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ECB Leaves Rates Unchanged and the Euro Falls
October 02, 2008 6:47 PM CEST
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G10 Advancers and Decliners vs USD |
| | Jpy | 0.26 |  |  | Gbp | -0.30 | | | Sek | -0.80 | | | Chf | -0.83 | | | Nzd | -1.12 | | | Dkk | -1.18 | | | Eur | -1.20 | | | Nok | -1.31 | | | Aud | -1.40 | | | Cad | -1.45 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA Index | 10,568.79 | - 2.42 | | S&P 500 Index | 1,128.15 | - 2.83 | | NASDAQ 100 Index | 2,007.14 | - 3.01 | | FTSE futures | 4,942.00 | - 0.86 | | CAC futures | 3,993.50 | - 1.70 | | DAX futures | 5,731.50 | - 2.08 | | SMI Futures | 3,034.00 | - 1.33 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 95.34 | - 3.24 | | Gold | 839.20 | - 3.63 | | Silver | 11.20 | - 10.86 | | USD Index | 80.43 | + 1.21 | | VIX | 43.25 | + 8.64 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| No Major Events Scheduled | | | |
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Currency Tech |
AUDUSD
R 3: 0.8380
R 2: 0.8348
R 1: 0.8097
CURRENT: 0.7892
S 1: 0.7802
S 2: 0.7676
S 3: 0.7616
EURJPY
R 3: 155.81
R 2: 155.22
R 1: 151.36
CURRENT: 147.50
S 1: 147.04
S 2: 146.21
S 3: 145.75
USDSGD
R 3: 1.4542
R 2: 1.4478
R 1: 1.4414
CURRENT: 1.4398
S 1: 1.4238
S 2: 1.4184
S 3: 1.4054
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Market Brief |
The Usd remains resilient against most of the G10 as Traders line up bets that global economy is entering a period of slowing growth. The EurUsd dropped over 200 pips finding support at the low 1.38 level, while the UsdJpy followed suit but losses were moderate at around 60 pips pushing the currency to the low range of 105. The GbpUsd fell as much as 140 pips, but has since bounced back down 60 pips at the low range of 1.76. Equity markets declined, with the Dow in particular down 245pts, and the DAX weaker by 145pts. The flight to quality assets was apparent in the recent buying of treasuries, with the 2yr yields tighter by 13bps and under the 2.00% level. Commodities continue to unravel, as oil trades with a 95 handle, and gold lower at 842.
The ECB decided to leave rates unchanged at 4.25% citing the deteriorating conditions in the Eurozone. Traders lined up bets that the ECB will cut rates before year-end, this is a move which may be perceived as long overdue considering the current economic environment, and corroding banking sector. The Euro has suffered losses across the board, and is likely to carry this trend into year-end. UK housing data hit its lowest levels since 1991, which was a major driver behind the weakness in cable trading. We remain bearish on the sterling looking for levels closer to 1.70 against the dollar before 2009.
Financial Markets in the US are trading sensitively to news regarding the bailout. Usd performance has taken its own direction based on the notion that the US economy is further along the down cycle than our counterparts in across the G10. With that said, we should expect to see easing in Fed Funds rate to 1.75%, and may have a slight effect on dollar momentum.
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Asian Session - US Bailout Passes Senate & Risk Aversion Stays Elevated
October 02, 2008 9:40 AM CEST
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G10 Advancers and Decliners vs USD |
| | JPY | 0.40 | | | CAD | -0.43 | | | GBP | -0.65 | | | CHF | -0.93 | | | DKK | -1.18 | | | EUR | -1.20 | | | NOK | -1.36 | | | SEK | -1.44 | | | AUD | -1.64 | | | NZD | -1.87 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 11,154.76 | - 1.87 | | Hang Seng Index | 17,793.52 | - 1.23 | | Shanghai Index | 2,293.78 | - 0.16 | | FTSE 100 Index | 4,959.59 | + 1.16 | | CAC 40 Index | 4,054.54 | + 0.55 | | SMI Index | 5,806.33 | - 0.42 | | DJIA futures | 10,756.00 | - 1.20 |
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World Markets |
Current Level |
% Change |
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| Gold | 871.53 | + 0.08 | | Silver | 12.47 | - 0.71 | | VIX | 39.81 | + 1.06 | | Crude wti | 98.31 | - 0.22 | | USD Index | 79.91 | + 0.55 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| CIPS/Markit Report on Construction (Sep) | 38.9 | 40.5 | UK / 8.30 | | Producer Prices (Aug) | -0.5%,+8.4 | +1.3%,+9.2 | EZ / 9.00 | | ECB Interest Rate Announcement | 4.25% | 4.25% | EZ / 11.45 | | Initial Jobless Claims (Sep 27th) | 475K | 493K | US / 12.30 | | Factory Orders (Aug) | -3.0% | +1.3% | US / 14.00 |
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Currency Tech |
AUDUSD
R 3: 0.8380
R 2: 0.8348
R 1: 0.8097
CURRENT: 0.7892
S 1: 0.7802
S 2: 0.7676
S 3: 0.7616
EURJPY
R 3: 155.81
R 2: 155.22
R 1: 151.36
CURRENT: 147.50
S 1: 147.04
S 2: 146.21
S 3: 145.75
USDSGD
R 3: 1.4542
R 2: 1.4478
R 1: 1.4414
CURRENT: 1.4398
S 1: 1.4238
S 2: 1.4184
S 3: 1.4054
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Market Brief |
The Usd rallied strongly in Asian session, as the US Senate passed a sweeping bailout plan by a margin of 74-25. The EurUsd fell from 1.4090 to 1.3921, while the UsdJpy bounced around the 106.12 to 105.60 levels. While yesterday Senate vote was widely expected, we are still not seeing an increase in risk appetite and worrying developments in both the US and European financial sectors keep confidence low. The inclusion of $100bn in tax cuts will keep the vote in the US House of Representatives a very close call and sustain event risk. Wall Street closed lower and Asian region stock indexes are following the downwards trend, with the Nikkei -1.87%. Commodities moved higher, with crude prices trading to $98.31bll and gold $871.53oz.
In Europe, there are conflicting reports (not a good sign) over a reaction mechanism, should pressure on banks intensify. There are the rumors that the European Union will create an emergency fund, while some European Union countries have pledge to deal with the matter individually. A summit of Euro zone officials has been announced for Saturday to deal with the issue.
The focus of the day will be the ECB rate decision. The recent events in the financial sectors have completely changed the dynamics of this meeting. We expect the ECB to hold rates steady at 4.25%. However, there is a slight (and growing) probability of a cut. Since last month's meeting that the economic conditions have deteriorated further and unprecedented developments in the financial markets (with Fortis and Dexia both needing bail-outs.) demand some sort of action.
However, Trichet stated, as recently as Tuesday, that "the ECB makes a clear separation between, on the one hand, the determination of monetary policy and, on the other hand, its implementation using liquidity operations". He also stressed the ECBs primary objective is price stability and anchoring inflation expectations. The ECB has reacted with force by adding an overnight maturity to US dollar funding facilities, increasing dollar funding operations to $110bn from $50bn. The market is not expecting the ECB to use monetary policy to contain the crisis, but will be looking for Trichet to define its role and response mechanism in an event the crisis is amplified. We expect a change in language, softening regarding inflation and the overall meeting should be Euro negative.
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ACM Advanced Currency Markets SA (hereinafter referred as ACM) is a professional financial intermediary, directly regulated by the Swiss Federal Department of Finance, Anti Money Laundering Control Authority. As forex specialist, ACM provides only currency trading via highly professional forex trading software. All customers are aware that this information or any part thereof has been prepared without taking account of your objectives, financial situation and/or needs. This information is not intended as personalized investment advice and does not constitute a recommendation. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. The analysis is based on the information which ACM finds reliable and accurate, but ACM does not assume any responsibility for any material nor for the transactions made on the basis of the information or the estimates of the analysis. ACM cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct, indirect and/or consequential loss arising from any use of this information, document or its content. All opinions and estimates constitute ACM analysis as of the data and are subject to change without notice. ACM does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. Past performance is not a reliable indicator of future performance.
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