeted to fresh multi-week lows against the currencies of Australia, New Zealand and Europe as a rise in European stocks reduced demand for the safe-haven Japanese currency.
Meanwhile, the yen plunged to a 12-day low against the Canadian dollar.
European stocks soared in early deals on strong results from UBS and Deutsche Bank. Germany's DAX rose 0.3% in early deals, France's CAC 40 index climbed 0.75% and U.K.'s FTSE 10 index gained 0.6%.
However, Tokyo stocks ended almost flat today as the market awaited a series of earnings reports from Japanese companies this week.
After drifting in and out of negative territory, the 225-issue Nikkei Stock Average finished 6.81 points, or 0.07 percent, lower from Monday at 9,496.85.
Swiss banking giant UBS AG reversed to a profit in its second quarter, helped by excellent performance of its Investment Bank business. The segment also benefited by a gain on its own debt. At the same time, the company noted that withdrawals from its wealth management business slowed.
UBS said that it made a profit of CHF 2.005 billion or US$1.911 billion compared to a loss of CHF 1.402 billion in the year-ago period, although it trailed the previous quarter's profit of CHF 2.202 billion.
German financial services firm Deutsche Bank reported a higher profit for the second quarter, helped by a sharp decline in provision for credit losses and strong revenue growth in its Global Transaction Banking and Asset Management businesses.
Net income attributable to Deutsche Bank shareholders was EUR 1.16 billion, or about US$1.51 billion, compared with EUR 1.09 billion in the prior-year quarter. Earnings per share were EUR 1.75 versus EUR 1.64 a year earlier.
An encouraging German GfK consumer confidence report released today also lifted investors sentiment.
German consumer climate is set to improve in August, as employment prospects brightened, results of a key survey showed. The consumer confidence index logged 3.9 for August, up from a revised 3.6 in July, a monthly survey from GfK Group showed. That was in contrast to an expected fall to 3.5.
The yen declined against the Australian dollar during early European session on Tuesday. As of now, the yen is trading near a 5-week low of 79.11 against the aussie, compared to 78.46 hit late New York Monday. On the downside, 80.9 is seen as the next target level for the Japanese currency.
During early European deals on Tuesday, the yen slipped against the New Zealand dollar. The kiwi-yen pair that closed yesterday's trading at 63.79 is now worth 64.25. This set the lowest level for the yen since June 23. If the yen weakens further, it may likely target the 65.4 level.
The yen plunged against the Canadian dollar in early European deals on Tuesday. As of now, the yen is trading at a 12-day low of 84.96 against the loonie and the next downside target level for the yen is seen at 86.5. At yesterday's close, the loonie-yen pair was quoted at 84.22.
At 4:35 am ET Tuesday, the yen slumped to near an 8-week low of 113.73 against the euro. At present, the yen is worth 113.65 against the euro with 114.2 seen as the next downside target level. The euro-yen pair closed yesterday's trading at 112.90.
The yen declined against the currencies of US and UK during early European deals on Tuesday. Currently, the yen is worth 135.20 against the pound and 87.40 against the dollar, compared to yesterday's close of 134.59 and 86.88, respectively. If the yen drops further, it may likely target 87.7 against the dollar and 135.6 against the pound.
Looking ahead, the U.S. consumer confidence for July and the S&P/Case-Shiller home price index for May have been slated for release in the New York morning.
Pound Jumps To New Multi-month High Against US Dollar
U.K.'s sterling surged up to 1.5619 against the US dollar by 1:35 am ET Wednesday, its highest level since February 18 and a further rally may push the pair to stay around the 1.5820 resistance level. The cable is presently quoted at 1.5614.
The pound also edged slightly higher to 137.21 against the yen and challenged yesterday's new multi-week high of 1.6552 against the Swiss franc at this time. The pound is presently quoted at 1.6549 against the alpine unit and 137.12 against the Japanese currency.
Japanese Auto Sales Growth Eases In July
Japan automobile sales grew at a pace of 15% year-on-year in July to 333,403 units, the Japan Automobile Dealers Association said Monday. In June, sales showed an annual growth of 20.6%. Sale of cars, trucks and buses excluding minicars in July totaled 333,403 units.
Toyota sold 161,444 units, up 19.1% from the prior year. Sales of Honda Motor increased 14.5% to 50,448 units. Nissan recorded only 2.3% increase in sales, now at 50,719. However, overall auto sales are expected ease in the months ahead as the government incentives to boost sales expire at the end of September.
Japan Automobile Manufacturers Association on July 30 said auto production increased 25.9% in June. Domestic sales climbed 17.4% to 448,831 vehicles. Overall auto production in the first half of 2010 surged 45.8%.
ISM Manufacturing Index Indicates Continued Growth In July
Manufacturing activity in the month of July expanded at a slower pace than in the previous month, the Institute for Supply Management revealed in a report on Monday, although the index of activity in the sector fell by less than economists had expected.
The ISM said its manufacturing index fell to a reading of 55.5 in July from 56.2 in June, with a reading above 50 indicating continued growth in the sector. Economists had expected the index to show a more notable decrease to a reading of 54.2.
Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee, said, "July marks 12 consecutive months of growth in manufacturing, and indications are that demand is still quite strong in 10 of 18 industries."
The slowdown in the pace of growth in the manufacturing sector reflected a deceleration in new orders and production, with the new orders index slipping to 53.5 in July from 58.5 in June and the production index falling to 57.0 from 61.4.
On the other hand, the employment index edged up to 58.6 in July from 57.8 in June, indicating a modest acceleration in the pace of employment growth in the sector. The index indicated the eighth consecutive month of growth in manufacturing employment.
The report also showed a turnaround for inventories, with the inventories index jumping to 50.2 in July from 45.8 in June. With the increase, the index rose above 50 for the first time since March.
With regard to inflation, the ISM said that the prices index edged up to 57.5 in July from 57.0 in June, pointing to the thirteenth consecutive month of price growth.
Paul Dales, U.S. economist at Capital Economics, said that the smaller than expected decrease by the headline manufacturing index is "consistent with a further modest easing in economic activity rather than newfound economic malaise."
"Admittedly, in just three months the index has dropped by 5 points, signaling a sharp slowdown in growth," Dales added. "But the key point is that it is falling from a very high level. Even after July's dip, it is still consistent with annualized GDP growth of around 4%."
On Wednesday, the ISM is scheduled to release a separate report on activity in the service sector, with the index of activity in the sector expected to edge down to 53.0 in July from 53.8 in June.
Euro Drops As Chinese Data Raises Red Flags
The euro pulled back sharply on Tuesday as signs that China's robust economy is cooling off caused a return to risk aversion.
Stocks were lower around the global today ahead of the latest interest rate announcement from the Federal Reserve.
Appetite for risk had been helping the euro rally until this week, when anxiety about the pace of the global economic recovery took hold.
The euro slipped to 1.3073 versus the dollar, down from last week's 3-month peak of 1.3333.
Versus the yen, the euro dropped to a 10-day low of Y112.27.
The single currency also tailed off versus the sterling, dropping to 0.8310 from a 10-day high of 0.8362.
The Conference Board leading economic index for the U.K. rose 0.5% in June from May, following the 0.2% increase in the previous month, the Conference Board said on Tuesday.
This marks the 15th straight month in which the leading index has risen.
Elsewhere, data showed China's July imports grew at the slowest pace since November, missing economists' forecasts.
And property prices in 70 major Chinese cities climbed 10.3 percent from a year earlier in July, the slowest pace for six months
This afternoon, the US monetary policy makers are widely expected to keep the nation's key interest rate near zero percent and signal concerns about deflation and downside risks to economic growth.
Dollar Steady Friday Morning Ahead Of Data Deluge
The dollar was mixed Friday morning in New York ahead of a slew of economic data related to inflation and the mindset of the US consumer.
Risk aversion and slumping stocks have helped the dollar find its footing against most majors this week, but the buck hit a 15-year low against the yen on Wednesday and has failed to improve much since.
The Labor Department will table the consumer price index for July at 8.30 a.m. ET. Economists expect that inflation rose 0.2% for July following the 0.1% decline in the previous month, while core inflation, excluding food and energy, is expected to be 0.1% following a 0.2% rate in June.
At the same time, the Commerce Department will release its report on retail sales for July. Economists expect that retail sales rose 0.5% for the month following 0.5% decline in the previous month.
At 9.55 a.m. ET, the preliminary report of the Reuters/University of Michigan's consumer sentiment survey for August will be released. Economists expect the consumer sentiment index to increase to 70 from July's 67.80.
The buck was steady near 1.2800 versus the euro, having rebounded nicely this week after touching a 3-month low of 1.3333 last Friday.
Eurozone gross domestic product grew at a faster pace of 1% sequentially in the second quarter, following a 0.2% rise in the first quarter, flash estimates published by Eurostat showed Friday.
The dollar also held its ground versus the sterling, staying near 1.5600. A week ago, the buck was at a 6-month low of 1.5998.
The buck remained stuck in the mud versus the yen, as the Japanese currency remains the preferred safe haven option. The pair was at Y85.73, near the dollar's 15-year low of 84.71.
EU Commission Proposes New Rules For Financial Conglomerates
The European Commission on Monday proposed to amend existing rules on the supervision of financial conglomerates as part of making the financial system resilient against future crisis.
"Drawing lessons from the financial crisis, the Commission proposes to equip national financial supervisors with new powers to better oversee the conglomerates' parent entities, such as holding companies," the Commission said in a statement.
The changed rules will allow supervisors to apply banking supervision, insurance supervision and supplementary supervision at the same time, thereby remedying to unintended loopholes identified in the context of the financial crisis, the Commission said. In this way, supervisors would be getting better information at an earlier stage of a trouble and allows them to be better equipped to intervene.
The proposal will be passed to member states and the European Parliament for consideration. Financial conglomerates are financial groups that are usually active in more than one country and operate in both the insurance and banking businesses.
Ifo: World Economic Climate Clouded In Q3
The world economic climate looks slightly clouded in the third quarter of 2010, latest survey results from the Ifo Institute for Economic Research showed Wednesday.
The think tank said its world economic climate indicator fell to 103.2 in the third quarter from 104.1 in the second quarter. It suggests that the recovery of world economic activity will continue at a slower pace in the second half of the year, the Munich-based Ifo said.
The world economic climate indicator fell in North America and in Asia, but rose in Western Europe. In North America, the assessments of the current economic situation were more favorable than in the previous survey and expectations for the coming six months were less optimistic. In Asia, the favorable economic situation has improved further, but the optimism for the next half year has declined somewhat.
In Western Europe, the assessments of the current economic situation have improved more clearly than the worldwide average. Since the six-month economic outlook has not clouded so strongly, the climate indicator as a whole rose marginally, the think tank said.
Although the surveyed experts have given better assessments of the current economic situation than in the first half of 2010, the economic expectations for the coming six months have been revised downwards. The corresponding indicator declined to 112.3 from 126.3.
In contrast to the previous surveys, the euro was assessed as slightly undervalued against the U.S. dollar. Overall, in the coming six months, after adjustments have occurred, the experts foresee largely stable exchange rates for the four major world currencies, the euro, the U.S. dollar, the Japanese yen and the British pound, Ifo said.
Beaten Down Euro Rises After Gory Look At US Housing
The euro was taking yet another beating on Tuesday, but snapped back after the release of data suggesting the US housing market is in even worse shape than the most pessimistic economists have feared.
Before finding its footing, the euro dropped to its lowest since 2001 versus the yen, and extended its steep recent losses versus the dollar.
Stocks continued to sell off, and commodity prices fell further on renewed risk aversion.
A mixed bag of economic data from Europe failed to generate any confidence that the region is on a path toward a sustainable recovery.
Euro zone industrial new orders rose by 2.5% month-on-month in June, slower than the revised 4.1% growth in the prior month, the European Union's statistical agency Eurostat said on Tuesday.
The German economy logged its biggest expansion since its 1991 reunification' in the second quarter. The economy grew by a seasonally adjusted 2.2% sequentially in the second quarter.
The euro dropped to a 7-week low of $1.2586 in early dealing versus the dollar, but stormed back to $1.2715 after industry data showed a record drop in US existing home sales.
The National Association of Realtors said existing home sales fell by 27.2 percent to an annual rate of 3.83 million units in July from a downwardly revised 5.26 million unit rate in June.
The euro fell to a more than 8-year low of Y105.41 versus the yen, then improved to Y106.45. At the same time, the US dollar fell to its lowest since 1995 versus the yen, which has become the preferred safe haven option.
Dollar Rally Stalls After BoJ Disappoints
The dollar struggled for direction Monday morning as traders contined to digest Friday's remarks from Federal Reserve Chairman Ben Bernanke, who said the US economic recovery is on track.
Still, this week's deluge of data is likely to confirm that the economy is slowing down. In addition to the government's monthly jobs report, traders will be treated to data on the pending homes sales, manufacturing, and consumer confidence.
US personal spending is estimated to have risen by 0.3% in July, helped by a small bounce in core retail sales and solid auto sales. At the same time, economists estimate a 0.2% increase in personal income.
The dollar came under pressure versus the yen in early dealing, giving back most of its rebound from the previous session. The buck slipped to 84.60, moving back towards a recent 15-year low of 83.63.
The Bank of Japan announced an expansion to its low-interest lending program after an extraordinary policy board meeting on Monday. At the same time, the bank also maintained its key interest rate at near-zero.
The buck firmed a bit versus the euro, improving to $1.2700 from $1.2765. At the same time, the dollar remained stuck in the mud near $1.5550 against the sterling.
The British Chambers of Commerce hiked U.K.'s 2010 GDP growth forecast to 1.7% from the earlier 1.3%. Similarly for 2011, the Chamber upped its forecast to 2.2% from the 2% predicted in June.
Eurozone economic confidence rose in August to 101.8 from 101.1 in July, a monthly survey from the European Commission showed Monday. The economic sentiment index remained above its long-term average and expected reading of 101.6.
Dollar Stuck Near 1995 Lows Against Yen
The dollar continued to hover around a 15-year low versus the yen but eked out gains versus the euro Tuesday morning in New York, as traders returned to their desks following the Labor Day weekend.
Stocks rose on Friday after better-than-expected jobs data, but momentum has not carried over into this week. Stocks are down around the world this morning amid renewed fears about the European banking system.
The dollar was again testing its worst levels since 1995 versus the yen, slipping to 83.80 in very early dealing. Two weeks ago, the dollar hit a 15-year low of 83.58.
The Bank of Japan maintained its key interest rate at near-zero at the end of its two-day policy meeting on Tuesday. It also promised to take more policy actions if judged necessary to kick start the deflation-ravaged economy.
Still, the markets have considered the BoJ's recent moves far too tepid to either bolster the economy or stop the yen from rising further.
Germany's factory orders declined 2.2% in July from the prior month, the Federal Ministry of Economics and Technology said on Tuesday. Economists were expecting factory orders to rise 0.5%.
The dollar rose to 1.2750 versus the euro, up a penny from Monday morning. The pair has been unable to sustain any direction for the past month.
The buck bounced back and forth near 1.5360 versus the sterling, having edged higher over the past few weeks.
ASEAN Recovery May Slow: OECD
The robust expansion of the south east Asian economies may weaken in the next quarter, the Organization for Economic Cooperation and Development, or OECD, said in its latest Asian Business Cycles quarterly report.
Both leading and coincident indicators for the Association of South East Asian Nations, or ASEAN, economies point towards steady growth on the back of sound exports and strong domestic demand supported by improved business sentiment, the report said.
However, the leading indicators suggested that growth may slow in these economies during the next quarter. Continued signs of slowing of the Chinese economy constitute a negative factor for the outlook for ASEAN economies, while uncertainty about growth prospects for OECD economies remain.
However, overall growth prospects are stronger on average for the ASEAN economies than for the Emerging Asia area including China and India.
The 10-member association consists of Malaysia, Vietnam, Thailand, Indonesia, Singapore, Philippines, Myanmar, Laos, Cambodia, Brunei Darussalam.
Dollar Hits New 15-Year Low Versus Yen As Kan Wins Party Vote
The dollar dropped to a fresh 15-year low versus the yen on Tuesday, after Japanese Prime Minister Naoto Kan survived a major political battle.
While the buck came under pressure versus the yen, risk aversion gave the dollar a bit of a lift versus the euro. German investor confidence fell to a 19-month low in September, a report showed today.
Trading took place ahead of a busy day on the US economic front.
Looking at this morning's currency charts, the dollar slumped to Y83.06 - its lowest since 1995.
Versus the euro, the buck improved to $1.2835 after hitting a weekly low of 1.2909 overnight.
German investor confidence slumped more than expected in September, according to research firm ZEW institute. The ZEW index of economic sentiment fell to a negative reading of -4.3 from 14.0 in August.
The buck continued to wobble versus the sterling, holding in a range around $1.54 for a second week.
The dollar remained on the ropes versus its Canadian counterpart, hanging around a 4-week low of C$1.0264.
Egypt Government to protect investors right in TMG's madinaty land deal
Egypt's Finance Minister said that the government will protect investors exposed to an ongoing dispute over the sale of state land to real estate firm Talaat Moustafa Group (TMG).
He added that Madinaty issue will be fixed in next few days.
Shares of property firm TMG tumbled last week after a court upheld a ruling that a housing ministry body broke the law by selling land for the company's landmark project without an auction.
Dollar In The Dumps Versus European Majors
The dollar continued to wobble versus other major currencies on Friday, nearing its lowest in a decade versus the Swiss franc while hovering near a recent 5-month low against the euro.
Another batch of economic news from the housing front may provide clues about the ailing sector. Durable goods data is also on tap this morning, and may shed some light on manufacturing activity.
Lingering economic weakness has fueled speculation that the Federal Reserve is preparing a second round quantitative easing measures. The central bank has few arrows left in its quiver, having long ago lowered interest rates to a record low near zero.
The dollar continued its dramatic slump versus the safe haven Swiss franc, dropping to a 2-year low of .9795. A move below 0.9645 would take buck to its lowest in more than a decade.
Dollar weakness has contributed to the rise of gold, which breached the $1300 an ounce mark for the first time today.
The dollar dropped to a 10-day low of Y84.19 against the yen, edging closer to this month's 15-year low of Y82.86.
Against the euro, the dollar held near $1.3439 -- its lowest level since May. After starting September near 1.2600, the buck has steadily lost ground, returning to levels not seen since the start of the European sovereign debt crisis.
Concerns about public debt in Europe have been soothed by austerity measures and the a series of successful bond offerings.
German business sentiment improved unexpectedly in September to the highest level since June 2007, despite concerns of a double-dip in the largest eurozone economy.
Eurozone Jobless Rate Remains At 12-Year High
The euro area unemployment rate continued to stay at a 12-year high in August as the region's economy started to cool, reflecting slowing trends in global economy. Official figures suggest large disparities in unemployment figures among core and peripheral economies of the single currency bloc.
The euro area unemployment rate came in at 10.1% in August, unchanged from July, data published by Eurostat, the statistical office of the European Union showed Friday. The rate for July was revised up from 10%. The jobless rate was 10.1% since May.
"Eurozone unemployment appears to have reached a plateau at a high level," said ING Bank economist Martin van Vliet.
Around 15.87 million people were unemployed in August. From the previous month, the number of persons unemployed decreased by 20,000 compared to an increase of 9,000 in July. From August 2009, unemployment rose by 0.569 million.
Compared with a year ago, the unemployment rate fell in seven member states, remained stable in one and increased in nineteen. The largest decreases were observed in Malta and Austria, while Estonia and Lithuania showed largest increases.
As the labor market situation improved in some major economies and deteriorated in some peripheral economies, the ING Bank economist said the devil is very much in the detail. When the Spanish and Ireland unemployment rose to 20.5% and 13.9% respectively, the rate fell to 8.2% in Italy.
Data released by Germany's Federal Labor Agency said the number of unemployed decreased sharply by 40,000 in September, taking the level to 3.15 million. The jobless rate fell to 7.5% in September, the lowest since 1992.
2 Americans, British-Cypriot Share Nobel Prize For Economics
U.S. researchers Peter Diamond and Dale Mortensen, and British-Cypriot Christopher Pissarides have won this year's Nobel Prize for Economic Sciences for their work on how unemployment, job vacancies and wages are affected by government rules and policies.
Announcing the Award in Stockholm on Monday, the Royal Swedish Academy of Sciences said the trio developed a theory that answer the questions why are so many people unemployed at the same time that there are a large number of job openings, and how can economic policy affect unemployment.
On many markets, buyers and sellers do not always make contact with one another immediately. This concerns employers who are looking for employees and workers who are trying to find jobs. Since the search process requires time and resources, it creates frictions in the market. On such search markets, the demands of some buyers will not be met, while some sellers cannot sell as much as they would wish. Simultaneously, there are both job vacancies and unemployment on the labor market.
Diamond analyzed the foundations of search markets, while Mortensen and Pissarides expanded the theory and applied it to the labor market.
"Their models help us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy," the Committee added.
The laureates' study concludes that more generous unemployment benefits give rise to higher unemployment and longer search times.
Search theory has been applied to many other areas in addition to the labor market. This includes, in particular, the housing market. The number of homes for sale varies over time, as does the time it takes for a house to find a buyer and the parties to agree on the price. Search theory has also been used to study questions related to monetary theory, public economics, financial economics, regional economics, and family economics.
President Barack Obama nominated him as a member of the U.S. Federal Reserve, but Senate rejected it. The White House re-nominated Diamond, but his nomination is pending clearance by the Senate Banking Committee.
The prize-money, worth 10 million Swedish kronor ($1.5 million), will be equally shared by the laureates. The Award also carries a gold medal and citation.
No EU Members Record Government Surplus In 2009: Eurostat
No member state of the European Union recorded a government surplus in 2009, latest data from the statistical office Eurostat showed Friday.
The largest government deficits in percentage of GDP were recorded in Ireland and the U.K. In Ireland, the deficit was 14.4% of GDP and that in the UK at 11.4%. The lowest deficit was recorded in Luxembourg, at 0.7% in 2009.
The statistical office postponed the publication of figures for Greece to mid November as it is undertaking a process of quality assessment of statistical source data from public accounts, in cooperation with the Greek Statistical Office and the Greek Court of Auditors.
Pound Jumps To Fresh 5-week High Against Swiss Franc
U.K.'s sterling continued its strong rally versus most major currencies in early New York trading on Thursday and touched a fresh 5-week high of 1.5708 against the Swiss franc, 16-day high of 0.8706 against the euro, 9-day high of 1.5932 against the US dollar around 8:15 am ET.
If the pound strengthens further, likely target levels are seen at 0.8630 against the euro, 1.60 versus the US dollar and 1.5880 against the Swiss franc.
The pound also reversed its course after hitting a 2-day low against the yen in early trading and touched as high as 129.41 before holding steady around 8:15 am ET. On the upside, the UK currency may target resistance around the 130.30 level.
Franc Spikes Up To Fresh Multi-week Highs Versus Greenback And Euro
The Swiss franc extended its previous session uptrend against the euro and the US dollar in late European trading on Friday. At 5:10 am ET, the franc climbed to a 2-week high of 1.3524 against the euro and nearly a 3-week high of 0.9550 versus the greenback, which may be compared to Thursday's closing value of 1.3618 and 0.9586, respectively.
Against its British counterpart, the franc also spiked up further and hit a 10-day high of 1.5464 by about 5:10 am ET. Currently, the Swiss currency is trading near 0.9575 against the dollar, 1.3547 versus the euro and 1.5490 versus the sterling.
Greece Remains Stuck Deep In Recession
The Greek economy contracted sharply between July and September, marking the ninth consecutive quarter of negative growth, figures showed on Friday.
The Hellenic Statistical Authority said GDP fell 1.1% compared to three months earlier. That was slower than the 1.5% fall forecast by analysts after the 1.7% drop in the June quarter.
The statistical office said investment and household consumption had the biggest negative influence on growth.
On a year-over-year basis, the Greek economy shrank 4.5%, compared to the 4% fall in the June quarter. Economists had predicted a 4.3% drop.
Eurozone Nov Economic Sentiment Improves
Eurozone economic confidence rose to 105.3 in November from 103.8 in October, a survey from European Commission showed Monday. The expected reading was 104.9.
Sentiment in services rose markedly by 2.1 to 10.2 in November, which was the main contributor to the overall improvement. At the same time, confidence in industry improved to 0.9 points.
Further, confidence among consumers gained momentum in November. The reading was minus 9.4. Meanwhile, retailers' sentiment fell to minus 1.5 from minus 1.1.
Separately, the commission said business confidence rose to 0.96 from 0.91 in October. The level of the indicator now stays at its highest since December 2007, suggesting that the recovery in industry will continue in the months ahead.
Dollar Mixed As Markets Weigh Tax Cut Agreement
The dollar was mixed against other majors on Wednesday, as markets considered the Obama administration's deal to extend Bush-era tax breaks in return for another year of unemployment benefits.
While low taxes and more government spending may provide a lift to the floundering economic recovery, many are warning that the nation faces the wrath of bond markets unless it grapples with runaway deficits.
Europe has been forced to deal with its debt problems this year, as the specter of defaults in Ireland, Greece, Spain, and Portugal threatened the viability of the euro.
The dollar was steady near $1.32 versus the euro this morning. After hitting a 10-month low near $1.4300 in October, the buck improved to $1.2960 as Europe prepared a rescue of Irish debt late in November.
German exports recorded a surprise fall in October, suggesting the rising euro and waning global demand are starting to hurt firms in Europe's largest economy. Belying expectations for no change, exports dropped 1.1% month-on-month.
The dollar dropped against the sterling, hitting $1.5795.
British manufacturers expect production to rise solidly in the next three months on the back of strengthening demand at home and abroad, results of the latest monthly industrial trends survey conducted by the Confederation of British Industry showed Wednesday.
Meanwhile, the dollar rose to Y84.10 against the yen, staying away from a recent 15-year low of Y80.22.
U.S. mortgage applications declined slightly last week, following a huge drop the week before, according to a closely watched housing survey, according to the Mortgage Bankers Association's latest survey.
For the week ending December 3, the Market Composite Index, a measure of mortgage loan application volume, decreased 0.9 percent on a seasonally adjusted basis from one week earlier.
Euro Off Early Highs Versus Dollar Amid Encouraging US Data
The euro raced ahead against the dollar Tuesday morning, as Italian Prime Minister Silvio Berlusconi narrowly avoided a vote of no-confidence and German economic sentiment continued to rise.
The Mannheim-based Centre for European Economic Research or ZEW said its economic sentiment indicator for Germany climbed to 4.3 points from November's 1.8 points.
However, the euro fell from its early highs after a flurry of US economic data signaled the nation's recovery may be on a sustainable path.
Traders also re-assessed Berlusconi's slim victory as the sun came up in New York. The 11th hour win for the Italian PM may ensure political stability for a few months, but his ruling coalition has been severely damaged by the close vote.
The euro rose to a 3-week high of $1.3497 against the dollar, but dropped a penny from there amid the release of US data.
Retail sales in the U.S. increased by more than anticipated in the month of November, according to a report released by the Commerce Department on Tuesday, with the data likely to add to recent optimism about the holiday shopping season.
And the Labor Department released a report on Tuesday showing that total producer prices for November increased by more than economists had been expecting.
Boosted by energy costs, producer prices increased by 0.8 percent in November after rising by 0.4 percent in each of the two previous months.
The euro kept its gains versus the sterling after rising to a 2-week high of 0.85.
The single currency also remained firm against the yen, edging just above Y112 to its highest level in about three weeks.
Looking ahead, the Federal Reserve will announce its latest decision on interest rates at 2:15 pm ET. No change in rates is expected, but commentary on the nation's economy will be closely watched.
Euro Mixed Against Majors
During early European deals on Thursday, the euro showed mixed trading against other major currencies.
The euro climbed to more than a 3-week low of 108.55 against the yen in Thursday's early European deals at 4:30 am ET. The euro is now worth 108.65 against the yen, compared to yesterday's close of 109.47. On the downside, 108.4 is seen as the next target level for the euro.
The euro that rose to a 6-day high of 0.8528 against the pound in early European session on Thursday at 3:20 am ET eased thereafter. Currently, the pair is trading near yesterday's close of 0.8516.
After reaching a high of 1.3153 against the dollar at 2:20 am ET Thursday, the euro fell. The euro-dollar pair is now trading near yesterday's close of 1.3109.
The euro soared to 1.2518 against the Swiss franc at 2:40 am ET Thursday. Thereafter, the euro-franc pair fell, but rebounded after touching a low of 1.2459 at 3:20 am ET. The pair is presently worth 1.2510, up from yesterday's close of 1.2472.
Traders are now likely to focus on the New York session, in which the U.S. personal income and spending, durable goods orders, new home sales - all for November, University of Michigan's final report on consumer confidence for December and the weekly jobless claims for the week ended December 18 are slated for release.
IMF Economist Sees Two-Speed Recovery In 2011
A two-speed economic recovery will be extended into 2011 with rich nations facing weak growth and emerging markets moving ahead with strong recovery, according to IMF's chief economist Olivier Blanchard.
In an interview to the Fund's online magazine, IMF survey, Blanchard noted that along with their strong rebound, emerging economies will be facing tough challenges like managing possible overheating and capital flows. At the same time, growth in advanced economies will remain low, barely enough to bring down unemployment.
"The two-speed recovery, low in advanced countries, fast in emerging market countries, is striking and its features are increasingly stark. They will probably dominate 2011, and beyond," Blanchard said.
He also warned that countries will be risking a healthy recovery in the absence of continued focus on rebalancing their economies in the coming year, including structural measures and exchange rate adjustments.
Countries with excessive budget deficit must rely more on external demand or exports. And, by symmetry, surplus countries, many of them emerging markets, must do the reverse, shift from external demand to domestic demand and reduce their dependence on exports, the economist noted.
Regarding the economic prospects of low-income countries, he said recovery in trade and high commodity prices have bettered economic conditions in these nations. Private domestic demand also remained quite strong.
Dollar Wobbles As Unemployment Drops To 9.4%
The dollar was mixed Friday morning in New York amid the release of government data showing the US unemployment rate dropped to 9.4 percent despite the creation of few jobs than analysts were expecting.
Modest strength was seen against the euro for a third day, and the buck remained away from multi-decade lows against the Swiss franc and aussie.
The Labor Department said Non-farm payrolls rose 103,000 in December, helping to drive the unemployment rate down to a year and a half low of 9.4 percent.
While the headline number on unemployment should give the Obama administration some breathing room, the Federal Reserve will likely focus on the the fact that only 103,000 jobs were generated.
The Fed is widely expected to support the economy with record low interest rates and asset purchases through the first half of 2011.
The dollar held near $1.2990 versus the euro, a gain of 0.15 percent.
Versus the yen, the dollar slipped very slightly to Y83.29, having seen strength in the last few sessions.
At the same time, the dollar remained firm against the Swiss franc, improving 0.2 percent to CHF 0.9675. The dollar hit a record low near CHF 0.93 earlier this month.
Eurozone economic growth for the third quarter was downgraded due to bleak investment and weaker-than-expected household spending. The performance of the member countries showed marked divergence, with Germany boosting overall Eurozone growth.
According to the latest report from the European Union statistical office Eurostat, gross domestic product grew only 0.3% in the third quarter, instead of previously estimated 0.4%. GDP growth slowed from second quarter's 1%.
German industrial production dropped more than expected in November, reflecting broad-based declines in all industrial groupings.
Dollar Recovers Against Yen, Euro And Franc
In European deals on Friday, the U.S. dollar recouped some of its early losses against the currencies of Europe, Japan and Switzerland. The dollar thus recovered from a 1-month low against the euro, 1-week low against the franc and a 9-day low against the yen.
As of now, the dollar is worth 82.85 against the yen, 1.3360 against the euro and 0.9651 against the franc.
In a surprise move, the People's Bank of China today raised banks' reserve requirement ratio by 50 basis points.
It was the seventh such rate hike since 2010. The last hike was on December 10. The central bank said new rates will be effective from January 20.
Euro Gains As Sovereign Debt Concerns Wane
The euro held its recent gains against other major currencies on Thursday amid mounting evidence that the monetary union will survive a prolonged sovereign debt crisis.
It appears for now that Spain and Portugal will not join Greece and Ireland in accepting debt relief from neighbors and the International Monetary Fund.
The Iberians conducted successful bond auctions earlier this week, allowing central bankers to turn attention to fighting inflation in the euro zone.
The European Central Bank acknowledged inflationary pressures in Tuesday's interest rate setting announcement.
While US policy makers are expected to maintain accommodative monetary policy in 2011, the inflation fighters at the ECB will likely tighten if prices continue to rise above their 2 percent target.
In economic news from the region, Germany's Federal Ministry of Economics and Technology raised its 2011 growth forecast. The ministry now sees 2.3% expansion for Germany this year, faster than the 1.8% growth it had predicted in October.
Extending this week's strong gains, the euro rose to $1.3537 against the dollar -- its highest level since late November.
From the US, a Commerce Department report showed a steeper than expected drop in housing starts in the month of December, However, the report also showed a much bigger than expected increase in building permits.
The euro touched a monthly peak of Y115.15 versus the yen on Tuesday, and was little changed from that mark today.
The single currency also continued its comeback bid against the Swiss franc, reaching a 5-week high of CHF 1.2996. The euro touched a record low of CHF 1.24 earlier in January.
Japan Suffers Credit Rating Downgrade
Standard & Poor's downgraded Japan's sovereign credit rating on Thursday, citing the country's soaring mountain of debt.
The agency said Japan's debt dynamics were under pressure from various factors and that the debt ratio is likely to rise further than previously envisaged.
The move took currency markets by surprise and the yen plunged to a six-day low of 83.09 against the dollar.
The credit rating was cut to AA- from AA, with the outlook on the rating seen as "stable."
Japan has the highest public debt ratio in the industrialized world, with its gross debt levels approaching 200% of gross domestic product.
This precarious fiscal position was being further undermined by persistent falling prices, a rapidly aging population, and a lack of coherent government strategy to tackle the issue, the S&P said.
The S&P forecast only a modest improvement in Japan's finances in the near-term. The fiscal deficit was seen falling from an estimated 9.1% of GDP in the current fiscal year to 8% in the 2013 financial year.
"In the medium-term, we do not forecast the government achieving a primary balance before 2020 unless a significant fiscal consolidation program is implemented beforehand," the S&P said.
It criticized Prime Minister Naoto Kan's coalition government for lacking a "coherent strategy" to address the problem, and said it did not expect any material development to emerge from the reviews of the nation's social security and tax systems this year.
Social security payments alone account for nearly a third of the Japanese government's record $1.1 trillion budget for the 2011 financial year and the agency expects this to swell further as the population ages and the labor force shrinks.
"The reasons for the downgrade are a timely reminder of the huge economic and financial challenges facing the Japanese government, which may simply not be up to the job," Julian Jessop, chief analyst at Capital Economics said.
Japan has been suffering from falling exports, a strong yen and almost two years of falling prices.
The country's economy grew 4.5% on an annualized basis between July and September of last year.
However, analysts said the relatively strong growth rate was due to one-off factors such as green car subsidies, and the economy is expected to lose momentum in the final three months of 2010.
Euro Shows Choppy Trading Against Most Majors
During early European deals on Friday, the euro showed choppy trading against the currencies of U.S., Japan and Switzerland after falling yesterday on ECB President Jean-Claude Trichet's comments.
Trichet said inflation rates could temporarily increase further in eurozone and are likely to stay slightly above 2% for most of 2011, before moderating again around the turn of the year.
The European Central Bank retained its key interest for the 21th consecutive month yesterday as the euro area battles rising inflationary pressures amid the resurfacing of the debt crisis in peripheral economies.
At the Governing Council meeting, the Frankfurt-based central bank led by President Jean-Claude Trichet left the key interest rate unchanged at a record low 1%. The decision was in line with economists' expectations.
As of now, the euro is worth 1.3642 against the dollar, 111.25 against the yen and 1.2910 against the franc, compared to yesterday's close of 1.3636, 111.37 and 1.2894, respectively.
Against the pound, the euro moved sideways in Asian deals, but it declined to a 15-day low of 0.8425 at 3:15 am ET as the pound rose on U.K.'s Halifax house price report. However, the euro rebounded soon and the pair is currently trading near yesterday's close of 0.8452.
Average house prices in the UK rose a seasonally adjusted 0.8% month-on-month in January to GBP 164,173, Halifax said. That was in contrast to analyst expectations for a 0.2% fall. During the three months to January, prices fell 0.7% compared to the preceding three months.
Unemployment reports from the U.S. and Canada for the month of January are expected to influence trading in the upcoming hours.
Pound Mixed Against Majors Ahead Of U.K. Industrial Production Report
Ahead of the release of the U.K. industrial production report for December at 4:30 am ET Thursday, the pound showed mixed trading against its major counterparts. While the pound gained against the euro, it fell versus the dollar, yen and the franc. At 4:25 am ET, the pound traded at 1.6045 against the dollar, 0.8492 against the euro, 132.80 against the yen and 1.5449 against the franc.
Dollar Stays Under Pressure Friday
The dollar fell further versus other major currencies on Friday, as popular unrest among strategic U.S. allies has fueled concerns about the nation's role in the Middle East.
Just one week after civil demonstrations toppled Hosni Mubarak in Egypt, the leadership in Bahrain fired on unarmed protesters in an effort to quell the uprising there.
Meanwhile, Federal Reserve Chairman Ben Bernanke was not backing away from the central bank's commitment to support the economy with massive bond purchases.
Speaking to finance ministers in France, Bernanke said emerging nations have benefited from the easy monetary policy adopted by developed economies.
He urged China to let its currency float in the open market, and to focus on improving domestic demand rather than rely on the U.S. consumer for growth.
Earlier in the day, China raised the reserve requirements for its banks, hoping to contain inflation in the world's most robust major economy.
Meanwhile, consumer prices leveled off a bit in Canada last month.
Stripping out volatile energy prices, Canada's Consumer Price Index (CPI) rose a tame 1.7 percent in the 12 months to January, identical to the increase in December.
The Bank of Canada's closely-watched core index advanced 1.4 percent annually in January, following a 1.5 percent rise in December.
Still, with commodity prices on the rise, the dollar hovered near this week's 2-year low of C$0.9814 versus the resource-linked loonie.
Versus the euro, the dollar dropped a penny to a nearly 2-week low of $1.3675.
The buck pulled back from a monthly high against the yen, slipping to Y83.13.
Members of the Japanese central bank's policy board felt more confident of the economic recovery last month amid signs of a rebound in exports, meeting notes of the January policy meeting showed.
Bank of Japan policymakers also felt the negative effects of the removal of government subsidies would wane, lifting the economy to "a moderate recovery path."
Loonie Up Amid Canada's January Industrial And Raw Materials Price Data
Following the release of Canada's industrial product price and raw materials price indexes-both for January at 8:30 am ET, the Canadian dollar remained stronger against its major counterparts. The loonie is presently trading at 0.9722 against the US dollar, 1.3442 against the euro and 84.31 versus the yen.
German Business Insolvencies Decrease In December
German insolvency courts reported 13,454 insolvencies in December, 1% less than December last year, the Federal Statistical Office said Thursday.
The total number of corporate insolvencies fell 1.9% year-on-year to 2,534, while insolvencies of consumers fell 0.8%.
In 2010, altogether 168,458 insolvencies were registered, representing an annual increase of 3.4%. While corporate insolvencies fell 2.1%, consumer insolvencies climbed 4.8% compared to 2009.
China Warns Independents Against Running for Local Legislatures
In another sign of tightening political controls, China warned independents against contesting for local legislatures.
The warningcame in response to a small but spreading online campaign by dozens who hope to fight for seats on local legislatures with no endorsement from the Party.
China's leaders have been shaken by anti-authoritarian uprisings across the Arab world, which they fear could inspire challenges to their grip on power.
"There are no so-called 'independent candidates', and there is no legal basis for 'independent candidates'," said the NPC official quoted in the People's Daily.
Ecb's Trichet: Nations With Weak Structural Reforms have faced Slow Growth
ECB's Trichet reported that nations that did not undergo far-reaching structural reforms have faced slow growth.
Trichet repeated ECB's warning that the new EU debt rules had not gone far enough.
"Those countries that have yet to implement more far reachingstructural reforms also have relatively low growth prospects after thecrisis," Trichet said.
"Results (of analysis) suggest that those who are questioning theviability of the euro area as a single currency area on the grounds ofeconomic heterogeneity are misguided," Trichet added.
U.S. Dollar Slightly Off Early Highs Against Most Majors
The U.S. dollar eased slightly from early Monday Asian session's highs against most major currencies in later part of the deals.
The greenback eased slightly from an 11-day high of 1.4323 against the euro, 10-day high of 80.70 against the yen, 4-day high of 0.9801 against the loonie, 12-day high of 0.8470 against the franc and near a 3-week high of 1.0527 against the aussie.
The greenback is now trading at 1.4340 against the euro, 80.45 against the yen, 0.9766 against the loonie, 0.8453 against the franc and 1.0552 against the aussie.
Euro Hits 4-day High Against Dollar And Yen
In the Asian session on Tuesday, the euro edged up against its US and Japanese counterparts. As of now, the euro is trading at a 4-day high of 115.91 against the yen and 1.4442 against the dollar, compared to yesterday's close of 115.66 and 1.4417, respectively. The next upside target level for the European currency is seen at 1.450 against the dollar and 116.5 against the yen.
Euro Falls Against Most Majors
The euro declined against its most major counterparts in the early Asian session on Wednesday on worries over Eurozone debt crisis.
The talks held by the Eurozone finance ministers failed to reach a consensus regarding second bailout for Greece.
The euro declined to a 2-week low against the loonie and the aussie.
The euro is now trading at 1.2177 against the franc and 1.4418 against the greenback, compared to Tuesday's close of 1.2209 and 1.4441, respectively. The next downside target level for the euro is seen at 1.21 against the franc and 1.42 against the greenback.
Against the pound and the yen, the euro is worth 0.8811 and 115.94, respectively. If the euro falls further, it may target 0.875 against the pound and 113.00 against the yen. The euro closed Tuesday's trading at 0.8824 against the pound and 116.23 versus the yen.
The euro fell to a 2-week low of 1.3969 against the loonie and 1.3502 against the aussie in the Asian session. The European single currency is now quoted at 1.3507 against the aussie and 1.3979 versus the loonie and the next downside target level for the euro is seen at 1.34 against the aussie and 1.38 versus the loonie. At Tuesday's close, the euro-loonie pair was worth 1.3985 and euro-aussie pair was worth 1.3518.
Consumer sentiment in Australia declined in May, according to index readings reported today by Westpac Bank and the Melbourne Institute.
The consumer sentiment index declined 2.6 percent in June compared to May. The reading of 101.2 was the lowest in two years. The index was at a seasonally adjusted 103.9 for May.
Meanwhile, a report from the Australian Bureau of Statistics said that the total number of housing starts in Australia was up a seasonally adjusted 3.1 percent in the first quarter of 2011 compared to the previous three months. That was well above analyst expectations for a decline of 0.8 percent following the upwardly revised fall of 4.0 percent in the fourth quarter of 2010.
In the European session, French CPI, Switzerland's producer and import prices data and the U.K. claimant count rate - all for May and the Eurozone industrial production for April are due for release.
Canada's manufacturing shipments for April is due at 8:30 am ET.
The U.S. CPI for May, results of the New York Federal Reserve's empire state manufacturing survey for June, Treasury Department's report on the flows of financial instruments into and out of the U.S. for April, industrial production for May and the NAHB housing market index for June are expected to influence trading in the North American session.
Euro Drops To More Than 2-week Low Of 0.8724 Against Pound
Euro Declines To More Than 3-week Low Of 114.33 Versus Yen
Euro Slides To Fresh 3-week Low Of 1.4115 Against U.S. Dollar
Euro Falls To 2-day Low Of 1.2066 Against Franc
Dollar Index Hits Three-Week High As Euro Slides Sharply, on Greece Debt Owes
Euro/dollar Hits Three-Week Low Below $1.4156
Euro Dips To Fresh 3-week Low Of 1.3845 Against Canadian Dollar
Euro Slides Against Most Majors
The euro fell against most major counterparts in the Asian session on Friday.
The euro is now trading at 1.2022 against the franc and 1.4145 against the greenback, compared to yesterday's close of 1.2040 and 1.4205, respectively. If the euro weakens further, it may find target at 1.20 against the franc and 1.41 against the greenback.
Against the pound and the yen, the euro is now quoted at 0.8778 and 114.06, respectively. The next downside target levels for the euro are seen at 0.8793 against the pound and 113.00 versus the yen. At yesterday's close, the euro was worth 0.875 against the pound and 114.56 versus the yen.
Japanese total cash earnings decreased for the second straight month in April, final data published by the Ministry of Health, Labor and Welfare showed. Total labor cash earnings fell by 1.4 percent year-on-year in April.
The European currency also fell to as low as 1.3914 against the loonie with 1.38 seen as the next downside target level. The euro-loonie pair closed Thursday's trading at 1.3941.
Looking ahead to the European session, Eurozone trade data for April is due for release.
Canada's wholesale sales data for April, preliminary figures of university of Michigan confidence for June from U.S are expected in the New York session.
European Economics Preview: Eurozone Current Account Data Due
Current account figures from Eurozone and producer prices from Germany are the major statistical reports due on Monday.
At 2.00 am ET, the Federal Statistical Office is slated to release German producer prices for May. Producer price annual inflation is seen at 6.3 percent, down slightly from 6.4 percent in April.
The European Central Bank is slated to issue current account figures for April at 4.00 am ET. The Eurozone current account showed a deficit of EUR 4.7 billion in March.
In the meantime, Italy's industrial order data is due. Industrial orders are forecast to fall 4 percent month-on-month in April, after rising 8.1 percent in March.
Eurozone labor cost figures are due at 5.00 am ET. Economists expect labor costs to rise 1.9 percent annually, following last month's 1.6 percent increase.
European Economics Preview: U.K. PSNB, German ZEW Survey Data Due
Public sector finances from the U.K. and ZEW economic confidence survey results from Germany are due on Tuesday.
Statistics Finland is set to release unemployment figures for May. Economists expect the jobless rate to rise to 9.5 percent from 8.2 percent in April.
At 3.00 am ET, the Swiss National Bank is scheduled to issue money supply data for May. Swiss money supply increased 6.9 percent year-on-year in April.
At 4.30 am ET, the Office for National Statistics is slated to release U.K. public sector finance figures for May. Public sector net borrowing is seen at GP 16.5 billion compared to GBP 7.7 billion in April.
German ZEW economic sentiment survey results are due at 5.00 am ET. The economic sentiment indicator is expected to show a negative reading of 3 after logging positive 3.1 points in May.
Half an hour later, Swiss KOF institute is set to publish June Economic Forecast.
At 6.00 am ET, U.K. Industrial Trends survey results are due from the Confederation of British Industry. The order book balance is seen at negative 5 for June compared to minus 2 in May.
European Economics Preview: BoE Minutes Due
The minutes of the last Monetary Policy Committee meeting of the Bank of England and industrial new orders from Eurozone are due on Wednesday.
At 2.45 am ET, the French statistical office Insee is slated to release business confidence survey results. Business sentiment is forecast to fall to 106 in June from 107 in May.
The National Institute of Economic Research is scheduled to release Sweden's economic tendency survey data at 3.15 am ET. Economists expect the economic tendency index to fall to 110.5 from 112.4 in May. The institute is also set to publish Economic Outlook.
At 3.30 am ET, Dutch consumer confidence and Sweden's SCB unemployment figures are due. Dutch consumer sentiment is seen at minus 12, down from minus 10 in May. Sweden's jobless rate is forecast to fall to 7.7 percent in May from 7.9 percent in April.
Half an hour later, unemployment figures from Norway and Poland are due. Economists expect Poland's jobless rate to drop to 12.1 percent in May from 12.6 percent in April.
At 4.30 am ET, the Bank of England is scheduled to issue the minutes of the last MPC meeting held on June 8 and 9. The central bank had retained its record low interest rate and GBP 200 billion asset purchase plan.
At 5.00 am ET, Eurozone industrial new orders data is due. Economists expect industrial orders to rise 1 percent month-on-month in April after falling 1.6 percent in March.
The European Commission is set to publish Quarterly Report on euro area at 6.00 am ET.
Eurodollar Futures steady After fED Cuts Economic Forecasts
Eurodollar futures contracts expiring in March 2012traded steady at 99.51, implying a dollar LIBOR of 0.49 pctcompared with 0.24550 pct currently
Dollar funding in Singapore edged higher from a 16-month low hit onWednesday
China, short-dated IRS rates extended rise, one-year IRS rates were at 3.95 pct
China benchmark 7-day govt bond repo ratejumped to 9 pctprompting the c.bank to pump in funds to alleviate the shortage
U.s. Corn Extends Gains for 2nd Day, Soy Rebounds on Greece News
Сhicago Board of Trade July corn gained 1.2 pct to$6.88-3/4 a bushel by 0249 GMT
July wheat slid 0.4pct to $6.46-1/2 a bushel
CBOT soybeans for July deliveryrose 0.7 pct to $13.26-3/4 a bushel
Greece's deal with international lendersfor a new austerity plansupports commodities
Market remained underpressure from improved weather conditions in Europe, raisinghopes of ample supplies
Yen Trades At Fresh Multi-year Low Against Franc
The yen has been declining against the European majors ahead of the European session on Monday. At present, the yen is trading at a fresh multi-year low of 96.63 against the franc.
Against the euro and the pound, the yen is now worth 114.34 and 128.97, respectively.
Swiss UBS Consumption Indicator Rises Significantly In May
Switzerland's consumption indicator rose significantly in May, driven by an increase in new car registrations, the UBS bank said Tuesday.
The bank's consumption indicator rose 0.34 points to 1.91, its highest level since August last year. This follows a 0.1 point decline in April.
The continued rise in new car registrations as well as growth in retail sector activity supported the economy. New car registrations rose 20.2 percent compared to the same month last year.
UBS Wealth Management Research sees private consumption as a key driver of the Swiss economy. Consumption is supported by low interest rates, consistently high immigration and falling unemployment. UBS expects consumer spending to play a major role in growth again this year.
The UBS consumption indicator is an index designed to provide concrete conclusions regarding the annual growth rate of private consumption.
U.K. June House Prices Remain Stable: Nationwide
British house prices remained flat in June on a monthly comparison after rising 0.3 percent in May, data from the Nationwide Building Society showed Thursday. The latest level matched consensus forecast.
Price of a typical home in June was 1.1 percent lower than a year ago. That follows May's 1.2 percent drop. The consensus forecast called for a 1.3 percent drop for June.
"A combination of low transaction volumes, still tight housing supply and flattish house prices looks set to stay for the remainder of the year," said Robert Gardner, Nationwide's chief economist.
French Manufacturing PMI Fall In June
French manufacturing sector expanded in June, but at the slowest pace since August 2009, latest report from Markit Economics showed Friday.
The headline seasonally adjusted purchasing managers' index dropped to 52.5 in June from 54.9 in May. The figure matched the flash estimate. A PMI score above 50 indicates expansion of the sector, while a reading below 50 suggests contraction.
Production levels rose at the weakest pace since July 2009, with particular softness registered in the intermediate goods sector, Markit said. The moderation in output growth reflected a slowdown in new order growth.
The latest rise in new work was the least marked in twenty-three months, while growth in new export orders eased to the slowest in the current two-year period of expansion.
Input price inflation eased to a sixteen-month low in June, the report said. A weaker rise in output prices was also recorded during the latest survey period. Although still strong, the rate of charge inflation eased to the slowest since December 2010.
Franc Declines Amid Swiss Retail Sales
Following the release of the Swiss retail sales for May at 3:15 am ET Monday, the franc slipped against its major counterparts. As of now, the franc is worth 0.8489 against the dollar, 95.03 against the yen, 1.3685 against the pound and 1.2341 against the euro.
Dollar Advances Against Majors
In the Asian session on Tuesday, the U.S. dollar rose against other major currencies as risk appetite reduced on speculation of an interest rate hike by China.
The People's Bank of China on Monday said inflationary pressure still remains at a high level and vowed to maintain prudent monetary policy.
In the Monetary Policy Committee meeting, policy makers stressed the need for paying close attention to the current international and domestic economic and financial situation and also the importance of 'stability' in implementing prudent monetary policy.
The PBOC's statement increased speculation that an interest rate hike could be imminent.
Adding to worries, Moody's Investor Service warned today that the scale of problem loans at Chinese banks may be larger than estimated by the National Audit Office (NAO).
The Chinese audit agency could be understating banks' exposures to the local governments borrowers and the local government debt may be CNY 3.5 trillion higher than estimated, the rating agency said.
It also warned that the absence of a clear master plan to deal with this issue may potentially turn the outlook for the Chinese banking system to negative.
The dollar rose to a 4-day high of 81.13 against the yen. The next upside target level for the dollar is seen at 81.3. At yesterday's close, the dollar-yen pair was quoted at 80.80.
Against the euro, the dollar strengthened to a 4-day high of 1.4467, compared to yesterday's close of 1.4539. On the upside, 1.445 is seen as the next target level for the U.S. currency.
The dollar climbed to a 4-day high of 1.6032 against the pound and if the dollar advances further, it may likely target the 1.600 level. The pound-dollar pair closed yesterday's trading at 1.6089.
The US dollar edged up to a 6-day high of 1.0667 against the Australian dollar, compared to yesterday's close of 1.0736. On the upside, 1.055 is seen as the next target level for the greenback.
As expected, the Reserve Bank of Australia decided to maintain its cash rate unchanged at 4.75 percent.
At today's meeting, the Monetary Policy Board judged that the current "mildly restrictive" stance of monetary policy remained appropriate. In future meetings, the board will continue to assess carefully the evolving outlook for growth and inflation, the bank said in a statement.
Against the New Zealand dollar, the US dollar rose to a 4-day high of 0.8268. The next upside target level for the greenback is seen at 0.824. The kiwi-greenback pair was worth 0.8297 at yesterday's close.
The U.S. dollar is trading at a 4-day high of 0.9622 against the Canadian dollar. If the US dollar rises further, it may likely target the 0.965 level. At yesterday's close, the greenback-loonie pair was quoted at 0.9612.
Traders are now likely to focus on the European session, in which final readings of services PMI for June from the major European economies and the Eurozone May retail sales are expected to influence trading.
The U.S. factory goods orders report for May is due at 10:00 am ET.
European Economics Preview: German Factory Orders Due
Factory orders from Germany and revised estimates of first quarter gross domestic product from Eurozone are the major highlights of the European economics news on Wednesday.
Spain is slated to release the industrial output data at 3 am ET. Economists expects production to remain unchanged in May.
At 5 am ET, Eurostat is expected to publish the third estimate of the first quarter Eurozone GDP. The economy expanded 0.8 percent sequentially in the first quarter, taking the annual rate to 2.5 percent.
At 6 am ET, the Federal Ministry of Economy and Technology is expected to release German factory orders data for May. Economists expect orders to rise 9.5 percent year-on-year after 10.5 percent growth in April. On a monthly basis, orders are forecast to fall 0.5 percent.
Euro Strengthens Against Most Majors
Ahead of the European session on Thursday, the euro has been gaining against the currencies of Japan, U.K. and Switzerland. At present, the euro is worth 1.2056 against the franc, 116.07 against the yen and 0.8982 against the pound.
German Exports Recover In May
German exports grew more than expected in May after easing in April, data from the Federal Statistical Office showed Friday.
Exports advanced 4.3 percent month-on-month, compared to April's 5.6 percent drop. Economists had expected it to grow only 1.5 percent in May. At the same time, imports climbed 3.7 percent, reversing a 2.5 percent fall in April. That was also bigger-than-expected 1.5 percent growth.
The trade surplus increased to EUR 14.8 billion from EUR 10.8 billion in April. The surplus stayed well above the consensus forecast of EUR 12.2 billion.
According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of EUR 6.9 billion in May. That was larger than the EUR 3.1 billion surplus seen in May 2010 and slightly below EUR 7 billion surplus expected by economists.
Euro Extends Decline Against Majors
The European currency continued its previous sessions' declining trend against its major counterparts in early European deals on Tuesday.
The common currency is presently trading at a fresh record low of 1.1633 against the Swiss franc, fresh multi-month lows of 110.76 against the yen and 1.3874 versus the US dollar and nearly a 4-week low of 0.8765 versus the pound.
On the downside, the single currency may break below the psychological mark of 1.16 against the franc in near-term. Also, the euro may test support levels at 110.50 against the yen, 0.8720 against the pound and 1.3850 against the greenback.
U.S. Dollar Drops Against Pound
During early European deals on Wednesday, the U.S. dollar extended its previous session's fall against the pound and touched a 2-day low of 1.5971 at 3:10 am ET. The pair is presently trading at 1.5967, compared to Tuesday's close of 1.5915. If the greenback slides further, it may target 1.615 level.
Pound Declines Against Majors
U.K.'s sterling edged lower against its major counterparts in early European trading on Wednesday.
The pound fell to 126.95 against the yen and 1.6098 against the US dollar around 3:05 am ET, down from yesterday's closing values of 127.68 and 1.6126, respectively.
If the British currency weakens further, it may find target levels at 1.6040 against the greenback and 125.50 versus the yen.
The UK currency also reached as low as 1.3250 against the Swiss franc and 0.8807 against the euro before holding steady around 3:05 am ET.
The pound that closed yesterday's deals at 1.3292 against the Swiss franc and 0.8781 against the euro is presently quoted at 1.3252 and 0.8801, respectively.
On the downside, the British unit may test support levels at 1.3150 against the Swiss franc and 0.8850 against the euro.
Euro Rises Against the Chf As Investors Cheer the Greek Deal
The Swiss franc fell against the euro after an emergency summit of leaders of the 17-nation currency area pledged to conduct a second bailout of Greece.
The franc slipped 0.4 pct against the euro compared with the New York close, trading at 1.1815 at 0644 GMT.
Analysts at Credit Suisse said the franc was likely to fall against the euro in coming months, if risk aversion abated.
Yen Jumps To Multi-day Highs Against Most Majors
Monday, the Japanese yen traded higher across the board, barring the Swiss franc, as worries about the U. S. debt ceiling and Moody's downgrade of Greece debt ratings increased bets on safe-haven currencies.
The yen is presently trading at a 1-week high of 82.20 against the Canadian dollar with 81.30 seen as the next likely target level. The loonie-yen pair settled Friday's deals at 82.76.
The Japanese currency also climbed to a 4-day high of 112.14 against the euro, 127.33 versus the pound, 84.48 against the Australian dollar and 67.44 against the NZ dollar around 3:45 am ET.
On the upside, the domestic unit may find target levels at 111.60 against the euro, 126.70 versus the pound, 67.30 against the NZ dollar and 84.20 versus the Australian dollar.
The Japanese currency also reached as high as 78.23 against the US dollar before holding steady around 3:20 am ET. The dollar-yen pair, which closed Friday's deals at 78.50, is presently worth 78.23 with 76.20 seen as the next likely target level.
U.K. GDP Growth Slows In Q2
The British economy expanded at a slower pace as estimated for the second quarter, the Office for National Statistics said Tuesday.
Gross Domestic Product (GDP) grew 0.2 percent sequentially in the second quarter, following an increase of 0.5 percent in the first quarter. The rate of growth matched economists' expectations.
On the production front, output of the production industries fell 1.4 percent, following a decline of 0.1 percent in the prior quarter. Manufacturing dropped 0.3 percent and mining and quarrying slipped 6.6 percent. The decrease in electricity, gas and water supply was 3.2 percent.
Meanwhile, construction output grew 0.5 percent, reversing last quarter's 3.4 percent quarterly drop.
On a yearly basis, the economy expanded 0.7 percent in the second quarter, slightly smaller than the 0.8 percent growth expected by economists.
The statistical office said there were a number of special events associated with the second quarter including the additional April bank holiday, the royal wedding and the after effects of the Japanese tsunami.
Euro Falls Against Yen And Franc Amid German Import Price Index
Amid the release of the German June import price index at 2 am ET Wednesday, the euro fell against the yen and the franc, but it changed little against the dollar and the pound. At present, the euro is worth 1.4530 against the dollar, 112.89 against the yen, 0.8844 against the pound and 1.1622 against the franc.
Chinese Yuan Rises Against Dollar
In Asian deals on Thursday, the Chinese yuan rose against the US dollar. At present, the yuan is worth 6.4425 per dollar and if the Chinese currency gains further, it will break a record high of 6.4395 hit early this week. At yesterday's close, the dollar-yuan pair was quoted at 6.4446.
The People's Bank of China set today's central parity rate for the yuan at 6.4438 per dollar, compared to Wednesday's daily reference rate of 6.4426.
The Chinese central bank sets the central parity rate every morning and allows the currency to fluctuate up to 0.5 percent from that level.
Euro Mixed Amid German Retail Sales
Following the release of the German June retail sales for June at 2 am ET Friday, the euro showed mixed trading against its major counterparts. While the euro fell further against the dollar and the yen, it changed little versus the pound and the franc.
As of now, the euro is worth 1.4278 against the dollar, 110.74 against the yen, 1.1442 against the franc and 0.8754 against the pound.
Italian Officials to Meet to Discuss Debt Crisis
* Officials from Italian economy ministry, Bank of Italy and market authorities are planning to meet to discuss the resolution of the crisis.
* PM Berlusconi also due to address Italian parliament on Wednesday.
* Italian CDS prices are up 24 bps today at 355 BPS
Pound Advances Against Dollar And Yen
The U.K. currency traded higher against the U.S. dollar and the yen ahead of European deals on Tuesday. The pound that ended yesterday's deals at 1.6456 against the greenback and 126.38 against the yen is presently trading at 1.6509 and 126.74, respectively. On the upside, the pound may target 1.67 against the greenback and 128.00 versus the yen.
Greece June Trade Deficit Falls
The Greek trade deficit declined in June, figures from Hellenic Statistical Authority showed Wednesday.
The trade balance, excluding oil products, totaled EUR 1.63 billion in June, smaller than the EUR 2.08 billion shortfall in the same period of 2010.
The total value of imports, excluding oil, dropped 11.6 percent annually to EUR 2.97 billion. Meanwhile, exports rose 4.6 percent to EUR 1.34 billion.
Euro Little Changed Amid German GfK Consumer Confidence Index
At 2 am ET Thursday, German GfK consumer confidence for September was released. Amid the report, the euro changed little against other major currencies. As of now, the euro is worth 1.1469 against the franc, 111.04 against the yen, 0.8802 against the pound and 1.4410 against the dollar.
Slovak Producer Price Inflation Slows For Fourth Month
Slovak producer price inflation slowed for a fourth consecutive month in July, data released by the Statistical Office of the Republic of Slovakia showed Friday.
The producer price index increased 3.3 percent year-on-year in July, slower than the 4.6 increase in June. Prices of goods meant for the domestic market rose 2.1 percent annually, slower than a 2.5 percent jump in the previous month.
Producer prices in the mining and quarrying industry moved up by 2.8 percent, while manufacturing prices advanced 4.4 percent. There was a 1 percent annual decrease in prices of electricity, gas, steam and air conditioning supply in July.
On a monthly basis, producer prices dropped 0.5 percent during the month, compared to 0.2 percent fall recorded in June. In the January-July period, total producer prices climbed 5 percent from the corresponding period last year.
Euro At More Than 5-week High Versus Franc
The euro spiked up to more than a 5-week high of 1.1764 against the Swiss franc at 2:05 am ET Monday. The euro-franc pair is presently trading at 1.1760, compared to 1.1702 hit late New York Friday. If the euro rises further, it may target 1.21 level.
Euro Pares Gains Against Majors
The euro pared its recent gains against its major counterparts ahead of the European session on Tuesday. The euro is now trading at 1.1865 against the franc, 111.38 against the yen, 1.4502 against the greenback and 0.8842 against the pound.
Euro Little Changed After Germany's August Unemployment Report
Following the release of German unemployment data for August at 3:55 am ET, the euro was little changed against its major counterparts. As of 3:56 am ET, the euro was trading at 110.60 against the yen, 1.1725 versus the Swiss franc, 1.4440 against the dollar and 0.8858 against the pound.
Euro Falls To 2-day Low Against PoundEuro Trades At 1-week Low Against U.S. Dollar
The euro fell against the U.S. dollar in early European deals on Thursday. The euro is now trading at a 1-week low of 1.4330 against the greenback, compared to Wednesday's close of 1.4370. The next downside target level for the euro is seen at 1.425.
UK Construction Activity Eases In August
UK construction sector activity slowed more than expected in August, latest survey results from Markit Economics showed Friday.
The headline Markit/CIPS purchasing managers' index for the construction sector fell to 52.6 in August from 53.5 in July. Economists expected the index to edge down to 53.2.
A PMI reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction. This was the lowest score in the current eight-month sequence of expansion.
Both employment levels and sub-contractor usage continued to fall during the latest survey period. Input price inflation picked up to a three-month high and the rate of increase was sharp and above the series trend.
Reflecting weaker increases in both output and new business, expectations for activity weakened to its lowest level in eight months.
European Economics Preview: Eurozone Composite PMI, Retail Sales Data Due
Composite Purchasing Managers' survey results and retail sales from Eurozone are the major statistical reports due on Monday, headlining a busy day for European economic news.
At 2.00 am ET, Statistics Finland is scheduled to issue GDP data for the second quarter. Ireland's services PMI is also due at the same time.
Turkish Statistical Institute is set to publish consumer prices and producer price figures at 3.00 am ET.
At 3.45 am ET, Italian services PMI is due. The index is forecast to rise to 49.2 in August from 48.6 in July. Final PMI data is due from France and Germany at 3.50 am and 3.55 am ET, respectively.
Eurozone composite PMI is expected at 4.00 am ET. The final composite PMI is seen at 50.7 in August, down from 51.1 flash estimate.
Eurozone sentix investor confidence is due. The indicator is seen at -17 in September, down from -13.5 points in August. In the meantime, U.K. CIPS/Markit services PMI is due.
At 5.00 am ET, Eurostat is scheduled to issue euro area retail sales figures. Economists forecast retail sales to fall 0.1 percent month-on-month in July after rising 0.7 percent in June. Annually, retail sales are expected to grow 0.1 percent.
European Economics Preview: Eurozone GDP, German Factory Orders Data Due
Gross Domestic Product figures from Eurozone, factory orders from Germany and consumer prices from Switzerland are the major statistical reports due on Tuesday.
At 3.00 am ET, the Czech Statistical Office is scheduled to issue industrial and construction output figures. Economists expect output to grow 5 percent annually in July, down from 7.4 percent in June. The trade balance data is also due in the meantime.
The Federal Statistical Office is set to publish August inflation data at 3.15 am ET. Swiss annual inflation is seen at 0.3 percent, down from 0.5 percent in July.
At 4.00 am ET, Germany's parliament will start debate on its draft 2012 budget.
At 5.00 am ET, Eurostat is slated to release second estimate for the Eurozone GDP. The statistical office is expected to confirm 0.2 percent sequential growth for the second quarter.
The Federal Ministry of Economy and Technology is scheduled to issue German factory orders at 6.00 am ET. After rising 1.8 percent month-on-month in June, factory orders are forecast to drop 1.5 percent in July.
European Banking Authority concerned About Capital Supply says Eba Executive Director
European Banking Authority has asked sovereign watchdogs to observe Liquidity situation in their respective domain said a EBA Executive Director Adam Farkas� to Financial Times Deutschland
"The availability of capital, the opportunity for banks to get medium and long-term financing and get short-term credit, are a cause for concern, But this does not yet present any risk and is not an emergency situation,"
EBA Executive Director Adam Farkas to Financial Times Deutschland
ECB Likely To Scale Back Rate Hikes: Capital Economics
The European Central Bank, or ECB, is most likely to reverse its recent rate hikes due to weak economic outlook and fading upside risks to price stability, Jennifer McKeown, a senior economist at Capital Economics, said.
ECB President Jean-Claude Trichet's statement that the risks to price stability were now balanced rather than on the upside has confirmed that the bank's earlier policy tightening bias has disappeared entirely, McKeown noted.
ECB hiked the interest rates twice this year to contain inflationary pressures.
The updated ECB staff forecast now signals a slower growth for the Eurozone this year and the next. As per the revised forecasts, the economy is expected to grow between 1.4 percent and 1.8 percent in 2011 and between 0.4 percent and 2.2 percent in 2012.
However, McKeown noted that the economy will slow much more dramatically than even the ECB's new forecast implies as the decline in euro-zone export orders and the recent slump in consumer confidence seems to confirm that consumers will not pick up the slack.
Euro Moving Sideways After Falling Earlier On Fears About Greek Default
Monday, the euro has been moving sideways against other major currencies after falling early in the Asian session on fears about a Greek default.
The surprise resignation of the European Central Bank executive committee member Juergen Stark on Friday also added worries about Europe. The ECB said Stark is resigning for personal reasons, but media reports suggested that his resignation reflects a conflict over the central bank's controversial bond-buying program.
The euro is now worth 1.3586 against the US dollar, compared to near a 7-month low of 1.3556 hit early in the session.
The euro that slipped to more than a 10-year low of 105.06 against the yen at 5:25 pm ET is presently worth 105.26.
The euro that declined to a 6-month low of 0.8565 against the pound and a 5-day low of 1.2056 against the franc in early deals is currently worth 0.8571 and 1.2060, respectively.
Hungary August Inflation Increases More Than Expected
Hungary's annual inflation accelerated more than expected in August, data released by the Central Statistical Office showed Monday.
The consumer price index grew 3.6 percent year-on-year in August. Economists expected prices to rise 3.4 percent, following July's 3.1 percent growth.
Food prices rose 6.3 percent annually, while clothing and footwear prices moved up 3.8 percent during the month. Meanwhile, there was a 1.3 percent annual decline in prices of consumer durable goods in August.
On a monthly basis, consumer prices edged down 0.1 percent, which was in line with economists' forecast. In July, prices dropped 0.3 percent month-on-month.
At the same time, the harmonized index o consumer prices (HICP), which is measured under the EU methodology, rose 3.5 percent annually in August, while month-month, they dropped 0.1 percent. Core consumer prices, excluding selected items increased 3.1 year-on-year, and rose 0.2 percent on a monthly basis in August, the agency said.
Russia's Central Bank Maintains Interest Rate
Russia's central bank on Wednesday decided to leave its key rate unchanged, as expected by economists, as inflation continued to ease.
Bank Rossii left its refinancing rate unchanged at 8.25 percent. The central bank said in a statement that the decision was based on an assessment of inflation risks and risks to the sustainability of economic growth.
Driven by food products prices, the downward trend in annual inflation continued in September, the bank noted.
German Manufacturing Employment Rises In July
Employment in Germany's manufacturing industry increased from last year in July, preliminary data released by statistical office Destatis showed Thursday.
Employment in manufacturing units with 50 or more employees increased 3.3 percent annually to 5.1 million in July.
Employment in metal products making units advanced 5.8 percent, while the number of workers in electrical equipment manufacturing units moved up 5.6 percent year-on-year. There was a 5.2 percent annual growth in employment in firms that manufacture rubber and plastic products during the month.
At the same time, the number of hours worked in German factories rose 1.9 percent year-on-year to 648 million in July, the agency said.
Europe Car Registrations Increase Sharply N August
European new car registrations increased significantly in August, after two successive months of declines, despite the intensified debt crisis and fiscal squeeze across the region.
Car registrations rose 7.7 percent year-on-year in August following a 2 percent decline in July, the European Automobile Manufacturers' Association (ACEA) said Friday. In June, registrations fell 8.1 percent.
During the January to August period, a total of 8.9 million new cars were registered, down 1.3 percent from the same period last year.
In August, new EU registrations totaled 753,709. New car sales in Germany climbed 18.3 percent annually, while sales in the UK rose 7.3 percent. Spain saw 5.9 percent more registrations than last year, while French market reported 3.1 percent rise in sales. Italian new car registrations rose 1.5 annually.
In July, only Germany posted growth, up 9.9 percent from last year. Car registrations fell 10.3 percent in Italy, 5.7 percent in France 4 percent in Spain and 3.5 percent in the U.K.
Euro Falls On Worsening Sovereign Debt Crisis
The euro fell against its major counterparts in the Asian session on Monday amid concerns about debt worries in the euro zone following a lack of progress in the bailout efforts.
The European finance ministers, who wrapped up two days of talks in Wroclaw, Poland, on September 17 said they would push back a decision on whether Greece should get its next payment from last year's $151 billion bailout package until next month.
Greece needs the payment to avoid defaulting on its debt, an event that would undermine the global economic recovery and hurt banks that hold Greek debt.
The euro also fell on worries that the ongoing credit woes in the euro zone will result in a marked slowdown in the global economic recovery.
Reports suggested that Greek Finance Minister Evangelos Venizelos will hold official talks today with European Union and International Monetary Fund inspectors on its eligibility for next aid payment due next month.
The euro hit 5-day lows of 104.99 against the yen and 1.3649 against the greenback, compared to Friday's close of 105.91 and 1.3789, respectively. The next downside target level for the euro is seen at 104.00 against the yen and 1.35 against the greenback
Against the pound, the euro fell to a 5-day low of 0.8694 and the pair held steady thereafter. The pair is now trading at 0.8706, compared to last week's close of 0.8736. If the euro drops further, it may target the 0.865 level.
The European currency fell to as low as 1.2058 against the franc and a 1-week low of 1.6531 against the kiwi. On the downside, the euro may target 1.20 against the franc and 1.64 against the NZ dollar. At Friday's close, the euro was worth 1.2095 against the franc and 1.6641 against the kiwi.
The Eurozone construction output data for July is due in the European session
From the U.S., NAHB housing market index for September is expected in the New York session.
German Producer Price Inflation Eases In August
German producer price inflation slowed in August, data from the Federal Statistical Office showed Friday.
Producer prices increased 5.5 percent year-on-year in August, while economists expected the rate of inflation to remain steady at July's 5.8 percent. On a monthly basis, the producer price index fell 0.3 percent compared to expectations for no change.
The annual increase was driven by 10.7 percent annual surge in producer prices of energy. Excluding energy, producer prices were 3.3 percent higher than in August last year.
Producer cost of intermediate goods climbed 4.9 percent year-on-year due to higher prices of metals. Factory costs of consumer goods increased 3.7 percent from August last year.
European Economics Preview: BoE Minutes, UK PSNB Due
Minutes from the Bank of England's September 8 meeting and UK public sector borrowing are the major news on tap for Wednesday.
At 3 am ET, money supply data from Switzerland and retail sales figures from Hungary are due. Swiss broad money supply grew 5.9 percent year-on-year in July. For Hungary, economists expects 1.3 percent decline in retail sales in July.
Noway unemployment data is expected to be released at 4 am ET. The jobless rate is forecast to stay at 3.3 percent.
At 4.30 am ET, the Bank of England is scheduled to release the minutes of the September 8 meeting of the monetary policy committee, which decided to leave the benchmark interest rate at record low of 0.5 percent. Economists are awaiting the release to know if any other members joined Adam Posen in seeking expansion in the QE.
The Office for National Statistics is slated to release the public sector net borrowing figures for the month of August. Economists forecast the borrowing, excluding interventions, to amount to GBP 13 billion during the month.
BoE's Posen: Central Bankers' Inflation Expectation Worries Exaggerated-Report
Bank of England policymaker Adam Posen said that the central bankers' fears over public inflation expectations are "exaggerated."
In an interview to the Wall Street Journal, published Thursday, he said the central bankers are overly worried that that the public and markets are going to expect more inflation. "The likelihood of it happening in the current economic environment seems extremely low."
Posen in the lone member in the Bank of England monetary policy committee demanding more stimulus to the economy.
Old habits and misperceptions of today's recovery are making his U.K. peers and some central banks in Europe and the U.S. reluctant to aggressively pump more credit into the economy, he said during the interview.
The U.K's above-target inflation is due to "temporary factors" and this should not prevent the central bank from easing in the future, he told the newspaper.
Posen called for "roughly coordinated" move by major developed-country central banks to ease monetary policy.
WTO Cuts 2011 Trade Forecast On Rising Downside Risks
The World Trade Organization (WTO) on Friday reduced the trade forecast for this year to 5.8 percent from its earlier 'conservative' estimate of 6.5 percent, citing rising downside risks.
According to economists at the global trade body, trade has grown more slowly than expected in recent months and the outlook for the global economy is increasingly uncertain.
WTO Director-General Pascal Lamy urged member countries to remain vigilant. "This is not the time for go-it-alone measures," he said. "This is the time to strengthen and preserve the global trading system so that it keeps performing this vital function in the future."
Eurozone Leading Index Falls In August: Conference Board
Eurozone's leading economic indicator declined in August, after improving slightly in the previous month, data released by the Conference Board showed Monday.
The leading economic indicator (LEI) dropped to 107.1 in August from 108.6 in July. In June, the reading was 108.5. The decline in the index was primarily due to a severe deterioration in business confidence and stock prices.
Meanwhile, the coincident economic index (CEI), which measures the current economic condition, remained unchanged at 103.4 in August. In June, the reading was 103.1.
In the six months ended August, the LEI decreased 1.7 percent, while the coincident index edged up 0.4 percent, the agency said.
S. Korean Business Confidence To Improve In October
South Korean business confidence will improve in October, a survey carried out by the Federation of Korean Industries revealed Tuesday.
The sentiment indicator for October came in at 101.4, the highest level since June. The index climbed from 96.3 in September. A reading above 100 suggests that companies forecasting business conditions to improve outnumber those predicting decline.
The survey based on 600 companies revealed that firms expect improvement in export performance due to the weakness of the Korean won against the U.S. dollar.
Euro Mixed Ahead Of German Import Price Index
German import price figures for August will be released at 2:00 am ET Wednesday. Ahead of the data, the euro showed mixed trading against its major counterparts. While the euro rose against the franc, it held steady against the yen. Against the greenback and the pound, the euro fell.
At 1:55 am ET, the euro traded at 1.3554 against the greenback, 103.80 against the yen, 0.8676 against the pound and 1.2202 against the franc.
Europe Aug. Commercial Vehicle Sales Growth Improves: ACEA
European new commercial vehicle sales increased at a faster pace in August, data from the European Automobile Manufacturers' Association (ACEA) showed Thursday.
New registrations of commercial vehicles moved up 15.7 percent year-on-year after rising 3 percent in July, which led to an 8.3 percent increase over the two summer months compared to the same period last year.
From January to August, a total of 12,611,244 new commercial vehicles were registered across the region, or 12.1 percent more than in the first eight months of previous year.
Most major markets logged growth, ranging from 6.4 percent in France to 21.1 percent in the U.K. and 23.3 percent in Germany. Spain was the only one to contract, where sales were down 6.3 percent.
In August, new truck registrations increased by 23.5 percent, reflecting the upturn in Germany. After a 3.8 percent fall in July, new bus and coach registrations increased by 4.8 percent in August.
European Economics Preview: Eurozone Flash Inflation Data Due
Flash inflation and unemployment from Eurozone and retail sales from Germany are the major statistical reports due on Friday, headlining a hectic day for European Economic news.
At 2.00 am ET, the Federal Statistical Office is scheduled to issue German retail sales. Economists forecast retail sales to fall 0.5 percent month-on-month in August, following a 0.3 percent rise in July. On a yearly basis, retail sales are forecast to fall 1 percent.
The French statistical office Insee is set to publish consumer spending and producer prices for August. Monthly increase in consumer spending is seen at 0.1 percent, down sharply from 1.2 percent rise in July. Producer price annual inflation is forecast to ease to 5.9 percent from 6.1 percent in July.
Denmark's GDP, Norway unemployment and Turkish trade balance are due at 3.00 am ET. The Danish economy is forecast to expand 0.8 percent sequentially in the second quarter. Turkey's trade deficit is seen at $7.1 billion in August, smaller than the $9.01 billion shortfall in July.
The Italian statistical office Istat is slated to issue unemployment data for the second quarter. The jobless rate is expected to fall to 8 percent from 8.2 percent in the first quarter.
Eurozone flash inflation and jobless figures are due at 5.00 am ET. Inflation is expected to remain unchanged at 2.5 percent in September. The jobless rate is seen at 10 percent in August.
In the meantime, Italy's inflation data is due. Annual inflation is forecast to rise slightly to 2.9 percent from 2.8 percent in August.
At 5.30 am ET, Swiss KOF leading index is due. The indicator is expected to ease to 1.3 in September from 1.61 in August.
Dollar Strengthens Against European Majors
After moving broadly sideways in the latter part of the Asian session, the US dollar edged higher against the major currencies of Europe in early European deals Tuesday.
The greenback is presently trading at fresh multi-month highs of 1.3148 against the euro and 0.9233 against the Swiss franc with 1.3080 and 0.93, respectively seen as the next likely resistance levels.
Against the pound, the US dollar advanced to an 11-day high of 1.54 around 3:50 am ET. The cable is presently worth 1.5415 with 1.5340 seen as the next likely target level.
European Economics Preview: ECB, BoE Interest Rate Decisions Due
Interest rate decisions from the European Central Bank and Bank of England are the major events due on Thursday. Both central banks are expected to leave key interest rates unchanged.
Spanish and Hungarian industrial production reports are due at 3.00 am ET. Spanish industrial output is forecast to fall 4.7 percent annually in August after easing 2.8 percent in July. Meanwhile, Hungary's industrial output growth is seen at 1.3 percent for August, down from 2.7 percent in the prior month.
At 3.15 am ET, Swiss consumer price figures are due from the Federal Statistical Office. Annual inflation is forecast to rise to 0.3 percent in September from 0.2 percent in August.
The Bank of England is slated to issue housing equity withdrawal figures for the second quarter at 4.30 am ET.
German factory orders are due from the Federal Ministry of Economy and Technology at 6.00 am ET. Economists forecast orders to remain flat month-on-month in August after falling 2.8 percent in July.
The Bank of England is set to announce its interest rate decision at 7.00 am ET. The Monetary Policy Committee led by Governor Mervyn King is expected to hold the interest rate at 0.50 percent, the lowest since the central bank was established in 1694. Further, the BoE is forecast to maintain GBP 200 billion asset purchase programme.
The European Central Bank is due to release monetary policy statement at 7.45 am ET. Economists expect the central bank to hold the rate steady at 1.50 percent.
ECB President Jean-Claude Trichet holds a press conference following the interest rate announcement at 8.30 am ET. Trichet, who is set to leave the ECB this month, is expected to unveil some non-standard measures.
Moody's Downgrades Nine Portuguese Banks
Moody's Investors Service on Friday downgraded senior debt and deposit ratings of nine Portuguese banks, citing deterioration of their unsupported financial strength.
Moody's said that it saw increased asset risk for these banks as a direct consequence of the their holdings of Portuguese government debt and the sovereign's downgraded rating.
Furthermore, the agency expected further deterioration of the banks' domestic asset quality due to weak outlook for economic growth in the context of the government's austerity measures.
The liquidity strains of the banks that currently lack access to wholesale funding is also a key driver of the rating action.
The six banks which faced downgrades of both their standalone ratings and their debt and deposit ratings are Caixa Geral de Depositos, Banco Comercial Portugues, Banco Espirito Santo, Banco BPI, Banco Santander Totta, and Caixa Economica Montepio Geral.
Banco Internacional do Funchal and Banco Portugues de Negocios had their debt and deposit rating downgraded as a consequence of the weaker Portuguese sovereign, resulting in a lower rating uplift for these banks' debt ratings. The debt ratings of Espirito Santo Financial Group follow the lower rating of its operating company, BES.
All of the banks' ratings carry a negative outlook with the exception of Banco Portugues de Negocios, which has a developing outlook on all of its ratings.
Euro Zone Investor Sentiment at Its Lowest Level in Oct Since July 2009
Euro zone investor sentiment declined for the 3rd consecutive month to -18.5 in Oct, its lowest level since July 2009, from -15.4 in Sept.
A sub-index tracking current conditions dropped to -5.75 from -3.25, while a sub-index tracking expectations fell to -30.5 from -26.75
"The unsolved European sovereign debt crisis and the weakening of momentum in emerging markets remain the principle drivers of this development,"
Eurozone Industrial Output Rises Unexpectedly In August
Industrial production in the Eurozone increased unexpectedly in August, data released by Eurostat showed Wednesday. This was the second consecutive increase after a marginal decline in June.
The seasonally adjusted industrial output increased 1.2 percent on a monthly basis in August, following an upwardly revised 1.1 percent rise in July. Economists expected a 0.8 percent fall.
In European Union member states, industrial output grew 0.9 percent month-on-month, at the same pace as in the previous month.
Year-on-year, industrial production in Eurozone increased 5.3 percent, following a 4.4 percent rise in July. Economists expected production to rise 2.1 percent. In EU27, production was up 4.3 percent annually.
Euro Mixed Ahead Of ECB Monthly Report
The European Central Bank is set to publish its monthly report for October at 4.00 am ET. The euro showed mixed trading ahead of the data.
While the common currency traded lower against the Swiss franc, it inched higher versus the rest of majors. As of 3:55 am ET, the common currency was trading at 0.8776 against the pound, 1.2356 against the Swiss franc, 1.3817 against the US dollar and 106.55 against the yen.
Trichet Urges Eurozone Leaders To Resolve Crisis
Eurozone leaders must resolve the crisis in Europe and take concrete steps to restore confidence, the outgoing President of the European Central Bank, Jean-Claude Trichet, said as the policymakers prepare for the crucial October 23 summit.
In an interview with the Financial Times newspaper on Thursday, Trichet said the policymakers in the eurozone have to strengthen banks' balance sheets and restore credibility. He reiterated that ECB will not act as a "lender of last resort" to governments.
Referring to the Eurozone debt crisis, he said "It is a historical event of the first magnitude, the worst crisis since the second world war." It could have produced a great depression had appropriate decisions not been taken at the appropriate time, he told the daily.
Trichet, who will be replaced by Mario Draghi next month, is meeting G20 leaders in Paris today. The emerging market economies are reportedly planning to boost the lending capacity of the International Monetary Fund, to help Europe fight the debt crisis.
"It's our duty to tell governments and other institutions what we see, but up to them to take the appropriate decisions," Trichet said in a separate interview with Bloomberg Television in London on Thursday.
He also urged policymakers to remain alert warning that a lot of unpredictable events can occur. Last week, the ECB offered unlimited liquidity and pledged to resume covered bond purchases in November, as part of its liquidity boosting efforts to stave off the crisis.
Research: Eur/usd - Trading Strategy, Trigger Points, and Support and Resistance Levels
RBS has given the following trading strategy, trigger points, and support and resistance levels:
TRADING STRATEGY: Longer term longs; stop below the neckline at 1.3650 target 1.4099 onto 1.4200 (spot 1.3778)
1.3873 - where the market looked toppy around the middle of September and where the 61.8% retracement falls from the previous range.
1.4099 - My (analyst) initial objective from this pattern and the 38.2% of this new found range from the retracements
1.3907 - a 50% retracement from the rally at the beginning of the year at 1.2874 to the high at 1.4940.
SUPPORT LEVELS: 1.3799, 1.3700
RESISTANCE LEVELS: 1.3907, 1.4099
-A strong close to the week, given that risk sentiment tends to suffer a sudden bout of fear as the weekly close nears, this didn't happen last Friday and the EUR closed up near the highs. The dominant technical feature is the inverse head and shoulders pattern with a target up at 1.4099 possibly 1.4200 with a stop currently positioned at 1.3650 – this can be moved up to 1.3750 if required.
EBRD Cuts Growth Forecast For Central & Eastern Europe
The European Bank for Reconstruction and Development, EBRD, has lowered the growth forecast for the Central and Eastern Europe, saying that the "protracted" debt crisis in Europe is adversely affecting the region's growth prospects.
Reports said citing an EBRD statement that the region is expected to expand 3.2 percent in 2012, much slower than the prior estimate of 4.4 percent. The GDP will grow 4.5 percent, compared with the 4.8 percent predicted in July.
The EBRD revised its 2012 forecast for the central Europe and Baltic region to 1.7 percent from the 3.4 percent predicted in July.
The bank's estimates are based on a central scenario of a "protracted but ultimately contained" eurozone crisis, reports said.
ECB's Trichet Stresses On Need To Amend Treaties To Save Eurozone
European Central Bank President Jean-Claude Trichet said that the treaties must be amended so that the authorities can "impose decisions" on countries that put the stability of the monetary union at risk by not complying with the fiscal rules.
In an interview to the Frankfurter Allgemeine Zeitung, a transcript of which was published at the central bank's website on Tuesday, Trichet said that it should be possible in future to impose decisions on countries that persist in not complying with the Stability and Growth Pact, thereby putting at risk the stability of Monetary Union.
"In my view, the Treaties would need to be amended to this end," he told the daily.
Asked about the conditions that persuaded ECB to intervene in the bond market, Trichet said that there was a delay during the ratification process of the European Financial Stability Facility, which needed approval of all 17 governments.
Due to this delay, ECB found itself in a situation where it had to intervene in the bond market in order to safeguard the transmission of monetary policy. "We had to act decisively vis-?-vis savers and investors throughout the world."
"But we never act as a substitute for the governments' responsibility and decisions," he said during the interview.
Trichet said that new Stability and Growth Pact is much stricter, although not as strict as all intended. The new one is unlikely to fail as the euro area countries have been made painfully aware of the dangers of constant violation. The most important thing for the ECB is to ensure medium and long-term stability, and it cannot use monetary policy to put right the failings of government policies, he told the newspaper.
Uk Inflation Likely to fall in 2012 says Broadbent
BoE's Broadbentsaid on Thursday that there is possibility of sharp inflation fall in 2012.
He expresses positivity that the euro zone crisis would be tackled, relieving pressure on the supply of retail credit throughout UK banks.
He reiterated that Margins in lending will come down and business conditions would improve
"The headline rate will fall back pretty sharply, especially as we get to the new year and VAT rates fall out of comparisons. Inflation will fall in the first part of the next year,"
- BoE's Broadbent
Thai Export Growth Slows Sharply In September
Thailand export growth eased more than expected in September, data from the Commerce Ministry showed Friday.
Export growth eased to 19.1 percent year-on-year in September from 31.1 percent in August. Economists expected the rate of growth to slow to 21 percent.
Meanwhile, imports grew 41.9 percent compared to 44 percent rise reported in the preceding month. Economists were looking for a 32.6 percent increase.
The trade balance resulted in a surplus of $238.2 million compared to a deficit of $1.2 billion in the previous month. A year ago, the balance was in a surplus of $3.07 billion.
BoE Broadbent Says Monetary Policy Cannot Fully Offset Euro Crisis Fallout
Monetary policy can offset the fallout from a potential Eurozone burst up "only to some extent," Bank of England policymaker Ben Broadbent told the Financial Times.
"To some extent, but I think only to some extent," he said in an interview published late on Sunday. The scale of the debt crisis mean that "one cannot offset them."
Broadbent said the central bank's decision to expand the asset purchase by GBP 75 trillion was not precise.
Denying that there was any limit to the total amount of quantitative easing the central bank could do, he said "the limit is what the correct policy is."
Eurozone Leading Index Drops Further In September: Conference Board
Eurozone's leading economic index declined further in September, data from a survey by the Conference Board showed Wednesday.
The leading economic index (LEI) decreased to 105.9 in September from 106.7 in August, which was lower than July's reading of 108.1.
Meanwhile, the coincident economic index (CEI), which measures the current economic situation, edged up to 103.7 in September from August's reading of 103.6. In July, the reading was 103.4.
In the six months ended September, the leading index declined 2.6 percent, while the coincident index moved up 0.8 percent, the agency said.
"The LEI for the Euro Area fell sharply in August on the back of a severe deterioration in business confidence and stock prices which continued in September," Jean-Claude Manini, the Conference Board senior economist for Europe, said. "The sovereign debt crisis and the uncertainty concerning its resolution are beginning to dampen current economic activity and the immediate outlook."
EU Banks May Require EUR 106 Billion Under Recapitalization Plan: EBA
The European banks would be required to raise EUR 106 billion as capital under the new recapitalization plan agreed by EU leaders at yesterday's summit, the European Banking Authority (EBA) said Thursday.
Under the plan, banks are required to establish a buffer such that the Core Tier 1 capital ratio reaches 9 percent. Banks will be expected to build these buffers by the end of June 2012. The EBA said that it expects to disclose the final capital shortfall by November.
Spanish banks need EUR 26.2 billion and Italian banks require EUR 14.8 billion in core tier 1 capital, according to EBA. French and German banks must raise EUR 8.84 billion and EUR 1.58 billion respectively, EBA said in a statement.
Greek banks will need an extra EUR 30 billion of capital, though this was covered by an existing aid program.
Banks will be required to submit their plans detailing the actions they intend to take to reach the set target to their respective national authorities by the end of 2011. These plans will have to be agreed with National Supervisory Authorities and discussed with the EBA, according to the statement.
The targets will have to be achieved avoiding excessive deleveraging, while they are expected to withhold dividends and bonuses to attain the target, the statement said.
The capital needs should be met only with capital of the highest quality. For private instruments, only new issuances of very strong convertible capital will be accepted if in line with strict and standardized criteria to be defined by the EBA, the EU's banks watchdog said.
European Economics Preview: French Consumer Spending Data Due
Consumer spending from France is the only major statistical report due on Friday, headlining a light day for the European economic news.
At 2.45 am ET, French consumer spending for September is due. Economists expect spending to fall 0.7 percent annually, following a 0.3 percent rise in August. On a monthly basis, spending is forecast to remain flat.
Spain's statistical office INE is set to release flash inflation data at 3.00 am ET. The Flash HICP inflation is seen at 2.9 percent in October, down from 3 percent in September. In the meantime, the jobless data is also due.
Hungary's unemployment figure is also due at 3.00 am. The jobless rate is forecast to fall to 10.7 percent in September from 10.8 percent in August.
Sweden's retail sales and manufacturing confidence survey reports are due at 3.30 am ET. Retail sales are forecast to rise 0.3 percent month-on-month, offsetting last month's 0.3 percent fall. Manufacturers' confidence reading is seen at -5 in October, down from -3 in September.
At 4.00 am ET, Italy's hourly wages data for September is due. It had increased 1.7 percent year-on-year in August. Norway's NAV unemployment figures are also due at the same time.
The Swiss KOF institute is scheduled to issue leading index at 5.30 am ET. The index is forecast to fall to 1 in October from 1.21 in the prior month.
Schauble Wants EU To Take Global Lead In Introducing Tobin Tax: Report
The European Union must take the lead role in introducing the financial transaction tax to curb speculative trade, German Finance Minister Wolfgang Schauble told the Financial Times.
During the interview, the minister said that in addition to the harmonized monetary policy, Europe needs stronger institutions to oversee the implementation of a commonly agreed finance policy.
He also urged the European leaders to take the next big steps towards a "fiscal union." The implementation of the tobin tax must be accompanied by tougher regulation of big banks and the "shadow" banking sector, such as hedge funds, Schauble told the newspaper.
Even if the UK disapprove on such a tax in the full EU, the Eurozone should press ahead on its own, the minister said. Any failure to reach agreement on tougher financial regulation by the G20 at the Cannes summit this week should also not stop Europe acting alone, he said.
"I am convinced that if we introduce a financial transaction tax in the EU, then the chances of getting a global agreement will increase enormously." he told the daily. On Italy, Schauble said that the country must solve its own problems by cutting the debt and balancing its budget as promised.
Italy still has work to do," he said. "The stability of the euro requires that the big member states must live up to their own responsibility."
The Euro summit last week mounted pressure on Italian Prime Minister Silvio Berlusconi to implement the announced budget cuts swiftly and effectively. In an interview to Corriere della Sera over the weekend, Berlusconi said that the Parliament must understand that the country will continued to get the support from the European Central Bank only if it implements the planned measures. "There is no room for games or tactics."
He said that the current legislature in Italy will last until 2013. "Only I and my government can achieve this reform program for 18 months, which is why there is no way for me to stand aside," Berlusconi told the newspaper.
Interest rates on 10-year Italian bonds rose to a euro-era record on Friday, reflecting market skepticism that if Italy can deliver on its pledge to cut spending and balance its budget by 2013.
The commitments made with the European Union at the summit will be presented on November 9 and 10, Berlusconi told Corriere della Sera.
Amended: UK House Prices Rise For Second Month: Nationwide
Corrects the story to show that the latest annual increase is the first since March.
Residential property prices in the United Kingdom increased for a second consecutive month in October, results of a survey by Nationwide Building Society showed Tuesday.
The house price index rose a seasonally adjusted 0.4 percent on a monthly basis in October, following a 0.1 percent increase in September. Economists expected prices to remain unchanged.
According to Nationwide Chief Economist Robert Gardner, house price growth is likely to remain soft in the period ahead.
On an annual basis, house prices increased 0.8 percent following a 0.3 percent drop during the preceding month. This was the first increase in prices since March. Economists had called for a 0.5 percent annual increase.
On a non-seasonally adjusted basis, the average house price in U.K fell to GBP 165,650 from GBP 166,256 in September.
European Economics Preview: German Unemployment Data Due
Unemployment from Germany and final Purchasing Managers' survey results from Eurozone are the major reports due on Wednesday, headlining a busy day for the European economic news.
At 3.00 am ET, Ireland's manufacturing Purchasing Managers' Index is due.
Hungary's producer price figures are due at 4.00 am ET. Economists forecast producer prices to rise 3.3 percent annually in September, following a 0.1 percent drop in August. In the meantime, Poland's Purchasing Managers' survey data is due.
Spain's manufacturing PMI is due from Markit Economics at 4.15 am ET. The index had fallen to 43.7 in September from 45.3 in August.
Italy's manufacturing PMI, due at 4.45 am ET, is forecast to fall to 47.2 in October from 48.3 a month ago. At 4.50 am ET, the French final manufacturing PMI is due.
German manufacturing PMI and unemployment reports are due at 4.55 am ET. The number of unemployed is forecast to fall by 10,000 in October after declining 26,000 in September. The jobless rate is expected to remain unchanged at 6.9 percent.
At 5.00 am ET, Eurozone final manufacturing PMI for October is due. The index is expected to match the flash estimate reading of 47.3.
In the meantime, Iceland's central bank is forecast to announce its interest rate decision. The central bank is widely expected to leave its key rate unchanged at 4.5 percent.
The U.K. CIPS/Markit construction PMI is due at 5.30 am ET. The index is seen at 50 in October, down from 50.1 in September.
Euro Weakens Against Most Majors
In early European deals on Thursday, the euro has been declining against its US, UK and Japanese counterparts. At present, the euro is worth 1.3660 against the dollar, 106.63 against the yen and 0.8600 against the pound. The next downside target level for the euro is seen at 0.855 against the pound, 105.0 against the yen and 1.361 against the dollar.
European Economics Preview: German Industrial Output Forecast To Fall
Industrial production from Germany and retail sales from Eurozone are the major reports due on Monday, headlining a busy day for the European economic news.
At 1.45 am ET, the State Secretariat for Economic Affairs (SECO) is scheduled to issue Swiss jobless data for October. The jobless rate is forecast to rise to 2.9 percent from 2.8 percent in September.
The Czech statistical office is set to release industrial output and trade balance data for September at 3.00 am ET. Industrial production had increased 5.9 percent year-on-year in August.
Swiss inflation data is due at 3.15 am ET. Economists forecast annual inflation to fall to 0.2 percent in October from 0.5 percent in September.
Statistics Norway is slated to release industrial output data for September at 4.00 am ET. Industrial production had increased 3.6 percent month-on-month in August.
The Sentix investor confidence index for Eurozone is due at 4.30 am ET. The index is seen at -20 in November, down from -18.5 in October.
Eurozone retail sales figures are due from Eurostat at 5.00 am ET. Retail sales are forecast to fall 0.1 percent month-on-month in September after rising 0.1 percent in August. On a yearly basis, it is expected to drop 0.5 percent.
The Federal Ministry of Economy and Technology is scheduled to issue German industrial production figures at 6.00 am ET. Economists forecast industrial output to fall 0.9 percent on a monthly basis after easing 1 percent in August.
Finance ministers from Eurozone are set to meet in Brussels later today. Finance chiefs will possibly discuss on strengthening of the bailout fund in order to shield other economies like Italy and Spain.
Moody's Downgrades Three Cypriot Banks
Moody's Investor Service on Tuesday lowered the long-term deposit and debt ratings of three Cypriot banks, following Cyprus' sovereign downgrade last week.
The rating action reflected the reduced ability of the economy to support its large banking system, which has an asset base six times bigger than the country's gross domestic product, the agency said in a statement.
Moody's said that it downgraded both Bank of Cyprus and Hellenic Bank by one notch to Ba2, while the ratings on Marfin Popular Bank Public Co Ltd was cut by three notches to B2.
Moody's has also placed the ratings of the three banks on review for further downgrade. These actions followed Moody's downgrade on November 4 of Cyprus government bond rating by two notches to Baa3.
Euro Drops To 2-day Low Against Yen
The euro edged lower against the currencies of the U.S., the U.K. and Japan in late Asian deals Wednesday.
The common currency slipped to a 2-day low of 107.07 against the yen around 2:35 am ET, compared to 107.54 hit late New York Tuesday. The next downside target for the pair is likely to be seen around the 106.80 level.
The common currency also reached as low as 0.8578 against the pound and 1.3784 against the dollar before holding steady around 2:35 am ET. The euro is presently worth 0.8580 against the pound and 1.3794 versus the buck.
Research: ECB Made An Additional Eur 9.5bn of Weekly Bond Purchas
Quotes from Standard Chartered:
-As the crisis in the euro area intensifies, yields on peripheral government bonds have soared, with Italian 10Y yields reaching a high of 7.49% on 9 November, although European Central Bank (ECB) buying helped to stabilise yields at a slightly lower level by the end of the trading day. Meanwhile the ECB reported that the emergency lending facility hit an eight-month high.
-Bond purchases through the Securities Market Program stood at EUR 129bn at the beginning of September, and have now reached EUR 183bn - with data this week showing that the ECB made an additional EUR 9.5bn of weekly bond purchases as contagion risks threaten to destabilise an already fragile euro area.
European Economics Preview: UK Output Price Data Due
Output price figures from the U.K. and preliminary gross domestic product estimates from Spain are the major European Economic news due on Friday.
At 1 am ET, Statistics Estonia released the flash GDP numbers for the third quarter. The economy grew 0.8 percent quarter-on-quarter on a seasonally adjusted basis.
Swedish unemployment data is due at 2 am ET. Jobless rate is expected to stay unchanged at 4.5 percent in October.
At 3 am ET, Spanish third quarter GDP data is due. The economy grew 0.2 percent sequentially in the second quarter, while expanding 0.7 percent annually. Economists forecast the GDP to rise 0.7 percent year-on-year and to record zero growth on a quarterly basis.
The Hungarian statistical office is scheduled to release the CPI figures for the month of October at 3 am ET. Turkish industrial production data is also expected at the same time.
At 4.30 am ET, the Office for National Statistics is slated to publish output price data for October. Output prices are forecast to increase 0.2 percent from September on an unadjusted basis.
European Economics Preview: Eurozone Industrial Output Due
Industrial production figures from Eurozone and current account data from France are the main European news on tap for Monday.
At 1 am ET, Estonia released unemployment figures for the third quarter, which showed jobless rate falling markedly to 10.9 percent from 13.3 percent in the second quarter.
Statistics Finland is due to release the consumer price index figures for the month of October at 2 am ET.
At 2.45 am ET, French current account data for September is due. Swiss producer and import price index data is expected at 3.15 am ET.
At 5 am ET, Eurostat is scheduled to release the industrial production figures for September. Production is forecast to fall 2.3 percent month-on-month, while rising at a slower pace of 3.6 percent annually.
Statistics Portugal is slated to publish the flash third quarter national accounts data at 5 am ET. The Portuguese economy stagnated in the second quarter compared to the preceding quarter. Annually, the gross domestic product dropped 0.9 percent.
European Economics Preview: BoE Inflation Report Due
Quarterly Inflation Report and claimant count from the U.K. and final inflation figures from the euro area are the major statistical events due on Wednesday.
At 3.00 am ET, Spain's final GDP figures are due from the statistical office INE. In the meantime, Turkish consumer confidence data is due.
The Office for National Statistics is set to release U.K. labor market statistics at 4.30 am ET. The number of people claiming jobseekers allowances is forecast to rise 21,000 in October. The claimant count rate is seen at 5.1 percent, up from 5 percent in September.
Half an hour later, Eurostat is slated to release final inflation data for October. Eurozone annual inflation is seen at 3 percent, in line with flash estimate.
The Bank of England is set to publish quarterly Inflation Report at 5.30 am ET. The report provides clear picture about the assessment of future inflation and growth. The bank is expected downgrade its growth outlook.
Europe Must Implement Agreed Fiscal Reforms: Luxembourg's Asselborn
European countries must implement the measures agreed at the October summit to resolve the debt crisis, Luxembourg Foreign Minister Jean Asselborn said Thursday.
In an interview to Deutschlandfunk radio, he also said that the euro rescue fund need to be strengthened.
Meanwhile, the minister rejected the idea of amending EU treaties, saying that this will not be helpful in Europe's efforts to contain the crisis.
Research: Eur/gbp - Trading Strategy, Trigger Points, and Support and Resistance Levels
RBS has given the following trading strategy, trigger points, and support and resistance levels:
TRADING STRATEGY: (from Tuesday) Short here target 0.8473 onto 0.8356 stop at 0.8640.
0.8536 - Two previous significant lows strong support level
0.8555 - The low of the cloud on the weekly chart watch for a close beneath here into week end.
0.8356 - The Feb low and overall objective from this range break
SUPPORT LEVELS: 0.8536, 0.8499
RESISTANCE LEVELS: 0.8617, 0.8706
-Very little in this cross - that has begun quite a distinct ranging period; capped around 0.8600 and supported at the 150% projection of a previous range at 0.8518. The short term trend is still bearish and predominantly the market is struggling to make a higher high. I (analyst) prefer shorts over longs and would add to these positions on the breaking of 0.8518
Euro Drops To 4-day Low Against Yen
Extending its early Asian session's downtrend, the European currency reached a 4-day low of 103.50 against the yen around 3:00 am ET Monday. The euro-yen pair is presently worth 103.55 and a move below the 103.40 support could set its lowest mark in 6-weeks.
Opec to Decide to Cut Output at It Dec Meeting As Global Oil Demand Is Likely to Decline-Iraq Oil Minister
Iraq's Oil Minister Adbul-Kareem Luaibisaid on Tuesday that he expects OPEC to cut output at itsDecmeeting on falling global oil demand. He said that oil will likely continue trade between a range of $100 and $120 and added that the range was reasonable
European Economics Preview: BoE Minutes Due
The minutes of the Monetary Policy Committee meeting from the Bank of England and flash Purchasing Managers' survey from France, Germany and Eurozone are the major reports due on Wednesday.
The French statistical office Insee is scheduled to issue business confidence survey results at 2.45 am ET. Business sentiment is seen at 95, down from 97 in October.
Flash French Purchasing Managers' survey results are due at 3.00 am ET. The manufacturing PMI is seen at 48 in November compared to 48.5 in October. At the same time, the services PMI is forecast to rise to 45 from 44.6.
Half an hour later, Markit Economics is slated to issue Flash German PMI. The manufacturing PMI is expected to drop to 48.5 and services PMI to fall to 50.
At 4.00 am ET, Flash Eurozone PMI data is due. The manufacturing PMI is seen at 46.5 compared to 47.1 in the prior month. Likewise, the services PMI is forecast to ease to 46 from 46.4.
The Bank of England is set to issue the minutes of the monetary policy meeting held on November 10. Policy makers have maintained the size of quantitative easing intact at GBP 275 billion and its record low interest rate.
Eurostat is scheduled to issue Eurozone industrial new orders for September at 5.00 am ET. Economists forecast new orders to fall 2.7 percent month-on-month in September after rising 1.4 percent in August.
Euro Steady After Germany's Q3 GDP Report
Following the release of Germany's final third quarter gross domestic product report at 2.00 am ET, the European currency held steady against its major rivals. As of 2:01 am ET, the euro was trading at 1.3374 against the US dollar, 0.8602 against the pound, 103.10 against the yen and 1.2290 against the Swiss franc.
Dollar Rises Against Most Majors On Eurozone Worries
The U.S. dollar strengthened against most major currencies in Asian trading on Friday as traders bought safe haven assets amid lingering worries about the financial crisis in the euro zone and its impact on the global economy.
Risk aversion aggravated yesterday after Fitch downgraded Portugal to BB+ with a negative outlook and German Chancellor Angela Merkel said euro bonds were "not needed and not appropriate."
German reluctance to backstop the debt of its floundering neighbors has raised concerns that borrowing costs will continue to rise.
Meanwhile, Moody's Investors Service on Thursday downgraded Hungary's government bond rating by one notch to 'Ba1', below investment grade. It also maintained a negative outlook, citing heightened uncertainty regarding the ability of the nation to meet its medium-term fiscal targets.
The U.S. dollar rose to 0.9686 against the Australian dollar and 1.0493 against the Canadian dollar. The next upside target level for the greenback is seen at 0.967 against the aussie and 1.066 against the loonie.
Against the euro, the dollar climbed to a fresh multi-week high of 1.3305. On the upside, 1.315 is seen as the next target level for the dollar.
The dollar jumped to a 1-week high of 0.9225 against the Swiss franc and a fresh 7-week high of 1.5455 against the pound. If the dollar gains further, it may target 1.540 against the pound and 0.924 against the franc.
The US dollar strengthened to a 2-day high of 77.55 against the Japanese yen. The next upside target level for the dollar-yen pair is seen at 78.0.
The yen declined after Japan's finance minister Jun Azumi reiterated today that the nation will again take steps if there are speculative movements in the foreign exchange market.
"We conducted a large-scale intervention on Oct. 31 and at this moment there is no sign that (the dollar) has become bottomless. We are carefully watching the market," Jun Azumi was quoted as saying at a regular press conference.
"If there are speculative moves that we can't overlook, we will take steps without hesitation," Azumi said.
But the greenback showed choppy trading against the NZ dollar, moving between 0.7405 and 0.7425.
Investors now focus on the European session, in which German import price index for October, French consumer confidence for November and the Bank of England's housing equity withdrawal for the second quarter are scheduled for release.
There are no major economic reports due in the New York session.
Moody's Says Debt Crisis Threatens EU Bond Ratings
Moody's Investor Service on Monday issued a warning to the European Union sovereigns that the severity of the euro area debt crisis has put their government bond ratings at risk.
The continued rapid escalation of the euro area sovereign and banking credit crisis is threatening the credit standing of all European sovereigns, Moody's said in a statement.
In the absence of policy measures that stabilize market conditions over the short term, or those conditions stabilizing for any other reason, credit risk will continue to rise, the agency said.
While Moody's central scenario remains that the euro area will be preserved without further widespread defaults, even this 'positive' scenario carries very negative rating implications in the interim period. The rating agency also noted that the political impetus to implement an effective resolution plan may only emerge after a series of shocks.
In Moody's view, the probability of multiple defaults by euro area countries is no longer negligible. A series of defaults would significantly increase the likelihood of one or more members not simply defaulting, but also leaving the euro area.
The rating agency said that the euro area is approaching a junction, leading either to closer integration or greater fragmentation.
Powered by Invision Power Board (http://www.invisionboard.com)
© Invision Power Services (http://www.invisionpower.com)