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Market Snapshot 05.05.08

Market Snapshot 05.05.08

USD

Brief:
1.Last Friday’s US economic releases, -actual- US Average hourly earnings –YoY-MoM- (3.4% - 0.1%), US Change in manufacturing payrolls (-46k), US Unemployment rate (5.0%) and US Change in NFP (-20k).
2.Economists said before a report today that US service industries probably contracted for a 4th month in April, reflecting the damage from the housing slump and credit crisis that are depressing growth.
3.USD strengthened against the dollar last Friday after government report showed jobless rate felled and payrolls decreased less than expected.
4.Last Friday’s economic releases showed US lost fewer jobs than forecast in April, and the unemployment rate dropped, signaling that the economic slowdown may be milder than expected.
5.Payrolls shrank by 20k workers, better than earlier economists forecast payrolls would fall by 78k and unemployment rate decreased by 0.1% to 5.0% in April from 5.1% in March.
6.Orders to US factories rose 1.4% in March, more than forecast, indicating rising demand from overseas may be helping US manufacturers weather a decline in sales at home.

On the upside:
•Cross currencies weakness. (JPY, EUR and CHF)
•US economy is showing signs of recovery.

On the downside:

•The dollar might slide on disappointing earnings reported by major corporate.


To monitor:
•News/statements related to Major institution.
•US capital markets movement.
•Fed member’s comments/statements.
•Other Central bank member’s statements/comments.
•Cross currency strength and weakness. (GBP, EUR, AUD, NZD, CAD and JPY –Main-)


Suggested pairs of the day:

Short: AUD/USD - NZD/USD - GBP/USD – EUR/USD
Long: USD/JPY - USD/CHF -
Possible main pairs are: – USD/JPY – AUD/USD – GBP/USD – EUR/USD -


-According to 13.15GMT price-


JPY

Brief:
1.JPY strengthens against most currencies early today as European and Asian stock markets felled after Microsoft withdrew its bid for Yahoo Inc.
2.PY weakens against most currencies last Friday after US stocks rose on payrolls report.
3.Unemployment in US felled by 0.1% to 5.0%, better than earlier economist forecast and payrolls decreased less than expected.

On the upside:
•US capital markets might slightly fall on profit taking after last week rally.

On the downside:
•Cross currency strength. (USD)
•US stocks markets might rally on buying interest and positive announcement.


To monitor:    
•US indexes movement.
•Major corporate earnings report, particularly financial sectors.
•News related to major institution.
•Fed members statements/comments.
•Economist comments on US/Japan economy, economic releases or sector growth.


Suggested pairs of the day:
Long: USD/JPY - GBP/JPY – AUD/JPY– NZD/JPY– EUR/JPY – CAD/JPY –
Possible main pairs are: –GBP/JPY – EUR/JPY – NZD/JPY – USD/JPY –

-According to 13.15GMT price-


EUR

Brief

1.EUR strengthens against the dollar early today as traders bet the ECB will keep interest rates at 6 years high this week to fight inflation.
2.Tomorrow’s Euro-zone economic releases, -forecast- France PMI –Services- (54.0), Germany PMI –Services- (54.6), Euro-zone PMI –Services- (51.8) and Euro-zone PPI –YoY-MoM- (5.6% - 0.7%).
3.EUR weakens against the dollar last Friday after a report showed US unemployment rate unexpectedly felled and payrolls decreased.
4.Economist predicts ECB will cut its 4% benchmark rate to 3.75% by the end of September and 3.50% by year end amid slower growth.
5.Last Friday’s Germany government report showed Germany retail sales unexpectedly felled. Germany Retail sales unexpectedly felled by 0.1%, economists expected an increase of 0.6% earlier.

On the upside:

•Cross currency weakness. (JPY and CHF)

On the downside:

•Cross currency strength. (USD, GBP and AUD)
•Major European institution posting worse than expected earnings.
•Weaker Euro-zone economic growth outlook.


To monitor:
•Tomorrow’s Euro-zone economic releases.
•News related to major corporate.
•Fed members statement/comments.
•Cross currency movement. –Main- (USD)
•ECB or other central banks member’s statements/comments.


Suggested pairs of the day:  
Short: EUR/USD – EUR/NZD – EUR/AUD – EUR/GBP
Long: - EUR/JPY - EUR/CHF – EUR/CAD -

Possible main pairs are: – EUR/NZD – EUR/AUD – EUR/USD – EUR/JPY -

-According to 13.15GMT price-


Crude oil

Brief:
1.Crude oil rose on early today as the dollar weakens against the euro and geopolitical risk prompt buying interest in commodities.
2.Crude oil rose more than $3, biggest gain since April 2, after Turkish warplanes pounded rebels (PKK) in northern Iraq, raising fears that oil supplies in the region may be disrupted.
3.Crude oil extended its rally amid stronger dollar as government report showed US unemployment rate unexpectedly decreased and payrolls posted smaller than expected losses, raising speculation that maybe fuel demand won’t fall as much as expected earlier.

On the upside:

•Further unrest in Nigeria delta, disrupting supplies.
•Turkish troops action against PKK rebels might disrupt oil supplies in the region.

On the downside:
•The dollar strengthens against the euro.
•Some selling pressure after last Friday late session surge.
•Capital markets might rise on buying interest.


To monitor:

•Strike and unrest in Nigeria.
•Turkish troops action against Iraqi rebels PKK.
•USD movement.
•US capital markets movement.
•Forecast on near-term US economic releases and economic growth.
•Fed or its member’s statements/comments.
    

Trade suggestion:
“Short” Crude oil around high $116 and low $117 (USD movement, Geopolitical risk and US indexes movement.)
-Exit all positions before market closes-

-According to 13.15GM price-


Time lapse prediction: (according to current situation)


14PM – 16PM GMT:    


•USD slightly recovers on early trading session.
•US capital market rises on early trading session.
•JPY weakens following US capital markets movement.
•EUR slightly weakens on early trading session.  
•Crude oil weakens on early trading session.


16PM – 18PM GMT:


•USD remains or slightly strengthens by mid trading session.
•US capital markets rises further on mid trading session.
•JPY weakens following US capital markets movement.
•EUR remains or slightly weakens on mid trading session.
•Crude oil remains or slightly weakens by mid trading session.


18PM – 22PM GMT:

    
•USD strengthens by late trading session.
•US capital markets remains or slightly retreats by late trading session.
•JPY strengthens following US capital markets movement.
•EUR weakens by late trading session.
•Crude oil falls by late trading session.

Loh Chang Yuen,

Junior Strategist

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Admiral Markets Philippines

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