DAILY MARKET COMMENTARY
10 December 2009
Thursday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4760 level and was supported around the $1.4685 level. The common currency was given earlier before retracing as traders continue to react to mounting credit concerns. Spain's credit outlook was downwardly revised by Standard & Poor's yesterday after it affirmed the country's long-term and sovereign investment-grade credit ratings. Spain's long-term debt rating of AAA was downgraded in January and the Spanish action follows Greece's downgrade this week by Fitch. European Central Bank President Trichet reported economic and financial conditions "are now stable enough that we can start to withdraw some of the excess support that is now needed to the same extent as it was in the past." Last week, the ECB reported it will start removing some policy accommodation in 2010 but will keep most measures in place. European Central Bank member Nowotny warned "We are closely watching the developments in economic deficits. The high deficits of countries as Greece, Ireland and Spain are a reason for concern to us. It's not the ECB's job to help defuse these situations. This is not part of the mandate of the ECB. Membership of the euro zone must not be seen as a solution to national structural problems. The member countries must do their own homework." Data released in the eurozone today saw the German November wholesale price index rise 0.7% m/m. In U.S. news, the October trade balance improved to –US$ 32.9 billion from a revised –US$ 35.7 billion in September. Also, weekly initial jobless claims rose to 474,000 from continuing jobless claims fell to 5.157 million from a revised 5.460 million. Euro bids are cited around the US$ 1.4505 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥88.45 level and was supported around the ¥87.70 level. Bank of Japan launched its new ¥10 trillion fund provision scheme overnight by offering ¥800 billion in loans to financial institutions at low rates. Data released in Japan overnight saw the November domestic corporate goods price index up 0.1% m/m and off 4.9% y/y. Also, October core machinery orders were off 4.5% m/m and 21.0% y/y. Finance minister Fujii yesterday reported deflation will be overcome in five years. Finance ministry Tooyoo Gyohten yesterday noted Bank of Japan's latest measures to address deflation are "appropriate and proper… What the BOJ has done is a sensible measure to stimulate demand for funds but at the same time avoiding (sending a) wrong signal to the market that the interest rate is further reduced." Last week, the central bank reported it is pumping up to ¥10 trillion in three-month funds at the overnight rate." Gyohten added "Apparently, the crucial moment will be when the new government decides what will be the shape of the budget for the next fiscal year, which starts April next year, and what will be the prospects of the fiscal situation and performance of industries and conditions in major trading partners, notably in North America and Asia." The Nikkei 225 stock index lost 1.41% to close at ¥9,862.82. 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 ¥130.35 level and was supported around the ¥129.05 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥144.40 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.30 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8287 in the over-the-counter market, up from CNY 6.8286. People's Bank of China official Zhu Min this week reported China can experience more than 8% economic growth. Zhu added China had "good reason" to devalue its currency during the global financial crisis but instead decided to "stabilize the renminbi exchange rate." The State Administration for Foreign Exchange said China will continue to implement foreign exchange reforms and PBoC indicated it will "improve" policy flexibility.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4729 1.4759, 1.4683
USD/ JPY 88.18 88.45, 87.72
GBP/ USD 1.6278 1.6345, 1.6214
USD/ CHF 1.0259 1.0301, 1.0236
AUD/USD 0.9168 0.9189, 0.9080
USD/CAD 1.0514 1.0581, 1.0477
NZD/USD 0.7281 0.7317, 0.7188
EUR/ JPY 129.91 130.36, 129.03
EUR/ GBP 0.9047 0.9070, 0.9018
GBP/ JPY 143.55 144.40, 142.47
CHF/ JPY 85.94 86.22, 85.31
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
Thursday, 10 December 2009
all times GMT
(last release in parentheses)
N/A Japan Q1 manpower survey
0000 Australia December consumer inflation expectations (3.2%0
0030 Australia November employment change (24,500)
0030 Australia November unemployment rate (5.8%)
0100 Australia Reserve Bank of Australia official speaks
0745 France November non-farm payrolls
0750 France October industrial production (-1.5% m/m)
0750 France October industrial production (-10.4% y/y)
0750 France October manufacturing production (-1.6% m/m)
0750 France October manufacturing production (-11.0% y/y)
0830 CH Swiss National Bank interest rate decision
0900 Eurozone European Central Bank monthly report
0900 Italy October industrial production (-5.3% m/m)
1000 Italy Q3 gross domestic product
1200 UK Bank of England interest rate decision
1200 UK Bank of England asset purchase program decision
1330 Canada October international merchandise trade (-C$ 900 million)
1330 US October trade balance (-US$ 36.5 billion)
1330 US Weekly initial jobless claims (457,000)
1330 US Continuing jobless claims (5.465 million)
2145 NZ November food prices (-1.5% m/m)
Friday, 11 December 2009
all times GMT
(last release in parentheses)
0000 Japan November consumer confidence (40.5)
0930 UK November PPI, input (2.6% m/m)
0930 UK November PPI, input (0.1% y/y)
0930 UK November PPI, output (0.2% m/m)
0930 UK November PPI, output (1.7% y/y)
0930 UK November PPI, core output (0.3% m/m)
0930 UK November PPI, core output (2.0% y/y)
1330 Canada October new housing price index (0.5% m/m)
1330 US November import price index (0.7% m/m)
1330 US November import price index (-5.7% y/y)
1330 US November advance retail sales (1.4%)
1330 US November retail sales, ex-autos (0.2%)
1500 US University of Michigan consumer sentiment (67.4)
1500 US October business inventories (-0.4%)
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