FX Old News Article (jun-2009)

FX Old News Article

by ac-markets.com

jun , 2009

’09 Q2 draws to a close – risk aversion remains a pertinent theme as key players are looking to undermine the dollar’s central role. As we draw nearer to this year’s half-way mark it is clear that reports of a V-shaped recovery back in March we’re greatly optimistic. The sheer complexity of the global economic crisis and it’s repercussions on business climate has greatly hampered the economy’s ability to right itself. The rapid cutting of interest rates, vast amounts of liquidity injections have central banks tackling...(more) ......................................................................................... EUR & GBP locked in downside consolidation Thursday’s trading can best be described as ‘scrappy’. There was no dominant theme for traders to cling to so they were cautious and reverted to type, following equity markets moves as a signal for risk appetite and as a barometer for the Dollar. The CHF seemed to be the subject of intervention (again there was no official comment from the SNB) as, on two occasions, the Swiss Franc took a sharp...(more) ......................................................................................... SNB Grabs the Spotlight While the FOMC failed to excite the market, it was SNB's currency intervention which provided the day's fireworks. Overall, the Fed stuck to the company line (perhaps a slight hawkish lean) stating 'conditions in financial markets have generally improved in recent months' and 'the pace of economic contraction is slowing' in regard to growth. In regard to inflation, stated “substantial resource...(more) ......................................................................................... FOMC Due In light trading, risk appetite has stabilized with USD weakening, while equities and commodities temporarily halted their downside slide. The S&P closed slightly higher, CRB Commodity Index closed back above its 200d MA on the back of stronger crude, which closed up $2.07 to $69.22bll. However, the rationale for the sudden shift in sentiment for a third time this week is difficult to...(more) ......................................................................................... World Bank Downgrade its Global Growth Estimate

With any market move, pundits (such as myself) are forced to assign a rationale. This has been the case with the recent sell off in commodity prices and spillover effect into FX. Yesterday, price move were conveniently attributed to the World Bank's downgrade of its global growth estimates. We have our doubts that an international organization forecast would have such a profound on market...(more)

.........................................................................................

Subtle USD Strength in an Uncertain Market

Uncertainty seems to be the core theme in FX markets, with the USD stuck in limbo. With a busy week ahead, markets are taking a wait and see approach to pricing. With Eurozone PMI, US durable goods, UK CBI distributive trades, Swiss KoF and the FOMC announcement on the docket, we would expect the EURUSD to be pushed out of its subtle bearish channel (horizontal support 1.3750). The key event for markets...(more)

.........................................................................................

FX Markets Range Bound & SNB Policy Unchanged We are seeing a return of buying risky assets. However, movements have been choppy and of little significance. Yesterday's Philly Fed survey positive surprise help give markets the lift they needed after a difficult week. In early Asian trading, Reuters reported that the British Bankers' Association (BBA) said it will allow more institutions to take part in the daily survey that sets the London...(more) ......................................................................................... SNB Rate Announcement & Philly Fed Index With the EURCHF heading towards the 1.5000 level, perhaps the main event in European session will be the SNB's announcement. There is little room for a surprise rate change of 3-mth Libor target, so speculation revolves around if the SNB will increase the scale of its QE and/or continue its efforts to weaken the CHF. Originally, the SNB announced its unsterilized FX intervention policy would...(more) ......................................................................................... Usd Gains Halted as Risk Appetite Returns The USD lost some ground, as European markets opened higher and risk appetite seems to be cautiously creeping back. The EURUSD rallied to 1.3900, while the JPY crosses, which had been under significant selling pressure, rallied across the board. Yesterday, the S&P closed down almost 2.4% and major indexes in the Asia-Pacific region all closed lower. European indexes, which opened notably...(more) ......................................................................................... USD Survives G8 and Continues to Strengthen Ahead of BRIC Conference

This weekend's G8 conference ended with no real surprises. The final communiqué left the impression that ministers have formed a united front on the need to develop “exit strategies” from unconventional policy measures (however obvious division among countries with respect to individual nations current strategies exist) to head off inflation. While forward looking thinking is always commendable,...(more)

.........................................................................................

Today its All About US Retail Sales Today’s US retail sales release will be an interesting test that FX market's reaction to US data might be shifting. Currently the trend is counter intuitive and positive US data is viewed as “pro-risk” causing USD selling. The recent discussions from FOMC members and participants globally over the timing of ending the entrenched accommodating monetary policy, prompted the market to price in 50bp...(more) ......................................................................................... Markets Pair Back Fed Rate Expectations The recent support the USD has garnered on speculation that the Fed would begin to drain liquidity and tighten rates seems to be waning. Mounting positive economic data (Friday's NFP) and hawkish comments from ECB members (Trichet's press conference comments) fueled USD buying and a decline in demand for risky assets. However, the foundation of the trade was thin and since Tuesday has seen a...(more) ......................................................................................... Flurry of encouraging news has optimists buzzing but can it convince the broader market?

Reports that the Fed will announce 10 banks are ready to pay back the TARP funds they benefitted from at the height of the crisis has added to the general idea that the larger economies are steering clear of the worst part of this economic crisis – this should amount to $50Bn in funds being returned. This is expected to be a Dollar and Yen bear signal as the haven currencies throughout this...(more)

......................................................................................... USD Rallies Back on Stronger US data There has been a stark change in the markets’ sentiment regarding the USD since last Thursday. The obvious question is: is this shift a complete reversal or just a temporary correction before a continued USD weakness? The markets reaction to the large upside surprise to private sector payroll employment (improvements across all sectors) seems to us slightly misguided. The USD initially sold off...(more) ......................................................................................... Waiting on NFP When the smoke cleared, not much really happened at yesterday's much hyped Central Bank announcement. In fact, we would venture to say that the day's only real fireworks occurred when rumors spread of the resignation of PM Gordon Brown and/or Alistair Darling. The GBPUSD fell from 1.6400 to 1.6090 on the false news. The once untouchable Sterling has now taken on a decidedly bearish tone....(more) ......................................................................................... Green shoots gets a reality check – risk aversion creeps back into markets – are we nearing the end of the correction? Recent market developments and commentary from government officials has refocused the dollar as the only available reserve currency. India, Japan and Korea have all expressed their conviction that only the dollar could be considered a viable option as a global reserve currency – this and the Chinese government reassuring Treasury Secretary Geithner that they would continue hold their...(more) ......................................................................................... S&P Hits a 6-Month High while GM Enters Bankruptcy Protection While the USD selling eased yesterday, concerns over the long term direction are still apparent. Yesterday, the S&P climbed to a 6 month high, while 10yr Treasuries closed at 3.67% up significantly from Friday. While Credit default swaps are stable the 10yr TIP spread have widen (signaling inflation concerns), so it seems that the risk of US default is less of an issue, but higher inflation...(more) ......................................................................................... Risk Appetite surges after stronger than expected China PMI - USD Falls

The USD has begun the new month on a weak footing, as news from the automotive sector has increased the risk premium on the greenback. It’s all but certain that the US largest car manufacturer, GM, will enter bankruptcy protection today. Proceedings should go relatively quickly as negotiations have proceeded for some time and we expect the impact on the market sentiment to be tempered. Risk...(more) thank forex news by ac-markets.com