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US Session: Financial Markets Turn Seeing Changes in Risk Aversion Trade
January 29, 2009 11:20 PM CET
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G10 Advancers and Decliners vs USD |
| | Jpy | 0.48 |  | | | Gbp | 0.46 | |  | Chf | -0.11 | | | Cad | -1.04 | | | Dkk | -1.53 | | | Eur | -1.54 | | | Sek | -1.89 | | | Nok | -1.90 | | | Aud | -1.97 | | | Nzd | -2.11 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA futures | 8,100.00 | - 2.67 | | S&P future | 841.50 | - 3.44 | | Nasdaq futures | 1,200.50 | - 2.50 | | FTSE futures | 4,107.00 | - 3.60 | | CAC futures | 2,971.00 | - 3.40 | | DAX futures | 4,382.50 | - 3.11 | | SMI Futures | 5,200.00 | - 2.84 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 41.53 | - 1.49 | | Gold | 908.70 | + 2.38 | | Silver | 12.38 | + 3.04 | | USD Index | 85.28 | + 0.72 | | VIX | 42.72 | + 7.72 |
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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: 0.7048
R 2: 0.6844
R 1: 0.6732
CURRENT: 0.6568
S 1: 0.6495
S 2: 0.6418
S 3: 0.6291
EURJPY
R 3: 125.28
R 2: 122.17
R 1: 119.56
CURRENT: 117.89
S 1: 116.14
S 2: 113.75
S 3: 112.52
USDSGD
R 3: 1.5336
R 2: 1.5249
R 1: 1.5120
CURRENT: 1.5063
S 1: 1.4924
S 2: 1.4809
S 3: 1.4760
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Market Brief |
The financial markets were bombarded with a series of commentary from the BoE and ECB. The dollar was mixed against the major showing a slight breakage in the risk aversion trade that dominated FX off and on over the last several months. The EurUsd collapsed over 200pips through previous support of 1.30, while the UsdJpy slipped roughly 30pips to the high range of 89. The GbpUsd picked up moderate gains of 60pips to 1.43, extending its attempt to regain ground after last week’s severe correction. Equities suffered in the US down 2.7% or 226pts on the Dow, the FTSE led the way in the European session losing 2.45% or 105pts. Bond yields saw tremendous gains at the 10 and 30yr portions of the curve, both of which higher by 19bps on strong selling. This phenomenon trumps investors whereas stocks selloff in a move away from risk, but bonds which are considered secure assets follow suit. The relationship between equities and bonds in today’s session led to a strong rally in gold proving that investors favored the precious metal as alternative choice to govt. debt. Commodities were mixed with oil off 1.57% at $41bbl, and gold up 2.3% at $907oz.
ECB President Trichet voiced a different perspective on their approach towards monetary policy. The central bank has been very resistant in regards to any quantitative easing providing a level of false support for the currency. We may a continued correction in the price of the Euro, this has been consistent with any currency whose central bank noted the possibility of quantitative easing. Monetary policy officials are beginning to yield to severe economic conditions and growing pessimism about the outlook for the region. We see further downside in the Euro, and a rising risk premium on the currency as the crisis deepens. The BoE also released statement which drove markets into varying directions, but the cable collected decent gains, showing the markets bias to the new reform plans. Alistair Darling warned that “Any further quantitative easing will require his consent.” In addition to their tough rhetoric regarding monetary policy, Mervyn King announced a new facility to purchase what he calls “strictly high quality assets.” The new investment vehicle will be financed through 3M Treasury bills, as opposed to Gilts sending gold higher on an anticipated squeeze in US govt. debt.
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Asian Session – FOMC Looking Towards Expansion
January 29, 2009 11:14 AM CET
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G10 Advancers and Decliners vs USD |
| JPY | -0.39 | | | NOK | -0.80 | | | CHF | -0.92 | | | CAD | -0.99 | | | GBP | -1.09 | | | SEK | -1.31 | | | EUR | -1.47 | | | DKK | -1.49 | | | AUD | -2.14 | | | NZD | -3.74 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 8,251.24 | + 1.78 | | Hang Seng Index | 13,154.43 | + 4.57 | | FTSE 100 Index | 4,202.05 | - 2.16 | | CAC 40 Index | 3,015.48 | - 1.96 | | DAX Index | 4,434.58 | - 1.86 | | SMI Index | 5,302.84 | - 2.12 | | DJIA futures | 8,211.00 | - 1.33 |
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World Markets |
Current Level |
% Change |
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| Gold | 878.92 | - 0.97 | | Silver | 11.71 | - 2.49 | | VIX | 39.66 | - 6.13 | | Crude wti | 42.02 | - 0.33 | | USD Index | 85.09 | + 0.48 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Consumer confidence, index Jan | -31 | -30 | EZ / 10.00 | | Industrial confidence, index Jan | -34 | -33 | EZ / 10.00 | | Durable goods new orders, % m/m Dec | -2.0,-18.8 | -1.5,-13.7 | US / 13.30 | | Initial jobless claims, thous (4wk mvg avg) 24-Jan | -- | 589 (519) | US / 13.30 | | New home sales, thous. saar Dec | 400 | 407 | US / 15.00 |
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Currency Tech |
AUDUSD
R 3: 0.7048
R 2: 0.6844
R 1: 0.6732
CURRENT: 0.6568
S 1: 0.6495
S 2: 0.6418
S 3: 0.6291
EURJPY
R 3: 125.28
R 2: 122.17
R 1: 119.56
CURRENT: 117.89
S 1: 116.14
S 2: 113.75
S 3: 112.52
USDSGD
R 3: 1.5336
R 2: 1.5249
R 1: 1.5120
CURRENT: 1.5063
S 1: 1.4924
S 2: 1.4809
S 3: 1.4760
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Market Brief |
The Usd was stronger in the Asian session, despite a rally in equity markets. The EurUsd traded sharply lower from 1.3285 to 1.3042, while the UsdJpy traded between 90.60 and 89.67. The Nzd came under significant selling pressure with NzdUsd falling from 0.5375 to 0.5131, as the RBNZ cut rates more than expected. Asian equity markets closed higher, but European indexes are currently broadly weaker. Commodity prices continue to decline, with gold falling 1.0% and wti crude falling -1.1%. Despite tentative signs of stabilization in the financial system and global economy, we still expect risk aversion to be the dominating theme, which will support the Usd, Jpy and to a lesser extent Chf.
As was widely expected, the Fed held rates steady within a 0%-0.25% target range. In the accompanying statement, the Fed noted it would keep the benchmark rate "exceptionally low" for a protracted period, while noting "the focus of the Committee's policy is to support the functioning of financial markets and stimulate the economy through open market operations and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high level." In addition, the FOMC comment directly referencing the purchasing long-term Treasury securities helped cement the markets view that the Fed is the most proactive central bank in dealing with the crisis. And in US politics, President Obama's $825bln stimulus plan passed the US House of Representatives. However, the vote was strictly along partisan lines and pundits expect the fight in the Senate to be much tougher (Democrats still lack a filibuster-proof majority).
In New Zealand, the RBNZ cut rates by 150bp to 3.50% (a record low), which were 50bp more than what was widely expected. The accompanying statement and press conference were overly dovish. The main reason for the aggressive easing was the deteriorating global economic environment and the central bank also cited dwindling inflationary pressures. RBNZ Governor Bollard made it very clear that additional cuts would be coming and stated "the RBNZ has plenty of room to move if needed".
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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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