DAILY MARKET COMMENTARY
8 March 2012 – 8:00 GMT
Thursday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
For the second day running, Australian dollar bulls were temporarily knocked back by weaker than expected domestic data, with a 15.4k decline in employment and an uptick in the unemployment rate to 5.2% in February, coming on the heels of weak Q4 GDP data yesterday. The Australian dollar recovered its poise as risk sentiment improved amid the rise in the major equity indices. USDJPY remained well supported in Asia, aided by confirmation of a current account deficit for January (non-seasonally adjusted), the first since January 2009 and the deepest on record. To be sure, this does not herald a shift to a sustained current account deficit position yet, as exports were distorted by the Chinese New Year and the large income surplus will continue to provide a buffer against the trade deficit.
However, today's figures serve reminder of Japan's increased sensitivity to volume and price spikes for imported energy that could progressively eat into the current account balance and heighten 'twin deficit' fears - a worrisome prospect for the yen. MoF data released today showed that the Japanese remained net buyers of foreign bonds last week to the tune of Y276 bn, following the hefty Y1.4 trn tally recorded the previous week. Net foreign bond purchases have been chalked up in 8 of the past 9 weeks, underlining our view that repatriation will not be a major yen-supportive factor. The market spotlight now shifts to the upcoming policy decisions from the BoE, ECB and Bank of Canada. In line with the consensus, our economists expect 'no change' verdicts from all three central banks. Beyond the ECB decision, euro risks will hinge heavily on the headlines out of Greece, in the run-up to the 2000 GMT PSI deadline for bondholders to confirm their involvement. It still looks as if the CACs will be invoked and a credit event will be triggered by early next week, an outcome that markets should be well prepared for at this stage. Overnight ranges for EURUSD and USDJPY were 1.3135-1.3162 and 81.08-81.36, respectively.
EUR
Germany's Finance Minister Schaeuble said he discussed very openly with Greece's finance minister whether it would be better for Greece to leave the euro, but that Greek authorities were 100% committed to remaining within it.
Ahead of the deadline for bondholders to declare their involvement in Greece's debt restructuring, Greek media said participation levels are approaching 77%. We note that consent from only two-thirds of participants (who express a preference) would open the door for the Greek authorities to actually invoke the CAC clauses - likely triggering a credit event by early next week. A Greek government official said that six Greek pension funds with holdings of EUR3.4 bn of Greek sovereign debt continue to oppose the deal.
Schaeuble said a teleconference of Eurozone finance ministers has been scheduled for 1300 GMT on Friday.
JPY
Weekly MoF statistics revealed that cumulative net Japanese purchases of foreign bonds have amounted to Y5.5 trn in the current quarter to date, tempering any lingering fears of repatriation ahead of the book closing on March 31. Separate monthly data indicated that the net foreign bond investment tally for Japanese insurers in February was the highest since October 2010 - another sign of the greater overseas diversification we expect to see from yield-hungry Japanese institutions into the new fiscal year. Please refer to our March 1 FX Comment ("Repatriation Games") for a more detailed analysis of the drivers underpinning our bullish USDJPY call.
The upward revision to Japan's Q4 2011 GDP was well telegraphed and had little FX impact. The headline print was 'less negative' at -0.2% q/q compared to the first preliminary estimate of -0.6% q/q, thanks in large part to the improvement in private capex flagged by the MoF's Financial Statements Statistics of Corporations by Industry. Real GDP growth is expected to turn positive from Q1 2012, helped by reconstruction demand.
AUD
The unemployment rate ticked up in February to 5.2%, after unexpectedly falling in January to 5.1% - though it has been holding around 5.25% since Q3 2011. The participation rate ticked down to 65.2% from 65.3%, matching the lowest since mid-2007. Employment was weaker than expected, retracing by 15k m/m in February, albeit after a 46k m/m rebound in January. The trend of jobs growth remains weak, with the y/y pace moderating to 0.2% from 0.3%.
Together with the weaker than expected Q4 2011 GDP result (0.4% q/q), slack employment conditions should open the door for an RBA rate cut, if the rise in the jobless rate continues. While our Australian economics team (and the RBA) continue to expect a modest increase in the unemployment rate towards 5.5%, it has been broadly steady for a number of months around 5.25%. With leading indicators suggesting a better trend in jobs growth ahead, we continue to expect the RBA to hold rates.
NZD
The RBNZ left the policy rate unchanged at 2.5%, with Governor Bollard noting that a strong currency undermines GDP growth - and, if the kiwi's recent gains are sustained, the need for rate hikes would be reduced.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
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Thursday, March 08, 2012
Wednesday, March 07, 2012
7th of March 2012 - Technical Forex Market Overview
DAILY MARKET COMMENTARY
7 March 2012 – 8:00 GMT
Wednesday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BEARISH Decline through 1.3056 would expose 1.2974. Resistance is at 1.3241.
USDJPY BULLISH We view the recent sell-off as correction; resistance is at 81.59, a move above which would expose 81.87. Support lies at 80.24, a prior high.
GBPUSD BULLISH Our focus remains on upside with resistances at 1.5883 and 1.5993, the year-to-date high. Key support lies at 1.5645.
USDCHF NEUTRAL Resistance is now at 0.9213 ahead of 0.9300, the February rejection high. Support lies at 0.9106 ahead of 0.9022.
AUDUSD NEUTRAL Support is at 1.0476 ahead of 1.0428. Resistance is at 1.0598 ahead of 1.0691.
USDCAD BEARISH Pair is approaching 1.0052; as long as this resistance holds our outlook would remain bearish. Supports are at 0.9937 and 0.9886.
EURCHF NEUTRAL Resistance is at 1.2084 and support is at 1.2041.
EURGBP NEUTRAL Support lies at 0.8311, the trendline support drawn off the Jan. 9 low, ahead of 0.8265. Resistance is at 0.8383 ahead of 0.8410.
EURJPY BULLISH Resistances are at 108.04 and 108.74 next. Support is at 105.44.
SCHEDULE
Please visit our Economic Calendar for a for a schedule of market news and events: http://www.fibosignals.com/5585/calendar.html.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
7 March 2012 – 8:00 GMT
Wednesday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BEARISH Decline through 1.3056 would expose 1.2974. Resistance is at 1.3241.
USDJPY BULLISH We view the recent sell-off as correction; resistance is at 81.59, a move above which would expose 81.87. Support lies at 80.24, a prior high.
GBPUSD BULLISH Our focus remains on upside with resistances at 1.5883 and 1.5993, the year-to-date high. Key support lies at 1.5645.
USDCHF NEUTRAL Resistance is now at 0.9213 ahead of 0.9300, the February rejection high. Support lies at 0.9106 ahead of 0.9022.
AUDUSD NEUTRAL Support is at 1.0476 ahead of 1.0428. Resistance is at 1.0598 ahead of 1.0691.
USDCAD BEARISH Pair is approaching 1.0052; as long as this resistance holds our outlook would remain bearish. Supports are at 0.9937 and 0.9886.
EURCHF NEUTRAL Resistance is at 1.2084 and support is at 1.2041.
EURGBP NEUTRAL Support lies at 0.8311, the trendline support drawn off the Jan. 9 low, ahead of 0.8265. Resistance is at 0.8383 ahead of 0.8410.
EURJPY BULLISH Resistances are at 108.04 and 108.74 next. Support is at 105.44.
SCHEDULE
Please visit our Economic Calendar for a for a schedule of market news and events: http://www.fibosignals.com/5585/calendar.html.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
7th of March 2012 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
7 March 2012 – 8:00 GMT
Wednesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
A cautious tone prevailed in Asia, with the commodity currencies starting on the back foot amid broad-based declines across the major equity indices. AUDUSD was initially pressured by the weaker-than-expected 0.4% q/q Australian GDP print for Q4 2011 - which significantly undercut the 0.8% q/q consensus estimate - but managed to stabilise later in the session as equities pared early declines. While our analysts team still believes the RBA will stay on hold over the balance of this year, a rising unemployment rate would certainly elevate the risk of a rate cut - magnifying the focus on Thursday's employment data for February. We expect an unchanged jobless rate of 5.1% vs the 5.2% consensus. Still looming on the horizon is Thursday's Greek PSI deadline, with uncertainty about the degree of participation fostering fears of a postponement or even a disorderly default, a risk scenario that could produce contingent liabilities of over EUR1 trn according to a leaked IIF report. Such concerns conspired to limit the upside for the euro.
Nonetheless, at this stage, it looks as if there will be sufficient involvement to reach the quorum required to make the vote on the amendments to the existing bonds embodied in the CACs valid. Consent from two-thirds of these participants would open the door for the Greek authorities to actually invoke the CACs - likely triggering a credit event by early next week, an outcome that is well discounted in the market. Apart from the Greek PSI drama, a number of central bank meetings will enter the spotlight on Thursday, with decisions due from the RBNZ, BoE, ECB and Bank of Canada. All are expected to deliver 'no change' verdicts. In fact, such views were uniformly expressed by all participants surveyed by Bloomberg for the RBNZ, BoE and Bank of Canada, while only 2 out of 58 respondents are predicting a 25bp ECB rate cut. Overnight, EURUSD traded 1.3111-1.3151 and USDJPY traded 80.59-80.94.
EUR
An article in the Financial Times quoted the Greek debt management agency as saying " [the agency] does not contemplate the availability of funds to make payments to private sector creditors that decline to participate in PSI". Other headlines from sources close to the matter said that the government expects to activate the CACs, but participation could reach 75-80%
Japan bought just 4.7% of Tuesday's EFSF debt sale, around half of the take-up at the previous auction. This provided further evidence of the cautious Japanese stance towards Eurozone debt.
EU Commissioner Rehn said that the Commission supports the combination of the EFSF and ESM to build a stronger European firewall..
AUD
Q4 GDP growth came in well below expectations at 0.4% q/q, with the y/y pace easing to 2.3% from 2.6% in Q3. Growth in the quarter came from a rebound in public demand, net exports and non-farm inventories - as well as below-trend growth in consumption. In contrast, business capex paused and dwellings slumped, while the production and income (wages and profits) sides of the accounts proved softer in the quarter.
Our analysts still expect the RBA to remain on hold for the remainder of this year, given the improving global outlook and limited CPI downside (even though there was no obvious inflation pressure in the GDP accounts). That said, the door would be open for a rate cut at some point if the unemployment rate starts to rise.
RBA member Lowe served up a bullish outlook for AUD, saying the strong currency is playing a stabilising role in the economy. He said industries that are affected by the currency strength need to adapt. He also said that rates would be flexible in the face of a currency overshoot. It seems clear that the RBA views a strong AUD as a positive in terms of keeping inflation stable against the backdrop of a booming mining sector. However, if the currency overshoots, the RBA would likely take action by cutting rates, and one indicator to watch here is the overall unemployment level. This suggests AUD can outperform other pro-risk currencies if the 'risk off ' theme continues, especially those where the central banks have taken an explicitly negative view of FX strength.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
7 March 2012 – 8:00 GMT
Wednesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
A cautious tone prevailed in Asia, with the commodity currencies starting on the back foot amid broad-based declines across the major equity indices. AUDUSD was initially pressured by the weaker-than-expected 0.4% q/q Australian GDP print for Q4 2011 - which significantly undercut the 0.8% q/q consensus estimate - but managed to stabilise later in the session as equities pared early declines. While our analysts team still believes the RBA will stay on hold over the balance of this year, a rising unemployment rate would certainly elevate the risk of a rate cut - magnifying the focus on Thursday's employment data for February. We expect an unchanged jobless rate of 5.1% vs the 5.2% consensus. Still looming on the horizon is Thursday's Greek PSI deadline, with uncertainty about the degree of participation fostering fears of a postponement or even a disorderly default, a risk scenario that could produce contingent liabilities of over EUR1 trn according to a leaked IIF report. Such concerns conspired to limit the upside for the euro.
Nonetheless, at this stage, it looks as if there will be sufficient involvement to reach the quorum required to make the vote on the amendments to the existing bonds embodied in the CACs valid. Consent from two-thirds of these participants would open the door for the Greek authorities to actually invoke the CACs - likely triggering a credit event by early next week, an outcome that is well discounted in the market. Apart from the Greek PSI drama, a number of central bank meetings will enter the spotlight on Thursday, with decisions due from the RBNZ, BoE, ECB and Bank of Canada. All are expected to deliver 'no change' verdicts. In fact, such views were uniformly expressed by all participants surveyed by Bloomberg for the RBNZ, BoE and Bank of Canada, while only 2 out of 58 respondents are predicting a 25bp ECB rate cut. Overnight, EURUSD traded 1.3111-1.3151 and USDJPY traded 80.59-80.94.
EUR
An article in the Financial Times quoted the Greek debt management agency as saying " [the agency] does not contemplate the availability of funds to make payments to private sector creditors that decline to participate in PSI". Other headlines from sources close to the matter said that the government expects to activate the CACs, but participation could reach 75-80%
Japan bought just 4.7% of Tuesday's EFSF debt sale, around half of the take-up at the previous auction. This provided further evidence of the cautious Japanese stance towards Eurozone debt.
EU Commissioner Rehn said that the Commission supports the combination of the EFSF and ESM to build a stronger European firewall..
AUD
Q4 GDP growth came in well below expectations at 0.4% q/q, with the y/y pace easing to 2.3% from 2.6% in Q3. Growth in the quarter came from a rebound in public demand, net exports and non-farm inventories - as well as below-trend growth in consumption. In contrast, business capex paused and dwellings slumped, while the production and income (wages and profits) sides of the accounts proved softer in the quarter.
Our analysts still expect the RBA to remain on hold for the remainder of this year, given the improving global outlook and limited CPI downside (even though there was no obvious inflation pressure in the GDP accounts). That said, the door would be open for a rate cut at some point if the unemployment rate starts to rise.
RBA member Lowe served up a bullish outlook for AUD, saying the strong currency is playing a stabilising role in the economy. He said industries that are affected by the currency strength need to adapt. He also said that rates would be flexible in the face of a currency overshoot. It seems clear that the RBA views a strong AUD as a positive in terms of keeping inflation stable against the backdrop of a booming mining sector. However, if the currency overshoots, the RBA would likely take action by cutting rates, and one indicator to watch here is the overall unemployment level. This suggests AUD can outperform other pro-risk currencies if the 'risk off ' theme continues, especially those where the central banks have taken an explicitly negative view of FX strength.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
Tuesday, March 06, 2012
6th of March 2012 - Technical Forex Market Overview
DAILY MARKET COMMENTARY
6 March 2012 – 8:00 GMT
Tuesday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD NEUTRAL Focus is on 1.3157, a break below which would open 1.3056. Resistance is at 1.3357 and 1.3487.
USDJPY BULLISH Resistance is at 81.87, a move above which would expose 82.25. Support lies at 81.06.
GBPUSD BULLISH Our focus remains on 1.5993, a clearance of which would reinforce the current trend. Support lies at 1.5786.
USDCHF BEARISH With the resistance at 0.9185 in place, we view the recent bounce as correction. Support lies at 0.9022 ahead of 0.8931.
AUDUSD BULLISH As long as the support at 1.0598 is intact our outlook would remain bullish with resistances at 1.0691 and 1.0744.
USDCAD BEARISH Break below 0.9886 would open the key low at 0.9842. Resistance is at 0.9992.
EURCHF NEUTRAL Resistance is at 1.2084 and support is at 1.2041.
EURGBP NEUTRAL Support lies at 0.8309, the trendline support drawn off the Jan. 9 low, ahead of 0.8265. Resistance is at 0.8354 ahead of 0.8383.
EURJPY BULLISH Resistances are at 108.74 and 109.93 next. Support is at 106.84.
SCHEDULE
Please visit our Economic Calendar for a for a schedule of market news and events: http://www.fibosignals.com/5585/calendar.html.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
6 March 2012 – 8:00 GMT
Tuesday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD NEUTRAL Focus is on 1.3157, a break below which would open 1.3056. Resistance is at 1.3357 and 1.3487.
USDJPY BULLISH Resistance is at 81.87, a move above which would expose 82.25. Support lies at 81.06.
GBPUSD BULLISH Our focus remains on 1.5993, a clearance of which would reinforce the current trend. Support lies at 1.5786.
USDCHF BEARISH With the resistance at 0.9185 in place, we view the recent bounce as correction. Support lies at 0.9022 ahead of 0.8931.
AUDUSD BULLISH As long as the support at 1.0598 is intact our outlook would remain bullish with resistances at 1.0691 and 1.0744.
USDCAD BEARISH Break below 0.9886 would open the key low at 0.9842. Resistance is at 0.9992.
EURCHF NEUTRAL Resistance is at 1.2084 and support is at 1.2041.
EURGBP NEUTRAL Support lies at 0.8309, the trendline support drawn off the Jan. 9 low, ahead of 0.8265. Resistance is at 0.8354 ahead of 0.8383.
EURJPY BULLISH Resistances are at 108.74 and 109.93 next. Support is at 106.84.
SCHEDULE
Please visit our Economic Calendar for a for a schedule of market news and events: http://www.fibosignals.com/5585/calendar.html.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
6th of March 2012 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
6 March 2012 – 8:00 GMT
Tuesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
The RBA kept policy rates on hold overnight, broadly in line with market expectations. The better-than-expected start to the year globally has probably given central banks in general more room for manoeuvre, but our economists note that the RBA has maintained a weak easing bias and is sounding more neutral at this stage - further policy projections will be contingent upon the employment situation, but for now there doesn't appear to be a strong case to move.
Despite the decision, AUD and risk in general appear to be stuck on a somewhat weaker footing, with Asian equities declining across the board overnight. The market may be responding adversely to the growth targets set by China at this week's NPC session, but given that the forecasts have been well choreographed advance the moves seem to be a bit excessive.
Oil prices remain a concern, but they are probably not at levels yet warranted to demand early policy action, or destabilise growth. Investors look ahead to seven G10 monetary policy meetings over the next ten days. Event risk lurks in other forms too with Greek Finance Minister Venizelos stressing overnight that Greece is 'ready to activate CACs if needed'. We would not be surprised to see this scenario materialise over the coming days - investors have until Thursday to declare whether they wish to accept the bond swap offer.
In the US, the ISM manufacturing report became the latest data point to surpass expectations, rising to 57.3 (cons. 56.0). Having sifted through the components of the survey our US economists have decided to keep their non-farm payrolls forecast for Friday unchanged at +190k (cons. 210k). Ahead today Eurozone growth figures are out - the market is looking for a preliminary Q4 print of -0.3%. We are in line with expectations, but growth momentum in the Eurozone should be strong enough to warrant the ECB remaining on hold later this week. Nonetheless, even in a better growth environment on a relative value basis the US is likely to continue its outperformance. Overnight EURUSD traded 1.3187-1.3226 and USDJPY traded 81.35-81.59..
EUR
The series of PMIs released across the Eurozone were mixed with the composite indicator revised down to 48.48 from 49.4. Germany and France had strong results where the forward looking components offset softer headline numbers Our European economist notes that the same is true for Italy, where expectations and new business held up while the activity index declined. In Spain the decline was instead more generalized.
Dow Jones reported that the Irish government is currently divided on the timing of a referendum for the European fiscal compact. There is greater talk of a vote than summer originally planned. Current opinion polls suggest the vote will be backed by voters.
AUD
As widely expected, the RBA kept the cash rate on hold at 4.25% for the second month in a row. The Australian dollar dropped about 30 pips soon afterwards.
Changes to the policy statement language suggest the board's concerns about global risks have eased somewhat - both in Europe and in China. Fears around the global growth outlook have also subsided, and the statement now acknowledges that a 'deep downturn' is probably not occurring. Crucially though, there was no change to the RBA's implied easing bias - the inflation outlook still provides 'scope for easier policy' if 'demand conditions weaken materially'.
Our analysts expect the RBA to remain on hold for the remainder of this year given their focus on the improving global outlook, the recent fall in the unemployment rate.
Australian net exports of GDP came in better than expected at 0.3, though the current account balance was a bit weaker than expected at -$A8.37bn (cons. -$8.05bn).
NZD
S&P warned that downward pressure on New Zealand's sovereign rating could re-emerge if the country's external position continues to worsen. We note that, last year, S&P and Fitch both stripped New Zealand of AAA status, but both ratings outlooks were reset to stable - where they remain. NZD continued to weaken during the Asia session, but this was largely in line with weaker risk appetite more generally.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
6 March 2012 – 8:00 GMT
Tuesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
The RBA kept policy rates on hold overnight, broadly in line with market expectations. The better-than-expected start to the year globally has probably given central banks in general more room for manoeuvre, but our economists note that the RBA has maintained a weak easing bias and is sounding more neutral at this stage - further policy projections will be contingent upon the employment situation, but for now there doesn't appear to be a strong case to move.
Despite the decision, AUD and risk in general appear to be stuck on a somewhat weaker footing, with Asian equities declining across the board overnight. The market may be responding adversely to the growth targets set by China at this week's NPC session, but given that the forecasts have been well choreographed advance the moves seem to be a bit excessive.
Oil prices remain a concern, but they are probably not at levels yet warranted to demand early policy action, or destabilise growth. Investors look ahead to seven G10 monetary policy meetings over the next ten days. Event risk lurks in other forms too with Greek Finance Minister Venizelos stressing overnight that Greece is 'ready to activate CACs if needed'. We would not be surprised to see this scenario materialise over the coming days - investors have until Thursday to declare whether they wish to accept the bond swap offer.
In the US, the ISM manufacturing report became the latest data point to surpass expectations, rising to 57.3 (cons. 56.0). Having sifted through the components of the survey our US economists have decided to keep their non-farm payrolls forecast for Friday unchanged at +190k (cons. 210k). Ahead today Eurozone growth figures are out - the market is looking for a preliminary Q4 print of -0.3%. We are in line with expectations, but growth momentum in the Eurozone should be strong enough to warrant the ECB remaining on hold later this week. Nonetheless, even in a better growth environment on a relative value basis the US is likely to continue its outperformance. Overnight EURUSD traded 1.3187-1.3226 and USDJPY traded 81.35-81.59..
EUR
The series of PMIs released across the Eurozone were mixed with the composite indicator revised down to 48.48 from 49.4. Germany and France had strong results where the forward looking components offset softer headline numbers Our European economist notes that the same is true for Italy, where expectations and new business held up while the activity index declined. In Spain the decline was instead more generalized.
Dow Jones reported that the Irish government is currently divided on the timing of a referendum for the European fiscal compact. There is greater talk of a vote than summer originally planned. Current opinion polls suggest the vote will be backed by voters.
AUD
As widely expected, the RBA kept the cash rate on hold at 4.25% for the second month in a row. The Australian dollar dropped about 30 pips soon afterwards.
Changes to the policy statement language suggest the board's concerns about global risks have eased somewhat - both in Europe and in China. Fears around the global growth outlook have also subsided, and the statement now acknowledges that a 'deep downturn' is probably not occurring. Crucially though, there was no change to the RBA's implied easing bias - the inflation outlook still provides 'scope for easier policy' if 'demand conditions weaken materially'.
Our analysts expect the RBA to remain on hold for the remainder of this year given their focus on the improving global outlook, the recent fall in the unemployment rate.
Australian net exports of GDP came in better than expected at 0.3, though the current account balance was a bit weaker than expected at -$A8.37bn (cons. -$8.05bn).
NZD
S&P warned that downward pressure on New Zealand's sovereign rating could re-emerge if the country's external position continues to worsen. We note that, last year, S&P and Fitch both stripped New Zealand of AAA status, but both ratings outlooks were reset to stable - where they remain. NZD continued to weaken during the Asia session, but this was largely in line with weaker risk appetite more generally.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
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