Brief reviews

EURUSD 18/08/09

Last week euro was up by 0,14 % versus the dollar. Last week in the currency market was rather uneasy.
At the beginning of the week euro conceded to the American currency. Not so positive macroeconomic data from China which have caused decrease in interest to highly remunerative actives became the main reason for euro deviation. So, industrial output in China in July has increased less than analysts expected. The export volume has fallen by 23 %. The level of consumer prices and producer prices has also decreased.
Rates of decrease of wholesale and consumer prices in Germany were accelerated. July CPI was revised to flat on the month from down 0,1 %, with year-over-year CPI down 0,5 %, revised from a decline of 0,6 %. July's harmonized inflation was revised to down 0,1 % month over month from a flash estimate of flat, with the year-over-year rate down 0,7 % (from down 0,6 %). The monthly result was the first negative reading in the measure in 22 years.
The middle of week has brought positive news to euro.
In Germany, second quarter seasonally adjusted GDP rose 0,3 % quarter over quarter, above expectation, and the first gain in the measure since 1Q 2008.
In France, second quarter GDP rose 0,3 % quarter over quarter, above expectation for a small decline, and the first rise in four quarters. Rising consumption and exports boosted output during the quarter. Private consumption grew 0,3 % after a rise of 0,2 % during the first quarter, helped by low inflation, tax breaks and public incentives for new car purchases. Exports rebounded, growing 1,0 % on the quarter after a 7,1 % decline in the first quarter.
European Union 2Q Flash GDP showed a decline of 0,1 % quarter over quarter, better than expected. Other EMU countries that showed positive GDP growth were Portugal and Greece, both up 0,3 %, and Slovakia, up 2,2 %. However, Italy's GDP, estimated last week, fell 0,5 % during the second quarter, while the Netherlands' GDP dropped 0,9 %.
The decision under rates by Fed was key event of week. Industrial production in July added to the argument that the recession is over, rebounding primarily on motor vehicle assemblies. Overall industrial production in July jumped by 0,5 %, following a revised 0,4 % decline in June. The July boost came in just under the market expectation for a 0,6 % gain.
Retail sales in USA in July were unexpectedly down and sharply disappointing. Overall retail sales slipped by 0,1 % in June, following a revised 0,8 % boost the month before. The July decline came in well below the consensus forecast for a 0,8 % advance. Excluding motor vehicles, retail sales dropped by 0,6 %, following a revised 0,5 % rise in June. The market had projected a 0,1 % uptick for the latest month. Weakness was led by gasoline sales which declined by 2,1 % in July, following a 6,3 % jump the prior month. Excluding motor vehicles and gasoline, retail sales fell by 0,4 %, following a 0,1 % dip the prior month.
The budget deficit of the USA continues to fly promptly upwards and for July has made $180.7 billion, from the beginning of fiscal year deficiency has made $1,267 bln., threefold above than one year ago.
Nevertheless, on Friday MSCI World has risen to maxima since October of the last year.
We consider that in the near future the dollar will strengthen the positions.

EURUSD 07/03/2009

The dollar declined by 0,19% versus the dollar. EUR/USD ended at $1,3975. USA celebrated a national holiday - Independence Day, therefore the auctions in the USA have been closed. Activity of players and volumes were on a low level.

Data on retail sales in the Eurozone has supported the dollar. Retail sales fell a larger than expected 0,4% on the month in mid-quarter. The May decline followed a smaller revised 0,1% gain (was 0,2%) in April and left the level of volumes 3,3% lower on the year. Average combined April-May sales were 0,4 percent below their first quarter mean when they dropped 0,9% from the fourth quarter of 2008.

Last week the American dollar added 0,65% versus the European union currency at $1,3975. Euro positions are weak enough. The further decline of pair is possible.

EURUSD 07/02/2009

The euro fallen by 1% versus the dollar at $1,4000. The dollar was supported by negative macrostatistics from Eurozone and USA.

The main events and news:

-      According to Eurozone unemployment data, joblessness rose by a further 273 000 to more than 15 million in mid-quarter, a new 10-year high. With April revised up by 0,1%, the rise in the number of people out of work was accompanied by a 0,2% point increase in the unemployment rate to a higher than expected 9,5%. However, not all countries providing data registered an increase in their unemployment rates. Germany (7,7 %t), Belgium (8,2%), the Netherlands (3,2%) and Austria (4,3 %) all saw no change. 

-      As expected the European Central Bank left its policy interest rate unchanged at 1 percent. The ECB strictly adheres to its inflation target goal of not more than 2 percent. Recent flash harmonized index of consumer price index was down 0.1 percent on the year in June mainly due to base effects of last year's oil price spike.

-      In USA, the labor sector continued to contract in June with payroll jobs falling more than expected while the unemployment rate rose just marginally. Nonfarm payroll employment in June declined 467,000, following a fall of 322,000 in May and a decrease of 519,000 in April. The June contraction in jobs was worse than the market forecast for a 350,000 decrease. May and April revisions were up a net 8,000. Payroll losses were widespread. On a year-ago basis, payroll jobs were down 4.1 percent in June, compared to down 3.9 percent the month before. The average workweek slipped to an extremely weak 33.0 hours from 33.1 hours in May.

-      June's U.S. payroll data are a disappointment but not jobless claims data which do show weekly and monthly improvement. Initial claims totaled 614,000 in the June 27 week, down 16,000 from the prior week for a 615,250 four-week average that's down nearly 17,000 from May's average. 

-      May was a good month for U.S. manufacturing as orders jumped 1.2 percent to an adjusted $347.9 billion in the month. New orders for durable goods rose 1.8 percent while orders for non-durable goods, boosted only modestly by higher oil-related prices, rose 0.7 percent.

EURUSD 07/01/2009

The euro was 0,8% higher versus the dollar at $1,4144. Euro growth was supported by the statements of financial representatives and encouraging statistics from Europe, USA and Asia.

The main events and news:

-      In Germany, real retail sales, excluding autos, rose a stronger than expected 0,4% on the month in mid-quarter. The modest advance, which followed an unrevised 0,5% increase in April, still left volumes 2,9% weaker on the year but, more significantly, also put the average April/May level up 0,8% from the first quarter mean. The latest monthly advance was the third in succession and clearly suggests that the worst of the downswing is now over as far as the retail sector is concerned.

-      In Japan, second quarter Tankan for large manufacturing firm business confidence improved to a reading of minus 48 from minus 58 in the first quarter. The first quarter reading showed that business confidence had slumped to the lowest level over the 35 year history of the survey. Medium and small non-manufacturing industries barely edged upward as well.

-      According to U.S. Challenger Job-Cut Report, jobless claims are definitely turning lower as is Challenger's layoff count, which fell sharply in June to 74 393 versus 111 182 in May. June's total is the lowest since the first months of the recession. The report said the results suggest the worst of the economic crisis has passed and that second-half layoff announcements are likely to be below those of the first half.

-      ADP is calling for private payroll contraction of 473 000 in June, not much changed from May's revised contraction of 485 000.

-      The U.S. PMI rose as widely foreseen, up 2 points to 44,8. The index was expected to climb by roughly 2 points a month until hitting the month-to-month breakeven level of 50 sometime in the third quarter. But that view may have changed given a nearly 2 point decline in new orders to 49,2, a sub-50 reading indicating that a greater share reported a month-to-month decline than a gain.

EURUSD 06/30/2009

The euro declined by 0,4% versus the dollar at $1,4030. European currency lost the positions against negative dynamics at share markets due to weak U.S. consumer sentiment data.

The main events and news:

-      In Germany the unemployment rose by another 31 000 on the month at the end of the quarter. The June increase was the eighth in a row and lifted the jobless rate by 0,1% points to a much as expected 8,3% . Changes to methodology helped to reduce the May increase by between 10 000 and 20 000 but even allowing for this, the rise was surprisingly small. The June gain was similarly down on average forecasts for an advance of around 50 000 so it may be that the labor market is actually holding up rather better than originally anticipated.

-      In Great Britain the quarterly decline in the economy previously put at 1,9% was revised yet steeper. At 2,4%, the new estimate marks the worst performance in more than half a century and revisions also mean that recession was entered in the third quarter of last year and so earlier than originally thought. Annual growth at the start of the year was revised even more sharply to minus 4,9% from 4,1%. The large revision to the first quarter was mainly due to added weakness in services where output dropped 1,6% or 0,4% more than previously reported. Activity in the construction sector was similarly adjusted down but the goods producing sector was revised stronger at minus 5,1% from -5,3%. 

-      Deutsche Bank experts have reconsidered the forecast of economic development for 2010, expecting growth by 2,5 %. The forecast, published in March, assumed growth by 2 %.

-      The U.S. consumer sector appears to have crumbled in June, according to this morning's chain-store reports and most prominently by the Conference Board's consumer confidence index which fell 5-1/2 points to 49,3. This index, along with other consumer readings, had been showing big improvement as consumers grew increasingly less pessimistic on current conditions and especially on the outlook. But the expectations component fell back in June, down 6 points to 65,5. The assessment of the present situation, in another setback, fell nearly 5 points to 24,8. High unemployment and high gas prices are two central reasons for the pessimism. Those saying jobs are plentiful fell 1,3 percentage points to a microscopic 4,5 percent.