Data Week
"Foreign net security purchases data is measured vs. the deficit to see if we are attracting enough financing for our deficit! We're a little behind on this data, but still it is a lot like me…it carries a lot of weight!
by Chuck Butler In This Issue… - Deficits All Around…
- Get ready for some data!
- Asian currencies getting some attention!
- Loonies join Aussie and kiwi…
--- Advertisement --- Looking for the nation's best checking account? Everbank's FreeNet Checking Account at www.everbank.com is a Forbes "Best of the Web" pick for four consecutive years and ranked #1 by Bankrate.com! --------------------- And now…today's Pfennig! Data Week… Good day. I hope you all had a great weekend…mine seemed to go too fast! UGH! The dollar would seem to be in deep dookie this week, with all the data that's on the docket. The current account deficit will be representing the proverbial cheese that binds for the dollar on Wednesday! The dollar has gotten some legs though overnight in Asia, but I wouldn't put too much into that given the fact that the current account deficit is forecast to widen to $182.8 billion in the 4th QTR, vs. $164.7 billion in the 3rd QTR. The trade deficit data on Friday didn't do anything to change the thought that the current account deficit will be "out of hand" this week. The trade deficit on Friday posted the second highest level for a month, ever at $58.3 billion, and since the trade deficit feeds a large portion of the current account deficit, it doesn't look good… However, there's no data today, and I think that's what has given the dollar bulls a brief reprieve. But, tomorrow it all begins with retail sales, which are not expected to give anyone a warm and fuzzy on the economy. That will be followed by the piece of data everyone is talking about these days: The TIC's…or Foreign Net Security Purchases data, which as you know, is measured vs. the deficit to see if we are attracting enough financing for our deficit! We're a little behind on this data, as it will be reported for January, but still it is a lot like me…it carries a lot of weight! Keeping with the data roll call, Wednesday will bring us the current account deficit, and the dynamic duo of industrial production and capacity utilization. After all that, we'll get ready for St. Patrick's Day, and initial jobless claims on Thursday. Whew! I'm worn out just thinking about all these "market moving" pieces of data this week! You know, last week I told you about a potential watershed comment by the Japanese PM Koizumi regarding the need for Japan to diversify their reserves, and then the immediate denial of those words by the Finance Minister. Well, I got to thinking about this chain of events this weekend, and the thought came to me that the Japanese are just trying to get the private sector investor to diversify their holdings. I think that by getting the private sector to diversify, it could take the pressure off them to do so! That way, if the Private sector gets out of hand and begins to really push yen higher, the Bank of Japan could step in and slow it down. They wouldn't be able to do that if they were the ones doing the selling! Of course, you and I have already diversified, but we're just spittin' in the sea regarding how many investors are really diversified. So, I give Japan officials an "A" for their thought process and effort. But really boys, shouldn't you two join the private sector? Just a thought from the cheap seats! I know, about a month ago, I said I was going to ignore China for a while, as they were giving me a rash with all their "we will change the currency policy/we will not change our currency policy" back and forth talk. However, there was a comment by the Premier Jiabao this weekend that I take seriously: Jiabao said that the country might "unexpectedly" change the currency policy. He really has thrown the currency policy in front of the gauntlet again, and renminbi forward prices are reacting to the comment pushing the forward price higher. I think all he was trying to do is to remind everyone that it could come at anytime, so don't get complacent… A trader friend at RBC sent me a note regarding Asian currencies that came from the Bank for International Settlements, because she knows that I have a great interest in this region: "Foreign exchange turnover in Asian currencies grew faster than the global total between 2001 and 2004. Renminbi trading rose particularly strongly. Evolving expectations about the renminbi seem to be joining the dollar/yen spot rate in exerting an influence on Asian foreign exchange markets. Asian currencies with more flexible exchange rates appear to be trading with an effective exchange rate orientation." Sounds like my thoughts regarding Asian currencies being the drivers of the next big leg down in the dollar are bang on…so far… I mentioned last week that Canada had really put on the Ritz with regard to their currency rally in the past couple of weeks. The commodity prices data continue to give all the commodity currencies a boost. But loonies, which have wavered while Aussie and kiwi went out ahead of the pack, has a lot of ground to catch up and I think it's on its way! Whether it's Aussie, kiwi, loonies, or even rands…these commodity currencies are hot! Currencies today: A$ .79, kiwi .7380, C$ .8285, euro 1.3415, sterling 1.9215, Swiss .8640, rand 5.94, krone 6.0975, forint 182.60, zloty 2.9825, koruna 22.09, yen 104.50, baht 38.33, sing 1.62, pesos 11.09, and gold… $442.83 That's it for today. Setting up the week, hope it wasn't boring, but it had to be done! The NCAA Basketball Tournament Teams were announced yesterday, no, my beloved Missouri Tigers didn't qualify, so at least I won't have to enter a pool with them as the Champion! HA! Get ready for the moves this data will cause this week…and have a great Monday and week! |
