Market Brief
Currencies traded very thin markets yesterday and this morning as investors’ reluctance shone through. The Yen gained against all currencies yesterday as a weaker domestic economy and continued unwinding of the popular carry trade – which consists of borrowing currency in low-cost countries such as Japan against higher yielding currencies. Asian trading remained fairly action free as volumes continue to falter – EURUSD trading range bound 1.2584 – 1.2664 and USDJPY staying between 96.2 – 96.78.
The Yen has risen 14% against the dollar in the past three months, the world’s best performer – the above mentioned carry trade is a large contributor but the stock/currency inverse correlation also to blame – whereby a weaker economy induces a higher currency – the BoJ intervened drastically in 2003 – 2004 by injecting 35 Trillion Yen into it’s economy to stem the currencies’ advance, hurting exports – a big chunk of Japan’s GDP. Real-estate is another sector that has lost substantially in recent months, weak demand sending shares of major developers tumbling.
Asian equities are down across the board this morning, Nikkei dropping 2.2% as markets digest the official announcement of recession on Monday and further - financial sector - job cuts in a large US bank spur on the “fear” that has been dictating the global markets for the past two quarters. The Chinese market was resilient yesterday, gaining where others had lost. Today the picture is very different, the Hang Seng and Shanghai composite losing – on average – 6% in morning trading. While the Chinese economy isn’t impervious to the global financial woes it has faired well and has been quick to act on a crisis – announcing a very generous $500Bn rescue plan last week. Many analysts continue to believe that China remains a beacon of economic strength in the region and globally.
Other developments in the Asian region are in Australia, this currency continues to weaken on dismal economic indicators and sentiment. The U.S equities decline last night and the RBA minutes – which commented on the RBA’s drastic run of rate cuts in the past weeks, cutting by two percentage points to 5.25% amidst recession fears.
Commodities see further losses, Gold dropping from $748/oz to $736 levels late last night, and slowly rising to $740 this morning. Crude continues to drop, trading at $54/bbl levels despite terrorists high-jacking a Saudi super tanker – said to contain 2 million barrels of light-sweet, ¼ of the Saudi daily production.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 8328.41 | -2.28 |
| Hang Seng Index | 12724.58 | -5.95 |
| Shanghai Index | 1902.43 | -6.31 |
| FTSE futures | 4108 | -2.92 |
| DAX futures | 4751 | 0.29 |
| DJIA futures | 8230 | -0.35 |
| Nasdaq futures | 1152.25 | -0.54 |
| World Markets | Current Level | % Change |
| Gold | 738.13 | 0.03 |
| Silver | 9.375 | 0.86 |
| VIX | 69.15 | 4.28 |
| Crude wti | 55.46 | 0.93 |
| USD Index | 87.056 | 0.29 |
| Todays Calender | Estimates | Previous | Country / GMT |
| GBP Consumer Price Index | 0.10% | 0.50% | GBP / 09:30 |
| GBP Retail Price Index | 0.00% | 0.60% | GBP / 09:30 |
| USD Producer Price Index (PPI) | -1.80% | -0.40% | US / 13:30 |
| USD Net TIC Flows | $27.2Bn | $14.0Bn | US / 14:00 |
Currency Tech
AUDUSD
R 3: 0.7065
R 2: 0.7015
R 1: 0.6758
CURRENT: 0.6431
S 1: 0.6390
S 2: 0.6339
S 3: 0.6009
EURJPY
R 3: 128.44
R 2: 125.48
R 1:; 123.11
CURRENT: 121.28
S 1: 119.10
S 2: 120.00
S 3: 115.00
USDSGD
R 3: 1.5680
R 2: 1.5411
R 1: 1.5304
CURRENT: 1.5276
S 1: 1.5099
S 2: 1.5000
S 3: 1.4921
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
