Currencies Stick to Recent Ranges in Quieter Session
AUS: Import Prices Lower in 2Q, But Export Prices Keep Climbing
Australian import prices rose 1.4% in the 2nd quarter, lower than forecasted. Export prices climbed 13.5%. The results should help the balance of trade for the economy though the boost in exports recently has caused extra inflation within the economy.
AUS/JPY - Aussie Climbs vs Yen on Risk Appetite, at New 9 Month High
The Aussie traded very flat against the greenback, but reached a new 9 month high against the Yen. The pair is up 230 pips since hitting a low on Wednesday. Stronger exports are expected to keep up, helping that sector of the economy. Though stocks in Asian markets were mixed, risk appetite was in effect overnight helping carry trade.
GER Annual PPI Measures 6.7% in June, A 26-Year High
Germany continues to face rising inflation at the producer level. Prices were up 0.9% on the month and reached a 26-year high annual pace of 6.7%. A higher oil bill is causing producers of raw materials to pass along more of the costs to other firms and consumers. Inflation is expected to keep climbing even as the economy cools, putting pressure on the ECB.
EUR: Trade Balance Shows €1.5 Billion Deficit
The Euro-zone trade balance showed a 1.5 billion euro deficit, surprising forecasts on the downside. Exports were down 3.4% as global growth cools, and exports to the US continue to fall. A higher Euro is also making European made goods more expensive abroad. Now, in addition to falter domestic demand, the Euro-zone has to deal with a weakening balance of trade.
UK Gov't Budget Swells
In the UK, the government borrows 9.2 billion pounds in June, 2.9 billion higher than June 2007. The budget deficit swelled to 24.4 billion pounds in the three month to June, the widest since records started 50 years ago. The government is now close to breaking its rule to keep debt below 40% of GDP, and will have to re-write its borrowing rules unless it wants to increase taxes, an unpopular move with the economy on the brink or recession.
GBP/USD - Pound In Slightly Downward Channel Following Jump To Start Week
The Pound was pressured following the news, hitting a session low near 1.9910. It did manage to recover, and was heading back towards the 2 to 1 level as of 12 PM. The last three sessions have seen ranging trading, after a big jump to start the week, and therefore the Pound is set to finish higher overall.
USD/JPY - Dollar Recoups Losses From Early in the Week
The Dollar-Yen pair held on to yesterday's gains in today's session. European stocks were higher, helping to boost risk appetite overnight. In the NY session Citigroup posted a smaller-than-expected loss while Merrill Lynch disappointed investors. The Dollar has rebounded nicely from its fall to begin the week.
CAN Wholesale Sales Up 1.6%, Leading Index Flat
In Canada, wholesale sales were up 1.6%, beating forecasts on the upside. The climb came as a result of better sales of agricultural chemical products. It's the 4th gain in the last 5 months, and 6 out of 7 sectors reported positive growth. In a second release, the leading index was unchanged in June, after increasing 0.2% in May. Both new orders for manufactured goods and the housing index turned down, while household spending remained the driving force behind growth.
USD/CAD - Greenback Gains Following Double Bottom
The US Dollar-Canadian Dollar pair traded above parity today, following yesterday's late climb. Prior to the NY open the Loonie made some marginal gains, but gave them back in NY trading. The pair is likely to end the week trading near 1.0050 after falling below the 1 to 1 level mid-week. Support, in the way of a double bottom, was apparent at the 0.9980 level.
Upcoming Release
Some upcoming releases to start next week include producer and consumer prices from Australia and retail sales from Canada. On Wednesday the Bank of England releases its minutes and the Reserve Bank of New Zealand decides on interest rates.
Capital Market Services, L.L.C.
www.cmsfx.com
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