U.S. Dollar Trading (USD) enjoyed the continued pullback in global markets, higher against all currencies except the Yen. June TICS flows jumped 90bn vs 17bn forecast as foreign investors poured into US Treasury Bonds. Commodities continued to slide tracking the general mood in the market although a bounce into the US session kept prices well off lows. Crude Oil Closed down $0.76 at $66.75. In US share markets, S&P ended -24.36 points (-2.43%) at 979, NASDAQ ended -54 points (-2.75%) at 1930 and DOW JONES ended -186 points (-2.00%) at 9135. Looking ahead, July Build Permits forecast at 0.58m vs. 0.57m and Housing starts forecast at 0.6m vs. 0.582m previously. Also released July PPI Forecast at -0.3% vs. 1.8% m/m. July Core PPI forecast at 0.1% vs 0.5% m/m.
The Euro (EUR) started falling from the open and accelerated into Europe after breaking through 1.4100. The Market found itself short going into New York and stabilized through a rally in EUR/JPY. The market now is poised for a test of the big 1.4000 level if the downside momentum continues over the next 24 hours. June Trade Balance 1.0Bn vs. 1.4bn forecast. Overall the EUR/USD traded with a low of 1.4046 and a high of 1.4203 before closing at 1.4080 Looking ahead, August ZEW Current Conditions forecast at -85 vs. -89 previously.
The Japanese Yen (JPY) was the strongest currency as the safe haven of choice was bought when stocks extended losses. The USD/JPY held up very well with large buying below 94.50 discouraging aggressive attempts lower citing sharpy reversals in recent weeks in the back of trader minds. Triple daily lows at 93.20 and 91.60 are natural downside targets and supports. Q2 GDP disappointed slightly at 0.9% vs. 1.1% forecast. Overall the USDJPY traded with a low of 94.21 and a high of 94.89 before closing the day around 94.55 in the New York session.
The Sterling (GBP) started falling and made fresh month lows into Europe as support at 1.6400 gave way and the pair slipped to below 1.6300. Rightmove HPI -2.2% in August added to selling pressure. The Pound joined an Oil, EURO and Aussie bounce to finish well above 1.6300 going into a heavy data release Tuesday. Overall the GBP/USD traded with a low of 1.6276 and a high of 1.6483 before closing the day at 1.6350 in the New York session. July Core CPI forecast at -0.3% vs. 0.3% previously.
The Australian Dollar (AUD) led the way down in Asia slipping nearly 2% on the back of heavy China stock losses and a slide in risk appetite. Strong fundamentals of the Australian economy and hawkish rates outlook are colliding with the usual market correlation of sell the AUD when stocks fall. Overall the AUD/USD traded with a low of 0.8156 and a high of 0.8326 before closing the US session at 0.8215. Looking ahead, RBA minutes from the August Meeting released.
Gold (XAU) fell heavily on USD strength to 930 supports. Overall trading with a low of USD$930 and high of USD$948 before ending the New York session at USD$934 an ounce.
Euro – 1.4080
Initial support at 1.4008 (July 29 low) followed by 1.3833 (Jul 8 low). Initial resistance is now located at 1.4447 (Aug 5 high) followed by 1.4621 (61.8% retrace of 1.6038 -1.2330)
Yen – 94.45
Initial support is located at 94.02 (July 29 low) followed by 93.10 (July 22 low). Initial resistance is now at 95.49 (August 14 high) followed by 96.73 (Aug 12 high).
Pound – 1.6345
Initial support at 1.6266 (July 17 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6719 (AUG 10 high) followed by 1.6831 (AUG 7 high).
Australian Dollar – 0.8215
Initial support at 0.8126 (July 29 low) followed by the 0.7925 (July 15 low). Initial resistance is now at 0.8519 (Sept 22 high) followed by 0.8694 (Aug 28 high).
Gold – 934
Initial support at 925 (July 29 low) followed by 918 (July 14 low). Initial resistance is now at 960 (August 13 high) followed by 971 (Aug 6 high).
Monday, August 17, 2009
Asian forex market wrap: consolidation in quiet session 10:54 PM
Asia led the way lower yesterday but today was a much calmer day with most regional stock markets rebounding from initial losses and this led to some profit taking on the JPY crosses. No data or financial markets comments of any note The Japanese general election now gets into full swing Australian treasury secretary says its too early to declare victory over the global financial crisis Gold recovers some losses, regional bourses mostly flat Japanese exporters in evidence selling USD/JPY between 94.80/95.00 Talk of Middle East sellers in cable above 1.6400 Sovereign names said to be buying EUR/USD on dips towards 1.4000. Possible barrier option protection at 1.4000 and again at 1.3975. Solid bids in USD/JPY at 93.80/94.00. We had a quiet pre-Tokyo morning session with most of the majors trading in 10-pip ranges close to their NY closing levels; EUR/USD at 1.4080, cable at 1.6340 and AUD/USD at .8200. Most traders waited for a lead from regional equity markets and when they opened only slightly lower and then started to rebound, traders took this as a signal to cover their short JPY positions and long USD positions. EUR/USD popped up to 1.4130 and USD/JPY to 95.00 before exporter selling in USD/JPY dampened the enthusiasm. Rumours of heavy cable selling above 1.6400 also dissuaded the bulls. Some light selling flows over lunchtime were enough to reverse the sentiment and most pairs have now returned towards their NY closing levels. Ranges: EUR/USD 1.4068/1.4130; cable 1.6328/91; USD/JPY 94.35/95.02; AUD/USD .8197/.8262; EUR/JPY 132.78/134.20. Markets: Nikkei- flat; Kospi -0.1%; HK -0.4%; Shanghai- flat; Gold +$3 @ $940/oz. Brent crude $70/bbl.
UPDATE: Asian Shares Trade Mostly Lower; China Shares Eyed 10:52 PM
SINGAPORE (Dow Jones)--Asian stock markets were mostly lower Tuesday with the closely-watched Shanghai Composite index moving in and out of the red a day after posting its biggest single-day percentage drop since November. Metals and energy stocks were generally weaker, pacing a sharp retreat in commodities prices on Monday. "Given how overheated Chinese stocks had been, this correction was inevitable, and some would say it was necessary," Tachibana Securities analyst Kenichi Hirano said, adding, "players will continue to monitor Chinese stocks." The Shanghai Composite index was down 1.1% while Japan's Nikkei 225 was flat. South Korea's Kospi Composite was down 0.5%. In Hong Kong, the Hang Seng Index traded down 1.0%, while Singapore's Straits Times Index shed 0.4%. Australia's S&P/ASX 200 was down 1.4%, and New Zealand's NZX-50 shed 1.5%, but both indexes traded off lows after the release of minutes from Australia's central bank meeting. The Dow Jones Industrial Average futures contract was up 4 points in screen trade. The DJIA fell 2.0% or 186.06 points in New York Monday, marking its largest one-day point and percentage drop since July 2. The losses in U.S. stocks were broad-based with energy and materials counters down on a pullback in commodities prices while financials were also hit. "A pause equals taking profits. The trading world is rightly locking in some of the outperformance of (assets associated with) risk and I expect this not to be a one-day event. This may well go on for weeks, yet I don't expect Wall Street down 2.0% every night," said Southern Cross Equities director Charlie Aitken. Though the selloff has stoked fears of a severe correction for stock markets after the summer rally, some analysts said that recent corporate earnings and data still provided hope and that the markets' uptrend was not completely dead in the water. "People still doubt the pace of the economic recovery. But we have witnessed positive earnings results and some economic data indicating a faster-than-expected economic recovery, so stocks will come back and rise after a cooling-down period," said You Seung-min at Samsung Securities in Seoul. Energy stocks across the region were lower after continued concerns over hefty stockpiles and weak demand in the U.S. led to further losses in crude oil futures prices. Nymex light, sweet crude oil for September delivery settled down 1.1% or 76 cents at $66.75 per barrel, the contract's lowest level since July 29. On Globex, the contract was recently trading up 38 cents at $67.13 per barrel. Korea's SK Energy was down 2.0%, Woodside Petroleum was 1.3% lower, Inpex was down 0.3% and Japan Petroleum was off 0.8%. In Hong Kong, Cnooc shed 1.6%. Base metals prices fell sharply Monday on the London Metal Exchange as the selloff in equities sparked renewed risk aversion and the stronger dollar also pressured prices. The correction in prices came after strong gains for the metals complex in recent weeks. LME three-month copper ended at $6,050 per metric ton, down $190 from the afternoon kerb on Friday. Aluminum ended at $1,960 per ton, down $30 while nickel finished at $19,100 per ton, down $475. Metals recovered a little of Monday's losses in early Asian trade with LME three-month copper at $6,095 per ton, up $45 from the London kerb. LME three-month aluminum was at $2,006/ton, up $46 since the London kerb lifted by worries that an incident at Russia's largest hydropower station could impact output at Russian aluminum smelters. Metals and mining stocks were mostly lower. Sumitomo Metal Mining Co. was down 1.5%, Equinox Minerals had shed 4.0% and Oz Minerals was down 0.4%. Hong Kong-listed shares of Zijin Mining shed 2.5%, while its China-listed shares fell 1.7%. Rio Tinto and BHP Billiton wavered between positive and negative, tracking the Shanghai index, with their shares down 0.1% and down 0.2% respectively. In Australia, shares retraced some losses, even briefly turning positive, after minutes from the central bank's August policy meeting showed the board agreed the economic outlook had improved and laid out details of how the central bank will judge when to tighten policy. "While many Australian commentators believe the S&P/ASX 200 will outperform Wall Street due to our better economic fundamentals, a theory I sympathize with, the reality is Wall Street is the dog and we are the tail," Aitken from Southern Cross said. James Hardie shares surged 20.4% after the company said its U.S. operations turned in a strong fiscal first-quarter result and it expected the operations would continue to perform well, guiding for full-year operating profits to come in at the top end of analysts' expectations. In Hong Kong, Citic Pacific tumbled 9.0%, while Cathay Pacific shed 1.7% and Air China dropped 6.4% after Air China bought a 12.5% stake in Cathay from Citic Pacific, raising its holding to just under 30% from its current 17.5%. The declines may reflect view Citic sold its stake too cheaply or that Cathay was being undervalued. In New Zealand, losses were broad-based with Auckland Airport down 0.6% while Fisher & Paykel Appliances lost 1.3%. Malaysia's KLCI index was down 0.9%, Taiwan's Taiex shed 2.5%, Indonesian shares lost 3.4%, while Philippine stocks lost 1.5%. In foreign exchange markets, the safe-haven yen was a little weaker as market players took a more sanguine view on the economic recovery than the pullback in stock markets was suggesting. The U.S. dollar was at Y94.76 from Y94.44 late in New York trade on Monday, while the euro was regaining some ground at Y133.69 from Y133.06 and $1.4103 from $1.4085. Lead Japanese government bond futures a little higher in directionless trade, despite a fairly strong result at an auction for five-year JGBs. The lead September JGB futures contract was up 0.06 points at 138.65. The 10-year cash JGB yield was flat at 1.340%. Spot gold was trading at $937.70 an ounce, up $4.50 since the New York close. -Matthew Allen, Dow Jones Newswires; +65-6415-4140; matthew.allen@dowjones.com TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkbackAsia@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments. 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Yen remains under 94.75 10:51 PM
USD/JPY Current Price: 94.62. Pair remains under key 94.75 level that has been holding the upside since past session. Slightly bullish in the hourly, bigger time frames remain bearish in the pair, so expect the 95.00 area to give strong resistance if reached. “20 SMA has turned flat in the hourly, suggesting also pair has temporally bottomed and next movement should be up.
JPY crosses still drifting lower 10:51 PM
GBP/JPY and AUD/JPY are leading the way and the FX markets are now dancing to their own tune and are not simply following equity market leads. Dealers say that markets remain thin and light flows are sufficent to move the market. Exporter offers are capping USD/JPY and the other major USD pairs are looking tired and continuing to drift lower. Cable is currently trading around 1.6340 and EUR/USD is back under 1.4100.
Cable fails to test 1.6400- starting to pull back 10:50 PM
There has been a fair bit of chatter in the market about Middle East offers in the cable above 1.6400. We managed to get to 1.6390 a little earlier after the Shanghai bourse recovered early losses, but it looks like traders are uncomfortable sitting on long sterling positions and the cable has now turned lower, back at 1.6360. I expect the session range edges to remain unchallenged now until Europe steps in.
Sterling fell to intraday low of 1.6275 10:37 PM
GBP/USD Current Price: 1.6362. After spending most of the American session above 1.6330 level, now first support to consider, pair also triggered some upside corrective movement after falling to an intraday low of 1.6275 past Monday. “Hourly indicators support further rises in the next hours, thus the clue will be as usual in stocks; above 1.6375, pair could extend the rally to the 1.6420 area, ahead of stronger 1.6460 level.
Confidence Drags Stocks, Props USD 3:39 AM
The dollar and the yen climbed higher at the end of the week against the major currencies as the US equity bourses post steep losses. The greenback pushed the euro below the 1.42-handle and the pound beneath the 1.65-figure. Meanwhile, the yen pushed the euro to 134.22 and the pound to 156.06. By afternoon trading the Nasdaq was lower by over 1.8%, while both the S&P 500 and Dow Jones slipped by more than 1.5%. The US economic reports released earlier in the session were mixed, with the data consisting of July CPI, industrial production, capacity utilization and the August University of Michigan consumer sentiment. Headline consumer prices missed consensus estimates, sparking fears of deflation with the monthly figure posting a flat reading versus a 0.7% increase in June and declining by 2.1% on an annualized basis from a 1.4% decline in the previous year. The industrial production reading beat forecasts in July, edging up by 0.5% reversing the 0.4% decline in June. Capacity utilization also edged up higher than expected, creeping to 68.5% and up from 68.0% from June. However, the University of Michigan consumer sentiment survey fell short of expectations, drifting to 63.2 in August from 66.0 in July while the expectations component slid to 62.1 from 63.2.EURUSD fell to 1.4161 as risk aversion dragged the single currency lower across the board. Data released overnight revealed inflationary pressure in the Eurozone to be at a minimum, suggesting that the ECB will likely keep interest rates unchanged in the months ahead.
