USD/CHF Fundamental Analysis March 9, 2012, Forecast

Analysis and Recommendations:

The USD/CHF is duplicating all the major trading partners of the USD. The dollar lost strength all day starting with positive sentiment from Greece and continuing as three negative reports were issued in the US, the Challenger report, the week unemployment report and household debt. All were disappointing. The dollar is trading down at .9091 dropping from .9167.

In America:

U.S. employers announced workforce reductions totaling 51,728 during February, down 3.3% from January levels, according to the latest job-cut report released Thursday by global outplacement firm Challenger.

Jobless claims in the U.S. rose to the highest level in five weeks, climbing by 8,000 to a seasonally adjusted 362,000, the Labor Department said Thursday. Markets had estimated claims would rise to 355,000 in the week ended March 3. Continuing claims – payments to people already approved for jobless benefits – increased by 10,000 to a seasonally adjusted 3.42 million in the week ended Feb. 25. 

Household debt edged up 0.3% in the fourth quarter, the Fed reported in its flow-of-funds report, as consumer credit surged at a 7% annualized rate. Household debt had declined for 13 consecutive periods before the slender fourth-quarter advance.

The Fed is considering a new form of “sterilized” quantitative easing that would allow asset purchases despite high oil prices, according to a report in The Wall Street Journal. Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates. The aim of such an approach would be to relieve anxieties that money printing could fuel inflation later, a fear widely expressed by critics of the Fed’s previous efforts to aid the recovery.

In northern America, the Canadian Central Bank held rates today at 1% following the lead of banks around the world.

In Europe:

The Greek government will announce early Friday the results of investors’ participation in the country’s ambitious debt-restructuring plan. More than 75% of private creditors have agreed to participate in Greece’s debt swap deal, the Associated Press reported Thursday, citing an unnamed Greek government official close to the situation.

The Bank of England announced their current rate decision which was as expected to hold rates. No new additions to their monetary easing policies announced in February.

The European Central Bank committee held lending rates at the current rate of 1% and made no comments on any additional lending policies.

ECB President Draghi said in his monthly press conference in Frankfurt on Thursday that the central bank’s long-term refinancing operation has had a positive effect on markets and sentiment in the euro zone but that “all non-standard measures are temporary.” He also said that the three-year LTROs have been an “unquestionable success.”

Prices for Italian government bonds jumped and Spanish bonds also rose Thursday, sending yields lower on expectations Greece will successfully complete its voluntary debt swap with private investors. Italy’s 10-year bond yield fell 0.20

 German production climbed 1.6% from December. Economists were expecting an increase of 1.1% in the euro zone’s largest economy. 

In a later statement ECB President Mario Draghi said higher-than-expected energy prices, along with increases in various state-administered prices, meant that “inflation is expected to remain above 2% in 2012, with upside risks prevailing.” The central inflation forecast for 2012 is now 2.4%, up from 2% three months ago, Mr. Draghi said.

At the same time, ECB forecasters now expect the bloc’s economy to shrink by 0.1% this year. For 2013, the ECB now expects growth of 1.1%, compared with a prior forecast of 1.3%.

  In Asia:

The New Zealand Reserve Bank has held the official cash rate at its historic low of 2.5 per cent at its review. Reserve Bank Governor Alan Bollard opted against making a rate change when releasing the quarterly monetary policy statement. He said if the New Zealand dollar remained at its high levels it would lessen the need to raise the rate. Dr Bollard says the New Zealand economy was continuing to improve despite the export sector being impacted by the high dollar.

Australia’s seasonally-adjusted unemployment rate increased 0.1 percentage points to 5.2% in February, the Australian Bureau of Statistics said Thursday.  The numbers were in line with forecasts.

Australia’s fourth-quarter gross domestic product rose 0.4% against economists’ expectations of a 0.8% gain, disappointing government officials and the markets.

South Korea kept its key interest rate on hold at 3.25% on Thursday, according to reports. The decision was widely expected.

Japan’s trade deficit widened in January to 1.382 trillion yen ($17.0 billion), up 245.9% compared to the year-ago period the country’s Ministry of Finance said Thursday. Japan’s current account deficit totaled 437.3 billion yen in the month, larger than the 322.4 billion yen expected by economists polled by Dow Jones Newswires. The trade deficit and current account deficit were the largest on record.

March 8, 2012 Economic Releases actual v. forecast

 

March 9, 2012 Economic Events Schedule (when possible we will start to incorporate Chinese economic events into our daily calendar)

 01:30    CNY       Chinese CPI (YoY)                         3.6%                      4.5%                     

 01:30    CNY      Chinese PPI (YoY)                          0.0%                     0.7%                     

 05:30    CNY       Chinese Fixed Asset Invest          19.6%                    23.8%     

05:30     CNY      Chinese Industrial Pro                   12.4%                   12.8%                   

05:30    CNY       Chinese Retail Sales (YoY)          17.4%                    18.1%

Beginning this month we will start including China in our economic reports, since their economic data has such a large effect on the global economy. Second only to the USA. The link inserted, will allow you to visit the English section of the Chinese government website where all the details and data are released in English.

07:00    EUR     German CPI (MoM)                          0.7%                 0.7%

The German Consumer Price Index (CPI) measures the changes in the price of goods and services purchased by consumers.

09:30    GBP    Industrial Production (MoM)            0.4%                0.5%

09:30    GBP    Manufacturing Production (MoM)    0.4%                1.0%

09:30   GBP     PPI Input (MoM)                               0.7%                 0.5%

 Industrial Production measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. Manufacturing Production measures the change in the total inflation-adjusted value of output produced by manufacturers. Manufacturing accounts for approximately 80% of overall Industrial Production. Producer Price Index (PPI) Input measures the change in the price of goods and raw materials purchased by manufacturers. The index is a leading indicator of consumer price inflation.

12:00   CAD     Employment Change                        13.8K                2.3K                

12:00   CAD     Unemployment Rate                         7.6%                 7.6%                

13:30    CAD    Labor Productivity (QoQ)                 0.6%                0.4%

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.  This is a triple header report giving all details on employment in Canada.

13:30   CAD    Trade Balance                                   2.0B                 2.7B

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

13:30     USD      Average Hourly Earnings             0.2%                      0.2%                     

 13:30    USD       Nonfarm Payrolls                         210K                      243K                     

13:30     USD       Unemployment Rate                    8.3%                      8.3%                     

 13:30    USD       Average Weekly Hours                34.5                       34.5                       

 13:30    USD      Private Nonfarm Payrolls            215K                      257K

The Nonfarm Payroll report consists of several sections each having its own releases and data, which the markets interpret. This are crucial reports, giving investors and economists deep insight to the American Economy and are excellent predictions of what is to come. 

13:30     USD      Trade Balance                              -49.0B                   -48.8B    

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

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Sovereign Bond Auction Schedule

Mar 12, 10Y Notes on Mar 13 & 30Y Bonds on Mar 14

Mar 08  16:30  Italy   Details BOT auction on Mar 13

Mar 09  11:00  Belgium  OLO mini bond auction

Mar 09  16:30  Italy   Details BTP/CCTeu on Mar 14