Yen Rises as Risk Appetite Falls

he dollar closed mixed on Friday, lower versus the yen but higher against the commodity currencies, on further signs of slowing US economic growth. The dollar index, rising for the first day in four, rose to 82.56 after finding the 82-area support. July consumer expectations dropped to the lowest level since March 2009 and June consumer prices declined for a third month. The S&P 500 plunged 31.60 to 1,064.88 on disappointing earnings reports and global recovery worries. The euro hit the highest level since May 10 after Chinese Premier Wen Jiabao said Europe would always be one of the main investment markets for China’s foreign exchange reserves. However, the overbought EUR/USD was unable to rise above the 1.30-area resistance and closed slightly lower. Unable to penetrate the 1.55-area resistance, the GBPUSD reversed most of yesterday’s strong gain. The Australian and Canadian dollars closed sharply lower as commodity prices declined. For the week, the greenback fell versus the European and Japanese currencies but gained against the aussie and loonie.

The USD/JPY fell to a 7-month low, pressured by carry trade unwinding and narrowing interest-rate spreads. The pair has traded lower since peaking in early-May. The sharp drop on May 6 caused the so-called flash crash in the stock market. Both the USD/JPY and stock market recovered after May 6; however, having trended lower. The USD/JPY is approaching the 86-area support. If this is broken, the pair will likely test the November 27 low at 84.80.



Financial and Economic News and Comments

US & Canada
US consumer prices slipped 0.1% m/m in June, a third consecutive monthly decline, after a 0.2% m/m decrease in May, according to CPI data from the Labor Department, indicating US consumer-price inflation remains well contained. The consumer-price inflation rate decelerated to 1.1% y/y, the lowest since October 2009, from May’s 2.0% y/y. The June month-on-month CPI decline was led by energy costs, which fell 2.9% m/m for a second month. Food prices were unchanged for a second month. The core CPI, which excludes food and energy, was up 0.2% m/m in June, the largest gain since October 2009, after a 0.1% m/m increase in May. The core CPI rate held at 0.9% y/y for a third successive month. Meanwhile, real average hourly earnings increased 0.1% m/m and 0.9% y/y in June, a separate report from the Labor Department showed.

The Reuters/University of Michigan preliminary consumer sentiment index fell to a lower-than-anticipated 66.5 in July from 76.0 in June, indicating US consumer confidence dropped to the lowest level since August 2009, according to the latest Thomson Reuters/University of Michigan surveys of consumers, compared with July 2009’s 66.0. The 9.5-point decrease from June’s figure was the largest since October 2008. The current economic conditions index slid to 75.5 in July, an 8-month low, from 85.6 a month earlier. The consumer expectations index declined to 60.6, the lowest level since March 2009, from June’s 69.8.


Net foreign purchases of long-term US securities slowed to $35.4 billion in May from a downwardly revised $81.5 billion in April, while monthly net TIC flows increased to $17.5 billion from April’s downwardly revised $13.0 billion, figures from the Treasury Department showed.

The Canadian leading economic indicators index, a measure of future economic activity, was up a more-thanexpected 1.0% m/m to 242.5 in June, a 13th straight monthly gain, after upwardly revised increases of 1.1% m/m in May and April, led by growth in the manufacturing sector, according to LEI data from Statistics Canada; thus, pointing to a sustainable Canadian economic expansion. New orders for durable goods rose 2.3% m/m in June, a fifth consecutive monthly rise.

Europe
In non-seasonally adjusted terms, the eurozone trade balance showed a ?3.4 billion ($4.4 billion) deficit in May, larger than expected, after a downwardly revised ?0.3 billion surplus in April, compared with a ?2.2 billion surplus in May 2009, figures from Eurostat showed. In seasonally adjusted terms, the trade balance unexpectedly registered a ?3.0 billion deficit in May, the first monthly shortfall since February 2009, following a downwardly revised ?0.1 billion surplus a month earlier. Seasonally adjusted exports, rising slower than imports, increased 1.6% m/m to ?123.6 billion in May after a revised 3.1% m/m decrease in April. Seasonally imports rose 4.2% m/m to ?126.5 billion, following April’s revised 3.0% m/m decline.



Asia-Pacific
The Japanese tertiary industry activity index declined a slightly more-than-expected 0.9% m/m sa to 97.1 in May after an upwardly revised 2.4% m/m advance in April, indicating Japan’s demand for services fell for the third time in four months, according to data from the Ministry of Economy, Trade and Industry. The index was up 1.0% y/y sa, a fifth successive year-on-year increase, following April’s upwardly revised 1.8% y/y gain.


Japan’s nationwide department store sales fell 6.0% y/y in June, a 28th straight year-on-year slide, after a 2.1% y/y decrease in May, data from the Japan Department Stores Association showed. Tokyo department store sales slid 5.5% y/y, also down for a 28th consecutive month, following May’s 1.8% y/y decline.

Источник: Hans Nilsson

16.07.2010