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Finotec News Archive - July 22 2008

Dollar weakens after American says profits fell

American Express, the biggest U.S. credit-card company by purchases, reported second-quarter profit fell

Tammy Wall
22 July 2008

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	EUR/USD	USD/JPY	GBP/USD	USD/CHF
Resistance	1.6035 1.5995 1.5940	108.20 107.75 107.10	2.0155 2.0100 2.0040	1.0305 1.0260 1.0185
Support	1.5910 1.5870 1.5835	106.10 106.00 104.75	1.9995 1.9960 1.9910	1.0135 1.0015 1.0000

The dollar traded near a record low against the euro after American Express Co. said profit dropped because more consumers defaulted on loans, raising concern the U.S. economic slowdown will deepen. The currency may extend declines against the yen before reports this week forecast by economists to show that U.S. home sales and durable-goods orders dropped in June. American Express, the biggest U.S. credit-card company by purchases, reported second-quarter profit fell 37 percent on bad consumer loans, as the housing market slumped and economic growth slowed. ``Traders will look for opportunities to sell the dollar,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``The housing market and corporate earnings show that the U.S. economy's fundamentals are weak.'' EUR/Dollar is currently trading at 1.5921 as of 7:40 am, GMT.

Chancellor of the Exchequer Alistair Darling said fallout from a global credit crunch is proving worse than previously expected, a sign that U.K. policy makers are bracing for slower growth. ``The effect of what has happened is going to be far more profound than people predicted even at the turn of this year,'' Darling said in an interview with Bloomberg Television, which will air excerpts today. ``It is quite clear that if you look during the course of this year, conditions have become more difficult across the world.'' The finance minister, whose tenure has coincided with the sharpest decline in house prices and the steepest rise in living costs in a decade, reiterated his belief the British economy will escape recession and pledged to keep up the fight against inflation. GBP/USD is currently trading at 2.0026 as of 7:43 am, GMT.

The euro is also poised to strengthen versus the yen. ``The euro still looks strong on charts,'' said Hashimoto at the unit of Japan's biggest publicly traded lender by assets. The next target of about 173.60 yen is also a 123.6 percent reversal of the euro's decline to 149.27 on Aug. 17 from a high of 168.99 set on July 23, 2007, based on the Fibonacci sequence, he said. Other Fibonacci points are 50 percent, 61.8 percent and 76.4 percent. A break of one of these indicates a currency may move to the next level. A failure suggests a trend may stall. Resistance is a level where selling may outweigh buying.

Finotec Analysis Team
22 July 2008

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Today's Economic Events

Time	Event	Currency	Period	Previous	Actual
14:00	Household Confidence	USD		-0.8%	-0.3%
Measures the mood of households in regard to economic conditions. The reading is derived from a monthly survey that asks households to evaluate the prospects for the economy in the future.
14:00	Richmond Fed Index	USD	Jul	-12	-16
Measures the general business conditions of manufacturers in the Richmond Federal Reserve district. The index is derived from a survey that asks respondents to rate the level of general business activity as \'decrease\', \'increase\', or \'no change\'. This report usually has little impact because the New York and Philadelphia Federal Reserve release similar reports about two weeks earlier.
12:30	Core Retail Sales m/m	CAD	May	1.1%	0.4%
Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.
12:30	Retail Sales m/m	CAD	May	0.6%	0.4%
Measures the value of sales at the retail level. A rising trend has a positive effect on the nation's currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.
12:30	FOMC Meeting Minutes	USD
The Federal Open Market Committee (FOMC) Meeting Minutes are a detailed record of the committee's interest rate meeting held about two weeks earlier. The minutes expose the votes cast at the meeting and can give traders further insight into the central bank's stance on monetary policy. Traders carefully comb the minutes for clues regarding future interest rate shifts.
08:45	BOE Governor King Speaks	GBP

07:15	Trade Balance	CHF	Jun	1.87B	2.41B
Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation's currency. When higher levels of exports are sold to the world, demand for the nation's currency is elevated as foreigners convert their native currency to purchase the exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production, as domestic factories work to fill this demand.
00:50	All Industries Activity Index m/m	JPY		0.8%	0.4%
Measures the change in spending for goods and services. This indicator is similar to the Tertiary Industry Activity Index released a few days prior, but it adds data from the primary sector, including fishing, farming, forestry, mining, and manufacturing.
00:50	All Industries Activity Index m/m	JPY		0.8%	0.4%
Measures the change in spending for goods and services. This indicator is similar to the Tertiary Industry Activity Index released a few days prior, but it adds data from the primary sector, including fishing, farming, forestry, mining, and manufacturing.

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Event Date

BOJ Governor Fukui Speaks(JPY)	19.08.2008 14:00
FOMC Meeting Minutes(USD)	19.08.2008 14:00
Wholesale Sales m/m(CAD)	19.08.2008 12:30

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