Weekly Drop for Dollar and Yen on Improving Sentiment

* Safe haven demand boosted the dollar on Friday after terrorist bombings in Jakarta, Indonesia. Data on US housing starts and building permits were better than anticipated. The S&P 500 fell 0.36 points to 940.38, but US stocks rose about 7% for the week. The dollar and yen declined on better risk appetite while the European and commodity currencies advanced for the week.

* The dollar index rose modestly on Friday but fell for the week. Unable to break the resistance at the 81 handle last week, the index was pressured this week by better-than-expected US corporate earnings and improving global economic data, particularly strong Chinese economic growth. The dollar index has been trading inversely with the stock market and risk appetite. The index reached a peak in the beginning of March, which coincided with the US stock market’s low. The index then traded sharply lower as stocks rallied. During June’s stock-market consolidation, the dollar index moved sideways. If the US stocks measured by S&P 500 can penetrate the resistance from the early-June high in the 950 area, the dollar index will break the 78-area support and likely drop significantly.

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Financial and Economic News and Comments

US & Canada

* US housing starts unexpectedly rose 3.6% to a seasonally adjusted 582,000 annual rate in June after an upwardly revised 17.3% gain to 562,000 in May, according to figures released by the Commerce Department. The rise in June housing starts was due to a 14.4% gain in single-family units, which have risen for four consecutive months for a total gain of 31.7% since February. Multi-family starts remained extremely volatile, declining 25.8%. June housing starts dropped 52.0% y/y. Housing starts advanced in the Northeast and Midwest, fell slightly in the South, and fell in the West. Building permits rose a more-than-expected 8.7% to a 563,000 annual rate in June after a 4.0% gain to 518,000 in May. Building permits increased for both singlefamily and multi-family units. Overall, the June figures indicate the US housing sector is stabilizing.

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* Canada’s consumer prices declined 0.3% y/y in June, the first 12-month decrease since November 1994, after a 0.1% y/y increase in May, CPI data from Statistics Canada showed. The year-on-year decline was mainly due to a 19.0% y/y drop in prices for energy products, particularly gasoline. The CPI advanced 0.3% m/m. The Bank of Canada core CPI rate decelerated to 1.9% y/y in June from 2.0% y/y in May. The BOC core CPI was unchanged m/m. All the numbers were in line with forecasts.

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* Canada’s leading economic indicators index was down 0.1% m/m in June, a tenth straight monthly drop; however, slowing the decline rate from 1.0% m/m in April to 0.1% m/m in May, according to LEI data from Statistics Canada. Dropping manufacturing orders led the June LEI decline, while the stock market and housing continued to gain.

Europe

* Eurozone exports fell 2.7% m/m in May after a 0.7% m/m decline in April, while May imports decreased 2.8% m/m, the same rate as in April, according to seasonally adjusted trade data released by Eurostat. The seasonally adjusted trade surplus swelled to ?800 million ($1.1 billion) in May from ?700 million in April.

* Eurozone construction output declined a seasonally adjusted 2.0% m/m in May after a downwardly revised 0.4% m/m increase in April, a separate report from Eurostat showed. May construction output fell 8.0 y/y, following April’s downwardly revised 5.0% y/y slide.

Asia-Pacific

* In Q2 2009, Australia’s export prices plunged a more-than-anticipated 20.6% q/q, the largest quarterly drop since the current series began in Q3 1974, while import prices fell a more-than-expected 6.4% q/q, the biggest quarterly decline since the current series started in Q3 1981, figures from the Australian Bureau of Statistics showed.

* Japan’s leading economic indicators index for May was revised down to 76.9 from a preliminarily reported 77.0, while the coincident index was revised up to 87.1 from a preliminarily reported 86.9, according to final May data from the Cabinet Office.

Источник: Hans Nilsson

17.07.2009