Forex Morning Comments: l’eurodollaro verso 1,2590
Con i primi segnali di divisione all’interno dei 26 Paesi che hanno firmato i nuovi accordi europei la scorsa settimana il termine fiscal compact non potrebbe essere più inappropriato. La prognosi per la zona euro non fa che peggiorare dopo il downgrade di un gruppo di banche da parte di Fitch e con la spada di Damocle del taglio del rating sul debito di Parigi: uno scenario ribassista che ha visto l’Euro tornare sui minimi di gennaio a $1,2950 e che lo proietta verso 1,2590 , specie qualora un eventuale rimbalzo non dovesse riportare i livelli sopra 1,3150.
Orientamento verso 0,7695 anche nei confronti della Sterlina, mentre il Dollaro si rafforza su quasi tutte le monete sfruttando il suo status di bene rifugio di ultima istanza, dopo che anche l’oro ha ceduto il passo sotto i 1600 dollari.
Oggi il bollettino mensile della Bce non dovrebbe riservare grosse sorprese e nel migliore dei casi potremmo avere qualche indicazioni circa le mosse di politica monetaria per il prossimo anno. Pressioni crescenti anche sulla banca centrale svizzera affinchè riveda al rialzo il peg Franco-Euro sopra 1,20, specialmente qualora il dato sulla produzione industriale dovesse attestare un calo dello 0,3%. Gli ultimi commenti da parte dei policymakers europei hanno tolto ogni speranza circa la possibilità che la Bce possa stampare moneta a breve termine: una presa d’atto che ha immediatamente generato una forte domanda di asset denominati in dollari e la vendita conseguente delle attività che incorporano un rischio maggiore. Anche sui mercati australiano e orientale ciò si è tradotto in flussi in uscita dal settore delle materie prime ed energetico poichè la risalita dei prezzi dei bond Usa mostra chiaramente come i trader si stiano preparando ad una recessione. L’impressione è che non ci siano più safe-haven dove ripararsi al momento con l’oro in ritirata e i T-bond con i rendimenti attuali che non offrono un rendimento plausibile. Da ultimo, la conferma che la Cina sia in una fase di contrazione della produzione manifatturiera non fa che aggiungere ulteriori ombre al quadro.
FOREX MORNING COMMENTS
London – 15th December 2011
(Comments below have been provided by CMC Markets Analyst Michael Hewson)
With cracks starting to appear in Friday’s fiscal compact the agreement could not be more badly named because it is anything but. This has seen investors finally lose confidence and seen the single currency break below 1.3000 to trade just above the highs of this year.
With ratings agency Fitch downgrading a host of European banks last night, the prognosis continues to go from bad to worse, with Credit Agricole downgraded one notch to “A+”.
Today’s economic data is unlikely to improve sentiment much either with the release of preliminary December services and manufacturing PMI for France, Germany and the Eurozone.
European PMI’s will be the name of the game this morning with France and Germany releasing at 8.00 and 8.30am respectively and the all European due at 9.00am. France’s manufacturing PMI is expected to come in at 47.1 down from last months 47.3 while the French service PMI may contract from 49.6 to 49.1 The only country with services PMI data in expansionary territory, and just barely at that, is Germany coming in last month with a paltry but better than expected 50.3. Even this level is expected to taper off slightly to 50.1.
The German Manufacturing PMI is expected to see greater contraction towards 47.6.
Spain will attempt to sell €3.5bn of bonds maturing in 2016, 2020, and 2021 today. Against the backdrop of Italy’s 5 year bond yield hitting record levels yesterday and the report from Ernst and Young suggesting the possibility of a euro break up it almost feels masochistic but investor focus will be very firmly trained on the yields and bid to cover figures.
The ECB monthly bulletin shouldn’t offer too many surprises given that the rate cut last week was all but priced in. We may see some clues as to what the ECB may have in store for us next year in respect of future rate movements. On the subject of price stability, the Eurozone CPI is expected to be confirmed at 3%, far removed from the Trichet target of 2%- while core CPI is expected to come in at 1.6%.
The economic data outside of the Europe bloc isn’t much better with UK data similarly poor with unemployment continuing to rise yesterday to a 17 year high, while the release of November retail sales looks set to offer a sombre outlook as we head into Christmas. Expectations are for a slide of 0.4% partially reversing October’s 0.6% rise.
The Bank of England is also expected to release the latest inflation expectations outlook for the next 12 months in conjunction with Gfk and the previous figure came in at 4.2%. The hope is that today’s expectations figure will have dropped back. CBI Industrial orders are expected to complete the bleak outlook with the December figure set to slip back slightly to -20 from -19.
Despite the bleak data the pound has held up quite well though, trading at 9 month highs against a basket of currencies, though that largely be put down to the fact that it isn’t the euro.
In Switzerland, pressure on the Swiss National bank to raise the peg will no doubt increase at their monthly rate meeting today, especially if Q3 industrial production comes in as expected. Expectations are for a decline of 0.3%, down from 3.6% on the previous reading. The bank is expected to leave the peg unchanged at 1.20 and leave rates at 0%.
Over in the US the economic docket is similarly heavy on data highlighted by last month’s producer prices, weekly jobless claims, industrial production, and the December Philly Fed survey.
The weekly jobless claims are expected to see a slight up tick from last week’s 381,000 to 390,000 following what could be deemed as temporarily inflated employment numbers in the wake of Black Friday. The key 400,000 level still remains intact however, so the barring any real surprises this shouldn’t act as a major market mover this time round.
Producer prices are expected to stay at 5.9% y/y, with 0.2% expected in the month on month figure a slight improvement on the previous 0.3% m/m. Softening in industrial production is expected with a figure of 0.2% the consensus estimated. Later this afternoon, the December Philly Fed should see improvement to 5.0 from November’s 3.6.
EURUSD – while we did get a pullback yesterday it was only as far as 1.3070 and the single currency hit a low of 1.2950, falling just shy of the January lows at 1.2870. Having closed below 1.3050 the onus continues to favour further downside and only a move beyond 1.3150 would change that. The next key level remains at 1.2870 and a break here would then target 1.2590 the August 2010 lows.
GBPUSD – yesterday’s cable declines managed to hold above the longer term support from the 2010 lows at 1.4230 which comes in at 1.5405.A move below 1.5400 retargets the 1.5270 lows in October, and then 1.5190 61.8% retracement of the 1.4230/1.6745 up move.
Pullbacks should find resistance around the 1.5530 area, while the larger resistance levels remains at the 55 day MA at 1.5740 as well as this month’s high at 1.5780. Only a break above here targets 1.5825 and 1.5900.
EURGBP – despite a move below long term trend line support at 0.8390 from the October 2008 lows at 0.7695, the market closed above it. It does seem only a matter of time before the line breaks but we must be prepared for pullbacks. We could still see a squeeze back towards 0.8450 and even the 200 week MA at 0.8567 but the 2011 lows at 0.8285 remain the ultimate target.
USDJPY – the US dollar continues to hold above the 77.20/30 level and 55 day MA area and this keeps the likelihood of a rally towards trend line resistance at 78.80 from the 2007 highs at 124.15, on a break above the 78.30 level, intact. The 200 day MA at 79.15 is the key long term resistance. Only below the 55 day MA 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.
RISK APPETITE OUT THE WINDOW
(Comments below have been provided by CMC Markets Sales Trader Ben Taylor)
Comments made by European policy makers overnight have slayed hopes that the ECB will turn on the printing press any time soon, this development is ensuring a strong demand for the relative safety of US debt and the sale of risk assets.
Our markets have reacted to the strong risk off environment with traders piling into Euro dollar short positions as the European debt problems escalate. The rise in US dollars is sending commodities sharply lower and we have seen a large sell off today across the energy and materials sector.
Risk appetite has flown out the window; the rise in US bond prices is showing traders are readying themselves for a European recession.
Ongoing debt concerns and the potential of a France sovereign downgrade are adding weight to today’s selloff. There is a feeling that there is nowhere to hide at the moment, the once safe haven of gold has been hijacked in US dollar strength, US bonds give you little to no real return and equity markets are quickly losing their appeal for super accounts.
The big four banks have also coming under selling pressure following an announcement that Fitch has downgraded five major European commercial banks and banking groups.
I think anyone expecting a Santa rally will be sorely mistaken. This market has the feeling that it is looking to drop, the break in the S&P 500 50 day moving average is a concern and something that the technical guys will be watching closely.
Today’s HSBC Flash Chinese manufacturing numbers at 49 shows that China remains in a contractionary manufacturing environment and has done little to hold the markets confidence over the day.