Market News

Barclays is not very concerned about slippage in late June Michigan consumer sentiment, says "The rebound in equity markets and steadily declining gasoline prices will likely provide support for consumer sentiment in the coming month."

North America auto sales for June are trickling across news wires. Ford's (F 14.02, +0.23) sales in June increased by 14% from the prior year. General Motors (GM 30.70, +0.34) announced that its sales for June increased by 11% from the same period one year ago. Privately held Chrysler reported a 30% year-over-year increase.
Nissan (NSANY 21.19, +0.14) announced that its sales for June increased by 11% year over year. Volkswagen said its sales for June were up 35% from the prior year.

The euro was poised for its first weekly gain in a month versus the dollar as Greek Prime Minister George Papandreou won approval for an austerity plan needed to keep aid flowing, while German banks agreed to roll over Greek bondholdings maturing through 2014. The Dollar Index was set for its biggest weekly drop since the first week of June.
“The risk of a default has really fallen significantly and Greece is moving in the right direction, so that’s why we’re seeing traders reduce their safe-haven bets and buy euros and other currencies,” said Kathy Lien, director of currency research with online currency trader GFT Forex in New York.
The European currency fell as much as 0.5 percent after Institute for Supply Management’s factory index showed U.S. manufacturing unexpectedly expanded at a faster pace in June. The measure rose to 55.3 last month from 53.5 in May, the Tempe, Arizona-based group said today.
“This is a really strong number for the U.S.,” said Mark McCormick, a New York-based currency strategist at Brown Brothers Harriman & Co. “You’re getting a little bit of selling pressure on the euro just based on how strong the U.S. ISM numbers were.”
The carry trade of selling dollars to buy the currencies of Norway, Australia, Canada and New Zealand has more than tripled this week as investor appetite for higher-yielding assets increases.
Canada’s dollar strengthened as much as 0.3 percent against its U.S. counterpart to the highest level since May 12.
The euro was supported as traders increased bets the European Central Bank will tighten monetary policy, pushing euribor futures lower. The implied yield on the March 2012 contract rose four basis points to 2.01 percent.
“The Europeans are trying to avoid default, but are not choosing devaluation; in the U.S., the Federal Reserve would rather see the dollar weaken and help create jobs and is assuming that won’t create too much inflation,” Kit Juckes, head of currency strategy at Societe Generale SA in London, said during a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.
“As long as that choice is there, unless there’s a disaster in the global economy that makes everyone just run and put their money under a mattress, then we will end up with a weaker dollar,” Juckes said.
Investors expect the ECB to increase interest rates by 76 basis points during the next year, up from a forecast 16 on June 22, according to a Credit Suisse Group AG index based on swaps.
ECB President Jean-Claude Trichet reiterated yesterday that policy makers are in a state of “strong vigilance” against inflation, highlighting chances of a rate increase at their meeting on July 7. The central bank raised its key rate in April for the first time in almost three years, lifting it by a quarter point to 1.25 percent.

Stocks are up markedly for the fifth straight session. That has the S&P 500 on pace for a weekly gain of 5.0%, which is actually the stock market's best weekly performance since a 5.4% advance during the week ended July 9, 2010.
The sharp march higher comes after stocks had spent several weeks stuck in a steady backslide. Prior to this week's advance, the stock market booked only weekly losses since April, save for one week in which the stock market mustered an incremental move higher.

The major market averages are resting on solid gains. For the second straight session, industrials are among the best performers. As a group, industrial plays are up 1.2%.
Consumer discretionary stocks are also in strong shape this session. Their 1.1% gain has been led by Darden Restaurants (DRI 51.68, +1.92) and Apollo Group (APOL 46.98, +3.30). Shares of DRI are up in the wake of news that the company posted in-line earnings and hiked its dividend 34% to $0.43 per share. As for APOL, its shares are up sharply in response to news of a better-than-expected bottom line for the latest quarter.

The major market averages are resting on solid gains. For the second straight session, industrials are among the best performers. As a group, industrial plays are up 1.2%.
Consumer discretionary stocks are also in strong shape this session. Their 1.1% gain has been led by Darden Restaurants (DRI 51.68, +1.92) and Apollo Group (APOL 46.98, +3.30). Shares of DRI are up in the wake of news that the company posted in-line earnings and hiked its dividend 34% to $0.43 per share. As for APOL, its shares are up sharply in response to news of a better-than-expected bottom line for the latest quarter.

Rebound off lows stretches to $1.4490 area as the bounce in US stocks encourages risk-trades and offsets the lift to the dollar from firmer US yields. Euro likely to encounter resistance around $1.4500 area of early US session highs, also at $1.4530 area ahead of offers at $1.4550/55 area. Euro last $1.4498.

EUR/USD: $1.4400, $1.4410, $1.4500, $1.4550
USD/JPY: Y80.75, Y80.95, Y81.05, Y81.10, Y81.55
EUR/JPY: Y117.85, Y115.85, Y115.65, Y114.90
GBP/USD: $1.5995, $1.6030, $1.6130
AUD/USD: $1.0705, $1.0685, $1.0675, $1.0650, $1.0625
EUR/AUD: A$1.3530, A$1.3535, A$1.3550
AUD/JPY: Y85.00
NZD/USD: $0.8130
NZD/CAD: C$0.7845

Data:

Eases back below $1.4500 into early NY trade, the rate trading around $1.4490 at posting. Demand sitting at $1.4480 supported an earlier dip, with residual interest suggested to remain in place.

Drops below $1.4500 as market reacts to the move in this weekend's meeting to Saturday at 1600GMT, from Sunday. Rate found support around $1.4485 bhut seen holding heavy below the figure. Support has been noted between $1.4485/80 ahead of the overnight low at $1.4467.

EUR/USD: $1.4400, $1.4410, $1.4500, $1.4550
USD/JPY: Y80.75, Y80.95, Y81.05, Y81.10, Y81.55
EUR/JPY: Y117.85, Y115.85, Y115.65, Y114.90
GBP/USD: $1.5995, $1.6030, $1.6130
AUD/USD: $1.0705, $1.0685, $1.0675, $1.0650, $1.0625
EUR/AUD: A$1.3530, A$1.3535, A$1.3550
AUD/JPY: Y85.00
NZD/USD: $0.8130
NZD/CAD: C$0.7845

GBP/USD falls after a weaker than forecast UK mfg PMI data (51.3 versus median 51.5). Rate fell to the lows around $1.6003 and currentl trades near $1.6011.

The euro was poised for its first weekly gain in a month versus the dollar as traders increased bets the European Central Bank will tighten monetary policy and Greece progressed in staving off a default.
The euro headed for a weekly advance after Greek Prime Minister George Papandreou won approval to implement an austerity plan needed to keep aid flowing to his nation.
“An interest-rate hike next week is pretty much a done deal for the ECB,” said Khoon Goh at ANZ National Bank Ltd.. “The yield differential will continue to provide support for the euro.”
The dollar was set to rise for a second week versus the yen before a report forecast to show U.S. consumer confidence was stronger than previously reported.  The Reuters/University of Michigan index of consumer sentiment was at 72 last month compared with a preliminary reading of 71.8, according to the median estimate of economists.
“I’m bullish on the dollar toward the year-end,” said Kengo Suzuki at Mizuho Securities Co.. “The U.S. economic slowdown is temporary.”
The New Zealand dollar weakened for the first time in four days versus the dollar after data showed Chinese manufacturing expanded in June by less than economists had estimated, sapping demand for higher-yielding assets.
The yen was headed for a weekly decline on prospects the Bank of Japan will lag behind its counterparts in raising interest rates.
The quarterly Tankan index of sentiment at large manufacturers fell to minus 9 in June from 6 in March, the BOJ said today. The median estimate of economists was for a reading of minus 7.

EUR/USD printed session highs on $1.4550 before retreated to $1.4508.
GBP/USD tested $1.6095, but failed to break above the figure and retreated to current $1.6070.
USD/JPY fell to session low at Y80.54 before recovered to Y80.80.

Today's focus will be on UK PMI report in Europe.
In US today's attention will be on final reading of Michigan sentiment index, ISM Mfg PMI and Construction spending.

GBP/USD rose to current $1.6085 after testing session high on $1.6096. Offers in place between $1.6095/00, a break to open a move toward Thursday's Asian high at $1.6118, with offers extending to $1.6120.

Majors close:
Nikkei 225 +18.83 +0.19% 9,816.09
FTSE 100 +89.76 +1.53%     5,945.71
CAC 40     +57.98     +1.48%     3,982.21
DAX +82.10 +1.13% 7,376.24
Dow     +152.39 +1.24% 12,413.81
Nasdaq     +33.03     +1.21% 2,773.52
S&P 500 +13.17     +1.01% 1,320.58
Oil     $95.13     -0.29     -0.30%
Gold     $1,502.10 -0.70 -0.05%

Japan's benchmark stock indices ended Friday's session higher, but shy of the best levels. The Nikkei 225 was up 51.98 points, or 0.53%, to stand at 9868.07. The broader-based TOPIX was up 4.36 points at 853.58.

The euro climbed to the highest in almost three weeks against the dollar on prospects the European Central Bank will increase interest rates next week to curb inflation and as European ministers are set to approve the next aid payment due to Greece.
The case for higher rates was strengthened as data showed European consumer-price growth was above the ECB’s 2% target for a seventh month. The inflation rate remained at an initially estimated 2.7% for a second month in June, statistics showed today.
A separate report showed German unemployment declined for a 24th straight month in June.
Greek Prime Minister George Papandreou won approval of a second bill to authorize his 78 billion-euro ($113 billion) package of budget cuts and asset sales, a key to receiving further international financial aid.
German banks have agreed to roll over about 2 billion euros in the Greek bonds they’re holding that mature through 2014, German Finance Minister Wolfgang Schaeuble said.
ECB President Trichet repeated that policy makers are in a state of “strong vigilance” ahead of the July 7 meeting, a phrase he has used before tightening monetary policy in the past.
The pound slid to the least in more than 15 months against the euro as reports showed U.K. consumer confidence fell this month. Moreover, the house prices were little changed, limiting the scope for interest-rate increases.
The average cost of a home was 168,205 pounds ($270,255), compared with 167,208 pounds in May, when it rose 0.3%.
Consumer confidence fell to minus 25 from minus 21 last month, GfK NOP said in a separate report, below the minus 24 median estimate.
Bank of England policy maker Adam Posen on June 27 dismissed a call by the Bank for International Settlements for tighter monetary policy worldwide to curb inflation as “nonsense”.

EUR/USD recovered to $1.4540 following the decline to $1.4445. But later rate corrected to $1.4500.

GBP/USD initially fell to $1.5970 from $1.6110. Later pound back to $1.6100.

USD/JPY sharply rose from Y80.25 to Y80.86 before rate retreated to Y80.40.

Today's focus will be on PMI reports from France, Germany, EMU and UK.
In US today's attention will be on final reading of Michigan sentiment index, ISM Mfg PMI and Construction spending.

Comments: Dollar broke above the downward channel from Jun 16 and currently consolidates after a sharp rise in NY yesterday. Minor resistance is at session highs on Chf0.8460 with stronger level comes at Chf0.8520 (channel linen from Jun 06 and trend line from Feb highs cross here). Support is around Chf0.8370 (Jun 29 highs). Below losses may widen to Chf0.8300 (Jun 30 lows) and then - to Chf0.8270 (channel support line from Jun 06).

Nikkei 225 +18.83 +0.19% 9,816.09
FTSE 100 +89.76 +1.53%     5,945.71
CAC 40     +57.98     +1.48%     3,982.21
DAX +82.10 +1.13% 7,376.24
Dow     +152.39 +1.24% 12,413.81
Nasdaq     +33.03     +1.21% 2,773.52
S&P 500 +13.17     +1.01% 1,320.58
Oil     $95.13     -0.29     -0.30%
Gold     $1,502.10 -0.70 -0.05%

07:45     Italy     PMI (June)         50.6    52.8
07:50     France     PMI (June)         52.5    54.9
07:55     Germany     PMI (June) seasonally adjusted         54.9    57.7
08:00     EU(17)     PMI (June)         52.0    54.6
08:30     UK     CIPS manufacturing index (June)         52.7    52.1
09:00     EU(17)     Unemployment (May)         9.9%    9.9%
      Canada     National Day              
13:55     USA     Michigan sentiment index (June) final         72.0    71.8
14:00     USA     ISM Mfg PMI (June)         52.0    53.5
14:00     USA     Construction spending (May)         0.0%    0.4%

Comments: Pound holds higher, heading for a strong resistance at $1.6090 (channel resistance line fron Jun14). Above there is a chance to probe $1.6260 (Jun 22 high). Key resistance is at $1.6330 (channel line from May 02). Support is near $1.5970 (Jun 30 lows). Below rate may get down to $1.5910. Support lines from Jun 14 and May 02 cross at $1.5805/95 (strong support).

Comments: Rate remains within the triangle pattern on 4-hour charts, limited today by $1.4530/$1.4130 (strong resistance/support respectively). Currently rate holds a bit lower the upper bound with a risk of challenging it. Break above opena the way up to $1.4650 and then - to Jun 07 high at $1.4700. Minor support is near $1.4430 (23.6% of the rise from $1.4100). Below rate may weaken to $1.4320 (50%). Further support comes at $1.4130.