DAILY MARKET COMMENTARY
18 November 2009
Wednesday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro moved sharply higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4990 level and was supported around the $1.4860 level. The common currency was partially propelled higher by very dovish comments from St. Louis Federal Reserve Bank President Bullard who reported "If you look at the last two recessions, in each case the FOMC watied two and a half-to-three years before we started our tightening campaign. If we took that as a benchmark, that would put us in the first half of 2012." Fed policymakers concluded at their 3-4 November FOMC meeting that rates will remain low for "an extended period" of time. On Monday, Federal Reserve Chairman Bernanke verbally intervened to support the U.S. dollar and was seconded yesterday by European Central Bank President Trichet. Nevertheless, there have not been much additional verbal intervention from eurozone monetary officials, leading to renewed speculation of dissention among the rank. Treasury Secretary Geithner reported U.S. banks have an "obligation" to lend more. Data released in the U.S. today saw the October headline consumer price index climb 0.3% m/m and was off 0.2% y/y while the ex-food and energy component was up 0.2% m/m and up 1.7% y/y. Also, October housing starts printed at an annualized 529,000 while building permits came in at an annualized 552,000, down from a revised 575,000 in September. In eurozone news, the German government will convene a meeting on 2 December to discuss the economy and financial crisis. Data released in the eurozone today saw September construction output decline 1.1% m/m and 8% y/y. Also, the EMU-16 current account printed at -€5.4 billion in September compared with a revised surplus of €0.6 billion in August. Euro bids are cited around the US$ 1.4445 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥89.40 level and was supported around the ¥89.00 figure. Data released in Japan overnight saw October preliminary machine tool orders climb 8.9% m/m and decline 42.5% y/y. Finance ministry Fujii said the government will finalize plans to deal with the tax revenue shortfall in December. Fujii yesterday reported the government is attempting to restrict new Japanese government bond issuance below ¥44 trillion in its formation of the 2010/ 2011 fiscal budget and warned any issuance above this could pose a problem. Fujii also warned that downside risks to the Japanese economy need to be monitored and added the jobless rate "remains high" and the economy remains "severe." On Monday, Bank of Japan Governor Shirakawa noted "If the continuation of low interest rates (in the U.S.) leads to a substantial rise in long-term interest rates by raising inflation expectations or by generating expectations for a weak dollar, this may give rise to another problem, namely that the fiscal burden increases and in turn the need for adjustments in the government's balance-sheet arises." BoJ's Policy Board recently predicted core consumer prices will decline 1.5% in the year ending March 2010, decline 0.8% in the fiscal year ending March 2011, and decline 0.4% in the fiscal year ending March 2012. The central bank recently reported it will stop its purchase of corporate debt and commercial paper at the end of 2009. BoJ Policy Board's next interest rate decision is scheduled for 19 November. The Nikkei 225 stock index lost 0.55% to close at ¥9,676.80. 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 bids around the ¥134.00 figure and was supported around the ¥132.55 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥149.35 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.70 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, up from CNY 6.8240. People's Bank of China member Fan Gang reported Chinese gross domestic product growth will probably be between 8% and 9% in 2010 and does not see a big inflation risk now.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4983 1.4988, 1.4858
USD/ JPY 89.37 89.42, 89.00
GBP/ USD 1.6757 1.6844, 1.6737
USD/ CHF 1.0086 1.0168, 1.0076
AUD/USD 0.9300 0.9337, 0.9264
USD/CAD 1.0500 1.0536, 1.0448
NZD/USD 0.7461 0.7497, 0.7430
EUR/ JPY 133.88 133.93, 132.57
EUR/ GBP 0.8939 0.8943, 0.8838
GBP/ JPY 149.74 150.32, 149.37
CHF/ JPY 88.58 88.63, 87.68
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
Wednesday, 18 November 2009
all times GMT
(last release in parentheses)
0000 Australia September Westpac leading index (1.1% m/m)
0030 Australia Q3 wage cost index (3.8% y/y)
0030 Australia Q3 wage cost index (0.8% q/q)
0600 Japan October machine tool orders (-61.9% y/y)
0900 Eurozone September current account (-€5.0 billion)
0930 UK Bank of England MPC meeting minutes
1000 Eurozone September construction output (-0.4% m/m)
1000 Eurozone September construction output (-11.3% y/y)
1100 UK October CBI industrial trends survey, total orders (-51)
1200 US MBA mortgage applications (3.2%)
1200 Canada October Bank of Canada CPI, core (0.3% m/m)
1200 Canada October Bank of Canada CPI, core (1.5% y/y)
1200 Canada October consumer price index (0.0% m/m)
1200 Canada October consumer price index (0.9% y/y)
1330 US October consumer price index (0.2% m/m)
1330 US October consumer price index (-1.3% y/y)
1330 US October CPI, ex-food and energy (0.2% m/m)
1330 US October CPI, ex-food and energy (-1.3% y/y)
1330 US October building permits (575,000)
1330 US October housing starts (590,000)
Thursday, 19 November 2009
all times GMT
(last release in parentheses)
0030 Australia August average weekly wages (1.2% q/q)
0030 Australia August average weekly wages (6.1% y/y)
0100 Australia Reserve Bank of Australia official Debelle speaks
0430 Japan September all-industry activity index (0.90% m/m)
0500 Japan September coincident index
0500 Japan September leading index
0545 US Philadelphia Fed President Plosser speaks
0715 CH October trade balance (CHF 1.91 billion)
0900 Italy September trade balance
0930 UK October public sector net cash requirement (₤19.4 billion)
0930 UK October M4 money supply (11.6% y/y)
0930 UK October retail sales (0.0% m/m)
0930 UK October retail sales (2.4% y/y)
0930 UK October mortgage approvals (56,000)
0930 UK October public sector net borrowing (₤14.8 billion)
1330 US Weekly initial jobless claims
1330 US Continuing jobless claims (5.631 million)
1330 Canada September wholesale sales (-1.4% m/m)
1330 Canada September leading indicators (1.1% m/m)
1330 Canada September international securities transactions
1500 US November Philadelphia Fed index (11.5)
1500 US October leading indicators (1.0%)
2145 US Dallas Fed President Fisher speaks
Friday, 20 November 2009
all times GMT
(last release in parentheses)
N/A Japan October Tokyo-area department store sales (-10.5% y/y)
N/A Japan October department store sales (-7.8% y/y)
N/A Japan Bank of Japan Policy Board interest rate decision
0200 NZ October credit card spending
0700 Japan October convenience store sales (-5.6% y/y)
0700 Germany October producer prices (-0.5% m/m)
0700 Germany October producer prices (-7.6% y/y)
0900 Italy September industrial sales
0900 Italy September industrial orders
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