Market Briefs - • BOE’s Carney could keep rates lower for longer to tackle low prices rather than start a new round of govt bond buying, expects to normalize rates within the foreseeable future (BBC) • Nowotny says ECB should decide sooner rather than later on QE (Der Standard) • EU signals flexibility on budgets, aiding France, Italy • Philadelphia, KC & Dallas Fed renewed request to raise discount rate to 1% ahead of Dec FOMC • Bk of Canada’s Lane CB;s will look through temporary effect of low oil on inflation but there is risk low prices could add to deflationary pressures in Europe/Japan • Bk of Canada’s Lane Low oil may delay countrys return to potential, recent CAD depreciation ag USD will help cushion economy from impact of lower oil • Greek FinMin says Greek bailout likely to be extended beyond end Feb. • Brazil’s Levy fiscal policy will aim to help CB battle inflation, any tax adjustment will be compatible w/govt goal to increase savings • Moodys downgrades Venezuelas rating to Caa3 from Caa1; Outlook stable • US Redbook MM w/e -3.2%, -0.6%-prev • US Redbook YY w/e 3.8%, 4.3%-prev • US NFIB Bus Optimism Idx Dec 100.4, 98.1-prev • US JOLTS Job Openings Nov +4.972m, f/c 4.863m, +4.83m-prev • US Federal Budget,$ Dec f/c 3.0b, -56.8b-prev • BOJ to cut next fiscal years CPI forecast to 1.5% or lower from 1.7% • WTI/Brent arb reaches parity, first time since October Looking Ahead - Economic Data (GMT) • 21:45 NZ Electronic Card Retail Sales mth Dec -0.001-prev • 21:45 NZ Elec Card Retail Sales YY* Dec 3.3%-prev Looking Ahead - Events, Other Releases (GMT) • No Significant Events Currency Summaries EUR/USD The EUR was broadly offered against the majors today. This saw EUR/USD trade heavy and threaten the 1.1750 level but it was unable to do so. IT held to a 1.1753/1.1800 range for NY and it sat nearer to the low end late in the day. The pair was unable to break the tight range as it was buffeted by EUR/JPYs dive from 140.50 to 138.44 and USD/JPYs dip below 117.60. However, with EUR so well offered across the board its likely EUR/USD will clear the 1.1750 soon as rallies have been meager and those looking to fade them have had no real chances to do so. Should the level break its likely a new bear leg begins and the pair then makes its run at the June 2010 low near 1.1640. USD/JPY Falling USD-JPY yield spreads since late Dec have left USD/JPY struggling at times when rising N225 futures would normally have given prices a nice push into positive, as was the case in early NorAm trading today. N225 futures made new session highs, but USD/JPY couldnt reach the late Asia peak at 118.85. Offers capped the pair at 118.77 as the hourly Cloud weighed on prices for a third straight day. Stocks, commodities, Tsy yields and USD/JPY all fell back after the Ldn close and USD/JPY posted a new session low at 117.52, with offers now trailing down to around 118. Prices falling into the daily cloud is somewhat bearish, despite the Tenkan remaining above the Kijun thus far, but the Kijun has now begun to fall into the Cloud, which doesnt bode well at all. The Dec low at 115.65 by the 38.2% of the Oct-Dec rise at 115.50 is back in play. Reuters reported sources close to the BOJ as looking to follow the Abe govts lead yesterday by lowering their FY 15 CPI target to reflect tumbling energy prices. EUR/JPYs breakdown Mon below 200-DMA & 61.8% supports left it on the slide today toward a 137.15 Fibo-projected base. JPY Machine Tool Ords tonight. GBP/USD Cable extended south to test 1.5078, last Fridays low, after the release of Decembers softer than expected 0.5% annualized UK CPI inflation number, 0.7% was the Reuters consensus forecast 1.5115 was the pre-data release low, after cable headed south from the London open. The recovery rally from 1.5078 lifted the pound to a high in NY by 1.5192. The BOEs Carney was on the wires saying the BOE will keep rates lower for longer rather that increase QE and he expects the UK to normalize rates within the foreseeable future. Cable remained firm ending the NY session by 1.5155, despite the weak inflation data. EUR/GBP moved from early highs by 0.7830, put in after the disappointing UK inflation data, to lows by 0.7757 before rising to end the session by 0.7770. The ECBs Nowotny was quoted in Der Standard as having said it would be sensible to decide sooner rather than later on QE. The prospect of EZ QE continues to weigh on EUR/GBP as the UK is likely to remain on hold, at a minimum, while the ECB seems to be on a more dramatic path in the near term. USD/CHF The falling EUR continues to drag the CHF down vs the USD as the SNB maintain their 1.2000 EUR/CHF floor. The SNBs vice chairman said late yesterday in a television interview that the cap on the franc at 1.2000 per euro will remain its key monetary policy tool. Danthine added they are not facing a deflationary spiral, although inflationary pressures were extremely weak. USD/CHF has squeaked out a minor new trend high today, so far at 1.0217, getting closer to the 61.8% of the post GFC slide at 1.0300. Little in the way of major econ news, mostly just pre-ECB QE angst and increasing volatility in equities. EUR/CHF daily ranges are vanishing as rallies disappear amid EURs sustained drop vs the SNBs sustained defense of 1.2008-09 lows. USD/CAD opened Noram marts 1.1984 +10 pips vs the close. O/N range 1.1943/93. WTI & Brent crude dropping to 5 year lows boosted the buck overseas, a barrier defence of 1.2000 stalled the rally and Noram traders booked profits. Noram session highs by 1.1986 shortly after the open were short-lived and spot slumped to 1.1926 given as oil pressed session highs (WTI 46.18) That was about it and we slipped back to 45.11 PM lows, prompting 1.1974 USD/CAD rebound highs. CAD was also sold off on comments from BoCs Lane who noted whilst low oil prices would have benefits for the global growth picture, on balance would probably be bad for the Canadian economy via the drop in higher paying jobs from cancelation of oil sands projects and lower investment from same. AUD/USD The NY session saw the pair hold a relatively tight range above the 200-HMA. The pair was basically directionless between 0.8130 and 0.8170 as it was buffeted by a falling AUD/JPY and USD/JPY. The upcoming Oz jobs report on Jan 15 (Oz time) is another likely factor keeping AUD traders from being overly aggressive. The pair is likely to remain in tight ranges until that data point comes out unless there is major external factor to drive it in either direction. As it stands now the pair is being supported by the 10 & 21-DMAs and RSIs are biased up while yield spreads widen a bit. The risk for a squeeze exists. If the Oz jobs data is very upbeat we may get that squeeze and see the pair test key resistance near 0.8370/0.8400. NZD/USD Europe applied bear pressure in their morning and NY did the same for most of their session. The pair sat near 0.7755 into NYs open and was hit right out of the gate. A low of 0.7713 was made and little bounce was seen as the pair lingered nearby late in the day. The pressure came from a combination of JPY strength pushing NZD/JPY below 90.80 and AUD/NZD maintaining it bull run as it threatened to break the January high. Adding to the bear view for NZD/USD was todays downside follow through after yesterdays bearish engulfing candle formed. Downward biased RSIs also add to the bearish tint. Should support near 0.7710 break bear immediately target the Jan 6 low at 0.7682. A continuation lower from there then puts the key 0.7600/20 support in play. If that big zone breaks the next major bear leg is likely under way. LATAM USD/MXN remains rangebound between the lower 21-d Bolli (14.5223) & the 21-DMA (14.7175). The peso has, for the most part, shrugged off weakness based on weak oil, holding in this pattern as oil continues to probe new lows. CFTC data indicates large short MXN positioning. Attempts to retrace December’s sharp rise have been thwarted by 14.54 near minor Fib support and the 21-d lower Bolli. A close below the lower Bolli opens the way for a move back toward 13.6770 the November highs. USD/CLP moved to highs by 620 as copper, as well as other industrial commodities, moved lower. Despite positive trade data out of China the selloff in commodities plunged copper to lows last seen in 2009. USD/BRL moved lower, the markets receptive to comments proffered by FinMin Levy regarding future steps to be taken to cure Brazil of its inflation, growth and fiscal ills. Levy commented that tax adjustments will be compatible w/the govts goal to increase savings and fiscal policy will aim to help the central bank battle inflation. USD/BRL is ending the session by 2.6400 just above lows of the day by 2.6300.
Posted on: Tue, 13 Jan 2015 20:59:07 +0000
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