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Fitch Sees Risk Of Sovereign Crisis Contagion ‘Exaggerated’
February 09, 2010 5:31 PM CET
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G10 Advancers and Decliners vs USD |
| | NZD | 0.50 |  | | | AUD | 0.46 | | | | SEK | 0.39 | | | | EUR | 0.24 | | | | DKK | 0.22 | | | | CHF | 0.15 | | | | NOK | 0.12 | |  | JPY | -0.07 | | | GBP | -0.26 | | | CAD | -0.27 | |
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Global Indexes |
Current Level |
% Change |
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| FTSE 100 Index | 5'116.79 | + 0.48 | | DAX Index | 5'515.59 | + 0.56 | | SMI Index | 6'333.16 | - 0.22 | | S&P 500 Index | 1'064.79 | + 0.76 | | DJIA Index | 10'014.88 | + 1.07 | | Nikkei 225 Futures | 10'000.00 | + 0.60 | | Hang Seng Futures | 19'690.00 | + 1.23 |
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World Markets |
Current Level |
% Change |
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| Gold | 1'077.22 | + 1.35 | | Silver | 15.31 | + 2.13 | | VIX | 25.71 | - 3.02 | | Crude wti | 72.69 | + 1.11 | | USD Index | 80.04 | - 0.33 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Wed 10 Feb | --- | --- | --- | | Industrial production, % m/m Dec | 0.5 | 0.2 | SEK/08:30 | | AMV Unemployment rate, % Jan | 5.7 | 5.6 | SEK/09:00 | | CPI, % m/m (y/y) Jan | 0.2 (2.0) | -0.2 (2.1) | NOK/09:00 | | Industrial production, % m/m (y/y) Dec | 0.2 (-4.1) | 0.4 (-6.0) | GBP/09:30 | | Manufacturing output, % m/m (y/y) Dec | 0.3 (-3.0) | 0.0 (-5.4) | GBP/09:30 | | BoE publishes quarterly Inflation Report Q1 | --- | --- | GBP/10:30 | | International Merchandise Trade, C$ bn Dec | -0.1 | -0.3 | CAD/13:30 | | Trade balance, $bn Dec | -35.8 | -36.4 | USD/13:30 |
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Currency Tech |
EURUSD
R 2: 1.3850
R 1: 1.3750
CURRENT: 1.3720
S 1: 1.3600
S 2: 1.3484
USDJPY
R 2: 90.00
R 1: 89.80
CURRENT: 89.40
S 1: 88.55
S 2: 88.10
GBPUSD
R 2: 1.5730
R 1: 1.5660
CURRENT: 1.5595
S 1: 1.5535
S 2: 1.5480
AUDUSD
R 2: 0.8790
R 1: 0.8760
CURRENT: 0.8715
S 1: 0.8580
S 2: 0.8545
USDCAD
R 2: 1.0870
R 1: 1.0780
CURRENT: 1.0745
S 1: 1.0645
S 2: 1.0590
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Market Brief |
EURUSD has continued to recover from last week’s rout, with the short term uptrend off Friday’s 1.3586 lows providing the platform for a test of the 1.3750 pivot level, and an earlier high of 1.3774. The EUR and broader risk sentiment has been buoyed by the news that ECB President Trichet has decided to cut short a visit in Australia to return to Brussels; fuelling speculation that an EU-wide plan may be announced imminently that would address current sovereign debt concerns. ECB officials have repeatedly stated that any bailout of Greece would be categorically out of the question (repeated again today by member Nowotny), but ratings agency Fitch stated this afternoon that the EU could ‘find a way’ to help troubled sovereigns, and added that the risk of contagion within the EU was ‘exaggerated’.
There has been another session of limited economic releases; in the morning we saw German CPI (EU harmonized) come in slightly higher than expected at 0.8% YoY compared to the forecast 0.7%; but there is unlikely to be anything in these numbers that will alarm the ECB. UK trade balance figures were worse than expected as the deficit widened to GBP7.278bn from GBP6.78bn; whereas the market had been looking for a slight contraction; however despite GBPUSD came under selling pressure from models earlier in the morning, the pair has recouped most of these losses – now trading virtually flat on the day.
USDJPY has been on a round trip from 89.35 levels up to highs of 89.81 (on the back of Trichet news), but is now back to 89.35 as the afternoon session saw US data disappoint; the IBD economic optimism index slipped to 46.8 in February from 48.8 in January, and later, wholesale sales missed forecasts with a 0.8% MoM gain in December against expectations for 1.00%.
Tomorrow we expect to get an uptick in economic releases; of particular importance being UK industrial production and the publication of the BoE Quarterly Inflation Report. Although the MPC decided to not to expand the asset purchase programme at the last meeting (which should be a GBP-positive development), there remains considerable uncertainty in economic projections going forward – particularly how the unnerving current trend of accelerating inflation and subdued growth will weigh on the economy (and currency). There will also be a number of releases from the Scandinavian economies with Norwegian CPI (2.2% YoY expected, 2.0% prior), along with Sweden’s industrial production for December (0.5% MoM expected, 0.2% prior) and AMV unemployment rate (5.7% expected, 5.6% prior). The latter two releases may be particularly significant considering Thursday’s meeting of the Riksbank; and although a first hike is not expected until autumn, a faster than projected rebound in the Swedish economy may force the central bankers to adopt a less dovish tone.
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Trichet Leaves Sydney Early
February 09, 2010 10:12 AM CET
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G10 Advancers and Decliners vs USD |
| | SEK | 0.39 | | | | NZD | 0.42 | | | | AUD | 0.33 | | | | EUR | 0.26 | | | | NOK | 0.30 | | | | DKK | 0.27 | | | | CAD | 0.18 | | | | CHF | 0.09 | | | GBP | -0.03 | | | JPY | -0.31 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 9,932.90 | - 0.19 | | Hang Seng Index | 19,711.76 | + 0.82 | | Shanghai Index | 2,940.41 | + 0.17 | | FTSE futures | 5,056.00 | + 0.60 | | DAX futures | 5,488.50 | + 0.57 | | SMI Futures | 6,286.00 | + 1.71 | | S&P future | 1,061.30 | + 0.51 |
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World Markets |
Current Level |
% Change |
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| Gold | 1,070.45 | + 0.71 | | Silver | 15.24 | + 1.60 | | VIX | 26.51 | + 1.53 | | Crude wti | 72.02 | + 0.18 | | USD Index | 80.13 | - 0.21 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| Trade balance, £ bn Dec | -6.7 | -6.8 | GBP / 09.30 | | Wholesale inventories, % m/m Dec | 0.5 | 1.5 | USD / 15.00 | | CPI inflation (% m/m) Jan | 1.01 | 0.41 | MXN / 16.00 | | Core machinery orders, % m/m Dec | 8.0 | -11.3 | JPY / 23.50 |
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Currency Tech |
AUDUSD
R 2: 0.8755
R 1: 0.8725
CURRENT: 1.3721
S 1: 0.8580
S 2: 0.8545
USDCAD
R 2: 1.0870
R 1: 1.0780
CURRENT: 1.0694
S 1: 1.0645
S 2: 1.0590
EURJPY
R 2: 123.30
R 1: 122.75
CURRENT: 122.90
S 1: 121.55
S 2: 120.70
USDMXN
R 2: 13.345
R 1: 13.255
CURRENT: 13.178
S 1: 13.100
S 2: 12.940
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Market Brief |
FX markets were choppy in the Asian session, with risk appetite see-sawing. The day started with a risk off tone, as Wall Street plunged due to speculation that FOMC Chairman Bernanke could indicate tightening when he testifies in the House on unwinding Fed liquidity programs this week. The USDJPY fell to 89.20, but failed to pierce daily cloud support at 89.02. The AUDUSD opened at 0.8640 and slipped 0.8616, as China press denied the much celebrated Australia-China coal deal reported yesterday. However, as Asia went to lunch it was reported that European Central Bank President Trichet is prematurely leaving a meeting of central bankers in Sydney to attend a European Council meeting scheduled for Thursday. European Council is holding an informal meeting of officials and Greek members are expecting to come under some heavy fire. The EURUSD traded up to 1.3742 on the first news that officials are recognizing the severity of the sovereign credit situation. Given the markets positive reaction and substantial EUR shorts, which have been building up as of late, we believe the EURUSD is ripe for a short squeeze. Also, the press has been flooding the airwaves with the collapse of the EUR theories and we believe that the retail investor might have bought too heavily into this strategy.
The calendar is relatively empty, with US Wholesale Inventories leading the way. We think the USD will remain supported until we see some rational solution to Eurozone sovereign debt worries. However, we are expecting, in the ultra near term, the USD to unwind for its massively overbought levels.
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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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