ForexLive » Mkt Talk

EUR/JPY trying to edge up as stocks extend gains late

Jamie Coleman — Thu, 02 Sep 2010 19:50:15 +0000

Many have trimmed positions in anticipation of tomorrow’s employment report but there are still a few intrepid jobbers around and they are marking up EUR/JPY a bit as US equities rally into the close. We’re up about 0.8% with a bit less than 15 minutes of trading to go.

Resistance on the hourly chart comes in around 108.20 near-term.

Citi analysts like EUR/CHF

Jamie Coleman — Thu, 02 Sep 2010 18:17:55 +0000

Citibank analysts (not the tech guys) say like EUR/CHF, noting the slide is overextended and that hedge funds have too large a short position. Yield spreads between Germany and the likes of Greece and Spain have narrowed a bit of late, lessening the safe-haven play. The like a small position, about 5% of a portfolio, they say…

EUR/USD sinking in range; Buyers were here earlier…

Jamie Coleman — Thu, 02 Sep 2010 17:01:54 +0000

Not a lot of buzz in the market this afternoon so it is tough to get much of a read on things at the moment.

EUR?USD has eased back into the 1.2805/10 area, a level where a European corporate was a significant buyer earlier in the session. Expect a few small stops just below 1.2800 if it turns out there are not on the bid this time around. Better support remains in the 1.2775/80 region. Stops are seen around 1.2770 if that level gives way.

Looks like Twitter the cause of the Twitter problem

Jamie Coleman — Thu, 02 Sep 2010 16:33:14 +0000

Looks like we are not alone in our problems with Twitter today…

Reuters: Euro zone and Japan have not discussed intervention

Jamie Coleman — Thu, 02 Sep 2010 15:42:29 +0000

Reuters quotes unnamed sources as saying officials in the euro zone and Japan have not discussed Euro zone participation in intervention to weaken the JPY.

The source offered these wise words “Do not pee into the wind, only with it.”

Profound.

Few expect Japan to garner much support from the G7 regarding intervention but they don’t expect any protest from other members, either.

I would not be at all surprised if intervention were to come that the Fed, ECB and BOE will intervene in the markets on the BOJ’s behalf, but almost certainly not for their own accounts.

Another rig explodes in Gulf

Jamie Coleman — Thu, 02 Sep 2010 15:39:22 +0000

Here we go again. Another oil rig has apparently exploded in the Gulf of Mexico.

Could be another very quiet afternoon

Jamie Coleman — Thu, 02 Sep 2010 15:32:53 +0000

Yesterday was extremely slow in the US afternoon and I fear a repeat today.

The stakes are fairly high tomorrow as an employment report that exceeds expectations will further buttress hopes that the US will be able to avoid a double-dip recession. If the data is better than expectations, look for safe-havens like USD, JPY and CHF to bear the brunt of the price action. Commodities currencies are the likely winners with majors like EUR and GBP next in line.

IF the data is appreciable worse than expected, turn the above forecast upside-down…

Reflation plays like AUD and CAD would suffer and the USD, JPY and CHF would be the likely winners.

GBP/USD pops on short-covering as stops survive

Jamie Coleman — Thu, 02 Sep 2010 14:56:42 +0000

Stops below the 1.5350 level survive their brush with a near-death experience and traders have been forced to scramble to cover. Low and behold, we’re up to 1.5400. She’s a cruel mistress, cable…

EUR/USD looks like it is building a right shoulder to me

Jamie Coleman — Thu, 02 Sep 2010 14:53:27 +0000

Is EUR/USD building a head and shoulders bottom on the daily charts? Looks like it to me. A few days of consolidation below 1.2850 would set the stage. Unfortunately, with payrolls ahead tomorrow, odds of narrow consolidation seem low.

Food for though…

Citi sells GBP/AUD

Jamie Coleman — Thu, 02 Sep 2010 14:41:44 +0000

They sold at 1.6880 looking for a move below 1.63…Stoploss 1.7050.

Think tank: December SNB hike still a possibility…

Jamie Coleman — Thu, 02 Sep 2010 14:39:45 +0000

A high-profile NY think tank which prefers to remain nameless says there is a possibility that the SNB could hike rates in December, though the odds are diminished (probably by the strong currency).

They firm sees the SNB hiking before the ECB, regardless.

Intervention cannot be ruled out, but it would not be as large as earlier efforts, they say…

My take is that the currency tightens monetary conditions enough that the SNB will refrain from hiking for soe time to come.

EUR/USD: Corporate seen buying dips

Jamie Coleman — Thu, 02 Sep 2010 14:26:25 +0000

Traders report a European corporate is buying EUR/USD on the dips toward the 1.2800 level, absorbing some decent-sized spec selling.

Why would a European company buy its own currency? Most likely to repatriate profits earned abroad…

Turnover is relatively high today within a 50 pip range in EUR/USD. Looks as though folks want to take care of business before tomorrow’s NFP sends the market spasmodic…

EUR/USD trades now at 1.2815.

Cable takes aim on stops below 1.5350

Jamie Coleman — Thu, 02 Sep 2010 14:08:05 +0000

Traders report stop-loss sell orders not far below present levels…

EUR/USD unable to maintain gains

Jamie Coleman — Thu, 02 Sep 2010 13:28:36 +0000

EUR/USD’s pop to fresh session highs at 1.2848 turned out to be very short-lived. Traders apparently took the shift to the ECB using a floating rather than fixed rates on its three-month liquidity operations as a sign the ECB was laying the ground work for a hike, at some stage. Trichet quickly poured cold water on that idea, saying the move had no message for monetary policy attached.

German banks were among the heavies sellers near the highs, traders report.

We dipped as low as 1.2810 to shakeout weak longs and trade now at 1.2825. 1.2775/1.2850 range-trade prevails for the near-term…

EUR rallies as ECB raises forecasts

Jamie Coleman — Thu, 02 Sep 2010 12:47:14 +0000

Seels like the ECB is treating the meltdown of European markets this spring as a tempest in a teapot and if looking ahead to a recoverying economy going forward. Staff raised its forecasts for growth and inflation but the Council announced that it will keep weak banks on life support for some months to come, at a minimum.

The market seems to like the combination and has pushed EUR/USD up toward offers in the 1.2840/50 area.

Japanese bids at 83.50/55

Jamie Coleman — Thu, 02 Sep 2010 12:30:10 +0000

Should the market grow suddenly risk averse, interbank traders tell us that Japanese bids are down at the 83.50/55 level. We’ve been as low as 83.58 in recent sessions. Some chatter about a barrier at the 83.50 level was heard earlier in the week,

See that range? That’s where the orders are

Jamie Coleman — Thu, 02 Sep 2010 12:24:02 +0000

Far East and BIS buying EUR/USD on dips to 1.2775/80, offers at 1.2840/50. Stops are seen above the 1.2860 level.

Claims and factory orders up next. Claims are expected to rise 2,000 to 475,000.

Factory orders are expected to rise 0.3% after falling .3% last time.

ForexLive European Wrap: Not much going on. GBP has poor morning, CHF good one

Gerry Davies — Thu, 02 Sep 2010 11:24:39 +0000

Sweden’s Riksbank raises key repo rate to 0.75% from 0.5%
French Q2 ILO jobless rate falls to 9.7%, better than median forecast of 10%
Japan’s Ozawa: FX intervention just by Japan may not have much effect, but should be prepared to act
Swiss Q2 real GDP +0.9% q/q, +3.4% y/y, better than median forecasts +0.8%, +2.7% respectively
Nationwide UK August house prices -0.9% m/m, +3.9% y/y. Much weaker than median forecasts of -0.3%, +4.9% respectively
UK construction PMI 52.1 in August, down from 54.1 in July. Much weaker than median forecast of 53.2
Euro zone Q2 GDP confirmed at +1.0% q/q. Revised up to 1.9% y/y from previous 1.7%
Swiss retail sales +4.8% y/y in July, better than median forecast of +2.3%
Spanish/German 10 year government bond yield spread fall to 169 bps . Lowest since August 20

Not too much going on. Sterling has had a poor morning, underminned by poor house price, construction PMI data. Swissy on the flip side has had good morning, underpinned by good Q2 GDP, retail sales data.

EUR/USD firmer on day, up at 1.2825 from early 1.2790. The pairing did suffer a bit of a swoon posting a session low 1.2777, but ready buyers emerged. The sell-off seemed to coincide with announcement of Swedish rate hike, which saw heavy selling of the EUR/SEK cross.

Asian central bank and hedge funds notable buyers below 1.2800 this morning. On the topside sell orders noted at 1.2830/50 and they’ve helped cap rally attempts at 1.2838 so far.

Cable down at 1.5400 from early 1.5445. Poor UK house price/construction PMI data have weighed on sterling. Real money buyer seen around 1.5375 low helping lend much-needed support.

EUR/GBP up at .8325 from early .8280, but sell orders noted at .8330/50 have capped topside at .8338 so far.

EUR/CHF down at 1.2980 from early 1.3015 having been as low as 1.2945 at one stage. Swissy supported by strong GDP/retail sales data. UK clearer notable seller in very early trade.

USD/JPY unchanged at 84.18. Got as low as 84.01 before decent buying from a Dutch bank lent much-needed support. The Danish bank, who has been notable buyer of late, was also said to have been in buying again.

Well……

Gerry Davies — Thu, 02 Sep 2010 10:50:58 +0000

Had to step away to take phone call past 45 mnutues or so and guess not a heck of a lot has happened. EUR/USD sits at 1.2820, sell orders up at 1.2830/50 still hanging tough.

USD/JPY managing to hold above 84.00 so far, presently at 84.19 having been as low as 84.01. Heard Dutch bank (not Danish this time) seen decent buyer off the lows.

Cable meanwhile managing to hold up after post construction PMI swoon. EUR/GBP at .8323, aforementioned sell orders up at .8330/50 managing to cap earlier rally which topped out at .8338.

Nearly home time.

Spanish/German 10-year government bond yield spread falls to 169 bps

Gerry Davies — Thu, 02 Sep 2010 09:38:23 +0000

Lowest since August 20. Hooray!!!