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Video for May 6th, 2008 (4 min 15 sec): Dollar Weakens as Oil Hits New Record, Fannie Mae Sinks Stocks at Open 

(correction - in the EUR/USD slide, the price measurement reads 180+ pips in the video when it should be 130+)

 

AUS Reserve Bank of Australia Holds Rates 

The Reserve Bank of Australia held rates steady at 7.25%, saying that growth in domestic demand should subside as higher credit costs put a clamp on consumer spending and business investment. Inflation however will be high in the short term, but is expected to cool as aggregate demand slows. The move was highly anticipated, and the accompanying statement did not veer from market expectations neither.

AUS Trade Balance Shows Smaller Deficit

The trade balance in Australia improved to negative A$2.74 billion, one very bright spot for the Australian economy. It was led by exports growth which climbed 4.4% on hungry demand for iron ore, coal, and other raw materials, especially from China.

UK Services Unexpectedly Drop to 50.4

For April, growth in the UK services sector slowed to the weakest pace in five years in April. The Services PMI slipped 1.7 points to 50.4, much lower than expected by economists. The decline comes as a result of more restrictive access to credit for both households and businesses, coupled with a weak housing sector.

EUR Services Improve Compared to Preliminary Estimate

In the Euro-zone, the final version of April's PMI, increased to 52 from the preliminary release 2 weeks ago. It was 51.5 in March. The Euro-zone, led by strong growth in Germany, recovered from its dip in January. Activity in Germany's services sector also improved compared to its initial release, climbing to 54.9, a 6-month high.

EUR Producer Inflation Higher Than Expected

Euro-zone producer prices increased 0.7% for the month of March, matching the upwardly revised figure for February. The annual pace picked up to 5.7%. Prices, as they have been all year, are being pushed up by energy costs which affect all stages of the production process.

EUR/GBP - Euro Gains on Pound as Services Falter in UK

 

The data showed that the Eurozone is withstanding a slowdown better than the UK. The Euro-Pound pair climbed following the releases. The pair is up about 100 pips since falling to a 6-week low on Friday.  

EUR/USD - European Data, Record High Oil Prices and Weak US Stocks Pressure Dollar

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(correction - the price measurement reads 180+ pips in the video, it should be 130+) 

The Euro gained 130 pips on the Dollar from its overnight low to set an intra-day high around 1.56. The European data is consistent with the ECB's current stance. Inflation remains a problem and the services sector seems to be faring well. In NY trading the Dollar was pressured by oil futures climbing to a new record price of $122-a-barrel. This pressured the US stock market as well as the dollar.

USD/JPY - Yen Gains on Weak Open to US Stocks

 

The Dollar-Yen pair fell on a very weak open to US stocks, as Fannie Mae reported a larger0than forecast $2.19 billion loss on record home foreclosure rates. The pair fell 100 pips from its overnight high to set a low near 104. As NY trading progressed, US stocks recouped some of their opening losses and the Dollar pared about half of its earlier losses.

SWZ Consumer Inflation Rises 0.8% in April, Cools to 2.4%

Consumer inflation in Switzerland increased 0.8% on a monthly basis and 2.3% in annual terms. The annual rate cooled from its 2.6% pace in March, undershooting the consensus forecast of a 2.4% increase.

EUR/CHF - Franc Gains on Weak European and US Stocks

 

The Swiss Franc was gaining overnight and in NY trading against the Euro and Dollar. Asian stock markets mostly retreated, while the European markets tumbled. Risk aversion boosted the Swiss Franc. However, as US markets recovered, the franc almost gave up all the overnight gains on the euro.    

Ivey PMI Posts 57.6 in April, Beats Expectations of Further Fall

In Canada, the Ivey "Purchasing Managers Index" which follows spending by companies, surprised forecasts on the upside in April. Though the 57.6 reading was lower than March's 59, it was higher than the consensus forecast and was a bright sign for the Canadian economy.

USD/CAD - Loonie Gains on Ivey PMI, Jump in Oil

The Canadian Dollar strengthened following the strong Ivey PMI reading. Record oil prices also gave the Loonie a boost. The USD/CAD pair lost 125 pips after the Ivey PMI release and is hovering slightly above parity at 2:40 PM EST.

Upcoming Releases:

Tonight the UK starts with consumer confidence data and follows that overnight with industrial and manufacturing production and its BRC shop price index. The Euro-zone reveals retail sales, while Germany releases factory orders

Tomorrow, the US will post data on labor productivity and costs for the 1^st quarter, along with pending home sales and consumer credit. The afternoon will see New Zealand's unemployment report.