If you are reading my site then you're an entrepreneur. And just as a new business must capitalize upon the strengths of its founders, a career in the markets crucially hinges upon the assets—personal and monetary—of the trader. I'm a self taught trader and I'll try to focus on numbers than the grammer/ perfect language as it holds no value in market.
Think clearly. Plan accordingly. Commit completely!!!
Caution Note
My forecast updates are my plans and sometimes it may look against trend and vice-versa. Individuals must assess their account & margin before committing all my trades.
All charts presented here are patterns (are free - no marketing) - some (around 60%) patterns hit target..
(Waiting for Daily Market latest session sentiments updates)...
Ratio Strategy (non technical -liquidity based)
When the providers ratio in this table >+65 or <-65 then take the trade for reverse trend. If the value is <-65 then BUY and viceversa.
Showing posts with label Indian FX Guru. Show all posts
Showing posts with label Indian FX Guru. Show all posts
Thursday, 31 December 2020
Thursday, 8 April 2010
Tuesday, 9 March 2010
My Forecasts
10:20GMT We are hitting today's low - say bottoms for JPYs crosses, EURs & GBPs.
08:40GMT SOS: EURUSD abt to sink..
07:50GMT With current momentum EURJPY Longs below 121.70s target back to 122.50s.
03:45GMT My Strategy for today: Take LONGs in GBPUSD 1.5015, EURJPY 122.66 & EURUSD 1.3627 for 40-50 pips target and book pending Shorts above 1.5080, 122.99, 1.3683 for 80-90 pips. I'll stick to this unless a new alert for direction change is generated.[The Uptrend never took the hook so we sank today - managed to book longs for 07:50 alerts]
00:00GMT Good Morning Friends, My Expectation for today is that EURUSD will drop to complete all pairs drop for profit bookings. JPY Crosses drops are complete it should make bottom-out soon i.e during japanses session close. For GBPUSD its almost completed the fall, it should lookup sooner with resistence at 1.5.
08:40GMT SOS: EURUSD abt to sink..
07:50GMT With current momentum EURJPY Longs below 121.70s target back to 122.50s.
03:45GMT My Strategy for today: Take LONGs in GBPUSD 1.5015, EURJPY 122.66 & EURUSD 1.3627 for 40-50 pips target and book pending Shorts above 1.5080, 122.99, 1.3683 for 80-90 pips. I'll stick to this unless a new alert for direction change is generated.[The Uptrend never took the hook so we sank today - managed to book longs for 07:50 alerts]
00:00GMT Good Morning Friends, My Expectation for today is that EURUSD will drop to complete all pairs drop for profit bookings. JPY Crosses drops are complete it should make bottom-out soon i.e during japanses session close. For GBPUSD its almost completed the fall, it should lookup sooner with resistence at 1.5.
Market Rumours
Japan core machinery orders--leading indicator of capex--likely down 3.7% on-month in January, marking 1st fall in 2 months, following December's robust 20.1% jump, according to economists polled by Dow Jones, Nikkei. But there's little reason to be pessimistic, some say. Expected (on-month) drop likely a "technical decline" that often follows unusually strong growth, says Morgan Stanley chief economist Takehiro Sato in report (he tips 5.6% fall in January). Adds, "we maintain our view that the underlying trend of machinery orders has started stabilizing." Previous data show October-December core orders +0.5% on-quarter, 1st gain in 7 quarters. Data bode well for nation's fragile economy as capex makes up 15% of GDP in Japan, though it may take some time before full-fledged capex recovery. Data due at 2350 GMT.
1-month ATM USD/JPY implied volatilities tick up to 11.10%/11.80% vs 11.05%/11.75% in NY overnight as spot's fall increases demand for downside protection vs USD/JPY. Bid of implied volatilities could rise toward upper-11% levels if spot market extends losses to 89.00, Tokyo options dealers say; USD/JPY last at 90.03. "On views that the dollar may trend higher, players had bought dollar-call options with a Y92 strike price. But now those deals are disappearing" as spot's rise look difficult for now.
U.K. February retail sales up sharply on-year with British Retail Consortium saying like-for-like sales +2.2% on-year after falling 0.7% in January; compares with +3.0% expected from Dow Jones poll of economists. Food store sales weaker after shoppers stocked up on goods during snowbound month of January; clothing and footwear sales grew more sharply in February vs January, sales of homewares and furniture returned to growth, BRC survey shows. "Despite appearances, these results are not that strong," says Stephen Robertson, director general of the BRC. "The growth is compared with very weak figures a year ago when February saw the worst of last winter's weather and this February's performance was helped by sales postponed from January." Suggests that while consumers more confident, willing to spend, UK emerging from recession, people remain cautious as unemployment continues to rise, ahead of widely expected tax rises, government spending cuts.
Rise in UK house prices slowed sharply in February as supply outpaces demand, says Royal Institution of Chartered Surveyors; says in seasonally-adjusted terms, proportion of surveyors reporting rise in house prices exceeds proportion reporting fall by 17 percentage points; compares with January's revised 31-point rise and well below 32-point rise tipped by Dow Jones poll of economists. "Most market indicators are still positive and consistent with further house price increases," says RICS spokesperson Jeremy Leaf; "However, the magnitude of the gains going forward is likely to continue to ease reflecting the fact that new supply coming onto the market is starting to outstrip fresh demand."
GBP/JPY down as weaker-than-expected U.K. February house price balance, lingering U.K. fiscal health concerns prompt investors to reduce risks, says Mizuho Corporate Bank senior market economist Daisuke Karakama; "players remain very sensitive to the U.K.'s huge deficit issue and economic fundamentals." GBP/JPY down almost 90 sen at 135.22 vs New York overnight level. Adds, "I don't expect the pound to rise back to pre-Lehman levels" in long-run (unit at 198.15 at end of August 2008). Says BOE may be forced to execute further monetary easing, which could weigh on unit. GBP/JPY's floor at 134.00.
USD/JPY has positive medium-term outlook, with rise above 93.78 possible, its highest level in past 3 months (marked January 8), says Barclays Capital FX analyst Yuki Sakasai; last at 90.25. Notes U.S. Treasury yield may trend higher in part helped by Fed asset purchase program ending at end March, which may buoy USD. Adds gains in pair could be in "better weather after February's snowstorms (that ground business to halt) could push up U.S. economic data for March," including non-farm payrolls next month. Says "the dollar has more upside risks than downside on views that the U.S. economy is well positioned to recover."
1-month ATM USD/JPY implied volatilities tick up to 11.10%/11.80% vs 11.05%/11.75% in NY overnight as spot's fall increases demand for downside protection vs USD/JPY. Bid of implied volatilities could rise toward upper-11% levels if spot market extends losses to 89.00, Tokyo options dealers say; USD/JPY last at 90.03. "On views that the dollar may trend higher, players had bought dollar-call options with a Y92 strike price. But now those deals are disappearing" as spot's rise look difficult for now.
U.K. February retail sales up sharply on-year with British Retail Consortium saying like-for-like sales +2.2% on-year after falling 0.7% in January; compares with +3.0% expected from Dow Jones poll of economists. Food store sales weaker after shoppers stocked up on goods during snowbound month of January; clothing and footwear sales grew more sharply in February vs January, sales of homewares and furniture returned to growth, BRC survey shows. "Despite appearances, these results are not that strong," says Stephen Robertson, director general of the BRC. "The growth is compared with very weak figures a year ago when February saw the worst of last winter's weather and this February's performance was helped by sales postponed from January." Suggests that while consumers more confident, willing to spend, UK emerging from recession, people remain cautious as unemployment continues to rise, ahead of widely expected tax rises, government spending cuts.
Rise in UK house prices slowed sharply in February as supply outpaces demand, says Royal Institution of Chartered Surveyors; says in seasonally-adjusted terms, proportion of surveyors reporting rise in house prices exceeds proportion reporting fall by 17 percentage points; compares with January's revised 31-point rise and well below 32-point rise tipped by Dow Jones poll of economists. "Most market indicators are still positive and consistent with further house price increases," says RICS spokesperson Jeremy Leaf; "However, the magnitude of the gains going forward is likely to continue to ease reflecting the fact that new supply coming onto the market is starting to outstrip fresh demand."
GBP/JPY down as weaker-than-expected U.K. February house price balance, lingering U.K. fiscal health concerns prompt investors to reduce risks, says Mizuho Corporate Bank senior market economist Daisuke Karakama; "players remain very sensitive to the U.K.'s huge deficit issue and economic fundamentals." GBP/JPY down almost 90 sen at 135.22 vs New York overnight level. Adds, "I don't expect the pound to rise back to pre-Lehman levels" in long-run (unit at 198.15 at end of August 2008). Says BOE may be forced to execute further monetary easing, which could weigh on unit. GBP/JPY's floor at 134.00.
USD/JPY has positive medium-term outlook, with rise above 93.78 possible, its highest level in past 3 months (marked January 8), says Barclays Capital FX analyst Yuki Sakasai; last at 90.25. Notes U.S. Treasury yield may trend higher in part helped by Fed asset purchase program ending at end March, which may buoy USD. Adds gains in pair could be in "better weather after February's snowstorms (that ground business to halt) could push up U.S. economic data for March," including non-farm payrolls next month. Says "the dollar has more upside risks than downside on views that the U.S. economy is well positioned to recover."
Monday, 8 March 2010
My Forecasts
14:05GMT Change in direction - GBPUSD & EURUSD going UP JPY crosses coming down soon.Wait for peaks & lows for the direction change.
11:45GMT We are almost at the lows for GBPUSD, GBPJPY.. looking for longs below 10-20 pips below for 50-70 pips up.
01:25GMT EURJPY & GBPJPY will drop by 30-40 pips and then rise to make today's high. Most probably Japanese session will be the best opportunity for Longs and UK/USA session for shorts
11:45GMT We are almost at the lows for GBPUSD, GBPJPY.. looking for longs below 10-20 pips below for 50-70 pips up.
01:25GMT EURJPY & GBPJPY will drop by 30-40 pips and then rise to make today's high. Most probably Japanese session will be the best opportunity for Longs and UK/USA session for shorts
Market Rumours
GBP/USD nudging 1.52 and EUR/GBP dipping below 0.90 proved too tempting for nervous sterling longs who have taken some profit off the table Monday morning. GBP/USD drops from 1.5196 to 1.5114 while EUR/GBP rises from 0.8997 to the session high of 0.9027.
The latest IMM positioning data for the period Feb. 23 to March 2 shows intensified pressure on sterling, with short positions being extended from already crowded levels, says Danske Bank. Net short GBP positions now stand at 52% of open interest, leaving GBP/USD in particular at risk from a potential position squeeze which could push the pair sharply higher. However, while risks from positioning are skewed to the upside, Danske reminds that even very crowded positioning can prove quite long lived. GBP/USD now trades at 1.5140.
With bullish daily momentum divergences in GBP/USD and daily momentum oscillators rolling bearish in EUR/GBP the odds favor near-term outperformance for sterling says Barclays Capital. For GBP/USD a move above 1.52 clears the way toward 1.5350 and potentially 1.5560, while EUR/GBP below 0.8950 opens risk toward the 0.8850-30 area says the bank. EUR/GBP now trades at 0.9012, GBP/USD at 1.5147.
EUR/USD has been trading in a corrective pattern over the last two weeks, with the RSI pointing higher, but that signal is being neutralized by sideways consolidation, says Commerzbank's Karen Jones. Allow for more upside stabs, but expect these to be shallow, says Jones, with resistance peg at 1.3750 and a top likely between 1.33845-75 where double Fibonacci retracement targets and the short-term downtrend line appear. For a strategy Jones favors selling rallies to 1.3750, adding at 1.3840, with a stop at 1.3875, looking for 1.3405 and 1.2930 on the downside. EUR/USD now at 1.3665.
USD is generally lower as French president Sarkozy's weekend reassurances about a Greek bail-out helped to lift market sentiment. The market's mood was already improved by strong payrolls data from the US Friday, as well as Japan's current account surplus coming in larger than expected. As the EUR bounced, so did the GBP, helped by new polls showing the Conservatives had widened their lead over Labour. USD is down a little at Y90.26 while EUR is up at $1.3671. GBP is up at $1.5194.
Friday's better-than-expected payrolls, together with new liquidity measures in Japan to combat deflationary pressures has put a bid under pro-risk strategies, and spark back into JPY-led carry trades, says Lloyds Banking Group. Says there is now a bullish set-up for risk assets and commodities, signalled by the FTSE 100 moving above 5600 and oil above $81/bbl. Favors long AUD, CAD and SEK vs JPY strategies.
The latest IMM positioning data for the period Feb. 23 to March 2 shows intensified pressure on sterling, with short positions being extended from already crowded levels, says Danske Bank. Net short GBP positions now stand at 52% of open interest, leaving GBP/USD in particular at risk from a potential position squeeze which could push the pair sharply higher. However, while risks from positioning are skewed to the upside, Danske reminds that even very crowded positioning can prove quite long lived. GBP/USD now trades at 1.5140.
With bullish daily momentum divergences in GBP/USD and daily momentum oscillators rolling bearish in EUR/GBP the odds favor near-term outperformance for sterling says Barclays Capital. For GBP/USD a move above 1.52 clears the way toward 1.5350 and potentially 1.5560, while EUR/GBP below 0.8950 opens risk toward the 0.8850-30 area says the bank. EUR/GBP now trades at 0.9012, GBP/USD at 1.5147.
EUR/USD has been trading in a corrective pattern over the last two weeks, with the RSI pointing higher, but that signal is being neutralized by sideways consolidation, says Commerzbank's Karen Jones. Allow for more upside stabs, but expect these to be shallow, says Jones, with resistance peg at 1.3750 and a top likely between 1.33845-75 where double Fibonacci retracement targets and the short-term downtrend line appear. For a strategy Jones favors selling rallies to 1.3750, adding at 1.3840, with a stop at 1.3875, looking for 1.3405 and 1.2930 on the downside. EUR/USD now at 1.3665.
USD is generally lower as French president Sarkozy's weekend reassurances about a Greek bail-out helped to lift market sentiment. The market's mood was already improved by strong payrolls data from the US Friday, as well as Japan's current account surplus coming in larger than expected. As the EUR bounced, so did the GBP, helped by new polls showing the Conservatives had widened their lead over Labour. USD is down a little at Y90.26 while EUR is up at $1.3671. GBP is up at $1.5194.
Friday's better-than-expected payrolls, together with new liquidity measures in Japan to combat deflationary pressures has put a bid under pro-risk strategies, and spark back into JPY-led carry trades, says Lloyds Banking Group. Says there is now a bullish set-up for risk assets and commodities, signalled by the FTSE 100 moving above 5600 and oil above $81/bbl. Favors long AUD, CAD and SEK vs JPY strategies.
Friday, 5 March 2010
My Forecasts
11:50GMT Waiting game is on.. still maintaining GBP & EUR drop & JPY to rise forecast [***** V]
05:20GMT GBPUSD & EURUSD is expected to drop and USDJPY to rise.
05:20GMT GBPUSD & EURUSD is expected to drop and USDJPY to rise.
Market Rumours
The short-term trend for EUR/GBP is up, with recent sideways trading merely helping momentum unwind from overbought, says Barclays Capital. Consolidation above 0.8950 is bullish and the bank says it has targets of 0.9150 and 0.9230, with a buy-dips strategy favored. EUR/GBP now at 0.9040.
While GBP/USD remains capped below 1.52 the outlook remains bearish, says Barclays Capital. Now at 1.5028, the bank looks for slippage below 1.50 to target 1.4850 where some stability may be seen. GBP/USD now at 1.5035.
London traders are hearing talk that this weekend's press will be very negative on both the UK and sterling's outlook, no matter who wins the Election. Sterling is slipping Friday, trading softer on the crosses and against the dollar, currently at $1.5030.
Downside surprises are likely in February's payrolls report says Credit Suisse with the bank's analysts looking for -125K against the -68K consensus. A number in line with this estimate will keep U.S. front-end yields under downward pressure which will have favorable consequences for the JPY says the bank, who favors a tactical USD/JPY short into the numbers. USD/JPY now at 89.23.
The market has been reluctant to short the USD pretty much all week, and neither a good nor bad payroll number is likely to change this outlook, says Lloyds Banking Group. The bank holds the view that buying USD dips vs EUR and GBP makes sense in the current environment. However, following MOF/BOJ initiatives and the bearish seasonal set-up for JPY it favors concentrating on USD/JPY, with a target of 90.65 and 92.00 on a break above. USD/JPY now at 89.28.
Nikkei's story suggesting the BOJ is likely to consider more monetary easing, may not immediately trigger JPY selling, but it should prevent USD/JPY from slipping past its recent lows says RBS. All in all RBS says despite the risk stemming from Japanese year-end repatriation, it sees levels below 90.00 as a buy. USD/JPY now trades at 89.25 from Thursday's 2010 low of 88.14.
Yesterday's drop in JPY 3-month Libors (now below USD's for first time since late Aug) likely to become additional USD positive factor as it makes it a relatively less attractive funding currency for trades into others, Standard Chartered says. Notes Libor switch, together with improved US outlook and worries on liquidity issues elsewhere, may result in significant changes in risk on/off trading environment prevalent over 2009--when equity gains pushed EUR higher, USD lower. "The historically elevated correlation between US equity markets and EUR/USD may ease further in the coming months as investors diversify their choice of funding currencies more widely across USD, GBP, EUR and JPY... The fact that US rates now appear to have found a floor relative to Japan reduces the USD's appeal as a carry funder." EUR/USD last at 1.3590 vs 1.3579 late in NY trade. See "Yen Libor Rate Drops Below Dollar Rate; First Time Since Aug"
Dollar/yen currency options were almost unchanged in Asia Friday, as a firm spot market left players reluctant to buy downside hedges against the U.S. unit. Market participants are now focused on U.S. non-farm payrolls data for February due at 1330 GMT to gauge the health of the world's biggest economy. Options could rise next week if the data come in weaker than expected, dealers said. "Demand for the dollar's downside hedges fell (Friday), but the actual selling amount was relatively small as players remained cautious about the upcoming U.S. jobs data," said an options trader at a major Tokyo bank. The dollar stood at Y89.24 as of 0330 GMT compared with Y89.09 in New York late Thursday. One-month at-the-money implied volatilities stood at 10.95%/11.65% compared with 10.90%/11.60% in New York late Thursday. One player sold 6-month at-the-money straddles, with a $50 million face value at 13.05%, said an options dealer in Tokyo. Such contracts become profitable when exchange rates swing sharply.
USD/JPY may rise above 90.00 in global day if awaited U.S. non-farm payrolls data beat economists' forecast, as markets now somewhat pricing in weak outcomes, says Mizuho Corporate Bank senior dealer Yuichiro Harada. That also means even if the data turn out to be weaker than expected, USD/JPY's downside will be very limited. Chance of upside surprise in today's jobs data relatively high as ADP jobs report released earlier this week stronger than market expectations, he says. Dow Jones poll of economists tip NFP to show jobs have declined by 75,000 in February; data due at 1330 GMT. Pair last 89.24.
1-month ATM USD/JPY implied volatilities almost unchanged at 10.95%/11.65% vs yesterday in NY as firm spot market leaves players reluctant to buy downside protection vs USD/JPY. One market participant sold 6-month ATM straddles, which benefit from greater volatility, with $50 million face value at 13.05%, options dealer in Tokyo says. Players to watch U.S. non-farm payrolls data for February due 1330 GMT; if come in stronger than expected, implied volatilities may fall toward 10.00% next week, options dealers say.
Japan's Finance Minister Naoto Kan's remark that he thinks JPY's rises will be subdued give Asian speculators excuse to sell JPY against USD, EUR, as comment seems to hint at JPY-selling intervention if JPY strengthens too much, though it's far from certain whether Tokyo would actually take such a step barring a sharp JPY rise, dealers say. Also weighing on JPY is Nikkei report that BOJ will likely consider further easing toward April; "the Nikkei report caused some foreign players to cover shorts," says Satoshi Okagawa, head of FX forward trading group at Sumitomo Mitsui Banking Corp. Dealers say those factors may continue to push up USD/JPY to 90.00, EUR/JPY to 121.80, but additional rises may be limited ahead of U.S. February non-farm payrolls data later in day. USD/JPY at 89.32, EUR/JPY at 121.28.
Even if BOJ decides to provide more money to financial firms by expanding fund-provision operation introduced in December as Nikkei reported, room for decline in funding rates of less than 1-year duration may be limited as market has already priced in prolonged BOJ accommodative policy, says UBS chief strategist Eiji Dohke; adds expansion of step may merely be alternative to special lending operation that will expire at end March; in special facility, BOJ has lent 3-month funds at 0.1% with corporate bonds, CP as collateral. Adds increases in JGB outright purchases would be taken after April-June quarter. Recommends to sell JGBs if prices rally sharply to 10-year yield around 1.25%; benchmark 10-year cash JGB yield now down 0.5 bps at 1.320%.
While GBP/USD remains capped below 1.52 the outlook remains bearish, says Barclays Capital. Now at 1.5028, the bank looks for slippage below 1.50 to target 1.4850 where some stability may be seen. GBP/USD now at 1.5035.
London traders are hearing talk that this weekend's press will be very negative on both the UK and sterling's outlook, no matter who wins the Election. Sterling is slipping Friday, trading softer on the crosses and against the dollar, currently at $1.5030.
Downside surprises are likely in February's payrolls report says Credit Suisse with the bank's analysts looking for -125K against the -68K consensus. A number in line with this estimate will keep U.S. front-end yields under downward pressure which will have favorable consequences for the JPY says the bank, who favors a tactical USD/JPY short into the numbers. USD/JPY now at 89.23.
The market has been reluctant to short the USD pretty much all week, and neither a good nor bad payroll number is likely to change this outlook, says Lloyds Banking Group. The bank holds the view that buying USD dips vs EUR and GBP makes sense in the current environment. However, following MOF/BOJ initiatives and the bearish seasonal set-up for JPY it favors concentrating on USD/JPY, with a target of 90.65 and 92.00 on a break above. USD/JPY now at 89.28.
Nikkei's story suggesting the BOJ is likely to consider more monetary easing, may not immediately trigger JPY selling, but it should prevent USD/JPY from slipping past its recent lows says RBS. All in all RBS says despite the risk stemming from Japanese year-end repatriation, it sees levels below 90.00 as a buy. USD/JPY now trades at 89.25 from Thursday's 2010 low of 88.14.
Yesterday's drop in JPY 3-month Libors (now below USD's for first time since late Aug) likely to become additional USD positive factor as it makes it a relatively less attractive funding currency for trades into others, Standard Chartered says. Notes Libor switch, together with improved US outlook and worries on liquidity issues elsewhere, may result in significant changes in risk on/off trading environment prevalent over 2009--when equity gains pushed EUR higher, USD lower. "The historically elevated correlation between US equity markets and EUR/USD may ease further in the coming months as investors diversify their choice of funding currencies more widely across USD, GBP, EUR and JPY... The fact that US rates now appear to have found a floor relative to Japan reduces the USD's appeal as a carry funder." EUR/USD last at 1.3590 vs 1.3579 late in NY trade. See "Yen Libor Rate Drops Below Dollar Rate; First Time Since Aug"
Dollar/yen currency options were almost unchanged in Asia Friday, as a firm spot market left players reluctant to buy downside hedges against the U.S. unit. Market participants are now focused on U.S. non-farm payrolls data for February due at 1330 GMT to gauge the health of the world's biggest economy. Options could rise next week if the data come in weaker than expected, dealers said. "Demand for the dollar's downside hedges fell (Friday), but the actual selling amount was relatively small as players remained cautious about the upcoming U.S. jobs data," said an options trader at a major Tokyo bank. The dollar stood at Y89.24 as of 0330 GMT compared with Y89.09 in New York late Thursday. One-month at-the-money implied volatilities stood at 10.95%/11.65% compared with 10.90%/11.60% in New York late Thursday. One player sold 6-month at-the-money straddles, with a $50 million face value at 13.05%, said an options dealer in Tokyo. Such contracts become profitable when exchange rates swing sharply.
USD/JPY may rise above 90.00 in global day if awaited U.S. non-farm payrolls data beat economists' forecast, as markets now somewhat pricing in weak outcomes, says Mizuho Corporate Bank senior dealer Yuichiro Harada. That also means even if the data turn out to be weaker than expected, USD/JPY's downside will be very limited. Chance of upside surprise in today's jobs data relatively high as ADP jobs report released earlier this week stronger than market expectations, he says. Dow Jones poll of economists tip NFP to show jobs have declined by 75,000 in February; data due at 1330 GMT. Pair last 89.24.
1-month ATM USD/JPY implied volatilities almost unchanged at 10.95%/11.65% vs yesterday in NY as firm spot market leaves players reluctant to buy downside protection vs USD/JPY. One market participant sold 6-month ATM straddles, which benefit from greater volatility, with $50 million face value at 13.05%, options dealer in Tokyo says. Players to watch U.S. non-farm payrolls data for February due 1330 GMT; if come in stronger than expected, implied volatilities may fall toward 10.00% next week, options dealers say.
Japan's Finance Minister Naoto Kan's remark that he thinks JPY's rises will be subdued give Asian speculators excuse to sell JPY against USD, EUR, as comment seems to hint at JPY-selling intervention if JPY strengthens too much, though it's far from certain whether Tokyo would actually take such a step barring a sharp JPY rise, dealers say. Also weighing on JPY is Nikkei report that BOJ will likely consider further easing toward April; "the Nikkei report caused some foreign players to cover shorts," says Satoshi Okagawa, head of FX forward trading group at Sumitomo Mitsui Banking Corp. Dealers say those factors may continue to push up USD/JPY to 90.00, EUR/JPY to 121.80, but additional rises may be limited ahead of U.S. February non-farm payrolls data later in day. USD/JPY at 89.32, EUR/JPY at 121.28.
Even if BOJ decides to provide more money to financial firms by expanding fund-provision operation introduced in December as Nikkei reported, room for decline in funding rates of less than 1-year duration may be limited as market has already priced in prolonged BOJ accommodative policy, says UBS chief strategist Eiji Dohke; adds expansion of step may merely be alternative to special lending operation that will expire at end March; in special facility, BOJ has lent 3-month funds at 0.1% with corporate bonds, CP as collateral. Adds increases in JGB outright purchases would be taken after April-June quarter. Recommends to sell JGBs if prices rally sharply to 10-year yield around 1.25%; benchmark 10-year cash JGB yield now down 0.5 bps at 1.320%.
Thursday, 4 March 2010
My Forecasts
13:40GMT Sound odd -Risky - Pound abt to go up..
13:30GMT Expecting EUR to drop..
11:30GMT Not many alerts today - all majors consolidating. Seen some volume early today but I expect more in next 20-30 mins.. a triangle formation in 1 hour charts of GBPUSD.
News:The euro has tumbled since the Greek debt crisis started to bite last December, but it looks as though the currency's long-term decline has only just begun.
Short-term accounts have already been blamed for the currency's 10% decline against the dollar over the past three months, with signs of record-breaking negative bets among some investors sparking suspicions of a speculative raid.
Other types of investors are feeling the heat too, with the U.S. Justice Department launching an investigation into whether certain hedge funds may have banded together to push the currency down.
However, a much weightier group of long-term investors has yet to start selling in bulk. Some commentators are now warning against complacency, stressing that the big wave of euro selling from longer-term accounts such as central banks and pension funds is still in its early stages. Particularly if German bonds come under pressure, a further 10% drop could well be just around the corner.
"The big issue is that pension funds, life insurance companies and central banks may de-rate their opinions of the euro, just as they de-rated their views on the dollar from 2002 to 2008," said Stephen Jen, a currencies specialist at hedge fund BlueGold Capital in London.
"We are dealing with a crisis situation where the political seed could have been sown for an eventual breakup of the European Monetary Union... In my view, an expanding universe of euro sellers will likely help power a protracted downtrend in the euro against the dollar," he said. Watch out for the euro to slide to $1.20, he added.
The budget crisis in euro member Greece and the potential that the European Union may need to bend the currency membership rules to bail it out have already attracted enthusiastic euro sellers.
Non-commercial, or speculative, traders on the Chicago Mercantile Exchange have already built up negative bets on the euro on a record-breaking scale, generating an aggregate negative position of around $9 billion, according to weekly data that the CME provides to the Commodity Futures Trading Commission.
Many analysts now think that with negative bets running at all-time extremes, the momentum for euro sales may wane. As some traders lock in profits on successful bets and close their positions, the euro could climb somewhat. Indeed, these pressures may account for the currency's recovery from its nine-month low of $1.3434 reached earlier in March to just under $1.37 Thursday. This recovery may have further to run. However, it clouds the bigger picture.
The CME numbers are scrutinized weekly because they are taken as a rough proxy for hedge-fund flows as a whole. Still, at around $9 billion, these positions are a tiny fraction of the total currencies business, which accounts for at least $3 trillion in flows each day.
"The data are interesting, but this is a sideshow," said Simon Derrick, a senior currencies analyst at The Bank of New York Mellon in London.
On a much bigger scale, around one-third of the enormous $7.5 trillion held in reserves by central banks around the world is denominated in euros, Derrick said.
Central banks are generally thought to follow a similar investment strategy to other long-term investors, and judging by the $13 trillion held by The Bank of New York's custody clients, it is clear that euros still make up a large share, Derrick said.
"Investors have been reducing their holdings of Greek and Italian debt, but relative to where they were in 2000, their overall holdings are much higher," said Derrick.
Moreover, while investors have trimmed their holdings of debt from the riskier euro-zone nations, they have boosted their holdings of German bonds, staying in euros and effectively using German government bonds, or bunds, as a European safe-haven.
That makes the near-term fate of bunds crucial, and here, the outlook is finely balanced.
Price movements so far show no sign of a pullback yet, but investors may start to shy away from German assets for fear of the liabilities that Germany may undertake.
In addition, if Germany offers some form of guarantee to Greek debt, then German bonds could suffer outflows as investors flock to higher-yielding Greek debt with a German safety net.
To make matters worse, if other struggling euro nations approach Germany for help, and Germany offers yet more guarantees, then the quality of German government debt could be seriously polluted. Rather than shifting from the bonds of one euro-zone nation to another, many investors may exit the currency bloc altogether, the theory goes.
"We can no longer make our judgments about German paper simply on the prudence of the German finance ministry. Instead, we must also now factor in the finances of the nations whose debt they may end up guaranteeing," Derrick said.
Like Jen at BlueGold, Derrick said he suspects that a move down for the euro to $1.15 to $1.20 is a clear possibility. "If you take away the reserve currency premium, that that's the long-run average," he said. "Why can't it be there?"
13:30GMT Expecting EUR to drop..
11:30GMT Not many alerts today - all majors consolidating. Seen some volume early today but I expect more in next 20-30 mins.. a triangle formation in 1 hour charts of GBPUSD.
News:The euro has tumbled since the Greek debt crisis started to bite last December, but it looks as though the currency's long-term decline has only just begun.
Short-term accounts have already been blamed for the currency's 10% decline against the dollar over the past three months, with signs of record-breaking negative bets among some investors sparking suspicions of a speculative raid.
Other types of investors are feeling the heat too, with the U.S. Justice Department launching an investigation into whether certain hedge funds may have banded together to push the currency down.
However, a much weightier group of long-term investors has yet to start selling in bulk. Some commentators are now warning against complacency, stressing that the big wave of euro selling from longer-term accounts such as central banks and pension funds is still in its early stages. Particularly if German bonds come under pressure, a further 10% drop could well be just around the corner.
"The big issue is that pension funds, life insurance companies and central banks may de-rate their opinions of the euro, just as they de-rated their views on the dollar from 2002 to 2008," said Stephen Jen, a currencies specialist at hedge fund BlueGold Capital in London.
"We are dealing with a crisis situation where the political seed could have been sown for an eventual breakup of the European Monetary Union... In my view, an expanding universe of euro sellers will likely help power a protracted downtrend in the euro against the dollar," he said. Watch out for the euro to slide to $1.20, he added.
The budget crisis in euro member Greece and the potential that the European Union may need to bend the currency membership rules to bail it out have already attracted enthusiastic euro sellers.
Non-commercial, or speculative, traders on the Chicago Mercantile Exchange have already built up negative bets on the euro on a record-breaking scale, generating an aggregate negative position of around $9 billion, according to weekly data that the CME provides to the Commodity Futures Trading Commission.
Many analysts now think that with negative bets running at all-time extremes, the momentum for euro sales may wane. As some traders lock in profits on successful bets and close their positions, the euro could climb somewhat. Indeed, these pressures may account for the currency's recovery from its nine-month low of $1.3434 reached earlier in March to just under $1.37 Thursday. This recovery may have further to run. However, it clouds the bigger picture.
The CME numbers are scrutinized weekly because they are taken as a rough proxy for hedge-fund flows as a whole. Still, at around $9 billion, these positions are a tiny fraction of the total currencies business, which accounts for at least $3 trillion in flows each day.
"The data are interesting, but this is a sideshow," said Simon Derrick, a senior currencies analyst at The Bank of New York Mellon in London.
On a much bigger scale, around one-third of the enormous $7.5 trillion held in reserves by central banks around the world is denominated in euros, Derrick said.
Central banks are generally thought to follow a similar investment strategy to other long-term investors, and judging by the $13 trillion held by The Bank of New York's custody clients, it is clear that euros still make up a large share, Derrick said.
"Investors have been reducing their holdings of Greek and Italian debt, but relative to where they were in 2000, their overall holdings are much higher," said Derrick.
Moreover, while investors have trimmed their holdings of debt from the riskier euro-zone nations, they have boosted their holdings of German bonds, staying in euros and effectively using German government bonds, or bunds, as a European safe-haven.
That makes the near-term fate of bunds crucial, and here, the outlook is finely balanced.
Price movements so far show no sign of a pullback yet, but investors may start to shy away from German assets for fear of the liabilities that Germany may undertake.
In addition, if Germany offers some form of guarantee to Greek debt, then German bonds could suffer outflows as investors flock to higher-yielding Greek debt with a German safety net.
To make matters worse, if other struggling euro nations approach Germany for help, and Germany offers yet more guarantees, then the quality of German government debt could be seriously polluted. Rather than shifting from the bonds of one euro-zone nation to another, many investors may exit the currency bloc altogether, the theory goes.
"We can no longer make our judgments about German paper simply on the prudence of the German finance ministry. Instead, we must also now factor in the finances of the nations whose debt they may end up guaranteeing," Derrick said.
Like Jen at BlueGold, Derrick said he suspects that a move down for the euro to $1.15 to $1.20 is a clear possibility. "If you take away the reserve currency premium, that that's the long-run average," he said. "Why can't it be there?"
Market Rumours
EUR/USD rises to a fresh session high of 1.3682 as the Greek 10-year bond sale finds strong demand with the book size now at EUR11B against EUR5B on offer and the book to close at 1100GMT.
While many of the major currencies are likely to stay rangebound ahead of Friday's US payrolls, JPY could be the exception says Barclays Capital. Fiscal year-end and falling US yields are triggering fresh JPY demand with many crosses being driven to the wire overnight says the bank. USD/JPY below 88.00, NZD/JPY below 60.00, EUR/JPY below 119.75 and GBP/JPY below 132.50 would suggest a full scale breakout is underway says the bank. USD/JPY trades at 88.44, NZD/JPY 61.00, EUR/JPY 120.90 and GBP/JPY 133.40.
While many of the major currencies are likely to stay rangebound ahead of Friday's US payrolls, JPY could be the exception says Barclays Capital. Fiscal year-end and falling US yields are triggering fresh JPY demand with many crosses being driven to the wire overnight says the bank. USD/JPY below 88.00, NZD/JPY below 60.00, EUR/JPY below 119.75 and GBP/JPY below 132.50 would suggest a full scale breakout is underway says the bank. USD/JPY trades at 88.44, NZD/JPY 61.00, EUR/JPY 120.90 and GBP/JPY 133.40.
Wednesday, 3 March 2010
My Forecasts
04:45GMT Liquidity still indicates GBPs to fall but I'll try to stay away till market has a clear intention.. though the pair is completing the pattern mentioned yesterday; i'll avoid the risk. Analysing the market times like this is the core for future success.
00:00GMT Careful with GBPs; Thursday BOE rate decision - Players strategy may in play now..
EURUSD RISK NEWS: Greek Prime Minister George Papandreou said on Tuesday his country was fighting for survival against bankruptcy and urged civil servants and pensioners to accept sacrifices to save the debt-burdened nation.In a dramatic speech to his Socialist PASOK party on the eve of a cabinet meeting expected to approve new austerity measures, Papandreou said: "I will fight to save the fatherland from whatever the nightmare possibility of bankruptcy might entail."Under pressure to meet European Union demands to find up to 4.8 billion euros (4.36 billion pounds) in additional savings before he visits Germany on Friday, he played up the risk of default, saying speculators had made borrowing costs prohibitive."If anyone thinks that this is a remote nightmare scenario, they don't realise what the situation is," he said. "Each day we discover new holes, new landmines, in the budget deficit."Papandreou did not spell out specific measures but he said public employees would have to get by on less, and the state could not go on subsidising pensions. That could hurt two of PASOK's key support bases. "We need to take tough decisions, decisions that can be unfair," he declared.Government sources said measures under consideration included raising value added tax (VAT), cutting public sector pay, freezing pensions and introducing higher duties on fuel, tobacco, alcohol and luxury goods.Greece's borrowing costs fell to their lowest level in weeks on Tuesday amid growing expectations that the government will announce new austerity measures that will in turn help it secure European financial support
00:00GMT Careful with GBPs; Thursday BOE rate decision - Players strategy may in play now..
EURUSD RISK NEWS: Greek Prime Minister George Papandreou said on Tuesday his country was fighting for survival against bankruptcy and urged civil servants and pensioners to accept sacrifices to save the debt-burdened nation.In a dramatic speech to his Socialist PASOK party on the eve of a cabinet meeting expected to approve new austerity measures, Papandreou said: "I will fight to save the fatherland from whatever the nightmare possibility of bankruptcy might entail."Under pressure to meet European Union demands to find up to 4.8 billion euros (4.36 billion pounds) in additional savings before he visits Germany on Friday, he played up the risk of default, saying speculators had made borrowing costs prohibitive."If anyone thinks that this is a remote nightmare scenario, they don't realise what the situation is," he said. "Each day we discover new holes, new landmines, in the budget deficit."Papandreou did not spell out specific measures but he said public employees would have to get by on less, and the state could not go on subsidising pensions. That could hurt two of PASOK's key support bases. "We need to take tough decisions, decisions that can be unfair," he declared.Government sources said measures under consideration included raising value added tax (VAT), cutting public sector pay, freezing pensions and introducing higher duties on fuel, tobacco, alcohol and luxury goods.Greece's borrowing costs fell to their lowest level in weeks on Tuesday amid growing expectations that the government will announce new austerity measures that will in turn help it secure European financial support
Market Rumours
1-month ATM USD/JPY implied volatilities rise to 11.30%/12.00% vs 10.95%/11.65% in NY yesterday as USD/JPY maintains weaker bias, though moves limited in Asia morning; one player eyed selling 1-month USD/JPY ATM straddle at 11.65%. "Looking at a 1- to 2-week period, volatilities have been up and down with 11.5% as a mid-point because the dollar/yen hasn't formed a clear trend, and the pair now isn't playing the leading role in the forex market. But volatilities may gradually ease to below 11% if the dollar rises above the Y90 mark," says Japan bank dealer. Spot now at 88.65.
EUR likely to maintain positive bias vs both USD, JPY in Asia trade, says Sumitomo Mitsui Banking Corp.'s head of FX forward trading group Satoshi Okagawa; tips EUR/USD in 1.3580-1.3680 range vs 1.3607 late NY, EUR/JPY in 120.50-121.50 vs 120.75. "Though uncertainty continues to be high over outlook of U.S. regulation laws as well as Greek debt issue, the market has gained some kind of tolerance against such downside risks, considering recent firm moves in U.S. stocks and commodity prices." Eyes USD/JPY in 88.40-89.40 range vs 88.75, but expects no huge moves in the pair as players waiting to see strength of U.S. economic fundamentals from series of data due later in week, including ISM non-manufacturing index due later today (non-manufacturing PMI tipped 51 for February vs 50.5 previous).
EUR likely to maintain positive bias vs both USD, JPY in Asia trade, says Sumitomo Mitsui Banking Corp.'s head of FX forward trading group Satoshi Okagawa; tips EUR/USD in 1.3580-1.3680 range vs 1.3607 late NY, EUR/JPY in 120.50-121.50 vs 120.75. "Though uncertainty continues to be high over outlook of U.S. regulation laws as well as Greek debt issue, the market has gained some kind of tolerance against such downside risks, considering recent firm moves in U.S. stocks and commodity prices." Eyes USD/JPY in 88.40-89.40 range vs 88.75, but expects no huge moves in the pair as players waiting to see strength of U.S. economic fundamentals from series of data due later in week, including ISM non-manufacturing index due later today (non-manufacturing PMI tipped 51 for February vs 50.5 previous).
Tuesday, 2 March 2010
My Forecasts
09:35GMT Players are showing 1.4850 is a good support for GBPUSD while they play with EURUSD. Just be careful they might comeback after making sure that traders are in with BUY lots. They might go for another 200-300 pips drop kill. My advice is stay away or hedge to the best.I'm not touching EURUSD as its within Blue channel in 8 hrs and greece problem is not sorted out yet..
05:40GMT Most of the pairs are expected to go up in next 2-4hrs
04:40GMT Big Volumes in again.. in most of the pairs; are we going to see another run like yesterday!!! wait & see
00:00GMT Good Morning Friends, Frankly I'm in a very bad mood after my broker screwed up my hedging and closed my trades instead of swaps (sorry for the language -fustration). Anyway leaving that there coming back to analysis; bad news is that GBPUSD is not stable at all. GBP Analysis:
05:40GMT Most of the pairs are expected to go up in next 2-4hrs
04:40GMT Big Volumes in again.. in most of the pairs; are we going to see another run like yesterday!!! wait & see
00:00GMT Good Morning Friends, Frankly I'm in a very bad mood after my broker screwed up my hedging and closed my trades instead of swaps (sorry for the language -fustration). Anyway leaving that there coming back to analysis; bad news is that GBPUSD is not stable at all. GBP Analysis:
Market Rumours
Should a bailout of Greece appear, then it cannot be excluded that the market will turn its attention to the state of the UK's national finances says Commerzbank. With this in mind the bank advises against sterling longs. GBP/USD now trades at 1.4968, EUR/GBP at 0.9050.
Sterling continues to be shunned on the foreign exchange markets as GBP/USD skirts the 1.5000 level, but the longer-term prospects for the currency paints an even bleaker picture. See Tuesday's Charting Europe column by Francis Bray.
Brown Brothers Harriman chief currency strategist Marc Chandler says in note that "sentiment on Europe and the UK remains very negative, and market is likely to still favor selling euros and sterling into strength." Echoing this view is Deutsche Bank senior currency analyst Koji Fukaya, who says "the (UK's) uncertain political picture and growing worries over a double-dip recession" may push GBP/USD down towards 1.4500, GBP/JPY towards 132.00; Fukaya adds if Friday's non-farm payrolls paint bleak picture of U.S. economy, fueling risk aversion broadly, GBP selling could accelerate. GBP/JPY last 133.60, GBP/USD at 1.4970.
1-month ATM USD/JPY implied volatilities rise slightly 11.10%/11.80% vs 11.05%/11.75% in NY Monday, as some players buy USD downside hedges despite spot stable in Asia morning. One player bought 6-month USD-put/JPY-call options with 88.30 strike price, around $50 million face value, says options trader at major Tokyo bank. Says after spot fell to near 4-week low at 88.70 yesterday amid mounting euro-zone economic uncertainty, "players are more likely to buy downside protection as any negative factors could trigger the dollar's steep falls." Players continue to watch for any Europe government officials' remarks on fiscally-troubled Greece. USD/JPY last at 89.31.
EUR, GBP down vs JPY on selling by non-Japan banks, due perhaps to grim outlook on eurozone economy, says dealer at major Tokyo banks; but "overall, trade remains thin since this morning as many players stay on the sidelines" before closely-watched decision from RBA's rate-setting meeting. Says an RBA rate hike could buoy risk-sensitive units including AUD, EUR, GBP vs JPY; "the focus is on what RBA officials will have to say about its economic outlook." Says if RBA's stance hawkish with suggestion pace of its rate hikes will be quicker, AUD/JPY may break ceiling of around 80.50, possibly testing 81.00. AUD/JPY last at 80.27; support 79.50. EUR/JPY support at 120.00 vs last 120.81; GBP/JPY's floor at 132.50.
Japan January all household spending +1.7% vs December's +2.1% due to lingering impact of economic stimulus packages including tax-reduction for electric appliances, says Mitsubishi Research Institute chief economist Yoko Takeda; "Japan's economic stimulus measures clearly supported household spending, but the effect may start to recede in the second half of this year." Meanwhile, favorable jobless rate comes as "global economic recovery discourages companies from laying off workers," such as in retail sales sector, says Shinko Research Institute economist Norio Miyagawa. Says even though worst is over for job market, corporate earning still very low, causing jobless rate to stay at current levels.
The pound suffered its worst drop in months, as uncertainty about looming national elections combined with persisting economic problems to spook investors already nervous about the U.K.'s ragged fiscal situation. The pound skidded early Monday in Europe, at one point falling 3% against the dollar to $1.4784 -- its lowest level since April 2009 -- before recovering to finish at $1.4973 in London, down 1.2% from Friday. Sterling is down 7.3% against the dollar this year, and negative sentiment has increased sharply in the past week. Monday's mid-morning fall was the biggest single-session drop in nearly a year, Bank of New York Mellon said. Investors have focused heavily on the euro's problems since Greece's fiscal difficulties surfaced late last year. But the euro, down 5.4% against the dollar this year, has held up better than the pound. While Greece faces tough funding challenges, other members of the euro zone, notably Germany, are in strong enough shape to give Athens assistance should it be required. The U.K. has no such rich relative to help it. Moreover, its fiscal situation has become a double-edged sword, with tensions around the deficit growing as the national election, due by June, approaches. Some market commentators argue that the U.K. must swiftly reduce its deficit to placate restless bond investors who are concerned about the possibility of the fiscal situation eroding even more. At the same time, analysts at Swiss bank UBS AG recently warned sterling could fall to $1.05 or even lower -- if Britain moves too aggressively to cut the deficit. Being too quick to cut spending could shove the economy back into recession, UBS said. Fourth-quarter gross domestic product had a meager gain of 0.3%, supported by government spending, so the fiscal debate remains a sticking point. "You've got negative economic surprises, negative political risks and negative capital outflows," says Monica Fan, a currencies portfolio manager at investment firm State Street Global Advisors in London. "Investors who are concerned about the possibility of a Greek default are increasingly eyeing the U.K.'s high level of public debt and public deficit as a reason to sell sterling." Ms. Fan's reference to capital outflows referred in large part to insurer Prudential PLC's plan, unveiled Monday morning, to acquire American International Group's AIA business for $35.5 billion, $25 billion of it in cash. U.K.-based Prudential will need to convert a large amount of sterling into dollars to make the acquisition, something that investors said amplified negative sentiment around the pound. The political debate has also turned darker now that the quagmire that would be caused by a hung Parliament is considered a realistic possibility after the coming elections. In such a scenario, the winning party still doesn't have sufficient Parliamentary support to carry out its legislative agenda without help from other parties. David Cameron, the leader of the opposition Conservative Party, has watched the disintegration of his once double-digit lead in opinion polls over Prime Minister Gordon Brown's ruling Labour Party. On Sunday, a YouGov poll for the London Sunday Times placed the Conservatives two points ahead. That is among the slimmest of Tory leads since Mr. Brown enjoyed a brief honeymoon after he took over from Tony Blair in June 2007. Because of the way the U.K.'s voting system works, most commentators believe the Conservatives need a 10-percentage-point national lead to be confident of commanding a parliamentary majority. The postelection stakes are large. Credit-ratings agencies have warned the U.K. it could lose its top-notch triple-A rating if the winner of the next election fails to offer a credible plan for fixing the nation's finances. Any new government plan must address what looks like a still-fragile national economy. Economists and traders have started rifling through the speeches of the smaller British parties, since they could hold the key to crucial votes on budget matters. The Liberal Democrats, the country's third-largest party, is seen as the most likely king maker. The Conservatives have pledged to start cutting spending this year, whereas Labour has said such a stance could undermine the nascent recovery. Labour also has promised to protect more government departments from cuts. The Conservatives have given limited details of how they would reduce the deficit, and occasionally have appeared to contradict themselves on when austerity measures would get under way. Many analysts are taking politicians at face value when they say that they understand the gravity of the deficit and will act accordingly. "Both sides recognize that something will have to be done quite quickly to avoid a downgrade," says Kevin Gardiner, the head of investment strategy at Barclays Wealth. The U.K. has lagged behind the U.S., Germany and France in bouncing back from the crisis.
Brown Brothers Harriman chief currency strategist Marc Chandler says in note that "sentiment on Europe and the UK remains very negative, and market is likely to still favor selling euros and sterling into strength." Echoing this view is Deutsche Bank senior currency analyst Koji Fukaya, who says "the (UK's) uncertain political picture and growing worries over a double-dip recession" may push GBP/USD down towards 1.4500, GBP/JPY towards 132.00; Fukaya adds if Friday's non-farm payrolls paint bleak picture of U.S. economy, fueling risk aversion broadly, GBP selling could accelerate. GBP/JPY last 133.60, GBP/USD at 1.4970.
Japan's 4.9% January jobless rate tad better than expected, with Mizuho Research Institute analyst Yusuke Ichikawa saying outcome suggests "Japan's job market conditions have become more favorable." Still, outlook remains cloudy because of a lack of permanent jobs; notes while corporate demand for temporary employment, part-timers increasing slowly, "employment in permanent positions still looks difficult due to the uncertainty over Japan's economic outlook". Expects jobless rate to remain around 5.0% levels in coming months, which historically high for Japan economy.
The level of debts written off because defaulting borrowers will never repay them shot up in 2009, Bank of England figures have shown.In 2009, financial institutions wrote off £4.12bn in credit card loans, up from the previous record amount in 2008 of £3.2bn. The value of mortgages written off more than doubled, but from a lower level, from £408m in 2008 to £984m in 2009.Other loans written off jumped from £3.2bn to £4.2bn - pushing up the total write-offs by UK lenders to people from £6.9bn to £9.3bn.In addition to this, financial institutions wrote-off £5.9bn that was lent to non-financial businesses, as well as £154m lent to other financial corporations.Banks have been revealing their own specific write-off levels during the current reporting season.These institutions set aside millions of pounds to cover potential losses on their loans, but only when the loss is confirmed as unrecoverable is the money finally written off.The effect of the increased losses has been felt by those people who borrow but make repayments on time.It became more difficult during the recession for first-time buyers to get on the property ladder as lenders were making their criteria more stringent.Last month, financial information service Moneyfacts said that credit card rates had risen to their highest level for 12 years - at 18.8%.Bank of England figures suggested the rise was not so acute. It said the average interest rate on credit cards offered by banks and building societies has risen to its highest level since June 2006. At the end of January, the rate was 16.4%.
The Greek government is expected to outline Wednesday a new austerity package of around EUR4 billion in an effort to cut its huge budget deficit by four percentage points this year, government officials said Tuesday."The new package will most likely be announced on Wednesday. First there will be a cabinet meeting to seal the measures and an announcement will follow," one official told Dow Jones Newswires.Another official said Greece's debt management agency is preparing a 10-year bond hoping to raise between EUR3 billion and EUR5 billion."It will be within days of the announcement of the austerity package. Soon after," he said. "We need to go to the market very soon with the 10-year note because we risk ending up with no money." the second official said.Greece's civil servants union ADEDY said that it would stage a 24-hour strike in the middle of the month to protest against the new measures."We are meeting now to decide on the day. It will either be March 15, 16 or 17. The civil servants, which are the lowest paid in Greece, are paying the price for this crisis. Enough in enough," ADEDY President Spyros Papaspyros
Sterling continues to be shunned on the foreign exchange markets as GBP/USD skirts the 1.5000 level, but the longer-term prospects for the currency paints an even bleaker picture. See Tuesday's Charting Europe column by Francis Bray.
Brown Brothers Harriman chief currency strategist Marc Chandler says in note that "sentiment on Europe and the UK remains very negative, and market is likely to still favor selling euros and sterling into strength." Echoing this view is Deutsche Bank senior currency analyst Koji Fukaya, who says "the (UK's) uncertain political picture and growing worries over a double-dip recession" may push GBP/USD down towards 1.4500, GBP/JPY towards 132.00; Fukaya adds if Friday's non-farm payrolls paint bleak picture of U.S. economy, fueling risk aversion broadly, GBP selling could accelerate. GBP/JPY last 133.60, GBP/USD at 1.4970.
1-month ATM USD/JPY implied volatilities rise slightly 11.10%/11.80% vs 11.05%/11.75% in NY Monday, as some players buy USD downside hedges despite spot stable in Asia morning. One player bought 6-month USD-put/JPY-call options with 88.30 strike price, around $50 million face value, says options trader at major Tokyo bank. Says after spot fell to near 4-week low at 88.70 yesterday amid mounting euro-zone economic uncertainty, "players are more likely to buy downside protection as any negative factors could trigger the dollar's steep falls." Players continue to watch for any Europe government officials' remarks on fiscally-troubled Greece. USD/JPY last at 89.31.
EUR, GBP down vs JPY on selling by non-Japan banks, due perhaps to grim outlook on eurozone economy, says dealer at major Tokyo banks; but "overall, trade remains thin since this morning as many players stay on the sidelines" before closely-watched decision from RBA's rate-setting meeting. Says an RBA rate hike could buoy risk-sensitive units including AUD, EUR, GBP vs JPY; "the focus is on what RBA officials will have to say about its economic outlook." Says if RBA's stance hawkish with suggestion pace of its rate hikes will be quicker, AUD/JPY may break ceiling of around 80.50, possibly testing 81.00. AUD/JPY last at 80.27; support 79.50. EUR/JPY support at 120.00 vs last 120.81; GBP/JPY's floor at 132.50.
Japan January all household spending +1.7% vs December's +2.1% due to lingering impact of economic stimulus packages including tax-reduction for electric appliances, says Mitsubishi Research Institute chief economist Yoko Takeda; "Japan's economic stimulus measures clearly supported household spending, but the effect may start to recede in the second half of this year." Meanwhile, favorable jobless rate comes as "global economic recovery discourages companies from laying off workers," such as in retail sales sector, says Shinko Research Institute economist Norio Miyagawa. Says even though worst is over for job market, corporate earning still very low, causing jobless rate to stay at current levels.
The pound suffered its worst drop in months, as uncertainty about looming national elections combined with persisting economic problems to spook investors already nervous about the U.K.'s ragged fiscal situation. The pound skidded early Monday in Europe, at one point falling 3% against the dollar to $1.4784 -- its lowest level since April 2009 -- before recovering to finish at $1.4973 in London, down 1.2% from Friday. Sterling is down 7.3% against the dollar this year, and negative sentiment has increased sharply in the past week. Monday's mid-morning fall was the biggest single-session drop in nearly a year, Bank of New York Mellon said. Investors have focused heavily on the euro's problems since Greece's fiscal difficulties surfaced late last year. But the euro, down 5.4% against the dollar this year, has held up better than the pound. While Greece faces tough funding challenges, other members of the euro zone, notably Germany, are in strong enough shape to give Athens assistance should it be required. The U.K. has no such rich relative to help it. Moreover, its fiscal situation has become a double-edged sword, with tensions around the deficit growing as the national election, due by June, approaches. Some market commentators argue that the U.K. must swiftly reduce its deficit to placate restless bond investors who are concerned about the possibility of the fiscal situation eroding even more. At the same time, analysts at Swiss bank UBS AG recently warned sterling could fall to $1.05 or even lower -- if Britain moves too aggressively to cut the deficit. Being too quick to cut spending could shove the economy back into recession, UBS said. Fourth-quarter gross domestic product had a meager gain of 0.3%, supported by government spending, so the fiscal debate remains a sticking point. "You've got negative economic surprises, negative political risks and negative capital outflows," says Monica Fan, a currencies portfolio manager at investment firm State Street Global Advisors in London. "Investors who are concerned about the possibility of a Greek default are increasingly eyeing the U.K.'s high level of public debt and public deficit as a reason to sell sterling." Ms. Fan's reference to capital outflows referred in large part to insurer Prudential PLC's plan, unveiled Monday morning, to acquire American International Group's AIA business for $35.5 billion, $25 billion of it in cash. U.K.-based Prudential will need to convert a large amount of sterling into dollars to make the acquisition, something that investors said amplified negative sentiment around the pound. The political debate has also turned darker now that the quagmire that would be caused by a hung Parliament is considered a realistic possibility after the coming elections. In such a scenario, the winning party still doesn't have sufficient Parliamentary support to carry out its legislative agenda without help from other parties. David Cameron, the leader of the opposition Conservative Party, has watched the disintegration of his once double-digit lead in opinion polls over Prime Minister Gordon Brown's ruling Labour Party. On Sunday, a YouGov poll for the London Sunday Times placed the Conservatives two points ahead. That is among the slimmest of Tory leads since Mr. Brown enjoyed a brief honeymoon after he took over from Tony Blair in June 2007. Because of the way the U.K.'s voting system works, most commentators believe the Conservatives need a 10-percentage-point national lead to be confident of commanding a parliamentary majority. The postelection stakes are large. Credit-ratings agencies have warned the U.K. it could lose its top-notch triple-A rating if the winner of the next election fails to offer a credible plan for fixing the nation's finances. Any new government plan must address what looks like a still-fragile national economy. Economists and traders have started rifling through the speeches of the smaller British parties, since they could hold the key to crucial votes on budget matters. The Liberal Democrats, the country's third-largest party, is seen as the most likely king maker. The Conservatives have pledged to start cutting spending this year, whereas Labour has said such a stance could undermine the nascent recovery. Labour also has promised to protect more government departments from cuts. The Conservatives have given limited details of how they would reduce the deficit, and occasionally have appeared to contradict themselves on when austerity measures would get under way. Many analysts are taking politicians at face value when they say that they understand the gravity of the deficit and will act accordingly. "Both sides recognize that something will have to be done quite quickly to avoid a downgrade," says Kevin Gardiner, the head of investment strategy at Barclays Wealth. The U.K. has lagged behind the U.S., Germany and France in bouncing back from the crisis.
Brown Brothers Harriman chief currency strategist Marc Chandler says in note that "sentiment on Europe and the UK remains very negative, and market is likely to still favor selling euros and sterling into strength." Echoing this view is Deutsche Bank senior currency analyst Koji Fukaya, who says "the (UK's) uncertain political picture and growing worries over a double-dip recession" may push GBP/USD down towards 1.4500, GBP/JPY towards 132.00; Fukaya adds if Friday's non-farm payrolls paint bleak picture of U.S. economy, fueling risk aversion broadly, GBP selling could accelerate. GBP/JPY last 133.60, GBP/USD at 1.4970.
Japan's 4.9% January jobless rate tad better than expected, with Mizuho Research Institute analyst Yusuke Ichikawa saying outcome suggests "Japan's job market conditions have become more favorable." Still, outlook remains cloudy because of a lack of permanent jobs; notes while corporate demand for temporary employment, part-timers increasing slowly, "employment in permanent positions still looks difficult due to the uncertainty over Japan's economic outlook". Expects jobless rate to remain around 5.0% levels in coming months, which historically high for Japan economy.
The level of debts written off because defaulting borrowers will never repay them shot up in 2009, Bank of England figures have shown.In 2009, financial institutions wrote off £4.12bn in credit card loans, up from the previous record amount in 2008 of £3.2bn. The value of mortgages written off more than doubled, but from a lower level, from £408m in 2008 to £984m in 2009.Other loans written off jumped from £3.2bn to £4.2bn - pushing up the total write-offs by UK lenders to people from £6.9bn to £9.3bn.In addition to this, financial institutions wrote-off £5.9bn that was lent to non-financial businesses, as well as £154m lent to other financial corporations.Banks have been revealing their own specific write-off levels during the current reporting season.These institutions set aside millions of pounds to cover potential losses on their loans, but only when the loss is confirmed as unrecoverable is the money finally written off.The effect of the increased losses has been felt by those people who borrow but make repayments on time.It became more difficult during the recession for first-time buyers to get on the property ladder as lenders were making their criteria more stringent.Last month, financial information service Moneyfacts said that credit card rates had risen to their highest level for 12 years - at 18.8%.Bank of England figures suggested the rise was not so acute. It said the average interest rate on credit cards offered by banks and building societies has risen to its highest level since June 2006. At the end of January, the rate was 16.4%.
The Greek government is expected to outline Wednesday a new austerity package of around EUR4 billion in an effort to cut its huge budget deficit by four percentage points this year, government officials said Tuesday."The new package will most likely be announced on Wednesday. First there will be a cabinet meeting to seal the measures and an announcement will follow," one official told Dow Jones Newswires.Another official said Greece's debt management agency is preparing a 10-year bond hoping to raise between EUR3 billion and EUR5 billion."It will be within days of the announcement of the austerity package. Soon after," he said. "We need to go to the market very soon with the 10-year note because we risk ending up with no money." the second official said.Greece's civil servants union ADEDY said that it would stage a 24-hour strike in the middle of the month to protest against the new measures."We are meeting now to decide on the day. It will either be March 15, 16 or 17. The civil servants, which are the lowest paid in Greece, are paying the price for this crisis. Enough in enough," ADEDY President Spyros Papaspyros
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