USD/JPY Bottoming?

* At cycle lows against most major currencies, the dollar found support on Wednesday. The dollar index rose to 76.42 after testing the 76-handle support. The S&P 500 index was up 2.56 points to 1,057.58. The euro fell for the first day in four ahead of Thursday’s European Central Bank’s interest-rate decision meeting, while the pound rose modestly ahead of the Bank of England’s meeting. The BOE is expected to keep its key interest rate at 0.50% while the ECB will likely maintain its benchmark rate at 1.00%. The USD/CAD climbed above the 1.06-handle. The AUD/USD, little changed, reached the highest level since August 2008. The Swiss franc fell as Swiss unemployment rose to an 11-year high.

* The USD/JPY declined after Finance Minister Hirohisa Fujii stated that “now is the time to calmly watch the currency markets” but there may be some action if movements become abnormal. The USD/JPY recouped most of its losses after testing the 88-handle support. The pair is in a clearly defined downtrend. However, there are strong supports at 88 and 87. The USD/JPY is extremely oversold; thus, we buy it with stop at 86.50.

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Financial and Economic News and Comments

US & Canada

* US consumer credit fell by $12.0 billion in August, or 5.8% at an annual rate, to $2.4627 trillion, after falling a revised $19.0 billion in July, figures from the Federal Reserve showed, marking a seventh monthly drop and the longest stretch of declines since 1991.

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Europe

* Eurozone GDP was revised slightly downward to a 0.2% q/q decline and a 4.8% y/y contraction for Q2 2009 from previous estimates of a 0.1% q/q decline and a 4.7% y/y contraction, final Q2 GDP figures from Eurostat showed, following a record 2.5% q/q contraction and a 4.9% y/y drop in Q1, signaling a eurozone economic recovery is likely to be gradual. Household consumption expenditure increased a downwardly revised 0.1% q/q in Q2, the first rise in more than a year, after a 0.5% q/q decline in Q1. Government spending rose an upwardly revised 0.7% q/q in Q2, after a 0.6% q/q increase in Q1. Investments were revised downward to a 1.5% q/q decline, still a substantial improvement from Q1’s 5.4% q/q drop. Exports declined 1.5% q/q in Q2 after a 9.2% q/q drop in Q1, while imports fell 2.9% q/q following Q1’s 7.9% q/q decrease.

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* Germany’s seasonally adjusted manufacturing orders rose a more-than-anticipated 1.4% m/m in August, a sixth consecutive month-on-month gain, after a downwardly revised 3.1% m/m increase in July, data from the Federal Ministry of Economics and Technology showed, signaling rising industrial production in Q3 2009. August manufacturing orders fell a non-seasonally adjusted 20.4% y/y, following July’s revised 20.1% y/y drop.

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* The Nationwide UK sentiment index rose more than expected to 71 in September from an upwardly revised 65 in August, indicating UK consumer confidence climbed to the highest level since April 2008, according to data from Nationwide Building Society.

* UK shop prices remained deflationary for a second straight month in September, declining 0.1% y/y and remaining broadly flat m/m, the BRC-Nielsen shop price index released by the British Retail Consortium showed.

* Switzerland’s seasonally adjusted unemployment rate rose to 4.1% in September, as forecast, from 4.0% in August, according to data from the State Secretariat for Economic Affairs. In non-seasonally adjusted terms, the unemployment rate increased to 3.9% from 3.8%.

Asia-Pacific

* The Japanese leading economic indicators index, a measure of future economic activity, increased to 83.3 in August, a sixth straight monthly gain, from a downwardly revised 82.5 in July, according to preliminary August LEI data from the Cabinet Office. The data came in line with expectations. The coincident index, measuring present economic activity, rose to 91.4, a fifth consecutive monthly rise, from July’s upwardly revised 89.8, indicating Japan’s economy is recovering from its worst postwar recession.

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* The Australian Industry Group/Housing Industry Association performance of construction index grew to 50.8 in September from 42.4 in August, indicating Australia’s construction sector posted modest growth for the first time since February 2008, according to an AiG/HIA report. The new orders index rose to 51.0 in September from 42.5 in August, signaling the first gain in new orders since February 2008 and an improvement in pipeline demand for construction firms. The employment index jumped to 51.8 from 42.6, indicating employment expanded in September.

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* Australia’s home-loan approvals fell for a second consecutive month in August, falling a seasonally adjusted 0.6% m/m to 62,718, in line with forecast, after a revised 2.2% m/m decrease in July, figures from the Australian Bureau of Statistics showed. The total value of loans increased 0.7% m/m to A$22.782 billion ($20.25 billion). The value of lending for owner occupied housing fell 1.7% m/m to A$16.543 billion while the value of lending for investment housing rose 7.6% m/m to A$6.239 billion.

Источник: Hans Nilsson

07.10.2009