DAILY MARKET COMMENTARY
4 December 2011 – 8:00 GMT
Monday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BEARISH Break below 1.3259 would open the key low of 1.3212. Resistance is at 1.3607.
USDJPY BULLISH Focus is on 78.29, a move above which would expose 78.83. Support lies at 77.49.
GBPUSD BEARISH Decline through 1.5526 would expose 1.5459. Resistance is at 1.5756.
USDCHF BULLISH Key resistance is at 0.9331, a break here would pave the way for 0.9401. Support lies at 0.9066.
AUDUSD BULLISH Focus is on 1.0337, a break of which would expose 1.0447 while support lies at 1.0151.
USDCAD NEUTRAL Initial support lies at 1.0055 ahead of 0.9975. Resistance is at 1.0223 ahead of 1.0364.
EURCHF BULLISH Resistance is at 1.2394 ahead of key high of 1.2474. Support lies at 1.2226.
EURGBP NEUTRAL The near-term directional triggers are at 0.8620 and 0.8519.
EURJPY NEUTRAL Resistance is at 105.70 ahead of 106.74 while support lies at 103.34 ahead of 102.49.
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.
+++ market trends - news - analysis - strategies and more! +++
Monday, December 05, 2011
4th of December 2011 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
4 December 2011 – 8:00 GMT
Monday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
Expectations continued to build overnight for impending solutions for the Eurozone sovereign debt crisis. Several different papers have reported different plans, from enlarged ECB resources to even the Fed providing funding to the IMF. Eurozone leaders will start meeting today to set the groundwork for Friday's crunch talks. True, it seems that the market has been here before, only to be disappointed at every single turn, but the vibes from Berlin and Frankfurt suggest that the political establishment and the European Central Bank have now reached an understanding on what needs to be done. Perhaps more importantly, the leaders now recognize what is at stake, for the rhetoric on Eurozone breakup by the most pro-European of leaders are now at levels which would have been unthinkable previously. Markets have already rallied in anticipation of good news, and the process has also enjoyed some help from firm data outside of the Eurozone. Friday's payrolls number may have registered a somewhat disappointing headline print at 120k, but the dip in the unemployment rate to 8.6% is welcome news, depending on interpretation.
Ahead this week, politicians aside, the ECB will take centre stage, but the BoE, BoC, RBA and RBNZ will all be deciding this week. Markets expect the ECB and RBA to deliver rate cuts (we expect unchanged for both), but the pressure to adopt fresh stimulus measures would perhaps be less pressing should the Eurozone's decisions surprise to the upside. The market may choose to square some positioning in risk ahead of the crunch talks, but the headline risk is also clearly to the positive side and the current squeeze may yet find legs for a few days. Ahead today, PMI figures are out throughout Europe but headlines will be the dominant driver for currencies. The non-manufacturing ISM is due out in the US. EURUSD traded overnight in a range of 1.3375-1.3441 and USDJPY 77.89-78.11..
EUR
German Chancellor Angela Merkel pledged to work towards fiscal union, one which is legally enforceable. Headlines over the past few days suggest that plans are taking shape to set the wheels in motion at Friday's Eurozone summit. However, Merkel has also rejected quick fixes to the current problems, and the ECB will unlikely increase their firepower unless they see structural solutions put in place.
European Economics Commissioner Rehn warned that "This week, the stable future of the euro and thus the economic recovery in Europe and employment are at stake". He called for a 'convincing' package to come into force at the upcoming summit. He previously warned that time was running to save the euro.
ECB President Draghi told the European Parliament that a 'fiscal compact' was needed for the Eurozone to regain credibility in markets. He said that 'countries are on the right track to reform but a credible message is needed now'. It is widely assumed that Draghi will be more open to stronger asset purchases once such a 'compact' can be reached.
According to the Financial Times, the ECB is expected to step up in its response to the crisis by helping the banking sector. This may come in the form of longer refinancing operations, but this does not mean that the ECB will increase its bond purchases.
German Chancellor Merkel and French President Sarkozy are set to meet on Monday to decide on further Eurozone integration. This would mark the beginning of a week of talks leading up to the European Union Summit on Friday where concrete proposals are expected towards fiscal union. Bond markets have rallied in the hope of agreements but we note that headline risk remains strong.
We expect the ECB to remain on hold this week, though the market expects a 25bp cut. However, we have cut our 2012 GDP forecasts aggressively and expect another policy move in the first quarter of next year. Otherwise on the data front, Eurozone composite PMI and Eurozone retail sales are due.
According to Die Welt, the Fed may join other central banks and provide the IMF with funding for the Eurozone. The reported noted Eurozone central banks may pay up to EUR100bn into special funds within the IMF, while other central banks may also participate.
The Sunday Times reported that the ECB is preparing a EUR1tln infusion for the Eurozone as part of the comprehensive package. The story said that the plan would be executed if Europe's leaders reach agreement on a broader political reform of the currency bloc - imposing strict budget controls on nations struggling to control their state finances.
Italy passed another EUR20bn austerity package over the weekend. This is more welcome news but implementation will be closely watched..
GBP
The Bank of England will decide on policy this week. We expect no change in the asset purchase programme though developments in the Eurozone will have a greater bearing on the UK's domestic conditions, from macro to financial stability.
UK services PMI is due on Monday, we expect a 51.8 print (cons. 50.5).
CAD
Canadian payrolls came in far weaker than expectations again at -19k, vs. expectations for a 20k rise. However, the breakdown was more favourable than last months' as full time jobs increased by 35k, though this was offset by a 53k drop in part-time numbers.
The Bank of Canada will decide on policy on Tuesday. Our economists believe the Bank will leave the overnight rate target unchanged at 1.00%. Despite Q3 domestic economic growth which exceeded the Bank's projections (from October Monetary Policy Report), concern has increased regarding the economic outlook due to external factors, primarily potential fallout from the European sovereign debt crisis.
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.
4 December 2011 – 8:00 GMT
Monday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
Expectations continued to build overnight for impending solutions for the Eurozone sovereign debt crisis. Several different papers have reported different plans, from enlarged ECB resources to even the Fed providing funding to the IMF. Eurozone leaders will start meeting today to set the groundwork for Friday's crunch talks. True, it seems that the market has been here before, only to be disappointed at every single turn, but the vibes from Berlin and Frankfurt suggest that the political establishment and the European Central Bank have now reached an understanding on what needs to be done. Perhaps more importantly, the leaders now recognize what is at stake, for the rhetoric on Eurozone breakup by the most pro-European of leaders are now at levels which would have been unthinkable previously. Markets have already rallied in anticipation of good news, and the process has also enjoyed some help from firm data outside of the Eurozone. Friday's payrolls number may have registered a somewhat disappointing headline print at 120k, but the dip in the unemployment rate to 8.6% is welcome news, depending on interpretation.
Ahead this week, politicians aside, the ECB will take centre stage, but the BoE, BoC, RBA and RBNZ will all be deciding this week. Markets expect the ECB and RBA to deliver rate cuts (we expect unchanged for both), but the pressure to adopt fresh stimulus measures would perhaps be less pressing should the Eurozone's decisions surprise to the upside. The market may choose to square some positioning in risk ahead of the crunch talks, but the headline risk is also clearly to the positive side and the current squeeze may yet find legs for a few days. Ahead today, PMI figures are out throughout Europe but headlines will be the dominant driver for currencies. The non-manufacturing ISM is due out in the US. EURUSD traded overnight in a range of 1.3375-1.3441 and USDJPY 77.89-78.11..
EUR
German Chancellor Angela Merkel pledged to work towards fiscal union, one which is legally enforceable. Headlines over the past few days suggest that plans are taking shape to set the wheels in motion at Friday's Eurozone summit. However, Merkel has also rejected quick fixes to the current problems, and the ECB will unlikely increase their firepower unless they see structural solutions put in place.
European Economics Commissioner Rehn warned that "This week, the stable future of the euro and thus the economic recovery in Europe and employment are at stake". He called for a 'convincing' package to come into force at the upcoming summit. He previously warned that time was running to save the euro.
ECB President Draghi told the European Parliament that a 'fiscal compact' was needed for the Eurozone to regain credibility in markets. He said that 'countries are on the right track to reform but a credible message is needed now'. It is widely assumed that Draghi will be more open to stronger asset purchases once such a 'compact' can be reached.
According to the Financial Times, the ECB is expected to step up in its response to the crisis by helping the banking sector. This may come in the form of longer refinancing operations, but this does not mean that the ECB will increase its bond purchases.
German Chancellor Merkel and French President Sarkozy are set to meet on Monday to decide on further Eurozone integration. This would mark the beginning of a week of talks leading up to the European Union Summit on Friday where concrete proposals are expected towards fiscal union. Bond markets have rallied in the hope of agreements but we note that headline risk remains strong.
We expect the ECB to remain on hold this week, though the market expects a 25bp cut. However, we have cut our 2012 GDP forecasts aggressively and expect another policy move in the first quarter of next year. Otherwise on the data front, Eurozone composite PMI and Eurozone retail sales are due.
According to Die Welt, the Fed may join other central banks and provide the IMF with funding for the Eurozone. The reported noted Eurozone central banks may pay up to EUR100bn into special funds within the IMF, while other central banks may also participate.
The Sunday Times reported that the ECB is preparing a EUR1tln infusion for the Eurozone as part of the comprehensive package. The story said that the plan would be executed if Europe's leaders reach agreement on a broader political reform of the currency bloc - imposing strict budget controls on nations struggling to control their state finances.
Italy passed another EUR20bn austerity package over the weekend. This is more welcome news but implementation will be closely watched..
GBP
The Bank of England will decide on policy this week. We expect no change in the asset purchase programme though developments in the Eurozone will have a greater bearing on the UK's domestic conditions, from macro to financial stability.
UK services PMI is due on Monday, we expect a 51.8 print (cons. 50.5).
CAD
Canadian payrolls came in far weaker than expectations again at -19k, vs. expectations for a 20k rise. However, the breakdown was more favourable than last months' as full time jobs increased by 35k, though this was offset by a 53k drop in part-time numbers.
The Bank of Canada will decide on policy on Tuesday. Our economists believe the Bank will leave the overnight rate target unchanged at 1.00%. Despite Q3 domestic economic growth which exceeded the Bank's projections (from October Monetary Policy Report), concern has increased regarding the economic outlook due to external factors, primarily potential fallout from the European sovereign debt crisis.
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.
Friday, December 02, 2011
2nd of December 2011 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
2 December 2011 – 8:00 GMT
Friday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
In Asian hours risk sentiment has been stable in the absence of any major news. Most Asian stock market indices are trading broadly flat with the Hang Seng down by 0.2%. EURUSD traded 1.3448-1.3489 and USDJPY traded 77.73-77-78. Yesterday, the ECB has hinted that its armory has not been fully deployed yet, and that more aggressive action may be on the cards should politicians deliver on more fiscal integration. German Finance Minister Schaeuble hinted towards concrete plans for fiscal integration. He also said proposals for special funds for sovereign debts of over 60% of GDP would be made at the Dec 9 summit. From that angle policymakers are indeed making more progress. Hence more aggressive action from the ECB cannot be excluded. This in combination with the fact that positioning in pairs such as EURUSD or AUDUSD remains heavily skewed to the downside suggests that there could be more upside potential. Altogether, investors will continue to closely follow any developments on the political front. German Chancellor Merkel will address lawmakers in Berlin today to outline her stance before next week's EU summit. In the US, growth data has been constructive with yesterday's release of the manufacturing ISM beating market expectations. Our economists note that the print shows more evidence of some momentum in Q4 as export orders have risen despite the Eurozone's woes. Data wise non-farm payrolls will be today's key release.
EUR
ECB President Draghi hinted at some degree of flexibility as he said 'other elements' might follow if there is a 'fiscal compact, binding governments to stronger public deficit and debt rules'. He said the sequencing matters, perhaps stressing that the ECB would not do more unless the Eurozone can show commitment to fiscal union
German Finance Minister Sch?uble said that Germany will 'propose to set up special national funds for Eurozone debt that is over 60% of GDP' to maintain market confidence. These comments hint at some degree of joint liability, which is one of many steps along the route towards fiscal integration. The funds would have a maturity of 20 years and supported by national revenues. There is a strong resemblance to the 'Eurozone Redemption Fund' plan proposed in early November, though the 'national basis' may help get around some constitutional issues' in Germany.
French President Sarkozy announced that he would be meeting with German Chancellor Merkel again on Monday, to 'make joint proposals' for the Eurozone. He said that a collapse of the euro would paralyse France, but also stressed that no Eurozone country will go into default, casting into doubt whether coercive restructuring would take place in Greece or other countries in the coming quarters.
CHF
Yesterday, Swiss Q3 GDP has come in lower than expected, with a yearly increase of 1.3%, 0.2%q/q. The figures will likely add to the pressure on the SNB to act amid weakening external conditions.
Bloomberg reported that the Swiss Government is 'looking into' negative interest rates. However, this is apparently a procedural response to routine queries by lawmakers and we would not read too much into the news. Our economists note that the SNB had the opportunity to adopt negative rates this summer when it was engaged in sight-deposit targeting but chose not to resort to this step.
GBP
The Bank of England has released its H2 Financial Stability Report. It warned that Eurozone sovereign and banking risks are still the biggest threat to the UK's financial stability and the current environment is exceptionally threatening for the UK's banks.
UK manufacturing PMI came in at 47.6, better than expected but still showing contraction.
CAD
Canada payrolls are due on Friday, we are looking for a headline gain of +20k (cons. +17.5k), a reversal of last month's rather disappointing figure.
We continue to favour CAD as a relative value play heading into next year as the US economy continues to show signs of improving economic momentum.
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.
2 December 2011 – 8:00 GMT
Friday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
In Asian hours risk sentiment has been stable in the absence of any major news. Most Asian stock market indices are trading broadly flat with the Hang Seng down by 0.2%. EURUSD traded 1.3448-1.3489 and USDJPY traded 77.73-77-78. Yesterday, the ECB has hinted that its armory has not been fully deployed yet, and that more aggressive action may be on the cards should politicians deliver on more fiscal integration. German Finance Minister Schaeuble hinted towards concrete plans for fiscal integration. He also said proposals for special funds for sovereign debts of over 60% of GDP would be made at the Dec 9 summit. From that angle policymakers are indeed making more progress. Hence more aggressive action from the ECB cannot be excluded. This in combination with the fact that positioning in pairs such as EURUSD or AUDUSD remains heavily skewed to the downside suggests that there could be more upside potential. Altogether, investors will continue to closely follow any developments on the political front. German Chancellor Merkel will address lawmakers in Berlin today to outline her stance before next week's EU summit. In the US, growth data has been constructive with yesterday's release of the manufacturing ISM beating market expectations. Our economists note that the print shows more evidence of some momentum in Q4 as export orders have risen despite the Eurozone's woes. Data wise non-farm payrolls will be today's key release.
EUR
ECB President Draghi hinted at some degree of flexibility as he said 'other elements' might follow if there is a 'fiscal compact, binding governments to stronger public deficit and debt rules'. He said the sequencing matters, perhaps stressing that the ECB would not do more unless the Eurozone can show commitment to fiscal union
German Finance Minister Sch?uble said that Germany will 'propose to set up special national funds for Eurozone debt that is over 60% of GDP' to maintain market confidence. These comments hint at some degree of joint liability, which is one of many steps along the route towards fiscal integration. The funds would have a maturity of 20 years and supported by national revenues. There is a strong resemblance to the 'Eurozone Redemption Fund' plan proposed in early November, though the 'national basis' may help get around some constitutional issues' in Germany.
French President Sarkozy announced that he would be meeting with German Chancellor Merkel again on Monday, to 'make joint proposals' for the Eurozone. He said that a collapse of the euro would paralyse France, but also stressed that no Eurozone country will go into default, casting into doubt whether coercive restructuring would take place in Greece or other countries in the coming quarters.
CHF
Yesterday, Swiss Q3 GDP has come in lower than expected, with a yearly increase of 1.3%, 0.2%q/q. The figures will likely add to the pressure on the SNB to act amid weakening external conditions.
Bloomberg reported that the Swiss Government is 'looking into' negative interest rates. However, this is apparently a procedural response to routine queries by lawmakers and we would not read too much into the news. Our economists note that the SNB had the opportunity to adopt negative rates this summer when it was engaged in sight-deposit targeting but chose not to resort to this step.
GBP
The Bank of England has released its H2 Financial Stability Report. It warned that Eurozone sovereign and banking risks are still the biggest threat to the UK's financial stability and the current environment is exceptionally threatening for the UK's banks.
UK manufacturing PMI came in at 47.6, better than expected but still showing contraction.
CAD
Canada payrolls are due on Friday, we are looking for a headline gain of +20k (cons. +17.5k), a reversal of last month's rather disappointing figure.
We continue to favour CAD as a relative value play heading into next year as the US economy continues to show signs of improving economic momentum.
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.
Thursday, December 01, 2011
1st of December 2011 - Technical Forex Market Overview
DAILY MARKET COMMENTARY
1 December 2011 – 8:00 GMT
Thursday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BEARISH Initial support lies at 1.3259 ahead of 1.3212, the Nov. 25 key low. Resistance is at 1.3607.
USDJPY BULLISH Resistance is at 78.29 ahead of 78.83. Support lies at 77.10.
GBPUSD BEARISH Support is at 1.5526, a break below which would expose 1.5423, the Nov. 25 key low. Key resistance is at 1.5883.
USDCHF BULLISH Near-term resistance is at 0.9252, a clearance of which would expose 0.9331. Support lies at 0.9066.
AUDUSD NEUTRAL Resistance is at 1.0337 ahead of 1.0447 while support lies at 1.0000 ahead of 0.9943.
USDCAD NEUTRAL Support lies at 1.0124 ahead of 1.0055. Resistance is at 1.0364 ahead of 1.0474.
EURCHF BEARISH Support lies at 1.2226 ahead of 1.2208. Key resistance is at 1.2474.
EURGBP BEARISH Two key supports to watch for are at 0.8519 and 0.8486 while resistance is at 0.8620.
EURJPY NEUTRAL Resistance is at 105.97 while support lies at 103.34.
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.
1 December 2011 – 8:00 GMT
Thursday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BEARISH Initial support lies at 1.3259 ahead of 1.3212, the Nov. 25 key low. Resistance is at 1.3607.
USDJPY BULLISH Resistance is at 78.29 ahead of 78.83. Support lies at 77.10.
GBPUSD BEARISH Support is at 1.5526, a break below which would expose 1.5423, the Nov. 25 key low. Key resistance is at 1.5883.
USDCHF BULLISH Near-term resistance is at 0.9252, a clearance of which would expose 0.9331. Support lies at 0.9066.
AUDUSD NEUTRAL Resistance is at 1.0337 ahead of 1.0447 while support lies at 1.0000 ahead of 0.9943.
USDCAD NEUTRAL Support lies at 1.0124 ahead of 1.0055. Resistance is at 1.0364 ahead of 1.0474.
EURCHF BEARISH Support lies at 1.2226 ahead of 1.2208. Key resistance is at 1.2474.
EURGBP BEARISH Two key supports to watch for are at 0.8519 and 0.8486 while resistance is at 0.8620.
EURJPY NEUTRAL Resistance is at 105.97 while support lies at 103.34.
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.
1st of December 2011 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
1 December 2011 – 8:00 GMT
Thursday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
Asian indices mirrored the rally late in Europe and the US on Wednesday. Key markets are up, with Hong Kong gaining over 5.5% as the combination of central bank liquidity injection and China easing spurred a risk recovery. The news helped offset a very poor manufacturing PMI in China. Brazil, another key emerging market, joined the party by announcing an interest rate cut of 50bp to 11%.
In a surprise but much-needed move, the ECB, in coordination with the Fed, Bank of Canada, BoJ, BoE and SNB have decided to cut the cost of the existing temporary US dollar liquidity swaps from OIS + 100bp to OIS + 50bp. Bilateral cross-currency swap lines will also be established and the operations will now be extended into 2013. To alleviate the situation further, the ECB has also cut the margin on the 3-month operations from 20% to 12%. The EUR rallied back to 1.35 from 1.33 after the release, and the dollar has fallen across the board.
The move came in a context of broad 'risk on', which was further supported by strong employment data in the US as the ADP print came in at +206k, significantly above consensus. Our US economists now look for 150k in Friday's nonfarm payrolls (consensus 120k, after 80k) and a 175k rise in private payrolls (consensus 146k, after 104k). Both forecasts are 25k higher than their earlier estimate. Chicago PMI for November was also strongly above consensus at 62.
In the short term, we believe the rally will continue as further short positions are squeezed and expectations for political developments in Europe remain intact. However, we question its sustainability in the longer term, particularly for EURUSD, as none of the underlying problems have changed. Market focus will shift to the Dec. 9 meeting, but scope for disappointment remains high. Ahead today bond auctions are due in Spain and France, and some key purchasing manager surveys are out in the Eurozone, UK and US.
EUR
In a surprise but much-needed move, the ECB, in coordination with the Fed, Bank of Canada, BoJ, BoE and SNB have decided to cut the cost of the existing temporary US dollar liquidity swaps from OIS + 100bp to OIS + 50bp. Bilateral cross-currency swap lines will also be established and the operations will now be extended into 2013. To alleviate the situation further, the ECB has also cut the margin on the 3-month operations from 20% to 12%. For further details, please see "Cheaper Funding Boosts Euro" on www.ubs.com/fxweb.
Italy's PM Monti said it is important to be together with France and Germany in making proposals. He added that Sarkozy and Merkel will make important announcements on European politics in the next couple of days. We believe that anticipation of announcements will keep risk assets in demand in the short term.
The Italian Treasury said it will launch auctions to lend or borrow "significant amounts" of cash using the Treasury's account at Bank of Italy. It said that it will normally offer overnight maturities with credit limits via auctions, and hold morning or sometimes, afternoon auctions. It is largely an operation to help the treasury optimize its cash management.
German Finance Minister Schaeuble said the country is open to extending the IMF's resources through bilateral loans. However, he stressed that the debate needed to be centered around IMF instruments, implying that Germany was not yet ready to pursue aggressive options involving using the ECB to lend to the IMF to extend aid to at-risk Eurozone countries yet.
Ahead today France will auction EUR4.5bn in auctions, while Spain has EUR3bn on offer. France's Q3 jobless rate has been pushed up to 9.7%.
European Economics Commissioner Rehn warned that 'we are now entering a crucial period of 10 days to complete and conclude the crisis response of the European Union'. Alluding to the summit on the 9th, given that central banks have probably done what they could/want the pressure is now on politicians to deliver.
CHF
The Swiss KOF leading indicator for November came in weaker than expected at 0.35 vs 0.65 consensus. The previous number was revised down slightly to 0.75. Our Swiss economist notes that the little details provided suggests that the main categories, with the exception of the construction sector, are edging lower. From a qualitative point of view, the index, however, corroborates with the slowing business sentiment indicators, but not necessarily the activity indicators such as trade of late.
Swiss Q3 GDP has also come in lower than expected, with a yearly increase of 1.3%, 0.2%q/q. The figures will likely add to the pressure on the SNB to act amid weakening external conditions and we continue to target a raising of the EURCHF target floor in December.
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.
1 December 2011 – 8:00 GMT
Thursday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
Asian indices mirrored the rally late in Europe and the US on Wednesday. Key markets are up, with Hong Kong gaining over 5.5% as the combination of central bank liquidity injection and China easing spurred a risk recovery. The news helped offset a very poor manufacturing PMI in China. Brazil, another key emerging market, joined the party by announcing an interest rate cut of 50bp to 11%.
In a surprise but much-needed move, the ECB, in coordination with the Fed, Bank of Canada, BoJ, BoE and SNB have decided to cut the cost of the existing temporary US dollar liquidity swaps from OIS + 100bp to OIS + 50bp. Bilateral cross-currency swap lines will also be established and the operations will now be extended into 2013. To alleviate the situation further, the ECB has also cut the margin on the 3-month operations from 20% to 12%. The EUR rallied back to 1.35 from 1.33 after the release, and the dollar has fallen across the board.
The move came in a context of broad 'risk on', which was further supported by strong employment data in the US as the ADP print came in at +206k, significantly above consensus. Our US economists now look for 150k in Friday's nonfarm payrolls (consensus 120k, after 80k) and a 175k rise in private payrolls (consensus 146k, after 104k). Both forecasts are 25k higher than their earlier estimate. Chicago PMI for November was also strongly above consensus at 62.
In the short term, we believe the rally will continue as further short positions are squeezed and expectations for political developments in Europe remain intact. However, we question its sustainability in the longer term, particularly for EURUSD, as none of the underlying problems have changed. Market focus will shift to the Dec. 9 meeting, but scope for disappointment remains high. Ahead today bond auctions are due in Spain and France, and some key purchasing manager surveys are out in the Eurozone, UK and US.
EUR
In a surprise but much-needed move, the ECB, in coordination with the Fed, Bank of Canada, BoJ, BoE and SNB have decided to cut the cost of the existing temporary US dollar liquidity swaps from OIS + 100bp to OIS + 50bp. Bilateral cross-currency swap lines will also be established and the operations will now be extended into 2013. To alleviate the situation further, the ECB has also cut the margin on the 3-month operations from 20% to 12%. For further details, please see "Cheaper Funding Boosts Euro" on www.ubs.com/fxweb.
Italy's PM Monti said it is important to be together with France and Germany in making proposals. He added that Sarkozy and Merkel will make important announcements on European politics in the next couple of days. We believe that anticipation of announcements will keep risk assets in demand in the short term.
The Italian Treasury said it will launch auctions to lend or borrow "significant amounts" of cash using the Treasury's account at Bank of Italy. It said that it will normally offer overnight maturities with credit limits via auctions, and hold morning or sometimes, afternoon auctions. It is largely an operation to help the treasury optimize its cash management.
German Finance Minister Schaeuble said the country is open to extending the IMF's resources through bilateral loans. However, he stressed that the debate needed to be centered around IMF instruments, implying that Germany was not yet ready to pursue aggressive options involving using the ECB to lend to the IMF to extend aid to at-risk Eurozone countries yet.
Ahead today France will auction EUR4.5bn in auctions, while Spain has EUR3bn on offer. France's Q3 jobless rate has been pushed up to 9.7%.
European Economics Commissioner Rehn warned that 'we are now entering a crucial period of 10 days to complete and conclude the crisis response of the European Union'. Alluding to the summit on the 9th, given that central banks have probably done what they could/want the pressure is now on politicians to deliver.
CHF
The Swiss KOF leading indicator for November came in weaker than expected at 0.35 vs 0.65 consensus. The previous number was revised down slightly to 0.75. Our Swiss economist notes that the little details provided suggests that the main categories, with the exception of the construction sector, are edging lower. From a qualitative point of view, the index, however, corroborates with the slowing business sentiment indicators, but not necessarily the activity indicators such as trade of late.
Swiss Q3 GDP has also come in lower than expected, with a yearly increase of 1.3%, 0.2%q/q. The figures will likely add to the pressure on the SNB to act amid weakening external conditions and we continue to target a raising of the EURCHF target floor in December.
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.
Subscribe to:
Posts (Atom)