Monday, November 9, 2009

"Big Twenty" appreciated the economic recovery as fragile

All the attention at the end of last week was focused on the report on the number of jobs and unemployment in the United States. For the main indicators of the results were worse than forecast: employment outside the agricultural sector declined by 190 000 jobs 175 000 against the projection, but it's better than the previous month, even after the figure for that same month was revised in the large party of 44 000. However, the attention, if not the market, then press accurately captured the level of unemployment, which rose to 10,2%, which is much worse than the forecast 9.9%, and first demonstrated two-digit number from the middle of 1983. Also, to everyone's dismay, the average workweek remained in the area of the historic low of 33 hours per week.

Initial market reaction was quite traditional: the dollar began to rise, and Wall Street prepared for a weak opening. However, found out about significant revisions to previous values, the bears that ranged as Wall Street finished a week in positive territory at 3.2%. Picture of employment in Canada was also not impressive. The unemployment rate rose from 8,4% to 8,6%, which placed pressure on the Canadian dollar and led to the growth of a pair of dollar / Canadian dollar on 100 items. Exacerbate the situation and the continued drop in oil prices. The gold price has set a new historical record of above 1100, which helped commodity currencies more or less stabilized. Course of the dollar against the yen dropped below the 90, while the yield on U.S. securities fell under the influence of disappointing statistics.

At the meeting, "Twenty Grand" at the weekend has not been told anything, what would catch on markets, besides the appeal to save steps to clean up, as the recovery of the global economy remains unstable, and of particular concern is the high unemployment. The meeting was scheduled to discuss the problem of global imbalances, however, the discussion did not go beyond words that need a "flexible exchange rate" (ie China). British Prime Minister Brown tried to agitate for his proposed tax on financial transactions, but almost never met like-minded people. U.S. Treasury Secretary T. Geithner said in an interview that they were not prepared to support such a tax now, but as he said himself, Prime Minister Brown, the plan can be implemented only with the support of all financial centers.

Because the market had nothing to enrich themselves at the meeting of the Big Twenty ", they switched to the IMF report, which formed the dynamics of the opening in Asia. The report said that the dollar is now used as a funding currency speculation on the difference in interest rates ( "carry trade") and that he is still overvalued, despite the recent decline, which helped him get closer to the medium-term equilibrium. It was also noted that the euro exceeds the point of equilibrium, and the yuan was "very undervalued" in terms of medium-term prospects.

These statements gave a green light to venture "bulls" / dollar "bears", and the dollar gradually declined during the session. Downswing of the dollar strengthened with new vigor, when the New Zealand dairy farmers' cooperative Fonterra has reviewed a large side payments in 2010 to NZ $ 6.10/kg of NZ $ 5.10/kg due to higher prices for milk powder. After that, the New Zealand dollar continued to rise steadily due to the negative attitude against the dollar and was able to reach the 1.5-week high.

The beginning of the week is not marked by any important developments. In the European session, leave only the data on trade and industrial production in Germany. Recommend to follow, as talks are underway to merge Kraft and Cadbury. According to reports at the weekend, the situation could tense, and the pound feels more support on the background of these negotiations. The final decision on this transaction will be known to approximately 17:00 pm London time. In the North American region today will calmly on the agenda only report on new tabs homes in Canada.


Saxo Bank

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