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JPN Corporate Goods Price Index Cools to 2.8% Gain in November Japan's corporate goods price index cooled to an annual pace of 2.8% in November. On the month, prices were down 1.9%, led by a drop in crude oil and other commodities. Still, lower costs are not going to help offset the loss of demand facing companies during this global recession. JPN Machinery Orders Down 4.4% A second release showed Japanese machinery orders fell 4.4% in October as the deepening global recession cuts into business investment spending. With Japan's key trading partners, like the US, UK, and Euro-zone, all facing recessions, foreign demand for machinery parts was down 37%, the biggest drop in 5 years. AUS Consumer Confidence Improves, Home Loans Up 1.3% In Australia, consumer confidence increased for a second straight month as consumers responded positively to the RBA's recent rate cuts, lower prices at the pump and a government stimulus package. In another positive sign, the number of home loans approved increased by 1.3%, besting economists' forecasts. The RBA has cut rates by 3% since September, which is filtering down to lower mortgages and increased demand in the housing market. AUD/JPY - Aussie Gives Up Earlier Gains vs Yen
Asian markets were higher Wednesday, as expectations of interest rate cuts and economic-stimulus measures gave global stocks some strength. The Aussie-Yen pair, always sensitive to investor sentiments, rose about 80 pips after a down day yesterday. This move seemed subdued compared to other Yen crosses, and reversed in later NY trading. EUR/JPY - Euro Rallies to New Weekly High vs Yen
The Euro-Yen on the other hand climbed 240 pips during the session, moving above Monday's high to set a new two-week high at 121.45. European shares traded choppy, with losses from banks and pharmaceutical stocks offsetting gains from a rise in mineral extractors. Risk sentiment improved in early NY trading which helped the Euro reach its intra-day high. GER Wholesale Price Index Drops 3.3% In fundamental news, Germany saw its wholesale price index decline 3.3% in November a larger than expected fall. Prices around the world have been coming down sharply after oil and other commodities prices sank in the midst of the slowdown in global growth. Such a strong reduction in November means that this trend is continuing and perhaps accelerating, which will ease pressure on the ECB when it comes to inflation. US Inventories Decline 1.1% In the US, wholesale inventories fell 1.1% during October as demand collapsed amid the slumping economy. With consumer spending very weak companies are not carrying large inventories, as they don't want to be holding extra stockpiles following the holiday season. Usually, a decline in inventories means stores are drawing down their stocks and will have to replace them, adding to economic activity. That may not be the case now though as sales of US wholesalers plummeted by 4.1%. EUR/USD - Euro Continues Rally, Climbs to 1.3070
The Euro-Dollar continued its rally this week, breaching the 1.30 level to set an intra-day high at 1.3070. That was a two-week high for the pair, as it comes close to testing strong medium term resistance at the 1.31 level. The markets may be thinking that the worst is behind us, and therefore demand for the Dollar as a safe haven may start to wind down. USD/JPY - Dollar Rallies vs Yen on Auto Sector Bailout News
As we alluded to earlier, US stocks were up today as there were reports lawmakers and the White House had reached an agreement in principle on a bailout of the US auto industry. Shares were also still feeling some upward pressure from President-elect Obama's plan to spend more than $700 billion on an infrastructure-based stimulus package to bolster the economy. The Dollar-Yen rebounded from its low near 92 to start the global session and climbed about 100 pips to the set a high near the 93 level. USD/CHF - Swiss Franc Gaining Ground Despite Risk Appetite
The Dollar did fall rather heavily against the Swiss Franc, which saw strength following a improved from the ZEW expectations index. The pair dipped 130 pips from its overnight high near 1.2080 and is now down almost 300 pips from its high on Friday. Today's low around 1.1930 is a key level of support.
Tonight's and Tomorrow's Releases
Now, lets take a look at some upcoming releases. Tonight, Australia will reveal its employment numbers for November while New Zealand will post data on food prices and activity in the manufacturing sector. Overnight, the Swiss National Bank will decide on interest rates, though they already lowered borrowing costs by 1% in an unscheduled move on November 20th and are expected to hold. The UK meanwhile will release a measure of manufacturing output. Tomorrow, both Canada and the US release their trade balances. The US follows up with jobless claims and import prices, while Canada will also be revealing its new housing price index. |
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*Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange and futures trading, and seek advice from an independent financial advisor if you have any doubts. |
