Japan July household spending down 1.3 pct
Spending by households in July dropped 1.3 pct in real terms from a year before to an average 292,328 yen, declining for the seventh straight month, the Ministry of Internal Affairs and Communications said.The fall was smaller than what the market had expected. A Nihon Keizai Shimbun poll of 18
brokerage and research firms were looking for a year-on-year drop of 1.5 pct.
The overall income of households rose 5.9 pct year-on-year and the income of household heads increased 0.3 pct. Disposable income was up 5.6 pct from a year earlier, the ministry said.
Forex - Asia currency summary
Asian currency rates against the US dollar at 0855 GMT (vs previous late levels):-Australian dollar: 1.3171 (1.3150)
-Hong Kong dollar: 7.7783 (7.7785)
-Indian rupee: 46.5050 (46.5675)
-Indonesian rupiah: 9,115.00 (9,120.00)
-Japanese yen: 116.94 (117.19)
-Korean won: 963.50 (961.50)
-Malaysian ringgit: 3.6795 (3.6778)
-Philippine peso: 51.185 (51.355)
-Singapore dollar: 1.5763 (1.5775)
-Taiwan dollar: 32.913 (32.881)
-Thai baht: 37.69 (37.64)
Eurozone M3 july growth slows to 7.8 pct
Euro zone M3 money supply grew 7.8 pct year -on-year in july,down from an 8.5 pct growth rate in June , the European Central Bank said .
Weekly Economic Data Calendar until 4th September
The forthcoming week will be dominated by US economic data, of which there is plenty, the highlight being Friday’s nonfarm payrolls. The ECB make a rate announcement on Thursday and the monetary committee is expected to keep rates unchanged at 3.0%.
The past week was light on economic data and most of the majors were tightly range-bound. The Japanese yen retreated and hit an all-time low against the euro after the release of soft inflation data, while the Canadian dollar made significant progress as oil prices are on the rise again. Sterling finished the week strongly after a positive CBI industrial trends survey and a quarter 2 GDP estimate put at 0.8%.
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Five key factors that inflence currencies
Action Forex gives the five key factors and influence currencies .
According to Action Forex five factors are the biggest influence on a currency, they are:
- Non Farm Payrolls – Unemployment
- FOMC Interest Rate Decisions
- Trade Balance
- CPI – Consumer Price Index
- Retail Sales
Retail Sales Index
A monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. This report is the “advance” report, which can be revised fairly significantly after the final numbers are calculated.
Many analysts choose to look at the figures “ex-auto”, which means excluding the volatile car sales figure. It is thought that this number is a better measure of across-the-board purchasing trends. The report does not include money spent on services, so it represents less than half of total consumption during the month. However, even with these limitations, the figures are closely watched as an indicator of the health of the economy.
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U.S. Import Price Index
An import price index measures changes in the prices of imports of merchandise into a country. The index numbers for each reference period relate to prices of imports landed into the country during the period.
The United States Import Price Index is published by the United States Department of Labor’s Bureau of Labor Statistics. It is part of the Office of Prices and Living Conditions. It began as an annual publication, publishing its first index in 1973. It began publishing on a quarterly basis in 1974. A major program milestone occurred in 1982 when the Office of Management and Budget placed the IPP indexes on its list of Principal Federal Economic Indicators together with the Consumer Price Index and Producer Price Index. In January 1993, the IPP began the monthly publication of merchandise indexes. The IPP is constantly expanding in its mission to measure the import and export of goods and services to the U.S.
The IPP publishes indexes on merchandize categories and selected categories of services. Currently, the IPP published monthly air passenger, air freight, ocean liner, and ocean tanker service indexes.
The IPP publishes its merchandize indexes following the Harmonized Classification System, the SITC classification system, and the Bureau of Economic Analysis (or END USE) classification system. The IPP will begin publishing based on the North American Industrial Classification System system in the January 2006 news release.
In January 2005, the IPP expanded its Locality of Origin indexes adding a break-out for China. Starting with the January 2006 news release, the IPP will begin publishing import and export indexes based on the NAICS.
One of the primary customers of the IPP is the Bureau of Economic Analysis. They use the Import and Export price indices to deflate GDP. The IPP is currently headed by William Alterman.
From Wikipedia, the free encyclopedia
Big Week Ahead Could Cause Sharp Moves in the US Dollar
To the disappointment of many traders, Ben Bernanke kept his mouth closed about the state of the economy and the outlook for monetary policy. This left the market in disarray and caused quite a bit of volatility in what was otherwise another thin trading day. The dollar rallied as traders focused on what Bernanke did not say. The fact that he kept mum on the recent evidence of a further downturn in the housing market prompted many traders with short dollar positions ahead of the announcement to square up and call it day.
Choosing a Forex Broker
Choosing a good Forex broker is the first step in successfully trading the foreign currency market. Obviously with more and more online traders getting in the Forex market, the choice of online brokers has grown exponentially in the past few years and is now almost overwhelming.
Considering that you’ll trust them with your money and they’ll be executing your trades, it’s important to take time to do your research. Here’s what you should be looking for:
1- Account Type Available
2- Spreads / Commissions / Fees
3- Margin / Leverage
4- Execution
5- Rollover Policy
6- Trading Platform
7- Reputation
8- Support
CPI Hammers Yen
USD/JPY catapulted to monthly highs of 117.25 in early Asian trading this morning as weakness continues to be the prevailing theme in Japan. CPI data came in weaker than expected as National CPI for the month of July posted -0.1% versus 0.0% predicted while annualized data also slipped below market expectations to 0.3% versus the consensus of 0.6%.
Annualized Core National CPI fell to 0.2% versus forecasts of 0.5%. Furthermore June’s annualized CPI figure of 0.6% was revised down to 0.2%, which was much steeper than the market anticipated. Although price appreciation remains net positive for the worlds second largest economy, lower than expected numbers today will most likely leave the Bank of Japan hesitant to extend lending rates past 25 basis points before the end of the year. As of 7:00GMT, USD/JPY traded at 117.20, up from Thursday’s New York close price of 116.48.
Dollar Regaining Strength
EUR/USD – The EURUSD still holds just above the 38.2% fibo of 1.2456-1.2938 at 1.2754, but the pair broke below a short-term trendline on the daily chart, and daily and hourly RSI turned bearish as well. Price above 1.2750 keeps our previous bullish argument intact. Weakness below 1.2750 would suggest that the pair is heading back to 1.2693. Resistance is at yesterday’s high at 1.2843. If this is a 3rd wave rally, then price should exceed 1.2938 fairly soon.
Forex - Dollar stays rangebound
With no US data out today and a bank holiday in the UK on Monday, most investors are choosing to remain on the sidelines amid continued uncertainty over the outlook for US interest rates.
The euro recovered, however, after slipping to a 10-day low against the dollar of 1.2726 usd in the wake of weaker-than-expected German inflation data.
Figures released this afternoon showed the CPI measure fell to an annual 1.7 pct in August, below expectations for a 1.8 pct reading, while the EU harmonised measure fell to 1.9 pct from 2.1 pct.
Dollar Down on Data
For the week, EUR/USD traded in a range that was barely 150 points wide with some sessions so listless that that price charts often resembled an electroencephalogram of a person peacefully asleep. Nevertheless, economic data exerted some influence and the weight of overwhelmingly negative numbers from the US pressed on the greenback. Most importantly, both inflation gauges missed to the downside indicating that pricing power remains muted dampening any hopes of a restart of the Fed rate hike campaign. Furthermore, Housing and Consumer sentiment readings plunged suggesting that higher energy prices and plummeting housing values are putting US consumers into a decidedly sour mood.
The Fed Pause - Its Not Just About Economic Growth
The Fed Pause – Its Not Just About Economic Growth
On the surface the US banking sector appears to be in tip top shape. At a time when the rest of the stock market is mired in range bound doldrums the Philadelphia KBW Bank index has posted a gain of 7.3% since the end of 2005 compared to a paltry 2.4% return from the broader S&P 500. While some investors worry that the broad slowdown in the economy will negatively impact big money center banks such as Bank of America and Wells Fargo, the market ignores these worries, rallying the stocks of both to record highs at beginning of August. Yet beneath the veneer of success reside nagging questions regarding the true health of the banking sector remain unanswered. The Fed’s recent decision to take a pause in its interest rate hike cycle may have more to do with monetary officials’ private worries about the state of these bank’s balance sheets than about the state of economic growth in the broader economy.
Bernanke Not Likely To Cause Ripples in the US Dollar
US Dollar
The US dollar has become practically immune to the continual disappointments in US economic data. We started the week off with a sharp drop in existing home sales and today, we saw another fall in the sales of new homes along with a weaker than expected durable goods report. The signs of a slowdown in the US economy are clear, but the extent of the slowdown is not. This is the main reason why the US dollar has remained strong. Traders are still holding out for the possibility of another rate increase this year by the Federal Reserve. However given the recent trend of economic data and oil prices, we doubt that there is enough evidence to convince Federal Reserve Chairman Ben Bernanke to change his mind. His recent silence since the last monetary policy meeting has caused some of his critics to back off. To resurrect the talk of another rate hike in the near future would at the same time resurrect speculation about his credibility. The lower price of oil has helped to alleviate inflationary pressures while the deterioration in the housing market raises the risk of a housing market driven recession.
The Bulls Are In US Durable Statistics
Dollar-based pairs were put through their paces Thursday as held over volatility from yesterday’s data, was kept alive by today’s durable goods and housing sales numbers. As usual, encompassing the greenback’s moves in one chart, the EURUSD was trading within a range that has set up with yesterday’s action.From the overnight session, the base that had formed around 1.2750 was used as a springboard for a 95-point rally that eventually topped out around 1.2845 – where the bull run yesterday was squelched. The same pattern evolved in the GBPUSD. A spike touch low on 1.8875 in European hours developed into a 100-point advance that was quickly returned to the support level for additional touches. Against the Swiss franc, the dollar won a touch on the 1.2390 level, but quickly traded down 85 points to 1.2305 just before the open of US trade. When North American liquidity flooded into the market, the dollar quickly ran back to 1.2390 to solidify the band. Finally, the USDJPY was mirroring the other pairs’ moves but to a lesser extent. Resistance has formed with multiple touches of 116.55, but support lies only 40 points lower at 116.15.
FX CHART EUR/USD : Steady above 1.2780/00 support
24 Aug EUR/USD Daily
15:05 - Sideways trade of the last few hours continues. No change in view. Sup. at 1.2780/00 needs to hold or pressure will swing back to the downside. Above today’s high at 1.2843 next
res. is at 1.2852 then 1.2876/90. N.I.
R5: 1.2939 21 Aug high
R4: 1.2900 hour high, cong. area
R3: 1.2876/90 * Tues highs
R2: 1.2852 * Wed high
R1: 1.2843 today high
S1: 1.2780/00 break area
S2: 1.2751 today low
S3: 1.2693 * 15 Aug low
S4: 1.2655 28 Jul low
US New Home Sales in July came slightly lower than expected at 1.072 mln, but with downward revisions to the Jun levels to 1.120 mln from the originally released 1.131 mln on net the data is disappointing.
USD’s immediate reaction was to do nothing. With the data undershooting expectations and no sellers showing up, dealers have been forced to pay up to cover USD shorts. But, there is not enough interest or risk in the market to send prices near the extremes of the day.
Consumer Price Index (CPI, also retail price index)
Consumer Price Index (CPI, also retail price index) is a statistical measure of a weighted average of prices of a specified set of goods and services purchased by wage earners in urban areas. It is a price index which tracks the prices of a specified set of consumer goods and services, providing a measure of inflation. The CPI is a fixed quantity price index and a sort of cost-of-living index.
The CPI can be used to track changes in prices of all goods and services purchased for consumption by urban households, i.e., of the consumer basket. User fees (such as water and sewer service) and sales and excise taxes paid by the consumer are also included. Income taxes and investment items (like stocks, bonds, life insurance, and homes) are not included.
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European data hurts dollar
The dollar fell strongly this morning following the better than expected European Ifo release. Launching from support at 1.2750, EURUSD surged higher to trace out a 1.2752-1.2838 range while USDJPY remained relatively quiet (116.59 - 116.38 range). This contrast saw EURJPY catapulted higher from 148.67 to 149.40 placing the pair in striking distance of Monday’s 149.71 high.
Gross domestic product - GDP
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IMF 2005 figures of GDP of nominal compared to PPP.
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IMF 2005 figures of GDP of nominal compared to PPP.
A region’s gross domestic product, or GDP, is one of several measures of the size of its economy. The GDP of a country is defined as the market value of all final goods and services produced within a country in a given period of time. Until the 1980s the term GNP or gross national product was used. The two terms GDP and GNP are almost identical. The most common approach to measuring and understanding GDP is the expenditure method:
GDP = consumption + investment + government spending + (exports − imports)
“Gross” means depreciation of capital stock included. Without depreciation, with net investment instead of gross investment, it is the Net domestic product. Consumption and investment in this equation are the expenditure on final goods and services. The exports minus imports part of the equation (often called cumulative exports) then adjusts this by subtracting the part of this expenditure not produced domestically (the imports), and adding back in domestic production not consumed at home (the exports).
Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector (or government) spending. Two advantages of dividing total consumption this way in theoretical macroeconomics are:
* Private consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption.
* If separated from endogenous private consumption, government consumption can be treated as exogenous, so that different government spending levels can be considered within a meaningful macroeconomic framework.
Therefore GDP can be expressed as:
GDP = private consumption + government + investment + net exports
(or simply GDP = C + G + I + X - M (X - M accounts for exports - imports)