Morning Forex Fundamental
EUR
'The downward slide continues as German companies are increasingly becoming pessimistic about the future' - Carsten Brzeski at ING
German business confidence deteriorates
Impact high
German business confidence deteriorated for a fourth consecutive month in August to the lowest reading in more than two years, a sign domestic companies are vulnerable to the debt crisis in Europe. Ifo business climate index, which is based on a survey of 7,000 businesses, declined to 102.3 points from 103.2 points in July.
'The downward slide continues as German companies are increasingly becoming pessimistic about the future,' said Carsten Brzeski at ING.
'It looks as if the German economy will, at best, be treading water in the coming months. The latest batch of sentiment indicators even points to a contraction in the third quarter,' he added.
The Stoxx Europe 600 Index fell 0.37 per cent to 268.20. Germany's DAX Index rose 1.10 per cent and France's CAC 40 Index added 0.86 per cent.
USD
'There's not much going on as we look ahead to Jackson Hole…' - Dan Veru, chief investment officer at Palisade Capital Management LLC
U.S. stocks closed mixed on Monday
Impact High
U.S. stocks closed mixed on Monday ahead of Jackson Hole Symposium as investors awaited signals on the next round of quantitative easing.
The Standard & Poor's 500 slid 0.05% to 1,410.44. The Dow Jones Industrial Average edged lower 0.25%, or 33.30 points, to 13,124.67. The Nasdaq Composite climbed 0.11 per cent to 3,073.19.
'There's not much going on as we look ahead to Jackson Hole, and we might make some new lows in terms of trading volume going into that as investors wait,' said Dan Veru, chief investment officer at Palisade Capital Management LLC in Fort Lee, New Jersey.
'There's no great conviction in either direction,' said Richard Sichel, chief investment officer at Philadelphia Trust Co. 'People are looking ahead for Fed signals.'
GBP
'I've always taken the view that there is a very high probability of QE3' - Robert Parker, a senior adviser at Credit Suisse Asset Management
U.K. stocks traded flat on Friday
Impact High
U.K. banks were closed on Monday in observance of the Summer Bank Holiday.
U.K. stocks were little changed on Friday as speculation that the Federal reserve will ease monetary policy offset worse than expected unemployment claims report in the U.S. The FTSE 100 Index was unchanged at 5,776.60. The broader FTSE All-Share Index slid to 3,002.62.
'I've always taken the view that there is a very high probability of QE3,' said Robert Parker, a senior adviser at Credit Suisse Asset Management in London
'Politically, I think that has to be in September.'
CHF
'Markets are more driven by political headlines than by fundamental news' - Lex Van Dam, a fund manager at Hampstead Capital LLC
Swiss stocks gained on Monday
Impact: Medium
Swiss stocks extended gains on Monday after German's Finance Minister Wolfgang Schaeuble said France and Germany will seek for new solutions to strengthen fiscal and monetary union.
The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies gained 0.24% to 6,491.28. The broader Swiss Performance Index rose to 5,994.08.
'Markets are more driven by political headlines than by fundamental news,' said Lex Van Dam, a fund manager at Hampstead Capital LLC in London.
'It's a very quiet market which is no surprise for a U.K. bank holiday. Real investors remain on the side lines.'
JPY
'Last week, stocks markets rose and the dollar weakened after the Fed's minutes raised easing speculation, but the markets are short of catalysts to maintain such expectations' - Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd.
Japanese stocks fell on Tuesday
Impact: Medium
Japanese stocks fell on Tuesday after the government cut growth outlook.
The Nikkei 225 Stock Average fell 0.57 per cent, or 52.10 points, to 9,033.29. The broader Topix Index lost 1.20 per cent, or 9.07, to 746.30.
'Last week, stocks markets rose and the dollar weakened after the Fed's minutes raised easing speculation, but the markets are short of catalysts to maintain such expectations,' said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd.
'That's why investors are focusing on Bernanke's speech in Jackson Hole at the end of this week.'
Press Review
Europe
Eurozone's services and manufacturing output contracted for a seventh month in a row in August, with region's PMI Index rising to 46.6 from 46.5 in July. Any reading below 50 indicates contraction.
The 'troika' is to decide whether Greece is to receive its next tranche worth 31.5bn euros in order to stay in the Eurozone and avoid default or not.
Europe drawn back to its first problem: Greece
http://www.reuters.com/article/2012/08/27/us-eurozone-greece-options-idUSBRE87Q08P20120827
The euro zone debt crisis was born in Greece. Nearly three years and two bailouts on, Europe must decide whether to give the country yet more help or cut it loose.
New Euro Bailout Fund Could Fall Short
http://www.cnbc.com/id/48793670
The new fund set up to bail out struggling euro zone economies may face a 150 billion euro ($189 billion) shortfall if Spain and Italy need a full bailout program before the end of 2014, according to analysts at Credit Suisse.
USA
The number of Americans claiming for jobless benefits rose by 4,000 to 372,000 and reached a one-month high in the week ended August 18. Meanwhile, employers added 163,000 workers in July, the biggest gain since February.
Minutes released by the Fed on August 22 point at a higher possibility of a next round of quantitative easing in September.
U.S. Existing-Home Sales Rise From Eight-Month Low: Economy
http://www.bloomberg.com/news/2012-08-22/u-s-july-home-resales-rise-to-a-4-47-million-rate.html
Sales of existing homes climbed in July from an eight-month low, showing the cheapest mortgage rates on record are underpinning a market struggling to join the U.S. economic recovery that began three years ago.
Clouds over economy unlikely to clear soon
http://www.marketwatch.com/story/clouds-over-economy-unlikely-to-clear-soon-2012-08-26
The cloudy state of the economy has put the Federal Reserve in a fix. The central bank seems increasingly willing to take another stab at stimulating the economy, but only if growth clearly appears to be faltering.
Asia & Pacific
Chinese manufacturing activity contracted further in August, showed a survey conducted by HSBC Holdings PLC. An index measuring factory output fell to 47.8 from 49.3 in July.
The Bank of China made record cash injection of $34.6 billion into the banking system on August 21.
Japan recorder larger-than-expected trade deficit of $6.53 billion in July, Japan's Ministry of Finance data showed. Nation's exports lost 1.1% from June, while imports dipped 0.9% the same month.
Australia New-Home Sales Near Low As Sentiment Weakens: Economy
http://www.bloomberg.com/news/2012-08-28/australia-new-home-sales-near-low-as-sentiment-weakens-economy.html
Australian sales of newly built homes dropped to the second-lowest level on record in July, undermining the central bank's view that interest-rate cuts were helping stabilize the housing market.
Japan Cuts Economy Assessment as Global Slowdown Bites
http://www.cnbc.com/id/48808555
Japan's government cut its assessment for the export-reliant economy on Tuesday for the first time since October 2011, as slowing global growth weighed on exports and factory output, and threatened recovery prospects |
