CFD Markets News and Forecasts — 30-08-2011

Minutes from the August 9 meeting between Federal Open Market Committee (FOMC) members were just released. So far, stocks really haven't reacted to them

"Uncertainty surrounding the outlook" rose appreciably and recognized "increase in the downside risks" to growth. FOMC discussed "range of policy tools available to promote a stronger econ recovery" incl forward guidance, more asset buys, increase avg mat'y of holdings, reduce IOER. Some said no tools would likely do much and would risk boosting inflation. Agreed on 2 days for Sept FOMC to discuss. Most thought mon-pol "could contribute importantly to better outcomes"; some saw add'l accommodation needed because unemployment rate is high. Forward guidance seen as "measured response" but a few wanted a more substantial move and accepted the stronger guidance as step in that direction. "Three members dissented because they preferred to retain the forward guidance language employed in the June statement." Rejected conditioning FF rate on explicit numerical values for unemployment or inflation, with arguments on both sides. Most said conditional FF expectation thru mid-2013 provided useful guidance; some noted this did not remove flexibility to adjust later.

The euro weakened against most major counterparts on speculation the European Central Bank has finished raising interest rates as the region’s sovereign-debt crisis curbs economic growth.
The yen rose versus 12 of its 16 major peers as U.S. consumer confidence dropped to the lowest since April 2009 and home prices fell, adding to demand for safer assets. The euro snapped a two-day gain versus the dollar after ECB President Jean-Claude Trichet said yesterday the bank is reviewing its assessment of inflation risks, and data today showed confidence in the region’s economy plunged. The ECB meets next week.
“There’s signs that the ongoing financial-market troubles are starting to have a more noticeable impact not only on confidence but on actual economic activity,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “The challenges for the euro are accumulating, and this is a reason the euro is down today.”
U.S. stocks fell as the Conference Board’s index slumped to 44.5 this month, from a revised 59.2 reading in July, figures from the New York-based private research group showed. It was the biggest point drop since October 2008. Economists predicted the August gauge would fall to 52. The Standard & Poor’s 500 Index dropped 0.6 percent.
The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent in June from a year earlier, after dropping 4.6 percent in the 12 months ended in May, the group said today in New York. The median forecast was for a 4.6 percent drop.
“We’re going to see a lot of the risk-off trades come back into the picture during the rest of the week,” said Robert Sinche, global head of currency strategy at Royal Bank of Scotland Plc in Stamford, Connecticut. “We continue to see euro- dollar move with equity prices and risk in general.”
A Credit Suisse AG index shows traders are betting the ECB will cut its key rate by 20 basis points, or 0.2 percentage point, in the next 12 months. A month ago, they wagered it would raise rates by 22 basis points.
The euro extended losses after the European Commission in Brussels said an index of executive and consumer sentiment in the single-currency region fell to 98.3 in August from a revised 103 in July. That’s the lowest since May 2010 and below the 100.2 reading predicted.
The Fed is scheduled to release the minutes of its Aug. 9 meeting today. Policy makers pledged at the session to keep interest rates at a record low through at least mid-2013.

Stocks have moved to new session highs to give the S&P 500 and Dow modest gains. The Nasdaq is in even stronger shape, though. Internet-related plays like eBay (EBAY 30.87, +0.38), Amazon.com (AMZN 210.19, +3.66), and AOL (AOL 15.35, +0.25) have helped the Nasdaq outperform its counterparts for the second straight session.

Stocks have worked their way back from the lows that were set in the wake of an abysmal Consumer Confidence Index earlier this morning, but the major equity averages have yet to break out of negative territory.
Financials continue to hamper overall action. The frequently influential sector is down 1.4%, which makes it the worst performing sector in the pack. Financials, as a group, have been hurt by weakness in shares of insurance plays, which are under pressure after they had staged outsized gains in the prior session.

EUR/USD: $1.4500 
USD/JPY: Y77.00, Y76.50, Y75.50
EUR/JPY: Y111.00, Y112.00
GBP/USD: $1.6300, $1.6500
AUD/USD: $1.0500
AUD/NZD: NZ$1.2650
AUD/JPY: Y81.00

Data:

EUR/USD 

Data released:
01:30   Australia Building Permits (YoY) (Jul)     -15.0%        -14.3%
01:30   Australia Building Permits (MoM) (Jul)     1.0%    2.1%    -3.6%
06:00   Switzerland UBS Consumption Indicator (Jul)     1.29        1.48

The Swiss franc, yen and dollar weakened after stocks extended a global rally amid signs of continued resilience among Asia’s biggest emerging economies.
The euro rose toward a seven-week high versus the Swiss franc as a benchmark Asian stock index gained for a fourth day, reducing demand for safer assets.
“Safe-haven currencies like the dollar, yen and franc are being sold because of higher stock prices,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. “The market is looking carefully at economic data to get a clearer outlook for growth.”
The MSCI Asia Pacific Index added 1.1%. The MSCI World Index climbed 2.4% yesterday, while the Standard & Poor’s 500 Index of stocks advanced 2.8%.
The greenback has appreciated 1% in August against a basket of currencies.
Demand for the euro was limited after European Central Bank President Jean-Claude Trichet said the bank is reviewing its assessment of inflation risks after a slowdown in growth.
Trichet said yesterday that “risks to the medium-term outlook for price developments are under study.” The comment to the European Parliament’s economic committee contrasts with the ECB president’s last policy statement on Aug. 4, when he said risks to the inflation outlook were “on the upside.”

EUR/USD printed session highs on $1.4530, but failed to set above the figure and retreated to below the figure, then - to current $1.4430.
GBP/USD also retreats after it earlier tested $1.6420 and currently holds at $1.6330.
USD/JPY fell from Y77.00 to Y76.64. Currently rate tries to recover.

EU data include EU Consumer Confidence, Economic Confidence and Industrial Confidence (09:00 GMT).
At 12:30 GMT Canada releases its Q2 Current Account.
US Aug Consumer Confidence is scheduled to release at 14:00 GMT.
But the main event of the day will come at 18:00 GMT with the release of Fed's FOMC.

EUR/USD: $1.4500
USD/JPY: Y77.00, Y76.50, Y75.50
EUR/JPY: Y111.00, Y112.00
GBP/USD: $1.6300, $1.6500
AUD/USD: $1.0500
AUD/NZD: NZ$1.2650
AUD/JPY: Y81.00

EUR/USD
Offers: $1.4510/20
Bids:  $1.4480, $1.4450

GBP/USD
Offers: $1.6455/60, $1.6480, $1.6530/35
Bids: $1.6370, $1.6350, $1.6325/20

USD/JPY
Offers: Y77.00/10, Y77.30
Bids: Y76.50

AUD/USD
Offers: $1.0700, $1.0720

Majors close:
Nikkei 225 +53.57 +0.61% 8,851.35
FTSE 100 -1.18     -0.02%     5,129.92
CAC 40     +66.56     +2.16%     3,154.20
DAX +132.59 +2.39% 5,670.07
Dow     +254.71 +2.26% 11,539.25
Nasdaq     +82.26     +3.32% 2,562.11
S&P 500 +33.28     +2.83% 1,210.08
10 Year Yield     2.27%     +0.08     --
Commodities Oil     $87.45     +0.18     +0.21%
Gold     $1,783.40     -8.20     -0.46%  
 
Japanese stocks gained for a third day as Federal Reserve Chairman Ben S. Bernanke indicated the U.S. economy may not need more stimulus, and Finance Minister Yoshihiko Noda was elected head of Japan’s ruling party.
Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, gained 2.8 percent. Kawasaki Kisen Kaisha Ltd. (9107), Japan’s third- largest shipper by market value, jumped 3.1 percent after Nomura Holdings Inc. said it was “bullish” on the industry. Softbank Corp. (9984), Japan’s third-largest mobile-phone operator, increased 2 percent after profiting from selling shares in Yahoo! Inc.
“Bernanke’s speech fell into what people had expected, but by extending the next meeting, it showed they are ready to introduce a measure,” said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co. in Tokyo. “U.S. stocks have stabilized, which is a plus for Japanese stocks.”

European stocks rose after two days of losses dragged equities near to the cheapest valuation in more than two years and a report showed U.S. consumer spending gained in July.
EFG Eurobank Ergasias SA (EUROB) and Alpha Bank SA jumped by the maximum 30 percent after agreeing to merge to create Greece’s biggest bank, driving the ASE Index to the biggest gain in 21 years.
Munich Re and Swiss Re Ltd., the world’s largest reinsurers, advanced more than 4 percent as the damage from Hurricane Irene in the U.S. was less severe than estimated.
National Bank of Greece SA (ETE), the country’s largest bank, surged 29 percent to 3.59 euros while Piraeus Bank SA (TPEIR) jumped 29 percent to 72 euro cents.
Public Power Corp. SA, Greece’s biggest electricity producer, rallied 24 percent to 6.81 euros.

U.S. stocks rose, extending the first weekly gain since July for the Standard & Poor’s 500 Index, amid optimism the economy will recover and after Hurricane Irene failed to shut financial markets.
The S&P 500 Insurance Index (S5INSU) of 22 stocks rallied 4.6 percent as Hurricane Irene’s estimated cost declined with the storm losing strength en route to New York.
Bank of America Corp. (BAC) rose 7.7 percent after agreeing to sell about half its stake in China Construction Bank Corp. in a deal generating $8.3 billion in cash proceeds.
Pfizer Inc. (PFE) added 3.7 percent as the drugmaker won U.S. approval to sell a drug to treat lung cancer.
The S&P 500 has fallen as much as 18 percent from a three- year high on April 29 amid concern about a global economic slowdown. Gauges of financial, industrial and energy shares, which are most-tied to the economy, led the declines in the index, slumping at least 22 percent over that period.
Equities climbed today after Americans’ spending increased more than economists forecast while incomes grew at the projected pace. Benchmark gauges also rose as two Greek banks, EFG Eurobank Ergasias SA and Alpha Bank SA, discussed merging. Equities in Greece rallied the most in more than 20 years.
All 10 groups in the S&P 500 rose between 1.1 percent and 3.7 percent, with gains being led by financial and industrial stocks. The Morgan Stanley Cyclical Index of companies most- dependent on economic growth added 3.9 percent.

The dollar is poised for its biggest monthly gain since May, reclaiming its status as a haven while Switzerland and Japan boost efforts to weaken their currencies.
The greenback has appreciated 1.2% in August against a basket of currencies.
Demand for U.S. assets is rising even though the Federal Reserve has pledged to keep its benchmark interest rate near zero through mid-2013 and Standard & Poor’s cut the nation’s credit rating from AAA. The two other currencies considered havens in times of financial and political strife - the Swiss franc and yen - are under siege by their governments and central banks after strengthening to records.
“The dollar is a buy through the end of the third quarter,” Nick Bennenbroek at Wells Fargo & Co.. “The yen and the Swiss franc are very expensive and the dollar is very cheap and it’s the only major central bank that is not standing in the way of a currency advance.”
Meanwhile, slowing growth in the U.S. and the Fed’s pledge to keep its target rate for overnight loans between banks at a record low of 0% to 0.25% until mid-2013 may constrain the greenback.
Citigroup lowered its 2011 U.S. growth estimate to 1.6% from 1.7%.

EUR/USD rose from $1.4464 to $1.4550 before retreated to $1.4513 and then - to $1.4483.
GBP/USD rose from $1.6340 following the euro and printed session highs on $1.6454. Later pound was back below the figure.
USD/JPY holds within the Y76.55/Y76.80 range before it rose to Y70.00. rate failed to go further and retreated to Y76.80.

EU data include EU Consumer Confidence, Economic Confidence and Industrial Confidence (09:00 GMT).
At 12:30 GMT Canada releases its Q2 Current Account.
US Aug Consumer Confidence is scheduled to release at 14:00 GMT.
But the main event of the day will come at 18:00 GMT with the release of Fed's FOMC.

Resistance 3: Y78.00/10

Resistance 3: Chf0.8520
Resistance 2: Chf0.8400
Resistance 1: Chf0.8260
Current price: Chf0.8163
Support 1: Chf0.8010
Support 2: Chf0.7880
Support 3: Chf0.7810

Comments: Rate holds below yesterday's highs and strong resistance at Chf0.8260 (channel line from the mid-Feb). Further rise may extend to Chf0.8400 and Chf0.8520 (Jul 01 high). Support is near Chf0.8000/10 (earlier resistance). Friday's lows come at Chf0.7880/85 with a break under targets Chf0.7810 (Aug 19 lows).

Resistance 3:$1.6620
Resistance 2:$1.6570
Resistance 1: $1.6460
Current price: $1.6398
Support 1: $1.6300
Support 2: $1.6200
Support 3: $1.6160

Comments: Rate consolidates after yesterday's rise. Strong resistance is around $1.6460 (61.8% Fibo of decline from Aug 19 high). Back above will target $1.6570 (Aug 12 high). Stronger resistance comes at $1.6620 (Aug 19 high). Minor support is near $1.6300 (23.6%), stronger - at $1.6200/10 (Aug 26 lows). Below losses may widen to $1.6160 (Aug 12 lows).

Resistance 3: $1.4650
Resistance 2: $1.4580         
Resistance 1: $1.4550
Current price: $1.4497
Support 1: $1.4460
Support 2: $1.4330
Support 3: $1.4260

Comments: Rate holds below minor resistance at $1.4550/60 (yesterday's high and Bollinger band). Support is around yesterday's lows on $1.4460, stronger - at $1.4330 (Friday's low). Break under opens the way to Aug 19 low on $1.4260. Break above $1.4550 opens the way to $1.4580 (Jul 04 high).

Nikkei 225 +53.57 +0.61% 8,851.35
FTSE 100 -1.18     -0.02%     5,129.92
CAC 40     +66.56     +2.16%     3,154.20
DAX +132.59 +2.39% 5,670.07
Dow     +254.71 +2.26% 11,539.25
Nasdaq     +82.26     +3.32% 2,562.11
S&P 500 +33.28     +2.83% 1,210.08
10 Year Yield     2.27%     +0.08     --
Commodities Oil     $87.45     +0.18     +0.21%
Gold     $1,783.40     -8.20     -0.46%  

08:00     Italy     Retail sales (June) adjusted         0.1%    -0.1%
08:00     Italy     Retail sales (June) Y/Y unadjusted         -    -0.6%
08:30     UK     M4 money supply (July) final         0.3%    -0.5%
08:30     UK     M4 money supply (July) final Y/Y         -    -0.7%
08:30     UK     Consumer credit (July), bln          0.6    0.4
09:00     EU(17)     Economic sentiment index (August)         102.4    103.2
09:00     EU(17)     Business climate indicator (August)         -    0.45
10:00     Italy     Business confidence (July)         -    98.5
12:55     USA     Redbook (27.08)              
14:00     USA     Consumer confidence (August)         51.5    59.5
23:01     UK     Gfk consumer confidence (August)         -31    -30
23:50     Japan     Industrial output (July) preliminary         1.4%    3.8%
23:50     Japan     Industrial output (July) preliminary Y/Y         -    -1.7%