• The dollar fell versus most major currencies on Friday ahead of the G-20 meeting this weekend. Q1 2010 US annualized GDP growth was revised down to 2.7%, while Q1 corporate profits were revised higher and June consumer sentiment climbed to the highest level since January 2008. The S&P 500 rose 3.07 to 1,076.76, supported by the lower dollar and reduced uncertainty following an agreement on a financial-regulation overhaul bill. The yen rose for a fourth consecutive day, boosted by narrowing yield spreads. Japan’s consumer prices declined at a slower pace in May. The euro was up for a third straight day and approaching important resistance. European Commission President Jose Barroso said the region’s leaders are determined to keep the euro a “very strong” currency. The Australian and Canadian dollars reversed earlier weaknesses as commodity prices rose.
• The GBP/USD closed above the important 1.50 resistance as world leaders gather in Toronto for the G-20 meeting. Leaders are likely to debate fiscal stimulus versus austerity. The new UK coalition government has embarked upon the austerity path and the currency market has endorsed the approach. The GBP/USD rose for a third straight week and tentatively broke its long-term downtrend; thus, indicating further gains. Support is in the 1.48 area and resistance in the 1.52 area.

Financial and Economic News and Comments

US & Canada

• US GDP grew at a downwardly revised 2.7% annualized rate in Q1 2010 (vs. previously reported 3.0%), a third consecutive quarterly expansion, after a 5.6% annualized pace in Q4 2009, according to the third GDP estimate released by the Commerce Department. GDP rose 2.4% y/y, following Q4’s 0.1% y/y increase. Personal consumption expenditure added 2.13 percentage points to Q1 GDP growth and inventories contributed 1.88 percentage points, while net exports of goods and services subtracted 0.82 percentage points and government spending subtracted 0.39 percentage points. Consumer spending rose at a 3.0% annualized pace in Q1 (vs. previously reported 3.5%) after a 1.6% annualized rate in Q4. Core PCE, the Federal Reserve’s preferred price measure, increased at a 0.7% annualized rate in Q1 (vs. previously reported 0.6%), showing inflation was at the lowest level since records began in 1959 and decelerating from a 1.8% annualized pace the prior quarter. The GDP price index advanced at a 1.1% annualized rate in Q1 (vs. previously reported 1.0%) after a 0.5% annualized pace in Q4.

• US corporate profits rose 8.0% q/q to an upwardly revised $1.585 trillion annual rate in Q1 2010, a fifth consecutive quarterly advance, after rising at the same rate in Q4 2009, data from the Commerce Department showed. Corporate profits rose 34.0% y/y in Q1, registering the second consecutive year-over-year gain and the largest since 1984; thus, pointing to better prospects for business investment and employment.

• The Reuters/University of Michigan final consumer sentiment index climbed to 76.0 (vs. preliminarily reported 75.5) in June from 73.6 in May, indicating US consumer confidence rose to the highest level since January 2008, the latest Thomson Reuters/University of Michigan surveys of consumers showed, compared with June 2009’s 70.8. The current economic conditions index advanced to 85.6 (vs. preliminarily reported 82.9) in June, the highest since January 2008, from 81.0 the prior month. The consumer expectations index increased to 69.8 (vs. preliminarily reported 70.7), the highest since January, from May’s 68.8.

Europe

• Germany’s import prices climbed a more-than-expected 0.6% m/m in May, an eighth straight month-on-month advance, after a 2.0% m/m increase in April, according to data from the Federal Statistical Office. Import prices rose 8.5% y/y, a fifth consecutive year-on-year rise and the most since November 2000, following April’s 7.9% y/y advance. Meanwhile, export prices were up 0.5% m/m in May, a seventh successive month-on-month increase; they grew 3.6% y/y, a fifth straight year-on-year rise and the most since October 2000.

Asia-Pacific

• Japan’s core consumer prices, which exclude fresh food, slipped 1.2% y/y in May, a 15th straight year-on-year decline but easing from a 1.5% y/y decrease in April, CPI data from the Statistics Bureau showed. The CPI excluding food and energy fell 1.6% y/y, matching April’s record drop. Tokyo’s core CPI, a leading indicator for nationwide price trends, slid 1.3% y/y in June after a revised 1.5% y/y decrease in May.

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.

Past performance is not indicative of future results. Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. Please contact a registered trading advisor if you have any questions.

This report is intended solely for distribution to customers of Capital Market Services, LLC. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, LLC with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, LLC accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Globicus International, Inc.

©2004-2010 Globicus International, Inc. and Capital Market Services, LLC.