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US Session - Dollar Retracts Gains in the European Session
June 16, 2008 4:57 PM CEST
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G10 Advancers and Decliners vs USD |
| | NOK | 1.14 |  | | | GBP | 0.83 | | | | CAD | 0.70 | | | | DKK | 0.67 | | | | SEK | 0.66 | | | | EUR | 0.64 | | | | CHF | 0.52 | | | | NZD | 0.22 | | | | AUD | 0.19 | |  | JPY | -0.24 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 14,354.37 | + 2.72 | | FTSE 100 Index | 5,790.90 | - 0.20 | | CAC 40 Index | 4,652.41 | - 0.63 | | DAX Index | 6,704.53 | - 0.89 | | DJIA Index | 12,268.19 | - 0.31 | | S&P 500 Index | 1,357.72 | - 0.17 | | NASDAQ 100 Index | 2,457.99 | + 0.11 |
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World Markets |
Current Level |
% Change |
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| Gold | 887.88 | + 1.87 | | Silver | 17.26 | + 4.13 | | VIX | 22.08 | + 4.03 | | Crude wti | 137.19 | + 1.73 | | USD Index | 73.70 | - 0.60 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Interest Rate Announcement | 16.25% | 15.75% | Tur / 17.00 | | NAHB Housing Market Index (Jun) | 19 | 19 | US / 18.00 |
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Currency Tech |
AUDUSD
R 3: 0.9648
R 2: 0.7527
R 1: 0.9490
CURRENT: 0.9398
S 1: 0.9304
S 2: 0.9290
S 3: 0.9220
EURJPY
R 3: 170.00
R 2: 169.10
R 1: 167.65
CURRENT: 167.48
S 1: 164.97
S 2: 162.25
S 3: 161.70
USDMXN
R 3: 10.5000
R 2: 10.4690
R 1: 10.4475
CURRENT: 10.3445
S 1: 10.3240
S 2: 10.2860
S 3: 10.2190
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Market Brief |
The dollar fell in the European session due to comments or lack thereof in the G8 Summit over the weekend. The Usd traded lower against the Eur at the 1.55 level, but slightly held steady vs. the Jpy at 108. The GbpUsd moved higher to 1.96 from 1.94 last Friday as the cable probably won’t reach our target of 1.93 until the US economy stabilizes further. The equity markets traded lower in Europe, and opened lower in the US due to additional losses announced by firms in the financial sector, as well as a surge in oil to 138, and a rise in gold to 892. Bonds fell sharply last week, as the yield curve saw flattening in the 2yrs and 10 yrs. We may see Traders buying into US treasuries in the near-term based on the notion that the market may have overreacted to hawkish Fed commentary regarding inflation combined with pockets of economic weakness in the US economy.
Eurozone inflation ticked up in May from 3.7% from 3.6% exp, which was consistent the decadent assessment of price stability. Today’s inflation news may force the ECB to remain hawkish longer than anticipated, as the market may start to look for rate hikes beyond the July meeting, which should provide Eurodollar strength in coming months. The US Market will be listening intently to Fed Chairman Bernanke whom is speaking live at healthcare reform conference, as well as the housing the market index which is released at 1:00 ET, and Q1 earnings from Financials which have shown weakness over the last several months. The Empire State Manufacturing Index fell substantially to -8.7 vs. -0.5 exp, signaling that US economic growth may not be able to support the Fed’s plans to tighten.
Look for the Usd to give up gains from last week as the market moved to aggressively based on rate expectations. Several key economic data points are scheduled to be released tomorrow such as Producer Price Index, Housing Starts, and Industrial Production.
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Asian Session - G8 Fails to Mention FX
June 16, 2008 9:36 AM CEST
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G10 Advancers and Decliners vs USD |
| | GBP | 0.11 | | | | CAD | 0.06 | | | | NOK | 0.05 | | | SEK | -0.04 | | | AUD | -0.09 | | | EUR | -0.11 | | | DKK | -0.12 | | | NZD | -0.19 | | | CHF | -0.29 | | | JPY | -0.47 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 14,354.37 | + 2.72 | | Hang Seng Index | 23,201.39 | + 2.69 | | Shanghai Index | 2,877.03 | + 0.28 | | FTSE futures | 5,810.00 | + 0.35 | | DAX futures | 6,791.00 | + 0.30 | | SMI Futures | 7,260.00 | + 0.63 | | DJIA futures | 12,312.00 | + 0.09 |
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World Markets |
Current Level |
% Change |
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| Gold | 868.00 | - 0.40 | | Silver | 16.47 | - 0.64 | | VIX | 21.22 | - 9.04 | | Crude wti | 134.08 | - 0.57 | | USD Index | 73.94 | - 0.27 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| CPI (May Final) | +0.6%(+3.6 | (+3.6%)p | EZ / 10.00 | | Core CPI (May) | 1.8% | 1.6% | EZ / 10.00 | | Empire State Manufacturing Index (Jun) | -1.5 | -3.2 | US / 13.30 | | New Motor Vechicle Sales m/m (apr) | 0.0% | -0.5% | CA / 13.30 | | Net Foreign Purchases of US Securities (Apr) | -- | -$48.2bn | US / 14.00 | | Interest Rate Announcement | 15.75% | 16.25% | Tur / 17.00 | | NAHB Housing Market Index (Jun) | 19 | 19 | US / 18.00 |
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Currency Tech |
AUDUSD
R 3: 0.9655
R 2: 0.9649
R 1: 0.9527
CURRENT: 0.9373
S 1: 0.9305
S 2: 0.9290
S 3: 0.9220
EURJPY
R 3: 169.10
R 2: 167.65
R 1: 167.15
CURRENT: 166.62
S 1: 164.98
S 2: 162.27
S 3: 161.70
USDSGD
R 3: 1.3940
R 2: 1.3889
R 1: 1.3850
CURRENT: 1.3776
S 1: 1.3700
S 2: 1.3580
S 3: 1.3555
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Market Brief |
Usd was mixed in the Asian session as the G8 communiqué failed to mention FX and traders pairing down bets. EurUsd fell below 1.5400 before trending up to 1.5436 as the Asian trading day evolved. Jpy continued to come under selling pressure as UsdJpy rallied off 107.90 supports and headed to 108.40 while AudJpy in choppy action traded to 101.80. Jpy & Chf funded carry trades should continue to outperform this week baring any significant change in the macro environment (lower oil prices and firm equity markets helping risk appetite).
Crude wti & gold prices continue to pull back to 133.93bll and 867.13oz. Asian equities are trading up and European futures are pointing to higher open with the SMI index leading the way.
As was generally expected at this weekends G8 finance minister meeting made no specific mention to FX in its statement. Given the recent shift in policymakers use of verbal intervention there was some speculation that the meeting in Osaka would give ministers a timely platform. However, typically FX comments are reserved for when Central Bankers are in attendance. The communiqué did focus on the risks to growth (which have improved in recent moths) and the negative effects of higher energy prices stating “further declines in housing prices in the United States and greater strains in the financial markets may adversely affect the global outlook” and "elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressure."
While the communiqué stop short of a specific reference to the greenback, in his press conference US Trsy Sec. Paulson reiterated support for the strong USD, "A strong dollar is in our nation's interest," he stated, adding that better US economic fundamentals will eventually be priced in the USD.
Initial reports have Ireland rejecting the referendum on the Lisbon treaty but the official results have yet to be released.
Kiwi manufacturing sales for q1, rose by 0.2% q/q, a considerable slowdown from 3.4% q/q in q4. The data continues to reinforce there is an economic slowdown in New Zealand and we expect the RBNZ begin cutting rates as early as September. Nzd was stable today, however we expect mounting evidence of economic erosion will weigh on the NzdUsd and are looking for 0.7400 near term.
In the European session markets will be watching the final estimate of eurozone CPI. We are expected a slight pickup in headline due to energy and food cost and second round effects to pressure core (which has been stable at less then 2.0%). Despite the EurUsd inability hold below the 1.5400 lvl for any significant time our bearish view is intact and opens the way to 1.5280 support.
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