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US Session-Dollar Continues to Rally across the G10
July 23, 2008 9:55 PM CEST
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G10 Advancers and Decliners vs USD |
| | Gbp | 0.29 |  |  | Cad | -0.23 | | | Jpy | -0.52 | | | Eur | -0.61 | | | Dkk | -0.62 | | | Sek | -0.68 | | | Chf | -0.70 | | | Aud | -0.93 | | | Nok | -1.01 | | | Nzd | -1.14 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA Index | 11,605.00 | + 0.36 | | S&P 500 Index | 1,281.50 | + 0.57 | | NASDAQ 100 Index | 1,843.00 | + 1.04 | | FTSE 100 Index | 5,435.50 | + 1.14 | | CAC 40 Index | 4,414.00 | + 1.65 | | DAX Index | 6,576.00 | + 1.26 | | SMI Index | 7,058.24 | + 1.97 |
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World Markets |
Current Level |
% Change |
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| Gold | 917.90 | - 3.01 | | Silver | 17.34 | - 3.48 | | VIX | 21.61 | + 2.03 | | Crude wti | 124.15 | - 3.33 | | USD Index | 72.81 | + 0.50 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| MBA Applications | -6.2% | 1.2% | USA/ |
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Currency Tech |
AUDUSD
R 3: 0.9895
R 2: 0.9850
R 1: 0.9818
CURRENT: 0.9673
S 1: 0.9675
S 2: 0.9665
S 3: 0.9597
EURJPY
R 3: 171.07
R 2: 170.00
R 1: 169.92
CURRENT: 169.78
S 1: 168.25
S 2: 166.00
S 3: 165.33
USDSGD
R 3: 1.3717
R 2: 1.3660
R 1: 1.3597
CURRENT: 1.3606
S 1: 1.3452
S 2: 1.3395
S 3: 1.3300
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Market Brief |
The Usd rose in the European session based on a continued decline in oil prices and light volatility. The EurUsd traded down over 100 pips to 1.56, while the UsdJpy rose to the high 107 price. The GbpUsd is slightly off its early high of 2.00 at 1.99, based on a persistent trend of dollar strength. Equity markets traded higher in the US and Europe based on lower oil prices and a string of positive corporate earnings. Bond Traders continue to sell govt. securities in a migration back to riskier component of the market. In addition, commodities fell across the board with oil trading lower at 124 and gold lower by nearly $30 at 920 setting the stage for a Usd rally.
Industrial production fell in the Eurozone to -3.5% vs. -4.4% expected, although the data beat expectations, it was still negative. The overall manufacturing outlook for the region is increasingly pessimistic, which is consistent with the recent trend in deteriorating growth. Inflationary pressure is weakening a bit on the back of lower oil prices, which would give the ECB room to possibly hold next meeting. We project the EurUsd to see a floor of 1.56 in the near-term and resistance around the 1.59 level. These ranges are likely to act as a sliding scale in tandem with oil prices due to the high degree of correlation. The BoE held rates at 5.00% despite severe growth issues in the UK, which gave the cable strength early on in the trading session. The central bank noted recent increases in inflation, but was not prepared to hike rates considering the weakness in the overall UK economy. The GbpUsd should remain trade between 1.98 and 2.00 in the near term.
US Financial markets rallied on weaker oil prices and gave way for the dollar to rally across most of the G10. Risk appetite is increasing, which is reflected in the recent rally in equities and sell off in the treasuries. If the housing sector starts to stabilize we can expect a strong move to the upside in the Usd, and a clearer picture of what the Fed will be willing to do in their next meeting.
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Asian Session - Usd Strengthen on Comments & Lower Oil
July 23, 2008 9:59 AM CEST
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G10 Advancers and Decliners vs USD |
| | GBP | 0.07 | | | | SEK | 0.04 | | | | CAD | 0.04 | | | NOK | -0.08 | | | DKK | -0.11 | | | EUR | -0.11 | | | CHF | -0.18 | | | AUD | -0.26 | | | JPY | -0.48 | | | NZD | -0.69 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 13,312.93 | + 0.97 | | Hang Seng Index | 22,951.68 | + 1.88 | | Shanghai Index | 2,833.14 | - 0.45 | | FTSE futures | 5,374.50 | - 0.45 | | CAC futures | 4,384.50 | + 0.96 | | SMI Futures | 6,922.00 | + 0.78 | | DJIA futures | 11,592.00 | + 0.24 |
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World Markets |
Current Level |
% Change |
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| Gold | 939.48 | - 0.73 | | Silver | 17.77 | - 1.11 | | VIX | 21.18 | - 8.11 | | Crude wti | 127.51 | - 0.70 | | USD Index | 72.51 | + 0.08 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| BoE MPC Minutes (9th/10th Jul) | 8-1 | -- | UK / 8.30 | | Industrial New Orders (May) s.a | -1.3%(2.1) | 2.5%(11.7) | EZ / 9.00 | | CBI Industrial Trends (Jul/Q3) | -30 | -23 | UK / 10.00 | | Consumer Price Index (Jun) | 0.5%(2.9%) | 1.0%(2.2%) | CA / 12.00 | | Consumer Price Index (Jun) Core | 0.1%(1.6%) | 0.3%(1.5%) | CA / 12.00 | | MBA Mortgage Applications | -- | 1.7% | US / 12.00 | | Fed’s Beige Book | -- | -- | US / 18.00 | | RBNZ Rate Announcment | 8.25% | 8.25% | NZ / 21.00 |
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Currency Tech |
AUDUSD
R 3: 0.9895
R 2: 0.9850
R 1: 0.9818
CURRENT: 0.9673
S 1: 0.9675
S 2: 0.9665
S 3: 0.9597
EURJPY
R 3: 171.07
R 2: 170.00
R 1: 169.92
CURRENT: 169.78
S 1: 168.25
S 2: 166.00
S 3: 165.33
USDSGD
R 3: 1.3717
R 2: 1.3660
R 1: 1.3597
CURRENT: 1.3606
S 1: 1.3452
S 2: 1.3395
S 3: 1.3300
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Market Brief |
The Usd consolidated gains in the Asian session as hawkish comments from US officials and oil falling sharply helped boost the Usd. The EurUsd stayed in a tight range from 1.5775 to 1.5798, while the UsdJpy saw choppy trading between 107.16 to 107.38. The NzdUsd slipped to 0.7750, as traders speculate on an earlier than expected rate cut. The AudUsd also lost ground, despite the higher then expected inflation reading. The US equity market shrugged off poor earnings to close up and Asian equities are following. Commodities still are soft with gold down -1.65% to 945.68oz and wti crude at 127.74, as the declining global growth story gains traction and damped demand of inflation hedges.
It was Fed’s Plosser ultra hawkish comment that added momentum to the Usd buying frenzy yesterday (part of a recent trend of hawkish comments from Fisher, Hoenig, Stern & Lacker but divergent from Bernanke’s stated views). Stating "We will need to reverse course - the exact timing depends on how the economy evolves, but I anticipate the reversal will need to be started sooner rather than later. And I believe it will likely need to begin before either the labor market or the financial markets have completely turned around." The comment “before either the labor market or financial market has completely turned around” was unprecedented, since the Fed has never raised rates while payrolls shown a negative trend. As we stated yesterday in our Asian session, we had expected rhetoric from policy makers to affect FX sentiment in the ultra short term and expect the aggressive Usd buying to reverse intraday.
Australian CPI released today rose quicker than the market had expected by 1.5% q/q vs. 1.2% exp (lifting y/y to 4.5% vs. 4.2% exp). However, the RBA preferred measure rose by q2 1.2% q/q, which was unchanged from previous reading. We expect the RBA to be on hold for the remainder of the year, as moderating growth should help ease inflationary pressures.
The highlight of the European session will be the UK MPC minutes for July. There are mounting signs that the MPC might have slightly shifted towards a growth focus. June’s minutes showed that members had discussed further tightening and, since then, all measures of inflation have increased (ppi, cpi and inflation expectations). However, much of this deterioration was expected. What has been unexpected was the rate of moderation in the real economy and the genuine risk the UK might slip into a recession. We expect Blanchflower to have voted for a cut (as always), but the market might get a surprise from Kate Barker, a good proxy for general sentiment. With the Gbp trading at 1.9900 on yield differentials, any real or perceived shift could lead to a considerable sell-off.
14.00gmt - Fed's Mishkin speaks
16.15gmt - Fed's Kohn speaks
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