Fundamental Report for the week of May 23, 2010
Monday, May 24, 2010
Yawn, stretch, yawn. I think the market took a long weekend after wearing itself out this past month. Though I don’t think the USD rally is over, it is clearly overbought and time for a pause. The economic calendar was kind enough to accommodate with a light schedule of releases, with the only real new of interest being a rebounding U.S. housing market.
The Euro did garner a little bit more selling attention from the market based on China’s attention as turned to the European credit crisis, more and more focus falling to Spain. That itty bitty movement may be a bit of a telegraphed punch for us little guys, so I’ll be watching for one more small pullback then another selling opportunity.
Interestingly the JPY pairs tightened up into uncharacteristic ranges, giving me the impression that further risk aversion will drive the Yen higher against almost everything it is paired with, but especially the EUR/JPY and the GBP/JPY which are both at their Daily Trendlines and waiting…waiting for the next phase of the Euro-Zone’s debt crisis, I think.
Tuesday may be the last light day of the week, however, as we hit the more major announcements later in the week.
Tuesday, May 25, 2010
Italy’s positive surprise in Retail Sales, beating market expectations by .4%, couldn’t boost the Euro during the London session as it fell to recent lows all over again. However, it did regain a little of that ground back in the NY session, putting it right back at square one.
GBP took a bit of a hit overnight as well even though the UK’s preliminary Gross Domestic Product (GDP) numbers look good. It was able to regain footing during the NY session as well.
The Loonie saw a bit of a pullback after that USD extension and has reset the game for the USD/CAD until there is news to give it momentum one direction or another.
With the exception of its pairing with the JPY, the USD seemed to experience that Asian/London session buying across the board as a risk reaction by the marketplace as all eyes redirect to North and South Korea and, by extension, China.
Similar selling was seen in anything even remotely resembling a carry trade made similar moves for similar reasons, all with corrective late NY session trading.
One additional item on my radar regarding the USD economic releases is the disconnect between the Consumer Confidence numbers which jumped from 57.9 to 63.3, presumably on steady job increases, and the slight dip in the Richmond Fed Manufacturing Survey from 30 – 26. Since I use these two indicators to help me get a good feel for upcoming GDP and Retail sales, I like it better when they agree. However, I did review the history of the Richmond Survey and once I realized this grew from -2 to 2 to 6 to 30 I realized that a large jump like that is due for a bit of a pullback of its own, so overall, it seems that indicators are lining up for another good GDP report for May.
Wednesday, May 26, 2010
Euro tried to rally, but capped out and dumped again. Economic releases like the dip in German Consumer Confidence and significant decline in France’s Production outlook and Consumer spending could be responsible. However, since neither of these announcements are usually market moving and the JPY selling capped as well, it seems to me that the selloff is mostly based on frustration from the marketplace as there has been no actual intervention on the Euro (despite the rumors) and the general market risk from N/S Korea has yet to improve. Risky times = USD buying, plain and simple, the poor Euro is simply the easiest fall guy for now.
The US posted some good news with their increase in Durable Goods Orders popping up to 2.9% from -1.2%. Though it is not market moving in and of itself, it looks like further proof of ongoing improvements in GDP.
Asian session brought mostly good news for the Kiwi with a positive trade balance for the 6th month in a row. The climb up to a whopping 656M didn’t do much for the health of the New Zealand Dollar, however, which leads me to believe that it has more room to the downside in the near future.
Thursday, May 28, 2010
China was the biggest market mover during the London and NY sessions. By stating a neutral “lets gather more intelligence” stance on North Korea and by an announcement that China will not be evaluating its Euro holdings China infused large amounts of confidence back into the market place, giving the USD bears a big win and giving the Euro, the Pound, the Loonie and the Kiwi some much needed relief.
Likewise, the risk pairs, the EURJPY and the GBPJPY in particular saw some relief as confidence raised both pairs out of their long-held consolidation areas.
In terms of the economic releases, news was light. This big item I was watching was USD GDP which dropped in its annualized numbers by .2%, however the index gained by .1% making the overall sentiment about May’s U.S. production somewhat of a wash.
The only other item of interest, for me, is Germany’s increase in CPI numbers, with the MoM, YoY and harmonized data all climbing that inflationary red flag could be bad news for the largest success in the hard hit EuroZone right now.
Friday, May 28, 2010
The Asian and London sessions brought a pause to the USD selling frenzy that ensued after China’s calming forces.
The Euro hasn’t been hit by Germany’s increase in Import prices (up to 2 % from 1.7 on the MoM, and a whopping jump to 7.9% from 5 on the YoY), but it does signal something else for me to watch over time since an increase in Germany’s cost of goods will ultimately bring a rise to the consumer’s cost of goods and create some unwanted inflationary pressure on the Euro.
USD saw a rise in personal income, but a decrease in personal spending. I’ll be watching for data on personal savings and consumer credit. As a long term measure, it may be a good thing if US consumers are saving while paying down debt because that will increase their buying capabilities over time.
The Chicago Purchasing Managers Index (PMI) saw its first decline in 6 months going from 63.8 in April to 59.7 in May. Not market moving on its own, but could be telling for next month’s US GDP reports.
Next Monday:
- CAD Industrial Product Prices (CPI)
- CAD Raw Materials Prices (CPI)
- CAD Retail Sales (GDP)
Next Tuesday:
- EUR Germany’s Manufacturing PMI (Employment and GDP)
- EUR Germany’s Unemployment Change
- GBP Manufacturing PMI
- USD ISM PMI
Next Wednesday:
- EUR Germany’s CPI (Inflation)
- EUR Italy’s Business Confidence and Employment (Retail Sales, Confidence and Employment)
Next Thursday
- EUR Germany’s PMI
- GBP PMI
- EUR EZ PMI
- USD Employment numbers
- USD Factory orders
Next Friday:
- EUR GDP
- CAD Employment
- USD NFP
- CAD Ivey PMI
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 
Anyone think that the GBPJPY might move up a bit ? Have things bottomed out a bit, could we see a little retracement ?