Sale of Chrysler, GM filed for bankruptcy and Opel acquired by Magna. The U.S. dollar

[RTFX-Trading]

Sale of Chrysler, GM filed for bankruptcy and Opel acquired by Magna. The U.S. dollar hits its lowest level this year against the euro at 1.4115.

What's new:
United States: the bankruptcy court approves the sale of Chrysler to a group of investors led by the manufacturer Fiat.
U.S.: GM is expected to file for bankruptcy today; the U.S. State takes 60%.
Germany: Opel acquired by the Canadian supplier Magna.
United States: fall of 5.70% of GDP in Q1 2009.
United States: a further increase in the households? confidence - Michigan.
U.S.: Chicago PMI index sharply down to 34.9 in May.
United States: net rebound of activity in the New York area - NAPM.
England: rising property prices for 2nd time in 3 months.
Japan: 19.10% drop in the car market in May.


Today:
France 09h48: PMI manufacturing index in May, expected 43.1, previous 40.1
09h53 Germany: PMI manufacturing index in May, expected 39.1, previous 35.4
09h58 Euro zone: PMI manufacturing index in May, expected 40.5, previous 36.8.
10:28 England: PMI manufacturing index in May, expected 44.0, previous 42.9.
14.30 United States: household income in April, due -0.20%, previous -0.30%.
14:30 U.S. PCE price index in April, the last 0.00%
14.30 United States; price index "core" PCE in April, due 0.20%, previous 0.20%.
14:30 Canada: GDP in March, due -0.30%, previous -0.10%.
14:30 Canada: index of producer prices in April, due 0.10%, previous 0.30%.
16:00 U.S. April construction spending last -1.30%, previous 0.30%.
16:00 U.S. ISM manufacturing index in May, expected 42.0, previous 40.1.

Rates in Asia and Indices:
EURUSD: 1.4165-1.4099.
USDCHF: 1.0699 - 1.0658.
GBPUSD: 1.6245 - 1.6162.
EURJPY: 134.80 - 133.89.
USDJPY: 95.48 - 94.67.
DowJones: 8,500 +1.15%.
NASDAQ: +1.29% 1'774.
S & P 500: 919 +1.36%.
Nikkei: 9'678 +1.63%.
GOLD: $ 983.

Comments:

The U.S. manufacturer General Motors is widely expected to file for bankruptcy today and begin a reorganization process in the coming two to three months. Bankruptcy proceedings in U.S. approved the sale of U.S. automaker Chrysler to a group of investors led by Fiat for two billion dollars. The German car manufacturer Opel has been bought by the Canadian supplier Magna, together with a group of Russian partners. This cleansing of the American car market, coupled with encouraging figures which show a stabilization of the economic crisis, has pushed the market to address the "carry trades", which in turn leads to a rising euro, pound sterling, the Australian dollar and New Zealand dollar. The dollar and the yen in turn are under pressure. Precious metals are also requested, an ounce of gold is closer to the psychological point of $ 1,000.

The U.S. Treasury Secretary, Geithner, reaffirmed last night its policy of a strong dollar and the Chinese government reassured that their massive holdings of dollars are safe. "We believe in a strong dollar", he said. "The Chinese financial assets are very safe." I remind you that China is the largest holder of U.S. Treasury Bond.

Good Day

Nicolas Longchamp
RTFX Ltd
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[Cozy]

Thanks for the update friend, i think by ?investing? in 60% of GM and 70% of Chrysler, it allows for the US government to incentivize the purchase of these vehicles over others.

Take for example the scenario in which a CEO wants to buy 100 new cars for a corporate fleet, and he is looking at Ford as his choice, the US government, in order to ensure that their investments succeed, can offer tax rebates and incentives on the GM and Chrysler lines that would not be available to Ford - the only US automaker that stands on its own.

I bring this up because over the weekend I read a story in the financial times about how protectionist ideologies are beginning to take hold in much of the world. The article focused specifically on Canada, and as forex traders know, the Canadian economy lives and dies by the price of commodities.

In response to a strong ?Buy American? campaign south of the Canadian border, the Canadians are implementing their own buy Canadian campaign - from everything from Manitoban Wheat to Edmonton Oil. Canada, which has a small stake in GM and Chrysler, is being left out of the loop when it comes to the car sales. There is talk of plant closings and supplier chain closings associated with the bankruptcies of these two carmakers, and the first plants to close will seemingly be the ones in Canada ? adding more Canadians to the unemployment rosters while sparing the US of these cuts.