Reply #6: dollar watch [View All]

[UpInArms]

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 82.502 Change -0.032 (-0.04%)

Will The Fed Leave Rates At 5.25% Even If Housing Slows Growth Further?

http://www.dailyfx.com/story/topheadline/Will_The_Fed_Leave_Rates_1182269154990.html

The US housing sector – the Achilles’ heel of the economy - continues to be a much-discussed issue by Fed members as it has the potential to prolong the recent slowdown in expansion. However, with monetary policy makers remaining hawkish on inflation, the US dollar may benefit as it appears that rates have almost no chance of being cut.

US Fed – Homegrown Slowdown?
RBA – Slow And Steady Wins The (Inflation Fighting) Race
ECB – On Hold Until Year End
BOJ – No Hope For Hikes Keeps Carry Trades In Play

Yield Spread Analysis 06/12 – 06/19

Yields around the globe have fallen back after surging to multi-year highs as the steep plunge in government bond prices have finally shown a recovery. Long-term yields in the US and Canada have taken the biggest hit, especially after softer US economic data has hurt prospects for rate hikes by the Fed while weaker Canadian CPI has quelled fears of aggressive policy action by the BOC. Meanwhile, Swiss long term rates have also fallen even after the SNB’s rate hike to 2.50 percent as markets are not expecting much in the way of rate normalization this year.

Looking ahead, the release of the minutes from the BOE’s meeting earlier in the month could have major impact on Gilts. The risk lies in how the policy makers voted, as just a few members in favor of a hike would ramp up expectations for action in July. On the other hand, a unanimous vote for steady rates could signal a repeat next month.

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Nikkei Climbs to a 7-Year High, Yen Regains Its Stance Against the Dollar

http://www.dailyfx.com/story/currency/jpy_news/Nikkei_Climbs_to_a_7_Year_1182331232677.html

Japanese stock market hit a 7 year high on record gains from export industries. The yen regained some ground against the dollar a little, trading as low 123.00 today. The bond yields contracted on weak manufacturing sentiment.

Headlines

Govt adopts '07 economic guideline / Improving economy focus of reforms – Japanese government adopted a first reform under the administration of Prime Minister Shinzo Abe, appointed in September. The reform is aimed at improving economic growth through increasing productivity, especially in nonmanufacturing industries, calls for maximum cuts in expenditures in the budget of fiscal 2008. Source: Yomuri Shimbun
http://www.yomiuri.co.jp/dy/national/20070620TDY01006.htm

ECONOMIC FORUM / Scandals taint private sector / Comsn, Nova wrongdoing shows government's oversight role vital – Comsn Inc., provider of nursing care services, was notified by Japanese Health, Labor and Welfare Ministry that it could not open new brunches and could not renew licenses for the existing ones in April 2008. Likewise Nova Corp., a chain of English conversation schools, was prohibited from offering new contracts to students lasting longer than a year for the next six months. The companies were imposing strict quotes on sales and prioritized sales over quality of service. The regulations that companies face now are squeezing them out of business altogether and result from government’s push to grow the services industry. The message sent was quite powerful as both firms were the largest in their respective industries. Source: The Yomuri Shimbun
http://www.yomiuri.co.jp/dy/business/20070619TDY04003.htm

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US Housing Data, Round Two

http://www.dailyfx.com/story/bio1/US_Dollar_Succumbs_To_Another_1182287736600.html

Housing starts fell in line with expectations by 2.1 percent to 1474K from an upwardly revised 1506K, signaling that homebuilders are not initiating projects as quickly as in previous months. However, building permits jumped a greater-than-expected 3.0 percent to 1501K from an upwardly revised 1457K. As a leading indicator for starts, the data points to a pick up in construction during the summer. Given the lack of solid demand for properties, these building plans will only contribute further to softness sector-wide as inventories will only rise further, and prices will have to be slashed in order to liquidate. The breakdown of the data is worth nothing as well: Improvements were contained to multi-family units - which tend to be rented out - while declines were seen across the board for single-family units - which are typically mortgaged. Although the multi-family index tends to be highly volatile, this will be a factor worth watching as potential homeowners seem to be shifting towards more affordable rentals and away from expensive loans as mortgage rates rise.

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