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US Session: US Q3 GDP Beats Forecasts, Boosts Risk Appetite
October 29, 2009 5:36 PM CET
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G10 Advancers and Decliners vs USD |
| | NOK | 2.07 |  | | | AUD | 2.05 | | | | NZD | 1.82 | | | | SEK | 1.48 | | | | GBP | 1.28 | | | | CAD | 1.14 | | | | CHF | 0.93 | | | | EUR | 0.90 | | | | DKK | 0.91 | |  | JPY | -0.67 | |
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Global Indexes |
Current Level |
% Change |
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| FTSE 100 Index | 5'140.23 | + 1.18 | | DAX Index | 5'580.87 | + 1.54 | | SMI Index | 6'345.94 | + 1.05 | | S&P 500 Index | 1'059.87 | + 1.65 | | DJIA Index | 9'899.55 | + 1.40 | | Nikkei 225 Futures | 9'900.00 | - 1.79 | | Hang Seng Futures | 21'203.00 | - 2.24 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'045.03 | + 1.65 | | Silver | 16.65 | + 3.13 | | VIX | 25.06 | - 10.21 | | Crude wti | 79.91 | + 3.16 | | USD Index | 75.94 | - 0.69 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Building Permits , % m/m Sep | 4.0 | 1.7 | NZD/21:45 | | Nationwide CPI, % y/y Sep | -2.2 | -2.2 | JPY/23:30 | | Unemployment rate, % Sep | 5.6 | 5.5 | JPY/23:30 | | Fri 30 Oct | - | - | - | | BoJ rate announcement, % Oct | 0.10 | 0.10 | JPY/AM | | GfK consumer confidence, index Oct | -14 | -16 | GBP/00:01 | | Private sector credit % m/m (y/y) Sep | 0.2 (2.0) | 0.1 (2.5) | AUD/00:30 | | Germany: Retail sales, % m/m (y/y) Sep | 1.0 (-2.2) | -2.4(-2.6) | EUR/07:00 | | CPI, % y/y Oct | -0.1 | -0.3 | EUR/10:00 | | KoF leading indicator Oct | 1.16 | 0.85 | CHF/10:30 | | GDP, % m/m (Aug) | 0.1 | 0.0 | CAD/12:30 | | PCE price index, % m/m (y/y) Sep | 0.1 (-0.5) | 0.3 (-0.5) | USD/12:30 | | Core PCE price index, % m/m (y/y) Sep | 0.2 (1.3) | 0.1 (1.3) | USD/12:30 | | Employment cost index, % q/q Q3 | 0.4 | 0.4 | USD/12:30 | | Chicago Purchasing Managers Index Oct | 48.9 | 46.1 | USD/13:45 | | U/M consumer sentiment index Oct F | 70.0 | 69.4 | USD/13:55 |
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Currency Tech |
EURUSD
R 2: 1.5967
R 1: 1.4850
CURRENT: 1.4840
S 1: 1.4684
S 2: 1.4650
GBPUSD
R 2: 1. 6700
R 1: 1.6640
CURRENT: 1.6580
S 1: 1.6450
S 2: 1.6240
USDJPY
R 2: 93.10
R 1: 92.50
CURRENT: 91.35
S 1: 90.75
S 2: 90.10
AUDUSD
R 2: 0.9330
R 1: 0.9220
CURRENT: 0.9160
S 1: 0.8940
S 2: 0.8900
USDCAD
R 2: 1.0965
R 1: 1.0830
CURRENT: 1.0680
S 1: 1.0620
S 2: 1.0500
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Market Brief |
The day’s trading has been dominated by the US Q3 GDP release which convincingly beat expectations with a 3.5% annualized pace of growth vs. expectations for 3.2% (-0.7% last). At first, FX markets seemed tentative in pushing EURUSD higher, but European indices quickly turned positive on the day and US stock markets opened higher, which gave the green light for risk-correlated assets to rally. Commodity currencies (the hardest hit over the last couple of days) and EURUSD were initially the main beneficiaries of the uptick in risk sentiment, but GBPUSD then burst through stops above 1.6484 resistance, flying from 1.6490 to 1.6580 in a matter of seconds, going on to touch a high of 1.6604. EURGBP was whip-lashed from 0.8940 to 0.8985 immediately after the release then down to 0.8910 as GBP surged. In unison with the move in EURUSD and improved global outlook, commodities have recovered broadly, with gold rallying back ABOVE $1045 and crude oil managing to regain $80 levels.
The growth in Q3 does indeed look encouraging, but should of course be viewed with the disclaimer that gains have been made under the glow of the fiscal stimulus package, and many of these measures cannot be relied upon going forward. Nevertheless, the number should be viewed as a positive step for the global recovery and we believe will sustain risk appetite in the coming weeks. Although overshadowed by the GDP number, we also saw the latest US jobless claims data which highlighted a greater than expected drop in continuing claims, and a modest downtick in initial claims from last week. With unemployment standing at 9.8% these numbers will have done little to change the market view of the labour market, but next week we can look forward to the more significant ADP Report and Non-Farm Payrolls.
The earlier events of the day included Norway Retail Sales (Sep) which posted a dreadful -1.1% figure MoM against expectations for a 0.4% rise. The 0.3% figure from the prior month was also revised down to 0.1%, but NOK managed to hold its ground well around 5.7000 levels and has been one of the biggest beneficiaries of risk appetite this afternoon; USDNOK currently 5.6300. The other major release of the morning, Eurozone Consumer Confidence (Oct), was exactly in line with forecasts at -18 (slightly better than last month’s -19), but had no effect on the FX markets.
Coming up on Friday we will have a slew of data out of Japan including CPI, Unemployment Rate and the BoJ Rate Meeting, but as usual it seems unlikely that the Japanese data will affect JPY significantly. More influential will be the statement and rhetoric following the BoJ meeting that could refer to the currency’s strength; however given that JPY has weakened from its levels earlier in the month we feel the chances of strong verbal intervention are lower. In the European session, focus will be on Eurozone CPI and Unemployment, whilst the US session highlights include Canadian GDP, US PCE, Chicago PMI and U.Mich. Consumer Confidence.
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European Session: Risk Aversion Puts EURUSD And Gold On The Ropes
October 29, 2009 9:04 AM CET
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G10 Advancers and Decliners vs USD |
| | NOK | 0.75 | | | | AUD | 0.49 | | | | NZD | 0.42 | | | | CAD | 0.39 | | | | GBP | 0.37 | | | | SEK | 0.30 | | | | DKK | 0.20 | | | | EUR | 0.20 | | | | CHF | 0.18 | | | | JPY | 0.14 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 9'891.10 | - 1.83 | | Hang Seng Index | 21'190.40 | - 2.62 | | Shanghai Futures | 2'960.47 | - 2.34 | | FTSE 100 Index | 5'080.42 | - 2.32 | | DAX Index | 5'496.27 | - 2.46 | | SMI Index | 6'279.94 | - 1.38 | | S&P future | 1'041.50 | + 0.28 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'032.43 | + 0.42 | | Silver | 16.26 | + 0.68 | | VIX | 27.91 | + 12.40 | | Crude wti | 77.31 | - 0.19 | | USD Index | 76.32 | - 0.19 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Germany: Unemployment rate sa, % Oct | 8.3 | 8.2 | EUR/08:55 | | Retail sales, m/m Sep | 0.4 | 0.3 | NOK/10:00 | | Unemployment rate, % Oct | 2.7 | 2.7 | NOK/10:00 | | Consumer confidence, index Oct | -18 | -19 | EUR/10:00 | | Real GDP, % q/q saar (y/y) Q3 1st | 3.1 (-2.4) | -0.7(-3.8) | USD/12:30 | | Initial jobless claims, thous 24-Oct | 523 | 531 | USD/12:30 | | Continuing claims, thous 17-Oct | 5905 | 5923 | USD/12:30 |
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Currency Tech |
AUDUSD
R 2: 0.9330
R 1: 0.9220
CURRENT: 0.9010
S 1: 0.8940
S 2: 0.8900
USDCAD
R 2: 1.0965
R 1: 1.0830
CURRENT: 1.0760
S 1: 1.0620
S 2: 1.0500
EURJPY
R 2: 138.50
R 1: 137.37
CURRENT: 133.55
S 1: 133.30
S 2: 132.75
USDMXN
R 2: 13.455
R 1: 13.386
CURRENT: 13.279
S 1: 13.025
S 2: 12.855
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Market Brief |
Equities traded heavily throughout the day yesterday, but it took a large miss in forecasts for US New Home Sales (-3.6% MoM vs. +2.6% expected) to add the catalyst for a USD rally late in the session. The numbers are particularly worrying considering that these figures reflect the performance of the housing market under stimulus, and considering the recent speculation that first-time homebuyer tax credits may be allowed to expire imminently, the prospect is not encouraging. EURUSD had spent the day stubbornly underpinned by support at 1.4750-60, but gradually as the wave of risk aversion took hold it collapsed to touch a low of 1.4683 overnight. Commodity currencies (the recent outperformers) were hit particularly hard; AUDUSD was down over 2% on the day to 0.8980, whilst USDNOK was down around 1.7% at 5.7400 despite the earlier rate hike and hawkish statement. NZDUSD suffered the most brutal sell-off, down over 3% on the day (0.7200 last) as there were few supportive factors to emerge from the RBNZ meeting. As expected, the central bank kept rates on hold at 2.5%, but they conceded very little in shifting from a dovish bias to a neutral stance. Wary of the effect of a strong NZD on the export-led economy, they were extremely careful to anchor expectations for no rate hikes “until the second half of 2010”. Given the much improved data over the last month and uptick in inflation in the 3rd quarter, it is likely this subdued assessment disappointed many speculators.
This morning the Asian equity markets are universally in negative territory, and futures are pointing to a lower open across Europe. The USD’s recent strength has left gold looking extremely vulnerable around its pivotal $1030 level; so far it has dipped to a low of $1026 in the past 24 hours ($1032 last), and silver has also suffered an aggressively sell-off to $16.12 lows ($16.25 last)
Looking ahead to today’s session there are a number of further key releases. First up will be Norwegian Retail Sales (Sep), where the market is looking for a 0.4% increase MoM after the 0.3% gain last month. The spate of impressive figures from Norway in the last few months has pushed ambitions high, and this number is likely follow suit. However, if there is a downside miss in the numbers, NOK could suffer acutely as positioning and market sentiment is primed for an unwind in commodity currencies today.
The other major release of the European session will be Eurozone Consumer Confidence (-18 expected, -19 prior); given sentiment we believe the bias strongly favours EURUSD weakness as better-than-expected figure will be unlikely to present a compelling case for buying EUR, but a weak number will almost certainly add fuel to the risk aversion fire.
Of course the centre-piece of the day’s releases will come in the US session as the US Q3 GDP first reading is revealed. Markets are still optimistic that the end of recession is nigh, but given the shock miss in UK GDP last week, there is certain to be some caution attached to forecasts. Obviously the prospect of a disappointing number will have a devastating effect on risk correlated trades and prompt strong USD buying, but markets should also consider the prospect that improvements in the US outlook may well beget the end of stimulus measures and indeed change the Fed’s attitude to low-for-long interest rate policy. A situation which would eventually also favour an unwind of USD carry trades.
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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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