Market Review May 31 2012

May 31 • Market Reviews • 1388 Views • No Comments

The deepening euro crisis is hurting Asian stocks as they head for their worst monthly performance since late 2008. The euro has also fallen below $1.24 levels, forcing Asian currencies to also pare losses against the greenback. The SGX Nifty is trading lower by 43 points, tracking other peers.

On the Economic front, we have the Retail Sales and the Unemployment Rate from the Euro-zone, both of which could show a down tick, hurting the euro in the afternoon session. From the US, there is a lot of data, out of which ADP employment would be closely watched and is expected to increase to 150K, from a previous number of 119K.

Euro Dollar:

EURUSD (1.2376) The U.S. dollar added to gains on Wednesday, pushing the euro dipped below $1.24 for the first time since mid-2010, on persistent worries about Europe’s debt crisis.

The ICE dollar index which gauges the greenback’s performance against a basket of six major currencies, climbed to 83.053 from 82.468 late Tuesday.

The euro fell as low as $1.2360 and recently traded at $1.2374, down from $1.2493 in North American trade late Tuesday. It hasn’t closed below $1.24 since June 2010.

The Great British Pound

GBPUSD (1.5474) Sterling fell to a four-month low against the dollar on Wednesday as worries about Spain’s banking sector problems and its rising borrowing costs pushed investors into the safety of the U.S. currency.

The pound lost 0.5 percent on the day to $1.5565, breaking below a reported options barrier at $1.5600 to mark its lowest since late January.

However, the pound was expected to remain well supported against the euro as investors seek alternatives to the troubled common currency.

Asian –Pacific Currency

USDJPY (78.74) Against the Japanese yen, the dollar slipped to ¥78.74 from ¥79.49

The yen is strengthening but that doesn’t immediately change the outlook for Japanese output. More crucial is final demand in China, as Asia-bound exports have yet to show signs of picking up and negative eco data from the US.

The BOJ is becoming increasingly convinced of Japan’s recovery prospects and hopes that firm domestic spending, due partly to government subsidies for low-emission cars, will offset the slowdown in overseas demand.

 

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Gold

Gold (1561.45) locked in gains on a day when most other commodities suffered decisive losses on renewed fears about the euro-zone credit crisis.

The precious metal caught a boost as prices per troy ounce neared the closely watched $1,535 area. Seen as a key support level by technical traders, investors rushed in to buy gold as they had twice before in the past two weeks.

The most-actively traded contract, for August delivery, gained $14.70, or one per cent, to settle at $1,565.70 a troy ounce. Gold prices had set a fresh 2012 intraday low of $1,532.10 a troy ounce.

Crude Oil

Crude Oil (87.61) prices have sunk to multi-month lows on worries about a possible Spanish bailout, with sentiment also hit as the US dollar soared to a near two-year peak against the European single currency.

New York’s main contract, West Texas Intermediate (WTI) crude for delivery in July, dropped $US2.94 to $US87.72 a barrel on Wednesday.

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