Market Brief
Yesterday the USD suffered another devastating rout after the two major risk events (BoE and ECB rate meetings) passed without surprises and offered little or no encouragement to curtail buying risky assets. The BoE left rates (at 0.5%) and the size of their Asset Purchase Target (175bn) unchanged, deferring the major decision of whether to expand stimulus measures until the November meeting – by which time the BoE’s Quarterly Inflation Report will be available. The ECB also kept rates on hold and offered an accompanying statement that was broadly in line with previous releases, albeit slightly more positive on the outlook for the labour market and growth going forward. Nevertheless, Trichet was resolute that current rates are appropriate and inflation expectations firmly anchored. Despite journalists’ best efforts in the Q&A to bait for comments on EUR strength, the responses merely re-iterated previous comments about the adverse effects of FX volatility and his appreciation for the US strong USD policy. With no explicit criticism of EURUSD levels, the pair made a push above 1.4800, dragging most other currencies higher in tandem, but after failing to hold ground above key threshold levels, the USD managed to pare back some of its losses into the US afternoon.
Gold once again hit new highs yesterday ($1061.5 the peak), but this morning seems to be spending time consolidating between intraday support at $1046 and supply coming in around $1053. Overnight most Asian stock indices rose as the outlook for the global recovery continued to entrench itself in the investor psyche. China’s Shanghai Composite is up a staggering 4% at the time of writing, and as we consider this to be a strong indicator of risk sentiment, it certainly feels like the momentum for market confidence continues to be to the upside. The DXY has managed to recover from its 75.77 lows yesterday and is looking far less sickly at current levels (76.25); but with no earnings releases expected today from the US and a barren data schedule, there seems to be very little likely to stand in the way of another day of USD selling.
German CPI data already released this morning came out at -0.5% MoM (-0.4% expected); the few remaining figures to come include Norwegian CPI, UK Trade Balance and PPI, Canadian Unemployment, and lastly US Trade Balance. With USDCAD nudging at downside support, the employment data could be a significant catalyst to push the pair down towards the next big levels at 1.0300.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10'016.39 | 1.87 |
| Hang Seng Index | 21'528.69 | 0.17 |
| Shanghai Index | 2'908.37 | 4.64 |
| FTSE 100 Index | 5'154.64 | 0.9 |
| DAX Index | 5'716.54 | 1.34 |
| SMI Index | 6'305.80 | 0.73 |
| S&P future | 1'062.50 | -0.12 |
| World Markets | Current Level | % Change |
| Gold | 1'046.97 | -0.77 |
| Silver | 17.62 | -0.96 |
| VIX | 24.18 | -2.03 |
| Crude wti | 71.14 | -0.77 |
| USD Index | 76.26 | 0.39 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Germany: Final HICP, % m/m (y/y) Sep | -0.4(-0.4) | -0.4(-0.4) | EUR/06:00 |
| Norway: CPI, % m/m (y/y) Sep | 0.6 (1.0) | -0.2 (1.9) | NOK/08:00 |
| UK: Trade balance, £ bn Aug | -6.3 | -6.5 | GBP/08:30 |
| UK: Producer input prices, % m/m (y/y) Sep | -0.8(-6.8) | 2.2 (-7.5) | GBP/08:30 |
| UK: Producer core output prices, % m/m (y/y) Sep | 0.2 (0.9) | 0.2 (0.7) | GBP/08:30 |
| UK: Producer output prices, % m/m (y/y) Sep | 0.1 (-0.1) | 0.2 (-0.4) | GBP/08:30 |
| Cad: Unemployment Rate, % Sep | 8.80% | 8.70% | CAD/11:00 |
| Cad: Net Change In Employment, K Sep | 5 | 27.1 | CAD/11:00 |
| US: Trade balance, $bn Aug | -33 | -32 | USD/12:30 |
Currency Tech
AUDUSD
R 2: 0.9325
R 1: 0.9130
CURRENT: 0.9040
S 1: 0.8645
S 2: 0.8570
USDCAD
R 2: 1.0825
R 1: 1.0650
CURRENT: 1.525
S 1: 1.0510
S 2: 1.0420
EURJPY
R 2: 132.10
R 1: 131.70
CURRENT: 131.40
S 1: 129.60
S 2: 129.05
USDMXN
R 2: 13.815
R 1: 13.685
CURRENT: 13.295
S 1: 13.260
S 2: 13.195
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
