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Video for August 4th, 2008 (5 min): Markets Prep for FOMC, Dollar Gains on Pound, Loonie, Yen, Holds Steady vs. Euro NZ Labor Costs Up 0.8% The New Zealand labor Cost Index rose 0.8% in the second quarter, which met expectations. Wages were up 2% on the quarter. The data shows that the labor market remains tight, with employment growing. AUS Housing Prices Fall in 2Q Australian housing prices fell in the 2nd quarter, registering a -0.3% change compared to the 1st quarter. It's the first time housing prices have shown a quarterly decline in almost 3 years, though forecasts had called for an even bigger decline. Compared to a year ago prices are up 8.2%, a slowdown from the 13.8% seen in the 1st quarter. AUD/JPY - Aussie Pares Some of Last Week's Losses vs Yen
Both the Aussie and Kiwi were up on the Japanese Yen overnight, which cut into some of the steep falls seen in the pair last week. Today the Aussie rallied about 100 pips from its open. SWZ Purchasime Managers Index Down to 54.1, EUR Sentix Inv. Confidence at 5 Year Low Switzerland's purchasing managers index fell to 54.1. The report says that this is the first time the index dipped below its long term moving average since mid-2005. Meanwhile, the Euro-zone Sentix measure of investor confidence fell 6 points to -15.3, its lowest level in 5 years. High inflation, a strong euro, a weakening job market and last month's rate hike by the ECB are all factors weighing on sentiment.
EUR Annual Proudcer Price Inflation Hits 8%, Record For Survey
Producer prices in the Euro-zone were up 0.9% for the month of June, putting the annual rate at 8%. That is a new record high for the series which goes back to 1990. Rising energy costs are the main culprit and put the ECB in a bind as inflation continues to climb as growth cools. UK Construction Sector Actibity at 11 Year Low In the UK, the construction PMI came in at an 11-year low of 36.7 in July. The housing sector there has ground to a halt impacting the rest of the economy. EUR/GBP - Euro Jumpes on Pound to Start the Week
The Euro-Pound pair jumped in overnight trading and in the NY session as higher inflation will put the pressure on the ECB, while weaker growth in the UK has put the Bank of England on the defensive recently.
US Incomes and Spending Cool in June, Effect or Rebates Fizzling
In the US, personal incomes climbed 0.1% in June, a steep drop off from the 1.8% increase seen in May. May's figure was boosted by the government sending out rebate checks. This effect was less apparent in June. Spending was up 0.6%, which beat forecasts. US Core PCE Elevated, at 0.3% for Month, 2.3% on Year A measure of consumer inflation, the core PCE index climbed to 0.3% for the month and 2.3% for the year. This index excludes food and energy prices and is closely examined by the Fed, which prefers to see the annual rate at or below 2%. Higher prices may have amounted for a lot of the spending seen in June. US: Factory Orders Surprise on Upside Later in the NY morning session, data for factory orders surprised forecasts, coming in at 1.7% for the month. Demand for durable goods were up as was a gauge of capital investment. USD/JPY - Dollar Regains 108.30 Handle vs Yen
Overnight, the Dollar-Yen pair gained to test near 108.30, but paused at the NY open. There was a dip at the NY open as US stocks started in the red pressuring the greenback. By 11 am however, the Dollar retested it's session high as oil slid $4, and stocks remained down but firm. GBP/USD - Pound Weakness Apparent in Markets, Greenback Hits 1 Month High
The Pound-Dollar saw a strong move in favor of the greenback this session. It broke below 1.9750, its open for the week, falling 150 pips to find support near 1.96. That's the lowest level for the pair since June 24th. The Fed has more room than the Bank of England to raise rates and the market may be pricing in a more hawkish statement from tomorrow's FOMC decision. USD/CAD - Loonie Falls to 1.0360 vs Dollar
The US Dollar-Canadian Dollar pair broke above key resistance at 1.03, jumping to test 1.0360 around 11:30 NY time. A fall in oil prices helped the greenback. For the day the pair is up 80 pips and has rallied 140 pips since Thursday's test of 1.0220. Upcoming Releases: RBA and FOMC on Tap Tonight, Australia release its services PMI and while the Reserve Bank decides on interest rates. The UK and Euro-zone both post their services PMI's overnight. The UK will also post industrial production data while the Euro-zone releases info on retail sales. Tomorrow, the US posts its ISM Non-Manufacturing Index, and the afternoon brings the FOMC interest rate decision. |
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