MORNING BRIEFING: US concerns ease slightly after yesterday’s data releases

What’s new:
United States: Better than expected Jobless claims, and narrowing trade deficit
USD: Enjoys renewed support on the back of increasing bond yields
United Kingdom: Negative trade balance and speculation on more QE leading to reduced support for GBP
China: Better than expected Chinese Imports fuels demand for the commodity bloc currencies
Yen: Suffers reduced support fuelled by carry trades

Today:


Rates in Asia and Indices:
EURUSD: 1.2713 - 1.2644.
USDCHF: 1.0226 - 1.0137.
GBPUSD: 1.5435- 1.5365.
EURJPY: 106.98 – 106.25.
USDJPY: 84.29 – 83.78.
DowJones: 10’415.24 +0.27%
NASDAQ:  2’236.20 +0.33%
S & P 500: 1’104.18 +0.48%
Nikkei: 9’239.17 +1.55%
Shanghai: 2'662.42 +0.23%
Gold: $ 1'248.7    
Crude Oil: $ 75.35

 
Comments:

Dollar found some renewed support earlier this morning as US concerns eased up a little bit, thanks to yesterday’s better than expected jobless claims and narrowing US trade deficit, but also given a rise in US bond yields which helped the US Dollar rebound.

The British pound suffered decreasing support given yesterday’s negative trade balance and increasing speculation that the BoE might resort to Quantitative Easing to support the economy.  It was also reported that the British Finance Minister George Osborne was planning on introducing an extra 4bln British pounds of welfare cuts on top of the 11 bln already planned cuts – this kept dampening the prospects of short term growth.

The commodity Bloc (AUD, CAD & NZD) enjoyed renewed support on the back of better than expected Chinese imports released early morning - this shows an increasing domestic Chinese demand. Imports rose by 35.2% against an expected 27.5%.

The support for the commodity currencies, reflected in lost support for the Yen due to its function in financing the purchase of higher yielding currencies (carry trades).

Good day,

Rudolf Muscat
Trading desk

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