Market Brief
The Usd was mixed in the Asian Session, as equities rallied and risk appetite increased. Markets are watching the potential divergence between Usd and stock markets. Yesterday, the S&P fell by more than 6%, while the EurUsd gained, just adding support to the divergence theory. For the last 4 months, the tight correlation has had significant effect on traders positioning and, should decoupling continue, it will leave markets without a perceived critical driver. In Asia, the EurUsd slid to 1.2424 before rallying back to 1.2546, while the UsdJpy collapsed to 93.57 and then climbed to 95.00. With the abrupt reversal in Jpy, carry trades were also revived with the AudJpy climbing from 56.88 to 59.79. The GbpJpy rose to 141.10. Asian regional indexes are broadly positive, with only Shanghai lower. European futures are point to a positive open. Crude prices continue to hover around the $50.0bll handle, as demand just hasn’t returned even at these attractive prices. Volatility is still a major player, with VIX trading at 80. Overall, it was another tough week for risky assets, with VIX rising above 70% again, credit spreads reaching new highs, stock indexes dropping to new lows and continued weakness in commodity prices. Given the pessimistic malaise now cover the financial markets we don’t anticipate any near term change in themes.
In Japan the BoJ held rates at 0.30%, which was widely expected despite confirmation this week that the economy has slid into a recession. The Bank core assessment in their Economic Assessment was the economy was still sluggish and recovery to take awhile. The statement from the BoJ’s November Monetary Policy Meeting held on to the wording "increasingly sluggish" growth as the economic assessment. Again, saying previous increases in energy and materials prices and decreasing export growth the culprit. Although the outlook still expects a gradual reduction to moderate growth, the BOJ again stated that "it will take some time for the necessary conditions for Japan ’s economic recovery to be satisfied….given the slowdown in overseas economies and turmoil in global financial markets".
The calendar today is on the light side, with no major events or data scheduled in the UK or US. ECB's President Trichet will contribute in a discussion on Bretton Woods II in Frankfurt , However, we don’t expect any comments on monetary policy or other market moving remarks. Euro-zone PMI surveys for November will probably indicate that output in the eurozone is continuing to contract in Q4.
| Global indexes | Current level | % Change |
| Nikkei 225 Index | 7,910.79 | 2.69 |
| Hang Seng Index | 12,659.20 | 2.93 |
| Shanghai Index | 1,969.30 | -0.72 |
| FTSE 100 Index | 3,896.34 | 0.55 |
| CAC 40 Index | 3,008.02 | 0.92 |
| DAX Index | 4,250.13 | 0.7 |
| DJIA futures | 7,771.00 | 3.79 |
| World markets | Current level | % Change |
| Gold | 758.78 | 1.84 |
| Silver | 9.24 | 2.99 |
| VIX | 80.86 | 8.88 |
| Crude wti | 49.56 | 0.28 |
| USD Index | 87.84 | -0.14 |
| Todays calender | Estimates | Previous | Country / GMT |
| PMI Manufacturing (Nov Prov.) | 40.5 | 41.1 | EZ / 8.00 |
| PMI Services (Nov Prov.) | 45 | 45.8 | EZ / 8.00 |
| PMI Composite (Nov Prov.) | 42.8 | 43.6 | EZ / 8.00 |
| ECB’s Gonzalez-Paramo on Economic Uncertainty | -- | -- | EZ / 10.30 |
| ECB’s Trichet in Panel Disc. on Bretton Woods II | -- | -- | EZ / 12.00 |
| CPI Core (Oct) y/y | 1.9 | 1.7 | CA /12.00 |
| CPI (Oct) y/y | 3.1 | 3.4 | CA / 12.00 |
Currency Tech
AUDUSD
R 3: 0.6696
R 2: 0.6596
R 1: 0.6416
CURRENT: 0.6238
S 1: 0.6077
S 2: 0.6009
S 3: 0.5875
EURJPY
R 3: 124.30
R 2: 121.17
R 1: 119.31
CURRENT: 119.27
S 1: 116.44
S 2: 115.00
S 3: 113.59
USDSGD
R 3: 1.5684
R 2: 1.5436
R 1: 1.5339
CURRENT. 1.5315
S 1: 1.5266
S 2: 1.5167
S 3: 1.5051
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
