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Overnight Eurusd TradedTitle:
Asia Session: More Evidence Beijing Should Ease Policy
It didn't take much to halt the overnight rally, only JPMorgan reporting mark-to-markets losses, albeit a big loss, and some nonchalant inflation data out of China. Accordingly, most equity markets in Asia are slipping lower and commodity currencies have failed to make any headway against the dollar.
Whilst official estimates before the release of the Chinese consumer prices data for April were averaged at 3.4% y/y, which turned out to be correct, there was hope in the market for a figure closer to 3.0% which would have given Beijing more scope to cut the RRR, thereby stimulating growth. Thus, high beta currencies slid a little following the release of the data as the market priced in a decreased chance of more policy easing in China.
However, we are of the opinion the inflation data ...
Title:
Market Drivers - Currencies : 08/05/2012
Today's Comment
We have seen small movements following yesterday's strong reaction to the elections in Greece and France. We expect that today will be a day of consolidation and volatility will fall. The financial market is playing the waiting game in respect of Greece. The largest party of the country has given up forming a government; now it is up to the second largest party. If it does not succeed, the third largest party will be in turn and then the president. If none of the parties succeed, new elections will be called. If a new election is called, we assess that this will result in a somewhat calmer development in the financial market.
Today industrial production data will be released in Germany and Norway. Our macro-economist expect a small increase for German industry.
Rumour ...
Title:
The Market Waits For A Seemingly Magical Budget Out Of Australia
Overnight, the FX and equity markets regained some of their composure following on from yesterday's risk sell-off on the back of the elections in France and Greece, but investors have consolidated today leading to a slow slide lower for most risk assets.
Price action was fairly range bound during the session, except for a small drop in the aussie following figures out of Australia showing a wider than expected trade deficit. The actual deficit was AUD 1.59 bn, a 110.5% jump's from February's figure and modestly higher than the expected –1.3 bn. A 1.6% jump in exports was not enough to reduce the trade balance considering imports increased by 4.9%. Nonetheless, the dip in AUDUSD was limited by overall investor sentiment which is centred on Europe right now.
However, the market is eagerly ...
Title:
Market Drivers - Currencies : 03/05/2012
Today's Comment
Yesterday, the PMI data from the euro zone showed signs of weakness as practically all data surprised by showing declines. The indicators showed that unemployment in Europe has worsened relative to the preceding month. Even the otherwise strong German labour market showed signs of weakness. Overnight China added to risk aversion as PMI data (service) showed a steeper fall than feared. Given all the negative events over the past 24 hours, it is not strange that the safe havens, USD, JPY and GBP, were among the investors' favourites.
Today will see two very important economic events: the ECB has its interest-rate meeting and ISM service will be released in the US. ISM offers a status for about 88% of the US economy, and therefore a weak figure in this respect will be a hard ...
Title:
Sterling Leaps Higher On Less Dovish BoE Minutes
Sunrise Market Commentary
Fixed Income: core bonds remain near contract highs
Global core bonds reversed Tuesday's losses in a rather uneventful session. Today, all attention will go to the Spanish bond auction. A weak auction two weeks ago put pressure on Spanish yields since. The 10-yr yield flirts with the psychological 6% mark. In order to avoid more tensions, failure today is not an option.
Currencies Sterling leaps higher on less dovish BoE Minutes
While EUR/USD trading was rather uneventful, sterling was the star performer. Helped by less dovish BoE Minutes and a stronger labour market report, sterling shot higher pushing EUR/GBP below key support and GBP/USD above 1.60.
The Sunrise Headlines
US Equities dropped slightly lower on Wednesday, giving back part of ...
Title:
Asia mixed ahead of Spanish 10-yr auction
Forex Morning Briefing : Asia mixed ahead of Spanish 10-yr auction
What’s new:
Asia: Asian mixed; US in negative
Spain: Auctioning off key 10-yr debt
Italy: Pushes the attainment of its balanced budget target by one year
Sweden: Riksbank remains on hold
Japan: BoJ reiterates commitment to inflation target, more easing
Rates in Asia and Indices:
EURUSD: 1.3105 - 1.3131.
USDCHF: 0.9153 - 0.9175.
GBPUSD: 1.6014 - 1.6066.
EURJPY: 106.53 - 107.04.
USDJPY: 81.17- 81.56.
DowJones: 13'032.75 -0.63%
NASDAQ: 3’031.45 -0.37%
S & P 500: 1'385.14 -0.41%
Nikkei: 9'588.38 -0.82%
Shanghai: 2'378.03 -0.12%
Gold: $ 1'641.10
Crude Oil: $ 102.74
Comments:
Some disappointing earnings reports weighed on the performance of US equity indices; which closed in the negative yesterday evening. Asian counterparts ...
Title:
Australian employment report stronger than expected
FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)
WORLD
A much stronger than expected Australian employment report gave AUDUSD 70 pips of upside overnight. 44k new jobs were created against expectations of only 6.5k, and the unemployment rate held steady at 5.2% despite fears it would tick higher. Our analysts team sound a note of caution though – they point out that when averaged across several months jobs growth is still relatively soft and not strong enough to keep the unemployment rate as low as it currently is. The team sticks to its view that the RBA will cut 25 bp at each of its May and June meetings, thanks to what is expected to be a low enough CPI reading for Q1.
Fed Vice-Chair Yellen’s much anticipated speech provided a fairly balanced assessment of where Fed policy is headed. She ...
Title:
RBA: Cash Rate unchanged
FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)
WORLD
The RBA held the cash rate at 4.25%, in line with expectations. The rates market had 8bp of easing priced in, and AUDUSD jumped 20 pips immediately. The more dovish policy statement quickly put an end to the rally and the pair soon dropped 40 pips below its pre-announcement level. Growth was deemed to be “somewhat below trend” and “somewhat lower than earlier estimated”. This represents a significant shift from the “close to trend” language used previously.
The rhetorical shift means the RBA may consider a rate cut in May if the Q1 inflation reading (due on April 24) is low enough. If a cut eventually materializes this would not do AUD any favours in our view. However, even with a policy rate at 4% AUD would still offer by far the most ...
Title:
Sideways trading in risky assets following ECOFIN
What’s new: Sideways trading in risky assets following ECOFIN. Upbeat data from China boosting Asia - Europe to follow?
Asia: Strong PMI from China took Asian currencies to two-week highs.
Europe: Positive session in Europe on Friday although equities retreated a bit overall for the week.
US: Mixed equities on Friday. USD losing for the third week in a row against majors.
Rates in Asia and Indices:
EURUSD: 1.3331 – 1.3376.
USDCHF: 0.9003 – 0.9032.
GBPUSD: 1.5979 - 1.6042.
EURJPY: 110.55 – 111.14.
USDJPY: 82.76– 83.30.
DowJones: 13’212.04 +0.5%
NASDAQ: 3'091.57 -0.12%
S & P 500: 1'408.47 +0.37%
Nikkei: 10’109.87 +0.26%
Shanghai: 2'262.79 +0.47%
Gold: $ 1'670.30
Crude Oil: $ 103.13
Comments:
On Friday, the ECOFIN-meeting in Copenhagen resulted in a boost in the EU firewall that is to ...
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