Fxpro Daily Briefing

[kapak]

Turkey time

22/11/12 @ 08:17 GMT by Michael Derks, Chief Strategist

Data/Event Risks

• USD: Thanksgiving Day holiday – as such, trading conditions will be lighter than usual. Some dollar longs took profits yesterday. Focus next week will return to fiscal cliff discussions.

• GBP: Only CBI Trends up for release today. Otherwise, keep attuned to scatter-gossip re how Whitehall discussions on Autumn Budget Statement are progressing.

• EUR: French preliminary manufacturing and services PMI today, as well as actual German and EC PMI. Focus though will remain on how Europe bridges differences with IMF over Greece.


Idea of the Day

Unlikely to see big moves in the next couple of days. Next week will be more active, with Europe pre-occupied by Greece, America by the fiscal cliff and the Israeli-Gaza conflict, and Japan by its election. Right now, politics as much a driver of forex direction as economics.


Latest FX News

• EUR: Some euro short-covering yesterday and overnight ahead of US Thanksgiving holiday. Soothing words from Merkel and Schaeuble also helped yesterday. The outcome of Monday’s meeting of the troika re Greece remains an important determinant of near-term direction.

• USD: Retained a bid tone in the morning before some profit-taking in the afternoon. As long as fiscal cliff is resolved, dollar ought to retain its allure.

• JPY: Still out of friends, with losses against all of the other majors yesterday. No need to fight the tape just yet, although yen weakness becoming consensus.

• AUD: Aided overnight by a decent print on the China HSBC flash manufacturing PMI, although the upside push ran out of puff above 1.04. We may well see the bears have a pop at dragging the Aussie lower next week, as recent attempts to rally have generally faltered. RBA on top makes it tough for the bulls.

http://www.youtube.com/watch?feature=player_embedded&v=nt4hTAvNvuY

 

[kapak]

Choppy Shopping Friday

23/11/12 @ 07:59 GMT by Simon Smith, Chief Economist

Data/Event Risks

• USD: This is the ‘bridge’ day that many in US take off after yesterday’s holiday. Volatility risk mainly from (large institutional) orders pushing market with low liquidity.

• GBP: Data on lending for house purchase is not a big market mover, but sterling may be a little more sensitive in low liquidity environment. Lending has been improving of late.

• EUR: The IFO index is the main risk, with weaker number (expected 99.5) making euro vulnerable on fears of more protracted slowdown in Germany.


Idea of the Day

This is the day known as ‘Black Friday’, when US retailers supposedly move into the black (profit) as Christmas shoppers go crazy. It’s never clear whether we should celebrate or fear rising spending from US consumers. After all, debt-fuelled spending was one of the reasons (but not the main one) why things went wobbly in the US before. US consumer spending is still more than 70% of the US economy, so the rebalancing away from consumer spending still has some way to go. In markets, the main risk comes from low liquidity on a Friday, which could make for some choppy end of week trading conditions.


Latest FX News

• EUR: EU leaders look unlikely to agree on a long-term budget deal at today’s summit. EUR a touch lower on Merkel headlines overnight, but recovered, helped by firmer tone to stocks.

• JPY: The yen firmer, despite the gains in Asian stock markets (holiday in Japan), reflecting the fact that the currency is seeing some short covering pushing USDJPY lower into the end of the week.

• AUD: Apocalyptic talk from Gina Rinehart, mining billionaire, said Australia risks being another “Greece, Spain or Portugal” as it becomes less competitive in the mining sector, losing out to African nations. Aussie not concerned, pushing above 1.04 as Asian stocks have moved higher every day this week.

 

[kapak]

Trader preference for yen shorts

26/11/12 @ 07:55 GMT by Michael Derks, Chief Strategist

Data/Event Risks

• USD: Fiscal cliff discussions recommence this week – progress (or lack of) will be a key determinant of dollar direction. Tomorrow is hectic for data releases, including durable goods orders, Case-Shiller house prices and consumer confidence.

• GBP: Not much out today but tomorrow we see if Q3’s 1% GDP increase will be revised. BoE still adopting a wait-and-see on policy.
• EUR: Minor economic news, including Spanish and Irish house prices. Progress in Greek debt discussions will be critical.


Idea of the Day

Traders have been covering euro shorts over the last couple of weeks, for two main reasons. Firstly, they were simply not making any money out of these positions. Secondly, short yen was becoming more profitable. As such, the euro has looked bid in part because shorts have switched to the yen. This process is probably not yet complete.


Latest FX News

• EUR: Friday witnessed more short-covering, but also some new longs being established. Indeed, euro has been steadily moving higher over the past two weeks, despite Greek debt hiccup and French downgrade. Shorts have been complacent.

• JPY: It is as though traders have decided that the yen is a better short, and as such have closed out euro short positions where they were not getting anywhere. Judging from the price action, it appears that there is still plenty of interest in selling the Japanese currency. As such, no need to fight the tape.

• AUD: Enjoyed some short-covering over the second half of last week, as dollar longs took profit. Still trapped in a very tight range. Has cleared 1.0450, which is encouraging for the bulls.

• GBP: FX flows for now are mostly in the other majors, so sterling is just bobbing around without any real independent direction. Traders are not playing, preferring other trades such as yen and the euro.

 

[kapak]

US fiscal deal still a long way off

28/11/12 @ 07:58 GMT by Michael Derks, Chief Strategist

Data/Event Risks

• USD: New Home sales and the Fed’s Beige Book are the only releases of note today. Month-end flows probably at their peak today.

• EUR: German CPI and Irish retail sales emerge later today. Note the gains in Spanish bonds in recent days – market fears that Catalonia vote will trigger a rush for independence have diminished.


Idea of the Day

Now that Washington politicians have eaten as much turkey as they can bear, the hard grind of finding a path through the fiscal cliff maze recommences. Although there is some thawing on both sides, they remain a long way apart, and markets may need to put some additional heat on them in order for deeply entrenched positions to shift. Unfortunately, the latter is not yet forthcoming. Fiscal cliff and tax uncertainty spells trouble for risk assets, and benefit the dollar, as do month-end flows.


Latest FX News

• EUR: Yet another case of buy the rumour (of a Greek debt deal) and sell the fact, with the euro retreating after running into a determined wall of sellers up at 1.30. Upbeat economic news out of the US helped the buck, as did month-end flows. Single currency may drift lower near term.

• JPY: Yen shorts headed for cover again overnight, amidst rumours that the government in Japan would announce a massive fiscal stimulus on Friday. May see yen climb further in the very near term in what will be a big test of conviction for the bears.

• AUD: Struggling very slightly, although not in a way that should cause too many alarms. Asian equities off by around 1% overnight and yet Aussie still fairly firm. Some traders alert to rising prospect of a rate cut next week.

• GBP: Sterling got a lift yesterday as traders and investors alike responded positively to the news that Mark Carney had been appointed BoE Governor. Month-end flows probably helped the pound as well. Some of yesterday’s gains have been diluted overnight.

http://www.youtube.com/watch?v=KZr4_XB5mFM&feature=share&list=PL8302B08FD7185AF3

 

[kapak]

The mysterious plunge in gold

29/11/12 @ 08:07 GMT by Michael Derks, Chief Strategist

Data/Event Risks

• USD: Busy day for releases, with GDP for Q3 and jobless claims at 1.30pm, followed by pending home sales at 3pm. Q3 GDP may be revised higher, which could assist the dollar. US Treasury Secretary Geithner meets Congressional leaders to discuss the fiscal cliff.

• EUR: Italian business confidence and EU consumer confidence out this morning. Greece still not out of focus, as questions persist re proposed debt buyback plan. On a more positive note, Spanish banks are to receive EUR 37bn of funding after EU regulators finally gave their imprimatur.


Idea of the Day

Risk assets and currencies suffered for a time yesterday, while safe-haven assets/currencies strengthened, although some soothing words from House Speaker Boehner later on reversed some of the pessimism. In Europe, core 10yr bond yields dropped 7bp, while in Spain the 10yr fell 20bp. Given trepidation surrounding the fiscal cliff, may see more nervousness near-term, so this trend towards safe-havens could well continue. One exception may be the gold price, which mysteriously plunged USD 30 below USD 1,710 for a short time yesterday.


Latest FX News

• EUR: Crawled lower over the course of the day as mood towards risk darkened. A couple of large SWF’s were omnipresent on the sell-side in terms of both size and consistency, pushing it below 1.29. Recovered later after Boehner’s remarks. Still looks soggy.

• JPY: Lost ground overnight after LDP leader Abe called for unlimited monetary policy easing until inflation in Japan reaches 2%. Very weak retail sales also contributed to the yen’s softness.

• AUD: Held very firm amidst the chill winds of global risk aversion. Strengthened later on as risk sentiment became more positive, with the Aussie reaching 1.0480. RBA meets next Tuesday, front end favours another rate cut but local economists are less convinced. Looks well-bid – upside may continue to be tested near-term.

• GBP: Cable dropped back below 1.60 yesterday amidst general risk-averse backdrop. Worth watching out for in coming days are any leaks regarding the Chancellor’s Autumn Statement in a week’s time.