Friday, February 6, 2009

Forex Market Update

MAJOR HEADLINES – PREVIOUS SESSION

HEADLINES:

  • US Q4 Non-farm Productivity at 3.2% vs revised 1.5% prior
  • US Q4 Unit Labour Costs +1.8% vs revised +2.6% prior
  • US Initial Jobless Claims (Feb1) at 626K vs revised 591k prior
  • US Dec factory Orders -3.9% vs revised -6.5% prior
  • JP Moody’s downgrades Toyota rating to Aa1 from Aaa, outlook negative
  • AU RBA slashes 2009 growth f/c to just +0.5%


THEMES TO WATCH – UPCOMING SESSION

Events Today:

  • Swiss Unemployment (0645)
  • Denmark Industrial production(0830)
  • Norway manufacturing Production (0900)
  • UK Industrial Production(0930)
  • UK Manufacturing Output (0930)
  • UK Input/Output Price Index (0930)
  • German Industrial Production (1100)
  • Canada Unemployment (1200)
  • US Non-farm Payrolls (1330)
  • US Unemployment Rate (1330)
  • Fed’s Yellen speaks (2245)
  • Fed’s Fisher speaks (0145)

Market Comment:

US data releases yesterday reverted back to their more normal weaker bias after having shown some surprises earlier in the week. Although Q4 productivity data was better than expected (+3.2% q/q vs +1.5% f/c), this was more than offset by a worse factory goods orders number (-3.9% m/m vs -3.1% f/c) while initial jobless claims rose to 626k, up from a revised 591k the previous week, the first time it has risen above 600k since 1982.

Despite the soft data, US stocks recovered from early weakness to finish deeply in the black (DJIA +1.34%, S&P +1.64% and Nasdaq +2.06%) on hopes that the US stimulus package would cushion the downturn and on market talk that the SEC would relax some accounting rules. In addition, Senate Banking Committee Chairman Stephen Dodd hinted at changes in mark-to-market rules. This prompted a sharp u-turn in the banking sector which had been -4.7% as a group at one stage. Newswires were also suggesting that Timothy Geithner would be able to present his comprehensive financial system plan on Monday, giving the positive closing sentiment a further shot in the arm.

Asian bourses took the baton from Wall Street and were firm throughout the session, with the occasional knock-back finding buying interest, and this should start European bourses off on a positive note.

More analysis: Saxo Bank Market News & Analysis

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