Weekly Review 13.7.2009:
The Dollar rose this week against 11 of the 16 most- active currencies, as investors reduced bets on higher-yielding assets such as stocks and commodity- linked currencies. US consumer confidence unexpectedly fell during June as signs of growth fail to materialize. ISM manufacturing index rose in June, but held below 50, signaling contraction for the 17th straight month. US non-farm payrolls were disappointing, indicating that the pace of job losses accelerated in June. The Dollar ended the week as the strongest of the majors due to risk aversion caused by disappointing economic news. NASDAQ and Dow Jones dropped by -2.27% and -1.87% respectively. Crude Oil completed a third week of decline, dropping by almost 5% this week and closing at 65.95$ a barrel after worse than expected unemployment reports in the US and continues problems with oil pipes in Nigeria. Gold (XAU) remained almost unchanged closing at 930$ an ounce. Looking ahead, The ISM Manufacturing survey is to be released on Monday supposed to show an improvement in June and is estimated to rise to 46.0 from 44.0. Wholesale inventories will be released on Thursday, expected to fall for the ninth straight month by -1.0% versus -1.4%. On Friday the Michigan's Consumer Confidence is expected to decrease mildly to 70.6 from 70.8 and Trade Balance for May is expected to widen to -30.0B versus -29.2B prior.
The Euro left almost unchanged versus the Dollar unable to break from its monthly range. The short term trading in the EUR/USD was very volatile this week following the ECB's rate decision and the US Non Farm Payrolls, but still remained within range. Overall, EUR/USD traded with a high of 1.4201 and a low of 1.3927. Looking ahead, On Monday the Sentix investor confidence will be released expected to rise modestly to -24.3 versus -27.0 prior. On Tuesday the German Factory Orders survey is expected at 0.5% versus 0.0 prior. The European GDP is expected to remain at -4.8% in the 1st quarter any downturn revision to that assessment could send the Euro lower.
The Pound dropped versus the Dollar following a larger than expected contraction in 1st Quarter GDP of -2.4% versus the preliminary -1.9%. The U.K manufacturing PMI for June rose to its highest since May 2008 at 47.0 versus 45.4. PMI Services fell in June to 51.5 from 51.7 expected lowering recovery hopes. The BOE's Credit Conditions survey showed that credit to households in the 1st quarter rose which may help spur domestic growth and help offset the declining demand for U.K exports. Overall, GBP/USD traded with a high of 1.6742 and a low of 1.6421. Looking ahead, On Tuesday Industrial Production and Manufacturing Production Surveys are to be released, also Consumer Confidence is expected to rise modestly to 55 from 53. The BOE rate decision will be on Thursday and is expected to remain at 0.50% and is expected to attract the most attention. PPI Input and Output surveys will be released on Friday.