DAILY MARKET COMMENTARY
17 November 2009
Tuesday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro fell sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4810 level and was capped around the $1.5000 figure. Dealers cited some carryover demand following U.S. dollar-supportive comments and verbal intervention from Federal Reserve Chairman Bernanke yesterday. Bernanke noted the Fed supports a strong dollar, wading into generally unfamiliar ground for Fed chairmen and officials. European Central Bank President Trichet followed suit today, "noting with great interest comments made yesterday" by Bernanke. Trichet referred to Bernanke's comments as a "very important statement" and said a strong U.S. dollar is of great interest to the "entire international community." The common currency has borne the brunt of most of the U.S. dollar's recent adjustment lower, especially since important currencies such as the yuan are trading in concert with the U.S. dollar. Data released in the U.S. today saw the October headline producer price index climb a less-than-expected 0.3% m/m and decline 1.9% y/y while the ex-food and energy component was off a lower-than-expected 0.6% m/m and up a less-than-expected 0.7% y/y. These data indicate less wholesale inflation is evident that previously expected and could mean greater disinflationary pressures at the consumer price level. Other data released today saw September net long-term TIC flows print a stronger-than-expected US$ 40.7 billion, up from a revised US$ 34.2 billion in August, while September total net TIC flows came in at US$ 133.5 billion, up from a revised US$ 25.3 billion in August. Additionally, October industrial production was up 0.1%, down from a revised 0.6% in September, with capacity utilization at 70.7%. Finally, the November NAHB housing market index printed at +17, unchanged from the revised October result. In eurozone news, European Central Bank member Stark hawkishly noted "After extended discussions, we are moving closer to phasing out our liquidity measures, as not all of them will be needed to the same extent as in the past." Stark also warned that all of the liquidity in the global financial system cannot be allowed "to sow the seeds of new imbalances." ECB member Quaden reported "There are more reasons to be relatively optimistic and to expect a gradual recovery in 2010." Data released in the eurozone today saw the September trade balance climb to a €6.8 billion surplus. 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 ¥89.55 level and was supported around the ¥88.75 level. Finance minister Fujii 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." Data released in Japan overnight saw the September tertiary industry activity index decline 0.5%, a reversal from August's +0.3% gain, and was up +0.5% in the July – September quarter. Traders are still talking about Bank of Japan Governor Shirakawa's comments yesterday in which he reported "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." Three-month yen Libor fell to 0.30813% yesterday, its lowest print since 12 June 2006 and this reflects BoJ's commitment to maintain an ultra-easy monetary policy. Similarly, three-month U.S. dollar Libor retreated to a record low of 0.27125% and has remained below the yen's rate since 24 August. 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 0.63% to close at ¥9,729.93. 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 ¥132.45 level and was capped around the ¥133.60 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥150.20 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.60 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8240 in the over-the-counter market, up from CNY 6.8210. Dealers have scrapped any notion that President Obama's visit to China and the Pacific Rim will result in a quick revaluation of the yuan. Obama today said he welcomes China's previous commitment to "move toward a more market-oriented exchange rate over time." China's main banking regulator yesterday 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.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4814 1.4998, 1.4808
USD/ JPY 89.32 89.53, 88.73
GBP/ USD 1.6790 1.6872, 1.6754
USD/ CHF 1.0187 1.0208, 1.0060
AUD/USD 0.9271 0.9375, 0.9235
USD/CAD 1.0569 1.0618, 1.0464
NZD/USD 0.7433 0.7500, 0.7407
EUR/ JPY 132.57 133.58, 132.43
EUR/ GBP 0.8836 0.8907, 0.8833
GBP/ JPY 150.04 150.22, 149.34
CHF/ JPY 87.70 88.49, 87.59
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, 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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