• The dollar pared early gains and traded mixed on Thursday. Better risk appetite boosted equities and commodities. European leaders promised to help Greece, if it slashed its budget deficit, saying they would provide “determined and coordinated action if needed to safeguard stability.” The agreement stopped short of providing immediate financial support for Greece but gave an implicit assurance to help Athens, if it encountered problems in refinancing its sovereign debt. China’s decelerating inflation reduced fear of further monetary tightening. US initial jobless claims fell more than anticipated. The S&P 500 gained 10.34 to 1,078.47. The yen rose modestly. Sterling reversed yesterday’s decline. The Australian and Canadian dollars advanced as risk appetite and commodity prices rose. The aussie was particularly strong on the largest Australian employment gain in three years. A sixth consecutive monthly rise in Canada’s new housing prices supported the loonie.
• The EUR/USD fell as the European Union pledge to solve the Greek debt problem left traders with few clues as to exactly how it would be enacted. The EUR/USD successfully tested the 1.36-area support again. We expect a further consolidation between the 1.36 and 1.38 areas. Resistances are in the 1.38 and 1.40 areas. Although oversold, the EUR/USD long-term outlook remains bearish. The 50-day moving average has fallen below the 200-day moving average, signaling further EUR/USD declines.

Financial and Economic News and Comments

US & Canada

• US companies are firing fewer workers in a sign labor-market conditions are improving amid continuing economic growth. Initial jobless claims in the week ending February 6 fell 43,000 to a lower-than-expected 440,000 from the previous week’s upwardly revised 483,000, according to figures from the Labor Department. The 4-week moving average declined 1,000 to 468,500. Continuing claims in the week ending January 30 dropped 79,000 to 4,538,000, the fewest since January 2009, from the preceding week’s upwardly revised 4,617,000. The 4-week moving average of those continuing claims decreased 17,750 to 4,603,500. The insured unemployment rate for the week ending January 30 was unchanged at 3.5%.

• Canada’s new housing prices rose 0.4% m/m in December, a sixth straight month-on-month gain, after rising at the same rate in November, data from Statistics Canada showed. December new housing prices declined 0.9% y/y, easing from a 1.4% y/y November decrease, with continued year-on-year drops in Western Canada.

Europe

• German wholesale prices grew a more-than-expected 1.3% m/m in January, a third consecutive month-on-month rise, after a 0.2% m/m increase in December, according to data from the Federal Statistical Office. Wholesale prices posted a second year-on-year advance in January, rising 1.9% y/y, following a 0.2% y/y December increase.

• Switzerland’s consumer prices declined a less-than-expected 0.1% m/m in January after a 0.2% m/m decrease in December, according to CPI data from the Swiss Federal Statistical Office. The consumer-price inflation rate rose to 1.0% y/y from December’s 0.3% y/y.

……Asia-Pacific

• Australia’s seasonally adjusted employment jumped a much more-than-anticipated 52,700 in January, the largest gain since December 2006, to 10,966,300, after an upwardly revised 37,500 rise in December, figures from the Australian Bureau of Statistics showed. The unemployment rate fell to an 11-month-low 5.3% from December’s 5.5%. Full-time employment climbed 15,900 to 7,652,200 in January and part-time jobs rose 36,900 to 3,314,200. The participation rate remained at 65.3%. The January employment boom increased bets the Reserve Bank of Australia will raise interest rates in March.

• Australia’s median expected inflation rate declined to 3.2% in February from 3.5% in January, according to the latest Melbourne Institute survey of consumer inflationary expectations.

• China’s consumer-price inflation rate decelerated to 1.5% y/y in January from 1.9% y/y in December, according to data the Statistics Bureau. Producer prices grew 4.3% y/y, the highest since October 2008. Property prices surged at the fastest rate in 21 months in January and lending of 1.39 trillion yuan ($203 billion) exceeded the prior three months combined.

FX Strategy Update

*Expert Market Commentaries, charts and information are provided by Hans Nilsson of Globicus International, Inc., a registered third party CTA, are intended for educational purposes only and do not constitute trading recommendations.

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