After breaking its long-term rising trendline against the greenback, followed by primary support at $1.01, the Canadian Loonie is testing resistance at $1.02. Weak economic data should increase selling pressure. Reversal below $1.01 would confirm the down-trend, offering a target of $0.96*.
* Target calculation: 1.01 – ( 1.06 – 1.01 ) = 0.96
The Swiss Franc fell sharply before finding support at $1.25 as fears of SNB intervention subsided. Expect some consolidation, but recovery above $1.30 would indicate another test of $1.40. Failure of support is unlikely, and would offer a target of $1.10*.
* Target calculation: 1.25 – ( 1.40 – 1.25 ) = 1.10
The Australian Dollar is edging towards the upper trend channel against its Kiwi counterpart, but the primary trend remains downward. Respect of the upper channel (and resistance at $1.28) would signal a test of the lower border at the 2010 low of $1.21.
* Target calculation: 1.23 – ( 1.28 – 1.23 ) = 1.18
The Aussie Dollar recovered above the former primary support level at $1.04, testing resistance at $1.06. Breakout would indicate an advance to $1.10. But there are several question-marks over the latest advance. First, the rally has accompanied a similar recovery on the ASX 200 (to test resistance at 4500). If resistance holds, as expected, the AUD is likely to retreat.
* Target calculation: 1.04 – ( 1.10 – 1.04 ) = 0.98
Second, the CRB Commodities Index confirmed a primary down-trend with a sharp fall below 335. The primary trend is unlikely to reverse at this stage and another down-swing would drag the Aussie Dollar lower.
* Target calculation: 330 – ( 350 – 330 ) = 310
Having fallen by almost $1 trillion since its peak in 2009, the decline in US bank lending is slowing, with the annual rate of change approaching zero. A stable level of debt would reduce deflationary pressure and signal that residential and commercial real estate prices are bottoming.
Most of the money pumped into the economy over the last year leaked straight back out, with excess bank reserves deposited with the Fed rising by more than $500 billion.
UK bank lending to households jumped slightly in June 2011, but the annual rate of change remains negative at -3%.
Commercial loans continue to shrink at an annual rate of 7.5%, signaling a dearth of new investment and job creation by the private sector.
China’s growth in bank lending has slowed to an annual rate of 15% from its peak of 35% in 2009, but indicates that further tightening is required to bring the inflation hangover under control.
Annual rate of change in Australian household debt is falling but remains in positive territory for the time being.
Commercial debt, however, has fallen by more than A$100 billion since its peak in 2009, signaling a fall in new capital investment and job creation by the private sector.
Total estimated outflows from long-term mutual funds were $16.94 billion for the week ended Wednesday, August 3, the Investment Company Institute reported today.
Replacing all national sovereign bonds (although not loans) with common eurobonds would create a market worth €5,500bn. It would be backed by governments that together owe less debt, run a lower combined deficit and have greater tax-raising capacity than the US and Japan. It would almost certainly lead to lower yields than the current eurozone average and virtually eliminate the possibility of a bond buyers’ strike.
via Europe need not wait for Germany – FT.com.
Creating a common Eurobond would make economic sense but is politically unachievable because of opposition in Germany. Convincing Germans that it is in their best interests will test Angela Merkel’s leadership abilities to the full.
