DAILY MARKET COMMENTARY
19 January 2010
Tuesday
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro depreciated sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4260 level and was capped around the $1.4415 level. U.S. markets reopened after yesterday's market holiday and liquidity returned to normal levels. Data released in the eurozone today saw the German January ZEW economic sentiment index slip to 47.2 from 50.4 in December, lower than forecast and the fourth consecutive decline in expectations. The common currency moved lower on these data as recent German economic data had been stronger-than-expected. German finance minister Schaeuble said the government will draft legislation to reform supervision, remuneration, and restructuring for the financial sector to help stabilize the financial markets. Dealers are still closely monitoring the fiscal crisis in Greece. Greek finance minister Papaconstantinou said eurozone finance ministers have welcomed Greece's plans to sharply reduce its budget deficit. Moody's reported Greece's fiscal program addresses short-term challenges and is consistent with its current A2 rating but the outlook remains negative. Other data released in the eurozone today saw the EMU-16 January ZEW economic sentiment indicator fall to 46.4 from 48.0 in December while EMU-16 November construction output fell 1.1% m/m and 8% y/y. European Central Bank member Bini Smaghi reported "Bank lending...is subject to some risk. While subdued bank lending has so far reflected the weak state of the real economy, credit supply restrictions may become more binding when loan demand by enterprises picks up as the economy recovers." In U.S. news, November long-term Treasury International Capital flows print at US$ 126.8 billion, up from a revised October print of US$ 19.3 billion. Also, November total net flows printed at US$ 26.6 billion, up from a downwardly revised –US$ 25.4 billion in October. Other data to be released in the U.S. today include the January NAHB housing market index. Traders are paying close attention to the U.S. earnings season with Citigroup having met analysts' expectations with a sizable loss related to its TARP repayment. 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 ¥91.05 level and was supported around the ¥90.30 level. Traders reacted to news that Japan Airlines will file for bankruptcy, a move that had been anticipated for weeks. Data released in Japan overnight saw December consumer confidence print at 37.6. Former Bank of Japan Policy Board member Hirano reported a weak yen is positive for Japan's economy. Prime Minister Hatoyama, whose government is embroiled in a funds scandal, said the government and BoJ must cooperate in combating deflation. 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 yesterday saw November industrial production downwardly revised to +2.2% from +2.6% m/m. Yesterday, 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 yesterday reported "The Bank of Japan recognized it 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 0.83% to close a ¥10,764.90. 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 ¥129.60 level and was capped around the ¥130.70 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.05 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.80 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8277 in the over-the-counter market, up from CNY 6.8268. People's Bank of China guided its benchmark one-year bill yield to its highest level in fourteen months to moderate record loan growth and slow asset bubbles. PBoC sold bills at a rate of 1.9264% in open-market operations and this is the central bank's latest signal that it is intent on tightening monetary policy this year. The State Administration for Foreign Exchange reported non-U.S. dollar reserves account for about 40% of China's reserves now. China International Capital Corporation reported China attracted US$ 48.7 billion of "hot money" in December, the largest amount in eight months. Premier Wen said China will encounter inflationary expectations this year and said China must be prepared to deal with trade frictions. Also, Wen said proactive fiscal policies will help expand domestic demand.
₤
The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6310 level and was capped around the $1.6455 level. Prime Minister Brown said the European Union must develop a new economic growth strategy when policymakers convene on 11 February. Data released in the U.K. today saw December consumer price inflation spike to 2.9% in December, well above Bank of England's 2.0% target and expectations of a 2.5% print. This was up from 1.9% in November but most economists believe the upward spike will prove temporary. On the flip side, a sustained rise in CPI will precipitate a policy response from Bank of England. Cable bids are cited around the US$ 1.5730 level. The euro lost ground vis-à-vis the British pound as the single currency tested bids around the ₤0.8730 level and was capped around the ₤0.8810 level.
CHF
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0350 level and was supported around the CHF 1.0225 level. Swiss National Bank President Hildebrand yesterday 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 higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.4780 level while the British pound gained ground vis-à-vis the Swiss franc and tested offers around the CHF 1.6915 level.
Technical Outlook at 1330 GMT (EDT + 0500)
(Bid Price) (Today's Intraday Range)
EUR/ USD 1.4270 1.4413, 1.4264
USD/ JPY 90.97 90.99, 90.30
GBP/ USD 1.6321 1.6457, 1.6310
USD/ CHF 1.0346 1.0351, 1.0225
AUD/USD 0.9182 0.9273, 0.9178
USD/CAD 1.0305 1.0311, 1.0246
NZD/USD 0.7340 0.7407, 0.7340
EUR/ JPY 129.83 130.70, 129.78
EUR/ GBP 0.8745 0.8809, 0.8728
GBP/ JPY 148.40 149.04, 147.97
CHF/ JPY 87.87 88.69, 87.84
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
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)
No comments:
Post a Comment