DAILY MARKET COMMENTARY
20 October 2009
Tuesday
Fundamental Outlook at 1400 GMT (EDT + 0400)
€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4880 level and was capped around the $1.4995 level. The common currency stopped just short of testing the psychologically-important US$ 1.5000 figure. Eurozone finance ministers verbally intervened en masse against the euro's recent appreciation overnight, reiterating their support for the U.S.'s official strong dollar policy. French finance minister Lagarde talked up the U.S.'s dollar policy and suggested officials may implement an exit strategy from their fiscal and monetary stimuli in 2011 "if the situation in terms of growth stabilizes." European Central Bank President Trichet reported "excess volatility" in the foreign exchange market was "bad for economic development." Trichet also noted the U.S.'s official strong dollar policy. ECB member Liikanen reported eurozone economies appear to be stabilizing with "increasing information" that upcoming business quarters are going to be evidence improvements. Despite pronouncements from eurozone officials, there is little evidence that they are prepared to conduct actual intervention by selling euro in the interbank market. Data released in the eurozone today saw German September producer price inflation off 0.5% m/m and 7.6% y/y. In U.S. news, data released in the U.S. today saw September headline producer price inflation off 0.6% m/m and 4.8% y/y while the ex-food and energy components were off 0.1% m/m and up 1.8% y/y. Other data saw September housing starts print at an annualized 590,000 while September building permits came in at an annualized 573,000. San Francisco Fed President Yellen suggested it will be a fair amount of time before the Fed begins to withdraw monetary stimuli from the economy. Euro bids are cited around the US$ 1.4445 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.05 level and was supported around the ¥90.10 level. Finance minister Fujii reported the government will issue new bonds to cover an anticipated tax revenue shortfall in 2009/ 2010. Fujii also said the yen's strength is on account of the Federal Reserve's "easy" monetary policy – less of an indication that current currency movements are misalignments that will require actual intervention. Data released in Japan overnight saw September revised machine tool orders decline 62.1% y/y and climb 35.5% m/m. Bank of Japan yesterday 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 yesterday 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. The Nikkei 225 stock index lost 0.98% to close at ¥10,336.84. 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 ¥135.85 level and was supported around the ¥134.85 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥147.50 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.75 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8241 in the over-the-counter market, down from CNY 6.8244. People's Bank of China Deputy Governor Ma reported China's economic growth accelerated in Q3 from the previous three months. Ma also reported further dollar weakness may fuel expectations of more yuan appreciation.
Technical Outlook at 1230 GMT (EDT + 0400)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4906 1.4994, 1.4881
USD/ JPY 90.87 91.06, 90.08
GBP/ USD 1.6333 1.6488, 1.6327
USD/ CHF 1.0137 1.0167, 1.0081
AUD/USD 0.9205 0.9311, 0.9180
USD/CAD 1.0482 1.0526, 1.0265
NZD/USD 0.7460 0.7573, 0.7439
EUR/ JPY 135.51 135.84, 134.85
EUR/ GBP 0.9132 0.9151, 0.9069
GBP/ JPY 148.37 149.37, 147.50
CHF/ JPY 89.61 89.73, 89.10
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
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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