Aug. 2 (Bloomberg) — Hans-Guenter Redeker, head of global currency strategy at Morgan Stanley, discusses the outlook for the Japanese yen and investment in European bonds. He speaks from London with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)
Jones Says U.S. Needs 3% Growth to Keep Debt in `Check’
Aug. 2 (Bloomberg) — Bryn Jones, a fund manager at Rathbone Unit Trust Management Ltd., talks about the U.S. debt ceiling and the possibility of a credit-rating downgrade. He speaks with Linzie Janis on Bloomberg Television’s “Countdown.” (Source: Bloomberg)
ANZ Bank’s Yetsenga Says Aussie May Strengthen to $1.14
Aug. 2 (Bloomberg) — Richard Yetsenga, global head of foreign exchange strategy at Australia & New Zealand Banking Group Ltd., talks about the impact of recent U.S. government debt negotiations on global currencies. Yetsenga speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)
Primavera’s Hu Says China Seeing `Meaningful Slowdown’
Aug. 2 (Bloomberg) — Fred Hu, chairman of Primavera Capital Group in Beijing and former Greater China chairman at Goldman Sachs Group Inc., talks about China’s economy and holdings of U.S. Treasuries. Hu also discusses the proposed plan to raise the U.S. debt limit and the nation’s credit rating. He speaks with Susan Li on Bloomberg Television’s “First Up.”(Source: Bloomberg)
Norwegian Economy Fights through Terrorist Crisis
The initial response to the attacks in Oslo last week was a quick sell-off in Norwegian assets as investors fled uncertainty. The show of support by the Norwegian public, and solid economic numbers, however, has helped the Scandinavian giant regain much of its initial losses, and then some.
Reports by Norway’s Manufacturing Purchasing Managers Index (PMI) this week revealed an uptick beyond analyst forecasts and polls. Several forecasts had put the numbers between 55.5 and 56.1. The actual results, which came out at 56.5, trounced the expected range. Forecasters are also expecting the unemployment rate to hold steady at 3.4% in Norway come Thursday. These data reports are helping to drive many investors back into their Norwegian assets.
Assisting the Norwegian kroner’s (NOK) ascent this week is also a sentiment favoring commodity-linked currencies due to risk aversion in the global economy. Though oil prices have tumbled back towards $95 a barrel in recent days, the overall upwardly-trending strength of oil has remained a staunch price support for the NOK, and appears that it will continue to do so in the days ahead.
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US Personal Spending and Income Growth Sluggish
Reports issued by the US Bureau of Economic Analysis, a branch of the Department of Commerce, revealed sluggishness in American spending and income levels at the consumer level. Three reports – Personal Spending, Personal Income, and the Core PCE Price Index – concur that US consumption is stagnating through the record hot summer months.
Personal spending stands out as the only indicator among the three to experience a contraction. Spending levels declined by approximately 0.2% in June. The other two reports each signaled a sluggish 0.1% growth, moderately below market forecasts. The news piles atop several other indicators of growing consumer pessimism which may lead the US dollar (USD) to make gains in the days ahead due to safe-haven asset purchases by global investors.
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Australian Housing the Exception; Sees Decline
While most other industrialized nations are publishing bullish housing data, Australia appears to be signaling a contraction in its housing market. Yesterday it was a report from the Housing Industry Association (HIA) which revealed an 8.7% decline in new home sales for June. Today it is the level of building approvals.
The report, released by the Australian Bureau of Statistics this morning at 2:30 GMT, underscored a decline in the month-on-month issuance of building approvals by approximately 3.5%. Forecasts were expecting a 2.6% expansion in building permits from last month’s decline of over 6%.
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Barclays’ Stacey Says RBA May Tighten Once PMI Improves
Aug. 2 (Bloomberg) — Gavin Stacey, chief interest-rate strategist at Barclays Capital in Sydney, discusses the Reserve Bank of Australia’s decision to leave its benchmark interest rate unchanged at 4.75 percent for an eighth straight meeting. He speaks with Linzie Janis on Bloomberg Television’s “First Look.” (Source: Bloomberg)
New Highs for CHF and JPY
The US dollar was stronger versus the euro but the real movers have been the safe haven Swiss franc and the Japanese yen. Yesterday’s dreadful US PMI numbers dragged Asian and European bourses lower keeping the safe haven currencies bid into today’s North American forex trading session.
Japanese officials are attempting to jawbone the yen lower with an increase of harsh rhetoric versus the strengthening currency. The stepped up speech-making over the past few days suggests the Japanese Ministry of Finance is leaning closer towards steps to stem the strengthening of the yen. Reuters reports the BOJ is ready to act should the yen appreciation prove to be destabilizing to the Japanese economy. To increase the effectiveness of any direct intervention in the forex markets the BOJ may accompany the JPY selling with an easing of monetary policy in the form of additional asset purchases. USD/JPY support comes in at the all-time low near 76.25 with short-term resistance at the falling trend line from the July 20th high at 77.80.
The CHF hit a new all-time low versus the US dollar and the euro as traders continue to use the Swiss franc as the safe-haven currency of choice. The SNB may be less aggressive than Japan to step in and weaken the CHF. Last time the SNB sold the CHF the central bank suffered an embarrassing $21B loss on its long euro and USD positions versus the CHF. A such the downward trends of the EUR/CHF and the USD/CHF my continue.
Data from Eurostat showed European PPI was flat for the month of June. Consensus forecasts for a 0.1% suggest inflation pressures are slowing, albeit by a small amount. Combining the inflation numbers with yesterday’s Euro zone PMI data that was unchanged from a 2-year low suggests the ECB may have room to hold off on future interest rate increases as the EU economy slows. A break of 1.4150 and the EUR/USD may have scope towards 1.4100, a 61% retracement of the move from July 12th to yesterday’s high.
Yesterday’s disappointing US ISM Manufacturing PMI surveys have put equity markets in the red while supporting the USD. The Nikkei finished down -1.21% while the FTSE 100 is lower by 0.65%. A Senate vote to raise the US debt ceiling is set for 16:00 GMT. While nothing is set in stone all indicators point to the legislation getting the OK and signed into law by Obama.
A lack of important data releases on the economic calendar will keep market players focused on the debt ceiling vote as markets anticipate a heavy economic calendar tomorrow. The highlights for the day will likely be the ADP payrolls data and the ISM non-manufacturing survey. The ADP report has had a poor history of predicating Friday’s jobs report while economists have had an even tougher time forecasting the payrolls report from the Bureau of Labor Statistics. Last month a surprise increase in the ADP report caused economists to increase their non-farm payrolls report only to overshoot the actual target by a wide margin.
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Forex CT 2-8-11 Video News Update
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
