Risky assets were under pressure last week amid speculations that the Fed would taper QE measures sooner than expected. Fed Chairman Bernanke said during the week that labor market conditions “have shown some improvement recently” but still remain “weak overall”. Although he also stated that “monetary policy does not have the capacity to fully offset an economic headwind of this magnitude”, he also suggested that “a step down” in the pace of purchases “in the next few months” might be warranted if policymakers see sustainable improvements in the economy.
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Weekly Fundamentals – US Enters Driving Season, Gasoline Demand in Focus
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8:30am USD Core Durable Goods Orders m/m USD Durable Goods Orders m/m 9:00am EUR Belgium NBB Business Climate Statistics: Posted by Bon — Fri May 24, 2013 4:12 am
Daily News Events • 24th may
UK sterling is back on a slide against major world currencies after this week’s retail sales volumes including fuel sank 1.3 percent, confounding economists forecasts for flat sales in the British economy.
Latest UK Sterling Rates
As of 08:10 GMT today, one pound UK sterling bought 1.16670 euro (0.12 percent lower) and against the US dollar the rate was $1.50950 (0.08 percent lower) and is heading close to its lowest level since early April.
Blame the Weather
The Office for National Statistics, which published the figures, said retailers had indicated that poor weather hindered their spring and summer ranges, with sales of barbecue food and garden furniture taking a hit.
Consumer spending, which accounts for 60pc of Britain’s gross domestic product, has been pressured in recent years by below-inflation wage growth, worries about the economy and government austerity measures.
“Much of the latest news on the UK economy has been relatively encouraging; but even allowing for the negative impact of ongoing cold weather and the fact that Easter occurred in March this year, April’s marked drop in retail sales provides a reminder that the economy is not yet out of the woods and still has a challenging job to develop sustained, clear growth.” said Howard Archer, chief economist at IHS Global Insight.
UK retail sales including fuel declined 1.3 percent from March, when they fell 0.6 percent according to the UK’s Office for National Statistics. The median forecast of 25 economists in a Bloomberg News survey was for a 0.1 percent increase. Food sales plunged 4.1 percent, the most since May 2011.
The ONS added that “there was little evidence of the bad weather having a significant effect on the services industry” during the first quarter. Added to the mix, strong oil and gas production from the North Sea also helped the economy to avoid a potential triple-dip recession.
The data was published one day after the International Monetary Fund (IMF) declared that Britain was “a long way” from a sustainable economic recovery. In a gloomy report, the IMF also called for the government to boost infrastructure spending in order to accelerate economic growth and offset state austerity.
The IMF repeated its call for British finance minister George Osborne to ease the coalition government’s austerity drive, despite his insistence last week that he would stick by his deficit slashing measures.
The price of NYMEX WTI oil opens Friday’s trading session holding out near $94 a barrel after a brief dip yesterday near $92 but crude prices remain resilient amid record high US inventory levels for this time of the year.
Latest WTI Oil Price
US Light crude oil futures for July 2013 delivery was trading at $93.89 a barrel, 07:46 GMT this morning in electronic trading on the NYMEX. WTI crude sank as low as $92.21 on Thursday after weak manufacturing data from China triggered stock markets to slide lower.
US Inventory Levels
According to the US EIA (Energy Information Administration) US crude oil stockpiles dropped by 300,000 barrels this week to 394.6 million barrels, however oil supplies remain above the upper limit of the average range for this time of year. In recent months, crude oil stockpiles have risen to heights unseen in more than 80 years.
US Oil Demand
US crude oil demand inched up 0.3 percent in April from a year earlier, despite a sharp 3.9 percent drop in gasoline use, the US API (American Petroleum Institute) said in a report out yesterday.
“For the second month demand is up from a year ago. Consumer confidence has improved and distillate deliveries are up, but gasoline demand remains weak.” API chief economist John Felmy said in the data report.
US crude oil output climbed 15.9 percent from a year earlier to a 21 year April high of 7.264 million barrels a day. Crude oil production topped seven million barrels a day for a sixth straight month, as new technology such as hydraulic fracturing and horizontal drilling, unlocks oil deposits trapped in shale rock in several areas of the nation.
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WTI crude oil price holding near $94 amid record high US inventory levels
Financial tumbled after Bernanke’s comments raised speculations for Fed’s tapering of QE and disappointment in Chinese PMI data. The loss in US session was pared later in the day as initial jobless claims came in better than expected. Wall Street dropped with the DJIA and the S&P 500 indices losing -0.08% and -0.29% respectively.
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Financial Markets Slumped amid Worries about Fed’s Exit
HPQ is making a gap up into possible resistance on the daily chart. Look to take HPQ short on a new low below the open with strong volume. Wait at least 2 minutes after the market opens and look to take it short once it makes a new low of the day. If HPQ moves up at the open simply set an alert at the low of day and take it short if it breaks that low of day. First target is .23 from your entry, second target is .46 from your entry. Manage the last piece with a trailing stop. Remember to always use a stop. Statistics: Posted by Exactrades — Thu May 23, 2013 9:20 am
Stock Watch • HPQ, Hewlett Packard
NEW TRADES: NONE PENDING TRADES: BUY LIMIT USD/JPY 101.00 / SL 100.20 / TP 105.00 OPEN TRADES: SELL LIMIT EUR/USD 1.2950 / SL 1.3030 / TP 1.2800 (closed in profit) 97 pips CANCEL THESE TRADES: NONE Statistics: Posted by TAP — Thu May 23, 2013 7:37 am
In the precious metal complex, palladium has been the best performer so far this year. As of May 22, the Comex contract for palladium has added almost +7%, compared with a -4.7% drop in platinum and selloffs of gold and silver by -18.4% and -25.75 respectively. The relatively outstanding performance is due to the better fundamentals which would likely remain in deficit this year with strong autocatalytic demand and tight supply.
8:30am USD Unemployment Claims 9:00am USD Flash Manufacturing PMI USD HPI m/m 10:00am EUR Consumer Confidence USD New Home Sales 10:30am USD Natural Gas Storage Forecast 90B Previous 99B 3:30pm EUR ECB President Draghi Speaks Statistics: Posted by Bon — Thu May 23, 2013 6:08 am
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Daily News Events • 23rd May
Fed Chairman Bernanke’s testimony to the Joint Economic Committee of Congress was the reason for the rollercoaster trading in the US dollar. Bernanke’s comments were generally dovish and sent the USD lower but a reversal was seen when the Chairman stated that tapering might be considered if US economic indicators show improvements.
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USD’s Strength on Speculations of Tapering Fed’s QE Sent Risky Assets Lower