DAILY MARKET COMMENTARY
17 December 2009
Thursday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4505 level and was capped around the $1.4590 level. The Federal Open Market Committee yesterday voted to keep interest rates unchanged and reported its emergency lending programs will continue to be unwound. The Fed's message was generally upbeat with policymakers acknowleding the improving labour market. The common currency also came off further today on growing concerns that Greece's fiscal position is deteiorating to the detriment of the euro. Data released in the U.S. today saw weekly initial jobless claims print at 480,000, up from a revised 473,000, while continuinmg claims increased to 5.186 million. Additionally, November leading indicators improved to 0.9% from the prior reading of 0.3% and the December Philadelphia Fed index improved to 20.4. Federal Reserve Chairman Bernanke's new term as the Chairman was approved today by the U.S. Senate. In eurozone news, October construction output was off 0.6% m/m and 7.7% y/y. Dealers continue to talk about diverging growth potentials between the U.S. and eurozone with the former's improving prospects a net positive for the U.S. dollar. Euro bids are cited around the US$ 1.4445 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥90.35 level and was supported around the ¥89.55 level. Many traders believe Bank of Japan Governor Shirakawa will indicate he is prepared to expand the central bank's monetary easing policies if the appreciating yen and deflation continue to threaten Japan's economy recovery. Bank of Japan's Policy Board is expected to keep its unsecured overnight call rate target unchanged at 0.10%. Data released in Japan yesterday saw November revised machine tools up 0.9% m/m and off 8.4% y/y, an upward revision from provisional data. Banking minister Kamei warned the economy and deflation are worsening, the latest attempt by the government to pressure the central bank into maintaining its emergency lending programs. Other data released yesterday saw the October tertiary activity index increase 0.5% m/m. Finance minister Fukii this week reported the government must keep bond issuance below ¥44 trillion for the fiscal year that begins in April 2010. Today, he noted the government may postpone some planned tax reforms. The Bank of Japan December quarterly Tankan survey was released on Monday and evidenced an improvement in corporate sentiment among large manufacturers. The headline diffusion index improved to -24 from -33 in the September quarterly survey, marking the third consecutive quarterly improvement. Sentiment among large non-manufacturers improved to -22 in December from -24. On a negative note, it was reported that large firms plan to reduce capital spending by 13.8% in the fiscal year ending in March, a downward revision from the 10.8% decline expected in the September tankan. Collectively, these data paint a mixed picture that evidences some improvement in current sentiment but a less-than-sanguine outlook for the future. Traders cite an increasing chance of actual yen-selling intervention by Japanese monetary authorities if the yen remains at elevated levels. The Nikkei 225 stock index lost 0.48% to close at ¥10,163.80. 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 ¥128.80 level and was capped around the ¥130.65 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥144.65 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.55 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8335 in the over-the-counter market, up from CNY 6.8290. China reported it attracted US$ 7 billion in foreign direct investment in November. A People's Bank of China household inflation survey reported many believe prices are escalating too quickly during the economic recovery.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4360 1.4535, 1.4327
USD/ JPY 90.06 90.25, 89.56
GBP/ USD 1.6129 1.6341, 1.6079
USD/ CHF 1.0470 1.0507, 1.0380
AUD/USD 0.8876 0.9011, 0.8845
USD/CAD 1.0675 1.0745, 1.0608
NZD/USD 0.7116 0.7207, 0.7095
EUR/ JPY 129.33 130.67, 128.91
EUR/ GBP 0.8900 0.8918, 0.8850
GBP/ JPY 145.27 146.85, 144.67
CHF/ JPY 85.98 86.57, 85.55
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, 17 December 2009
all times GMT
(last release in parentheses)
N/A Japan Bank of Japan Policy Board interest rrate decision
0000 Australia November HIA new home sales (-6.0% m/m)
0200 NZ December NBNZ business confidence (43.4)
0500 Japan October leading index (89.7)
0500 Japan October coincident index (94.3)
0900 Italy Q3 unemployment rate
0930 UK November retail sales (0.4% m/m)
0930 UK November retail sales (3.4% y/y)
1000 CH December Credit Suisse ZEW survey, expectations (56.4)
1000 Eurozone October construction output
1100 UK December CBI distributive trades
1200 Canada November consumer price index (-0.1% m/m)
1200 Canada November consumer price index (0.1% y/y)
1200 Canada November CPI, core (0.1% m/m)
1200 Canada November CPI, core (1.80% y/y)
1330 US Weekly initial jobless claims
1330 US Continuing jobless claims
1330 Canada October international securities transactions (C$ 13.59 billion)
1500 US November leading indicators (0.3%)
1500 US December Philadelphia Fed index
Friday, 18 December 2009
all times GMT
(last release in parentheses)
N/A Japan November Nationwide department store sales (-10.5% y/y)
N/A Japan November Tokyo-area department store sales (-13.1% y/y)
0700 Germany November producer prices (0.0% m/m)
0700 Germany November producer prices (-7.6% y/y)
0745 France December business confidence (89)
0900 Italy October industrial orders
0900 Italy October industrial sales
0900 Germany December Ifo, business climate (93.9)
0900 Germany December Ifo, current assessment (89.1)
0900 Germany December Ifo, expectations (98.9)
0900 Eurozone October current account (-€ 5.4 billion)
0930 UK November mortgage approvals (61,000)
0930 UK Q3 total business investment (-3.0% q/q)
0930 UK Q3 total business investment (-21.7% y/y)
0930 UK November public sector net cash requirement (₤5.9 billion)
0930 UK November public sector net borrowing (₤11.4 billion)
0930 UK November M4 money supply
1000 Eurozone October trade balance (€3.7 billion)
1000 Eurozone October trade balance (₤6.8 billion)
1030 CH December KOF economic forecast
1330 Canada October wholesale sales (0.2% m/m)
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