Protectionism Sinks Asian Markets

European Session: Protectionism Sinks Asian Markets

September 14, 2009 10:47 AM CEST

G10 Advancers and Decliners vs USD
DKK 0.01
CHF -0.02
EUR -0.06
JPY -0.08
SEK -0.39
NOK -0.47
AUD -0.50
GBP -0.58
CAD -0.59
NZD -0.63

Global Indexes Current Level % Change
Nikkei 225 Index 10,202.06 - 2.31
Hang Seng Index 20,922.14 - 1.13
Shanghai Index 3,026.74 + 1.23
FTSE 100 Index 4,981.96 - 0.58
DAX Index 5,585.30 - 0.68
SMI Index 6,191.06 - 0.67
S&P future 1,041.60 - 0.01

World Markets Current Level % Change
Gold 998.48 - 0.66
Silver 16.45 - 1.72
VIX 24.15 + 2.54
Crude wti 68.81 - 0.69
USD Index 76.83 + 0.27

Todays Calender Estimates Previous Country / GMT
Industrial production, % m/m (y/y wda) Jul -0.3 -0.3,-16.7 EUR / 09.00
Employment, % q/q ( y/y) Q2 -- -0.8,-1.2 EUR / 09.00
FRB of Richmond President Lacker (FOMC voter) spea -- -- USD / 16.30
BoE Executive Director of Financial Stability Andr -- -- GBP / 17.00
FRB of San Francisco President Yellen (FOMC voter) -- -- USD / 19.50
RICS housing market survey, price balance Aug -- -8.1 GBP / 23.01


Currency Tech

AUDUSD
0.8813
0.8694
CURRENT: 0.8582
0.8507
0.8379

USDCAD
R 2: 1.1103
R 1: 1.0951
CURRENT: 1.0833
S 1: 1.0630
S 2: 1.0547

EURJPY
R 2: 135.01
R 1: 134.41
CURRENT: 131.94
S 1: 131.04
S 2: 129.36

USDMXN
R 2: 13.573
R 1: 13.544
CURRENT: 13.471
S 1: 13.246
S 2: 13.131

Market Brief

The Greenback fell to 2009 fresh lows against most major currencies last week, with Dollar Index used to track the greenback against 6 major currencies dropped 2% to 76.608 from 78.136 a week earlier. Demand for the safe-haven currency dropped sharply last week as Standard & Poor’s 500 Index posted its biggest weekly gain for the year, and gold continued its uptrend to top at 1011.95 on Friday. Other important factors put pressure on the safe-haven currency. The three months LIBOR for dollars dropped to a record low on Wednesday, making the greenback the cheapest currency to fund purchases of higher yielding assets, and UN called for dollar reserve role to be eliminated. Should the USD fall further this week? I believe we need to watch closely the stock indices as it’s relation with the USD are still inversely proportional, while key events such as retail sales, consumer prices and TICS could be the market movers for this week.

The EUR appreciated 2% against the USD last week, but was almost unchanged on Friday, closing at 1.4570 after posting a new 2009 high at 1.4635 earlier in the day. The GBP rallied after the BoE left rates at 0.5%, and quantitative easing stance unchanged at £175 B. The JPY possibly benefited from funds flowing back to safer assets towards the end week, as we’ve seen correction in U.S. stock markets and drop in commodities except the precious metals. Commodity currencies such as AUD and CAD also fell on Friday as commodity prices dropped.

Gold for the first time since February closes above $1,000 benchmark. The yellow metal rallied to as high as 1013.7 on Friday before closing at 1006.4. I do favorite some more upside in gold for a test of 1033.9 levels. Crude Oil dropped to a low of $68.8 after topping at $72.9. OPEC announced to keep production quotas unchanged on Wednesday. Obviously members are satisfied with the current price level and suggest 68-73 levels to continue for some time.

This week there would be couple of important data releases, especially from the US and UK, along with 2 central banks meetings ‘BoJ & SNB’. US data could show more signs of economic recovery with focus on retails sales, CPI, TIC capital flow, and housing market. While UK will be releasing its CPI, which is expected to remain far below BoE’s target at 2%, UK jobs report and retails sales would be even released. From the Eurozone focus will be on German ZEW, CPI, and trade balance.