WEEKLY MARKET RECAP, WEEK AHEAD, AND SCHEDULE
6 July 2008

Sunday

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€

The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.5655 level and was capped around the $1.5465 level. The pair lost about 85 pips last week.  Treasury Secretary Paulson verbally intervened to support the U.S. dollar.  Atlanta Fed President Lockhart sees Q2 GDP growth “substantially” above Q1’s 1.0% pace.  Bush verbally intervened to support the dollar.

Germany’s DIW lifted its 2008 GDP forecast to 2.7%.  ECB lifted its refinancing rate by 25bps to 4.25% and Trichet is not precommitting to another hike. ECB’s Liebscher said the ECB has no policy bias but is concerned about “gruesome upward changes to the inflation outlook.” Banco de Espana sees lower Q2 GDP growth.

Data released in the U.S. last week saw the Chicago June PMI print at 49.6; June manufacturing ISM increased to 50.2 with the prices index up to 91.5; ADP June payrolls were off 79,000; May factory orders were up 0.6% with the ex-transportation component up +0.4%; June non-farm payrolls were off 62,000 with a cumulative downward revision of 52,000 to April’s and May’s tallies; the June unemployment rate was steady at 5.5% with average hourly earnings up 3.4% y/y; and weekly initial jobless claims were up 16,000 to 404,000.

Data released in the eurozone last week saw EMU-15 June CPI rise to 4.0%; German May wholesale sales were off 0.9% m/m and 0.8% y/y; the EMU-15 May jobless rate was steady at 7.2%; EMU-15 June PMI contracted for the first time in three years; German June PMI printed at 52.6; EMU-15 PPI was up 1.2% m/m and 7.1% y/y; German may new plant, machinery was off 12% y/y; EMU-15 May retail sales rose 1.2% m/m and 0.2% y/y; German June final services PMI fell to 49.1; the EMU-15 June services PMI fell to 49.1; and German manufacturing orders fell 0.9%.

Technical Outlook

Last week’s high (1) was above the 76.4% retracement of the 1.6020-1.5285 range and last week’s low (2) was right around the 50.0% retracement of the same range.  The 1.5844/ 1.5903/ 1.6018 levels represent upside resistance targets while the 1.5650/ 1.5563/1.5456/ 1.5285 levels represent downside support targets.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the ¥106.90 level and was supported around the ¥105.00 level.  The pair gained about 55 pips last week. The Nikkei 225 stock index lost 0.21% on Friday to close at ¥13,237.89.  Moody’s lifted the credit ratings of Japanese government bonds.  Nikkei expects BoJ to lower its economic assessment for the FY to March 2009 on 14-15 July and acknowledge higher price risks.  G8 policymakers convene in Hokkaido this week and inflation will be priority number one. A BoJ consumer expectations survey sees higher prices next year.

Data released in Japan this week saw May housing starts fall 6.5% y/y; May construction orders were off 25.2% y/y; BoJ’s Tankan quarterly Tankan survey of large manufacturers’ sentiment fell to +5; May employees’ average pay rose 0.2%; average land prices were up 10% in 2007; the June monetary base was up 0.4% y/y; the May leading index fell to 92.6; and May leading indicators were at 40.0 with the coincident index at 33.3.

In Chinese news, the Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8589 in the over-the-counter market, down from CNY 6.8622.  PBoC’s Zhou reiterated China has several monetary policy instruments at its disposal. Primer Wen called on the U.S. to “stabilize” the dollar.

Data released in China last week saw the June CLSA PMI survey fall to 53.3; the June CFLP PMI survey receded to 52.0; and the May consumer confidence index rose to 94.3 from 94.0.

Technical Outlook

Last week’s high (1) was above the 38.2% retracement of the 124.13-95.71 range and last week’s low (2) was above the 23.6% retracement of the same range. Upside resistance targets remain the 107.15/ 108.56/ 110.18/ 112.66/ 114.65 levels while downside support targets remain the 105.18/ 103.44/ 102.42/ 100.18 levels.

₤

The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.9795 level and was capped around the $2.0005 level.  The pair lost about 120 pips last week.  The BoE Credit Conditions survey saw lower credit in the three months to March. BoE Deputy Governor Bean sees ongoing market dislocations.

Data released in the U.K. last week saw Hometrack June house prices off 1.0% m/m and 3.2% y/y; Bank of England reported May mortgage approvals fell to 42,000; BSA May mortgage approvals fell to ₤2.34 billion; final May M4 money supply growth was unrevised at 0.4% m/m and 10.9% y/y; the June manufacturing PMI survey fell to 45.8; Nationwide June house prices were off 0.9% m/m and 6.3% y/y; June construction PMI fell to 38.8; BoE house equity withdrawals fell to ₤5.0 billion; the June services PMI survey fell to 47.1 with the prices charged sub-index up fractionally; and IDS pay deals were up 3.5% in the three months to the end of May.

Technical Outlook

Last week’s high (1) was below the 38.2% retracement of the 2.1159-1.9336 range and last week’s low (2) was above the 23.6% retracement of the same range.  Upside resistance targets include the 2.0033/ 2.0248/ 2.0463 levels while downside support targets include the 1.9767/ 1.9602/ 1.9395 levels.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the CHF 1.0280 level and was supported around the CHF 1.0110 level. The pair gained about 50 pips last week. 

Data released in Switzerland last week saw June PMI fall to a three-year low around 54.9, down from 55.7, and June CPI was up 0.2% m/m and 2.9% y/y.

Technical Outlook

Last week’s high (1) was above the 38.2% retracement of the 0.9647-1.0623 range and last week’s low (2) was below the 50.0% retracement of the same range.  Upside resistance targets include the 1.0250/ 1.0393/ 1.0623/ 1.0850/ 1.1134 levels while downside support targets include the 1.0135/ 1.0020/ 0.9877/ 0.9647/ 0.9605 levels.

CAD

The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.0235 level and was supported around the C$ 1.0060 level.  The pair gained about 45 pips last week. 

Data released in Canada last week saw April GDP up 0.4% m/m.

Technical Outlook

Last week’s high (1) was above the 76.4% retracement of the 1.0378-0.9709 range and last week’s low (2) was above the 50.0% retracement of the same range.  Upside resistance targets include the 1.0202/ 1.0378/ 1.0439/ 1.0797 levels while downside support targets include the 1.0069/ 0.9965/ 0.9867/ 0.9752 levels.

AUD

The Australian dollar appreciated vis-à-vis the U.S. dollar last week as the Aussie tested offers around the US$ 0.9665 level and was supported around the US$ 0.9510 level.  The pair gained about 25 pips last week. Reserve Bank of Australia kept interest rates unchanged.

Data released in Australia last week saw private sector credit growth climb 0.6% m/m and 13.4% y/y; the TD Securities monthly inflation gauge rose 0.5% m/m and 4.8% y/y in June; May new home sales fell 5%; the June PMI rate fell to 47.0; June vacancies fell 3.7% m/m and 8.2% y/y; May building approvals were off 6.5%; May retail sales rose 0.7%; June vacancies fell 3.7%; the RBA commodity prices index jumped 7.9% in June; and the May trade balance printed at –A$ 965 million.

Technical Outlook

Last week’s high (1) was a new multi-decade high and last week’s low (2) was above the 23.6% retracement of the 0.7673-0.9667 range.  Upside resistance targets include the 0.9648/ 0.9920/ 1.0053 levels while downside support targets include the 0.9487/ 0.9394/ 0.9263/ 0.9120/ 0.9003/ 0.8887 levels.

SCHEDULE

Sunday, 6 July 2008

all times GMT

(last release in parentheses)

2330     Australia           June performance of construction index (36.9)

2350     Japan                June official reserve assets (US$ 997.09 billion)

Monday, 7 July 2008

all times GMT

(last release in parentheses)

N/A       Germany           June wholesale price index (1.4% m/m)

N/A       Germany           June wholesale price index (8.1% y/y)

0030     Japan                Bank of Japan Governor Shirakawa speaks

0130     Australia           June ANZ job advertisements (-1.7% m/m)

0545     CH                    June unemployment rate (2.4%)

0830     UK                    May industrial production (0.2% m/m)

0830     UK                    May industrial production (0.2% y/y)

0830     UK                    May manufacturing production (0.1% m/m)

0830     UK                    May manufacturing production (0.1% y/y)

0830     Eurozone          July Sentix investor confidence (5.2)

1000     Germany           May industrial production (-0.8% m/m)

1000     Germany           May industrial production (-0.8% m/m)

1000     Germany           May industrial production (4.8% y/y)

1230     Canada             May building permits (14.5% m/m)

1400     Canada             Q2 business outlook survey

1500     US                    San Francisco Fed President Yellen speaks

2200     NZ                    Q2 NZIER business opinion survey

2301     UK                    June NIESR GDP estimate (0.2%)

2350     Japan                June M2+CD money supply (2.0% y/y)

2350     Japan                June M3 money supply (0.7% y/y)

2350     Japan                June bank lending (1.5% y/y)

Tuesday, 8 July 2008

all times GMT

(last release in parentheses)

0130     Australia           June NAB business confidence (-4)

0130     Australia           June NAB business conditions (7)

0430     Japan                June bankruptcies (-1.5% y/y)

0500     Japan                June economy watchers’ survey, current (32.1)

0500     Japan                June economy watchers’ survey, outlook (35.1)

0830     UK                    May DCLG house prices (4.9% y/y)

1230     US                    Federal Reserve Chairman Bernanke speaks

1400     US                    May pending home sales (6.3% m/m)

1400     US                    May wholesale inventories (1.3%)

1630     US                    Richmond Fed President Lacker speaks

1900     US                    May consumer credit (C$ 8.9 billion)

2301     UK                    June Nationwide consumer confidence (69)

2350     Japan                May machine orders (5.5% m/m)

2350     Japan                May machine orders (0.5% y/y)

Wednesday, 9 July 2008

all times GMT

(last release in parentheses)

0030     Australia           July Westpac consumer confidence (-5.6%)

0130     Australia           May home loans (-3.0%)

0130     Australia           May investment lending (1.4%)

0130     Australia           May value of loans

0600     Germany           May trade balance (€18.7 billion)

0600     Germany           May current account (€14.5 billion)

0600     Japan                June machine tool orders (1.4% y/y)

0645     France              May trade balance

0830     UK                    May visible trade balance (-₤7.594 billion)

0830     UK                    May total trade balance (-₤4.325 billion)

0900     Eurozone          Q1 GDP (0.8% q/q)

0900     Eurozone          Q1 GDP (2.2% y/y)

0930     UK                    June BRC shop price index

1199     US                    MBA mortgage applications

1215     Canada             June housing starts (221,300)

2350     Japan                Foreign purchases of Japanese equities and bonds

2350     Japan                Japanese purchases of foreign equities and bonds

2350     Japan                June domestic corporate goods price index (1.1% m/m)

2350     Japan                June domestic corporate goods price index (4.7% y/y)

2350     Japan                May current account total (¥1.38 trillion)

Thursday, 10 July 2008

all times GMT

(last release in parentheses)

0000     NZ                    June PMI (49.3)

0100     Australia           July consumer inflation expectations (5.9%)

0130     Australia           June unemployment rate (4.3%)

0130     Australia           June employment change (-19,700)

0645     France              May industrial production (1.4% m/m)

0645     France              May industrial production (3.2% y/y)

0800     Italy                  May industrial production (2.0% y/y)

0800     Eurozone          July European Central Bank monthly report

1100     UK                    Bank of England interest rate decision (5.00%)

1230     US                    Weekly initial jobless claims (404,000)

1230     US                    Continuing jobless claims (3.116 million)

1400     US                    Federal Reserve Chairman Bernanke testifies

1400     US                    U.S. Treasury Secretary Paulson speaks

1930     US                    San Francisco Fed President Yellen speaks

Friday, 11 July 2008

all times GMT

(last release in parentheses)

0430     Japan                May industrial production (2.9% m/m)

0430     Japan                May industrial production (1.2% y/y)

0430     Japan                May capacity utilization (-0.7% m/m)

0430     Japan                June consumer confidence (34.1)

1100     Canada             June unemployment rate (6.1%)

1100     Canada             June employment, net change (8,400)

1230     US                    May trade balance (-US$ 60.9 billion)

1230     US                    June import price index (2.3% m/m)

1230     US                    June import price index (17.8% y/y)

1230     Canada             May international merchandise trade (C$ 5.1 billion)

1230     Canada             May new housing price index

1400     US                    July University of Michigan consumer sentiment (56.4)

DISCLAIMER: GCI’s Weekly Market Recap and Week Ahead is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

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