Market Review May 2 2012

May 2 • Market Reviews • 2590 Views • Comments Off on Market Review May 2 2012

Economic events scheduled for today

01:30  JPY    Labor Cash Earnings
Indicator released by the Ministry of Health, Labour and Welfare shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses but it doesn’t take into account earnings from holding financial assets or capital gains. Higher income puts upward pressures over consumption; therefore an increasing trend in earnings is inflationary for the Japanese economy.

02:30  CNY   HSBC Manufacturing PMI
The HSBC Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics is an early indicator of economic health in the Chinese manufacturing sector. Any reading above 50 signals expansion, while a reading under 50 shows contraction. As the Chinese economy has influence on the global economy, this economic indicator would have an impact on the Forex market.

07:15  CHF    Real Retail Sales
The Retail Sales is conducted by the Swiss Federal Statistical Office. The retail sales is a survey of goods sold in the last month and serves as an indicator of the Swiss consumer demand. The figure here is real, not nominal, and non-seasonally adjusted. Generally, an increase in this figure is bullish for the CHF while a decrease is bearish.

07:30  CHF    SVME – Purchasing Managers’ Index
The SVME Manufacturing Purchasing Managers Index (PMI) released by the Credit Suisse captures business conditions in the manufacturing sector. The Manufacturing PMI is an important indicator of production growth in Switzerland. A result that values above 50 signals appreciates (or is bullish for) the CHF, whereas a result that values below 50 is seen as negative (or bearish).

12:15  USD   ADP Employment Change
The Employment Change released by the Automatic Data Processing, Inc is a measure of the change in the number of employed people in the US Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth.

14:00  USD   Factory Orders
The Factory orders released by the US Census Bureau is a measure of the total orders of durable and non durable goods such as shipments (sales), inventories and orders at the manufacturing level which can offer insight into inflation and growth in the manufacturing sector.

22:30  AUD   AiG Performance of Services Index
AiG Performance of Services Index released by the Australian Industry Group presents business conditions in the Australian service sector. The group surveys 200 manufacturers on their assessment of the business situation including employment, production, orders, prices, and inventories, and their short-term planning. A result above 50 is seen as positive (or bullish) for the AUD, whereas a result below 50 is seen as negative (or bearish).

22:45  NZD    Unemployment Rate
The Unemployment Rate released by Statistics New Zealand is the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the New Zealand lobar market. As a result, a rise leads to weaken the Australian economy.

Euro Dollar:
EURUSD (1.3227)
With holidays across Europe, there was no data and very few media comments to drive EUR. The currency continues to defy expectations, reaching a new 20‐session high today. Tomorrow, the Eurozone will release PMI data; both China and UK disappointed slightly as exports slowed; leaving Eurozone also vulnerable to some disappointment. May Day protests are planned across Europe, which could draw further attention to the potential rise of the unemployed youth voice and prove a EUR negative. The ECB meets on Thursday and accordingly the risk for EUR is rising, this could explain why there has been a recent shift in risk reversals to protect against USD strength

The Sterling Pound
GBPUSD (1.6235)
In holiday trading the sterling is down 0.2% from yesterday’s close following the release of a weaker manufacturing PMI (50.5 vs 51.5 expected and 51.9 previously).  The release suggested a weaker export trend, which is a concern for the broader economy.   Given that services are a larger component of the UK’s economy, market participants are awaiting Thursday’s services PMI (expecting 54.1) to see whether the deterioration is part of a broader trend.

Asian –Pacific Currency
USDJPY (80.34)
The yen trade flat throughout the morning as investors remain wary of risk amid economic uncertainty.   Markets have driven a nearly 4.5% gain in the yen since mid‐March, despite efforts from the BoJ to create weakness via an expansion of its asset purchase program. Interventionist rhetoric has continued to emanate from policymakers, with recent comments from the Vice Finance Minister indicating a level of concern over the recent appreciation.

Once the US ISM survey was released showing an unexpected expansion in the manufacturing sector the USD climbed against all of its trading partners. This was aided by hopes that the Fed would be more accommodating at its next meeting after two weeks of poor data.

 

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Gold
Gold (1659.75)
Gold traded a bit lower, but spent the day see sawing up and down slightly once again looking for direction. Over the past month of so, gold seems to want to fall below the 1650 level but gets stuck in a range between 1650 and 1660 until some event pushes it up for a few days.

Crude Oil
Crude Oil (105.97)
rose after the release of the US ISM Manufacturers Survey showing an expansion in manufacturing. Investors are hoping this is a glimmer of what is to come, showing that the US recovery is still on tract. Crude moved into the 106 level but declined a few cents in early morning trading.

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