Market Review May 8 2012

May 8 • Market Reviews • 789 Views • No Comments

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Economic Events for May 8, 2012 for the European and US Markets

00:01   GBP   RICS House Price Balance   -10%   -10%
The Royal Institution of Chartered Surveyors (RICS) House Price Balance measures the percentage of surveyors reporting a house price increase in their designated area. A level above 0.0% indicates more surveyors reported a rise in prices; below indicates more reported a fall. The report is a leading indicator of house price inflation as surveyors have access to the latest price data.

02:30   AUD   Trade Balance   -1.40B   -0.48B
The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

06:45   CHF   GDP   0.1%
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.

06:45   CHF   SECO Consumer Climate   -18   -19
The State Secretariat for Economic Affairs (SECO) Consumer Climate Index measures the level of consumer confidence in economic activity. On the index, a level above zero indicates optimism; below indicates pessimism.

13:15   CAD   Housing Starts   202K   216K
Housing starts
measures the change in the annualized number of new residential buildings that began construction during the reported month. It is a leading indicator of strength in the housing sector.

Euro Dollar
EURUSD (1.30.60)
 The euro is weak, having lost 0.4% from Friday’s close and having briefly touched a three and a half month low, below 1.30. The weakness has been building over the last five sessions and is a reflection of a deterioration in the economic data, rising political uncertainty and a failure of policy makers to provide further support. The weekend elections are the main focus, with the European bond markets providing a clear indication that it is the Greek election that is a more significant threat to EUR than the French.

Greek 10‐year yields have jumped up to 22.80% (a post default high) while French yields have dropped to 2.81% Fundamental data was mixed with weaker than expected Spanish industrial output (falling ‐7.5% y/y); but stronger than expected German factory orders (increasing 2.2% m/m)

The Sterling Pound
GBPUSD (1.6192) •
The UK is on holiday while GBP is retracing some lost ground, up 0.3% since Friday’s close and having its first up session in six. This week’s BoE meeting is likely to see both the asset purchase program and interest rates on hold at £325bn and 0.5%, respectively. Without a change there will be no statement, leaving markets waiting for the BoE inflation report on May 16th and the BoE minutes on May 23rd. The threat of QE is likely to be kept alive; however on a relatively basis the outlook for GBP is still relatively strong.

Asian –Pacific Currency
USDJPY (79.87) •
The yen is strong, trading below 80 and flirting with a break of the 100‐day MA. There was no domestic data; however interest rate differentials are supportive of a lower USDJPY.  Finance Minister Azumi reiterated that Japan is watching for speculative yen movement and will act on yen if necessary. The release of the BoJ April 9‐10th meeting, were important as they highlight the importance of the Japanese government’s role in monetary policy.

 

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The ministry official at the meeting suggested that the BoJ should conduct policy decisively and promptly achieve its inflation target; while concern from one BoJ member that QE risks the appearance of monetizing of debt were dismiss

Gold
Gold (1637.05)
Gold weakened slightly weighed by a strong dollar which rose due to the elections in France and Greece. The Euro dropped to a three month low against dollar after the election which raised worries of a Euro zone debt crisis again. At the same time slothful US payroll numbers on Friday are likely to prompt hopes of another round of the monetary easing programme which may raise gold’s safe haven appeal again. As per the data available from US Commodity Futures Trading Commission, speculators lifted up their bullish bets in gold to the highest level since early April in the first week of May.

However physical demand for gold from Asian markets remained subdued with buyers moving back to the sidelines.

Crude Oil
Crude Oil (97.83)
Nymex crude oil prices declined by 0.7 percent today on the back of more than expected fall in European investor confidence coupled with strength in the US dollar index. Additionally, rising tensions in the Euro Zone after the elections in France and Greece also exerted downside pressure on oil prices. Crude oil touched an intra-day low of $ 95.40/bbl and hovered at $ 97.80/bbl

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