Euro Slides as Governmets Rescues Dexia, US Stocks Recover Reversing Dollar's Losses to Yen
Daily Forex Fundamentals |
Written by CMS Forex |
Sep 30 08 22:53 GMT |
Euro Slides as Governmets Rescues Dexia, US Stocks Recover Reversing Dollar's Losses to Yen
JPN Spending Falls 4%, Unemployment Climbs to 4.2%
Japanese household spending was down a sharp 4.0% in August compared to a year ago, surprising expectations on the downside. It was the 4th straight month that spending was down. The unemployment rate meanwhile rose to 4.2% from 4% in July, higher than expected.
JPN Industrial Production Down 3.5%, Manufacturing PMI Falls to 44.3
Japanese industrial production for August showed a sharp 3.5% decrease, which was a larger fall than expected. Companies are cutting output as exports decline in the face of a global slowdown. The Manufacturing PMI was down to 44.3, which was the 6th straight month that manufacturing activity was below the 50 boom-bust level.
AUD/JPY - Carry Trade Pairs Stabilize After Sharp Fall Yesterday
The Aussie-Yen pair fell sharply yesterday, along with other carry trade pairs, plunging from its level near 89 to test 82 last evening. That's a 700 pip difference! From there it managed to recover to the 85 level prior to the NY open where it dipped down again.
UK GDP Flat in 2nd Quarter
In the UK, the final version of 2nd quarter GDP confirmed flat growth for the quarter and growth of 1.5% compared to a year earlier. That's the weakest annual pace since 1992, though is slightly higher than the revised estimate of 1.4%.
EUR Consumer Prices Index Down to 3.6% in Flash Estimate
In the Euro-zone consumer inflation is expected to slow in September according to the flash estimate. CPI is expected to be 3.6% compared to Augusts' 3.8%. That reinforces the perception that inflation peaked at 4.0% in July.
GER Unemployment Falls by 29K in August
The number of German workers that were unemployed in August fell by 29K, which was a larger drop than forecast. It kept the unemployment rate at 7.6%, a 16-year low.
EUR/GBP - Pound Gains on Euro Rescue of Dexia
The Euro-Pound pair, after strengthening in yesterday's session, fell sharply in the hours surrounding the NY open. The Euro was pressured by further bailouts on the continent as France and Belgium led a state-backed rescue of Dexia SA.
US S&P Sees Housing Prices Continuing to Decline
In the US, housing prices in US metropolitan areas continued to see declines. The 20-city composite was down 16.3% on the year as prices fell 0.9% on the month. The pace of declines seems to be moderating, but the current figures do not indicate a bottom.
US Chicago PMI Falls to 56.7, Consumer Confidence Improves to 59.8
The Chicago PMI fell to 56.7 in September compared to the 57.9 seen in August. Still the headline figure was much stronger than expectations. US consumer confidence edger higher again in September, after a modest bounce in August. The present situation index fell lower, but future expectations for the economy grew. Note that the survey was taken before the bailout plan was proposed.
EUR/USD - Euro Pressured By Another Rescue
The Euro-Dollar pair continued its descent from yesterday falling to test 1.40 in today's session. That was almost a 400 pip drop from today's open. Though the credit crisis originated in the US, the European continent is feeling its effects and therefore the Dollar is actually improving against its main rival.
USD/JPY - With US Markets Recovering, Dollar Pares Yesterday's Losses to Yen
After yesterday's sharp drop in the Dollar-Yen pair, today saw a reversal of fortunes. The pair climbed almost 300 pips from its low near 103.50 to trade near yesterday's open near 106. US stocks jumped today as it became clear that some form of congressional plan to shore up the US financial system will pass. The Dow was up 400 points as of 2:30 PM, and the Nasdaq and S&P were up around 4%.
CAN July's GDP Comes In at 0.7%, Besting Expectations
Canadian GDP rose 0.7% on the month of July, which handily beat forecasts of a 0.2% increase. Gains were led by increased energy production, manufacturing, wholesale trade, and the financial sector.
CAN Producer Prices Fall for by 0.2%, Raw Materials Down 7.7%
Canadian PPI In August, the price indexes for manufactured goods and raw materials declined 0.2% and 7.7% respectively from July. The strong decrease in prices for petroleum products ends an uninterrupted monthly rise in the PPI going back to the end of 2007.
USD/CAD - Greenback Gains on Loonie as US Stocks Recover
The US Dollar- Canadian Dollar, after being confined to a tight range the last 5 sessions, showed a volatile move today following the NY open as the pair surged ahead to 1.0640 from its open near 1.0450 a move of 200 pips.
Tonight's Releases
Coming up tonight we get the Tankan survey out of Japan. Overnight, Germany posts retail sales, and the UK and the Euro-zone reveal manufacturing PMI.
Tomorrow's Releases
Tomorrow, the US will release its ADP employment change, its ISM manufacturing index, and data on construction spending.
