Greenback Testing Resistance

* The dollar reversed overnight gains as risk appetite improved and US stocks reversed morning softness and closed higher in New York Wednesday. Overnight the Shanghai composite index fell over 4%, leading other Asian stock markets lower and supporting the safe haven currencies. The dollar index failed to penetrate the resistance from the long-term downtrend for a third consecutive day. The S&P 500 rose 6.79 points to 996.46. The USD/JPY declined, testing the 94-area support. Sterling fell after the release of Bank of England minutes, which showed that 3 Monetary Policy Committee members wanted to boost the quantitative easing program by more than £50 billion. Dissenters including BOE Governor Mervyn King wanted a £75 billion expansion. The pound later pared losses as US stocks rose and risk appetite returned, while the euro advanced. The Australian and Canadian dollars reversed earlier losses as commodity prices climbed. Crude oil rose after US inventories fell the most in more than a year.

* The USD/CHF fell today, having traded sideways since early-May. Switzerland’s government announced it would sell its stake in UBS. The Swiss National Bank earlier intervened to prevent deflationary pressures and default on Swiss franc denominated foreign loans. The invention usually happened when the EUR/CHF approached 1.50. The EUR/CHF is still a bit above this level. However, we believe the downside in the USD/CHF is limited and will buy the pair with stop at 1.0540.

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Financial and Economic News and Comments

US & Canada

* Canada’s consumer prices fell a slightly more-than-expected 0.9% y/y in July, the biggest fall since 1953, after a 0.3% y/y decline in June, CPI data from Statistics Canada showed. The year-on-year decline was mainly due to a 23.4% y/y drop in prices for energy products, particularly gasoline. July CPI decreased a slightly morethan- expected 0.3% m/m. The Bank of Canada core CPI rate was at 1.8% y/y in July, decelerating from 1.9% y/y in June. The BOC core CPI was unchanged m/m in July.

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* Canada’s leading economic indicators index increased a more-than-expected 0.4% m/m in July, the first gain since August 2008, after declines in May and June were revised up to no change, according to LEI data from Statistics Canada. Six of the 10 components advanced in July, the most since May 2008, led by a 5.7% gain in Canada’s S&P/TSX index, a 4.5% rise in the housing index and a 2.1% increase in the “other durable goods sales” category, which excludes furniture and appliances.

Europe

* The eurozone seasonally adjusted current account deficit widened to ?5.3 billon in June from a revised ?0.1 billion in May, while the non-seasonally adjusted current account deficit narrowed to ?0.3 billion from May’s revised ?11.9 billion, the European Central Bank reported.

* Eurozone construction output declined a seasonally adjusted 1.1% m/m in June after falling 2.0% m/m in May, Eurostat reported. Adjusted for working days, June construction output fell 8.8% y/y, following May’s revised 7.6% y/y decrease.

* Germany’s producer prices fell a more-than-expected 1.5% m/m in July, on a drop in energy prices, after a 0.1% m/m decline in June, PPI data from the Federal Statistical Office showed. Energy costs dropped 16.5% y/y in July. Excluding energy costs, producer prices were down 0.2% m/m in July, down 3.6% y/y. July PPI decreased a more-than-expected 7.8% y/y, the largest year-on-year drop since records began in 1949, following June’s 4.6% y/y slide.

* The CBI UK factory orders index increased less than expected to -54 in August from a 17-year-low -59 in July, according to data from the Confederation of British Industry. The CBI said “manufacturers have endured another difficult month but, following months of destocking, their outlook for production over the three months ahead is the least negative since June 2008.”

Asia-Pacific

* Australia’s Westpac-Melbourne Institute leading index, a measure of future economic activity, increased 0.7% m/m to 247.9 in June from 246.1 in May, Westpac Banking Corp. and the Melbourne Institute reported. The index annualized growth rate was -3.3% in June, easing the pace of contraction following May’s -5.3%. The coincident index, measuring current economic activity, declined 0.4% m/m in June to 237.3.

* Japan’s all industry activity index rose a less-than-expected 0.1% m/m in June, a third consecutive month-onmonth gain, after a 0.7% m/m advance in May, according to data from the Ministry of Economy, Trade and Industry. The index fell 8.2% y/y, following May’s 10.2% y/y drop.

Источник: Hans Nilsson

19.08.2009