Dollar to Climb

123jump.com Staff
21 Aug, 2005
New York City

Despite rising oil prices, the U.S. economy has delivered positive news on labor, housing and GDP front. However trade and budget deficits are another stories. In the coming week market will be watching oil, dollar and earnings from BHP, Heinz, Toro, Petsmart, Intuit, and home builder Toll Bros.

The market is entering one of the quiet trading periods of the year. The last tow trading weeks in August match in trading volume to the last week of trading in December. The August month daily trading volume can decline by 30% from the peaks in February.

This year is proving to be no different if trading volume of the previous weeks are any indicators. However, there are 240 companies are expected to release earnings, government is set to report on durable goods orders and new home sales and two IPOs are scheduled to be priced.

Oil price movement will be in the headlines if current refinery problems in Venezuela and unrest continue in Ecuador and Nigeria. Nervous traders have used every opportunity in the past to drive oil prices higher.

At the current price level, oil is trading 58% higher than a year ago. The protestors in Ecuador managed to curtail daily crude production from 210,000 to 33,000 on Saturday. The government is still hard pressed to regain the normal production level. The 50% of Ecuadorian production is exported to the U.S.

U.S. dollar rebound since the beginning of the year to 12% against euro was supported last week as it added 2% during the week. The rebound may sustain as traders in currency market believe that Fed will keep rising interest rate to combat higher inflation generated by rising economic activity.


ECONOMIC CALENDAR

Existing home and new home sales, weekly jobless claims, durable goods orders and monthly consumer sentiment are on economic calendar for the week.

On Tuesday the National Association of Realtors is expected to report that July existing home sales have declined to 7.25 million from 7.33 in June and 7.14 million in May. National median price on housing in June was $219,000. On Wednesday, Commerce Department is expected to report new home sales of 1.325 million from 1.374 million in June.

On Wednesday the Commerce Department is also scheduled to report July durable goods orders declined by 1.2% after rising 1.4% in June, 6.4% in May, and 1.5% in April. If the orders do decline then this will be the first decline since March 2005.

On Thursday Labor Department is to report weekly unemployment for the week ended August 20 to rise to 320,000 from 316,000 in the previous week. The initial claims after peaking in March 2005 at 455,000 have been on steady decline.

On Friday Fed’s Chairman is scheduled to report on the health of the economy at the Fed’s annual meeting in Jackson Hole, Wyoming. Final read on August consumer sentiment from the University of Michigan is expected to match the initial estimate of 92.7.

EARNINGS CALENDAR

Toro, lawn mowers maker, is estimated to report a profit of 69 cents per share on revenue of $482.43 million and sales growth of 6.3%. The stock in the last three months has dropped some 20%.

Williams-Sonoma, home products retailer, is estimated to report a profit of 25 cents per share, up vs. 23 cents a share for the same period last year on revenue of $782.99 million. The company share has risen some 7% in the last three months.

Resmed, medical equipment manufacturer, is forecasted to post on Monday earnings of 55 cents per share on revenue of $113.54 million. The company stock has increased by 5% over the last three months.

Wind River Systems, microprocessor and related software provider, is estimated to report a profit of 5 cents per share, up vs. a loss of 2 cents for the year-ago quarter on revenue of $64.87 million and strong sales growth. The company stock has jumped 11% for the last three months.

J.M. Smucker, jams, jellies, and preserves producer, is expected to report on Monday a profit of 63 cents per share, up from 56 cents a share in the same period last year on revenue of $516.30 million. The company share has dropped some 5% for the last three months.

Intuit, accounting company, is estimated to report a 2Q loss of 10 cents per share on revenue of $281.88 million. The company stock has gained 6% for the last three months.

Petsmart, specialty retailer of pet food, is expected to report 2Q profit of 22 cents per share, down vs. 23 cents per share in the year-ago period on revenue of 905.20 million. The company share has declined 12% over the last three months.

Coldwater Creek, upscale retailer, is estimated to report 2Q profit of 8 cents a share, up vs. 5 cents a share in the same period last year on revenue of $139.18 million. The company stock has risen 22% for the last three months.

Restoration Hardware, upscale home furnishings seller, is estimated to report a 2Q loss of 3 cents per share, up vs. a loss of 6 cents per share in the year-ago period on $142.24 million. The company stock has gained 17% for the last three months.

Chico's FAS, specialty stores company, is expected to post 2Q profit of 27 cents per share, up vs. 19 cents per share for the same period last year on revenue of $337.14 million. The company stock has increased 11% over the last three months.

Toro, lawn mowers maker, is estimated to report a profit of 69 cents per share on revenue of $482.43 million and sales growth of 6.3%. The stock in the last three months has dropped some 20%.

Williams-Sonoma, home products retailer, is estimated to report a profit of 25 cents per share, up vs. 23 cents a share for the same period last year on revenue of $782.99 million. The company share has risen some 7% in the last three months.

Resmed, medical equipment manufacturer, is forecasted to post on Monday earnings of 55 cents per share on revenue of $113.54 million. The company stock has increased by 5% over the last three months.

Wind River Systems, microprocessor and related software provider, is estimated to report a profit of 5 cents per share, up vs. a loss of 2 cents for the year-ago quarter on revenue of $64.87 million and strong sales growth. The company stock has jumped 11% for the last three months.

OTHER NEWS

International Copper Study Group stated that copper demand in the first five months ending in May 2005 rose 17% in Russia, 12% in India and 8.8% in China. Demand for refined copper declined by 2.9% and out put from copper mines rose 5.8% narrowing the supply deficit to 37,000 tons in May from 48,000 in April.

The World Bank has agreed to lend $9 billion to India for rural development over the next three years. According to the bank’s president, Paul Wolfowitz, the bank is prepared to start lending next year to alleviate poverty in the world’s second most populous nation with $661 billion GDP growing at 7% per year. More than 340 million people live on less than a dollar a day in a nation of 1.1 billion people.