DAILY MARKET COMMENTARY
16 November 2009
Monday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5015 level and was supported around the $1.4880 level. Federal Reserve Chairman Bernanke spoke today and said "headwinds" of reduced bank lending and a weaker labour market will restrain the pace of economic growth in the U.S. economy. Bernanke also verbally intervened to support the U.S. dollar, saying the Fed is "attentive" to its value and "will help ensure that the dollar is strong." Bernanke also reiterated U.S. interest rates will remain low for an "extended period." Most dealers believe rates will remain unchanged well into the middle of 2010. It is unlikely that Bernanke's verbal intervention will lead to a volte face and sustainable reversal of the U.S. dollar's recent weakness. Dallas Fed President Fisher said the U.S. dollar's depreciation has been "gradual." Data released in the U.S. today saw October retail sales climb 1.4%, more-than-anticipated and stronger than the revised -2.3% print for September. The ex-autos component was up 0.2%, worse-than-expected and down from the revised +0.4% print in September. Also, the November Empire State manufacturing index fell to 23.51 to 34.57 in October while September business inventories were off 0.4%, up from a revised -1.6% in August. In eurozone news, European Central Bank member Quaden reported "short-term measures have to be unwound at the right time and place," the latest indication the ECB is in no hurry to change monetary policy at this time. Data released in the eurozone today saw EMU-16 October consumer prices up 0.2% m/m after remaining unchanged in September, and were off 0.1% y/y in October – the fifth consecutive annual decline. ECB member Weber spoke today and said "stabilization is not recovery…
"Even if the banking sector is looking more solid since the stabilization of the financial markets, there are still challenges ahead which should not be underestimated." Euro bids are cited around the US$ 1.4445 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥88.75 level and was capped around the ¥89.70 level. The pair moved lower after it was reported Japanese gross domestic product data expanded 1.2% in the April – June period, better-than-expected and 4.8% on an annualized basis. These data render it likely Japan is leaving a technical recession but it is still highly probable that deflation will remain a problem over the next several business quarters. Today's GDP data were leaked by the Japanese trade minister. Bank of Japan Governor Shirakawa spoke about interest rates today saying ""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." He added balance sheet adjustments in the U.S. and European economies is a "key issue in determining the outlook for the global economy." 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 climbed 0.21% to close at ¥9,791.18. 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 ¥133.20 level and was capped around the ¥134.30 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥150.35 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.25 level. In Chinese news, the U.S. dollar weakened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8210 in the over-the-counter market, down from CNY 6.8240. President Obama met in China with leaders there and does not appear to have obtained any official concessions from the government there on further liberalization of the yuan's exchange rate. China's main banking regulator today criticized U.S. monetary policy as having led to greater financial speculation. European official Alumnia said the Chinese government knows its yuan currency must appreciate.
₤
The British pound appreciated sharply vis-à-vis the U.S. dollar today as sterling tested offers around the US$ 1.6875 level and was supported around the $1.6670 level. Data released in the U.K. today saw Rightmove November house prices off 1.6% m/m and up 1.6% y/y. Bank of England Deputy Governor Tucker spoke about recapitalizing banks today. BoE Monetary Policy Committee member Sentance optimistically reported the U.K. economy is "in the very early stages of a resumption of growth." He also reiterated that the U.K. economy faces the danger of inflation in two years, as first indicated in last week's quarterly inflation report. Cable bids are cited around the US$ 1.6410 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8870 level and was capped around the ₤0.8980 level.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4960 1.4993, 1.4880
USD/ JPY 89.21 89.70, 89.13
GBP/ USD 1.6815 1.6816, 1.6668
USD/ CHF 1.0084 1.0142, 1.0064
AUD/USD 0.9370 0.9378, 0.9315
USD/CAD 1.0468 1.0536, 1.0425
NZD/USD 0.7476 0.7477, 0.7394
EUR/ JPY 133.50 134.32, 133.24
EUR/ GBP 0.8896 0.8978, 0.8872
GBP/ JPY 149.98 150.35, 149.10
CHF/ JPY 88.46 89.01, 88.26
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, 15 November 2009
all times GMT
(last release in parentheses)
2130 NZ September performance of services index (51.3)
2145 NZ Q3 producer prices, inputs (0.0% q/q)
2145 NZ Q3 producer prices, outputs (-0.7% q/q)
2350 Japan Q3 gross domestic product, nominal (-0.5% q/q)
2350 Japan Q3 gross domestic product, annualized (2.3%)
2350 Japan Q3 gross domestic product (0.6% q/q)
Monday, 16 November 2009
all times GMT
(last release in parentheses)
0001 UK November Rightmove house prices (2.8% m/m)
0001 UK November Rightmove house prices (0.2% y/y)
0030 Japan Bank of Japan Governor Shirakawa speaks
0900 Italy October consumer price index
1330 US October retail sales (-1.5%)
1330 US November Empire manufacturing index (34.57)
1330 US October retail sales, ex-autos (0.5%)
1330 Canada September manufacturing shipments (-2.1% m/m)
1500 US September business inventories (-1.5%)
1715 US Federal Reserve Chairman Bernanke speaks
2350 Japan September tertiary industry index (0.3% m/m)
Tuesday, 17 November 2009
all times GMT
(last release in parentheses)
N/A Germany October wholesale price index (-0.2% m/m)
N/A Germany October wholesale price index (-8.1% y/y)
0815 CH September retail sales (-1.0% y/y)
0930 UK October consumer price index, core (1.7% y/y)
0930 UK October consumer price index (0.0% m/m)
0930 UK October consumer price index (1.1% y/y)
0930 UK October retail price index (0.4% m/m)
0930 UK October retail price index (-1.4% y/y)
1000 Eurozone September trade balance (€1.0 billion)
1330 US October producer price index (-0.6% m/m)
1330 US October producer price index (-4.80% y/y)
1330 US October PPI, ex-food and energy (-0.1% m/m)
1330 US October producer price index, ex-food and energy (1.8% y/y)
1400 US September TICS capital flows, total net (US$ 10.2 billion)
1400 US September TICS capital flows, long-term (US$ 28.6 billion)
1415 US October capacity utilization (70.5%)
1415 US October industrial production (0.7%)
1515 US Richmond Fed President Lacker speaks
1800 US November NAHB housing market index (18)
2205 Australia Reserve Bank of Australia official Debelle speaks
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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