Tuesday, February 21, 2012
Second Greek Bailout Package Pass Eurogroup
The initial reaction was a one of relief as the much anticipated Greek second bailout package was passed by the Eurogroup finance ministers was announced. However, there was little else in regards to further rally in risk appetite. We do have DJIA futures trading above 13000, which is a solid, bullish signal, but the movement in FX has been less than compelling. Dow Jones reported that financing...
Monday, February 20, 2012
Expectations High for todays Eurogroup Meeting
It seems that no matter how much the market tries to convey the critical and fragile nature of the current crisis, European leaders again have pushed the crisis to the cliff's edge. Risk appetite firmed as cut China the RRR by 50bp and Greek cabinet has approved further austerity measures of €125mio over the weekend. EURUSD consolidated its gains around the 1.3200 but momentum has clearly...
Friday, February 17, 2012
FX on Standby Till Monday
Well it seems that Europe's new love affair with deadlines continues with a new one being set for next Monday. Late on Wednesday, the Eurogroup released their conference call statement, that had replaced the physical meeting. The statement said that "all the necessary decisions" on Greece regarding the extra €325bn of austerity measure, would be postponed until next Monday. This would allow the...
Thursday, February 16, 2012
Risk on the Run Due to Greek Bailout Concerns
Once again to was Moodys that rode in and killed any hope of risk gaining a foothold today. Moody's cautioned it may downgrade the credit ratings of 121 financial institutions with 114of those being European, in another indication the impact of the euro zone government debt crisis is spreading throughout the global financial system. "Capital markets firms are confronting evolving challenges, such...
Wednesday, February 15, 2012
China to Europes Rescue
All it took was some comments from China to put risk appetite into hyper drive. Traders took no time to recover from the yesterday's news that Moody's had downgraded the rating of six Eurozone sovereigns, and cut the outlooks of two more. PBoCs Zhou stated that China was ready to expand its investment in Europe's EFSF and ESM and would participant in resolving the EU debt crisis. This was just...
Tuesday, February 14, 2012
Moodys Downgrades Dents Risk Appetite
Well, leave it to the credit rating agencies to asphyxiate the fragile optimism. Moody’s downgraded nine European sovereigns in early trading trigger a selloff in risk and provided a boost for USD buyers. Spain was cut by two notches to A3, which is one notch below S&P and Fitch. But the big new was really was Moody’s warning that the UK AAA ratings could be at risk. EURUSD quickly...
Monday, February 13, 2012
Markets Upbeat after Greek Austerity Vote
Events from Greece are still dominating the airwaves and FX positioning. The latest headlines indicate that the vote in Athens on the €130 billion package has passed in a 199-74 count. The next step, before any Troika cash is released, is for the austerity plan to be accepted by the EU in a Euro-zone FinMin meeting in Brussels on Wednesday. In the last few days, Greece’s ruling party...
Friday, February 10, 2012
Greece Package Rejection May Derail Recent Euro Optimism
It is difficult to choose what has been the most notable event of the last 24 hours. At one point yesterday it seemed like the unequivocal answer would be the news that Greece’s political parties had finally managed to reach a long-overdue agreement on austerity measures – the crucial piece required to pave the way for a new EUR130bn bailout. However, after the conclusion of yesterday’s Eurogroup...
Thursday, February 9, 2012
Waiting on the BoE and ECB
Yesterday, FX traders spent much of the day waiting for news from Greece and today looks to be much the same. But while we wait, the general mood is risk-on. The equities continues to edge higher and US bond yields have reacted with a bearish run to the short term range highs. It’s clear by EURUSD price action that traders are scared of going short ahead of any Greek headline or today’s ECB rate...
Wednesday, February 8, 2012
Troika Deadline Looms
The global risky rally sustained its earlier gains in Asian session and continued to push higher. Rejuvenated confidence on a the ability of Greece to secure the Troika second bailout package buoyed risk sentiment yesterday, pushing equities higher and pushed Treasury prices and USD lower. EURUSD climbed to 1.3287 from 1.3100 yesterday while AUDUSD jumped to 1.0844. Asian equities kept the...
Tuesday, February 7, 2012
RBA Holds Rates at 4.25%
EURUSD and risk appetite were marginally weaker as news wires reported that the Greece Troika bailout negotiations would be delayed until Tuesday. Traders focus in Asian session has been squarely on the AUD. In a surprise move the RBA held rates at 4.25% (although we correctly predicted the decision see Central Bank Preview ) and noted that policy was appropriate "for the moment". AUDUSD...
Monday, February 6, 2012
Aid Talks Stall in Athens
High yielding currencies continued to outperform as the developed nations central banks have all committed to a sustained period of ultra-loose monetary policy (unlimited free liquidity) and the contraction of volatility has put the carry trade back on the map. As with the crowded dividend trading in the equity markets, we suspect that growth projections in many of these nations have already been...
Friday, February 3, 2012
Stalled Greece Negotiations Will Weigh On Euro Going Forward
Talks between Greece and its private sector creditors have still not come to a conclusion and there has been a complete absence of updates on progress this week – raising the uncomfortable possibility that negotiations drag on into another week. The immediate consequences of this lack of resolution are clear; EURUSD has repeatedly failed to garner much buying interest up towards 1.3200 as...
Thursday, February 2, 2012
Global PMIs Spark Optimisms Over Growth
After a slight pullback in earlier European trades, risk appetite cautiously in Asian session crept back into the markets. EURUSD was range bound between 1.3160 and 1.3200 while AUDUSD continued its strong rally running to 1.0757. Asia’s regional indices were green across the board with the Hang Seng up 1.94% and Shanghais 1.96%. The catalyst was the generally positive manufacturing PMI prints...
Wednesday, February 1, 2012
Traders Watching EURCHF for SNBs Response
The market remains positive on the recent developments in Europe, supporting risk across the board. EURUSD continues to feel heavy falling to 1.3026 from yesterday’s high of 1.3212. In China manufacturing PMI had a strong print coming in at 50.5 vs. 49.6 exp. The fact that the EU summit ended with no real development failed to dampen the growing optimism (only the 16th summit in the two years...
Tuesday, January 31, 2012
Worries of Europes Immediate Collapse Dissipates
Risk appetite was firm in Asian session as the FT produced an article suggesting that the next LTRO could find demand of up to €1trn. If this is correct it would all but eliminate concerns that European banks could face a near term liquidity crisis. Optimism continues to grow despite the fact that Eurozone summit yesterday brought no real progress on the Greek debt crisis. There is a growing...
Monday, January 30, 2012
Greece Rejects Greater EU Oversight
With Greek negotiations ongoing but yet to reach a conclusion, media chatter over the weekend was dominated by reports that Germany wishes to have greater oversight of Greece’s budget – a proposal that Greece has readily dismissed. The suggestion was endorsed by German cabinet minister Philipp Roesler, and reflects the widespread scepticism both across the market and amongst policy makers that...
Friday, January 27, 2012
Swiss KoF Goes Negative
USD selling continued for the majority of yesterday’s session. EM & commodity currencies have been a primary recipient to inflows. USDTRY sank to 1.7862, while USDRUB gapped lower at the open and proceed to fall to 30.1811. The impetus seems to be the residual effect of the FOMC meeting where Mr. Bernanke announced it would be nearly 3 years before hikes (he also indicated that selling of...
Thursday, January 26, 2012
Fed Initiate Explicit Inflation Target
USD was sold in Asian session as the FOMC sounded very dovish in their pledge to hold rates at near zero “at least through late 2014”. EURUSD climbed to 1.3134 while AUDUSD ran to 1.0642, on broad USD selling. In addition to the commitment to low rates the Fed also committed to explicit inflation targeting for the first time. Core personal consumption expenditure will be now steered towards 2.0%...