USD
USD fell against most currencies last week as advancing equities reduces appeal of the dollar as safe haven and economic figures shows that economy in Europe and US may be stabilizing, indicating that the global recession will return to growth in 2nd or 3rd quarter. Concerns that the spreading swine flu will become a pandemic eases as the number of swine flu cases in Mexico wanes. Director of the White House National Economic Council said the US economy will keep shrinking dampened investors prospect for a rapid economy recovery amid economic figures indicates that manufacturing sector and confidence among investors and consumers are improving. Housing markets are showing signs of stabilizing amid a report last week showed home prices in 20 major US metropolitan posted an 18.6% drop from the same month a year before, less than economists expected, while fed members said at a meeting last week that the economy has continued to contract, though the pace of contraction appears to be somewhat slower, suggesting that government measures and Fed rate cuts are bolstering the region's economy and confidence among consumers and businesses.
Stock market remained steady last week despite major companies like Exxon Mobil, Metlife and MasterCard posted worse that expected earnings in the 1st quarter and undervalued share prices attracted investors who bets that the US economy will return to growth in the 2nd quarter, while the government pushed Chrysler into bankruptcy, spurred concerns over higher unemployment and shattered the automobiles industry. The dollar this week may recover this week as investors exit position on profit taking after last week's retreat, and report may show job markets in the region continues to deteriorate despite confidence improved. Monitor this week's US economic releases – Fed's Hoenig Speaks in on US financial crisis, US Pending home sales, US Construction spending, US ISM Non-manufacturing composite, Fed Chairman Bernanke testifies, ABC Consumer confidence, US MBA Mortgage application, US ADP Employment change, US Initial jobless claims, US Non-Farm productivity, Fed Chairman Bernanke speaks on financial regulation, US Consumer credit, US NFP, US Unemployment rate, US Change in manufacturing payrolls, US Average hourly earnings and US wholesale inventories -, cross currencies important economic releases, Fed/Treasury or other central banks' member statements/comments, US indexes movement, news related to major corporate and any measures/plans intended to bolster the region's economy.
JPY
JPY fell against most currencies last week as stocks around the world rose on optimism that the global recession is stabilizing and will return to growth in 2nd or 3rd quarter. Japan's retail sales fell for a 7th month in March as worsening job prospects and declining wages prompted households to cut spending despite government measures to bolster the region economy. Stocks in US rose as low stocks' prices lured investors who bets that the region's economy will return to growth in 2nd or 3rd quarter, undermined statement made by director of the White House National Economic Council, which said the US economy will keep shrinking to end in 2009. Concerns that the swine flu will become a major pandemic eases as swine flue cases ebbs as worldwide government took measures to prevent the virus from spreading further.
Exxon Mobile, Metlife and MasterCard all reported weaker than expected 1st quarter earnings last week, but failed to make any major impact on US stock market as undervalued stocks caused by credit-crisis lured investors who bets that US economy will return to growth in 2nd or 3rd quarter this year. The yen will recover this week as last week retreat was overdone considering stocks are just beginning to stabilize and showing no concrete evidence that the trend will last. Monitor this week's Japan economic releases – Publication of BOJ Meeting minutes, Japan Monetary base -, cross currencies important economic releases, central banks' member's statements/comments, US indexes movement, commodities performance, news related to major corporate and governments' measure/plan to bolster the economy.
EUR
EUR advanced against most currencies last week as stocks around the world rose, and economic figures indicates the recession in the region is stabilizing, while some investors bets that the region economy will return to growth in 2nd half of the year. Government measures and stimulus package has boosted confidence among businesses and consumer in Europe, particularly Germany despite rising unemployment and the country's leading economic institutes predict the economy will shrink by 6% this year. Swine flu spread deeper into Europe stoked concerns that the virus will hurt global economy and at one point at the brink of being declare as a pandemic, but the threat level eases as day passes with less case reported amid governments around the world took measures to prevent the virus from spreading into their country.
Last week, the euro was further supported by declining dollar as stocks in US advanced despite companies like MasterCard, Metlife and Exxon Mobile reported weaker than expected profit in 1st quarter and the US government pushed Chrysler into bankruptcy last week, as investors remains optimistic that the country's economy will return to growth in 2nd or 3rd quarter of the year, reducing appeal of the dollar as safe haven. The euro this week will retreat against the dollar this week as investors exit position on profit taking after last week's gains, and stocks may retreat on selling pressure amid high unemployment in the region. Monitor this week's Euro-zone economic releases – Germany Retail sales, Italy Manufacturing PMI, France Manufacturing PMI, Germany Manufacturing PMI, Euro-zone Manufacturing PMI, Italy PPI, Euro-zone Sentix confidence, Euro-zone PPI, Italy Services PMI, France Services PMI, Germany Services PMI, Euro-zone Services PMI, Euro-zone Retail sales, France Trade balance, Germany Factory orders, ECB Rate decision, Germany Trade balance, Germany Current account, Germany Imports, Germany Exports and Germany Industrial production -, cross currencies important economic releases, central banks' member's statements/comments, news related to major corporate, US indexes movement and speculation on any additional measures by European countries or its officials from the region.
Crude oil
Crude oil rose to a 5-week high last week as the dollar fell versus the euro, increasing appeal of commodities as inflation hedge, and advancing equities spurred speculation that fuel consumption will recover. Oil prices rose last week as equities advanced on stream of better than estimated corporate profits reported in April spurred optimism that the US economy will return to growth in the 2nd or 3rd quarter, boosting fuel demand. US Energy Department report showed US daily fuel demand in the four weeks ended April 24 is down 6.8% from a year earlier, and crude oil inventories increased by 4.1Million barrels, while gasoline inventories decreased by 4.7Million barrels as refiners reduced operating rates.
Widening outbreak of swine flu failed to keep pressure on oil price last week as concerns that it will become a major pandemic eases as cases of the flu ebbs after government around the world took measures to contain the virus. Oil prices are likely to retreat this week as fuel consumption weakens and equities may retreat on selling pressure on concern unemployment will keep rising and major companies may post worse than expected earnings and drag the market lower. Monitor this week's US economic releases, central banks' member's statements/comments, news related to major corporate, US indexes movement, USD movement, geopolitical risk, major corporate fiscal results, stimulus to bolster the economy and storage report.
Loh Chang Yuen,
Junior Strategist
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