Trading Economic News - Page 34

John Rivera · #**496** (**permalink**) 02-11-2009, 03:20 PM

Now that it is clear that the fiscal stimulus plan is going to pass, markets will be focusing in on tomorrow's U.S. retail sales report. The forecast is for another 0.4% decline in spending which may be seen a s positive given the 2.7% drop in December. Also with tax cuts on the way and with income tax refunds starting to hit Americans pockets we could see expectations for consumer spending increase which could fuel risk appetite. A rise in equity markets has been a negative fro the dollar and a positive consumption report could send the greenback lower.

John Rivera · #**497** (**permalink**) 02-12-2009, 10:47 AM

U.S. retail sales unexpectedly rose by 1.0% in January as retailers deep discounting lure shoppers and gas prices stabilizing led gas stations to end its declining trend. However, the news was completely overshadowed by the prevailing fears that the efforts by the U.S. and other governments may not be enough to pull the global economy out of its current downturn. Tomorrow's Euro-Zone GDP report could add to those concerns as expectations are that growth in the region contracted another 1.2%.

John Rivera · #**498** (**permalink**) 02-13-2009, 10:54 AM

E.Z. GDP was worse than expected and that ended the bullish momentum of the Euro derived from increasing risk appetite. The upcoming G-7 summit this weekend could see the leaders of the developed nations develop a coordinated efforts to help end the credit crisis and reverse the current global downturn. This could spark risk appetite and lead to the higher yielders like the Euro , Kiwi and Australian dollar trading higher.

John Rivera · #**499** (**permalink**) 02-17-2009, 10:39 AM

The U.K. CPI report sent the pound higher but the 20-Day SMA capped its gains. Tomorrow's BoE minutes are expected to signal more rate cuts from the central bank. 1.4100 has held as support and dovish minutes could see the level broken.

John Rivera · #**500** (**permalink**) 02-18-2009, 09:40 AM

The BoE minutes showed that the central bank is considering quantitative easing and that member David Blanchflower called for 100 bps cut. But the release was overshadowed by a story that the country's AAA rating was in jeopardy due the the extend of the bailouts of the banking system, which sent the pound into a free fall. U.K. retail sales are coming up on Friday and if we see a consecutive month of increases it could push the pound above the 20-Day SMA which has served as resistance. Forecasts are calling for a 0.1% decline which makes it very likely that we could see a positive print.

John Rivera · #**501** (**permalink**) 02-20-2009, 11:21 AM

U.S. CPI data showed that we may be seeing the stabilization of prices as inflation rose by 0.3% in January. This will increase concerns that interest rates near zero and the government pumping the system with money will cause inflation to rise again. However, expectations are that prices will moderate as consumers continue to retrench as companies continue to layoff workers. Therefore, inflation data may be a non-factor until growth start to pick up, unless it sharply falls bringing back deflation concerns.

John Rivera · #**502** (**permalink**) 02-23-2009, 11:00 AM

The German IFO survey lies ahead for the Euro and if today's reaction to a bout of risk appetite is any indication, then we could see the volatility derived from the investor confidence reading. Forecasts are for a flat reading of 83.0 which is slightly above the 26 year low set in December, as a deepening recession and banking concerns have offset any optimism derived from the German stimulus package. An improvement could send the Euro to retest 1.300 where declining optimism may send back to retest 1.2500.

John Rivera · #**503** (**permalink**) 02-24-2009, 10:21 AM

U.S. consumer confidence fell to 25 from 37.4 which was already a record low, meanwhile home prices fell by 18.55% on a yearly basis in the 20 biggest markets in the U.S. signaling that the efforts by the government have failed to stabilize credit markets and the housing markets which along with mounting job losses has dim the hopes of Americans that the economy will pull out of the current recession any time soon. The dour data has led equity markets to reverse earlier gains which has added to the current bullish dollar sentiment. Fed Chairman Bernanke is being questioned by Congress at the moment, after he said the U.S. economy is in a “severe” contraction, and warned the recession may last into 2010 unless policy makers can stabilize the financial system. Comments like this will only fuel the prevailing risk aversion.

John Rivera · #**504** (**permalink**) 02-25-2009, 11:14 AM

Weak export data from Japan and Germany , a decline in U.K. private consumption and a drop in U.S. existing home sale prices all point toward an extended global downturn and we are seeing that in the markets today. Dollar strength continues on the risk aversion flows and with U.S. durable goods expected to decline tomorrow by another 2.5% we could see bullish dollar momentum continue.

John Rivera · #**505** (**permalink**) 02-26-2009, 11:03 AM

We saw some initial dollar support following the sharp drop in durable goods orders, but equity markets are ignoring it and focusing on the recently revealed budget of $750 billion and the fact the U.S. government is finally moving forward with their bank recovery plan. Tomorrow's GDP figures may not have a significant impact due to their backward looking nature. However, a sharp decline could lead to safe-haven flows leaving the U.S. as we saw in Japan which could weaken the dollar.

John Rivera · #**506** (**permalink**) 02-27-2009, 10:44 AM

We are starting to dollar weakness following the dismal 6.2% contraction in 4Q GDP. However, we are seeing equity markets pick up which could explain some of the volatility. Yet, the dismal growth numbers and the banking issues in the U.S. could see the dollar start to sell off after gaining the entire week.

John Rivera · #**507** (**permalink**) 03-02-2009, 11:17 AM

A 3.4% contraction in 4Q GDP has sunk the Canadian dollar and with the BoC rate decision ahead we could see continued weakness. The central bank is expected to cut its benchmark rate by 50bps to 0.50%, as it is forecasting another 4.8% contraction in the first quarter.

John Rivera · #**508** (**permalink**) 03-03-2009, 12:19 PM

Well the BoC didn't disappoint and the Canadian dollar sunk on the news as traders had started to hedge against a rate hold when the RBA surprised markets by pausing their easing policy. ADP and ISM non-manufacturing hits the wires tomorrow. The employment data usually provides a sharp price movement after the release but typically it doesn't have a lot of legs with the ISM due right behind it and NFP's on Friday, but for scalpers it could be an opportunity. Regardless, an inline print with the projection of a job loss of 630,000 in February alone should elicit some risk aversion and could add to recent bullish dollar sentiment.

John Rivera · #**509** (**permalink**) 03-04-2009, 10:22 AM

A dismal ADP report which showed job losses of 697,000 in February led to some initial dollar strength but a higher open for stock markets on the back of a second stimulus plan for China. However, a weak ISM report has dollar bulls at it again. Tomorrow, we will have major event risk in the ECB and BoE rate decisions, both are expected to cut rates by 50 bps and we could see very dour post decision commentary which could add to the bullish dollar sentiment.

John Rivera · #**510** (**permalink**) 03-10-2009, 10:14 AM

The Reserve Bank of New Zealand is expected to cut their benchmark rate by 50 bps to 3.00%. Initial projections had called for a 75bps reduction, but after the RBA kept their rates on hold, expectations have grown that we could see a shallower than expected cut. If that is the case then a we could see a bullish price reaction.