DAILY MARKET COMMENTARY
9 December 2009
Wednesday
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$ 1.4780 level and was supported around the $1.4670 level. The common currency reached its lowest level since 3 November before reversing course. Traders moved back into higher-yielding currencies like euro as U.S. equity markets gathered strength and eventually finished on the plus side. Traders continue to assess credit concerns following Dubai World's and Greece's credit downgrades yesterday. There is also increasing talk that the U.S.'s and U.K.'s credit ratings may be in jeopardy if they do not improve their fiscal positions. Data released in the U.S. today were stronger-than-expected with MBA mortgage applications up +8.5% and October wholesale inventories at +0.3%, up from a revised -0.8% in September. The fed funds futures rate is currently trading at 0.14%, within the Fed's 0% to 0.25% range, and the implied June 2010 fed funds futures rate is now around 0.27%. The Fed today drainned US$ 225 million from the banking system through one-day tri-party reverse repos. This is one of the Fed's first moved to withdraw its unprecedented monetary stimulus. In eurozone news, European Central Bank member Weber said there is no "generalized" credit crunch in Germany. Data released in Germany overnight saw October exports increase 2.5% to €69.9 billion. Also, German November final consumer price inflation was off 0.1% n/n and up 0.4% y/y. Euro bids are cited around the US$ 1.4505 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥87.35 level and was capped around the ¥88.70 level. Finance minister Fujii reported deflation will be overcome in five years. Finance ministry Tooyoo Gyohten reported 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 yen continues to appreciate on escalating global credit concerns following the collapse of Dubai World's debt to junk status and yesterday's downgrade of Greece's credit rating. Data released in Japan overnight saw revised gross domestic product growth of 0.3% q/q in the July – September period – worse than economists' forecast. The Nikkei 225 stock index lost 1.33% to close at ¥10,140.47. 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 ¥128.75 level and was capped around the ¥130.45 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥142.00 figure while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.25 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8286 in the over-the-counter market, up from CNY 6.8280. People's Bank of China official Zhu Min yesterday 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.
₤
The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6165 level and was capped around the $1.6375 level. Traders were unimpressed with announcements from Chancellor of the Exchequer Darling that he is raising taxes and adopting other contractionary fiscal policies. Darling announced banks will be responsible for paying a 50% tax on bank bonuses above ₤25,000. Darling delivered his pre-Budget report and traders do not put much stock in his growth estimates or his plan to reduce the U.K.'s growing deficits. The U.K. government now anticipates a GDP contraction of 4.75% in 2009 and economic growth of 1.0% to 1.5% in 2010. Data released in the U.K. today saw the October global goods trade deficit widen to ₤7.1 billion, its worst level this year.
Cable bids are cited around the US$ 1.5985 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9095 level and was supported around the ₤0.9000 figure.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4688 1.4781, 1.4668
USD/ JPY 87.80 88.68, 87.34
GBP/ USD 1.6198 1.6375, 1.6166
USD/ CHF 1.0288 1.0299, 1.0218
AUD/USD 0.9032 0.9113, 0.9014
USD/CAD 1.0569 1.0660, 1.0541
NZD/USD 0.7087 0.7145, 0.7042
EUR/ JPY 128.99 130.45, 128.77
EUR/ GBP 0.9065 0.9094, 0.9001
GBP/ JPY 142.25 144.33, 141.99
CHF/ JPY 85.32 86.37, 85.24
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
Wednesday, 9 December 2009
all times GMT
(last release in parentheses)
N/A UK November NIESR gross domestic product, estimate (-0.4%)
0030 Australia October home loans (5.10%)
0030 Australia October trade balance (-A$ 1.894 billion)
0030 Australia October investment lending (-0.1%)
0030 UK Pre-Budget report
0645 CH November unemployment rate (4.0%)
0700 Germany October trade balance (€10.6 billion)
0700 Germany November consumer price index (-0.2% m/m)
0700 Germany October current account (€9.4 billion)
0700 Germany November consumer price index (0.3% y/y
0700 Germany October imports (5.8% y/y)
0700 Germany November CPI, harmonized (0.4% y/y)
0930 UK October trade balance (-₤7.194 billion)
1030 UK November BRC shop price index
1200 US MBA mortgage applications (2.1%)
1500 US October wholesale inventories (-0.9%)
2000 NZ Reserve Bank of New Zealand interest rate decision
2145 NZ Q3 terms of trade index (-9.0% q/q)
2350 Japan October machine orders (10.5% m/m)
2350 Japan October machine orders (-22.0% y/y)
2350 Japan November domestic corporate goods price index (-0.7% m/m)
2350 Japan November domestic corporate goods price index (-6.7% y/y)
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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