USD Stability in Assian Session

Forex Market Overview 20 August 2008

The Usd was stable in the Asian session, despite the upside surprise in US PPI and slightly better than expected housing data. The EurUsd remained range bound between 1.4806 and 1.4742, and the UsdJpy traded between 109.90 and 109.62. Wall Street was lower yesterday lead by the financial sector and worries over Fannie and Freddie. Commodities bounced back with crude trading to $115.00bll, while gold rebounded back above $815oz. Asian regional stock indexes are surging with Shanghai higher by 7.55% and European indexes are poised to open higher with, the exception of the FTSE, down -2.28%.

The highlight of the European session will be the UK MPC minutes and we will see how close the BoE really is to raising rates. Judging from the price action of the Gbp, the markets are clearly expecting very dovish minutes echoing the dovish Inflation report. We expect the August vote to be identical to July's surprise vote, ie,7-1-1 (Tim Besley voting to raise rates). However, it is a bit astonishing that given the concerns over near term inflation stated in last weeks Inflation Report that in the same report would seem to endorse a rate move lower. There is considerable risk that, in light of the dovish Inflation Report, the market will view another 7-1-1 vote as slightly hawkish.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8703
S 1: 0.8626
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 162.39
CURRENT: 162.28
S 1: 160.88
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4201
CURRENT: 1.4108
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Forex Market Overview

Forex Market Overview 07 August 2008

The Usd was vaguely weaker during the Asian Session, as participants seem to be content with their positions ahead of the critical BoE & ECB rate announcement today. The EurUsd traded higher to 1.5451 from 1.5401, while the UsdJpy traded up to 109.90 (7-month highs), on rumors of option barriers triggered on the break of 108.55. With no surprise, the Jpy fueled carry traded continued to see strong gains as the EurJpy climbed to an August. high at 169.43 and the “King of Carry”, the TryJpy, peaked at 94.45. The commodity bloc found some relief in Asian trading, with the AudUsd climbing from 0.9080 to 0.9120, while NzdUsd reversed earlier gains slipping from 0.7218 to 0.7175. We are seeing some pullback in EM appetite, with the UsdMxn looking to retest the 10.00 resistance and the EurPln continued to rally off 3.200 support to 3.2433. Wti crude is slightly frimer at $118.89bll, as well as gold at $884.15oz. Wall Street closed up and regional Asian stock markets are mixed, with Nikkei leading the losers down -0.93%. European stock futures are pointing to a mixed open.

The BoE & ECB rate announcement will dominate the European session.

In the UK, the BoE is expected to hold rates at 5.00%. Since the MPC is unlikely to issue a accompanying statement, market reaction will be limited. Recentley the market has witnessed a string of gloomy economic data not seen since the last recession. However, the tone of the last meeting minutes suggest that rates are more likely to go up to combat rising inflation than to fall….but that was before this last more economic deterioration and financial turmoil. We are expecting Besley to call for a hike and might find some support, given that the Inflation Report will be released this month. But with this commodity prices easing and a slight dropping in public’s inflation expectations, the BoE might be getting some relief. But right now, showing a “stiff upper lip” in spite of deteriorating fundamentals might be enough to anchor inflation expectations.

On the continent, the ECB is widely expected to hold rates at 4.00%. We doubt, given the clear signs of economic deterioration and headline inflation expected to fall with easing commodity prices, that a move upward would be prudent. Trichet will have to stick with the usual hawkish rhetoric. There is significant risk that this month’s statement will put greater emphasis on the slowing growth story (again helped by declining commodity prices), which the market will perceive as dovish and as the reconsideration of the “no bais” mindset.Throughout our partnership with the industrial leaders, we are capable of delivering incomparable quality of online currency trading service.
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Forex Market Overview

Forex Market Overview 25 July 2008

The Usd was slightly weaker in Asian session, as sell off in the equity markets and higher oil price put pressure on the greenback. The EurUsd traded in a 1.5640 – 1.5750 range while the UsdJpy traded from 107.98 down to 107.40. US economic data came in worse than expected, sending yields lower, S&P -2.3% and halting the growing sense of optimism surrounding the US. In addition, deterioration in the Eurozone, lead by a decline in the German IFO, increased speculation that the ECB has room to raise rate in the coming month. Crude prices rose to $124.75bll.

In Japan, CPI was broadly inline with expectations. Nationwide CPI increased by 2.0% vs. 1.9% exp and core rose by 0.1% vs. 0.0% y/y exp. While the rise on inflation will catch the BoJ attention, BoJ’s Mizuno warned yesterday that the government might say that Japan is in a recession and that the BoJ is more concerned with risk to growth than inflation.

In the UK, provisional estimate of GDP q2 will capture the market’s attention. We expect that the UK economy has come to a stand still and possible ground to a halt. With dismal reports for the critical services sector and recent drop in retail sales, the risk is to the downside. We should see continued selling pressure on the Gbp.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9818
R 2: 0.9794
R 1: 0.9738
CURRENT: 0.9577
S 1: 0.9597
S 2: 0.9565
S 3: 0.9477

EURJPY
R 3: 171.81
R 2: 171.07
R 1: 169.97
CURRENT: 167.67
S 1: 168.25
S 2: 166.01
S 3: 165.33

USDSGD
R 3: 1.3826
R 2: 1.3717
R 1: 1.3661
CURRENT: 1.3591
S 1: 1.3452
S 2: 1.3399
S 3: 1.3300

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Forex Market Overview

Forex Market Overview 23 July 2008

The Usd consolidated gains in the Asian session as hawkish comments from US officials and oil falling sharply helped boost the Usd. The EurUsd stayed in a tight range from 1.5775 to 1.5798, while the UsdJpy saw choppy trading between 107.16 to 107.38. The NzdUsd slipped to 0.7750, as traders speculate on an earlier than expected rate cut. The AudUsd also lost ground, despite the higher then expected inflation reading. The US equity market shrugged off poor earnings to close up and Asian equities are following. Commodities still are soft with gold down -1.65% to 945.68oz and wti crude at 127.74, as the declining global growth story gains traction and damped demand of inflation hedges.

It was Fed’s Plosser ultra hawkish comment that added momentum to the Usd buying frenzy yesterday (part of a recent trend of hawkish comments from Fisher, Hoenig, Stern & Lacker but divergent from Bernanke’s stated views). Stating "We will need to reverse course - the exact timing depends on how the economy evolves, but I anticipate the reversal will need to be started sooner rather than later. And I believe it will likely need to begin before either the labor market or the financial markets have completely turned around." The comment “before either the labor market or financial market has completely turned around” was unprecedented, since the Fed has never raised rates while payrolls shown a negative trend. As we stated yesterday in our Asian session, we had expected rhetoric from policy makers to affect FX sentiment in the ultra short term and expect the aggressive Usd buying to reverse intraday.

Australian CPI released today rose quicker than the market had expected by 1.5% q/q vs. 1.2% exp (lifting y/y to 4.5% vs. 4.2% exp). However, the RBA preferred measure rose by q2 1.2% q/q, which was unchanged from previous reading. We expect the RBA to be on hold for the remainder of the year, as moderating growth should help ease inflationary pressures.

The highlight of the European session will be the UK MPC minutes for July. There are mounting signs that the MPC might have slightly shifted towards a growth focus. June’s minutes showed that members had discussed further tightening and, since then, all measures of inflation have increased (ppi, cpi and inflation expectations). However, much of this deterioration was expected. What has been unexpected was the rate of moderation in the real economy and the genuine risk the UK might slip into a recession. We expect Blanchflower to have voted for a cut (as always), but the market might get a surprise from Kate Barker, a good proxy for general sentiment. With the Gbp trading at 1.9900 on yield differentials, any real or perceived shift could lead to a considerable sell-off.

14.00gmt - Fed's Mishkin speaks
16.15gmt - Fed's Kohn speaks

Daily Forex Pivot Points
AUDUSD
R 3: 0.9895
R 2: 0.9850
R 1: 0.9818
CURRENT: 0.9673
S 1: 0.9675
S 2: 0.9665
S 3: 0.9597

EURJPY
R 3: 171.07
R 2: 170.00
R 1: 169.92
CURRENT: 169.78
S 1: 168.25
S 2: 166.00
S 3: 165.33

USDSGD
R 3: 1.3717
R 2: 1.3660
R 1: 1.3597
CURRENT: 1.3606
S 1: 1.3452
S 2: 1.3395
S 3: 1.3300

The ForexGen's provided services are all restricted and regulated by the international banking and financial regulatory standards. All our provided activities are supported by creativeness and modernization. Ambitious & motivated employees are working simultaneously to protect the customer's confidentiality. ForexGen is continuously providing the market's most competitive conditions.

ForexGen complies with the trade commissions in the USA, EU and Australia. Being registered by the commercial authorities in 18+ countries, we adhere to the United Nations Commission on International Trade Law (UNCITRAL).

Profile regulatory information:

ForexGen is complying with all applicable international laws and all financial regulations and procedures governing its industry in order to sustain the security standards in the financial services world.