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Selling of JPY crosses catches second wind

Sean Lee — Thu, 18 Mar 2010 05:13:35 +0000

Typical, within seconds of my pressing submit on my session ranges, the JPY crosses get hit by another wave of selling. EUR/USD has made a new intraday low at 1.3690, cable at 1.5280 and EUR/JPY at 123.45.

US PRESS: The NY Times says that across Europe, from.

Market News International — Thu, 18 Mar 2010 05:10:49 +0000

US PRESS: The NY Times says that across Europe, from profligate Greece
to newly strait-laced Ireland, countries are promising deep, painful
cuts in public spending even as they face the likelihood of a new
recession. To protect the value of the euro, satisfy investors and
appease Europe’s economic taskmaster, Germany, the regions most heavily
indebted nations consider that they have no choice but to slim down, the
paper says.

Asian FX market wrap: quiet consolidation of overnight moves

Sean Lee — Thu, 18 Mar 2010 05:05:55 +0000

Once again repatriation flows at Tokyo fix were the only highlight of a quiet session
Reuters Tankan survey suggests increased optimism among Japanese corporates
Increasing disquiet over European austerity measures
Regional stockmarkets flat on the session

Once again there has been very little to report from a quiet Asian session. Some JPY-buying flows around the time of the Tokyo fixing saw the JPY crosses dip but the volumes were not large enough to cause any lingering effect and most currency pairs will end the session close to where they started.

USD/JPY opened around 90.40, fell to 90.15 when the JPY buying was at its strongest, but has since recovered most of these small losses. Corporate sell orders at 91.10/20 are still live but much of the selling has already been done and the pressure should ease by mid next week. Ranges: USD/JPY 90.15/45, EUR/JPY 123.66/124.28.

The AUD/USD had hoped for a more exciting day after a bullish close in NY above it’s recent consolidation range but the follow through has been negligible here today. Range: .9210/42.

Cable slipped from its NY closing level at 1.5320 when some GBP/JPY flows hit the market but it has managed to claw back most of those losses. There have been no major sterling-related announcements and order books are light 100 pips either side of the market. Ranges: Cable 1.5290/1.5324, EUR/GBP .8957/73

The EUR has again been quiet in Asia despite increasing reports of major differences of opinion between the EU partners. It looks a bit like Germany versus the rest. EUR/USD range 1.3713/42.

Markets: Nikkei -0.25%, Kospi -0.1%, HK +0.1%. Gold steady at $1123/oz.

UK press takes a breather on sterling-bashing

Sean Lee — Thu, 18 Mar 2010 04:36:53 +0000

Unless I’ve missed something, it seems that London dealers will be getting off their commuter trains without an overly bearish GBP mindset. The UK press is concentrating on the upcoming election and on European woes. I have short term technical support/resistance levels in the cable at 1.5275/1.5380 with 1.5180/1.5425 outside of there.

UK PRESS: Angela Merkel has challenged Gordon Brown..

Market News International — Thu, 18 Mar 2010 04:25:28 +0000

UK PRESS: Angela Merkel has challenged Gordon Brown to drop his
objections to European regulation of the hedge fund and private equity
industry, the FT reports. The German chancellor called for greater
progress in agreeing new financial regulations at an international
level, and singled out UK opposition to the proposed European Union
hedge fund directive, the paper says.

Reuters Tankan survey shows increased optimism among Japanese corporates

Sean Lee — Thu, 18 Mar 2010 04:03:48 +0000

The most watched event on the Japanese economic calendar is the quarterly Tankan report and today’s release of the Reuters mini-Tankan suggests that next months BoJ Tankan will show a marked improvement in business confidence. Longer term JGB yields are on the rise as this and the spilt vote yesterday suggest that there will be no more policy easing in the months ahead. The JPY remains close to its session highs against the other major currencies.

CHINA: The People’s Bank of China and China Banking..

Market News International — Thu, 18 Mar 2010 03:55:41 +0000

CHINA: The People’s Bank of China and China Banking Regulatory
Commission have told banks to stop extending loans to developers who
hoard land, the China Securities Journal reports. It said that banks
were issued with a joint requirement on February 22 and cited a source
who was not identified. The report also said that commercial banks and
financial institutions should start a “loan pressure test” for
developers to reinforce their risk management standards, though no
further details were provided. Financial institutions should also play a
role in stopping the speculative purchases of houses, the report said.

UK PRESS: UK businessmen want immediate cuts in and..

Market News International — Thu, 18 Mar 2010 03:40:49 +0000

UK PRESS: UK businessmen want immediate cuts in public spending and
believe the Conservatives have better economic policies than Labour,
according to an eve-of-Budget survey for The Independent. The ComRes
poll of 185 business leaders will increase the pressure on Alistair
Darling to announce detailed cuts in next week’s Budget, the paper says.
Only 28 per cent support the Chancellor’s view that immediate cuts would
jeopardise economic recovery, while 72 per cent endorse the Tory
Opposition’s call for cuts to start this year to reduce Britain’s
stg 178bn public deficit.

Quick look at the order books

Sean Lee — Thu, 18 Mar 2010 03:40:47 +0000

USD/JPY: corporate sellers 91.10/20; trader stops below 89.75
AUD/USD: light corporate buying .9200; talk of heavy offers .9250/60; market wary of RBA interest at .9325
EUR/USD: Sovereign selling 1.3825/50

UK PRESS: Thousands more British Airways passengers..

Market News International — Thu, 18 Mar 2010 03:25:52 +0000

UK PRESS: Thousands more British Airways passengers will be able to fly
during a three-day strike due to start on Saturday as growing numbers of
cabin crew call in offering to work, the airline says, the FT reports.

CHINA: China needs to increase the flexibility of….

Market News International — Thu, 18 Mar 2010 03:25:46 +0000

CHINA: China needs to increase the flexibility of the yuan exchange rate
and make more efforts to rebalance its economy, U.S. Ambassador to China
Jon Huntsman said to students at China’s elite Tsinghua University in
what the embassy here pitched as a “major” speech on the bilateral
relationship. He acknowledged that the U.S. also needs to make more
progress on its economic rebalancing, including higher savings, lower
consumption and increased exports.

Chinese internal demand increasing rapidly- anecdotal evidence

Sean Lee — Thu, 18 Mar 2010 03:20:00 +0000

I had a chat this morning with an old friend of mine who is in the rag trade; he owns a garment production factory in Vietnam. He says that the clothing industry has changed out of sight, even in the last 3 months. Chinese factories are now turning away business from wholesalers in the US and Europe because they can fill their capacity locally within China and at improved rates. This has increased the demand on suppliers outside of China and has driven prices (and wages) up by as much as 20%. It seems that the days when western consumers could expect to have access to cheap clothing because someone somewhere was willing to work for $1 a day are soon to be a thing of the past.

It is this internal Chinese growth which is driving the incredible demand for capital and it is why the Chinese authorities are so keen to rein in new bank lending. It may be a bubble as Andy Xie consistently tells us, but it could be another 5 years before it bursts.

USD/JPY: always looks heavy in Asia

Sean Lee — Thu, 18 Mar 2010 02:57:44 +0000

We’ve had the same price action every day for the last two weeks it seems like. USD/JPY falls for most of the Asian session, steadies, then makes it’s daily session high around the NY open and then returns to its opening levels again. It doesn’t look as if today will be any different (famous last words).

European austerity measures meeting increasing dissent

Sean Lee — Thu, 18 Mar 2010 02:41:52 +0000

The financial markets as an entity see debt reduction as the only solution for Europe’s over-spenders but this takes no account of the toll such measures will have on individuals who lose jobs or benefits. Germany, with its trade surplus and strong saving mentality, also sees debt as the main problem but they may have to ease their demands on their near neighbours. This report is from the NY Times.

CHINA: Traders say China PBOC selling 3-month paper..

Market News International — Thu, 18 Mar 2010 02:25:52 +0000

CHINA: Traders say China PBOC selling 3-month paper at unchanged yield.

Around the markets: regional bourses flat, gold steady

Sean Lee — Thu, 18 Mar 2010 02:09:42 +0000

The Nikkei is -0.15% and the Kospi is +0.15%. Gold is steady at $1123/oz after retreating overnight when it failed to test important resistance levels towards $1140. The JPY buying around the Tokyo fix now looks to have been soaked up by the market and the JPY crosses have bounced back a little albeit in very quiet trade.

We could “enjoy” these types of markets for another 12 months

Sean Lee — Thu, 18 Mar 2010 01:38:03 +0000

I’m thinking that we may need to adjust our trading styles to these present choppy markets and that we may be in a phase which lasts for 12 months or more. It’s difficult to see any major trend arising in the EUR, GBP, JPY or USD (barring a Greek tragedy) and I think we should be looking to make 400/500 pips maximum in any one market phase, book these profits and then go looking again for the next opportunity. Buy and hold big dips in the AUD/USD and then trade the other majors according to short term sentiment, that’s how I see the next few months evolving.

CHINA: Yuan-dollar parity CNY6.8262, unchanged from..

Market News International — Thu, 18 Mar 2010 01:25:19 +0000

CHINA: Yuan-dollar parity CNY6.8262, unchanged from Wednesday.

CHINA: China PBOC draining CNY80 bln via 91-day say..

Market News International — Thu, 18 Mar 2010 01:25:18 +0000

CHINA: China PBOC draining CNY80 bln via 91-day repos, traders say. That
takes this week’s net drain to CNY213 bln, according to MNI
calculations, the biggest since March, 2008.

Cross flows bit heavier than usual according to dealers

Sean Lee — Thu, 18 Mar 2010 01:20:21 +0000

The selling of the JPY crosses, particularly EUR/JPY and GBP/JPY, has been a bit heavier than usual this morning and the moves haven’t quite finished yet. USD/JPY has been a real mixed bag in recent days but if we get below 90.00, watch out for dealers targeting stops below 89.75.