DAILY REPORT: Friday 8th March 2013

General dollar weakness overnight as stocks rose to another record, as the US jobless claims fell (+340k, +355k expected, +347k prior) and US treasuries also continued to
fall. EURUSD is back above 1.3100 as the ECB left rates unchanged and Draghi struck a balanced rather than dovish tone at the press conference. The key elements of the
statement were focused on the staff macro economic projections and the assessment of inflation risks. Although the ECB did marginally lower the 2014 inflation profile
(from 0.6%-2.2% to 0.6%-2%), it repeated that the risks to price stability were broadly balanced. Draghi also mentioned that a rate cut was discussed, but the consensus

Read more: DAILY REPORT: Friday 8th March 2013

DAILY REPORT: Monday 4th March 2013

The white House released an order over the weekend beginning $85 billion in government spending cuts. The deadline was set two years ago to avoid a debt default, with the budget cuts intended to be onerous enough to facilitate discussion between the Democrats and Republicans and generate alternative measures. As yet there has been no such alternative forthcoming; however with the spending authorization for government operations ending on March 27 it is going to be a busy month of negotiations ahead. Still in the US and the Federal Reserve Chairman Ben Bernanke

Read more: DAILY REPORT: Monday 4th March 2013

DAILY REPORT: Tuesday 26th February 2013

Overnight, the EUR’s sold off sharply after the results from the Italian elections came in very different from the initial exit polls. The results suggested a gridlock in the upper
house, with both coalitions falling well short of the requisite 158 seat majority. The bottom line is that the ‘worst case’ scenario of a hung parliament appears to be playing out. While repeat elections, a technical government or a ‘grand coalition’ are the likely way forward, Italian political tensions are likely to remain in place for some time as a
result. EURUSD fell from 1.3300 to below 1.3050, EURJPY sold off from 125.00 to below 120.00, while Italian 10y bond yields closed near 4.50%, after dipping below 4.20%. USDJPY was also in a sharp sell-off mode, amid the continued uncertainty there

Read more: DAILY REPORT: Tuesday 26th February 2013

DAILY REPORT: Thursday 7th March 2013

US equities were firmer overnight with the Dow continuing to post record highs. Ahead of US NFP tomorrow, ADP numbers were better than expected, showing the US added
+198k workers in Feb (+170k expected, +215k revised prior). The Beige book was released and all 12 regional Fed banks reported that US economy stayed on ‘modest to
moderate’ growth pace. In other markets crude was down, 10 year US treasury +4.31bp to 1.9409% and the dollar was generally firmer against the majors. The EUR traded

Read more: DAILY REPORT: Thursday 7th March 2013

DAILY REPORT: Friday 1th March 2013

The concerns in Italy subsided overnight and equities in Europe finished in positive territory. Across the pond in the US, all was going along well, with equities up modestly for the better part of the day. Data in the US wasn’t spectacular but wasn’t dire either. 4Q annualized GDP was up +0.1% (+0.5% expected, -0.1% prior) and initial jobless claims fell to 344k (360k expected, 362k prior). However, late in the session U.S. stocks erased gains after the Senate rejected a pair of partisan proposals to replace $85 billion in automatic spending cuts scheduled to start tomorrow. As a result the S&P, NASDAQ and Dow all closed softer. In currencies,  AUD grinded lower through London and New York after reaching a high of 1.0290 in early Europe, falling just below 1.0200 as the US

Read more: DAILY REPORT: Friday 1th March 2013

DAILY REPORT: Monday 25th February 2013

The pound declined to its lowest level against the USD dollar since July 2010 closing the week at 1.5163. This was largely due in part to Moody’s Investor Services cutting the
UK’s credit rating from AAA to Aa1 on Friday, citing weakness in the nation’s growth outlook. Earlier in the week the minutes released from the Bank of England’s monetary
policy meeting on Feb 7 indicated Bank of England Governor Mervyn King backed more stimulus in the form of increasing bond purchases. The vote was split 6-3 against
the move but it has increased market expectations of further quantitative easing in the coming months from the central bank. The pound has depreciated against most major

Read more: DAILY REPORT: Monday 25th February 2013

DAILY REPORT: Wednesday 6th March 2013

The Dow closed at record levels in NY yesterday, back to levels not seen since Oct 2007. The drivers came from stronger US ISM data and reaction to Fed Yellen’s earlier
comments that they should continue with QE. And also assisting were the comments from Chinese authorities pledging to support economic expansion. The bid tone in
equities eventually transferred through to the dollar, losing some of it gloss of recent sessions. A neat bit of color was just forwarded to me by One of the sales guys from

Read more: DAILY REPORT: Wednesday 6th March 2013

DAILY REPORT: Thursday 28th February 2013

Another night of whippy action on headlines and data. The AUD hit a 2013 low at 1.0184 however recovered to now trade around 1.0230 aided by stronger equity markets. In
Europe, the DAX was up +1.04%, CAC up +1.92% and then in the US the Dow has closed up +1.26% and S&P up +1.27%. For the time being concerns around the political
situation in Italy have abated and there was a successful Italian 10 and 5 year auction yesterday. The ECB's Draghi was also on the wires; Euro break up fears were unjustified by fundamentals; ECB is independent, focuses on price stability; 2014 inflation will be significantly below 2%; and ECB far from having exit in mind. Elsewhere

Read more: DAILY REPORT: Thursday 28th February 2013

DAILY REPORT: Friday 22th February 2013

Over the past 48 hours the markets have seen a pull back in risk sentiment with most markets taking a hit. This week has been dominated by investor reaction to the board minutes released by both the Federal Reserve and the BOE. The market's response to the FOMC minutes mirrored the reaction that followed the December minutes - equities
heavily sold, bonds sold and USD strength. Overnight was no exception, not helped by the economic data released in Europe and the US. The Euro zone flash PMIs for February seemed to disappoint market expectations, resulting in the EUR being sold

Read more: DAILY REPORT: Friday 22th February 2013

DAILY REPORT: Tuesday 5th March 2013

Interesting comments from the Fed's Yellen overnight, stating that the Fed should press on with $85bio in monthly bond buying while tracking possible costs and risks from the
program. Although we continue to hear the odd opposition, QE is still very much on the cards and employment data needs to be monitored to assess the progress; we need to see a trend-consistent gain in Non Farm Payrolls of 160k with the unemployment rate unchanged at 7.9%. For markets overnight equities had a late rally in the US on Yellen's
comments and the market appears to have been running a short AUD position as there

Read more: DAILY REPORT: Tuesday 5th March 2013

DAILY REPORT: Wednesday 27th February 2013

The uncertainty and stalemate in Italian politics continues to spur concerns in the markets. Interestingly, it was confined to European equity and bond markets which were all softer however US markets were firmer as data on housing (new home sales jumping to their highest levels since July 2008) and consumer confidence (first improvement seen in 4 months) provided the catalyst. Bernanke started the first day  of his congressional testimony, defending the Fed’s asset purchasing program and

Read more: DAILY REPORT: Wednesday 27th February 2013

DAILY REPORT: Thursday 21th February 2013

The January FOMC Minutes revealed a wide spilt over the conduct of asset purchases with many participants expressing concern about the potential costs and risks of further asset purchases. Several felt that the Committee should be prepared to vary the pace of future purchases while "a number" felt that the Fed may want to taper or end the purchases even before a substantial improvement in the labor market was achieved. Alternatively, several argued that the cost of reducing or ending purchases too soon was
potentially significant with some members warning about the historical experience (would guess 1936/37 was on their minds) of premature withdrawal leading to adverse

Read more: DAILY REPORT: Thursday 21th February 2013