The North American market open report
Low Volume Trading Dominates With U.S. & Canada Closed
Low Volume Trading Dominates With U.S. & Canada Closed
The following is a summary of the main economic events of September 1st, 2010:
· Low volume trading dominates an extremely quiet Monday, with the U.S. and Canada closed for the long Labour Day weekend.
· Australian and Canadian dollars are among the top performers despite a lack of economic data for either region; traders say the gains are likely follow through from last Friday’s better than expected jobs report from the United States.
· Sterling is the day’s top underperformer despite a lack of economic data to explain the move; GBP/USD declines 0.3% on the day.
· Euro comes under pressure despite upbeat comments from European Central Bank President Jean-Claude Trichet over the weekend, telling news agencies that the odds of a double dip recession in Europe are declining.
· Euro ignores comments from Austrian central banker Ewald Nowotny telling Bloomberg News that the central bank will wait until December before discussing how to withdraw its emergency lending in the region, echoing comments made by Trichet and Bundesbank President Axel Weber in recent weeks.
The Day Ahead- Asia/ Pacific
· Tuesday’s Asia-Pacific session appears to be light, but the Reserve Bank of Australia and Bank of Japan interest rate decision makes it far from boring.
· Released at 12:30 a.m. EDT, economists and traders are unanimously looking for no change to the 4.50% benchmark interest rate.
· What is going to be interesting will be whether or not the central bank decides to signal that it is ready to star hiking rates again.
· Last week’s stronger than expected GDP report, combined with an increasingly more stable outlook on Europe, may have the central bank moving away from its neutral stance, or at the very least, admitting that the global economy may be getting better.
· Either development should help the USD.
· The Bank of Japan rate decision comes at an unspecified time, but also promises to be interesting seeing as it comes right off an emergency meeting just days ago.
· Economists are not expecting a shift in interest rates, but there could be a tweak in the size of the central banks ¥30 trillion lending facility.
· On August 29, the BOJ held an emergency meeting and opted to widen the lending facility by ¥10 trillion in a bid to weaken the yen. The measure was deemed insufficient by the markets which punish the currency by buying it.
· As such, failure to act again may strengthen the yen further.
The Day Ahead- Europe
· Tuesday’s European session is indeed light, with only German factory orders to trade on.
· Released at 6 a.m. EDT, economists expect factory orders to rise 0.5% month-over-month in July, slower than forecasts for a 3.2% pickup.
· Annual orders are projected to advance 20.6%, less than the prior 24.6% pickup.
· A better than expected results should help the euro, and vice versa.
The Day Ahead- North America
· U.S. and Canadian markets reopen from the long Labour Day weekend on Tuesday, but there are no economic data or events on the docket, leaving FX subject to the whims of the broader equity markets and technical developments.
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