HERE is the some of the market and this can help ot strengthen the forex mfarket.The strong performance by the German ZEW confidence indicators led the way to a slight shift in risk appetite yesterday, with a strong day for European equities providing the impetus for Wall St to register gains in the 1% region. A softer reading for US housing starts and building permits was a mild dampener and it may be significant that the S&P failed to regain the 1,000 handle again. The greenback was pulled this way and that – weaker initially after the ZEW data but rebounding back to mid-range by the close following the housing data. One more cloud was the weekly ABC consumer confidence numbers which were below expectations but above last week’s readings. It is still unclear whether they confirm or rebut last week’s Michigan sentiment data.The UK CPI data was a disaster for the MPC, rising 0.3% m/m on the core reading and remaining stubbornly high despite the deep recession the UK is experiencing. However, as John points out, the details show gains in computer games, DVDs, alcohol and tobacco as the main culprits – more a sign of a “stay-at-home” consumer rather than one that is actively out spending. Nevertheless, today’s BOE minutes will be scrutinized to see if inflation talk was on the agenda and, if so, what measures/implications were mentioned. It may be worthy to note that incoming MPC member Posen said yesterday that any tightening of monetary policy in the near-term would be a mistake – “I hope nobody (BOE included?) tightens credit any time in the near future. That would be premature”.The CHF grabbed some headlines overnight after SNB’s Jordan said that the central bank would not tolerate a rising CHF, but were content with the EURCHF at current levels (it’s been 1.50-1.54 for the past five months). In addition, he added that the Swiss recovery would likely lag behind its neighbours, adding that it was not yet time to step back from its unconventional measures.
Asia started this morning’s session with a better attitude to risk, hoping to extend the sentiment from Wall St. Indeed the Australian bourse was lifted by news that China had agreed an A$50 bln LNG contract with Australia last night, the largest single trade deal in Australia’s history. Australian trade officials were quick to assert that this was testament to strong trade relations between the two countries, despite the recent Rio Tinto headlines. However, by lunch the gains had been pared back and most bourses were back to flat or marginally in the red. EURUSD again looked a tad top-heavy above 1.4150 but managed to trigger stops above 1.4160 en-route to 1.4170, apparently disregarding a Telegraph article suggesting Germany is bracing itself for a second wave of credit crunch, and that the Economics Ministry and Bundesbank were drawing up plans for special measures in the event of such an occurrence. Nevertheless, the reversal in equities called a halt to the risk rally and most major pairings stalled below key resistance levels, notably the EUR still below 1.42 despite the stellar data yesterday.On the turn, GBP saw early aggressive selling which some linked to Asia focusing on reports in the Guardian and Telegraph that UK Opposition leader David Cameron had warned of the risks of a UK default on its debt. This story had been out late in the NY session and so others suggested the selling was more a case of a top fund booking profits and short-term speculators joining in.So, we head into Europe pretty much in limbo. With a relatively barren data slate on tap we will undoubtedly remains stock-watchers, though the particular bourse to monitor remains unclear. As mentioned above, the Bank of England minutes will probably attract the most attention closely followed by the CBI trends survey. German PPI and Euro-zone c/a balances and construction output also feature. North American data is limited to Canadian CPI and leading indicators and the weekly US MBA mortgage applications.
Asia started this morning’s session with a better attitude to risk, hoping to extend the sentiment from Wall St. Indeed the Australian bourse was lifted by news that China had agreed an A$50 bln LNG contract with Australia last night, the largest single trade deal in Australia’s history. Australian trade officials were quick to assert that this was testament to strong trade relations between the two countries, despite the recent Rio Tinto headlines. However, by lunch the gains had been pared back and most bourses were back to flat or marginally in the red. EURUSD again looked a tad top-heavy above 1.4150 but managed to trigger stops above 1.4160 en-route to 1.4170, apparently disregarding a Telegraph article suggesting Germany is bracing itself for a second wave of credit crunch, and that the Economics Ministry and Bundesbank were drawing up plans for special measures in the event of such an occurrence. Nevertheless, the reversal in equities called a halt to the risk rally and most major pairings stalled below key resistance levels, notably the EUR still below 1.42 despite the stellar data yesterday.On the turn, GBP saw early aggressive selling which some linked to Asia focusing on reports in the Guardian and Telegraph that UK Opposition leader David Cameron had warned of the risks of a UK default on its debt. This story had been out late in the NY session and so others suggested the selling was more a case of a top fund booking profits and short-term speculators joining in.So, we head into Europe pretty much in limbo. With a relatively barren data slate on tap we will undoubtedly remains stock-watchers, though the particular bourse to monitor remains unclear. As mentioned above, the Bank of England minutes will probably attract the most attention closely followed by the CBI trends survey. German PPI and Euro-zone c/a balances and construction output also feature. North American data is limited to Canadian CPI and leading indicators and the weekly US MBA mortgage applications.
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