Good morning from Hamburg. The weekend will be affected by the G 20 meeting in Washington where the leaders of the world economy discuss about the credit crunch and to develop some ideas for a new financial architecture to suppress further mistakes like that. However it is Friday and we wish a nice weekend to all of you.
Market review
The EUR hold gains versus USD and JPY as investors continue short covering and following a strong rebound on Wall Street that eased investor’s worries about the global economy recession. An expected rally in Japanese shares is seen continuing to lend support to the EUR, some traders guess. The EUR/USD edged up 2.27 percent to 1.2769 yesterday. The EUR/JPY even grew up about 5.13 percent and closed the session at 124.85.
The 2 year euro zone government bonds outperform the 10 years, while Germany official enters a recession, as economic fears keeps rate cutting view intact. 2 years - 10 years curve steepens to 4 year high above 145 bps. The Schatz yield was flat yesterday at 2.275 percent but earlier hit a 3 year low of 2.2 percent. The 10 year Bund yield was last up 0.6 basis points at 3.71 percent.
The US jobless claim rose more than expected in the last week to 516,000, higher than the 484,000 forecast. The Report boost the USD briefly as it raises fears about a global economy. In Canada the trade surplus shrank more than expected in September as the country sold less energy and cars to the slowing US market, while imports resumed their climb after a slump in August, Statistics in Canada said on Tuesday. The USD/CAD lost 1.8 percent and closed at 1.2133.
EUR/CAD
After touching the lower line of the Bollinger Bands last week the EUR/CAD broke the middle line yesterday first time since end of October. When the currency pair would break the middle line clearly, that could be a sign for further gains to the upper line of the Bollinger Bands.
NZD/JPY
The NZD loose more and more versus the low yielding JPY because of decreasing carry trades. Since mid of September the currency pair trades in a clear downward trend. After a rebound at the end of October the NZD/JPY could realise further losses.
