Currency Market outlook juny 2011, US dollar index was slightly weaker : , Asset class performance was mixed. US equities were supported by positive Q2 earnings surprises from bellwether companies Google, Citigroup and JP Morgan, but otherwise the global news mix was uninspiring. US economic data (NY manufacturing survey, industrial production, and consumer confi dence) was disappointing, and the US debt ceiling talks faltered.
The European bank stress tests saw 8 of 90 fail, well below the 30% expected fail rate, although there was some scepticism since banks were not tested for a Greek default. The S&P500 closed up 0.6%, and the CRB commodities index rose 0.5%. US 10yr treasury yields close 5bp lower, though, paying more attention to US data and debt talks. Standard & Poor’s put some US agencies, including Fannie Mae and Freddie Mac, on negative watch. Eurozone 10yr yields suggested investors there remain nervous, Greece up 49bp, Spain +20bp, Ireland and Italy +13bp.
The US dollar index was slightly weaker. EUR was directionless, ranging sideways between 1.4123 and 1.4189. Safe-haven Swiss franc outperformed, and USD/CHF opened this morning making a record 0.8033 low. USD/JPY ranged between 79.00 and 79.28. AUD was aff ected by Westpac’s downgraded RBA forecast, weakening further to 1.0619. NZD performed well, possibly due to AUD/NZD cross selling, rising from 0.8380 to 0.8473. AUD/NZD fell from Friday afternoon’s 1.2750 to 1.2570.
Economic wrap
US CPI contracted 0.2% during June following an increase of 0.2% the previous month although the annual rate remained steady at 3.6%. The core rate, however, came in slightly above expectations rising 0.3% on the month with the annual rate ticking up to 1.6%. The drop in the headline was primarily down to the fall in energy prices (-4.4%), in particular a marked fall in gasoline prices (-6.8%) over the month, but there was still price increases away from that with food (0.2%) and clothing (1.4%) both rising.
US Empire manufacturing survey improved a touch to -3.76 from -7.79 in July but still much weaker than market expectations of +5. The index has now registered two consecutive negative prints and continues to suggest that manufacturing sector is yet to see much renewed momentum. New orders continued on a downtrend falling to -5.45 from -3.61 while inventories also fell in to negative territory to -5.5. The employee component also suff ered a fall, declining to 1.1 from 10.2.
US Industrial production rebounded 0.2% in June following a 0.1% contraction in May. A sharp rise in utilities (+0.9%) was off set somewhat by weakness in business equipment production (-0.7%) and autos (-2.0%).
Market outlook
AUD/USD and NZD/USD outlook next 24 hours: AUD’s correction is possibly still in progress, a break below 1.0619 signalling a move to 1.0585. NZD should correct further to 0.8380 at least, but is vulnerable to a surprise from today’s Q2 CPI data.
The European bank stress tests saw 8 of 90 fail, well below the 30% expected fail rate, although there was some scepticism since banks were not tested for a Greek default. The S&P500 closed up 0.6%, and the CRB commodities index rose 0.5%. US 10yr treasury yields close 5bp lower, though, paying more attention to US data and debt talks. Standard & Poor’s put some US agencies, including Fannie Mae and Freddie Mac, on negative watch. Eurozone 10yr yields suggested investors there remain nervous, Greece up 49bp, Spain +20bp, Ireland and Italy +13bp.
The US dollar index was slightly weaker. EUR was directionless, ranging sideways between 1.4123 and 1.4189. Safe-haven Swiss franc outperformed, and USD/CHF opened this morning making a record 0.8033 low. USD/JPY ranged between 79.00 and 79.28. AUD was aff ected by Westpac’s downgraded RBA forecast, weakening further to 1.0619. NZD performed well, possibly due to AUD/NZD cross selling, rising from 0.8380 to 0.8473. AUD/NZD fell from Friday afternoon’s 1.2750 to 1.2570.
Economic wrap
US CPI contracted 0.2% during June following an increase of 0.2% the previous month although the annual rate remained steady at 3.6%. The core rate, however, came in slightly above expectations rising 0.3% on the month with the annual rate ticking up to 1.6%. The drop in the headline was primarily down to the fall in energy prices (-4.4%), in particular a marked fall in gasoline prices (-6.8%) over the month, but there was still price increases away from that with food (0.2%) and clothing (1.4%) both rising.
US Empire manufacturing survey improved a touch to -3.76 from -7.79 in July but still much weaker than market expectations of +5. The index has now registered two consecutive negative prints and continues to suggest that manufacturing sector is yet to see much renewed momentum. New orders continued on a downtrend falling to -5.45 from -3.61 while inventories also fell in to negative territory to -5.5. The employee component also suff ered a fall, declining to 1.1 from 10.2.
US Industrial production rebounded 0.2% in June following a 0.1% contraction in May. A sharp rise in utilities (+0.9%) was off set somewhat by weakness in business equipment production (-0.7%) and autos (-2.0%).
Market outlook
AUD/USD and NZD/USD outlook next 24 hours: AUD’s correction is possibly still in progress, a break below 1.0619 signalling a move to 1.0585. NZD should correct further to 0.8380 at least, but is vulnerable to a surprise from today’s Q2 CPI data.
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