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US Session - Markets are Quiet Awaiting the FOMC Decision
June 25, 2008 4:44 PM CEST
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G10 Advancers and Decliners vs USD |
| | NOK | 0.41 |  | | | CAD | 0.30 | | | | SEK | 0.05 | | | | GBP | 0.04 | |  | DKK | -0.01 | | | EUR | -0.02 | | | AUD | -0.04 | | | JPY | -0.13 | | | CHF | -0.15 | | | NZD | -0.19 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 13,829.92 | - 0.14 | | Hang Seng Index | 22,635.16 | + 0.79 | | FTSE 100 Index | 5,649.00 | + 0.25 | | DAX Index | 6,573.85 | + 0.57 | | DJIA Index | 11,858.89 | + 0.43 | | NASDAQ 100 Index | 2,398.39 | + 1.27 | | S&P 500 Index | 1,325.72 | + 0.87 |
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World Markets |
Current Level |
% Change |
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| Gold | 881.59 | - 0.91 | | Silver | 16.63 | - 0.24 | | VIX | 21.44 | - 4.37 | | Crude wti | 134.73 | - 1.63 | | USD Index | 73.15 | - 0.11 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Fed Interest Rate Announcement | 2.00% | 2.00% | US / 19.15 |
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Currency Tech |
AUDUSD
R 3: 0.9655
R 2: 0.9649
R 1: 0.9587
CURRENT: 0.9564
S 1: 0.9490
S 2: 0.9448
S 3: 0.9405
EURJPY
R 3: 170.00
R 2: 169.10
R 1: 168.39
CURRENT: 168.37
S 1: 166.77
S 2: 166.00
S 3: 165.53
USDMXN
R 3: 10.4697
R 2: 10.4690
R 1: 10.3880
CURRENT: 10.2932
S 1: 10.2650
S 2: 10.2500
S 3: 10.2000
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Market Brief |
The Usd loss ground in the European session due to market expectations for the Fed to leave rates unchanged. The EurUsd moved to the 1.56 level, while UsdJpy remains in 107-108 range. The GbpUsd continues to trade at the 1.97 level, volume remains light as we await a rate decision by the Fed later this afternoon. Both European and US Equity markets are trading slightly higher, while both energy and metals are trading lower, with oil at 136, gold fell to 884, while silver is trading at the mid 16 level. Yields widened slightly across the curve, particularly in 5yr and 10yrs, with a segment of the bond market who is speculating hawkish comments regarding inflation from the Fed.
There was limited action in the European session with the exception of industrial orders which came in higher at 2.5% vs. -0.5% expected. Italian retail sales were flat, but better than the anticipated fall of 0.6%. Trichet made some aggressive comments suggesting a possible intervention in the recent movements within the currency markets. He warned that G10 currencies are seeing “disorderly moves”, and also cited that action needs to take place to address the current state of the FX market. The Eur gained strength against the dollar as it moved up to 1.56, and is currently at 0.79 versus the cable.
The dollar remains in the 1.55-1.56 range today as volume is expected to be light prior to the Fed rate announcement. New home sales came in lower at 512k vs. 515k expected, while durable goods came in lower as well, but in line with the consensus figure of -0.9%. The recent economic data supports the weak growth story, which will make it difficult for the Fed to move rates higher in the near future. Inflation is a key concern, and the recent rhetoric by the Fed implies that a strong dollar is in the best interest of the overall economy. We will have to wait and see if the Fed comments will be reflected in monetary policy movements
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Asian Session - Waiting on the Fed
June 25, 2008 10:00 AM CEST
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G10 Advancers and Decliners vs USD |
| | CAD | 0.13 | | | JPY | -0.05 | | | AUD | -0.13 | | | GBP | -0.16 | | | NOK | -0.20 | | | DKK | -0.25 | | | EUR | -0.27 | | | CHF | -0.30 | | | SEK | -0.40 | | | NZD | -0.45 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 13,829.92 | - 0.14 | | Hang Seng Index | 22,728.38 | + 1.21 | | Shanghai Index | 2,905.01 | + 3.63 | | FTSE futures | 5,6191.00 | + 0.21 | | DAX futures | 6,640.00 | + 0.34 | | SMI Futures | 7,072.00 | + 0.38 | | DJIA futures | 11,848.00 | + 0.29 |
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World Markets |
Current Level |
% Change |
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| Gold | 888.78 | - 0.09 | | Silver | 16.73 | + 0.36 | | VIX | 22.42 | - 0.97 | | Crude wti | 137.01 | + 0.01 | | USD Index | 73.30 | + 0.08 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| CBI Distributive Trades (Jun) | -16 | -14 | UK / 11.00 | | Norges Bank Interest Rate Announcement | 5.50% | 5.50% | NO / 13.00 | | Poland Interest Rate Announcement | 6.00% | 5.75% | PD / 13.00 | | Durable Goods Orders (May) | 0.0% | -0.5% | US / 13.30 | | Core Durable Goods Orders (May) | -0.9% | 2.5% | US / 13.30 | | New Home Sales (May) | 512k | 526k | US / 15.00 | | Fed Interest Rate Announcement | 2.00% | 2.00% | US / 19.15 |
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Currency Tech |
AUDUSD
R 3: 0.9655
R 2: 0.9648
R 1: 0.9588
CURRENT: 0.9555
S 1: 0.9490
S 2: 0.9449
S 3: 0.9405
EURJPY
R 3: 170.00
R 2: 169.10
R 1: 168.39
CURRENT: 212.36
S 1: 166.78
S 2: 166.00
S 3: 165.53
USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3681
S 1: 1.3634
S 2: 1.3580
S 3: 1.3554
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Market Brief |
FX markets were unusually calm in the Asian session as markets await the news from the FOMC meeting. EurUsd was stuck in a 10 pip range for most of the session trading from 1.5565 to 1.5577 before breaking to the downside as Europe prepared to open. UsdJpy provided little excitement ranging from 107.67 to 107.94 despite trade data showing that exports jumped a whopping 3.7%. GBP traded between 1.9695 and 1.9712 as it followed the rest of the currencies against the USD. Carry trades eased slightly from their elevated levels with EurJpy falling to 167.64 & AudJpy 102.90.
Stocks ended up lower after a choppy session Tuesday in the wake of consumer confidence data that fell to a 16 month low in June and after UBS’s profit warning. Asian markets are mostly trading down this morning due to a fall in metal prices that weighed heavily on the mining companies. Japanese stocks were lower on the back of default concerns around developer and consumer-finance companies. Oil prices closed higher, but below the day’s peak of near $139, ahead of today’s rate announcement and US petroleum inventory data. The Aug '08 contract is up $0.26 to $137.00. Gold closed with gains, as weakness in the dollar underpinned demand for the precious metal; the most active Aug '08 contract up $4.40 to $891.60 and Sep '08 silver -15.7 ¢ at $16.739/oz.
In New Zealand The Westpac consumer confidence index fell sharply from 96.5 to 81.7 and is just above the extreme lows recorded in the early 90's recession. The RBNZ was looking for more evidence of weakness in the household sector and this clearly helps build a case. We expect the central bank to begin cutting in the fall.
If you haven’t heard already the FOMC will be announcing their rate decisions and releasing an accompanying statement later today. We are inline with market expectation and believe the Fed will hold rates at 2.00%. We expect some slight changes in the accompanying statement specifically regarding inflation and inflation expectations, however we are less hawkish then most. On the growth side, better then expected retail sales, inventories and external trade indicates that GDP will just miss contracting in Q2, while both ISM manufacturing and non-Manu have strengthened in recent months. However, we expect the downside risk to the US economy, which has been highlighted by a string of soft housing, consumer confidence data, and the decline in households’ real incomes and wealth shrinking to influence the Fed decision (we are expecting 1-2 members to vote for a hike). Overall we expect the market to be slightly disappointed by the dovish tone and lack of willingness to pre commit to any rate hike near term. Should our base scenario prove correct we should see some Usd weakness as the 60bp already priced in for 2008 looks over done.
However, it should be noted that recently The ECB has been trying to pour cold water on recent comments that there will be a more aggressive rate increasing policy by saying they have not spoken about a series of rate hikes in the Eurozone. Basically it seems that policy makers at the ECB are concerned that investors have jumped the gun and that the latest data could make it harder to raise rates that previously thought.
In addition to the FOMC, the Norge Bank (Poland Central bank is also releasing and are expect to raise 25bp to 6.00%) will also announce rates and publish its monetary policy report today. Risk is slightly skewed to a hold, but with 40% of economists that were polled looking for a hike of 25bp this will be a close one to call. We are expected a 25bp hike in the next 6 months, however this will not be the meeting. We expect the MPR to show inflation projection being revised upward which keep the NOK supported.
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ACM Advanced Currency Markets SA (hereinafter referred as ACM) is a professional financial intermediary, directly regulated by the Swiss Federal Department of Finance, Anti Money Laundering Control Authority. As forex specialist, ACM provides only currency trading via highly professional forex trading software. All customers are aware that this information or any part thereof has been prepared without taking account of your objectives, financial situation and/or needs. This information is not intended as personalized investment advice and does not constitute a recommendation. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. The analysis is based on the information which ACM finds reliable and accurate, but ACM does not assume any responsibility for any material nor for the transactions made on the basis of the information or the estimates of the analysis. ACM cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct, indirect and/or consequential loss arising from any use of this information, document or its content. All opinions and estimates constitute ACM analysis as of the data and are subject to change without notice. ACM does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. Past performance is not a reliable indicator of future performance.
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