18 January 2010
Monday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4335 level and was capped around the $1.4395 level. French President Sarkozy was quoted on 7 January as saying the global foreign exchange systemn is in a state of "disorder" and eurozone finance ministers today said Sarkozy "has a point." G7 finance ministers will convene in northern Canada in early February and are expected to press China to liberalize its exchange rate regime further. The euro remains top-heavy on account of ongoing Greek fiscal problems. Dutch finance minister Bos today said the Greek government will need to address its budget problems without intervention from other European Union members. Greece's draft budget for 2010 has its budget deficit falling below 3% of GDP by 2012 after having reached an estimated 12.7% last year. There are lingering concerns that Greece's credit ratings could be slashed further and possibly make the country's debt ineligible for collateral repurchase operations. The ECB is expected to restore its previous threshold of A- for collateral it will accept for funding operations later this year and Greece could in theory lose access to funding from the central bank. Germany's IW Institute said Germany's 2011 federal budget can sustain planned tax cuts if the government implements an aggressive consolidation plan this year. The European Central Bank today reported it will stop providing Swiss franc liquidity at the end of this month, the latest unwinding of its quantitative easing measures. Around €442 billion in funds from the ECB's first emergency twelve-month operations will expire in June without the banks having an opportunity to "roll over" the funds automatically. In U.S. news, liquidity was dry during North American dealing on account of the U.S. market holiday and will return to normal overnight. Traders will pay very close attention to earnings data from Citigroup, Morgan Stanley, Bank of America, Goldman Sachs, and Wells Fargo this week. Euro bids are cited around the US$ 1.3885 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.60 level and was capped around the ¥91.05 level. Traders are paying very close attention to a funds scandal involving Prime Minister Hatoyama and the Democratic Party of Japan. This scandal has been brewing for several months but some traders believe the problems are worsening and could prevent the government from enacting needed reforms and budget agreements. Data released in Japan overnight saw November industrial production downwardly revised to +2.2% from +2.6% m/m. Bank of Japan lifted its economic assessment in four of Japan's nine regions, noting the economy "picked up in all regions…many regions continued to point to the low level of economic activity." BoJ Governor Shirakawa reported "The Bank of Japan recognized its is a crucial challenge for Japan's economy to overcome deflation and return to a sustainable growth path with price stability. The central bank is aiming to maintain an extremely accommodative financial environment." There is increasing speculation the central bank will extend its near-zero per cent interest rate policy and possibly ramp up fund injections into the economy. Group of Seven finance ministers are expected to discuss exchange rates in Canada when they convene on 5-6 February. The Nikkei 225 stock index lost 1.16% to close at ¥10,855.08. 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 ¥130.05 level and was capped around the ¥130.95 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥148.90 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.75 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8268 in the over-the-counter market, down from CNY 6.8269. China International Capital Corporation reported China attracted US$ 48.7 billion of "hot money" in December, the largest amount in eight months. Some economists are predicting China's inflation rate could accelerate to as high as 8% in 2010, requiring probable monetary tightenings by People's Bank of China. PBoC last week decided to lift reserve requirements at commercial banks by 50bps from 15.50% to 16.00%, effective today. It is expected that China's consumer price inflation may have expanded by as much as 1.4% last month. China is expected to release December inflation, investment, industrial output, retail sales, and Q4 gross domestic product data on Wednesday.
₤
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6375 level and was supported around the $1.6250 level. Sterling gained ground after Rightmove reported January house prices climbed +0.4% this month. At the same time, there was an increase in the number of people looking for new property and this added to cable's gains. Bank of England Monetary Policy Committee member Miles today saw U.K. banks should hold triple the amount of equity. Data released in the U.K. last week saw the November leading indicator index decline 0.9%. Bank of England Monetary Policy Committee member Posen last week called for additional business lending while MPC member Barker said she does not expect the economy to gather steam in the first six months of the year. Barker also indicated she sees first half growth prospects as "patchy." MPC member Sentance moved the markets last week when he said "At some point you have to say we have increased the amount of stimulus enough. It doesn't mean you are going to withdraw it but you don't have to keep adding to it. The Bank is approaching the point where we need to hold back and wait and see how that's flowing into the recovery." Cable bids are cited around the US$ 1.5730 level. The euro lost ground vis-à-vis the British pound as the single currency tested bids around the ₤0.8780 level and was capped around the ₤0.8830 level.
CHF
The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0235 level and was capped around the CHF 1.0290 level. Swiss National Bank President Hildebrand reported he will "resolutely prevent" an "excessive" strengthening of the franc. He also said SNB must "carefully and gradually" normalize its monetary policy. Data released in Switzerland last week saw December producer price inflation up 0.1% m/m and decline 2.5% y/y. The OECD today called on Switzerland to keep interest rates unchanged until the economic recovery takes hold. U.S. dollar offers are cited around the CHF 1.0420 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4735 level while the British pound gained ground vis-à-vis the Swiss franc and tested offers around the CHF 1.6790 level.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4381 1.4397, 1.4334
USD/ JPY 90.79 91.05, 90.62
GBP/ USD 1.6332 1.6377, 1.6249
USD/ CHF 1.0252 1.0290, 1.0236
AUD/USD 0.9264 0.9278, 0.9173
USD/CAD 1.0257 1.0313, 1.0247
NZD/USD 0.7392 0.7401, 0.7328
EUR/ JPY 130.55 130.93, 130.07
EUR/ GBP 0.8802 0.8831, 0.8780
GBP/ JPY 148.26 148.88, 147.50
CHF/ JPY 88.53 88.76, 88.17
Support Resistance Support Resistance
EUR/ USD USD/ JPY
L1. 1.4355 1.4925 86.95 93.20
L2. 1.4175 1.5145 84.85 95.50
L3. 1.3795 1.5360 82.30 98.85
GBP/ USD USD/ CHF
L1. 1.5755 1.6890 1.0040 1.0370
L2. 1.5355 1.7310 0.9920 1.0580
L3. 1.4950 1.7615 0.9750 1.0695
AUD/ USD USD/ CAD
L1. 0.8870 0.9425 1.0150 1.0590
L2. 0.8685 0.9600 0.9920 1.0820
L3. 0.8225 0.9840 0.9735 1.1060
NZD/ USD EUR/ JPY
L1. 0.7145 0.7645 125.70 135.75
L2. 0.6880 0.7785 122.50 138.20
L3. 0.6750 0.8215 118.55 141.00
EUR/ GBP EUR/ CHF
L1. 0.8795 0.9175 1.4575 1.4875
L2. 0.8675 0.9290 1.4305 1.5010
L3. 0.8320 0.9430 1.4110 1.5450
GBP/ JPY CHF/ JPY
L1. 144.90 149.20 85.30 91.60
L2. 141.20 150.60 83.35 93.60
L3. 135.95 152.20 81.40 97.95
SCHEDULE
Sunday, 17 January 2010
all times GMT
(last release in parentheses)
2100 NZ December REINZ housing price index
2100 NZ December REINZ house sales (41.5% y/y)
2100 NZ December REINZ housing price index (0.2% m/m)
2330 Australia December TD Securities inflation (0.3% m/m)
2330 Australia December TD Securities inflation (2.1% y/y)
Monday, 18 January 2010
all times GMT
(last release in parentheses)
0001 UK January Rightmove house prices (-2.2% m/m)
0001 UK January Rightmove house prices (1.7% y/y)
0030 Japan Bank of Japan Governor Shirakawa speaks
0430 Japan November industrial production (2.6% m/m)
0430 Japan November industrial production (-3.9% y/y)
0430 Japan November capacity utilization (0.2% m/m)
0900 Italy November trade balance
1330 Canada November international securities transactions
Tuesday, 19 January 2010
all times GMT
(last release in parentheses)
N/A Japan December Tokyo department store sales (-11.9% y/y)
0500 Japan December consumer confidence (39.9)
0930 UK December consumer price index (0.3% m/m)
0930 UK December consumer price index (1.9% y/y)
0930 UK December CPI, core (1.90% y/y)
0930 UK December retail price index
0930 UK December retail price index (0.3% m/m)
0930 UK December RPIX (2.7% y/y)
1000 Germany January ZEW survey, economic sentiment (50.4)
1000 Germany January ZEW survey, current situation (-60.6)
1000 Eurozone January ZEW survey, economic sentiment (48)
1000 Eurozone November construction output (-0.6% m/m)
1000 Eurozone November construction output (-7.7% y/y)
1330 Canada December leading indicators (1.30% m/m)
1330 Canada Bank of Canada interest rate decision
1400 US November net long-term TIC flows (US$ 20.7 billion)
1400 US November total net TIC flows (-US$ 13.9 billion)
1800 US January NAHB housing market index (16.0)
2145 NZ Q4 consumer prices (1.3% q/q)
2145 NZ Q4 consumer prices index (1.7% y/y)
2145 NZ December food prices
2350 Japan November tertiary industry index (0.5% m/m)
Wednesday, 20 January 2010
all times GMT
(last release in parentheses)
0600 Japan December machine tool orders
0700 Japan December convenience store sales (-6.3% y/y)
0700 Germany December producer prices (0.10% m/m)
0700 Germany December producer prices (-5.9% y/y)
0900 Italy November industrial orders (0.3% m/m)
0900 Italy November industrial sales
0930 UK Bank of England Monetary Policy Committee meeting minutes
0930 UK December jobless claims change (-6,300)
0930 UK December claimant count rate (5.0%)
0930 UK November ILO unemployment rate (7.9%)
0930 UK November average earnings, ex-bonus (1.7%)
1005 Italy November current account
1200 Canada December consumer price index (0.5% m/m)
1200 Canada December consumer price index (1.0% y/y)
1200 Canada Bank of Canada CPI, core (0.40% m/m)
1200 Canada Bank of Canada CPI, core (1.50% y/y)
1330 US December producer price index (1.8% m/m)
1330 US December producer price index (2.4% y/y)
1330 US December PPI, ex-food and energy (0.5% m/m)
1330 US December PPI, ex-food and energy (1.2% y/y)
1330 US December housing starts (574,000)
1330 US December building permits (584,000)
1330 Canada November manufacturing sales (2.0% m/m)
2145 NZ November retail sales (0.0% m/m)
2145 NZ November retail sales, ex-autos (0.5% m/m)
Thursday, 21 January 2010
all times GMT
(last release in parentheses)
N/A Germany January PMI, manufacturing (52.7)
N/A Eurozone January PMI, services (53.6)
N/A Eurozone January PMI, manufacturing (51.6)
N/A Eurozone January PMI, composite (54.2)
0500 Japan November leading index
0500 Japan November coincident index
0800 CH December M3 money supply (7.6% y/y)
0900 Eurozone European Central Bank monthly report
0930 UK December public sector net cash requirement (₤14.7 billion)
0930 UK December public sector net borrowing (₤20.3 billion)
0930 UK Bank of England major banks' mortgage approvals (63,000)
0930 UK December M4 money supply
1000 CH January ZEW survey, expectations (54.0)
1100 UK January CBI quarterly industrial trends
1330 US Weekly initial jobless claims
1330 US Continuing jobless claims
1330 Canada November wholesale sales (0.3% m/m)
1500 US December leading indicators (0.9%)
1500 US January Philadelphia Fed index (20.4)
1530 Canada Bank of Canada senior loan office survey
1530 Canada Q4 business outlook, future sales
Friday, 22 January 2010
all times GMT
(last release in parentheses)
0030 Australia Q4 export price index (-9.6% q/q)
0030 Australia Q4 import price index (-3.0% q/q)
0430 Japan November all-industry activity index (1.2% m/m)
0745 France January business confidence indicator (89.0)
0745 France January production outlook
0800 France January PMI, services (59.3)
0800 France January PMI, manufacturing (54.4)
0930 UK December retail sales (-0.3% m/m)
0930 UK December retail sales (3.1% y/y)
1000 Eurozone November industrial new orders
1330 Canada November retail sales (0.8% m/m)
1330 Canada November retail sales, ex-autos (0.2% m/m)
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