Daily Forex Snapshots

Risk Appetite Recovers But Sovereign Debt Concerns Still Simmer

November 27, 2009 5:42 PM CET

G10 Advancers and Decliners vs USD

	SEK	-0.02
	GBP	-0.18
	JPY	-0.32
	CAD	-0.32
	EUR	-0.33
	DKK	-0.35
	CHF	-0.35
	NOK	-0.40
	AUD	-0.51
	NZD	-0.70

Global Indexes

Current Level

% Change

FTSE 100 Index	5'251.76	+ 1.11
DAX Index	5'693.89	+ 1.42
SMI Index	6'344.52	+ 0.97
S&P 500 Index	1'094.95	- 1.41
DJIA Index	10'325.57	- 1.33
Nikkei 225 Futures	9'140.00	- 2.66
Hang Seng Futures	21'413.00	- 3.45

World Markets

Current Level

% Change

Gold	1'177.43	- 0.92
Silver	18.39	- 1.49
VIX	23.69	+ 15.67
Crude wti	75.42	- 3.26
USD Index	75.02	+ 0.30

Todays Calender

Estimates

Country / GMT

No further releases

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Currency Tech

EURUSD
R 2: 1.5200
R 1: 1.5100
CURRENT: 1.4970
S 1: 1.4800
S 2: 1.4626

GBPUSD
R 2: 1.7040
R 1: 1.6845
CURRENT: 1.6505
S 1: 1.6459
S 2: 1.6272

USDJPY
R 2: 90.60
R 1: 88.20
CURRENT: 86.95
S 1: 86.30
S 2: 83.60

AUDUSD
R 2: 0.9406
R 1: 0.9335
CURRENT: 0.9080
S 1: 0.8910
S 2: 0.8570

USDCAD
R 2: 1.0785
R 1: 1.0735
CURRENT: 1.0630
S 1: 1.0450
S 2: 1.0370

Market Brief

After the early drama of gold’s $50 plunge down to $1137.86 lows, risk appetite has recovered strongly thanks to European equities rallying into positive territory on the day; in turn helping US indices to recoup ground and sending the USD lower against most major currencies. The turnaround comes after a statement from Dubai’s Chairman of the Supreme Fiscal Committee started to gain some traction in the market; a statement which confirmed that the Dubai government intended to directly intervene and manage the debt restructuring of Dubai World. EURUSD has been on a dramatic round trip from 1.5020 highs down to 1.4828 this morning (just below the 100 day moving average but above major 1.4800 support), and since the recovery in equity markets the pair has traded back up to 1.4990 levels. Gold too has rebounded strongly back above $1175, but is still down over 1% on the day – underscoring the large volatility and precarious nature of trading this rally.

The morning data releases were largely overshadowed by broader risk appetite driven moves, however the first significant releases of the day were Swedish GDP and Retail Sales. The Q3 GDP figures missed forecasts with a 0.2% QoQ expansion against expectations for a 0.6% rate of growth, but Retail Sales figures convincingly beat forecasts with a 1.5% MoM increase in October against estimates of 0.5%. The SEK strengthened against the EUR after the releases; taking out 10.4450 support to touch 10.4100, and has since held onto its gains well. Eurozone Economic and Industrial Confidence indicators followed up later in the European morning but were exactly in line with forecasts (at -17 and -19 respectively), and FX markets were completely unmoved on the releases.

It seems that for now, the Dubai debt crisis has distracted markets from the growing concerns surrounding Greece’s own sovereign debt problems; however we feel the dismal and deteriorating state of Greek public finances will not be easily swept under the carpet and forgotten. With the spread between Greek government bonds and German government bonds soaring, and CDS premiums on Greek sovereign bonds climbing to more than double levels in early August (above 200bps), there are significant warning signs emerging that the financial crisis is far from concluded.

Dubai Concerns Continue To Weigh On Risk Appetite

November 27, 2009 9:08 AM CET

G10 Advancers and Decliners vs USD

	JPY	0.59
	DKK	-1.04
	EUR	-1.06
	CAD	-1.20
	CHF	-1.24
	GBP	-1.41
	NZD	-1.42
	SEK	-1.42
	NOK	-1.75
	AUD	-1.77

Global Indexes

Current Level

% Change

Nikkei 225 Index	9'081.52	- 3.22
Hang Seng Index	21'045.24	- 5.25
Shanghai Index	3'096.27	- 2.36
FTSE 100 Index	5'194.13	- 3.18
DAX Index	5'614.17	- 3.25
SMI Index	6'283.38	- 2.16
S&P future	1'067.60	- 3.72

World Markets

Current Level

% Change

Gold	1'146.95	- 3.49
Silver	17.86	- 4.34
VIX	20.48	+ 0.05
Crude wti	73.98	- 5.11
USD Index	75.52	+ 0.97

Todays Calender

Estimates

Country / GMT

GDP, % q/q Q3	0.6	0.2	SEK/08:30
Retail sales, % m/m Oct	0.5	0.2	SEK/08:30
Consumer confidence, index Nov	-17	-18	EUR/10:00
KoF leading indicator Nov	1.78	1.45	CHF/10:30

Currency Tech

AUDUSD
R 2: 0.9406
R 1: 0.9335
CURRENT: 0.8960
S 1: 0.8910
S 2: 0.8570

USDCAD
R 2: 1.0785
R 1: 1.0735
CURRENT: 1.0725
S 1: 1.0450
S 2: 1.0370

EURJPY
R 2: 134.02
R 1: 132.95
CURRENT: 128.15
S 1: 126.91
S 2: 124.39

USDMXN
R 2: 13.265
R 1: 13.120
CURRENT: 13.069
S 1: 12.797
S 2: 12.767

Market Brief

The slump in equities continues today as further details of Dubai World’s debt burden come to the fore; dragging risk sentiment lower across asset classes. Asian indices are down 3-5% across the board and US equity futures point to an equally unsavoury open after yesterday’s public holiday. The USD rebound has caused gold to collapse to $1140 levels, oil below major support at $75, and EURUSD back toward 1.4850 levels; a mere 50 pips away from the 1.4800 support that defined the lower end of its range in the prior two weeks. Increasingly, the break out in risk assets against the USD on Tuesday feels like it was an exercise in triggering stop losses around major technical levels more than a bona fide break out on genuine demand. The longevity of the previous ranges meant the market was well aware of the key supports and likely build-up of stop loss orders, and it seems that the uninspiring data calendar coupled with light liquidity has meant traders had very little alternative sources of volatility.

The one exception to the pattern is USDJPY which has dropped to fresh 14-year lows overnight at 84.83; igniting another flurry of rhetoric from Japanese policy makers in a bid to temper JPY strength. Finance Minister Fujii today indicated that he may contact US and European authorities about the possibility of coordinated currency intervention if it was deemed that JPY strength posed a threat to Japan’s recovery. His remarks had the desired effect by pushing USDJPY back above 86.00 levels; but the trend remains resolutely downwards and it is unlikely his words will be sufficient to permanently ward off USDJPY bears.

Of the limited data we did get yesterday; Eurozone M3 figures disappointed. Predictably, credit conditions remain tight as the broader measure of money showed growth of just 0.3% against consensus estimates for a rise of 0.8%. Loans to private non-financial companies declined to at a rate of 1.2% whhile in contrast, loans to households improved from -0.3% to -0.1%. German CPI for November came in weaker than expected at 0.3% YoY ( 0.5% expected) but the reading was still an improvement from the month prior.

For today, it seems that risk aversion is going to reign supreme over other data releases until a satisfactory conclusion is reached about the Dubai issue; however events coming up include Swedish GDP and Retail Sales, Eurozone Consumer Confidence and Swiss KOF Leading Indicator.

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