FX Daily Planet: New York Open
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View for the day
There has been a distinct lack of trend in the FX markets during the session as the major pairs hog the recent ranges.
EUR/USD price action has been choppy to say the least, rising to over 1.3560 and subsequently coming back under renewed
pressure as Greece continues to dominate sentiment. European finance ministers are meeting today for an informal meeting
though it seems unlikely that any substantive news will emerge, as suggested by ECOFIN Head Juncker. European equity
markets are mixed whilst US stock futures are trading in negative territory. The one of only two major earnings release
of the day, GE reports stronger than expected EPS. Bank of America reports later. On the economic data front, Mar. CPI
from the euro area has failed to stir markets. In the US Mar. housing starts, building permits and Apr Michigan Univ.
consumer sentiment from the US are due for release.
Overnight news
EUR: Euro area final CPI is slightly softer than the flash estimate, rising 1.4% y/y.
CNY: The China Banking Regulatory Commission said China will crackdown on fraudulent home loans; The banking regulator also
called for prudent management of property development loans and mortgage down payment ratios according to the statement
published on its website today.
CNY: ADB Chief Economist Lee said “This is the time for the Chinese authorities to take action to allow great flexibility of
the Chinese yuan”.
CNY: Singapore PM Lee said “I think they (China) really should revert to where they were before the crisis and allow the
yuan to go up gently again”.
NZD: March REINZ housing price index rose 1.8%m/m vs 0.4% in the previous month..
USD: San Francisco Fed President Yellen said she’s increasingly certain the U.S. economy is “on the right track,” and that
officials will “at some point” need to lift borrowing costs. She still said, “it’s important not to lose sight of just
how fragile this recovery is,” while reaffirming the Fed’s pledge to keep the benchmark U.S. interest rate low for an
“extended period”.
EUR: UK Telegraph reported that a financial institution warned that the Greek issue could prompt Germany’s eventual
withdrawal from the EMU.
GBP: Two properly conducted instant polls following the debate, carried out by YouGov and ComRes both show Liberal Democrat
Nick Clegg winning, Cameron second and Brown last (YouGov has NC51, DC29, GB19. ComRes has NC 46, DC 26, GB 20).
US earnings: Google Q1 10 earnings came in at $6.76 vs $6.62 estimate.
Today’s watchlist (all times BST; +9hrs for Sydney, +8hrs for Tokyo, -5hrs for New York)
CHF: Mar producer and import prices (%oya) @8:15 (Cons: -0.1)
EUR: EU Finance Chiefs, Central Bankers in Madrid: informal EcoFin
USD: Mar housing starts (000s, saar) @13:30 (JPM: 620, Cons: 610); Mar building permits (000s, saar) @13:30 (JPM: 620, Cons:
625); Fed’s Warsh speaks on ‘Beyond the Exit’; Mar U. Michigan consumer confidence (index) @14:55 (JPM: 74.5, Cons:
75.0); Fed’s Hoenig speaks on Financial Crisis @18:00; Bank of America earnings for 1Q @Bef-mkt (Cons : 0.157) ; GE
earnings for 1Q @Bef-mkt (Cons : 0.096)
MXN: Banxico rate announcement @15:00 (JPM: 4.50)
Overnight price action
FX: JPY maintains gains in lacklustre trading.
FX vol: USD/JPY vols higher across the curve and mainly in the front end; 1m vol up 0.3vols.
Commodities: Oil and gold are broadly unchanged on the day
Bonds: European bond futures are slightly higher.
Equities: European equities are trading lower
Technical View for the day
In a rather lackluster trading week so far there are a few things sticking out which could be part of a major regime
change. One is the general weakness of the JPY which raises the question whether we might have started a broader JPY
downtrend and the other remarkable development of the last weeks is the strength of GBP across board. The JPY issue
seems not to be as imminent as the GBP issue where we have already experienced major upside breaks or where confirming
breaks supporting a long-term turnaround are close by. Key-barriers to watch in this respect are at 0.8743 & 0.8671 in EUR/GBP, at 1.5584 & 1.5709 in Cable, at 147.53/148.55 in GBP/JPY and at 1.6673 in GBP/CHF. Once these are broken decisively the story of a
weak Pound would have most likely come to a premature end. As for EUR/USD the very short-term picture has become a bit
blurry but in general the downtrend seems to be intact as long as key-resistance between 1.3769 and 1.3840 is not taken
out. It however takes a break below 1.3379 to re-confirm the 1.3093/81 bear-target. For risk in general, keep an eye on
a massive resistance barrier at 1215/22/29 in the S as a failure to clear the latter could be fatal as the risk of running into a major setback is fairly high underneath.
Research from the region you may have missed:
House prices in New Zealand rose unexpectedly in March
ENDS