MORNING BRIEFING: Lower than expected US figures push investors to take profits on their “carry trades” positions. France and Germany are out of reces

[RTFX-Trading]

MORNING BRIEFING: Lower than expected US figures push investors to take profits on their “carry trades” positions. France and Germany are out of recession.
 
What’s new:
France: Lagarde still sees an exit from crisis in summer of 2010.
France: GDP increases by 0.30% in 2nd quarter 2009.
Germany: Merkel declares that the German economy has reached a bottom.
Germany: Surprise growth of 0.30% in 2nd quarter.
Switzerland: PPI index down 6.10% in July over a year.
Euro zone: GDP contraction limited to 0.10% in 2nd quarter 2009.
United States: Dramatic increase in bankruptcies from April to June.
United States: Import prices down to -0.70% in July.
United States: Unexpected drop in retail sales.
United States: Increase in weekly jobless claims to 558’000.

Today:


Overnight Rates and Indices:
EURUSD: 1.4304 – 1.4252.
USDCHF: 1.0728 – 1.0691.
GBPUSD: 1.6606 – 1.6542.
EURJPY: 136.45 – 135.54.
USDJPY: 95.48 – 95.05.
DowJones: 9’398 +0.39%.
NASDAQ: 2’009 +0.53%.
S&P 500: 1’012 +0.69%.
Nikkei: 10'615 +0.93%.
Gold: $956.05.
Crude Oil: $70.82.
 
Comments:

Yesterday, retail sales for July declined in the United States against all expectations. Investors now doubt the long-awaited recovery in consumer spending expected in the third quarter of 2009. Weekly jobless claims rose during the week of August 8 to 558'000 while the market expected 545'000 claims. More negative news yesterday that puts the end of the recession in the US into question was the number of bankruptcies from April to June, which jumped by 38%, more than 16,000 US companies a figure unprecedented. These figures have prompted US investors to take profits on long "carry trades" positions accumulated this week.

Earlier in the day, investors were happy to position themselves for an increase in "carry trades" following pleasing GDP figures from the Euro zone: Germany and France are out of the recession in the second quarter of 2009, which is earlier than expected. The two largest economies in the euro zone grew by 0.30% over the period April-June, ending four consecutive quarters of contraction. Throughout the Euro zone, GDP growth remained negative by only 0.10%, while expectations were for -0.50%.
   
Today will be marked by the publication of a series of economic data from Europe and the United States, mainly the final figures of HICP inflation in the Euro zone and the evolution of consumer prices in the United States.

Good day.

Emman Xuereb
RTFX Ltd
Head Office
The Cornerstone Complex, 16th September Square | Mosta MST 1180 | Malta
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