MORNING BRIEFING: Talks of a new stimulus plan for the United States supports the US dollar, the EURUSD down near 1.3900, the "carry trades" fall behi

[RTFX-Trading]

MORNING BRIEFING: Talks of a new stimulus plan for the United States supports the US dollar, the EURUSD down near 1.3900, the "carry trades" fall behind.

What’s new?
Oil: Sarkozy and Brown agree on anti-volatility mechanisms.
United States: A new revival plan to be discussed.
Switzerland: UBS to pay fine for US fiscal infringement.
Italy: GDP estimates for 2009 fall to new low to 5.20%
United Kingdom: Industrial Production fell in May.
Banking Secrecy: France and Belgium sign agreement.
France: Trade deficit reduced to €2.72B in May, exports rise.
United States: The US automotive supplier Lear filed for bankruptcy.

Today:
07h45 Switzerland: Unemployment rate s.a. June, exp 3.60%, previous 3.50%.
10h00 United Kingdom: Halifax House Prices M/M June, exp -0.70%, previous 2.60%.
11h00 Euro Zone: GDP revised Q1, exp -2.50%, previous -1.80%.
12h00 Germany: Industrial Production M/M May, exp 0.50%, previous -1.90%.
13h00 United States: MBA Mortgage Applications, previous -18.9%
21h00 United States: Consumer Credit May, exp 9.50B, previous -15.7B.

Overnight Rates and Indices:
EURUSD: 1.3927 – 1.3881.
USDCHF: 1.0915 – 1.0883.
GBPUSD: 1.6140 - 1.6062.
EURJPY: 132.14 – 130.96.
USDJPY: 94.89 – 94.16.
DowJones: 8’163 -1.94%.
NASDAQ: 1'746 -2.31%.
S&P 500: 881 -1.97%.
Nikkei: 9’428 – 2.27%.
Gold: $923.50
Crude Oil: $62.30
 
Comments:

The markets are weakened, resulting in a sharp drop in "carry trades". At noon yesterday, the Pound was down to 151.50 from 155.50, the New Zealand Dollar down to 59.00 from 60.95 against the Yen and the Australian dollar down to 74.00 from 76.60 against the yen. The talk of an enhanced stimulus plan to promote economic recovery in the United States encouraged investors to doubt more and more the impending recovery. The current situation caused renewed risk aversion leading to a decline in the stock market, a sharp drop in "carry trades" and a rising US dollar (which is still regarded as safe).

Regarding the G8 summit from Aquila, we do not see at this time important news that may affect the foreign exchange market. The hot topic on the status of the dollar as reserve currency should be discussed tomorrow when the G5 (the major emerging economies including China) will take part in discussions.

Good Day

Emman Xuereb
RTFX Ltd
Head Office

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