FX Daily Planet: New York Open

FX Daily Planet: New York Open

Click here for the full Note and disclosures.

View for the day

High beta currencies are in the ascendancy during the session as European equities post gains of nearly 1%. NZD is leading the charge higher, rising over 1% versus JPY. GBP has also performed well following much stronger than expected UK PPI data and a YouGov poll which shows that the Conservative Party lead has widened to 9 points. NOK has managed to shrug off some disappointing inflation data with the currency supported by a healthy rebound in manufacturing activity. EUR/USD has found some support this morning following Thursday’s comments by ECB President Trichet and encouraging fiscal news from Greece. However, as events following the 26 March EU Summit showed, this does not mark the turning point in the fortunes of EUR particularly with Greece needing to find €10bn in refunding for May. We therefore remain sidelined in EUR/USD for now.

Speculation on a potential CNY revaluation has abated for now following the visit of US Treasury Secretary Geithner to Beijing. USD/CNY 12mth NDF’s have bounced during the session has little in the way of new information filters through to the markets. The release schedule in North America is fairly light this afternoon with only Canadian employment figures of note. There will be some focus on CHF today with SNB board member Danthine due to talk and once again likely to caution on excessive CHF strength.

Overnight news

NOK: Inflation is softer than expected, with the headline rate rising 3.4% y/y and the underlying rate rising 1.7% y/y.

SEK: Industrial production is soft, falling 0.8% m/m.

GBP: BoJ Shirakawa said that PM Hatoyama did not make any requests (to BoJ) at the meeting held today.

JPY: PPI is stronger than expected. YouGov opinion poll sees Conservative lead widening to 9 points.

EUR: ECB Trichet says not possible to enter and leave euro zone as if getting on and off a bus.

CNY: US Treasury Secretary Geithner and Vice Premier Wang “exchanged views on U.S.-China economic relations, the global economic situation and issues relating to” a May meeting of officials from the two nations in Beijing, according to a Treasury Department statement.

USD: FRB Chairman Bernanke said “Policy makers must respond forcefully, creatively, and decisively to severe financial crises”. While Bernanke didn’t comment on congressional proposals to curtail emergency powers, he said programs created under the authority helped the Fed “restore the flow of credit to American families and businesses.”

KRW: BoK left its policy rate unchanged at 2.0% as widely expected.
Today’s watchlist (all times BST; +9hrs for Sydney, +8hrs for Tokyo, -5hrs for New York

CAD: Mar unemployment rate (%, sa) @12:00 (JPM: 8.1, Cons: 8.1); Mar employment (ch, m/m 000s, sa) @12:00 (JPM: 20.0, Cons: 26.0)

USD: Feb wholesale inventories (%m/m) @15 :00 (Prev :-0.2)
Overnight price action

FX: High beta currencies are in the ascendancy with NZD leading the way versus
JPY as European stocks rally.

FX vol: Front-end vol softens as high beta FX rallies

Commodities: Both oil and gold trade around 0.5% higher

Bonds: European bond futures are in negative territory as stocks rally.

Credit: European credit markets are broadly unchanged

Equities: European equities post strong gains of nearly 1%

Technical View for the day

Risk markets extended their latest setback a bit further yesterday but didn’t come close to any key-support yet which would raise the idea that the accumulation phase since March last year has finally reached an exhaustion point The levels to watch are however well defined whereas key-support at 1151/50 in the S&P500 could be taken as a leading indicator. Above, the risk positive environment remains intact meaning that Commodity currencies can proceed to test their key-resistance barriers at 1.3290/78 (EUR/CAD), at 1.4146/1.4073 (EUR/AUD), at 1.8567 (EUR/NZD) and at 7.9158 in EUR/NOK. Almost independent of the Greek problem the EUR remains under pressure against USD and is still on course towards its main target at 1.3093/81. Only a recovery past Fibonacci-resistance at 1.3380 would ease the pressure a bit but to really pick up stronger up-momentum it would take a break above 1.3519/39. The JPY has on the other hand managed to extend its latest recovery but in order to indicate a resumption of its previous up-trend it would require a break below 121.61/05 in EUR/JPY or below 137.01 in GBP/JPY.

Research from the region you may have missed

UK: Core PPI goods prices still not showing a disinflationary trend

Getting close to the activation of the Greek support mechanism

Swedish IP disappoints yet again

ENDS

© Scoop Media