Markets Mixed As EU Leaders Tell Greece They Are Wanted | May 25, 2012

‘All taste and no nourishment’ appears to be the general consensus after the Euro-leaders dinner meeting in Brussels which yielded little in the way specifics or conclusive way forward. Any sign of solidarity or a unified front from Euro leaders is proving to have a limited impact at a time when concise direction is required. The topic of Eurobonds remained in contention with French President Francois Hollande using the event as a platform to promote the need for jointly issued debt. Meanwhile, Italian Prime Minister Mario Monti has also thrown his support behind implementing Eurobonds suggesting they should be considered “when the time is right, but not in too long.” Nonetheless, nations with high borrowing costs in support of jointly issue bonds are likely find strong resistance from Germany who remains opposed to such measures.

Despite solid gains across European equity markets and mild support for stocks across the Atlantic, the overall theme of negativity continued to hold risk assets at bay overnight with intermittent periods of strength quickly overcome with European drama’s remaining the key directive. After falling to fresh 22-month lows the Euro regained some composure throughout the session, but any upside was quickly met with resistance with the pair stabilizing around current levels of $US1.2540. The Australian dollar followed a similar path but has overall outperformed its major counterparts and found moderate support against the greenback. After a brief stint below 97 US cents yesterday, the local unit rose to highs of 98.14 US cents overnight before tailing the Euro lower in the latter part of trade.

With little in the way of local economic directives, we anticipate regional equities to remain the primary driver throughout domestic trade with the AUDUSD pair likely to remain supported above the 97.1 US cent region. At the time of writing the Australian dollar is buying 97.65 US cents.

European Equity Markets Weak On Greek Exit Concerns | May 24, 2012

Risk currencies took a deeper leg lower overnight with Euro-region dramas remaining the key directive. European equities slid amid further ‘Grexit’ concerns with benchmark indices the FTSE, CAC and DAX all falling in excess of 2 percent on the day. The bid for safety found market participant’s flock to all the likely places with German debt yields falling to records lows in a testament to the sort fear and trepidation in the market place. Fears escalated Tuesday after former Greek PM Lucas Papademos revealed contingency plans are in place in the event of a Greek departure and this theme continued overnight with reports the European Central Bank are assessing the ramifications should Greece fail in its efforts to form government.

 

The US dollar remained on form with solid gains recorded against the out-of-favour Euro with price action making a break to the downside of the $1.26-handle. The Euro fell to lows near two-year lows of $US1.2545 before a slight reprieve but remains under pressure below $US1.26-figure. The Australian dollar followed a similar trajectory hitting fresh 6-month lows of 96.89 US cents before finding its feet above 97 US cents and is currently buying 97.5 US cents.

 

The day ahead will see the focus shift to China with the HSBC Manufacturing PMI due for release. This is clearly the type of environment that could induce further short-term pressure for risk currencies, with the Australian dollar eyeing the 96.6 US cent region should today’s data undershoot estimates. Meanwhile, market participants are eyeing any feedback from a meeting of Euro-zone leaders in Brussels were its expected they attempt to strike common ground on pro-growth strategies to bring troubled nations back from the brink.

Aussie Dollar Trades Through Six Month Lows | May 23, 2012.

After making significant headway throughout yesterdays domestic and in early European trade, the Australian dollar resumed its downward rout overnight with price action briefly crossing the downside of 98 US cents earlier this morning, representing fresh 6-month lows. Risk currencies in general remained defeated despite positive leads from European markets which saw the FTSE, DAX and CAC record solid gains. For European markets it remained a ‘no news is good news’ environment with moderate optimism ahead of the EU Summit Wednesday. European leaders including new French President Francois Hollande will attend an informal dinner with the primary agenda expected to be centered on ways to promote growth and employment in the region. It’s also expected to see Hollande put forth the importance of implementing a Euro-bond which will yield little result.

U.S stocks erased earlier gains with continued uncertainty across the Atlantic the primary catalyst. A solid existing home sales report provided some earlier upside momentum, however European fears dominated by the close with the DOW and S&P500 finishing largely flat on the day.

Meanwhile, consumer prices in the UK continued to moderate according to official inflation data released overnight with headline inflation slowing to an annual pace of 3 percent from a previous 3.5 percent while core inflation slowed to 2.1 percent from a previous 2.5 percent. Sterling outperformed risk counterparts overnight and saw on moderate losses against the greenback relative to the Euro and commodity units. After an early week reprieve, the Euro pared gains overnight with EURUSD price action moving to lows of $US1.2657 and currently remains under pressure below $US1.27-figure.

With a reasonably light day in terms of local economic data, we anticipate the key directive for the local unit will remain regional equity markets with the Conference Board Leading Index the only low-tier theme domestically. Japan will also be a primary focus with the Bank of Japan interest rate decision due today which has seen broad based Yen weakness in the lead up, with some corners of the market anticipating further easing measures.

Markets Rebound After Leaders Commit To Greece | May 22, 2012.

European and U.S equity markets rebounded overnight with market participants finding solace in global leaders unwavering commitment to keep Greece in the Euro-zone.  Over the weekend the G8 leaders confirmed their support for a united Euro region, while opinion polls suggest the pro-bailout New Democracy Party is gaining support ahead of next month’s elections in Greece.

We’ve seen a succession of negative themes lead to a sustained period of weakness across the risk spectrum but moderate optimism began to feed through with investors also encouraged by Chinese Premier Wen Jiabao who over the weekend who indicated a need for stimulus in an effort to sustain strong growth in the region. After a series of largely uninspiring data points, there appears to be a significant shift in language from Premier Jiabao which indicates a gradual unwinding of policy initiatives designed to keep inflationary pressures under control.

While we may see a period of relative stability across global markets, it’s clear that without a solution to Greece’s political instability the balance of risk will continue to err on the side of caution. With plenty of dead air to fill between now and the next Greek elections on June 19, without intervention, it’s only a matter of time before markets take a deeper south-bound turn. Meanwhile, Speaking in Tokyo, Fed Atlanta President Dennis Lockhart expressed the need to keep policy easing measures such as quantitative easing in the Fed’s took kit, stating “QE3 will work under the right circumstances. But I don’t believe such circumstances prevail at this time.”

It was a relatively solid night across risk currencies with the Euro and commodity currencies rallying in unison. The Euro has managed to squeeze out gains with a break to the upside of $US1.28-figure while the Aussie rebounded to highs of 99.19 US cents. In essence, we’re seeing moderate optimism lead to a short squeeze across risk currencies with further upside momentum reliant on more positive news from the source, Europe.

Risk currency’s slide as Euro dilemmas force global bid for safety

The US dollar continued to thrive through the course of last week as heightened anxiety from the Euro region forced a global bid for safety. This cautious positioning remained the key theme on Friday at the expense of the Euro, Sterling and commodity bloc currencies with Spain and Greece once again the key elements. Equities from both sides of the Atlantic continued to fall under the weight of general anxiety from Europe with risk barometers the DOW and S&P500 falling 0.60 and 0.74 percent respectively. The perceived safety of U.S debt kept treasuries well-support throughout the week with 10yr yields finishing the week slightly higher after falling near to record lows on Thursday.

It’s been a succession of negative themes for commodity-contingent  currencies with the Aussie and CAD posting around 2 percent losses for the week, while the Kiwi took a deeper leg-down with the NZDUSD pair losing near 4 percent for the week. Along with a treasure-trove of ratings downgrades for Spanish banks, throw into the mix the potential for a Greece departure from the Euro-zone and further signs of slowing in China and you’ve got a recipe for deep losses across the risk spectrum.

Meanwhile, a higher than anticipated Canadian CPI read failed to provide the Canadian dollar a sustained boost on Friday the USDCAD pair continuing on a north-bound trajectory for the most part of north American trade. Canadian consumer prices rose 0.4 percent in April to represent annual growth of 2 percent. Core inflation also recorded 0.4 percent growth slightly higher than the 0.2 percent estimated to represent annual growth of 2.1 percent. Despite recent hawkish language from the Bank of Canada, Friday’s inflation data is not considered the smoking gun for the BoC with inflation remaining within target.

In the absence of any top-tier local economic data, the key focus for local pundits will remain focus on the events of abroad with Europe’s debt dramas front row and centre. Amid the constant conjecture over the health economic future of Greece and Spain, growth data from Europe’s largest economy will also be a key focus in the week ahead. German Gross Domestic Product is expected to show seasonally adjusted growth of 0.5 percent in the first quarter to represent annual growth of 1.2 percent. The German IFO data series will also be closely watched alongside Euro-Zone and German PMI which are also on Thursday’s docket. Across the Atlantic, the health of U.S housing will be under the microscope this week with Existing/New home sales and house price index on the bill. Durable goods orders are expected to rebounded in April after 4.2 percent decline March and the final revision for the University of Michigan consumer confidence gauge is expected to be unchanged at 77.8 in May.

 

 

Risk currency’s slide as Euro dilemmas force global bid for safety

The US dollar continued to thrive through the course of last week as heightened anxiety from the Euro region forced a global bid for safety. This cautious positioning remained the key theme on Friday at the expense of the Euro, Sterling and commodity bloc currencies with Spain and Greece once again the key elements. Equities from both sides of the Atlantic continued to fall under the weight of general anxiety from Europe with risk barometers the DOW and S&P500 falling 0.60 and 0.74 percent respectively. The perceived safety of U.S debt kept treasuries well-support throughout the week with 10yr yields finishing the week slightly higher after falling near to record lows on Thursday.

It’s been a succession of negative themes for commodity-contingent  currencies with the Aussie and CAD posting around 2 percent losses for the week, while the Kiwi took a deeper leg-down with the NZDUSD pair losing near 4 percent for the week. Along with a treasure-trove of ratings downgrades for Spanish banks, throw into the mix the potential for a Greece departure from the Euro-zone and further signs of slowing in China and you’ve got a recipe for deep losses across the risk spectrum.

Meanwhile, a higher than anticipated Canadian CPI read failed to provide the Canadian dollar a sustained boost on Friday the USDCAD pair continuing on a north-bound trajectory for the most part of north American trade. Canadian consumer prices rose 0.4 percent in April to represent annual growth of 2 percent. Core inflation also recorded 0.4 percent growth slightly higher than the 0.2 percent estimated to represent annual growth of 2.1 percent. Despite recent hawkish language from the Bank of Canada, Friday’s inflation data is not considered the smoking gun for the BoC with inflation remaining within target.

In the absence of any top-tier local economic data, the key focus for local pundits will remain focus on the events of abroad with Europe’s debt dramas front row and centre. Amid the constant conjecture over the health economic future of Greece and Spain, growth data from Europe’s largest economy will also be a key focus in the week ahead. German Gross Domestic Product is expected to show seasonally adjusted growth of 0.5 percent in the first quarter to represent annual growth of 1.2 percent. The German IFO data series will also be closely watched alongside Euro-Zone and German PMI which are also on Thursday’s docket. Across the Atlantic, the health of U.S housing will be under the microscope this week with Existing/New home sales and house price index on the bill. Durable goods orders are expected to rebounded in April after 4.2 percent decline March and the final revision for the University of Michigan consumer confidence gauge is expected to be unchanged at 77.8 in May.

Stocks Lower Again In Choppy Trade On Greek Worries| May 17, 2012.

Overnight equities finished in negative territory for the 12^th time in 13 sessions in choppy trade, early in the trading session the markets were bullish on reports that Germany and France will act to keep Greece in the euro zone. Markets turned sour after news that the ECB has halted monetary operations to certain Greek banks.

The Dow Index slid 33 points to close at 12,598, while the S&P 500 fell 5.86 points to finish at 1,324.80. Earlier in the session the Dax closed down 0.26 percent at 6384.

On the economic front, US housing starts rose more than expected in April, gaining 2.6 percent to a seasonally adjusted annual rate of 717,000 units. The Fed meeting minutes showed that a couple of Fed policymakers were in favour of further quantitative easing if the economy falters.

WTI crude oil (see above chart) fell to the lowest level in more than six months as US supplies grew to the most since 1990 and ongoing troubles in Greece further highlighted the euro zone debt crisis.

The volatility index which is considered the best gauge of fear in the market settled at 22.27, this is the highest level this year.

INDICES
	Last Traded
SPI 200 future	4157
S&P500 Index	1324.80
Dow Jones	12598.55
FTSE 100 Index	5405.25
COMMODITIES
	Last Traded
Gold	1540.20
Oil (Nymex)	92.77
CURRENCIES
	Last Traded
AUDUSD	0.9912
EURUSD	1.2716
GBPUSD	1.5913
USDJPY	80.31

Source
Bloomberg, Dow Jones News

http://www.vantagefx.com/market-news/market-wrap/

Markets Lower As Greek Politicians Fail To Form Coalition Government| May 16, 2012.

European shares settle at their lowest level for 2012 as the attempts to form a Greek coalition government collapses.

The Dow Index slid 63.35 points to close at 12,632 while the S&P 500 weakened by 7.69 points to finish at 1,330.66. Earlier in the session the Dax dropped 0.8 percent to settle at 6401.

The euro dropped against the dollar for the 12^th straight day after Greek politicians officially called for new elections to break a stalemate over forming a new coalition government, this is its lowest level since the 17^th January. EURUSD (see above chart) traded down from overnight highs of 1.2871 to as low as 1.2724 recently.

On the economic front, the German GDP grew 0.5 percent in the first quarter as exports helped the economy bounce back from a contraction in the previous quarter. Meanwhile the New York Federal Reserve released figures that showed that the Empire State manufacturing index rebounded in May.

The Commerce Department numbers showed that US Consumer prices were flat in April, in line with economists’ expectations, while retail sales edged up slightly as the boost from an unusually warm winter faded.

Gold has continued to show signs of weakness as it slipped to a fresh four month low overnight as the euro continued to lose ground to the dollar after Greece’s political failure has led investors to reject risky assets.

INDICES
	Last Traded
SPI 200 future	4241
S&P500 Index	1330.65
Dow Jones	12632.00
FTSE 100 Index	5437.62
COMMODITIES
	Last Traded
Gold	1543
Oil (Nymex)	93.98
CURRENCIES
	Last Traded
AUDUSD	0.9940
EURUSD	1.2734
GBPUSD	1.5999
USDJPY	80.20

Source
Bloomberg, Dow Jones News

http://www.vantagefx.com/market-news/market-wrap/

Stock Finish Higher For First Time In Six Sessions| May 11, 2012.

US stocks finished the session positive territory for the first time in six sessions after the Greeks secured bailout funds that stave off an immediate default; there was also speculation that the country could avoid a second round of elections.

The Dow Index edged up 19 points to close at 12,855 while the S&P500 traded up 3.41 points to end at 1,357. Earlier in the session the German Dax settled up 0.66 percent at 6518 amid hopes that Greek leaders could form a coalition government and shore up its commitment to remain in the euro zone.

On the economic front the US Labour Department released numbers that showed that weekly claims for unemployment benefits edged down 1,000 last week to a seasonally adjusted 367,000.

The AUDUSD (see above chart) has advanced throughout the overnight session as concerns have somewhat eased surrounding the concerns that Greece will leave the euro zone, boosting demand for higher yielding assets. Recently AUDUSD has dropped significantly from highs of 1.0144 to recent lows of 1.0053.

WTI crude oil prices were flat in a choppy trading session as investors mulled over weaker than expected Chinese trade data and higher OPEC production against a better picture of the U.S. jobs market.

 

INDICES
	Last Traded
SPI 200 future	4295
S&P500 Index	1357
Dow Jones	12855
FTSE 100 Index	5543
COMMODITIES
	Last Traded
Gold	1594
Oil (Nymex)	96.51
CURRENCIES
	Last Traded
AUDUSD	1.0053
EURUSD	1.2937
GBPUSD	1.6142
USDJPY	79.93

Source
Bloomberg, Dow Jones News

http://www.vantagefx.com/market-news/market-wrap/

Markets Off Lows After News That Greece Will Receive Another Bailout Payment | May 10, 2012.

The Australian equity market is expected to open in negative territory but well off their lows after news that Greece will receive another bailout payment.

The Dow Index fell for a sixth-consecutive session, falling 97 points to finish at 12,835 while the S&P 500 erased 9.14 points to close at 1,354.58. Earlier in the session the German benchmark Index, the Dax edged up late in the session to end 0.47 percent in the green at 6475.30 after a senior euro zone official announced that the European Financial Stability Facility agreed to make a 4.2 billion euro payment in emergency aid to Greece.

On the economic front the US Commerce Department released numbers that showed that wholesale inventories rose a less-than-expected 0.3 percent in March to $480.4 billion, after an unrevised 0.9 percent gain in February.

Gold (see above chart) dropped to near lows for 2012 as political uncertainty in Greece and Spanish bank worries urged investors to dump bullion for the third consecutive day.

 

WTI crude oil prices continued south for a sixth-straight day which is the longest losing streak in almost two years to settle under $97 a barrel after US crude supplies rose.

 

INDICES
	Last Traded
SPI 200 future	4250
S&P500 Index	1354
Dow Jones	12835
FTSE 100 Index	5530
COMMODITIES
	Last Traded
Gold	1591
Oil (Nymex)	94.40
CURRENCIES
	Last Traded
AUDUSD	1.0047
EURUSD	1.2935
GBPUSD	1.6131
USDJPY	79.64

Source
Bloomberg, Dow Jones News

http://www.vantagefx.com/market-news/market-wrap/