Market Brief
FX markets were quiet at the start of the week, with only the JPY seeing any real activity. Asian equity markets are currently trading lower and European futures are looking to follow. Risk appetite declined and with it risk correlated trades. The EURUSD traded down to 1.4600, while the AUDJPY slipped to 76.60. JPY witnessed some decent demand, pushing USDJPY briefly below 88.50. Commodities are basically were we left them on Friday, with crude wti at $65.57 and spot gold $989.65. The G20 final communiqué from Pittsburg didn’t provide any significant agreements. The tone seemed to be positive regarding the global economic recovery, as leaders declared efforts hard “worked” and recovery had “clearly taken hold.” In the realm of FX policy makers provided the vague words "undertake monetary policies consistent with price stability in the context of market oriented exchange rates that reflect underlying economic fundamentals." Not quite the solid decisive agreement leaders had promised earlier in the week.
In Germany Chancellor, Angela Merkel’s, election victory was briefly EUR positive but the news was quickly faded. The margin of victory was widen enough for Merkel to change coalition partners to pro-business Free Democrats, which would allow her to pursue an agenda of tax cuts and labor market deregulations.
Perhaps the biggest story in FX is the unrelenting strength of the JPY. We believe the Yen strength is supported by the decline in risk appetite. Finance Minister Fujii’s comments over the weekend, in which he reiterated that the government would not intervene in FX, and USDJPY moves as 'not abnormal' and finally repatriation flow from local exporters. IMM commitment of traders showed JPY longs were extended further over the week. Net JPY long positions were increased to 46k from the previous week's level of 37k. Today, G10 economic release will be limited to German and CPI figures. Barring any significant deviation (highly unlikely) trading should be subdued.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10,009.52 | - 2.49 |
| Hang Seng Index | 20,674.51 | - 1.66 |
| Shanghai Index | 2,763.53 | - 2.65 |
| FTSE 100 Index | 5,094.12 | + 0.23 |
| DAX Index | 5,634.03 | + 0.94 |
| SMI Index | 6,219.57 | - 0.27 |
| S&P future | 1,040.60 | - 0.04 |
| World Markets | Current Level | % Change |
| Gold | 988.73 | - 0.22 |
| Silver | 15.86 | - 1.21 |
| VIX | 25.61 | + 2.64 |
| Crude wti | 65.68 | - 0.51 |
| USD Index | 76.96 | + 0.19 |
| Todays Calender | Estimates | Previous | Country / GMT |
| German Preliminary CPI, % m/m (y/y) | -0.2 ,-0.1 | 0.2 (0.0) | EUR / -- |
| German Preliminary HICP, % m/m (y/y) Sep | -0.1 (-0.2 | 0.4 (0.0) | EUR / -- |
| ECB President Trichet testifies before the Economi | -- | -- | EUR / 14.30 |
Currency Tech
AUDUSD
R 2: 0.8815
R 1: 0.8790
CURRENT: 0.8624
S 1: 0.8527
S 2: 0.8380
USDCAD
R 2: 1.1125
R 1: 1.1100
CURRENT: 1.0984
S 1: 1.0860
S 2: 1.0710
EURJPY
R 2: 133.85
R 1: 132.10
CURRENT: 130.80
S 1: 129.36
S 2: 127.82
USDMXN
R 2: 13.790
R 1: 13.662
CURRENT: 13.851
S 1: 13.465
S 2: 13.325
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
