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Friday, 15 Feb 2008
Data On Tap - U.S Consumer Sentiment
The U.S. Labor Department published yesterday its weekly data concerning the number of the U.S. initial claims for state unemployment insurance aid. The data indicated a drop of 9,000 to 348,000 - slightly better than Wall Street's consensus expectation of 350,000.
The December trade balance came in at a monthly deficit of $58.8B, lower than the expected $61B. The trade deficit totaled $711.6 billion for all of 2007, down 6.2 percent from the record set in 2006 and the largest annual percentage drop since 1991.
As the subprime crisis continues to drag down the U.S. economy, a private report indicated yesterday that Sales of Existing Homes fell in 45 states during the October-December quarter, and Nationwide, Existing Homes sold at an annual rate of 4.96 million units in the 4th quarter, down 21% from the sales pace of the 4th quarter in 2006.
In addition, Fed Chairman Ben Bernanke hinted yesterday that more rate cuts could be on the way in his statement in Washington. Bernanke mentioned that the outlook for the economy has worsened in recent months, indicating that the Fed would probably keep its insistent strategy in the short term. Although inflation remains a concern, Bernanke restate his certainty that prices would moderate this year.
As a consequence of Bernanke's statement, The U.S. dollar dropped against 14 of the 16 most-active currencies and it headed for the biggest weekly loss since December against the 15- nation currency.
Today to close out the week, the U.S. economic data will be released at 13:30 GMT as we await the figures from the Empire State Business Conditions Index and the Capacity Utilization. Later, the U.S. Industrial Product and Consumer Sentiment will also print there figures. Forex traders should keep an eye on the economic events around the world, as today could prove to be very volatile.
The EUR headed for the biggest weekly loss since December against the USD after the Fed Chairman Ben Bernanke warned that the bank may cut interest rates further to avert a recession.
The EUR increased 0.9% versus the U.S. dollar and traded near a one-week high. Yesterday it traded at $1.4643 in afternoon trading, up from $1.4580. It is also expected the EUR may increase today to 1.4740 vs. the greenback.
The U.S. economy is on a course of a serious slowdown and it is still under up coming pressure. A weaker USD is boosting exports from the U.S. to Europe. Many investors began recently to relocate numerous of their funds to European countries where their deposits and mixed income investments can obtain higher returns.
The Euro is being pushed forward and European Central Bank is working by slow but sure moves of midterm rate increase. Data showed on Thursday that the German economic growth increased more than half in the 4th quarter. The German gross domestic product increased by 0.3% compared with the 3rd quarter. The 4th quarter was powered by a further strong increase in equipment investment and by net trade, suggesting German exporters enjoyed from the strength of the EUR.
As for today's European calendar, there is only a Trade Balance figure expected to be released. Also, later that day the ECB President Trichet is scheduled to deliver a speech. As head of the central bank's governing body, which is responsible for setting the euro zone's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.
The Japanese Government published yesterday good economic data. The Gross Domestic Product rose from 0.4% to 0.9% in the 4th quarter. At the same time, the Industrial Production increase more than forecasted, suggesting that Japan's positive momentum is till in. Bank of Japan Governor Fukui will probably leave the overnight lending rate at 0.5%. The BoJ will possibly remain quit passive through the 1st quarter of 2008. The conclusion to keep the interest rate fixed was commonly expected by the policy board as the effects of the U.S. subprime crises keeps on and resounds in the global markets. Many investors around the world began shifting chancy assets due to continuous uncertainties which still effecting the sluggish U.S. economy over the global economy. Due to this fact investors believe that the BOJ will not increase its key interest rate until the middle of next year.
Apart from the Interest Rate Announcement, today the Japanese economic calendar is barren of any scheduled events. Forex traders should keep an eye on the economic events around the world, as today could prove to be very volatile.
This pair is continuing its bullish rally and indications are that there is still steam left in the uptrend. However Momentum and RSI on the 4H chart are flat and on the daily chart they are beginning to show a negative slope. Therefore a reversal may be imminent and traders should be cautious when placing a long today.
We are now at the beginning of a very tight bullish channel on the 4H chart. Indicators on the hourlies and the daily charts are mixed. Therefore this pair should remain within a tight range today. Preferred strategy today will be to buy on lows and sell on dips.
This pair has through a relatively choppy trading session of late and seems to be unable to pick up a sustained trend. Bollinger bands are widened indicating increased volatility.
Indications on the 4H are giving a bullish signal and this pair should target the 108.50 level today.
This pair dipped yesterday well beyond the key 1.1000 resistance level. The next target price will now be the 1.0950 level as the RSI and Momentum still indicate further bearish movement. However after yesterday's sharp dip this pair now seems to be leveling out and it may consolidate today before resuming its downward movement.
The Wild Card
This commodity rallied sharply yesterday peaking at the 95.53 level. All indicators show that we are now deep in overbought territory. Therefore forex traders may be able to maximize gains by entering an early short position.
|13:30||CAD||NZD Core Retail Sales||m/m||1.0%||0.6%||0.6%|
|14:45||USD||Flash Manufacturing PMI||55.5||56.2||-|
|15:00||USD||New Home Sales||440K||455K||-|
|15:30||USD||Crude Oil Inventories||10.0M||2.6M||-|
|22:00||NZD||Official Cash Rate||2.75%||3.00%||-|
|22:00||NZD||RBNZ Rate Statement||*||*||*|
|01:00||EUR||Spanish 10-y Bond Auction||3.29|2.1||*||-|
|09:00||EUR||German Ifo Business Climate||110.7||110.5||-|
|10:00||EUR||ECB President Draghi Speaks||*||*||*|
|11:00||GBP||CBI Realized Sales||13||18||-|