Thread: Daily FX Market Outlook by AceTrader-4-7-2011

Market Review - 01/07/2011 20:07 GMT

Euro ends higher against greenback after intra-day volatile movements

The single currency ended higher against the greenback on Friday and climbed to a three-week high of 1.4553 in European morning before retreating as some investors unwound safe-haven positions in the aftermath of Greek votes on austerity measures earlier this week.

Earlier in Asia, euro resumed recent gain against the greenback after meeting renewed buying at 1.4467 at Asian open, price briefly penetrated Thursday's high of 1.4538 to a 3-week high of 1.4553 in early European trading, however, profit-taking ahead of ECB rate decision next week limited intra-day gain and euro later dropped to a session low of 1.4437 before rebounding strongly, the pair closed near 1.4527 at New York closing.

Versus other major currencies, the greenback jumped briefly but strongly agianst the yen and Swiss franc and rose to a sessions high of 81.15 and 0.8525 respectively after data showed business activity in the US manufacturing sector came in stronger than expected in June.

U.S. reported manufacturing expanded at a faster pace in June with ISM manufacturing index rose to 53.3 from 53.5 in May, whilst US construction spending and University Michigan survey (Final) showed at a decrease of 0.6 percent in May and 71.5 in June respectively.

Cable moved in a volatile manner on Friday with price initially rising to as high as 1.6096 at European opening and then tumbled to a session low of 1.5987 on speculation that Bank of England would keep interest rate at record lows in coming months after UK reported a weaker-than-expected manufacturing survey in June, however, cross-buying in sterling, especially versus euro emerged and price later rebounded strongly to around 1.6080/85 in New York before moving sideways. UK Manufacturing PMI in June came in at 51.3 versus 52.1 in last month.

News quoted comments from Standard & Poor's (S&P) that 'S&P continues to hold view that there is 1 in 3 chance that ratings on Italy could be lowered within the next 24 months; far more substantial reforms will be needed in light of Italy's weak growth, and Italy austerity plans generally credible but government could be overly optimistic on its fight against tax evasion'.

Economic data to be released next week include:

Switzerland Retail sales, EU Sentix Investor Confidence and PPI, UK PMI construction, and Canada PPI on Monday (US market holiday);

Australia Trade balance and RBA rate decision, German Services PMI, EU service PMI and retail sales, U.K. Services PMI and and US factory orders on Tuesday;

Japan Leading indicators, EU GDP (rev.), German factory orders, Canada Building permits, U.S. ISM non-manufacturing and New Zealand GDP on Wednesday;

Japan Machine orders, Australia Unemployment rate, Swiss CPI, UK Industrial production, manufacturing production and BOE rate decision, German Industrial production, EU rate decision, US ADP employment and Jobless claims, and Canada New housing price index and Ivey PMI on Thursday;

Japan Current account and Economic watch DI, Germany Trade data, U.K. PPI data, Canada Unemployment rate and Employment change, and US non-farm payroll, private payrolls, average hourly earnings, unemployment rate and wholesale inventories on Friday.

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Market Review - 04/07/2011 16:19 GMT

Euro pares gain after S&P says debt rollover may put Greece in ‘selective default’

The single currency extended last week's rally to a fresh one-month high of 1.4580 in Australia on Monday after EU finance ministers promised to release the 5th tranche of 12-bln euro EU/IMF aid package to Greece at EU FinMins' teleconference on Saturday, however, euro pared most of the gains and retreated after Standard & Poor’s said a debt-rollover plan for Greece may prompt a 'selective default' rating for the country. The pair weakened to 1.4496 in relatively thin European session as U.S. Markets were closed for the Independence Day holiday.

Bank of Japan Governor Masaaki Shirakawa said Japanese economy continues to face downward pressure, mainly on output, but showing signs of picking up; Japanese economy likely resume moderate recovery as output improves.' He also said 'global economy continues to recover, albeit at a slower pace; global financial markets remain unstable due to worries about Greek sovereign risk.' The greenback fell briefly from 80.94 to 80.54 versus Japanese yen before recovering on short-covering together with dollar's rebound against other major currencies.

In other news, Bloomberg reported that Reed, which runs British's largest recruitment website, released a report showing that U.K. employment creation accelerated as demand for skilled, highly qualified staff has added fuel to this month's increase. Despite extending erratic rise from last week's near 3-month low of 1.5912 to 1.6140 in European morning, the British pound retreated after the release of slightly weaker-than-expected U.K. construction PMI which came in at 53.6 versus the economists' forecast of 53.7 and cable weakened to 1.6055 before rebounding to 1.6100 on short-covering.

The Australian dollar dropped from last Friday's high of 1.0790 to 1.0712 due to a surprise fall in Australian retail sales which decreased by 0.6% versus economists' forecast of 0.3% increase. The Reserve Bank of Australia is expected to keep rates on hold for the eight straight month on Tuesday at 4.75%.

Tuesday will see the release of Australia trade balance, German services PMI, eurozone service PMI and retail sales, U.K. Services PMI and US factory orders.

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Market Review - 05/07/2011 21:40 GMT

Euro tumbles after Moody's cut Portugal's credit rating to junk

The single currency declined sharply on Tuesday after Moody's Investors Service downgraded Portugal's credit rating to junk, igniting renewed fears over the Greek debt crisis, that could spread to other weaker members of the eurozone.

Moody's cut Portugal's rating by 4 levels to BA2, 2 notches into junk territory, with a negative outlook saying there is great risk the country will need a second round of official financing before it can return to capital markets.

Earlier in the day, renewed selling interest at 1.4554 in Australian session capped the euro's intra-day recovery and price then ratcheted lower to 1.4442 in New York morning. Later, despite staging a modest recovery in New York midday, the single currency fell swiftly and sharply from around 1.4485/88 to as low as 1.4395 in late New York session after Moody's cut Portugal's government bond rating to junk. Cross-selling in euro versus the Japanese yen, the Swiss franc and sterling also pressured the single currency in late New York trading as eur/jpy, euro/chf and eur/gbp tumbled to the day's lows of 116.69, 1.2100 and 0.8970 respectively.

The British pound declined from 1.6100 in tandem with the euro in Asian session n despite falling to a session low of 1.5990 in European morning, cable then jumped after the release of slightly higher-than-expected UK CIPS services PMI which came in at 53.9 versus economists' forecast of 53.5. Later, price climbed to an intra-day high of 1.6128 b4 retreating to 1.6039/40 in late New York trading.

The Swiss franc strengthened against the dollar and euro as investors flocked to the franc as a safe-haven asset. Usd/chf and eur/chf tanked from around 0.8456 to 0.8385 and 1.2238 to 1.2100 respectively in late New York session before staging a minor recovery.

Data to be released on Wednesday include:

BRC Shop Price Index, Japan Leading indicators, EU GDP (rev.), German factory orders, Canada Building permits, U.S. ISM non-manufacturing.

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Market Review - 06/07/2011 19:41 GMT

Euro falls to one-week low due to persistent fears of European debt crisis

Euro tumbled to a one-week low versus the dollar on Wednesday due to the escalating concerns on European debt crisis together with interest rates hike by the Chinese central bank, spurring demand for the greenback and the Swiss franc as safe-haven assets.

Despite ratcheting higher on minor short-covering to 1.4467 in European morning following the selloff to 1.4395 in the previous session, the widening of periphery bond yields gave euro bears extra ammunition to give euro another bashing, price penetrated said support easily and intra-day decline accelerated after the People's Bank of China raised interest rate by 25 basis points in European midday, the single currency later tanked to a one-week low of 1.4286 in New York morning before staging a minor recovery. Cross selling in euro also pressured the single currency as eur/jpy, eur/gbp and eur/chf tumbled from 117.05 to 115.56, 0.9018 to 0.8943 and 1.2172 to 1.1966 respectively.

The Portuguese 10-year government bond yields jumped to a record 12.55 percent after Moody's cut the country's credit rating to junk on Tuesday, while Irish, Italian, Spanish and Greek yields also surged on bets that more ratings cuts may follow.

China raised benchmark interest rates for the third time this year after inflation accelerated to the fastest pace since July 2008. Benchmark one-year lending rates will be hiked by 25 basis points to 6.56% and benchmark one-year deposit rates will be raised by 25 basis points to 3.5%, effective on this Thursday.

The British pound tracked euro's intra-day movement closely. Despite staging a modest recovery to 1.6090 at European open, cable also tumbled in European morning on active cross-selling in sterling versus the Japanese yen as the cross pair tumbled from 130.29 to 128.99. The pound eventually dropped briefly to a session low of 1.5947 in New York morning after triggering stops below recent good support at 1.5970.

Elsewhere in the market, spot gold price jumped from $1510.70/oz to as high as $1533.40/oz as concerns over the European sovereign debt problems and the Chinese central bank's rate move increased a flight to safety.

Data to be released on Thursday include:

Japan Machine orders, Australia Unemployment rate n unemployment change, Swiss CPI, UK Industrial production, manufacturing production and BOE rate decision, German Industrial production, ECB rate decision, US ADP employment and Jobless claims, and Canada New housing price index and Ivey PMI.

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Market Review - 07/07/2011 20:03 GMT

Euro rallies broadly as ECB suspends collateral rules for Portugal

The single currency rose strongly on Thursday across the board after European Central Bank President Jean-Claude Trichet said the central bank decided to suspend the application of the minimum credit rating threshold in the collateral requirements for Portugal until further notice at the ECB press conference following interest rate announcement. The ECB raised its widely expected lending rate to 1.50% from 1.25% to tame inflation pressure.

ECB President Trichet also said that we did not decide that we would have a series of interest rate increases and the further adjustment of the current accommodative monetary policy stance is warranted in the light of upside risks to price stability.

Earlier in the day, renewed selling interest at 1.4347 pressured the single currency lower in Asia. Later, despite falling below previous session low of 1.4286 to 1.4277 in European morning and then to a day's low of 1.4220 after Trichet started the press conference regarding data which showed some deceleration in growth, the euro then rallied across the board in New York morning and price eventually climbed to as high as 1.4375 before retreating on profit-taking. Eur/jpy, eur/gbp and eur/chf jumped from 115.54 to 116.80, 0.8905 to 0.8995 and 1.1977 to 1.2144 respectively.

The British pound fell against the dollar on active cross selling in sterling versus the euro due to the widening interest rate differential prospect. Although cable staged a minor recovery from the day's low of 1.5944 in European morning, price then retreated after meeting renewed selling interest at 1.6018 and the pound was confined inside the aforesaid intra-day range for the rest of the day despite euro's rally in New York morning.

The Bank of England kept key UK interest rate at a record low of 0.50% and maintained QE total at 200 billion sterling. Cable showed little reaction after the BoE rate decision.

The dollar rallied against the Japanese yen and the Swiss franc after the release of much better-than-expected U.S. June ADP employment change which came in 157K vs economists' forecast of 70K and the upwardly revised 36K in May. Usd/jpy rose above last week's high of 81.27 to 81.41 from around 81.10/15 while usd/chf strengthened briefly from 0.8440/45 to as high as 0.8495 before retreating on profit-taking.

Data to be released on Friday include:

Japan Current account and Economic watch DI, Germany Trade data, U.K. PPI data, Canada Unemployment rate and Employment change, and US non-farm payroll, private payrolls, average hourly earnings, unemployment rate and wholesale inventories.

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Market Review - 15/08/2011 22:00 GMT

Euro rallies on risk appetites and dollar's broad-based weakness

The single currency rallied to a three-week high against the greenback Monday on risk appetite and dollar's broad-based weakness as investors hoped that a meeting on Tuesday between French President Nicolas Sarkozy and German Chancellor Angela Merkel may result in further action to contain the region’s debt crisis.

The single currency ratcheted higher from 1.4261 to 1.4329 in European morning before retreating to 1.4264. However, euro rallied sharply to 1.4476 in NY morning due to return of risk appetite together with dollar's broad-based weakness after release of weak U.S. data before stabilising. Active cross buying of euro vs yen and sterling also lifted the single currency as eur/jpy and eur/gbp rallied from 109.60 to 111.01 and from 0.8756 to 0.8829.

The U.S. Empire state manufacturing index for August came in at -7.72 compared to a forecast of 0.80 and previous figure of -3.76. U.S. Net purchases of long-term securities fell to $3.7 billion in June from a revised $24.2 billion in May.

Euro was also supported by the rally in U.S. equities as DJI surged by 1.90% or 213.88 points and closed the day at 11482.90.

The single currency was also encouraged by the ECB's bond-buying last week as the ECB completed 22 billion euros of bond purchases under securities markets programme in week to Aug 12, which was the highest weekly settlement since it began buying EU government bonds from the market in May 2010.

Versus the Japanese yen, the greenback briefly climbed above the 77.00 level to a high of 77.09 on active cross selling of yen. However, price retreated sharply to 76.80 in Asian morning before staging a recovery to 76.97. Dollar later fell in NY morning on weak U.S. manufacturing data and extended a intra-day decline to 76.60 after the release of U.S. net purchases of long-term securities before recovering to 76.88 in NY afternoon.

The British pound traded sideways around 1.6280 in Asia and fell briefly to 1.6257 in European morning. However, cable rallied sharply to 1.6410 in tandem with euro in NY morning before trading sideways in NY afternoon.

Data to be released on Tuesday include:
Australia RBA meeting minutes, Germany GDP Q2, U.K. CPI, RPI, DCLG, EU GDP Q2, trade balance, U.S. building permits, housing starts, export price index, import price index, capacity utilisation, industrial production.

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Market Review - 16/08/2011 22:04 GMT

Euro pares its gain on disappointing French-German proposal

The single currency retreated on Tuesday as German Chancellor Angela Merkel and French President Nicolas Sarkozy said in a press conference that they did not support the creation of eurobonds or an expansion of the EFSF to contain the debt crisis.

The single currency ratcheted lower from Australian high at 1.4454 on cross selling of euro and fell sharply to 1.4355 in European session on weak German and eurozone GDP data (German and EU Q2 Q/Q GDP growth was 0.1% and 0.2% vs forecasts of 0.5% and 0.3% respectively). However, euro rebounded on weak U.S. data and extended its gain to 1.4473 in NY midday after the German and French leaders announced their conclusions but price retreated swiftly to 1.4377 in NY afternoon as their speech failed to ease worries about the debt crisis.

U.S. housing starts and building permits for July dropped by 1.5% and 3.2% to 604k and 597k vs forecasts of 600k and 605k, respectively.

Cable edged lower in tandem with euro to an intra-day low of 1.6323 in European morning before rallying strongly on active cross buying of sterling vs euro which tumbled from 0.8824 to 0.8738. The British pound eventually climbed to 1.6478 in NY afternoon before retreating.

The British pound was supported by higher than expected inflation with U.K. CPI m/m and y/y for July coming in at 0.0% and 4.4% vs market expectations of -0.1% and 4.3% respectively.

Versus the Japanese yen, the greenback edged lower from Asian high of 76.91 to 76.66 on cross buying of yen but the pair staged a strong rebound to 76.93 in NY morning after Fitch reaffirmed its AAA rating of the U.S. However, price swiftly fell to 76.69 before staging a recovery in NY afternoon.

Ratings agency Fitch affirmed U.S. AAA rating and assured its outlook remains stable. Fitch said "U.S.'s exceptional creditworthiness remains intact. AAA rating of U.S. reflects the pivotal role in global financial system and also reflects monetary and exchange rate flexibility which helps economy absorb and adjust to shocks."


Data to be released on Wednesday include:

New Zealand PPI input, PPI output, EU current account, HICP final, U.K BoE minutes, ILO unemployment, avg. earnings, claimant count, U.S. PPI, PPI core.

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Market Review - 22/08/2011 22:00 GMT

Euro retreats on risk aversion

The single currency pared its early gain Monday on risk aversion due to the retreat of U.S. equities. Investors are focusing on the August 26 conference in Jackson Hole by Federal Reserve Chairman Ben Bernanke who may indicate the Fed will increase monetary stimulus to boost the economy.

Despite euro's brief rise to 1.4393 in Asia, the single currency edged lower to an intra-day low of 1.4347 before surging to 1.4434 on the rally in European equities together with cross buying of euro. However, the pair pared most of its gains and fell to 1.4366 in NY morning as U.S. stocks retreated together with cross selling of euro vs jpy and chf and then dropped further to 1.4356 ahead of NY closing

DJI opened up by more than 1%, however, it pared its initial gain and closed the day at 10854.56, up by 37.00 points or 0.34%. FTSE-100, CAC-40 and DAX once rallied by more than 2% but they later retreated and eventually closed up by 1.08%, 1.14%, and down by 0.11% respectively.

Versus the Japanese yen, the greenback rose to 76.87 in New Zealand following Sunday's comments by a senior Japanese government official, who said that there is no change in Japan's stance of taking decisive action in the currency market depending on market's developments. Despite dollar's retreat to 76.57 in Asian morning, the pair spiked to 77.21 on speculation of possible intervention from Bank of Japan but price came off quickly and then traded around 76.80 in European and NY sessions.

Although the British pound traded sideways in Asia after last Friday's selloff from 3-month high of 1.6618 to 1.6456 and then rose to 1.6522 in NY morning, cable fell in tandem with euro to 1.6435 before recovering to 1.6489 in NY afternoon due to cross buying of gbp vs euro.

Data to be released on Tuesday include:

China HSBC flash manufacturing PMI, Japan Machine tools orders, Swiss Trade balance (chf), Germany Manufacturing PMI, Services PMI, ZEW Economic Sentiment, ZEW Current Situation, EU Manufacturing PMI, Services PMI, ZEW economic sentiment, Consumer Sentiment, U.K. BBA Mortgage Approvals, CBI Orders, Canada Retail sales, U.S. New home sales, Richmond Fed Manufacturing.

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Market Review - 24/08/2011 21:57 GMT

Dollar advances broadly on speculation Fed won't provide more stimulus

The greenback rose across the board Wednesday as investors lowered their expectations that Fed Chairman Ben Bernanke will signal further stimulus this Friday in Jackson Hole, Wyoming. Spot gold price tumbled sharply by more than $100 to $1750.60/oz on Wednesday, one day after reaching an all-time high of $1911.40/oz.

Versus the Japanese yen, the greenback fell from 76.88 in Asian morning as Japanese Finance Minster Yoshihiko Noda did not explicitly mention currency intervention, instead focusing on other measures to stem the yen's rise. Although the pair dropped to 76.48 in NY morning, the greenback rebounded after the release of better-than-expected U.S. durable goods data and climbed to 77.07 in NY afternoon due to dollar's broad-based strength together with cross selling of yen as further actions by the Fed look less likely.

Earlier in Australia, Moody's lowered Japan's government rating from Aa2 to Aa3 with outlook stable. Moody's said 'frequent changes in administration have prevented government from implementing long-term economic and fiscal strategies.'

U.S. durable goods orders were 4.0% vs forecast of 2.0%, the previous figure was revised to -1.3%. U.S. durable goods ex-transport and ex-defense were 0.7% and 4.8% vs forecasts of -0.5% and 3.2% respectively.

The single currency extended its fall from Tuesday's NY high at 1.4447 in Asia to 1.4379 in European morning after the release of weaker-than-expected German IFO data. However, price rose strongly to 1.4475 on talks of the ECB was buying Italian bonds and gained further to 1.4482 in NY morning before dollar's broad-based strength sent euro sharply lower to 1.4389.

German IFO business climate and current assessment for August were reported at lower than expected 108.7 and 118.1 compared to forecasts of 111.0 and 120.0 respectively.

The British pound traded sideways in Asia and rose in tandem with euro to an intra-day high of 1.6535 in European morning. However, cable tumbled sharply to 1.6365 at NY mid-day on dollar's broad-based strength together with active cross selling of sterling vs euro (eur/gbp rallied from 0.8725 to 0.8813) before stabilising.

The DJI rose by 143.95 points, or 1.29%, to 11320.71. The FTSE-100, CAC 40, and DAX surged by 1.49%, 1.79%, n 2.69%, respectively.

On the data front, eurozone June industrial orders M/M n Y/Y are reported at -0.7% n 11.1% against forecasts of 0.5% and 12.1% respectively. U.S. home prices in June were +0.9% m/m and -4.3% y/y, prior figures were +0.4% and -6.3%, respectively.

Data to be released on Thursday include:

U.K. consumer confidence, Germany Gfk consumer confidence, Switzerland employment level, ZEW index, U.K. CBI distribution trade, U.S. jobless claims.

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Market Review - 29/08/2011 21:58 GMT

Dollar rises versus yen and franc on risk appetite

The greenback strengthened against the Japanese yen and the Swiss franc Monday due to rally of U.S. and European stock markets as solid U.S. economic data raised investors' appetite to buy riskier assets instead of holding safe-haven currencies.

Versus the Japanese yen, the greenback traded narrowly in Asia on dollar's weakness before dropping to 76.58 in European session. However, the pair climbed to 77.02 in NY morning on risk appetite together with the rally of U.S. and European equities before retreating to 76.81 ahead of NY closing.

The DJI gained 254.71 points, or 2.26%, to 11539.25 whilst the CAC-40 and DAX closed up 2.16% and 2.39% respectively. U.K.was closed on market holiday.

The greenback was supported by better-than-expected U.S. economic data. U.S. personal income and personal spending in Jul increased 0.3% and 0.8% vs forecasts of 0.3% and 0.5% respectively. PCE index M/M and Y/Y in Jul came in at 0.4% and 2.8% whilst core PCE M/M and Y/Y were up 0.2% and 1.6% respectively.

Earlier in Asia, Japan's Finance Minister Yoshihiko Noda was elected as the next leader of the DPJ and the vote for PM is scheduled for Tuesday.

Despite euro's retreat to 1.4466 in Asia, the single currency surged to 1.4550, it's highest level since early July on improved risk appetite in thin European session but price pared intra-day gain and retreated to 1.4485 at New York open. Although the pair met renewed buying and rebounded to 1.4546 on the rally of U.S. and European equities, offers around 1.4550 sent euro back to 1.4491 in NY afternoon before stabilising.

The British pound briefly dipped to 1.6322 in Australia but edged higher on risk appetite in Asian and European sessions. Cable eventually climbed to an intra-day high of 1.6454 in NY morning on cross buying of sterling but retreated in tandem with euro to 1.6387 in NY midday before recovering.

Data to be released on Tuesday include:

New Zealand building permits, Japan household spending, unemployment rate, retail sales, Australia building approvals, U.K. mortgage approval, EU business climate, economic sentiment, industrial sentiment, consumer sentiment, Canada PPI, current account, U.S. SnP/CS home price, consumer confidence, FOMC minutes.

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