Market Brief
USD was on the back footing again, as Wall Street’s rally spilt over to Asian regional indexes. Risk correlated FX trades are moving lock in step with risk appetite. The positive risk sentiment was also helped by better than expected corporate earning from Apple and Komatsu Ltd. Perhaps the one barrier to continued USD weakness was the meeting of Eurozone finance ministers in Luxembourg. Yet, with no mention of the euro strength, traders are refocusing on 1.5000. The EURUSD traded in the range of 1.4829-1.4981, reaching a new 14-month high. In his second speech overnight, Fed’s Bernanke said that policy exit strategy is vitally important in maintaining confidence in the US economy and in the greenback. These comments follow on the heels of NY fed comments that reverse repos, which here actively being tested (and root of many tightening rumours), should not be viewed as impending change in monetary policy.
In Australia today, the RBA October meeting minutes (commenced the tightening cycle with a 25bp rate hike to 3.25%) showed a hawkish central bank, who was concerned over the rate of inflation. Exactly what the AUD bulls wanted to hear. The minutes stated that “the expected trough in inflation was significantly higher than earlier thought” and therefore heightening the importance of next Wednesday’s Q3 CPI report for future policy decisions. The other major event scheduled for today will be the BoC rate announcement. However, after Friday’s weak CPI figure, markets are expecting no shift in policy or in their comments to the exiting policy framework. Later this week, the Canadian October Monetary Policy reports might provide some indication of when exit strategies would begin and if there was any change in the Q2 2010 tightening target.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10.336.84 | 0.98 |
| Hang Seng Index | 22,376.58 | 0.79 |
| Shanghai Index | 3,073.28 | 1.15 |
| FTSE futures | 5,249.00 | 1.39 |
| DAX futures | 5,886.50 | 0.19 |
| SMI Futures | 6,450.00 | 0.27 |
| S&P future | 1,096.30 | 0.47 |
| World Markets | Current Level | % Change |
| Gold | 1,067.19 | 0.28 |
| Silver | 17.8 | -0.18 |
| VIX | 21.49 | 0.27 |
| Crude wti | 79.94 | 0.41 |
| USD Index | 75.13 | -0.15 |
| Todays Calender | Estimates | Previous | Country / GMT |
| PSNB/PSNCR, £ bn Sep | -- | 16.1/10.4 | GBP / 08.30 |
| BoE releases provisional estimates of M4 Sep | -- | -- | GBP / 08.30 |
| Construction output, % m/m (y/y wda) Aug | 15.3 | -2.0 (-10. | EUR / 09.00 |
| ing starts, thous Sep | 607 | 598 | USD / 12.30 |
| Building permits, thous Sep | 590 | 580 | USD / 12.30 |
| PPI, % m/m (y/y) Sep | 0.1 (-4.3) | 1.7 (-4.3) | USD / 12.30 |
| Core PPI, % m/m (y/y) Sep | 0.1 (2.0) | 0.2 (2.3) | USD / 12.30 |
| BoC policy interest rate annoucement Oct | 0.25 | 0.25 | CAD / 13.00 |
| Fed Governor Warsh (FOMC voter) | -- | -- | USD / 15.00 |
| BoE Governor Mervyn King speaks in Edinburgh | -- | -- | GBP / 19.15 |
Currency Tech
AUDUSD
R 2: 0.9475
R 1: 0.9345
CURRENT: 0.9269
S 1: 0.9115
S 2: 0.8985
USDCAD
R 2: 1.0650
R 1: 1.0435
CURRENT: 1.0286
S 1: 1.0207
S 2: 1.0129
EURJPY
R 2: 137.87
R 1: 136.10
CURRENT: 134.90
S 1: 133.33
S 2: 132.25
USDMXN
R 2: 13.330
R 1: 13.175
CURRENT: 12.925
S 1: 12.767
S 2: 12.620
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
