Market Review April 18 2012

Apr 18 • Market Reviews • 2536 Views • Comments Off on Market Review April 18 2012

Economic events scheduled for today

08:30:00   GBP   Average Earnings including Bonus   1.30%   1.40%
The Average Earning Including Bonus released by the National Statistics is a key short-term indicator of how levels of pay are changing within the UK economy. Generally speaking, the positive earnings growth anticipates positive (or bullish) for the GBP, whereas a low reading is seen as negative (or bearish).

 08:30:00   GBP   Bank of England Minutes
The minutes of the BoE MPC meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the BoE is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the GBP.

08:30:00   GBP   Claimant Count Change    7.0K   7.2K
The Claimant Change released by the National Statistics presents the number of unemployment people in the UK. There is a tendency to influence the GBP volatility. Generally speaking, a rise in this indicator has negative implications for consumer spending which discourage economic growth. Generally, a high reading is seen as negative (or bearish) for the GBP, while a low reading is seen as positive (or bullish).

08:30:00   GBP   Claimant Count Rate   5%
The Claimant Count Rate released by the National Statistics is a monthly measure of unemployment in the UK It indicates the health of the UK labor market. If the rate is up, it indicates a lack of expansion within the UK labor market, while it indicates economic expansion and could spark inflationary pressures if the rate is down. Generally, a decrease of the figure is seen as positive (or bullish) for the GBP, while an increase is seen as negative.

08:30:00   GBP   ILO Unemployment Rate (3M   8.40%   8.40%
The ILO Unemployment Rate released by the National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate is up, it indicates a lack of expansion within the U.K. labor market. As a result, a rise leads to weaken the U.K. economy. Generally, a decrease of the figure is positive (or bullish) for the GBP, while an increase is negative.

09:00:00   CHF   ZEW Survey – Expectations   -8   0
The ZEW Survey Expectations published by the Centre for European Economic Research presents business conditions, employment conditions and other elements affecting the day to day running of a business in Switzerland. Generally speaking, a high reading is seen as positive (or bullish) for the CHF, whereas a low reading is seen as negative (or bearish).

14:30:00   CAD   Bank of Canada Monetary Policy Report
The Bank of Canada publishes a study of economic movements in Canada. It indicates a sign of new fiscal policy. Any changes in this report tend to affect the CAD volatility. If the BoC report shows a hawkish outlook, that is seen as positive (or bullish) for the CAD, while a dovish outlook is seen as negative (or bearish).

22:45:00   NZD   Consumer Price Index (QoQ)   0.60%   -0.30%
Consumer Price Index released by Statistics New Zealand is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services . The purchase power of NZD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative.

23:50:00   JPY   Merchandise Trade Balance Total   ¥-220.0B   ¥32.9B
The Merchandise Trade Balance Total released by the Ministry of Finance is a measure of balance amount between import and export. A positive value shows a trade surplus while a negative value shows a trade deficit. Japan is so many dependants on exports that the Japanese economy heavily relies on a trade surplus. Therefore, any variation in the figures influences the domestic economy. If a steady demand in exchange for Japanese exports is seen, that would turn into a positive sentiment.

Euro Dollar
EURUSD (1.3145)
Yesterday, the EUR failed to break decisively below 1.30, pushing the currency back into its recent range. The jump higher in yesterday’s NA afternoon session, is difficult to explain and was likely technically and model driven. Opening today, EUR is trading between its 50 and 100‐day moving average (1.3211 and 1.3132, respectively), supported by Fitch’s affirmation of Austria’s AAA rating, stable outlook, a better than expected Spanish auction, rising Eurozone inflation (1.6% on core and 2.7% on headline) and a strong German ZEW release. Rising European inflation, partially caused by energy prices, decreases the flexibility of the ECB to cut interest rates and accordingly supports EUR on a near‐term basis. Most indicators suggest EUR downside; however the resiliency of the currency this year is a major theme.

The Sterling Pound
GBPUSD (1.5953)
The Sterling is outperforming, up 0.4% from yesterday’s close as market participants react to higher than expected inflation data and its implications for monetary policy.  The upside surprises to CPI, both core (2.5% y/y vs. 2.3% exp) and headline (3.5% y/y vs. 3.4% exp) are the second upside surprises and mark a reversal of the decline that had been in place since the fall of 2011.  The release has even prompted cautious comments from dovish MPC member Posen.  The BoE may find it difficult to maintain its accommodative stance in an environment of above target (2.0%) inflation even as growth remains stagnant, and BoE Governor King recently stated that policy tightening would first come via rate hikes and not through a shrinking of the asset purchase program.  Lastly, there is an increasing concern that the April 25th release of GDP could see a negative print, marking a technical recession for the UK

Asian –Pacific Currency
USDJPY (80.65)
The Japanese yen is down 0.3% vs. the USD, the decline being driven by risk appetite and a shedding of safe haven assets. The final release of IP figures was unchanged at 1.5%, suggesting continued weakness, while consumer confidence has improved somewhat.  The underperformance in yen is the first in recent sessions to have occurred without the help of rhetoric from officials at the BoJ. However, policy makers are likely to remain vigilant as USDJPY continues to approach 80.00.

AUDUSD (1.0372) The Aussie is up 0.2% from yesterday’s close, as inflation surprises higher in the EU & UK.   The RBA has released cautious sounding minutes, as policy makers remain concerned about downside risks in Europe and note the slowdown in economic activity in both China and the US.  Inflation remains key to the decision making process, as the RBA will await the release of CPI data on April 23rd, with a further decline likely to provide for a rate cut on May 1st.


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Gold (1651.80)
Gold edged up 0.1 percent to $1,650.00 an ounce, U.S. gold was little changed at $1,650.80. Technical analysis suggested that spot gold could fall to $1,630 an ounce during the day  a stronger dollar may cap gains in gold and keep prices in a range, especially as the U.S. economic recovery seems to be on track but unsure of itself at the moment. People may buy into the dollar as a safe haven, which causes some kind of neutral trade in gold. We are looking at gold to trade between $1,600 to $1,660. Gold continues to look for direction

Crude Oil
Crude Oil (104.98)
Oil is up skyrocketed in yesterday’s trading, for virtually no reason. President Obama is asking congress for more powers to control oil speculation and the American Petroleum Assn is predicting higher stocks in this week’s official inventory.

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