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Market Tracker

2/9/10 10:57
Target   3-Mo
3.75 Aust 4.09
0.10 Japan 0.25
0.50 U.K. 0.62
1.00 E-Z 0.60
0.25 Switz 0.25
0.25 Cda 0.42
0.13 U.S. 0.25
2-YR % bp chg
Aust 4.11 3
Japan 0.16 0
U.K. 1.23 2
E-Z 1.02 2
Switz 0.46 0
Cda 1.09 -1
U.S. 0.78 0
10-YR % bp chg
Aust 5.38 -3
Japan 1.35 -1
U.K. 3.98 3
E-Z 3.16 1
Switz 1.95 -1
Cda 3.34 -1
U.S. 3.59 0


 


 


The Daily Forex View

 

The Daily Forex View


An Uneasy Calm

11:00 GMT- Feb 9 (global-view.com) The USD is trading generally weaker against Europe, but is higher against the JPY today. There has been a lot of talk about the early return of ECB President Trichet to attend a pre-existing EU summit It is unclear if this is because he needs to mediate an agreement to help Greece through its economic difficulties. Worries about credit risks at the periphery of Europe have not been resolved to the satisfaction of most investors yet and could resurface at any time.

We would not go far to say that the risk trade is back on today, but the commodity currencies have rebounded and oil and gold are up at this hour. No major U.S. data are due before Thursday, so the markets will have another day today to digest the latest employment data from last week, which were a bit weaker than expected, but not excessively so.  

Today the U.S. will see a 3-yr auction and the API energy data. See ECONOMIC CALENDAR for a complete list of upcoming forex market events and consensus data estimates. Go to the forex forum for up-to-date market developments and technical trading ideas.


FOREX

CHARTS: Forex pairs vs 2-yr note spreads

Forex   EUR vs.     GBP vs. 10:57
EUR 1.3713 57 JPY 122.90 93 JPY 139.60 28
GBP 1.5577 -23 GBP 88.03 50 CHF 166.55 -79
CHF 1.0692 -35 CHF 1.4662 13 CHF vs.    
JPY 89.62 31       JPY 83.82 56

EUR/USD is higher. The equity correlation trade has been working off and on recently. The ECB has been backing away gradually from extraordinary policy ease and worries about the weaker Eurozone economies have been a weight off and on.

EUR/CHF is steady. It has been established well below its perceived 1.50 SNB  floor. USD/CHF is lower. The SNB periodically has reconfirmed EUR/CHF support. The SNB made comments that it would continue to prevent excessive franc gains against the euro. The SNB periodically has been intervening in the EURCHF cross. 

USD/JPY is higher, and the EUR/JPY is stronger. Japanese forex policy is now aiming at weakening the JPY. The government and BOJ have reconciled their differences.

GBP/USD is steady. EUR/GBP is up. Mixed data have been triggering GBP instability. BOE King recently indicated that a weaker GBP could contribute positively to U.K. economy.


COMMODITIES and Commodity Currencies

Commodity         10:57
CAD 1.0695 -47 AUD 0.8704 58 Gold 1068 5.20
CNY 6.8277 2 NZD 0.6889 55 WTI 72.28 0.39

The CAD is stronger. The Bank of Canada has been turning turned less dovish as the economy stabilizes. Canada could be one of the early major economies to raise interest rates, but not immediately.

The AUD and NZD are higher. Risk trades keep cycling in and out. The RBA surprised by holding rates steady. Some still expect an April RBNZ rate hike.

Gold and Oil are higher. Gold, oil, equities and the commodity currencies are all carry trades. Gold is another anti-dollar.


EQUITIES & INTEREST RATES

Equities           10:57
NIK 9933 -19 DAX 5504 19 DJIA 9908 -23
HSI 19790 239 FTSE 5119 26 S&P 1057 -9
SSEC 2949 14 SMI 6353 #REF! NAS 2126 -4
ASX 4505 -16       TSE 11115 -108

Far East equity markets closed lower amid ongoing concerns about a tightening of Chinese monetary policy and weakness overseas. European bourses are up. U.S. equities are better. 

The U.S. 10-yr note is 3.59%, +2 bp. Fixed income markets are vulnerable as they consider the prospect of an end to excessive Fed ease and large borrowing needs by the the U.S. government. Nevertheless. Fed Funds should remain low for an extended time period.


John M. Bland  is an author, and co-founder and partner of Global-View.com in 1996. Before that, he was a Vice-President and senior dealer in the fx inter-bank and futures trading arm of the  Continental Grain Company in NYC. Previous to that, he was an early member of the Chemical Bank (NYC) corporate advisory service. He also worked in international liability management. John has an MBA from the Hass School at the University of California at Berkeley and a bachelors degree in International Economics from Berkeley .


WEEKLY- Sovereign Crisis to Remain

21:00 GMT- February 5  (global-view.com) We will never apologize for our fundamental bias. Most professional traders use the fundamentals in conjunction with their technical studies. Many pure technical traders assert that the fundamentals are already in the prices. Well sometimes they are and sometimes they are not. The end of this past week saw a price move that caught most traders by surprise. What happened was that credit issues suddenly erupted in Portugal. They came on the heels of worries about the Greek budget and triggered worries about Span and then some other nations. 

This evolving story triggered a wave of liquidations in a broad range of markets. Both the USD and JPY gained against many instruments for flight to safety reasons as the two have extensively been used as funding currencies for all manner of carry trades. When institutions sell equities they use the proceeds of those sales to pay back the USD or JPY they had to borrow to buy them. The same goes for gold, oil, commodities, commodity currencies, etc. This process sets off a self-reinforcing cycle as the funding currencies become more expensive and carry trade investments fall in value.

We noted on Thursday as the details of the crisis dribbled out that those who followed the fundamentals recognized quickly that a basic change in the markets was under way. On the other hand, we noticed that many technical traders, rather than pulling out, tried to fade the move all the way down. A recognition of the fact that this was not a status quo move could have saved pure technical traders a lot of money and gotten them on the right side of the market. The bottom-line. it is a big mistake to think the all the fundamentals are built into the market. They are not now and never have been. This is not to say that the study of price patterns does not play a major role in successful trading, but traders must realize that they are only part of the puzzle that is trading.

Looking ahead, we are not confident that the sovereign debt issues in Europe will be resolved quickly or easily, they are structural problems that will have to be addressed. In one form or another these same issues will have to be addressed in most mature economies. In the trading horizon of most Forex traders, liquidation of carry trades are likely to continue to provide support for the USD and JPY and weigh on many of the favored investment vehicles.    

John M. Bland is an author and co-founder and partner of Global-View.com. Prior to Global-View.com, he was a Vice-President and senior dealer in a forex inter-bank and futures trading arm of a subsidiary (ContiCurrency) of the Continental Grain Company in NYC. Previous to that, he was one of the early members of the Chemical Bank corporate advisory service in NYC, and also worked in international liability management for that bank. John holds an MBA from the Hass School at the University of California at Berkeley and a bachelors degree in International Economics from Berkeley.

 

 


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Global-View.com Chart Gallery
02/09//2010                
10:57 GMT   2yr bp 10yr bp DJIA 9908 -23
USDX 80.13 -17 0.78 0 3.59 0 S&P 1057 -9
USD vs.             NAS 2126 -4
EUR 1.3713 57 1.02 2 3.16 1 DAX 5504 19
GBP 1.5577 23 1.23 2 3.98 3 FTSE 5119 26
CHF 1.0692 35 0.46 0 1.95 -1 SMI 6353 #REF!
JPY 89.62 31 0.16 0 1.35 -1 NIK 9933 -19
CAD 1.0695 47 1.09 -1 3.34 -1 TSE 11115 -108
AUD 0.8704 58 4.11 3 5.38 -3 ASX 4505 -16
NZD 0.6889 55         HSI 19790 239
CNY 6.8277 2         SSEC 2949 14
EUR vs. GBP vs.   CHF vs.  
JPY 122.90 93 JPY 139.60 28   JPY 83.82 56
GBP 88.03 50 CHF 166.55 79   Gold 1068.1 5.20
CHF 1.4662 13         WTI 72.28 0.39
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Extensive Free Daily Technical Chart Points

2/8/2010 EURUSD USDJPY USDCHF GBPUSD USDCAD
Close 1.3659 89.28 1.0724 1.5604 1.0744
High 1.3714 89.56 1.0772 1.5660 1.0746
Low 1.3622 89.15 1.0685 1.5536 1.0658
Mov avgs EURUSD USDJPY USDCHF GBPUSD USDCAD
5 day 1.3783 89.76 1.0650 1.5772 1.0675
10 day 1.3878 89.92 1.0589 1.5925 1.0660
20 day 1.4091 90.35 1.0446 1.6091 1.0526
50 day 1.4353 90.50 1.0358 1.6143 1.0514
100 day 1.4596 90.17 1.0274 1.6246 1.0559
200 day 1.4348 92.56 1.0519 1.6249 1.0855
Pivots 1.3665 89.33 1.0727 1.5600 1.0716

Source: Free Global-View FX Database





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