Daily Forex Snapshots

Bernanke Spooks Markets With Strong Dollar Rhetoric

November 16, 2009 6:46 PM CET

G10 Advancers and Decliners vs USD

	GBP	0.63
	NOK	0.56
	NZD	0.38
	CAD	0.33
	SEK	0.29
	AUD	0.26
	JPY	0.22
	DKK	0.15
	EUR	0.15
	CHF	0.14

Global Indexes

Current Level

% Change

FTSE 100 Index	5'382.67	+ 1.63
DAX Index	5'804.82	+ 2.07
SMI Index	6'422.81	+ 1.13
S&P 500 Index	1'108.28	+ 1.35
DJIA Index	10'382.25	+ 1.09
Nikkei 225 Futures	9'820.00	+ 0.72
Hang Seng Futures	22'846.00	+ 1.58

World Markets

Current Level

% Change

Gold	1'131.33	+ 1.13
Silver	18.18	+ 4.24
VIX	23.24	- 0.51
Crude wti	78.37	+ 2.65
USD Index	75.24	- 0.13

Todays Calender

Estimates

Country / GMT

Tue 17th Nov	---	---	---
Adjusted real retail sales, % y/y Sep	0.5	-1.0	CHF/08:15
CPI, % m/m (y/y) Oct	0.1 (1.5)	0.0 (1.1)	GBP/09:10
Trade balance, € bn (sa)Sep	---	1.0	EUR/10:00
PPI, % m/m (y/y) Oct	0.5 (-1.7)	0.6 (-4.8)	USD/13:30
Industrial production, % m/m Oct	0.4	0.7	USD/14:15
Capacity utilization, % Oct	70.8	70.5	USD/14:15

Currency Tech

EURUSD
R 2: 1.5060
R 1: 1.5045
CURRENT: 1.4930
S 1: 1.4820
S 2: 1.4785

GBPUSD
R 2: 1.6845
R 1: 1.6795
CURRENT: 1.6785
S 1: 1.6515
S 2: 1.6400

USDJPY
R 2: 90.85
R 1: 90.60
CURRENT: 89.40
S 1: 89.60
S 2: 89.25

AUDUSD
R 2: 0.9475
R 1: 0.9370
CURRENT: 0.9355
S 1: 0.9210
S 2: 0.9195

USDCAD
R 2: 1.0780
R 1: 1.0603
CURRENT: 1.0490
S 1: 1.0415
S 2: 1.0375

Market Brief

Currency markets have been stuck in relatively tight ranges for most of the day as strong equity market performances across Europe and the US negated slightly disappointing economic data releases. Gold took advantage of the positive risk sentiment to power to new highs at $1136.70, a staggering 8.8% gain month-to-date, however in contrast (perhaps highlighting the breakdown in the correlation) EURUSD has spent almost the entire European session in a 50 pip range between 1.4940-1.4990. Eurozone CPI slightly missed estimates at 0.2% MoM (vs. 0.3% expected), but annualized figures were broadly in line with consensus at -0.1% YoY. The directionless price-action continued into the US session where the main release of the day was US Retail Sales for October. The 1.4% MoM print was significantly higher than forecasts for a 0.9% gain, but countering this positive surprise was the negative surprise that last month’s -1.5% reading had been revised lower to -2.3%. The knee-jerk 20 pip sell-off in EURUSD was quickly reversed, but subsequent comments from Ben Bernanke where he stated that Fed policy would ensure the “dollar is strong” caused EURUSD to plunge 90 pips to 1.4880 in a knee-jerk sell-off, but has since recovered to 1.4940 levels.

The downward pressure on USDCHF has ensured EURCHF continues to test major support at 1.5080-90; it seems the repeated and consistent profitability of bets on SNB intervention has attracted significant attention, and we may now be facing the end of the party if key support fails and we do not see the central bank stepping in to weaken the CHF and rescue EURCHF longs.

Japanese GDP Growth Accelerates

November 16, 2009 8:57 AM CET

G10 Advancers and Decliners vs USD

	NOK	0.90
	SEK	0.79
	DKK	0.60
	EUR	0.59
	CHF	0.58
	CAD	0.56
	GBP	0.44
	AUD	0.25
	NZD	0.19
	JPY	0.09

Global Indexes

Current Level

% Change

Nikkei 225 Index	9'791.18	+ 0.21
Hang Seng Index	22'955.11	+ 1.78
Shanghai Index	3'275.05	+ 2.74
FTSE 100 Index	5'296.38	+ 0.38
DAX Index	5'686.83	+ 0.40
SMI Index	6'351.08	- 0.07
S&P future	1'101.30	+ 0.91

World Markets

Current Level

% Change

Gold	1'133.07	+ 1.28
Silver	17.83	+ 2.24
VIX	23.36	- 3.63
Crude wti	77.33	+ 1.28
USD Index	74.93	- 0.54

Todays Calender

Estimates

Country / GMT

HICP, % m/m (y/y) Oct	0.3 (-0.1)	0.0 (-0.3)	EUR/10:00
Retail sales, % m/m Oct	0.9	-1.5	USD/13:30
Empire State manufacturing index Nov	30.00	34.57	USD/13:30
Business inventories, % m/m Sep	-0.7	-1.5	USD/15:00

Currency Tech

AUDUSD
R 2: 0.9475
R 1: 0.9370
CURRENT: 0.9345
S 1: 0.9210
S 2: 0.9195

USDCAD
R 2: 1.0780
R 1: 1.0603
CURRENT: 1.0465
S 1: 1.0415
S 2: 1.0375

EURJPY
R 2: 135.39
R 1: 135.03
CURRENT: 134.25
S 1: 133.60
S 2: 133.20

USDMXN
R 2: 13.195
R 1: 13.100
CURRENT: 13.017
S 1: 12.985
S 2: 12.925

Market Brief

The USD begins another week on the back foot as momentum from Friday’s post-U.Mich sell-off continues and Asian equities have started the session off with strong gains. The buoyant sentiment across Asian markets has been fuelled by Japan’s Q3 GDP figures which revealed the economy grew by an annualized pace of 4.8%, considerably higher than the 2.9% anticipated, and indeed the fastest pace of growth since Q1 2007. USDJPY has so far touched lows of 89.39, but for now further JPY strength is being constrained by buying interesting around 89.00, coupled with the fact the pair has been notably detached from participation in broader USD sell-offs as a general rule.

Meanwhile, gold headlines continue to simmer as the price surges to dizzying heights above $1132; making startling month-to-date gains in November of 8.5%. The rally has pulled silver back from the brink of breaking downside support at $17.00 on Friday, and allowed the metal to surge in unison back to 17.70 levels at the time of writing. The sheer pace of the rally in precious metals makes for precarious long entry, however we still strongly discourage shorting gold just yet given the lack of any protective upside technical levels.

Looking ahead to today’s session we await European CPI figures for October where markets are anticipating a 0.3% gain MoM after last month’s flat reading. With the ECB governing council exclusively concerned with maintaining price stability, this reading will be significant; especially if there is an upside surprise that could nudge the YoY reading out of negative territory (-0.1% expected, -0.3% prior). Recent rhetoric from members has included González-Páramo’s predictions that Eurozone CPI could rise around 1% next year, and that rate hikes were still possible even with some member states still in recession.

This afternoon’s key event will be US Retail Sales, where consensus estimates look for a 0.9% gain in October after last month’s -1.5% reading (reflecting the expiry of the cash-for-clunkers stimulus plan). The behavior of FX markets to Friday’s disappointing U.Mich suggests that poor US data is now a catalyst to further USD selling; a reversal of the pattern we have grown accustomed to where poor US data is supportive of USD. We continue to feel that from here, the balance of risks are supportive of further EURUSD gains on the back of a weakening USD, and expect the pair to regain 1.5000 levels and re-test 1.5060 resistance in due course.

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