BillyT's Forex Currency-Trading WEEKLY MARKET RECAP for w/e 8 JULY 2007

BillyT's Forex Currency-Trading WEEKLY MARKET RECAP for w/e 8 JULY 2007

EURO:

The euro appreciated vis-à-vis the U.S. dollar last week as the single currency tested offers around the $1.3660 level and was supported around the $1.3525 level. The pair gained about 85 pips last week. ECB’s Bini Smaghi said the ECB can act “promptly” to intervene and the EC warned a stronger euro could jeopardize exports. The ECB kept rates on hold and Trichet reiterated policymakers will “closely” watch price risks and rates remain “accommodative.” U.S. payrolls data suggest the U.S. economy picked up steam in late H1. San Francisco Fed’s Yellen said tight labour markets could add inflationary pressures.

Data released in the U.S. last week saw the June ISM manufacturing index improve to +56 from +55 in May; May pending hone sales were off 3.5% m/m and 13.3% y/y; Redbook retail sales were off 1.1% m/m; May factory orders were off 0.5% from a revised +0.5% in April; ADP June payrolls were up 150,000; weekly initial jobless claims were up 2,000; continuing jobless claims were up 84,000 to 2.57 million; the June ISM non-manufacturing index improved to 60.7; June non-farm payrolls were up 132,000; June’s unemployment rate was unchanged at 4.5%; and average hourly earnings were up 0.3% m/m and 3.9% y/y.

Data released in the eurozone last week saw the EMU-13 manufacturing PMI survey improve to 55.6; German May plant and machinery orders were up 18% y/y; May producer price inflation was up 0.3% m/m and 2.3% y/y; May eurozone unemployment ticked lower to 7.0%; EMU-13 May retail sales were off 0.5% m/m and up 0.4% y/y; EMU-13 June services PMI improved to 58.3; and German May manufacturing orders surged 3.2% m/m.

YEN:

The yen depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the ¥123.55 level and was supported around the ¥122.10 level. The pair gained about 5 pips last week. The Nikkei 225 stock index closed the week at ¥18,140.94. A mixed tankan didn’t alter the view the BoJ could lift rates as early as next month. The MoF announced Naoyuki Shinohara will succeed Watanabe as the top currency diplomat. BoJ’s Muto reiterated the central bank’s gradualist stance. The BoJ is expected to keep borrowing costs unchanged this week. BoJ boss Fukui said consumer prices will “follow a positive trend” over the longer-term.

Data released in Japan last week saw the headline large manufacturers tankan index at +23; the large non-manufacturers tankan index was +22; non-financial firms expect a 3.1% increase in capital expenditures in the fiscal year to March 2008; May employees’ average pay was off 0.6% y/y; the June monetary base fell 4.1% y/y; foreigners sold a net ¥396.6 billion in Japanese bonds last week; the May leading index improved to 30.0 from 18.2 in April; and June FX reserves rose to US$ 913.57 billion.

CHINESE YUAN:

The Chinese yuan appreciated vis-à-vis the U.S. dollar last week as the greenback closed at CNY 7.6010 in the over-the-counter market, down from CNY 7.6120. China and the EU convened last week to discuss global imbalances and trade issues.

Data released in China today saw actual foreign direct investment up an estimated US$ 30 billion in H1 2007 and Q2 business confidence was up slightly to a record 143.1.

BRITISH POUND:

The British pound appreciated vis-à-vis the U.S. dollar last week as cable tested offers around the US$ 2.0205 level and was supported around the $2.0055 level. The pair gained about 45 pips last week. Cable reached a multi-decade high last week. MPC’s Bean and Barker are being reappointed to the MPC. BoE’s MPC lifted the main repo rate by 25bps to 5.75% and at least one more hike of +25bps is anticipated this year.

Data released in the U.K. last week saw Hometrack house prices decelerated in England and Wales in June; Q1 productivity growth climbed to 2.7%; June manufacturing PMI receded to 54.3 from a revised 54.7; U.K. service sector output was off 0.1% m/m in April; June construction sector PMI improved; REC June wage pressures remained elevated; June services PMI rallied to 57.7; BoE Q1 housing equity withdrawal printed at ₤13.2 billion; June shop prices were up 0.5% y/y; Halifax June house prices were up +0.4% m/m and +10.7% y/y; IDS median pay settlements remained at 3.5% in the three months to June; and May manufacturing output rose 0.4% m/m.

SWISS FRANC:

The Swiss franc appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the CHF 1.2090 level and was capped around the CHF 1.2230 level. The pair lost about 45 pips last week.

Data released in Switzerland last week saw the June PMI survey improved to 62.8 from 58.9 in May; June consumer prices were up 0.1% m/m and 0.6% y/y; and the June unemployment rate printed at 2.5%

CANADIAN DOLLAR:

The Canadian dollar appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the C$ 1.0470 level and was capped around the C$ 1.0635 level. The pair lost about 175 pips last week.

Data released in Canada last week saw May building permits up 21.4% m/m; the June Ivey PMI survey improved to 67.4 from 62.7 in May; June payrolls saw 35,000 new jobs created last month; and the June unemployment rate held steady at 6.1%.

AUSTRALIAN DOLLAR:

The Australian dollar appreciated vis-à-vis the U.S. dollar last week as the Aussie tested offers around the US$ 0.8610 level and was supported around the US$ 0.8470 level. The pair gained about 90 pips last week. RBA kept interest rates unchanged, as expected.

Data released last week saw the June performance of manufacturing index lower at 53.1 while the TD Securities June inflation gauge was up 0.2% m/m; May retail sales were off 0.1% m/m; May building approvals were off 5.6% m/m and 7.2% y/y; and the May trade deficit narrowed to –A$ 807 million.


BillyT Daily Forex