Forex Morning Comments: la crescita europea resta anemica, la Bce dovrebbe tenerne conto
Nessun cambiamento di rilievo nelle quotazioni dell’Eurodollaro con la resistenza di $1,4575 ancora da superare per poter puntare di nuovo ai massimi dell’anno: la preoccupazione maggiore rimane la crescita anemica dell’Eurozona e ciò dovrebbe portare la Bce ad una maggiore ragionevolezza circa l’opportunità di adottare ulteriori rialzi dei tassi, specialmente dopo gli ultimi dati sull’inflazione pubblicati la scorsa settimana in Francia e Italia.
Oggi le minute della Bank of England dovrebbero fornire un’indicazione circa la possibilità di allentare ulteriormente la politica monetaria, anche se le probabilità che ciò avvenga sono piuttosto scarse. Il Dollaro Australiano questa settimana si incanala nel range compreso tra 1.04 e 1.05 e, mentre il Franco Svizzero arretra in conseguenza della “crociata” svalutativa della Swiss National Bank, continua inarrestabile la corsa dell’Oro, che potrebbe presto raggiungere quota 1800 dollari.
FOREX MORNING COMMENTS
London – 17th August 2011
(Comments below have been provided by CMC Markets Analyst Michael Hewson)
The key takeaways from yesterday’s meeting between Merkel and Sarkozy was greater convergence of government, harmonisation of tax rates and a financial transaction tax, all profoundly disappointing, notwithstanding the difficulties of implementing such changes.
The tax harmonisation plan will not go down well with other EU countries, particularly Ireland where it has been a red line issue.
There was no talk about boosting the EFSF and no talk about euro bonds, all rather disappointing, but not altogether surprising, given the political obstacles against them. The biggest worry remains the lack of economic growth in Europe after yesterday’s Q2 GDP numbers showed that the economic slow down is now spreading to the core economies without exception.
German Q2 GDP eked out growth of 0.1% and yesterday’s failure to outline any clear measures to stimulate growth in the face of this Europe wide problem has got markets worried. The main concern is about where future growth will come from, if Germany as the main heartbeat and cash generator of Europe catches a cold.
Back in the UK yesterday’s CPI figures nudged higher on an annualised basis and could well push even higher, after the price rises from the power companies kick in this month.
Today’s Bank of England minutes could give indications as to whether any more MPC members join Adam Posen in calling for more QE in light of recent disappointing data. It is more likely that the status quo will remain given the inherent risks that further QE would bring in sterling devaluation and imported inflation.
UK Unemployment on the ILO measure is expected to remain constant at 7.7% while the change in jobless claims is expected to rise by 20k for July. Back in Europe Eurozone July CPI is expected to slip back on a monthly basis by 0.6%, but remain constant at 2.5% on an annualised basis.
The likelihood of further rate rises from the European Central Bank on this basis should be diminishing by the day on that basis, given that CPI was negative in both Italy and France last week, however one cannot be too careful where the ECB is concerned given their almost one eyed fixation on inflation. Nevertheless the time could well be fast approaching where the next move in rates could well be down, especially if growth shows no signs of re-establishing itself in Europe’s core economies.
US producer prices for July are expected to stay constant at 7% year on year and rise 0.1% month on month, up from June’s -0.4%.
EURUSD – nothing much has changed from this week’s moves with the resistance from the June highs at 1.4700 at 1.4475 holding for now. The market continues to trade within the broader 1.4000/1.4500 range, with the major resistance around the July highs at 1.4575/80. While these levels act as resistance it is hard to look for any evidence that the euro can re-test the highs of this year. The major support remains just above the 200 week MA at 1.4030 which remains a tough nut to crack.
There is also minor trend line support from the 1.3835 lows currently around the 1.4150 level.
GBPUSD – the pound continues to beat expectations on the back of significant dollar weakness. Having managed to hold above the 1.6250/60 area the pound has pushed on beyond the 1.6380 area and has hit trend line resistance at 1.6450 from the 1.6750 highs in April. Only a break above 1.6500 could tip the odds back for a move towards the highs of 1.6745. Back below 1.6220 retargets 1.6170 while the 200 day MA remains the key support at 1.6085/95, and a sustained break below could well target further losses.
EURGBP – the 0.8830 area and the 55 day MA are currently capping the upside here. It needs a daily close above this level to target higher levels, and a move towards 0.8900. The key support remains around the 200 day MA around 0.8660/70 and while below last weeks’ highs the potential remains for a move lower. A close below the 200 day MA has the potential to retarget the May lows at 0.8610 and ultimately the trend line support at 0.8545 from the 2010 lows at 0.8065.
USDJPY – no change in view here as US bond yields continue to remain weak. The risk remains for further losses but the market needs to take out the base that appears to be building up around the major lows around the 76.25/30 area. Any move below these key lows could well see further US dollar losses towards 74.50. Ten year US treasury yields continue to remain extremely stodgy and until these yields rally above 2.5% it is hard to see how the US dollar can rally at the moment. It really needs to rally beyond the 77.80 area to kick on towards the 55 day MA and bigger resistance level at 79.50/60. Once through the 79.50/60 area it then needs to kick on towards the trend line resistance at the 80.85 level.
AUD Wearing A Path In The 1.04-1.05 Range So Far This Week
(Comments below have been provided by CMC Markets Senior FX Dealer Tim Waterer)
A dismal German GDP print and an underwhelming outcome from the German and French leaders meeting gave the market little to get excited about. As a result the risk trade was out of favour again but mercifully we did not witness the selling of epic proportions which was on display last week. The fall on equities was much more measured, which meant that whilst currencies like the Euro and AUD were weaker the trading ranges were far narrower than seven days earlier.
The fact that the highly touted meeting of Merkel and Sarkozy produced nothing of any real substance was a little deflating. Whilst their rhetoric did not sound alarmist by any means, they still seem hesitant to think outside the box, as market hopes of an imminent Eurobond were effectively iced.
Gold continues to be bought with solid conviction, perhaps even more so now that the Swiss Franc has fallen a notch or two on the safe haven ‘wish list’ in light of the SNB’s crusade to devalue it. Depending on how US and European data fares for the rest of the week gold could be nudging US$1800 again sooner rather than later.
The AUDUSD rate has been wearing a path in the 1.04-1.05 range with the market in recovery mode after it almost needed life support last week. A decent effort on local stocks despite the weak offshore lead has the AUD hovering around 1.0450 in what can be described as subdued trading conditions.
Market Focuses On Index Wide Valuations
(Comments below have been provided by CMC Markets Institutional Equities Dealer David Barrett-Lennard)
The market has put in a very solid performance today, catching many unawares by its strength. We forward priced the UK and US yesterday, after we experienced some weakness yesterday with uncertainty ahead of last night’s date between French President Nicholas Sarkozy and German Chancellor Angela Merkel.
This uncertainty was enough for some investors to take profits off the table after the 8 odd percent rally of the last week. As an aside, it was a fairly uneventful outcome and does little to boost confidence in the state, or immediate future, of the Eurozone However, our market has managed to focus on index wide valuations as well as some ongoing support from company specific results – Brambles and Dexus being a couple of the highlights today.
There was also talk of a large buy portfolio in heavy-weight names that helped buoy the market today. With heavyweight sector banks and resources leading the way, but also supported by consumer staples sector – unusual for a defensive sector on an up day-Many fund managers are busy digesting earnings results and it has been a particularly quiet day on the desk here, nevertheless market turnover has been in line with the last few days – again supportive of speculation that a large offshore buy portfolio was around.
Some analysts have been speculating that the mid August market event and downgrade of the US rating has marked a turning point for the Australian market. It has acted to focus attention back on our economy and the relative and fundamental soundness we are in as a result of our exposure to Asia, in conjunction with a diversification away from US based assets at the global allocation level.
Another solid day in the SPI market today with 45k traded at time of writing. During this rally of the last week, we have observed the cash market playing a degree of catch up with the SPI on occasions, and there has even been talk that the PBOC may have even been using the futures contract to gain exposure to our equity market during the rally last week.
The cash may have led us higher today with talk of the buy portfolio, but the SPI hitting 4300 at about 3 O’clock, has marked the high of the day at time of writing.
The index remains just below the pre-capitulation levels of around 4350, and if we can crawl back to around the 4400-4500, then we may unfortunately return to looking for direction from ongoing macro events from the EU, US and China. This is in contrast to the last week during which we have been standing on our own two feet based on forward looking valuations of our own market.