USD/MYR lower late at 3.5540 vs yesterday's close at 3.5850 in active trade; dealers say pair at 3-week low on higher risk appetite, tracking USD/Asians, also in line with strong gains in local equity market. "All major local banks as well as foreign banks were net sellers of USD today," says one dealer; but says drop "a bit too much, and a bit too fast," adds, pair could recoup some losses as players square off positions ahead of long weekend. Another dealer says no intervention by central bank seen, though sees strong support at 3.5400.
Thursday, April 30, 2009
USD/MYR lower late
The Bank of England's Monetary Policy Committee
The Bank of England's Monetary Policy Committee is likely to stick to its GBP75 billion securities purchase plan at its meeting next week, but will probably need to boost buying during the summer.
The U.K. central bank is well on its way to achieving the desired level of asset purchases by early June, having bought over GBP40 billion since the start of March.
But the process is clouded with uncertainty. The bank plumped for the GBP75 billion figure to spur a 5% increase in nominal gross domestic product in 2009 and 2010 - the average rate of growth that's been consistent with inflation of around the BOE's 2% target since 1997.
However, bank policymakers have acknowledged there's a high degree of uncertainty over the amount of assets they would need to buy to achieve this. While the MPC has highlighted some encouraging signs that the program is having the desired effect, officials have stressed that it will take time for the full impact to become visible.
Preparations for the bank's quarterly Inflation Report in mid-May, when it will release new forecasts for economic activity and inflation, will provide the MPC with the opportunity to review the desirability of upping its level of purchases. However, most economists expect the bank's policymakers to opt for no change to the size of its buying plan at its regular meeting next week.
Economists polled by Dow Jones Newswires unanimously expect the MPC to keep its key interest rate at 0.5% when its two-day meeting ends Thursday at 1100GMT. Some believe it could stay at that record-low level for a year or more.
Of the 13 analysts surveyed, 11 said the MPC wouldn't alter its plan for purchasing GBP75 billion of public and private sector securities over the three months to early June. Just two economists tipped the bank to immediately announce an increase in the overall amount of purchases.
"Our central view is that the MPC stick with the original plan on quantitative easing at next week's meeting and see out the GBP75 billion of purchases," said Allan Monks, an economist at JPMorgan Chase Bank.
"We expect a pause after May, with more purchases likely in the second half of 2009" prompted by weak growth and falling inflation, he said.
Domestic economic developments over recent weeks have combined pronounced signs of weakness with some tantalizing glimpses of light at the end of the tunnel.
U.K. gross domestic product shrank 1.9% in the first quarter, marking the third straight quarter of output declines and its sharpest contraction since the third quarter of 1979. In annual terms, activity fell 4.1% on the year - the biggest drop since 1980.
U.K. retail prices fell in annual terms for the first time in nearly 50 years in March, while unemployment hit its highest level for nearly 12 years.
But countering that, the Confederation of British Industry said Tuesday that sales volumes at U.K. retailers in April jumped to their highest level since January 2008.
There were indications that worsening in housing market activity was beginning to abate, and the BOE's own credit conditions survey showed signs of improvement.
One issue that could complicate matters further is the announcement from the U.K.'s Debt Management Office that it will need to sell a record GBP220 billion of gilts in the 2009/2010 financial year. That has pushed up bond yields and could reduce the impact of the bank's monetary easing.
Analysts said that the bank would be anxious not to give the impression that it was targeting bond yields or intentionally funding the government with its purchases, but that this could increase the need for more asset buying.
"Quantitative easing cheerleaders could observe that the level of market yields would be higher were it not for the BOE's asset purchases. However, the MPC's task is to hit an absolute inflation target of 2%, not to generate inflation that is "higher than it would otherwise have been," said Simon Hayes, U.K. economist at Barclays Capital.
"It is the absolute level of rates that is important, therefore, not the level relative to some counterfactual scenario. If there are market developments that run counter to the MPC's goal of lowering yields, the MPC needs to do more," he said.
Hayes said the bank could provide guidance on how long it will keep interest rates at their current level, and that he expected it would announce an increase in securities purchases by at least GBP25 billion in May.
Other analysts go further.
Alan Clarke, U.K. economist at BNP Paribas, expects the bank to keep policy on hold in May, but that far more purchases will be needed in future, because BOE growth forecasts are on the optimistic side and because the asset buying will have a smaller impact that it thinks.
FOMC statement likely has done
Chief currency strategist Shaun Osborne of TD Securities says FOMC statement likely has done little besides afford USD some minor short-term reprieve following a substantial decline earlier in the day against EUR and many other currencies. "We've seen quite a decent move already today for currencies against the dollar, so I think this is just a bit of back-and-filling," said Osborne. "I doubt we're going to see that much of a rebound for the dollar." EUR/USD dipped into $1.3260s following statment, but is now back at $1.3286, while USD/JPY has also receded to Y97.68 from immediate post-FOMC intraday high at Y97.96.
The Fed still sees green shoots
The Fed still sees green shoots and believes the US economy will begin to rebound later this year, says Sherry Cooper, chief economist at BMO Capital Markets. "The Fed also feels inflation will remain low despite its running the printing presses and despite massive fiscal red ink," she says The 1Q GDP release suggests the econ is poised to bottom and even begin to grow in 3Q or 4Q, but all of that assumes little added disruption from the swine flu, she says. "Developments there are happening fast and neither the Fed nor market participants know the ultimate outcome. But surely, the Fed sees little risk in being as accommodative as possible," Cooper adds.
Tuesday, April 28, 2009
USD/CAD moderately higher
USD/CAD moderately higher in line with the more risk-averse tone across global markets, but CAD is outperforming many of its counterparts after closing in on the top of its half-year trading range last week, and this momentum is seen sustaining a risk of a challenge of 1.2000 area soon. "Beyond the swine flu issue, we remain more constructive on the Canadian dollar after its recent performance," said currency strategists at TD Securities in Toronto. USD/CAD at 1.2149, from 1.2088 late Fri.
Gold futures are down
Gold futures are down slightly in reaction to a stronger greenback, lower crude prices and weaker equities futures. "Players observed the rising U.S. dollar (and) slipping oil and were seen as apprehensive about the Dow before the start of trading," Kitco Bullion Dealers analyst Jon Nadler says in a research note. Comex June gold is down $5 at $909.10 an ounce.
A plane circling Lower
A plane circling Lower Manhattan escorted by two fighter jets is part of a "photo op," said Federal Aviation Administration spokesman Jim Peters, according to The Wall Street Journal. Peters said the Defense Department is conducting a photo op that involves deploying two F-16s and escorting a Boeing 747 in the vicinity of Lower Manhattan and the Statue of Liberty. Peters says the maneuver isn't an emergency and was coordinated in advance with the FAA and state and local officials.
Risk appetite took another hit overnight
Risk appetite took another hit overnight on reports the stress tests will call for Citi and BOA to raise billions of dollars of new capital. This, along with the ongoing swine flu worries kept the greenback and the JPY in demand, while increased speculation that the ECB will announce quantitative easing on May 7th sent EUR/USD below 1.30 and EUR/JPY to a 6 week low of 124.38. For Tuesday the data calendar is light so stocks, swine flue and stress tests will dominate the wire headlines and likely the safe haven currencies bid.
Friday, April 24, 2009
World Bank Pres Robert Zoellick expressed
World Bank Pres Robert Zoellick expressed concern Thu that Group of 20 countries continue to restrict trade flows despite vowing to resist protectionist policies. Since the April 2 G20 summit, nine of the countries have already either taken or considered 23 restrictive measures, he said at a briefing ahead of the spring meetings of the bank and the International Monetary Fund. "As the recession deepens, leaders will be under pressure to protect home markets," said Zoellick.
economic decline is easing
Focus for coming days should switch back to U.S. data, which could illustrate pace of economic decline is easing, in turn boosting risk appetite and eroding USD, says Brown Brothers Harriman FX Strategists. "The anticipation of a recovery is helping to ease global market tensions, reducing flight to quality trades and playing as a short term negative for USD." But says USD remains better longer term option than EUR. "We have not changed our long run view that the USD will strengthen as it becomes clear the U.S. is further along in the recovery process than the euro zone." Says buy EUR/USD at 1.3000 or below, with potential to rally to 1.3300. Last 1.3135.
USD/IDR tad down
USD/IDR tad down at 10,855 vs previous close 10,910 despite heightened local political tension, on profit taking after recent dollar gains. But trader says "rupiah strength should be limited as, at these levels, the dollar is well bid, reflecting healthy demand from local corporates to finance imports and repay debt by the end of the month." Range likely at 10,830-10,950
short-term players triggered
USD/JPY, EUR/JPY falling, as some short-term players triggered stop-loss sell orders at 97.50 (USD/JPY), says senior dealer at major bank in Tokyo, on back of increasing concerns about Chrysler's chances of filing for Chapter 11. Dealers tip USD/JPY support at 96.80, last 97.25, EUR/JPY last 127.95, may fall to 127.50.
Tuesday, April 21, 2009
USD/KRW tipped to rise
USD/KRW tipped to rise vs 1,335 last close on sharp fall in U.S. shares, anticipated Kospi weakness, which likely to keep participants risk averse, traders say. Local bank trader expects pair to gap up at market open after 1-month NDFs last end around 1,362.5; says there's a chance pair may target 1,370, then 1,380 after an initial jump; but adds players likely inclined to take profit near 1,380. Samsung Futures analyst Jeon Seung-ji says whether foreigners will continue to buy local shares or not will be another market focus. Tips 1,330-1,375 range
USD/CNY central parity
USD/CNY central parity may be set tad higher after USD again gains broadly on international markets overnight; Guangzhou-based dealer with foreign bank tips fixing at 6.8345 vs 6.8329 previous. Also tips pair to trade in 20 point range around fixing, in line with recent sessions; "unless the spot drops below 6.8300, I don't think we'll see any change in balance between buying and selling." USD/CNY closed Monday at 6.8336.
Friday, April 17, 2009
AUD/USD pullback
AUD/USD pullback likely "temporary" with no fundamental cause behind selloff, pair unlikely to swing heavily in Asian trade today, Nomura chief economist Stephen Roberts says. Expects AUD/USD will make more convincing push above 0.7300 later this month as USD weakness and risk appetite renewal persists. Some tendency to drift upward likely in local session given continued rise in risk appetite but unlikely to get back near 0.7300 today. "When you're up near 0.7300 - that is the high point over recent months in the Australian dollar - it's not surprising to see a pullback from time to time." AUD/USD now 0.7197.
Thursday, April 16, 2009
Treasurys ended firmer
Most Treasurys ended firmer Wednesday after weakness earlier in the session. The leveling out of prices was not the result of some fundamental shift in sentiment. Said Andrew Brenner, of MF Global: "This is more a result of lack of liquidity in the market than anything else." The Federal Reserve Bank of New York announced five more purchases, beginning with TIPS Thursday. The 10-year Treasury note stood at 99 27/32, up 5/32 to yield 2.77%. The 30-year Treasury was down by 3/32 at 97 1/32, yielding 3.66%.
USD/JPY is under pressure
USD/JPY is under pressure, having stalled at 101.65/70, the 61.8% Fibonacci retracement of the move down from August '08, says Commerzbank analyst Karen Jones. Adds the pair has started to erode its 200-day and 20-day moving averages at 99.00 and 98.69, respectively. Sees a risk of a test of the three-month uptrend at 96.54 prior to recovery. USD/JPY currently trades at 98.75, from around 98.83 in NY Tuesday.
Wednesday, April 15, 2009
Expect rangebound day for AUD/USD
Expect rangebound day for AUD/USD with slight bid bias, Suncorp-Metway strategists say. Note market seems more inclined to rally on positive news than sell on negative headlines. "Despite the nervousness of the market, there does seem to be an undercurrent of confidence creeping back." Domestic data due 0130 GMT may give some cues to AUD/USD today. Pair last 0.7202.
Tuesday, April 14, 2009
AUD/USD trading around long-term
AUD/USD trading around long-term average of 0.7200 with hopes global recession may be abating already priced into AUD, National Australia Bank senior currency strategist John Kyriakpoulous says. Notes "it will take evidence of an actual recovery in global growth to drive the currency significantly higher", which has not yet eventuated. Suggests watching copper price for any reversal of rising trend. Expects support 0.7135-50 with break of this level pegging support 0.7030-50. Resistance likely 0.7250, then 0.7300. Last 0.7201.
AUD/USD short-term corrective
AUD/USD short-term corrective phase continues to develop following reversal from key 0.7360-0.7400 resistance zone, JPMorgan technical strategists say. Note 0.7328, 200-day moving average, continues to cap; reversal yesterday suggests increased risk for more weakness, initial support likely at 0.7135, then 0.7205. But adds "the intermediate bias remains bullish given the recent breakouts and bullish structure from last month's lows." Closely monitoring 0.7030 and 0.6960-0.7000 zone for deeper pullback. AUD/USD now at 0.7212.
Monday, April 13, 2009
AUD/USD bounce
AUD/USD bounce from recent corrective lows in 0.7150 area puts focus on top end of recent trading range, BNP Paribas FX strategists say. Break above recent high of 0.7325 will put target at 0.7500 area. Notes market likely to interpret relatively weak Chinese 1Q GDP as bottom for Chinese growth. "Consequently, we expect downside in the AUD to be limited especially given the price action yesterday." AUD/USD now 0.7211.
Sunday, April 12, 2009
NZD/USD a tad higher
NZD/USD a tad higher but move unrelated to NZ 1Q CPI data, says Bank of NZ's Danica Hampton; "I really don't think it is a Kiwi story." Says move higher came on back of USD weakness across the board, with CPI data "bang on expectations." Pair last 0.5744 vs 0.5714 early in NZ, 0.5728 before data. Says Kiwi may see more squeezes higher, could test 0.5760 but "it is still a sell on rallies." Tips short-term support to hold at 0.5680; "I am not convinced we will necessarily break that today but ultimately in the next couple of weeks we are looking at heading back toward 0.5550."
Saturday, April 11, 2009
USD/JPY may rise
USD/JPY may rise with Japan shares called higher on U.S. lead, says Shoichi Handa, general manager at SBI Liquidity Market; tips 99.00-99.85 range vs 99.43 now. Says trading cues across global day will be Citigroup earnings and Uni of Michigan consumer confidence survey; "if the Citi announcement is basically in line with expectations and confidence shows some improvement, that could push the dollar above 100 again." Says "big point" through end of next week will be U.S. employment conditions, after jobless claims overnight fell 53,000 to 610,000, their lowest since January 24; "the U.S. jobless claims were really good news, and if that carries through to next week's jobless claims data, that might be the start of a trend, which would buoy markets," hurting JPY. Tips EUR/JPY in 130.50-131.50 band vs 131.05 now, EUR/USD at 1.3140-1.3230 range vs 1.3182.
Friday, April 10, 2009
USD/PHP tipped to fall
USD/PHP tipped to fall early, trade 47.60-47.90 range vs 47.73 last close, on overseas lead, particularly overnight gains on Wall Street; "remittances are also slowly finding their way into the market, specially with the coming school term," says local bank trader. No major demand for USD expected.
Thursday, April 9, 2009
trim recent safe-haven JPY bets
USD/JPY, EUR/JPY up as players trim recent safe-haven JPY bets on cue from rising Japan share prices, with Nikkei +2.1%, says Jun Kato, deputy general manager at Shinkin Central Bank. Tips immediate USD/JPY resistance at 99.70, last at 99.58, while EUR/JPY ceiling at 131.80, last 131.25. For rest of Asian session, says "unfortunately the market seems like it will be rather trendless," with no major trading cues, though in NY hours, says "the Citigroup earnings announcement has some players worried"; if it comes in bad, says "the stock market may test the downside," possibly weighing EUR/JPY down to around 130.50, USD/JPY to 99.20.
Wednesday, April 8, 2009
USD/KRW lower
USD/KRW lower at 1,327.75 vs 1,332 last close; pair tracking positive KRW cues from Wall Street, but import settlements kicking in on dips, say dealers. "Importers are steadily buying dollars for settlement in small volume around 1,324," says local bank trader; market likely listless rest of session given coming weekend, and with no particular momentum to push pair to low-1,300s for now. Tips 1,318-1,340 band today.
USD/MYR lower
USD/MYR lower at 3.5925 vs yesterday's close at 3.5970; trader says increasing risk appetite, positive sentiment on Wall Street pushing pair lower; "JP Morgan's better-than-expected 1Q results seem to have increased investors' confidence in the financial system... that's having on knock-on effect on the ringgit," says trader. Tips pair to continue trade lower today, 3.5750-3.5950 range eyed.
Tuesday, April 7, 2009
USD/TWD likely to fall
USD/TWD likely to fall after ending steady at 33.800 yesterday, on expected strong Taiwan shares tracking U.S. stocks, and as regional bourses rise. Foreign bank trader says "the performance of the shares will set the tone of the forex market," but adds any TWD gains likely limited as central bank may support USD to smooth any sharp falls for pair. Tips pair to find support at 33.700.
Monday, April 6, 2009
USD/CNY central parity may rise
USD/CNY central parity may rise on USD gains vs EUR overnight. Shanghai-based dealer at foreign bank tips fixing at 6.8308 vs 6.8301 yesterday; "USD/CNY may continue to move in a narrow range because everyone understands Beijing's intention of keeping the yuan stable as China's economy is just seeing signs of recovery," she says; tips pair in 8.310-6.8335 range vs 6.8326 at yesterday's close.
Sunday, April 5, 2009
USD/SGD bid lower
USD/SGD bid lower at 1.4966 vs 1.4982 yesterday on slight risk appetite, but players waiting to look at U.S. bank earnings tonight before placing larger bets on regional currencies, says trader with foreign bank; "if (U.S. bank) results are good, people will expect that a turnaround is happening and then we might see dollar/Sing falling more." Tips support at 1.4950, resistance at 1.5010.
Saturday, April 4, 2009
USD/HKD flat
USD/HKD flat at 7.7503 and likely to remain in tight range before weekend; "market activity is subdued as the weekend approaches and in the absence of market-moving news. Also, the Hibor-Libor gap is not wide enough to prompt investors to make carry trades, leaving the pair steady," says trader at Chinese bank. Tips 7.7500-7.7505 band in near term.
Friday, April 3, 2009
USD/IDR slightly lower
USD/IDR slightly lower at IDR10,700 vs last 10,750 last close as risk appetite continues improving; but pair may not fall much further today as market participants likely to take profit on IDR later today ahead of weekend. "The impetus to push the dollar lower further seems to have faded somewhat this morning," a dealer with a foreign bank says. Still, pair unlikely to bounce strongly either as underlying tone still bearish for USD. 10,675-10,775 day range tipped.
Thursday, April 2, 2009
USD/TWD rises
USD/TWD rises to 33.820 vs 33.800 last close in thin volume, on modest real demand from foreign banks, also as investors "are likely to cautious about local shares after (the benchmarket stock index) breaches 6000 level," says local bank trader. Taiex last +0.7% at 6041.10. Expects trading volume to remain thin on investors' caution, tips pair to consolidate in 33.700-33.850 band for rest of session.
Wednesday, April 1, 2009
Euro/yen currency options fell
Euro/yen currency options fell in Tokyo Friday as players holding bets on the common currency's rise found comfort in its staying well above yesterday's lows, dealers said.
With these players demanding fewer euro-put options, which are hedges against the unit's fall, the price of benchmark one-month at-the-money euro/yen options fell to 19.05%/22.05% from 19.75%/22.75% Thursday in New York.
"The euro-yen spot range looks like it's consolidating in a narrower range today," denting hedging needs, said an options dealer at a major Japanese bank.
The common currency fell overnight to a low of Y129.37, its lowest since March 31, but traded in a higher Y130.84-Y131.47 band Friday morning in Tokyo.
If the euro stayed above Y130.00 into the weekend, options may fall another half percentage point or so early next week, the dealer said.
Expectations for a less volatile spot market overall were also keeping dollar/yen options lower, other dealers noted, adding that no major deals were struck due given the low hedging demand.
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