Market Brief
The Usd was stable in the Asian session, as markets await the BoE & ECB rate decisions today. The EurUsd traded between 1.2799 and 1.2871, while the UsdJpy traded between 89.22 and 89.90. The risk rally that had been driving prices over the last few days seems to be losing energy. US Equity markets closed lower (despite a better than expected non manufacturing ISM figure) and both Asian and European markets are trading in the red. As we have stated earlier, we believe risk is well entrenched, which, in turn, will support the Usd mid term.
Nez Zealand’s employment data surprised to the upside this morning. The unemployment rate only rose to 4..6% from 4.2% (market 4.7% exp) and employment showed surprising buoyancy and grew by 0.9% q/q in Q4 (market: -0.7%). Clearly, these figures were not the shock the market had been anticipating. However, we continue to forecast weakness in the domestic economy and NZD.
We don’t expect the ECB or the MPC to surprise the market today with their decisions, as both Central Banks have been very transparent. Markets expect the BoE to cut 50bp to 1.00%, taking the Bank Rate to a new low, while providing further notice of unconventional measures. The BoE has been honest concerning the likelihood of quantitative easing and rates do not need to be at zero for this measure to start. The ECB President Trichet's has repeated remarked that the "next important meeting will be in March," given this verbal guidance we don’t expect the ECB to cut the interest rate.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 7,949.65 | -1.11 |
| Hang Seng Index | 13,178.90 | 0.88 |
| Shanghai Index | 2,098.02 | -0.46 |
| FTSE 100 Index | 4,161.00 | -0.81 |
| DAX Index | 4,432.00 | -1.35 |
| SMI Index | 5,120.80 | -2 |
| DJIA futures | 7,926.00 | 0.01 |
| World Markets | Current Level | % Change |
| Gold | 909.65 | 0.43 |
| Silver | 12.61 | 0.59 |
| VIX | 43.85 | 1.83 |
| Crude wti | 40.2 | -0.29 |
| USD Index | 85.57 | -0.14 |
| Todays Calender | Estimates | Previous | Country / GMT |
| BoE MPC Bank Rate decision, % Feb | 1.00% | 1.50% | UK / 12.00 |
| ECB rate announcement, % Feb | 2.00% | 2.00% | EZ / 12.45 |
| New manufacturing orders, % m/m Dec | -2 | -6.0,-24.0 | GE / 11.00 |
| Nonfarm productivity, % q/q Q4 | 1.0,2.1Y | 1.3,2.1Y | US / 13.30 |
| Unit labour costs, % q/q Q4 | 3.2,1.1Y | 2.8,1.4Y | US / 13.30 |
| Initial jobless claims, thous (4wk mvg avg) 31-Jan | -- | 588 | US / 15.00 |
Currency Tech
AUDUSD
R 3: 0.6844
R 2: 0.6732
R 1: 0.6546
CURRENT: 0.6471
S 1: 0.6249
S 2: 0.6077
S 3: 0.6011
EURJPY
R 3: 122.17
R 2: 119.56
R 1: 117.03
CURRENT: 115.60
S 1: 113.15
S 2: 112.52
S 3: 112.12
USDSGD
R 3: 1.5312
R 2: 1.5249
R 1: 1.5178
CURRENT: 1.5058
S 1: 1.5014
S 2: 1.4924
S 3: 1.4809
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
