Forex Market Commentary and Analysis (15 April 2010)
The euro depreciated vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3520
level and was capped around the $1.3665 level. There is an increasing consensus among traders
that Greece will be forced to tap its credit facilities with the European Union
and International Monetary Fund.Greece
is said to have sufficient cash to meet its obligations until the beginning of
May at which time some ‚ā¨ 8.8 billion in bond redemptions will come due.Greek finance officials scaled back a planned
bond auction for the end of April to less than US$ 5 billion from a much larger
facility that was planned. European
Central Bank member Bini-Smaghi today said the Greek crisis is at a ‚Äúturning
point‚ÄĚ but those comments are inconsistent with the run-up in spread between
Greek ten-year debt and German bonds to more than 400 basis points.The European Central Bank released its April
monthly report today in which it pessimistically said ‚ÄúIt remains to be seen whether significant progress
will be made in the main deficit and surplus economies in terms of living up to
the commitments made at the Pittsburgh G20 Summit last September.‚ÄĚ The ECB
added ‚ÄúSince the outbreak of the crisis, global imbalances have narrowed, but
this narrowing is likely to remain transitory to the extent that it has been driven
by cyclical factors that are likely to reverse from 2010 onwards. Another key
reason why global imbalances are likely to re-widen in the period ahead is that
the main structural factors that led to the initial build-up in imbalances are
likely to remain largely in place.‚ÄĚG20
officials will convene in Washington, D.C. from next week at the annual
meetings of the International Monetary Fund and World Bank.ECB member Stark said the central bank will ‚Äúoppose
any call to cut deficits with inflation‚ÄĚ and added the ECB still views current
rates as appropriate even though inflation risks seem ‚Äútilted to the upside.‚ÄĚHe added he is concerned about a ‚Äúdramatic‚ÄĚ
fiscal deterioration and said the European economic expansion may not be
sustainable.In U.S. news, data released in the U.S. today saw weekly initial
jobless claims print at 484,000, up from last week‚Äôs 460,000 tally, while
continuing jobless claims were higher at 4.639 million.These data indicate the U.S. labour market
has not had much traction early in the second quarter.Other data released today saw the April
Empire State manufacturing index print at 31.86 from the prior reading of 22.86
while February net long-term Treasury International Capital flows came in at +US$
47.1 billion, up from the revised print of +US$ 15.0 billion.Total net TIC flows were at +US$ 9.0 billion,
up from the revised ‚ÄďUS$ 10.2 billion.Also, March industrial production printed at +0.1%, March capacity
utilization came in at 73.2%, the April Philadelphia Fed manufacturing index
improved to 20.2, and the April NAHB housing market index came in at +19.Euro
bids are cited around the US$ 1.3175 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the
greenback tested bids around the ¬•92.85 level and was capped around
the ¬•93.50 level. Bank of Japan upgraded
its economic assessment in seven of the country‚Äôs nine areas. The central bank
reported the local economies ‚Äúhad picked up, although there remained
differences in the pace and extent of the recovery.‚ÄĚThe upgrade increases the likelihood the
central bank will increase their estimates for economic growth and inflation
when its semi-annual outlook is released on 30 April.Data released in Japan overnight saw February
industrial production decline 0.9% m/m and climb 31.3% y/y while February
capacity utilization was up 0.0% m/m.Traders await the release of the government‚Äôs April economic report
overnight.The Nikkei 225 stock index climbed
0.61% to close at ¬•11,273.79. U.S.
dollar offers are cited around the ¬•96.85 level.The
euro moved lower vis-√†-vis the yen as the single currency tested bids around
the ¬•126.30 level and was capped around the ¬•127.65 level.The
British pound moved lower vis-√†-vis the yen as sterling tested offers
around the ¬•143.25 level while the Swiss
franc moved lower vis-√†-vis the yen and tested bids around the ¬•87.70 level.
In Chinese news, the U.S. dollar appreciated
vis-√†-vis the Chinese yuan as the greenback closed at CNY 6.8260 in the
over-the-counter market, up from CNY 6.8258. Many data were released in China
overnight.First, Q1 real GDP came in on
the high end of expectations, printing at an annualized growth rate of 11.9%
y/y.Also, the March producer price
index was up 5.9% y/y and March consumer prices were up 2.4% y/y.Additionally, March retail sales were up
18.0% y/y and March industrial production was up 18.1% y/y.These data make it extremely likely the
Chinese government will revalue its yuan currency or widen its trading band by
an estimated 2-3%.Some traders believe
this move could take place as early as next week while most China-watchers
believe it will happen before the end of the second quarter.
British pound depreciated vis-√†-vis the U.S. dollar today as cable tested bids
around the US$ 1.5455 level and was capped around the $1.5505 level. Prime Minister Brown and Tory leader Cameron
debated ahead of the 6 May general election.Many political pundits believe the contest will result in a hung
Parliament and some now say the general election is too close to call with
Cameron perhaps still holding a slight lead over Brown.Data released in the U.K. today saw March
Nationwide consumer confidence print at 72, down from a revised +81.Cable bids are cited around the US$ 1.5140
level.The euro moved lower vis-√†-vis the British pound as the single
currency tested bids around the ¬£0.8750 level and was capped around the ¬£0.8830
franc depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers
around the CHF 1.0610 level and was supported around the CHF 1.0505 level.March producer and import prices data will be
released tomorrow.Swiss National Bank Vice
Chairman Jordan said regulators cannot allow governments to be ‚Äúblackmailed‚ÄĚ
into protecting banks from collapse during future financial crises.There was talk yesterday that the Swiss
National Bank may have sold francs for euro in an intervention to try and
support the Swiss export sector.U.S.
dollar offers are cited around the CHF 1.0920 level.The
euro moved lower vis-√†-vis the Swiss franc as the single currency tested bids
around the CHF 1.4330 level while the
British pound moved higher vis-√†-vis the Swiss franc and tested offers
around the CHF 1.6390 level.
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Mon 18 Dec
10:00 EZ- final HICP Tue 19 Dec
09:00 DE- IFO Survey
13:30 US- Housing Starts/Permits
13:30 US- Current Account Wed 20 Dec
15:00 US- Existing Homes Sales
15:30 US- EIA Crude Thu 21 Dec
03:00 JP- BOJ Decision
13:30 CA- CPI & Retail Sales
13:30 US Weely Jobless
13:30 US- GDP Fri 22 Dec
09:30 US- GB- GDP
13:30 US- core PCE Deflator & Presonal Income
15:00 US- New Homes Sales
15:00 US- final University of Michigan
17:00 US- early Closes Mon 25 Dec
00:00 Christmas Holidays
Potential Trading Opportunities
POTENTIAL PRICE RISK: Medium Mon--10:00 GMT-- EZ- final November HICP. flash data are rarely changed.
POTENTIAL PRICE RISK: HIGH- Medium Tue --09:00 GMT-- DE- IFO Survey. Key report but usually not a market-mover
POTENTIAL PRICE RISK: HIGH- Medium- Tue --13:30 GMT-- US- Housing Starts and Permits. Leading indicators of activity
POTENTIAL PRICE RISK: HIGH-Medium- Wed --15:00-- US- Existing Homes Sales. Top Housing statistic
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