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Forex − Risk appetite creeps back into markets

Tue, Jun 30 2009, 09:26 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Forex News and Events:

The Yen slipped across the board on monday due to higher oil price, gains in share prices and a better-than-expected sentiment in the euro-zone which boosted hopes of a global recovery, helping investor risk appetite. Investors seem to feel more confident these days and risky assets are bid again. The EUR carried on the trend set in London with continued buying versus the USD, consolidating on the 1.41 level before breaking higher over NY closing bell. Market was pretty quiet with most people having one eye on Madoff‘s sentencing. Equity markets were higher across the board, especially from the Banking and Housing sectors, though US markets made only modest gains despite solid upswings across Europe. The Far East began with continued GBPUSD buying filling stops through above the 1.6605/25 Band. This continued through out the session. EURGBP month end demand expected later today. EUR/USD continued to push higher testing last weeks high of 1.4138, triggering many orders around 1.4130. These will not stop EUR rally just merely holds it up for the time being. USD was a touch lower overnight as investors braved thinning markets to push the risk rally even further. Equity indices in Asia-Pacific followed their European and US counterparts but volumes are light in general as summer trading patterns take hold. The VIX index has now fallen back to levels last seen prior to the events of September 2008. Trust banks bought AUDJPY and EURJPY ahead of the Tokyo fix with expected demand for USDJPY being talked about on the London fix. Japanese jobless still on the rise with May’s figure reported at 5.2% versus 5.0% the previous month. Nikkei carried on the global trend in stock market moves, despite the jobless figures, rising 1.8% to 9958 at the time of this report. With a little more volume trading throughout the Far East session market optimism looks to be on the way back. 

Today's Key Issues (time in GMT):

09:00 EUR Euro-Zone M3 s.a. (YoY) MAY 4.60% vs. 4.90%
09:00 EUR Euro-Zone M3 s.a. 3 mth ave. MAY 4.90% vs. 5.20%
09:30 GBP UK GDP (QoQ) 1Q F -2.10% vs. -1.90%
09:30 GBP UK GDP (YoY) 1Q F -4.30% vs. -4.10%
09:30 GBP UK Current Account (BP) 1Q -6.7B vs. -7.6B
09:30 GBP UK Total Business Investment (QoQ) 1Q F -5.50% vs. -5.50%
09:30 GBP UK Total Business Investment (YoY) 1Q F -6.80% vs. -6.80%
10:00 EUR Euro-Zone CPI Estimate (YoY) JUN -0.20% vs. 0.00%
12:30 EUR EU to Hold Accession Talks With Turkey Jun-30
13:30 EUR EU-Turkey Ministerial News Conference in Brussels Jun-30
14:00 USD S&P/CaseShiller Home Price Ind APR
14:00 USD S&P/CS Composite-20 YoY APR -18.83% vs. -18.70%
14:40 EUR EU's Kroes Speaks on Financial Crisis in London Jun-30
14:45 USD Chicago Purchasing Manager JUN 39 vs. 34.9
15:00 USD Consumer Confidence JUN 55.2 vs. 54.9
15:00 USD NAPM-Milwaukee JUN 45 vs. 43

The Risk Today:

EurUsd EUR/USD is edging closer towards its 1.4180 range high. However, a move below 1.3890 would trigger a run to 1.3720 but until then the range may continues with a marginal USD bearish bias.

GbpUsd It has been a long time coming but finally Cable has rallied out of its recent trading range. The move implies further gains and a run up to 1.6830/1.6950. Intraday consolidation above 1.6550 (ideally above 1.6600) is bullish.

UsdJpy The near-term outlook for USD/JPY is neutral with price locked in a 95.00 to 96.70 range. Longer-term charts hint a downside potential at 94.30.

UsdChf USD/CHF is caught in between trendlines at 1.0630 and 1.1020. After the SNB fireworks last week it is becoming very clear that outside the central bank there is not a lot of interest to pay up for the dollar. Intraday, while capped below 1.0915 targets are at 1.0765 and 1.0715. 

Resistance and Support:

Published on  Tue, Jun 30 2009, 09:34 GMT