Tuesday, September 29, 2009

US Dollar: Optimistic Economic Outlooks to Meet Hard Facts This Week

US Dollar: Optimistic Economic Outlooks to Meet Hard Facts This Week

The US dollar ended the past week marginally higher after the Federal Reserve issued a more optimistic outlook on the economy. In the coming week, though, there will be a variety of growth indicators on hand that may help to signal whether the US recession really ended in Q2. That said, the US dollar index will have to contend with resistance just above 77.00 at the start of the week, but a break above there will likely coincide with a EURUSD drop below 1.4615.

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US Dollar: Optimistic Economic Outlooks to Meet Hard Facts This Week

Fundamental Outlook for US Dollar: Bullish

- The Federal Reserve left rates unchanged, but signaled a more optimistic outlook
- University of Michigan consumer confidence jumped to a 21-month high in September
- US durable goods orders tumbled 2.4% in August, marking the steepest drop since January

The US dollar ended the past week marginally higher after the Federal Reserve issued a more optimistic outlook on the economy. In the coming week, though, there will be a variety of growth indicators on hand that may help to signal whether the US recession really ended in Q2. That said, the US dollar index will have to contend with resistance just above 77.00 at the start of the week, but a break above there will likely coincide with a EURUSD drop below 1.4615.

Looking to the upcoming event risk, on Tuesday, the September reading of the Conference Board’s measure of US consumer confidence is expected to rise up to a one-year high of 57 from 54.1 in August, but overall, there are some upside risks for this report. Indeed, the final reading of the University of Michigan’s consumer confidence index show that sentiment improved greatly in September, with the index hitting a 21-month high of 73.5 from 65.7.

On Wednesday, the third round of US Q2 GDP estimates is due to hit the wires, but the results will only be market-moving if we see surprising revisions. The final reading is forecasted to be revised down to -1.2 percent from -1.0 percent, though this would still represent a sharp improvement from Q1, when GDP plunged 6.4 percent. Readings in line with expectations may not have a very big impact on price action, but better-than-anticipated results could lead carry trades higher, especially in light of speculation that the recession may have ended in Q2.

On Thursday, the ISM manufacturing index is projected to rise for the ninth straight month in September to 54 from 52.9, which would be the highest reading since April 2006. With 50 being the point of neutrality, this would also be the second month that the index signals an expansion in activity, adding to evidence that the sector is experiencing a recovery in business activity. The last release didn’t have much of an impact on the US dollar, as risk aversion dominated the day, leading the currency higher. However, the report will still be useful because of its employment component as a leading indicator for the big news on Friday: US non-farm payrolls.

The US non-farm payrolls (NFPs) index is forecasted to show job losses for the 21st straight month in September, though the rate of decline is anticipated to slow further. At the time of writing, Bloomberg News was calling for NFPs to decline by 187,000, which would be the smallest drop since August 2008. Meanwhile, the unemployment rate is projected to edge up to 9.8 percent from 9.7 percent, but ultimately, the NFP result will be the event to watch as it is extremely volatile and is one of the sole reports that impacts the US dollar from a pure fundamental point of view. A better-than-anticipated result is likely to provide a boost to the US dollar, but it will be interesting to see the impact of disappointing results as weak US data tends to weigh on risky assets and push the greenback higher amidst flight-to-quality. – TB

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Major stock exchanges

Twenty Major Stock Exchanges In The World: Market Capitalization & Year-to-date Total Turnover at the end of May 2009

Region ↓ Stock Exchange ↓ Market Value
(millions USD) ↓		 Total Share Turnover
(millions USD) ↓
Africa Johannesburg Securities Exchange 605,040.2 117,424.7
Americas NASDAQ 2,773,684.3 12,256,704.3
Americas São Paulo Stock Exchange 920,263.9 191,926.1
Americas Toronto Stock Exchange 1,347,674.0 490,912.4
Americas New York Stock Exchange 9,574,066.6 7,986,835.8
Asia-Pacific Australian Securities Exchange 839,062.7 273,205.9
Asia-Pacific Bombay Stock Exchange 1,032,589.6 83,906.6
Asia-Pacific Hong Kong Stock Exchange 1,773,002.2 519,465.7
Asia-Pacific Korea Exchange 640,357.6 618,607.8
Asia-Pacific National Stock Exchange of India 968,815.1 242,641.7
Asia-Pacific Shanghai Stock Exchange 2,069,937.1 1,685,862.2
Asia-Pacific Shenzhen Stock Exchange 563,103.3 880,744.6
Asia-Pacific Tokyo Stock Exchange 3,102,492.9 1,561,888.8
Europe Euronext 2,262,751.6 742,885.6
Europe Frankfurt Stock Exchange (Deutsche Börse) 1,132,126.2 1,101,064.6
Europe London Stock Exchange 2,204,320.0 1,483,263.3
Europe Madrid Stock Exchange (Bolsas y Mercados Españoles) 1,084,606.4 591,217.3
Europe Milan Stock Exchange (Borsa Italiana) 554,613.9 341,421.1
Europe Nordic Stock Exchange Group OMX1 664,465.8 319,398.1
Europe Swiss Exchange 854,369.0 272,201.5

^Note 1 includes the Copenhagen, Helsinki, Iceland, Stockholm, Tallinn, Riga and Vilnius Stock Exchanges

The London Stock Exchange in the City of London.
New York Stock Exchange, New York City.
São Paulo Stock Exchange in São Paulo.
The Tokyo Stock Exchange in Tokyo.
Australian Securities Exchange's Sydney Exchange Centre in Sydney.
The Johannesburg Securities Exchange in the City of Johannesburg.

The main stock exchanges:

See also: Category:Stock exchanges

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