Today we launch our coverage of key Chinese economic data. The following events will now be reported on the Forex Factory calendar:
* GDP q/y
* Industrial Production y/y
* Trade Balance
* Manufacturing PMI
* CLSA Manufacturing PMI
* CPI y/y
* PPI y/y
* CGPI y/y
* Fixed Asset Investment ytd/y
* More Coming Soon
As you may have noticed, Chinese data releases are gradually having a more pronounced impact on the currency markets. Presently their influence can rival high-profile G7 indicators, especially in regard to the yen and commodity currencies. It has long been evident that we needed to add the Chinese yuan (CNY) to the calendar, and early this year the Forex Factory economists set out to tackle the project.
The sources for Chinese data are far less transparent and less reliable than we are used to dealing with on the calendar, which is why we had avoided CNY for so long. It took our team five months of research, source gathering, release monitoring, and beta-testing to report the data with the same quality and reliability that we strive for on the calendar.
We cannot change how Chinese sources release and schedule data, but we can implement procedures that will bring clarity and consistency to our coverage. We have made several ‘FF Notes’ (see the Detail View by clicking the icon) to inform you of special circumstances you might expect to see, and we created a new set of ‘FF Alerts’ (see the inside the Detail View, where applicable) that will be used keep you abreast of scheduling issues as they happen. For the least reliable release schedules we opted to set the event’s default time to ‘Tentative’ to make you aware that we don’t know the exact release time. With all CNY data you should be prepared to see surprise early releases, leaked data later retracted, and data being delayed for days - we will do our best to inform you of these issues with the FF Alert function. Finally, we ask that you be slightly more forgiving of our mistakes as we become further acquainted with the new coverage.
We will report our first live CNY data, GDP q/y, in about 24 hours… see you there!
Thursday, July 16, 2009
Tuesday, July 14, 2009
Dollar dips on rising U.S. stocks
NEW YORK, July 13 (Xinhua) -- The dollar fell slightly against most major currencies on Monday as financial stocks jumped and drove the entire market up.
U.S. bank stocks rise after Meredith Whitney, founder of Meredith Whitney Advisory Group LLC, gave positive comments on Goldman Sachs and Bank of America. Rising stocks improved risk appetite in currency trading, driving the dollar lower.
Investors are waiting for some governmental economic reports and quarterly results of major U.S. banks, including Citigroup, Goldman Sachs, JP Morgan & Chase and Bank of America. Results of Intel and Johnson & Johnson are also due later this week.
Risk appetite in currency trading has been rising in the previous weeks, helped by some positive economic data. But a worse-than-expected non-farm payroll report and consumer sentiment report released recently sparked fresh worries over economic recovery. The market is looking for trading clues from new economic data and profit results.
The euro bought 1.3977 dollars in late New York trading compared with 1.3947 dollars it bought late Friday. The pound rose to 1.6211 dollars from 1.6192 dollars.
The dollar fell to 1.1532 Canadian dollars from 1.1631 Canadian dollars, and fell to 1.0831 Swiss francs from 1.0845 Swiss francs. It rose to 92.82 Japanese yen from 92.34 Japanese yen.
U.S. bank stocks rise after Meredith Whitney, founder of Meredith Whitney Advisory Group LLC, gave positive comments on Goldman Sachs and Bank of America. Rising stocks improved risk appetite in currency trading, driving the dollar lower.
Investors are waiting for some governmental economic reports and quarterly results of major U.S. banks, including Citigroup, Goldman Sachs, JP Morgan & Chase and Bank of America. Results of Intel and Johnson & Johnson are also due later this week.
Risk appetite in currency trading has been rising in the previous weeks, helped by some positive economic data. But a worse-than-expected non-farm payroll report and consumer sentiment report released recently sparked fresh worries over economic recovery. The market is looking for trading clues from new economic data and profit results.
The euro bought 1.3977 dollars in late New York trading compared with 1.3947 dollars it bought late Friday. The pound rose to 1.6211 dollars from 1.6192 dollars.
The dollar fell to 1.1532 Canadian dollars from 1.1631 Canadian dollars, and fell to 1.0831 Swiss francs from 1.0845 Swiss francs. It rose to 92.82 Japanese yen from 92.34 Japanese yen.
Monday, July 13, 2009
Forex Daily Analysis
The Yen and the Dollar strengthen as stock start the week with a decline
Japan to diversify its currency holdings and the prospect of national elections in the country
The greenback probably won’t be affected by calls for Japan to diversify its currency holdings and the prospect of national elections in the country, UBS AG said. “These developments are unlikely to be a catalyst of U.S. dollar weakness, but rather accentuate U.S. dollar weakness in the event that it does start to structurally weaken, something we expect to occur through the course of 2010,” Ashley Davies, a strategist in Singapore, wrote in a research report today. “We continue to expect the dollar to recover some lost ground over the summer months as risk appetite falters.” The USD/JPY is currently trading at 92.21 as of 8:48am, London Time.
The European Central Bank and euro zone central banks have bought 43 million Euros more in covered bonds, the ECB said on Monday, taking the total amount purchased to 66 million Euros. The ECB kept its interest rates on hold this month, having narrowed the gap between its main policy rates to 75 basis points from 100 basis points on May 13. The headline rate is at a record low of 1.0 percent. Banks currently receive 0.25 percent interest on overnight deposits and pay 1.75 percent to borrow overnight. Overnight deposits at the ECB rose slightly, data also showed on Monday, with banks still holding on to much of the near half trillion injection of 12 month liquidity. The EUR/USD is currently trading at $1.3950 as of 9:00am, London Time.
The British Pound fell to a five-week low against the euro on Monday as the UK currency came under broad selling pressure as struggling share prices suggested ongoing risk aversion, while the euro remained fairly supported. Data on Wednesday also showed a slight fall in UK house prices in June, but they had limited impact on the market as their reversal from a jump the previous month was muted. Traders largely brushed off UK government proposals for banking sector reforms, as they were largely known to the market already. The GBP/USD is currently trading at $1.6090 as of 9:16am, London Time.
Japan to diversify its currency holdings and the prospect of national elections in the country
The greenback probably won’t be affected by calls for Japan to diversify its currency holdings and the prospect of national elections in the country, UBS AG said. “These developments are unlikely to be a catalyst of U.S. dollar weakness, but rather accentuate U.S. dollar weakness in the event that it does start to structurally weaken, something we expect to occur through the course of 2010,” Ashley Davies, a strategist in Singapore, wrote in a research report today. “We continue to expect the dollar to recover some lost ground over the summer months as risk appetite falters.” The USD/JPY is currently trading at 92.21 as of 8:48am, London Time.
The European Central Bank and euro zone central banks have bought 43 million Euros more in covered bonds, the ECB said on Monday, taking the total amount purchased to 66 million Euros. The ECB kept its interest rates on hold this month, having narrowed the gap between its main policy rates to 75 basis points from 100 basis points on May 13. The headline rate is at a record low of 1.0 percent. Banks currently receive 0.25 percent interest on overnight deposits and pay 1.75 percent to borrow overnight. Overnight deposits at the ECB rose slightly, data also showed on Monday, with banks still holding on to much of the near half trillion injection of 12 month liquidity. The EUR/USD is currently trading at $1.3950 as of 9:00am, London Time.
The British Pound fell to a five-week low against the euro on Monday as the UK currency came under broad selling pressure as struggling share prices suggested ongoing risk aversion, while the euro remained fairly supported. Data on Wednesday also showed a slight fall in UK house prices in June, but they had limited impact on the market as their reversal from a jump the previous month was muted. Traders largely brushed off UK government proposals for banking sector reforms, as they were largely known to the market already. The GBP/USD is currently trading at $1.6090 as of 9:16am, London Time.
Friday, July 10, 2009
Euro Loses Ground on Talks of IMF Credit Deal
Friday, 10 July 2009 08:11:39 GMT
EUR-USD traded defensively after losing its hold above 1.4000 in Asia. It started the European session at 1.3960 and traded in to 1.3905 lows as European interbank names favored short positions on negative European news. The focus was on Eastern European credit concerns noted in the Handesblatt that said at least 10 states are negotiating with the IMF for credit. European indices headed lower in line with easier S&P futures and this also encouraged EUR-JPY offers and it fell from 130.00 to 128.74 lows. There was some disappointment that the Japanese investment trust launch overnight only saw a 10% take up, which dampened expectations of heavy Japanese investment overseas. EUR-JPY has scope for further weakness if equities sustain softer levels, while EUR-USD could retest support in to the mid-1.38s if stop losses are triggered below 1.3870.
Wednesday, July 8, 2009
US Dollar to Rise Against Forex Majors on Demand for Safety
Article
The US Dollar is likely to see gains in the days and weeks ahead as stock markets reverse lower, boosting demand for the safety-linked currency. The Dow Jones Industrial Average looks to have broken support at the neckline of a Head and Shoulders topping chart formation, hinting a bearish reversal is ahead:
Dow Jones Industrial Average (daily)
The US Dollar is likely to see gains in the days and weeks ahead as stock markets reverse lower, boosting demand for the safety-linked currency. The Dow Jones Industrial Average looks to have broken support at the neckline of a Head and Shoulders topping chart formation, hinting a bearish reversal is ahead:
Dow Jones Industrial Average (daily)
US Dollar, Japanese Yen Surge as DJIA, S&P 500 Tumble to Key Levels - G8 Summit Adds to Event Risk
Tuesday, 07 July 2009 22:08:33 GMT
The US dollar and Japanese yen both saw extremely choppy price action, and ultimately ended the day up against the majors as risk aversion drove FX carry trades and equities lower. However, where the S&P 500 and DJIA closed leave very mixed signals, as daily charts of both indices show head and shoulders patterns, but the former ended the day just above its neckline of 880, while the latter made a bearish break below its neckline at 8260. This leaves Wednesday’s price action as being quite critical for the outlook for equities and FX carry trade alike. Personal suspicions sit on the bearish side of the fence, as global economic outlooks may be a bit too rosy for reality, which could ultimately disappointing corporate earnings down the road (and thus, declines in equities).
While there are no major US economic indicators due out on Wednesday, there will be lingering event risk stemming for the upcoming Group of Eight (G8) meeting from July 8 - July 10. According to a program outline on the G8 Summit site, participating government leaders will discuss the world economy, global issues, international issues, development policies, futures sources of growth, and the impact of the crisis on Africa. In between all of these meetings, there will also be a variety of press conferences, leaving ample room open for market-moving commentary.
The US dollar and Japanese yen both saw extremely choppy price action, and ultimately ended the day up against the majors as risk aversion drove FX carry trades and equities lower. However, where the S&P 500 and DJIA closed leave very mixed signals, as daily charts of both indices show head and shoulders patterns, but the former ended the day just above its neckline of 880, while the latter made a bearish break below its neckline at 8260. This leaves Wednesday’s price action as being quite critical for the outlook for equities and FX carry trade alike. Personal suspicions sit on the bearish side of the fence, as global economic outlooks may be a bit too rosy for reality, which could ultimately disappointing corporate earnings down the road (and thus, declines in equities).
While there are no major US economic indicators due out on Wednesday, there will be lingering event risk stemming for the upcoming Group of Eight (G8) meeting from July 8 - July 10. According to a program outline on the G8 Summit site, participating government leaders will discuss the world economy, global issues, international issues, development policies, futures sources of growth, and the impact of the crisis on Africa. In between all of these meetings, there will also be a variety of press conferences, leaving ample room open for market-moving commentary.
Tuesday, July 7, 2009
EURUSD
EURUSD
The Euro was unable to push back above the 1.40 level against the dollar in Asian trading on Monday and had a significantly weaker tone in Europe. The Euro-zone Sentix index was weaker than expected with a deterioration to -31.3 for June from -27.0 the previous month which reinforced fears that any improvement in the economy would stall quickly. In addition, there were renewed fears over the regional banking sector following larger than expected losses at the German IKB bank.
The Chinese Foreign Ministry offering further reassurance on the dollar which helped underpin the currency, although comments from Russian and Indian officials were less supportive and the debate will remain a very important issue. Markets will also remain on alert for comments from G8 officials ahead of meetings this week which start on Wednesday.
The US ISM index for the non-manufacturing index strengthened to 47.0 from 44.0 the previous month and this was above market expectations. Most components improved, although employment was still at a very low level. The data will offer some degree of reassurance over the economy and helped stabilise risk appetite.
As confidence improved, the Euro found support and pushed back to the 1.3980 region from a low near 1.3875 ahead of the US open and with no major data releases due on Tuesday.
The Euro was unable to push back above the 1.40 level against the dollar in Asian trading on Monday and had a significantly weaker tone in Europe. The Euro-zone Sentix index was weaker than expected with a deterioration to -31.3 for June from -27.0 the previous month which reinforced fears that any improvement in the economy would stall quickly. In addition, there were renewed fears over the regional banking sector following larger than expected losses at the German IKB bank.
The Chinese Foreign Ministry offering further reassurance on the dollar which helped underpin the currency, although comments from Russian and Indian officials were less supportive and the debate will remain a very important issue. Markets will also remain on alert for comments from G8 officials ahead of meetings this week which start on Wednesday.
The US ISM index for the non-manufacturing index strengthened to 47.0 from 44.0 the previous month and this was above market expectations. Most components improved, although employment was still at a very low level. The data will offer some degree of reassurance over the economy and helped stabilise risk appetite.
As confidence improved, the Euro found support and pushed back to the 1.3980 region from a low near 1.3875 ahead of the US open and with no major data releases due on Tuesday.
Monday, July 6, 2009
Stocks, Oil, Metals Drop on Economy Concern; Yen, Dollar Gain
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_jQ.efsacwk
By Daniel Hauck
July 6 (Bloomberg) -- Stocks fell, pushing the MSCI World Index lower for a third day, and oil and industrial metals retreated on concern the global economic recovery is faltering.
The MSCI World Index of 23 developed countries slipped 0.8 percent at 1:32 p.m. in London, extending its decline since reaching a high for the year on June 2 to 6.1 percent. Germany’s DAX Index retreated, bringing its drop from its 2009 high to 10 percent, the common definition of a correction. Nickel decreased for a third day on the London Metal Exchange, while oil slumped to its lowest level in five weeks. The yen rose against all 16 most-traded currencies tracked by Bloomberg.
Standard & Poor’s 500 Index futures declined 0.8 percent before the U.S. earnings season begins with Alcoa Inc.’s results on July 8. Profits at S&P 500 companies dropped last quarter and will contract in the three months ending in September, extending the stretch of declines to a record nine quarters, according to analysts’ estimates compiled by Bloomberg. The Institute for Supply Management’s index today may show U.S. service industries contracted for a ninth straight month in June.
“The reassessment of the global economic outlook is likely to continue this week,” a team of Citigroup Inc. strategists, including Todd Elmer in New York, wrote in a research report today. “As a result, an extension of the recent bout of risk aversion may lie in store.”
Volkswagen, Porsche
The Dow Jones Stoxx 600 Index of European shares slid 1.5 percent, led by commodity producers and automakers. Germany’s DAX slipped as much as 2.1 percent as Volkswagen AG retreated 2.9 percent. Porsche SE decreased 3.2 percent after the carmaker was cut to “sell” from “neutral” by UBS AG, which cited growing debt and a likelihood that the company will sell its Volkswagen stake.
BHP Billiton Ltd., the world’s biggest mining company, lost 3.8 percent. Rio Tinto Group, the third-largest, decreased 4.4 percent as nickel slid 4.5 percent to $15,480 a metric ton on the LME, while copper for three-month delivery fell 2.4 percent to $4,860 a ton. Gold for immediate delivery slipped 0.9 percent to $923.86 an ounce.
Brent crude for August settlement fell 2.5 percent to $63.95 a barrel on London’s ICE Futures Europe exchange. Oil retreated on concern that a faltering economic recovery will curb fuel demand, and as the dollar strengthened against the euro, limiting investor appetite for commodities as a hedge against inflation.
‘Misread’ by Obama
U.S. Vice President Joe Biden said yesterday on the ABC News program “This Week” that the Obama administration “misread the economy” when it forecast unemployment would peak at 8 percent if Congress enacted a $787 billion fiscal stimulus. Unemployment reached 9.5 percent last month, the Labor Department said July 2.
Biden also said it was premature to discuss crafting another economic stimulus measure because the administration has paid out only about $120 billion of the funds approved for road and school construction and other job-creating projects in February.
Emerging-market stocks fell the most in nine days as benchmark equity indexes in India and Russia recorded the world’s steepest declines.
The Bombay Stock Exchange Sensitive Index tumbled 5.8 percent after Finance Minister Pranab Mukherjee said the nation’s fiscal deficit may grow to the widest since 1994, fueling concern that more government borrowing will drive up interest rates for companies and consumers.
Russian Stocks, Yen
Russia’s Micex Index sank 3.8 percent as falling commodity prices dragged down OAO Rosneft, the nation’s biggest oil producer, and OAO GMK Norilsk Nickel, the largest mining company. The MSCI Emerging Markets Index lost 1.7 percent for the steepest slide since June 23.
The yen gained 1.3 percent against the euro as investors sought the Japanese currency as a refuge. The dollar dropped 0.7 percent versus the yen after French Finance Minister Christine Lagarde said the global exchange-rate system should be improved, adding to growing calls for an alternative to the dollar as the world’s reserve currency.
Russian President Dmitry Medvedev said in an interview with Corriere della Sera published yesterday the dollar system is “flawed,” and Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said July 3 he is urging his nation to diversify its foreign holdings away from the U.S. currency. The comments come as leaders of the Group of Eight countries meet in Italy with counterparts from China and India.
Pound, Gilts
The pound tumbled and gilt prices jumped to their highest level this month after the Sunday Times said yesterday the Bank of England may increase its program of asset purchases by 25 billion pounds ($40 billion) as the recovery in Europe’s second- largest economy shows signs of petering out.
Britain’s currency weakened 1.1 percent against the dollar and 0.6 percent versus the euro. The yield on the 10-year gilt fell five basis points to 3.67 percent.
“Sterling is coming under increasing pressure as the market focuses on this week’s MPC announcement and the potential expansion of the quantitative easing program,” Paul Day, chief market analyst at MIG Investments SA in Neuchatel, Switzerland, wrote in an e-mail today. “I continue to favor sterling to underperform after its recent good run.”
Two-year Treasury notes rose for a third day, driving the yield two basis points lower to 0.96 percent, as the Federal Reserve prepared to buy securities maturing between 2013 and 2016 today as part of its $300 billion program of asset purchases.
Treasury Sales
The Treasury Department plans to sell $8 billion of 10-year inflation-linked notes today, $35 billion of conventional three- year notes tomorrow, $19 billion of 10-year securities July 8 and $11 billion of 30-year bonds on July 9.
The cost of protecting European corporate bonds in the credit-default swap market rose to the highest in almost two weeks, according to JPMorgan Chase & Co. prices for Markit Group Ltd. indexes. Default swaps on the high-yield Markit iTraxx Crossover Index climbed 26 basis points to 760, the highest level since June 23, indicating a deterioration in perceptions of credit quality.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A basis point on a contract protecting 10 million euros ($14 million) of debt from default for five years is equivalent to 1,000 euros a year.
Last Updated: July 6, 2009 08:36 EDT
By Daniel Hauck
July 6 (Bloomberg) -- Stocks fell, pushing the MSCI World Index lower for a third day, and oil and industrial metals retreated on concern the global economic recovery is faltering.
The MSCI World Index of 23 developed countries slipped 0.8 percent at 1:32 p.m. in London, extending its decline since reaching a high for the year on June 2 to 6.1 percent. Germany’s DAX Index retreated, bringing its drop from its 2009 high to 10 percent, the common definition of a correction. Nickel decreased for a third day on the London Metal Exchange, while oil slumped to its lowest level in five weeks. The yen rose against all 16 most-traded currencies tracked by Bloomberg.
Standard & Poor’s 500 Index futures declined 0.8 percent before the U.S. earnings season begins with Alcoa Inc.’s results on July 8. Profits at S&P 500 companies dropped last quarter and will contract in the three months ending in September, extending the stretch of declines to a record nine quarters, according to analysts’ estimates compiled by Bloomberg. The Institute for Supply Management’s index today may show U.S. service industries contracted for a ninth straight month in June.
“The reassessment of the global economic outlook is likely to continue this week,” a team of Citigroup Inc. strategists, including Todd Elmer in New York, wrote in a research report today. “As a result, an extension of the recent bout of risk aversion may lie in store.”
Volkswagen, Porsche
The Dow Jones Stoxx 600 Index of European shares slid 1.5 percent, led by commodity producers and automakers. Germany’s DAX slipped as much as 2.1 percent as Volkswagen AG retreated 2.9 percent. Porsche SE decreased 3.2 percent after the carmaker was cut to “sell” from “neutral” by UBS AG, which cited growing debt and a likelihood that the company will sell its Volkswagen stake.
BHP Billiton Ltd., the world’s biggest mining company, lost 3.8 percent. Rio Tinto Group, the third-largest, decreased 4.4 percent as nickel slid 4.5 percent to $15,480 a metric ton on the LME, while copper for three-month delivery fell 2.4 percent to $4,860 a ton. Gold for immediate delivery slipped 0.9 percent to $923.86 an ounce.
Brent crude for August settlement fell 2.5 percent to $63.95 a barrel on London’s ICE Futures Europe exchange. Oil retreated on concern that a faltering economic recovery will curb fuel demand, and as the dollar strengthened against the euro, limiting investor appetite for commodities as a hedge against inflation.
‘Misread’ by Obama
U.S. Vice President Joe Biden said yesterday on the ABC News program “This Week” that the Obama administration “misread the economy” when it forecast unemployment would peak at 8 percent if Congress enacted a $787 billion fiscal stimulus. Unemployment reached 9.5 percent last month, the Labor Department said July 2.
Biden also said it was premature to discuss crafting another economic stimulus measure because the administration has paid out only about $120 billion of the funds approved for road and school construction and other job-creating projects in February.
Emerging-market stocks fell the most in nine days as benchmark equity indexes in India and Russia recorded the world’s steepest declines.
The Bombay Stock Exchange Sensitive Index tumbled 5.8 percent after Finance Minister Pranab Mukherjee said the nation’s fiscal deficit may grow to the widest since 1994, fueling concern that more government borrowing will drive up interest rates for companies and consumers.
Russian Stocks, Yen
Russia’s Micex Index sank 3.8 percent as falling commodity prices dragged down OAO Rosneft, the nation’s biggest oil producer, and OAO GMK Norilsk Nickel, the largest mining company. The MSCI Emerging Markets Index lost 1.7 percent for the steepest slide since June 23.
The yen gained 1.3 percent against the euro as investors sought the Japanese currency as a refuge. The dollar dropped 0.7 percent versus the yen after French Finance Minister Christine Lagarde said the global exchange-rate system should be improved, adding to growing calls for an alternative to the dollar as the world’s reserve currency.
Russian President Dmitry Medvedev said in an interview with Corriere della Sera published yesterday the dollar system is “flawed,” and Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said July 3 he is urging his nation to diversify its foreign holdings away from the U.S. currency. The comments come as leaders of the Group of Eight countries meet in Italy with counterparts from China and India.
Pound, Gilts
The pound tumbled and gilt prices jumped to their highest level this month after the Sunday Times said yesterday the Bank of England may increase its program of asset purchases by 25 billion pounds ($40 billion) as the recovery in Europe’s second- largest economy shows signs of petering out.
Britain’s currency weakened 1.1 percent against the dollar and 0.6 percent versus the euro. The yield on the 10-year gilt fell five basis points to 3.67 percent.
“Sterling is coming under increasing pressure as the market focuses on this week’s MPC announcement and the potential expansion of the quantitative easing program,” Paul Day, chief market analyst at MIG Investments SA in Neuchatel, Switzerland, wrote in an e-mail today. “I continue to favor sterling to underperform after its recent good run.”
Two-year Treasury notes rose for a third day, driving the yield two basis points lower to 0.96 percent, as the Federal Reserve prepared to buy securities maturing between 2013 and 2016 today as part of its $300 billion program of asset purchases.
Treasury Sales
The Treasury Department plans to sell $8 billion of 10-year inflation-linked notes today, $35 billion of conventional three- year notes tomorrow, $19 billion of 10-year securities July 8 and $11 billion of 30-year bonds on July 9.
The cost of protecting European corporate bonds in the credit-default swap market rose to the highest in almost two weeks, according to JPMorgan Chase & Co. prices for Markit Group Ltd. indexes. Default swaps on the high-yield Markit iTraxx Crossover Index climbed 26 basis points to 760, the highest level since June 23, indicating a deterioration in perceptions of credit quality.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A basis point on a contract protecting 10 million euros ($14 million) of debt from default for five years is equivalent to 1,000 euros a year.
Last Updated: July 6, 2009 08:36 EDT
Yen Strengthens on Concern Credit Losses May Increase in Europe
July 6 (Bloomberg) -- The yen strengthened against the euro and the dollar on concern credit-market losses will keep increasing in Europe, spurring demand for the relative safety of Japan’s currency.
The yen gained versus all of the 16 most-active currencies on speculation Asian stocks will drop, prompting investors to cut holdings of higher-yield assets. The euro and the dollar fell after Russian President Dmitry Medvedev said the world is too reliant on the currencies, damping the appeal of European and U.S. assets. Germany’s IKB Deutsche Industriebank AG said it lost 580 million euros ($809 million) in the fiscal year ending March 31 as the value of its investments fell.
“The IKB news is a reminder there are still financial problems in Europe that imply the region may not be so safe” for investments, said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “It’s a negative for the euro and a positive for the yen.”
The yen advanced to 133.85 per euro as of 8:50 a.m. in Tokyo from 134.26 last week in New York. Japan’s currency rose to 95.90 per dollar from 96.04. The dollar traded at $1.3957 per euro from $1.3980.
The yen may strengthen to 133.58 per euro and 95.50 against the dollar today, Soma said.
Last Updated: July 5, 2009 19:54 EDT
Earnings Drop Worldwide as Job Losses Hurt Consumers
http://www.bloomberg.com/apps/news?pid=20601087&sid=apzVRyR2Nbp0
July 6 (Bloomberg) -- Earnings at such companies as Ford Motor Co. and ArcelorMittal may continue to decline in the next three months as the highest unemployment in a quarter-century keeps consumers from spending.
The year-over-year profit slide for Standard & Poor’s 500 Index members may narrow to 21 percent from July through September, after declines of an estimated 34 percent in the second quarter and about 60 percent in the year’s first three months, according to data compiled by S&P and Bloomberg. Earnings may rise by year-end based on comparisons to late 2008, which was roiled by the meltdown in financial markets.
Consumers in the U.S., the world’s largest economy, remain concerned about jobs after unemployment reached a 26-year high in June, analysts and investors said. Until Americans start spending again on cars, cell phones and clothes, most U.S., Asian and European companies may keep squeezing out costs.
“So long as unemployment keeps rising, the consumer will continue to be very conservative,” said Walter “Bucky” Hellwig, who helps manage $30 billion at Morgan Asset Management in Birmingham, Alabama. “Any improvement will come from cost cutting, and that’s not sustainable. If you have no anticipation of top-line growth -- it will be a little tougher to generate that enthusiasm into the fourth quarter.”
Consumer Confidence
U.S. consumer confidence slipped unexpectedly in June, reflecting unemployment that rose to 9.5 percent and wealth destruction triggered partly by a drop in property values. U.S. employers slashed 467,000 jobs last month, and about 6 million jobs have been eliminated since the recession began in December 2007. June’s jobless rate was the highest since August 1983.
Almost 67 percent of S&P 500 members topped analysts’ estimates for first-quarter earnings after eliminating jobs and closing plants, Bloomberg data shows. That helped the S&P 500 index rally 15 percent in the second quarter, the most since 1998.
The benchmark MSCI Asia Pacific Index surged 28 percent in the quarter, the largest gain since the gauge started in 1988, while Europe’s Dow Jones Stoxx 600 Index rose 17 percent, the biggest advance since 1999.
The second-quarter earnings barrage begins in the U.S. on July 8 with aluminum producer Alcoa Inc., the first member of the Dow Jones Industrial Average to report results. Alcoa is based in New York.
‘What’s Your Potential?’
“The analysts will probably lowball things once again and the companies will be able to jump over it again,” said Charles Smith, chief investment officer for Fort Pitt Capital Group Inc. The Cleveland-based firm has $800 million assets under management. “If the teacher expected you to get a “C-” and you get a ‘C,’ then the question is: what’s your potential as a student?”
Railcar shipments and other U.S. shipping data provide scant hope that manufacturers are gearing up for increased demand, said Mark Demos, a Minneapolis-based portfolio manager who helps manage $21 billion at Fifth Third Asset Management. Railcar shipments are down 19 percent so far this year and 18 percent in the week ended June 20.
Demand is best described by the title of the 1966 novel, “Been Down So Long It Looks Like Up to Me,” said Andrew Bartels, an analyst at Cambridge, Massachusetts-based Forrester Research Inc. Technology purchases in the U.S. will decline 5.1 percent this year, with a recovery in the fourth quarter, he said in a report last month.
Slow Profit Growth
Mountain View, California-based Google Inc., the biggest Internet advertising company, may post its second-slowest rate of profit growth since selling shares to the public. Chief Executive Officer Eric Schmidt said June 30 the economy is bottoming and will be better in a month.
Microsoft Corp., based in Redmond, Washington, may report its second straight sales drop, according to a Bloomberg survey of 22 analysts. Prior to the quarter ended in March, sales at the world’s largest software maker had never declined.
Mobile-phone users are trading down toward lower-priced phone plans that don’t require buying a new handset, said Andreas Mark, a Frankfurt-based fund manager at Union Investment GmbH with about 30 billion euros ($42 billion) of equity assets under management.
Espoo, Finland-based Nokia Oyj, the world’s biggest handset maker, may report a 67 percent slide in net income, analysts estimate, as customers concerned about losing their jobs postponed phone upgrades.
“Companies are laying off people and not hiring them back,” said Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York, who forecast payrolls would decline by 450,000. “This leaves us with a weak, irregular recovery.”
Rising unemployment in Europe is trimming as much as 10 percent of industry sales, said Amsterdam-based Simon van Veen, who helps manage a global portfolio of 2.2 billion euros at the Fortis Global High Income Equity Fund.
‘Sluggish’ Consumer Spending
“The outlook for electronics companies isn’t clearing,” said Tetsuro Ii, president of Commons Asset Management Inc. in Tokyo. “Consumer spending continues to be sluggish in the U.S. and elsewhere, pressuring prices.”
Global sales still will bolster results at U.S. multinational companies, said Michael Williams, managing director of New York-based Genesis Asset Management, which has assets of about $2 billion. “The struggling U.S. consumer will be more than offset by the massive number of people in China, Brazil, Russia and India that are moving up the consumption ladder,” he said.
Chinese Economic Growth
China’s Purchasing Managers’ Index climbed for a fourth month in June, the latest sign the country’s 4-trillion yuan ($585 billion) stimulus is reviving its economy. China’s economy is forecast to grow 7.8 percent this year, according to a Bloomberg survey. That compares with a decline of 2.7 percent in the U.S. and 4.3 percent in Europe’s 16-nation euro zone.
PetroChina Co., the world’s largest company by market value, and China Petroleum & Chemical Corp., or Sinopec, may post increased second-quarter profit after oil prices rebounded from December lows and China’s economy grew, said Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong.
Second-quarter earnings at Exxon Mobil, Chevron Corp. and ConocoPhillips, the largest U.S. oil companies, probably fell after the recession sapped fuel demand, causing crude-oil prices to drop by half from the record set last July.
At Irving, Texas-based Exxon Mobil, net income may drop 64 percent from a year earlier to $4.21 billion, according to analyst estimates compiled by Bloomberg. The profit would be the company’s smallest for any quarter since 2003.
‘Excess Production’
“There’s a lot of excess production and not that much demand,” said Barry R. James, who holds Exxon Mobil, Chevron and ConocoPhillips shares among the almost $2 billion in investments he manages at the James Advantage Funds in Dayton, Ohio. “We don’t see much of a recovery.”
Toyota Motor Corp., Honda Motor Co., Nissan Motor Co., Japan’s three largest automakers, will likely post losses in the three months ended June 30 because of the lower demand in the U.S., traditionally their most profitable market, according to three analysts surveyed by Bloomberg. Honda and Nissan are based in Tokyo, and Toyota in Aichi prefecture in central Japan.
“The numbers will look really ugly,” said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, who expects Toyota to post a loss comparable to the 766 billion yen ($8 billion) loss in the quarter ended in March.
Ford Motor Co., the only major U.S. automaker that hasn’t filed bankruptcy, is gaining market share from its distressed domestic rivals, said Brian Johnson, a Chicago-based auto analyst for Barclays Capital.
No One ‘Sneering Anymore’
Ford, based in Dearborn, Michigan, is boosting third- quarter output 16 percent to meet rising demand. Detroit-based General Motors Corp., which filed for Chapter 11 bankruptcy protection June 1, is selling controlling interest in its European operations. Chrysler LLC, which filed Chapter 11 on April 30, has emerged from bankruptcy as Chrysler Group LLC, 20 percent owned by Italy’s Fiat SpA.
“People used to sneer at me for owning Ford, but no one is sneering anymore,” said Bernie McGinn, president of McGinn Investment Management of Alexandria, Virginia, which owns about 300,000 Ford shares. “The market is rewarding them for not going to the government to get money.”
Ford, which had a 33 percent decline in U.S. auto sales through June, may lose $718.3 million in the second quarter, an improvement from an $8.7 billion loss a year earlier, according to the mean estimate of four analysts surveyed by Bloomberg.
U.S. Air Carriers
The nine biggest U.S. air carriers, including Delta Air Lines Inc., American Airlines parent AMR Corp. and United Airlines parent UAL Corp., may have a combined quarterly loss of $1 billion, estimated Michael Derchin, an analyst at FTN Equity Capital in New York. Derchin said he previously expected a $600 million loss. AMR is headquartered in Forth Worth, Texas, and UAL in Chicago.
Delta, based in Atlanta, and American Airlines both plan to trim additional flights when the peak travel season ends after the Labor Day holiday. U.S. carriers have eliminated 31,700 jobs and parked more than 500 jets since the start of 2008 as air travel plummeted amid job losses and tighter credit.
Large banks in general will report lower earnings than in the first quarter, though analysts said companies such as Charlotte, North Carolina-based Bank of America Corp. and New York-based Goldman Sachs Group Inc. will still post profits. Credit losses will offset some gains in trading and underwriting, said Rochdale Securities LLC analyst Richard Bove.
‘Difficult to Decipher’
“You’re going to get a quarter that is going to be very difficult to decipher,” Bove said. “If people look at operating earnings, they’re going to be tremendously pleased with everything associated with the capital markets area, but you also have these losses in the retail banking area.”
Earnings per share will likely decline as many banks sold shares, including Bank of America’s $13.5 billion total, after the government’s stress tests determined 10 of the biggest lenders needed more capital to withstand a prolonged recession. The 19 largest lenders have announced plans to raise more than $100 billion since the stress tests were completed.
In retail, discounters such as Wal-Mart Stores Inc., based in Bentonville, Arkansas, have fared better than higher-priced competitors.
Luxury retailers such as Saks Inc. and Nordstrom Inc. have been among the hardest-hit by the slowdown in consumer spending, said Sarah Henry, an analyst with MFC Global Investment Management. “People are shopping for value, and Wal-Mart’s message is very resonant right now,” she said.
Raw Materials
Sliding consumer demand from the retail sector to manufacturing has ultimately affected raw-materials providers, leaving producers of commodities such as aluminum and chemicals struggling to remain profitable.
Steelmakers are grappling with prices that have yet to rebound after demand plunged the most since World War II. Luxembourg-based ArcelorMittal, the world’s largest steelmaker, may report its third consecutive loss before returning to profit in the third quarter, analysts estimate.
Melbourne, Australia-based BHP Billiton Ltd., the world’s biggest mining company, may report its first profit decline in nine years for the 12 months ended June 30, because of a drop in commodity prices, according to analyst estimates. The Reuters/Jefferies CRB Index of 19 materials has plunged 46 percent in 12 months.
Dow Chemical Co., the largest U.S. chemical maker, may report a second-quarter loss and a 94 percent profit decline in the current quarter, according to analysts’ estimates, as falling demand for paints and plastics prompt the industry to shut factories. The Midland, Michigan-based company announced three plant closures and 2,500 job cuts on July 1.
“There is no pricing power in chemicals,” Fifth Third’s Demos said. “That area is a disaster.”
Last Updated: July 5, 2009 11:01 EDT
July 6 (Bloomberg) -- Earnings at such companies as Ford Motor Co. and ArcelorMittal may continue to decline in the next three months as the highest unemployment in a quarter-century keeps consumers from spending.
The year-over-year profit slide for Standard & Poor’s 500 Index members may narrow to 21 percent from July through September, after declines of an estimated 34 percent in the second quarter and about 60 percent in the year’s first three months, according to data compiled by S&P and Bloomberg. Earnings may rise by year-end based on comparisons to late 2008, which was roiled by the meltdown in financial markets.
Consumers in the U.S., the world’s largest economy, remain concerned about jobs after unemployment reached a 26-year high in June, analysts and investors said. Until Americans start spending again on cars, cell phones and clothes, most U.S., Asian and European companies may keep squeezing out costs.
“So long as unemployment keeps rising, the consumer will continue to be very conservative,” said Walter “Bucky” Hellwig, who helps manage $30 billion at Morgan Asset Management in Birmingham, Alabama. “Any improvement will come from cost cutting, and that’s not sustainable. If you have no anticipation of top-line growth -- it will be a little tougher to generate that enthusiasm into the fourth quarter.”
Consumer Confidence
U.S. consumer confidence slipped unexpectedly in June, reflecting unemployment that rose to 9.5 percent and wealth destruction triggered partly by a drop in property values. U.S. employers slashed 467,000 jobs last month, and about 6 million jobs have been eliminated since the recession began in December 2007. June’s jobless rate was the highest since August 1983.
Almost 67 percent of S&P 500 members topped analysts’ estimates for first-quarter earnings after eliminating jobs and closing plants, Bloomberg data shows. That helped the S&P 500 index rally 15 percent in the second quarter, the most since 1998.
The benchmark MSCI Asia Pacific Index surged 28 percent in the quarter, the largest gain since the gauge started in 1988, while Europe’s Dow Jones Stoxx 600 Index rose 17 percent, the biggest advance since 1999.
The second-quarter earnings barrage begins in the U.S. on July 8 with aluminum producer Alcoa Inc., the first member of the Dow Jones Industrial Average to report results. Alcoa is based in New York.
‘What’s Your Potential?’
“The analysts will probably lowball things once again and the companies will be able to jump over it again,” said Charles Smith, chief investment officer for Fort Pitt Capital Group Inc. The Cleveland-based firm has $800 million assets under management. “If the teacher expected you to get a “C-” and you get a ‘C,’ then the question is: what’s your potential as a student?”
Railcar shipments and other U.S. shipping data provide scant hope that manufacturers are gearing up for increased demand, said Mark Demos, a Minneapolis-based portfolio manager who helps manage $21 billion at Fifth Third Asset Management. Railcar shipments are down 19 percent so far this year and 18 percent in the week ended June 20.
Demand is best described by the title of the 1966 novel, “Been Down So Long It Looks Like Up to Me,” said Andrew Bartels, an analyst at Cambridge, Massachusetts-based Forrester Research Inc. Technology purchases in the U.S. will decline 5.1 percent this year, with a recovery in the fourth quarter, he said in a report last month.
Slow Profit Growth
Mountain View, California-based Google Inc., the biggest Internet advertising company, may post its second-slowest rate of profit growth since selling shares to the public. Chief Executive Officer Eric Schmidt said June 30 the economy is bottoming and will be better in a month.
Microsoft Corp., based in Redmond, Washington, may report its second straight sales drop, according to a Bloomberg survey of 22 analysts. Prior to the quarter ended in March, sales at the world’s largest software maker had never declined.
Mobile-phone users are trading down toward lower-priced phone plans that don’t require buying a new handset, said Andreas Mark, a Frankfurt-based fund manager at Union Investment GmbH with about 30 billion euros ($42 billion) of equity assets under management.
Espoo, Finland-based Nokia Oyj, the world’s biggest handset maker, may report a 67 percent slide in net income, analysts estimate, as customers concerned about losing their jobs postponed phone upgrades.
“Companies are laying off people and not hiring them back,” said Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York, who forecast payrolls would decline by 450,000. “This leaves us with a weak, irregular recovery.”
Rising unemployment in Europe is trimming as much as 10 percent of industry sales, said Amsterdam-based Simon van Veen, who helps manage a global portfolio of 2.2 billion euros at the Fortis Global High Income Equity Fund.
‘Sluggish’ Consumer Spending
“The outlook for electronics companies isn’t clearing,” said Tetsuro Ii, president of Commons Asset Management Inc. in Tokyo. “Consumer spending continues to be sluggish in the U.S. and elsewhere, pressuring prices.”
Global sales still will bolster results at U.S. multinational companies, said Michael Williams, managing director of New York-based Genesis Asset Management, which has assets of about $2 billion. “The struggling U.S. consumer will be more than offset by the massive number of people in China, Brazil, Russia and India that are moving up the consumption ladder,” he said.
Chinese Economic Growth
China’s Purchasing Managers’ Index climbed for a fourth month in June, the latest sign the country’s 4-trillion yuan ($585 billion) stimulus is reviving its economy. China’s economy is forecast to grow 7.8 percent this year, according to a Bloomberg survey. That compares with a decline of 2.7 percent in the U.S. and 4.3 percent in Europe’s 16-nation euro zone.
PetroChina Co., the world’s largest company by market value, and China Petroleum & Chemical Corp., or Sinopec, may post increased second-quarter profit after oil prices rebounded from December lows and China’s economy grew, said Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong.
Second-quarter earnings at Exxon Mobil, Chevron Corp. and ConocoPhillips, the largest U.S. oil companies, probably fell after the recession sapped fuel demand, causing crude-oil prices to drop by half from the record set last July.
At Irving, Texas-based Exxon Mobil, net income may drop 64 percent from a year earlier to $4.21 billion, according to analyst estimates compiled by Bloomberg. The profit would be the company’s smallest for any quarter since 2003.
‘Excess Production’
“There’s a lot of excess production and not that much demand,” said Barry R. James, who holds Exxon Mobil, Chevron and ConocoPhillips shares among the almost $2 billion in investments he manages at the James Advantage Funds in Dayton, Ohio. “We don’t see much of a recovery.”
Toyota Motor Corp., Honda Motor Co., Nissan Motor Co., Japan’s three largest automakers, will likely post losses in the three months ended June 30 because of the lower demand in the U.S., traditionally their most profitable market, according to three analysts surveyed by Bloomberg. Honda and Nissan are based in Tokyo, and Toyota in Aichi prefecture in central Japan.
“The numbers will look really ugly,” said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, who expects Toyota to post a loss comparable to the 766 billion yen ($8 billion) loss in the quarter ended in March.
Ford Motor Co., the only major U.S. automaker that hasn’t filed bankruptcy, is gaining market share from its distressed domestic rivals, said Brian Johnson, a Chicago-based auto analyst for Barclays Capital.
No One ‘Sneering Anymore’
Ford, based in Dearborn, Michigan, is boosting third- quarter output 16 percent to meet rising demand. Detroit-based General Motors Corp., which filed for Chapter 11 bankruptcy protection June 1, is selling controlling interest in its European operations. Chrysler LLC, which filed Chapter 11 on April 30, has emerged from bankruptcy as Chrysler Group LLC, 20 percent owned by Italy’s Fiat SpA.
“People used to sneer at me for owning Ford, but no one is sneering anymore,” said Bernie McGinn, president of McGinn Investment Management of Alexandria, Virginia, which owns about 300,000 Ford shares. “The market is rewarding them for not going to the government to get money.”
Ford, which had a 33 percent decline in U.S. auto sales through June, may lose $718.3 million in the second quarter, an improvement from an $8.7 billion loss a year earlier, according to the mean estimate of four analysts surveyed by Bloomberg.
U.S. Air Carriers
The nine biggest U.S. air carriers, including Delta Air Lines Inc., American Airlines parent AMR Corp. and United Airlines parent UAL Corp., may have a combined quarterly loss of $1 billion, estimated Michael Derchin, an analyst at FTN Equity Capital in New York. Derchin said he previously expected a $600 million loss. AMR is headquartered in Forth Worth, Texas, and UAL in Chicago.
Delta, based in Atlanta, and American Airlines both plan to trim additional flights when the peak travel season ends after the Labor Day holiday. U.S. carriers have eliminated 31,700 jobs and parked more than 500 jets since the start of 2008 as air travel plummeted amid job losses and tighter credit.
Large banks in general will report lower earnings than in the first quarter, though analysts said companies such as Charlotte, North Carolina-based Bank of America Corp. and New York-based Goldman Sachs Group Inc. will still post profits. Credit losses will offset some gains in trading and underwriting, said Rochdale Securities LLC analyst Richard Bove.
‘Difficult to Decipher’
“You’re going to get a quarter that is going to be very difficult to decipher,” Bove said. “If people look at operating earnings, they’re going to be tremendously pleased with everything associated with the capital markets area, but you also have these losses in the retail banking area.”
Earnings per share will likely decline as many banks sold shares, including Bank of America’s $13.5 billion total, after the government’s stress tests determined 10 of the biggest lenders needed more capital to withstand a prolonged recession. The 19 largest lenders have announced plans to raise more than $100 billion since the stress tests were completed.
In retail, discounters such as Wal-Mart Stores Inc., based in Bentonville, Arkansas, have fared better than higher-priced competitors.
Luxury retailers such as Saks Inc. and Nordstrom Inc. have been among the hardest-hit by the slowdown in consumer spending, said Sarah Henry, an analyst with MFC Global Investment Management. “People are shopping for value, and Wal-Mart’s message is very resonant right now,” she said.
Raw Materials
Sliding consumer demand from the retail sector to manufacturing has ultimately affected raw-materials providers, leaving producers of commodities such as aluminum and chemicals struggling to remain profitable.
Steelmakers are grappling with prices that have yet to rebound after demand plunged the most since World War II. Luxembourg-based ArcelorMittal, the world’s largest steelmaker, may report its third consecutive loss before returning to profit in the third quarter, analysts estimate.
Melbourne, Australia-based BHP Billiton Ltd., the world’s biggest mining company, may report its first profit decline in nine years for the 12 months ended June 30, because of a drop in commodity prices, according to analyst estimates. The Reuters/Jefferies CRB Index of 19 materials has plunged 46 percent in 12 months.
Dow Chemical Co., the largest U.S. chemical maker, may report a second-quarter loss and a 94 percent profit decline in the current quarter, according to analysts’ estimates, as falling demand for paints and plastics prompt the industry to shut factories. The Midland, Michigan-based company announced three plant closures and 2,500 job cuts on July 1.
“There is no pricing power in chemicals,” Fifth Third’s Demos said. “That area is a disaster.”
Last Updated: July 5, 2009 11:01 EDT
Wednesday, July 1, 2009
Overnight Interest Rate Update - July 09
| Current | Yesterday | ||
| USD | 0.27750 | 0.26375 | |
| GBP | 0.55250 | 0.55000 | |
| EUR | 0.30875 | 0.28938 | |
| JPY | 0.13000 | 0.13125 | |
| CHF | 0.09833 | 0.10667 | |
| AUD | 3.12500 | 3.14500 | |
| CAD | 0.21000 | 0.18667 | |
| NZD | 2.45000 | 2.50000 |
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