Market Brief
The dollar traded higher yesterday as President elect Barrack Obama announced his proposal for a $310Bn Tax cut amidst a stimulus package that could tip the scales at just over $775Bn over a two year period. Equity and currency markets saluted the announcement yesterday and this morning by posting broad gains.
The Euro continues to dwindle in light of the recent dollar strength, yesterday’s move bringing the Euro 1.3540 (down 8%) from the 3 month high of 1.4723 on September 22nd. In recent market conditions the Yen has always bucked the trend with regards to the dollar moves as repatriation and risk aversion tied in with unwinding of carry trades to strengthen the Yen against the dollar – to 13 year highs. It seems that we have rekindled some sort of normality, the yen giving way to the dollar, USDJPY rising 3 big figures since the end of 2008 – now trading near 93.80, levels last seen at the beginning of December.
We are witnessing a change in market dynamics in this near trading year as risk appetite returns and traders are realistic about 2009 being difficult but optimistic governments will continue to intervene and stimulate the global economy. EURUSD is a very large recipient of these new trade flows as the U.S Power transition, concerted intervention and a general renewal in positivism.
Comments from notable economist Jeffrey Sachs on the current recessions’ likelihood of becoming a full blown depression has calmed nerves has been encouraging, highlighting the fact that governments are not imposing tariffs, exchange rate regimes, remain far more flexible and providing copious amounts of liquidity.
Gold has dropped $40/oz since the end of 2008 as the backwardation trade subsides and dollar rises. Gold’s safe haven status continues to hold true but the sheer amount of dollar biased trades of these past few months raises the question of whether bullion is overpriced amidst a slowing global economy. Crude holds around $48.8/bbl.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 9,080.84 | 0.41 |
| Hang Seng Index | 15,509.51 | -0.39 |
| Shanghai Index | 1,937,15 | 3.01 |
| FTSE 100 Index | 4,568.00 | -0.05 |
| CAC 40 Index | 3.348.32 | -0.34 |
| SMI Index | 5,745.64 | -0.18 |
| DJIA futures | 8,912.00 | -0.06 |
| World Markets | Current Level | % Change |
| Gold | 842.35 | -1.99 |
| Silver | 10.88 | -3.41 |
| VIX | 39.08 | -0.28 |
| Crude wti | 48.1 | -1.45 |
| USD Index | 83.46 | 0.99 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Final Services PMI, index | 46.4 | 46.4 P | GE / 8.55 |
| Final Services PMI, index | 42 | 42.0 P | EZ / 9.00 |
| Final Composite PMI, index | 38.3 | 38.3 P | EZ / 9.00 |
| Services PMI, index | 38.9 | 40.1 | UK / 9.30 |
| Flash" HICP, % y/y | 1.8 | -0.5 ,2.1y | EZ / 10.00 |
| ISM non-mfg composite, index | 37 | 37.3 | US / 15.00 |
| Factory orders, % m/m | -2.2 ,-9.0 | -5.1 ,-5.3 | US / 15.00 |
| Pending home sales, % m/m | -1.0 ,1.3 | -0.7 ,-1.0 | US / 15.00 |
| Trade balance, NZD bn (nsa) | -0.838 | -0.942 | NZ / 21.45 |
Currency Tech
AUDUSD
R 3: 0.7355
R 2: 0.7239
R 1: 0.7200
CURRENT: 0.708
S 1: 0.7063
S 2: 0.6920
S 3: 0.6853
EURJPY
R 3: 130.80
R 2: 129.70
R 1: 128.56
CURRENT: 125.65
S 1: 125.35
S 2: 123.70
S 3: 122.57
USDSGD
R 3: 1.4895
R 2: 1.4807
R 1: 1.4765
CURRENT: 1.4778
S 1: 1.4500
S 2: 1.4335
S 3: 1.4170
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
