Morning Forex Fundamental
EUR
'The euro zone is being buffeted by major headwinds' - Howard Archer, chief European economist at IHS Global Insight
European manufacturing and services sectors shrink
Impact high
European manufacturing and services industries contracted in May. A composite index based on a survey of purchasing managers in manufacturing and services sectors declined to 45.9 from 46.7 in April, said the Markit Economics on Thursday.
'The euro zone is being buffeted by major headwinds, notably increased fiscal tightening in many countries and markedly rising unemployment,' said Howard Archer, chief European economist at IHS Global Insight in London.
'The heightened Greek crisis is magnifying the problems by weighing down on already weak and fragile business and consumer confidence, adding to uncertainty about the outlook.'
The Stoxx Europe 600 Index added 1.00 per cent to 241.91. Germany’s DAX Index rose 0.48 per cent and France’s CAC 40 Index gained 1.16 per cent. The U.K.’s FTSE 100 Index climbed 1.59 per cent to 5,350.05.
USD
'It looks more and more like businesses are hesitating to invest in the face of worsening uncertainties in the and global economy' - Pierre Ellis, a senior economist at Decision Economics
U.S. unemployment claims decline, durable goods orders edge higher
Impact High
The number of Americans claiming for unemployment benefits declined slightly by 2,000 to a seasonally adjusted 370,000 in the week ended May 19 from the week before, said the Department of Labor on Thursday.
'We might see a modest pickup in (jobs) growth in May versus April,' said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.
'It looks more and more like businesses are hesitating to invest in the face of worsening uncertainties in the and global economy,' said Pierre Ellis, a senior economist at Decision Economics in New York.
Also Thursday, the Commerce Department said orders for long-lasting goods rose 0.2 per cent in April to a seasonally adjusted 215.5 billion dollars after declining 3.7 per cent in March
GBP
'[U.K.] employment remains fragile and wage growth weak' - Ross Walker, chief U.K. economist at Royal Bank of Scotland Group
U.K. economy shrinks more than forecast
Impact High
The U.K. economy shrank by more than expected in the first quarter of the year, revised figures have shown. Gross domestic product fell 0.3 per cent from a revised drop of 0.2 per cent, the Office for National Statistics said on Thursday.
'Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago. The result is that Britain is now in a weaker position if things get worse in the eurozone in the coming months,' said shadow chancellor Ed Balls.
'The economy is not recovering properly and with the uncertainty over Europe hanging over the outlook as well, our suspicion is the Monetary Policy Committee [of the Bank of England] will sanction further quantitative easing (QE) at some point later on this year,' said Philip Shaw at Investec.
CHF
'European markets are rebounding, supported by a short squeeze, especially on banking shares' - John Plassard, director at Louis Capital Markets SA
Swiss stocks closed higher on Thursday
Impact: Medium
Swiss stocks rose for a third day in four on Thursday.
The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, added 0.59%, or 34.53 points, to 5,852.44. The broader Swiss Performance Index gained 0.56%, or 30.38 points, to 5,467.89.
'European markets are rebounding, supported by a short squeeze, especially on banking shares,' said John Plassard, director at Louis Capital Markets SA in Geneva.
'This technical rebound we’re seeing right now may be short-lived, however.'
JPY
'Investors are so sensitive about European debt that they are swayed by every remark on the issue' - Naoki Fujiwara, a fund manager at Shinkin Asset Management Co.
Japanese stocks edged slightly higher on Thursday
Impact: Medium
Japanese stocks gained on Thursday on speculation they are undervalued.
The Nikkei 225 increased 0.08%, or 6.78 points, to 8,563.38. The broader Topix gained 0.09%, or 0.68, to 722.25.
'Investors are so sensitive about European debt that they are swayed by every remark on the issue,' said Naoki Fujiwara, a fund manager at Shinkin Asset Management Co. in Tokyo.
'Some people are inclined to buy shares because Japanese stocks are undervalued.'
Press Review
Europe
The Bank of England refrains from additional easing measures for the time being, given considerable risks associated with soaring inflation.
Experts claim Spain has never been so close to default and Greece, Ireland and Portugal may need additional financial aid.
Euro-Zone Economic Contraction Deepens
http://online.wsj.com/article/SB10001424052702304707604577423562723731778.html
Concerns over the future of the euro deepened Thursday on more evidence of policy inertia and a fresh spate of dire economic data that showed some of the remaining supports for business activity in the 17-country euro zone splintering away.
Europe Makes Crisis Management Hostage To Volatile Greek Voters
http://www.bloomberg.com/news/2012-05-24/europe-makes-crisis-management-hostage-to-volatile-greek-voters.html
European leaders tied their next steps on the financial crisis to the outcome of a bitterly contested election in Greece that may determine whether the 17- nation euro currency splinters.
USA
It is widely agreed that the Fed is unlikely to launch the third round of quantitative easing as the U.S. economy improves.
The International Monetary Fund rose U.S. economic growth forecast to 2.1 from 1.8 per cent in 2012.
Durable-goods orders edge up 0.2% in April
http://www.marketwatch.com/story/durable-goods-orders-edge-up-02-in-april-2012-05-24
Orders for long-lasting goods edged up 0.2% in April, the second rise in three months after demand for cars and car parts picked up.
Jobless claims little changed last week
http://www.reuters.com/article/2012/05/24/us-usa-economy-idUSBRE84M1G420120524
New claims for unemployment benefits fell slightly last week, while two reports on manufacturing suggested the economy continued to expand moderately.
Asia & Pacific
China is suffering a major economic slowdown, as growth flags in the country's real estate, construction, steel, and other sectors.
Japan has published a shrinking trade surplus in March after a record deficit in January.
N.Z. Projects Narrower Surplus As Greek Risks Darken Outlook
http://www.bloomberg.com/news/2012-05-24/n-z-projects-narrower-surplus-as-greek-risks-darken-outlook.html
New Zealand’s government projected a narrower budget surplus in 2015, the first in seven years, and indicated that a disorderly exit by Greece from the euro region heightens the risk to achieving that goal.
Most Asia stocks drop on China data; Tokyo climbs
http://www.marketwatch.com/story/asia-stocks-rise-in-choppy-session-2012-05-23
Most Asian markets fell after a choppy trading session Thursday as data showed the Chinese manufacturing sector remained soft in May and as European leaders remained divided on steps to address the region’s debt crisis |
