Tuesday, November 24, 2009

MORNING FX
BRIEFING
Tokyo holiday Monday (Labour Thanksgiving), with the US out Thursday for Thanksgiving (early close Wednesday/half staff Friday) made for a relatively subdued Asian session. A continued paring back of risk into early Asia, with system accounts showing decent demand for dollars, pressed euro-dollar to lows of $1.4833, cable to $1.6474 and Aussie to $$0.9112. This opening scenario was quickly reversed as market reacted to the opening bullish tone in gold, the price spiking to $1164.75 with traders linking the move to $1200 Comex calls that roll off today. Euro-dollar rallied back to $1.4948, cable to $1.6552, with Aussie edging back up to $0.9206. Yen was basically sidelined due to the holiday.

Risk remains favoured into early Europe, aided by the positive tone in Asian equities, and boosted by weekend comments from Fed Bullard on wanting to see an extension of the Fed's MBS buy programme, as well as Fed Fisher not surprised if Fed keeps rates near zero until at least the middle of 2010. EZ flash manufacturing PMI's, Canada retail sales, US home sales and US 2yr Tsy auction the day's highlights.

EURO
Euro-dollar opened in Asia around $1.4860 and was pressed to a session low of $1.4833 as system accounts showed decent demand for dollars, as well as market reacting to a Telegraph article noting concerns about Greek debt rising CDS premiums). This early move was quickly reversed as gold opened with a strong bull tone, the price spiking to $1164.75, with traders linking the move to physical need ahead of $1200 Comex calls expiring today (2.5mln ozs in open market mentioned). Euro-dollar rallied to a session high of $1.4948 with ongoing demand into early Europe lifting it on to $1.4959 ($1.4966 76.4% $1.5017/1.4800). A break above this area to open a move on toward $1.4990/00 ($1.4990 76.4% $1.5049/1.4800). Above here and rate can extend toward $1.5015/20 ahead of stronger interest in the $1.5050/65 area. Support $1.4920, more toward $1.4900.


YEN
Traders reported light activity in the yen thanks to the Tokyo holiday, with attention this week moving to CPI data for October, anticipated to be the lowest levels since records began in 1971. Attention also focused on unemployment data Thursday and the release of BoJ minutes Wednesday. Dollar-yen traded in a tight Y88.80/89.03 range, while traders did report euro-yen buying coming from a model fund, lifting the cross off early lows at Y131.85 as comments from Fed's Bullard aided risk positions.


CABLE
Closed in NY Friday at $1.6503, off session lows of $1.6460. Early system demand for dollars acted to take rate back under the figure and on to session lows of $1.6474. The spike up in gold (talk of large $1200 expiring calls on Comex) reversed the early risk off tone and allowed rate to rally back to $1.6537. Rate then settled between $1.6500/35 during the Asia afternoon before picking up a late bid tone that extended the recovery to $1.6552. Rate dipped to $1.6530 into the European session before again picking up fresh demand, the rate pushing on to $1.6573 ($1.6568 50% $1.6676/1.6460) as risk given additional boost from gold, as it continues to squeeze higher. Offers seen placed toward $1.6580, a break to open a move back toward $1.6600, where minor sell interest so far noted. Above here and stronger interest seen at $1.6625 (76.4%). Support noted at $1.6520, with further interest extending toward $1.6500. Further demand noted from $1.6475 through to $1.6460.


OPTIONS AND MORE
FX Option expiries for today's 1500GMT cut

* Euro-dollar; $1.4900, $1.4875, $1.4800
* Dollar-yen; Y89.00, Y88.50, Y87.45, Y90.00
* Dollar-Canada; C$1.0700


EUROPEAN STOCKS: European equity bourses are seen opening higher this morning, with spreadbetters calling the FTSE-100 up 31pts, CAC-40 up 26pts and Xetra-DAX up 46pts. The mining sector is once again being eyed for strength today as gold hits new record highs, and from the macro front, the US Existing Home Sales at 1500GMT is the only release of note. With this, "equity markets are a bit doubting of everything at the moment and a figure below expectations will be badly received" suggests Daniel Roy, equity strategist at Newedge, also noting a figure pushing the gauge close to 6mln will be positively received.

DAILY CALENDAR
Monday's European data starts at 0730GMT, when the raft of national service and manufacturing PMI flash data are released. First up is the German data, followed at 0757 with the release of the French data and the overall EMU flash releases at 0800GMT.

Central bank speakers start at 0815GMT,when ECB Governing Council member Miguel Fernandez Ordonez is set to appear before the Committee on Budgetary Affairs of the Senate, in Madrid

At 1245GMT, ECB President Jean-Claude Trichet speaks at the Association de Mercados Financieros'annual convention, in Madrid

Ahead of that, the Canadian September 2009 Retail trade data is released at 1230GMT.

US data starts at 1430GMT, with the release of the MNI Capital Goods Index for the Nov 20 week.

At 1500GMT, Oct 09 Existing Home Sales data from the National Association of Realtors data are released. Existing home sales are expected to rise to a 5.70 million annual rate in October after jumping 9.4% in September. The government extended the tax credit for first time home buyers, but not before October and November sales likely got a boost from last minute purchases.

At 1800GMT, the US Treasury starts the latest leg of financing, with the auction of $44.0 billion in 2-year notes. The sale schedule is bumped up a day from the norm, due to Thursday's Thanksgiving holiday.

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