MAJOR HEADLINES – PREVIOUS SESSION
- US University of Michigan Confidence out at 69.0 vs. 69.5 expected vs. 68.7 prior read.
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US Treasury Geithner spoke at the G8 news conference in Italy.
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BOJ Monetary Policy Meeting
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Norwegian Trade balance (MAY) out at 22.2B vs. 24.4B prior read (revised lower to 23.9B)
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Euro-Zone Employment QoQ (1Q) out at -0.8% vs. -0.3% prior read (revises lower to –0.4%)
THEMES TO WATCH – UPCOMING SESSION
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US June Empire Manufacturing (1230)
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US April Net Long-term TIC Flows (1300)
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US Treasurer Geithner speaks at Time Warner Event in New York (1300)
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US FED’s Evans Speaks on Financial Crisis in Chigago (1330)
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US NAHB’s Housing Market Index (1700)
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US FED’s Duke Speaks in Washington on Financial Crisis Responses (2200)
Market Comments:
The dollar is rising again. This is largely spurred by falling oil and equity markets, but the dollar was also supported by Russia’s Finance Minister, Alexei Kudrin, who said that Russia has full faith in the U.S. currency. However this is still talk – whether this is backed up by action remains to be seen.
The euro dropped against several currencies after the British newspaper, The Daily Telegraph, cited Hans Heinrich Driftman, president of the German Chamber of Commerce and Industry, saying that the nation’s credit conditions are worsening. The Chambers survey which is to be released later this week shows that one third of all large companies are facing tightening credit conditions. This should put further pressure on the ECB to take some action.
The Bank of England may need to print more money to spur growth, the CBI (Confederation of British Industry) said in forecasts published today. We still have negative outlook for the UK economy and if equities continue to fall (as we expect) risk appetite is going to be under some pressure and then the pound will probably weaken somewhat further against the yen. The GBP has so far been seen as a global recovery story and markets seems to be a little nervous as to whether this recovery is going to happen at the so far predicted pace.
The Lati continues to be under pressure, but for the first time The Latvian Central Bank sold lati. The government is aiming for a 10 pct. budget cut in order to meet the requirements set by the EU and IMF in order to receive further funding. But the expectation is still to see a contraction of the Latvian economy at 18% this year and this will still incur pressure on the Lati as well on the SEK due to the Swedish banks' exposure towards The Baltics.
