I love Monday through Tuesday! Inflation data in France and UK, and probably-widened Trade Balance in the U.S could attract everyone who is seeking for reasons to buy the recently battered European currencies.
Wednesday looks difficult to play. Industrial Production in Euro-area and Unemployment in the UK suggest weakness when the Bank of England Quarterly Inflation Report could just complicate the situation.
On Thursday I would be asleep through the day! CPI and GDP in Euro-area and Germany in addition to CPI in the U.S make it simply too difficult to analysis.
Friday might make opportunities but I think everything must be done on Monday.
Showing posts with label weekly outlook. Show all posts
Showing posts with label weekly outlook. Show all posts
August 10, 2008
July 27, 2008
Weekly Outlook: How to Play the Big Picture
This week, Consumer Spending and the second quarter's GDP may look encouraging in numbers but mostly thanks to the positive effects from the tax rebates. At this time, it seems that the market's belief is very near to this:
"The U.S. economy will be weaken in the second half of the year when the effect of the stimulus package start to fade and the negative effects from falling home prices, rising unemployment, and elevated prices of food and energy persist and definitely reduce consumer spending and overall economic activity."
(to be completed)
"The U.S. economy will be weaken in the second half of the year when the effect of the stimulus package start to fade and the negative effects from falling home prices, rising unemployment, and elevated prices of food and energy persist and definitely reduce consumer spending and overall economic activity."
(to be completed)
July 13, 2008
Weekly Outlook: Hunting the Weaker
In my view, recent depreciation of dollar, especially on Friday, doesn't reflect any particular strength in most of other currencies. Investors preferred to buy more gold as a safe heaven when the level of risks rose significantly in response to IndyMac crisis, Fannie and Freddie troubles, and increased tensions in Iran's nuclear program.
US: Everyday in the last week had something to increase pressure on the greenback. Even an unexpected narrower Trade Deficit on Friday had almost nothing for the dollar; poor dollar!
Euro zone: GDP revised lower, industrial production contracted in Germany and France, German exports turned negative when trade surplus narrowed, all show signs of weakness in an economy that must face even more burden from recent increase in interest rates.
UK: Economy looks generally weak in Europe and the Britain is not an exception. Industrial production shrieked 0.8 percent in May and consumer confidence dropped in June to 63 from 69. It is just when the MPC find it more difficult to restore balance between fighting increasingly rising inflation and promoting economic growth.
Having that background and looking at this week's calendar, I think every day has its own victim; dollar in one day, euro in another.
(to be completed)
US: Everyday in the last week had something to increase pressure on the greenback. Even an unexpected narrower Trade Deficit on Friday had almost nothing for the dollar; poor dollar!
Euro zone: GDP revised lower, industrial production contracted in Germany and France, German exports turned negative when trade surplus narrowed, all show signs of weakness in an economy that must face even more burden from recent increase in interest rates.
UK: Economy looks generally weak in Europe and the Britain is not an exception. Industrial production shrieked 0.8 percent in May and consumer confidence dropped in June to 63 from 69. It is just when the MPC find it more difficult to restore balance between fighting increasingly rising inflation and promoting economic growth.
Having that background and looking at this week's calendar, I think every day has its own victim; dollar in one day, euro in another.
(to be completed)
June 22, 2008
Weekly outlook: 22-27 June 2008
Two factors could affect the currency market this week:
- Jeddah summit and its possible effects on the oil market
- FOMC rate decision on Wednesday
Jeddah summit: I am not even sure whether it could affect the market at all, but I think if there is anything in the summit, which might be invisible to me, its impact would be significant. The possibility of a 2 percent increase in production from Saudi Arabia has been in the news headlines at least for a week and it is unlikely to surprise anyone. The summit was divided on almost all issues such as the reasons behind the jump in oil price or the need to increase the production.
FOMC rate decision: It is almost certain that the Fed will keep rate unchanged this week, but how a certain event could affect the market. In Fact I see the Wednesday more important itself than the FOMC meeting! Because I think it is the day which separates two different participants in the market; dollar sellers and dollar buyers. But how:
- Dollar sellers: Until Wednesday there would be sufficient data from Euro-zone and US to convince anyone who believes that the possibility of a wider interest rate differential makes sense to buy EURUSD.
- Dollar buyers: Everyone who believes that the Fed will ultimately raise interest rate would find Wednesday a good time to buy dollar.
However it is a general view and doesn't dictate any specific trade or decision. For example, a depreciation of Euro before Wednesday could be an opportunity for buying Euro but it is unlikely to be bear trend.
Finally, I think just a significant deviation from actual economic data and market estimates could change this general view and minor difference could be ignored.
June 15, 2008
Weekly Outlook: Inflation vs. Credit strains
G-8 summit, exploring the possible impact:
Soaring food and energy prices was a common concerns this weekend, both in G-8 Finance Ministers summit in Osaka and World Economic Forum on East Asia in Kuala Lumpur.
As it was expected, the officials expressed their concerns on a weak dollar as an inflating factor. Although such views are usually dollar-positive, but there was some remarks, especially from the US Treasury Secretary Henry Paulson, which could limit any real effect on the dollar. He said: (based on Bloomberg reports)
- "…surging oil costs may postpone a rebound in the American economy, which still faces ``challenges'' from the housing slump and credit crunch".
Showing different view on the link between dollar and oil price, he said: "All evidence points to differences between supply and demand as the main reason for commodity price gains" - It is also important to note that there was no official statement on the dollar or any other currency.
OPEC and Customers in Jeddah:
It is said that the Saudi Arabia might announce an increase in oil production, but I am not sure whether it could affect oil price or not. If the answer is yes I expect to see its full effect on Monday.
Quarterly reports from the Financials:
Lehman, Goldman and Morgan Stanley are to report this week. Considering recent disappointing results, I think it could just revive concerns on credit strains, favoring people who don't expect the Fed to raise interest rate soon.
June 8, 2008
Weekly outlook
Interest rate decisions are always important and this week Canada and Japan are to set the rate on Tuesday and Friday respectively.
Canadian Dollar:
Remembering last Friday, when 139 $/b oil was unable to convince investors not selling CAD, so it is not difficult to imaging what an interest rate cut, which is almost certain, could do with the currency. However I don't see it as an easy game at all but it needs smart choices in both pair and entry point.
Japanese Yen:
It is a long way before Friday. Important data, especially GDP, is ahead and any decision must be based on evolutions in market's sentiment.
US Dollar:
Advanced retail sales report makes Thursday a pivot point for the week, at lease in my view.
This week has updated data on inflation, for US, UK, and Germany, at the time when everyone you see is speaking about inflation. I don't miss Tuesday when Fed's Bernanke and Fisher speak on inflation and monetary policy.
Canadian Dollar:
Remembering last Friday, when 139 $/b oil was unable to convince investors not selling CAD, so it is not difficult to imaging what an interest rate cut, which is almost certain, could do with the currency. However I don't see it as an easy game at all but it needs smart choices in both pair and entry point.
Japanese Yen:
It is a long way before Friday. Important data, especially GDP, is ahead and any decision must be based on evolutions in market's sentiment.
US Dollar:
Advanced retail sales report makes Thursday a pivot point for the week, at lease in my view.
This week has updated data on inflation, for US, UK, and Germany, at the time when everyone you see is speaking about inflation. I don't miss Tuesday when Fed's Bernanke and Fisher speak on inflation and monetary policy.
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