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USD/JPY generally pushed higher, trading to the 108.20 area in late NY
Tue, Aug 5 2008, 06:04 GMT
by Westpac Institutional Bank Team
News and views
The overnight session was mostly cautious as little fresh capital was committed ahead of the FOMC meeting. The main excitement was when a dollar sell-off was reversed by a sharp >$4/bbl plunge in NYMEX oil prices, with rumours swirling of commodity hedge funds in trouble. The New Zealand dollar was generally a little firmer through the session, trading to a high of 0.7335 before easing to just above 0.7300.
The Australian dollar’s underperformance continued, probing above 0.9340 only to be firmly rebuffed as oil and other commodities fell (e.g. spot gold -$10/oz in short order), sending it below 0.9300.
USD/JPY generally pushed higher, trading to the 108.20 area in late NY.
EUR/USD was little changed overall, with its foray above 1.5620 ended by the oil price slide which knocked it back to 1.5570/80.
US core PCE deflator up 0.3% in June. This result was in line with the core CPI in June, and consistent with the quarterly core PCE deflator published last week in the Q2 GDP report, so not really fresh news. The annual rate edged up from 2.2% yr to 2.3% yr. The report also showed a modest 0.1% rise in personal income, on top of the tax rebate boosted 1.8% surge in May; and a 0.6% rise in personal spending, stronger than June retail sales which only rose 0.1%.
US factory goods orders jump 1.7% in June. Durables were unrevised at 0.8%, while higher energy prices boosted non-durable orders to a 2.5% gain, and factory inventories by 1.0%.
Euroland Sentix investor confidence falls from –9.3 to –15.3 in Aug. The survey evidence out of Europe keeps plunging, pointing to a sharp decline in economic activity in the second half of this year. But Euroland producer prices accelerated to 8.0% yr in June, a new cycle high, so the ECB will remain alert to upside inflation risk.
UK construction PMI drops further in July. A new all-time low of 36.7 for this measure of activity in the housing and commercial property sector.
Outlook
We continue to like NZD lower multi week especially on a TWI basis. Rate cutting cycles from the US Federal Reserve, Bank of England and Bank of Canada over the past 12 months have shown that currencies typically continue to decline through the cycle, despite a market already expecting the future cuts to come.
Published on Tue, Aug 5 2008, 06:12 GMT
Archive
- UK PMI construction dives from 35.1 to 31.8 in Nov
Published On Wed, Dec 3 2008, 05:41 GMT - The NZD fell overnight in Europe with the poor news
Published On Tue, Dec 2 2008, 05:28 GMT - UK GfK consumer confidence rose 1 point to -35 in November
Published On Mon, Dec 1 2008, 05:30 GMT - NZD: Stable in a narrow 55 to 55.5 cent range yesterday
Published On Fri, Nov 28 2008, 05:40 GMT - US personal income and spending reports showed an increasingly cautious consumer
Published On Thu, Nov 27 2008, 05:48 GMT
Westpac Institutional Bank
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http://www.westpac.co.nz | natalie_denne@westpac.co.nz
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