Fundamental Analysis, Mei 17th, 2013Written by Research | Fri May 17, 2013
Dollar struggles against euro and yen on weak data
The U.S. dollar dropped against the euro and Japanese yen on Thursday as a deluge of data highlighted vulnerabilities in the U.S. economy and curbed expectations the Federal Reserve will scale back its bond-buying program any time soon.
The dollar snapped a five-day advance against the euro after data showed the number of Americans filing new claims for unemployment benefits climbed last week to the fastest pace in six months, raising concerns about government austerity measures.
The Fed has made it clear that monetary policy will remain accommodative until they see broad and sustained growth in jobs.
Other data showed a sharp drop in gasoline costs led U.S. consumer prices to tumble in April by the most in over four years. Meanwhile, ground-breaking for new U.S. homes fell more than expected in April from an almost five-year high.
The euro was last up 0.1 percent at $1.2897 EUR=, above a six-week low of $1.2842 touched on Wednesday when data showed the euro zone's economy contracted for a sixth consecutive quarter.
Dollar losses accelerated in midmorning North American trade after a survey showed factory activity in the U.S. mid-Atlantic region contracted in May as new orders fell to their lowest level in almost a year.
Against the yen the dollar last traded down 0.1 percent at 102.16 JPY= yen, down from a session peak of 102.68 yen. The dollar touched a peak of 102.76 yen on Wednesday, its strongest since late 2008, according to Reuters data.
Wall St flat after mixed data, Cisco jumps
U.S. stocks barely budged on Thursday, with the Dow and S&P 500 hovering near record highs, as weak factory and labor market news was offset by data indicating inflation pressure remains tame despite aggressive monetary policy.
Cisco Systems CSCO.O led gains in both the Dow and Nasdaq Composite with a 12 percent surge after the network equipment maker posted a higher-than-expected quarterly profit and said current-quarter revenue could increase.
Cisco shares shot up 12.3 percent to $23.82 after hitting $24.24, the highest since November 2010.
The U.S. economy showed fresh signs of slower growth in the second quarter, with factory activity slipping in the mid-Atlantic region, while groundbreaking slumped at home construction sites. New claims for jobless benefits unexpectedly jumped last week.
However, soft underlying inflation - which could point to weak demand in the economy - also means the Federal Reserve has room to continue the aggressive monetary policy that has provided a main pillar for the U.S. stock market's advance.
The S&P 500 is up 16 percent so far this year and trading at historic highs.
The Dow Jones industrial average .DJI fell 42.47 points, or 0.28 percent, to end unofficially at 15,233.22. The Standard & Poor's 500 Index .SPX slipped 8.31 points, or 0.50 percent, to finish unofficially at 1,650.47. The Nasdaq Composite Index .IXIC declined 6.37 points, or 0.18 percent, to close at 3,465.24.
Gold Futures Head for Longest Slump in 16 Months
Gold futures fell, capping the longest slump in 16 months, as U.S. filings showed that George Soros and BlackRock Inc. (BLK) cut stakes in exchange-traded products backed by the metal, signaling waning investment demand.
Soros Fund Management LLC lowered its holding in the SPDR Gold Trust, the biggest such fund, by 12 percent as of March 31 from the previous quarter, data showed yesterday. The World Gold Council said today that demand dropped 13 percent in the first quarter from a year earlier as ETP sales outweighed a surge in purchases of coins, bars and jewelry in China and India.
Gold futures for June delivery dropped 0.7 percent to close at $1,386.90 an ounce at 1:38 p.m. on the Comex in New York. The price fell for the sixth straight session, the longest slump since December 2011. Earlier, the metal touched $1,368, the lowest for a most-active contract since April 18.
Crude Rises on Stimulus Speculation
West Texas Intermediate crude rose on speculation that central banks will bolster stimulus after more Americans than projected filed for unemployment benefits and U.S. consumer prices decreased.
Futures climbed 0.9 percent as Labor Department figures showed that jobless claims exceeded all forecasts in a Bloomberg survey of economists. The U.S. cost of living fell in April for a second month. St. Louis Federal Reserve President James Bullard said last month that persistent disinflation may require the central bank to provide additional stimulus. The dollar slid after the U.S. economic headlines, bolstering oil.
WTI oil for June delivery advanced 86 cents to settle at $95.16 a barrel on the New York Mercantile Exchange. The volume of all contracts traded was 28 percent above the 100-day average at 3:34 p.m.
Brent crude for June settlement, which expired today, rose 12 cents to end the session at $103.80 a barrel on the London-based ICE Futures Europe exchange. The more actively traded July futures increased 28 cents, or 0.3 percent, to settle at $103.78 a barrel. Volume for all contracts was 3.6 percent greater than the 100-day average.
Nikkei may pull back on Wall St drop, set for 2nd weekly gains
The Nikkei share average may pull back slightly on Friday after Wall Street weakened overnight, but the market is on track to log its second-straight weekly gain on the back of a depressed yen and optimism over the earnings outlook for Corporate Japan.
Market players said the Nikkei was likely to trade between 14,900 and 15,100, while Nikkei futures in Chicago 0#NIY: closed at 14,955 on Thursday, down 0.8 percent from the Osaka close JNIc1 of 15,070.
U.S. stocks fell overnight, with the selling accelerating late in the day after a Federal Reserve official said the central bank could begin easing up on its monetary stimulus this summer.
On Thursday, the benchmark Nikkei .N225 dropped 0.4 percent to 15,037.24 after earlier touching a fresh 5-1/2-year high of 15,155.72. The Topix .TOPX shed 0.6 percent to 1,245.23 in heavy trade.
The Nikkei has risen around 6 percent since the dollar punched through the 100-yen mark last Thursday, which has prompted some profit-taking.
The yen was quoted at 102.10 to the dollar in early Asian trade on Friday after falling to a 4-1/2-year low of 102.76 yen on Wednesday, according to Reuters data.
Source : Reuters