Market Brief
As discussed in earlier reports, we believed that the pricing in of a Fed rate hike in late 2009 was premature. It seems that the markets are now in agreement. The USD was weaker across the board in the Asian session, as risk appetite returned (regional equity indexes were broadly higher).The EurUsd traded up to 1.4130 from 1.4060, while the UsdJpy slid to 97.10 before rallying back to 97.60. Carry and EM are now trading higher with AudJpy pushing up towards 79.30 while the UsdTry down to 1.5360. Since Friday's NFP release the market has been speculating about the probability that the Fed would drain liquidity and tighten rates much sooner than the market had originally expected. However, recent price action in the USD and yields suggest (2yrs fell by 9bp) that participants are now fading out of this trade. In other news, the US treasury confirmed that 10 banks were approved to repay TARP funds. We see this as positive for risk appetite in that there is greater confidence in the financial sector and refunded funds are now available for other banks struggling to raise capital. Out of the Eurozone, EU’s Almunia stated that EU finance ministers are now discussing exit strategies while ECB's Liikanen commented that a failure to reign in fiscal stimulus could push counties into a debt driven economic downward spiral. This evening, the market expect the RBNZ to hold rates at 2.50% (slight prob of a 25bp cut) while keeping watch for language that rationalizes intervention to halt NZD strength.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 9,991.49 | + 2.09 |
| Hang Seng Index | 28,648.39 | + 3.26 |
| Shanghai Index | 2,816.25 | + 1.01 |
| FTSE 100 Index | 4,404.79 | - 0.01 |
| DAX Index | 4,997.86 | - 0.13 |
| SMI Index | 5,388.67 | - 0.05 |
| DJIA futures | 8,828.00 | + 0.98 |
| World Markets | Current Level | % Change |
| Gold | 959.78 | + 0.52 |
| Silver | 15.31 | + 0.39 |
| VIX | 28.27 | - 5.03 |
| Crude wti | 71.09 | + 1.54 |
| USD Index | 79.85 | + 0.01 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Industrial production, % m/m (y/y) | -0.2,-12.5 | -0.6,-12.4 | GBP / 8.30 |
| Manufacturing output, % m/m (y/y) | 0.0,-12.6 | -0.1,-12.9 | GBP / 8.30 |
| Trade balance, £ bn | -6.4 | -6.6 | GBP / 8.30 |
| Int'l merchandise trade, C$ bn | 0.9 | 1.1 | CAD / 12.30 |
| Trade balance, $ bn | -29.0 | -27.6 | USD / 12.30 |
| FRB of Richmond President Lacker (FOMC voter) spea | -- | -- | USD / 14.00 |
| ECB’s Stark speaks at a book presentation "Der Eur | -- | -- | EUR / 16.30 |
| Fed's beige book published | -- | -- | USD / 18.00 |
| Budget balance, $ bn | -175.0 | -165.9 | USD / 18.00 |
| RBNZ interest rate announcement, % | 2.50 | 2.50 | NZD / 21.00 |
| real GDP, second preliminary, % q/q saar | -14.9 | -14.4 | JPY / 23.50 |
Currency Tech
AUDUSD
R 3: 0.8378
R 2: 0.8265
R 1: 0.8120
CURRENT: 0.8086
S 1: 0.7830
S 2: 0.7745
S 3: 0.7705
EURJPY
R 3: 144.60
R 2: 141.75
R 1: 139.75
CURRENT: 137.56
S 1: 135.30
S 2: 133.90
S 3: 131.50
USDSGD
R 3: 1.4800
R 2: 1.4748
R 1: 1.4665
CURRENT: 1.4496
S 1: 1.4425
S 2: 1.4385
S 3: 1.4335
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
