Risk-aversion continued to dictate market direction, with the Japanese yen touching a fresh 15-year high against the dollar while most of the major currencies tumbled against the greenback. The Canadian dollar slid by 1.2% and the euro dropped by more than 1.5%. The US equity bourses slid after returning from the long-weekend, with the major indexes shedding more than 1%. Meanwhile, safe-haven flows propped spot gold it’s a new record higher to settle around $1,257.30 per ounce while crude oil drifted lower to dip beneath the $73-per barrel mark.
Central bank policy decisions will be the key event risks in the week ahead. The Reserve Bank of Australia announced the results of its policy deliberation, leaving interest rates on hold at 4.5%. The accompanying policy statement was largely unchanged from the August statement, widely seen as more dovish and indicative the RBA leaving rates on hold for the rest of the year.
The Bank of Canada is scheduled to announce its monetary policy decision at 9:00 AM EDT, with consensus forecasts calling for a 25-basis point rate hike to 1.0%. Traders will closely scrutinize the accompany statement from the BoC. In light of the sharp pullback in second quarter GDP growth, which revealed the pace of economic growth slowing to 2.0% and down drastically from first quarter growth of 5.8%, it will be interesting to see whether the Bank will downwardly revise its growth outlook again following the downgrades from the policy statement issued in July. Given market expectations leaning toward a rate hike tomorrow, the risk stands with an unchanged BoC decision and a signal that interest rates will remain on hold in the near future as a result of the pullback in economic activity. If that scenario was to materialize, the reaction in the currency market will likely prompt a knee-jerk sell-off in the Loonie to breach the 1.0550-mark.
Senin, 04 Oktober 2010
U.S: Credit Still Tight
by Angelo Airaghi [Guest Analyst]
U.S banks are still resilient in expanding credit, especially to the private sector and hiring stays subdued for now. In Europe, exports are increasing, but growth would be uneven.
U.S.: Credit is still low
The economic recovery should continue throughout this year, albeit at a slower pace. The household deleveraging in the United States and in many European countries, coupled with the possible fiscal consolidation in some nations, would eventually slow the recovery next year. In effect, consumer confidence stays subdued, and not only in the U.S., as financial incentives are ending, while hiring remains slow. Banks are still resilient in expanding credit, especially to the private sector. As a result, consumer credit fell 4.5% in May, while delinquency in the credit card business slid to the lowest level of the past seven years. Both the manufacturing and service sector appear to the moderating from higher levels, while the housing market is still near the bottom in many nations. In reality the US manufacturing industry grew for the sixth consecutive month, but new orders declined in June, although remaining in the expansionary mode. The index is now at 54.4 from 62.3 reached in March. The service sector fell instead to 53.8 from 55.4, but business activity stays strong at 58.1. Exports are falling, probably due to the strong U.S. dollar and the contraction in the world economic recovery. Nonetheless, in the U.S., the whole sale inventories rose 0.5% month on month in May, marking the fifth consecutive month of increase. The Federal Reserve is expected to keep rates low for most part of 2010, as inflation is mild and recovery still bumpy.
Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.
This article contains the following sections:
# U.S.: Credit is still low
# EUROPE: Exports rising
# GBP/USD: at key resistance line
U.S banks are still resilient in expanding credit, especially to the private sector and hiring stays subdued for now. In Europe, exports are increasing, but growth would be uneven.
U.S.: Credit is still low
The economic recovery should continue throughout this year, albeit at a slower pace. The household deleveraging in the United States and in many European countries, coupled with the possible fiscal consolidation in some nations, would eventually slow the recovery next year. In effect, consumer confidence stays subdued, and not only in the U.S., as financial incentives are ending, while hiring remains slow. Banks are still resilient in expanding credit, especially to the private sector. As a result, consumer credit fell 4.5% in May, while delinquency in the credit card business slid to the lowest level of the past seven years. Both the manufacturing and service sector appear to the moderating from higher levels, while the housing market is still near the bottom in many nations. In reality the US manufacturing industry grew for the sixth consecutive month, but new orders declined in June, although remaining in the expansionary mode. The index is now at 54.4 from 62.3 reached in March. The service sector fell instead to 53.8 from 55.4, but business activity stays strong at 58.1. Exports are falling, probably due to the strong U.S. dollar and the contraction in the world economic recovery. Nonetheless, in the U.S., the whole sale inventories rose 0.5% month on month in May, marking the fifth consecutive month of increase. The Federal Reserve is expected to keep rates low for most part of 2010, as inflation is mild and recovery still bumpy.
Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.
This article contains the following sections:
# U.S.: Credit is still low
# EUROPE: Exports rising
# GBP/USD: at key resistance line
Langganan:
Postingan (Atom)