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Early US Session-Trichet Reignites the Dollar Rally
August 07, 2008 5:18 PM CEST
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G10 Advancers and Decliners vs USD |
| | Jpy | 0.26 |  | | | Nok | 0.05 | |  | Cad | -0.03 | | | Sek | -0.06 | | | Chf | -0.08 | | | Aud | -0.14 | | | Gbp | -0.22 | | | Dkk | -0.25 | | | Eur | -0.27 | | | Nzd | -0.47 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA Index | 11,505.00 | - 1.08 | | NASDAQ 100 Index | 1,887.50 | - 0.46 | | S&P 500 Index | 1,275.50 | - 0.95 | | FTSE futures | 5,478.00 | - 0.28 | | CAC 40 Index | 4,460.50 | + 0.16 | | DAX Index | 6,573.00 | - 0.45 | | SMI Index | 7,178.00 | - 0.55 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 120.63 | + 1.70 | | Gold | 874.16 | - 0.64 | | Silver | 16.45 | - 0.66 | | USD Index | 74.28 | + 0.05 | | VIX | 20.90 | + 3.31 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| No Major Events Scheduled | | | |
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Currency Tech |
AUDUSD
R 3: 0.9347
R 2: 0.9301
R 1: 0.9206
CURRENT: 0.9122
S 1: 0.9032
S 2: 0.9230
S 3: 0.8979
EURJPY
R 3: 169.97
R 2: 169.73
R 1: 169.33
CURRENT: 169.38
S 1: 167.29
S 2: 166.86
S 3: 166.01
USDSGD
R 3: 1.3983
R 2: 1.3940
R 1: 1.3850
CURRENT: 1.3822
S 1: 1.3767
S 2: 1.3716
S 3: 1.3651
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Market Brief |
The Usd loss ground in the European session, but picked up momentum again based on Dovish comments from Trichet. The EurUsd traded through previous support to the high 1.53 level, while the UsdJpy fell a bit over 50 pips to the low 109 price. The GbpUsd continues to trade with a 1.94 handle, off 10 pips from yesterday’s close. Equity markets opened significantly lower, with the Dow in particular down over 150 pts. European indexes are trading marginally higher following commentary by ECB President Trichet. Bond markets saw heavy buying in govt. securities with US treasury yields tighter by as much as 10bps. The shift in market sentiment seems to be closely tied to the price of oil, which returned to a level slightly above 120.
Industrial production in Italy came in lower than expected at 0.1% vs. the consensus figure of 0.2%. In addition, German industrial production failed to meet expectations at 0.2% vs. 0.8% est. which lends to the weakening growth story in the Eurozone. The Euro retracted early gains from the uptick in oil, due to dovish comments from Trichet. The ECB focus is expected to shift more towards growth and the market may start to price in a rate cut from the central bank in their next meeting. Halifax HPI was released at -1.7% vs. -1.5% exp, further solidifying the view that the housing market is moving towards a recessionary state. We maintain our target range for the cable between 1.95-1.93 in the near-term.
Jobless claims rose 7k to 455k, which was higher than the estimated 425k. Pending home sales are scheduled to be released later today (22:00). The lackluster economic data paired with higher oil prices could be a serious break in the recent dollar rally. We saw a sharp move to the downside early in the trading session, which reversed mostly on the dovish commentary from Trichet and the ECB. The EurUsd is likely to stay rangebound between 1.53-1.55 in the near-term, considering there are no major disruptions from the credit markets in the form of additional bank failures.
Risk Disclaimer:
Although every investment involves some degree of risk, the risk of loss in trading off-exchange forex contracts can be substantial. Therefore if you are considering trading in this market, you should be aware of the risks associated with this product so you can make an informed decision prior to investing
The material presented here is not to be construed as trading advice or strategy. ACMUSA makes a strong effort to use reliable, expansive information, but we make no representation that it is accurate or complete. In addition, we have no obligation to notify you when opinions or data in this material change.
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Asian Session - Up Next BoE & ECB
August 07, 2008 5:20 PM CEST
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G10 Advancers and Decliners vs USD |
| | SEK | 0.47 | | | | NOK | 0.44 | | | | CHF | 0.40 | | | | DKK | 0.31 | | | | EUR | 0.30 | | | | AUD | 0.24 | | | | CAD | 0.12 | | | | GBP | 0.09 | | | | NZD | 0.03 | | | JPY | -0.03 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 13,124.99 | - 0.98 | | Hang Seng Index | 22,079.51 | + 0.59 | | Shanghai Index | 2,731.32 | + 0.43 | | FTSE futures | 5,493.50 | + 0.78 | | DAX futures | 6,586.00 | - 0.25 | | SMI Futures | 7,218.00 | + 0.11 | | DJIA futures | 11,574.00 | - 0.49 |
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World Markets |
Current Level |
% Change |
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| Gold | 884.68 | + 0.55 | | Silver | 16.64 | + 0.48 | | VIX | 20.32 | - 4.30 | | Crude wti | 119.08 | + 0.42 | | USD Index | 74.12 | - 0.17 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Industrial Production (Jun) s.a. | 0.8%(1.9% | -2.4%(+0.8 | GE / 10.00 | | BoE Interest Rate Announcement | 5.00% | 5.00% | UK / 11.00 | | ECB Interest Rate Announcement | 4.00% | 4.00% | EC / 11.45 | | Initial Jobless Claims (Aug 2nd) | 425k | 448k | US / 12.30 | | Pending Home Sales (Jun) | -1.0% | -4.7% | US / 14.00 |
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Currency Tech |
AUDUSD
R 3: 0.9347
R 2: 0.9301
R 1: 0.9206
CURRENT: 0.9122
S 1: 0.9032
S 2: 0.9230
S 3: 0.8979
EURJPY
R 3: 169.97
R 2: 169.73
R 1: 169.33
CURRENT: 169.38
S 1: 167.29
S 2: 166.86
S 3: 166.01
USDSGD
R 3: 1.3983
R 2: 1.3940
R 1: 1.3850
CURRENT: 1.3822
S 1: 1.3767
S 2: 1.3716
S 3: 1.3651
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Market Brief |
The Usd was vaguely weaker during the Asian Session, as participants seem to be content with their positions ahead of the critical BoE & ECB rate announcement today. The EurUsd traded higher to 1.5451 from 1.5401, while the UsdJpy traded up to 109.90 (7-month highs), on rumors of option barriers triggered on the break of 108.55. With no surprise, the Jpy fueled carry traded continued to see strong gains as the EurJpy climbed to an August. high at 169.43 and the “King of Carry”, the TryJpy, peaked at 94.45. The commodity bloc found some relief in Asian trading, with the AudUsd climbing from 0.9080 to 0.9120, while NzdUsd reversed earlier gains slipping from 0.7218 to 0.7175. We are seeing some pullback in EM appetite, with the UsdMxn looking to retest the 10.00 resistance and the EurPln continued to rally off 3.200 support to 3.2433. Wti crude is slightly frimer at $118.89bll, as well as gold at $884.15oz. Wall Street closed up and regional Asian stock markets are mixed, with Nikkei leading the losers down -0.93%. European stock futures are pointing to a mixed open.
The BoE & ECB rate announcement will dominate the European session.
In the UK, the BoE is expected to hold rates at 5.00%. Since the MPC is unlikely to issue a accompanying statement, market reaction will be limited. Recentley the market has witnessed a string of gloomy economic data not seen since the last recession. However, the tone of the last meeting minutes suggest that rates are more likely to go up to combat rising inflation than to fall….but that was before this last more economic deterioration and financial turmoil. We are expecting Besley to call for a hike and might find some support, given that the Inflation Report will be released this month. But with this commodity prices easing and a slight dropping in public’s inflation expectations, the BoE might be getting some relief. But right now, showing a “stiff upper lip” in spite of deteriorating fundamentals might be enough to anchor inflation expectations.
On the continent, the ECB is widely expected to hold rates at 4.25%. We doubt, given the clear signs of economic deterioration and headline inflation expected to fall with easing commodity prices, that a move upward would be prudent. Trichet will have to stick with the usual hawkish rhetoric. There is significant risk that this month’s statement will put greater emphasis on the slowing growth story (again helped by declining commodity prices), which the market will perceive as dovish and as the reconsideration of the “no bais” mindset.
Risk Disclaimer
Although every investment involves some degree of risk, the risk of loss in trading off-exchange forex contracts can be substantial. Therefore if you are considering trading in this market, you should be aware of the risks associated with this product so you can make an informed decision prior to investing. The material presented here is not an offer to buy or sell any security/instrument or to participate in any trading strategy. ACMUSA and/or its employees not involved in the preparation of this material may have investments in the instruments mentioned in this material, and may trade them in a different fashion from those discussed in the material. ACMUSA makes a strong effort to use reliable, expansive information, but we make no representation that it is accurate or complete. In addition, we have no obligation to notify you when opinions or data in this material change.
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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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