March 9th, 2010 11:32:20 GMT

ForexLive European Morning Wrap: JPY, USD firm

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  • S.Korea fx authorities buying dollars to curb won’s strength – traders
  • Russia central bank shifts lower bondary of rouble band to 34.55 vs basket after buying $700 mln – traders. Shifts bondary second time during morning to 34.50
  • French January trade balance -3.681 bln euros, slightly better than median forecast of -4.0 bln – customs office
  • Swiss February CPI +0.1% m/m, +0.9% y/y, slightly weaker than median forecasts +0.2%, +1.0% respectively
  • UAE FinMin: Expects Dubai debt issues to be resolved soon
  • French EconMin Lagarde: Idea of European Monetary Fund is interesting, but not short-term priority. Still working on technical proposals on CDS market
  • Fitch: UK sovereign credit profile has deteriorated.  UK needs stronger fiscal adjustment. Among larger AAA sovereigns, urgency greatest for UK, Spain and France
  • Fitch: UK still within tolerance of AAA rating, but uncomfortable with fiscal adjustment path set out by UK authorities
  • Fitch: Portugal’s gradual approach to fiscal consolidation to 2013 is a concern.  Short-term outlook for Greece probably OK, longer-term outlook more open to question. Possible to have a sovereign default in the euro zone
  • Fitch: United States vulnerable to interest rate shocks
  • UK January global trade balance -7.987 bln, worse than median forecast -7.0 bln, biggest shortfall since August 2008

Risk aversion has picked up this morning, European stocks lower, oil off over a buck and gold lower. Fitch’s various prognostications (see above) hardly helped matters.  USD and especially JPY the beneficiaries.  JPY also aided by ongoing reports of fiscal year end repatriation flows.

EUR/USD started around 1.3615. Dipped early, briefly below 1.3600 before bouncing with reports circulating that Russia and BIS had been notable buyers.  The recovery didn’t last long and sell orders tipped at 1.3640/50 never came into play.  We were soon back below 1.3600, downbeat comments from Fitch Rating (see above) pressuring the pairing.  We’ve been as low as 1.3562 so far, presently at 1.3570.

EUR/JPY is down at 121.75 from early 122.50.

Cable has had a bad day.  Started around 1.5010 and was under pressure fairly quickly. Poor RICS housing data out overnight, Times poll showing Labour and Conservatives running neck and neck in key marginal seats and Moody’s warning of possible downgrades to UK banks/lenders among factors weighing. 

The sell-off accelerated as comments from Fitch Rating hit the wires (see above) and as data came out showing UK’s trade picture worse than expected (see above) We’ve been as low as 1.4940 so far, talk of sovereign buying below 1.4950 lending some very tenuous support.  We’re presently at 1.4952.

USD/JPY has seen a more active morning, down at 89.80 from early 90.30 amid heightened risk aversion and ongoing reports of fiscal year end repatriation flows.  A US investment bank seen notable seller this morning.  We’ve been as low as 89.63 so far, just above tipped buy orders at 89.50/60.

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March 9th, 2010 11:10:41 GMT

US: US event calendar for Tuesday March 9 (time in…

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US: US event calendar for Tuesday March 9 (time in GMT/EST),
1230/0730 NFIB index.
1300/0800 CEA’s Romer at NABE.
1430/0930 Chi Fed’s Evans at NABE.
—/— Fed TAF.
1630/1130 UST auctions 4wk, $26b 52wk bills.
1730/1230 USTR Kirk speech on trade promotion.
1800/1300 UST auctions $40b 3y notes.
2000/1500 Feb Tsy allotments by investor class.
2115/1615 CFTC’s Gensler speech on mkts.

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March 9th, 2010 10:55:47 GMT

US: US data calendar for Tuesday March 9 (time in….

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US: US data calendar for Tuesday March 9 (time in GMT/EST),
1245/0745 06-Mar ICSC-Goldman Store Sales Last -0.8% w/w, +0.7% y/y
1355/0855 06-Mar Redbook Average Last +1.6% thru wk 4
1500/1000 Mar-10 IBD/TIPP Econ Optimism Index Last 46.8
2000/1500 Feb-10 Treasury Allotments By Class
2200/1700 07-Mar ABC News Survey Last -49

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March 9th, 2010 09:56:40 GMT

Fitch says United States vulnerable to interest rate shocks

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Share the love.

  • Spain’s fiscal adjustment programme a plus factor for the country
  • Portugal’s gradual approach to fiscal consolidation to 2013 is a concern
  • Short-term outlook for Greece probably OK, longer-term outlook more open to question
  • Possible to have a sovereign default in the euro zone

EUR/USD sits at 1.3585,  1.3570/85 zone of sovereign buy interest so far just about holding, session low 1.3578.

Elsewhere cable up at 1.4970 aforementioned sovereign buying below 1.4950 having stemmed the bleeding for now.

2 Comments

March 9th, 2010 09:48:02 GMT

UK January trade data weaker than expected

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UK January global goods trade deficit has come in at -7.987 bln, weaker than median forecast of -7.0 bln and biggest deficit since August 2008. Non-EU goods trade balance -4.834 bln,  much weaker than median forecast -3.40 bln and biggest deficit since January 2009.

Getting reports of sovereign buying below 1.4950, but haven’t seen any bounce as yet, presently at 1.4940/45.

3 Comments

March 9th, 2010 09:40:56 GMT

UK DATA: Jan global goods deficit Stg7.987bn vs in…

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UK DATA: Jan global goods deficit Stg7.987bn vs Stg7.01bn in Dec
–Jan global goods/services deficit Stg3.768bn vs Stg2.599bn in Dec
–Jan global goods deficit ex oil/erratics Stg7.432bn vs Stg6.548bn Dec
–Jan global goods deficit median forecast Stg6.9bn; total Stg3.1bn
————————————————————————
The global goods deficit widened sharply in Jan to its highest
level since Aug 2008, close to the record high seen in Sep 2007. Exports
plunged 6.9% m/m while imports were down 1.6%. Most of the worsening was
seen with the non-EU shortfall which rose to Stg4.8bn the highest since
Jan 09. Non-EU exports dropped 12.5% m/m the largest fall since Jan last
year while imports were up 1.6%. The underlying trade gap was also up
sharply to Stg7.432bn from Stg6.548bn the widest since Sep 2008. NS said
there was no direct evidence that the cold weather in Jan had impacted
the data. Ports remained open throughout Jan although it may be that
some exporters could not get their goods to ports.

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