Forex Morning Comments: l’Italia riuscirà ad imporre il suo piano di salvataggio?
Forex Morning Comments a cura di Michael Hewson (Senior Market Analyst) e Tim Waterer (Senior Trader) di CMC Markets.
La seduta di oggi ruota intorno alle risposte che verranno fornite in merito a due quesiti-chiave pe determinare l’andamento dei mercati nel medio termine: riuscirà l’Italia a imporre alla Germania il suo piano di salvataggio dell’Euro utilizzando i veicoli EFSF e ESM nell’acquisto dei titoli di Stato dei Paesi in sofferenza? La situazione macro americana è tale da convincere la maggioranza del FOMC ad adottare un ulteriore livello di Quantitative Easing?
L’attendismo degli investitori potrebbe dunque essere di breve respiro: da una parte la decisione di LCH Clearnet di innalzare i margini richiesti sui titoli spagnoli ne ha aumentato ulteriormente l’onerosità e rende più urgente trovare una soluzione, dall’altra la Fed ha ben presente che una mancanza di azione in questo momento non farebbe che aumentare il nervosismo sui mercati e ridare fiato alle quotazioni del Dollaro e di tutti gli altri safe-haven deprimendo ulteriormente le spinte in acquisto dei mercati. Alternativamente, la ripresa dell’Operazione Twist vedrebbe disfarsi le posizioni lunghe in dollari e aumentare i trade su Euro e Dollaro Australiano, tra gli altri, che potrebbe in questo caso raggiungere 1,03 già a partire dalla prossima settimana.
I mercati asiatici questa mattina sembrano scontare questo scenario di “lieto fine” mentre anche la BoE potrebbe annunciare un nuovo QE a partire da luglio. In questo scenario si rafforzano le posizioni di breve rialziste dell’Eurodollaro: finchè non si viola al ribasso $1,2550, la moneta unica resta suscettibile di ricoperture fino a 1,2820. Nessuna nota di rilievo sul cambio DollaroYen in attesa delle decisioni della Fed.
Germany denies bailout fund bond plans, while UK awaits BOE minutes
(Comments below have been provided by CMC Markets Senior Market Analyst Michael Hewson)
In Europe there appears to be some uncertainty about a proposal by Italy that the EU rescue funds of the EFSF and ESM should start buying the bonds of distressed EU countries, in place of the ECB. There certainly needs to be some plan since LCH Clearnet last night raised the margins on Spanish bonds, making it more expensive to trade in them. There certainly needs to be some plan but whether this is it remains to be seen. Reports that Germany is in favour of the proposals was flatly denied by German officials who stated that this was not true, and that the ideas were one of many proposals due to be discussed at the forthcoming EU finance ministers meeting on 21st and 22nd June.
If agreement is reached on such a measure this would help drive the currently elevated bond yields of the affected countries lower and ease the pressure and thus ease borrowing costs. The EFSF already has the power to do this, as it was given it last year, but any decision to do so is subject to strict conditionality. There is also the subject of where the EFSF and ESM, which doesn’t exist yet, intend to raise the amount of money needed to carry out this plan, if it goes ahead.
In the UK the bigger than expected fall in CPI inflation yesterday has raised expectations that the Bank of England could well be minded to embark on further easing measures when it next meets in July. There was some surprise that the bank didn’t ease at its June meeting, given how poor recent economic data has been, but it was probably felt that the MPC needed to see more evidence that price pressures were continuing to ease.
The recent sharp falls in oil prices has certainly helped the CPI numbers in that regard, and today’s Bank of England minutes are expected to show how finely balanced this months decision to leave policy unchanged was. Given last week’s comments by the Bank Governor at the Mansion House dinner last week the expectation is that the decision earlier this month may well have been quite close. Today’s publication of the latest minutes will show us how close, and whether the odds of further easing, on top of the recent policy initiatives last week, have increased. The voting patterns will be of particular interest given that only David Miles voted for more QE the last time. Did others join him in voting for more QE and did Adam Posen change his vote back after admitting that he might have erred, in changing his position earlier this year.
At around the same time the latest ILO unemployment numbers for April are expected to come in unchanged at 8.2% while May jobless claims are expected to decline further by 3.7k. Three month average earnings, on the other hand, are expected to nudge up from 0.6% to 0.8%, a slight relief but no comfort to consumers weighed down by an inflation rate over three times higher.
EURUSD – the single currency is having trouble breaking below the trend line support at 1.2550 from the lows this year at 1.2290. Until we break below here the euro will remain susceptible to short covering. The current rebound could take us to 1.2820, but until the euro is able to get back above these levels the focus remains to the downside. A break of the trend line support from the 1.2290 lows at 1.2545 is likely to open up a move back towards the next support at 1.2430/40. The primary objective still remains the 2010 post first Greek bailout lows at 1.1880, but we could see a bit of a short squeeze first.
GBPUSD – the pound had a go at pushing through both sides of the range yesterday, finding support just above the 1.5600 area, while also failing to close above the 200 day MA at 1.5755. These are the two key levels that will determine the next move in the cable. A slide back below 1.5620 could well see the pound slide back towards the 1.5470/80 area. Only a break above 1.5755, the 200 day MA and through 1.5780 targets 1.5910 which would be the 61.8% retracement of the same move. Support now lies at the 1.5610/20 area. The key support remains between 1.5230 and 1.5260 and lows for the last nine months which if broken could well see a sell-off on a break of this level towards 1.4950.
EURGBP – still in the range here after yesterday’s rebound from the 0.8020 level while the 55 day MA continues to cap on the topside. The key resistance remains at this months highs at 0.8150 and is the main obstacle to a move towards 0.8200, the trend line resistance from the 0.8830 highs last November. On the downside there is trend line support from the recent lows at 0.7950, at the 0.8000 level which continues tocould limit the downside here. If we break below the recent lows at 0.7950 then we could well be set for the move towards 0.7845 and the November 2008 lows.
USDJPY – not much to add here as the key levels continue to lie either side of the cloud extremities at 80.40 on the upside and 77.90 on the downside. Hopefully today’s decision about further Fed QE will give some direction. The US dollar continues to hold above the 200 day MA for now which remains a positive sign, but a close back below shifts the focus to a much more negative stance. Only a weekly close above the 80.42 cloud resistance line would suggest a stabilisation in the dollar towards 82.00.
Financial markets banking on FOMC to come to the party
(Comments below have been provided by CMC Markets Senior Trader Tim Waterer)
The mood of financial markets has swung into more favourable territory, however the large dependence on the FOMC to ‘come to the party’ with more monetary easing adds a sizeable layer of fragility to the recent rebound. As such, we could be looking at a pretty decisive move one way or the other when the FOMC makes their statement. An extension of Operation Twist or a brand new asset purchase program would see an unwinding of US Dollar long positions, however a defiant stand by the Fed to stick with the status quo would see the Greenback soar.
When the FOMC announce their game plan going forward for the economy, it is the US Dollar reaction to this that will set the tone for the broader market, with the likes of gold, oil and the Euro all set to take their cues from the directional move in the Dollar. The better sentiment prevailing in the market has the Australian Dollar poised to run higher over coming weeks should the FOMC announce easing measures. Such a move would appease the market and have traders once again on the search for yield, with the AUD offering plenty of attraction in that regard.
Also, in light of the RBA minutes suggesting that they are in no hurry to cut rates again we could conceivably see the AUDUSD rate back at 1.03 next week if equity markets continue to march higher. However if Spanish yields flare up again it could be a different story in which case staying above parity would be an achievement in the short term.
Share markets across Asia today were mostly on the advance due to the prevailing train of thought being that the FOMC will deliver the goods with stimulus measures. While traders want to be ‘on board’ should the market take off in coming days on any FOMC action, the downside risk should not be ignored in case the committee does not give the market the quantitative easing which it so openly desires. The phrase ‘spit the dummy’ could be given new meaning if the FOMC statement is devoid of easing measures.
The Australian market curtailed its enthusiasm in afternoon trade, with traders being mindful of not setting themselves up too much for a fall if the FOMC disappoint the market. Financials and energy stocks performed quite well courtesy of the strong leads we received from offshore, however overall it was quite a mundane performance on the index. The reserved trading fashion on our market today was reflective of how important the FOMC statement shapes regarding direction for the market over the short term. I would expect tomorrow’s trading activity to have greater conviction once we know where the US sits in regards to QE3 or an equivalent measure.