Daily Forex Snapshots

US Session: Dollar Gives Back Some Gains, Stocks on Track for Light Rally

December 02, 2008 8:56 PM CET

G10 Advancers and Decliners vs USD

	Sek	1.58
	Nok	1.46
	Dkk	0.90
	Eur	0.88
	Gbp	0.42
	Aud	0.42
	Cad	0.38
	Chf	0.13
	Nzd	0.05
	Jpy	-0.35

Global Indexes

Current Level

% Change

DJIA futures	8,325.00	+ 2.29
S&P future	836.20	+ 2.50
Nasdaq futures	1,118.00	+ 2.15
FTSE futures	4,125.50	+ 2.10
CAC futures	3,158.50	+ 2.35
DAX futures	4,554.00	+ 4.08
SMI Futures	5,548.00	+ 0.33

World Markets

Current Level

% Change

Crude wti	50.01	+ 1.48
Gold	780.00	+ 1.44
Silver	9.64	+ 3.94
USD Index	86.53	- 0.22
VIX	63.60	- 7.17

Todays Calender

Estimates

Country / GMT

No Major Events Scheduled

Currency Tech

AUDUSD
R 3: 0.6696
R 2: 0.6618
R 1: 0.6544
CURRENT: 0.6370
S 1: 0.6333
S 2: 0.6232
S 3: 0.6077

EURJPY
R 3: 126.24
R 2: 123.67
R 1: 121.54
CURRENT: 116.93
S 1: 116.43
S 2: 114.41
S 3: 113.64

USDSGD
R 3: 1.5529
R 2: 1.5436
R 1: 1.5345
CURRENT: 1.5318
S 1: 1.5109
S 2: 1.5052
S 3: 1.4965

Market Brief

The dollar gave up some of yesterday’s gains against the majors based on a light reversal in the risk aversion trade. The EurUsd rose over 100pips to the low range of 1.27, while the UsdJpy picked up 45pips moving up to the mid 93 level. The GbpUsd made a small step towards recovery following the massive selloff in the previous session. The pair increased 50pips to the low 1.49 price area, trading is likely to be flat as interest rate expectations have been incorporated into current levels. The Equity markets opened higher in US following the trend of positive European stock indexes. The Dow is up 2.5% or 200pts, we are likely to see the market close higher after its steep plunge in Monday’s session. Commodities are mostly flat with the exception of gold which recovered 1.08% at $782oz, oil stands at $49bbl off .1%. Bond yields are mixed but well below normal levels across the curve, the 2yr rate is at .90% and the 10yr at 2.69%. Some of the bond buying can be attributed to expectations of Fed buying securities, which may subside allowing yields to amass some gains.

The growth story remains the central focus for the ECB, as recent economic data pointed to further downside risks. Eurozone PPI fell to 6.3% vs. 7.0% expected, and the prior reading of 7.9%. Both Eurozone PMI and retail sales are scheduled to be released tomorrow, but the most significant data point will be the interest rate meeting scheduled to be announced on Thursday. We are looking for 75bps cut, to 2.75% from 3.25%, much of which is priced into price of the Euro. There is a segment of the market that is looking for a 50bps cut, so there may be room for a move downward following the release. There was limited out of the UK, cable trading should probably range trade until the BoE meets to announce their rate decision.

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Asian Session - Equity Selling Continues

December 02, 2008 10:00 AM CET

G10 Advancers and Decliners vs USD

	JPY	0.36
	DKK	-0.31
	EUR	-0.32
	CHF	-0.34
	GBP	-0.37
	NOK	-0.76
	CAD	-0.87
	SEK	-1.18
	AUD	-1.21
	NZD	-1.56

Global Indexes

Current Level

% Change

Nikkei 225 Index	7,863.69	- 6.35
Hang Seng Index	13,405.85	- 4.98
Shanghai Index	1,889.64	- 0.26
FTSE 100 Index	3,981.11	- 2.07
DAX Index	4,323.10	- 1.63
SMI Index	5,433.12	- 1.70
DJIA futures	8,148.00	+ 0.11

World Markets

Current Level

% Change

Gold	763.35	- 0.74
Silver	9.26	- 0.16
VIX	68.51	+ 23.93
Crude wti	47.93	- 2.73
USD Index	87.15	+ 0.46

Todays Calender

Estimates

Country / GMT

CIPS/Markit Report on Construction (Nov)	33.5	35.1	UK / 8.30
Producer Prices (Oct)	-0.3%,+7.0	-0.2%,+7.9	EZ / 9.00

Currency Tech

Market Brief

The Usd was stronger in the Asian session, as risk appetite took a serious hit. US equity markets collapsed, with the Dow down 7% and 10 year yields dropped by 16bps. Weak data in China , UK Germany PMIs & US manufacturing ISM, combined with subdued public address by Bernanke and Paulson, weighed on investor sentiment. In addition, an announcement by the BoJ that they would hold an unscheduled monetary policy meeting today just added to the markets nervousness. The EurUsd traded from 1.2688 down to 1.2565, while UsdJpy, in a choppy session, traded from 93.82 to 92.89. Asian regional indexes are significantly lower across the board and European stocks have opened lower. Crude prices continue to slide with gold trailing right behind, as fear of a global slowdown becomes the focus once again. Given the renewed bout of risk aversion and safe haven buying, we expect the Usd, Jpy and Chf to outperform.

The BoJ will initiate plans to make it simpler for firms to acquire funding, with exact details to be decided at today's meeting. Initial reports hints the CB will create a special lending facility which will be open to lower rated corporate bonds. There is considerable speculation on whether monetary policy will be discussed.

In Australian, the RBA cut rates by 100bp (we expected 75bp) to 4.25%. In the statement accompanying the decision the RBA noted recent stability in global financial markets but the global outlook was still deteriorating and monetary policy is now expansionary. On the data front retail sales printed higher than expected and the current account deficit contracting by more than predictable. Australian retail sales rose by 0.7% m/m in October on a seasonally adjusted basis, following a contraction of -1.1% m/m in Sept. However, in the current environment risk aversion trumped data and AudUsd weakened to 0.6336 from 0.6481.

On this light calendar day European markets will be watching Oct. euro-zone producer price inflation. After reaching 9.2% in July, we expect price inflation to continue to slow.

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