Debt Level Risk Pressures GBP/USD

The dollar rose against most major currencies on Monday ahead of upcoming European debt auctions and the beginning of the US Q2 2010 earnings season. The greenback was supported by Federal Reserve Bank of Richmond President Jeffrey Lacker’s comment that any consideration for further monetary easing is “very far away.” The S&P 500 gained 0.79 to 1,078.75. The yen reversed earlier losses induced by the government’s poor showing in Sunday’s upper-house elections. Prime Minister Naoto Kan’s election loss could lead to a downgrade of Japan’s credit rating, Standard & Poor’s and Moody’s Investors Service said. The euro depreciated for a second day. The Australian and Canadian dollars fell for the first day in four as commodity prices declined.

The GBP/USD dropped for a third consecutive day. Q1 2010 UK GDP was unrevised from the previous estimate, but revisions indicated that the recession had been worse than previously thought. The peak-totrough fall in output during the recession was revised up to 6.4% from 6.2%. The GBP/USD was also pressured after Standard & Poor’s warned that the UK’s debt level could threaten its coveted AAA standing. Technically, the pair failed to penetrate its downtrend and the 1.52 resistance last week. The GBP/USD is now testing the 1.50-area support. If this is broken, further decline will occur.



Financial and Economic News and Comments

US & Canada
Federal Reserve Bank of Richmond President Jeffrey Lacker said further monetary easing is a remote possibility. “It would take a very substantial, unanticipated adverse shock” for further stimulus measures to be appropriate, Lacker said, asserting that “consideration of further easing steps is very far away.”

Canada’s economic rebound is “progressing,” according to the Bank of Canada’s latest business outlook survey. “Firms report a pickup in sales growth over the past year and they expect sales volumes to rise at a greater rate over the next 12 months.”

Europe
UK GDP increased an unrevised 0.3% q/q in Q1 2010 after a 0.4% q/q gain in Q4 2009, final Q1 GDP data from the Office for National Statistics (ONS) showed. The Q1 GDP declined an unrevised 0.2% y/y, following Q4’s 2.9% y/y contraction. In Q1 industrial production increased a downwardly revised 1.0% q/q and services grew an upwardly revised 0.3% q/q, while construction declined a downwardly revised 1.6% q/q.


The UK current-account deficit was £9.6 billion ($14.4 billion) in Q1 2010, larger than expected and the widest since Q3 2007, compared with an upwardly revised £521 million surplus in Q4 2009, which was the first positive result since 1998, according to figures from the ONS.

The UK index of services rose a slightly more-than-expected 0.6% in the three months through April after an upwardly revised 0.3% increase in the three months through March, a separate report from the ONS showed.

Asia-Pacific
Japan’s domestic corporate goods prices slipped 0.4% m/m in June, the first decline in seven months, after an upwardly revised 0.2% m/m increase in May, according to the Bank of Japan corporate goods price index. June domestic corporate goods prices rose 0.5% y/y, a second consecutive year-on-year rise, following an upwardly revised 0.5% y/y May advance.


China’s exports, outpacing an increase in imports, jumped 43.9% y/y to $137.4 billion in June after a 48.5% y/y gain in May while imports grew 34.1% y/y to $117.4 billion following May’s 48.3% y/y rise, data from the Customs Bureau showed. The trade surplus widened to $20.02 billion in June, an 8-month high, from $19.53 billion a month earlier.


Australia’s home-loan approvals rose a more-than-expected 1.9% m/m to 48,818 in May, the first rise in eight months, after a revised 1.5% m/m decline in April, according to figures from the Australian Bureau of Statistics. The total value of loans increased 0.7% m/m to A$21.36 billion ($18.69 billion) in May. The value of lending for owner occupied housing declined 0.3% m/m to A$13.70 billion in May, but the value of lending for investment housing grew 2.6% m/m to A$7.66 billion.

Источник: Hans Nilsson

12.07.2010