Forex Morning Comments: attenzione al ritorno della propensione al rischio
In attesa che questa mattina prenda il via la prima asta di rifinanziamento illimitato alle banche da parte della Bce tutti i segnali sembrerebbero indicare una ripresa della propensione al rischio e una conseguente apertura positiva delle borse europee. Ancora incerta la somma totale che verrà presa a prestito dal sistema creditizio: le stime vanno da 300 a 600 miliardi di euro, con la possibilità più che concreta che le banche operino una sorta di carry trade andando a comperare titoli di Stato, mai così a buon prezzo sul mercato.
Il dubbio è che la soluzione passi per la porta della liquidità mentre dovrebbe assumere garanzie sul fronte della solvibilità e non si è ancora affrontato il tema della crescita. Eurodollaro in rimbalzo ma non oltre $1,3150 e fintantochè non si supererà questa soglia lo scenario rimane ribassista verso 1,2590; moneta unica ancora debole nei confronti della Sterlina rompendo al ribasso il supporto a 0.8370. Il ritorno degli acquisti sul mercato ha riportato il Dollaro Australiano a ritrovare per poi superare la parità con il biglietto verde a 1.01; legate invece alla pubblicazione dei dati sulla crescita del Pil attesa per domani le stime sul recupero del Dollaro Neozelandese.
FOREX MORNING COMMENTS
London – 20th December 2011
(Comments below have been provided by CMC Markets Analyst Brenda Kelly)
The bulk of investor and speculator interest will be fixed firmly on the Eurozone today as the ECB offers banks the first of its unlimited 3 year loans. The LTRO operation was described a ‘bazooka’ by Christian Noyer, Head of the Banque de France and is intended to loosen the credit squeeze, but mostly the crux of the idea is that banks will buy sovereign debt with the funds.
Nobody is able to predict how much of the funding will be utilised to buy up sovereign debt and there is a strong possibility that banks will for the most part take the cheap money as replacement for maturing existing funding. With expectations building that the take up will be extraordinary the range in the consensus is a gaping one. Many analysts expect a take up of approximately €300 billion and some are predicting as high as €600 billion.
We have already seen yields in the likes of the Spanish and Italian bonds decline and the markets will no doubt continue their rally from yesterday. However, the main stickler is that the ‘solution’ is assuming a liquidity problem, while the real issue of solvency and the lack of growth remains unaddressed once again.
With that in mind Italian Q3 GDP is expected to show that the economy contracted by 0.2% a slide of 0.5% from the previous 0.3% as austerity measures start to bite. In the UK, the balance between cutting public spending and delivering capital investment to spur growth continues to be daunting. The Public sector Net Borrowing figure is expected to show a disconcerting deficit of £15.5bn for November. With Moody’s ratings Agency issuing a stark warning that the British government needed to “stay on track” with its deep public spending cuts or risk a downgrade there may be worrying times ahead.
The Bank of England MPC minutes are also due and given that rates were unanimously kept on hold at the last rate review. The minutes are expected to show that the Bank, while mindful of concerns about growth, are in no hurry to pre-commit to further asset purchases in the short term, a point made recently by Spencer Dale the Bank’s chief economist.
Given these concerns about the deteriorating economy, not helped by the Eurozone crisis, investors will be looking for clues as to the timing of further QE. Evidence suggests we won’t see any commitment about that until early in the Q1 of next year.
Over in the US, hot on the heels of better than expected new housing starts data yesterday existing home sales are to have expected to risen 2.6%, up from 1.4% on October.
EURUSD – we saw the single currency break out to the upside yesterday, however it was unable to get beyond the 1.3150 area and as such the risk remains for further losses. The January lows at 1.2870 remain the main barrier to a move towards the August 2010 lows at 1.2590. Yesterday’s rather bullish daily candle seems to suggest limited downside in the near term and as such we could well see some range trading unfold now between the recent lows at 1.2950 and the 1.3150 and even possibly 1.3220.
GBPUSD – the break beyond the 1.5580/90 area was followed by a move towards the 1.5700 level, a break above which would target the 55 day MA at 1.5740 as well as this month’s high at 1.5780. A fall below 1.5580 and could target the longer term support of 1.5420 which is uptrend support from the 2010 lows at 1.4230. A move below 1.5390/1.5400 retargets the 1.5270 lows in October, and then 1.5190 the 61.8% retracement of the 1.4230/1.6745 up move.
EURGBP – the single currency continues to slide lower against the pound breaking below the recent lows at 0.8370 yesterday as it edges towards the 2011 lows at 0.8285 and ultimate target. The key resistance remains around the highs this week at 0.8425, and only a move beyond here would target a move back towards 0.8450 and even the 200 week MA at 0.8567.
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 78.50 from the 2007 highs at 124.15, on a break above the 78.30 level, intact. The 200 day MA at 79.10 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.
AUD RECLAIMS MANTLE ABOVE PARITY ON PLEASING NIGHT OF NUMBERS
(Comments below have been provided by CMC Markets Senior FX Dealer Tim Waterer)
Everything seemed to come up trumps for risk assets on Tuesday. A scenario which was warmly received by traders as evidenced by the 300+ point rally on the Dow Jones Index. Positive developments on both sides of ‘the pond’ provided welcome relief to financial markets which had been drooping bruised and battered towards year-end. In Europe, German Ifo data was surprisingly good as was the Spanish Bond Auction, whilst housing start figures in the US were on the ascent which was a pleasing result also.
With Tuesday’s economic data providing a breath of fresh air, the confidencesensitive Australian dollar reclaimed the mantle of parity against the Greenback. Not only that, but the bumper night on US equities had the AUDUSD rate knocking on the door of 1.01.
I expect some of the higher yielding currencies which ran higher overnight to consolidate gains today. Asian equity markets are looking quite strong which is helping to lock in overnight gains.
The AUDUSD will likely hover within a 40 pip range of 1.01 during Asian trading hours today until we see what appetite for risk that Europe and the US display tonight. Last night’s move will be a tough act to follow.
WEEK OF NZ ECONOMIC RELEASES
(Comments below have been provided by CMC Markets Sales Trader Andrew May)
Like a valiant boxer in a title fight, the NZD has fought almost 12 months in a spectacular financial turf war this year – battling to keep upright and stay above the USD 0.75c level. Although knocked down to 0.72c in March and recently on the ropes at just under 0.74c in November, there’s still some vigour left in the NZD yet. In a topsy turvy week of mixed data and unpredictable overseas fundamentals, risk appetite swung from pillar to post.
Finance ministers failed to agree on the 200billion EUR worth of additional loans to the IMF, Fitch ratings agency laying down the gauntlet in declaring an imminent ratings cut to France’s AAA credit status within 2 years and Italian 10 year bond yields were well over 7% .
The NZD also had to deal and with a barrage of mixed data on a domestic front. Credit card spending figures out today reflected that, post Rugby World Cup, New Zealanders are still spending – but not as much. We’re down -3.4% (month on month) for November, yet up 3.2% (year on year). This is a far cry from the 7.8% figure released for October. Today’s data release absolutely gob-smacked analysts.
The current account balance – which shows the flow of goods, services, income and transfer payments in and out of New Zealand expanded to a net deficit of NZD $4.6billion, which was way off the mark from a gregariously expected NZD $3.75billion.
That’s a massive 4.3% of GDP, worse than economists’ expectations of 3.9%. Overseas expenditure is exceeding New Zealand’s net earnings from overseas. Lower prices for goods exported vs higher overseas borrowing costs have exacerbated the Bottom line. This was instrumental in diary magnate Fonterra’s final milk powder auction for the year early this morning. It found prices fell for the first time in three sales to 1.16% to USD 3,589 a metric tonne.
Prices of commodities have declined quite considerably through much of December amid speculation global growth is faltering in the face of Europe’s debt crisis. This no doubt had an impact on the Current Account Balance sheet. Fonterra remained up-beat despite their prices having fallen 22% below their peak in March of this year which raised its forecast payout for farmers for the 2012 season. Fonterra cited we should see a modest recovery in prices over the next two months.
Third quarter NZ GDP figures are due out tomorrow morning. Economists have predicted expansion albeit slight. However could we be in for another ‘rude awakening tomorrow”?
With US GDP figures also due later this week , we may be in line for one last surprise. Seeing a figure above 2% could indicate the light at the end of the tunnel for an economy that for too long now has endured the wrath of its actions.