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Wakeup Call on Forex Markets

Markets Set To Ease Into a New Week

Mon, May 5 2008, 07:18 GMT
by Christian Svendsen

Saxo Bank


With not much on the board we expect a quiet Monday, Note it is Bank Holiday in UK


Overnight News Bullets

  • GE Retail Sales MoM/YoY (Mar) out at -0.1%/-6.3% vs. 0.6%/-2.3% expected.

  • A streak of European PMI Manufacturing Surveys slightly worse than expected.

  • US Change in Nonfarm Payrolls (Apr) out at -20K vs. -75K expected. 

  • US Unemployment Rate (Apr) out at 5.0% vs. 5.2% expected.

  • US Change in Manufacturing Payrolls (Apr) out at -46K vs. -35K expected.

  • US Avg. Hourly Earnings YoY (Apr) out at 3.4% vs. 3.6% expected.

  • US RPX Composite YoY (Feb) out at -11% vs. -9.18% prior.

  • US Factory Orders (Mar) out at 1.4% vs. 0.2% expected.

  • NZ Avg. Hourly Earnings QoQ (1Q) out at 1.1% vs. 0.9% prior.

  • AU House Price Index YoY (1Q) out at 13.8% vs. 11.0% expected.

  • AU ANZ Job Advertisement MoM (Apr) out at 3.1% vs. -0.7% prior.

  • NZ ANZ Commodity Price (Apr) out at -0.3% vs. 2.0% prior.


Markets

  • FX: USD strength against major currencies; EUR weaker against JPY, marginally stronger against CHF.

  • Fixed income: Bunds and Treasuries trading lower on equity market rally, but is still holding up.

  • Stocks: We saw the US stocks trading higher on better than expected earnings from tech companies and Asia followed the trend overnight.

  • Commodities: Oil, gold and silver traded lower on USD strength; Oil was down by more than 4 USD.


O/N Data Heat map:

Data heat map


Calendar

Today's Highlights:

Time (GMT)RegionReleaseConsensus
07:00NONorway PMI SA (APR)52.3
08:00NOUnemployment Rate (Apr)1.60%
08:30E-ZSentix Investor Confidence (May)3.9
14:00USISM Non-Manuf. Composite (Apr)49.1
00:30USBernanke Speaks on Mortgage Foreclosures


This and Next Week’s Highlights:
DateRegionRelease
May-06AUTrade Balance, Exports, Imports, RBA Cash Target
May-06SZCPI,
May-06GEPMI Services
May-06ECPMI Services, E-Z PPI
May-06UKPMI Services, Offcial Services, Nationwide Consumer Confidence
May-06CABuilding Permits, Ivey Purchasing Managers Index
May-06USABC Consumer Confidence
May-07UKIndustrial Production, Manufacturing Production
May-07E-ZRetail Sales
May-07GEFactory Orders
May-07USMBA Mortgage Applications, Nonfarm Productivity


What's going on?

  • Much discussion about the current rally in stocks. Is it a “suckers rally” or for real? Current P/E in S&P500 has moved to 22.66 – the highest in five years. But estimated P/E is at 15.33 – the lowest in 17 years. We believe that the full impact from the faltering housing market on earnings is not fully priced in yet and that we will see a lot of earnings disappointing in the months to come.

  • Friday’s US labor market data was somewhat better than expected, but our indicators are still showing a severe slow-down of economic acticivity since October, 2007.

  • EURUSD hasn’t closed below it’s 38.2% Fibo retracement (1.444-1.602) since 11th of March. This level (1.542) will be important after the better than expected US figures on Friday.

  • Very strong come-back in Crude Oil on Friday (again).

FX

fx graph

Fx trading strategiesf

FX Trading Strategies

Pair Supp. Resis. Comments
USDCHF 1.0451.06The dollar reversed after intial strength post US non farm payrolls, which could be a theme to continue in Europe. We placed an order to sell at 1.0533 stop offer, targeting 1.0440, stop at 1.0550 bid.

Published on  Mon, May 5 2008, 07:37 GMT

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http://www.saxobank.com/ | info@saxobank.com

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