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Wakeup Call on Forex Markets

Signs of Risk−Aversion Re−entering the Market

Fri, May 9 2008, 07:00 GMT
by David Karsbøl

Saxo Bank


Fixed Income in strong rally. CHF and JPY strengthening. Stocks Uninspiring. Crude Oil towards $125.


Overnight News Bullets

  • SZ Unemployment Rate (Apr) out at 2.6% vs. 2.5% expected.

  • SW Industrial Production MoM/YoY (Mar) out at -0.1%/0.8% vs. -0.3%/1.9% expected.

  • SW Industrial Orders MoM/YoY (Mar) out at 6.9%/-9.5% vs. -3.5%/1.6% prior.

  • NO Industrial Production MoM/YoY (Mar) out at 1.4%/4.0% vs. 0.4%/0.3% expected.

  • NO Ind. Prod. Manufacturing MoM/YoY (Mar) out at -2.0%/-0.4% vs. 0.0%/2.3% expected.

  • GE Industrial Production MoM/YoY (Mar) out at -0.5%/4.7% vs. -0.5%/4.8% expected.

  • UK BoE Rate Announcement out at 5.00% (unchanged) as expected.

  • E-Z ECB Rate Announcement out at 4.00% (unchanged) as expected.

  • CA Housing Starts (Apr) out at 213.9K vs. 225.0K expected.

  • US Initial Jobless Claims out at 365K vs. 370K expected.

  • US Continuing Claims out at 3020K as expected.

  • US Wholesale Inventories (Mar) out at -0.1% vs. 0.5% expected.

  • US EIA Natural Gas Storage out at 65 vs. 62 expected.

  • US ICSC Chain Store Sales YoY (Apr) out at 3.6% vs. -0.5% prior.


Markets

  • FX: USD slightly weaker. JPY and CHF strengthening a lot.

  • Fixed income: Noteworthy rally in all sovereign fixed income.

  • Stocks: Europe mixed, US slightly higher. Nikkei down 1.78%.

  • Commodities: Crude Oil still going higher, despite big DOE build on Wednesday. Precious metals both higher.


O/N Data Heat map:

Data heat map


Calendar

Today's Highlights:

Time (GMT) Region Release Consensus
07:30SW Activity Index Level (MAR) Prior 123.7
08:00NO Producer Prices incl. Oil MoM/YoY (APR) 0.8% / 18.0%
08:00NO Headline CPI MoM/YoY (APR) 0.2% / 3.5%
08:00NO Core CPI MoM/YoY (APR) 0.3% / 2.3%
11:00CA Unemployment Rate (APR) 6.00%
11:00CA Net Change in Employment (APR) 10.0K
12:30US Trade Balance (MAR) -$61.0B
12:30CA International Merchandise Trade (MAR) C$4.5
17:00US Baker Hughes U.S. Rig Count (MAY) Prior 1839


This and Next Week’s Highlights:
Date Region Release
Mar-09GE Wholesale Price Index
May-09NO Producer Prices, CPI,
May-09CA Unemployment Rate, Net Change in Employment, Int’l Mercandise Trade
May-09US Trade Balance
May-12AU Home Loans, Investment, NAB Business Confidence and Conditions.
May-12UK Trade Balance, BRC April Retail Sales Monitor, PPI
May-12CA New Housing Price Index
May-12US Monthly Budget Statement
May-13SW CPI Headline and Underlying, AMV Unemployment Rate
May-13UK CPI Headline and Core, RPI, DCLG House Prices
May-13US Import Price Index, Retail Sales, Business Inventories, IBD/TIPP Economic Optimism, ABC Consumer Conf.
May-13JN CGPI, Current Account, Trade Balance


What's going on?

  • Crude oil has seen yet another record high at $124.70 on speculation diesel and gasoline may prove to be insufficient to meet demand levels during the summer driving season. We are looking crude to test $125 in today’s trading.

  • After effects of Myanmar cyclone on rice prices have been coupled by Philippines and Nigeria, two of the world’s largest importers, seeking new shipments, pushing for a 6 consecutive days of price appreciation.

  • Yen is headed for biggest weekly gain in 3 month period against euro as continued decline in Asian stocks has punished the carry trades. In his post rate decision remarks, ECB President Trichet said the inflation would remain high for some time, signaling to markets that the bank was in no rush to lower rates despite slowing growth.


FX

GBPUSD to resume downtrend?

fx graph

Fx trading strategies

FX Trading Strategies

Pair Supp. Resis. Comments
GBPUSD 1.951.98BoE decided to keep rates unchanged as expected yesterday and on the longer term, we still see the GBP weaker. However, with lack of data today, we technically buy the break of 1.9671 bid, stop offer at 1.9555targeting 1.9650.

Published on  Fri, May 9 2008, 07:13 GMT

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

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