MORNING BRIEFING: G8 statements for caution on the resumption of growth in the global economy worried investors.

What’s new?
Switzerland: UBP objects to a new procedure in the US in the Madoff case.
United States: Washington chose nine funds to buy toxic assets.
G8: Caution on the economy, progress on climate.
G8: Signs of stabilizing, the situation remains uncertain.
Crude Oil: More than expected decline in inventories of crude oil to US.
Paramo (ECB): Recovery in the Euro area may be delayed.
Germany: Industrial Production much better than expected.
Euro zone: GDP confirmed at -2.50% in Q1, -4.90% in one year.

Today:
08h00 Germany: CPI M/M June, exp 0.40%, previous -0.10%.
08h00 Germany: CPI Y/Y June, exp +0.10%, previous 0.00%.
08h00 Germany: HICP M/M June, exp +0.40%, previous -0.10%.
08h00 Germany: HICP Y/Y June, exp 0.00%, previous 0.00%.
08h00 Germany: Trade Balance May, exp 9,0Bln previous 9.0Bln.
10h00 Euro zone: Monthly Bulletin.
10h30 United Kingdom: Trade Balance mai, exp -6.75Mrds, previous -7.00Mrds.
13h00 United Kingdom: BoE Interest Rate Decision, exp 0.50%, previous 0.50%.
14h30 United States: Weekly Jobless Claims, exp 605'000, previous 614'000.
16h00 United States: Wholesale Inventories, exp -1.00%, previous -1.40%.

Overnight Rates and Indices:
EURUSD: 1.3934 – 1-3859.
USDCHF: 1.0917 – 1.0875.
GBPUSD: 1.6117 – 1.6028.
EURJPY: 130.02 – 128.09.
USDJPY: 93.51 – 92.38.
DowJones: 8'178 +0.18%.
NASDAQ: 1’747 +0.06%.
S&P 500: 879 -0.17%.
Nikkei: 9’324 -1.03%.
Gold: $911.35
Crude Oil: $60.80.
 
Comments:

Statements made by a Japanese spokesman yesterday heckled the currency markets, mainly the Yen, which appreciated dramatically against all of its rivals. Takeo Kawamura, a Japanese government official said the Yen's excessive movements are undesirable, they endanger the stability of the Japanese economy and financial markets.
In addition, the G8 leaders said Wednesday they saw signs of stabilization of the economy, while indicating that the situation remains uncertain and it was too early to discard measures used to revive the economy.

Investors, concerned about the timing of the recovery of the global economy, have aggressively sold the "carry trades", the GBPJPY has fallen from 153 to 147 (4% decrease), the EURJPY from 132 to 127 (4% decline), the NZD / JPY from 59.65 to 56.80 (5% drop) and AUDJPY from 74.90 to 71 (5.2% drop!!!). According to a statement from a major German bank, risk aversion could return in the 3rd quarter of 2009. They expect that the currencies like the Euro, the Pound, the Australian Dollar and New Zealand Dollar are under great pressure, while the Japanese Yen, Swiss franc and the Dollar should increase. The G8 statement of caution on the economy also put pressure on the commodity market, as oil has fallen by 4% and silver by 3% and gold by 2%.

The priority today is the second day of the G8, which meets G5 leaders this afternoon, statements on the status of the US Dollar as the world’s reserve currency are expected. In the short term, there is a range of buyers in the 1.3820-30 area, a series of buyer's stop loss orders are below 1.3800. Sellers are noted at 1.3980 and 1.4020. Seller’s stop losses are noted above 1.4050.

Good Day.

Emman Xuereb
RTFX Ltd
Head Office

Level 2, Suite 2, The Cornerstone Complex, 16th September Square | Mosta MST 1180 | Malta
Tel:  +356 23 31 00 00
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