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US Session: Dollar Weakens on Expectations for Further Downside in Global Economy, Fed Looks to Source Liquidity from Private Sector
May 21, 2009 11:13 PM CEST
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G10 Advancers and Decliners vs USD |
| | Dkk | 0.13 |  | | | Eur | 0.13 | | | | Sek | 0.12 | |  | Gbp | -0.07 | | | Chf | -0.13 | | | Jpy | -0.14 | | | Cad | -0.17 | | | Nzd | -0.17 | | | Nok | -0.23 | | | Aud | -0.33 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA Index | 8,282.18 | - 1.66 | | S&P 500 Index | 888.32 | - 1.68 | | NASDAQ 100 Index | 1,694.63 | - 1.92 | | Nikkei 225 Futures | 9,250.00 | - 0.32 | | Hang Seng Futures | 17,023.00 | - 1.98 | | FTSE futures | 4,333.50 | - 2.59 | | SMI Futures | 5,507.00 | + 0.01 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 60.23 | - 2.92 | | Gold | 943.39 | + 0.50 | | Silver | 14.29 | - 0.04 | | USD Index | 81.25 | + 0.10 | | VIX | 30.82 | + 6.17 |
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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: 0.8519
R 2: 0.8350
R 1: 0.8095
CURRENT 0.7727
S 1: 0.7630
S 2: 0.7450
S 3: 0.7337
EURJPY
R 3: 134.82
R 2: 133.59
R 1: 132.40
CURRENT 130.23
S 1: 126.63
S 2: 124.39
S 3: 122.10
USDSGD
R 3: 1.4845
R 2: 1.4803
R 1: 1.4748
CURRENT: 1.4561
S 1: 1.4523
S 2: 1.4501
S 3: 1.4446
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Market Brief |
The dollar depreciated against most of the majors following a resurgence of pessimism regarding financial markets. The EurUsd gained 110pips testing 1.39 as a point of resistance, while the UsdJpy fell nearly 70pips to the low range of 94. The GbpUsd continues to rally trading with a 1.58 handle in contention with expectations for further quantitative easing from the BoE. Equity markets declined in the US and Europe, with the Dow lower by 2% or 178pts and the FTSE off 2.75% or 122pts. The yield curve experienced a degree of steepening, specifically in 10 and 30yr bonds. Commodities are mixed with oil finding support at $60bbl, while gold surged trading through previous resistance of $950oz.
The Fed expressed further concern regarding the outlook for the US economy triggering a retreat in risk appetite. With that said, the dollar is subject to further selling pressure due to anticipation for the central bank to purchase additional assets. In Europe, economic data was positive namely PMI which beat estimates in bother services and manufacturing at 40.5 and 44.7 respectively. Commentary from ECB member Kranjec noted signs of recovery, but he is assuming some level of caution in regarding complete stabilization in the economy. This data prompted Traders to take long positions in the Euro as the overall bias is shifting to a more optimistic tone. Early in the session, the Sterling faced strong downside momentum following an announcement that S&P downgraded their outlook for the UK, and is considering lowering the sovereign credit rating from its current AAA. The decision by S&P is based on the ratio of total debt versus GDP growth which is nearly 100%. Despite the troubling news, Traders bought the currency back after its 100pip nosedive, and the current price is trading above yesterday’s close.
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Asian Session: FOMC Minutes Provide a Reality Check
May 21, 2009 10:58 AM CEST
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G10 Advancers and Decliners vs USD |
| | NOK | 0.23 | | | | GBP | 0.17 | | | | CAD | 0.15 | | | | AUD | 0.13 | | | | JPY | 0.12 | | | EUR | -0.01 | | | DKK | -0.05 | | | CHF | -0.07 | | | NZD | -0.09 | | | SEK | -0.14 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 9,264.15 | - 0.86 | | Hang Seng Index | 17,250.22 | - 1.29 | | Shanghai Index | 2,750.01 | - 2.23 | | FTSE 100 Index | 4,394.96 | - 1.64 | | DAX Index | 4,959.23 | - 1.58 | | SMI Index | 5,509.27 | + 0.19 | | DJIA futures | 8,373.00 | - 0.01 |
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World Markets |
Current Level |
% Change |
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| Gold | 942.50 | + 0.54 | | Silver | 14.39 | + 0.81 | | Crude wti | 61.78 | - 0.42 | | USD Index | 81.34 | - 0.23 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Retail Sales m/m | 0.5 | 0.3 | GBP / 8.30 | | Jobless Claims | 645 | 637 | USD / 12.30 | | Leading Indicators m/m | 1 | -0.3 | USD / 12.30 | | Philadelphia Fed Survey | -20 | -24.5 | USD / 12.30 |
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Currency Tech |
AUDUSD
R 3: 0.8519
R 2: 0.8350
R 1: 0.8095
CURRENT 0.7727
S 1: 0.7630
S 2: 0.7450
S 3: 0.7337
EURJPY
R 3: 134.82
R 2: 133.59
R 1: 132.40
CURRENT 130.23
S 1: 126.63
S 2: 124.39
S 3: 122.10
USDSGD
R 3: 1.4845
R 2: 1.4803
R 1: 1.4748
CURRENT: 1.4561
S 1: 1.4523
S 2: 1.4501
S 3: 1.4446
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Market Brief |
The USD continues to trade near yesterday's lows in Asian Session as the FOMC's down beat projections hurt sentiment and slowed the greenback losses. The EurUsd traded in a 1.3755-1.3810 range and UsdJpy traded in a 94.26-95.00 range while equity markets in the Asia-Pacific region are also slightly lower following Walls Street decline. Yesterday's FOMC minutes showed Fed officials marking down GDP projections from a range of -0.5% to -1.3% to a new range of -1.3% to -2% for 2009, while unemployment forecasts were also raised (effect on Stress Test results will need to be examined). However, projections for total inflation was little changed. Over all the effect on the FX markets were balanced as the revelation that the Fed’s quantitative easing program may have to be expanded further to ensure an adequate recovery, the negative assessment of the economy eventually weighed on stocks
The gold rush carries on, as Traders continue to take long positions driving prices higher. Inflationary fears are acting as a strong supporting factor of the precious metal trading at current levels. Gold 1M forward contracts point to further upside with interim resistance at medium-term resistance at $950oz. Our theory suggesting that gold would benefit in an environment of greater risk aversion or heightened risk appetite stands, as investors would hold this instrument as a tool against inflation and an alternative to govt. securities if markets pull back. As commodities continue to rally on the back of a weaker dollar, gold should follow suit with the possibility of breaking new highs towards the end of 2009. ETF flows remain strong, and institutional buyers express a mild bullishness regarding price expectations.
Today’s economic calendar is interesting given the lineup of leading indicator data, with focus likely to be on the Euro-area PMI data, US initial jobless claims and the US Philly Fed Survey in addition to the more coincident UK retail sales report. Given the sharp jump in the ZEW investor sentiment survey markets will be looking additional signals in the Euro-area releases that the speed of contraction is gradually declining. However, the unexpected fall in the ZEW current conditions index gives rise to temper optimism. In US data, we expect the crisis in the auto sector (dealerships closing) to push jobless claims higher and a show drop in the ISM manufacturing survey in the near term.
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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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