Market Brief
The Usd was weaker in Asian session, as the US equities rally helped pull risk appetite along for the ride. The EurUsd traded up from 1.3200 to 1.3276, while the UsdJpy strengthened from 89.90 to session highs of 90.57. Equity market received some good news, after being down as low as 3%, with the US Senate allowing USD350bn TARP money to be released, stronger than expected Empire State manufacturing and Philadelphia Fed data and Freddie Mac releasing a report that US fixed rate mortgages (30yr) had dropped below 5%. However, the financial sector was under pressure as a major US bank would be provided with $20bn in new capital in exchange for preferred stock. We don't see this having a lasting effect on the market, as reaction was muted. Yesterday, SNB's Governing Board member Jordan took aggressive verbal action on the strengthening Chf. He first noted that the currency price was a "cause for concern" and then stated that the SNB could "intervene beyond money markets". This harsh warning to traders could potentially keep Chf buyers sidelined and cap any meaningful rally. Asian regional indexes are slightly higher and European indexes are poised to follow. Crude prices have stabilized around the $35.50bll, as yesterday's trade sent prices from $38bll to $33.25bll session lows. With VIX climbing above 50 for the first time since December and FX implied Vols elevated, we expect any correction in the Usd and Jpy to be short lived.
The BofA package of asset guarantees & loan, liquidity support and a capital injection (announced overnight after a day of rumors and speculation) highlights the continuing vulnerability of the US financial system despite signs of progress in credit markets. This fragility will benefit safe haven fx trades (Usd, Jpy, Chf) in the mid term.
In European session, there are no key events or data releases scheduled.
| Global indexes | Current level | % Change |
| Nikkei 225 Index | 8,230.15 | 2.57 |
| Hang Seng Index | 13,213.39 | -0.22 |
| Shanghai Index | 1,954.44 | 1.78 |
| FTSE 100 Index | 4,121.11 | -1.42 |
| CAC 40 Index | 2,995.88 | -1.83 |
| SMI Index | 5,382.44 | 0.06 |
| DJIA futures | 8,239.00 | 0.94 |
| World markets | Current level | % Change |
| Gold | 821.63 | 0.46 |
| Silver | 10.64 | 0.3 |
| VIX | 51 | 3.78 |
| Crude wti | 35.37 | -0.08 |
| USD Index | 84 | -0.52 |
| Todays calender | Estimates | Previous | Country / GMT |
| Trade balance, bn (sa) | -- | -1.3 | EZ / 10.00 |
| CPI, % m/m | -0.9,-0.1Y | -1.7,1.1Y | US / 13.30 |
| Core CPI, % m/m | 0.1,1.9Y | 0.0,2.0Y | US / 13.30 |
| NSA CPI, index | -- | 212.425 | US / 13.30 |
| Net foreign security purchases (TICs), $bn | -- | 1.5 | US / 14.00 |
| Industrial production, % m/m | -0.8,6.4Y | -0.6,-5.5Y | US / 14.15 |
| Industrial production: mfg, % m/m | -- | -1.4,-7.3Y | US / 14.15 |
| Capacity utilisation, % | 74.7 | 75.4 | US / 14.15 |
| Michigan consumer sentiment, index | 58.5 | 60.1 | US / 15.00 |
Currency Tech
AUDUSD
R 3: 0.7048
R 2: 0.6819
R 1: 0.6752
CURRENT: 0.67375
S 1: 0.6538
S 2: 0.6490
S 3: 0.6294
EURJPY
R 3: 125.28
R 2: 121.65
R 1: 119.74
CURRENT: 119.65
S 1: 117.77
S 2: 115.88
S 3: 114.41
USDSGD
R 3: 1.5114
R 2: 1.5068
R 1: 1.4992
CURRENT: 1.4880
S 1: 1.4882
S 2: 1.4831
S 3: 1.4759
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
