Forex Blog by Greg Secker

Yesterday – notes Greg Secker – , the FTSE 100 closed up by 1 per cent, ending up 45.42 points to close at 4716.76. Banks were among the top Bluechip risers, as investors responded to positive news from the UK inflation report. Investors took their positions ahead of last night’s Federal Reserve statement on US growth prospects. Yesterday – notes Greg Secker – , the Dow Jones industrial average gained 120.16 points (+1.3%) to close at 9,361.61.Yesterday – notes Greg Secker – , the S&P 500 index rose 11.46 points; or 1.15 % to 1005.81. The S & P is up 48.7 % since early March. Yesterday – notes Greg Secker – , the Nasdaq Composite Index added 28.99 points (1.47%) to close up at 1,998.72. US stocks surged yesterday as the Fed saw more signs of a stable economy. Also positive results from, Applied Materials, Toll Brothers and Macys resulted in these shares all rising in value.
 

Grainger, a property developer has added more positive news to the housing sector stating that there has been a rise in house sales turnover. The BOE announced that if interest rates remain in line with market expectations, the inflation forecast will remain well below the 2 % target until at least 2011. The MPC’s decision to increase the QE to 50bn last week was aimed at returning inflation to target.  The Office of National Statistics has stated that Britain’s jobless rate reached 7.8% in the three months to June, this was slightly above expectations of 7.7%. The number of Unemployed also reached 2.435million, which is a 14 year high. German prelim Q-2 GDP has come in better than expected, it rose 0.3% better than the median forecast of -0.2%. Also the French Economy Minister Christine Lagarde announced French Q-2 GDP was surprisingly robust, coming in at +0.3%, compared to a median forecast of -0.3%. The US Federal Reserve has seen a “leveling out” of the American economy as financial markets and consumer spending continues to stabilise. America’s central bank on Wednesday held interest rates at the existing range of 0-0.25%. The Fed also decided to extend the duration but not the size of its program to buy long term government debt.
 

Cable is enjoying a decent rally this morning, underpinned by better than expected German and French GDP data. GBP/USD is up at 1.6540 from yesterday’s close of 1.6488, while EUR/USD is up at 1.4243 from yesterday’s close at 1.4202. AUD/USD has enjoyed a nice rally this morning, presently up at 0.8380. The USD has seen some marginal weakness. Analysts believe the USD weakness comes against the backdrop of generally healthy risk appetite, financial markets having found confidence in the Fed’s assertion that economic activity is “leveling out.”
 

Today Gold is at 954.50 USD, Brent Crude is at 74.22 USD and Copper is currently at 288.25 USX.
 

The main focus today will be on European Q-2 growth data and US advanced retails sales.

Yesterday – notes Greg Secker – , the FTSE 100 was 50.86 points lower at 4,671.34 by the close of the session. Weakness was shown in the heavyweight banks, miners, and oils, but defensive stocks were back in favor once again. Yesterday – notes Greg Secker – , the Dow Jones industrial average lost 96.28 points (or 1.03%) to 9,241.67. Yesterday – notes Greg Secker – , the S&P 500 index fell 12.77 points (or 1.27%) to 994.33. Yesterday – notes Greg Secker – , the Nasdaq Composite Index slid 22.51 points (or 1.13%) to close at 1,969.73. Investors were cautious as the US Federal Reserve two day monetary policy meeting got underway and also an unexpectedly large drop in wholesale inventories raised worries about an economic recovery. Further earnings reports are due this week from retailers Wal-Mart, JC Penney and Macy’s.
 

Britain’s bigger listed companies are forecast to pay out £8bn ($13bn) less in dividends this year as many seek to repair balance sheets that became overstretched before the credit crunch. According to Capita Registrars, the dividends received by shareholders in these groups fell 9$ to £28bn in the first half of 2009. Threadneedle Street’s latest growth and inflation forecasts published today are widely expected to be downbeat about the prospects for the UK economy, suggesting a weak recovery and the potential for further expansion of Quantitative Easing (QE). Also today’s jobless figures are due, there has been a worrying increase in jobless figures in recent months, and unless there is an indication of this easing there are concerns that this could rise to 3 million this year. However on a more positive note, the Department for Communities and Local Government (DCLG) found that UK house prices rose 1.6% in June on the previous month.
 

Cable at 1.6458 is drifting a little lower in early trade.   The market now awaits the release of latest jobs data and BOE quarterly inflation report later this morning. Resistance levels are up around the 1.6520 and 1.6550 levels. The JPY has seen some further strength, USD/JPY down at 95.54 from 97.11, while EUR/JPY is down at 135.10 from around 135.80. With Asian stocks trading lower, the JPY is benefitting from a pickup in risk aversion. There is also some focus on today’s FOMC meet, the Fed is widely expected to affirm its commitment to an accommodative monetary policy i.e. to keep interest rates low. EUR/USD sits at 1.4135, just below yesterday’s close.
 

US crude oil dipped below the $70-a-barrel mark on Tuesday after cautious remarks from Opec, warned that sustaining prices at current levels would depend on “clearer signs of improvement in the global economy”. Today Gold is at 947.40 USD, Brent Crude is at 72.17 USD and Copper is currently at 275.20 USX.
 

Due for release today, according to Greg Secker, there are a variety of releases, GBP Jobless Claims Change (JUL), GBP average Earning Ex Bonus, Bank of England quarterly inflation report. In the Euro zone industrial production June expected +0.2% m/m. In the US, USD Federal Open Market Committee Interest Rate Decision and USD trade balance.

The FTSE dropped yesterday ending down 9.36 points (or 0.2%) at 4,722.20, after reaching a 10-month closing high on Friday. Miners were the worst performers on the index. Last week investors booked profits from substantial gains in miners and banks.
 

US stocks fell as investors booked profits following a four-week rally. Yesterday – notes Greg Secker – , the Dow Jones industrial average lost 32.12 points (or 0.34%) to close at 9,337.95. Yesterday – notes Greg Secker – , the S&P 500 index fell 3.38 points (or 0.33%) to close at 1,007.10. Yesterday – notes Greg Secker – , the Nasdaq dropped by 8.01 points (or 0.4%) to close at 1,992.24. There is an abundance of economic data due for release this week, including the Federal Reserve interest rate statement and government figures for monthly retail sales.
 

Today Royal Institution of Chartered Surveyors (RICS) house price balance came in at -8.1, better than the expected -10.0, and the highest reading since August 2007. According to the Markets UK Regional Purchasing Managers Indices (PMI) London had the steepest rate of job cuts in July. Employment was found to be falling at its fastest rate for 5 months. The British Retail Consortium (BRC) today released figures showing that the retail sales values rose by 1.8% on a like for like basis compared to last July.
 

Food retail sales rose 4.2%, whilst non-food fell 1.4%. Tomorrow’s, BOE quarterly inflation report and June jobs data remain obstacles to further gains. This week all eyes are on the record £75bn US debt sale by the US treasury and Federal Reserves. The Federal Reserve meeting finishes tomorrow, the sale is set to open around two hours before the end of the two-day meeting, there is concern in the market that this could cause diminished demand.
 

EUR/USD little changed, overnight and the EUR/USD is currently bouncing around the 1.4149 level. Cable has drifted a little lower in early European trade but has made some gains now at the 1.6486 mark.  The JPY has gained strength with the USD/JPY down at 96.80. JPY has benefited from disappointing Chinese data. The main reason for the USD to rebound late last week; was the markets anticipation that the Fed might exit from its zero interest rate policy sooner than expected.
The US currency advanced strongly on Friday, gaining more than 2 per cent against the yen and more than 1 per cent against the euro and the pound, following the release of stronger-than-expected US jobs data.
 

Today Gold is at 949.40 USD, Brent Crude is at 73.83 USD and Copper is currently at 279.50 USX.
 

Due for release today, according to Greg Secker, there are a variety of releases, GBP Visible Trade Balance (JUN), GBP Total Trade Balance (JUN), CAD Housing Starts (JUL), USD Non-Farm Productivity (2QP), USD Unit Labor Costs.
 

Yesterday – notes Greg Secker – , the FTSE 100 added 43.40 points to close up (0.9%) at 4,690.53. The FTSE, writes Greg, hit a new intraday high of 4,729.58 driven by the strength of banks as the BoE announced a further 50 billion of QE. This announcement saw gilt futures soar. Weakness was shown among oil stocks, as US crude oil prices decreased by $1 to $71 a barrel. Yesterday – notes Greg Secker – , the Dow Jones industrial average dropped 24.71 points, or 0.27 % to 9,256.26. The S and P 500 Index fell 5.64 points (or 0.56%) to 997.08. Losses were broad based, with the consumer staples and telecommunications services sectors among the biggest losers. The Nasdaq fell 19.89 points to close at 1,973.16. Investors in the US were cautious ahead of the critical government report on July employment and took profits after recent gains. 

  

US retailers reported their eleventh straight month of sales declines for July yesterday, but data showed that jobless claims fell last week, fanning hopes that the job market may be stabilizing. The BOE shocked the markets yesterday with an unexpected increase of its quantitative easing program to $175bn. The bank said that the recent recession appears to be deeper than thought and that while recent data suggested that a recovery in output was near credit conditions remained tight. RBA issues an upbeat assessment of the Australian economy. Their previous stance was seen as pessimistic by many so this readjustment was positive. German June trade surplus has come in better than median forecast of 10.6 bn.  Assets invested globally in exchange traded funds have reached a record high of $862bn on the back of the partial recovery in stock markets and the continuing strong demand for passive investment, according to data from Barclays Global Investors Global exchange-traded funds (ETF). The value of global ETFs plunged from $805bn in April 2008 to $711bn at the end of last year as the global recession hit stock, fixed income and commodity markets, the FT reports. 

  

Yesterday – notes Greg Secker – Sterling fell more than a cent against the dollar after it hit a nine month high earlier this week; after the BOE decided to keep interest rates at 0.5% and increase its QE from 125 bn to 175 bn. Cable has opened slightly lower today and is still pushing lower at present, currently around the 1.6757 mark. EUR/USD has slipped lower in early European trading, presently at 1.4353. There is resistance at around 1.4452. This has been fueled by comments from ECB’s Trichet, stating we’re still in a period of economic contraction, freefall is over, but we must remain cautious. 

  

Today Gold is at 962.00 USD, Brent Crude is at 74.89.53 USD and Copper is currently at 272.45 USX. Oil has already risen by a third this year and there are concerns as sugar also reaches a 28 year high, up 65% since January. 

 

Yesterday – notes Greg Secker – , the FTSE 100 ended 24.24 points lower (down 0.5%) at 4,647.13. The weaker than expected data in the US dragged the equities lower, with oil producers and miners leading the losers. This has caused investors to shift into Finance (up 1.56%) and also Consumer Cyclicals (up 1.19%). Yesterday – notes Greg Secker – , the Dow Jones industrial average dropped 39.22 points to close at 9,280.97. The S and P 500 Index fell 0.29 points to close at 1002.72.The Nasdaq Composite Index fell by 18.26 points to close at -18.26. The weaker data from the services sector and private payroll knocked recent US optimism and the market finished off low as investors ventured into riskier financial shares.

BDO Stoy Hayward has announced that Private equity and trade M&A has fallen for the sixth successive quarter in a row with half the number of deals being completed in Q2 2009 compared to the same period in 2008. With UK manufacturing and construction surveys rising strongly, hope has been raised for a rising GDP in Q3. In addition a strong report from the Halifax has suggested that house prices are stabilizing and the recent Services sector purchasing managers index has jumped to 53.2 suggesting a return to growth. A worrying factor for the UK at the moment is the weak M4 money supply growth rate, which could affect the QE plans of the MPC today. Government data showed that orders received by US factory’s unexpectedly rose in June, advancing for a third month in a row. While factory orders data was strong, reports on the services and labor markets were weaker. Yesterday – notes Greg Secker – , Eurozone retail sales fell unexpectedly in June pointing to a weak consumer demand. Retail trade was expected to rise 0.2% but instead fell 0.2%. Today the ECB is expected to keep interest rates on hold at 1%. Swiss consumers are not feeling too confident these days.  Market will be looking to Trichet for hints regarding quantitative easing and monetary policy bias. The Swiss consumer sentiment index fell to -42 in the Q3 from -38 points in the previous quarterly survey.  The result is pretty much in line with the median forecast of -43.

Yesterday – notes Greg Secker – , it was a nine month high for the Sterling which rose to $1.7039 after industrial output recorded a surprise increase. Cable has ticked higher in early European trade, but is presently at 1.6983.  General sentiment is against the Bank of England quantitative easing program, will lend cable some support. Technical resistances now come at 1.7025/30 and then 1.7045/50.  The dollar weakened on worse than expected US job losses. Despite an awaited ECB rate decision; EURO/USD has remained fairly stable at around the 1.4408 mark.

Today Gold has dropped – 0.1% to 964.40 USD, Brent Crude has remained stable today at 75.53 USD and Copper is currently 277.60USX.

Due for release today, according to Greg Secker, there is a variety of important releases, EUR German Factory Orders, EUR German Factory Orders, GBP Bank of England Interest Rate Decision, EUR European Central Bank Interest Rate  Decision.

In forex news, the yen rose again yesterday against the euro and the dollar as Asian equity markets and US stock futures declined.   The dollar is testing levels near 2009 lows against the euro as a strong housing report suggests that the recession is coming to an end.  In key data releases the GBP Halifax HPI released this morning was better than expected at 1.1%. At 9.30 is the GBP manufacturing production m/m and the services PMI.  At 1.15pm watch out for the USD ADP non-farm employment change and then at 3.00pm, USD ISM non-manufacturing. Yesterday – notes Greg Secker – the FTSE 100 closed down 11 to close at 4,671.

In forex news, the U.S. dollar fell yesterday against a basket of currencies to its lowest level in eleven months as rising global equity markets and encouraging economic data from around the world eroded the greenback’s safe-haven appeal. Positive manufacturing reports from the United States, Europe and China lifted hopes about the global economy and boosted risk appetite. That drove the euro to a 2009 high and sterling and the Australian and New Zealand dollars to their highest since autumn versus the U.S. currency. In overnight data releases the AUD central bank left official interest steady at 3.00% and major data releases to look out for today there is the USD pending home sales at 3.00pm. Yesterday – notes Greg Secker – the FTSE 100 closed up 74 points to closed at 4,682. The rise was lead by good news from Barclays and HSBC.

On Friday the FTSE closed down 24 points at 4,608 and formed a high-test bar bouncing off 4,650. The Dow closed up 16 points at 9,171. In Forex news the US dollar tested two month lows against the euro as the market shift focus to higher yielding currencies on expectations that US manufacturing will show improvement with pace of contraction slowing.  In data releases today to look out for GBP manufacturing PMI at 9.30am and the USD ISM manufacturing PMI at 3.00pm. Then at 11.45pm there is the NZD labor cost index q/q