Thread: Daily FX Market Outlook by AceTrader-11-1-2011

Market Review - 10/01/2011 21:47 GMT

Euro recovers from 4-month low on short-covering

The single currency extended last week's selloff to a fresh four-month low at 1.2860 (NZ) on Monday due to lingering eurozone sovereign debt crisis after a senior eurozone source said on Sunday that pressure was growing on Portugal from Germany, France and other eurozone countries to seek financial help from the EU and IMF, however, a Portuguese government spokesman later denied a German magazine report that Lisbon was under pressure from Berlin and Paris to seek a bailout. Euro recovered from said intra-day low and reached 1.2965 in NY on short-covering.

In addition, a French government source said 'it's nonsense to say France, Germany pressuring Portugal to take aid.' German Chancellor Angela Merkel also said Germany was not trying to force Portugal to accept a EU bailout and would not do so in the future.

In other news, Greece is set to sell 1.5 billion euros (US$ 1.94 billion) of short-term debt on Tuesday and Portugal will sell as much as 1.25 billion euros in government bonds on Wednesday, followed by Spanish and Italian bond sales on Thursday.

The greenback recovered from last Friday's NY low 82.85 against the Japanese yen and reached 83.30 in NZ, however, price retreated from there and edged lower to 82.66 in NY session.

Minneapolis Fed President Narayana Kocherlakota said 'sees U.S. GDP growth of 3-3.5% in 2011; sees inflation rising 1.5-2% in 2011'; he said bar would be very high for him to support stops to bond buying program. Kocherlakota added that 'unemployment rate between 6.5-8% is range that could lead to inflationary pressures'; he expected U.S. unemployment rate declining to close to 9% by end-2011, staying above 8% through 2012.

Atlanta Federal Reserve Bank President Lockhart said US economy gained durable momentum and Fed's QE helped. Friday's job report confirmed economy is moving forward at modest pace with labor market improving. There was little sign of inflationary pressures and household deleveraging to continue in 2011.

The British pound briefly retreated to 1.5505 (NZ) but cable rebounded in tandem with euro and reached 1.5569 in Asian morning. Although price fell sharply to 1.5475 later, cable rebounded strongly and rose sharply to 1.5604 in NY session as cross-buying in pound provided support to cable. Eur/gbp weakened to near 4-month low of 0.8285 before staging a recovery.

Earlier in London morning, cable tanked after U.K. Halifax house price in December fell more than street forecast, came in at -1.3% m/m vs forecast of -0.4% m/m , recording the largest decline in 3 months.

Economic indicators to be released on Tuesday include:

Japan leading indicators, UK RICS house prices, Australia trade balance, Canada housing starts and US wholesale inventories.

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Market Review - 11/01/2011 21:40 GMT

Euro edges higher before Portugal's debt auction

The euro ratcheted higher against the dollar on Tuesday due to short-covering as traders became cautious ahead of a heavy schedule of debt issuance by southern European countries this week. Traders would pay attention to Portugal's debt auction on Wednesday and the country will sell up to 1.25 billion euros of bonds, followed by Spanish and Italian bond sales on Thursday.

Euro was supported as Japan's Finance Minister Yoshihiko Noda said Japan will buy euro bonds to help boost trust in European Financial Stability Facility (EFSE) scheme while eurozone sources said the finance ministers of the region would be likely to consider the option of raising the effective lending capacity of the zone's rescue fund as part of efforts to calm sovereign debt markets. Market speculation of increased Portuguese bond buying by ECB also lifted the single currency. Although the single currency retreated to 1.2904 from Asian high of 1.2992, the euro later edged higher to 1.2994 in NY.

In other news, Portuguese Prime Minister Jose Socrates echoed earlier comments by his finance minister Santos and said in a speech in Lisbon that Portugal wouldn't need a bailout from the EU and its 2010 budget deficit would be lower than forecast, he also added rumours that the country needed aid are only helping 'speculators' while hurting Portugal and the euro.

The greenback rose from 82.68 against the Japanese yen in Asian morning and although the pair staged a pullback, renewed buying interest at 82.90 lifted up the pair and dollar reached 83.50 in NY before retreating.

Minneapolis Federal Reserve Bank President Narayana Kocherlakota said this would not be the time to start tightening policy now. He added 'if U.S. Fed haven't started to consider tightening by end-2011, it may need to start considering by 2012.' In other news, U.S. sold $32 billion 3-year notes at high yield 1.027% with a bid-to-cover ratio at 3.06.

The British pound initially edged lower and dipped to 1.5513 in Europe after U.K.'s BCC warned that Britain's economic recovery was risking a setback in Q4, 2010, however, cable rebounded strongly from there and rose to 1.5640 in NY before moving sideways.

Economic indicators to be released on Wednesday include:

Japan trade balance and Economic watch DI, UK trade balance, Canada new housing price index, and US export price index and Fed budget.

http://www.acetraderfx.com

Market Review - 12/01/2011 21:41 GMT

Euro surges versus dollar as Portugal auction demand rises

The euro strengthened against the dollar on Wednesday after Portugal sold bonds due in 2020 at a yield of 6.716%, lower than 6.806% at the previous auction Nov. 10. The auction was met with increased demand as investors asked for 3.2 times the amount of 10- year bonds sold, up from 2.1 times at the November sale.

The single currency edged higher in Asia and reached 1.3047 in European morning. Although euro staged a pullback to 1.2961 on profit-taking, the single currency subsequently surged from said intra-day low and eventually climbed to 1.3145 in NY session.

Traders would wait for the results of the Spanish and Italian bond auctions together with ECB rate decision on Thursday. In other news, an academic adviser to the People's Bank of China said no one wishes to see the euro disappear and Europe's debt crisis did not alter the long-term strategic position of the euro in the global monetary system.

The greenback initially fell to 82.98 against the Japanese yen from 83.42, however, the pair rose sharply to 83.47 before tumbling to 82.80 on dollar's broad-based decline in NY.

Fed's beige book indicated that all Fed districts showed employment levels were rising in at least some sectors, generally by modest amounts. U.S. economic activity continued to expand moderately through early January and manufacturing sector continued to improve across all Fed districts. Retail spending improved across all districts but banking and financial services were mixed. Most Fed districts indicated business contacts were positive about outlook but still cautious, upward pressure on wages was not seen yet.

Although cable climbed to 1.5681 in European morning, price quickly retreated after release of larger-than-expected U.K. November trade deficit, which widened to 8.736 billion pounds vs forecast of 8.33 billion pounds, the Nov figure was the highest (worse) since records began in Jan 1980. Cable staged a pullback to 1.5583 but swiftly surged from there in tandem with euro and later rallied to 1.5780 in NY before stabilizing.

Economic indicators to be released on Thursday include:

Australia jobs data, UK industrial production, manufacturing and Band of England rate decision, ECB rate decision and press conference, Canada trade data, and US trade balance, jobless claims and PPI.

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Market Review - 13/01/2011 21:53 GMT

Euro surges broadly on short-covering due to Trichet's hawkish comments

Euro rose sharply across the board on Thursday after head of ECB Trichet expressed concerns about inflation. Traders bought the single currency aggressively on short-covering following his hawkish comments.

Although the single currency staged a pullback to 1.3088 in European morning, euro then staged a spectacular rally on hawkish remarks by ECB President Jean-Claude Trichet at the ECB press conference after ECB kept benchmark interest rate unchanged at 1.00% as expected. Trichet said 'euro zone inflation was somewhat higher than expected in Dec., could temporarily increase further; risks to inflation outlook are still broadly balanced and risk could move to the upside.'

Trichet's comments triggered broad-based short-covering in euro, the single currency eventually climbed to 1.3383 versus the dollar. Cross-buying in euro also helped price as eur/jpy surged to 110.67 from 108.72, eur/chf rallied to 1.2885 from 1.2686 and eur/gbp rose to 0.8443 from 0.8314.

In other news, the much-awaited Spanish bond auction ended successfully as demand was strong with a bid-to-cover ratio of 2.6 vs previous 1.6 in Nov 2010, however, Spain had to pay 4.542% interest for its 5-year debt vs previous rate of 3.576%.

The greenback initially rose to 83.15 against the Japanese yen in Asia, however, the pair fell sharply to 82.55 in NY session before recovery. The greenback was pressured as U.S. initial jobless claims came in at 445,000, much higher than the forecast of 405,000 and the previous reading of 409,000.

Despite the British pound's initial dip to 1.5719, cable later rose sharply in tandem with euro and climbed to 1.5885 before retreating. On economic front, U.K. Nov manufacturing production came in at 0.6% vs forecast of 0.4%, Nov industrial production was weaker than expected, actual 0.4% vs forecast of 0.5% (British industrial output grew at its slowest annual pace since July). Later, BOE kept key interest rate unchanged at 0.50% and asset purchase target remained at 200 billion.

Economic indicators to be released on Friday include:

Japan Domestic CGPI, Germany CPI final and HICP final, Switzerland Combined PPI, UK PPI and CPI, and US retail sales, real earnings, industrial production, capacity utilisation and business inventories.

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Originally Posted by acetraderfx

market review - 13/01/2011 21:53 gmt

euro surges broadly on short-covering due to trichet's hawkish comments

euro rose sharply across the board on thursday after head of ecb trichet expressed concerns about inflation. Traders bought the single currency aggressively on short-covering following his hawkish comments.

Although the single currency staged a pullback to 1.3088 in european morning, euro then staged a spectacular rally on hawkish remarks by ecb president jean-claude trichet at the ecb press conference after ecb kept benchmark interest rate unchanged at 1.00% as expected. Trichet said 'euro zone inflation was somewhat higher than expected in dec., could temporarily increase further; risks to inflation outlook are still broadly balanced and risk could move to the upside.'

trichet's comments triggered broad-based short-covering in euro, the single currency eventually climbed to 1.3383 versus the dollar. Cross-buying in euro also helped price as eur/jpy surged to 110.67 from 108.72, eur/chf rallied to 1.2885 from 1.2686 and eur/gbp rose to 0.8443 from 0.8314.

In other news, the much-awaited spanish bond auction ended successfully as demand was strong with a bid-to-cover ratio of 2.6 vs previous 1.6 in nov 2010, however, spain had to pay 4.542% interest for its 5-year debt vs previous rate of 3.576%.

The greenback initially rose to 83.15 against the japanese yen in asia, however, the pair fell sharply to 82.55 in ny session before recovery. The greenback was pressured as u.s. Initial jobless claims came in at 445,000, much higher than the forecast of 405,000 and the previous reading of 409,000.

Despite the british pound's initial dip to 1.5719, cable later rose sharply in tandem with euro and climbed to 1.5885 before retreating. On economic front, u.k. Nov manufacturing production came in at 0.6% vs forecast of 0.4%, nov industrial production was weaker than expected, actual 0.4% vs forecast of 0.5% (british industrial output grew at its slowest annual pace since july). Later, boe kept key interest rate unchanged at 0.50% and asset purchase target remained at 200 billion.

Economic indicators to be released on friday include:

Japan domestic cgpi, germany cpi final and hicp final, switzerland combined ppi, uk ppi and cpi, and us retail sales, real earnings, industrial production, capacity utilisation and business inventories.

http://www.acetraderfx.com

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