Market Review April 30 2012
Economic events scheduled for today
08:30 CAD GDP
Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health. Canada releases fresh GDP data on a monthly basis.
13:30 USD Core PCE Price Index
The Core Personal Consumption spending (PCE) Price Index measures the changes in the price of goods and services purchased by consumers for the purpose of consumption, excluding food and energy. Prices are weighted according to total expenditure per item. It measures price change from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.
14:45 USD Chicago PMI
The Chicago Purchasing Managers’ Index (PMI) determines the economic health of the manufacturing sector in Chicago region. A reading above 50 indicates expansion of the manufacturing sector; a reading below indicates contraction. The Chicago PMI can be of some help in forecasting the ISM manufacturing PMI.
18:45 NZD Labor Cost Index
The Labor Cost Index measures the change in the price businesses pay for labor, excluding overtime. It is a leading indicator of consumer inflation.
21:00 CNY Chinese Manufacturing PMI
China Manufacturing Purchasing Managers Index (PMI) provides an early indication each month of economic activities in the Chinese manufacturing sector. It is compiled by China Federation of Logistics & Purchasing (CFLP) and China Logistics Information Centre (CLIC), based on data collected by the National Bureau of Statistics (NBS).Li & Fung Research Centre is responsible for drafting and disseminating the English PMI report. Every month questionnaires are sent to over 700 manufacturing enterprises all over China. The data presented here is compiled from the enterprises responses about their purchasing activities and supply situations. The PMI should be compared to other economic data sources when used in decision-making.
21:30 AUD House Price Index -1.00%
The Australian House Price Index (HPI) measures the change in the selling price of homes in the nation’s eight state capitals. It is a leading indicator of health in the housing sector.
Euro Dollar
EURUSD (1.3254) The dollar dipped against the euro and the yen as lower-than-expected U.S. economic data fed views that the Federal Reserve could ease policy further to boost flagging growth. The possibility of more stimulus from the Fed weighed on the dollar, which fell against the euro and the yen. The greenback slipped 0.79 percent to 80.37 yen. The euro firmed 0.24 percent to $1.3240 against the greenback – well within the $1.30 to $1.34 range in which the single currency has spent much of the year.
The Sterling Pound
GBPUSD (1.6265) Sterling hit its highest level in nearly two years against the euro on Friday as a ratings downgrade of Spain reignited fears about problems about the euro zone’s worst-indebted economies, pressuring the common currency.
Although concerns remained about a fragile British economy after data this week showed the UK entered recession in the first quarter of 2012, analysts said sterling was still favored as an alternative to the troubled euro and could gain further.
A survey overnight by GfK showed UK consumer morale weakened in April, but data recently has been mixed, with lender Nationwide on Thursday reporting consumer confidence hit a nine-month high last month. The pound has performed well since Bank of England minutes last week suggested policymakers were unlikely to opt for more quantitative easing due to worries that inflation may not be falling as they expected.
The euro fell to 81.345 pence, marking is lowest level in 22 months.
Against the dollar the pound was steady at $1.6265, passing the 7-1/2 month peak of $1.6208 hit on Thursday. This left sterling’s trade-weighted index at 83.3, matching a level hit on Tuesday which was its highest since August 2009.
Asian –Pacific Currency
USDJPY (80.27) The Japanese yen weakened after the Bank of Japan said it would expand its asset-purchase program by 5 trillion yen ($61.88 billion), while keeping interest rates on hold as expected with the dollar jumping well above the ¥81 level, before fading back to ¥80.85. The greenback had traded at ¥80.27 in late North American trading Thursday.
Japan’s been in a deflationary cycle for 20 years. … Getting out of that psychologically as an investor and believing that Japan is going to turn it around is difficult to do, so the market has been skittish.
Earlier in the day, investors had sifted through a batch of Japanese data released just before the market open, including a weaker-than-expected rise in industrial production but a surprise jump in retail sales, ahead of the central bank decision
Gold
Gold (1664.80) gained Friday, as the dollar weakened after data showed U.S. economic growth slowed more than expected in the first quarter. Gold rose $4.30, or 0.3%, to $1,664.80 an ounce on the Comex division of the New York Mercantile Exchange.
That was gold’s best settlement since April 12, and one that took weekly gains to 1.4%. The contract rallied 1.1% Thursday, more than making up for losses earlier in the week.
Crude Oil
Crude Oil (104.15) prices retreated on Friday as a raft of bad news for Spain’s indebted economy raised concerns about weak demand for energy, traders said. New York’s main contract, West Texas Intermediate crude for delivery in June fell 40 cents to $104.15 a barrel. Brent North Sea crude for June shed 43 cents to $119.49 a barrel approaching midday in London.
The eurozone trouble is causing a lot of worry about demand. S&P on Thursday cut Spain’s rating by two notches to BBB-plus and added a negative outlook, saying it expected the economy to shrink this year and next.
