Daily Forex Snapshots

Asian Session - Markets Wary Due to Crude

June 09, 2008 10:00 AM CEST

G10 Advancers and Decliners vs USD

	CHF	0.48
	NOK	0.33
	EUR	0.30
	DKK	0.29
	CAD	0.29
	NZD	0.21
	SEK	0.18
	JPY	0.13
	AUD	0.13
	GBP	0.02

Global Indexes

Current Level

% Change

Nikkei 225 Index	14,181.38	- 2.12
Hang Seng Index	24,402.18	+ 0.60
Shanghai Index	3,329.27	- 0.65
FTSE futures	5,918.50	- 1.37
CAC futures	4,781.00	- 0.32
SMI Futures	7,380.00	- 2.51
DJIA futures	12,239.00	+ 0.20

World Markets

Current Level

% Change

Gold	900.60	- 0.18
Silver	17.49	- 0.22
VIX	23.56	+ 26.46
Crude wti	137.77	- 0.55
USD Index	72.37	- 0.02

Todays Calender

Estimates

Country / GMT

Producer Prices (May) Input	2.6%(+23.8	2.4%(+23.3	UK / 9.30
Producer Prices (May) Output	0.7%(+7.9%	1.4%(+7.5%	UK / 9.30
Producer Prices (May) Core	0.5%(+4.8%	1.0%(+4.6%	UK / 9.30
Housing Starts (May)	220.0k	213.9k	CA / 13.15
Pending Home Sales (Apr)	-0.3%	-1.0%	US / 15.00

Currency Tech

AUDUSD
R 3: 0.9700
R 2: 0.9655
R 1: 0.9643
CURRENT: 0.9622
S 1: 0.9564
S 2: 0.9488
S 3: 0.9430

EURJPY
R 3: 167.65
R 2: 166.69
R 1: 166.38
CURRENT: 166.12
S 1: 164.60
S 2: 162.27
S 3: 161.73

USDSGD
R 3: 1.3774
R 2: 1.3732
R 1: 1.3710
CURRENT: 1.3625
S 1: 1.3581
S 2: 1.3554
S 3: 1.3470

Market Brief

Usd was slightly weaker in Asian session after a coming under significant pressure on Friday. The combination of a weak payroll figures, Trichet ultra hawkish comments and geopolitical tensions from the Middle East which caused crude wti to close at $138.54bll all weighed heavily on the greenback. EurUsd in choppy action traded between 1.5766 to 1.5795, while UsdJpy rallied sharply from 104.43 to 105.43. Despite VIX jumping to 23.56 carry trades performed well with EurJpy leading the trading pack, rising above 166.30 and due to tight correlation with S&P (Jpy cross and Equity correlation has been on the rise) should provide an interesting barometer in the days to come. In these conditions we are bearish on the Jpy prospects and are looking for opportunity to build shorts.

US equity indices were pummelled Friday, first by a leap in May's jobless rate and then by a super-surge in the price of oil. At one stage the DJIA was off 400 points, and even though that loss moderated by the end of the day, its 394 point or 3.13% deficit was the largest in points and percentage terms since Feb 27th of last year (it also pushed its loss for 2008 up to nearly 8%). The Nasdaq dropped 2.96% and the S&P gave up 3.09%. Financials took a battering, with WaMu the worst of the lot with a 13% deficit (for a 45% loss this year). Asian are moving lower and European stock are looking to open below fair value.

The market uncertainly caused by Israel’s comments towards Iran’s will keep trader focused on the macro environment in the near term. Friday, Israel stated that an attack on Iran’s nuclear site looks ‘unavoidable’ which caused crude prices to spike to $10.00bll. Those bullish on the price of oil got added support from Libya's comment that the oil could reach $140 soon and a series of price bullish reports from US Investment bank forecasting $150 by July 4th ), and Nigeria press seeing potential output cut of 450k on threatened strike at local Chevron plant. Comex gold closed 896/897 after a high of 899/900 and low at 885/886 (Europe lows ad 878/879) - A day made a world of difference for gold, or $23.50 in price terms.

In Europe the ECB’s Trichet will speak and should he mention monetary policy will most likely reiterate the ultra hawkish tone we hear on Thursday. Given the market reaction the last time Trichet raised the bar means we could see some market reaction should monetary policy comments get introduce.

In the UK producer price inflation should show inflation pressures have gotten worse and are expected to jump to 7.5%. While we should see a broad increase, average oil prices in May should have pressured producers raw materials cost which in part will be passed to customers in output prices. Overall the lack of follow through for the decline in economic activity into prices will continued to make the BoE monetary policy decisions difficult.

17.15gmt - Fed's Geithner speaks
17.30gmt - ECB's Trichet speaks
22.00gmt - Fed's Rosengren speaks

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