Fundamental Report of the Week of May 2, 2010
Fundamental Report for Week of May 2, 2010
Monday
Overall, the USD stayed steady after some early NY Session buying, the exceptions being in the Loonie, on a pullback and the Kiwi which seemed to strengthen on fundamentals alone.
Kiwi made significant gains on a large jump in commodity prices from 1.8% to 4.9% which is a strong indicator for them in terms of their exports, but may hurt them in their Producer Price Index (PPI).
Personal income/Personal spending increases (0-3%/.3-.6%) in the US didn’t help the USD as it consolidated for the bulk of the day. However, the increase in both could be telegraphing boost in retails sales and general confidence in the US market.
Also good news for the USD is the ISM Purchasing Managers Index (ISM PMI) as it has seen an increase for the fourth month in a row, and has stayed above 50 for all four months, indicating expansion overall. This should be a good indicator for the US’s Gross Domestic Product (GDP) as well as their PPI.
Tuesday:
With the exception of the USD/JPY, there has been significant USD strengthening across the board. This is especially true against the Euro and mostly due to risk aversion regarding Greece’s credit crisis.
However Germany’s poor showing in Retail Sales, dumping from 1.1% to -2.4% (MoM) didn’t help. The Euro-Zone, on the whole saw increased PPI as well, which could mean an increase in consumer prices down the road. Inflationary signs like this are not good for such a strapped economy.
The Pound was able to stabilize slightly more than the Euro based on steady, positive growth in Money Supply (increasing by .1% on both MoM and YoY data).
The US continues to surprise with an increase in Factory orders as well, jumping from .6% to 1.3%, possibly another precursor for good GDP and Employment in the States.
Wednesdsay:
The Services sector of Germany’s Purchasing Manager Index (PMI) actually saw a slight jump, from 55 to 55.2. Generally speaking index numbers above 50 are a good sign of expansion, however Germany can no longer hold up the Euro-Zone on its own and fears revolving around Greece in addition to risk aversion prior to European Central Bank’s (ECB) rate decision/discussion led to a huge sell off of the Euro into US Dollars.
The Cable tried to hold on with positive signs coming out of their Construction sector PMI, which can be a good indication for job growth, but it slowly wielded to the USD over the course of the day as well, giving an overall feel of further shorting ahead. With Thursday’s election coming up it is very likely the GBP will see some sell off simply due to an unwillingness of the market makers to invest in the UK until a candidate is elected.
The lone champion against the USD was the New Zealand Dollar (NZD) which rose quite significantly during the Asian session due to positive job numbers. No surprise since both visitors and credit card use has been up in that region and gaining still.
Thursday:
The British Pound took a bit of hit with a dip in their Services PMI, coming in 1.7 points lower than market expectations. Coupled with the risk of an election the GBP dumped against the US Dollar putting the GBP/USD back at February 2010 support levels. This is a significant level since it hasn’t been broken since Fall of 2008.
Germany posted fantastic numbers, raising (MoM) data from 0 to 5%, and (YoY) numbers from 24.5 to 26.1% but couldn’t bolster the Euro ahead of Trichet’s comments on the interest rate. Interest rates stayed steady at 1%, giving the Euro a bit of rest as the selloff action slowed. Slower decline are still declines, however, and the Euro hit the muddy area of the Winter 2008/2009 double bottom and retracted slightly prior to the Asian session.
The Loonie weakened against the USD despite positive Ivey PMI numbers that have strengthened over the last 4 months as crude oil fell to a 9 week low and hitting $75/bbl. Businesses willingness to spend money wasn’t enough to keep the CAD strong today, but may indicate a willingness to hire.
Friday:
Canada had the best employment numbers with an increase in jobs from 17.9K in March to 108.7 in April, and a decrease of .1% in their unemployment rate. This gave a boost to the CAD after Thursday’s retracement.
USD also posted positive employment numbers, jumping from 162K to 290K from March to April. However a slight bump by .2% in the unemployment rate tempered further USD buying.
Next Monday:
- EUR: German exports
- GBP: BOE rate decision
- NZD: Credit card spending
Next Tuesday:
- EUR CPI (Germany)
- GBP Industrial Numbers
- USD Consumer Confidence
Next Wednesday:
- EUR Germany’s/EZ’s GDP
- EUR Industrial Production (GDP and Employment)
- GBP Employment/Avg Earnings
- USD Bloomberg Global Confidence (Retail Sales)
- USD Trade Balance (Long-term GDP)
- NZD Business PMI (Trade Balance and Employment)
Next Thursday:
- EUR Germany’s Trade Numbers
- GBP BOE rate decision
- NZD Credit Card Spending (Retail Sales)
Next Friday:
- USD Industrial Production (GDP/Employment)
Is there anything on here that you are surprised that I watch? Anything that you’re surprised that I don’t?
Be good to yourselves this weekend and I’ll see you on Monday! 
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 
