This Week's Data and Events
The dollar was all over the place last week as the euro correction ran out of steam and the appetite for risk fluctuated. Apparent weakness of the yen reversed, while weak fundamentals sapped the pound. Expect consolidation this week, with the euro seeing slightly more risk on the upside.
This Week's Data and Events
United States
The US economic agenda will start on Tuesday with the release of the important retail sales report for April.
Wednesday will see the release of the CPI report for April. We all know we have significant inflation eating into our income, but let see if this reports recognizes it.
On Thursday, be on the lookout for the release of several market movers: the Empire State Manufacturing and the Philly Fed Surveys for May, and the industrial production and capacity Utilization reports for April.
Friday will witness the release of the Housing starts report for April and of the University of Michigan survey for May, both possibly significant readings.
The Eurozone
The Eurozone calendar will begin on Monday with the release of the release of the Italian Industrial Production report for March – not a market mover.
French and Italian CPI Reports for April are due on Wednesday; expect them to be high enough so that ECB officials can tell us once again why they will not cut rates.
The Eurozone Industrial Production report for March is due on Wednesday as well.
The German CPI report for April, along with the regional, German and French GDP reports for the first quarter are due on Thursday.
Japan
The Japanese economic will open on Wednesday with the release of the current account balance report for March.
The Machinery Orders report for March is due on Thursday.
Friday will see the release of the first quarter GDP and of the industrial production report for April.
The UK
The UK calendar is busy this week.
It will begin on Monday with the release of the trade balance report for March and of the PPI input reports for April.
Tuesday will see the release if the CPI report for April, of the BRC retail sales total sales report for April, the RICS House Price Balance report for April, and the
DCLG house prices report for March.
Finally, the claimant count report for April is due on Wednesday.
Canada
The Canadian economic calendar includes only the New Housing Price report for March on Monday and the survey of manufacturing shipments for March on Thursday.
Past Week's Data and Events
United States
The oil prices are burning holes in consumption and accelerate recession forces in the US and eventually in Europe and elsewhere. But the commodity currencies failed to take much advantage, with the high yielding New Zealand dollar succumbing to growing economic weakness. The pound, not a commodity currency, slumped further across the board. The dollar look like a teething bull early last week, but that didn't last long. There is somewhat more risk for it on the downside.
The dollar sprang higher on Monday on news that the Institute for Supply Management's index of non- manufacturing businesses unexpectedly expanded to 52 in April from 49.6 the prior month.
Non-farm productivity rose to a higher-than-expected 2.2 percent annual pace in the first quarter because business reduced worker hours.
Meanwhile, the index of pending home re-sales fell 1 percent to 83 in March on top of 2.8 percent decline in February that was larger than previously reported, according to the National Association of Realtors.
Jobless claims declined by 18,000 to 365,000 from an upwardly revised reading of +3,000.
Finally, on a good note for the first quarter GDP, the trade deficit narrowed more than forecast to $58.2 billion in March from a revised $61.7 billion in February. Exports fell 1.7 percent and imports decreased 2.9 percent.
The Eurozone
The euro/dollar look poised for more thrashing last week. Only that is started to recover and with the long-term uptrend in good shape, a further rally is likely.
A mix of rising inflation and weakening economy kept the ECB officials tough on their anti-inflation positions.
The Eurozone PPI rose 0.7 percent in March, after rising by the same percentage in February, and accelerated to 5.7 percent on a yearly basis from 5.4 percent in February.
The Eurozone service PMI rose to 52 in April from 51.6 in March.
European retail sales declined 0.4 percent in March and contracted aggressively by 1.6 percent on the year, the most since at least 1995 and twice as much the expectations.
German manufacturing orders unexpectedly declined 0.6 percent in March, a fourth month of declines. They also contracted 5 percent in the year, the first annual decline since March 2005.
German industrial production fell 0.5 percent in March and slowed to 4.7 percent on the year.
In addition, French industrial production contracted 0.8 percent in March after expanding a revised 0.5 percent in February.
German trade surplus narrowed to 16.7 billion euros in March from 16.9 billion euros. Meanwhile, the current account surplus widened to 17.2 billion euros in the month under review from previous month's 16.1 billion euros.
The European Central Bank kept interest rates at 4 percent, as universally expected.
Japan
Dollar/yen failed its recovery melted away into the end of the week.
The few fundamentals available last week carried no weight. No surprise there.
The leading index fell to 20 percent in March from 54.5 the previous month, signaling growth will slow over the next two quarters. The index has been below 50 in nine of the past 12 months. Moreover, the coincident index fell to 33.3 percent in March from 70 in February.
The UK
The sterling/dollar continues to devalue under the weight of the housing problems. The Bank of England stepped closer to another rate cut following weak UK data, but held its rate unchanged at 5 percent on Thursday, as widely expected.
Adding to the woes of the housing sector, home repossession claims by mortgage lenders rose 16 percent on a yearly basis. This sent the pound further down and forced the government to pledge support to home owners struggling with their debts.
The UK PMI services index fell to 50.4 in April, the least since March 2003, from 52.1 in March.
Manufacturing output unexpectedly fell 0.5 percent in March to reverse a 0.4 percent gain in February. Industrial production fell 0.2 percent in the first quarter, twice as much as previously estimated.
Meanwhile, a consumers' sentiment index fell 7 points to 70, the lowest since the survey began in May 2004, according to the Nationwide Building Society.
Canada
Dollar/Canada remains in a trading range despite failed attempts to break out.
Canada's unemployment rate rose to 6.1 percent in April from 6 percent the month before. Employers hired 19,200 new workers, the fourth straight monthly gain.
The trade surplus widened to C$5.53 billion in March, the largest in 10 months, from a revised C$4.79 billion in February. That owes to rising energy exports jumped and declining imports of automotive products. Exports rose for a third month, gaining 1.6 percent. Imports fell 0.3 percent.
Switzerland
Dollar/Swiss franc reversed some of the gains last week and threatens to decline further.
Australia
The Australian dollar kept its own in times of risk adversity and ended the week close to the highs of the uptrend.
The RBA left interest rates unchanged at 7.25 percent, as high borrowing costs should slow the economy.
Australia's trade deficit narrowed to A$2.74 billion in March from a record A$3.26 billion in February.
Meanwhile, employment rose for a record 18th month in April, this time by 25,400. The jobless rate rose to 4.2 percent from 4.1 percent as more people looked for work.
Cornelius Luca
http://www.gftforex.com
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