After three days of gains, the first such streak in six weeks, the market remains in the red after sellers intensified their efforts following a press conference in which German Chancellor Merkel and French President Sarkozy offered only a proposal for new government leadership in the eurozone, rather than a new plan to address the fiscal and financial challenges facing the region. The absence of a plan was even more glaring in the wake of disappointing GDP data from Germany and the broader eurozone. Support for the S&P 500 at the 1180-1181 level has helped stocks bounce back a bit.
Stocks have started to bounce back from their recent drop, but the major equity averages are all still down with losses well in excess of 1%. Such weakness has helped Treasuries climb another leg higher. That has dropped the yield back down to almost 2.20%.
The euro weakened against a majority of its most-traded counterparts after German and French leaders refrained from introducing a mechanism for the region to jointly issue debt to contain its sovereign-debt crisis.
The 17-nation currency briefly pared losses after French President Nicolas Sarkozy said after a meeting with German Chancellor Angela Merkel that France and Germany are working on “ambitious” joint proposals to defend it. The Swiss franc erased gains against the dollar and euro after U.S. industrial production climbed in July, curbing the currency’s haven appeal. The pound rose versus the dollar after data showed U.K. inflation accelerated more than forecast.
A press conference between German Chancellor Merkel and French President Sarkozy featured a proposal to establish a eurozone economic council and a common government that would feature a president who would serve a term of two and a half years.
The slide by stocks took the Nasdaq back to its session low, but neither the S&P 500 nor the Dow confirmed the move.
Data "imply that consumer spending probably rose slightly more than the 0.1% shown in the previous Q2 GDP calculation" and also "challenges the contention that the US economy is already in recession."
European stocks fell on Tuesday, halting a recovery rally started last week, as investors fretted about a tepid reading of German GDP growth ahead of talks between German and French leaders on the euro zone debt crisis.
"Industrial production is a coincident indicator, not a leader; fast that ISM new orders was below 50 in July does not indicate a pickup from here.
EUR/USD: $1.4500, $1.4325, $1.4285, $1.4205, $1.4190, $1.4185
USD/JPY: Y76.00, Y77.15, Y77.80, Y79.00
EUR/JPY: Y109.80
GBP/USD: $1.6200, $1.6180
USD/CHF: Chf0.7900, Chf0.7560
EUR/CHF: Chf1.1280, Chf1.1060
AUD/USD: $1.0510, $1.0230, $1.0190, $1.0140
Data:06:00 Germany GDP (Q2) flash 0.1%
06:00 Germany GDP (Q2) flash Y/Y 2.7%
08:30 UK HICP (July) 0.0%
08:30 UK HICP (July) Y/Y 4.4%
08:30 UK HICP ex EFAT (July) Y/Y 3.1%
08:30 UK Retail prices (July) -0.2%
08:30 UK Retail prices (July) Y/Y 5.0%
08:30 UK RPI-X (July) Y/Y 5.0%
09:00 EU(17) GDP (Q2) flash 0.2%
09:00 EU(17) GDP (Q2) flash Y/Y 1.7%
09:00 EU(17) Trade balance (June) adjusted, bln -1.6
Edges higher again, moves through the overnight Asian high at $1.6388 to $1.6394, with rate seen challenging the reported retail sell interest placed between $1.6390/10. Rate currently trades around $1.6387.
Data released:
06:00 Germany GDP (Q2) flash 0.1% 0.6% 1.3 (1.5)%
06:00 Germany GDP (Q2) flash Y/Y 2.7% 3.1% 4.7 (4.9)%
The euro dipped against the dollar on Tuesday, having eased off the previous day's three-week high, with the focus on whether a Franco-German summit will lay the groundwork for further measures to help quell the euro zone's sovereign debt crisis.
The two leaders will meet in Paris from 1400 GMT and a joint news conference is expected at 1600 GMT.
Data showed German GDP growth slowed more than expected in the second quarter, dropping to 0.1% in seasonally adjusted terms from a revised 1.3% in the first three months of the year.
"This is a serious disappointment," West LB economist Joerg Lueschow said. "Many growth forecasts will now likely be lowered and we will do so too. This does not provide any positive signs for euro zone GDP. We cannot expect more than stagnation now."
With French data last week signalling a stagnated economy in the second quarter, the weak German figures suggested a slowdown for EU economy.
Germany's surprisingly weak data dragged down the euro, while German stocks featured among the top losers, with the DAX down 2.4%.
EUR/USD rose to $1.4474 in Asia before retreated to the lows around $1.4360. Currently rate tries to recover.
GBP/USD also was under pressure, weakened to $1.6319. But strong UK CPI report lifted the rate to $1.6380.
USD/JPY remains within the 20-points range, limited by Y76.70/90.
US Housing starts, Building permits and Import Price Index come at 12:30 GMT.
Later at 13:15 GMT US Industrial Production will be released.
EUR/USD
Offers: $1.4500/10
GBP/USD
Offers: $1.6385/90, $1.6411
Bids: $1.6335, $1.6320, $1.6300
USD/JPY
Offers: Y77.10/20
Bids: Y76.50/60
EUR/USD: $1.4500, $1.4325, $1.4285, $1.4205, $1.4190, $1.4185
USD/JPY: Y76.00, Y77.15, Y77.80, Y79.00
EUR/JPY: Y109.80
GBP/USD: $1.6200, $1.6180
USD/CHF: Chf0.7900, Chf0.7560
EUR/CHF: Chf1.1280, Chf1.1060
AUD/USD: $1.0510, $1.0230, $1.0190, $1.0140
Data released:
12:30 USA NY Fed Empire State manufacturing index (August) -7.7 -0.2 -3.8
13:00 USA TICS net flows (June), bln -29.5 - -48.8 (-67.5)
13:00 USA TICS net long-term flows (June), bln 3.7 28.0 24.2 (23.6)
The euro rose for a third day Monday on speculation a meeting tomorrow between French President Nicolas Sarkozy and German Chancellor Angela Merkel in Paris may result in action to contain the region’s debt crisis.
The Swiss franc tumbled against the euro, headed for its biggest three-day decline since the European currency’s 1999 debut on speculation Switzerland will take further action to counter recent gains.
The franc slid for a fourth day versus the dollar after the SonntagsZeitung newspaper said the Swiss government and central bank are in “intense” talks over setting a target for their currency.
Manufacturing in the New York region shrank for a third month in August (to -7.7 versus the median of 0).
In June, global demand for U.S. stocks, bonds and other financial assets weakened as the White House and Congress wrangled over raising the debt limit, government figures show. Net buying of long-term equities, notes and bonds totaled $3.7 billion, compared with net buying of $24.2 billion in May, according to Treasury Department data said.
EUR/USD rose to $1.4475 before set stable within the $1.4426/54 range.
Majors close
Nikkei 225 +122.69 +1.37% 9,086.41
FTSE 100 +30.55 +0.57% 5,350.58
CAC 40 +25.18 +0.78% 3,239.06
DAX +24.50 +0.41% 6,022.24
Dow +213.88 +1.90% 11,482.90
Nasdaq +47.22 +1.88% 2,555.20
S&P 500 +25.68 +2.18% 1,204.49
10 Year Yield 2.28% +0.05 --
Oil $87.95 +0.07 +0.08%
Gold $1,766.90 +8.90 +0.51%
Japan’s Nikkei 225 Stock Average rose the most in more than six weeks after gross domestic product shrank less than economists expected, signaling the country is rebounding from March’s earthquake disaster.
Gross domestic product shrank at an annualized 1.3 percent rate for the quarter ended June 30, Japan’s Cabinet office said today. The contraction was less than the median estimate of a 2.5 percent drop
Toyota Motor Corp. (7203), the world’s largest carmaker, climbed 2.9 percent after Finance Minister Yoshihiko Noda pledged to take “bold action” to curb gains in the yen.
Exporters including Sony Corp. (6758) also got a boost after U.S. retail sales gained the most in four months.
Nintendo Co. surged 9.8 percent on speculation the gamemaker may be included in the Nikkei 225 if Osaka Securities Exchange Co. merges with the Tokyo bourse.
European stocks rose, extending the biggest three-day rally for the benchmark Stoxx Europe 600 Index in 15 months, after last week sliding to the cheapest valuation in more than two years.
Nokia Oyj jumped 9.1 percent after Google Inc. agreed to buy U.S. rival Motorola Mobility Holdings Inc. for about $12.5 billion.
Swatch Group AG (UHR) paced gains among Swiss exporters as the franc headed for its largest three-day decline on record against the euro.
Michael Page International Plc (MPI) tumbled 8.1 percent after the recruiter’s earnings missed analyst estimates.
U.S. stocks rose, erasing last week’s drop, as $21.5 billion in takeovers and valuations near the cheapest level in two years helped the Standard & Poor’s 500 Index extend its best three-day rally since 2009.
Motorola Mobility Holdings Inc. soared 56 percent as Google Inc. (GOOG) agreed to buy the company for about $12.5 billion in cash.
Bank of America Corp. (BAC) rallied 7.6 percent on plans to exit the international credit-card business by selling its $8.6 billion card business in Canada to TD Bank Group and leaving the U.K. and Irish markets.
Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) advanced at least 2.6 percent, pacing energy-company gains, as oil rose.
Resistance 3: Y78.20
Resistance 2: Y77.80
Resistance 1: Y77.20
Current price: Y76.86
Support 1:Y76.30
Support 2:Y75.00
Support 3:Y74.60
Comments: Rate holds weak. Strong support/resistance come at Y76.30/Y77.20 respectively. Further support is around key level Y75.00 and then - at Y74.60 (channel line from Dec'2008). Break above Y77.20 points for a further rise to Y77.80 and Y78.20/25.
Resistance 3: Chf0.8370
Resistance 2: Chf0.8180
Resistance 1: Chf0.8000
Current price: Chf0.7822
Support 1: Chf0.7780
Support 2: Chf0.7640
Support 3: Chf0.7530
Comments: Dollar sits on support at Chf0.7780 (23.6%). While higher there is a room for a test of yesterday's high Chf0.8000. Then the recovery extends to Chf0.8180/85 (channel line from Feb). Under Chf0.7780 the rate may dip to Chf0.7640 (38.2%) and then - to Chf0.7530/35 (50%).
Nikkei 225 +122.69 +1.37% 9,086.41
FTSE 100 +30.55 +0.57% 5,350.58
CAC 40 +25.18 +0.78% 3,239.06
DAX +24.50 +0.41% 6,022.24
Dow +213.88 +1.90% 11,482.90
Nasdaq +47.22 +1.88% 2,555.20
S&P 500 +25.68 +2.18% 1,204.49
10 Year Yield 2.28% +0.05 --
Oil $87.95 +0.07 +0.08%
Gold $1,766.90 +8.90 +0.51%
Resistance 3:$1.6480
Resistance 2:$1.6450
Resistance 1: $1.6410
Current price: $1.6334
Support 1: $1.6340
Support 2: $1.6260
Support 3: $1.6160
Comments: The pound under pressure and still challenging support at $1.6340. Break under targets $1.6250/60 (yesterday's lows and 50% of Monday's rise). Resistance remains at recent highs on $1.6410. Stronger one - near channel line from the end-Apr at $1.6450. Further resistance comes at $1.6475/80.
Resistance 3: $1.4580
Resistance 2: $1.4540
Resistance 1: $1.4480
Current price: $1.4379
Support 1: $1.4370
Support 2: $1.4260
Support 3: $1.4200
Comments: Rate remains under pressure after it broke support at $1.4420. Euro tested strong support at $1.4370 (50% of yesterday's rise) and currently tries to recover. Below $1.4370 losses may dip to $1.4260 (yesterday's lows). Resistance remains at $1.4480 (Monday's highs). Neat band of resistance comes at $1.4540 (Jul 27 high) and $1.4580 (Jul 04 high).
06:00 Germany GDP (Q2) flash 0.6% 1.5%
06:00 Germany GDP (Q2) flash Y/Y 3.1% 4.9%
08:30 UK HICP (July) -0.2% -0.1%
08:30 UK HICP (July) Y/Y 4.3% 4.2%
08:30 UK HICP ex EFAT (July) Y/Y 3.0% 2.8%
08:30 UK Retail prices (July) -0.2% 0.0%
08:30 UK Retail prices (July) Y/Y 5.0% 5.0%
08:30 UK RPI-X (July) Y/Y 5.1% 5.0%
09:00 EU(17) GDP (Q2) flash 0.4% 0.8%
09:00 EU(17) GDP (Q2) flash Y/Y 1.8% 2.5%
09:00 EU(17) Trade balance (June) unadjusted, bln - 0.0
09:00 EU(17) Trade balance (June) adjusted, bln 0.2 -0.6
12:30 USA Housing starts (July), mln 0.600 0.629
12:30 USA Building permits (July), mln 0.604 0.624
12:30 USA Import prices (July) -0.2% -0.5%
12:30 USA Export prices (July) - 0.1%
12:55 USA Redbook (13.08)
13:15 USA Industrial production (July) 0.3% 0.2%
13:15 USA Capacity utilisation (July) 76.9 76.7
23:01 UK Nationwide consumer confidence (July) - 51
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