Friday, October 2, 2009

NordMarkets Morning FX - October 2

Traders reported a relatively calm Asian session with China still closed and ahead of today's key US employment data. US stocks had closed on their lows (S&P -2.58%), with yen crosses coming lower in late NY and into early Asia. Sterling-yen fell over 100-points to Y142.00, while euro-yen printed a fresh lows for the recent run at Y129.65, bang in line with the 200-day moving average. Dollar-yen stayed heavy throughout after dropping to an Y89.21 low, while Japan's jobless rate improved to 5.5% from 5.7% versus market forecast of 5.8%. Meanwhile Japanese finmin Fujii said he would not bring up the topic of the strong yen at the G7. Elsewhere, euro-dollar was pulled down by the euro-yen move, taking out Thursday's base en-route to $1.4502 before a bounce back to the $1.4550 area into early Europe, focus switching the Ireland's second referendum on the Lisbon Treaty today, though results will not come until the weekend. Cable traded in a $1.5882/1.5938 Asia range before release of Nationwide House Price data into Europe pushed the pair briefly towards $1.5950.

After coming under persistent sell pressure through the US session, euro-dollar recovered slightly off the $1.4517 low to close around $1.4540. Traders said downside pressure was again evident into Asian dealing as a variety of accounts looked to sell. A back-box fund was said to have been the driving force to trigger weak stops through $1.4510. Decent demand then emerged into $1.4500, cushioning the fall at $1.4502, with the rate then recovering steadily over the balance of the day towards $1.4550. Early Europe sees marginal highs for the day, though underlying tone said to remain bearish after this week's sell-off. Reports of stops under $1.4500 still, specifically at $1.4470 and said to be particularly large under $1.4450. Attention now switching to Ireland's second referendum on the Lisbon Treaty today, though results not expected to filter out until the weekend.

Dollar-yen closed the US session around Y89.60, while euro-yen struggled to bounce off the Y130.13 low, ending around Y130.35. Traders said yen crosses were under pressure from the open in Asia, with dollar-yen selling then overwhelming any fixing demand. Euro-yen cleaned out the stops under Y130.00, with slippage extending down to Y129.65, bang in line with the 200-day moving average. Sterling-yen lost 100-points down to Y142.00, while dollar-yen slipped down to an Y89.21 low. Meanwhile finmin Fujii made it clear that he would not comment on the yen rise at the G7, while Japanese employment data came in better than expected. Japanese stocks traded in the red throughout to close down 246-points (-2.47%). Subsequent bounces in the yen pairs were relatively muted, dollar-yen struggling to get back above Y89.50, though euro-yen has managed to regain the Y130 handle, moving towards Y130.20 into early Europe.

Data already out showed UK house price deflation came to a halt in September, with house prices flat on the year, according to the Nationwide survey. House prices rose 0.9% on the month in September to stand unchanged on the year. This was the first time house price were not down on the year since March 2008 in the Nationwide data series. The three monthly growth rate of house prices was even more striking. House prices rose 3.8% on a 3-month basis, the fastest such growth since August 2004. Nationwide is the first house price survey to show house prices no longer falling on the year.

It is non-farm Payrolls day in the states, but ahead of then, UK house price data from the Nationwide gets a slow European calendar underway.

UK data also sees CIPS Construction PMI and the Q2 BoE Housing Equity Withdrawal data at 0830GMT.

Core-European data sees just the 0900GMT release of EMU industrial PPI for August.

Ahead of the US data, at 1215GMT, Boston Fed President Eric Rosengren speaks to the Greater Boston Chamber of Commerce on inflation and financial markets.

At 1230GMT, September nonfarm payrolls are expected to fall 170,000 after the 216,000 decline in August. Jobs cuts have been virtually across the board. Manufacturing payrolls are expected to fall 55,000. The unemployment rate is expected to rise to 9.8% after jumping to 9.7% in August. Hourly earnings are expected to rise 0.2% after two strong gains, while the average workweek is forecast to remain at 33.1 hours.

US data continues at 1400GMT, when factory new orders are expected to rise 1.0% in August despite the reported 2.4% drop in durable goods orders.

Finally, at 2035GMT, Dallas Fed President Richard Fisher has a conversation on the new global economy with Cokie Roberts at Duke University.

Best Regards,


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