Bobbys Corner-Open Market-Jan.28.2010

Good Morning:

The EUR/USD pair fell below 1.40 , trading at 1.3936  during the overnight hours. Comments from China’s central bank that they should not purchase Greece’s debt-added pressure on the Euro.
Yesterday the FOMC’s statement commented that the US economy is in “recovery”, and that they will continue to keep interest rates at record lows.

World equity markets were higher-and US Futures are pointing to a higher opening this morning.
Ford and Procter & Gamble reported better that expected Q4 earnings.

Oil:$74.25                                      Gold:$1092.40

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Jan.26.2010

Good Morning:

As China takes further steps to slow down the fast pace of their economy, the USD and JPY rose as demand for higher-yielding assets waned.  With China slowing the availability of loans to the marketplace, along with raising the proportion of deposits banks must set aside for reserves-investors are looking for the safe haven of the USD and JPY. 

World equity markets dropped as news of China curbing their lending practices, thus causing speculation that any global recovery and growth will be curtailed.
US Futures are slightly lower this morning.

Oil:$74.60                                               Oil:$1091.30  

Today’s Data:

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Jan.20.2010

Good Mornings:

The USD and JPY rose as speculation that China’s curbing of bank lending may slow the global recovery.
Trouble in Greece are still weighing very heavily on the Euro, and straining the Euro Zone’s economy in general.
Comments from the IMF stating that Greece’s budget woes are “a serious problem”, and comments that China will pare lending after record amounts of new loans were processed in 2009 drove the FX markets to the safety of the JPY and USD .

World equity markets were lower-and US Futures are also pointing to a lower opening this morning.

Speculation that central banks may be considering raising interest rates as they see signs of economic recovery are also spooking the  equity markets-and driving FX investors to safe haven currencies.

Oil:$77.87                                      Gold:$1130.20

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Jan.15.2010

Good Morning:

The USD and JPY rose as speculation that the tightening of credit availability in China may slow growth in the world’s 3 rd largest economy, boosting  demand for the safety of the USD and JPY.  The Euro struggled as Greece’s financial woes dragged on European investments.

Asian equity markets were higher-Europe is lower at this time, and US Futures are also pointing to a lower opening
later this morning.  JP Morgan Chase missed estimates.

We have reports today regarding-CPI,Manufacturing, Industrial Production and Consumer Confidence (see details below)

Oil:$78.88                                                             Gold:$1135.40

Today’s Data:

HAVE A GREAT DAY & WEEKEND-and GOOD LUCK

Bobbys Corner-Open Market-Jan.11.2010

Good Morning:

The USD was weaker overnight.  Signs that any signal from the Fed regarding increasing interest rates was pushed forward after Friday’s disappointing jobs data.  Also adding to the greenbacks woes was a release from China that they are now the largest auto market in the world.  This ends more than a century of the US being the largest auto market.  The ruble also rallied against the USD as the Russian markets opens for their first time in 2010.

Worldwide equity markets are higher-as US futures are pointing to a higher opening.
Crude oil continues to rise as cold weather blankets the US and most of Europe. 
Orange juice futures may also extend their rally because of cold weather in Florida.
Metals increased across the board.

Oil:$83.89                                       Gold:$1156.50

HAVE A GREAT DAY & GOOD LUCK

IMF review on China speaks favorably on the economy

The newswires are reporting that the IMF has prepared a China Review where they have said the economy is turning around but there is room for additional fiscal stimulus as unemployment is thought to continue to rise in the near term.  Furthermore, they advise the  unwinding of monetary easing when the recovery is in place.

This news should help the AUDUSD as it stands to benefit from increased economic activity out of China.  However, the reaction has been fairly muted so far.  The market did break to new move highs at the 0.8212 earlier in the day but quickly reversed. The highs for 2009 remain at 0.8262 and below that 0.8236. These are the next hurdles for the bullish trend that has seen the pair retrace more than half of the move down from the July 2008 high.  The next long term target for the AUDUSD comes in at the 0.8380 level which corresponds to the 61.8% retracement of the move down from July 2008 high to the October 2008 low (see chart below).

A large amount of China data to be released tonight should have market impact

Tonight at 10 PM New York time, China will release a whole slew of economic data. 

The GDP for the 2Q will be the focus.  Expectations are for a a rise of 7.8% which is higher than the 6.1% gain in the 1st quarter.  Although much higher than other major global economies, the thought is that a growth rate of 8% is needed to support employment growth in China.  As a result, a gain of 7.8% is still indicative of a economy slowed by lower growth/exports. Last week, exports for China showed a decline of -21.4% YoY (Imports meanwhile fell by -13.2% over the same period). The growth has been helped by a $585 billion stimulus package. 

Retail Sales for June will also be released.  The expectation if for a gain of 15.3% YoY versus a gain of 15.2%  in May.  Although higher on a YoY basis, a gain of 15.3% YoY would imply a -0.6% decline on a MoM basis.  This is after a gain of 7.3% last month.   Once again although better in comparison to a year ago, the month on month figure will need something stronger to indicate economic momentum.

Also released will be the Industrial Production.  The expectation is for a gain of 9.5% YoY.  This is up from +8.9% last month and off the low of 5.4% in November 2008.  Like the Retail Sales, although up, the gain is still well below +17.8% in March 2008 prior to the 2008 Olympics and also below the trend growth rate of 15-20% that prevailed for most of the 2003 to 2008 period.  

Finally, the Producer and Consumer Price YoY Indices  will give an indication of inflation in China. The expectation is for CPI to fall-1.3% versus -1.4% last month. The Producer Price Index is expected to fall by a record 7.4% for the year.  So far inflation continues to remain contained.  However, gains from commodities could cause  a reversal of the trend especially if the global economy does pick up.

For the markets, stronger data than expected would likely help the global stock markets and give commodities a boost.  This has probably contributed to the gains in the commodity currencies as well as perhaps even stock gains over the last few days.

The reaction post the numbers will help dictate the tone for tomorrow.  If the data is already discounted the gains from the stronger economy may cause a reversal of the recent trends.  For example, there may be  profit taking in commodities, stocks and some of the trends seen the currency markets of late.  

Of course, it is impossible to predict what might happen or the market reaction. What is certain, however, is the level of risk in the market increases tonight as a result of the large amount of data and the markets focus on China of late.

China says G8 should promote more currency diversification

Chinese Official Dai is on the newswires saying the management of reserve currency system must be improved with the goal of a more diversified system

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