Daily Morning Report 01/11/2012

The dollar traded steady to lower against most major currencies after Chinese factory data beat expectations.

China’s manufacturing expanded for the first time in three months in October, adding to signs growth in the world’s second-biggest economy is rebounding after a seven-quarter slowdown. The Purchasing Managers’ Index rose to 50.2 in October from 49.8 in September, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing.

China's economy is finally regaining traction, official and private sector factory surveys showed on Thursday, although the recovery remains sluggish with the latter recording its 12th straight month of slowing growth. Evidence is mounting that the economy revived in October after domestic credit curbs and poor demand from overseas markets pushed economic growth in the third quarter to its weakest rate since the depths of the global financial crisis.

Elsewhere, Eurozone finance ministers are mulling giving Greece more time to meet deficit-reduction targets, and hopes Greece will be granted an extension sent the euro and other higher-yielding assets rising against the dollar earlier. The euro also saw support from Spanish Prime Minister Mariano Rajoy, who said he would not rule out asking for a bailout.

Later Thursday, the U.S. will release its weekly government report on initial jobless claims, as well as official data on nonfarm productivity and labor costs, important inflationary indicators, while the Institute of Supply Management is to publish data on U.S. manufacturing activity.

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.