Daily Report: Focus on UK PPI and Fed Speakers
March 16, 2008 on 10:11 am | In Currency | No Comments
Action Insight | Written by ActionForex.com | Sep 10 07 07:14 GMT |
Forex Daily Technical Report Focus on UK PPI and Fed Speakers
Yen and Swissy are mildly higher on risk aversion as the week starts. Meanwhile, dollar remains weak in tight range. UK PPI inflation will be the main featured economic data today. No US economic data is scheduled and markets focus will likely turn to Fed speakers including Lockhart, Yellen, Fisher and Mishkin. While a cut is widely expected, opinions on whether it will be 25bps or 50bps, or whether there will be an inter-meeting cut, is divided. Fed speakers will continue to be focus of the markets.
UK PPI input is expected to have another monthly drop of -0.2% mom while yoy rate is expected to be 1.9%. PPI output is expected to rise 0.2% mom, 2.5% yoy in Aug. Released in Asia, Japan Q2 GDP final print revised further lower than expected to -1.2% annualized rate, with qoq rate down to -0.3%. Though, the yen remains supported by risk aversion. EUR/USD
Daily Pivots: (S1) 1.3687; (P) 1.3742; (R1) 1.3822; «www.actionforex.com»
EUR/USD turns into sideway trading as the week starts. But still, further rise is expected as long as 1.3710 support holds. Retest of key resistance zone of 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822 and 1.3851 high should be seen. On the downside, touching of 1.3710 will indicate an intraday top is formed and bring pull back, probably towards 4 hours 55 EMA (now at 1.3658). But rise from 1.3360 should still be in force as long as EUR/USD stays above 1.3552 support.
In the bigger picture, as discussed before, with long term cluster support at 1.3328/29 (38.2% of 1.2483 to 1.3851 at 1.3328 and 23.6% retracement of 1.1639 to 1.3851 at 1.3329), as well as 55 weeks EMA (now at 1.3266) still holds, medium term up trend from 1.1639 is still in force. Focus is now on 1.3822/51 resistance zone. Decisive break of this resistance zone will indicate that such up trend from 1.1639 has resumed. Also, this will add much weight to the case that long term up trend from 0.8223 (00 low) has resumed too. Further upside should then be seen targeting 1.4000 psychological resistance and probably further to 1.4523 (95 high).
However, note that failure to sustain above 1.3822/51 and a break of 1.3552 support will indicate that the consolidation from 1.3851 is not completed yet and another test of 1.3360 low could be seen before completion. But still, decisive break of 1.3262 low is needed to add favor to the case that whole up trend from 1.1639 has completed and bring further fall to 1.2978 (medium term resistance turned support). Otherwise, medium term outlook is neutral at worst.
GBP/USD
Daily Pivots: (S1) 2.0189; (P) 2.0256; (R1) 2.0353; «www.actionforex.com»
Cable turns into sideway trading as the week starts. But still, further rally is expected as long as 2.0160 support holds. Retest of 2.0462 resistance should be seen and break will bring retest of key resistance zone of 2.0652 high and 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677. Below 2.0160 will turn intraday outlook consolidative and probably bring pullback. But rise from 1.9652 should still be in force as long as 1.9959 support holds.
In the bigger picture, cable is still kept above 1.9621 support as well as 55 weeks EMA (now at 1.9522), thus giving no confirmation of a long term reversal yet. That is up trend from 1.7047 could still be in force. Focus remains on 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677. Decisive break of this resistance is needed to confirm rally from 1.7047 has resumed for 100% projection of 1.3680 to 1.9554 from 1.7047 at 2.2901
On the downside, failure to take out 2.0677 fibo resistance or a break below 1.9959 will suggest that fall from 2.0652 is probably developing into deeper correction and retest of mentioned support zone of 1.9621 support and 38.2% retracement of 1.8090 to 2.0652 at 1.9673 should be seen. Also, sustained trading below 1.9621 support will add more credence to the case that whole rally from 1.7047 has indeed completed and bring deeper decline to next support zone of 1.9183 and 38.2% retracement of 1.7047 to 2.0652 at 1.9275 first. But still, medium term outlook will remain neutral at worst as long as 1.9621 support holds.
USD/CHF
Daily Pivots: (S1) 1.1820; (P) 1.1923; (R1) 1.1985; «www.actionforex.com».
USD/CHF’s edges lower to 1.1852 today. At this point, intraday bias remains on the downside as long as 1.1926 minor resistance holds. Next downside target will be 1.1816 low. Above 1.1926 will turn intraday outlook consolidative and bring recovery. But fall from 1.2150 should still be in force as long as upside is limited by 1.2026 resistance.
In the bigger picture, as discussed before, outlook is turned mixed after the strong rebound from 1.1816 dampened our original view that USD/CHF has completed a wide range triangle consolidation that started at 1.1919. There are various interpretation of the medium term price actions that started at 1.1919 (May 06) but none of them is really convincing yet.
Nevertheless, USD/CHF has had a series of lower highs since Nov 05, ie 1.3823, 1.3238, 1.2768, 1.2571 and then 1.2467 in June. Such pattern is still holding and the medium term outlook is still remaining mildly bearish and neutral at best. It will take a break above 1.2467 high to indicate USD/CHF has made an important low at 1.1816 and have the medium term down trend from 1.3283 reversed. Otherwise, with USD/CHF still staying below 55 weeks EMA (now at 1.2257), further medium term fall is still in favor.
USD/JPY
Daily Pivots: (S1) 112.45; (P) 114.04; (R1) 114.96; «www.actionforex.com»
USD/JPY edges lower to 112.58 today and at this point intraday bias will remain on the downside as long as 114.08 minor resistance holds. Next downside target will be 111.59 low. On the upside, above 114.08 will turn intraday outlook neutral first and bring recover. But fall from 116.59 should still be in force as long as upside is limited below 115.65 resistance.
In the bigger picture, as discussed before, daily MACD’s stay above signal line suggests that the whole decline from 124.12 could have already completed at 111.59. Hence, further break of this low is needed to confirm that sharp fall from 124.13 has resumed. Otherwise, USD/JPY could still develop into lengthier consolidation with another test of 117.15 resistance before completion.
Also, prior break of long term rising trend line (101.65, 108.99) indicates the the whole up trend from 101.65 could also have completed at 124.13 already, with bearish divergence condition in weekly MACD and RSI.. Break of 111.59 will indicate fall from 124.13 has resumed for support zone between 108.99 and 61.8% retracement of 101.65 to 124.13 at 110.23.
EUR/JPY
Daily Pivots: (S1) 155.11; (P) 156.69; (R1) 157.68; «www.actionforex.com»
EUR/JPY edges lower to 155.15 today and at this point, intraday bias remains on the downside as long as 156.52 minor resistance holds. Further fall is still in favor towards 154.53 support and lower. Above 156.52 will turn intraday outlook neutral again and bring recovery.
But still, as discussed before, with daily MACD now staying above signal line, the sharp fall from 168.93 could have completed at 149.27 already. Rebound from 149.27 is likely still in progress as long as 153.36 cluster support (61.8% retracement of 149.27 to 159.67 at 153.24) holds and another rise could still be seen before completing the correction from 149.27. However,below 153.36 will indicate that rebound from 149.27 has completed and bring retest of this low.
In the bigger picture, the break of trend line support (137.16, 150.75) confirmed that rally from 130.60 has already completed at 168.93, with bearish divergence condition in weekly RSI. Hence, an important medium term top is in place at 168.93 already. However, since EUR/JPY is still supported within the rising channel shown in the monthly chart. the whole up trend from 88.9 could still be in force and price actions from 168.93 is probably just developing into consolidation to this long term up trend.
But in any case, firm break of 168.93 is needed to confirm long term up trend has resumed, otherwise, another fall could still be seen before completing the consolidation that started from 168.93. Meanwhile, a break of 149.27 low will add much favor to the case that up trend from 88.9 has completed and bring much deeper decline.
Forex News Digest
«c.moreover.com»
Mon, 10 Sep 2007 04:34:00 GMT from CNBC
«c.moreover.com»
Mon, 10 Sep 2007 04:24:00 GMT from CNBC
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan GDP annualised Q2 F -1.20% -0.70% 0.50%
23:50 JPY Japan GDP Q/Q Q2 F -0.30% 0.00% 0.30%
23:50 JPY Japan GDP deflator Y/Y Q2 F -0.30% -0.30% -0.30%
5:00 JPY Japan Economic watch DI Aug 44.1 N/A 46.7
8:30 GBP U.K. PPI input M/M Aug -0.20% -0.50%
8:30 GBP U.K. PPI input Y/Y Aug 1.90% 0.10%
8:30 GBP U.K. PPI output M/M Aug 0.20% 0.20%
8:30 GBP U.K. PPI output Y/Y Aug 2.50% 2.40%
12:30 USD Fed’s Lockhart Speaks
15:00 USD Fed’s Yellen Speaks
17:00 USD Fed’s Fisher Speaks
23:30 USD Fed’s Mishkin Speaks
Mugabe stripped of his honorary degree
March 16, 2008 on 10:11 am | In Money | No Comments
THE honorary doctorate awarded by Edinburgh University to Robert Mugabe, the president of Zimbabwe, was officially withdrawn yesterday.
Mr Mugabe was given the degree in 1984 for services to education in Africa. But at a meeting in early June, the Senate of Edinburgh University - its highest decision-making body - decided to strip him of the honour.
Mr Mugabe was informed in writing that the withdrawal process had begun and given time to appeal. That deadline expired over the weekend, and the university has confirmed the degree will be revoked.
A spokesman said: “We have not heard back, so we have formally agreed today he’s no longer got an honorary degree. We will send a final letter to confirm that once and for all.”
The decision represents a first in the history of the ancient institution.
Mr Mugabe was stripped of his degree after years of campaigning by politicians and students, concerned about his record on human rights.
He has run Zimbabwe with his ZANU-PF party since independence from white rule in 1980.
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Sask. Pool plans to sell 9 Agricore elevators to Cargill
March 16, 2008 on 10:10 am | In Finance | No Comments
The Saskatchewan Wheat Pool is prepared to sell nine grain elevators and one of its port terminals so it can pursue a hostile bid for Agricore United.
The Canadian Competition Bureau has said it would approve the deal if the Pool got rid of some of its assets.
As a result, the Pool announced Wednesday that Cargill Ltd. would buy the nine elevators five in Alberta, three in Saskatchewan and one in Manitoba if the Pool acquires them from Agricore.
Agricoreelevators the Saskatchewan Wheat Pool wants to sellto Cargill
Davidson, Sask. (grain handling/crop input)
Kindersley, Sask. (grain handling/crop input)
Congress, Sask. (grain handling/crop input)
Vermilion,Alta. (grain handling)
Camrose, Alta. (grain handling/crop input)
Blackie, Alta. (grain handling)
Viking, Alta. (grain handling)
Equity, Alta. (grain handling)
Elva, Man. (grain handling/crop input)
Source: Saskatchewan Wheat Pool
Cargill has also agreed to sell to the Pool its 50 per cent ownership interest in the Cascadia terminal on Vancouver’s south shore that is jointly operated with Agricore. Cargill would, in turn, buy the Pool’s Vancouver port terminal on the north shore.
As part of the deal, Cargill would pay the Pool $70 million, plus the value of the crops in inventory at the elevators.
The Pool, meanwhile, would be required to back out of its partnership at the Vancouver port with James Richardson International. That’s the same privately held grain company that recently launched its own bid a friendly one for Agricore.
The deal between the Pool and Cargill depends on the Pool being able to complete its takeover of Agricore.
However,the Pool’s offer for Agricore has been rejected by company officials and Agricore’s principal shareholder, Archer Daniels Midland.
Regina-based Saskatchewan Wheat Pool is Canada’s second-largest grain company.Winnipeg-based Agricore, which has major holdings in Alberta and Manitoba, is the largest.
Agricore was formed when Agricore Co-operative merged with United Grain Growers in 2001.
Hong Kong and China: The Future
March 16, 2008 on 7:00 am | In Money | No Comments
Michael Enright knows a thing or two about the Pearl River Delta (PRD). He and Edith Scott published The Greater Pearl River Delta, a study of the region, in 2003. He has been a professor at Harvard Business School and is currently the Sun Hung Kai Professor of Business Administration at the University of Hong Kong. He is known for his optimistic view of the mainland’s economic rise. CHINA ECONOMIC REVIEW spoke to him exclusively at the Australian Institute of Company Directors’ annual conference in Shanghai.
What impact has the Closer Economic Partnership Agreement (CEPA) had on Hong Kong, nearly four years after it was first signed?
The effects vary by industry. Of course Hong Kong is not a major manufacturing center anymore, so there has been an impact there, but that’s somewhat limited. There has been a greater impact in the service sector sector; things like logistics and transportation companies, and also on the financial sector.
Has CEPA had any intangible impact on business?
I think the biggest impact of CEPA has is on mindsets. It sends a very clear signal about the increasing integration of Hong Kong’s economy with the Chinese mainland. It is a signal to business in Hong Kong to look for market opportunities in the mainland. It’s also a signal to foreign companies that Hong Kong should be dealt with as part of the China strategy.
What about the charge that Hong Kong firms are doing well, but not Hong Kong as a whole?
The answer is undoubtedly no. If one looks over the last 10 years, since 1997, the growth rates in the Hong Kong economy have been strong. For a mature economy, that has gone through the Asian [financial] crisis, SARS, the aftermath of 9/11, the aftermath of the Asian tsunami, real growth in Hong Kong since 1997 has averaged a little over 4% and in the last five years has averaged 5% or 6%.
How have individual sectors been doing?
The financial sector has been booming in 2006. It was the leading equity capital raiser worldwide, and that’s of course almost exclusively due to listings of mainland companies on the Hong Kong Stock Exchange. If you look at the professional service sectors, they’re expanding rapidly, mostly either serving businesses in China or those interested in China. Also, increasingly, the sector is also serving mainland companies who are seeking international markets on their own. Hong Kong is a source of linkages to the global economy and also a source of expertise.
So most sectors have fared well?
In virtually every sector, there’s been a strong positive impact, even areas where people raise concerns, [such as] whether Hong Kong will lose its port sector to Shenzhen. [In that sector], we’ve seen Hong Kong lose market share, but in the context of still healthy growth in volume. Even in a sector like that, what’s happened is the high-end, managerial, financial, communication and coordination services have been growing rapidly in Hong Kong. From an economic standpoint, I think almost across the board, in terms of sectors and the economy as a whole, there is a clear benefit.
What is the downside?
Adjustment. There is a segment of the workforce that finds it difficult to adjust, as it becomes more efficient [for companies] to carry out their jobs in China. I think the adjustment issue is a concern, but not the overall integration - that is clearly good.
What about labor movement issues, like immigration, taxation and so on?
I see them as friction. Are they obstacles to doing even more business back and forth? The answer is yes. Are they obstacles that are high enough to prevent business being done? The answer’s obviously no. I think that both the Hong Kong side and the central and provincial leadership have for the most part been moving cautiously, which makes sense.
What’s the trend in terms of labor movement issues?
We see the frictions gradually reducing. Connectivity is better, processes are becoming more streamlined, tax authorities are starting to share information.
Consumer sentiment slips in July: Westpac
March 16, 2008 on 7:00 am | In Money | No Comments
Consumer sentiment remains at a very strong level, despite a slight decline from record highs, new figures show.
The Westpac-Melbourne Institute Index of Consumer Sentiment fell by 0.6 per cent in July to 120.8 points from 121.5 in June.
This follows a record high of 123.9 points in May.
Westpac chief economist Bill Evans said sentiment remained very high amid firm economic fundamentals.
“There was good reason for sentiment to remain high in July,” he said.
“The Reserve Bank kept interest rates on hold despite some speculation of a rate hike, petrol prices fell by 5.3 per cent, the share market reached more record highs and the Australian dollar surged by around two per cent,” Mr Evans said.
He said that while there were surprisingly soft readings on retail spending in April and May, the lower results were probably most reflective of some consolidation following the surge in spending and confidence in the first quarter of the year.
“The strong reads for confidence in June and July point to a likely recovery in retail spending growth in June and July,” he said.
“Indeed, sentiment on the time to buy major household items rose in July despite the dip in the aggregate index.”
“The short term expectations components of the Index were weaker than those measuring current conditions,” Mr Evans said.
The figures showed that three of the five component indices of consumer sentiment improved in July.
The time to buy major household items index increased by 3.2 per cent in July, while the family finances compared with a year ago index rose marginally by 0.1 per cent.
The index reflecting family finances next 12 months declined by 3.7 per cent and economic conditions index for the next 12 months decreased by three per cent.
However, the index for economic conditions in the next five years rose 0.5 per cent.
Those not working, those earning up to $20,000 and those living in rental accommodation registered the largest decreases in consumer sentiment, the figures showed.
The survey was conducted in the week following the Reserve Bank of Australia (RBA)’s decision to keep interest rates on hold at 6.25 per cent as well as the narrowing of the trade deficit for May.
However, retail sales and building approvals fell in May.
Crucial to future consumer sentiment levels will be any changed to the RBA’s monetary policy.
The Reserve Bank Board next meets on August 7.
Mr Evans said the RBA would most likely not need to raise rates before early 2008.
However, he said an interest rate rise eventually followed each time the consumer sentiment index reached record or near record levels.
AAP