DAILY MARKET COMMENTARY
2 December 2009
Wednesday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro gained ground vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5110 level and was supported around the $1.5030 level. The common currency continues to try and gain traction above the psychologically-important US$ 1.5000 figure. The Federal Reserve released its December Beige Book today and it cited "dismal" conditions in the commercial real estate sector and ongoing weakness in labour markets. The greenback continues to react positively to negative U.S. economic news on the premise that less demand will emerge for higher-yielding currencies. Gold also rose to new record highs today, gaining ground above the US$ 1,200/ ounce level, and the U.S. dollar moved lower on the back of that trade. Data released in the U.S. today saw November Challenger job cuts decline 72.3% y/y while ADP November employment was off 169,000, an improvement from the revised 195,000 decline in October. Data to be released in the U.S. on Friday include the all-important non-farm payrolls report for November. Many forecasts are focusing on job losses of around 125,000 workers. In eurozone news, German Chancellor Merkel called for a "sufficient credit supply" to help improve the economy. European finance ministers agreed to issue new recommendations for eurozone countries to reduce their deficits below the European Union limit of 3% of gross domestic product. Also, EU finance ministers reached a compromise on a new supervisory framework for the financial markets of the bloc. Data released in the eurozone today saw October producer prices climb 0.2% m/m and decline 6.7% y/y. Also, German October industrial orders were off 29% y/y. Euro bids are cited around the US$ 1.4720 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥87.50 level and was supported around the ¥86.60 level. Traders are becoming more concerned that Japanese monetary authorities may conduct actual yen-selling intervention. Japanese finance ministry officials met in Washington this week with U.S. Treasury officials, meetings that both sides are eager to spotlight. Bank of Japan Govenror Shirakawa will also meet with U.S. officials from tomorrow. Bank of Japan Policy Board member Suda verbally intervened today, indicating the yen's rise may impact Japan's economic growth. Suda also indicated no policy options were being ruled out, a signal that policymakers are not content with recent yen movements. Bank of Japan yesterday announced it is offering three-month loans to commercial banks at 0.1% as part of a ¥10 trillion program to counter deflation. Japan's banking minister today called the BoJ's new program "sleepyheaded" and this is adding to tensions between the central bank and the government. The move has been broadly interpreted by the markets as being a minimal response to deflationary pressures. BoJ Governor Shirakawa and Prime Minister Hatoyama are scheduled to meet this week to discuss the economy and deflation. Data released in Japan overnight saw the November monetary base climb 3.8% y/y. Hatoyama today said the yen's rise cannot be left "as is." The Nikkei 225 stock index gained 0.38% to close at ¥9,608.94. 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 ¥132.25 level and was supported around the ¥131.40 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.20 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.75 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8233 in the over-the-counter market, down from CNY 6.8240. People's Bank of China official Hu reiterated China is sticking to its monetary policies. There is a growing sense that China will allow its yuan currency to gradually appreciate/
₤
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6670 level and was supported around the $1.6625 level. Bank of England Chief Economist Dale today reported the economy "appears to have turned" but warned some factors could inhibit the economic recovery. BoE Monetary Policy Committee member Posen this week said new monetary policymaking tools are required to stop asset bubbles and reiterated inflation-targeting will continue. Cable bids are cited around the US$ 1.6430 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.9025 level and was capped around the ₤0.9105 level.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.5050 1.5108, 1.5041
USD/ JPY 87.29 87.37, 86.58
GBP/ USD 1.6654 1.6694, 1.6549
USD/ CHF 1.0021 1.0022, 0.9977
AUD/USD 0.9243 0.9294, 0.9238
USD/CAD 1.0482 1.0483, 1.0431
NZD/USD 0.7224 0.7295, 0.7223
EUR/ JPY 131.22 131.97, 130.64
EUR/ GBP 0.9031 0.9104, 0.9025
GBP/ JPY 145.28 145.73, 143.78
CHF/ JPY 87.07 87.53, 86.66
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, 2 December 2009
all times GMT
(last release in parentheses)
0930 UK November PMI, construction (46.2)
1000 Eurozone October producer price index (-0.4% m/m)
1000 Eurozone October producer price index (-7.7% y/y)
1315 US November ADP employment change (-203,000)
1730 US Richmond Fed President Lacker speaks
1900 US Fed Beige Book
2330 Australia November performance of service index (54.8)
2350 Japan Q3 capital spending (-21.7%)
Thursday, 3 December 2009
all times GMT
(last release in parentheses)
0130 Australia October retail sales (-0.2% m/m)
0200 Australia November ANZ commodity prices (4.6%)
0745 France Q3 ILO unemployment rate (9.5%)
0845 Italy November PMI, services
0850 France November PMI, services
0855 Germany November PMI, services
0900 Eurozone November PMI, services
0930 UK November PMI, services (56.9)
1000 Eurozone Q3 gross domestic product (0.4% q/q)
1000 Eurozone Q3 gross domestic product (-4.1% u/u)
1000 Eurozone October retail sales (-0.7% m/m)
1000 Eurozone October retail sales (-3.6% y/y)
1245 Eurozone European Central Bank interest rate decision
1330 US Q3 non-farm productivity (9.5%)
1330 US Weekly initial jobless claims
1330 US Continuing jobless claims
1500 US November ISM, non-manufacturing (50.6)
Friday, 4 December 2009
all times GMT
(last release in parentheses)
N/A UK November Halifax house prices (1.2% m/m)
N/A Canada November employment, net change (-43,200)
N/A Canada November unemployment rate (8.6%)
0815 CH November consumer price index (0.6% m/m)
0815 CH November consumer price index (-190,000)
1330 US November non-farm payrolls, net change (-190,000)
1330 US November unemployment rate (10.2%)
1330 US November average hourly earnings (0.3% m/m)
1330 US November average hourly earnings (2.4% y/y)
1330 US November average weekly hours (33.0)
1500 US October factory orders (0.9%)
1500 US Philadelphia Fed President Plosser speaks
1500 Canada November Ivey purchasing managers index (61.2)
1815 US St. Louis Federal Reserve President Bullard speaks
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