Market Brief
FX markets were choppy in the Asian session, as the thin liquidity amplified small moves. Asian equities were slightly weaker, with Shanghai down -2.0% following yesterday’s drops across Europe and the US . Risk appetite was damaged as rumors of a Coup in Pakistan sent traders into scrambling USD. However, Pakistan President Asif Ali Zardari’s spokesman denied rumors of a coup, after the defense minister Supreme Court this week threw out an amnesty protecting Defense Minister Chaudhry Ahmed Mukhtar and thousands of others from corruption charges. Perhaps the most interesting move was in the EURCHF, which traded down to 1.4908 for the fist time below 1.500 since March and just a few days after the ECB's last 12 month liquidity tenor. There has been increasing speculation that the SNB is relating its intervention stance and becoming comfortable with the prospect of a stronger CHF. We believe this is somewhat premature given the continued rhetoric by SNB officials (although slightly less hawkish) and EUR weakness. As was universally expected, the BoJ unanimously voted to hold rates at 0.10%. They also used the meeting to solidify their position on price stability as a critical objective of monetary policy. Previously, the definition stated a goal of "approximately between 0 and 2%" with a median figure of "around 1%". Now CPI "must be in a positive range of 2% or lower" with the language clearly conveying the BoJ intolerance for a deflation environment. Given the tools left, the BoJ would most likely increase their monthly purchases of JGBs which would have a negative JPY (and given recent weakness in JGB yields, the markets seem to have increased probability of this scenario).
In Australia, the November business sales grew vigorously +6.8% y/y, the strongest reading in 22-months. In New Zealand, the December consumer confidence index slipped -2.9 pts to 118.6, however still a decent read.The AUDUSD traded up to 0.8902, after finding support on its 100-day moving average at 0.8848. The economic data highlight of the day should be the German IFO, which is expected to have the sentiment index improved to 94.5, vs. 93.9 prior, and expectations index 99.0 vs. 98.9 prior.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10,142.05 | -0.21 |
| Hang Seng Index | 21,173.38 | -0.81 |
| Shanghai Index | 3,113.89 | -2.05 |
| FTSE futures | 5,230.50 | -1.62 |
| DAX futures | 5,854.00 | 0.33 |
| SMI Futures | 6,512.00 | 0.33 |
| DJIA futures | 10,372.00 | 0.33 |
| World Markets | Current Level | % Change |
| Gold | 1,106.49 | 0.69 |
| Silver | 17.25 | 0.64 |
| VIX | 22.51 | 9.59 |
| Crude wti | 72.95 | 0.41 |
| USD Index | 77.62 | -0.14 |
| Todays Calender | Estimates | Previous | Country / GMT |
| German IFO business climate, index Dec | -- | 93.9 | EUR / 09.00 |
| GE IFO current assessment, index Dec | -- | 89.1 | EUR / 09.00 |
| GE IFO business expectations, index Dec | -- | 98.9 | EUR / 09.00 |
| Current account, € bn (sa) Oct | -- | -5.4 | EUR / 09.00 |
| Final business investment, % q/q (y/y) Q3 | -- | -3.0,-21.7 | GBP / 09.30 |
| PSNB/PSNCR, £ bn Nov | -- | 11.4/5.9 | GBP / 09.30 |
| Trade balance, € bn (sa) Oct | -- | 6.8 | EUR / 10.00 |
Currency Tech
AUDUSD
R 2: 0.9070
R 1. 0.9010
CURRENT: 0.8877
S 1: 0.8760
S 2: 0.8645
USDCAD
R 2: 1.0780
R 1: 1.0750
CURRENT: 1.0685
S 1: 1.0610
S 2: 1.0555
EURJPY
R 2: 131.60
R 1: 130.77
CURRENT: 129.09
S 1: 126.90
S 2: 126.65
USDMXN
R 2: 13.020
R 1: 12.995
CURRENT: 12.860
S 1: 12.710
S 2: 12.645
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
