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Video for August 27th, 2008 (5 min): Pound Pressured by Weak Economy, Euro Boosted by ECB Officials Comments, US Sees Strong Durable Goods Orders AUS Construction Work Declines in 2nd Quarter In Australia construction work done in the 2nd quarter declined 2.6%. The figure for the 1st quarter, however, was revised up modestly to a 5% gain. High interest rates and a turndown in the economy have affected the housing market, though not to the same degree as seen in the UK or US. NZ Business Confidence Shows Signs of Life New Zealand's business confidence improved modestly, posting a -20.5 for August, compared to -43.2 in July. With oil prices easing, inflation seems to be stabilizing and business confidence may have a chance to rebound further. NZD/USD - Kiwi Advances vs Dollar on Better Business Confidence
The Kiwi-Dollar pair rose 160 pips from yesterday's low. The rally started after Austrlia's construction data and extended after the stronger NZ business confidence report. The Kiwi pared its losses from its slide in early-Tuesday trading. A positive US release in today's NY session gave the greenback renewed strength, and the pair retreated. GER Import Prices Now at 9.3%, 8-Year High Import prices remain to be high in Germany during the July period, with the annual rate hitting 9.3%, the highest in 8 years. Energy prices continue to dominate the index but July was the month that saw oil prices rise to $147 a barrel, and have eased since then. On the month prices were a cooler 0.6%. GER Consumer Inflation Comes in Lower Than Expected for August Germany also released its preliminary data for Augusts' CPI. Consumer inflation slowed to an annual pace of 3.1%, and declined 0.3% on the month. Those numbers came in below forecasts, and will be a welcome sign for the ECB. The EU harmonized rate slowed to 3.3% from 3.5%, and also came in lower than expected. EUR/USD - Euro Boosted Overnight On ECB Member Comments, High Import Inflation
Yesterday the Euro was tested due to poor data from Germany, but the tables turned today. Overnight, the Euro's prospects were boosted by hawkish comments from ECB Council member Axel Weber. He said that interest-rates are "where they should be" and the ECB may have to tighten rater after the economy recovers. The Euro rebounded from yesterday's six-month low to reel off a 180-pip counter-rally. It hit resistance at the NY open where the Dollar pared some of its earlier losses. EUR/CHF - Euro Regains Footing vs. Swiss Franc
The Euro gained on the Swiss Franc overnight, stopping a two-day slide that amounted to almost 150 pips. European stocks came back from a rise in oil prices and investor sentiments seem to be returning to the market after a shaky start to the week. EUR/GBP - Euro Gains 80 Pips on Pound as UK Economy Falters
The Euro also rose to its highest in almost three months against the Pound, which had a very poor day today. The Euro-Pound pair rose about 80 pips as a stronger ECB puts the Euro at odds with a weaker Bank of England. EUR/GBP - Euro Tests Recent Range's Upper Boundary
In this long term view you can see that the pair is now testing the upper boundary of its 3-month range near .8040. The Pound has been in a free fall against its rivals in August as the problems in the housing market are putting the economy on the brink of a recession. GBP/JPY - Pound Facing Sharp Declines vs Yen and Dollar
The Pound-Yen pair is down 1150 pips since the Bank of England's last meeting. The central bank is feeling the pressure to cut rates and the markets are pricing that in. The Pound-Dollar pair fell sharply in NY trading as well hitting a fresh 2-year low. US Durable Goods Surprise on Upside, Positive Data for US The US was boosted by a report showing strong orders for durable goods in July. Orders increased 1.3% on the month with June's level revised up as well. Orders excluding transportation surprised forecasts. Durable goods are more expensive goods designed to last more than 3 years. USD/JPY - Dollar Boosted by Durable Goods Reports, Jumps 80 Pips vs Yen
The Dollar-Yen had a strong move up in the 30 minutes following the release, climbing about 80 pips. The Dollar managed to hold those gains and climb to 109.90 as US stocks rallied despite a jump in crude oil. Upcoming Releases Tonight, Australia releases data on capital spending by the private sector. Overnight, the UK posts its Nationwide house price index and a measure of manufacturing. Switzerland and Germany will release employment figures. Tomorrow, the US releases its jobless claims and preliminary measures of GDP. Canada will post its current account. |
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