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[Darika]

In further signs that the worst of the recession is over, the decline in Eurozone service sector activities eased further in May, reports said Wednesday, citing data released by the Markit Economics.

The purchasing managers' index or PMI for the Eurozone service sector rose to 44.8 in May from a flash reading of 44.7 and 43.8 in April. The PMI thus reached to a seven-month high. However, the headline index is still below the 50-mark that divides expansion and contraction. The expectations index for the service sector rose to a 15-month high of 59.1 from April's 54.4.

The composite index that contains both service and manufacturing PMIs was at 44, an increase from previous month's 41.1 and the flash reading of 43.9.

The PMI for Germany's service sector increased to 45.2 from 43.8 in April and that for France stood at an eight-month high of 48.3, up from 46.5 in April and 47.6 initially estimated. The Italian services PMI climbed to 43.1 from 42 in the previous month. However, in Spain, the activity contracted notably. The PMI fell to 39.1 from 42.3.

Out of the euro area, the CIPS/Markit PMI for the British service sector unexpectedly moved above the 50-mark to record a growth for the first time in a year. The indicator rose to 51.7 in May from 48.7 in April, while forecast was for a reading of 49.5. That was the sixth consecutive gain.


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[Darika]

Extending its recent rally, the UK's sterling rallied strongly higher against its major rivals on Tuesday morning in Asia. The pound rose to a 5-day high of 158.6 against the Japanese yen and 1.7548 against the Swiss franc by 8:00 pm ET. The pound also ticked up to 1.6102 against the US dollar and 0.8656 against the euro during this time.

Traders mulled reports showing the average asking price for houses in Great Britain came in at -44.1 in May, the Royal Institute of Chartered Surveyors said today, posting an 18-month index high. The score beat analyst expectations for -50.0 following the revised -58.7 in April for the highest reading since November 2007.

At the same time, the British Retail Consortium report showed today that same-store sales in May were down 0.8 percent on year. Overall sales, including those from newly opened stores, were up 0.8 percent on year.

The next upside target levels for the pound are seen at 1.773 against the franc, 161 versus the yen, 1.61 against the buck and 0.865 against the euro. At Monday's North American session, the pound closed deals at 0.8663 against the euro, 1.7525 versus the franc, 1.6053 against the greenback and 158.14 against the yen.

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News are provided by InstaForex in partnership with RTT.

[Darika]

Crude oil inventories fell sharply in the recent week, according to Energy Information Administration data released Wednesday morning. Gasoline stockpiles also declined.

U.S. commercial crude oil inventories decreased by 4.4 million barrels from the previous week. At 361.6 million barrels, U.S. crude oil inventories remained above the upper boundary of the average range for this time of year.

The report backed the American Petroleum Institute data revealed Tuesday, showing crude supplies dropped 5.96 million barrels last week. Participation in the API survey is voluntary, so the EIA report is more closely watched.

Total motor gasoline inventories decreased by 1.6 million barrels last week, distillate fuel inventories slipped by 300,000 barrels and propane/propylene inventories increased by 1.4 million barrels.

Over the last four weeks, motor gasoline demand has increased by 0.4 percent from the same period last year, distillate fuel demand has declined 8.4 percent from the same period last year and jet fuel demand is 14.3 percent lower.

Crude oil maintained its early gains following the report. Light sweet crude moved to $70.71, up 90 cents for the session. Oil touched as high as $71.79 shortly after the data was announced but quickly cooled off.


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News are provided by InstaForex in partnership with RTT.

[Darika]

The dollar firmed up in choppy trading versus other major currencies Wednesday, but most of its gains came prior to the release of the Federal Reserve's Beige Book, which said that economic conditions remained weak or deteriorated further during the period from mid-April through May.

After coming under pressure over the last two days versus the euro and sterling amid increased risk appetite, the dollar steadied as a rally in stocks faded, causing traders to seek safer ground in the world's reserve currency.

The dollar spent most of the afternoon between 1.3900 and 1.4000, staying away from a 5-month low of 1.4338 set a week ago. Versus the sterling, the dollar managed to hold its ground near 1.6350, having slipped more than 5 cents over the previous two sessions. 8 days ago, the buck dropped to a 6-month low of 1.6662, culminating a dismal one-month run to the downside.

Russian Central Bank rattled currency traders today by saying it may cut its U.S. treasury investments in favor of International Monetary Fund bonds.

Also Wednesday, official data showed that the German annual inflation rate reached the lowest level since 1987 on easing energy and food prices. French industrial production dropped faster than expected in April due to widespread contraction in all industrial sub-sectors, especially in the manufacture of petroleum products.

Out of the euro area, British manufacturing output recorded growth for the second straight month in April signaling that the economy is on the road to a gradual recovery.

The dollar crept higher versus the yen, rising back above 98 to challenge a 4-week high of 98.87, set Monday morning. Wednesday saw some key statistical data releases from major Asian economies. Official reports showed that orders for Japanese machinery dropped to the lowest level in more than two decades and in China, consumer prices fell for the fourth straight month.

Back in the US, the Fed's Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Federal Reserve districts, said manufacturing activity declined or remained at a low level across most districts.

However, the Fed said that several districts also reported that the outlook by manufacturers has improved somewhat.

With the value of exports falling by more than the value of imports in the month of April, the Commerce Department released a report Wednesday morning showing that the U.S. trade deficit for the month came in modestly wider than in March.

The report showed that the trade deficit widened to $29.2 billion in April from a revised $28.5 billion in March. Economists had expected the deficit to widen to $29.0 billion from the $27.6 billion originally reported for the previous month.


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News are provided by InstaForex in partnership with RTT.

[Darika]

Thursday during early deals, the U.S. dollar showed mixed performance against its major counterparts. While the recovered its Asian session's loss against the euro and the pound, it pared gains against the yen and the franc. The dollar rose from a 3-day low against the euro and jumped to a 9-day high against the pound.

Traders now look forward to the New York session, in which the Labor Department is due to release its customary weekly jobless claims report for the week ended June 13th at 8:30 am ET.

The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 am ET. Economists expect the diffusion index of current activity to show a reading of -17 for June.

At the same time, the Conference Board is scheduled to release a report on the U.S. leading index for May . The consensus estimate calls for a 0.9% increase in the leading indicators index for the month.

The dollar gained against the euro after falling to a 3-day low of 1.3992 at 3:20 am ET Thursday. The euro-dollar pair that closed yesterday's trading at 1.3947 reached 1.3908 by about 4:55 am ET. The near term resistance level for the dollar is seen at 1.383.

Italy's trade deficit decreased to EUR277 million in April from EUR1.02 billion in the previous year, the country's statistical office ISTAT said today. Economists expected a deficit of EUR250 million.

Exports dropped 28.7% year-on-year to EUR23.9 billion, while imports declined 30% to EUR24.2 billion. Month-on-month, on a seasonally adjusted basis, exports fell 2.9% and imports were down 3.9%.

At 5:25 am ET Thursday, the dollar reached a 9-day high of 1.6191 against the pound, moving up from an Asian session low of 1.647. If the dollar strengthens further, it may likely target the 1.581 level.

A report from the Office for National Statistics showed an annual decline of 1.6% in the U.K. retail sales volume in May. Economists had expected only 0.4% fall in sales. From April, retail sales volume unexpectedly decreased 0.6%, as economists were looking for a 0.3% rise.

Meanwhile, the Bank of England said in a preliminary report that the M4 money supply grew 16.6% year-over-year in May, slower than the 17.4% increase in April. Economists had expected an increase of 17.3%.

On a monthly basis, the M4 money supply rose 0.2% in May, marking the same pace as in the previous month. Economists were looking for an increase of 0.7%.

The dollar jumped to 1.0831 against the Swiss franc before losing ground at 1:10 am ET Thursday. Currently, the dollar-franc pair is worth 1.0769, down from yesterday's close of 1.0802. The next target level for the pair is seen at 1.065.

The Swiss National Bank left its three-month libor target range unchanged at 0-0.75% as expected. In other words, the bank kept its key interest rate unchanged at 0.25%.

The central bank said in a statement that it will continue to provide the economy with a generous supply of liquidity and to purchase Swiss franc bonds with the aim of reducing risk premia on long-term bonds issued by private sector borrowers. The SNB also said it will take firm action to prevent an appreciation of the Swiss franc against the euro.

The dollar soared to 96.10 against the yen by about 3:00 am ET Thursday. Thereafter, the dollar dropped and touched 95.64 at 4:55 am ET and this may be compared to Wednesday's close of 95.71.On the downside, 95.53 is seen as the next target level for the U.S. currency.

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[Darika]

The International Monetary Fund or IMF may raise its 2010 growth outlook for the world economy in the coming weeks, reflecting some improvements in global economic conditions, IMF's First Deputy Managing Director John Lipsky said Friday. He called for forceful policies to tackle the financial sector stress and continued international collaboration to ensure signs of economic improvement lead to a sustained global recovery.

In a keynote address to Turkish Industrialists' and Businessmen's Association in Bodrum, Lipsky said, "Financial conditions have improved, confidence is recovering gradually, and indicators of future production and demand have firmed. Reflecting these developments, I expect that in the coming weeks we will revise our growth projections modestly upward, mainly with regard to 2010."

However, he warned that given the worldwide increase in unemployment, it is far too early to conclude that the goal of restoring global growth has been accomplished.

While noting that recent indicators have signaled a slowdown in economic contraction, Lipsky said the timing and pace of the global economic recovery remains uncertain.

In April, the IMF had forecast that the global economy will contract by 1.3% in 2009, the deepest recession since the World War II. The economy is then expected to grow by 1.9% in 2010. The IMF is due to announce its updated forecasts for the world economy on July 7.

However, Lipsky said, "Even the upbeat indicators widely cited as representing "green shoots" still point to a global recovery that would be sluggish by historic standards."

He said activity in the advanced economies will revive only gradually over the course of 2010, weighed down by financial deleveraging, limited credit growth, weak household income growth and declining household net worth. Emerging economies are unlikely to return to trend growth while advanced economies are still underperforming. As a result, output gaps and unemployment rates in most economies likely will continue rising through 2010, Lipsky said.

In this context, he said, it should be clear that in most cases, continued strong policy actions will be needed during the remainder of this year and into 2010 in order to insure that economic activity begins a sustained improvement.

He stressed that robust growth will not be achieved until continuing financial sector problems are addressed forcefully. He noted that recent bank stress tests in major advanced economies, especially in the United States and the United Kingdom, have represented a significant step toward rebuilding market confidence and attracting new private capital.


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News are provided by InstaForex in partnership with RTT.

[Darika]

The greenback, which slumped to multi-day lows against most majors just before the release of the US Commerce Department report on personal income, started trending higher following the report. As of now, the dollar is trading at 95.42 against the Japanese yen, 1.0847 versus the Swiss franc, 1.6491 against the pound and 1.4083 against the euro.

The report showed that personal income jumped 1.4 percent in May following an upwardly revised 0.7 percent increase in April. Economists had expected income to rise 0.3 percent compared to the 0.5 percent growth originally reported for the previous month.

Additionally, the Commerce Department also said that personal spending rose 0.3 percent in May after coming in unchanged in the previous month. The moderate increase in spending came in line with economist estimates.


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News are provided by InstaForex in partnership with RTT.

[Darika]

Tuesday in Asia, the U.S. dollar and the Japanese yen plummeted against their key counterparts as hopes of an economic recovery increased risk appetite to buy higher-yielding assets.

The dollar and the yen are viewed as safe-haven currencies and tend to attract buying when worries about the global economy and financial markets flare up, but can come under pressure when such concerns recede.

Asian stock markets are broadly higher today, taking their cue from gains on Wall Street with energy stocks buoyed by a continued rise in crude oil prices.

Japan's Nikkei 225 was up 1.9%, Australia's S&P/ASX 200 was 1.5% higher, Korea's Kospi Composite Index was up 0.8%, Hong Kong's Hang Seng was up 1.4%, China's Shanghai Composite was 0.1% higher and Taiwan shares were up 0.9%.

Japan's Nikkei average rose 1.9 percent today, and briefly it hit 10,000 as surging crude prices boosted trading houses such as Mitsubishi Corp., which deal in oil, amid growing optimism that economic recession may be easing.

The 225-issue Nikkei Stock Average gained 184.57 points, or 1.89 percent, from Monday to 9,968.04 in the morning session after briefly touching 10,000.30. The benchmark index last topped the 10,000 line on June 15, logging an intraday high of 10,126.55.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 14.32 points, or 1.56 percent, to 929.64.

Stock market gains are fueling risk appetite in the currency markets, sending the euro, aussie and kiwi higher.

Sentiment in Japan was helped by news that household spending in May rose 0.3% on year, up for the first time in 15 months, and beating expectations for a 1.5% decline.

But that was tempered by the release of the May jobless rate, which rose to 5.2%, the highest since September 2003, from 5.0% in April. Analysts had expected an increase of 5.1% for May.

The job-to-applicant ratio came in at a record low of 0.44, compared to forecasts for 0.45 after the 0.46 level in April.

But the number of employed persons rose from 63.22 million in April to 63.42 million in May. The job participation rate was 60.5 percent, up from 60.4 percent a month earlier.

The Organization for Economic Cooperation and Development last week forecast Japan's jobless rate will rise to an unprecedented 5.8 percent in 2010.

In Asian trading on Tuesday, the yen fell to a 2-week low of 159.97 against the pound. This may be compared to yesterday's close of 159.15. If the yen weakens further, it may likely target the 162.6 level.

The yen has declined 4% against the pound after it reached a 3-week high of 154.13 on June 23.

The yen tumbled to a 15-day low of 135.97 against the euro during Asian deals on Tuesday. The next downside target level for the Japanese currency is seen at 138. At yesterday's close, the euro-yen pair was quoted at 135.32.

The euro gained 1% against the yen yesterday after a report showed that the Euro-zone economic sentiment rose more than expected in June.

The economic sentiment indicator rose to 73.3 from an upwardly revised reading of 70.2 recorded in May. Meanwhile, economists had expected the index to rise to 71 from May's initially reported reading of 69.3.

Against the Swiss franc, the yen slipped to a 6-day low of 89.14 in Asian deals on Tuesday. On the downside, 89.8 is seen as the next target level for the yen. The franc-yen pair was worth 88.80 at Monday's New York session close.

After hitting a 1-month high of 86.89 against the franc on June 24, the yen has been declining and it has lost more than 2% thus far.

The dollar also weakened today on optimism the global slump is waning, reducing the currency's appeal as a refuge.

During Asian deals on Tuesday, the dollar plunged to 1.6663 against the pound. This set the lowest level for the dollar since June 03. If the dollar slides further, it may likely target a new multi-month low of 1.70. The pound-dollar pair closed yesterday's trading at 1.6567.

The pound rose as U.K. consumers became much more upbeat about the economy's prospects over the next 12 months in June, boosting the overall measure of confidence for the fourth time in five months.

Consumers seem to believe that the measures taken by the government and the Bank of England to support the economy are likely to work, and indicating that they in turn won't cut back on spending as sharply as many economists had expected.

Polling firm GfK NOP said today that the headline measure of consumer confidence rose to -25 in June from -27 in the previous month. The index was in line with economists' expectations. At the same time, the index came in better than the minus 34 registered in June last year.

The dollar plummeted to a 7-month low of 1.6666 against the pound on June 03. Although the dollar gained thereafter, it pulled back again after reaching a 12-day high of 1.5805 on June 08.

However, the pound-dollar pair largely bounced between 1.6212 and 1.6623 for the past two weeks, but the pair moved off the range today.

The dollar slumped to a 4-day low of 1.0802 against the Swiss franc and a 6-day low of 1.4133 against the euro in Asian deals on Tuesday. If the dollar drops further, it may likely target 1.065 against the franc and 1.418 against the euro. The euro-dollar pair closed trading at 1.4089 and the dollar-franc pair at 1.0823 on Monday.

Extending yesterday's 1% gain, the dollar surged up against the yen in today's early Asian deals and reached a 5-day high of 96.33 at 8:05 pm ET. But the dollar fell thereafter and the pair is currently trading at 95.69, down from yesterday's New York session close of 96.06. The near term support level for the U.S. currency is seen at 95.1.

Traders are now likely to focus on the European session, in which the Swiss May UBS consumption indicator, French May PPI, German June unemployment rate, Euro-zone M3 money supply for May and CPI for June, Italian CPI for June and PPI for May, U.K. final first quarter GDP estimate and current account reports are expected.

From the U.S., the S&PCase-Shiller home price index for April and the consumer confidence report for June are due in the North American session.

News are provided by InstaForex.

[Darika]

The US dollar that edged slightly higher against its major rivals immediately after the ADP employment report lost ground shortly. As of 8:30 am ET, the greenback drifted lower to 96.67 against the Japanese yen, 1.0795 against the Swiss franc, 1.6494 against the pound and 1.4123 against the euro.

The ADP report showed that non-farm private employment fell by 473,000 jobs in June following a revised decrease of 485,000 jobs in May. Economists had expected a decrease of 394,000 jobs compared to the loss of 532,000 jobs originally reported for the previous month.

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[Darika]

The dollar pulled back versus the euro and sterling but managed to stabilize against the resurgent yen Thursday morning in New York, as traders looked ahead to weekly jobless claims figures.

Yesterday, The Group of Eight largest industrialized nations meeting in L'Aquila released a statement recognizing serious downside risks to the global economy.

Still, stock futures on Wall Street crept ahead Thursday morning on Wall Street, fueling renewed risk appetite. Alcoa kicked off earnings season with a better than expected result.

The dollar gave back some of its recent gains versus the euro and sterling. Versus the euro, the dollar dropped to 1.3980, falling more than a penny from its 3-week high of 1.3832.

The dollar plunged versus the sterling, dropping to 1.6260 from a monthly high of 1.5982.

Thursday, the Bank of England retained its key interest rate and decided to continue with its asset purchase scheme totaling GBP 125 billion by utilizing central bank reserves.

At the end of the two-day rate setting meeting, the Monetary Policy Committee decided to hold the Bank Rate at 0.5% as expected. The rate now stands at the lowest since the central bank was established in 1694.

The dollar steadied versus the yen,, holding near 93 after plummeting to a 5-month low of 91.79.

Despite nagging rumors that G8 leaders would discuss an alternative to the dollar as the world's de facto reserve currency, there was no mention of a new international currency in the statement released following the first day of meetings in Italy.

A Labor Department report on the number of first time claimants for unemployment benefits is likely to be in the radar, given the linkage jobs and wage growth has got with consumer spending. Economists expect the report to reveal a decline in claims in the recent reporting week. Additionally, the results of the Treasury auction of $11 billion worth of 30-year bonds may also be closely watched.

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[Darika]

Thursday, in its July issue of the Asia Economic Monitor, the Asia Development Bank noted that the East Asian Economies had already entered the transistion from recession to recovery, although the economic growth was continuing to slow this year.

"Emerging East Asia could see a V-shaped recovery, with growth dipping sharply in 2009 before regaining last year's pace in 2010," Jong-Wha Lee, ADB Chief Economist and Head of the Office of Regional Economic Integration said.

However, the report cautioned saying that given the tentative nature of the expected recovery, it was critical for authorities to continue to follow measures which would support domestic demand and growth. "Monetary and fiscal policies in the region need to remain accommodative until the recovery gains substantial traction", the ADB said.

"Emerging East Asia should reinforce cooperation in enhancing financial stability by accelerating regional initiatives, and actively participate in designing the new global financial architecture", it added.

Moreover, the ADB pointed out that deep recessions in the U.S,Europe and Japan would continue to hurt emerging Easing Asian economies, particularly the smaller one that were highly reliant on exports. However, larger economies like China, that had implemented major fiscal packages were begining to see some results from the stimulus packages.

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[Darika]

The dollar came under further pressure versus the euro and continued its trek toward parity against the surging loonie Monday morning in New York.

Rising global stocks and speculation that the economy is on the mend have fueled increased appetite for riskier higher yielding currencies.

Traders were looking ahead to a fairly busy week on the economic front, kicked off by the Commerce Department's new home sales report for June.

The consensus estimate for the report coming at 10 AM ET this morning calls for an increase in new homes sales to 352,000.

New home sales declined 0.6% in May from the previous month to a seasonally adjusted annual rate of 342,000.

The dollar remained on the defensive versus the euro, dropping to an 8-week low of 1.4296, just shy of its lows from last December. A move to 1.4340 would take the dollar to its lowest level since the last week of 2008.

There was no relief for the dollar versus the scorching-hot loonie. Amid growing evidence that the Canadian economy is in much better shape than its neighbor to the south, the dollar dropped to C$1.0780, its lowest level since September 2008.

The dollar extended its run of choppy trading versus the sterling, easing to 1.6500 after seeing some modest strength late last week.

Versus the yen, the dollar firmed up slightly to 95.20, staying near a monthly high of 95.28.

In economic news from around the globe, German consumer confidence for August improved strongly, suggesting a recovery in the economy that is hit hard by recession.

According to the latest consumer climate survey from the market research firm GfK, the forward-looking consumer sentiment index rose to 3.5 points for August.

Monday, the quarterly report from the Bank of England said the continued asset purchases in the second quarter were accompanied by signs of improvement in the corporate credit markets.

News are provided by InstaForex.

[Darika]

The International Monetary Fund welcomed Indonesia's fiscal stimulus plan for 2009, underscoring timely and efficient implementation of the spending program. The Washington-based agency urged Indonesia to maintain some of the stimulus measures next year.

The Executive Board of IMF noted that private consumption supported by the fiscal stimulus package helped to maintain positive economic growth. However, another round of global risk aversion could adversely affect nation's external liquidity, demand and growth prospects. To withstand these risks, the authorities should strive to achieve the appropriate policy mix and promptly adjust it as needed to preserve macroeconomic and financial stability.

The board assessed that the current level of the real effective exchange rate is broadly in line with fundamentals and that reserves are at a comfortable level. Some others believed that the current level of reserves and the various contingency arrangements should provide an adequate cushion.

Regarding inflation, the fund said, "Strong commitment to the medium-term inflation targets, as well as publication of inflation forecasts, would help guide inflation expectations and enhance policy credibility."

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[Darika]

The public's trust in business has stabilized and is recovering significantly in some of the world's largest markets, results of a survey conducted by Edelman, a leading independent public relations firm, showed Thursday.

Edelman's previous survey, conducted in January, showed a devastating loss in trust in the private sector.

The mid-year survey was conducted among 1,675 informed public in six countries - the U.S., the U.K., France, Germany, India, and China.

The survey found that India and China are the most positive about business. At 75%, India recorded the highest level of trust in business of any of the six countries surveyed. China followed with 60% saying they trust business to do what is right.

"The private sector is perceived as enabling an economic growth that has led to healthier living standards. The survey numbers reflect a high degree of national pride in the accomplishments of business," said Alan VanderMolen, president, Asia Pacific, Edelman.

In the U.S., 48% of informed public trust business to do what is right, up from a low of 36% in January. The figure for France rose to 41% from 30%.

"Trust in business is on the way back, but we're still in the middle of the game," said Richard Edelman, president and CEO, Edelman.

The public's trust in government rose the most in India, an increase of 13 points to 55% followed by the U.S., where the trust barometer rose 12 points to 42%.

News are provided by InstaForex.

[Darika]

German retail sales dropped unexpectedly in June despite rising consumer confidence and low price level as recession continued to put pressure on consumer spending.

According to a provisional report from the Federal Statistical Office, retail sales for June recorded a surprise monthly decrease of 1.8% in real terms, following a revised 1.3% drop in May. Economists were looking for a 0.3% rise.

Year-on-year, sales slipped 1.6% in June, smaller than a revised 3.7% fall seen in May. The annual decline was also unexpected as economists were looking for an increase of 0.9%.

For the January to June period, retail turnover dropped 2.1% in real terms compared to the corresponding period of the previous year. Sales were down nominally by 2.3%.

In nominal terms, retail sales dipped 2% year-on-year and 1.6% from the prior month in June.

Simon Junker, Commerzbank analyst said in a note that German retail sales proved to be stable despite severe recession, probably because of the still stable labor market and the low price level. The crisis has reached retail too, supporting the judgment that the largest Eurozone economy shrunk again in the second quarter, albeit only moderately, he said.

According to the analyst, the German economy would possibly pick up in the months ahead, though retail may not benefit very much in the coming months. At most, the favorable price trend could strengthen purchasing power and support sales. However, rising unemployment would dent retail sales again.

German unemployment decreased in July, which was the first decline since October 2008. Meanwhile, the jobless rate stood at 8.3%, unchanged from June.

Consumer confidence and business climate in the economy showed improvements in recent months as a result of Chancellor Angela Merkel's spending plan. Merkel is seeking a second-term in office in September elections.

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