Daily Forex Brief 15th August
Daily Forex Brief For all the volatility and trauma, it's remarkable how little most things moved overall last week. The S&P was down less than 2%, despite the 8% price range. In FX, EUR/CHF was more than 9% lower on the week at one point, but for the week as a whole ended up around 0.7%. Perhaps the main exception was some of the peripheral debt markets in the eurozone, with yields on Italian debt nearly 75bp lower on the week and Spanish bonds down by nearly the same amount. The ECB's decision to start buying Italian debt had a significant impact and has bought some time for politicians to piece together a route-map for the way ahead. The potentially positive step over the weekend was a report that the German government may not longer be against the issuance of eurozone bonds, according to the Welt am Sonntag newspaper. If true (the FT reports that the German finance minister remains firm in his opposition), it could be a significant moment, given that, in terms of keeping the eurozone together long-term, some degree of fiscal union (and the partial political integration it would require) is the only viable way ahead from here. Also in today's Daily Forex Brief:
London: Monday 15th August 2011
تحلیل جفت ارزها - 15th Aug
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| Please note that due to market volatility, some of the below sight prices may have already been reached and scenarios played out. | |||||||||||||||||||||||||||||||
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Dow Jones Newsletter 12th Aug
| ifcmarkets Intraday snapshot |
| EUR/USD |
The corrective rally off 1.4103 has created upside scope to the 1.4335 area. However, reaching 1.4335 will be dependent on projected support at 1.4144 holding. The main threat remains to the downside, as Wednesday's weakness completed a bear pennant continuation pattern on the daily chart, and a break below 1.4103 would extend the dominant short-term downtrend to 1.4055 and towards 1.3920. Only a sustained break above 1.4335 would provide respite, opening 1.4402. |
| GBP/USD |
| Resistance at 1.6275 is likely to come under pressure, following Thursday's recovery off 1.6114. However, only a break above there would put GBP bulls in control, opening 1.6326 and leaving the 1.6114 low stranded. Whilst below 1.6275, there is still downside risk to the 1.6040 support area, achievable on a break below 1.6114. |
| USD/JPY |
| The setback off Friday's Asian session high at 77.02 is looking to force a break beneath projected support at 76.67. An extension below 76.60 would leave the 77.02 high as a near-term bull failure, and bring the focus back onto critical support in the 76.25/76.30 area for the third consecutive day. And despite Thursday's volatility, USD bears are still on course for a downwave equality target at 75.68. Only a sustainable break above 77.02 would question the bearish outlook, opening 77.30 and 77.50. |
| AUD/USD |
| Action appears trapped between 1.0111 and 1.0417, as AUD bulls look to strengthen Tuesday's 0.9927 reaction low. A break above 1.0417 is required to do so, prompting more gains towards 1.0500 and potentially 1.0600. A push below 1.0111 would bring the focus back onto the 0.9927 low, threatening a downtrend extension towards 0.9705. |
| ifcmarkets Focus |
| Investing in developed market currencies in the hope of rising interest rates can be a dangerous business these days. Such hopes can be very swiftly dashed. Look at sterling. When 2011 got under way, the interest-rate futures markets were confidently predicting at least two 25 basis-point rises from the Bank of England before its end. Indeed three were almost fully priced, and the pound was benefiting accordingly. Well, look again. Here we are at summer's end and, not only does the BoE base rate remain stubbornly at its post-crisis record low of 0.5%, the markets don't think it's going to rise at all through 2012, never mind 2011. Now the Canadian dollar has been getting a bit of the same treatment, buffeted by a swift reversal of rate-increase expectations, as much due to U.S. and global weakness as anything home-grown and Canadian, for sure, but no less potent for that. "The market is now pricing nearly two cuts in rates from the Bank of Canada by the end of the year, having anticipated hikes as recently as a few weeks ago," said analysts at LLoyds Bank Corporate Markets in London. Sure enough, from a recent low of CAD0.9411 July 27, the U.S. dollar powered back through parity August 8 and now hovers just below it. Of course the U.S. Federal Reserve has blown any thought of interest rate support for the Loonie's southern neighbor out of the water this week with its surprisingly emphatic pledge Tuesday to keep borrowing costs down until at least the middle of 2013. It's doubtful whether anyone thought U.S. rates were going up very far before the Fed dropped its bombshell but, even so, it has certainly underlined the bank's commitment to easy policy. And Canada is hardly immune from worries about U.S. growth which prompted it. |
| Europe |
In European trading hours the Swiss franc is once again the standout loser, dropping sharply against the euro, the dollar, the pound and even the yen. EUR/CHF is near 1.10, GBP/CHF is around 1.26 and CHF/JPY ffall through the 100 level. Speculation about a EUR/CHF peg is hitting the safe-haven currency hard and pushing it down from its all-time highs. GBP/USD caught a bid after official data showed that U.K. construction output grew much faster than previously thought in 2Q, propping up the overall growth rate. |
| Asia |
| The dollar maintained a generally firm tone in Asian trading while the euro trended lower Friday, with Japan's summer holiday period cutting into volume. The dollar held onto gains overnight in New York, treading water around Y76.85 in what would appear to be--at least temporarily--out of intervention range for Japan's Ministry of Finance. The dollar slid Thursday to Y76.30, provoking a rate check by the Bank of Japan that pushed the currency back up. Asked whether last week's intervention had been a success, Finance Minister Yoshihiko Noda said, "At this stage it is still too early to tell." The Aug. 4 intervention was Japan's largest ever, judging by data released by the Bank of Japan, at around Y4.6 trillion. Noda said Friday the government will consider various measures if the currency's "one-sided" moves continue. The dollar was at Y76.80 as of 0450 GMT, from Y76.83 late in New York trade Thursday. The euro trended lower after, meanwhile, Asian stock markets failed to get swept up by Wall Street's strong gains overnight, with the Dow Jones industrial average up 3.95%. As of 0500 GMT, the Nikkei Stock Average was down 0.6% at 8931.24. Some traders said moves by European regulators to ban short-selling of financial stocks had created fresh concerns about the underlying situation. Tomohiro Nishida, senior dealer at Chuo Mitsui Trust and Banking, said these are moves "they wouldn't do under ordinary circumstances." |
| World |
| The euro strengthened Thursday in New York as negative euro zone headlines were unable to dent risk sentiment and the rally in the U.S. equities markets provided a boost. Early in the day, the Swiss franc plunged against the euro and the dollar with rampant speculation that Switzerland would resort to dramatic measures to weaken its currency. Some even suggested Switzerland could take the drastic step of pegging its currency to the euro, which itself has been hurt by Europe's sovereign debt crisis. "By pegging the franc to the euro, Switzerland would repeat the mistake that China has made by pegging the Yuan to the dollar," said Peter Schiff, chief executive officer of brokerage firm Euro Pacific Capital. "Such a move would add to global imbalances, deny investors an important safe haven currency, and place an unfair tax on the Swiss people who will no longer enjoy the benefits of a strong currency." As the day progressed, the rally in the U.S. stock markets took center stage as the Dow gained nearly 500 points. |