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Forex - Trade the News - U.S. Market Update
Dow -30 S&P +0.15 NASDAQ +6.6
- Indices start the week in the red as AIG spooks markets ahead of the NY open. In a filing released just before the open AIG -11% disclosed that they have been advised to expand prior disclosures for fair value of CDOs and super senior default swaps. The Co. is saying they have yet to determine the decline in value that will be included in its 2007 financial statements. AIG was not the only Dow components to make noise ahead of the open. CVX and BAC will be replacing MO and HON in the DJ Industrial Average at the start of trade on Feb 19th. Several small buyout announcements were announced driving gains for POSS +35%, ACLS +20%, and HYC +30%. Home building stocks have been rallying since the open. XHB +4% Tech stocks are holding up the NASDAQ led by the semis. SMH +2.8%. Treasury prices moved higher as stock futures moved lower after the AIG disclosure. The 10-year note future has added 11 ticks while the cash yield has slipped back to 3.60%. April crude has drifted back towards overnight highs to trade up 0.75% at $92.55.
- The USD was mixed in a quiet start of the trading week. Little catalysts were seen from the weekend G7 summit. The G7 did not single out US dollar or Euro in their official statement scaled down rhetoric on China FX policy. However, risk aversion theme remains the apparent motivator in Forex as unwinding of carry flows is helping the JPY and CHF pairs firm against the major currencies. Dealer chatter focused on AIG disclosure just prior to the US equity open of weakness in Credit-Default Swap Accounting. UK''s Standard Charter bank noted that its Whistlejacket SIV breeched capital note NAV. EUR/JPY is at 154.60, lower by 150 pips since the start of Asian trading today. EUR/CHF is holding below the 1.60 handle. The short end of the yield curve is firmer with safe haven flows cited as the catalyst. The iTraxx Crossover Index traded at 557bps, highest on record. The GBP remains mixed following its PPI data despite the fact that the YoY reading of input prices was at the highest level since 1981. GBP/USD remains consolidating in a .9400 to 1.9500 level in the aftermath of the inflation data. Commodity currencies were mixed in the session as metals and oil drifted lower. CAD is softer in the session at 1.0030 following its new housing data release. AUD is maintaining a firm tone following the RBA quarterly outlook relased during the Asian session. March Bund futures are up 29 ticks at 117.52; March Gilts remain softer following the UK PPI data, last at 110.51 (down 34 ticks in session). Euro Stoxx 50 Index down 1% at 3,663; FTSE 100 lower by 1.4% at 5,702; Cac-40 down 0.9% at 6,715 and Dax Index softer by 0.75% at 6,710
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