Posts Tagged ‘ risk aversion ’

Risk appetite fell sharply across most Asset Classes, fuelled by events. China’s unexpected and sizeable trade defi cit released shortly before London opened was the initial impetus. That was followed by Moody’s downgrading Spain to Aa2 (with negative outlook), citing ballooning bank sector support costs which threaten the fi scal position. US jobless claims data then sprung a negative surprise. The S&P500 is currently down 1.3%, testing 1294 major support. Commodities are weaker, oil down 2.7%, copper down 0.3%, and silver down 2.9% and technically weak. US 10yr treasury yields are 5bp lower at 3.42, benefi ting from risk aversion and a successful 30yr auction (5bp below market, 3.0 bid-cover a 10 year high). Eurozone peripheral bonds were contained, despite the Moody’s action. The EU summit (Fri-Sat) will probably include debate around member bailouts, Germany saying in advance it opposes any secondary market intervention support for bonds.

The US dollar index rose to a two-week high at 77.30. EUR fell to 1.3880 on China, then to 1.3805 on Spain, and probed 1.3791 in NY as equities sank. USD/JPY rose from 82.70 to 83.17, reversing late NY to 82.80.

AUD underperformed, stung by weak data in China and Australia, falling from 1.0060 to 0.9992.

NZD was resilient relative to a 50bp RBNZ rate cut, falling after the domestic close around 0.7360 to 0.7323 but reversing the fall in NY. AUD/NZD fell from the 1.3650 area to 1.3600.

US initial jobless claims jump 28k to 397k in the week prior to the March payrolls survey, but this could be a distorted number associated with the Presidents’ Day holiday – so wait for next week’s report before drawing fi rm conclusions. The claims downtrend may yet resume.

US trade deficit $46.3bn in Jan, up $6bn on Dec. Exports rose 2.7% to a new record high but imports surged 5.2% on higher oil prices and other broad-based strength.

Japanese Q4 GDP revised down slightly in second estimate. The outcome is still -0.7%qtr, but the annualised pace slipped a little, from -1.1% to -1.3%. The only real change was a rounding down of PCE to -0.5% from -0.4% in the fi rst estimate. History was re-invented once again, with more growth packed into 2009Q4 and 2010Q1 than previously, with 2010Q3 losing out.

Japanese domestic corporate goods price index rose by 0.2% in Feb and is now up 1.7% over the year, a slight moderation from Jan’s 1.9%yr pace.

Bank of England on hold. no statement as usual – minutes due in two weeks Time. on the data front, industrial production rose 0.5% in Jan, with factories up 1.0% but utilities down 6.2% after Dec’s cold snap 6.4% spike.

Canada posted another trade surplus, but it was just C$0.1bn in Jan, down from C$1.7bn in Dec. Imports jumped 5.3% due to energy and autos, while exports were held to a 0.8% rise due to falls in agri and forestry.

AUD/USD and NZD/USD outlook next 24 hours: Watch out for the swag of China data released this afternoon, and US retail sales tonight. AUD broke trend support (since 12 Jan) at 1.0050, and that level should cap bounces today. Longer term, a long awaited reversal is starting to unfold. The NZD lower is surprisingly resilient at 0.7340 support, probably due to AUD/NZD cross selling, but we expect any continuation of global risk aversion will push it towards 0.7270.

Events Today

Date Country Release last Forecast 11 Mar NZ  Feb Food Prices   1.8% -0.3%    Aus  RBA’s Debelle and Broadbent speaking        US  Feb Retail Sales 0.3%  0.80%     Feb Retail Sales ex Autos and Gas   0.2% 0.20%     Mar UoM Consumer Sentiment  77.5 74     Jan Business Inventories 0.8%  0.80%     Chn  Feb Consumer Price Index %yr  4.90% 4.80%     Feb Industrial Production %yr  13.50% 13.00%     Feb Producer Price Index %yr  6.60% 7.00%     Feb Fixed Assets Inv. Urban %ytd   24.5% 23.00%     Feb Industrial Profits %ytd          Feb Retail Sales %yr  19.10% 19.00%   UK  Feb Output Prices %yr  3.20% 3.40%   Can  Feb Employment  69.2 10 14-Mar Jpn  Feb Consumer Confidence  41.1 -    Eur  Jan Industrial Production  -0.1%  -    Can  Q4 Capacity Utilization Rate  78.10% -  15-Mar Aus  RBA Minutes          Feb New Motor Vehicle Sales  -1.9%  -    US  Mar Empire Manufacturing  15.4 16

<a href="http://www.actionforex.com/analysis/daily-forex-fundamentals/forex-exchange-morning-report-20110311135154/tag:news.google.com,2005:cluster=http://www.actionforex.com/analysis/daily-forex-fundamentals/forex-exchange-morning-report-20110311135154/Fri, 11 Mar 2011 03:35:39 GMT 00:00″>Forex Exchange Morning Report

Michael Wright, On Wednesday December 15, 2010, 11:30 am EST

the AUDUSD has worked its way into a descending channel on the 15 minute chart, but the decline may be short-lived as the pair finds major support at the 0.99 area, which coincides with the rising trend line on the hourly chart.

Potential 24 Hour Setups

Currency Pair

Potential Target

Pivot Support

Pivot Resistance

Pending Long AUDUSD

0.9985

0.9865

1.0047

*Trade updates during the course of the day will be provided through our real time news page.

Review of Price Action on the Previous Day’s Trade

Currency

Entry

Potential Target

Close

Pending Long AUDCHF

–Failed to get entered–

–

–

The AUDUSD has worked its way into a descending channel on the 15 minute chart, but the decline may be short-lived as the pair finds major support at the 0.99 area, which coincides with the rising trend line on the hourly chart. Indeed, we may see a lackluster performance in the pair ahead of the U.S. inflation report. the report is of great importance in that it trails the FOMC’s second round of quantitative easing in which the Fed expressed concerns of low inflation and high employment. Indeed, risk aversion has been the main driver during the overnight trade, and if the sentiment continues to favor the greenback, market participants should not rule a push below the rising trend line, which will then expose additional losses towards the 0.98 area as the overall trend is to the downside. if price action moves in our favor, make sure to place a trailing stop in order to avoid any unforeseen losses.

AUDUSD 15 Minute Chart

Charts created using FXCM’s Strategy Trader

Close: 0.9916

SSI: -2.40

Retail positioning relates to our speculative sentiment index which illustrates where traders are at in the market. the larger the retail positioning is within the highlighted area, the more likely it is that longs exceed shorts or vice versa. we will look to use this indicator in conjunction with other technical developments to dictate price action over the next 24 hours.

Every day at 16:00 GMT, we analyze potential 24 hour trade set ups. the trade is no longer valid if it is not triggered by 16:00 GMT the next day. good luck Trading!

Written by Michael Wright, Currency Analyst

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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, Intraday Trading, and forex trading Weekly Forecast

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AUDUSD Bounded by Descending Channel Ahead of U.S. CPI Report