DAILY MARKET COMMENTARY
21 December 2009
Monday
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$ 1.4280 level and was capped around the $1.4370 level. Liquidity is expected to remain relatively light through next week as traders prepare for Christmas and the New Year's holidays. Key economic reports will be released this week and the market could move significantly on account of decreased liquidity. Dealers are still citing lingering effects from Greece's fiscal crisis and global credit concerns are adding to the U.S. dollar's status as a safe-haven currency. In recent weeks, the U.S. dollar has benefited despite its negative interest rate differentials versus other currencies. For most of the year, traders chased higher-yielding currencies but the dollar's recent appreciation – coincident with ongoing improvements in U.S. equity markets – suggest traders may be starting to once again focus on fundamentals such as economic growth prospects. There is a growing sense the Federal Open Market Committee could unwind some of its emergency lending programs earlier than previously believed. June 2010 fed funds futures are implying a rate around 0.285%, above the current rate of 0.15% and current target range of 0% to 0.25%. Chicago Fed President Evans today warned the unemployment rate will probably remain "quite high" in 2010. In eurozone news, European Central Bank member Stark reported the unwinding of monetary stimuli is going to be "gradual and progressive" and said some measures have negative side effects. On a negative note, he added the banking sector may shrink in the future and warned credit conditiobns may be less comfortable in 2010. Euro bids are cited around the US$ 1.3885 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.20 level and was supported around the ¥90.25 level. Bank of Japan Governor Shirakawa reported the central bank will "persistently" keep interest rates at "virtually zero" per cent to combat deflation. Shirakawa pledged "to supply ample liquidity and maintain stability within the financial system…if it is deemed necessary to achieve that, we are always prepared to act swiftly and decisively." Last week, Shirakawa stepped up the verbal rhetoric noting the BoJ "does not tolerate a year-on-year rate of change in the consumer price index equal to or below zero per cent." Data released in Japan overnight saw the November trade surplus come in stronger-than-expected at ¥373.9 billion with exports off 6.2% y/y – marking the fourteenth consecutive monthly decline but up from October's significant 23.2% y/y decline. Shirakawa also warned consumer prices will continue to decline "for some time" and noted economic improvements "will be moderate." The Nikkei 225 stock index climbed 0.41% to close at ¥10,183.47. 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 bids around the ¥130.35 level and was supported around the ¥129.20 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.45 level while the Swiss franc moved higher vis-à-vis the yen and tested bids around the ¥86.35 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8296 in the over-the-counter market, down from CNY 6.8330. People's Bank of China advisor Fan Gang said the U.S. dollar may decline in the "very long term" and fluctuate in the short term. State Information Center member Zhu Baoliang reported "the yuan shouldn't move against the dollar next year." The Chinese government reported industrial output will have expanded 11% in 2009 when final data are tallied.
₤
The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6045 level and was capped around the $1.6165 level. The CBI reported the U.K. economy is likely to emerge from the recession more slowly than the government expects. CBI believes the economy will expand 1.2% in 2010 and 2.5% in 2011, significantly below the government's forecast of 3.5%. Cable bids are cited around the US$ 1.5955 level. The euro moved higher vis-à-vis the British pound as cable tested offers around the ₤0.8925 level and was supported around the ₤0.8870 level.
CHF
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0480 level and was supported around the CHF 1.0385 level. Swiss National Bank released its quarterly report today and said it would be "premature" to begin raising borrowing costs, noting there are "downside risks" to the inflation outlook." Trying to provide a balanced outlook, however, SNB reported "expansionary monetary policy cannot be maintained indefinitely." On 10 December, SNB voted to keep its benchmark rate unchanged at 0.25% and noted it will end its corporate bond purchases as a first step to withdraw its emergency measures. Today, SNB reported it will "continue to act decisively to prevent any excessive appreciation." There are ongoing market rumours the central bank is conducting franc-selling appreciation. U.S. dollar offers are cited around the CHF 1.0615 level. The euro came off vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4875 level while the British pound depreciated 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 1.4319 1.4372, 1.4280
USD/ JPY 90.94 90.97, 90.23
GBP/ USD 1.6082 1.6163, 1.6054
USD/ CHF 1.0429 1.0480, 1.0385
AUD/USD 0.8829 0.8910, 0.8812
USD/CAD 1.0588 1.0697, 1.0534
NZD/USD 0.7083 0.7115, 0.7065
EUR/ JPY 130.23 130.29, 129.19
EUR/ GBP 0.8902 0.8927, 0.8861
GBP/ JPY 146.21 146.41, 145.44
CHF/ JPY 87.16 87.20, 86.36
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, 20 December 2009
all times GMT
(last release in parentheses)
2350 Japan November merchandise trade balance (¥805.4 billion)
Monday, 21 December 2009
all times GMT
(last release in parentheses)
0200 NZ November credit card spending (0.2% m/m)
0430 Japan October all industry activity index (-0.6% m/m)
0500 Japan Bank of Japan monthly report
0700 Japan November convenience store sales (-5.5% y/y)
0800 CH November M3 money supply (7.7% y/y)
1330 US November Chicago Fed national activity index (-1.08)
1330 Canada October retail sales (1.0% m/m)
1330 Canada October retail sales, ex-autos (1.1% m/m)
2145 NZ Q3 current account balance (NZ$ 124 million)
2300 Australia October leading index (0.3%)
Tuesday, 22 December 2009
all times GMT
(last release in parentheses)
N/A Germany January GfK consumer confidence (3.7)
0500 Japan November supermarket sales (-5.2%)
0700 Japan Bank of Japan Governor Shirakawa speaks
0715 CH November trade balance (CHF 2.44 billion)
0845 France November producer prices (0.8% m/m)
0900 Italy November hourly wages (0.2% m/m)
0900 Italy November hourly wages (3.2% y/y)
0930 UK Q3 gross domestic product (-0.3% q/q)
0930 UK Q3 gross domestic product (-5.1% y/y)
0930 UK Q3 current account (-₤11.4 billion)
1330 US Q3 gross domestic product, annualized (2.8%)
1330 US Q3 gross domestic product price index (0.5%)
1330 US Q3 PCE, core (1.3% q/q)
1500 US December Richmond Fed manufacturing index (1.0%)
1500 US October house price index (0.0% m/m)
1500 US November existing home sales (6.10 million)
1500 US November existing home sales (10.1% m/m)
2145 NZ Q3 gross domestic product (0.1% q/q)
2145 NZ Q3 gross domestic product (-2.1% y/y)
Wednesday, 23 December 2009
all times GMT
(last release in parentheses)
0745 France November consumer spending (1.1% m/m)
0745 France November consumer spending (3.5% y/y)
0830 Italy December consumer confidence
0900 Italy October retail sales
0930 UK Bank of England MPC meeting minutes
0930 UK November BBA house purchase loans
1200 US MBA mortgage applications
1330 US November personal income (0.2%)
1330 US November personal spending (0.7%)
1330 US November PCE deflator (0.2% y/y)
1330 US November PCE, core (1.4% y/y)
1330 Canada October gross domestic product (0.4% m/m)
1500 US December University of Michigan consumer sentiment (73.4)
1500 US November new home sales (430,000)
1500 US November new home sales (6.2% m/m)
2350 Japan Bank of Japan Policy Board meeting minutes
2350 Japan Q4 BSI large all-industry
2350 Japan Q4 BSI large manufacturing
Thursday, 24 December 2009
all times GMT
(last release in parentheses)
N/A Germany November German import price index (0.5% m/m)
N/A Germany November German import price index (-8.1% y/y)
N/A Germany December Ifo business climate
0615 Japan Bank of Japan Governor Shirakawa speaks
1330 US November durable goods orders (-0.6%)
1330 US November durable goods, ex-transportation (-1.3%)
1330 US Weekly initial jobless claims (480,000)
1330 US Continuing jobless claims (5.186 million)
1700 France November total jobseekers
2330 Japan November jobless rate (5.1%)
2330 Japan November household spending (1.6% y/y)
2330 Japan December Tokyo-area CPI (-2.2% y/y)
2330 Japan December Tokyo-area CPI, ex-food, energy (-1.3% y/y)
2330 Japan November consumer price index (-2.5% y/y)
2330 Japan November CPI, ex-food, energy (-1.1% y/y)
2350 Japan November corporate services prices (-2.2% y/y)
Friday, 25 December 2009
all times GMT
(last release in parentheses)
0500 Japan November housing starts (-27.1% y/y)
0500 Japan November housing starts, annualized (762,000)
0500 Japan November construction orders (-40.1% y/y)
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