10/06/2009
Asian Session: USD Weakness Resumes
Asian Session: USD Weakness Resumes
June 10, 2009 11:41 AM CEST
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| G10 Advancers and Decliners vs USD |
|
NZD |
1.44 |
 |
|
AUD |
1.43 |
|
|
NOK |
1.32 |
|
|
SEK |
1.07 |
|
|
GBP |
0.79 |
|
|
DKK |
0.70 |
|
|
EUR |
0.67 |
|
|
CHF |
0.45 |
|
|
CAD |
0.34 |
|
 |
JPY |
-0.08 |
|
|
| Global Indexes |
Current Level |
% Change | |
| Nikkei 225 Index |
9,991.49 |
+ 2.09 |
| Hang Seng Index |
28,648.39 |
+ 3.26 |
| Shanghai Index |
2,816.25 |
+ 1.01 |
| FTSE 100 Index |
4,404.79 |
- 0.01 |
| DAX Index |
4,997.86 |
- 0.13 |
| SMI Index |
5,388.67 |
- 0.05 |
| DJIA futures |
8,828.00 |
+ 0.98 |
|
| World Markets |
Current Level |
% Change | |
| Gold |
959.78 |
+ 0.52 |
| Silver |
15.31 |
+ 0.39 |
| VIX |
28.27 |
- 5.03 |
| Crude wti |
71.09 |
+ 1.54 |
| USD Index |
79.85 |
+ 0.01 |
|
| Todays Calender |
Estimates |
Previous |
Country / GMT | |
| Industrial production, % m/m (y/y) |
-0.2,-12.5 |
-0.6,-12.4 |
GBP / 8.30 |
| Manufacturing output, % m/m (y/y) |
0.0,-12.6 |
-0.1,-12.9 |
GBP / 8.30 |
| Trade balance, £ bn |
-6.4 |
-6.6 |
GBP / 8.30 |
| Int'l merchandise trade, C$ bn |
0.9 |
1.1 |
CAD / 12.30 |
| Trade balance, $ bn |
-29.0 |
-27.6 |
USD / 12.30 |
| FRB of Richmond President Lacker (FOMC voter) spea |
-- |
-- |
USD / 14.00 |
| ECB’s Stark speaks at a book presentation "Der Eur |
-- |
-- |
EUR / 16.30 |
| Fed's beige book published |
-- |
-- |
USD / 18.00 |
| Budget balance, $ bn |
-175.0 |
-165.9 |
USD / 18.00 |
| RBNZ interest rate announcement, % |
2.50 |
2.50 |
NZD / 21.00 |
| real GDP, second preliminary, % q/q saar |
-14.9 |
-14.4 |
JPY / 23.50 |
| |
| Currency Tech |
AUDUSD
R 3: 0.8378
R 2: 0.8265
R 1: 0.8120
CURRENT: 0.8086
S 1: 0.7830
S 2: 0.7745
S 3: 0.7705
EURJPY
R 3: 144.60
R 2: 141.75
R 1: 139.75
CURRENT: 137.56
S 1: 135.30
S 2: 133.90
S 3: 131.50
USDSGD
R 3: 1.4800
R 2: 1.4748
R 1: 1.4665
CURRENT: 1.4496
S 1: 1.4425
S 2: 1.4385
S 3: 1.4335
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| Market Brief |
As discussed in earlier reports, we believed that the pricing in of a Fed rate hike in late 2009 was premature. It seems that the markets are now in agreement. The USD was weaker across the board in the Asian session, as risk appetite returned (regional equity indexes were broadly higher).The EurUsd traded up to 1.4130 from 1.4060, while the UsdJpy slid to 97.10 before rallying back to 97.60. Carry and EM are now trading higher with AudJpy pushing up towards 79.30 while the UsdTry down to 1.5360. Since Friday's NFP release the market has been speculating about the probability that the Fed would drain liquidity and tighten rates much sooner than the market had originally expected. However, recent price action in the USD and yields suggest (2yrs fell by 9bp) that participants are now fading out of this trade. In other news, the US treasury confirmed that 10 banks were approved to repay TARP funds. We see this as positive for risk appetite in that there is greater confidence in the financial sector and refunded funds are now available for other banks struggling to raise capital. Out of the Eurozone, EU’s Almunia stated that EU finance ministers are now discussing exit strategies while ECB's Liikanen commented that a failure to reign in fiscal stimulus could push counties into a debt driven economic downward spiral. This evening, the market expect the RBNZ to hold rates at 2.50% (slight prob of a 25bp cut) while keeping watch for language that rationalizes intervention to halt NZD strength.
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Forex - Markets Pair Back Fed Rate Expectations
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Forex News and Events:
 The recent support the USD has garnered on speculation that the Fed would begin to drain liquidity and tighten rates seems to be waning. Mounting positive economic data (Friday's NFP) and hawkish comments from ECB members (Trichet's press conference comments) fueled USD buying and a decline in demand for risky assets. However, the foundation of the trade was thin and since Tuesday has seen a complete reversion in trading patterns. The market is now pricing in a 50bp hike by Jan 2010, a shift from a hike before the end of 2009. The USD was weaker across the board in the Asian session, as risk appetite returned (regional equity indexes were broadly higher).The EurUsd traded up to 1.4130 from 1.4060, while the UsdJpy slid to 97.10 before rallying back to 97.60. Carry and EM are now trading higher with the AudJpy pushing up towards 79.30 while the UsdTry traded lower to 1.5360. Risky assets also got a boost from the news that the US Treasury has cleared 10 banks to repay TARP funds. A move that will help restore confidence in the banking sector and provide additional funds for banks still struggling to raise capital. Tonight in New Zealand, the RBNZ is expected to hold rates at 2.50%. However there is a significant number of analysts expecting a rate cut (bills market are pricing in a cut of 36bp). The rational for further easing is based on the fact that domestic economic conditions remain weak and the stronger NZD will not help NZ's fragile export driven recovery. Irrespective of the final decision outcome, the markets will also be watching for the RBNZ to talk down recent NZD strength, perhaps even building a case for intervention. The recent pull back in AUD and NZD in our view should provide traders with a good opportunity to build long positions. The stronger global growth outlook and surging commodity prices (copper hitting an 8-month high an tin and nickel were up 5.9% and 4.9%, respectively ) we expected will offset spells of risk aversion. On a side note, the market will be watching the results of $19bn 10yr auction today. Recently, demand for US sovereign debt has been strong (including indirect bids, seen as a reflection of central banks demand) but any perceived weakness will have significant repercussions across assets classes (such as pressure on US longer term yields and USD weakness). On the economic front we will see the first major release from the US in Trade Balance today.
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