Forex Futures Forum Archive for 01/17/2010

Syd 22:55 GMT January 17, 2010 Reply   
DJ European Investment Bank Mandates 2013 Kangaroo Bond Increase
European Investment Bank has mandated ANZ, JPMorgan and RBC Capital markets to jointly lead manage an increase to its existing A$2.5 billion 6% August 2013 kangaroo bond, RBC said in a statement Monday.

The new tranche will be priced in the near future, subject to market conditions, RBC said.

Syd 22:18 GMT January 17, 2010 Reply   
Australian interest rate futures should extend rally in coming days, driven by gains in longer-dated Treasurys, with spread between 3-10 year futures implied yields narrowing, says Deutsche Bank Head of Research David Plank. "I generally think people are going to be a bit cautious about risk assets during the course of the week and therefore we will see a modest rally from here." Expects quiet trading session ahead given U.S. public holiday, lack of data. Main pointers for rates in coming days are AOFM supply and a list of top tier Chinese data Thursday. Doesn't expect AOFM's auction of inflation linked and Treasury bonds to weigh market, but in absence of clear local lead, could have some impact. Three-year spot contract ended Friday's overnight session five ticks higher at 94.88


NEW YORK (Dow Jones)--Commodity-backed currencies will gain next week as the dollar's December resurgence fades and expectations for increases in U.S. interest rates get pushed further into the future.

With the U.S. labor market and real-estate sector still challenged, the recovery is not taking hold fast enough for investors to believe the Federal Reserve will raise any time soon the ultra-low interest rates intended to stimulate the economy.

While the dollar, euro and yen may languish in the near term, leaving the currencies of the relatively strong commodity-exporting economies of Australia, Canada and New Zealand to benefit the most from improving global conditions. These three currencies are often called the dollar bloc as they tend to advance or retreat in unison.

"The presumption that pro-growth economic policies are likely to remain firmly in place around the world in the months ahead is the lifeblood of commodity currencies," Neil Mellor, a BNY Mellon currency strategist, wrote in a note to clients.

Friday in New York, the euro was at $1.4384 from $1.4504 late Thursday, according to EBS via CQG. The dollar was at Y90.81 from Y91.09, while the euro was at Y130.59 from Y131.93. The U.K. pound was at $1.6253 from $1.6335. The dollar was at CHF1.0262 from CHF1.0182.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 77.209 from 76.729.

Despite a hiccup Friday as risk aversion swept over markets because of concerns over euro-zone sovereign debt and more tightening in Chinese fiscal policy, the dollar-bloc currencies will outperform their competitors in the near term, analysts said.

The euro next week should trade between $1.4370 and $1.4620, analysts said. The dollar should trade between Y90.60 and Y93.80.

As the global recovery picked up steam at the end of 2009, Thanos Papasavvas, head of currency management for Investec Asset Management in London, said his firm sold some investments in dollar-bloc currencies to take profits on positions that had run up big gains.

"We've put some of that risk back on," buying into the commodity-backed currencies in 2010, "because the overall environment is quite positive," said Papasavvas, whose firm manages more than $60 billion.

Dollar-bloc currencies should benefit from next Thursday's release of fourth-quarter Chinese gross domestic product, which is expected to grow by 10.8% from the same quarter a year earlier, according to a Dow Jones Newswires survey of economists.

Even if China continues on its path to slowly tighten fiscal policy, strong growth in emerging markets should keep demand stoked for commodities, helping prop the dollar bloc currencies, said Robert Lynch, currency strategist at HSBC in New York.

The Australian dollar hit a nearly two-month high against the U.S. dollar Thursday, while the Canadian dollar soared to a three-month high. Both slipped a bit Friday, but are expected to rebound.

The Australian dollar next week should trade around $0.9093 to $0.9330, while the U.S. dollar should trade around C$1.0200 to $C1.0420, analysts said.

"We're quite confident that the commodity currencies are going to have pretty well-supported levels," Papasavvas said. "Even if they don't rally against the [U.S.] dollar dramatically, we would expect them to appreciate."

The euro, which benefited in 2009 from the dollar's woes, will sag under the weight of fiscal issues in the euro zone, especially concerns over sovereign credit in Greece.

For much of 2009, the euro would gain when the global economic picture brightened and investors decided to buy riskier assets, but the relationship between the euro and risk has broken down so far this year as the euro zone struggles with high deficits and sovereign credit issues.

"The expansion and contraction of the risk trade and its correlation with the eurodollar that was so evident in 2009 doesn't seem to be as evident now," Lynch said.

GVI Forex Blog 20:43 GMT January 17, 2010 Reply   
The US dollar held up well amid a generally risk averse Friday sessions, despite US economic data generally improved and close to expectations.

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