Market Analisis

Today's Focus
Market Snapshot 11.07.08
11.07.08

Market Snapshot 11.07.08

USD

Brief:
1.Today's US economic releases, -forecast- US Trade balance -May- (-$62.2B), US Import price index -MoM- (1.9%) and University of Michigan consumer confidence index (55.8).
2.Today's US economic releases, -actual- US Initial jobless claims (346k) and US ICSC Chain store sales -YoY- (4.3%).
3.The dollar weakens against the euro today on speculation US consumer confidence fell to a 28 years low, giving the Fed less reason to raise interest rates this year.
4.USD retreats from gain yesterday as Treasury Secretary Henry Paulson told lawmakers markets will take additional time to stabilize and Fannie Mae and Freddie Mac tumbled in New York trading, raising possibilities that tumbling housing markets impact on US economy may be worser that anticipated.
5.USD remains weak yesterday as crude oil rise more than $5 yesterday and Fed Chairman Bernanke said Fannie Mae and Freddie Mac need to raise more capital, raising prospect that other major mortgage firms might follow suit.
6.Economists said the dollar may decline today against the euro before a report forecast to show US consumer confidence dropped this month to the lowest level since 1980.

On the upside:
•Cross currencies weakness. (EUR and JPY)

On the downside:
•Further speculation on a possible major economic slowdown in US.
•More negative news related to major corporate.


To monitor:
•Today's US economic releases. (Important)
•Major financial companies earnings report speculation.
•Fed members outlook and statements/comments.
•US indexes movement.
•News/statements related to Major institution.
•Other Central bank member’s statements/comments.
•Cross currency strength and weakness. (GBP, EUR, AUD, NZD, CAD and JPY –Main-)

Suggested pairs of the day:
Short: AUD/USD - NZD/USD - GBP/USD – EUR/USD –
Long: USD/JPY - USD/CHF – USD/CAD -
Possible main pairs are: – EUR/USD – NZD/USD - GBP/USD – USD/CAD - (Light)

-According to 12.15GMT price-


JPY

Brief:
1.JPY strengthens today as Asian and European markets fell on concern credit losses may cause wider impact and as crude oil rose to a record today.
2.Today's Japan economic releases, -actual- Japan Industrial production -YoY-MoM- (2.8%) and Japan Consumer confidence -Households -June- (32.6).
3.JPY weakens against the dollar yesterday as US stock indexes rebounds from previous day losses amid Fed Chairman Bernanke said Fannie Mae and Freddie Mac need to raise more capital after both company shares plunged to a 16 years low.
4.JPY remains weak yesterday as commodities market rebounds after recent retreat, increasing the appeal for carry trades.

On the upside:
•More negative news related to major corporate.

On the downside:
•Cross currency strength (USD and GBP)
•Rising US equities on buying interest.

To monitor:
•Today's US economic releases.
•Fed members outlook and statements/comments.
•Major corporate fiscal reports/speculation.
•Central bank member’s statements/comments.
•US stock indexes movement.
•News related to major institution.
•Economist comments on US/Japan economy, economic releases or sector growth.

Suggested pairs of the day:
Long: USD/JPY - GBP/JPY – AUD/JPY– NZD/JPY– EUR/JPY –
Possible main pairs are: –GBP/JPY – EUR/JPY - USD/JPY – AUD/JPY -

-According to 12.15GMT price-


EUR

Brief:
1.Today's Euro-zone economic release, -actual- Germany WPI -MoM- (8.9%).
2.EUR strengthens today before US consumer confidence report and after a report showed Germany Wholesale price index rose more than expected in June.
3.EUR rose to a 1 week high against the dollar yesterday after Treasury Secretary Henry Paulson told lawmakers markets will take additional time to stabilize, raising fears that US economic slowdown will be prolonged,
4.EUR remains strong against the dollar yesterday amid Euro aerospace industry told ECB's President Trichet that the dollar's drop is of deep concern, suggesting that stronger euro are affecting exporters in the region.
5.EUR rebounds from losses against the dollar yesterday after reports shows France and Italy industrial production dropped more that economists anticipated in May as record oil prices and a stronger euro sapped European growth.

On the upside:
•Cross currency weakness. (JPY).
•On speculation more US financial firms will report further writedowns.

On the downside:
•Cross currency strength. (USD and GBP)
•Weaker euro-zone economic growth outlook.

To monitor:
•Today's US economic releases.
•Fed members statement/comments.
•ECB members' statements/comments.
•US stock indexes movement.
•News related to major corporate.
•Cross currency movement. –Main- (USD)
•Other central banks member’s statements/comments.

Suggested pairs of the day:
Short: EUR/USD – EUR/NZD – EUR/AUD – EUR/GBP
Long: - EUR/JPY - EUR/CHF – EUR/CAD -
Possible main pairs are: – EUR/USD – EUR/GBP – EUR/JPY – EUR/CHF -

-According to 12.15GMT price-


Crude oil

Brief:
1.Crude oil rose more than $4 to a record today on concerns that Israel may be preparing to attack Iran after the Jerusalem Post said Israeli war planes practiced over Iraq and renewed militant activity in Nigeria threaten to cut supplies.
2.Crude oil rose more than $5 per barrel yesterday as commodities rebounds on short-covering after recent retreats and as the dollar weakens after Treasury Secretary Henry Paulson told lawmakers markets will take additional time to stabilize.
3.Crude oil remains strong yesterday after the Nigerian militant group will call off its unilateral cease fire beginning midnight on July 12, the group's spokesman said.
4.US government forecasters -NWS- said yesterday that La Nina, the weather pattern linked with high hurricane activity in the Caribbean and Atlantic, faded away last month. CFTC will issue an interim report on oil markets in the coming weeks, the acting chairman of the agency said yesterday.
5.Crude oil rose before US trading session yesterday after Iran tested its 2nd missiles at Persian Gulf and the IEA raised its forecast for 2008 global oil demand, ending five months of downward revisions, amid rising consumption in developing countries.

On the upside:
•Atlantic hurricane season.
•Heat wave.
•Possible supply/production disruption in Nigeria.

On the downside:
•Dollar recovery.
•Production raise speculation.
•Tensions between Iran and western countries easing amid missile test.


To monitor:
•Today's US economic releases.
•USD movement.
•Geopolitical risk.
•Fed members statement/comments.
•News related to Nigeria oilfields and/or workers strike. (Sensitive)
•OPEC members' comments/statements.
•Atlantic ocean hurricane activities and weather report.
•US indexes movement.
•Forecast on near term US economic releases and economic growth.


Trade suggestion:
“Short” Crude oil around low $145 and mid $145 (Economic releases, USD movement and US indexes movement)
-Exit all positions before market closes-

-According to 12.15GMT price-


Time lapse prediction: (according to current situation)

14PM – 16PM GMT:

•USD recovers on early trading session. (Depends on economic releases)
•US capital market rises on early trading session. (Depends on economic releases)
•JPY weakens following US indexes movement.
•EUR retreats on early trading session.
•Crude oil remains or slightly weakens on early trading session.


16PM – 18PM GMT:

•USD rises on mid trading session. (Depends on economic releases)
•US capital markets remains or slightly weakens on mid trading session. (Depends on economic releases)
•JPY remains or slightly strengthens following US capital markets movement.
•EUR weakens on mid trading session.
•Crude oil falls by mid trading session


18PM – 22PM GMT:

•USD remains or slightly strengthens by late trading session.
•US capital markets rises by late trading session.
•JPY weakens following US capital markets movement.
•EUR remains or slightly weakens by late trading session.
•Crude oil remains or weakens by late trading session.

Loh Chang Yuen,

Junior Strategist