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U.S. retail sales rose during May

admin — Mon, 08 Jun 2009 15:00:24 +0000

U.S. retail sales rose during May, posting the third increase in five months, but much of the gain was due to gasoline station receipts given a boost by higher prices.

The 0.5% increase in retail sales reported Thursday by the Commerce Department was smaller than expected. Economists surveyed by Dow Jones Newswires forecast a 0.6% increase.

Several categories of retailers tumbled last month. The increases tended to be among sellers of essential items, such as food and clothes.

Filling station sales rose 3.6%. Excluding gasoline sales, other retailers’ sales increased 0.2%. Gas prices have gone up about 28% in the past six weeks, driving station receipts.

Overall retail sales in April were revised higher, decreasing 0.2% instead of 0.4% as previously reported. March sales fell 1.2% instead of 1.3%.

Latvia’s parliament approved an amended budget proposal

admin — Fri, 22 May 2009 19:22:58 +0000

Latvia’s parliament approved an amended budget proposal Thursday, passing a budget deficit of 9.2% of gross domestic product, nearly double the level agreed to with international lenders, the Baltic News Service reported.

The 100-member parliament approved the budget amendments in the first reading with 68 votes for and 10 votes against, and the proposal will now face a second reading June 17.

The preliminary approval by lawmakers comes amid increasing speculation that the recession-hit Baltic nation will need to break free from its currency peg to the euro and devalue the lat as debt soars. The economy is forecast to contract by 18% this year, the fastest rate in the European Union.

International lenders agreed to an International Monetary Fund-led EUR7.5 billion rescue package in December, conditional on limiting public-sector expenditure to 5% of GDP.

Prime Minister Valdis Dombrovskis said that adoption of the budget amendments in the first reading was only the first step, and the government would keep working in the proposals for further reduction of expenditures, BNS reported.

Earlier Thursday, a spokeswoman from the IMF said Latvia’s government is making progress in addressing its escalating budget deficit, but more steps must be taken.

“The government’s budget is a first step, and there is more work to be done,” said Caroline Atkinson, the IMF’s director of external relations.

The IMF and EU have missions in the country reviewing the economic program, and Dombrovskis has said the country needs the second portion of the loan by early next week.

Latvia’s central bank has said it will maintain the stability of the national currency until it can adopt the euro.

Commodity rally comes down

admin — Tue, 12 May 2009 19:18:23 +0000

The recent commodity rally comes down to two factors: a weaker dollar and hopes of an economic rebound, Morgan Stanley says. “If one sees green shoots, one should be long commodities. If one sees future inflationary pressures resulting from excessive fiscal and monetary activism, one should be long commodities. If one sees weakening confidence in the US dollar and the difficulty of US policymakers to sufficiently stimulate the economy without further risk to the dollar, one should be long commodities,” the bank’s commodity researchers say. No surprise that they conclude a slowing in the greenback’s decline is the “biggest near-term risk to commodity prices.”

Banks will not be allowed to buy their own assets

admin — Wed, 06 May 2009 19:15:03 +0000

“Banks will not be allowed to buy their own assets,” through the PPIP, said Joseph Jiampietro of the FDIC, speaking at a SIFMA-PREA conference in NYC and noting that there has been some confusion around this issue. Also, he said the FDIC met with several pension funds and mutual funds and generally there was a sense that investors and banks were “reluctant” to participate if TARP funds were involved. James Wigand of the FDIC said investors did not want to subject themselves to the risk of legislation if they used government funds.

Financial conditions and commodity prices have improved significantly

admin — Fri, 01 May 2009 14:13:01 +0000

The Bank of Canada says that in recent weeks, financial conditions and commodity prices have improved significantly, and consumer and business confidence have recovered modestly. But it adds that “If the unprecedentedly rapid rise in the Canadian dollar (which reflects a combination of higher commodity prices and generalized weakness in the U.S. currency) proves persistent, it could fully offset these positive factors.”

Global emerging market equity funds absorbed $3.79 billion

admin — Tue, 28 Apr 2009 19:09:20 +0000

Global emerging market equity funds absorbed $3.79 billion in week to June 3 vs just over $2 billion in previous week, says fund tracker EPFR Global. Notes investors put more cash in emerging markets, commodities, energy, following broad weakness of safe-haven USD, JPY. Adds higher risk appetite eyed in $22.7 billion being pulled out from money market funds to look for higher yields, also $1.1 billion being pumped into global bond funds – largest weekly inflows since 4Q of 2004. Says U.S., Japan, Europe equity funds had outflows on concerns over weak domestic demand. Notes global emerging market equity funds have taken $26.1 billion net inflows year-to-date vs $50 billion net outflows for whole of 2008

NZD/USD traders sharp sell off

admin — Sun, 26 Apr 2009 19:06:24 +0000

NZD/USD traders today will eye 0.6375/0.6400 area as continued resistance following Wednesday evening’s sharp sell off, says BNZ Bank FX Strategist Danica Hampton. Adds NZD’s fortunes will ultimately mirror those of the major currencies; immediate support on day should be evident on any pullback to the 0.6275-0.6300 level, “though a breach would encourage those looking for a deeper pullback for the currency in the days ahead.” Pair last at 0.6333.

New Zealand dollar ticked up

admin — Tue, 14 Apr 2009 18:56:02 +0000

The New Zealand dollar ticked up Friday on stronger equity markets, but the currency struggled to push ahead as some traders say its recent rally has topped out.

“I think the currency will head further down now that it appears to have topped out. Unless we have a big (positive) surprise from U.S. payrolls, I don’t see us pushing much higher,” said Imre Speizer, senior markets strategist at Westpac.

The U.S. releases its May non-farm payrolls data tonight.

Speizer said the Kiwi has lost its upward momentum, and has only managed to hold up because of some residual buying on the back of higher equity markets.

Domestic swap rates and bond yields were squeezed higher in a thin market. A local trader said mortgage-related paying interest is also pushing rates up, with the yield curve steepening.

“Some of the comments from various central banks overnight has seen a weaker offshore market and that has filtered through into the local market.”

He said the market was likely to tread warily ahead of Thursday’s review of the Official Cash Rate by the Reserve Bank of New Zealand. Economists are divided on whether the central bank will pause its aggressive easing cycle or cut another 25 basis points. The RBNZ has sliced the cash rate by 575 basis points since July to a record low 2.5%.

Westpac’s Speizer said the New Zealand dollar will probably struggle around current levels before dribbling down, possibly toward US$0.6150 levels.

He said equity markets are likely to lose steam once investors start expecting to see stronger data rather than data that are simply less negative. “I think expectations around data have gotten too far, people will now be looking a bit more than just for data to be bouncing off a low base,” he said.

ANZ bank said in a report that the Kiwi may face resistance around US$0.6400 ahead of the RBNZ meeting next week. However, the bank said that the U.S. dollar will be a crucial factor in the local currency’s fortunes.

“Ultimately, for the NZD to head lower, we need the USD retracement to continue. Perhaps tonight’s non-farm payrolls number could be the catalyst for this,” the report said.

USD/INR down on large inflows

admin — Fri, 10 Apr 2009 10:52:19 +0000

USD/INR down on large inflows, but RBI likely stepped in at 47.02 to support pair after pair fell from 47.12, four dealers tell Dow Jones Newswires; pair at 47.05 vs 47.21 last close. “The central bank is believed to have been buying dollars in the last hour below 47.10,” says dealer with foreign bank. “The sudden drop in the pair from what was a narrow range since morning seems to be have come from a one-off flow,” says a private bank dealer, who tips size of flow at around $300 million. “The one-off flow probably comes from a foreign direct investment or private placement related inflow in the equity market, and seems to be coming from three large foreign banks,” says another private bank dealer, tipping a large British bank active in Asia, two large U.S. banks as likely seller.

Recent economic data are fitting

admin — Thu, 26 Mar 2009 07:07:33 +0000

Recent economic data are fitting into either the good or
great category, says Societe Generale’s Patrick Bennett; “there are no bad
numbers. Risk appetite is once again in the ascendant as investors are cheered by data and the translation to equity market gains – anyone for a bubble?” Are a number of key data prints to come this week, including U.S. payrolls Friday; USD remains under broad pressure and JPY is underperforming, while AUD has been top G10 performer in last 24 hours, putting on some more ground following solid 1Q GDP. “A fair question to ask might be what were the RBA thinking yesterday?
There have been some suggestions that the recent strength in the Australian
dollar may have played a role in their cautionary tone – if so they must be
none too pleased today.” USD/Asians finding some support though on intervention by central banks in region to provide local currency liquidity.