Fundamental Report for the week of June 27, 2010
Monday, June 28, 2010
With no real surprises coming out of the G20 meeting, where there was a lot of focus on debt reduction and overall budget reduction, there’s not a whole lot to report on a slow news day.
Germany’s Consumer Price Index stayed fairly steady. Giving the Euro a bit of boost, especially against the US Dollar, but that didn’t hold long as end of London session seemed to just take their toys and go home.
Personal Income in the US stayed flat at .4% while Personal Spending had a minor .2% increase indicating that US consumers are still playing it safe and will likely be paying off debt or increasing their savings with the regulated summer spending. Smart move for the consumer but it could weigh heavy on the USD.
My USD concern is in the sharp decline in the Dallas Fed Manufacturing report moving from 2.9% to -4%. While it is not unexpected (I’ve been talking about time for a pullback in the last few reports) it is still the 4th of the 6 reports I watch to predict Gross Domestic Product (GDP) to dump so July’s GDP (and by extension employment) numbers will likely be poor.
Majors and risk pairs alike stayed steady through NY session, giving no indication of true market preference.
Tuesday, June 29, 2010
European session’s slumping equities and China’s severe change in outlook on growth made way for heavy USD and JPY buying reestablishing the risk relationship with the JPY that has been missing.
NY session’s apathy neither continued the FX selloff nor created a significant pullback, which leads me to believe that the pause is more indicative of a hold out for US jobs news and the rest of the week may be slow as a result.
While Canada’s Industrial Product Price Index (PPI) stabilized at .3%, their Raw Materials Price Index plummeted to -7.2% from 1.7%. Since this is the price Canada pays for the goods it needs to make product with this should go a long way toward stabilizing their currency as long as the PPI report for next month follows suit. The idea being that if producers are paying less to produce, then consumers are paying less to consume – a natural check toward any inflationary pressures, at least in the short term. This should have been good news for the pair, but it responded to the overall risk aversion in place before NY session began more than its own economic data.
The British Pound had the least reaction to the USD buying frenzy and merely pulled back to old consolidation levels near 1.50. This could be signaling an overall confidence in the U.K.’s economic outlook as their GDP and Total Business Investment numbers are expected to stabilize in Wednesday’s report.
Wednesday, June 30, 2010
Good news out of the European Central Banks as their 3 month loans expired and new loans were issued at 131.9B Euros, almost 70B fewer than expected. The market sold USD on the news as it seemed to celebrate unforeseen strength in the battered Euro Zone economy.
The Euro made some quick gains on the news, however the NY session pulled it back to Tuesday’s levels on what seems to be nothing more than profit taking. There is another bright spot for the European Union in Germany’s “not as bad as before” employment numbers, but it failed to keep any momentum behind the EUR throughout the NY Session.
The Loonie weakened after its poor GDP showing dipping back down to 0% after last month’s steady .6%. With Canada’s dip in Wholesale and Retail Sales the GDP can hardly be a surprise, but the market reacted to the news with confidence resulting in a very quick selloff of the CAD.
A little off the radar, but important to me is the small decline in the Chicago Purchasing Managers’ Index (PMI) from 59.7 from 59.1. Like the other purchasing reports this decline is a telegraphed punch to the gut for American GDP next month and should not be ignored. Even though this is the first month of the year for this report to go backward it is still #5 of 6 similar reports now to see a decrease.
Thursday, July 01, 2010
The Kiwi stayed weak against the US dollar as the ANZ Commodity Price report fell from 2.5% to -1.2%. This decline is bad news for the New Zealand economy which relies quite heavily on their exports and could be a precursor for bad news to come in their GDP, Producer Price Index (PPI), and by extension Consumer Price Index (CPI).
The moment of truth for the US recovery approaches with the coming of Friday’s Non-Farm Payroll (NFP) report and the preliminary numbers are not looking good. Initial Jobless Claims and Continuing Claims both skyrocketed in June.
While the USD saw a strong pullback on wavering confidence in the global economic recovery, a similar move in the JPY leads me to believe that those moves were merely the market getting out of their old sell positions in preparation for the actually report. A typical, buy the rumor, sell the news scenario.
Friday, July 02, 2010
With little news in the releases or in the headlines, the foreign exchange market merely consolidated during the Asian and Euro sessions after Thursday’s NY moves. The Euro seems the most primed to gain on an expected poor showing in the US jobs market as they have also experienced a bit of a rebound in their equities market which may make the Euro a smart buy for investors looking to sell their USD.
The GBP continues to struggle near recent highs and the Construction PMI numbers didn’t help with a very slight decrease from 58.5 to 58.4. But the numbers have stayed above the growth benchmark, 50, since March which may be an indication of longer term stabilization. But for now the money makers seem content to hold onto their trades until the US NFP announcement.
Disappointing US payroll data failed to nudge the market as investors struggled between risk aversion and pure, economic USD selling. The dropoff in government census hiring was expected however the market was looking toward a 110K job gain in the private sector to make up the difference. US companies were only able to produce 83K new jobs.
Next Monday:
- GBP Services PMI
Next Tuesday:
- USD ISM Non-Manufacturing Composite
Next Wednesday:
- EUR Germany’s Factory Orders
- CAD Ivey PMI
Next Thursday:
- EUR Germany’s Trade Balance
- GBP Industrial Production
- GBP Manufacturing Production
- GBP BoE Rate Decision
- EUR ECB Rate Decision
- USD Consumer Credit
- NZD Credit Card Spending
Next Friday:
- EUR Germany’s CPI
- CAD Employment Numbers
…
Triffany Hammond helps traders of all levels, gain the tools, resources and guidance necessary to build on their strengths and work around their weaknesses so that they can make the best possible decisions for themselves in the Forex Market. Triffany is a regular speaker and contributor at 
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