Daily Forex Snapshots

Asian Session - Market's Confidence Wobbly

June 03, 2008 11:45 AM CEST

G10 Advancers and Decliners vs USD

	CAD	0.25
	SEK	0.12
	AUD	0.04
	JPY	0.04
	CHF	0.02
	EUR	-0.03
	DKK	-0.05
	NZD	-0.12
	GBP	-0.18
	NOK	-0.26

Global Indexes

Current Level

% Change

Nikkei 225 Index	14,209.17	- 1.60
Hang Seng Index	24,328.71	- 2.02
Shanghai Index	3,436.40	- 0.65
FTSE futures	6,016.00	- 0.41
DAX futures	6,977.50	- 0.66
SMI Futures	7,565.00	+ 0.53
DJIA futures	12,481.00	- 0.20

World Markets

Current Level

% Change

Gold	895.70	+ 0.48
Silver	16.90	+ 0.41
VIX	19.83	+ 11.21
Crude wti	127.47	- 0.22
USD Index	72.85	- 0.01

Todays Calender

Estimates

Country / GMT

CIPS/RBS Report on Construction (May)	45.8	46.1	UK / 9.30
GDP (Q1 1st Release) q/q(y/y)	0.7%(+2.2%	0.7%(+2.2%	EZ / 10.00
Producer Price Index (Apr)	0.8%(+6.1%	0.7%(+5.7%	EZ / 10.00
Factory Orders (Apr)	-0.1%	1.3%	US / 15.00

Currency Tech

AUDUSD
R 3: 0.9655
R 2: 0.9639
R 1: 0.9581
CURRENT: 0.9554
S 1: 0.9511
S 2: 0.9430
S 3: 0.9392

EURJPY
R 3: 164.51
R 2: 164.21
R 1: 162.61
CURRENT: 162.09
S 1: 161.83
S 2: 161.60
S 3: 160.86

USDSGD
R 3: 1.3774
R 2: 1.3732
R 1: 1.3688
CURRENT: 1.3635
S 1: 1.3566
S 2: 1.3554
S 3: 1.3470

Market Brief

Usd was relatively unchanged in Asian session as risk aversion sentiment crept back into the market. Eurusd traded between 1.5520 – 1.5470 and UsdJpy rose to 104.69 before sliding down to 104.11. AudUsd spiked on the RBA rated decision to 0.9580 but fell back to 0.9540 as the session wore on. GbpUsd dropped to 1.9615 from 1.9669 and was a touch weaker against the Euro at .7918 zones. News of a major US bank preparing to reports write downs and require additional capital continued the trend of worrying news from the financial sector. Yesterday saw S&P downgrade its outlook for 3 US financial firms and UK lender Bradford & Bingley issued warnings and slashed the price of its emergency right issue. These events were a clear reminder that the credit crisis is not completely worked out of the financial system however safeguards and liquidity added by the central banks seem to have contained the worst. Equities markets fell but there seems to be a lack of real follow through the typical risk aversion trading pattern. Asian stock markets were lower with the Hang Seng leading the pack -2.19% ( as telecoms plunged after details of the restructuring of the Chinese industry were announced) and European futures are looking to open below fair value. Crude wti was stable at 127.53bll while gold was higher at 895.38oz up +0.44%.

As was widely expected the RBA held rates at 7.25%. The accompanying statement was relatively unchanged form the proceeding board meeting. Monetary policy was viewed as appropriat but warned of uncertainty over demand and inflation. We expect the RBA to stay on hold for the remainder of the year as declining economic actively will help ease inflationary pressures. However, without a significant drop in commodity prices (a possibility becasue of a start in slowing global demand) we expect the Aud to stay elevated near term.

In Switzerland CPI surged to y/y 2.9% vs. 2.4% exp. This is the highest headline reading in 10 and was years led by pressure in housing, transportation and energy sectors. The SNB will clearly be concerned with this data especially after yesterday's moderated growth of GDP which only crawled q/q 0.3%. The recent bout of risk aversion should help the Chf but negative longer term dynamics could eventually catch up.

The first detailed release of Eurozone q1 GDP (flash estimate 0.7%) will show that the boost seen was based on distinctive short term factors in such areas as consruction output and inventories, which could be easily reversed in q2. However the overall backward looking indicators should be reasonably solid.

The very light economic calendar today will allow traders to see how the problems in the financial sectors play out and we believe that the risk appetite will slowly return into the market. Investors will be awaiting the speech from Fed Chairman, Ben Bernanke, this afternoon which may give some further clues to interest rate policy.

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