Market Brief
After a brief pause, risk appetite seem to have returned in Asian trading. Regional equities were broadly higher, with only the Nikkei lagging. Gold surged to $1165.30oz on growing concern the Fed will maintain stimulus measures. The EURUSD traded up to 1.4950, while the USDJPY fell to 88.60. Surprisingly, AUDUSD failed to see a sustained rally on the back of a weaker greenback and commodity appreciation, as the AUD and precious metals continue to diverge. The root of the markets concern over the Fed policy was comments by St. Louis Fed President Bullard, that said he would be in favor of extending the Fed's MBS buying program, which is expected to expire in March 2010. Bullard stressed that the FOMC had not made any decisions and he will not become a full voting member till January. In an interview with Dow Jones on Sunday, Bullard sounded ultra dovish, stating the Fed should keep rates low for an extended period, but added that “… would prefer to keep the central bank's asset buying program active beyond its current cut off date…” Speculation on the extensions of Fed asset purchases should be good for risk appetite and negative for the USD. In our minds, the price action seen today should be the theme for the odd holiday shortened, low volume, week with the USD on a back footing and EM, carry and commodity currencies appreciating.
Over the weekend, ECB President Trichet stated that the ECB will be adjusting eligibility criteria of the ABS collateral it will accept early next year. While the slight tightening will most probably have no real noticeable effect on liquidly and rates, it does mark the first step on the path of unwinding emergency policies initiated during the financial crisis.
In Australia, vehicle sales rose for the third consecutive month by 3.1% m/m. While not a critical number, on its own, we believe that combined with the growing body of evidence pointing to and a sturdy domestic economy ready for the RBA to raising rates by another 25bp on Dec 1st.
This week, US rates will be a probable source of volatility, with a few Fed speakers taking the podium (which caused plenty of activity last week), the release of the FOMC minutes, 2nd estimate of US GDP, and around $120bn of Treasury bond auctions. Today is a somewhat light event calendar with flash November manufacturing PMIs from both Germany and the Eurozone and the US Existing homes sales. ECB's Trichet and SNB Roth will also be speaking today.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 9,497.68 | -0.54 |
| Hang Seng Index | 22,705.05 | 1.1 |
| Shanghai Index | 3,338.65 | 0.91 |
| FTSE futures | 5,257.50 | -0.14 |
| DAX futures | 5,723.50 | 1.05 |
| SMI Futures | 6,322.00 | 0.72 |
| S&P future | 1,097.80 | 0.7 |
| World Markets | Current Level | % Change |
| Gold | 1,167.06 | 1.43 |
| Silver | 18.88 | 1.99 |
| VIX | 22.19 | -1.99 |
| Crude wti | 78.48 | 1.3 |
| USD Index | 75.18 | -0.53 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Flash manufacturing PMI, index Nov | 51.7 | 51 | EUR / 08.28 |
| Germany: "Flash" services PMI, index Nov | 51.2 | 50.7 | EUR / 08.28 |
| EUR "Flash" manufacturing PMI, index Nov | 51.4 | 50.7 | EUR / 08.58 |
| Flash services PMI, index Nov | 52.8 | 52.6 | EUR / 08.58 |
| Flash" composite PMI, index Nov | 53.3 | 53 | EUR / 08.58 |
| NBH Rate Announcement, % 24 Nov | 6.50% | 7.00% | HUF / 13.00 |
| Retail sales, % m/m Sep | -- | 0.8 | CAD / 13.30 |
| ECB President Trichet speaks | -- | -- | EUR / 13.00 |
| Existing home sales, mn Oct | 5.7 | 5.57 | USD / 15.00 |
Currency Tech
AUDUSD
R 2: 0.9337
R 1: 0.9215
CURRENT: 0.9226
S 1: 0.9060
S 2: 0.8970
USDCAD
R 2: 1.0780
R 1: 1.0733
CURRENT: 1.0629
S 1: 1.0610
S 2: 1.0545
EURJPY
R 2: 134.02
R 1: 132.95
CURRENT: 132.69
S 1: 131.75
S 2: 131.00
USDMXN
R 2: 13.265
R 1: 13.120
CURRENT: 13.011
S 1: 12.998
S 2: 12.975
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
