Daily Morning Report 31/10/2012

The dollar softened against most major currencies on Wednesday as investors sold safe-haven dollars they acquired before Sandy, a hurricane that morphed into a post-tropical giant, and continues to dump snow and rain over the northeastern U.S.

While the country continues to assess the damage, investors sold safe-harbor USD and prepped to take up other positions to play clean up and recovery. Markets were closed in the U.S. earlier for a second day, though investors who bought dollars prior to the storm's landfall began to loosen up by Asian trading on Wednesday, selling
their dollars to play recovery, which weakened the USD against its Japanese counterpart.

Elsewhere, Australian building approvals have risen for a second consecutive month in September, putting the chances of an interest rate cut from the Reserve Bank of Australia next week further in doubt. According to the Australian Bureau of Statistics total dwelling units approved increased 7.8 per cent in September, following a 6.4 per cent jump in August. That is a modest recovery from precipitous falls in July, when approvals fell 17.3 per cent. The approvals data is a leading indicator of future construction work, suggesting a return of confidence in the interest-rate sensitive housing sector.

Later Wednesday in the U.S., payroll processing firm ADP is to release a report on nonfarm payrolls, a leading indicator of private-sector job creation while the Canadian Bureau of Statistics is to announce GDP data.

Daily Afternoon Report 30/10/2012

Subsequent to a meeting in Berlin, France Finance Minister Moscovici and http://jobsmoney.blogspot.com/Minister Schaeuble declared that they are aiming for a solution to Greece by November. They both want to see Greece remains in the Euro-zone, and the solution will be discussed more in tomorrow’s Euro-group meeting. Schaeuble refused to comment on the size of the funding gap in Greece, but added that they can’t go in the opposite direction on debt reduction. Moscovici said he doesn’t want to reopen the discussion on Euro bonds.

The amount of people out of work in Germany now totals 2.94 million. The German economy has suffered because of the Euro debt crisis, and the GDP only rose 0.3% in the second quarter. Germany is the largest economy in the Euro and signs of economic suffering are Euro negative in forex markets.

Clearly, the largest story of the day is Hurricane Sandy and its impact on the East Coast of the US. It is appraised that the damages are coming up to 20 billion dollars from the hurricane and US stock markets will remain closed today, the US markets might reopen tomorrow.  

Daily Morning Report 30/10/2012

The dollar traded mixed against most major currencies on Tuesday as Sandy kept foreign-exchange trading subdued. Hurricane Sandy, now reclassified as a super storm, could have an impact on U.S economy. Preliminary estimates are that damage will range between US$10b and US$20b.

Spanish retail sales fell 10.9% in September from the same month a year ago, much worse than market expectations for a decline of 6.2%, which dampened appetite for risk and gave the dollar some support

German inflation data gave the euro and other higher-yielding currencies support.
The German Federal Statistics Bureau said consumer price inflation accelerated at an annualized rate of 2.0% in October, in line with expectations and unchanged from September.

Japan’s average household spending marked the first decline in eight months in September as lower tuitions and rents offset the effects of subsidy-backed car purchases, data from the Ministry of Internal Affairs and Communication Tuesday showed. Japan’s industrial production fell more than economists forecast, highlighting the risk of an economic contraction as the central bank decides whether to ease for the second time in two months.

Later today, ECB President Mario Draghi is due to deliver opening remarks at the Second Conference of the Macro-Prudential Research Network of the European System of Central Banks, in Frankfurt.

Daily Afternoon Report 29/10/2012

UK mortgage approvals rose for the fourth straight month in September, possibly signalling the success of the BoE’s funding for lending scheme. Home loans were up to 50,024 in September, beating expectations for 48,700, and higher than August’s revised 47,921 mortgages.  

Net consumer credit was 1.2 billion Pounds in September, according to the Bank of England. Earlier today, housing prices were reported to have fallen 0.1% in the UK according to the Hometrack Housing Survey.

As Spain is expected to contract for the fifth consecutive quarter, the heightening threat for a prolonged recession will continue to dampen the appeal of the Euro, and the European Central Bank might come under additional pressure to expand monetary policy further as the governments functioning under the single-currency become increasingly dependent on monetary support.

The ECB may have little choice but to push the benchmark interest rate further to a fresh record-low amid the weakening outlook for growth and inflation, and we may see the Governing Council carry its easing cycle into the following year as European policy makers struggle to stem the threat for contagion. The EURUSD slipped as an 11% drop in Spanish retail sales dampened the outlook for the euro-area, and the single currency may face additional headwinds.

Daily Morning Report 29/10/2012

The dollar traded higher against most major currencies on Monday, as investors snapped up safe-haven USD positions to brace for U.S. unemployment data due out later this week as well as the Bank of Japan's latest decision on interest rates.

The USD was up against the GBP, CAD, NZD, AUD, JPY and CHF in Asian session.

 Fears Greece may run into hurdles securing its next tranche of bailout money sparked the risk-off session as well.

Japan, meanwhile, is to release data on unemployment, household spending and industrial production this week, though investors were keeping a close eye on the Bank of Japan, which will announce its latest decision with interest rates and monetary policy on Tuesday.

Later Monday, the U.S. government plans to issue data on personal income and spending for September on Monday even though the government has shut down to brace for Hurricane Sandy. The Federal Reserve, however, will postpone its regularly scheduled data. The Commerce Department will post the monthly report on consumer spending on its web site at 1230 GMT, as regularly scheduled. In contrast, the Fed said it would wait until the federal government reopens to release its data, including a weekly report on selected interest rates and figures on commercial paper issuance.

Daily Afternoon Report 26/10/2012

Earlier in the day, official data showed that Tokyo's core consumer price inflation, which excludes fell by 0.4% in October, less than the expected 0.5% decline, following after a 0.4% fall the previous month.

In the U.S., real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the third quarter of 2012, according to the "advance" estimate released by the Bureau of Economic Analysis.  The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), federal government spending, and residential fixed investment that were partly offset by negative contributions from exports, non-residential fixed investment, and private inventory investment.  Imports, which are a subtraction in the calculation of GDP, decreased.

In addition to that, the dollar index rose to its highest in 1-1/2 months on Friday, helped by the U.S. currency gains against the euro as fresh worries about Greece weighed on the single currency.

Elsewhere, a preliminary report by the IMF showed on Thursday that the Greek debt will be above the target of 120 percent of GDP in 2020, hence Athens will need more reforms before emergency credit from international lenders can start flowing again.

A separate report showed that Spain's unemployment rate rose to 25.0% in the second quarter, from a rate of 24.6% the previous quarter, barely beating expectations for a rise to 25.1%.

Daily Morning Report 26/10/2012

In Europe, the IMF dropped the Irish GDP forecast to 1.1% and the Bundesbank points to downside risks of the 1.8% growth forecast in Germany. The Euro has extended its weakening against the US Dollar after the US closing bell in the back of news from APPL missing dividends estimates and news from Europe on Greece needs an additional €30 billion thru 2016.

The Aussie dollar started a rally early Wednesday morning that instigated with the surprise showing from 3Q CPI figures. The 2.0 per cent pace it does remove some pressure for aggressive cuts.

The Chinese PMI figures which printed better than expected but were 12 months into a reductionary phase. The UK Q3 GDP came much stronger-than-expected at 1% versus 0.6%.

 AUD/JPY is set to print gains for a third straight week, with traders observing for the Bank of Japan to increase its current 90 trillion Yen QE program by another 10 trillion Yen next week, according to the latest Japanese press reports.

Daily Afternoon Report 25/10/2012

Earlier Thursday, the Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.5%, marking Governor Graeme Wheeler's first decision as head of the central bank, after replacing Alan Bollard in late September.

The preliminary release of the UK Q3 GDP came in much stronger than expected causing EUR/GBP to plunge, while GBP/USD rose.

The euro extended its correction versus the dollar after the jobless claims drop as well as the durable goods orders rise to more than expected levels.

Elsewhere, the yen remained broadly weaker amid mounting speculation over the possibility of more easing by the BoJ at its upcoming policy meeting on October 30.

Daily Morning Report 25/10/2012

The Great Britain pound advanced on hopes that the United Kingdom will emerge from recession. Traders turned their attention to the GDP report, released today, which is expected to show growth of 0.6% in the Q3. BoE Governor Mervyn King appears to be softening the tone on monetary policy.

German and French manufacturing data disappointed markets with PMI reporting under forecast, followed by a slew of other German data all under forecast and the EU manufacturing PMI also under forecast.  Reports are surfacing that officials from the European Union, European Central Bank and the International Monetary Fund rejected Germany’s proposal to tighten Greece’s access to the established financial aid account. With this proposal out of the way, the market is pricing in the possibility that Greece will eventually get its next tranche of aid. 

Canadian Dollar strengthened against its U.S. counterpart boosted by a hawkish statement from the Bank of Canada on Tuesday that stands in stark contrast to most other developed economies. The central bank was expected to set the currency’s direction for a second straight session, with Bank of Canada Governor Mark Carney holding a news conference following the release of its Monetary Policy Report later on Wednesday.

US new Home Sales surprised markets with a strong upward report coming in above forecast at 389k against 385k supporting a US recovery

Daily Afternoon Report 24/10/2012

The U.S. dollar was higher against the euro on Wednesday, as weak data out of the euro zone fuelled concerns over the deepening impact of the sovereign debt crisis on the region’s economy, but morning losses were erased later in the afternoon.

Meanwhile, European Central Bank President Mario Draghi is currently at a meeting in Germany’s central bank, which is to be followed by a press conference.

Later Wednesday, the Federal Reserve is to announce its benchmark interest rate and release its first monetary policy statement since the central bank announced a third round of quantitative easing in September. The U.S. was to release official data on new home sales.

Elsewhere, the Sterling found support after Bank of England Governor Mervyn King said Tuesday that policymakers would have to think "long and hard" before implementing further quantitative easing measures.

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