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Video for May 20th, 2008 (3 min 30 sec): Dollar Declines on Rising Oil and Inflation Data from Germany
AUS RBA Minutes Hawkish
The Reserve bank of Australia released its minutes from the May 8th interest rate decision. They noted that inflation will remain high, but would decline if the recent slowdown is sustained. The upside risk is that expectations for high ongoing inflation could affect affect wage setting behavior. The bank admitted that they spent considerable time discussing an interest rate hike. AUD/USD - Aussie Boosts Above Yesterday's New 24-Year High
The Australian Dollar continued its climb against the US Dollar, boosted by the hawkish minutes and general greenback weakness in the markets overnight. JPN Bank Holds Rates at 0.50%, as Expected In Japan, policy makers held rates at .50%, and released their monthly monetary policy report. In it they mentioned slowing growth as a result of high energy and materials prices. Specificaly, exports growth and industrial output are weakening. In this environment the bank is expected to hold rates steady for the rest of the year. SWZ Producer Inflation Higher Than Forecast Swiss producer prices came in higher than forecasted for April. Prices were up 0.7% on the month and 3.6% on the year. The annual rate in April was lower than in March, but still above expectations. CHF/JPY - PPI Boosts Franc vs Yen
In a comparison of the two countries' currencies, the producer inflation data helped spur a Swiss Franc rally against the Yen. The Franc-Yen pair climbed about 100 pips from its overnight low prior to the release. And reached resistance at the 100 level. GER Annual Producer Prices Gerow 5.2%, Highest in 2 Years Producer prices in Germany accelerated at the fastest annual pace in nearly 2 years, up 5.2% for April. On the month, producer inflation rose 1.1%. The economy continues to digest high energy prices. Higher inflation will curb consumer's appetites, and keep the European Central Bank on the defensive. GER ZEW Economic Sentiment Falls to -41.4, Euro-Zone Improves to -43.6 In a second release, investor sentiment in Germany deteriorated slightly. This surprised forecasts, which called for an improvement. The ongoing slowdown in the US and the consequences on German exports, a stronger Euro and high inflation were all concerns. For the Euro-zone as a whole, sentiment did improve, and by a larger degree than forecasts. US Producer Inflation Mixes, Headline Figures Cool, Core Up In the US, overall producer prices cooled in April, though the core figures showed higher than expected readings. On the month overall prices were up 0.2% as food and energy prices eased. Core prices almost doubled expectations, coming in at 0.4%. On the year, the headline figure slowed to a rate of 6.5%. Core prices however rose to 3% from 2.7%. The 3% annual increase in core prices was the fastest pace since 1991. EUR/USD - Euro Rallies On Higher German PPI
The Euro-Dollar pair recovered yesterday's losses and climbed above 1.5670 as of 12PM EST. The Euro was bolstered by the higher than expected German prices while the US inflation data came in softer than expected. The pair is now on a 5 session uptrend, which started last Wednesday. GBP/USD - Pound Surges 200 Pips vs Dollar
As mentioned earlier there was general sense of Dollar weakness today. Oil prices surged to a new record above $129 a barrel, and stocks were down in NY trading. The Pound-Dollar pair climbed 200 pips from its open, extending those gains in the NY session. USD/JPY - Dollar Weakens Vs Yen, US Stocks Have Rough Morning
As of noon time in NY, US stocks were on the ropes, with the Dow industrials down 200 points. Concerns about the high cost of oil, increased producer costs, sluggish retail sales and a Fed that looks to be moving to the sidelines, were all factors that pressured stocks. The Dollar-Yen pair which has a strong correlation with stocks, declined reaching 103.45. CAN Wholesale Sales Rise 0.6%, Foreign Purchases of Canadian Securities at C$5.3B In Canada, wholesale sales increased 0.6% in March, better than forecast, and rebounding from the 1.8% decrease in February. A second report showed foreign purchases of Canadian stocks increased to C$5.3 billion, also stronger than expected. USD/CAD - Loonie Dips to .9870, Greenback Recovers in Later NY Trading
The US Dollar-Canadian Dollar pair declined further today, touching 0.9870, though the greenback managed to pare those losses in NY trading. Upcoming Releases Tonight, Australia reveals its consumer sentiment. Overnight Germany posts its IFO business climate index. The UK will release Bank of England minutes and government borrowing figures. Tomorrow, Canada posts its consumer price data and its leading index. The only US release on tap is the minutes from the latest FOMC meeting. |
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