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Video for July 14th, 2008 (5 min): Greenback Gains Overnight Following Gov't Plan to Help Fannie Mae, Freddie Mac But Relinquishes Gains in NY Trading EUR/USD - Dollar Gives Up Earlier Gains on Fannie Mae, Freddie Mac Bailout Plans
The big news over the weekend was the US government's willingness to step in with a plan to back up Fannie Mae and Freddie Mac, ensuring that they have the capital to survive the continuing US housing crash and other financial market-turmoil. The announcement helped the greenback gain against the Euro during Asian and European trading. After opening the week at 1.5970, a 3-month high, the Euro-Dollar pair slid down to 1.5840. The dollar gave back some of those gains in NY trading as the deal may work to add extra strain on the Federal debt and spell further trouble for the Dollar's fundamentals in the longer term. USD/JPY - US Stocks Relinquish Gains from Open, Yen Gain in NY Trading
The Dollar-Yen pair opened the week recovering some of its losses from Friday, but resistance at 106.80 turned the pair around. US stocks opened higher as the immediate concern of a collapse by the 2 mortgage giants receded, however, after the initial reaction stocks weakened. The pair fell in favor of the Yen as a result. USD/CAD - Loonie Gains Prior to BOC Announcement Tomorrow
The same theme held for the US Dollar-Canadian Dollar pair. The greenback gained overnight reaching near the 1.0140 level, but as NY trading progressed, fell to a 2-week low to test 1.0050. The Bank of Canada meets tomorrow and in the last week the pair has been trending down. UK: Annual Producer Prices Hit New Record Highs Turning to today's fundamental releases, the UK showed that its producer output inflation cooled in June on a monthly basis, though increased in annual terms. The 10% annual increase in fact is the highest since 1986, when records began. For the month, output prices were up 0.9%, lower than expectations. UK producer input prices were up 2.1% on the month and a whopping 30.3% on the year. Input prices are more directly affecting by surging petroleum prices. GBP/USD - Pound Climbs vs Dollar Following PPI Data
In terms of market movements, the annual figures won the day, as the Pound-Dollar pair advanced 90 pips following the UK release. The pair was back near its highs from Friday, around the 1.9930 level as of 11AM. EUR: Production Down 1.9% in May Industrial production in the Euro-zone fell 1.9% in May, reversing the gains seen in April. The data underlines the recent weakness in the Euro-zone economy as higher credit costs and weaker consumer spending limits spending by companies, and European goods become more expensive abroad as a result of a stronger Euro. NZ: Auto Sales Weaken Retail Sales Data for May In New Zealand retail sales fell 1.2% in May, offsetting the 1.2% gain in April. The result surprised forecasts on the downside. Sales were most affected by a drop in autos. Core sales, which exclude the auto sector, showed a 0.7% increase, a turnaround from the 0.5% decrease from April. NZD/USD - Kiwi Gains Following Sales Release
Directly following the release the Kiwi-US Dollar pair fell to 0.7565 but quickly recovered. It continued gaining overnight, climbing to 0.7635 by 12 noon EST, close to its high set on Friday. Upcoming Releases The fundamental docket heats up overnight and into tomorrow. Tonight, New Zealand posts data on consumer prices and food prices. The UK releases its BRC retail sales monitor and the RICS house price balance. From Australia we get meeting minutes, while the Bank of Japan decides on interest rates. Overnight, the UK reveals figures on consumer and retail prices. Germany and the Euro-zone post their ZEW measure of economic sentiment. Tomorrow, the US releases data on retail sales and producer prices, along with the Empire manufacturing index. Finally, in the Canada the central bank will announce its decision on interest rates. |
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