MORNING BRIEFING: Yen increases as risk appetite diminishes. FOMC meeting starts today.

[RTFX-Trading]

MORNING BRIEFING: Yen increases as risk appetite diminishes. FOMC meeting starts today.

What’s new?
United States and European Union to announce WTO case.
Euro zone: Trichet says economy still in downturn, policymakers must remain alert.
Euro zone: German IFO edges higher.
United States: White House sees unemployment reaching 10% within months.
US Dollar: Yen hits 3 week high against Dollar, 1 month high against the Euro.
United States: Fed FOMC meeting starts today.

Today:
08h00 Germany: Gfk Consumer Confidence Survey July 2.9, exp 2.5, previous 2.5
08h15 Switzerland: Trade Balance May (CHF), previous 2.56B
08h45 France: Consumer Spending M/M May, exp -0.30%, previous 0.70%
08h50 France: Business Climate Index June, exp 74.0, previous 72.0
09h28 Germany: Services Flash PMI June, exp 46.0, previous 45.2
09h28 Germany: Manufacturing Flash PMI June, exp 40.9, previous 39.6
09h59 Euro zone: Manufacturing Flash PMI June, exp 42.0, previous 40.7
09h58 Euro zone: Services Flash PMI June, exp 45.6, previous 44.8
16h00 United States: Existing Home Sales May, 4.8Mln, previous 4.68Mln.
16h00 United States: Richmond Fed Manufacturing Index June, previous 4.0.
16h00 United States: Richmond Fed Services Index June, previous -29.0.

Overnight Rates and Indices:
EURUSD: 1.3871 – 1.3829.
USDCHF: 1.0882 – 1.0852.
GBPUSD: 1.6360 – 1.6248.
EURJPY: 133.02 – 131.43.
USDJPY: 95.96 – 95.00.
DowJones: 8’339 -2.35%.
NASDAQ: 1’766 -3.35%.
S&P 500: 893 -3.06%.
Nikkei: 9’549 -2.82%.
Gold: $916
Crude Oil: $66.69.
 
Comments:

Risk aversion returned yesterday as the World Bank cut its global growth forecast. The world economy is expected to contract by 2.9% in 2009, versus earlier predictions of a 1.7% decline. Forecast growth for next year is estimated at 2.0% down from previous prediction of 2.3%. The Dollar gained yesterday against the Euro and other major high-yielding currencies.

The Yen reached a 3 week high versus the Dollar at 94.99 earlier today and reached its highest level since May at 131.43 against the Euro. The Australian Dollar dropped to month lows against the Yen and the Dollar as traders apparently liquidated their long positions in riskier assets before end of the 1st half of 2009. The focus remains on the upcoming FOMC meeting. Some people are suggesting that the Fed may discuss exit strategies in their statements, whereas on the other hand there is still a risk that the Fed may find some way to confirm their commitment to low rates.

Good Day

Emman Xuereb
RTFX Ltd
Head Office

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