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The Dollar Rallies, Inspired By ISM
February 01, 2010 5:47 PM CET
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G10 Advancers and Decliners vs USD |
| | SEK | 1.37 |  | | | NOK | 0.65 | | | | NZD | 0.34 | | | | CHF | 0.23 | | | | DKK | 0.21 | | | | EUR | 0.17 | | | | CAD | 0.12 | |  | AUD | -0.05 | | | JPY | -0.47 | | | GBP | -0.55 | |
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Global Indexes |
Current Level |
% Change |
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| FTSE 100 Index | 5'238.13 | + 0.96 | | DAX Index | 5'653.14 | + 0.79 | | SMI Index | 6'484.43 | + 0.68 | | S&P 500 Index | 1'085.93 | + 1.12 | | DJIA Index | 10'168.67 | + 1.01 | | Nikkei 225 Futures | 10'240.00 | + 0.49 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'097.93 | + 1.58 | | Silver | 16.54 | + 20.80 | | VIX | 23.00 | - 6.58 | | Crude wti | 74.00 | + 1.52 | | USD Index | 79.38 | - 0.11 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Tue 2 Feb | --- | --- | --- | | RBA rate announcement, % Feb | 4.00 | 3.75 | AUD/03:30 | | Consumer confidence, index Q1 | -10.00 | -14.00 | CHF/06:45 | | PPI, % m/m (y/y) Dec | 0.0 (-0.3) | 0.1 (-4.4) | EUR/10:00 | | Pending home sales, % m/m Dec | 1.0 | -16.0 | USD/15:00 |
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Currency Tech |
EURUSD
R 2: 1.4090
R 1: 1.4030
CURRENT: 1.3905
S 1: 1.3830
S 2: 1.3790
USDJPY
R 2: 91.90
R 1: 91.00
CURRENT: 90.30
S 1: 89.36
S 2: 88.00
GBPUSD
R 2: 1.6080
R 1: 1.6020
CURRENT: 1.5920
S 1: 1.5845
S 2: 1.5770
AUDUSD
R 2: 0.9050
R 1: 0.8960
CURRENT: 0.8880
S 1: 0.8780
S 2: 0.8735
USDCAD
R 2: 1.0780
R 1: 1.0745
CURRENT: 1.0650
S 1: 1.0625
S 2: 1.0555
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Market Brief |
The US ISM Manufacturing came out at an impressively strong 58.4 in January against forecasts for 55.5; strengthening the USD, and sending USDJPY gapping above the 90.55 pivot level to touch highs of 90.94 so far. This is a few pips above the Friday highs, and coincides with the downtrend vibration line running from the 21 Jan and 29 Jan lower highs. The encouraging data has also sent equity markets rallying; both the S&P and Dow Jones are up over 1% on the day, and European indices too have been positively influenced by the news of an expansion in the US manufacturing sector. Gold is up around 1.5% on the day at $1096, but we are yet to see it threaten the $1104-5 area that has provided decent supply on the previous few visits.
The morning’s data out of Europe was also generally good; with Swiss Manufacturing PMI (56.0 vs. 55.2 expected) and Eurozone Manufacturing PMI (52.4 vs. 52.0 expected) better than expected, but currency gains were limited against a well supported USD. UK Manufacturing PMI was also strong with a 56.7 print against expectations for 54.00, but the GBPUSD was weighed heavily by anxiety ahead of Thursday’s BoE meeting. A brief rally higher in GBPUSD was soon overwhelmed by a wave of selling pressure that pushed it to touch lows of 1.5850, just above key support at 1.5833 (30 Dec lows).
Coming up in tomorrow’s session we will get one of the first major central bank events of the week with the RBA rate announcement. Markets are looking for a fourth consecutive rise of 25bps to 4.00%, a scenario decided for most people by last week’s jump in Q4 CPI to 2.1% (annualized). Nevertheless, the key to AUDUSD’s price action will be held in the accompanying statement as markets have gradually been swaying towards the consensus that the RBA will indicate a pause after this meeting; a development that would likely be seen as considerably AUD-negative especially as the Fed looks ever more compelled to drop their dovish stance. Other data due includes German Retail Sales, Eurozone PPI and US Pending Home Sales.
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FSAs Lord Turner's Comments Weigh on Carry Trades
February 01, 2010 9:01 AM CET
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G10 Advancers and Decliners vs USD |
| | SEK | 0.43 | | | | JPY | 0.28 | | | | NOK | 0.24 | | | | CHF | 0.06 | | | | DKK | 0.05 | | | | EUR | 0.01 | | | GBP | -0.37 | | | CAD | -0.39 | | | NZD | -0.41 | | | AUD | -0.54 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 10.205.02 | + 0.06 | | Hang Seng Index | 20,102.36 | - 0.09 | | Shanghai Index | 2,953.67 | - 1.19 | | FTSE futures | 5,148.50 | + 0.58 | | DAX futures | 5,607.50 | + 0.66 | | SMI Futures | 6,390.00 | + 0.26 | | S&P 500 Index | 1,073.20 | + 0.26 |
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World Markets |
Current Level |
% Change |
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| Gold | 1,081.13 | + 0.02 | | Silver | 16.18 | - 0.13 | | VIX | 24.62 | + 3.75 | | Crude wti | 72.77 | - 0.16 | | USD Index | 79.42 | - 0.05 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Germany: Final Manufacturing PMI, index | 53.4 | 53.4 P | EUR / 08.53 | | Final Manufacturing PMI, index | 52.0 | 52.0 P | EUR / 08.58 | | PMI manufacturing, index | 54 | 54.1 | GBP / 09.28 | | BoE mortgage approvals, k | 61.7 | 60.5 | GPB / 09.30 | | Personal income, % m/m (y/y) | 0.3 (0.3) | 0.4 (-0.3) | USD / 13.30 | | Personal spending, % m/m (y/y) | 0.3 (3.8) | 0.5 (2.3) | USD / 13.30 | | PCE price index, % m/m (y/y) | (2.2) | 0.2 (1.5) | USD / 13.30 | | Core PCE price index, % m/m (y/y) | 0.1 (1.5) | 0.0 (1.4) | USD / 13.30 | | Construction spending, % m/m (y/y) | -0.3,-10.5 | -0.6,-13.2 | USD / 15.00 | | ISM manufacturing index | 55.6 | 54.9 | USD / 15.00 | | Geithner testifies to the Senate Finance Committee | -- | -- | USD / 15.00 |
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Currency Tech |
AUDUSD
R 2: 0.9050
R 1: 0.8960
CURRENT: 0.884
S 1: 0.8780
S 2: 0.8735
USDCAD
R 2: 1.0780
R 1: 1.0745
CURRENT: 1.0698
S 1: 1.0625
S 2: 1.0555
EURJPY
R 2: 127.10
R 1: 126.70
CURRENT: 125.23
S 1: 124.40
S 2: 122.15
USDMXN
R 2: 13.145
R 1: 13.105
CURRENT: 13.080
S 1: 12.945
S 2: 12.890
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Market Brief |
FX markets were relatively range bound at the start of this trading week. The EURUSD jumped around between 1.3855 and 1.3890, while the USDJPY traded up to 90.38 before falling back slightly. The USD and the JPY trades gained initially in Asia, as the UK Times reported that FSA chief Lord Turner had commented that carry trades were without real utility and hinted of a potential crackdown. It seems that the reported comments could be signaling a regulatory tightening for trades (which he views) serving little or no useful social and wider economic purpose. Asian regional stock indexes had a bumpy morning but things have begun to look slightly brighter as we approach the European open. We should mention that at this point half of the S&P has reported with roughly 70% of corporate earning printing higher than expected. In spite of this positive turn, equity prices are still weighing on risk correlated trades. We believe that it's concern over sovereign credit risks and worries that China will tighten monetary policy that are hurting sentiment over corporate earnings outlook. In addition, news that the US will sell arms to Taiwan has aggregated the Chinese and could mean rising trade tensions in the near term, which would also weigh on these defining macro driver.
Last week, Finance Minister Merz said that he was comfortable with the CHF levels against the EUR. However, on Friday it was rumored that the central bank returned to the Fx markets. Remember it's the SNB, not the Swiss government, that determine the exchange rate policy. Despite the grandstanding, its clear that the SNB was uncomfortable with the sharp fall in the EURCHF and the new threshold seems to be 1.47. Moving forward, with the EUR suffering from a myriad of internal problems, the EURCHF should continue to naturally depreciate and participants should expect further SNB action. While there is no “exit schedule”, fundamental pressure will not allow the SNB to support the EURCHF forever. Long term players have begun to trade around this concept.
This week will be chocked with central bank rate decisions - the RBA, Norges Bank, ECB and the Bank of England. Perhaps the most interesting and market moving will be the RBA. Markets are expecting that the Australian central bank will raise the cash rate 25bp to 4.00%. However, the bills market is less convinced and is pricing in only a 16bp increase. No only will the rate decisions be important, but in the accompanying statement we expect that rates are close to neutral and any additional tightening will be data dependent…words that will most probably hurt the AUD in the short 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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