This week could only be described as confused. With the risk aversion momentum carried over from last week on sovereign debt concerns in Greece, Portugal, Spain, and even Italy, market sold off the EUR during early week. Then in a twist of events, first with the FOMC Minutes showing extensive discussions on further Quantitative measures, followed by the Fed Chairman Bernanke’s testimony openig the door for QE3, market immediately turned around and sold off the USD.To add more confusion in the mix, NZD made another all-time high against multiple currencies on its much better than expected Q1 GDP release, while AUD dropped on Westpack analyst calling for a rate cut of 100 basis points by the end of Dec. 2011… With China’s inflationery pressure remaining constant at above 6.0% and it’s GDP remaining at 9.0%, global recovery is diverging from US and EU.
With Moody’s and S&P putting US sovereign credit rating on WATCH NEGATIVE, chances for a credit downgrade has risen up to 50% due to the stalemate in congress on raising the debt ceiling.
Let’s also not forget the EBA Stress Test result showing 8 out of 90 banks failed, which is a surprising good release since analysts were expecting around 12 to 15 banks failing. However, EBA has been criticized previously for setting the bar too low, and despite of the much stricted guidelines for this stress test, EBA avoided the 800lb gorrilla question of how many banks would survive on a sovereign default… so go figure…
Next week we’ll have 6 tradable news releases… here is the list:
Tue July 19, 2011 – 9:00am EDT – CA BOC Interest Rate
Wed July 20, 2011 – 4:30am EDT – UK MPC Minutes
Wed July 20, 2011 – 10:00am EDT – US Existing Home Sales
Thu July 21, 2011 – 4:30am EDT – UK Retail Sales
Fri July 22, 2011 – 7:00am EDT – CA Core CPI
Fri July 22, 2011 – 8:30am EDT – CA Core Retail Sales
The most focused news for this week is probably UK MPC Minutes, but I believe the UK Retail Sales may be the most tradable.
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