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- Swiss Consumption Indicator Rises in June
- British Macro Data Suggests Economic Stagnation
- German Consumer Climate Report Reveals Growing Optimism
- Japanese Retail Sales Beats Forecasts
- Dollar Stronger as Austerity Vote Approaches
- Shifting Growth Expectations Supporting USD
- Weekly Fundamental FX Preview – Commodity Headwinds, Greece, and US Budget Talks
| Swiss Consumption Indicator Rises in June Posted: 28 Jun 2011 07:09 AM PDT
Switzerland's UBS AB investor and financial services company based in Zurich released its consumption indicator this morning at 7:00 GMT. The indicator, which represents the level of a composite index made of data from five consumer-based economic indicators, revealed mild growth in consumer optimism and spending. The indicator's growth level was minor in comparison to other data which has resulted in its muted impact on today's market. The news that consumption is rising in the European heavy-weight is a bullish note in these bearish days. Analysts have digested the news to represent a forecast of higher retail sales in the coming months, which may help Switzerland regain some of last month's economic losses. Read more forex trading news on our forex blog. |
| British Macro Data Suggests Economic Stagnation Posted: 28 Jun 2011 07:05 AM PDT
The British economy released several reports this morning which appear to have underlined recent concerns of a flattening-out in market activity in the second quarter of 2011. Final GDP for the UK came in right at the expected level of 0.5% growth, dismal by any standard. Additionally, the economy's Current Account, a measure of the difference between imports and exports, revealed a widening trade deficit, well beyond market forecasts. Economists had anticipated a steadying of the deficit near 5 billion UK pounds, but the actual figure showed an expansion of the deficit to 9.4 billion pounds. A revised reading on business investment, however, did give minor cause for optimism, showing that business activity did not contract as much as previously assumed. The data was still bearish in overall investment activity, but the declining speed of contraction is a ray of light on an otherwise gloomy day for Britain. Read more forex trading news on our forex blog. |
| German Consumer Climate Report Reveals Growing Optimism Posted: 28 Jun 2011 07:02 AM PDT
A recent survey by the GfK Group, one of the world's leading market research organizations, revealed a burst of optimism in Germany regarding its present financial situation. The monthly survey is a leading indicator of consumer confidence and often carries a moderate impact on market forecasts. Today's reading, which not only beat expectations but actually grew beyond last month's survey results, suggests that consumer fears of economic stagnation are beginning to abate. The mild uptick in consumer risk appetite was enough to give the EUR a small boost in earlier trading, but the currency has so far failed to maintain its recent support. Read more forex trading news on our forex blog. |
| Japanese Retail Sales Beats Forecasts Posted: 28 Jun 2011 06:57 AM PDT
Yesterday's anticipation of Japanese retail sales data gave a tinge of pessimism regarding the island economy's ability to post gains amid this sluggish period. That pessimism was defeated this morning as Japan managed to post retail sales data that was better than forecast. Japan's consumer sector is still in a decline, of sorts, but this morning's news underlines the rapid pace with which the country is addressing its economic reconstruction. The effect has been positive for the Japanese yen (JPY) so far, with mild gains seen across the board. Read more forex trading news on our forex blog. |
| Dollar Stronger as Austerity Vote Approaches Posted: 28 Jun 2011 04:58 AM PDT
The greenback was up albeit slightly versus the euro and rest of the majors as the Greek austerity vote approaches. A bounce higher in the euro may occur should the Greek parliament approve the additional tax increases, spending cuts, and asset sales. This afternoon US housing and consumer confidence data will be released which could continue to support the dollar until tomorrow's Greek vote. Early support for the euro faded while European banks squabble over an extension of the maturities for Greek debt. French banks have the largest exposure to Greek debt and yesterday released their suggestions which would call for a 30-year extension of the debt, similar to the Brady bond plan that was initiated in Latin American. A 48-hour general strike in Greece is also not supporting the euro as participants take to the streets of Athens to protest the austerity package. Previous protests have turned violent; such was the case on June 15th when the euro shed 1.9%. Today's selling has been lighter as expectations are for the austerity measures to pass parliament tomorrow. This could give the euro a short term bounce to resistance at last week's high of 1.4440 followed by 1.4500. To the downside the current consolidation pattern is found at 1.4110. A break here might have scope to the May low at 1.3970. Sterling was lower after a host of negative factors underline the recent weakness of the pound. The Q1 current account showed a larger than expected deficit. The Q4 2010 numbers were also revised to show a greater trade deficit and underscored the report's negative tone. BOE MPC member Adam Posen spoke for greater BOE independence as he lashed out at yesterday's Bank of International Settlements report that called for an increase in UK interest rates. Posen called the report's advice "nonsense." UK Q1 GDP went unchanged and remained at a tepid 0.5% increase. The negative data, bearish comments, and low growth numbers all underscore the reasons for sterling's recent weakness. Turning towards the US trading session the S&P/Case-Shiller index is expected to show further declines in US housing prices, a factor that is not likely to change in the near-term. Also due out are US consumer confidence numbers which are expected to remain the same. Disappointing data could feed into additional USD buying but market participants will be more focused on the outcome of the Greek Austerity vote. This could keep the majors in their current ranges for the meanwhile. Read more forex trading news on our forex blog. |
| Shifting Growth Expectations Supporting USD Posted: 28 Jun 2011 12:18 AM PDT
A return of the European debt crisis combined with expectations of slowing global growth has broadly supported dollar over the past month. Should the Greek parliament approve the additional austerity measures USD strength may to wane in line with the longer term trends of the FX markets. However, in the near-term higher yielding currencies such as the AUD, NZD, and CAD could face headwinds should commodity prices continue to decline along with a further deterioration in the already sluggish US economic data. Economic Data Releases: GBP – Current Account – 08:30 GMT USD – CB Consumer Confidence – 13:00 GMT Read more forex trading news on our forex blog. |
| Weekly Fundamental FX Preview – Commodity Headwinds, Greece, and US Budget Talks Posted: 28 Jun 2011 12:03 AM PDT
The decline in commodity prices has begun to make headlines after the IEA's release of strategic reserves shocked the crude oil market while dragging spot crude oil prices lower by 4.6% on Thursday. Could additional weakness in commodity prices be on the way following the declines during the months of April and May? After the recent downturn in US data growth factors face major headwinds. Therefore the economic data releases from the G7 nations this coming week may carry further significance. Greece will also be a headline for next week as the next austerity vote is scheduled for Tuesday. Last week George Papandreou survived a no confidence vote by only 5 voices as the vote was split down party lines. Given the potentially negative effects the austerity measures may have on Greek society as a whole, the next vote may prove to be more challenging as Papandreou will face harsh criticism from both the political opposition his own PASOK party and Greek protesters. Key to the Greek situation is a plan for a voluntary debt roll over in return for the second Greek bailout. EU/IMF authorities face a formidable challenge to convince a number of parties to come aboard. How officials will entice private holders of Greek debt has yet to be unveiled. Rating agencies have taken a firm stance against any restructuring and have pledged to classify an increase in maturity lengths as a credit event. The ECB is also not yet onboard and has refused to allow restructured Greek debt to be used in its liquidity provisions. US budget talks are beginning to heat up following the Republican decision to walk out of talks with Democrats on Thursday. This may set up a final confrontation to be hashed out by the key players of the political parties; President Obama and Republican leaders John Boehner and Eric Cantor. The parties have until August 2nd to raise the debt ceiling or face the possibility of a US default. The rating agencies have previously warned on this deadline. Given the headwinds the US economy faces and the potential for political gridlock could the euro benefit from its recent safe haven status despite the obvious flaws the currency currently faces? Read more forex trading news on our forex blog. |
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