BillyT's Forex Currency-Trading WEEKLY MARKET RECAP for w/e 2 September 2007

BillyT's Forex Currency-Trading WEEKLY MARKET RECAP for w/e 2 September 2007

EURO:

The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.3560 level and was capped around the $1.3720 level. The pair lost about 50 pips last week. FOMC policymakers reported a “policy response” may be necessary in their 7 August meeting minutes and were still concerned with inflation. Bernanke noted the Fed is “prepared to act as needed” but cautioned the Fed is not designed to bail out lenders and investors. President Bush unveiled a mortgage assistance plan for U.S. homeowners. ECB chief Trichet suggested the ECB will see how the financial markets crisis impacts the markets and then decide on rate hike this month as the ECB “does not precommit” to policy decisions. France’s Sarkozy called on the ECB to not tighten credit.

Data released in the U.S. last week saw the August consumer confidence index fall to 105.0; the Richmond Fed August manufacturing index improved to +7; July existing home sales fell 0.2%; Q2 GDP expanded at an annualized 4% rate; weekly initials jobless claims were up 334,000; continuing jobless claims were up 13,000 top 2.579 million; the Q2 core PCE price index was revised lower to 1.3% from 1.4% and was down from 2.4% in Q1; the overall PCE price index was up a revised 4.2%; July personal income and spending were up 0.5% m/m and 0.4% m/m, respectively; July factory orders were up 3.7%; the August Chicago PMI survey improved to 53.8; and the August University of Michigan consumer sentiment index fell to 83.4 from 90.4.

Data released in the eurozone last week saw the German Ifo August business climate index receded to 105.8; the EMU-13 M3 money supply expanded 11.7% y/y, up from 10.9% y/y; the German GfK September consumer climate index fell to 7.6 from 8.5 in August; the EMU-13 August economic sentiment index moved lower; provisional August HIPC was up 1.8% y/y; EMU-13 July unemployment was unchanged at 6.9%; and German July retail sales were up 0.3% m/m and off 1.5% y/y.

YEN:
The yen appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the ¥113.85 level and was capped around the ¥116.75 level. The pair lost about 90 pips last week. The Nikkei 225 stock index closed the week at ¥16,569.09. BoJ’s Policy Board meeting minutes rate-setters postpone their decision until they saw if April’s growth forecast of 2% materializes. Finance chief Omi was replaced by ex-defense chief Nukaga who reported deflation is still a problem. BoJ’s Mizuno said a Fed rate cut won’t necessarily postpone BoJ’s next hike.

Data released in Japan last week saw July retail sales off 2.2% y/y; July nationwide core consumer prices were off 0.1% y/y; Tokyo-area core CPI was unchanged y/y in August; the unemployment rate fell to 3.6%; July housing starts were off -23.4% y/y; July construction orders were off 10.4% y/y; and July industrial output was off 0.4% m/m.

CHINESE YUAN:

The Chinese yuan appreciated vis-à-vis the U.S. dollar last week as the greenback closed at CNY 7.5450 in the over-the-counter market, down from CNY 7.5666. PBOC deputy Su Ning reported 2007 CPI could exceed the government’s 2% target rate. Deutsche Bank sees another rate hike this month.

Data released in China last week saw the July consumer confidence index fell to 96.7 from 97.5 in June.

BRITISH POUND:

The British pound appreciated vis-à-vis the U.S. dollar last week as cable tested offers around the US$ 2.0230 level and was supported around the $1.9960 level. The pair gained about 15 pips last week.

Data released in the U.K. last week saw BBA July mortgage approvals fall; August Hometrack house prices were unchanged m/m and up 5.4% y/y; July Land Registry prices in England and Wales rose at a thirteen-month low; BoE mortgage approvals were stable at 115,000 in July; CBI August retail sales growth weakened; Nationwide August house prices were up 0.6% m/m; and the August GfK consumer confidence index rose unexpectedly to -4 from -6 in July.

SWISS FRANC:

The Swiss franc depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the CHF 1.2080 level and was supported around the CHF 1.1960 level. The pair gained about 65 pips last week

Data released in Switzerland last week saw the July UBS private consumption index fall to 2.26 from 2.31 in June; the August KPOF economic barometer declined to 2.06 from a revised 2.09 in July; and August CPI was off 0.1% m/m and up +0.4% y/y.

CANADIAN DOLLAR:

The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.0675 level and was supported around the C$ 1.0470 level. The pair gained about 55 pips last week. Talk that Microsoft could purchase Canada’s Research in Motion propelled the loonier higher.

Data released in Canada last week saw the number of employees rise 0.1%, or 12,700 new jobs, in June; June average weekly earnings climbed 3.6% y/y; the Q2 current account surplus expanded to C$ 8.36 billion; July industrial product prices fell 0.7% m/m; and Q2 GDP was up 0.8% q/q and 3.4% y/y.

AUSTRALIAN NEW ZEALAND DOLLAR:

The Australian dollar depreciated vis-à-vis the U.S. dollar last week as the Aussie tested bids around the US$ 0.8050 figure and was capped around the US$ 0.8330 level. The pair lost about 150 pips last week. RBA deputy Battellino pledged more liquidity to the banking system if needed and RBA injected liquidity all week.

Data released last week saw Q2 capital expenditures up 6.3% q/q; the Q2 current account deficit was up 3% q/q at A$ 15.99 billion; the July trade balance printed at –A$ 756 million; July private sector credit growth was up +0.9% m/m and +15.4% y/y; and July retail sales were up +0.9% m/m

BillyT Daily Forex