FX Old News Article (may-2009)

FX Old News Article

by ac-markets.com 

MAY , 2009

Final US Treasury Auction of $26bn of 7yr Notes Goes Off Without a Hitch - USD Under Pressure

Yesterday's final US treasury auctions of $26bn of 7yr notes went off without a hitch. In a week which saw $101bn of new supply entering the market, investors' worries were calmed as bid-cover ratio and percentage awarded to indirect bidders matched auctions in the past. So it looks like for now the foreign demand for US debt is unchanged. However, as we had mentioned in the past if there was a...(more)

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Dollar momentarily constructive as U.S Govt. Yields rise massively – structural worries remain and GM prepares for bankruptcy filing.

The news monopolizing the financial newswires yesterday was the massive jump and subsequent selloff in U.S Government yields. US10Y jumped 20bps and closed above the important resistance of 3.70%. This could potentially be disastrous for the mortgage market, which is widely seen to be the major to an economic recovery in the U.S; furthermore high govt. yields stunt domestic growth and weighs on...(more)

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US Treasury Auction Pass Without Incident

Risky assets are once again in fashion' as yesterday's US treasury auction went off without a hitch and the US Conference Board consumer confidence jumped unexpectedly to 54.9 vs. 39.2 previously. US equities enjoyed another strong trading day and today both Asian and European indexes are trading higher. Going into yesterdays US trading session, markets optimism had begun to wane on the back of...(more)

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Market Focused on US Treasury Auctions

Yesterday's Holidays in the UK and US combined with a lack of fresh data has kept FX markets range bound. However, as European markets open we are seeing decent demand for the USD. The EUR/USD slipped through the 1.3900 level and the GBPUSD dropped below 1.5800. Traders are selling out of KRW after a 20% appreciation against the USD on the back of its neighbor’s hawkish activities. We expect a...(more) .........................................................................................

North Korea's Weapons Test Fail to Provide Markets with a Direction

With no major economic data today, worries and debate over the US ’s credit outlook and optimism surrounding the Eurozone's economic data will provide traders with a choppy, directionless trading day. The migration from risk aversion trading to the examination of fundamentals was tested by new missile tests from N. Korea. Local news agency reported that N. Korea successfully tested an underground...(more)

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USD forecast to extend losses versus Euro and Sterling

The week drew to a close in Asia with the Dollar showing no signs of recovery whatsoever. USD selling was the highlight yesterday with an early charge of EURUSD and GBPUSD getting sharply reversed on the back of S&P cutting its outlook for the UK 's AAA sovereign rating. Similar comments were made early this morning in regards to the USA . Price action...(more) .........................................................................................

Euro Rises on positive German ZEW survey

There was little in the way of news overnight but markets generally kept the faith and held in taking on a decided more 'normal' look as VIX broke back below 30 for the first time since September. Data was in the news (probably because there was little else to draw attention) but different interpretations of it probably make any strong conclusions hard to draw. US Housing Starts and Building...(more)

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USD Under Pressure as Stocks Rally

The risk rally continues. Risky assets recovered sharply yesterday after last week’s bout of selling. Sentiment received a further boost yesterday, as media reports suggested that US regulators decided to allow banks to just to repay the TARP funds, rather than requesting government approval. On the back of the report, banks that were recognized as not requiring additional capital are reported...(more)

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Shift In Global View on Weak GDP Figures

The release of German GDP on Friday, which showed a contraction of -3.8% q/q, took the wind out of the EUR and the “Green Shoots” theory. Pundits over the weekend, such as Times columnist Anatole Kaletsky, described the data as 'arguably the most catastrophic economic statistics produced by any official institution in the capitalist world since 1945'. We see such comments as overdone, but it...(more) .........................................................................................

Markets remain buoyant despite shimmers of risk aversion amidst deflation fears.

Equity markets in the U.S are set to end the week lower for the first time in 9 weeks as data flows this week were less encouraging than the headliners of last week. This said it is apparent that markets are convinced a bottom is in and there is no going back, U.S jobless claims coming out at 637K against a consensus of 610K not even rattling markets. In the newsletter I wrote on Monday I...(more) .........................................................................................

Data Disappoints & Challenges Near Term Recovery Hopes

It was only a matter of time before the economic data wouldn’t hold up to the hype and “green shoots” theory trampled on. And yesterday was such a day, quickly reversing risk takers growing optimism. Actually, yesterday started off very well, with China's retail sales posting a 14.8% y/y jump and recoveries champion continued to make headway. However, in the Eurozone industrial production...(more) .........................................................................................

FT Article Prompts USD Selling

Markets are currently stable, as participant wait for fresh news or data. Overnight, a report from the Financial Times weighed on the USD. The FT ran an opinion piece by David Walker, the former comptroller general of the US , suggesting that the US needs to take immediate action to steer clear of a downgrade in its AAA rating (re-hashing the long-term critique of US public finances). It’s...(more)

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Comments Help Risk Appitite
The EUR continues to be helped by recent risk-appetite, supported by equity market rallies and declining VIX and growing credibility to the ‘green shoots’ theory. In addition, as the market discounts the probability of a “black swan” event in the financial sector, the flight to safety trades becomes less relevant. With focus being put back on the Fed’s massively bloated balance sheet, timing of...(more)

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Risk appetite, jobs and more risk appetite... Oh and green shoots too!
The calls for tentative signs of a recovery a little under 2 months ago seem to have caught on – the movement verdantly labeled “green-shoots” has seen economic data improve consistently – and markets take heed of these signs by being more aggressive. Data such as the ADP and NFP numbers were more than encouraging (even Australian employment numbers were encouraging, actually rising while markets...(more)

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Stress Test Results Impact Benign & Markets Wait for NFP
The much anticipated results of the US bank Stress Test failed to soften investor’s optimism, despite 10 firms requiring nearly $75bn in new capital. US equity markets closed slightly lower and the USD was able to make some headway, as traders braced themselves for uncertain events (US 30year yields rallied sharply after the 30year auction went quite badly). However, on the release, with no...(more)
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Jobless numbers encourage investors as stress tests seem to be priced in, BoE and ECB announcements set to be benign.
The ECB and BoE are both meeting respectively today to discuss monetary policy. The MPC is set to keep rates the same and announce step 2 of their QE policy. Furthermore the BoE is expected to announce further GILT purchases – tapping into the remaining £75Bn of the £150Bn committed by the government. The ECB is expected to be cutting Refi rates by 25bps down to 1.00% and announce further...(more)
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Risk Appetite Fragile Ahead of Tomorrows ECB Meeting & Stress Test Results
After a slight drop in risk appetite due to newswire reports suggesting that BofA will need an additional $34bn of capital, risk taking seems to be creeping back into the markets (Citigroup's shortfall is reported to be 'more limited'). Yesterday's Wall Street session closed lower, with the S&P down -0.37%, but Asian regional indexes were able to rally back this morning. Initially, the USD...(more)

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