Things to keep an eye on in the world of currencies, (I believe keeping an eye on the US Dollar and its relative value to other currencies is an important factor to what happens in the US markets since foreign interest in it will remain, so long the US Dollar continues to be as strong as it has been in the recent past --a sort of "security blanket"-- -g-)
My personal opinion is that interest rates in the US will remain low, and continue to go lower. This could undermine the case for the bears... then again, the market may ignore the Fed, (but it does not look like it). What about inflation ? (particularly with energy cost seemingly going up)... good question, I do not have an answer.
Ladies and gentlemen, place your bets -G- Casino is open.
Edit: Look what I found...
Message 15732270
I agree.
Edit (2): LOL !
Message 15733674
________________________________________________
WEEKLY HIGHLIGHTS AND THE WEEK AHEAD IN FOREIGN EXCHANGE
4 May 2001
Friday
New York
1900 GMT
____________________________________________________________
GCI Foreign Exchange Research:
globalcap.com
Blair Baker, Director of FX Research: blairbaker@globalcap.com
Reuters Comment Pages: KBA11 – KBA35
Telephone: + (212) 248 3700 · Facsimile: + (212) 248 4988
____________________________________________________________
WEEKLY HIGHLIGHTS AND WHAT TO WATCH
¥ (Yen)
Weekly High: 124.22
Weekly Low: 120.65
Weekly Close: 121.20
The yen appreciated vis-à-vis the dollar this week despite the Golden Week holiday in Japan when many Japanese exporters were absent from the market. Traders await a major policy speech from new Prime Minister Koizumi on Monday as it is expected he will discuss his plans to enact structural reforms and address the bad loan problem of the banking system. The major drama this week involved BoJ Governor Hayami amid widespread rumours that he will resign. Insiders suggest Hayami is leaving his post but is not confirming same publicly until former Deputy Govenor Fukui is declared his successor.
Highlights:
· MoF’s Shiokawa:
Economy hit "rock bottom" last autumn
U.S. should react "with an appropriate monetary response" if needed
Does not favour intervention except in rare instances
Asked BoJ Governor Hayami "to please stay on"
Former BoJ DG Fukui has "expertise" and is "well-suited" for top job
· BoJ Governor Hayami denied rumours he is resigning; former BoJ Deputy Governor Fukui is seen as a replacement said the recent quantitative easing "might drive the yen excessively low, disrupting world financial markets, and drive up long-term interest rates": Is Hayami holding out to assure that Fukui claims the top job?
· Japanese financial markets largely closed for Golden Week holiday
· BoJ’s 19 March Policy Board minutes evidenced 8 – 1 vote to abolish the inflation rate target in favour of targeting commercial banks’ reserves; policymakers are concerned about increased purchase of outright Japanese government bond purchases
· BoJ failed to buy ¥800 billion in treasury and financing bills due to insufficient demand for the first time since the quantitative easing of 19 March: will the central bank be forced to increase its outright purchase of JGBs?
· Organization of Economic and Cooperation Development cut its forecast for Japanese GDP to 1.0%
E (Euro)
Weekly High: 0.9003
Weekly Low: 0.8851
Weekly Close: 0.8942
The euro traded in a very narrow range vis-à-vis the dollar this week and closed the week around last week’s closing rate of $0.8940. Eurozone policymakers, including Duisenberg, Issing, and Welteke, maintained their hawkish stance on interest rates and the purchasing managers’ indices moved broadly lower in April. The euro got a sharp lift on Friday following the weaker-than-expected U.S. employment scene but bids were challenged at the $0.9000 figure. A Washington Post article suggested decreased corporate capital spending plans precipitated the Fed’s 50 bp intermeeting move on 18 April. Ecofin finance ministers convene in Brussels on Monday.
Highlights:
· G7 meeting of finance ministers and central bankers:
- Communiqué: "Foreign exchange rates should reflect fundamentals"
O’Neill: ECB not pressed to make rate cuts
Duisenberg: CPI could remain above 2.0% until next year
Welteke: ECB monetary policy "proactive"
Reynders: "Greenspan said Q3 or Q4 U.S. rebound is possible"
· Purchasing Management Index data
EMU-12 PMI saw manufacturing sector contract at 49.3 from 51.2
Germany, France, and Italy down to 49.3, 49.3, and 49.2 respectively
· ECB Vice President Noyer
Risks to price stability are now more balanced
U.S. is in a "deep slowdown"
Real eurozone interest rates are "conducive to growth"
· ECB Chief Economist Issing
Short-term outlook for inflation is "not so good"
ECB is "always ready" to fend off price stability
Impact of U.S. and Japanese economies is "sizable but limited"
· Washington Post article suggested Fed relied heavily on anecdotal evidence when they cut rates by 50bp on 18 April – heavy emphasis on earnings reports and capital spending plans
· Eurozone officials:
Duisenberg: "Low inflation is best way to help confidence in euro"
Padoa-Schioppa: "Conditions do not allow" for lower rates
Vanhala: "Not as sure" CPI will be below 2.0% this year
Welteke: Rates "on hold"
Meister: Will watch how "M3 and expected price increases develop"
· Eurozone data: M3 money supply aggregate +5.0% y/y in March; EMU-12 current account surplus +2.1 billion euros; Italian producer prices off 0.4% m/m and up 4.1% y/y; EC economic sentiment index fell to 8.4% from 8.5%; French consumer confidence declined two points to zero; French capacity utilization at 86.3%; Italian industrial orders +1.4% y/y; German services activity index at 51.5; German March wholesale sales off 0.6%; EU business climate indicator fell to 0.36 from 0.58
· U.S. data: March personal income +0.5%; March personal spending +0.3%; Chicago Purchasing Management index of area economic activity rose to 38.9 from 35.0 – prices paid component fell to 55.8 from 59.6; New York Purchasing Management business conditions fell to 45.4 from 50.2; new orders index up to 45.9 from 42.3 and inventories index fell to 39.6 from 44.2; employment index fell to 38.1 from 40.4; construction spending +1.3% to US$854.4 billion annuual rate; factory orders +1.8% to US$370.52 billion; initial jobless claims +9,000 to +421,000; April unemployment +4.5%; non-farm payrolls down 233,000; average hourly earnings +0.4%
· Fedspeak
Parry: "Serious doubts" the economy will enter a recession
Counterproductive if Fed overstimulates economy with easing
· OECD’s Global Economic Outlook
ECB will cut rates by 50bp by mid-year
Eurozone will grow by 2.6% this year; current pace is "healthy"
Fed will cut rates by 25bp this summer
£ (Sterling -Cable)
Weekly High: 1.4450
Weekly Low: 1.4264
Weekly Close: 1.4383
The British pound ceded a modicum of ground to the dollar this week as sterling was unable to close the week above the $1.4400 figure. Cable closely tracked the euro this week and may be quiet ahead of next week’s MPC meeting in which policymakers are expected to lower the headline repo rate by 25bp to 5.25%. Dovish comments from BoE’s George coincided with weak PMI and strong housing data. Barker’s confirmation hearing went smoothly in TSC: will she be as dovish as the outgoing Julius?
Highlights:
· Bank of England Governor George
"U.S. GDP was better than anyone was expecting"
"Surprised by weak Q1 output due to foreign trade and domestic demand"
Sympathizes with ECB
· U.K. data: IRS pay awards steady at 3.3%; Nationwide house prices +0.8% m/m; narrow M0 money supply +0.2% m/m and +7.5% y/y; CIPS’ Purchasing Management Index at 47.8 with 49.8, the weakest reading since February 1999; net mortgage lending surged in March to £7.647 billion, up 28%; net consumer credit +£813 million; mortgage approvals +104,000 to 101,000; housing market lending +£3.809 billion; M4 money supply +0.7% m/m; April PMI services business activity index fell to 51.2 while business expectations index at 71.2; CIPS reported service sector fell to two-year low in April; Halifax Plc house prices +1.7% m/m and +5.7% y/y
· Chancellor of the Exchequer Brown
Snubbed ECB and reaffirmed BoE’s 2.5% inflation target
· MPC’s Julius:
"Economy is growing at or below trend and is still slowing"
· Kate Barker, MPC-appointee
"Important question is what will happen in the U.S. economy"
"Timing of MPC’s cut in interest rates and timing has been about right"
Does not favour lowering RPIX target from 2.5%
U.K. should not adopt the euro at the current exchange rate
Approved by TSC
· OECD predicts "further monetary easing is expected" by MPC
· Recruitment and Employment Confederation said new permanent jobs fell for seventh consecutive month in April
· Office of National Statistics reported average earnings growth will decrease in coming months
Sfr (Swiss Franc)
Weekly High: 1.7382
Weekly Low: 1.7145
Weekly Close: 1.7267
The Swiss franc depreciated slightly vis-à-vis the dollar this week but traded in a narrow band as traders could not decide where to take the euro. March 2002 futures contracts are signaling unchanged interest rates over the next ten months.
Highlights:
· June EuroSwiss futures signaling three-month rates of 3.10% in late June; March 2002 contracts signaling interest rates of 3.10% in late June
· OECD report
Little reason for SNB to ease policy further
"It is assumed interest rates will remain stable" for next 18 months
"Fiscal discipline should not be relaxed"
· Three-month June EuroSwiss futures indicating three-month rates of 3.15%
· Swiss data: April CPI +0.3% m/m and 1.2% y/y; core rate +0.1% m/m and +1.2% y/y
SCHEDULE
Saturday, 5 May 2001 – Friday, 11 May 2001
Saturday, 5 May 2001
GMT
nil
Sunday, 6 May 2001
GMT
nil
Monday, 7 May 2001
GMT
N/A Australia. RBA monetary policy statement
N/A Japan. Prime Minister Koizumi delivers key policy speech
N/A Belgium. Eurozone finance ministers meet
N/A Switzerland. G10 central bankers meet; BoE’s George speaks
N/A Switzerland. May consumer price inflation
0130 Australia. March retail trade
0930 Germany. Bundesbank President Welteke speaks
1000 EU-12. March industrial producer price index
1230 Canada. March building permits
1300 U.S. Philadelphia Fed President Santomero speaks
1625 U.S. Cleveland Fed President Jordan speaks
1630 U.K. April BRC sales monitor
1730 U.S. Cleveland Fed President Jordan speaks
1900 U.S. March consumer credit
Tuesday, 8 May 2001
GMT
N/A Australia April business conditions
0530 Japan March housing spending
1215 Canada April housing starts
1230 U.S. Preliminary first quarter non-farm productivity and costs
1400 U.S. Richmond Fed monthly manufacturing and services indices
1400 U.S. March wholesale inventories
0830 U.K. April final M0 money supply
1000 U.K. CBI regional trends survey
2245 NZ February quarterly employment survey
2245 NZ March quarterly labour cost index
2350 Japan April foreign reserves
Wednesday, 9 May 2001
GMT
N/A Australia May consumer sentiment survey
N/A Australia April merchandise imports
N/A U.K. BoE MPC meeting starts
0500 Japan March preliminary index of leading and coincident indicators
2350 Japan April wholesale price index
2350 Japan April bank lending
2350 Japan April money supply
Thursday, 10 May 2001
GMT
0130 Australia April labour force
0830 U.K. March housing starts
0830 U.K. March industrial production
1100 U.K. MPC announces rate decision
1145 Germany ECB interest rate announcement
1230 Germany ECB news conference
1230 U.S. April import and export prices
1230 U.S. Weekly jobless claims
1315 U.S. Chicago Fed President Moskow speaks
1325 U.S. Fed Chairman Greenspan speaks
1445 Canada Bank of Canada "Bank of Canada Review"
1600 U.S. March Chicago Fed midwest manufacturing index
1600 Canada. Bank of Canada Deputy Governor
Friday, 11 May 2001
GMT
N/A Australia RBA Governor Macfarlane speaks
0500 Japan March machinery orders
0600 Japan Vice Economics Minister Kawade speaks
1030 Germany Bundesbank President Welteke speaks
1100 Canada April labour force survey
1230 U.S. April retail sales
1230 U.S. April producer price index
1230 Canada. March new housing price index
1600 U.S. March Chicago Fed midwest manufacturing index
2300 U.S. Cleveland Fed President Jordan speaks
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