Fundamental Outlook at 1400 GMT (EDT + 0400)
€
The euro came off vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4690 level and was capped around the $1.4840 level. The common currency extended its sell-off as dealers reduced their exposure to riskier, higher-yielding assets and moved into assets perceived as safe havens. One indication of this change in market sentiment was the Australian dollar, a higher-yielding currency that tumbled after Australian economic data came in weaker-than-expected, reducing expectations regarding upcoming rate tightenings by Reserve Bank of Australia. U.S. equity markets extended their recent pullback also and some traders believe the paring of risk could continue through the end of the month. European Central Bank member Noyer reported he estimates 2010 eurozone economic growth “slightly above one per cent.” He also added “nothing would justify” lifting the ECB’s benchmark refinancing rate, currently at a record low of 1.0%. ECB President Trichet said policymakers recently concluded the “existing rate was appropriate,” adding “It is clear that for the past several months we have exited the period of (economic) free-fall.” Trichet continued “We have signs of stabilization on both sides of the Atlantic, and certainly on our side. But at the ECB my colleagues and I remain very prudent. We think we have to remain alert. We think we have a chaotic road ahead of us and that, above all, incertitude is very significant. We must therefore manage this uncertainty as best as possible.” Data released in the U.S. today saw September new home sales off 3.6% m/m to an annualized 402,000 pace. Also, September durable goods orders were up 1% with the ex-transportation component up a stronger-than-expected 0.9%. In eurozone news, German preliminary October consumer price inflation was up 0.1% m/m and flat y/y. Also, the September EMU-16 leading indicator was up +1.2% while the September import price index was off 0.9% m/m and 11% y/y. French finance minister Lagarde verbally intervened in the markets today saying China and France both support a strong U.S. dollar policy. Other data released saw the CEPR EuroCoin indicator improved to 0.33 in October from 0.07 in September, evidencing the second consecutive month of economic growth. Euro bids are cited around the US$ 1.4445 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.55 level and was capped around the ¥91.80 level. Demand for risky assets continued to decline across the board and the yen was the biggest recipient as traders shunned assets with higher yields. Bank of Japan Policy Board member Noda noted it is too early to raise interest rates, adding “the current situation doesn’t warrant changing them yet.” The central bank could announce its plans as early as this week to end its purchases of commercial paper and corporate bonds from lenders in December. A report surfaced today that BoJ and the government may hold meetings monthly to exchange views about the economy and economic conditions. Finance minister Fujii reported the government must be aware of Japanese government bond sales and supply when compiling its budget. Prime Minister Hatoyama today said the government will be able to “maintain fiscal discipline and secure the trust of the Japanese government bond market.” Data released in Japan overnight saw September overall retail sales off 1.4% y/y. Futures implied rates for December 2009 are right around 0.510% and are 0.505% for June 2010, an indication the market expects BoJ interest rate policy to remain unchanged through at least the middle of 2010. The Nikkei 225 stock index lost 1.34% to close at ¥10,075.04. 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 ¥133.55 level and was capped around the ¥136.00 figure. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥148.25 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.15 level. In Chinese news, the U.S. dollar weakened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8242 in the over-the-counter market, down from CNY 6.8255. People’s Bank of China deputy governor Yi Gang yesterday said “inflation is not a big risk for the nation in the foreseeable future.” On Monday, Zhou Hai, a division chief at People’s Bank of China in Harbin, released a report indicating the central bank should sell dollars for euro and yen and diversify its massive foreign reserves portfolio. While this represented Zhou’s personal opinion and not PBoC policy, it was enough to move the markets earlier this week, especially given the size of China’s massive US$ 2.273 trillion foreign reserve war chest. There remains widespread speculation the central bank will accelerate the removal of monetary stimuli and liquidity from the system, possibly resulting in further yuan appreciation.
Technical Outlook at 1230 GMT (EDT + 0400)
(Bid Price) (Today’s Intraday Range)
EUR/ USD 1.4708 1.4839, 1.4700
USD/ JPY 90.78 91.81, 90.55
GBP/ USD 1.6387 1.6465, 1.6284
USD/ CHF 1.0268 1.0273, 1.0191
AUD/USD 0.8969 0.9204, 0.8963
USD/CAD 1.0793 1.0804, 1.0636
NZD/USD 0.7264 0.7463, 0.7255
EUR/ JPY 133.53 135.99, 133.26
EUR/ GBP 0.8975 0.9068, 0.8950
GBP/ JPY 148.77 150.38, 148.27
CHF/ JPY 88.39 89.87, 88.17
Support Resistance Support Resistance
EUR/ USD
L1. 1.4470
L2. 1.4355
L3. 1.4175
GBP/ USD
L1. 1.6115
L2. 1.5720
L3. 1.5405
AUD/ USD
L1. 0.8450
L2. 0.8300
L3. 0.8070
NZD/ USD
L1. 0.6880
L2. 0.6750
L3. 0.6535
EUR/ GBP
L1. 0.8795
L2. 0.8675
L3. 0.8320
GBP/ JPY
L1. 146.10
L2. 142.05
L3. 135.70
SCHEDULE
Wednesday, 28 October 2009
all times GMT
(last release in parentheses)
0000 Germany October consumer price index (-0.4% m/m)
0000 Germany October consumer price index (-0.3% y/y)
0000 Germany October CPI, harmonized (-0.5% m/m)
0000 Germany October CPI, harmonized (-0.5% y/y)
0030 Australia Q3 consumer price index (0.5% q/q)
0030 Australia Q3 consumer price index (1.5% y/y)
0030 Australia October DEWR skilled vacancies (1.2% m/m)
0200 NZ October NBNZ business confidence (49.1)
0500 Japan October business confidence (43.5)
0830 Italy October business confidence
0830 Italy October services survey
1100 US October MBA mortgage applications
1230 US September durable goods orders (-2.6%)
1230 US September durable goods, ex-transportation (-0.3%)
1400 US September new home sales (0.7% m/m)
1400 US September new home sales (429,000)
2000 NZ Reserve Bank of New Zealand interest rate decision
2145 NZ September trade balance (-NZ$ 725 million)
2315 Japan October PMI, manufacturing (54.5)
2350 Japan September industrial production (1.8% m/m)
2350 Japan September corporate service prices (-3.5% y/y)
Thursday, 29 October 2009
all times GMT
(last release in parentheses)
0000 Australia August leading index (0.7%)
0000 Germany September import price index (1.3% m/m)
0000 Germany September import price index (-10.9% y/y)
0100 Australia September HIA new home sales (11.4% m/m)
0200 NZ September M3 money supply (3.5% y/y)
0855 Germany October unemployment change (-12,000)
0900 Italy September hourly wages
0930 UK September mortgage approvals (52,300)
0930 UK September new consumer credit (-₤300 million)
0930 UK September net lending secured on dwellings (₤1.0 billion)
0930 UK September M4 money supply (0.7% m/m)
0930 UK September M4 money supply (11.3% y/y)
1000 Eurozone October economic confidence (82.8)
1000 Eurozone October business climate indicator (-2.07)
1000 Eurozone October consumer confidence (-19)
1000 Eurozone October industrial confidence (-24)
1000 Eurozone October services confidence (-9)
1230 US Q3 gross domestic product, annualized (-0.7%)
1230 US Q3 PCE, core (2.0% q/q)
1230 US Weekly initial jobless claims (531,000)
1230 US Continuing jobless claims (5.923 million)
1230 Canada September industrial product prices (0.5% m/m)
1230 Canada September raw materials price index (3.7% m/m)
1500 US Bank of Japan Policy Board meeting
1500 US Bank of Japan economic outlook
2145 NZ September building permits (1.7% m/m)
2330 Japan September jobless rate (5.5%)
2330 Japan September household spending (2.6% y/y)
2330 Japan October Tokyo-area consumer price index
2330 Japan October Tokyo-area CPI, ex-food, energy (-1.4% y/y)
2330 Japan September national consumer price index (-2.2% y/y)
2330 Japan September CPI, ex-food, energy (-0.9% y/y)
Friday, 30 October 2009
all times GMT
(last release in parentheses)
N/A Eurozone October Ifo business climate
N/A Germany September retail sales (-1.5% m/m)
N/A Germany September retail sales (-2.6% y/y)
0000 Australia Q3 NAB business confidence (-4)
0000 UK October Nationwide house prices (0.9% m/m)
0000 UK October Nationwide house prices (0.0% y/y)
0001 UK October GfK consumer confidence (-16)
0030 Australia September private sector credit (0.1% m/m)
0030 Australia September private sector credit (2.5% y/y)
0500 Japan September housing starts (-38.3% y/y)
0500 Japan September housing starts, annualized (676,000)
0500 Japan September construction orders (-25.2% y/y)
0745 France September producer prices (0.4% m/m)
0745 France September producer prices (-8.5% y/y)
0900 Italy September producer price index
1000 Eurozone October consumer price index (-0.3% y/y)
1000 Eurozone September unemployment rate (9.6%)
1030 CH October KOF leading indicator (0.85)
1230 US September personal income (0.2%)
1230 US September personal spending (1.3%)
1230 US September PCE, core (0.1% m/m)
1230 US September PCE, core (1.3% y/y)
1230 US September PCE deflator (-0.5% y/y)
1230 US Q3 employment cost index (0.4%)
1230 Canada August gross domestic product (0.0% m/m)
1345 US October Chicago PMI (46.1)
1400 US October University of Michigan consumer sentiment (69.4)
