Forex Morning Comments: l’intervento coordinato delle banche centrali mette le ali alle risk-currencies
Previsioni di apertura positiva oggi per i mercati azionari, galvanizzati dall’estensione di liquidità offerta ieri dalle maggiori banche centrali del mondo, che permette agli istituti centrali di fornire credito in valute diverse dal dollaro Usa. Questa decisione, avvenuta in parallelo a quella cinese di tagliare di 50 bp le riserve bancarie richieste, ha contribuito a mettere le ali ai mercati asiatici e alle cosiddette risk-currencies: l’Euro è tornato a $1,3540, pur tuttavia, nonostante si apra ora la possibilità di un ulteriore rafforzamento a 1,3620, riteniamo che lo scenario ribassista con target 1,30 sia comunque il più probabile nel medio periodo.
Dollaro Australiano da 99 cent a 1.03 contro il biglietto verde nello spazio di 24 ore riflette un trading furioso e sincopato di quegli investitori che sono stati colti alla sprovvista dal newsfloor migliore delle attese. Per quanto ci riguarda, riteniamo che in Europa i problemi siano tutt’altro che risolti, che il rafforzamento della moneta unica non farà che peggiorare le condizioni competitive dei Paesi periferici e servirà ai policy makers ad ottenere un surplus di tempo per accordarsi su una soluzione definitiva. Oggi il focus dei mercati rimane la Francia, che subisce l’intensificarsi delle indiscrezioni circa un possibile downgrade e che oggi deve collocare in asta titoli per 4 miliardi e mezzo di euro.
FOREX MORNING COMMENTS
London – 1st December 2011
(Comments below have been provided by CMC Markets Analyst Michael Hewson)
It’s another packed calendar today after yesterday’s central bank induced surge higher sent the bears scurrying back to their caves to lick their wounds, and in the process sent the euro and stock markets soaring. The key question is does it fix the underlying problems within Europe? No it doesn’t.
For a start it makes it much more difficult for peripheral Europe to recover competitiveness due to the stronger euro. It does however buy European leaders more time, so let’s hope they use it wisely and don’t waste it, but I’m not holding my breath.
In Europe we have the final manufacturing PMI data for November for France, Italy, Germany and the Eurozone and they are expected to confirm that the measures in each country are firmly in recession territory. Last night another bank downgraded its growth forecast for Europe, with Goldman Sachs revising their 2012 outlook to -0.8% from 0.1%.
The French economy is of most concern to markets given its position as Europe’s second largest economy, over fears of a possible ratings downgrade.
Last night one of the smallest ratings agency’s Egan Jones started the ball rolling by downgrading France’s rating one notch citing the country’s fiscal situation which was in a “disastrous trend, and the worst has yet to come.” Given the talk earlier this week about a possible downgrade from S&P apprehension remains about the sustainability of France’s three A’s.
With French 10 year yields around 3.40% the last thing France needs is for their borrowing to become more expensive as a result of a rating downgrade and today it has a bond auction where it hopes to sell 2017, 2021, 2026 and 2041 bonds totalling €4.5bn in a key test of investor confidence.
French President Nicolas Sarkozy is also expected to announce proposals on EU Treaty changes on fiscal responsibility in Toulon today which will focus on penalties to ensure greater fiscal discipline.
Spain is also hoping to sell 2015, 2016 and 2017 bonds totalling €3.75bn. Meanwhile in Greece the Greek public sector union Adedy is holding a general strike, protesting at further austerity measures.
In the UK the state of the economy is also expected to come under scrutiny with the release of the November manufacturing PMI in the wake of this weeks OECD growth downgrades and the prognosis isn’t that optimistic after this week’s rather grim autumn statement. Manufacturing PMI is expected to slip back further from 47.4 to 47.0.
In the US yesterday’s blow out ADP number helped markets rally strongly yesterday while the Fed beige book of economic activity showed that the US economy continued to recover moderately in 11 out of 12 districts, driven mainly by manufacturing and consumer spending.
Today’s weekly jobless figures are expected to show claims remaining constant around the 390k level, while the ISM manufacturing will be closely watched to see if it shows the same level of bounce back that we’ve seen from the consumer confidence numbers, and Chicago manufacturing earlier this week.
The strong Chicago figure yesterday makes it all the more puzzling why Chicago Fed Dudley seems so minded towards more QE. Expectations are for an increase in ISM from October’s 50.8 to 51.5, but it wouldn’t surprise if it actually came in higher.
EURUSD – yesterday’s sustained push above 1.3420 saw the single currency surge back towards last weeks highs at 1.3570, making a high of 1.3540 in the process. This unexpected rebound higher rather complicates the downward move but doesn’t negate it. While we could well see a move towards 1.3620, such a move would not derail a move lower towards the 1.3050 level. The objective remains for a retest of the lows in October at 1.3150 on the way to the 1.3050 level, which is the 61.8% retracement level of the 1.1880/1.4940 up move. A break here would then target this year’s low at 1.2870.
GBPUSD – yesterday saw the pound break above the 1.5720 level and hit 1.5780 in the process. Having seen this strong move unfold it would not be within the realms of possibility to see a move towards 1.5825 and even 1.5900. The pound now needs to hold above 1.5620 for this move to unfold otherwise we could well see a sharp move back towards 1.5520.
EURGBP – the single currency remains range bound between the broader resistance at last weeks highs and resistance at the 0.8650/70 area and 55 week MA. As such while below these highs the odds continue to favour a move back towards last weeks lows and a break below the 200 week MA, on the way to further sterling gains towards 0.8450. There is also trend line support at 0.8380 from the October 2008 lows at 0.7695. A move above 0.8670 retargets a move towards 0.8730.
USDJPY – yesterday’s sell-off keeps the scenario for further gains intact while above the 77.20/30 area. The main target remains for a move towards trend line resistance at 79.00 from the 2007 highs at 124.15. Only below 77.20/30 area would undermine this scenario, and risk a move lower that would see the next key support area around the 76.20/30 area, a break below of which opens up the lows at 75.30.
BANKS LEAD LOCAL MARKET AS TALK OF CREDIT FREEZE ABATES
(Comments below have been provided by CMC Markets Sales Trader Ben Taylor)
The Australian market has rocketed higher today after rumours and speculation turned into action last night as the world’s major central banks acted in unison to provide US dollar liquidity to European banks. The idea to lower the cost of existing dollar swap lines by 50 basis points as well as other bi-lateral swap arrangements has effectively enabled central banks to provide liquidity in other currencies.
Another move which had our market excited today was China’s decision to cut its reserve requirement for its commercial banks by 50 basis points. The move has the Chinese markets moving sharply higher and has helped to push Australian assets leveraged to growth in China along with it.
The fact that all the six central banks acted in unison is what has this market excited today. Whilst the underlying issues are still present, the measures should give policy makers additional time to design a plan to help weave through the debt crisis.
The banks are among the best performers today following on from US and European leads as talk of credit freeze abates. BHP and RIO also put on impressive performances today after USD falls and rallies in risk currencies sent metals higher.
The Australian dollar has taken off on the concerted effort by global central banks, better than expected US data and the Chinese announcement to cut its reserve requirements for its commercial banks. The moves launched risk currencies higher as traders furiously bought into a rising market, in a mad panic to get set. The Aussie dollar moved from lows of around US 99.40 on the news to around 103.30.
The market was also awoken by a decent jump in US ADP job numbers. 206,000 jobs were created in November, and this number is welcome in the States where they are desperately trying to lower their unemployment numbers and should provide welcome relief for Friday’s non farm payroll number.
Our market failed to be deterred by woeful retail sales and building approval numbers today. The retail sales result shows that consumers are in two minds over their financial wellbeing. Our politicians are saying we are healthy and the outside world is talking Armageddon – it’s easy to see why consumers seem confused as both arguments ring hot in their ears.
Building approvals also slumped today as Australia’s high cost homes remains a rich man’s dream.