DAILY MARKET COMMENTARY
26 October 2009
Monday
Fundamental Outlook at 1400 GMT (EDT + 0400)
€
The euro came off vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4845 level and was capped around the $1.5060 level. The common currency established a fresh multi-month high before eroding and moving away from the psychologically-important US$ 1.5000 figure. The common currency failed to sustain gains it scored after a People's Bank of China research report was released that favoured more euro purchases by the central bank. Technically, today's intraday low was right around the 38.2% retracement of the move from $1.4480 to $1.5060. The common currency was also propelled lower on a growing view the U.S. dollar's sell-off may have been overdone recently. Also adding to the dollar's gains were reports in the Wall Street Journal and Financial Times that the Fed is considering ways to remove liquidity from the system, possibly through reverse repos. European Central Bank member Liikanen reported the U.S.'s commitment to its strong dollar policy is "justified" and said strong exchange rate fluctuation "are undesirable as they increase economic uncertainty." French finance minister Lagarde warned France's labour market is set to wosen over the next several quarters. The September unemployment rate climbed 0.8% with 2.575 million now officially unemployed. German Chancellor Merkel indicated the formulation of monetary policy will be "incredibly difficult" for her new government and pessimistically warned the "crisis" will extend into 2011. Data released in Germany today saw the Novembe GfK consumer confidence survey decline to 4 from 4.2 in October. European Central Bank member Noyer warned "There are signs that parts of the financial industry have resumed risk taking practices reminiscent of those which led to the crisis." In U.S. news, the Chicago Fed's Midwest Manufacturing Index improved 1.0% to 82.3 in September, the highest reading since February 2008. Euro bids are cited around the US$ 1.4445 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥92.25 level and was supported around the ¥91.55 level. Prime Minister Hatoyama reported the "employment and current situation still requires us to remain alert." Hatoyama failed to provide specifics as to how his Democratic Party of Japan administration would reduce Japan's escalating public debt. Other media outlets have joined Nikkei in reported Bank of Japan believes deflationary pressures will remain in Japan through at least 2011. The central bank now sees core consumer prices excluding fresh food falling 0.5% in the year starting 1 April 2011 with economic growth ramping up to 1.2%. It remains probable the central bank will not increase interest rates anytime soon. The discontinuation of BoJ's emergency liquidity programs is sleighted for the end of December and any indication of a change in that time frame could impact the yen. It is also possible the BoJ will indicate its schedule for these changes as early as this week. In addition, Japan's Policy Board may release its latest round of economic forecasts this week. The Nikkei 225 stock index climbed 0.77% to close at ¥10,232.62. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥136.80 level and was capped around the ¥138.45 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥149.15 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥90.30 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8275 in the over-the-counter market, up from CNY 6.8245. The pair moved higher after Zhou Hai, a division chief at People's Bank of China in Harbin, released a report indicating the central bank should sell dollars for euro and yen and diversify its massive foreign reserves portfolio. While this represented Zhou's personal opinion and not PBoC policy, it was enough to move the markets, especially given the size of China's massive US$ 2.273 trillion foreign reserve war chest. There remains widespread speculation the central bank will accelerate the removal of monetary stimuli and liquidity from the system, possibly resulting in further yuan appreciation.
₤
The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6250 level and was capped around the $1.6395 level. Sterling continued its correction lower after economic data released on Friday revealed the U.K.'s gross domestic product fell 0.4% in the third quarter, defying expectations of a 0.1% expansion. Traders reduced their exposure to sterling under the renewed premise Bank of England may need to expand its asset-purchasing program. Sterling had been bid over the past couple of weeks on the growing perception the central bank would be discontinuing or at least not enlarging its asset-purchasing program. BoE will publish its quarterly inflation report next month and its quantitative easing program will surely be revised by the MPC then. There is speculation the asset purchase program could balloon to ₤250 billion from the current ₤175 billion. BoE's next Monetary Policy Committee meeting will be held on 4-5 November. MPC member Posen dovishly said "There is no evidence from relevant periods of U.K. or other major economies' history that quantitative easing will result in high or sustained inflation. Thus, high inflation is not what we should be worrying about…There are even indications that the recession – now a severe but normal one – is coming to an end." MPC member Miles said further quantitative easing decision will be dependent on inflationary pressures. Cable bids are cited around the US$ 1.6080 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.9095 level and was capped around the ₤0.9240 level.
Technical Outlook at 1230 GMT (EDT + 0400)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4860 1.5062, 1.4856
USD/ JPY 92.16 92.27, 91.56
GBP/ USD 1.6326 1.6394, 1.6250
USD/ CHF 1.0189 1.0193, 1.0050
AUD/USD 0.9153 0.9276, 0.9149
USD/CAD 1.0645 1.0666, 1.0501
NZD/USD 0.7472 0.7566, 0.7468
EUR/ JPY 136.93 138.47, 136.80
EUR/ GBP 0.9102 0.9240, 0.9094
GBP/ JPY 150.39 151.16, 149.13
CHF/ JPY 90.38 91.55, 90.32
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, 25 October 2009
all times GMT
(last release in parentheses)
N/A
Monday, 26 October 2009
all times GMT
(last release in parentheses)
0001 UK October Hometrack housing survey (0.2% m/m)
0001 UK October Hometrack housing survey (-5.6% y/y)
0030 Australia Q3 producer price index (-0.8% q/q)
0030 Australia Q3 producer price index (2.1% y/y)
0700 Germany November GfK consumer confidence survey (4.3%)
1230 US September Chicago Fed national activity index (-0.9%)
1430 US October Dallas Fed manufacturing activity index (-6.4%)
1700 France September total jobseekers
Tuesday, 27 October 2009
all times GMT
(last release in parentheses)
0700 CH September UBS consumption indicator (0.658)
0745 France October consumer confidence
0830 Italy October consumer confidence
0900 Eurozone September M3 money supply (3.0%)
0900 Eurozone September M3 money supply (2.5% y/y)
1100 UK October CBI distributive trades
1300 US August S&P/ Case-Shiller home price index (-13.30% y/y)
1400 US October consumer confidence (53.1)
1400 US October Richmond Fed manufacturing index (14)
1600 US Treasury Secretary Geithner speaks
2350 Japan September large retailers' sales (-6.8%)
2350 Japan September retail trade (1.0% m/m)
2350 Japan September retail trade (-1.8% y/y)
Wednesday, 28 October 2009
all times GMT
(last release in parentheses)
0000 Germany October consumer price index (-0.4% m/m)
0000 Germany October consumer price index (-0.3% y/y)
0000 Germany October CPI, harmonized (-0.5% m/m)
0000 Germany October CPI, harmonized (-0.5% y/y)
0030 Australia Q3 consumer price index (0.5% q/q)
0030 Australia Q3 consumer price index (1.5% y/y)
0030 Australia October DEWR skilled vacancies (1.2% m/m)
0200 NZ October NBNZ business confidence (49.1)
0500 Japan October business confidence (43.5)
0830 Italy October business confidence
0830 Italy October services survey
1100 US October MBA mortgage applications
1230 US September durable goods orders (-2.6%)
1230 US September durable goods, ex-transportation (-0.3%)
1400 US September new home sales (0.7% m/m)
1400 US September new home sales (429,000)
2000 NZ Reserve Bank of New Zealand interest rate decision
2145 NZ September trade balance (-NZ$ 725 million)
2315 Japan October PMI, manufacturing (54.5)
2350 Japan September industrial production (1.8% m/m)
2350 Japan September corporate service prices (-3.5% y/y)
Thursday, 29 October 2009
all times GMT
(last release in parentheses)
0000 Australia August leading index (0.7%)
0000 Germany September import price index (1.3% m/m)
0000 Germany September import price index (-10.9% y/y)
0100 Australia September HIA new home sales (11.4% m/m)
0200 NZ September M3 money supply (3.5% y/y)
0855 Germany October unemployment change (-12,000)
0900 Italy September hourly wages
0930 UK September mortgage approvals (52,300)
0930 UK September new consumer credit (-₤300 million)
0930 UK September net lending secured on dwellings (₤1.0 billion)
0930 UK September M4 money supply (0.7% m/m)
0930 UK September M4 money supply (11.3% y/y)
1000 Eurozone October economic confidence (82.8)
1000 Eurozone October business climate indicator (-2.07)
1000 Eurozone October consumer confidence (-19)
1000 Eurozone October industrial confidence (-24)
1000 Eurozone October services confidence (-9)
1230 US Q3 gross domestic product, annualized (-0.7%)
1230 US Q3 PCE, core (2.0% q/q)
1230 US Weekly initial jobless claims (531,000)
1230 US Continuing jobless claims (5.923 million)
1230 Canada September industrial product prices (0.5% m/m)
1230 Canada September raw materials price index (3.7% m/m)
1500 US Bank of Japan Policy Board meeting
1500 US Bank of Japan economic outlook
2145 NZ September building permits (1.7% m/m)
2330 Japan September jobless rate (5.5%)
2330 Japan September household spending (2.6% y/y)
2330 Japan October Tokyo-area consumer price index
2330 Japan October Tokyo-area CPI, ex-food, energy (-1.4% y/y)
2330 Japan September national consumer price index (-2.2% y/y)
2330 Japan September CPI, ex-food, energy (-0.9% y/y)
Friday, 30 October 2009
all times GMT
(last release in parentheses)
N/A Eurozone October Ifo business climate
N/A Germany September retail sales (-1.5% m/m)
N/A Germany September retail sales (-2.6% y/y)
0000 Australia Q3 NAB business confidence (-4)
0000 UK October Nationwide house prices (0.9% m/m)
0000 UK October Nationwide house prices (0.0% y/y)
0001 UK October GfK consumer confidence (-16)
0030 Australia September private sector credit (0.1% m/m)
0030 Australia September private sector credit (2.5% y/y)
0500 Japan September housing starts (-38.3% y/y)
0500 Japan September housing starts, annualized (676,000)
0500 Japan September construction orders (-25.2% y/y)
0745 France September producer prices (0.4% m/m)
0745 France September producer prices (-8.5% y/y)
0900 Italy September producer price index
1000 Eurozone October consumer price index (-0.3% y/y)
1000 Eurozone September unemployment rate (9.6%)
1030 CH October KOF leading indicator (0.85)
1230 US September personal income (0.2%)
1230 US September personal spending (1.3%)
1230 US September PCE, core (0.1% m/m)
1230 US September PCE, core (1.3% y/y)
1230 US September PCE deflator (-0.5% y/y)
1230 US Q3 employment cost index (0.4%)
1230 Canada August gross domestic product (0.0% m/m)
1345 US October Chicago PMI (46.1)
1400 US October University of Michigan consumer sentiment (69.4)
No comments:
Post a Comment