Global Market Key Points
Stock markets in the U.S. were up yesterday indicating maybe that investors are becoming more optimistic over the global economic recovery. News coming from China was showing a positive outlook as industrial production as well as retail sales continued to grow more than expected. The Basel Committee on Banking Supervision’s new capital rules turned out to be less strict than investors expected. The U.S. treasury budget deficit came in at $90.5 billion bringing the fiscal year-to-date deficit to a huge $1.26 trillion which is over 9% of GDP. The European Commission has raised its forecast for the 27-nation European Union and the 16-nation Euro-zone GDP growth for 2010 to 1.8% and 1.7% respectively, expecting a rapid growth in industrial exports. The forecast for the U.K. economic growth was updated as well from 1.2% to 1.7% for the year 2010. In Australia the labor market continues to grow and unemployment rate edged down to 5.1% in August, as employers added approximately 31 thousands positions. In the past 12 months 350,000 new positions were added in spite of the overall global economic conditions. The Swiss Franc gained yesterday more than 1% vs. the U.S. dollar from 1.0189 to 1.0081 Francs to dollar. The Swiss Federal Statistical office reported yesterday that producer and import prices were up 0.5% year-on-year more than expectations for 0.3%.
EUR/USD – The U.S. Fiscal Y-T-D Budget Deficit Came-in at a Huge $1.26 Trillion
The U.S. treasury budget report for August showed a less than expected deficit of $90.5 billion vs. $103.6 billion in August last year. The average deficit for the month of August has been $71.1 billion over the past ten years and $89.6 billion over the past five years. The fiscal year-to-date budget deficit came in, in August at a huge figure of $1.26 trillion which comes to nearly 9% of GDP, but still was less than the $1.38 trillion deficit recorded in August 2009. Year to date tax receipts were 1.6% up at $1.92 trillion while outlays edged down 2.5% to $3.18 trillion.
USD/JPY – Consumer Confidence in Japan Declined, Machinery Orders Increased
Machinery orders in Japan increased by 8.8% in July almost four times higher than economists expected following 1.6% gain in June due to a higher external demand that boosted companies’ investment, indicating business activity is improving though the strong yen is affecting exporters. Household confidence unexpectedly declined in August for the second successive month as consumers got less confident regarding their overall economic condition and their employment safety in the near future. The index declined from 43.3 points in July to 42.4 in August while index was forecasted to rise to 43.8 points.
GBP/USD – U.K. NIESR’s Report Showed Economic Growth is Slowing
Economic growth in the U.K. is slowing. According to the National Institute of Economic and Social Research, output rose by 0.7% in the three months to August following 1.3% increase in the three months to July. Albeit 0.7% is still a robust pace of growth the NIESR expects growth to decelerate further over the coming months. The European Commission revised upward its forecast for the U.K. GDP growth for the year 2010 from 1.2% forecasted few months ago to 1.7% as the European Commission expects exports growth boosted by improved economic conditions among the European markets and the U.K.
AUD/USD – Labor Market in Australia Continues to Improve, Unemployment Rate Edged Down to 5.1%
The Australian labor market continues to grow. Unemployment rate edged down by 0.2 basis points to 5.1% in August, as employers added approximately 31 thousands positions. The employment gain in August was mainly due to an increased of full-time workers while the number of part-time jobs declined and the Australian Bureau of Statistics reported that hours worked rose 0.9% monthly. In the past 12 months a total of 350,000 new positions have been added in spite of the global economic conditions.
USD/CAD – Bank of Canada Will be more Cautious on Further Interest rate Hikes
After raising the overnight rate by 0.25 basis points to 1% for the third successive rate-hike since June, the Bank of Canada’s Governor hinted last Friday that the bank will be more cautious on further hikes of the interest rate, as the global economy condition raises more challenges. He highlighted his concern over the implication of the weaker U.S. economy on the Canadian economic growth and therefore said that “any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook”.
USD/CHF – Swiss National Bank Expects the Economy to Grow by 2% This Year
According to the latest Swiss National Bank forecast the Swiss economy is expected to expand by 2% in the year 2010. Switzerland is ranked by the Geneva-based World Economic Forum as the world’s most competitive economy due to its innovation and business culture. The Swiss Franc gained yesterday more than 1% vs. the U.S. dollar from 1.0189 to 1.0081 Francs to dollar. The Swiss Federal Statistical office reported yesterday that producer and import prices were up 0.5% year-on-year more than expectations for 0.3%.
Gold futures contract for December delivery added yesterday $0.60 to settle at $1,247.10 per ounce on the Comex in New York after was traded during the session between $1242.30 and $1251.00 per ounce. The slightly gain is following the weekend’s Chinese industrial production report showing output rebounded by nearly 14% year-on-year in August. Gold price was also affected by the Basel Committee on Banking Supervision’s announcement of new capital rules that appeared to be less strict than expected. Silver closed up $0.31 to $20.15 per ounce – the highest price since mid-March.
Major Currencies Cross Rates:
Galit LevyHead of ResearchGlobal MarketGalitl@iforex.comDisclaimer & Company Profile:This analysis is neither a recommendation nor investment advice. Currency rates may fluctuate according to market conditions.iFOREX offers its clients 24 hrs Forex, metals, commodities and index trading. It is committed to ease of accessibility with credit card or bank transfer, online registration, tight spread and no commission. It prides itself of excellent customer service with dedicated contact person for all your trading requirements. Please feel free to contact us should you have any question (firstname.lastname@example.org). Or call us 24 hrs a day on +30-210-374-2599.The risk of losses involved in the transaction or speculation in the foreign currency market or other financial markets can be considerable. Please think carefully, taking into consideration all the relevant circumstances, as well as your personal resources, whether such trading suits you. Speculate only with funds that you can afford to lose. For more information please refer to our Risk Disclosure located on our web site at www.iforex.com.This communication is to be treated as confidential and the information in it may not be used or disclosed except for the purpose for whose it has been sent. If you have reason to believe that you are not the intended recipient of this communication, please contact the sender immediately. No employee or agent is authorized to conclude any binding agreement on behalf of iFOREX and or their affiliates with another party by E-mail without express written confirmation by an officer of iFOREX.