Daily Forex Snapshots

Asian Session – RBNZ’s Bollard Takes a Hawkish Tone

December 10, 2008 8:54 AM CET

G10 Advancers and Decliners vs USD

	CAD	0.35
	NZD	0.34
	GBP	0.20
	SEK	0.18
	NOK	0.17
	EUR	0.03
	CHF	0.01
	DKK	-0.01
	JPY	-0.44
	AUD	-0.54

Global Indexes

Current Level

% Change

Nikkei 225 Index	8,660.24	+ 2.14
Hang Seng Index	15,390.05	+ 4.31
Shanghai Index	2,079.12	+ 2.01
FTSE futures	4,387.00	+ 1.95
DAX futures	4,810.00	+ 0.56
SMI Futures	5,825.00	- 0.08
DJIA futures	8,820.00	+ 1.14

World Markets

Current Level

% Change

Gold	782.93	+ 0.77
Silver	9.99	+ 1.47
VIX	58.91	+ 0.71
Crude wti	43.12	+ 2.49
USD Index	85.49	- 0.40

Todays Calender

Estimates

Country / GMT

CPI (Nov)	-0.1%,+3.7	+0.4%,+5.5	NO / 8.00
ECB’s Stark speaks on financial crisis	--	--	EZ / 17.15
Monthly Budget Statement (Nov)	-$171.0bn	-$98.2bn	US / 18.00

Currency Tech

AUDUSD
R 3: 0.6984
R 2: 0.6758
R 1: 0.6696
CURRENT: 0.6597
S 1: 0.6453
S 2: 0.6294
S 3: 0.6232

EURJPY
R 3: 124.61
R 2: 121.48
R 1: 120.98
CURRENT: 120.37
S 1: 117.88
S 2: 115.88
S 3: 113.64

USDSGD
R 3: 1.5345
R 2: 1.5265
R 1: 1.5114
CURRENT: 1.5018
S 1: 1.4994
S 2: 1.4875
S 3: 1.4772

Market Brief

The Usd was stable in the Asian session, as the rally in risk appetite waned, with US stocks closing lower, while Treasury markets gained. The EurUsd has retraced from yesterday's session highs of 1.3002 to 1.2888, while the UsdJpy rallied off the 92.00 support to 92.76. We are seeing some level of divergence between equity prices and fx as S&P dropped -2.31%, while DXY depreciated. Asian regional equity indexes are all trading higher, while European stock futures are pointing to strong open. Much of the late day trading will depend on the evolving US automaker bailout package story. Currently, the $15bn package has stalled in Congress, as members of Congress place additional condition, such as drop lawsuits challenging environmental rulings, before approving the deal. Despite the temporary respite in risk aversion, commodities demand remains light as the current global slowdown is keeping buyers on the sidelines.

In New Zealand, RBNZ Governor Bollard speech today had a relatively hawkish tone. Bollard said that inflation remained elevated, although declining commodity prices would bring inflation lower over time, and that further monetary easing will depend on inflation dropping. The Nzd gained on the comments, which will no doubt have traders cutting their rate expectation.

Tomorrow in South Africa we are expecting the SARB to cut rates by 50bp to 11.50%. Growth has progressively become the primary focus in MPC decisions, as the economy grind to a halt - growth slowed sharply in Q3 to an annualized 0.2% qoq and manufacturing production continues to be in recession. Prolonged depression in commodity prices will weigh on growth through 2009 and further and rapid deterioration is expected. On the inflation front, the weak global environment has made it hard for producers to pass on cost increases and declines in commodity cost have also helped to ease inflation fears.

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