EMC: USD/JPY remains close to ¥150, keeping intervention threat alive

Indices overview

US dollar basket is flat this morning, after recording a tenth straight week of gains. USD/JPY remains above ¥148, keeping traders on intervention watch. Japan's finance minister issued a fresh warning against the recent JPY weakness and said the government would not rule out any options in addressing excess volatility in currency markets.

In Germany, Ifo business climate index is expected to decline to 85.2, from 85.7 in August. This would mark a fifth consecutive month of declines, from a 93.6 peak last April.

On Wednesday Germany's Gfk consumer confidence is forecast to remain at 25.5 in October. For the past five months the index has been hovering between -24 and -26, without any real direction. On Thursday, consumer price index should fall to 4.6% on an annual basis. A substantial drop after the 6.1% raise recorded in August.

In the US, the market awaits Chicago Fed National Activity and Dallas Fed manufacturing index. Later this week, final US GDP growth figures are due for the second quarter and expectations are for growth in the quarter to be reduced to an annualised rate of 2.2%.

On Friday, core PCE is forecast to come in at 3.9% in August, compared to 4.2% in July.

Corporate update

It will be relatively quiet on the corporate front in the US this week, but three stocks draw attention. Costco Wholesale is due to report at lunchtime on Tuesday. Earnings are expected to rise by 13% to $4.79 per share in the fourth quarter (Q4). Revenue should rise by 7.8% to $77.78 billion, a solid performance considering the current climate, and the fact that a year ago, Costco posted a 15% revenue increase.

Micron Technologies is scheduled to report Q4 earnings on Wednesday. The chip maker is going through difficult times. Revenue is forecast to fall for a fifth consecutive quarter, by 41% to $3.89Bln. Micron is seen posting a loss for the past three months, the fourth in as many quarters, this time of $1.18.

If Wall Street sees a return to profitability this year, it is unlikely to happen before the second half of the fiscal year. On Thursday, Nike earnings are expected to decline for a third quarter in a row to 75 cents per share, from 93 cents a year ago. Revenue is forecast to rise by 2.5% to $13.01Bln. This would be the slowest growth in over a year.

Investors will be very attentive to revenue per region. With a North American market that remains soft, Nike relies on other markets to keep revenue coming, such as Latin America, and especially China where it expects revenue growth to accelerate.

Commodities

WTI continues to hover around $90 per barrel. On Friday, Moscow announced a temporary ban on exports of gasoline and diesel to most countries, bringing new uncertainty into an already tight global market.

Also last Friday, Baker Hughes total rig count in fell by 11 to 630 - a drop due mostly to oil rigs in operation. The number of functioning oil rigs fell by eight to 507, a new 19-month low.