CommStock Israel Investor
Insights Newsletter
Monday, April 20th, 2009
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1) Dollar falls against euro
Demand for greenback wanes as Wall Street
rallies. Better-than-expected data from the euro zone supports
the 16-nation currency.
Last Updated: April 24, 2009: 5:33 PM ET
NEW YORK (Reuters) -- The euro rose against the dollar Friday for
a fourth straight session as improved business sentiment in Germany
added to hopes that the euro-zone economy may already have seen
the worst of the recession.
Dollar demand also faded as a stock rally lifted investor
risk appetite, though analysts said worries that U.S. automaker
Chrysler may be nearing bankruptcy also hit the greenback.
The dollar tends to rise with investor anxiety because
it is considered the safest store of value when economies worldwide
are contracting. It usually falls when risk appetite grows.
"Equities are bid (higher), keeping the dollar under
pressure, and recent data, particularly from Europe, supports the
notion that the pace of economic decline is at least not accelerating," said
Dustin Reid, currency strategist at RBS Global Banking & Markets
in Chicago.
The euro rose 0.8% to $1.3245 after earlier rising above
$1.33 for the first time in nearly two weeks. It hit a two-week
peak against sterling near 91 pence after data showed the U.K.
economy registered its sharpest contraction in 30 years during
the first three months of 2009.
Sterling fell 0.4% to $1.4663.
The dollar fell 0.8% to ¥97.21 and declined 0.9% to
1.1395 Swiss francs, with some of the losses tied to worries that
Chrysler is moving closer to bankruptcy, said Wells Fargo FX strategist
Nick Bennenbroek.
Some signs of life, but risk ahead
The euro pared some gains after the Federal Reserve
said the top 19 U.S. banks need to hold a "substantial" amount
of capital above regulatory requirements.
Some analysts warned that market sentiment may deteriorate
in the days ahead on any sign of new banking sector trouble.
Greg Salvaggio, senior vice president for capital markets
at Tempus Consulting in Washington, said there is still "significant
concern out there that more than one of the larger U.S. financial
institutions will be deemed failures."
The results of the government's bank stress tests are
due to be released on May 4.
Still, finance chiefs from the Group of Seven most industrialized
countries on Friday said the pace of economic decline had slowed
and pledged to clean up banks' bad assets and restore credit flows.
The euro got a boost after Germany's Ifo business sentiment
survey rose in April, adding to a string of improved euro-zone
data this week.
George Davis, director for foreign exchange at RBC Capital
Markets in Toronto, said the euro "has been oversold for some time,
and with better-than-expected data in the region giving support,
there might be further gains in store."
Earlier this week, the euro hit a one-month trough against
the dollar below $1.29 as investors speculated the European Central
Bank may not cut interest rates enough next month to stimulate
the economy.
2) Commentary by David Zwebner,
CEO of CommStock Trading
U.S. Economy - Keeps Improving?
The U.S. Commerce Department said that durable goods orders were
down .8% in March, but better than expected. The March eurodollars
were down .02 at 98.52.
The U.S. Census Bureau said that new home sales were
at an annual rate of 356,000 units in March, down .6% from February's
revised (higher) pace, but better than expected. The inventory
of new homes is down to a 10.7 month supply. July lumber was down
$3.40 at $187.00.
According to Reuters News, out of 108 Standard and Poor
500 companies that have reported first-quarter earnings so far,
59 have beat analyst expectations. Today, Ford said that they lost
$1.4 billion in the first quarter of 2009, not as bad as expected.
They continue to say that they don't expect to need any more government
aid.
What recession? Late yesterday, American Express said
that they earned $361 million in the first quarter, much better
than expected.
Today, federal officials tell the nation's 19 largest
financial institutions how they came out on the government's stress
test. The results are to be made public on May 4th, but will the
banks be able to keep a secret until then?
Grains and Cotton
Statistics Canada said that farmers are expected to plant 17.0
million acres of spring wheat this year, up 6.2% from a year
ago. July wheat ended up 2.5 cents at $5.432.
The USDA said that 58,000 tons of U.S. corn were sold
to unknown destinations for this year and another 58,000 tons for
2009-2010. Also, 120,000 tons of U.S. soybeans were sold to unknown
destinations for 2009-2010. July corn closed down 4.5 cents at
$3.855.
Coffee
Dow Jones Newswires continues to say that weather conditions for
Brazil's coffee crop are "generally favorable." July coffee ended
up 1.20 cents at $1.1945.
Sugar
July sugar closed up .51 at 14.18, the highest close in over six
months, helped by today's higher gasoline price.
Metals
China's government said that they now hold 1,054 tons of gold in
reserve, making them the fifth largest official owner in the
world. June gold closed up $7.50 at $914.10.
Energies
July crude oil jumped up $1.87 to $52.94, encouraged by economic
news that keeps improving.
July natural gas fell 11.2 cents to $3.55, another new
contract low, weighed down by abundant supplies and a slow economy.
Currencies
The U.K.'s Office for National Statistics lowered its estimate
of real GDP growth to -1.9% in the first quarter, the worst quarter
in 30 years.
The same Office also said that retail sales in the U.K.
were up .3% in March and up 1.5% from a year ago, better than expected.
The June British pound ended down .0025 at $1.4669.
The Ifo Institute's index of German business confidence
improved from 82.2 to 83.7 in April.
Real GDP in South Korea was up .1% in the first quarter.
Spain's National Statistics Institute said that the
unemployment rate increased to 17.4% at the end of the first quarter.
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