USD
USD had its biggest weekly decline against the euro since mid December last week as US stocks climbed, led by financial shares, as Citigroup, JPMorgan and Bank of America claims profitable in the first 2 months of the year spurred speculation the worst of the banking crisis is nearing an end. A survey indicates US jobless rate will reach 9.4% this year and remain elevated through at least 2011, spurring concerns that consumer spending and demand for automobiles and properties will remain weak. The euro advance last week are at most of the time taking advantage on the weakening dollar as demand for safe haven fell on optimism the worst of the banking crisis is nearing and end and stocks may have a bull run in near-future. Investors growing risk appetite on equities overshadowed concern that the UK government may expand acquisition after took control of Lloyds banking group Plc and EU Finance ministers said that they are not planning to impose any additional measures to stabilize economy in the region.
US trade deficit narrowed the lowest level in 6 years in January to $36Billion, on tumbling American demand everything on rising unemployment rate and falling home prices and US imports and exports both slumped for a 6th straight month in January. The dollar should recover against the euro this week as last week euro gains is mostly taking on advantage of weakening dollar and the euro may experience some selling pressure this week as investor take profits, while stocks markets might retreat on selling pressure amid uncertainty. Monitor this week's US economic releases – US Empire manufacturing, US Net long-term TIC Flows, US Industrial production, US NAHB housing market index, US PPI, US Housing starts, US ABC Consumer confidence, US Current account balance, US CPI, FOMC Rate decision, US Initial jobless claims, US Philadelphia Fed index, US Leading indicators, and Fed Chairman Bernanke speaks on Panel -, cross currencies important economic releases, Fed/Treasury or other central banks' member' statements/comments, US indexes movement, news related to major corporate and speculation of any fiscal package.
JPY
JPY fell against most currencies and posted a 4th weekly decline versus the euro last week as global stock markets rose, on speculation the worst of the banking crisis may be over after officials Citigroup, JPMorgan and Bank of America said that they are profitable in the first 2 month of the year, while some economists claimed stability in the industry. The yen remained weak last week as report showed Japan's economy shrank the most since 1974 , forcing the government pledged aid for the economy while its counterpart's Premier We said China has adequate ammunition to revive the economy and can add to its $585Billion stimulus package at any time. Freddie Mac posted a loss of more than $50Billion last year and UBS AG posted a $18Billion loss for 2008 failed suppress stock markets from rising as investors took opportunity to purchase undervalued financial shares after 3 US based financial institution reportedly to be profitable in January and February, spurring speculation more banks may claim similar.
US trade deficit reaching 6 years low on Americans demand for goods abroad drop and a survey indicates US jobless rate will reach 9.4% this year and remain elevated through at least 2011 failed to flush crowd of hungry investors as their appetite had been suppressed since the beginning of the financial turmoil. The yen should recover this week as stocks may retreat on selling pressure and there are still uncertainty lingers on the market and more positive figures or announcement is needed to ease investors' pessimism. Monitor this week's Japan economic releases – Japan Tertiary industry index, BOJ Rate decision, Japan Machine tool orders, Publication of BOJ monthly report, Japan Leading index, Japan Coincident index, Japan All industry activity index, Japan Supermarket sales and Japan Nationwide department store sales -, 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 stem weakening economy.
EUR
EUR had its biggest weekly gain against the dollar since mid December last week as stock markets climbed, reducing appeal of the dollar as safe haven amid economy in Euro-zone is contracting faster than expected. France industrial production plunged by the most on record in January and Germany manufacturing orders collapsed at the same month as the global recession reduced exports. The euro gains last week is mostly taking advantage of the dollar weakens on reduced demand for the greenback as refuge, fundamentally, the euro-zone economy are contracted at a faster pace than the US. Council member Axel Weber said the ECB shouldn't cut its main interest rate below 1% and EU's finance said they are not planning impose any additional measures battle the economic crisis as they intend to let the economy stabilize by itself. Stocks around the world climbed last week, led by bank, after Citigroup, JPMorgan and Bank of America claims to be profitable in January and February, spurring speculation that worst of the banking crisis may be near an end and more major financial institution may claim similar. Investors risk appetite grows on optimism that banking sector will recover soon, rushing into the undervalued banking shares, while some economist said the banking industry is stabilized.
Ifw institute last week said Germany's economy, the largest in Euro-zone, will shrink 3.7% this year, the biggest economic slump since WW2. The euro are likely to retreat this week as last week gains against the dollar are mostly by taking advantage of weakening the dollar on reduced safe haven demand for the currency, but the Euro-zone's economy contraction are showing no signs of slowing and the economy is still weaker than the US. Monitor this week's Euro-zone economic releases – Germany Import price index, Italy CPI, Euro-zone CPI, Euro-zone Employment, Germany ZEW Surveys, Euro-zone ZEW survey, Italy Industrial production, Italy Trade balance, Euro-zone Industrial production, Germany PPI, Euro-zone Trade balance, Italy Unemployment and Euro-zone Construction output -, cross currencies important economic releases, central banks' member's statements/comments, news related to major corporate and US indexes movement.
Crude oil
Crude oil rose last week as the weakening dollar increased appeal of commodities as inflation hedge and rising stock market boosted investors appetite on markets, increasing investment funds. Oil prices leans on higher side last week as before March 15 OPEC meeting, investors speculated that the group will slash production by atleast another 500,000 barrels to half the falling oil price, but that speculation turned out to be only pure speculation after OPEC agreed to maintain current production quotas, concerned that a 4th cut since September risked increasing energy costs during the worst global economy in six decades. IEA and OPEC both cut their global demand forecasts because of the recession in major consuming countries, spurring concerns that demand will remain weak throughout the year on climbing unemployment and falling home value dampen consumers spending confidence.
OPEC said that the group will aim to complete existing production cutbacks agreed to late last year and meet again on May 28 to review policy amid analysts said OPEC's production cutbacks are starting to take effect on major consuming countries. Oil prices are likely to remain on range trading between $42-$47 this week as there's no clear signal that indicates either supply and consumption fell into the line of significance, but may lean on the weaker price as the dollar may strengthen. 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 economies and storage report.
Loh Chang Yuen,
Junior Strategist
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