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US Session - Dollar is Stable Despite Weak Earnings
June 18, 2008 6:05 PM CEST
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G10 Advancers and Decliners vs USD |
| | NZD | 0.27 |  | | | CAD | 0.12 | | | | NOK | 0.10 | | | | AUD | 0.04 | | | | CHF | 0.04 | |  | GBP | -0.02 | | | JPY | -0.10 | | | EUR | -0.13 | | | DKK | -0.14 | | | SEK | -0.24 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 14,452.62 | + 0.72 | | FTSE 100 Index | 5,756.90 | - 1.79 | | CAC 40 Index | 4,618.17 | - 1.42 | | DAX Index | 6,728.91 | - 0.99 | | DJIA Index | 12,102.33 | - 0.47 | | NASDAQ 100 Index | 2,445.67 | - 0.49 | | S&P 500 Index | 1,344.50 | - 0.45 |
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World Markets |
Current Level |
% Change |
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| Gold | 886.63 | + 0.44 | | Silver | 17.23 | + 0.99 | | VIX | 21.80 | + 3.17 | | Crude wti | 132.63 | - 1.03 | | USD Index | 73.56 | + 0.06 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| No Additional Release | -- | -- | -- |
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Currency Tech |
USDCAD
R 3: 1.0323
R 2: 1.0300
R 1: 1.0250
CURRENT: 1.0187
S 1: 1.0154
S 2: 1.0140
S 3: 1.0080
EURJPY
R 3: 170.00
R 2: 169.10
R 1. 168.05
CURRENT: 167.48
S 1: 167.04
S 2: 165.51
S 3: 164.97
USDMXN
R 3: 10.4697
R 2: 10.4690
R 1: 10.3880
CURRENT: 10.292
S 1: 10.2960
S 2: 10.2860
S 3: 10.2190
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Market Brief |
The Usd held steady in the European session due to mixed economic data and additional warnings by major US investment banks that there may be a possibility of further write-downs. The EurUsd continued to trade within the 1.54-1.55 range, while the UsdJpy remained at the low 108 level. The Gbpusd showed little price movement at 1.95, as the market seemed to react very little to the BOE’s decision to leave rates unchanged. Equity markets are trading lower in Europe and the US, with a 57% drop in profit for Morgan Stanley and $241 million loss due primarily to fuel cost for courier FedEx. Gold ticked up to 890 intraday, while silver moved slightly higher to 17. Crude oil fell to 131 due to higher than expected EIA inventory numbers, which came in at -1.2M vs. -1.5M. Traders are buying bonds again, as speculation of Fed hike subsides due to weak industrial production numbers that were released yesterday.
In the European session the BoE voted 8-1 to leave rates unchanged at 5.00%, despite an uptick in inflation. The sole dissenter David Blanchflower voted for a rate cut, while a few board members considered a rate hike, but indicated that medium term inflation expectations remained within control. Cable volatility remains light against the Eur and Usd over the last month, as I suspect traders are waiting to see action on the behalf of both the Fed and ECB in upcoming meetings. We maintain our target level of 1.93 against the Usd There was minimal news out of the Eurozone except for commentary from ECB Board Member Jurgen Stark regarding wages and rising prices. He reiterated the ECB’s hawkish stance on inflation, and continued focus on rising energy prices.
The prospect of near term tightening by the Fed became less realistic as Industrial Production fell 0.2% vs. 0.1% expected. The markets continue to trade very sensitively to housing data, as investors look for some sign of recovery in that sector. Financials are still struggling with losses stemming from housing, while transportation services like airlines and couriers are suffering from rising oil prices. Although corporate earnings have been mixed and economic growth slowed, the dollar has been able to sustain a support level of 1.56 against the Eur over the last week. Fed’s Yellen will speak at 11:45 EDT, and the FOMC is scheduled to meet next week.
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Asian Session - Usd Gains as Questions Fade
June 18, 2008 9:46 AM CEST
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G10 Advancers and Decliners vs USD |
| | NZD | 0.11 | | | | CAD | 0.07 | | | JPY | -0.12 | | | AUD | -0.17 | | | NOK | -0.19 | | | CHF | -0.21 | | | DKK | -0.24 | | | EUR | -0.24 | | | SEK | -0.27 | | | GBP | -0.31 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 14,452.82 | + 0.72 | | Hang Seng Index | 23,350.51 | + 1.26 | | Shanghai Index | 2,940.93 | + 5.23 | | FTSE futures | 5,869.00 | + 1.35 | | DAX futures | 6,793.50 | - 0.17 | | SMI Futures | 7,250.00 | + 0.11 | | DJIA futures | 12,191.00 | + 0.16 |
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World Markets |
Current Level |
% Change |
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| Gold | 882.83 | + 0.01 | | Silver | 17.08 | + 0.01 | | VIX | 21.13 | + 0.85 | | Crude wti | 133.41 | - 0.44 | | USD Index | 73.62 | + 0.15 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| BoE MPC Minutes (4th/5th Jun) (Hold-Cut) | -- | -- | UK / 9.30 | | CBI Monthly Trends (Jun) | -12 | -10 | UK / 11.00 | | ZEW Survey | -60.8 | -60.4 | SZ / 10.00 | | MBA Mortgage Applications (jun13) | -- | 10.9% | US / 12.00 | | Leading Indicators (May) m/m | 0.2% | 0.1% | CA / 13.30 |
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Currency Tech |
AUDUSD
R 3: 0.9648
R 2: 0.7525
R 1: 0.9490
CURRENT: 0.9420
S 1: 0.9304
S 2: 0.9290
S 3: 0.9220
EURJPY
R 3: 170.00
R 2: 169.10
R 1: 167.80
CURRENT: 167.32
S 1: 167.09
S 2: 165.52
S 3: 164.97
USDSGD
R 3: 1.3940
R 2: 1.3887
R 1: 1.3850
CURRENT: 1.3683
S 1: 1.3645
S 2: 1.3580
S 3: 1.3554
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Market Brief |
Usd was slightly stronger in Asian session as yields moved lower. GbpUsd was able to regain slightly to 1.9511 from Tuesday’s massive sell-off which saw the cable fall sharply from 1.9700 to 1.9472 lows. EurUsd was range bound for much of the Asian session but slipped to 1.5480 from 1.5520 as the trading day progressed. UsdJpy was stuck in a tight range of 107.90 to 108.00 as Japanese data failed to give the market any direction.
US equity markets finished lower on Tuesday, as positive earnings from GS (-1.5%) and Best Buy (-5.3%) weren't enough to lift the market. Only three sectors finished higher, with Energy (+1.7%) and Materials (+0.2%) being the sole real gainers. Financials (-2.9%) were once again the issue, as the GS report, where they beat estimates, did little to raise spirits. Asian markets are higher this morning, with the Nikkei up 0.7%, the Hang Seng up 1.3% and the MSCI A-P up 0.5%. Miners were higher, as commodity prices rose, while investors gained confidence that second half earnings may be stronger than expected. JGBs gained for a second day, as speculation mounts that the BoJ may hold off on raising rates this year.
The strength in the Usd leads us to believe that the effect of yesterday’s articles in major newspapers is beginning to dissipate. However, their argument that a rate hike in the US was premature due to weak underlying fundamentals is still extremely valid. With 3 rate hikes in 2008 already priced into the market we believe this optimistic view is slightly overdone. The Fed meeting and accompanying statement this week will be critical in steering Usd sentiment.
The minutes from the BoJ meetings were released and there were no statements which point to a shift in monetary policy in the near term. We continue expect UsdJpy to reach 110.00 in the mid term. Leading Index and Coincident Index both came in line with expectations.
Expect a quiet day for economic data releases with the lone exception being UK MPC minutes for June. However, there is little evidence that we will see anything enlightening. We doubt the committee will suggest rates need to rise since May minutes, where the MPC members knew of CPI inflation above 3.0%, contained no hint of tightening. We expect ultra-dove David Blanchflower to be the lone dissenter, having historically disregarded all inflation news while focusing on the soft labor market data. In addition the CBI survey should show a continued move upwards as there is little evidence price pressures has already peaked. After yesterday sell off we could see temporary Gbp strength was a rate cut is now not expected until q1 2009.
8.35gmt - ECB's Tumpel-Gugerell speaks
16.45gmt -Feds Yellen speaks
21.00gmt - Paulson & China's Vice Premier holds post-meeting briefing
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