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July 4th, 2008 - Daily Video Forex Market News
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Video for July 7th, 2008 (5 min): Overnight Dollar Strength Reverses As US Equities Fall into Red Following Bullish Start USD/JPY - Risk Appetite Increases Overnight, But Reverses As US Equities Slipped into Red
The Dollar rose almost 100 pips on the Yen as markets in Japan, and Europe, though not the UK, were strong and helped spur risk appetite. There was anticipation that the G8 meeting, which kicked off in Japan, will focus its attention on the need for a stronger greenback. Oil was down as much as $6 and there was general Dollar strength overnight carrying over from last week. In NY trading, the situation reversed as US equities, which had started bullish, fell into the red by noon time. The Dollar gave up its gains and was being pressured for the rest of the NY session. UK Manufacturing Down 0.5% in May, Industrial Production Down 0.8% In the UK, manufacturing fell 0.5% in May, the lowest level since September. It was a surprise to economists, as they had predicted a flat reading. Industrial production, which includes manufacturing, declined 0.8% on the month and 1.6% on the year, also surprising forecasts on the downside. Factories are lowering their output as a result of higher commodity prices and slowing economic growth in the UK. The declines in production were broad-based, and will add pressure on the Bank of England to further lower rates this year, though not at this week's meeting. GBP/USD - Pound Pressured by Production Data, Recovers as US Equities Slide
The Pound-Dollar pair slid 150 pips from its open, finding support at 1.9650. The weak production report corresponded with Dollar strength overnight and brought the pair to its lowest level in 2 weeks. From this support the Pound managed to pare some of its losses as US stocks sputtered. GER Production Falls 2.4% in May, Lower than Forecast In Germany, industrial production fell 2.4% in May and cooled to a rate of 0.8% on the year. Both figures were far below forecasts, and add evidence that the European economy is succumbing to a slowdown. Germany has been the engine of growth for the euro-area but recent data has seen it losing its momentum amid record high commodity prices and credit costs, not to mention increasingly pessimistic consumers. EUR/USD - Euro Rebounds In NY Trading after Weakening Overnight
The Euro-Dollar fell to a one week low near 1.5610 overnight and consolidated there. However, the slide in US equities in mid NY trading gave the Euro life and it jumped close to 100 pips in a 2 hour span. The pair was consolidating near 1.5750 as of 2 PM EST. AUD/USD - Aussie Slides Overnight as Stocks, Commodity Prices Fall
The Aussie-Dollar pair fell 100 pips overnight, bouncing up off the 0.9515 level, last week's low. Stocks in Australia were lower, as commodity futures like gold slid in today's trading. From its support level, the Aussie managed a weak rally to 0.96 in the NY session, but fell back to consolidated near the 0.9560 range.
Upcoming Releases
Tonight, New Zealand and Australia will post reports on business confidence. Overnight, Japan will release its Eco Watchers survey, also a measure of business outlook. The UK meanwhile posts housing prices data. Tomorrow, the US will post figures on pending home sales, wholesale inventories, and consumer credit. |
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