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Video for July 29th, 2008 (5 min): US Stock Rally Along with Falling Oil Help Spur Strong Dollar Gains

JPN Household Spending Decreases Yet Again, While Unemployment Rate is Up

Yesterday evening Japan released several reports. Overall household spending was down 1.8% in June compared to a year ago. It's the 4^th month in a row that the figure was negative though it did beat forecasts of a bigger decline. Incomes were down 2.1%. The unemployment rate rose to 4.1%, surprising forecasts and reaching the highest level in 2 years. With households pressured by higher prices more women are entering the labor force or searching for higher paying jobs increasing the rate.

JPN Retail Sales Remain Positive in June, Defying Forecast

Though overall household spending was down, retail sales managed to show a 0.3% increase for the June period compared to a year ago. Forecasts had the figure falling into negative territory. Sales at large retailers were down 3.9% on the year, worse than forecast.

AUS Leading Index Turns Negative

In Australia, a measure of leading indicators fell to -0.1%. The economy is being choked by high interest rates, high inflation, and weakening housing and labor markets.

SWZ UBS Consumption Index Rebound in June, Soccer Championships Help Retail Activity 

In Switzerland, the UBS Consumption Index rose to 2.246. The sharp rise was due in particular to improvements in business activity in the retail sector. However, a lot of this rise can be attributed to spending during the soccer championship that was under way in June.

US S&P/Case-Shiller House Price Index Shows -15.8% Change on Year

In the US, housing prices in top metropolitan areas continued to fall in May. The S&P/Case-Shiller 20-city composite is down 15.8% on the year, while the 10-city composite is now down 16.9% compared to last year.

US Conference Board Consumer Confidence Shows Surprising Increase

Also, the Conference Board measure of consumer confidence rose to post a 51.9 for July. This surprised forecasts which called for another drop, and reinforces the UMich data seen last week. Though consumers attitudes seems to be stabilizing, they remain at low levels.

EUR/USD - Dollar Strength Enters Markets as US Stocks Rally, Oil Falls, and US Data Surprises

 

The Euro-Dollar took a sharp turn in favor of the greenback this session as US stocks recovered from yesterday's sell off and oil prices continued their slide, falling close to $4 to reach $121. The Dollar managed to pare all of its losses the last two sessions and broke below last week's support at 1.5650. Around 10 AM the Dollar was further boosted by a better than expected consumer confidence report. Today's moves put the Dollar at a one-month high against the Euro.

USD/JPY - Dollar Gains vs Yen as Risk Appetite Returns Following Monday Jitters

 

With stocks climbing in the US the Dollar-Yen pair rallied about 100 pips from its overnight low, setting a high near 108.30, the highest the pair's been since June 26^th. The Dow Jones index was up 160 points, and Nasdaq was about 50 points higher around noon time in NY.

UK Mortgage Approvals Hit New Low, Lending Lowest in 8 Years

In the UK, mortgage approvals for June were an anemic 36K, the lowest since records began in 1993. Mortgage lending hit an 8 year low.

UK CBI Distributive Trades Shows Retail Sector Worse Than Expected

A second release showed that the UK retail sector went through a rough patch in July, consistent with other data seen out of the UK economy recently. 36% more respondents said sales were weaker compared to a year ago, worse that expectations of a softer decline.

GBP/USD - Dollar Gains 150 Pips vs Pound

 

The Pound-Dollar pair saw a similar sharp move as the Euro-Dollar. It fell around 150 pips from its levels prior to the NY open. The pair broke below 1.9850 and found new support at the 1.98 level.

GBP/CHF - Pound Gains vs Swiss Franc on Better Stocks Despite Weak Data

 

Despite the weaker UK data, Stocks in London fared better than those in the rest of Europe which helped propel the Pound higher vs. the Swiss Franc and Euro. The Pound-Fran pair, after consolidating overnight, jumped 100 pips as investor sentiments picked up and appetite for risk increased in NY trading.

Upcoming Releases

Tonight, Japan releases data on industrial production while Australia reveals the number of building approvals for June. Overnight, Germany reveals retail sales figure, and the Euro-zone posts its end of the reports on economic sentiment, business climate, and consumer confidence.

Tomorrow, the US will release its ADP employment change and Canada reveals producer prices.