Daily Forex Snapshots

US Session: Dollar Volatile as Investors Watch Interest Rate Markets Closely

June 10, 2009 6:04 PM CEST

G10 Advancers and Decliners vs USD

	Gbp	0.25
	Aud	0.17
	Nzd	0.11
	Sek	0.04
	Chf	-0.39
	Nok	-0.69
	Eur	-0.70
	Dkk	-0.70
	Cad	-0.71
	Jpy	-0.83

Global Indexes

Current Level

% Change

DJIA Index	8,763.06	- 0.02
S&P 500 Index	942.43	+ 0.35
NASDAQ 100 Index	1,860.13	+ 0.96
Nikkei 225 Futures	10,050.00	+ 0.59
Hang Seng Futures	18,655.00	+ 3.88
FTSE futures	4,488.50	+ 2.10
SMI Futures	5,462.00	+ 1.32

World Markets

Current Level

% Change

Crude wti	71.20	+ 1.70
Gold	963.38	+ 0.90
Silver	15.37	+ 0.82
USD Index	79.73	- 0.14
VIX	28.27	- 5.04

Todays Calender

Estimates

Country / GMT

No Major Events Scheduled

Currency Tech

AUDUSD
R 3: 0.8378
R 2: 0.8265
R 1: 0.8120
CURRENT: 0.8086
S 1: 0.7830
S 2: 0.7745
S 3: 0.7705

EURJPY
R 3: 144.60
R 2: 141.75
R 1: 139.75
CURRENT: 137.56
S 1: 135.30
S 2: 133.90
S 3: 131.50

USDSGD
R 3: 1.4800
R 2: 1.4748
R 1: 1.4665
CURRENT: 1.4496
S 1: 1.4425
S 2: 1.4385
S 3: 1.4335

Market Brief

Dollar extended declines against most major currencies as encouraging economic data reduces the demand for safe haven currencies. Euro climbed back above $1.41 due to positive economic data of the bloc. Sterling dropped early in the session but rebounded robustly later following better-than-expected UK industrial output number. The GBP is trading at $1.638 at 9:40 am, up nearly 2% for the weak. Commodities’ rally boosted related currencies significantly, with Aussi and Kiwi both up more than 1% against the dollar. Crude oil climbed above $71bbl, a seven-month high due to reports that global crude inventory is reducing sharply. The Cad benefits significantly from oil’s rally, breaking the $1.1 level once again. Gold also regained some ground on a weaker dollar, back up $965oz.

The dollar lost major support as investors are reassessing the possibility that the Fed will increase interest rates by year end. The action by the Fed has been at the forefront recently but looks more and more unrealistic now. US treasuries continue to drop with 10 year yield near 4%, an important benchmark. Today’s $19 billion 10 year note auction will further test markets and investors confidence. Should the treasury continue to drop, the dollar should face further losses in the near future. In addition, the Russian central bank announced that it will shift a big proportion of investment into IMF bonds from US treasuries. Russia, the fifth largest US debt holder, has more than $120 billion US treasuries in its foreign reserves. Should Russia really takes the action, the dollar will be under huge pressure and further downside is inevitable. In addition, dollar weakness prevailed before the current crisis so it is probable that the trend should continue once the crisis is over

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Asian Session: USD Weakness Resumes

June 10, 2009 11:41 AM CEST

G10 Advancers and Decliners vs USD

	NZD	1.44
	AUD	1.43
	NOK	1.32
	SEK	1.07
	GBP	0.79
	DKK	0.70
	EUR	0.67
	CHF	0.45
	CAD	0.34
	JPY	-0.08

Global Indexes

Current Level

% Change

Nikkei 225 Index	9,991.49	+ 2.09
Hang Seng Index	28,648.39	+ 3.26
Shanghai Index	2,816.25	+ 1.01
FTSE 100 Index	4,404.79	- 0.01
DAX Index	4,997.86	- 0.13
SMI Index	5,388.67	- 0.05
DJIA futures	8,828.00	+ 0.98

World Markets

Current Level

% Change

Gold	959.78	+ 0.52
Silver	15.31	+ 0.39
VIX	28.27	- 5.03
Crude wti	71.09	+ 1.54
USD Index	79.85	+ 0.01

Todays Calender

Estimates

Country / GMT

Industrial production, % m/m (y/y)	-0.2,-12.5	-0.6,-12.4	GBP / 8.30
Manufacturing output, % m/m (y/y)	0.0,-12.6	-0.1,-12.9	GBP / 8.30
Trade balance, £ bn	-6.4	-6.6	GBP / 8.30
Int'l merchandise trade, C$ bn	0.9	1.1	CAD / 12.30
Trade balance, $ bn	-29.0	-27.6	USD / 12.30
FRB of Richmond President Lacker (FOMC voter) spea	--	--	USD / 14.00
ECB’s Stark speaks at a book presentation "Der Eur	--	--	EUR / 16.30
Fed's beige book published	--	--	USD / 18.00
Budget balance, $ bn	-175.0	-165.9	USD / 18.00
RBNZ interest rate announcement, %	2.50	2.50	NZD / 21.00
real GDP, second preliminary, % q/q saar	-14.9	-14.4	JPY / 23.50

Currency Tech

Market Brief

As discussed in earlier reports, we believed that the pricing in of a Fed rate hike in late 2009 was premature. It seems that the markets are now in agreement. The USD was weaker across the board in the Asian session, as risk appetite returned (regional equity indexes were broadly higher).The EurUsd traded up to 1.4130 from 1.4060, while the UsdJpy slid to 97.10 before rallying back to 97.60. Carry and EM are now trading higher with AudJpy pushing up towards 79.30 while the UsdTry down to 1.5360. Since Friday's NFP release the market has been speculating about the probability that the Fed would drain liquidity and tighten rates much sooner than the market had originally expected. However, recent price action in the USD and yields suggest (2yrs fell by 9bp) that participants are now fading out of this trade. In other news, the US treasury confirmed that 10 banks were approved to repay TARP funds. We see this as positive for risk appetite in that there is greater confidence in the financial sector and refunded funds are now available for other banks struggling to raise capital. Out of the Eurozone, EU’s Almunia stated that EU finance ministers are now discussing exit strategies while ECB's Liikanen commented that a failure to reign in fiscal stimulus could push counties into a debt driven economic downward spiral. This evening, the market expect the RBNZ to hold rates at 2.50% (slight prob of a 25bp cut) while keeping watch for language that rationalizes intervention to halt NZD strength.

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