*Time is with respect to Singapore Time.
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Global Events Calendar [30-07-2007] - [03-08-2007]
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Before market opens on Monday [30-07-2007]
Sunday [29-07-2007]
[Whole Day Event]---JPY Upper House Elections
Monday [30-07-2007]
7:50am---JPY Industrial Production m/m (p)
4:30pm---GBP Mortgage Approvals
4:30pm---GBP Net Lending to Individuals m/m
Tuesday [31-07-2007]
7:30am---JPY Overall Household Spending y/y
7:30am---JPY Manufacturing PMI
7:30am---JPY Unemployment Rate
9:30am---JPY Average Cash Earnings y/y
1:00pm---JPY Housing Starts y/y
2:00pm---EUR German Retail Sales m/m
3:55pm---EUR German Unemployment Rate
4:00pm---CHF Consumption Indicator
5:00pm---EUR CPI y/y (p)
5:00pm---EUR Unemployment Rate
5:00pm---EUR Consumer Confidence
5:00pm---EUR Italian CPI m/m
5:30pm---GBP Consumer Confidence
6:00pm---GBP CBI Distributive Trades Realized
6:00pm---GBP CBI Distributive Trades Expected
8:30pm---USD Core PCE Price Index m/m
8:30pm---USD Personal Spending m/m
8:30pm---USD Personal Income m/m
8:30pm---USD ECI q/q
9:45pm---USD Chicago PMI
10:00pm--USD Consumer Confidence
10:00pm--USD Construction Spending m/m
Wednesday [01-08-2007]
7:01am---GBP Consumer Confidence Index
3:55pm---EUR German Manufacturing PMI
4:00pm---EUR Manufacturing PMI (r)
4:30pm---GBP Manufacturing PMI
5:30pm---GBP BRC Shop Price Index y/y
8:15pm---USD ADP Nonfarm Employment Change
10:00pm--USD ISM Manufacturing Index
10:00pm--USD ISM Manufacturing Prices
10:00pm--USD Pending Home Sales m/m
10:30pm--USD Crude Oil Inventories
Thursday [02-08-2007]
[Time Unknown]---USD Domestic Vehicle Sales
7:50am-----------JPY Monetary Base y/y
3:30pm-----------CHF SVME PMI
4:30pm-----------GBP Construction PMI
7:00pm-----------GBP Interest Rate Statement
7:45pm-----------EUR Interest Rate Statement
8:30pm-----------USD Unemployment Claims
8:30pm-----------EUR ECB President Trichet Speaks
10:00pm----------USD Factory Orders m/m
Friday [03-08-2007]
1:45pm---CHF CPI m/m
3:55pm---EUR German Services PMI
4:00pm---EUR Services PMI (r)
4:30pm---GBP Services PMI
5:00pm---EUR Retail Sales m/m
8:30pm---USD Nonfarm Employment Change
8:30pm---USD Unemployment Rate
8:30pm---USD Average Hourly Earnings m/m
10:00pm--USD ISM Non-Manufacturing Index
10:00pm--USD ISM Non-Manufacturing Prices
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Sunday, July 29, 2007
Thursday, July 19, 2007
USD/CHF: Finally Back Below 1.20 - EUR/CHF At Expiry Level
As the US Dollar weakens against the Euro the Franc is managing to elicit a further period of strength against the US unit. USD/CHF has finally filled the bids into the 1.20-mark and the overnight lows down at 1.1988 are now in sight.
The Franc strength is not linked to the latest Swiss data as the local ZEW index fell to -2.1 in July. The survey also showed most economists expected the Swiss franc to appreciate against the euro over the coming six months.
On the whole the data does underpin the view that the mountain economy is in a comfortable position. Over at IFR, they are suggesting that a duel SNB hike scenario remains the most likely outcome for the remainder of 2007. Two 25bp hikes should be looked for into H2 07 (one in Q3 in September and the other in Q4 in December) with an outside risk for a more aggressive 50bp move higher from Roth in Q3 should the CHF reversal of late fail to hold.
Against the Euro the Franc has weakened intraday and EUR/CHF has been bought up to the 1.6595/6600 level where option dealers note expiries at the NY cut (14:00 GMT). 1.6595 & 1.6600 strikes are both set to mature today but dealers do suggest that option related supply into the figure will be found in an attempt to cap further spot gains.
The Franc strength is not linked to the latest Swiss data as the local ZEW index fell to -2.1 in July. The survey also showed most economists expected the Swiss franc to appreciate against the euro over the coming six months.
On the whole the data does underpin the view that the mountain economy is in a comfortable position. Over at IFR, they are suggesting that a duel SNB hike scenario remains the most likely outcome for the remainder of 2007. Two 25bp hikes should be looked for into H2 07 (one in Q3 in September and the other in Q4 in December) with an outside risk for a more aggressive 50bp move higher from Roth in Q3 should the CHF reversal of late fail to hold.
Against the Euro the Franc has weakened intraday and EUR/CHF has been bought up to the 1.6595/6600 level where option dealers note expiries at the NY cut (14:00 GMT). 1.6595 & 1.6600 strikes are both set to mature today but dealers do suggest that option related supply into the figure will be found in an attempt to cap further spot gains.
EUR/USD: Working Higher As EUR/JPY Triggers Stops
EUR/JPY managed to absorb the offers back from 168.40 to 168.50 and stops are tipped to have gone off amid the break higher. As a result, EUR/USD has also found a bout of strength as spot is now working higher once more to retest the all-time highs up at 1.3834 with talk of option related sales into 1.3840/50, linked to potential option structures at the price. EUR/JPY option barriers are seen into 169.00 and 170.00.
SWISS ECON: July ZEW Investor Sentiment -2.1 Vs -0.1 Pvs
Swiss ZEW investor sentiment dipped by 2 points in July to drop to -2.1 points from the previous -0.1 reading. Credit Suisse, who issues the indicator in cooperation with the German ZEW economic research institute, went on to indicate that current conditions also weakened from 95.7 in June to 93.6 in July.
Swiss Outlook (19th July 2007)
USD/CHF opened in NY near the day's 1.2050 high, but that breach of Monday and Tuesday's 1.2040 high proved futile, just as the overnight breach of Tuesday's 1.1977 low did. The new year-and-a-half low at 1.1962 was instigated by fresh US subprime concerns and rumors a US bank was in trouble. Traders squared up ahead of the US economic releases and Bernanke"s Hill appearance.
CPI was up 0.2% overall & core v +0.1% & +0.2% f/c. Housing Starts were up 2.3%, but single-family starts fell again, while Permits fell 7.5%. The 12.9% surge in multi-family housing starts may borrow from future single-family growth as buyers and builders lower their sights in the face of the housing slump and higher borrowing costs.
Fed Chair Bernanke kept inflation high on his talking list but the gist of his comments was that the housing issue remains a concern and that lenders would not be bailed out of their bad loans. Unsaid but understood is that the Fed may ease rates if the housing pullback undermines the economy. Philly Fed, Claims, LEI and more from Bernanke are Thursday's risks. Swiss Trade also due. Weak US stocks & Tsy yields are the main USD drag.
CPI was up 0.2% overall & core v +0.1% & +0.2% f/c. Housing Starts were up 2.3%, but single-family starts fell again, while Permits fell 7.5%. The 12.9% surge in multi-family housing starts may borrow from future single-family growth as buyers and builders lower their sights in the face of the housing slump and higher borrowing costs.
Fed Chair Bernanke kept inflation high on his talking list but the gist of his comments was that the housing issue remains a concern and that lenders would not be bailed out of their bad loans. Unsaid but understood is that the Fed may ease rates if the housing pullback undermines the economy. Philly Fed, Claims, LEI and more from Bernanke are Thursday's risks. Swiss Trade also due. Weak US stocks & Tsy yields are the main USD drag.
Sterling Outlook (19th July 2007)
The GBP/USD opened around 2.0540 after tracking higher during the US session when the market perceived Bernanke's testimony as being a bit more dovish than expected. The opening level at 2.0540 turned out to be the high for the Asian session as talk circulated that the 2.0550 option barrier was very large and was being defended by a large Asian player.
The GBP/USD eased a bit more after Anatole Kaletsky wrote in a UK Times article that despite the talk in the City, UK rates have probably peaked at 5.75%. The GBP/USD traded down to 2.0511 before decent buying emerged and it settled between 2.0515/30 for the balance of the session. The EUR/GBP opened at 0.6723 and pushed up to 0.6730 after the Kaletsky article before settling back around 0.6722/24.
Sentiment towards the GBP/USD remains bullish, but traders are a bit wary about taking on the option barrier at 2.0550 without fresh factors to do so. Daily techs are extremely overbought and warn that a period of corrective consolidation may be needed before the GBP/USD can move higher again. UK PSNB and Retail Sales are out later today.
The GBP/USD eased a bit more after Anatole Kaletsky wrote in a UK Times article that despite the talk in the City, UK rates have probably peaked at 5.75%. The GBP/USD traded down to 2.0511 before decent buying emerged and it settled between 2.0515/30 for the balance of the session. The EUR/GBP opened at 0.6723 and pushed up to 0.6730 after the Kaletsky article before settling back around 0.6722/24.
Sentiment towards the GBP/USD remains bullish, but traders are a bit wary about taking on the option barrier at 2.0550 without fresh factors to do so. Daily techs are extremely overbought and warn that a period of corrective consolidation may be needed before the GBP/USD can move higher again. UK PSNB and Retail Sales are out later today.
Yen Outlook (19th July 2007)
USD/JPY and JPY crosses did little in Asia today following the whippy moves seen yesterday. USD weakness, a prominent theme yesterday, looks to have faded and the unit maintained a more bid tone. This served to keep USD/JPY stable just below 122.00 for the most part and some of the JPY crosses better offered. USD/JPY traded up from a low of 121.74 to 122.01 early.
It later traded for the most part between 121.90-00. Orders look to be returning and helping to anchor down this market. Offers topside remain to 122.40. Stops are seen above but more offers are noted at 122.50-60. More stops are seen above 122.60. Standing bids are seen below at 121.55-60 with some stops below. More bids are seen trailing down from 121.50 to 121.00 and lower.
EUR/JPY traded a relatively tight 168.12-44 range. It came down from its highs early on the back of EUR/USD sogginess. It bounced later, spending the rest of the session between 168.20-30. GBP/JPY consolidated recent gains above 250, between 250.15-40. AUD/JPY consolidated in a 106.85-107.05 range. NZD/JPY traded between 96.40-80, weighed down by Japan sales on bond redemptions.
It later traded for the most part between 121.90-00. Orders look to be returning and helping to anchor down this market. Offers topside remain to 122.40. Stops are seen above but more offers are noted at 122.50-60. More stops are seen above 122.60. Standing bids are seen below at 121.55-60 with some stops below. More bids are seen trailing down from 121.50 to 121.00 and lower.
EUR/JPY traded a relatively tight 168.12-44 range. It came down from its highs early on the back of EUR/USD sogginess. It bounced later, spending the rest of the session between 168.20-30. GBP/JPY consolidated recent gains above 250, between 250.15-40. AUD/JPY consolidated in a 106.85-107.05 range. NZD/JPY traded between 96.40-80, weighed down by Japan sales on bond redemptions.
Euro Outlook (19th July 2007)
The EUR/USD opened in Asia around 1.3805 and immediately spiked to 1.3815 on reports of an explosion in New York. The explosion turned out to be an accident and the EUR/USD slipped back to 1.3800 and proceeded to trade in a very narrow 1.3791/1.3805 range for the balance of the session.
There was talk of good buying interest at 1.3790 and 1.3770 while stops are eyed below 1.3750. Sellers are lined up between 1.3820/35 with stops above 1.3840. Trading was subdued in Asia today compared to yesterday with most of the action confined to the peripheral currencies.
Sentiment towards the EUR/USD remains bullish, but most traders say they would prefer buying dips towards 1.3755/70 where sovereign names are rumoured to be bidding. They feel that concerns about sub-prime and US housing in general have been built in the EUR/USD at the higher levels and these concerns have had a tendency to fade in recent weeks when there was no fresh news to keep them alive. There is little in the way of data out of the EZ later today and the US data includes Leading Indicators and Philly Fed.
There was talk of good buying interest at 1.3790 and 1.3770 while stops are eyed below 1.3750. Sellers are lined up between 1.3820/35 with stops above 1.3840. Trading was subdued in Asia today compared to yesterday with most of the action confined to the peripheral currencies.
Sentiment towards the EUR/USD remains bullish, but most traders say they would prefer buying dips towards 1.3755/70 where sovereign names are rumoured to be bidding. They feel that concerns about sub-prime and US housing in general have been built in the EUR/USD at the higher levels and these concerns have had a tendency to fade in recent weeks when there was no fresh news to keep them alive. There is little in the way of data out of the EZ later today and the US data includes Leading Indicators and Philly Fed.
Monday, July 16, 2007
GBP/USD: Stops Above 2.0375 Tripped, New 26-Year Peak Scaled
Tripped buy stops above 2.0375 have helped propel sterling to a fresh 26-year peak of 2.0389. Some option-related supply might emerge ahead of 2.0400, re: a touted exotic option barrier at the figure. Further option barriers are tipped at 2.0450, 2.0500 and 2.0550+.
USD/CHF: Back Testing 1.20, 1.1985 Still Key To Lower Levels
As the US Dollar weakens USD/CHF is back testing the 1.20 area but it is not until a clear break below the Friday low at 1.1985 is seen that further downside momentum will be garnered.
Spot has managed to work back from 1.2005 to 1.1995 as EUR/USD gapped up into the 1.3790's but until the Euro pair manages to break back into the 1.38's the Dollar will continue to teeter on the brink.
EUR/CHF is also looking to key support with the 1.6550 area propping the cross on dips lower.
Spot has managed to work back from 1.2005 to 1.1995 as EUR/USD gapped up into the 1.3790's but until the Euro pair manages to break back into the 1.38's the Dollar will continue to teeter on the brink.
EUR/CHF is also looking to key support with the 1.6550 area propping the cross on dips lower.
EUR/USD: Gaps Above 1.3790 After EZ CPI Matches Expectations
EUR/USD has gapped higher to trade in the 1.3790's in the wake of the recent Euro Zone data. Into the publication and spot traded 1.3786/88 but the pair has since posted a fresh session and intraday high at 1.3794 as the data is digested. EZ final June CPI matched expectations to come in at +0.1% M/M & +1.9% on the year, however, some had looked for a slightly weaker report.
Offers in EUR/USD are still seen trailing back to the 1.3800 area with the new all-time highs up at 1.3815 noted above before the option barriers seen into 1.3830 and 1.3850.
Offers in EUR/USD are still seen trailing back to the 1.3800 area with the new all-time highs up at 1.3815 noted above before the option barriers seen into 1.3830 and 1.3850.
Sterling Outlook (16th July 2007)
The GBP/USD opened around 2.0340 after topping out between 2.0360/70 for the third day in a row. The GBP/USD traded down to 2.0322 in the Asian morning session when the USD broadly firmed led by the USD/JPY. The tone changed later in the morning and the dollar started to fade led by the AUD and NZD while the GBP/USD glided up to 2.0355.
The GBP/USD remained bid for the balance of the session despite talk of good selling interest camped between 2.0360/70. The EUR/GBP eased during the Asian session, as the dollar-bloc currencies outperformed when the USD came under a bit of pressure. The cross fell from the opening level at 0.6883 to 0.6772 before settling around 0.6775 for the balance of the session.
Sentiment towards the GBP/USD is decidedly bullish, as analysts feel that the GBP will be one of the main beneficiaries of ongoing US dollar weakness. In the short-term the GBP/USD needs to break above stubborn resistance at 2.0360/70 soon to maintain upward momentum. There is no data out of the UK today and only the Empire Mfg Survey out of the US today.
The GBP/USD remained bid for the balance of the session despite talk of good selling interest camped between 2.0360/70. The EUR/GBP eased during the Asian session, as the dollar-bloc currencies outperformed when the USD came under a bit of pressure. The cross fell from the opening level at 0.6883 to 0.6772 before settling around 0.6775 for the balance of the session.
Sentiment towards the GBP/USD is decidedly bullish, as analysts feel that the GBP will be one of the main beneficiaries of ongoing US dollar weakness. In the short-term the GBP/USD needs to break above stubborn resistance at 2.0360/70 soon to maintain upward momentum. There is no data out of the UK today and only the Empire Mfg Survey out of the US today.
Yen Outlook (16th July 2007)
The USD/JPY opened in Asia around 121.90 and came under pressure due to EUR/JPY, GBP/JPY and AUD/JPY selling out of Asia. The USD/JPY traded down to 121.83 when a few stops were triggered in the EUR/JPY below 167.85, but solid USD/JPY bids at 121.80 discouraged attempts lower.
The USD/JPY proceeded to make a hefty bounce back to 122.19 when the JPY crosses turned around with the EUR/JPY trading back to 168.34. Sellers ahead of 122.30 capped and the USD/JPY settled back between 121.90/122.00 for the balance of the Asian session that was quieter than usual due to the Tokyo holiday.
Traders speculate that some of the JPY buying this morning was a delayed reaction to the news that Iran would start taking Japan oil payments in JPY only. The effect soon wore off due to the fact that it only affects around 10 BLN USD worth of flows per year.
In any case the USD/JPY appears poised to move lower after completing a key outside week reversal lower on Friday. There are stops below 121.80 and a break below targets the top of the daily cloud at 121.10/15.
The USD/JPY proceeded to make a hefty bounce back to 122.19 when the JPY crosses turned around with the EUR/JPY trading back to 168.34. Sellers ahead of 122.30 capped and the USD/JPY settled back between 121.90/122.00 for the balance of the Asian session that was quieter than usual due to the Tokyo holiday.
Traders speculate that some of the JPY buying this morning was a delayed reaction to the news that Iran would start taking Japan oil payments in JPY only. The effect soon wore off due to the fact that it only affects around 10 BLN USD worth of flows per year.
In any case the USD/JPY appears poised to move lower after completing a key outside week reversal lower on Friday. There are stops below 121.80 and a break below targets the top of the daily cloud at 121.10/15.
Euro Outlook (16th July 2007)
The EUR/USD opened in Asia around 1.3780 after trading to an all-time high at 1.3812 on Friday in the wake of weaker than expected US Retail Sales data. The EUR/USD eased to 1.3771 in very early Asia due to EUR/JPY selling that took the cross down to 167.77 after stops were triggered below 167.90.
Good buying interest at 1.3770 and a rebound in the EUR/JPY buoyed the EUR/USD and the pairing trades back to 1.3792 before settling around 1.3785/90 for the balance of the quiet, Tokyo holiday affected session.
Sentiment towards the EUR/USD is decidedly bullish. The EUR/USD is getting short-term support from the mixed US data that is good enough to support the view that the global economy is on strong footing and thereby encouraging US investors push funds offshore and not so good as to raise expectations of a Fed hike.
The EUR/USD is getting long-term support from central bank diversification that is expected to accelerate later in the year. Traders expect the trend higher to continue, but there might be hesitation ahead of some key US inflation and housing data along with Bernanke testifying to the House on Thursday.
Good buying interest at 1.3770 and a rebound in the EUR/JPY buoyed the EUR/USD and the pairing trades back to 1.3792 before settling around 1.3785/90 for the balance of the quiet, Tokyo holiday affected session.
Sentiment towards the EUR/USD is decidedly bullish. The EUR/USD is getting short-term support from the mixed US data that is good enough to support the view that the global economy is on strong footing and thereby encouraging US investors push funds offshore and not so good as to raise expectations of a Fed hike.
The EUR/USD is getting long-term support from central bank diversification that is expected to accelerate later in the year. Traders expect the trend higher to continue, but there might be hesitation ahead of some key US inflation and housing data along with Bernanke testifying to the House on Thursday.
Sunday, July 15, 2007
Global Events Calendar [16-07-2007] - [20-07-2007]
*Time is with respect to Singapore Time.
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Global Events Calendar [16-07-2007] - [20-07-2007]
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Monday [16-07-2007]
[Whole Day Event]---JPY Holiday: Marine Day
2:00pm--------------EUR German CPI m/m
5:00pm--------------EUR CPI m/m
8:30pm--------------USD Empire State Business Conditions Index
Tuesday [17-07-2007]
7:50am---JPY Tertiary Industry Activity Index m/m
3:15pm---CHF Retail Sales y/y
4:30pm---GBP CPI y/y
4:30pm---GBP Core CPI y/y
4:30pm---GBP RPI y/y
5:00pm---EUR German ZEW Economic Sentiment
5:00pm---EUR ZEW Economic Sentiment
8:30pm---USD PPI m/m
8:30pm---USD Core PPI m/m
9:00pm---USD TIC Net Long-Term Transactions
9:15pm---USD Industrial Production m/m
9:15pm---USD Capacity Utilization Rate
Wednesday [18-07-2007]
1:00am---USD Kansas City Fed President Hoenig Speaks
1:00am---USD NAHB Housing Market Index
7:50am---JPY Monetary Policy Meeting Minutes
4:00pm---EUR Italian Trade Balance
4:30pm---GBP MPC Meeting Minutes
4:30pm---GBP Average Earnings Index +Bonus q/y
4:30pm---GBP Claimant Count Change
4:30pm---GBP Unemployment Rate
5:00pm---EUR Trade Balance
8:30pm---USD CPI m/m
8:30pm---USD Core CPI m/m
8:30pm---USD Housing Starts
8:30pm---USD Building Permits
10:00pm--USD Fed Chairman Bernanke Speaks
10:30pm--USD Crude Oil Inventories
Thursday [19-07-2007]
7:50am---JPY All Industries Activity Index m/m
2:00pm---EUR German PPI m/m
2:15pm---CHF Trade Balance
4:30pm---GBP Retail Sales m/m
4:30pm---GBP Public Sector Net Borrowing
4:30pm---GBP M4 Money Supply m/m
5:00pm---CHF ZEW Expectations
8:30pm---USD Unemployment Claims
9:30pm---USD Fed Chairman Bernanke Speaks
10:00pm--USD Leading Index m/m
Friday [20-07-2007]
12:00am--USD Philadelphia Fed Manufacturing Index
12:30am--USD Chicago Fed President Moskow Speaks
2:00am---USD FOMC Meeting Minutes
3:15pm---CHF PPI m/m
4:30pm---GBP GDP q/q (p)
4:30pm---GBP Index of Services 3m/3m
5:00pm---EUR ECB President Trichet Speaks
11:00pm--USD St. Louis Fed President Poole Speaks
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Global Events Calendar [16-07-2007] - [20-07-2007]
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Monday [16-07-2007]
[Whole Day Event]---JPY Holiday: Marine Day
2:00pm--------------EUR German CPI m/m
5:00pm--------------EUR CPI m/m
8:30pm--------------USD Empire State Business Conditions Index
Tuesday [17-07-2007]
7:50am---JPY Tertiary Industry Activity Index m/m
3:15pm---CHF Retail Sales y/y
4:30pm---GBP CPI y/y
4:30pm---GBP Core CPI y/y
4:30pm---GBP RPI y/y
5:00pm---EUR German ZEW Economic Sentiment
5:00pm---EUR ZEW Economic Sentiment
8:30pm---USD PPI m/m
8:30pm---USD Core PPI m/m
9:00pm---USD TIC Net Long-Term Transactions
9:15pm---USD Industrial Production m/m
9:15pm---USD Capacity Utilization Rate
Wednesday [18-07-2007]
1:00am---USD Kansas City Fed President Hoenig Speaks
1:00am---USD NAHB Housing Market Index
7:50am---JPY Monetary Policy Meeting Minutes
4:00pm---EUR Italian Trade Balance
4:30pm---GBP MPC Meeting Minutes
4:30pm---GBP Average Earnings Index +Bonus q/y
4:30pm---GBP Claimant Count Change
4:30pm---GBP Unemployment Rate
5:00pm---EUR Trade Balance
8:30pm---USD CPI m/m
8:30pm---USD Core CPI m/m
8:30pm---USD Housing Starts
8:30pm---USD Building Permits
10:00pm--USD Fed Chairman Bernanke Speaks
10:30pm--USD Crude Oil Inventories
Thursday [19-07-2007]
7:50am---JPY All Industries Activity Index m/m
2:00pm---EUR German PPI m/m
2:15pm---CHF Trade Balance
4:30pm---GBP Retail Sales m/m
4:30pm---GBP Public Sector Net Borrowing
4:30pm---GBP M4 Money Supply m/m
5:00pm---CHF ZEW Expectations
8:30pm---USD Unemployment Claims
9:30pm---USD Fed Chairman Bernanke Speaks
10:00pm--USD Leading Index m/m
Friday [20-07-2007]
12:00am--USD Philadelphia Fed Manufacturing Index
12:30am--USD Chicago Fed President Moskow Speaks
2:00am---USD FOMC Meeting Minutes
3:15pm---CHF PPI m/m
4:30pm---GBP GDP q/q (p)
4:30pm---GBP Index of Services 3m/3m
5:00pm---EUR ECB President Trichet Speaks
11:00pm--USD St. Louis Fed President Poole Speaks
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Tuesday, July 10, 2007
USD/CHF: Stops Seen Into 1.22's, EUR/CHF Steady-To-Bearish
Today the Swiss Federal Treasury announced it was to reopen the tender for the 3.0% 2019 bonds. The results will be released tomorrow but this is unlikely to have a significant impact on the CHF. Into European trading and the Franc is once more struggling as the Dollar looks to eke gains ahead of the Bernanke comments due later today.
The FOMC Chairman is due to speak on inflation and as a result the US unit has managed to elicit more than a modicum of support overnight. USD/CHF is currently testing the supply back from 1.2190 to the 1.2200 mark with local dealers reporting stop/loss interest on a break of 1.2205. French and German names are the best of the recent sellers with London dealers reporting good demand on dips below 1.2170. Bids into 1.2160/65 and 1.2150 will once more look to prop on dips.
EUR/CHF has been forced to trade on a choppy footing amid this initial USD/CHF volatility with the cross bought up to 1.6588. However, offers in the EUR cross are seen from 1.6590 back towards the 1.6600 to cap the topside and as a result the price should continue to look heavy and offset the early buyers once the markets get into top gear. Bids here are seen from 1.6570 back to 1.6565 with more support noted into the 1.6550 area.
Option dealers here suggest that the EUR 500mln 1.6600 strikes due later in the week are helping keep a lid on the price with intraday strikes noted below at 1.6450 & 1.6465. Vol activity has been steady amid the latest spot price decline with the front-end of the curve underpinned by the threats to longer-term support at 1.6550.
Yesterday 2-Month R&R's traded at 0.3 for EUR puts in a EUR 200mln per leg ticket while 1-Month prices are now seen at 3.1/3.5. In the back-end, we are hearing that the 1-Year contract was last sold at 3.1 and now remains offered here.
The FOMC Chairman is due to speak on inflation and as a result the US unit has managed to elicit more than a modicum of support overnight. USD/CHF is currently testing the supply back from 1.2190 to the 1.2200 mark with local dealers reporting stop/loss interest on a break of 1.2205. French and German names are the best of the recent sellers with London dealers reporting good demand on dips below 1.2170. Bids into 1.2160/65 and 1.2150 will once more look to prop on dips.
EUR/CHF has been forced to trade on a choppy footing amid this initial USD/CHF volatility with the cross bought up to 1.6588. However, offers in the EUR cross are seen from 1.6590 back towards the 1.6600 to cap the topside and as a result the price should continue to look heavy and offset the early buyers once the markets get into top gear. Bids here are seen from 1.6570 back to 1.6565 with more support noted into the 1.6550 area.
Option dealers here suggest that the EUR 500mln 1.6600 strikes due later in the week are helping keep a lid on the price with intraday strikes noted below at 1.6450 & 1.6465. Vol activity has been steady amid the latest spot price decline with the front-end of the curve underpinned by the threats to longer-term support at 1.6550.
Yesterday 2-Month R&R's traded at 0.3 for EUR puts in a EUR 200mln per leg ticket while 1-Month prices are now seen at 3.1/3.5. In the back-end, we are hearing that the 1-Year contract was last sold at 3.1 and now remains offered here.
EUR/USD: Dips Below 1.3600 Look For Stops And Sovereigns
Into early European trading and the Euro is back on the defensive with bids in EUR/USD into 1.3595/3600 looking to prop the price amid the latest dip. Spot was seen as "heavy" overnight and EUR/JPY sales are said to have weighed but it has not been until the approach of the European open that the price finally managed to fill the support into 1.3610 and work lower.
Any further short-term weakness through 1.3600 may threaten the bottom area of 1.3565/70 but for the moment no such sell momentum has been seen. London dealers will once more look for sovereign support for the EUR on dips and it will be such support that helps form the base intraday with dealers also reporting stops below 1.3590 and again sub-1.3575.
The short-term risk-profile for the pair is formed by the EcoFin meeting in Brussels and the French industrial output numbers. German data is already in the pipeline with offers now seen into 1.3610/15 and 1.3630 to cap the topside.
Looking ahead, central bank speculations have returned but today it is the BoC and the impending BoJ verdict that hold the short-term focus. EUR/USD has only comments to work with but speakers from both sides are due on the roster. At 13:00 GMT the ECB Vice President, Papademos, is scheduled to take part in a media event in Brussels while at 17:00 GMT Fed Chairman, Bernanke, is set to discuss US inflation in Massachusetts.
With oil back above $70pb we at IFR look for the FOMC man to give some warning on the knock-on and thus the potential dangers of second-round pressures. Following this event-risk combo the ECB's Stark is due to speak in Frankfurt but the speech will be embargoed until 10:00 GMT on Wednesday.
Any further short-term weakness through 1.3600 may threaten the bottom area of 1.3565/70 but for the moment no such sell momentum has been seen. London dealers will once more look for sovereign support for the EUR on dips and it will be such support that helps form the base intraday with dealers also reporting stops below 1.3590 and again sub-1.3575.
The short-term risk-profile for the pair is formed by the EcoFin meeting in Brussels and the French industrial output numbers. German data is already in the pipeline with offers now seen into 1.3610/15 and 1.3630 to cap the topside.
Looking ahead, central bank speculations have returned but today it is the BoC and the impending BoJ verdict that hold the short-term focus. EUR/USD has only comments to work with but speakers from both sides are due on the roster. At 13:00 GMT the ECB Vice President, Papademos, is scheduled to take part in a media event in Brussels while at 17:00 GMT Fed Chairman, Bernanke, is set to discuss US inflation in Massachusetts.
With oil back above $70pb we at IFR look for the FOMC man to give some warning on the knock-on and thus the potential dangers of second-round pressures. Following this event-risk combo the ECB's Stark is due to speak in Frankfurt but the speech will be embargoed until 10:00 GMT on Wednesday.
Swiss Outlook (10th July 2007)
Quiet consolidation was seen in North American trading, as the 1.2155 London lows were retested and held mid-morning in New York following a 1.2165 open. A pullback in US 10-yr Tsy yields from a failed attempt to displace Friday's 5.206% recovery high kept USD/CHF on a soft footing as did lingering expectations of future SNB rate hikes in the wake of Friday's report that Swiss Unemployment fell to 2.7% in June from 2.8% in May, better than the unchanged forecast.
CHF 3-mo LIBOR inched up to 2.72% Monday from 2.71% Friday as the market tries to guess if the SNB will hike rates before their September meeting or perhaps opt for a 50 bp hike at that meeting instead of the 25 bp already priced in. It is suspected that much will depend on how strong the franc is then, with greater leeway to hike if the franc weakens in the interim and vice versa. 1.2235 remains the nearby upside obstacle, with offers seen ahead of there and stops beyond. 1.2155 is a 61.8% Fibo support beside intraday lows.
Little first-tier US economic is due out until Thursday's May trade deficit and Friday's June Retail Sales.
CHF 3-mo LIBOR inched up to 2.72% Monday from 2.71% Friday as the market tries to guess if the SNB will hike rates before their September meeting or perhaps opt for a 50 bp hike at that meeting instead of the 25 bp already priced in. It is suspected that much will depend on how strong the franc is then, with greater leeway to hike if the franc weakens in the interim and vice versa. 1.2235 remains the nearby upside obstacle, with offers seen ahead of there and stops beyond. 1.2155 is a 61.8% Fibo support beside intraday lows.
Little first-tier US economic is due out until Thursday's May trade deficit and Friday's June Retail Sales.
Sterling Outlook (10th July 2007)
The GBP/USD opened in Asia around 2.0155 after being the best performing major currency during the Lon/NY sessions. The GBP/USD traded in a very narrow 2.0146/2.0161 range in Asia, but the GBP gained ground against the EUR with the EUR/GBP easing from 0.6760 to 0.6755.
The firm tone of the GBP was in part attributed to the strong BRC Retail Sales data that showed June like- for-like Retail Sales up 3% Y/Y. Traders also say that the JPY buying, which was the main theme in Asia today, was mostly against the EUR and NZD with the GBP/JPY seeing only light selling flows.
Sentiment towards the GBP/USD remains bullish, but the repeated fails above 2.0200 last week is tempering sentiment as we approach the higher levels. The GBP is getting broad support from the view that the BOE will have to hike again in the months to come.
Hourly support has formed around 2.0135 and only a fall below that level would relieve the upward pressure. UK trades are out later today, but the Bernanke speech on inflation should be the main event for the FX markets.
The firm tone of the GBP was in part attributed to the strong BRC Retail Sales data that showed June like- for-like Retail Sales up 3% Y/Y. Traders also say that the JPY buying, which was the main theme in Asia today, was mostly against the EUR and NZD with the GBP/JPY seeing only light selling flows.
Sentiment towards the GBP/USD remains bullish, but the repeated fails above 2.0200 last week is tempering sentiment as we approach the higher levels. The GBP is getting broad support from the view that the BOE will have to hike again in the months to come.
Hourly support has formed around 2.0135 and only a fall below that level would relieve the upward pressure. UK trades are out later today, but the Bernanke speech on inflation should be the main event for the FX markets.
Yen Outlook (10th July 2007)
The USD/JPY opened in Asia at 123.35 after the JPY made a broad recovery from historic lows against a number of currencies during the Lon/NY sessions. The JPY recovery story picked up steam in Asia amid talk of Japanese security houses and US funds selling decent amounts of EUR/JPY and NZD/JPY.
The EUR/JPY fell from 168.17 to 167.70 while the NZD/JPY fell from 96.30 to 95.55 during the session. The JPY buying on the crosses weighed on the USD/JPY and took it from the morning high at 123.49 to a low of 123.17 before settling between 123.20/30 for the balance of the session.
The EUR/JPY and NZD/JPY show signs of topping out in the short-term. The market is very short the JPY against those currencies and concern that the BOJ meeting might be a more "hawkish" event than previously expected could see some paring back of JPY shorts.
There is talk that some BOJ policy board members might vote for a hike and comments from Governor Fukui may have a hawkish edge. The move below yesterday's 167.90 low in the EUR/JPY ended an eight day sequence of higher daily lows suggesting that the EUR/JPY up move is losing momentum.
The EUR/JPY fell from 168.17 to 167.70 while the NZD/JPY fell from 96.30 to 95.55 during the session. The JPY buying on the crosses weighed on the USD/JPY and took it from the morning high at 123.49 to a low of 123.17 before settling between 123.20/30 for the balance of the session.
The EUR/JPY and NZD/JPY show signs of topping out in the short-term. The market is very short the JPY against those currencies and concern that the BOJ meeting might be a more "hawkish" event than previously expected could see some paring back of JPY shorts.
There is talk that some BOJ policy board members might vote for a hike and comments from Governor Fukui may have a hawkish edge. The move below yesterday's 167.90 low in the EUR/JPY ended an eight day sequence of higher daily lows suggesting that the EUR/JPY up move is losing momentum.
Yen Outlook (10th July 2007)
The USD/JPY opened in Asia at 123.35 after the JPY made a broad recovery from historic lows against a number of currencies during the Lon/NY sessions. The JPY recovery story picked up steam in Asia amid talk of Japanese security houses and US funds selling decent amounts of EUR/JPY and NZD/JPY.
The EUR/JPY fell from 168.17 to 167.70 while the NZD/JPY fell from 96.30 to 95.55 during the session. The JPY buying on the crosses weighed on the USD/JPY and took it from the morning high at 123.49 to a low of 123.17 before settling between 123.20/30 for the balance of the session.
The EUR/JPY and NZD/JPY show signs of topping out in the short-term. The market is very short the JPY against those currencies and concern that the BOJ meeting might be a more "hawkish" event than previously expected could see some paring back of JPY shorts. There is talk that some BOJ policy board members might vote for a hike and comments from Governor Fukui may have a hawkish edge.
The move below yesterday's 167.90 low in the EUR/JPY ended an eight day sequence of higher daily lows suggesting that the EUR/JPY up move is losing momentum.
The EUR/JPY fell from 168.17 to 167.70 while the NZD/JPY fell from 96.30 to 95.55 during the session. The JPY buying on the crosses weighed on the USD/JPY and took it from the morning high at 123.49 to a low of 123.17 before settling between 123.20/30 for the balance of the session.
The EUR/JPY and NZD/JPY show signs of topping out in the short-term. The market is very short the JPY against those currencies and concern that the BOJ meeting might be a more "hawkish" event than previously expected could see some paring back of JPY shorts. There is talk that some BOJ policy board members might vote for a hike and comments from Governor Fukui may have a hawkish edge.
The move below yesterday's 167.90 low in the EUR/JPY ended an eight day sequence of higher daily lows suggesting that the EUR/JPY up move is losing momentum.
Euro Outlook (10th July 2007)
The EUR/USD opened in Asia around 1.3625 after an extremely dull US session that saw the pairing trade in a 1.3616/34 range. This did not auger well for the Asian session where the EUR/USD tends to stay nailed inside the range of the previous session. Not surprisingly the range for the EUR/USD in Asia as of this writing has been 1.3616/33, but there have been pretty hefty EUR/JPY flows and they were mostly of a selling nature.
The cross fell from 168.15 to 167.70 before settling around 167.80 in the afternoon. The selling was mainly from Japanese security houses with US model funds joining in. The EUR/JPY selling gave the EUR/USD a heavy tone, but bids lined up around 1.3605 discouraged attempts lower.
Sentiment towards the EUR/USD remains bullish, but a correction lower in the EUR/JPY might be underway and this could temper EUR/USD gains. The key event today will be Bernanke's speech on inflation and some feel that he may be a bit more dovish than expected. If that is the case it could help the EUR/USD finally push through 1.3640 and challenge the all-time high around 1.3680/85.
The cross fell from 168.15 to 167.70 before settling around 167.80 in the afternoon. The selling was mainly from Japanese security houses with US model funds joining in. The EUR/JPY selling gave the EUR/USD a heavy tone, but bids lined up around 1.3605 discouraged attempts lower.
Sentiment towards the EUR/USD remains bullish, but a correction lower in the EUR/JPY might be underway and this could temper EUR/USD gains. The key event today will be Bernanke's speech on inflation and some feel that he may be a bit more dovish than expected. If that is the case it could help the EUR/USD finally push through 1.3640 and challenge the all-time high around 1.3680/85.
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