#kuwait#nbk#finance#economics#markets#us#imf
United States
Lower Greenback as Positive Sentiment Rules
Just days after rising Spanish yields spurred fears
of a Spanish default, it seems that risk sentiment is back on the
positive side again. First, the
#IMF stated it had some optimism in reference to the global economic
growth and revised the world’s economic growth for 2012 to 3.5% from an
earlier 3.3% forecast.
Additionally, Spanish and French bond auctions
saw relatively good demand from investors, with
both countries being able to raise as much capital as planned. Last,
the good economic figures also helped in taming risk aversion and giving
a boost to risky assets.
Naturally,
FX markets witnessed a sell-off of the #US Dollar against major
counterparts as a result of this improved risk sentiment, which shows in
the performance of the Dollar Index. The Index started the week at
79.90, and after rising swiftly for the first day,
broke lower and at 79.20.
The Euro
had a positive but weak momentum against the US Dollar, mainly hurt due
to crosses against other currencies such as the Sterling Pound. After
opening at 1.3080, the single currency reached a low of 1.2995 but
found a stable support there. The single currency broke higher
afterwards to a high of 1.3230 before ending the week at 1.3220. The
Sterling Pound had the strongest performance last week, boosted
as previously stated by the EURGBP cross trading. After opening around
the 1.5850, the Pound had an upward move to a high of 1.6150,
and ended sessions at 1.6120. The Swiss Franc followed suit with the
Euro, strengthening against the greenback from an opening level of
0.9195 to 0.9100, and closed at 0.9090. The Japanese Yen was the
exception last week, with USDJPY rising from a low of 80.95
to a high of 81.80, and closing at 81.50.
Retail Sales Climb More than Forecast
Retail
sales in the U.S. rose more than forecast in March as Americans snapped
up everything from cars and furniture to clothes and electronics. The
0.8% gain was
almost three times as large as projected and followed a 1%
advance in February, and was higher than the expected increase of 0.3%.
The improving job market is giving households confidence to sustain
spending in the face of higher gasoline costs, boosting
sales at chains such as Gap Inc. and Target Corp. Strengthening
consumer demand raises the odds that the world’s largest economy will
weather a recession in Europe and slower growth in China.
Previously Owned Home Sales Unexpectedly Fell in March
Sales of previously owned US homes unexpectedly fell
in March for the third time in the last four months, showing an uneven
recovery in the housing market.
Purchases dropped 2.6% to a 4.48 million annual rate from 4.6 million
in February, according to official figures released last week. In
January, sales at a 4.63 million rate were the strongest since May 2010,
and economists had called for an increase to 4.61
million last month. Residential real estate remains the economy’s soft
spot, challenged by stricter lending standards, lower home values and
the threat of more foreclosures. An improved labor market and mortgage
rates near historic lows have yet to stoke bigger
gains in demand.
US Factories Cool for the First Time in Four Months
Production at US factories dropped in March for the first time in four months,
as the industry cooled following the strongest surge in three decades.
Manufacturing,
which makes up about 75% of industrial output, decreased 0.2% last
month as appliance and furniture makers cut back. The decline followed a
revised 3.4% gain from December through February that marked the
biggest three-month jump since March 1984. The rebound
in manufacturing that helped the world’s largest economy climb out of
the recession in June 2009 may now be giving way to gains among service
industries, including retailers, as consumer spending grows.
Europe
Euro Zone Trade Surplus Contracts More than Estimated
The
Euro region’s trade surplus narrowed more than economists had estimated
in February as increased demand for imported goods outpaced exports.
The surplus
shrank to a seasonally adjusted 3.7 billion Euros from a revised 5.3
billion Euros in January, while economists had forecast a drop to 5
billion Euros. A breakdown of the figure shows that imports increased
3.5% in the month, while exports were up 2.4%. European
Central Bank President Mario Draghi said earlier that, while
economic-growth indicators had “broadly stabilized at low levels” after a
0.3% contraction in the fourth quarter of 2011, the outlook “remains
subject to downside risks.”
Spanish Debt Auction
Investors
showed a healthy appetite for Spanish debt last week but demanded a
higher borrowing rate in an auction that was a key test of confidence in
the government's
ability to get a handle on its debts. The Spanish Treasury auctioned
EUR 2.54 billion in two- and 10-year bonds at the top end of
targeted demand. It had set a range of EUR 1.5 billion to EUR 2.5
billion for the sale. The interest rate, or yield, on
the 10-year bond was 5.7%, up from 5.3% at the last auction on April 4.
Demand was more than double the amount sold, down from about triple at
the last auction. But that hasn't completely quelled the nervousness
over Spanish debt. The average yield for the
10-year bond dipped in its initial reaction to the auction, but then
reversed direction and rose to more than 5.9%. This was attributed in
part to investors rushing to safer bets such as German bonds, which have
seen their prices rising.
Inflation Exceeds Estimate in March
European consumer prices increased at a faster pace than initially
estimated in March, driven by energy costs, complicating the European
Central Bank’s task
as it tries to push the inflation rate below its 2.0% limit.
Inflation in the 17-nation euro region held at 2.7% for a fourth month.
This number is higher than the 2.6% increase that markets were
expecting. The European economy may struggle to gather
strength as budget cuts and rising energy prices erode consumer
spending and company investment.
German
Investor Confidence Increases to Two-Year High
German investor
confidence unexpectedly rose to a two-year high in April, suggesting
Europe’s largest economy can weather the resurgent debt crisis in the
euro
region’s periphery. The ZEW index of investor and analyst expectations,
which aims to predict economic developments six months in advance,
increased to 23.4 from 22.3 in March. That was the fifth straight gain
and the highest reading since June 2010, and investors
were expecting a drop to 19. Germany may avoid a recession as
unemployment at a two-decade low bolsters domestic spending, helping to
offset waning demand for its exports across the Euro region as austerity
measures bite.
Euro Zone Consumer Confidence Unexpectedly Drops
Even though confidence is surging regarding the German economy, Euro-area consumer confidence,
which is part of a broader economic-sentiment indicator, unexpectedly
fell in April for the first time this year. The consumer confidence
index dropped to -19.8 from -19.1 in March, marking the first decline
since December. Surging unemployment rates from Greece to Italy and
rising borrowing costs in Spain have fueled concerns
that the debt crisis is not under control. While European Central Bank
President Mario Draghi has stated that the Euro area economy is showing
signs of stabilization “at a low level” after the central bank’s
offering of three-year loans, the ECB still predicts
a contraction in the region this year.
United Kingdom
Inflation
Back on the Rise
UK inflation unexpectedly accelerated in March for the first time in six months, driven
by prices for food, clothing and recreation and culture. Consumer
prices
rose 3.5% from a year earlier, up from 3.4% in February, and higher
than the 3.4% forecast. In a change to recent history, energy proved to
be a drag on inflation, with the largest downward pressures to the
change in CPI coming from electricity, gas & other
fuels and transport. Analysts still expect the inflation rate to resume
its decline. The figures also reduce the scope for the Bank of England
to pump more monetary stimulus into the economy. The Bank of England
forecasts inflation, which has been above 2.0%
since December 2009, will hit that target by the end of the year.
MPC Meeting Minutes Surprise Markets
The minutes from the latest meeting of the Bank of England’s Monetary Policy
Committee (MPC) reveal that one of the policymakers, Adam Posen,
changed his long-held
view on the need for more quantitative easing (QE). Mr. Posen has been
the most dovish member of the committee for many months and it is a
genuine shock that he has changed his mind and said that further
injections of cash into the economy is not required
at this time. It is thought that Mr. Posen changed his mind because of
concerns that inflation is not going to fall as quickly or as far as
previously thought, and stated that the bank of England may have to
change its policies if core inflation failed to
show a sustained fall. In fact, the minutes from the MPC’s last meeting
reveal that the committee is now concerned that high inflation will
last longer than previously forecast. This is likely to influence them
to put any more QE on hold. However, David Miles
was the only member of the nine-man committee to vote for more QE. He
called for a further £25 billion of funds to be added.
UK Unemployment Unexpectedly Falls
UK unemployment has fallen to 2.65m in the three months ending
in February, to a rate of 8.3%, according to the Office for National
Statistics. The number was
down 35,000 on the quarter and is the first quarterly fall in
unemployment since the three months to May 2011. Youth unemployment has
also fallen, with the number of unemployed 16 to 24-year-olds down to a
rate of 22.2%.
Kuwait
Kuwaiti Dinar at 0.27775
The USDKWD opened at 0.27775 on Sunday morning.
Rates –
20 April 2012
|
Previous Week Levels
|
This Week’s Expected Range
|
3-Month
|
Currencies
|
Open
|
Low
|
High
|
Close
|
Minimum
|
Maximum
|
Forward
|
EUR
|
1.3080
|
1.2995
|
1.3230
|
13220
|
1.2980
|
1.3480
|
1.3225
|
GBP
|
1.5850
|
1.5820
|
1.6150
|
1.6120
|
1.5890
|
1.6480
|
1.6115
|
JPY
|
80.95
|
80.30
|
81.80
|
81.50
|
79.60
|
84.20
|
81.45
|
CHF
|
0.9195
|
0.9085
|
0.9250
|
0.9090
|
0.8930
|
0.9340
|
0.9075
|