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US Session: Financial Markets Dip and the Gbp Led the Drop
January 20, 2009 11:51 PM CET
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G10 Advancers and Decliners vs USD |
| | Jpy | 0.02 |  |  | Cad | -0.02 | | | Dkk | -0.04 | | | Chf | -0.05 | | | Eur | -0.05 | | | Nok | -0.06 | | | Nzd | -0.10 | | | Aud | -0.16 | | | Sek | -0.17 | | | Gbp | -0.36 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA futures | 7,942.00 | - 0.04 | | S&P future | 805.60 | - 0.05 | | Nasdaq futures | 1,144.75 | - 0.24 | | FTSE futures | 4,032.00 | - 1.01 | | CAC futures | 2,926.00 | - 2.27 | | DAX Index | 4,240.50 | - 1.89 | | SMI Futures | 5,246.00 | - 1.34 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 38.74 | + 6.11 | | Gold | 857.25 | + 2.55 | | Silver | 11.18 | + 0.01 | | USD Index | 86.22 | + 1.76 | | VIX | 56.65 | + 22.86 |
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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: 0.7142
R 2: 0.7049
R 1: 0.6840
CURRENT: 0.6626
S 1: 0.6538
S 2: 0.6490
S 3: 0.6294
EURJPY
R 3: 126.50
R 2: 125.28
R 1: 122.15
CURRENT: 117.72
S 1: 116.23
S 2. 115.88
S 3: 114.40
USDSGD
R 3: 1.5265
R 2: 1.5115
R 1: 1.5070
CURRENT: 1.5057
S 1: 1.4805
S 2: 1.4760
S 3: 1.4675
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Market Brief |
Dollar Strength overwhelmed the majors posting across the G10, with the exception of the Yen. The EurUsd declined roughly 200pips trading through previous support to high range of 1.28, while the UsdJpy fell nearly 100pips settling a bit under 90. The GbpUsd suffered massive losses, it collapsed 550pips settling at a new range between 1.37‐1.38. Stocks ended at its lowest levels on an inauguration day, we are not convinced that this was a direct reaction to the change in administration, but certainly marks the challenges ahead for Obama. European equities also closed lower, which was consistent with the worsening economic conditions and lack of risk appetite in the marketplace. Bond yields were mixed in the US with the 2yr testing 0.7% at its tightest levels. Eurobonds were also weaker, with the UK, Italian, and Spanish 10yr rates all rising on concerns that sovereign credit is losing viability. Commodities gained in both the energy and precious metals sector, gold rose to $857oz and oil retuned to $40bbl.
Spain’s long‐term debt rating was downgraded from AAA to AA+, sparking an unwinding in Eurobonds. This action serves as evidence that components of the Eurozone economy are weakening, and the ECB may need to take aggressive action to prevent a widespread decline in EU growth. The Euro sold off on this news as expected and in line with both risk aversion, as well as overall market fundamentals. In the UK, govt. officials are scrambling to deploy monetary policy mechanism to create liquidity, and also extreme measures like majority stakes in large banking institutions. Investors are awaiting the nationalization of RBS, and as well as further activity in the newly established facility to purchase “high quality private assets.” Rumors are looming on the street that UK paper is under increased scrutiny, and may face a downgrade action by one of the major rating agencies. Price action in the Sterling was reflects the degree of confidence behind the BoE to effectively resolve the crisis.
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Asian Session - President-Elect Barack Obama Inauguration
January 20, 2009 10:22 AM CET
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G10 Advancers and Decliners vs USD |
| | GBP | 3.51 | | | JPY | -0.35 | | | CAD | -0.46 | | | SEK | -1.09 | | | CHF | -1.17 | | | EUR | -1.29 | | | DKK | -1.32 | | | AUD | -1.45 | | | NOK | -1.75 | | | NZD | -2.37 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 8,065.79 | - 2.31 | | Hang Seng Index | 12,959.77 | - 2.85 | | Shanghai Index | 1,994.11 | + 0.37 | | FTSE 100 Index | 4,123.81 | + 0.37 | | DAX Index | 2,997.22 | + 0.25 | | SMI Index | 5,393.51 | + 0.22 | | DJIA futures | 8,177.00 | - 0.80 |
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World Markets |
Current Level |
% Change |
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| Gold | 829.33 | - 0.78 | | Silver | 11.05 | - 1.17 | | VIX | 46.11 | - 9.58 | | Crude wti | 33.32 | - 0.80 | | USD Index | 85.79 | + 1.26 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| CPI, % m/m | -0.9,2.6Y | -0.1,4.1Y | UK / 9.30 | | CPI ex food, energy, alcohol & tobacco, % m/m | -- | 0.2,2.0Y | UK / 9.30 | | RPI, % m/m | -1.5,0.9 Y | -0.8,3.0Y | UK / 9.30 | | ZEW economic expectations index | -42.0 | -45.2 | GE / 10.00 | | Manufacturing shipments, % m/m | -0.5 | -0.5 | CA / 13.30 | | BoC interest rates announcement, % | 1.00% | 1.50% | CA / 1400 | | Inauguration of President-elect Obama | -- | -- | US / 17.00 |
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Currency Tech |
AUDUSD
R 3: 0.7142
R 2: 0.7049
R 1: 0.6840
CURRENT: 0.6626
S 1: 0.6538
S 2: 0.6490
S 3: 0.6294
EURJPY
R 3: 126.50
R 2: 125.28
R 1: 122.15
CURRENT: 117.72
S 1: 116.23
S 2. 115.88
S 3: 114.40
USDSGD
R 3: 1.5265
R 2: 1.5115
R 1: 1.5070
CURRENT: 1.5057
S 1: 1.4805
S 2: 1.4760
S 3: 1.4675
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Market Brief |
The Usd strengthened in the Asian Session, as concerns over the longer-term health of the UK banking sector paired back risk appetite. In addition, Spain 's sovereign ratings downgrade (AAA to AA+) by S&P caused significant pressure on the EurUsd. The EurUsd traded down from 1.3350 to 1.2943 session lows, while the UsdJpy was stable, trading between 90.70 and 90.10. Asian regional indexes are trading lower, with only Shanghai bucking the trend. The general sentiment is that equities will face a challenging day, as UK bailouts continue and historically the DJIA closes lower on inauguration day. Commodities traded lower, with crude wti falling below $34.00bll. The rally in risk appetite at the start of 2009 has undoubtedly grinded to a halt. However, this time governments have heard the warning and have reacted hastily to avoid a further disintegration in market confidence. The failure of sentiment to briefly turn positive will weigh on our ultra short term forecast for a correction in the Usd strength and we again turn our sights on EurUsd at 1.2400
The downgrade in Spain 's long term debt to AA+ has been expected, since the country was placed on the rating agencies negative watch list a week ago. However, the move illustrates the divergence of economic activity within the Eurozone economies and will pressure the ECB for more aggressive action on rates and translate in continued Euro weakness. We are currently anticipating rates to move close to zero in 2009, as all factors point toward continued deterioration in Eurozone economies.
The UK government announced yesterday new actions meant at improving access to credit in the UK 's financial system. The Treasury has announced a new state-controlled insurance company focused on protecting bank customers in case of default. Other details include a increased in the goverments ownership in a major bank, and a new £100bn mortgage guarantee scheme to underwrite lending between financial institutions & banks.
The obvious highlight of the day will be US. President-elect Barack Obama inauguration at 12:00est.
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