MORNING BRIEFING:  Speculation of Chinese tightening weighs on Asian trading

What’s new:
Euro Zone: Ireland still in the headlines, speculators betting on Irish to ask for EU aid soon
FOREX: EUR/USD finds resistance at 1.3750
Asia: Stocks stage mixed performance
Japan: Q3 GDP better than expected

Today:



Rates in Asia and Indices:
EURUSD: 1.3750 - 1.3635.
USDCHF: 0.9863 – 0.9763.
GBPUSD: 1.6154- 1.6056.
EURJPY: 113.64 – 112.81.
USDJPY: 82.98 – 82.40
DowJones: 11’192.58 -0.80%
NASDAQ:  2’518.21 -1.46%
S & P 500: 1’199.21 -1.18%
Nikkei: 9’827.51 +1.06%
Shanghai: 3014.41 +0.97%
Gold: $ 1'365.10
Crude Oil: $ 85.14

Comments:

Euro Zone Bond spreads are still dominating market headlines, the big question is if Ireland will tap for EU help any time soon? – It seems like markets are expecting it to come very soon, even though Ireland and IMF strongly denied such thing. Irish troubles stem from fears that the Irish banking sector could weigh heavily on Ireland’s debt bill.

EUR/USD trading, up to this morning, was capped at 1.3750. With the debt concerns of the Euro Zone periphery resurfacing the pair will most likely tend to be bearish. Our daily market comments, in the Financial analysis section for EUR/USD, sees a potential rise “higher to 1.3734 - 1.3788 after which weakness may set it to a drift down to 1.3585 limit” – remains valid.

Asian stocks were mixed this morning, as Chinese inflation reports issued last week led to speculation that China may hike interest rates - which could potentially harm China’s massive demand. Japan reported better than expected Q3 GDP, which came out at 0.9% against an expected 0.6% - Even though Economy minister Kaieda’s comments were rather negative as he attributed the expansion to a temporary rise in consumption and said that the Japanese economy remained weak.

Data ahead of us today is the Euro Zone trade Balance, US Retail Sales & NY Fed Manufacturing Survey.

Good day,


Rudolf Muscat
Trading desk

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