FOREX IN REVIEW

TODAY Aug 9 -2012

European equity indices closed mixed yesterday as Spanish sovereign yields began to widen once more and the Bank of England noted the downside economic risks in the inflation report. The Spanish IBEX guided the decline in equities, falling -0.84% followed by a -0.68% slide in the Dutch AEX. The French CAC 40 was -0.43% weaker while the Swedish OMX surprised to the upside, outperforming 0.40%. Meanwhile, Greece's credit rating is facing another possible downgrade subsequent to yesterday's outlook by rating agency S&P. Greece which is rapidly seeing another repayment due on August 20th is desperately attempting to restore financial order with more budget cuts and better tax receipts. EURUSD continues to trend sideways, trading at 1.2382 while GBPUSD is up 0.15% to 1.5679.

Asian stocks remain strong even after mixed economic data from New Zealand, Australia and China. While Australia recorded a slight dip in the unemployment rate, New Zealand unemployment unexpectedly rose to 6.80% from 6.70% even though a decline was forecast. While Chinese CPI data has arrived better than expected, PPI data year-over-year showed larger than expected declines which could be more indicative of a slowdown in industrial production. Still on the docket this morning is industrial production data from China, India, and Malaysia. The Hang Seng is leading indices higher, climbing 0.80% as the Nikkei and Hang Seng are slightly stronger, gaining 0.43% and 0.25% respectively. USDJPY continues to grind slowly to the upside, ticking up to 78.420 while the biggest gainer is AUDUSD, rising 0.23% to 1.0595.

Stocks were mostly lower in the U.S. as earnings season begins to wrap up with 7 stocks falling for every 6 gainers. Right now major indices hang on a precipice as cyclical stock flows and the technicals point to movements in either direction. The S&P 500 and Dow Jones Industrial Average were marginal stronger, rising 0.06% and 0.05% respectively as the Nasdaq was notably weaker, falling -0.15%. WTI crude oil has continued the upward advance, rising 0.22% to $93.56 per barrel as gold climbs 0.23% to $1619.70 on speculation that Central Banks will add more stimulus to offset slowing recoveries. Even though no formal easing has been mentioned, contradictory statements from regional Federal Reserve Presidents still maintain the possibility if the situation does deteriorate.

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