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EURUSD Stages A Corrective Rally
February 02, 2010 5:56 PM CET
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G10 Advancers and Decliners vs USD |
| | NOK | 0.47 |  | | | NZD | 0.42 | | | | JPY | 0.40 | | | | SEK | 0.35 | | | | CAD | 0.31 | | | | EUR | 0.30 | | | | DKK | 0.27 | | | | CHF | 0.19 | | | | GBP | 0.13 | |  | AUD | -0.64 | |
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Global Indexes |
Current Level |
% Change |
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| FTSE 100 Index | 5'281.56 | + 0.65 | | DAX Index | 5'712.18 | + 1.02 | | SMI Index | 6'546.23 | + 0.77 | | S&P 500 Index | 1'097.01 | + 0.72 | | DJIA Index | 10'249.84 | + 0.63 | | Nikkei 225 Futures | 10'370.00 | + 0.29 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'117.18 | + 1.06 | | Silver | 16.75 | + 0.49 | | VIX | 21.87 | - 3.19 | | Crude wti | 76.22 | + 2.40 | | USD Index | 79.07 | - 0.15 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Wed 3 Dec | --- | --- | --- | | Germany: Final Services PMI, index Jan | 51.2 | 52.7 | EUR/08:53 | | Final Services PMI, index Jan | 52.3 | 53.6 | EUR/08:58 | | Final Composite PMI, index Jan | 53.6 | 54.2 | EUR/08:58 | | Unemployment rate AKU, % Nov | 3.3 | 3.2 | NOK/09:00 | | PMI services, index Jan | 56.5 | 56.8 | GBP/09:28 | | Retail sales, % m/m (y/y) Dec | 0.4 (-2.5) | -1.2(-4.0) | EUR/10:00 | | Norges Bank rate announcement, % Feb | 1.75 | 1.75 | NOK/13:00 | | Change in ADP private payrolls, thous Jan | -30 | -84 | USD/13:15 | | ISM non-mfg index Jan | 51.0 | 49.8 | USD/15:00 |
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Currency Tech |
EURUSD
R 2: 1.4090
R 1: 1.4030
CURRENT: 1.3955
S 1: 1.3830
S 2: 1.3790
USDJPY
R 2: 91.90
R 1: 91.00
CURRENT: 90.40
S 1: 89.36
S 2: 88.00
GBPUSD
R 2: 1.6080
R 1: 1.6020
CURRENT: 1.5970
S 1: 1.5845
S 2: 1.5770
AUDUSD
R 2: 0.9050
R 1: 0.8965
CURRENT: 0.8840
S 1: 0.8735
S 2: 0.8645
USDCAD
R 2: 1.0749
R 1: 1.0725
CURRENT: 1.0600
S 1: 1.0555
S 2: 1.0500
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Market Brief |
There has been a lack of economic drivers in today’s session, but risk appetite has remained healthy with equity indices across Europe and the US higher on the day. Eurozone producer prices ticked up 0.1% MoM; higher than the 0.0% expected but certainly not by a margin that is likely to impact on Thursday’s ECB meeting. EURUSD has continued its corrective rally off yesterday’s 1.3853 lows (and the lower bound of the 1-month downtrend) to touch highs of 1.3965, but offers remain above that should cap any further continuation of the move beyond 1.4000 resistance. This unwind of shorts came about in spite of comments from the ECB’s Constancio that he was “relatively pessimistic” about the short term prospects for Portugal’s economy, and added that there is an “imperative” need to reduce Portugal’s budget deficit.
The afternoon session saw US pending home sales come out exactly in line with expectations at 1.0% MoM, but FX markets were largely unchanged after the release. The lack of economic releases and fundamental drivers has meant technical factors have taken centre stage – with gold being one of the best performers on the day due to renewed buying interest on the break above $1105 resistance. So far, gold has traded to a high of $1116.90, with next upside resistance coming in at the $1120 pivot level, and then 5-week downtrend resistance at $1130.
Tomorrow will bring the release of a number of major European and US economic figures, including a stream of PMI services data from the Eurozone and UK – after the strong figures from the manufacturing PMIs on Monday, most of the service sector surveys are expected to be slightly lower than last month’s readings, but still in positive territory. Eurozone retail sales is expected to show a 0.4% MoM increase in December, up from the dismal -1.2% print seen last time around, but unless there is a significant misalignment between the actual figure and the consensus forecast we believe that EURUSD price action will be constrained ahead of Thursday’s ECB meeting. On the theme of central bank meetings, tomorrow will also see the latest rate decision from the Norges Bank. Consensus is looking for an on hold decision at 1.75%, as it is likely the Executive Board will want to see the contents of the March Monetary Policy Report before committing to further tightening. Nevertheless, given the strong economic backdrop in Norway, and the fact that the markets were caught wrong-footed by the last hike, it is certainly possible that analysts may have underestimated the Norges Bank once more.
The afternoon releases include the US ISM non-manufacturing, along with the significant ADP employment report ahead of Friday’s non-farm payrolls.
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RBA Keeps Rates Unchanged
February 02, 2010 9:47 AM CET
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G10 Advancers and Decliners vs USD |
| | NOK | 0.47 | | | | CAD | 0.40 | | | | SEK | 0.33 | | | | DKK | 0.21 | | | | EUR | 0.20 | | | | CHF | 0.08 | | | | JPY | 0.10 | | | | GBP | 0.06 | | | NZD | -0.20 | | | AUD | -1.05 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 10,371.09 | + 1.62 | | Hang Seng Index | 20,308.51 | + 0.31 | | Shanghai Index | 2,934.71 | - 0.22 | | FTSE futures | 5,196.00 | + 0.92 | | DAX futures | 5,658.50 | + 0.08 | | SMI Futures | 6,437.00 | + 0.04 | | S&P future | 1,085.90 | - 0.03 |
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World Markets |
Current Level |
% Change |
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| Gold | 1,105.88 | + 0.03 | | Silver | 16.66 | - 0.06 | | VIX | 22.59 | - 8.24 | | Crude wti | 74.50 | + 0.09 | | USD Index | 79.12 | - 0.09 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| PMI construction, index | 47.1 | 47.1 | GBP / 9.30 | | PPI, % m/m (y/y) | 0.0 (-3.1) | 0.1 (-4.4) | EUR / 10.00 | | Vehicle sales, mn | 11.2 | 11.2 | USD / -- | | Pending home sales, % m/m (y/y) | 0.9 (11.2) | -16.0, 15. | USD / 15.00 |
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Currency Tech |
AUDUSD
R 2: 0.9050
R 1: 0.8965
CURRENT: 0.8804
S 1: 0.8735
S 2: 0.8645
USDCAD
R 2: 1.0749
R 1: 1.0725
CURRENT: 1.0587
S 1: 1.0605
S 2: 1.0555
EURJPY
R 2: 127.05
R 1: 126.70
CURRENT: 126.40
S 1: 124.43
S 2: 124.40
USDMXN
R 2: 13.145
R 1: 13.105
CURRENT: 12.883
S 1: 12.840
S 2: 12.800
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Market Brief |
Risk appetite saw a brief resurgence in early Asian trading, as global PMI data posted better than expected readings. However, everything changed when the RBA surprised the market by keeping rates unchanged at 3.75%. This caused risk to rapidly sell off, with JPY and AUD crosses crashing. The AUDUSD collapsed to 0.8815, paused briefly, and then dropped further to 0.8784.
The RBA held rates steady, citing China ’s slowdown as a core rational for pausing. While analysts, including us, were expecting a 25bp hike, the bills markets had been less convinced (as mentioned in our Central Bank Preview). However, in its accompanying statement its clearly stated that the RBA expects rates will likely head higher. Bank Bills futures then rallied by around 30bp, indicating that markets believe the RBA is underestimating the need to tighten further. We expect the global and Australian domestic economic conditions to improve and the RBA to raise rates by 25bp in March. In this environment, we expect the AUD to remain firm and provide some upside potential in the near term.
Markets are still very concerned over sovereign credit risk, which has weighed significantly on the EUR. Yesterday, EU commissioner Almunia stated that Greece’s strategy to cut the deficit will be difficult but achievable. We added that no changes in the timetable would be accepted. We saw a noticeable positive reaction in the EUR, as Greek CDS and government bond spreads tightened.
In the US yesterday, manufacturing ISM index jumped to 58.4 in Jan vs. 55.5 exp from 54.9 in Dec. Continued strong domestic economic data (and risk aversion) will give the USD support in the near term. With a very light economic calendar, we expect markets to be generally range bound, with some slight unwinding of short risk positions and equity and commodities markets move into the green.
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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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