Weekly Fundamental Preparation of Currencies

Fed leaves rates and statement unchanged


The European Commission, Britain and the Pound


U.S. states: Running with the PIIGS


NEW YORK (Fortune) -- The term PIIGS has been coined to refer collectively to Portugal, Italy, Ireland, Greece, and Spain. Aside from being a cute acronym, the term describes the actions of these countries very aptly as they have acted "piggish" in issuing debt to support overzealous government budgets. While the American media has at times made light of these countries and their PIIGS moniker, the same mistakes are at play in creating domestic pigs.

There are two key ratios used to highlight when a government is reaching the crisis zone of fiscal imbalance: the debt-to-GDP ratio and deficit-as-a-percentage-of-GDP. Historically, a debt-to-GDP of north of 90% and a deficit-as-a-percentage-of-GDP north of 10% have been the lines in the sand to watch. As governments cross these barriers, they enter the Pig Zone.





Housing starts (Feb): Setback caused by snow storms


Forex TV's Equities & Commodities - Feb 26


PM Exchange - Julie Sinha interviews Derek Frey

Oil rises above $82 ahead of OPEC meet

"Oil prices continue to be supported by the soft tone of the U.S. dollar, while the industry data showing a fall in gasoline is also somewhat supportive," said David Moore, an oil analyst at the Commonwealth Bank of Australia.

The U.S. dollar hovered near one-month lows against a basket of currencies on Wednesday as investors cut long positions after the U.S. central bank retained its dovish bias.

"As for OPEC, expectations that it will leave production targets unchanged are now well factored in prices, so the market will place focus more on the weekly U.S. inventory report instead," Moore added.

Oil demand is picking up and that could mean OPEC does not need to take any further action on supply this year, the group's biggest producer, Saudi Arabia, said, as ministers prepared to rubber stamp existing outpaced targets.

"We have been sailing very well and we will continue to sail very well," Saudi Arabian Oil Minister Ali al-Naimi told reporters a day ahead of the grouping's meeting in Vienna on Wednesday, as other members voiced concern OPEC was pumping too much oil.

U.S. crude oil stockpiles rose much less than expected last week, posting gains of 403,000 barrels in the week to March 12, versus analysts' forecast of a 1.1 million barrel build, according to weekly data from the American Petroleum Institute (API) on Tuesday.

The U.S. Energy Information Administration's report is set for release on Wednesday at 1430 GMT.

PRECIOUS-Gold extends gains on weak dollar, near 1-wk high

* Gold extends gains on firm euro * Worries about China's attempt to quel inflation linger * Coming Up: U.S. PPI/Core PPI for February, 1230 GMT

Gold was about 6 percent below record of around $1,200
struck in early December. A firmer euro supported gold but there were also worries
China would tighten up after consumer inflation jumped to a
16-month high, possibly denting its appetite for commodities. "Some investors have pushed up the gold price because of
weak dollar. I think sentiment is still flat. It's not really
too bullish," said Ronald Leung, director of Lee Cheong Gold
Dealers in Hong Kong.
"We don't know when the Chinese are going to increase the
interest rates. I think people are pretty cautious. Gold will
go up by another $10 or $20 and then backtrack," he added.
China has already tightened bank reserve requirements twice
this year, with each move hitting commodity markets worried
about demand growth.

[UK DATA FLASH] Indicator For Actual Consensus Previous UK Unemployment Rate Feb-10 4.9% 5.0% 5.0% UK Unemp Change 000s M/M Feb-10 -32.2K 8.0K 5.3K R UK Avg Earnings 3M Y/Y Jan-10 0.9% 1.6% 0.7% R 09:30 GMT - Regulation talk from [EU'S BARNIER] who says the EU cannot afford another similar crisis and needs to put rules in place to avoid excessive risk taking. He calls for more coordination and supervision, but adds, over-regulation needs to be avoided. He points out that the Commission will present a proposal for a reform package in Jun, adding that it will also focus on naked selling and CDS, without revealing any further details. As the EU's internal market commission, Barnier also warns that some European countries seem to fall back into protectionism. Meanwhile, [GERMAN CHANC] Merkel believes it is right to push for a ban of naked selling, adding that Greece has suffered at the hands of speculators. She points out that greek fiscal measures are necessary, but no EMU country will be left alone. She calls for the possibility of exclusion from the EMU and pledges action if the Euro becomes unstable.

gbp/jpy
support at 138.55 but not much buying..

UK unemployment: It's not all good news


Labour will seize on the good news for the economy today - vastly better unemployment data than expected - but a closer look at the figures shows the labour market is struggling, argues Angela Monaghan.


Oil rises as supplies drop

Oil prices jumped Wednesday, after the weekly government energy inventory report showed supplies of crude fell more than analysts had expected.

Crude prices rise on EIA report, OPEC decision

Drought plagues southwest China




More than 50 million people in southwestern China are being affected by the worst drought in 60 years.

In some places, it is the worst drought in a century, and forecasters see no sign of it abating soon.

State media says the environmental disaster has cost the national economy nearly $3bn and left more than 20 million people without adequate access to drinking water.

The five-month dry spell has severely affected the autonomous region of Guangxi, the megacity of Chongqing, and the province of Sichuan.

But the provinces of Yunnan and Guizhou have experienced the worst conditions.

Harry Fawcett reports from a village near the town of YiLiang in Yunnan province.

03/22/10 The stories, data, and stocks that may have the greatest impact during the next trading session.

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Germany okay with bilateral EU aid to Greece: minister

Germany will agree to European countries providing bilateral assistance to debt-stricken Greece, Finance Minister Wolfgang Schaeuble said Saturday.


"For EU aid to Greece, there is no collective instrument. In case of extreme necessity there could be coordinated bilateral aid on a voluntary basis," Schaeuble was quoted in Bild am Sonntag weekly to appear Sunday, excerpts of which were released in advance.


Schaeuble did not indicate if Germany would be willing to help Greece, which is facing difficulties in refinancing this year some 50 billion of its 300 billion euros in debt.


His comments came a day after a German official indicated that Berlin was open to the possibility of the International Monetary Fund helping Greece, throwing into doubt a plan for the other 15 countries which use the euro to help Athens meet its borrowing needs.


Schaeuble also evoked the possibility of an IMF rescue.


"Greece also has ... legally the possibility of benefiting from IMF assistance," said the minister.


Previously the idea of the IMF bailout for one of its members was anathema to eurozone countries as it would signal they could not properly manage their monetary union.


Germany has traditionally been the fiercest advocate for fiscal rigour within the eurozone, and loath to advocate any measures that would undermine the credibility of the monetary union.


A plan endorsed by EU finance ministers would involve coordinated bilateral loans to get around EU law which bans bailout loans to any of the 16 countries, including Greece, which use the euro currency.


Greek Prime Minister George Papandreou called Saturday for EU leaders to back the plan when they meet on Thursday and Friday in Brussels.


He implicitly criticised Germany for opposing European efforts to help his country out of its fiscal crisis, warning they risked destabilising the bloc.


"Many forces forget the political importance of the euro, and are withdrawing the substance of the political vision of the European project, which is a joint effort to develop our economy in a calm and stable climate," the Greek prime minister said in a speech to his socialist PASOK party.


"In the end this could destablise the EU, lead it in the opposite direction to that of those who inspired and created a united Europe and its common currency," he warned.

Crude Prices Slide On Stronger Dollar

Stephen Roach Discusses 'America's Hypocrisy' on the Chinese Yuan


Stephen Roach, chairman of Morgan Stanley Asia, talks with Bloomberg’s Susan Li and Paul Gordon from Beijing about the U.S. calls for a stronger yuan. China is conducting stress tests to gauge the effect of yuan appreciation on companies, a sign the government may be preparing for policy change even as it rebuffs foreign criticism of its 20-month dollar peg.
Criticizing Paul Krugman’s comments that the U.S. should consider a 25% surcharge on Chinese goods, Roach said:

They don’t want to look in the mirror. America doesn’t have a China problem. It really has a savings problem. America has the biggest shortfall of national savings of any leading country in modern history. And when you don’t have savings you have to run current account deficits to import surplus savings from abroad and run massive trade deficits to attract the capital. Last year America ran trade deficits with over 90 - that’s right nine zero - countries. … Isn’t it the height of hypocrisy that America can articulate a particular position in its currency but the Chinese are not allowed to do that.

Trading Week Outlook: March 22 - 26, 2010



With the EU Summit scheduled for March 25-26, following a messy EU Finance Ministers meeting that has failed to provide concrete financial aid to Greece and has once again shaken investors’ confidence, the week ahead should unveil the next phase of the Greek debt drama and could prove crucial for the future fate of the euro.

In preparation for the new trading week, here is a look at the most important economic events that every currency trader should pay attention to.

Monday, Mar. 22 will bring only two notable economic reports, beginning with the Swiss National Bank’s Quarterly Bulletin on economic conditions, inflation and monetary policy, at 6:00 am, ET.

As the Swiss Franc continues to push the euro lower and the EUR/CHF currency pair has recently approached 2008 lows, traders will pay close attention to the SNB bulletin, and any statements from SNB officials that may follow it, for clues of the Swiss National Bank’s position on the strength of the Swiss Franc and signs of future currency market interventions by the SNB.

The light on economic data day will end with the Bank of Japan Meeting Minutes from the last monetary policy meeting that may provide an outlook on the economy and the bank’s future monetary policy, scheduled at 7:50 pm, ET.

Tuesday, Mar. 23 will start with the first spotlight event of the week- the U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, at 5:30 am, ET, along with a leading indicator of the U.K. housing market- the British Bankers Association’s Mortgage Approvals Report, measuring the number of issued home loans, also at 5:30 am, ET.

Rising inflation and signs of housing market recovery in the U.K. have been some of the few fundamental factors that have been supportive for the British pound. Inflation in the U.K. in February rose above the Bank of England’s 3.00% ceiling to reach 3.5%, but consensus forecasts range from 3.1% to 3.4% as economists anticipate that Tuesday’s U.K. CPI report may show inflationary pressures subsiding a bit in the U.K.

Another notable report from the U.K. that morning will be the CBI- Confederation of British Industry Distributive Trades Survey of realized sales made by retailers and wholesalers, at 7:00 am, ET.

News from Canada will bring the Canadian Leading Indicators of economic activity, scheduled at 8:30 am, ET.

The U.S. economic data will begin with a spotlight event- the U.S. Existing Home Sales, the main gauge of the condition of the U.S. housing market measuring the number of closed sales of previously constructed homes, condominiums and co-ops, due at 10:00 am, ET.

Existing home sales declined in February to 5.05 M from 5.44 M in the previous month and the downward trend may extend in March, with consensus forecasts expecting another monthly decline to 5.0 M.

The U.S. economic reports will continue with the U.S. House Price Index of the price changes of homes with mortgages backed by Fannie Mae (FNM) and Freddie Mac (FRE), at 10:00 am, ET, along with the Richmond Fed Index of manufacturing activity in the Richmond Federal Reserve district, also at 10:00 am, ET.

The New Zealand Current Account of goods, services and transfer of payments into and out of the country will be released at 5:45 pm, ET.

The day will end with a spotlight event- the Japanese Trade Balance of the difference between imported and exported goods and services, at 7:50 pm, ET. The report is expected to show lesser amount of trade surplus to 0.41 T yen from 0.73 T in the previous month.

Wednesday, Mar. 24 will begin with the French and the German Manufacturing and Services PMI--Purchasing Manager's Indexes, two leading indicators of economic conditions measuring the activity of purchasing managers in the manufacturing and service sectors, scheduled at 4:00 am, ET and 4:30 am, ET.

A spotlight event from the euro-zone will bring the German IFO Institute Business Climate and Expectations Index, a leading indicator of economic conditions and business expectations in the euro-zone’s largest economy, at 5:00 am, ET, along with the euro-zone Manufacturing and Services PMI- Purchasing Manager's Indexes, two leading indicators of economic conditions measuring the activity of purchasing managers in the manufacturing and service sectors, also at 5:00 am, ET.

The German IFO Survey may come a bit higher with a reading of 95.8 compared to 95.2 in the previous month, but the euro-zone Composite PMI is expected to show a slight slowdown in economic activity to 53.6 from 53.7.

The European data will continue with the euro-zone Industrial Orders, a leading indicator of manufacturing activity at 6:00 am, ET.

One of the main spotlight events of the week--the U.K. Government Annual Budget will be released at 8:30 am, ET. The report is expected to have a significant impact on the British pound, as any increase in U.K. Government spending would likely be perceived as negative, but budget and spending cuts could provide some support for the pound.

The U.S economic reports will begin with a spotlight event- the U.S. Durable Goods Orders, a leading indicator of economic activity, measuring orders placed with domestic manufacturers for immediate and future delivery of factory hard goods, at 8:30 am, ET. The orders for durable goods are expected to decline to 0.9% m/m from the 2.6% m/m increase in the previous month.

Another spotlight event will bring the U.S. New Home Sales, a gauge of housing market conditions measuring the number of newly constructed homes with a committed sale during the previous month, at 10:00 am, ET, followed by the EIA- Energy Information Administration Weekly Oil Inventories, at 10:30 am, ET.

The new home sales in the U.S. registered much larger that anticipated month-over-month decline of -11.2% in February, but they are expected to pick-up the pace in March to 316 K from 309 K.

The sequence of spotlight events will continue with the New Zealand GDP- Gross Domestic Product, the main measure of economic activity and growth, at 5:45 pm, ET.

As a higher yielding commodity currency, the New Zealand dollar has proven attractive to investors in the current environment, and the GDP report may keep the Kiwi well bid on expectations of faster quarter-over-quarter economic growth of 0.8% in Q4 2009 from 0.2% in Q3 2009.

The busy day will conclude with the Japanese CSPI- Corporate Services Price Index, a measure of inflation experienced by corporations when purchasing services, at 7:50 pm, ET, and the Reserve Bank of Australia’s Financial Stability report of the Australian financial system, at 8:30 pm, ET.

Thursday, Mar. 25 will mark the first day of the most important economic and geo-political event of the week- the EU Summit, a March 25-26 two-day meeting of European Union officials in Brussels, Belgium. The event could be pivotal for the euro and the euro-zone debt crisis, depending on whether the summit attendees agree to provide or continue to deny concrete financial aid to Greece, which is due to face debt obligations in April and May.

The morning economic reports will start with the German Gfk Group Consumer Climate Survey, an early indicator of current economic conditions and consumer expectations, at 3:00 am, ET. The GfK index of consumer sentiment is expected to decline to 3.1 from 3.2 in the previous month.

The U.K. Retail Sales, an important gauge of consumer spending, measuring the total sales at retail establishments, will follow at 5:30 am, ET. Retail sales in the U.K. dropped by 1.8% m/m in January but the February report could show an improvement, with consumer purchases expected to increase by 0.6% m/m.

The U.S economic data will begin with the weekly Jobless Claims, a gauge of labor market conditions measuring new unemployment claims, scheduled at 8:30 am, ET, and the EIA- Energy Information Administration Natural Gas Inventories, at 10:30 am, ET.

Another notable U.S. event that morning will be the Fed Chairman Ben Bernanke’s Testimony before the House Financial Services Committee on the Federal Reserve’s plans for reducing the record amount of liquidity pumped into the financial system and the potential impact on the U.S. economic recovery.

Economic data from “down under” will bring the New Zealand Trade Balance of the difference between imported and exported goods and services, at 5:45 pm, ET, followed by the Australian Leading Indicators of economic activity, at 7:00 pm, ET.

The day will end with a spotlight event- the Japanese CPI- Consumer Price Index, the main measure of inflation, at 7:30 pm, ET. The consensus forecasts expect a reading of -1.2 % y/y and deflation could continue to pose serious threat to the Japanese economy, especially if the report shows core inflation falling below the previous level of -1.3% y/y.

Friday, Mar. 26 will begin with one of the major spotlight events of the week- the U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth in the world’s largest economy, at 8:30 am, ET.

Economic forecasts anticipate that the final reading of the U.S. Q4 2009 GDP could be slightly lower in a range between 5.7% and 5.9%, compared with last month’s estimate which showed the U.S. economy growing faster than expected by 5.9% in Q4 2009.

The busy trading week will end with the U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, scheduled at 9:55 am, ET. The index of consumer sentiment could inch higher to 73.1 from a previous estimate of 72.5.

Rogers Discusses the Euro, and Prospect of Greek Bailout

Grinding higher, U.S. stocks could get direction from abroad


Home sales, health care, Fed speakers and Oracle on U.S. calendar


U.S. stock investors, having just pocketed three weeks of gains, may look overseas for reasons to add to their bets in the coming week -- or take some money off the table.

Domestic news, from manufacturing data to the Federal Reserve's attachment to keeping interest rates near 0%, has been good enough to help stocks extend gains. But daily trading has lacked the momentum that characterized big run-ups in the past year.



"What's been good recently is basically the lack of news," said Jason Pride, director of investment strategy for Philadelphia-based Glenmede, which manages about $18 billion.

During the Dow Jones Industrial Average's /quotes/comstock/10w!i:dji/delayed (INDU 10,742, -37.19, -0.35%) eight sessions of gains, which ended Friday, the blue-chip average never added more than 50 points, or 0.5%, in a single day. Still, it closed the week with a 1.1% advance, its third week of gains.

One risk to this extended run could come from China or other fast-growing economies that are likely to raise interest rates before the U.S., say strategists.

On Friday, a surprise rate increase by India's central bank weighed on the U.S. stock market. The move renewed a simmering anxiety about how the global economy will react as governments in China, India and elsewhere raise interest rates, said Russ Koesterich, a managing director at BlackRock, Inc.

"As they change policy, does that mean the liquidity tap is being turned off?" he said.

European government finances could also ripple through stock, currency and commodities markets. Perceived reluctance by European Union members to support Greece have undermined the euro in the past week, helping the dollar, and in turn, weighing on the price of dollar-denominated commodities.

As European ministers meet next week in Brussels, any hint that the European monetary union is under stress may again bolster the dollar. The euro fell about 1.2% against the greenback last week, helping pull the U.S. dollar index /quotes/comstock/11j!i:dxy0 (DXY 80.76, +0.50, +0.62%) up by 0.9%.

"There's some concern that if the E.U. doesn't step in, the case for the euro may be weakened," said Brad Sorensen, director of market and sector research at Charles Schwab. For stock investors, however, the worries about a return to crisis-mode for the global financial system have faded.

"Contagion hasn't happened," he said. "It's really a European, Greek issue at this point."

House has votes to pass health bill, Democrat says

Historic health-care bill goes to Obama for signature

[COMMODITIES: MORE PAIN] The commodities complex is coming under further pressure following the rather strange remarks from the Greek deputy PM made a short while ago, which probably instigated the break of key levels as the Dollar popped higher. Losses in [GOLD] accelerated once the $1100/oz area gave way, with funds bailing out to forge a new session base at 1093.95. [OIL] also slumped to $78.86/brl, extending its intraday loss to about 2.5%. The black gold was pressured beforehand on comments from UAE Oil Min al-Hamli who said the market was well supplied & forward cover is exceptionally high. The renewed bout of risk aversion saw the $TWI surge past 81.00 and looked prompted by the Greek deputy PM who stated Germany allows its banks to speculate against Greece and that Germany puts its interests first & wants a weak Euro to aid exports.

ej chart

Just joining your thread.

EMU Economic Indicators Preview

(Week of 22 to 28 March 2010)

 

1. PMI manufacturing index EMU (March): up slightly
2. German ifo business climate (March): up slightly
3. M3 money supply (February): edging down

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Annual M3 growth turned positive again in January. However, this was just a statistical variation, mirroring a steep decline of M3 in January 2009. The underlying trend is still downwards, as banks curtail the growth of their balance sheets. Extremely low market interest rates reduce the attractiveness of term and saving deposits as well as money market instruments. As opportunity costs are low, some of these funds are held as overnight deposits; others are channelled into long term liabilities such as bank bonds. Month-on-month, we expect M3 to have declined moderately in February, by about €10bn. Annual growth will drop to about -0.5%. MFI loans to “other euro area residents” (domestic private non-bank sector) could fall at about the same rate, -0.5 % yoy.
The ifo business climate for Germany could have rebounded in March: although business expectations are likely to have deteriorated, there will probably have been a weather-related improvement in the current assessment. The US ISM manufacturing index and the German ZEW economic sentiment have both fallen; crude oil prices have gone up. German yield spreads have narrowed somewhat, as long-term interest rates have decreased more than short-term rates. However, the DAX has gone up and the euro has depreciated. The German GfK consumer confidence for April could have stabilised.

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Thanks for the content! Sorry. I've been away from my desk but come back soon.

More good news
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