DAILY MARKET COMMENTRY |
DAILY MARKET COMMENTARY
10 December 2008 |
| RFF Foreign Exchange Research: |
www.royalforexfunds.com |
| RFF Research Desk: |
info@royalforexfunds.com |
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Fundamental Outlook at 1500 GMT (EDT + 0500) |
€
The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3000 figure and was supported around the $1.2905 level. Traders became less risk averse overnight as it appeared the U.S. House of Representatives would vote today on a US$ 15 billion bailout plan to aid the U.S. automakers industry. Data released in the eurozone today saw October industrial output decline in France, Italy, and Greece and it is expected that November’s and December’s data will worsen substantially. These data are likely to lead to downward revisions for Q4 gross domestic product growth. French output was off 2.7% m/m and 7.2% y/y, the largest decline on record. The German government reported it has no plan to reduce its growth forecasts despite increasing expectations for an extended economic pullback. In mid-October, the government reduced its official 2009 GDP growth forecast to 0.2%. German finance minister Steinbrueck said there will be no new announcements on 5 January regarding new stimulus measures. The European Union announced it will release a new economic forecast on 19 January on account of the worsening economic outlook. European Central Bank member Stark reported “The environment for conducting economic policies, in particular monetary policy and fiscal policies, has become extremely difficult. Only a few countries have the scope to take additional action. There is a clear risk that any additional stimulus program may erode, rather than restore, public confidence...Over and beyond the confidence-related effects, it is by no means clear that stimulus measure will be effective.” In other German news, it was reported that November wholesale prices were off 3.3% m/m and 0.8% y/y. Euro bids are cited around the US$ 1.2135 level.
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¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥92.90 level and was supported around the ¥92.05 level. Yomiuri reported the Japanese government is likely to issue its most dire assessment of the Japanese economy in nearly seven years by downgrading its view and noting conditions are worsening. Data released in Japan overnight saw annual wholesale inflation growth slow to 2.8% in November after peaking at 7.4% in August. Bank of Japan will issue its quarterly tankan survey next Monday and is expect to confirm a sharp slide in confidence among large Japanese manufacturers. BoJ Deputy Governor Nishimura reported “financial institutions are becoming less capable of lending.” Other data released in Japan overnight saw October core private-sector machinery orders fall 4.4%, worse-than-expected. Also, October machinery orders from foreign operators fell 37.2%. BoJ Governor Shirakawa spoke today and said “If moves in the foreign exchange market become too excessive, an intervention is one way” to control excess volatility. The government has not overtly intervened in the foreign exchange markets since March 2004. Shirakawa added “The economy is stagnant due to drops in exports and high commodities prices.” Swap contracts on Japan’s benchmark overnight rate are pricing in a 20% to 30% chance of a 25bps interest rate cut in early 2009. The Nikkei 225 stock index climbed 3.15% to close at ¥8,660.24. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥120.55 level and was supported around the ¥119.00 figure. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥137.75 and ¥77.25 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8633 in the over-the-counter market, down from CNY 6.8735. Data released in China overnight saw exports decline for the first time in more than six years. People’s Bank of China announced it will maintain “appropriately easier” monetary policy in 2009 to counter “substantial challenges.” Other data released today saw November annual producer price inflation fall for the third consecutive month, printing at +2% and down from October’s 6.6% reading. These data evidence potential deflationary pressures. |
₤
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4865 level and was supported around the $1.4735 level. NIESR released an estimate that indicates the U.K. economy contracted 1.0% in the three months to November. Cable offers are cited around the US$ 1.4920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8780 level and was supported around the ₤0.8725 level. |
CHF
The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2085 level and was supported around the CHF 1.1975 level. Most traders expect Swiss National Bank will reduce interest rates tomorrow for the fourth time in two months, probably by about 50bps in a move that could take the central bank’s three-month Swiss franc LIBOR band to 0.00% - 1.00%. Some dealers believe the SNB will also aim to weaken the Swiss franc over the next several months to counter slowing economic activity. Data released in Switzerland today saw the December ZEW investor sentiment index rise 12.3 points to 76.2. U.S. dollar offers are cited around the CHF 1.2140 level. The euro and British pound came off vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.5565 and CHF 1.7740 levels, respectively |
Technical Outlook at 1330 GMT (EDT + 0500) |
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(Bid Price) |
(Today’s Intraday Range) |
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| EUR/ USD |
1.2939 |
1.3002, 1.2903 |
| USD/ JPY |
92.69 |
92.89, 92.07 |
| GBP/ USD |
1.4788 |
1.4863, 1.4734 |
| USD/ CHF |
1.2049 |
1.2083, 1.1998 |
| AUD/ USD |
0.6578 |
0.6641, 0.6560 |
| USD/CAD |
1.2586 |
1.2666, 1.2485 |
| NZD/USD |
0.5453 |
0.5495, 0.5399 |
| EUR/ JPY |
119.96 |
120.54, 118.99 |
| EUR/ GBP |
0.8747 |
0.8778, 0.8724 |
| GBP/ JPY |
137.25 |
137.75, 135.72 |
| CHF/ JPY |
76.95 |
77.26, 76.35 |
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 |
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| Support |
Resistance |
Support |
Resistance |
|
|
| L1 |
1.2130 |
1.2925 |
89.30 |
100.75 |
| L2 |
1.1590 |
1.3205 |
84.20 |
103.10 |
| L3 |
1.1210 |
1.3595 |
81.10 |
106.00 |
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|
|
| L1 |
1.5065 |
1.6435 |
1.1335 |
1.1895 |
| L2 |
1.4580 |
1.7150 |
1.1080 |
1.2425 |
| L3 |
1.4155 |
1.7725 |
1.0875 |
1.3285 |
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|
| L1 |
0.5535 |
0.6380 |
1.2375 |
1.3460 |
| L2 |
0.5380 |
0.6620 |
1.2100 |
1.3980 |
| L3 |
0.4775 |
0.6980 |
1.1655 |
1.4505 |
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|
| L1 |
0.5120 |
0.5875 |
110.20 |
119.90 |
| L2 |
0.4915 |
0.6055 |
108.05 |
121.90 |
| L3 |
0.4650 |
0.6340 |
102.95 |
129.15 |
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|
| L1 |
0.7565 |
0.8195 |
1.3750 |
1.4655 |
| L2 |
0.7365 |
0.8400 |
1.3210 |
1.5060 |
| L3 |
0.7170 |
0.8840 |
1.2940 |
1.5560 |
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|
| L1 |
138.60 |
156.95 |
76.50 |
84.80 |
| L2 |
124.20 |
168.25 |
69.75 |
87.40 |
| L3 |
103.90 |
177.35 |
58.85 |
91.70 |
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| SCHEDULE |
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| Wednesday, 10 December 2008 all times GMT (last release in parentheses) |
| 0001 |
UK |
November NIESR gross domestic product estimate (-0.5%) |
| 0030 |
Australia |
December Westpac consumer confidence (4.3%) |
| 0030 |
Australia |
October home loans (-2.7%) |
| 0030 |
Australia |
October investment lending (-1.1%) |
| 0745 |
France |
October industrial production (-0.5% m/m) |
| 0745 |
France |
October industrial production (-1.9% y/y) |
| 0745 |
France |
October manufacturing production (-0.8% m/m) |
| 0745 |
France |
October manufacturing production (-2.5% y/y) |
| 0900 |
Italy |
October industrial production |
| 0900 |
Italy |
October gross domestic product |
| 1000 |
CH |
December ZEW survey, expectations (-88.5) |
| 1200 |
US |
MBA mortgage applications |
| 1330 |
Canada |
Q3 labour productivity (-0.2% q/q) |
| 1500 |
US |
October wholesale inventories |
| 2130 |
NZ |
November PMI (43.5) |
| 2145 |
NZ |
November food prices |
| 2350 |
Japan |
Japanese purchases of foreign equities and bonds |
| 2350 |
Japan |
Foreign purchases of Japanese equities and bonds |
|
Thursday, 11 December 2008 all times GMT (last release in parentheses) |
| 0000 |
Australia |
December consumer inflation expectations (3.3%) |
| 0030 |
Australia |
November unemployment rate (4.3%) |
| 0030 |
Australia |
November employment change (34,300) |
| 0745 |
France |
Q3 non-farm payrolls |
| 0830 |
CH |
Swiss National Bank interest rate decision |
| 0900 |
Eurozone |
December European Central Bank monthly report |
| 1330 |
US |
October trade balance (-US$ 56.5 billion) |
| 1330 |
US |
November import price index (-4.7% m/m) |
| 1330 |
US |
November import price index (6.7% y/y) |
| 1330 |
US |
Weekly initial jobless claims (509,000) |
| 1330 |
US |
Continuing jobless claims (4.087 million) |
| 1330 |
Canada |
October international merchandise trade (C$ 4.5 billion) |
| 1330 |
Canada |
October new housing price index (0.1% m/m) |
| 2145 |
NZ |
October retail sales (0.1% m/m) |
| 2145 |
NZ |
October retail sales, ex-autos (-0.5% m/m) |
|
Friday, 12 December 2008 all times GMT (last release in parentheses) |
| 0430 |
Japan |
October industrial production (-3.1% m/m) |
| 0430 |
Japan |
October industrial production (-7.1% y/y) |
| 0430 |
Japan |
October capacity utilization (1.6% m/m) |
| 0500 |
Japan |
November consumer confidence (29.8) |
| 0745 |
France |
October current account |
| 0900 |
Italy |
Q3 labour costs (3.1% y/y) |
| 1000 |
Eurozone |
Q3 labour costs (2.7% y/y) |
| 1000 |
Eurozone |
October industrial production (-1.6% m/m) |
| 1000 |
Eurozone |
October industrial production (-2.4% y/y) |
| 1330 |
US |
November advance retail sales (-2.8%) |
| 1330 |
US |
November retail sales, ex-autos (-2.2%) |
| 1330 |
US |
November producer price index (-2.8% m/m) |
| 1330 |
US |
November PPI, ex-food and energy (0.4% m/m) |
| 1330 |
US |
November PPI, ex-food and energy (4.4% y/y) |
| 1330 |
Canada |
Q3 capacity utilization (78.9%) |
| 1500 |
US |
December University of Michigan consumer sentiment (55.3) |
| 1500 |
US |
October business inventories (-0.2%) |
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| Forex Daily and 4 hour Trends |
| Trends study provides additional edge to any Forex trading strategy or system. |
| After identifying the main trend traders can use it to their advantage by taking positions on the market that follow the direction of the main trend and ignoring trades that contradict with it. |
| Current trends study is done once a day in the morning. Thus while daily trend remains applicable for the rest of the day, 4 hour trend suggestion is valid only for 4 hours after the signals update. |
| Needless to say that trend is you friend. If you know the trend and trade with it, your winning trades percentage in Forex will rise. |
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DISCLAIMER: RFF’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. RFF assumes no responsibility or liability from gains or losses incurred by the information herein contained. |
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