CommStock Israel Investor
Insights Newsletter
Monday, January 18th, 2009
1) Dollar mixed on job news
Greenback gains against euro, falls versus
yen, little changed against pound as investors mull U.S.
job losses.
By Lara Moscrip,
CNNMoney.com contributing writer
Last Updated: January 9, 2009: 6:19 PM ET
NEW YORK (CNNMoney.com) -- The dollar was mixed against
major currencies Friday, as investors took the news of the high
number of U.S. December job losses in stride.
The greenback was boosted on the slightly better-than-expected
news of 524,0000 jobs
lost in December, according to John Kicklighter, a currency
strategist with DailyFX. That's because some speculators may have
been expecting a higher figure, as was the case in November when
job losses exceeded many forecasts, he said.
The lower than expected losses sparked a slight dollar
rally, but the movement was due "more on relief and repositioning
than any belief that the worst is behind [us]," according to a
research note from Sacha Tihanyi, currency strategist at Scotia
Capital.
The Labor Department also reported that the unemployment
rate rose to 7.2% last month from 6.7% in November - its highest
rate since January 1993.
The pound had been gaining against the dollar for five
consecutive days, but was largely unchanged late Friday, ended
slightly lower against the dollar.
The British pound fell 0.25% against the dollar to $1.5178
from $1.5197 late Thursday.
The Bank of England lowered its key
interest rate by half a percentage point to 1.5% on Thursday,
an historic low. That caused the pound to surge, as many investors
were expecting a larger cut, up to three-quarters of a point,
according to Tom Benfer, director of foreign exchange at BMO
Capital Markets. That surprise likely caused many speculators
who had shorted the pound to buy it back to cover their positions,
causing it to rise, Benfer said.
The greenback dropped 0.95% against the Japanese yen,
purchasing ¥90.32, down from ¥91.28 late Thursday.
Kicklighter cited the bleak jobs report as one reason
why investors prefer investing in yen to dollars.
"The yen is perceived as a less risky investment than
the dollar, and with so many jobs lost, the yen will continue to
appreciate against the dollar," Kicklighter said.
According to analysts, the yen's recent strength comes
from investors borrowing the currency over the past 10 years in
order to buy assets - often in the United States - that provided
a higher return.
As those assets, which include real estate, have fallen
in value, investors have had to pay back the money to Japan. That
has been driving the dollar lower versus the yen.
The 15-nation euro fell 1.90% against the dollar, trading
at $1.3442 from $1.3726 late Thursday.
Kicklighter attributed the euro's gains to the fact
that investors are evaluating where they can expect to find the
greatest return, and they may be finding that in European investments,
as opposed to American investments.
"Investors aren't as nervous as they were in October.
They are looking for returns on capital rather than trying to preserve
capital. In the euro zone, people are more optimistic about growth," Kicklighter
said.
The European Central Bank is widely expected to cut
its key interest rate at its Jan. 15 meeting.
Outlook: Kicklighter said he thinks investors
will be less likely to stash their cash in Treasurys in an effort
to preserve capital, and will begin to seek investments that offer
returns.
Investors must buy dollars to get into Treasurys, and
if investors sell their dollar-denominated Treasurys, that could
weaken the greenback against major currencies.
"Investors are looking for which economy is going to
recover first, and they will be looking more at economic fundamentals
from here on out," Kicklighter said.
2) Commentary by David Zwebner, CEO of CommStock
Trading
Our Kivun CommStock (6F)Commodity Futures Leveraged Fund
No. 5107966 closed the year with the maximum 5 star rating yielding
a NET pre tax 21.45% profit after all fees.
U.S. Economy
The U.S. Labor Department said that the unemployment rate increased
from 6.7% to 7.2% in December, the most in 16 years. Non-farm
payrolls were down 524,000 in December, resulting in a total
loss of 2.6 million jobs for all of 2008, the most jobs lost
since 1945.
While the number of jobs lost in December was not as
big as some feared, non-farm payrolls in November were revised
from -533,000 to -584,000. October's decline of 320,000 jobs was
revised to a loss of 423,000 jobs.
Overall, the economic news remains poor and cash remains
king. The December eurodollars closed up .115 at a new contract
high of 98.81.
The U.S. Census Bureau said that wholesale sales were
down 7.1% in November while inventories were down .6%.
Grains and Cotton
March soybeans jumped up 46.5 cents to $10.36 with more hot and
dry weather in the forecast for Argentina and southern Brazil.
March cotton fell 1.10 to 49.32 ahead of Monday morning's
USDA supply and demand estimates.
Lumber
Canada's Mortgage Housing Corporation said that new home construction
was at an annual rate of 177,300 in December, down slightly from
November's pace. March lumber closed up $4.00 at $181.00.
Energies
Russian officials agreed to resume the flow of natural gas to Europe
as long as European officials agreed to make sure that Ukraine
wouldn't steal any of it.
The National Weather Service's 6 to 10 day forecast
is expecting below average temperatures in the northeastern U.S.
March natural gas ended down 7 cents at $5.494.
Metals
In spite of the poor economic outlook, March copper finished up
8.05 cents at $1.5595 on hopes that government plans to increase
infrastructure spending in China and the U.S. will help copper
demand.
Currencies
Statistics Canada said that the unemployment rate increased from
6.3% to 6.6% in December with a net loss of 34,400 jobs. For
all of 2008, the economy gained 98,000 jobs. Also, building permits
were down 11.8% in November. The March Canadian dollar closed
down .37 at 84.20.
The U.K.'s Office for National Statistics said that
manufacturing output was down 2.9% in November and down 7.4% from
a year ago. It was the biggest annual drop since 1981. The March
pound was down .0096 at $1.5109.
David Zwebner, CEO
CommStock Trading Ltd.
Tel: +972-(0)2 624-4963
Fax: +972-(0)2 624-4876
www.ecommstock.com
3) A Fan of Forex?
Interested in reading perspectives and analyses on the
Forex market? In learning what factors affect the Forex market
every week and what to be on the lookout for? In getting trade
recommendations? Email mona@ecommstock.com to
get your copy of a weekly Forex report.
4) Closing Prices for Friday, January
9, 2008
Amidex: Amidex35 (Class No Load Shares),
$9.73; Index, 1263.57, Daily Change, -.10%; “A” Shares NAV, $7.49.
Global Asset Management: Capital
Appreciation, $187.12; Composite Absolute Return, $772.64; Diversity,
$648.12; GAMCO, $616.63; Interest Trend, $165.47; Trading IV-US$
Class, $145.40; US$ Special Bond Fund, $313.20.
Invesco: Asian Equity Core, $2.86; Bond, $26.62;
Emerging Markets Bond, $14.45; European Bond, EUR 4.4486;
Gilt, GBP 12.94; Global High Income, $8.57; Japanese
Equity Core, $1.16; UK Equity, GBP 4.310.
JPMorgan Fleming: JF Eastern Smaller
Co., $56.88; JF Japan, JPY 10,473; JF Japan Equity, $9.46;
JF Japan OTC, JPY 720; JF Japan Smaller Companies, JPY
24,725; JF Japan Technology, JPY 29,520; JF Korea, $23.76;
Pacific Securities, $141.16; Pacific Smaller Companies
$14.23; Global Bond & Currency, $22.41;
JF America, $31.52; JF Europe, $26.87; JF Germany, EUR
14.45; JF Global Equity, $27.00.
PCP: Emerging Markets, $12.68; Balanced, $6.62; Aggressive,5.70.
Platinum (updated once a month – October 2008
Prices): Equity Plus, $50.18.
Mona Liss
CommStock Trading Ltd
PO Box 7777
Jerusalem 91077
Tel: +972-2-6244963
Fax: +972-2-625 9515
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