The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4295 level and was supported around the $1.4190 level. The common currency retraced some of yesterday’s losses as U.S. economic data were generally weaker-than-expected. First, it was reported that MBA mortgage appications were off 2.2% in the latest week, down from the prior reading of +7.5%. Second, August Challenger job cuts were off 13.8% y/y, down from the prior reading of -5.7%. Third, the August ADP employment report evidenced a 298,000 contraction in private sector jobs, worse than forecast but better than July’s revised reading of -360,000. Fourth, July factory orders printed at +1.3%, below estimates but above the revised June print of +0.9%. Fifth, Q2 unit labour costs were off 5.9%, down from the preliminary reading of -5.8%. Sixth, it was reported that Q2 non-farm productivity grew a healthy 6.6%, up from the prior reading of 6.4%. While productivity growth is generally seen as a long-term benefit to the economy, it is also coincident with a decrease in payrolls and that means companies are accomplishing more with fewer workers. Seventh, August personal bankruptices were up 24% y/y. Minutes from the Federal Open Market Committee’s interest rate deliberations on 12 August were released today and they did not offer much guidance about the Fed’s plans to maintain significant amounts of liquidity in the banking system to support the economy. In eurozone news, the German finance ministry reported the state of the economy has “stabilized” following a meeting of Ecofin finance ministers in Brussels. The hot button in the eurozone and U.K. now is a plan to limit bankers’ bonuses. Data released in the eurozone today saw EMU-16 industrial producer prices register their sharpest annual decline in more than 27 years, off 0.8% m/m and 8.5% y/y. Also, EMU-16 Q2 GDP was off 0.1% q/q and 4.7% y/y. Euro bids are cited around the US$ 1.3900 figure.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥92.10 level and was capped around the ¥93.05 level. The pair reached a seven-week low as traders reacted to a worse-than-expected U.S. private sector jobs report. Risk aversion remains strong with the VIX index – a measure of stock market volatility – at its highest level since 10 July. Bank of Japan Governor will attend the Group of Twenty meeting in London this week followed by the Bank for International Settlements meeting in Basel. Democratic Party of Japan legislator Kohei Otsuka said the new DPJ government “won’t meddle” in the central bank’s monetary policy and market operations and added the new government will “respond appropriately” to excessive currency moves. Data released in Japan overnight saw the August monetary base climb 6.1% y/y. The Nikkei 225 stock lost 2.02% to close at ¥10,280.46. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥131.00 figure and was capped around the ¥132.50 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥149.00 figure while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.40 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8273 in the over-the-counter market, up from CNY 6.8257. China announced today that it plans to purchase US$ 50 billion in International Monetary Funds bonds. Chinese benchmark money rates rose by the most in one month on speculation that demand for capital will increase ahead of Metallurgical Corp. of China Ltd’s first share issuance next week. Data released in China yesterday saw the August Purchasing Managers’ Index improve to 54. China is experiencing its worst export slump in more than two decades and some economists are predicting China’s US$585 billion stimulus could lead to a surge in Chinese imports in the fourth quarter.
Technical Outlook at 1230 GMT (EDT + 0400)
(Bid Price) (Today’s Intraday Range)
EUR/ USD 1.4285 1.4294, 1.4190
USD/ JPY 92.10 93.07, 92.09
GBP/ USD 1.6288 1.6299, 1.6113
USD/ CHF 1.0591 1.0685, 1.0580
AUD/USD 0.8368 0.8372, 0.8239
USD/CAD 1.1031 1.1101, 1.1005
NZD/USD 0.6742 0.6776, 0.6683
EUR/ JPY 131.62 132.50, 131.01
EUR/ GBP 0.8771 0.8820, 0.8747
GBP/ JPY 150.05 150.55, 149.01
CHF/ JPY 86.96 87.35, 86.41
Support Resistance Support Resistance
EUR/ USD USD/ JPY
L1. 1.3780 1.4295 90.05 98.85
L2. 1.3605 1.4630 88.60 101.65
L3. 1.3400 1.5105 87.10 105.05
GBP/ USD USD/ CHF
L1. 1.5845 1.6495 1.0510 1.1165
L2. 1.5690 1.6740 1.0275 1.1270
L3. 1.5440 1.6830 0.9750 1.1555
AUD/ USD USD/ CAD
L1. 0.7715 0.8250 1.1340 1.1920
L2. 0.7440 0.8555 1.1130 1.2190
L3. 0.7165 0.9050 1.0725 1.2520
NZD/ USD EUR/ JPY
L1. 0.6190 0.6665 125.65 134.50
L2. 0.6020 0.6945 121.70 139.80
L3. 0.5655 0.7760 118.50 141.50
EUR/ GBP EUR/ CHF
L1. 0.8320 0.8770 1.4905 1.5380
L2. 0.7870 0.9080 1.4670 1.5580
L3. 0.7590 0.9355 1.4420 1.5880
GBP/ JPY CHF/ JPY
L1. 146.10 157.75 81.55 93.55
L2. 142.05 160.30 79.20 97.90
L3. 135.70 167.30 75.40 105.05
SCHEDULE
Wednesday, 2 September 2009
all times GMT
(last release in parentheses)
0130 Australia Q2 GDP growth (0.4% q/q)
0130 Australia Q2 GDP growth (0.4% y/y)
0830 UK August PMI, construction
0900 Eurozone Q2 gross domestic product (-0.1% q/q)
0900 Eurozone Q2 gross domestic product (-4.6% y/y)
0900 Eurozone July producer price index (0.3% m/m)
1100 US MBA mortgage applications (7.5%)
1130 US August Challenger job cuts (-5.7% y/y)
1215 US August ADP employment change (-371,000)
1230 US Q2 non-farm productivity (6.4%)
1230 US Q2 unit labour costs (-5.8%)
1400 US July factory orders (0.4%)
1800 US Federal Open Market Committee meeting minutes
2330 Australia August performance of services index (44.1)
Thursday, 3 September 2009
all times GMT
(last release in parentheses)
0130 Australia July trade balance (-A$ 441 million)
0300 NZ August ANZ commodity prices (1.0%)
0645 France Q2 ILO unemployment rate (9.1%)
0745 Italy August PMI, services (44.5)
0750 France August PMI, services (48.9)
0755 Germany August PMI, services (54.1)
0800 Eurozone August PMI, services (49.5)
0800 Eurozone August PMI, composite (50.0)
0830 UK August PMI, services (53.2)
0900 Eurozone July retail sales (-0.2% m/m)
0900 Eurozone July retail sales (-2.4% y/y)
1145 Eurozone European Central Bank interest rate decision
1230 US Weekly initial jobless claims (570,000)
1230 US Continuing jobless claims (6.133 million)
1400 US August ISM, non-manufacturing (46.4)
1500 US August ICSC chain store sales (-5.0% y/y)
2350 Japan Q2 capital spending (-25.3%)
Friday, 4 September 2009
all times GMT
(last release in parentheses)
0715 CH August consumer price index (-1.2% y/y)
0715 CH August consumer price index (-0.7% m/m)
0800 Italy June trade balance
0945 Eurozone European Commission economic forecasts
1100 Canada August net change in employment (-44,500)
1100 Canada August unemployment rate (8.6%)
1230 US August non-farm payrolls, net change (-247,000)
1230 US August unemployment rate (9.4%)
1230 US August average weekly hours (33.1)
1230 US August average hourly earnings (0.2% m/m)
1230 US August average hourly earnings (2.5% y/y)
1400 Canada August Ivey, PMI (51.8)
1600 US G20 central bankers and finance ministers meet
