DAILY MARKET COMMENTARY
19 October 2009
Monday
Fundamental Outlook at 1400 GMT (EDT + 0400)
€
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4960 level and was supported around the $1.4825 level. Further strong gains in U.S. equities prices created demand for higher-yielding currencies, including the common currency. The dollar was also pressured lower by a story that the Federal Reserve Bank of New York is making preparations to utilize reverse repurchase agreements to remove liquidity from the financial system. The New York Fed clarified its position, saying the tests it is conducting are "a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary policy tightening." The dollar also came off following remarks from Federal Reserve Chairman Bernanke who warned policymakers need to remain alert against unsustainable global imbalances including U.S. budget deficits. Data released in the U.S. today saw the October NAHB housing market index decline to +18 from the prior reading of +19. Data to be released in the U.S. tomorrow include September producer price inflation numbers. In eurozone news, eurozone finance ministers are convening and will likely discuss the strength of the common currency as it races toward the psychologically-important $1.50 figure. Eurogroup Chairman Juncker said the continued appreciation of the euro "along the lines of recent weeks" could "slow the economic recovery in Europe." Some dealers believe the ECB is inching closer to selling euro in the market through intervention while others believe the ECB will maintain a hands-off approach. ECB member Bini Smaghi warned lending to companies will continue to move lower before improving. Euro bids are cited around the US$ 1.4445 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.35 level and was capped around the ¥91.10 level. Bank of Japan released its quarterly regional report overnight and noted "Signs of picking up had appeared throughout the economy, although regional differences remained." The BoJ last week lifted its assessment of the economy for the second consecutive month. Minutes from the BoJ Policy Board's 16-17 September meeting were released overnight in which policymakers concluded "A few members were of the view that the positive effects these measures could producer were on the wane." The central bank is likely to not renew some of its emergency spending programs when they expire at the end of the month. Data released in Japan overnight saw the August tertiary activity index rise 0.3%. The Nikkei 225 stock index lost 0.21% to close at ¥10,236.51. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥135.90 level and was supported around the ¥134.75 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.10 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.70 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8244 in the over-the-counter market, up from CNY 6.8243. The Chinese government reported it will reduce industrial overcapacity. The U.S. Treasury last week stopped short of characterizing China as a manipulator of its currency but said China exhibits a "lack of flexibility" on the yuan. China's State Administration of Foreign Exchange last week reported it does not anticipate any upward pressure on the yuan in the near future and noted it expects China's international balance of payments and net capital inflows to continue to expand.
₤
The British pound appreciated further vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6420 level and was supported around the $1.6240 level. Sterling's upside was limited by comments from Bank of England Monetary Policy Committee member Posen who this weekend said the central bank may potentially increase the size of its quantitative easing program. Last week, sterling was bid sharply higher on speculation the BoE's quantitative easing program would be paused at ₤175 billion in size. BoE's new quarterly inflation forecasts will be known to policymakers at their November MPC meeting. Data released in the U.K. overnight saw Rightmove October house prices climb 2.8% m/m and 0.2% y/y. Also, the U.K. ITEM Club upgraded its 2010 growth forecast to 1% from 0.5%. Cable bids are cited around the US$ 1.6170 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9190 level and was supported around the ₤0.9095 level.
Technical Outlook at 1230 GMT (EDT + 0400)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4950 1.4962, 1.4827
USD/ JPY 90.70 91.12, 90.37
GBP/ USD 1.6406 1.6422, 1.6239
USD/ CHF 1.0125 1.0228, 1.0114
AUD/USD 0.9269 0.9271, 0.9112
USD/CAD 1.0301 1.0420, 1.0299
NZD/USD 0.7529 0.7546, 0.7365
EUR/ JPY 135.59 135.90, 134.74
EUR/ GBP 0.9110 0.9189, 0.9097
GBP/ JPY 148.78 149.11, 147.07
CHF/ JPY 89.53 89.69, 88.79
Support Resistance Support Resistance
EUR/ USD USD/ JPY
L1. 1.4470 1.4915 88.60 93.30
L2. 1.4355 1.5140 87.10 95.50
L3. 1.4175 1.5360 86.10 98.85
GBP/ USD USD/ CHF
L1. 1.6115 1.6685 1.0275 1.0580
L2. 1.5720 1.6830 1.0040 1.0695
L3. 1.5405 1.7040 0.9750 1.0885
AUD/ USD USD/ CAD
L1. 0.8450 0.8830 1.0535 1.0945
L2. 0.8300 0.9050 1.0365 1.1125
L3. 0.8070 0.9120 1.0155 1.1355
NZD/ USD EUR/ JPY
L1. 0.6880 0.7125 131.45 135.75
L2. 0.6750 0.7260 129.75 136.90
L3. 0.6535 0.7395 127.00 138.75
EUR/ GBP EUR/ CHF
L1. 0.8795 0.8995 1.5110 1.5380
L2. 0.8675 0.9105 1.4905 1.5580
L3. 0.8320 0.9225 1.4670 1.5880
GBP/ JPY CHF/ JPY
L1. 146.10 152.50 86.30 88.65
L2. 142.05 157.75 85.40 90.10
L3. 135.70 161.70 81.55 91.60
SCHEDULE
Sunday, 18 October 2009
all times GMT
(last release in parentheses)
N/A Australia Q3 NAB business confidence (-4)
N/A Japan September Tokyo department store sales (-10.3% y/y)
N/A Japan September Tokyo department store sales (-8.8% y/y)
2130 NZ September performance of services index
2301 UK October Rightmove house prices (0.6% m/m)
2350 Japan Bank of Japan Policy Board meeting minutes
2350 Japan August tertiary industry index (0.6% m/m)
Monday, 19 October 2009
all times GMT
(last release in parentheses)
0030 Japan Bank of Japan quarterly branch managers' meeting
0100 US Federal Reserve Chairman Bernanke speaks
0100 US San Francisco Federal Reserve President Yellen speaks
0200 Australia Reserve Bank of Australia Assistant Governor Lowe speaks
0900 Eurozone August construction output (-2.0% m/m)
0900 Eurozone August construction output (-10.8% y/y)
1230 Canada August international securities transactions (C$ 351 million)
1500 US Federal Reserve Chairman Bernanke speaks
1700 US October NAHB housing market index (19)
Tuesday, 20 October 2009
all times GMT
(last release in parentheses)
0130 Japan Bank of Japan Deputy Governor Nishimura speaks
0500 Japan August leading index
0500 Japan August coincident index
0600 Japan September machine tool orders
0600 Germany September producer prices (0.5% m/m)
0600 Germany September producer prices (-6.9% y/y)
0700 Japan September convenience store sales
0800 Italy August industrial orders
0800 Italy August industrial sales
0830 UK September public sector net cash requirement (₤10.4 billion)
0830 UK September public sector net borrowing (₤16.1 billion)
0830 UK September M4 money supply (10.5% y/y)
1230 US September producer price index (1.7% m/m)
1230 US September PPI, ex-food and energy (0.2% m/m)
1230 US September producer prices (-4.3% y/y)
1230 US September PPI, ex-food and energy (2.3% y/y)
1230 US September housing starts (598,000)
1230 US September building permits (579,000)
1230 Canada August wholesale sales (2.8% m/m)
1230 Canada September leading indicators (1.1% m/m)
1300 Canada Bank of Canada interest rate decision
1500 US Federal Reserve Governor Warsh speaks
Wednesday, 21 October 2009
all times GMT
(last release in parentheses)
0000 Australia August Westpac leading index (1.1% m/m)
0000 US Philadelphia Federal Reserve President Plosser speaks
0200 NZ September credit card spending (0.1% y/y)
0700 CH September M3 money supply (7.7% y/y)
0830 UK October Bank of England MPC meeting minutes
1000 UK CBI quarterly industrial trends, total orders
1100 US MBA mortgage applications
1600 US Federal Reserve Bank of Richmond President Lacker speaks
1800 US Federal Reserve Beige Book
2030 US Federal Reserve Bank of Boston President Rosengren speaks
2350 Japan September merchandise trade balance (¥185.7 billion)
Thursday, 22 October 2009
all times GMT
(last release in parentheses)
0430 Japan August all-industry activity index (0.5% m/m)
0500 Japan September supermarket sales (-3.4% y/y)
0615 CH September trade balance (CHF 1.79 billion)
0645 France October business confidence (85)
0800 Eurozone August current account (€ 6.6 billion)
0800 Italy August retail sales
0830 UK September retail sales (0.0% m/m)
0830 UK September retail sales (2.1% y/y)
1230 US Weekly initial jobless claims
1230 US Continuing jobless claims
1230 Canada August retail sales (-0.6% m/m)
1230 Canada August retail sales, ex-autos (-0.8% m/m)
1400 US September leading indicators (0.6%)
1400 US August house price index (0.3% m/m)
1430 US Federal Reserve Bank of Boston President Rosengren speaks
1430 Canada Bank of Canada Monetary Policy Report
1730 US Federal Reserve Bank of New York President Dudley speaks
Friday, 23 October 2009
all times GMT
(last release in parentheses)
0030 Australia Q3 import price index (-6.4% q/q)
0645 France September consumer spending (-1.3% y/y)
0800 Germany October Ifo, expectations (95.7)
0800 Germany October Ifo, business climate (91.3)
0800 Germany October Ifo, current assessment (87.0)
0830 UK Q3 gross domestic product (-0.6% q/q)
0830 UK Q3 gross domestic product (-5.5% y/y)
0830 UK September BBA house purchase loans
0900 Eurozone August industrial new orders (-24.3% y/y)
1230 US Federal Reserve Chairman Bernanke speaks
1400 US September existing home sales (5.10 million)
1400 US September existing home sales (-2.7% m/m)
1530 US Federal Reserve Vice Chairman Kohn speaks
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