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[IFX Darika]

UK Manufacturers Expect Pace of Decline In Output To Slow: CBI Survey

Wednesday, the latest monthly Industrial Trends survey from the Confederation of British Industry showed that 17% of the 575 firms surveyed expect the output volume to increase over the next three months, while 34% anticipate a fall. However, the resulting balance of minus 17% was a marked improvement on the previous month's balance of minus 32%.

Thus, firms expect the pace of decline in output to slow significantly in the next quarter, indicating that they believe the toughest phase of the recession may be behind them.

Ian McCafferty, the CBI's Chief Economic Adviser said, "After scaling back production very sharply at the beginning of the year, manufacturers can see a glimmer at the end of the tunnel. They still expect manufacturing activity to fall, but at a much slower rate over the next few months."

The survey found that a balance of 56% reported a below normal order books in May. The CBI said export order books remained below par this month despite the relative weakness of sterling.


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[IFX Darika]

Dollar Slumps To New Multi-month Lows Against Euro And Franc

In early European deals on Thursday, the dollar slipped to new multi-month lows against its European and Swiss counterparts as fresh concerns about the strength of global recovery resurfaced.

Yesterday, the Federal Reserve lowered its forecast of U.S. economic growth for the next three years. Minutes from its April meeting showed the Fed projected the world's biggest economy to contract by up to 2 percent this year with the unemployment rate rising to as high as 9.6 percent.

They also showed that Fed policymakers had considered buying more securities to spur recovery, a move that would inject more dollars into the market.

At the April meeting the FOMC voted unanimously to keep the target range between 0 and 0.25 percent. In the accompanying statement the FOMC noted that "the economy has continued to contract, though the pace of contraction appears to be somewhat slower."

"Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time," the statement read.

Once again, the FOMC said that interest rates will remain exceptionally low for some time, adding that they will "employ all available tools to promote economic recovery and to preserve price stability."

A disappointing 2009 outlook from Hewlett-Packard, the world's biggest PC maker, also fanned concerns about corporate profits in a slowing economy.

The dollar, which closed yesterday's trading at 1.1003 against the Swiss franc, fell to a new multi-month low of 1.0962 during early deals on Thursday. The next downside target level for the U.S. currency is seen at 1.07.

In early trading on Thursday, the dollar weakened to 1.3840 against the euro. This set the lowest point for the dollar since January 05. On the downside, 1.40 is seen as the next target level for the dollar. At Wednesday's close, the euro-dollar pair was quoted at 1.3781.

At 4:55 am ET Thursday, the dollar spiked up to 1.5518 against the pound, moving from a new multi-month low of 1.5819 hit in early Asian deals today. If the dollar gains further, it may likely target the 1.535 level. The pound-dollar pair was worth 1.5755 at Wednesday's close.

The pound plummeted after the Standard & Poor's revised the outlook on the U.K. to negative from stable. The rating agency affirmed 'AAA' long-term and 'A-1+' short-term sovereign credit ratings.

Standard & Poor's credit analyst David Beers said, "We have revised the outlook on the U.K. to negative due to our view that, even assuming additional fiscal tightening, the net general government debt burden could approach 100% of GDP and remain near that level in the medium term."

Rating outlooks assess the potential direction of a rating, typically over a period of up to two years.

In economic news, U.K.'s retail sales rose 0.9% in April from the previous month, larger than the expected increase of 0.5%. On a yearly basis, sales grew 2.6%, while economists were looking for a 2.4% rise.

Against the Japanese yen, the dollar is presently trading at 94.97, up from a new multi-month low of 94.31 hit at 9:25 pm ET Wednesday. The next upside target level for the dollar-yen pair is seen at 95.5.

An index measuring tertiary industrial activity in Japan fell a seasonally adjusted 4.0 percent in March compared to the previous month, the Ministry of Economy, Trade and Industry said today, posting a score of 100.8.

That was sharply lower than analyst expectations that had called for a 1.5 percent monthly decline following the revised 1.3 percent monthly easing in February.

Investors are now likely to focus on the North American session, in which the U.S. leading indicator for April, Philadelphia Federal Reserve's manufacturing survey data for May and the weekly jobless claims report for the week ended May 16 are expected.


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News are provided by InstaForex in partnership with RTT.

 

[IFX Darika]

British pound falls to 4-day low against US dollar as stocks Drop

During early European deals on Tuesday, the British pound declined to a 4-day low against the US dollar as Britain's top share index fell 0.8 percent in early today with investors nervous after reports that North Korea fired more short range missiles, denting oil and metal prices and pressuring commodity stocks.

The pound also showed weakness against other major currencies. The British currency thus fell from an Asian session's 4-day high against the European currency and the Swiss franc.

By 4:57 am Eastern Time, the FTSE 100 .FTSE was down 36.45 points at 4,328.84 after gaining 0.5 percent on Friday. The index is down 2.1 percent this year, but has gained over 25 percent since touching a six-year trough on March 9.

Against the US dollar, the British pound traded down during early deals on Tuesday. At 5:00 am ET, the pound-dollar pair touched a 4-day low of 1.5781, compared to 1.5911 hit late New York Monday. If the pair falls further, 1.553 is seen as the next target level.

The British currency that closed Monday's North American session at 0.8812 against the European currency reached a 4-day high of 0.8776 at 2:05 am ET Tuesday. Thereafter, the pound reversed its direction and is currently trading at 0.8795 against the euro with 0.892 seen as the next target level.

Germany's gross domestic product posted its sharpest decline since records began in 1970 on weak investment activity and a sharp drop in net exports.

The German economy contracted 3.8% on a sequential basis in the first quarter, the Federal Statistical Office said in a detailed report today. The first-quarter drop in GDP marked an unprecedented fourth successive quarterly contraction for Germany's economy.

In the fourth quarter of 2008, the gross domestic product had slipped 2.2%. Compared with the first quarter of 2008, GDP decreased a price-adjusted 6.7% in the first quarter of 2009, much larger than the 1.7% drop seen in the fourth quarter. When calendar-adjusted, the economic performance went down 6.9%.

Elsewhere, a consumer climate survey by market research firm GfK Group revealed that German consumer sentiment remained unchanged in May amid the economic crisis. The survey's forward-looking overall indicator showed a value of 2.5 points for June, matching May's reading.

Economic expectations improved slightly for the second month in a row. The corresponding indicator showed a reading of minus 28.3 points in May, up 2.9 points from previous month.

UK's sterling lost ground after hitting a 4-day high of 1.7305 against the Swiss franc at 2:05 am ET Tuesday, The pound-franc pair is currently trading at 1.7255, compared to Monday's closing value of 1.7230. The next downside target level for the pair is seen around 1.704.

Switzerland's employment growth slowed in the first quarter and the UBS Consumption indicator declined in April.

The Swiss Federal Statistical Office announced that the employment increased 0.8% year-on-year in the first quarter, slower than the 1.6% in the previous quarter. Economists were looking for a decline of 0.1%.

The employment level stood at 3.957 million in the first quarter, down from 3.963 million in the preceding quarter. Economists had predicted the employment level at 3.92 million.

The UBS said its consumption indicator for Switzerland fell slightly to 0.92 in April from 0.99 in March, resuming the downtrend after a rise in March. The indicator has thus remained below its long-term average of 1.50 for seven months.

The British pound that climbed to 151.20 against the Japanese yen at 2:00 am ET Tuesday weakened thereafter. The pound-yen pair thus dropped to 149.61 at 4:40 am ET. On the downside, 146 is seen as the next target level for the British currency. The pair closed Monday's New York deals at 150.90.

A report released by Japan's Finance Ministry showed that Japan's net external assets as at the end of 2008 were down 9.9% year-over-year at 225.51 trillion yen due to the strengthening yen. The Bank of Japan's corporate service price index report for April showed a 0.2% monthly drop and a 2.4% year-over-year decline. Annually, prices have shown a negative trend since October 2008.

Traders are now likely to focus on the North American session, in which the S&P/Case-Shiller home price index is scheduled for release at 9 am ET. Economists expect an 18.4% year-over-year decline in the 20-city composite house price index for March.

At 10:00 am ET, the Conference Board is scheduled to release its consumer confidence report for May. The survey, which is based on a survey of 5,000 US households, is expected to show that the consumer confidence index rose to 42 in May.


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News are provided by InstaForex in partnership with RTT.

 

[IFX Darika]

US Dollar falls To New Multi-month Lows Against Euro, Pound And Franc

Monday, the U.S. dollar headed south to new multi-month lows against its European, Swiss and UK counterparts as investor risk appetite dampened demand for the safe-haven greenback and boosted higher yielding currencies.

The dollar fell as General Motors is expected file for bankruptcy protection today, which would be the biggest industrial bankruptcy in the history of the U.S., in a deal that will give taxpayers a 60 percent ownership stake and expand the government's reach into big business.

The Obama administration said Sunday that it has deemed GM's reorganization plan viable, and will provide the company $30.1 billion in what is called debtor-in-possession financing - money the company can use while it moves through the bankruptcy process.

The company will also receive some support from the governments of Canada and Ontario, which will lend the firm $9.5 billion.

The dollar fell sharply against other major currencies in the past week as global shares surged up on recovery hopes. But contracting gross domestic product, tumbling business investment spending and homebuilding activity in the U.S. suggested lingering economic weakness and reminded investors that the road to recovery is far from near.

The greenback tumbled to a new multi-month low of 1.4247 against the euro during early deals on Monday. This may be compared to Friday's New York session closing value of 1.4148. On the downside, the next likely target for the greenback is seen around the 1.436 level.

The U.S. currency suffered significant weakness versus the euro in May, falling around 7% despite a series of disappointing news from Europe's largest economy, Germany.

The European Central Bank rate decision is due this week. In May, the ECB has lowered its main refinancing rate to a record low of 1 per cent to boost consumption.

The U.S. dollar slumped to its lowest level since October 2008 against the U.K. currency and hit as low as 1.6434 by 4:15 am ET Monday. At last week's close, the pair was quoted at 1.6190. If the dollar slides further, 1.667 is seen as the next likely target level.

The dollar fell nearly 10 per cent versus the pound in May and tumbled around 3.6% in the previous week on the back of rising U.K. equity markets and encouraging data. The pound is the only currency that has strongly appreciated against the dollar in the past week.

On Friday, the pound spiked higher as U.K. house prices rose unexpectedly in May to record the largest increase since October 2007, hinting that the U.K. economy is on the road to recovery. U.K. house prices rose 1.2% in May from the prior month, reversing a 0.3% decline reported in April

The Bank of England will also meet this Thursday to decide on whether to cut, hold, or raise interest rates further.

Against the yen, the dollar slipped to a 5-day low of 94.47 during today's early trading. The next downside target level for the dollar-yen pair is seen around the 93.8 level. The dollar was worth 95.24 against the yen at Friday's New York session close.

Rising equity markets and signs that the global economy's downtrend is easing, such as a rebound in Japanese industrial production put pressure on the dollar.

Against its Swiss counterpart, the dollar declined to a 6-month low of 1.0621 during Monday's early trading and 1.054 is seen as the next likely target level. At Friday's New York session close, the dollar-franc pair was quoted at 1.0677.

From U.S., the Bureau of Economic Analysis is due to release its personal income & outlays report for April. Economists estimate the report, which is due out at 8:30 am ET, to show that personal income fell 0.2% and the personal spending also declined 0.2% in the month.

Thereafter, the results of the manufacturing survey of the Institute for Supply Management, is due at 10:00 am ET. Economists expect the index to show a reading of 42 for May. the Commerce Department's construction spending report is also scheduled to be released at the same time. The report is expected to show a 1.8% decline in spending for April.

The week's biggest economic news comes on Friday in the form of the U.S. government's monthly jobs report for May. Nonfarm payrolls are expected to drop by 550,000 after slipping 539,000 the month before.


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News are provided by InstaForex in partnership with RTT.

 

[IFX Darika]

Crude Stockpiles Drop 4.4 Million Barrels, Gasoline Stocks Also Fall

Crude oil inventories fell sharply in the recent week, according to Energy Information Administration data released Wednesday morning. Gasoline stockpiles also declined.

U.S. commercial crude oil inventories decreased by 4.4 million barrels from the previous week. At 361.6 million barrels, U.S. crude oil inventories remained above the upper boundary of the average range for this time of year.

The report backed the American Petroleum Institute data revealed Tuesday, showing crude supplies dropped 5.96 million barrels last week. Participation in the API survey is voluntary, so the EIA report is more closely watched.

Total motor gasoline inventories decreased by 1.6 million barrels last week, distillate fuel inventories slipped by 300,000 barrels and propane/propylene inventories increased by 1.4 million barrels.

Over the last four weeks, motor gasoline demand has increased by 0.4 percent from the same period last year, distillate fuel demand has declined 8.4 percent from the same period last year and jet fuel demand is 14.3 percent lower.

Crude oil maintained its early gains following the report. Light sweet crude moved to $70.71, up 90 cents for the session. Oil touched as high as $71.79 shortly after the data was announced but quickly cooled off.


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News are provided by InstaForex in partnership with RTT.

 

[IFX Darika]

Dollar Nearing December 2008 Lows Versus Euro

The dollar came under further pressure versus the euro and continued its trek toward parity against the surging loonie Monday morning in New York.

Rising global stocks and speculation that the economy is on the mend have fueled increased appetite for riskier higher yielding currencies.

Traders were looking ahead to a fairly busy week on the economic front, kicked off by the Commerce Department's new home sales report for June.

The consensus estimate for the report coming at 10 AM ET this morning calls for an increase in new homes sales to 352,000.

New home sales declined 0.6% in May from the previous month to a seasonally adjusted annual rate of 342,000.

The dollar remained on the defensive versus the euro, dropping to an 8-week low of 1.4296, just shy of its lows from last December. A move to 1.4340 would take the dollar to its lowest level since the last week of 2008.

There was no relief for the dollar versus the scorching-hot loonie. Amid growing evidence that the Canadian economy is in much better shape than its neighbor to the south, the dollar dropped to C$1.0780, its lowest level since September 2008.

The dollar extended its run of choppy trading versus the sterling, easing to 1.6500 after seeing some modest strength late last week.

Versus the yen, the dollar firmed up slightly to 95.20, staying near a monthly high of 95.28.

In economic news from around the globe, German consumer confidence for August improved strongly, suggesting a recovery in the economy that is hit hard by recession.

According to the latest consumer climate survey from the market research firm GfK, the forward-looking consumer sentiment index rose to 3.5 points for August.

Monday, the quarterly report from the Bank of England said the continued asset purchases in the second quarter were accompanied by signs of improvement in the corporate credit markets.

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[IFX Darika]

IMF Advises Indonesia To Continue Stimulus Measures In 2010

The International Monetary Fund welcomed Indonesia's fiscal stimulus plan for 2009, underscoring timely and efficient implementation of the spending program. The Washington-based agency urged Indonesia to maintain some of the stimulus measures next year.

The Executive Board of IMF noted that private consumption supported by the fiscal stimulus package helped to maintain positive economic growth. However, another round of global risk aversion could adversely affect nation's external liquidity, demand and growth prospects. To withstand these risks, the authorities should strive to achieve the appropriate policy mix and promptly adjust it as needed to preserve macroeconomic and financial stability.

The board assessed that the current level of the real effective exchange rate is broadly in line with fundamentals and that reserves are at a comfortable level. Some others believed that the current level of reserves and the various contingency arrangements should provide an adequate cushion.

Regarding inflation, the fund said, "Strong commitment to the medium-term inflation targets, as well as publication of inflation forecasts, would help guide inflation expectations and enhance policy credibility."

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[IFX Darika]

Trust In Business Recovering In World Markets: Survey

The public's trust in business has stabilized and is recovering significantly in some of the world's largest markets, results of a survey conducted by Edelman, a leading independent public relations firm, showed Thursday.

Edelman's previous survey, conducted in January, showed a devastating loss in trust in the private sector.

The mid-year survey was conducted among 1,675 informed public in six countries - the U.S., the U.K., France, Germany, India, and China.

The survey found that India and China are the most positive about business. At 75%, India recorded the highest level of trust in business of any of the six countries surveyed. China followed with 60% saying they trust business to do what is right.

"The private sector is perceived as enabling an economic growth that has led to healthier living standards. The survey numbers reflect a high degree of national pride in the accomplishments of business," said Alan VanderMolen, president, Asia Pacific, Edelman.

In the U.S., 48% of informed public trust business to do what is right, up from a low of 36% in January. The figure for France rose to 41% from 30%.

"Trust in business is on the way back, but we're still in the middle of the game," said Richard Edelman, president and CEO, Edelman.

The public's trust in government rose the most in India, an increase of 13 points to 55% followed by the U.S., where the trust barometer rose 12 points to 42%.

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[IFX Darika]

Fitch Maintains Stable Outlook For Malaysian Banks' Credit Ratings

Thursday, Fitch Ratings maintained the stable outlook on Malaysia's local banks' credit ratings, despite very weak macro economic indicators.

The firm said the probability of capital impairment for Malaysian banks still appeared fairly low, despite the extremely stressed macro economic conditions and the reasonably-stressed assumptions simulated by the agency. Fitch said this in the context of its report titled "Stress Test on Malaysian Banks", where it attempts to simulate a fairly-stressed scenario for Malaysian banks.

The firm also noted that although banks' earnings were likely to be lower in 2009 and 2010 compared with 2008, they appeared adequate to fully absorb the credit costs associated with asset quality deterioration. This means their loss absorption capacity would likely remain adequate and financial strength largely intact, Fitch said.

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