外国為替の取引.com

Switzerland’s Gross Domestic Product is expected to shrink 1% in the three months to June, marking the fourth consecutive quarter in negative territory and revealing the economy is now contracting at an annual pace of 3%, the fastest in at least 34 years. Looking ahead, a survey of economists conducted by Bloomberg expects output will continue to shrink though the end of this year and begin a modest recovery in the first quarter of 2010. However, this may prove too rosy: exports of goods and services account for a whopping 51.6% of the overall economy, an overwhelming majority of which are headed for markets in the European Union. Indeed, Germany, France and Italy alone make up a whopping 37.3% of foreign demand. Continental European economic growth is expected to trail sharply behind that of most other developed economies (with the notable exclusion of Japan) through the end of next year, suggesting overseas sales and with them overall performance may remain under water for substantially longer than consensus forecasts would have us believe. Deflation adds to the downside risks for the economy: annual inflation is expected to shrink for the fifth consecutive month in August; if this translates into expectations of lower prices in the future, consumers and businesses will perpetually delay spending and investment as they wait for the best possible bargain, bringing economic growth to a virtual standstill.

Turning to the Euro Zone, German Retail Sales are expected to grow for the first in three months, adding 0.7% in July, while the annual pace of decline moderates to -1.2% . The government’s 85 billion euro spending plan (including a “cash-for-clunkers” program to boost auto sales) is the likely catalyst behind the improvement. However, labor market data to be released later in the session is set to show that the German economy shed 30,000 jobs in August, bringing the Unemployment Rate to 8.4%, the highest since November 2007. Job losses will weigh on incomes and weigh on consumption, suggesting the economy will have a hard time building positive momentum after the flow of stimulus cash dries up. The broader Euro Zone Unemployment Rate result will probably follow higher, with forecasts calling for the metric to tick up to a decade high of 9.5% in July, mimicking the dynamics seen in the region’s top economy.

In the UK, the August edition of the Purchasing Manager Index is set to show that the manufacturing sector expanded for the second consecutive month. However, more attention is likely to be given to Net Consumer Credit, which is expected to remain flat at 0.1 billion pounds in July, a hair above the record low posted in March. This will serve to keep pressure on the Bank of England to press on with quantitative easing measures as banks fail to pass on lower interbank borrowing costs to the broader economy. Indeed, the market the BOE’s dovish posture seems to be the driving force behind sterling price action despite surface-level improvements in economic data: a trade-weighted index of the Pound’s average value topped out on 08/05, the day before the last rate decision, and has been trending lower ever since; a Credit Suisse index gauging traders’ 1-year BOE rate hike expectations (as derived from overnight index swaps) topped out on the very same day.

Asia Session Highlights

Australia’s AiG Performance of Manufacturing Index rose to 51.7 in August, showing the sector expanded for the first time in 14 months. Still, AiG chief executive officer Heather Ridout struck a cautious tone, saying that although “manufacturing activity has been improving…conditions are uneven and pressures remain on employment.” Indeed, looking at the components of the metric reveals that the rate of contraction in Employment accelerated for the first time since February. Ridout added that “There is a risk, particularly if interest rates are raised too early in the recovery phase, that as the effect of stimulus measures wane, the nascent recovery will fail to get traction.” The government of Prime Minister Kevin Rudd has distributed over A$12 billion in cash handouts this year and set aside A$22 billion for infrastructure projects.

Meanwhile, the Current Account Balance deficit widened more than economists expected in the second quarter, revealing a shortfall of –A$13.4 billion, shaving 0.2% off GDP in the three months to June. Preliminary forecasts had called for a –A$10.7 billion result. Exports dropped by a whopping 14.9%, more than doubling the -7.16% contraction in imports, with overseas shipments of gold (-40.1%), transport equipment (-35.9%), coal (-25.5%) and metal ores (-20.5%) leading the decline. This offered a counter-balance to the encouraging manufacturing PMI result, bolstering the argument that firms will be faced with sharp declines in sales as absent private demand is unable to replace the stimulative effects of the government’s fiscal measures.

The Reserve Bank of Australia kept interest rates unchanged at 3%, as expected. Bank Governor Glenn Stevens sounded broadly optimistic, saying “consumer spending, exports and business investment [are] notable for their resilience” while “Unemployment has not, to this point, risen as far as had been expected.” On inflation, Stevens noted that lower labor demand and commodity prices are likely to see prices continue to decline in the near term but “the likelihood of inflation being persistently below the target now looks low.” Such rosy comments notwithstanding, however, the bottom line is that Stevens and company judged that the “the present accommodative setting of monetary policy remains appropriate for the time being,” a disappointing outcome considering the hawkish tone of the RBA chief’s semi-annual testimony before the Parliament’s finance committee. The Australian Dollar sold off on the release, testing as low as 0.8407 to the US Dollar.

To reach Ilya regarding this article or subscribe to his email distribution list, please contact him at

Switzerland’s Gross Domestic Product is expected to shrink 1% in the three months to June, marking the fourth consecutive quarter in negative territory and revealing the economy is now contracting at an annual pace of 3%, the fastest in at least 34 years. Looking ahead, a survey of economists conducted by Bloomberg expects output will continue to shrink though the end of this year and begin a modest recovery in the first quarter of 2010. However, this may prove too rosy: exports of goods and services account for a whopping 51.6% of the overall economy, an overwhelming majority of which are headed for markets in the European Union. Indeed, Germany, France and Italy alone make up a whopping 37.3% of foreign demand. Continental European economic growth is expected to trail sharply behind that of most other developed economies (with the notable exclusion of Japan) through the end of next year, suggesting overseas sales and with them overall performance may remain under water for substantially longer than consensus forecasts would have us believe. Deflation adds to the downside risks for the economy: annual inflation is expected to shrink for the fifth consecutive month in August; if this translates into expectations of lower prices in the future, consumers and businesses will perpetually delay spending and investment as they wait for the best possible bargain, bringing economic growth to a virtual standstill.

Turning to the Euro Zone, German Retail Sales are expected to grow for the first in three months, adding 0.7% in July, while the annual pace of decline moderates to -1.2% . The government’s 85 billion euro spending plan (including a “cash-for-clunkers” program to boost auto sales) is the likely catalyst behind the improvement. However, labor market data to be released later in the session is set to show that the German economy shed 30,000 jobs in August, bringing the Unemployment Rate to 8.4%, the highest since November 2007. Job losses will weigh on incomes and weigh on consumption, suggesting the economy will have a hard time building positive momentum after the flow of stimulus cash dries up. The broader Euro Zone Unemployment Rate result will probably follow higher, with forecasts calling for the metric to tick up to a decade high of 9.5% in July, mimicking the dynamics seen in the region’s top economy.

In the UK, the August edition of the Purchasing Manager Index is set to show that the manufacturing sector expanded for the second consecutive month. However, more attention is likely to be given to Net Consumer Credit, which is expected to remain flat at 0.1 billion pounds in July, a hair above the record low posted in March. This will serve to keep pressure on the Bank of England to press on with quantitative easing measures as banks fail to pass on lower interbank borrowing costs to the broader economy. Indeed, the market the BOE’s dovish posture seems to be the driving force behind sterling price action despite surface-level improvements in economic data: a trade-weighted index of the Pound’s average value topped out on 08/05, the day before the last rate decision, and has been trending lower ever since; a Credit Suisse index gauging traders’ 1-year BOE rate hike expectations (as derived from overnight index swaps) topped out on the very same day.

Asia Session Highlights

Australia’s AiG Performance of Manufacturing Index rose to 51.7 in August, showing the sector expanded for the first time in 14 months. Still, AiG chief executive officer Heather Ridout struck a cautious tone, saying that although “manufacturing activity has been improving…conditions are uneven and pressures remain on employment.” Indeed, looking at the components of the metric reveals that the rate of contraction in Employment accelerated for the first time since February. Ridout added that “There is a risk, particularly if interest rates are raised too early in the recovery phase, that as the effect of stimulus measures wane, the nascent recovery will fail to get traction.” The government of Prime Minister Kevin Rudd has distributed over A$12 billion in cash handouts this year and set aside A$22 billion for infrastructure projects.

Meanwhile, the Current Account Balance deficit widened more than economists expected in the second quarter, revealing a shortfall of –A$13.4 billion, shaving 0.2% off GDP in the three months to June. Preliminary forecasts had called for a –A$10.7 billion result. Exports dropped by a whopping 14.9%, more than doubling the -7.16% contraction in imports, with overseas shipments of gold (-40.1%), transport equipment (-35.9%), coal (-25.5%) and metal ores (-20.5%) leading the decline. This offered a counter-balance to the encouraging manufacturing PMI result, bolstering the argument that firms will be faced with sharp declines in sales as absent private demand is unable to replace the stimulative effects of the government’s fiscal measures.

The Reserve Bank of Australia kept interest rates unchanged at 3%, as expected. Bank Governor Glenn Stevens sounded broadly optimistic, saying “consumer spending, exports and business investment [are] notable for their resilience” while “Unemployment has not, to this point, risen as far as had been expected.” On inflation, Stevens noted that lower labor demand and commodity prices are likely to see prices continue to decline in the near term but “the likelihood of inflation being persistently below the target now looks low.” Such rosy comments notwithstanding, however, the bottom line is that Stevens and company judged that the “the present accommodative setting of monetary policy remains appropriate for the time being,” a disappointing outcome considering the hawkish tone of the RBA chief’s semi-annual testimony before the Parliament’s finance committee. The Australian Dollar sold off on the release, testing as low as 0.8407 to the US Dollar.

To reach Ilya regarding this article or subscribe to his email distribution list, please contact him at

Both euro and sterling pound experienced upside momentum during the session, helped by an improvement in regional U.S. manufacturing data. According to the Institute for Supply Management – Chicago report, business activity ratcheted higher in the month of August. The report sparked some signs of economic recovery as the reading increased to the pivotal 50 figure, higher than the 43.4 posting experienced in July.

Even more surprising were upticks in the separate components creating the overall index. Orders climbed to the highest level in a year as the employment index jumped a solid 3.4 points higher to a reading of 38.7. The month’s results support nothing but optimism on the idea that the world’s largest economy may be on the mend following one of the deepest recessions in decades.

However, given rather tepid data support in recent months (ie manufacturing, employment and confidence),  results for August may be subject to a downgrade next month as additional reports have cued in on a more pessimistic outlook. As a result, traders will likely take today’s results with a grain of salt, while looking ahead to potentially more concrete evidence through this week’s non-farm payroll report.

Expectations are for an optimistic loss of only 250,000 jobs in the economy.

Canadian Dollar Suprise

Although traders saw a less than expected rise in Canadian GDP, the fact that the figure rose in positive territory helped to boost a rather strong bid tone for the underlying Loonie. For the first time in almost a year, Canadian growth actually increased by 0.1 percent in the month of June, according to Statistics Canada.

What was especially positive about the figure is the fact that overall annualized growth has now improved to a mere contraction of 3.4 percent. This is almost 50 percent lower than the 6.1 percent contraction seen in the first quarter of this year. Helping to put the nation into the black was a rebound in consumer spending and a housing market that reheated following rescue measures implemented earlier in the year.

Incidentally, the current situation bucks what was previously expected for growth even as exports and business investment took a bit of a nosedive in the three month period. Ultimately, those bullish the Canadian dollar won out on the day as the currency continued to be bid higher following the announcement – the currency rose from an intraday low of 1.1091 to just below the 1.0950 figure.

More bidding is expected in coming weeks as the Canadian economy continues to remain one of the few economies that are expected to arise from the ashes in the coming quarter, earlier than other industrialized counterparts.

Both euro and sterling pound experienced upside momentum during the session, helped by an improvement in regional U.S. manufacturing data. According to the Institute for Supply Management – Chicago report, business activity ratcheted higher in the month of August. The report sparked some signs of economic recovery as the reading increased to the pivotal 50 figure, higher than the 43.4 posting experienced in July.

Even more surprising were upticks in the separate components creating the overall index. Orders climbed to the highest level in a year as the employment index jumped a solid 3.4 points higher to a reading of 38.7. The month’s results support nothing but optimism on the idea that the world’s largest economy may be on the mend following one of the deepest recessions in decades.

However, given rather tepid data support in recent months (ie manufacturing, employment and confidence),  results for August may be subject to a downgrade next month as additional reports have cued in on a more pessimistic outlook. As a result, traders will likely take today’s results with a grain of salt, while looking ahead to potentially more concrete evidence through this week’s non-farm payroll report.

Expectations are for an optimistic loss of only 250,000 jobs in the economy.

Canadian Dollar Suprise

Although traders saw a less than expected rise in Canadian GDP, the fact that the figure rose in positive territory helped to boost a rather strong bid tone for the underlying Loonie. For the first time in almost a year, Canadian growth actually increased by 0.1 percent in the month of June, according to Statistics Canada.

What was especially positive about the figure is the fact that overall annualized growth has now improved to a mere contraction of 3.4 percent. This is almost 50 percent lower than the 6.1 percent contraction seen in the first quarter of this year. Helping to put the nation into the black was a rebound in consumer spending and a housing market that reheated following rescue measures implemented earlier in the year.

Incidentally, the current situation bucks what was previously expected for growth even as exports and business investment took a bit of a nosedive in the three month period. Ultimately, those bullish the Canadian dollar won out on the day as the currency continued to be bid higher following the announcement – the currency rose from an intraday low of 1.1091 to just below the 1.0950 figure.

More bidding is expected in coming weeks as the Canadian economy continues to remain one of the few economies that are expected to arise from the ashes in the coming quarter, earlier than other industrialized counterparts.

Both euro and sterling pound experienced upside momentum during the session, helped by an improvement in regional U.S. manufacturing data. According to the Institute for Supply Management – Chicago report, business activity ratcheted higher in the month of August. The report sparked some signs of economic recovery as the reading increased to the pivotal 50 figure, higher than the 43.4 posting experienced in July.

Even more surprising were upticks in the separate components creating the overall index. Orders climbed to the highest level in a year as the employment index jumped a solid 3.4 points higher to a reading of 38.7. The month’s results support nothing but optimism on the idea that the world’s largest economy may be on the mend following one of the deepest recessions in decades.

However, given rather tepid data support in recent months (ie manufacturing, employment and confidence),  results for August may be subject to a downgrade next month as additional reports have cued in on a more pessimistic outlook. As a result, traders will likely take today’s results with a grain of salt, while looking ahead to potentially more concrete evidence through this week’s non-farm payroll report.

Expectations are for an optimistic loss of only 250,000 jobs in the economy.

Canadian Dollar Suprise

Although traders saw a less than expected rise in Canadian GDP, the fact that the figure rose in positive territory helped to boost a rather strong bid tone for the underlying Loonie. For the first time in almost a year, Canadian growth actually increased by 0.1 percent in the month of June, according to Statistics Canada.

What was especially positive about the figure is the fact that overall annualized growth has now improved to a mere contraction of 3.4 percent. This is almost 50 percent lower than the 6.1 percent contraction seen in the first quarter of this year. Helping to put the nation into the black was a rebound in consumer spending and a housing market that reheated following rescue measures implemented earlier in the year.

Incidentally, the current situation bucks what was previously expected for growth even as exports and business investment took a bit of a nosedive in the three month period. Ultimately, those bullish the Canadian dollar won out on the day as the currency continued to be bid higher following the announcement – the currency rose from an intraday low of 1.1091 to just below the 1.0950 figure.

More bidding is expected in coming weeks as the Canadian economy continues to remain one of the few economies that are expected to arise from the ashes in the coming quarter, earlier than other industrialized counterparts.

・【プチFX業界NEWS】→DMM.com証券が基準スプレッドを縮小へ。ドル円0.0～0.8銭以下、ユーロ円0.6～1.4銭以下、ポンド円1.6～2.4銭以下、豪ドル円1.2～2.0銭以下、ユーロドル0.8～1.6pips以下、ポンドドル1.8～2.6pips以下など。

■今日の為替相場の注目材料と指標ランク■


→更新履歴：★【9月1日AM05時10分】「注目材料と指標ランク」の【表】の部分をアップ→★【AM07時39分】「詳細情報や相場観」の部分をアップ

■1000通貨で取引可能＆無料◆FXTS＆ライオンFX＆kakakuFX＆NTT＆マネックスFX

9月1日(火)の為替相場の注目材料			指標ランク (注目度＆重要度)	コンセン サス	前回 発表値
・9月最初の営業日 ・英国が連休明け
10:00		中)製造業PMI	○	-	53.3
10:30		豪)住宅建設許可件数 [前月比/前年比]	◎	+3.3%	+9.3%
				-9.1%	-14.3%
		豪)第2四半期経常収支	△	-107.00億	-46.14億
13:30		豪)RBA政策金利＆声明発表	◎	3.00% 据え置き	3.00% 据え置き
14:45		ス)第2四半期GDP [前期比/前年比]	△	-1.0%	-0.8%
				-3.0%	-2.4%
15:00		独)小売売上高指数 [前月比/前年比]	△	+0.7%	-1.8% (-1.3%)
				-1.2%	-1.6%
16:30		ス)SVME購買部協会景気指数	△	46.9	44.3
16:55		独)失業者数	△	+3.0万人	-0.6万人
		↑・失業率		8.4%	8.3%
		独)製造業PMI【確報値】	×	49.0	49.0
17:00		欧)製造業PMI【確報値】	×	47.9	47.9
17:30		英)製造業PMI	◎	51.5	50.8
		英)消費者信用残高	×	+1億	+1億
		英)マネーサプライM4【確報値】	×	-	+13.6%
		英)モーゲージ承認件数	×	5.00万件	4.76万件
18:00		欧)失業率	△	9.5%	9.4%
23:00		米)ISM製造業景況指数 →過去発表時[ユーロドル][ドル円]	S	50.5	48.9
		米)中古住宅販売保留 →過去発表時[ユーロドル][ドル円]	AA	+1.6%	+3.6%
		米)建設支出 →過去発表時[ユーロドル]	C	-0.1%	+0.3%
太字→赤太字の順番で重要。ピンク太字は金融政策関連。ピンク色のバックは米国の材料で黄色は要人発言。 指標ランク について 米国の経済指標はSS→S→AA→A→BB→B→Cの7段階で表記 その他の経済指標は◎→○→△→×の4段階で表記 指標部分についての免罪 事項及びご利用上注意点

詳細情報は↓↓↓続きをどうぞ。

(【済】→「続き」以降の部分はAM6時～AM8時までにアップ予定)

The risk trade is in question for this week

The forex trading forecast has been interesting and unsettled this week, thanks to the fact that the risk trade has been questioned as volatility reigns in the financial markets. 

For now, the risk trade has been in the back ground. The U.S. stock market is following the lead of most other world markets, and is lower. Additionally, commodities continue to struggle. The risk trade may return later this week if consumer data turns out positive.

GFT’s Boris Schlossberg reports in FX360 on the risk trade, and what may be able to give recovery bulls some hope — and help — on the forex market:

Instead, the focus may now turn to the consumer. With the recovery story in the corporate sector now fully priced in, the bulls will need to see an improvement in consumer spending in order to provide further fuel to the risk trade. Last Friday’s muted US Personal Income/Personal Spending data were on one of the key drivers behind the fizzle in stocks and high beta FX as trading come to a close for the week. This week, German Retail Sales on Tuesday and EZ Retail Sales on Thursday could prove to be pivotal to success of the risk trade.

Even the fact that U.S. banks have repaid taxpayer bailout money hasn’t had a huge impact on sentiment. We will have to wait and see how consumers are feeling.

See Also

• Risk trade on the Forex Market
  Forex trading forecast

Is the economy on the way to recovery?

Today, it is being reported that U.S. taxpayers have a $4 billion profit from the fact that big banks repaid their bailout money. This is spurring some speculation that big banks might have recovered enough to provide some cornerstone for economic recovery. 

Even so, it is important to be careful about optimism. The U.S. government still has a great deal of debt, and that could lead to dollar weakness later this year, even as economic recovery begins. Another thing to remember is that this repayment of bailout funds does not take into account the fact that the U.S. government did a great deal of other things to support financial institutions through the credit market crash. The U.S. government is still on the hook for billions in potential losses from corporate bailout efforts.

See Also

• More on Economic Recovery Chances
  Information for forex traders

A preliminary estimate of the Euro Zone Consumer Price Index is expected to show that inflation fell at an annual pace of -0.3% in August, a slight improvement over the -0.7% result registered in the previous month. Still, the bottom line is that prices are set to decline for the third consecutive month, contributing to building expectations of lower prices in the future. This threatens to unleash a deflationary spiral that sees consumers and businesses perpetually hold off on spending and investment as they wait for the best possible bargain, bringing economic growth to a virtual standstill. At this point, a survey of economists polled by Bloomberg suggests the market sees CPI shrinking through the third quarter and returning to a path of positive growth by the end of the year. If this proves to be too rosy, traders may punish the Euro as it becomes clear that the currency bloc is heading for a long-term period of low interest rates and sub-par economic growth. A disappointing outcome seems likely considering the European Central Bank’s apparent inability to offer effective monetary easing as well as well-founded reservations about the sustainability of the upswing in economic growth seen in the second quarter.

Asia Session Highlights

The initial estimate of Japan’s Industrial Production showed that output added 1.9% in July from the previous month, more than economists expected but the least in four months. In annual terms, the pace of decline moderated to -22.9%, the slowest rate of contraction since December 2008. Output has rebounded from the lows noted in February as firms began to replenish inventories that had been depleted after sharp production cuts kicked in as overseas demand for Japanese cars and electronics began to drop off in March last year amid the deepening global economic crisis. Indeed, the Nomura/JMMA PMI gauge printed at 53.6 in August, showing that the manufacturing sector expanded for the second consecutive month. However, a sustainable upturn will have to come with growth in underlying demand, which seems destined to remain sluggish for some time. Indeed, the International Monetary Fund (IMF) said its latest world economic outlook that global trade volumes are likely to rebound just 1% having shed a whopping -12.2% in 2009.

Meanwhile, Japanese Retail Trade unexpectedly fell just -2.5% in the year to July, the smallest drop since January. Economists had predicted a -3.5% decline ahead of the release. However, the improvement in the headline figure may not be indicative of a true rebound in consumer sentiment. Indeed, most of the improvement seems to have been driven by a 7.6% jump in motor vehicle sales, which can likely be chalked up to tax breaks on purchases of fuel-efficient cars that were included into the government’s fiscal stimulus package. Looking ahead, continued weakness in the labor market is likely to keep a lid on spending as layoffs weigh on disposable incomes.

Australian Private Sector Credit grew 0.2% as expected in July, driven by a 0.84% jump in loans for new house purchases, the largest increase since April of last year. Separately, the Housing Industry Association reported that New Home Sales grew for the second consecutive month in July, adding 0.1%. The improvement is suspect however, having likely owed to fiscal stimulus rather than improved consumer confidence as the government extended a scheme offering an A$21,000 grant for first-time home buyers in May. Most worryingly, business loans grew just 0.5%, the least in over 7 years, while Operating Profits fell by a nearly twice as much as economists expected in the second quarter. A meaningful economic recovery will not materialize without a rebound in private consumption. This, in turn, requires a rebound in the labor market, which seems highly unlikely if firms are not able to either earn or borrow adequate funding for expansion. On balance, this could translate into a double-dip recession as the inherently temporary boost from fiscal stimulus begins to fade.

In New Zealand, NBNZ Business Confidence rose to 34.2 in August, the highest in over a decade. However, as we noted in our New Zealand Dollar Weekly Forecast, improvements in the headline figure may be misleading. The higher reading implies that optimists are outnumbering pessimists by an increasingly wider margin among polled survey respondents, but this is no tall order considering the New Zealand economy has been shrinking for six consecutive quarters and could prove to be flimsy evidence of a sustainable recovery in economic growth. Put another way, the relative improvement in firms’ optimism is more so a factor of the sharp declines in the recent past rather than a meaningful surge in confidence about the future.

The Japanese Yen surged sharply higher, with a trade-weighted index of the unit’s average value adding 1.2% from Friday’s close as stocks tumbled 2% in Asian trading to boost demand for the safety-linked currency. Chinese shares led the selloff, dropping over 5% to a three-month low, as China Merchants Bank (the nation’s fifth largest lender by market value) reported a third consecutive quarter of falling profits and set aside additional funds to cover future loan defaults. Japanese stocks slipped nearly a full percentage point as an election swept the Democratic Party of Japan into power for the first time ever, raising uncertainty about the practical impact that the change of leadership will have on economic policy.

To reach Ilya regarding this article or subscribe to his email distribution list, please contact him at

A preliminary estimate of the Euro Zone Consumer Price Index is expected to show that inflation fell at an annual pace of -0.3% in August, a slight improvement over the -0.7% result registered in the previous month. Still, the bottom line is that prices are set to decline for the third consecutive month, contributing to building expectations of lower prices in the future. This threatens to unleash a deflationary spiral that sees consumers and businesses perpetually hold off on spending and investment as they wait for the best possible bargain, bringing economic growth to a virtual standstill. At this point, a survey of economists polled by Bloomberg suggests the market sees CPI shrinking through the third quarter and returning to a path of positive growth by the end of the year. If this proves to be too rosy, traders may punish the Euro as it becomes clear that the currency bloc is heading for a long-term period of low interest rates and sub-par economic growth. A disappointing outcome seems likely considering the European Central Bank’s apparent inability to offer effective monetary easing as well as well-founded reservations about the sustainability of the upswing in economic growth seen in the second quarter.

Asia Session Highlights

The initial estimate of Japan’s Industrial Production showed that output added 1.9% in July from the previous month, more than economists expected but the least in four months. In annual terms, the pace of decline moderated to -22.9%, the slowest rate of contraction since December 2008. Output has rebounded from the lows noted in February as firms began to replenish inventories that had been depleted after sharp production cuts kicked in as overseas demand for Japanese cars and electronics began to drop off in March last year amid the deepening global economic crisis. Indeed, the Nomura/JMMA PMI gauge printed at 53.6 in August, showing that the manufacturing sector expanded for the second consecutive month. However, a sustainable upturn will have to come with growth in underlying demand, which seems destined to remain sluggish for some time. Indeed, the International Monetary Fund (IMF) said its latest world economic outlook that global trade volumes are likely to rebound just 1% having shed a whopping -12.2% in 2009.

Meanwhile, Japanese Retail Trade unexpectedly fell just -2.5% in the year to July, the smallest drop since January. Economists had predicted a -3.5% decline ahead of the release. However, the improvement in the headline figure may not be indicative of a true rebound in consumer sentiment. Indeed, most of the improvement seems to have been driven by a 7.6% jump in motor vehicle sales, which can likely be chalked up to tax breaks on purchases of fuel-efficient cars that were included into the government’s fiscal stimulus package. Looking ahead, continued weakness in the labor market is likely to keep a lid on spending as layoffs weigh on disposable incomes.

Australian Private Sector Credit grew 0.2% as expected in July, driven by a 0.84% jump in loans for new house purchases, the largest increase since April of last year. Separately, the Housing Industry Association reported that New Home Sales grew for the second consecutive month in July, adding 0.1%. The improvement is suspect however, having likely owed to fiscal stimulus rather than improved consumer confidence as the government extended a scheme offering an A$21,000 grant for first-time home buyers in May. Most worryingly, business loans grew just 0.5%, the least in over 7 years, while Operating Profits fell by a nearly twice as much as economists expected in the second quarter. A meaningful economic recovery will not materialize without a rebound in private consumption. This, in turn, requires a rebound in the labor market, which seems highly unlikely if firms are not able to either earn or borrow adequate funding for expansion. On balance, this could translate into a double-dip recession as the inherently temporary boost from fiscal stimulus begins to fade.

In New Zealand, NBNZ Business Confidence rose to 34.2 in August, the highest in over a decade. However, as we noted in our New Zealand Dollar Weekly Forecast, improvements in the headline figure may be misleading. The higher reading implies that optimists are outnumbering pessimists by an increasingly wider margin among polled survey respondents, but this is no tall order considering the New Zealand economy has been shrinking for six consecutive quarters and could prove to be flimsy evidence of a sustainable recovery in economic growth. Put another way, the relative improvement in firms’ optimism is more so a factor of the sharp declines in the recent past rather than a meaningful surge in confidence about the future.

The Japanese Yen surged sharply higher, with a trade-weighted index of the unit’s average value adding 1.2% from Friday’s close as stocks tumbled 2% in Asian trading to boost demand for the safety-linked currency. Chinese shares led the selloff, dropping over 5% to a three-month low, as China Merchants Bank (the nation’s fifth largest lender by market value) reported a third consecutive quarter of falling profits and set aside additional funds to cover future loan defaults. Japanese stocks slipped nearly a full percentage point as an election swept the Democratic Party of Japan into power for the first time ever, raising uncertainty about the practical impact that the change of leadership will have on economic policy.

To reach Ilya regarding this article or subscribe to his email distribution list, please contact him at