DAILY REPORT: Wednesday 13th February 2013

Early on in the London session yesterday the G7 released a statement that explicitly discussed the group’s policy towards currency manipulation. Initially, investors read the
report as supportive of Japan’s recent market interventions and caused a further sell-off in the Yen back towards the Asian high of 94.40. The Yen was also sold on comments
from a US foreign correspondent who affirmed his nations support for Japan’s efforts in stabilizing inflation and boosting growth – implicitly approving the recent action to
depreciate the Yen. However later in the evening Reuters reported that a G7 official said the statement had been misinterpreted by the media and reaffirmed the group’s position against currency manipulation. The official also said that the G7 is concerned about unilateral guidance on the JPY and mentioned Japan will be a spotlight at the G20

Read more: DAILY REPORT: Wednesday 13th February 2013

DAILY REPORT: Thursday 7th February 2013

Ahead of the Australian employment numbers today and the weaker retail sales data seen yesterday, AUD retreated overnight with leverage, systematic and real money all in the mix selling. We traded sub 1.0300 for a period of time and we are consolidating around the 1.0320 level this morning (200dma at 1.0312). A lot of chatter around the market that very good bids are seen from corporate and directional real money around the 1.0300 level. Other currencies were not spared and the USD was generally firmer across the board yesterday (JPY the exception). EUR traded sub 1.35 as today's ECB

Read more: DAILY REPORT: Thursday 7th February 2013

DAILY REPORT: Friday 1th February 2013

Stocks and commodities fell overnight and the dollar consolidated, after a rise in jobless claims (+368k vs +350k expected, +330k prior) raised concerns about this evening’s employment numbers out of the US. Treasuries also gained ground and the EUR continues to march on breaching 1.3600. There were the usual month end shenanigans which saw reasonable selling of dollars and position squaring with
AUD now once again north of 1.0400. With respect to NFP’s this evening, BNP Paribas' economics team expects more of the same with employment rising by +150k (BBG
estimate +165k) but a higher participation rate pushing the jobless rate +0.1% to 7.9%, while hourly earnings soften. The EUR continued its ascent against the USD overnight,

Read more: DAILY REPORT: Friday 1th February 2013

DAILY REPORT: Tuesday 12th February 2013

The Euro had a mixed performance last night as Euro zone members and the global financial leaders made comments ahead of the G20 economic summit later this week. The president of the German Bundesbank and a member of the ECB council, Jens Weidmann, said the Euro isn’t currently overvalued and warned the ECB from pursuing a policy to weaken the currency. The G20 group has been actively discussing the ‘currency wars’ whereby some nations are viewed as deliberately weakening their currency for the purpose of boosting growth. Japan has been in the spotlight for the past

Read more: DAILY REPORT: Tuesday 12th February 2013

DAILY REPORT: Wednesday 6th February 2013

Positive day for equities in Europe and Nth America with more companies posting improved earnings over the fourth quarter. The S&P was up over 1% and closed above the 1,500 level whilst the Yen was once again weaker after BoJ Gov. Shirakawa saying he would step down next month. Oil was back up after its biggest loss in two months. Elsewhere data in Europe was, as is normal, relatively soft, with several countries printing their PMI’s and Eurozone Retail Sales down year on year (-3.4%, vs -1.4% expected, -2.6% prior). Despite the data and a headline that French PM Hollande

Read more: DAILY REPORT: Wednesday 6th February 2013

DAILY REPORT: Thursday 31th January 2013

Headline US Q4 GDP came in significantly lower than expected overnight and the Fed reaffirmed its asset purchasing program which drove risk appetite and markets in general. The Fed stated that it will keep purchasing securities at a rate of $85b a month and keep interest rates close to zero. If we delve a little deeper into the other figures
though, it wasn't all doom and gloom, US personal consumption was up and this remains a foremost driver for the US and the global economy. Earnings season continues with 75% of companies that have reported so far exceeding profit projections - which has certainly helped fuel the rapid rise in equities this year. In the short term

Read more: DAILY REPORT: Thursday 31th January 2013

DAILY REPORT: Monday 11th February 2013

A divergent week for risk as the Japanese market leadership faded but overall risk held together. Specifically we saw the USDJPY and the Nikkei both rally to new highs (just over 94 and 11,500 respectively) early in the week but reverse by Friday and ultimately finish near unchanged at 92.75 and 11,150. Headlines by the Japanese finance minister that the pace of currency weakness was unexpected and potentially too quick seemed to be the catalyst for the reversal. In Europe, the EUR faced the opposite concerns as investors expressed concern that the currency had strengthened too much

Read more: DAILY REPORT: Monday 11th February 2013

DAILY REPORT: Tuesday 5th February 2013

The move lower overnight in the EUR seems to have been driven by a combination of factors. Given the lack of movement in some of the other currencies it seems that there
was some position squaring in the EUR and EURxxx on the back of the worse than expected LTRO payment seen last week, a failure to break 1.3700 post NFP’s and ongoing but fresh political concerns in Europe, this time, as mentioned yesterday, the corruption scandal in Spain now rocking the boat. Also, expectations are growing that Draghi will attempt, amongst other things, to slow the move in the EUR somehow at

Read more: DAILY REPORT: Tuesday 5th February 2013

DAILY REPORT: Wednesday 30th January 2013

Firmer earning results overnight in the US drove equity markets and drove a risk on environment. The S&P has had its best start to a year since 1994 and this morning both the S&P (+0.51%) and the Dow (+0.52%) have closed in positive territory. Whilst the economic data out of the US took the back seat; US Case Shiller housing data rose by the most in 6 years whilst US consumer confidence fell. AUD is now firmer trading to the upper of its 24 hour range around the 1.0470-75 level and the EUR continues its march higher now trading to its highest levels since early 2012, touching a high of 1.3497. Elsewhere commodities were also firmer with oil touching close to $98/brl, and base metals all benefitting from the risk on environment. There are a number of key US data releases due over the next 24 hours which are likely to move the Commod and FX

Read more: DAILY REPORT: Wednesday 30th January 2013

DAILY REPORT: Friday 8th February 2013

EUR tumbled overnight on the back of Draghi’s comments that the currency’s strength could hamper the economic recovery. He stated that “the exchange rate is not a policy
target, but it is important for growth and price stability” and that “we want to see if the appreciation is sustained, and if it alters our assessment of the risk to price stability.” The comments pushed the EUR to a low of 1.3371 and we are currently settling around the 1.34 level. Draghi highlighted that the recovery will come later in the year and downside risks were still of concern. Also in Europe, the Irish govt reached an agreement with the ECB after moving to liquidate former Anglo Irish. The govt claimed

Read more: DAILY REPORT: Friday 8th February 2013

DAILY REPORT: Monday 4th February 2013

It was quite a busy end to the week on Friday with several key data releases. The Euro touched the highest level against the USD in 14 months after the ECB’s balance sheet fell to 2.93 trillion euros, the lowest since February 12. Banks repaid 137.2 billion euros of emergency 3-year loans to the ECB last week and are expecting another 3.5 billion euros this week. Furthermore, the central bank has not purchased any sovereign debt for 45 straight weeks. Adding to the positive vibe, manufacturing in the region rose to the highest level in almost a year. The US also contributed to the currency move, with non-farm payroll data coming in slightly under expectations at +157k (+165k expected,
+155k prior) which saw risk dip a little following the announcement.. The unemployment rate rose to 7.9% (7.8% expected, 7.8% prior), due to an increase in the number of
people actively seeking employment. By and large the result was middle of the road,

Read more: DAILY REPORT: Monday 4th February 2013

DAILY REPORT: Tuesday 29th January 2013

The big moves yesterday were seen in USD Asia, the initial catalyst was generally seen as selling of local shares by foreigners in Korea and there was a sizeable short  squeeze across the board. Also providing impetus for the move has been the continued weakening of the JPY, as the currency wars heat up. G10 was generally subdued in our time zone, then lost ground into the London morning. AUD traded to a low of 1.0385 and looks to have now broken a key upward trend which started mid last year. In the US, data was mixed with solid Dec durable goods orders report but this was coupled with very

Read more: DAILY REPORT: Tuesday 29th January 2013