Daily Forex Snapshots

US Session: Strong Correction in the FX Market as Dollar Strength Evaporates

December 15, 2008 11:13 PM CET

G10 Advancers and Decliners vs USD

	Nok	0.03
	Dkk	0.02
	Eur	0.01
	Chf	0.01
	Sek	0.01
	Jpy	0.01
	Aud	-0.03
	Gbp	-0.05
	Nzd	-0.05
	Cad	-0.05

Global Indexes

Current Level

% Change

DJIA futures	8,604.00	- 0.98
S&P future	873.20	- 1.46
Nasdaq futures	1,193.50	- 1.65
FTSE futures	4,274.00	+ 0.07
CAC futures	3,188.00	- 0.70
DAX futures	4,667.00	- 0.17
SMI Futures	5,521.00	- 2.06

World Markets

Current Level

% Change

Crude wti	44.93	- 2.92
Gold	837.95	- 0.06
Silver	10.68	+ 0.01
USD Index	82.27	- 1.64
VIX	56.76	+ 4.57

Todays Calender

Estimates

Country / GMT

No Events Scheduled

Currency Tech

AUDUSD
R 3: 0.6986
R 2: 0.6801
R 1: 0.6733
CURRENT: 0.6667
S 1: 0.6490
S 2: 0.6453
S 3: 0.6294

EURJPY
R 3: 125.00
R 2: 124.61
R 1: 123.67
CURRENT: 121.88
S 1: 118.09
S 2: 115.90
S 3: 113.64

USDSGD
R 3: 1.5049
R 2: 1.5011
R 1: 1.4972
CURRENT: 1.4812
S 1: 1.4682
S 2. 1.4647
S 3: 1.4579

Market Brief

The dollar continues to weaken against the majors as the repatriation of capital back to US assets may be slowing down. The EurUsd rose nearly 300 pips to the high 1.36 price area, while the UsdJpy declined 60 pips to mid range of 90. The GbpUsd surged as much as 400pips in the early part of the trading session but has since cooled off finding resistance at the mid 1.52 level. Equities fell in the US and Europe with the Dow down as much as .77% or 65pts following weak economic data and anticipation for weak corporate earnings from financial institutions. Bonds are being called the next bubble on wall street, particularly US treasuries with yields on the 10yr at 2.5%, they more than 200pts below the historical average. Commodities picked up strong momentum to the upside but lost steam as the trading day progressed down 4.00% at $44bbl. Meanwhile gold continued to rally gaining 2% to $838oz well above its 30 day moving average.

Recent commentary from the ECB officials pointed out that macroeconomic data will play a significant role in the central bank’s stance on monetary policy. It sounds like an affirmation that markets may be moving slowly back to a state of normalcy as the risk aversion trade breaks and the volatility remains mostly flat. Clearly it will be a long process before we can look towards the recovery phase, but some key anecdotal evidence is becoming increasingly apparent. ECB member Weber stated that the bank “needs to be cautious in cutting rates to levels never seen before.” He goes on to say that rates need to be normalized quickly once the economy stabilizes. In the UK, a series of economic data is set to be released this week. Analysts are looking for a further decrease in CPI to 3.9% on an annualized basis from the prior 4.2% level. The BoE will also release minutes tomorrow likely showing a collective decision regarding the 100bps cut last meeting.

US Empire Manufacturing data was better than expected at ‐25.76, but still fell from the previous reading of ‐25.43. Industrial production was slightly better than projected at ‐0.6% vs. ‐0.8%, however it dropped significantly from the prior reading of 1.3%. The current economic state remains very weak ahead of the FOMC rate decision scheduled for this week. The Fed is expected slash the central bank rate by 50bps to 0.50% the lowest level in over a decade. The Usd dropped ahead of the rate announcement as recent trend of strength in the safe haven currency tapers off.

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Asian Session - Japanese Tankan Survey Sinks

December 15, 2008 9:37 AM CET

G10 Advancers and Decliners vs USD

	SEK	1.48
	NZD	0.95
	NOK	0.93
	AUD	0.89
	EUR	0.76
	DKK	0.73
	JPY	0.70
	GBP	0.70
	CAD	0.66
	CHF	0.61

Global Indexes

Current Level

% Change

Nikkei 225 Index	8,664.66	+ 5.20
Hang Seng Index	15,037.91	+ 1.89
Shanghai Index	1,964.37	+ 0.52
FTSE futures	4,271.00	- 2.68
DAX futures	4,744.50	+ 1.48
SMI Futures	5,85.00	+ 0.85
DJIA futures	8,678.00	- 0.12

World Markets

Current Level

% Change

Gold	828.66	+ 0.76
Silver	10.42	+ 1.16
VIX	54.28	- 2.68
Crude wti	46.05	- 0.46
USD Index	83.20	- 0.53

Todays Calender

Estimates

Country / GMT

Trade balance, NOKbn	--	32.2	NO / 9.00
Employment rate, % q/q	--	0.2 ,1.2 y	EZ / 10.00
Empire manufacturing, index	-27.0	-25.4	US / 13.00
Net foreign security purchases (TICs), $bn	40.0	66.2	US / 14.00
Industrial production, % m/m	-0.8 (-5.2	1.3 ,-4.1	US / 14.15
Industrial production: mfg, % m/m	--	0.6 ,-5.3	US / 14.15
Capacity utilisation, %	75.7	76.4	US / 14.15
NAHB housing market index	9	9	US / 18.00

Currency Tech

Market Brief

The Usd was weaker in the Asian Session, despite the weak Japanese economic news. The EurUsd traded sharply higher to 1.3500 from 1.3360, while the UsdJpy, in choppy trading, moved lower to 90.80 from 91.40. Asian regional indexes continued to grind higher, as Japan's Tankan index fell to -24 from -3, the lowest reading since 1974. In addition, China's Industrial Production saw its lowest growth since 2002. The tentative optimism / risk taking seen in the equity markets suggest that the recent trend of Usd strength on negative US economic news now looks to be shifting. However, we are not yet set to call an end to the de-levergaing flow, which has supported the Usd, and will be monitoring risk appetite carefully. European stock futures are pointing to a higher open and commodities are gaining on the positive sentiment.

In Japan, the Tankan survey showed the largest quarterly drop since 1974 and the forward looking indexs were also very weak at -36. Prime Minister Aso said Friday that supplementary stimulus package to boost economic growth will specifically target the labor market. The market is expecting the BoJ to hold rates steady at 0.30% on Thursday and there is little support for anything otherwise.

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