EUR/USD Support Held

* The dollar closed mixed on Friday, unable to penetrate important technical levels. The dollar and risk aversion got a boost after US employment fell more than expected, but pared overnight gains as PIMCO’s Bill Gross said he believes the US wants a weaker dollar and US stocks recovered most of earlier losses. Recent US economic figures have been weaker than expected, but our leading economic index suggests that the economic recovery is on track and some volatility in economic variables are to be expected at this stage of the business cycle. The S&P 500 declined 4.61 points to 1,025.21. The yen fell modestly, unable to break resistance. Sterling recovered most of its earlier losses after testing the 1.58 support. The Australian dollar depreciated somewhat while the Canadian dollar gained modestly.

* The EUR/USD reversed losses after finding support from the long-term uptrend. US unemployment rate rose to a 26-year high, increasing speculation that the Federal Reserve is not going to hike interest rates anytime soon, while the eurozone PPI increase raised speculation that the European Central Bank is going to raise rates. After making a cycle high on September 23, the EUR/USD has worked off its overbought condition. There is strong support in the 1.44-1.45 area. If this support is broken, the EUR/USD will turn bearish.

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Financial and Economic News and Comments

US & Canada

* US nonfarm payrolls fell a more-than-expected 263,000 in September after falling a revised 201,000 in August, figures from the Labor Department showed. Payrolls continued to decline in most key sectors. The largest payroll losses were in construction (-64,000), manufacturing (-51,000), and retail trade (-39,000). Health care was the strongest sector (+19,000). The unemployment rate rose to 9.8% in September, as forecast and the highest level since 1983, from 9.7% in August. Average hourly earnings increased 0.1% m/m in September after an upwardly revised 0.4% m/m gain in August. Earnings rose 2.5% y/y. Average weekly hours declined to 33.0 from 33.1.

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* US factory orders declined 0.8% m/m in August, worse than market expectations, to $352.9 billion, after an upwardly revised 1.4% m/m gain in July, according to data from the Commerce Department. Excluding transportation, August factory orders increased 0.4% m/m, with gains in metals and machinery, following July’s revised 0.6% m/m decline. August factory orders fell 19.4% y/y.

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Europe

* Eurozone producer prices increased 0.4% m/m in August, driven by a rise in wholesale energy prices, after a revised 0.7% m/m decline in July, according to PPI data released by Eurostat. August PPI fell 7.5% y/y, easing from July’s revised 8.4% y/y drop. The August figures were roughly in line with expectations.

* The contraction in the UK construction sector unexpectedly intensified in September. The CIPS/Markit UK construction PMI declined to 46.7 in September from 47.7 in August, according to data from Markit Economics and the Chartered Institute of Purchasing and Supply.

* UK house prices increased a more-than-expected 0.9% m/m in September, a fifth consecutive month-onmonth gain, to an average of £161,816 ($258,000) per home, after a downwardly revised 1.4% m/m advance in August, according to figures from Nationwide Building Society. September house prices were unchanged y/y, the first time not showing a year-on-year decline since March 2008, following August’s 2.7% y/y decrease.

* UK home owners injected a net £7.0 billion ($11.14 billion) of equity back into their homes in Q2 2009, a fifth consecutive quarterly injection, data from the Bank of England showed, little changed from a revised £7.3 billion repayment in Q1.

Asia-Pacific

* Japan’s unemployment rate unexpectedly declined to 5.5% in August from 5.7% in July, according to data from the Statistics Bureau. The number of employed climbed 290,000, the first rise since January. The job-toapplicant ratio remained at a record-low 0.42.

* Japanese household spending unexpectedly increased 2.6% y/y in August, the largest gain in 19 months, after a 2.0% y/y decline in July, a separate report from the Statistics Bureau showed.

* Japan’s monetary base rose 4.5% y/y in September, a thirteenth consecutive year-on-year rise, after a 6.1% y/y gain in August, the Bank of Japan reported.

Источник: Hans Nilsson

02.10.2009