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AC-Markets.com: Foreign Exchange Market (FOREX) daily and analyst comment
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Government Increases Pressure on the BoJ to Ease
The lack of 1st tier economic data and stories that have failed to capture the market’s imagination have kept FX markets in check. However, in Japan the rhetoric is really heating up, with even stronger worded comments regarding the stronger JPY and their perpetual fight against inflation, being hurled in to the market. Japanese PM Hatoyama said that the current market pricing of the yen did not...
RBNZ Dovish, SNB Still To Come
A bit like the football team AC Milan – star performer in years gone by – NZDUSD took a good old beating last night. Although the RBNZ’s decision to keep rates on hold at 2.5% was widely expected, the statement and subsequent commentary was altogether more dovish, and extinguished at least some of the prior enthusiasm for NZD this year. The statement repeated comments that the central bank...
GBP Under Heavy Selling Pressure
Overall trading has been insipid in the Asian session, a testimony to the lack of real drivers out there. And while we have seen some decent volatility in FX, pairs have not broken out of mid-term ranges. Interestingly, equity indexes continue to climb higher with S&P closing on the resistance at 1150, VIX safely below 20 and Crude prices steadily rising to $82.00bll. The Australian data was...
China's Comments Will Haunt Gold Buyers
FX markets were nervously quiet in Asian session, just waiting for a directional catalysis. Initially, the deputy governor of the PBoC and the head of the SAFE, Yi Gang, at a press conference in Asia, provided some detailed and honest comments regarding China’s foreign exchange and reserve policy. These comments reinforce remarks made on Friday from PBoC Gov. Zhou and Prime Minister Wen. On the...
Pressure on Greece and EUR Ease
Risk appetite has been cautiously creeping back into FX markets at the start of this trading week. While a one day doesn’t make a trend, the broader environment is shaping up to support a sustained rally in risk sentiment. First of all, the passing of the new austerity measures by the Greek congress on Friday was a step in the right direction. While unions immediately called for a general strike...
Greece Far From Out Of The Woods, Despite Successful Debt Sale
This week’s sale of Greek debt has gone unequivocally well; with pension funds and insurance companies alike lapping up the chance to secure 10 year bonds at a mouth-watering 6.35% yield. Compare that with Spain’s similar 5 year offering yesterday which went for 3% and the fact that this yield represents a hefty 295 basis points more than comparable German debt, and it’s clear to see why...
Waiting on the BoE & ECB
We still can’t shake the admission from the Greek Prime Minister that there were “holes” in the budget and tax collection was in “shambles”. While markets have initially embraced the Greek announcement of a 3rd set of new austerity programs, we have a hard time believing that these optimistic goals are actually attainable. It’s easy to austerity “grandstand”, the hard part is execution and we are...
Waiting on Greeces New Austerity Package
Barring a bombshell from the Greek austerity press conference, we believe markets will stay relatively quiet ahead of the BoE, ECB and Fridays NFP. In this environment, we will be looking to play the daily ranges. Leaks of the announcement conference have spilled out, with media outlets citing Greek government sources, saying that the government has decided on $6.5 billion in extra austerity...
RBA Hike Fails to Lift AUD & Waiting for the BoC
Markets were quiet until Europe woke up, where we saw a steady unwind of risk. The EURUSD traded down to 1.3490 from 1.3560, while the GBPUSD fell to 1.4860 from 1.4960. While in the mid-term we are short risk right now these pairs are well oversold and we would expect a near term term risk rally. There was really no single catalyst for the move, rather a continuation of yesterday’s...
Speculation of an Evolving Bailout Plan
Markets seem to be in a state of paralysis, unable to find a clear direction this Monday morning. The EURUSD was contained in a tight 100 pip range, while the USDJPY languished right below the Ichimoku daily could cover. Starting this week, the early part of March is filled with events which have the ability to truly shift market direction. This week is packed with macro G10 economic data...
Markets are Buzzing About a Potential CNY Shift...but we have heard it before
The EUR and GBP had a very tough day yesterday, while the JPY was by far the primary beneficiary. Risk aversion was rampant, due to the worries over a Greek downgrade and poor US economic data. This includes a durable goods number, which came out strong but, in further investigation, was weaker than the headlines had suggested. While the EUR was suffering from gloomy comments issued by rating...
Potential Greek Austerity Hitting Home
It seems that in the last few days the situation in Greece has taken a palpable turn for the worse. Not that any new economic revelations have revealed themselves, but rather there has begun a noticeable shift from the contained economic realm to the social realm. First, credit rating agencies S&P and Moody’s have both issued warnings that Greece might face further downgrades if the country...
Waiting on Bernanke's testimony
Risk appetite took a significant hit yesterday, as German IFO and US consumer confidence failed to impress the markets and concerns over Greece’s impending 24 hour strike weigh on sentiment. US equity closed down and today Asian and European markets followed. This was in spite of the positive economic data from Japan, that looked encouraging, as Jan trade surplus Y85.2 bln vs. Y108.5 bln deficit...
Dovish King Sends GBP Plummeting Lower
The lull in USD strength at the start of this week has quickly reversed this morning as lower than forecast IFO data in Germany and dovish central bank rhetoric from the UK has once again sent traders scurrying back to risk aversion trades. The BoE’s Governor King spoke to the Treasury select committee in London, opening with the assessment that the UK economy was still fragile and the risks to...
Soros Questions the Euros Survival & Bernanke's Testimony in Focus
Issues surrounding Greece are still the key driver of FX pricing and given the outlook, it will keep the EUR under pressure. This weekend, the German magazine “Spiegel” suggested that a eur25bn bailout was being negotiated, which gave the single currency and risk correlated trades a slight boost, but optimism was quickly grounded when the German Finance Minister denied the rumour. But more...
Fed Move Catches Markets Off Guard
By now the whole world has heard about the Federal Reserve raising the discount rate by 25bp to 0.75% last night. While the Feds official rhetoric claims that it is not signaling any shift in policy or economic outlook, it would be naïve view it in any other way. In his written testimony on Feb. 10th Fed Chairman Bernanke stated the Fed could adjust the discount rate "before long", and this would...
FOMCs Perceived Hawkishness Pushes USD Higher
Yesterday’s correction in oversold positions was short lived and the USD accumulation has continued unabated since. While no one story or headlines was the clear driver of risk aversion, the solid US economic data and FOMC minutes definitely supported USD bulls. US Housing starts came out 591k vs. 581k exp., while industrial production printed at 0.9 vs. 0.7 market expectation. Then, the FOMC...
Correction in Short Positions Not a Shift in Sentiment
Risk appetite has been rallying since yesterday, as the meeting of the Eurozone Finance Ministers resulted in the delay of any meaningful decision till mid-March. On the surface, this would seem to be negative for risk correlated trades, but given the size and speed of the recent selling, we view this recent move as a natural short-term unwind of overly sold positions, rather than a complete...
ECOFIN Meeting Today Not Expected to Provide Clarity
The fx markets main focus continues to be the Greek sovereign debt issue and the potential of something concrete materializing from the ECOFIN meeting today. However, we are doubtful we will hear anything new. The Eurozone members are expected to pressure Greece into endorsing further austerity measures and will be given until mid March to prove it will be able to reach its forecasted deficit...
Easing Pressure in Greek Bonds and CDS Fails to Benefit EUR
The Lunar New Year in Asia and President’s day in the US will keep trading subdued. However, light economic calendar will have little consequence, as the markets seem intently focused on the result of EU meetings and potential comments. We are noticing a level of divergence in the EU sovereign credit story, which will be critical to the direction of USD and EUR. On one hand you have a market that...
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