Dollar Index Downtrend Broken

* The dollar and yen rose as risk aversion increased. Norway raised its key interest rate a quarter point to 1.50%, reminding investors that money will not be nearly free forever. US new-home sales unexpectedly declined in September after posting a fifth consecutive gain in August. Goldman Sachs reduced its Q3 US GDP forecast to 2.7% from 3.0%, while the consensus estimate is 3.2%. Global stocks slumped and the S&P 500 index declined 20.78 to 1,042.63. US bond yields declined for a second day after a record $41 billion sale of 5-year notes drew the strongest demand in two years. The euro broke the 1.48 support and tentatively broke its long-term uptrend. Sterling was little changed. The AUD/USD penetrated the 0.90 support and the USD/CAD broke the 1.07 resistance as commodity prices fell. The USD/CAD also broke its downtrend, while the AUD/USD is still testing its uptrend.

* The dollar index rose for a fifth day as global stocks and risk appetite declined. Negatively correlated with the equity market, the oversold dollar is getting support from falling stocks. The dollar index’ long-term downtrend that began when the US stock market made a bottom and started to rally in March has now been broken. This points to the possibility of a test of the 78-area residence. A penetration of this resistance could indicate a trend reversal for the dollar.



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Financial and Economic News and Comments

US & Canada

* US durable goods orders increased 1.0% m/m to $165.7 billion in September, the second gain in the last three months, after a downwardly revised 2.6% m/m decline in August, the Commerce Department said. Excluding transportation, durable goods orders advanced a more-than-expected 0.9% m/m in September after a downwardly revised 0.4% m/m decrease in August. The largest increases in orders were for industrial machinery and defense aircraft/parts. Durable goods orders fell 17.4% y/y in September and fell 14.9% y/y excluding transportation. Shipments of non-defense capital goods excluding aircraft, used in calculating GDP, were down 0.2% m/m in September and revised down slightly for August. These shipments fell at a 1.9% annual rate in Q3, easing the pace of decline following a 14.0% plunge in Q2.

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* US new-home sales unexpectedly fell 3.6% m/m to a seasonally adjusted 402,000 annual rate in September from a downwardly revised 417,000 annual pace in August, according to figures released jointly by the US Census Bureau and the Department of Housing and Urban Development. September new-home sales fell 7.8% y/y, but rose 22.2% versus January’s low. Sales were up in the Midwest, unchanged in the Northeast, but down in the South and West. The median sales price of new homes was $204,800 in September, down 9.1% y/y. The value increased 2.5% m/m. The average sales price of new homes was $282,600, down 1.6% y/y. At the current sales pace, the supply of unsold new homes was unchanged at 7.5 months in September. Inventories declined to 251,000 in September, down 56.1% from the peak in mid-2006 and the lowest since late 1982.

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Europe

* Germany’s consumer prices are expected to increase 0.1% m/m in October after a 0.4% m/m decrease in September, according to October CPI estimates released by the Federal Statistical Office. The consumer-price inflation rate is estimated to remain unchanged (0.0% y/y), following September’s 0.3% y/y decline. The harmonised index of consumer prices (HICP) for Germany is expected to advance 0.2% m/m in October after a 0.5% m/m slide in September. The HICP is estimated to remain unchanged (0.0% y/y), following September’s 0.5% y/y fall.

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* Germany’s import prices declined a slightly more-than-expected 0.9% m/m in September after a 1.3% m/m increase in August, according to data from the Federal Statistical Office. September import prices fell a morethan- expected 11.0% y/y, an eleventh consecutive year-on-year fall, following August’s 10.9% y/y decrease. Excluding crude oil and mineral oil products, import prices declined 0.2% m/m and 7.4% y/y in September. Meanwhile, export prices declined 0.1% m/m in September after a 0.3% m/m increase in August. September export prices fell 3.2% y/y, the same falling rate as August.

Asia-Pacific

* Japan’s seasonally adjusted retail sales increased a more-than-expected 0.9% m/m in September, a third consecutive month-on-month gain, after a 1.0% m/m advance in August, according to data from the Ministry of Economy, Trade and Industry. September retail sales slid 1.4% y/y, a 13th consecutive fall but the smallest in 10 months, following August’s 1.8% y/y decrease. Sales at large-scale retail stores fell a less-than-expected 5.6% y/y in September, an 18th straight decline, after a 6.8% y/y slide in August.

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* Australia’s consumer prices rose 1.0% q/q in Q3 2009 after a 0.5% q/q increase in Q2, the Australian Bureau of Statistics said. The Q3 CPI rise was driven by electricity (+11.4% q/q), automotive fuel (+4.0% q/q), water and sewerage (+14.1% q/q), deposit and loan facilities (+3.0% q/q) and house purchase (+1.1% q/q). Food prices declined 0.8% q/q and health costs slid 1.0% q/q. The consumer-price inflation rate decelerated to 1.3% y/y in Q3, the slowest pace since Q2 1999, from 1.5% y/y in Q2, easing pressure on Reserve Bank of Australia interest-rate increases next week.

* The Reserve Bank of New Zealand kept the official cash rate unchanged at 2.50%, as forecast. RBNZ Governor Alan Bollard said: “Activity in New Zealand’s trading partners continued to rebound during the September quarter and financial market sentiment has improved further. However, there remain significant vulnerabilities and challenges to be worked through in many economies. This process could weigh on global growth going forward…..In contrast to current market pricing, we see no urgency to begin withdrawing monetary policy stimulus, and we expect to keep the OCR at the current level until the second half of 2010.”

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FX Strategy Update



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Источник: Hans Nilsson

28.10.2009