DAILY MARKET COMMENTARY
23 November 2009
Monday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro gained significant ground vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5000 figure and was supported around the $1.4850 level. Traders continue to hammer the U.S. dollar despite verbal intervention by U.S. and European officials intent on talking the greenback higher. Over the past couple of weeks, Federal Reserve Chairman Bernanke, Treasury Secretary Geithner, and European Central Bank President Trichet have reiterated their support for the long-standing strong U.S. dollar policy. Trichet reiterated his support for the dollar today, saying he "considers it extremely important" that U.S. authorities are supportive of the dollar. Trichet today talked about the ECB's monetary policy, reporting "There is an increasingly pressing need for ambitious and realistic fiscal exit strategies and for fiscal consolidation." He added some countries, like Spain, are close to losing their fiscal credibility. Trichet said the "freefall" of the global economic crisis has ended and the ECB last week said it will tighten some collateral standards involving the types of asset-backed securities it accepts for refinancing operations. St. Louis Federal Reserve Bank President Bullard today suggested the Fed should extend its program to purchase mortgage-backed securities and agency bonds past the current deadline of March 2010. Bullard said a policy like this "would give the Fed the option to react to future news as it comes in." Data released in the U.S. today saw October existing home sales print at a stronger-than-expected 6.10 million level on an annualized basis, up 10.1% m/m. These data are consistent with other recent data evidencing a pick-up in residential housing market activity. Other data released today saw the Chicago Fed's October national activity index print at -1.08, down from a revised September reading of -1.01. Data to be released in the U.S. tomorrow include Q3 gross domestic product growth with a print around 2.8% expected by some economists. Indian Prime Minister Singh today said there is "no replacement" for the U.S. dollar as the world's reserve currency. In eurozone news, ECB member Ordonez cautiously reported "We don't know yet if the incipient global economic recovery has enough independent support for a stimulus withdrawal without running the risk of a new drop in activity." Data released in the eurozone today saw the EMU-16 November composite purchasing managers index climb to 53.7 from 53.0 in October. The manufacturing PMI reading climbed to 51.0 while the services PMI reading printed at 53.2. Notably, activity in France's private sector expanded at its fastest pace in three years. 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 ¥89.95 level and was supported around the ¥88.55 level. Japanese financial markets were closed overnight and will reopen tonight. Bank of Japan and the government remain embroiled in a disagreement about how best to address Japan's problem with deflation. On Friday, the government declared the economy was again suffering from deflation for the first time since 2006. The government is exerting pressure on the central bank to make sure it does not unwind its ultra-easy monetary policy anytime soon. Last week, Bank of Japan's Policy Board kept its overnight call rate target unchanged at 0.1%. BoJ Governor Shirakawa then said the government and the central bank share the view that prices will keep declining. Shirakawa also defended his belief that purchasing more corporate bonds will not help the economy, saying "When there is a shortage of demand in the economy, providing liquidity alone won't help to push prices higher." Most BoJ-watchers believe the central bank will keep interest rates unchanged through at least most of 2010. Referring to the economy, the central bank on Friday reported "Japan's economy is picking up mildly due to various policy measures taken at home and abroad, although the momentum of a self-sustaining recovery in domestic private demand remains weak." 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 Nikkei 225 stock index on Friday lost 0.54% to close at ¥9,497.68. 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 ¥133.45 level and was supported around the ¥132.05 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥148.20 level while the Swiss franc moved lower vis-à-vis the yen and tested offers around the ¥88.40 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8319 in the over-the-counter market, up from CNY 6.8289. People's Bank of China is said to have requested that its commercial banks slow down their rampant lending and increase their capital. People's Bank of China Governor Zhou on Friday reported China is "passive" on the U.S. dollar and that its value does not impact the Chinese economy. Zhou also said the central bank "will continue to maintain the moderately loose monetary policy and expansionary fiscal policy for a while." U.S. Treasury Secretary Geithner last week reported he is "quite confident" China will relax controls on its currency.
₤
The British pound rallied vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6645 level and was supported around the $1.6480 level. Traders again chased yield as gains in global equities markets fueled demand for riskier assets. A Bank of England paper published this weekend noted "
Some studies have argued that credit growth and asset prices are useful leading indicators of banking system crises. It is important that this work be pursued, as it may be possible to introduce a baseline rule-like element into any system." On the political front, Tories leader Cameron pledged his opposition Conservative party would enact an emergency budget within 50 days after being elected. The International Monetary Fund today called on the U.K. government's support for the economy to remain in place for "some time." BoE Monetary Policy Committee member was quoted as saying a "modest recovery" is underway. Cable bids are cited around the US$ 1.6430 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9035 level and was supported around the ₤0.8995 level.
CHF
The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0070 level and was capped around the 1.0180 level. The pair is inching closer and closer to parity. Switzerland's Economiesuisse today predicted the Swiss economy will expand 0.7% in 2010 with unemployment rising to 4.9% and inflation printing around 0.7%. Swiss National Bank President Roth last week said the central bank has the instruments to reduce liquidity if needed and the markets know the central bank will react to inflation if it emerges. U.S. dollar offers are cited around the CHF 1.0270 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5105 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 1.6720 level.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4980 1.4998, 1.4851
USD/ JPY 88.98 89.02, 88.56
GBP/ USD 1.6620 1.6647, 1.6481
USD/ CHF 1.0086 1.0180, 1.0071
AUD/USD 0.9255 0.9275, 0.9136
USD/CAD 1.0562 1.0703, 1.0538
NZD/USD 0.7340 0.7366, 0.7222
EUR/ JPY 133.27 133.33, 132.05
EUR/ GBP 0.9014 0.9037, 0.8997
GBP/ JPY 147.78 147.96, 146.49
CHF/ JPY 88.15 88.23, 87.30
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, 22 November 2009
all times GMT
(last release in parentheses)
N/A
Monday, 23 November 2009
all times GMT
(last release in parentheses)
0800 CH October M3 money supply (7.8% y/y)
0800 France November PMI, manufacturing (55.6)
0800 France November PMI, services (57.7)
0830 Germany November PMI, manufacturing (51.0)
0830 Germany November PMI, services (50.7)
0900 Eurozone November PMI, manufacturing (50.7)
0900 Eurozone November PMI, services (52.6)
0900 Eurozone November PMI, composite (53.0)
1330 US October Chicago Fed national activity index (-0.81)
1330 Canada September retail sales (0.8% m/m)
1330 Canada September retail sales, ex-autos (0.5% m/m)
1500 US October existing home sales (5.57 million)
1500 US October existing home sales (9.4% m/m)
2300 Australia September leading index (1.8%)
Tuesday, 24 November 2009
all times GMT
(last release in parentheses)
N/A Japan November PMI, manufacturing (54.3)
0045 Japan Bank of Japan Deputy Governor Yamaguchi speaks
0500 Japan October supermarket sales (-2.4% y/y)
0500 Japan Bank of Japan monthly report
0700 Germany Q3 gross domestic product (0.7% q/q)
0700 Germany Q3 gross domestic product (-4.8% y/y)
0700 CH October UBS consumption indicator (0.632)
0745 France November business confidence (89)
0750 France October consumer spending (2.3% m/m)
0750 France October consumer spending (1.0% y/y)
0815 CH Q3 employment level (3.945 million)
0900 Germany November Ifo, expectations (96.8)
0900 Germany November Ifo, business climate (91.9)
0900 Germany November Ifo, current assessment
0930 UK Q3 total business investment (-10.2% q/q)
0930 UK Q3 total business investment (-21.8% y/y)
0930 UK October BBA house purchase loans
1000 Eurozone September industrial new orders (2.2% m/m)
1000 Eurozone September industrial new orders (-23.1% y/y)
1330 US Q3 gross domestic product, annualized (3.5%)
1330 US Q3 gross domestic product price index (0.8%)
1330 US Q3 PCE, core (1.4% q/q)
1400 US September S&P/ Case-Shiller home price index
1400 US September S&P/ Case-Shiller home price index (-14.9% y/y)
1500 US November consumer confidence (47.7)
1500 US September house price index (-0.3% m/m)
1500 US Q3 house price purchase index (-0.7% q/q)
1500 US November Richmond Fed manufacturing index (7)
2200 Australia Reserve Bank of Australia official speaks
2350 Japan October merchandise trade balance, total (¥525.3 billion)
2350 Japan October corporate service prices (-3.2% y/y)
Wednesday, 25 November 2009
all times GMT
(last release in parentheses)
N/A Japan November small business confidence (43.4)
0000 Australia November DEWR skilled vacancies (1.9% m/m)
0030 Australia Q3 private capital expenditure (3.3%)
0030 Australia Q3 construction work done (-0.1%)
0200 NZ November NBNZ business confidence (48.2)
0700 Germany December GfK consumer confidence (4.0)
0830 Italy November consumer confidence
0900 Italy September retail sales
0930 UK Q3 gross domestic product (-0.4% q/q)
0930 UK Q3 gross domestic product (-5.2% y/y)
0930 UK September index of services (-0.1%)
1200 US MBA mortgage applications
1330 US October durable goods orders (1.4%)
1330 US October durable goods, ex-transportation (1.2%)
1330 US October personal income (0.0%)
1330 US October personal spending (-0.5%)
1330 US October PCE deflator (-0.5% y/y)
1330 US October PCE, core (0.1% m/m)
1330 US October PCE, core (1.3% y/y)
1330 US Weekly initial jobless claims (505,000)
1330 US Continuing jobless claims (5.611 million)
1500 US November University of Michigan consumer sentiment (66)
1500 US October new home sales (402,000)
1500 US October new home sales (-3.6% m/m)
1900 US Federal Open Market Committee meeting minutes
2350 Japan Bank of Japan Policy Board meeting minutes
Thursday, 26 November 2009
all times GMT
(last release in parentheses)
N/A Germany November consumer price index (0.1% m/m)
N/A Germany November consumer price index (0.0% y/y)
N/A Germany November CPI, harmonized (0.1% m/m)
N/A Germany November CPI, harmonized (-0.1% y/y)
0200 NZ October M3 money supply (2.7% y/y)
0900 Eurozone October M3 money supply (1.8% y/y)
1100 UK CBI quarterly distributive trades survey
1700 France October total jobseekers
2145 NZ October trade balance (-NZ$ 424 million)
2350 Japan October jobless rate (5.3%)
2350 Japan October household spending (1.0% y/y)
2330 Japan November Tokyo-area consumer price index (-2.4% y/y)
2330 Japan November Tokyo CPI, ex-food and energy (-1.4% y/y)
2330 Japan October consumer price index (-2.2% y/y)
2330 Japan October CPI, ex-food and energy (-1.0% y/y)
2350 Japan October large retailers' sales (-5.6%)
2350 Japan October retail trade (0.9% m/m)
2350 Japan October retail trade (-1.3% y/y)
Friday, 27 November 2009
all times GMT
(last release in parentheses)
N/A Germany October import price index (-0.9% m/m)
N/A Germany October import price index (-11.0% y/y)
N/A Eurozone November Ifo business climate survey
0745 France November consumer confidence (-35)
0900 Italy October hourly wages
1000 Eurozone November economic confidence (86.2)
1000 Eurozone November business climate indicator (-1.78)
1000 Eurozone November consumer confidence (-18.0)
1000 Eurozone November industrial confidence (-21.0)
1000 Eurozone November services confidence (-7.0)
1030 CH November KOF leading indicator (1.45)
1330 Canada Q3 current account (-C$ 11.2 billion)
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