Weekly Briefing 121203

1.  Review.

I said: “EURUSD: If the S&P/ Case Shiller prices do increase in September it would be the eighth consecutive month of house price growth in the US. This may boost expectations for a deeper recovery in 2013, and we could see stocks and other risky assets start to price in a recovery in this important sector of the US economy. If fiscal negotiations continue to make progress and house prices are positive then we may see the SPX 500 drift higher next week.

The break above 1.2805 – the 200-day sma – keeps us constructive on the outlook for EURUSD in the medium-term. We think that a break above 1.30 could be on the cards, but we would expect the 1.3175 level – the high from September – to be a major stumbling bloc.” EURUSD closed the weekly London session above 1.30 on Friday for the first time since mid-October. This is a very bullish development for this cross.

“GBPUSD:

USDJPY: Given the possibility of more easing, and the shear aggressiveness of current easing, further JPY weakness may be on the horizon, at least until the election on December 16. A buy on dips” The dip was small, 81.8 and the pair is chasing the 82.7 high again.
Trades
None

2.  Analysis.

"Fundamental analysis"
Sunday:
Monday:
Tuesday: USD Core Durable Goods Orders m/m 1.5% -0.6% 2.0%
Wednesday: USD New Home Sales 368K 387K 389K
Thursday: USD Unemployment Claims 393K 404K 410K, USD Pending Home Sales m/m 5.2% 0.9% 0.3%
Friday: EUR EUR German Retail Sales m/m -2.8% -0.3% 0.5%
Saturday: CNY Manufacturing PMI 50.6 50.8 50.2
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
USD: Of the major economies to release manufacturing PMI’s next week, only China and the US are expected to show above 50 prints which signal expansion. Regional Fed surveys of manufacturing activity for the month of November have been soft and suggest that the pace of expansion has slowed.
AUD: Inflation has picked up but risks falling again as the exchange rate remains highs and the industrial sector declines. Furthermore, inflation remains at the very bottom end of the RBA’s target range after increasing by more than expected.
EUR: the fundamental picture is still dismal. On Friday unemployment data for the currency bloc was released that reached another record high of 11.7%. Next week sees the release of final November PMI surveys, which are expected to remain mired deep in recessionary territory. Sovereign concerns may also flare up again. Spain may be fully funded for 2012, but it has a record amount of debt to issue for 2013, thus we could be close to a bottom in Spanish bond yields.
GBP: Expectations are rising that the Chancellor will be forced to extend the target for reaching a cyclical budget surplus and a decline in the UK’s debt-to-GDP ratio by a year to 2016/17 from 2015/16 after some dismal fiscal data in recent months. The UK has retained its triple A credit rating and the rating agencies have said this is down to the UK’s fiscal consolidation plan. However, if the Chancellor sticks to his fiscal targets religiously and the economy is plunged into another recession then we may lose our top rating anyway.
JPY: At its latest meeting the BoJ’s board unanimously voted to leave policy unchanged, which included keeping interest rates on hold and not increasing the size of its asset purchase program (APP) or credit loan facility.
CNY: PMI above 50, more than expected.Tthe Chinese economy (the second largest in the world after the US) has begun to show signs that the economic slowdown may be nearing a bottom. Improvement in Chinese manufacturing is likely to be supportive of the overall risk environment and specifically the AUD if demand for Australia’s natural resources picks up
Gold: With both the Fed and Bank of Japan engaging in balance sheet expansion, gold has also regained its safe haven appeal and has performed strongly this week

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No
7	US	Fiscal cliff and risk off	Yes

"Technical analysis"
EURUSD: . From a technical perspective the bulls are still in control. The number of short contracts has been cut dramatically since June 2012. Momentum indicators don’t suggest that the euro is currently overbought in the short term. However, there is a major resistance level coming up at 1.3175
GBPUSD: flat after breaking through the key 1.5970 resistance zone. Any slackening of the fiscal targets may see a knee jerk reaction lower in GBPUSD, but we expect 1.5950 to attract buyers as long as the external risk environment remains stable. The long –term trend is still higher after GBPUSD broke above the top of the weekly cloud at 1.5925, which is the start of a long-term technical uptrend in this cross
USDJPY: broke the critical resistance of 82
AUDUSD: . We agree with the market consensus that the Bank will deliver a 25bps reduction in the policy rate to 3.00%. A move by the RBA to lower interest rates may increase pressure on the currency. Rising trendline support which dates back to the June lows is currently coming in below the 1.04 figure. This is also where the 100-day simple moving average (SMA) resides and is likely to be a key pivot. A break of the 1.0360 level is likely to see the 200-day SMA around 1.0300 next and below that may see the downside accelerate. To the upside, the 1.05 figure is a significant resistance level and a break above here would negate our bearish bias

Median grid
EURUSD GRID 1.2400-1.3000, neutral bias
USDJPY GRID 76.00-80.00, long bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Short	Short
AUD	Long	Long
EUR	Long	Neutral

"Market dynamics”
EURUSD: If the ECB does not enact anything new at this meeting, the last of 2012, then we may see sentiment towards the euro start to sell off at the tail end of next week. 1.2950 then 1.2830-80 – a cluster of daily smas – should act as good support in the short term. A positive surprise in PMI figures could see the EUR/USD break the top of the cloud, however we would wait for a convincing break above the 1.30 level to signal a possible move back towards recent highs ahead of the 1.32 figure
GBPUSD:
USDJPY: Given the possibility of more easing, and the shear aggressiveness of current easing, further JPY weakness may be on the horizon, at least until the election on December 16. A buy on dips
Key events:
Sunday:
Monday: USD ISM Manufacturing PMI 51.5 51.7
Tuesday: AUD Cash Rate 3.00% 3.25%
Wednesday: AUD GDP q/q 0.6% 0.6%, USD ADP Non-Farm Employment Change 127K 158K
Thursday: EUR ECB Press Conference , USD Unemployment Claims 381K 393K
Friday: USD Non-Farm Employment Change 91K 171K
Saturday:

Prices and Risk on/off view

RORO (30): -0.20 (-0.30)

3.  Plan
Still buy EURUSD and USDJPY on dips.

Weekly Briefing 121126

1.  Review.

I said: “EURUSD: . At the weekly London close EURUSD was just holding onto the 1.27 handle. 1.2653 is key support as below here is the start of a technical downtrend. This level has so far held, suggesting that there is buying interest down here; however, if we get a negative shift in the macro back drop then we could see the bears take control once more. Thus, we would look to sell EURUSD on rallies. We believe that strength will be capped above 1.28 due to a cluster of daily moving averages between 1.2750 and 1.3000 and also the top of the daily Ichimoku cloud at 1.2925 acting as stiff resistance.” Completrly wrong. Good economic data make the euro rally to 1.30

GBPUSD:

“USDJPY: We anticipate profit taking to slow the JPY’s sharp decline, however it appears as though a shift in the policy response may be forthcoming. As such, we favor JPY downside and would view dips in USD/JPY as potential long opportunities. Key levels to the upside are the 61.8% Fibonacci retracement around 81.50 and 76.4% Fib retracement that is around 82.50. The 80.00 big figure may be supportive as well as the 200-day SMA just below at around 79.70.” No dip this week with the pair rally above 82.5.
Trades
None

2.  Analysis.

"Fundamental analysis"
Sunday:
Monday: USD Existing Home Sales 4.79M 4.76M 4.75M
Tuesday: JPY Overnight Call Rate <0.10% <0.10%, USD Building Permits 0.87M 0.87M 0.89M
Wednesday: USD Unemployment Claims 410K 415K 451K
Thursday: CNY HSBC Flash Manufacturing PMI 50.4 49.5, EUR German Flash Manufacturing PMI 46.8 45.9 46.0
Friday: EUR German Ifo Business Climate 101.4 99.6 100.0
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
USD: The dollar index fell more than 1% as the US gave up ground verses the euro, the yen and the Aussie. There was no single fundamental driver for the dollar weakness and better tone to risk. Next week we see some meaty data releases from the US including durable goods for October and house price data.
CAD:
EUR: The big news in the FX market last week was the ease with which EURUSD broke above a number of key resistance levels to close the European session within touching distance of 1.30 – the highest level for a month.
Looking at the political backdrop first, Greece is likely to receive its next tranche of bailout funds on Monday 26th November. This removes a cause of near-term anxiety for traders as it means that Greece is not going to default any time soon.
The political back-drop in Spain, at least in the near-term, is showing signs of stabilisation into year-end, which could help the euro to rally in the medium-term.
The Fed’s policy stance appears more accommodative than the ECB. This could be positive for EURUSD in two ways. Firstly, the rate differential may start to move in the Eurozone’s favour, which is euro positive. Secondly, the Fed’s commitment to QE3 helps to depress volatility, which is good for risky assets like the euro and can cause selling pressure on safe havens like the dollar.
The PMI data in Europe remains very weak, but the GDP data was not as bad as the surveys suggest. There were some good signs from Germany.
GBP:
JPY: At its latest meeting the BoJ’s board unanimously voted to leave policy unchanged, which included keeping interest rates on hold and not increasing the size of its asset purchase program (APP) or credit loan facility.
CNY: PMI above 50, more than expected..
Gold: With both the Fed and Bank of Japan engaging in balance sheet expansion, gold has also regained its safe haven appeal and has performed strongly this week

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No
7	US	Fiscal cliff and risk off	Yes

"Technical analysis"
EURUSD: broke easily lot of technical resistances closing near 1.30
GBPUSD:
USDJPY: broke the critical resistance of 82
AUDUSD:

Median grid
EURUSD GRID 1.2400-1.3000, neutral bias
USDJPY GRID 76.00-80.00, long bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Short	Short
AUD	Long	Long
EUR	Long	Long

"Market dynamics”
EURUSD: If the S&P/ Case Shiller prices do increase in September it would be the eighth consecutive month of house price growth in the US. This may boost expectations for a deeper recovery in 2013, and we could see stocks and other risky assets start to price in a recovery in this important sector of the US economy. If fiscal negotiations continue to make progress and house prices are positive then we may see the SPX 500 drift higher next week.
The break above 1.2805 – the 200-day sma – keeps us constructive on the outlook for EURUSD in the medium-term. We think that a break above 1.30 could be on the cards, but we would expect the 1.3175 level – the high from September – to be a major stumbling bloc.
GBPUSD:
USDJPY: Given the possibility of more easing, and the shear aggressiveness of current easing, further JPY weakness may be on the horizon, at least until the election on December 16. A buy on dips
Key events:
Sunday:
Monday:
Tuesday: USD Core Durable Goods Orders m/m -0.6% 2.0%
Wednesday: USD New Home Sales 387K 389K
Thursday: USD Unemployment Claims 404K 410K, USD Pending Home Sales m/m 0.9% 0.3%
Friday: EUR German Ifo Business Climate 99.6 100.0
Saturday: CNY Manufacturing PMI 50.8 50.2

Prices and Risk on/off view

RORO (30): -0.31 (-0.50)

3.  Plan
Still buy EURUSD and USDJPY on dips.

Weekly Briefing 121119

1.  Review.

I said: “EURUSD: As we start a new week EURUSD is hovering close to 1.2650. Below here is the start of a technical downtrend “ Not yet, despite bad EZ data.
“GBPUSD: 10-year Gilt yields have trended lower this week as risk sentiment drained from the market, but the Inflation Report could see a reversal back towards the 200-day sma at 1.86%. This could benefit GBPUSD. 1.60 remains key near term resistance.” Not happened, the pair traded lower 1.59
“USDJPY: If communications indicate that the Fed is likely to engage in further balance sheet expansion to buy treasuries, the dollar could weaken and treasury yields may decline. This would likely weigh on USD/JPY as it traditionally has a close relationship to US treasury yields.” USDJPY jumped at 81.3 because of political issues.
Trades
None

2.  Analysis.

"Fundamental analysis"
Sunday:
Monday:
Tuesday: EUR German ZEW Economic Sentiment -15.7 -10.1 -11.5
Wednesday: USD PPI m/m -0.2% 0.2% 1.1%
Thursday: USD Core CPI m/m 0.2% 0.1% 0.1%, USD Unemployment Claims 439K 362K 355K,
Friday: USD Industrial Production m/m -0.4% 0.3% 0.4%, USD Capacity Utilization Rate 77.8% 78.4% 78.3%
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
USD: The November NAHB housing market index and weekly mortgage applications are also due next week. These data releases are becoming increasingly important as the Fed appears more concerned with the housing market to seek improvement in economic activity and the labor market. , “a number” of FOMC participants favored more QE after the end of the Maturity Extention Program (aka Operation Twist). The market impact of additional QE would likely be a weaker US dollar, lower UST yields, and a boost to equities. We note that each subsequent round of balance sheet expansion tends to have a diminishing impact and significant risks exist (i.e. US fiscal cliff, EU debt crisis) that can move markets.
Regarding the fiscal cliff, our main scenario is for protracted negotiations, however if headlines suggest the two parties are moving closer to an agreement then sentiment is likely to be given a boost which could see the USD trade softer.
CAD:
EUR: For the last few months Spain has been the biggest headache for the currency bloc, but as we move towards the final few weeks of the year Greece is once again coming back to take centre stage. , there are two things to look out for in Tuesday’s meeting: 1, If Greece gets its next tranche of cash and 2, if the finance ministers’ agree on how to reduce Greece’s debt load to 120% of GDP by 2020 as the IMF has requested. Seemingly never-ending sovereign debt problems combined with weak growth, the Eurozone slipped into a recession in Q3 after the economy contracted by 0.1%, could weigh on the euro in the long term.
GBP: Last week’s Inflation Report left the door wide open to more QE from the BOE.
JPY: will announce policy at the conclusion of a 2-day meeting on Tuesday November 20. With increases to its Asset Purchase Program (APP) in 2 out of the last 3 meetings, we expect the Bank to remain on hold for now before it resumes balance sheet expansion over the coming months. A changing political landscape is increasing speculation of more aggressive measures to come from the BoJ in efforts to weaken the currency as a December 16 election looms.
CNY: good data from China.
Gold: With both the Fed and Bank of Japan engaging in balance sheet expansion, gold has also regained its safe haven appeal and has performed strongly this week

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No
7	US	Fiscal cliff and risk off	Yes

"Technical analysis"
EURUSD:
GBPUSD:
USDJPY:
AUDUSD:

Median grid
EURUSD GRID 1.2400-1.3000, neutral bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Neutral	Short
AUD	Long	Long
EUR	Neutral	Long

"Market dynamics”
EURUSD: . At the weekly London close EURUSD was just holding onto the 1.27 handle. 1.2653 is key support as below here is the start of a technical downtrend. This level has so far held, suggesting that there is buying interest down here; however, if we get a negative shift in the macro back drop then we could see the bears take control once more. Thus, we would look to sell EURUSD on rallies. We believe that strength will be capped above 1.28 due to a cluster of daily moving averages between 1.2750 and 1.3000 and also the top of the daily Ichimoku cloud at 1.2925 acting as stiff resistance.
GBPUSD:
USDJPY: We anticipate profit taking to slow the JPY’s sharp decline, however it appears as though a shift in the policy response may be forthcoming. As such, we favor JPY downside and would view dips in USD/JPY as potential long opportunities. Key levels to the upside are the 61.8% Fibonacci retracement around 81.50 and 76.4% Fib retracement that is around 82.50. The 80.00 big figure may be supportive as well as the 200-day SMA just below at around 79.70..
Key events:
Sunday:
Monday: USD Existing Home Sales 4.76M 4.75M
Tuesday: JPY Overnight Call Rate <0.10% <0.10%, USD Building Permits 0.87M 0.89M
Wednesday: USD Unemployment Claims 397K 439K
Thursday: CNY HSBC Flash Manufacturing PMI 49.5, EUR German Flash Manufacturing PMI 45.9 46.0
Friday: EUR German Ifo Business Climate 99.6 100.0
Saturday:

Prices and Risk on/off view

Date	CRB	WTI Oil	Copper	Gold	Silver	SP500	Tnote	Bunds	VIX
29-ott	296	86.1	355	1711	32.1	1411	1.74	1.53	17.8
10-nov	292	86.7	344	1730	32.6	1379	1.6	1.34	18.6
Difference	-1.35%	0.70%	-3.10%	1.11%	1.56%	-2.27%	-8.05%	-12.42%	4.49%

Date	Dollar Index	AUDUSD	USDCHF	USDJPY	EURUSD	AUDJPY	Risk on/off
29/10/2012	79.9	1.037	0.934	79.62	1.293	82.5	-3.89
10/11/2012	81	1.038	0.948	79.4	1.271	82.5	-6.01
Difference	1.38%	0.10%	1.50%	-0.28%	-1.70%	0.00%	-54.49%

RORO (30): -0.50 (-0.60)

3.  Plan

Weekly Briefing 121112

1.  Review.

I said: “EURUSD The sell-off in the euro last week coincided with weak PMI data from the Eurozone, thus further declines in economic data could cause more pressure on the single currency. If the data next week is truly horrible then we expect a sharp fall to 1.2800 and then 1.2750 – the low from the middle of September - in the short term. The private ADP report which is due out on Thursday may take on more importance as new enhancements have been made.” EUR stayed above 1.28 but broke it definitely on Wednesday reaching 1.2702.
“GBPUSD: is likely to remain range bound for the short-term between 1.5800 and 1.6150. It is also sensitive to overall market risk, so if we see market sentiment continue to drain then we may test the top of the 1.6065 key support zone.”
“USDJPY: In the long run, we would prefer to fade yen weakness as increases to the Bank’s APP have not had lasting impacts on the exchange rate. While BoJ action may result in short term yen weakness, we doubt that USD/JPY upside can last without support from higher US treasury yields.” Also JPY gained on risk off reaching 79.07 low.
Trades
USDJPY long closed flat

2.  Analysis.

"Fundamental analysis"
Sunday:
Monday:
Tuesday:
Wednesday:
Thursday:
Friday:
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
USD: many policy details need to be ironed out and we anticipate rhetoric to pick up ahead of the December FOMC meeting which is the last of the year before voting members rotate. Specific targets are not likely to be agreed upon any time soon and the current stimulus program is expected to remain in place for some time.
CAD:
EUR: President Draghi was very clear that there will be no bond purchases through the OMT programme without conditionality. Madrid still managed to sell a 20-year bond, the first bond with this maturity that it has sold in over a year. This doesn’t suggest stress in Spain’s bond market. The real problem begins on 18th January when its first major bond redemption of 2013 is due.
While we think that Greece will manage to stay in the Eurozone for the medium-term, the power balance appears to be shifting away from Athens and towards Brussels.
GBP: growth signals for October suggest that the economy is growing at a flat to weak rate of approx. 0.1-0.2%. Inflation pressures are also starting to rise. We believe the Bank will continue to expect inflation to fall throughout next year, which could open the way for more policy support in 2013. There is a chance that the Bank may ditch QE altogether next year and concentrate on yet more unconventional policy measures that target the economy directly. We will be watching for is any sign of who has the upper hand at the BOE – the QE supporters, or those who view QE as ineffective.
JPY:
CNY: good data from China.
Gold: With both the Fed and Bank of Japan engaging in balance sheet expansion, gold has also regained its safe haven appeal and has performed strongly this week

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No
7	US	Fiscal cliff and risk off	Yes

"Technical analysis"
EURUSD: always range bound 1.28-1.31. Back towards 1.28. 1.2980 is good support ahead of 1.2850, that resisted.
GBPUSD: 1.60 , broken support at 1.6110 then 1.6050 and 1.5980.
USDJPY: back to 79.6 after breaking 80
AUDUSD: After a correction to 1.024, back to 1.037.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Neutral	Short
AUD	Long	Long
EUR	Neutral	Long

"Market dynamics”
EURUSD: As we start a new week EURUSD is hovering close to 1.2650. Below here is the start of a technical downtrend
GBPUSD: 10-year Gilt yields have trended lower this week as risk sentiment drained from the market, but the Inflation Report could see a reversal back towards the 200-day sma at 1.86%. This could benefit GBPUSD. 1.60 remains key near term resistance.
USDJPY: If communications indicate that the Fed is likely to engage in further balance sheet expansion to buy treasuries, the dollar could weaken and treasury yields may decline. This would likely weigh on USD/JPY as it traditionally has a close relationship to US treasury yields.
Key events:
Sunday:
Monday:
Tuesday: EUR German ZEW Economic Sentiment -10.1 -11.5
Wednesday: USD PPI m/m 0.2% 1.1%
Thursday: USD Core CPI m/m 0.1% 0.1%, USD Unemployment Claims 362K 355K,
Friday: USD Industrial Production m/m 0.3% 0.4%, USD Capacity Utilization Rate 78.4% 78.3%
Saturday:

Prices and Risk on/off view

Date	CRB	WTI Oil	Copper	Gold	Silver	SP500	Tnote	Bunds	VIX
29-ott	296	86.1	355	1711	32.1	1411	1.74	1.53	17.8
10-nov	292	86.7	344	1730	32.6	1379	1.6	1.34	18.6
Difference	-1.35%	0.70%	-3.10%	1.11%	1.56%	-2.27%	-8.05%	-12.42%	4.49%

Date	Dollar Index	AUDUSD	USDCHF	USDJPY	EURUSD	AUDJPY	Risk on/off
29/10/2012	79.9	1.037	0.934	79.62	1.293	82.5	-3.89
10/11/2012	81	1.038	0.948	79.4	1.271	82.5	-6.01
Difference	1.38%	0.10%	1.50%	-0.28%	-1.70%	0.00%	-54.49%

RORO (30): -0.50 (-0.60)

3.  Plan
Still waiting to play JPY short trades (78 should be good) and EURUSD long on pullbacks (wait for 1.29).

Weekly Briefing 121029

1.  Review.

I said: “EURUSD: October flash PMI readings are released next week. The market expects these indices to move towards 50 but not get above this crucial level. But expect the markets to react to any positive PMI surprises from the Eurozone next week (1.31highs).” PMI was bad, but the EUR rallied in mid-week.
“We could be range bound in EURUSD for the medium term unless a big event – a Spanish aid request or volatility in Spain’s bond market – gives the market some direction.” Yes, Spain bailout is more unlikely.
“US date due next week, with the key report being Friday’s advance GDP figures for 3Q. Any surprises in the economic data is likely to see the dollar respond more the impact on the risk environment rather than Fed expectations. Therefore better than expected readings may see the dollar softer on improving sentiment while misses could see dollar gains amid risk aversion.” Ok, good GDP reading and small spike of EUR
“GBPUSD: In an environment of elevated Eurozone stress we could see the dollar attract some safe haven demand this week, which could weigh on GBPUSD.” Not in short term.
“USDJPY: we believe we are seeing bottoming behavior in USDJPY and it won't go lower. The USDJPY will move on what happens in the US and not in the Yen side of the equation. ,The JPY will remain sensitive to broader risk sentiment as well as US Treasury yields.” Rallied on more easing expected, but retraced on Friday.
Trades
USDJPY long

2.  Analysis.

"Fundamental analysis"
Sunday:
Monday:
Tuesday: CAD Overnight Rate 1.00% 1.00%, CNY HSBC Flash Manufacturing PMI 49.1 47.9
Wednesday: EUR German Flash Manufacturing PMI 45.7 48.1 47.4, EUR German Ifo Business Climate 100.0 101.7 101.4, USD FOMC Statement
Thursday: USD Unemployment Claims 369K 366k 388K
Friday: USD Advance GDP q/q 2.0% 1.8% 1.3%
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
Sentiment drained from the market . The key drivers of lower markets were weak economic data out of Europe, strong data out of the US which threatens to cut QE3 short and weak Q3 corporate earnings.

USD: The S&P 500 has seen 30% of companies that have reported so far miss earnings estimate. Since the tech sector is considered a lead economic indicator the decline in Q3 earnings could precede a sharper slowdown in the broader economy.
CAD: Finance Minister Jim Flaherty said that Canada may have to revise down its economic outlook and that Canada is not immune to world economic challenges
EUR: It doesn’t look like Spain is in any hurry to apply for a bailout (see the European section for more), European data is likely to remain fairly weak for some time. The sovereign debt crisis seems to have lost some of its potency to rattle financial markets in recent months. There is a deteriorating growth picture across the currency bloc and not just in Spain. Eurozone inflation is expected to have declined to 2.5% this month from 2.7% in September when it is released this week
GBP: dealt a blow last week when Q3 GDP data rose 1%, taking the UK out of recession in style. Next week’s October PMI surveys are going to be crucial to the QE decision at the next BOE meeting on 8th November.
JPY: the Price Outlook report will show a reduction in inflation forecasts which underscores the fact that the BoJ is struggling to achieve its 1% inflation target. We expect the Bank to respond with more stimulus in the form of yet another increase to the Asset Purchase Program (APP). A drop in economic activity will weigh on prices which have been indicating deflation for some time
CNY: good data from China. The growth outlook still faces a few hurdles and should not be greeted by traders with unbridled enthusiasm
Gold: Several of the big banks are currently very bullish on gold. From $2000 to $3000 in the next year or two are their calls. And it is mainly due to the money printing is good for gold price argument. They also know if there is a serious risk off event then gold goes down. Therefore the impression is that they are not only bullish on gold but also on the absence of such a big risk off event.

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No

"Technical analysis"
EURUSD: always range bound 1.28-1.31. Back towards 1.28. 1.2980 is good support ahead of 1.2850, that resisted.
GBPUSD: 1.60 , broken support at 1.6110 then 1.6050 and 1.5980.
USDJPY: back to 79.6 after breaking 80
AUDUSD: After a correction to 1.024, back to 1.037.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Short	Short
AUD	Long	Long
EUR	Neutral	Long

"Market dynamics”
EURUSD The sell-off in the euro last week coincided with weak PMI data from the Eurozone, thus further declines in economic data could cause more pressure on the single currency. If the data next week is truly horrible then we expect a sharp fall to 1.2800 and then 1.2750 – the low from the middle of September - in the short term. The private ADP report which is due out on Thursday may take on more importance as new enhancements have been made.
GBPUSD: is likely to remain range bound for the short-term between 1.5800 and 1.6150. It is also sensitive to overall market risk, so if we see market sentiment continue to drain then we may test the top of the 1.6065 key support zone.
USDJPY: In the long run, we would prefer to fade yen weakness as increases to the Bank’s APP have not had lasting impacts on the exchange rate. While BoJ action may result in short term yen weakness, we doubt that USD/JPY upside can last without support from higher US treasury yields.
Key events:
Sunday:
Monday: JPY Overnight Call Rate <0.10% <0.10%
Tuesday: USD CB Consumer Confidence 72.4 70.3
Wednesday: CNY Manufacturing PMI 50.3 49.8, EUR Unemployment Rate 11.4% 11.4%
Thursday: GBP Manufacturing PMI 48.1 48.4, USD Unemployment Claims 371K 369K, USD ADP Non-Farm Employment Change 139K 162K, USD ISM Manufacturing PMI 51.2 51.5
Friday: USD Non-Farm Employment Change 120K 114K , USD Unemployment Rate 7.9% 7.8%
Saturday:

Prices and Risk on/off view

Date	CRB	WTI Oil	Copper	Gold	Silver	SP500	Tnote	Bunds	VIX
22-ott	306	90.1	363	1721	32	1433	1.76	1.59	17
29-ott	296	86.1	355	1711	32.1	1411	1.74	1.53	17.8
Difference	-3.27%	-4.44%	-2.20%	-0.58%	0.31%	-1.54%	-1.14%	-3.77%	4.71%

Date	Dollar Index	AUDUSD	USDCHF	USDJPY	EURUSD	AUDJPY	Risk on/off
20/08/2012	79.6	1.034	0.92	79.3	1.302	81.9	-2.62
29/10/2012	79.9	1.037	0.934	79.62	1.293	82.5	-3.89
Difference	0.38%	0.29%	1.52%	0.40%	-0.69%	0.73%	-48.26%

RORO (30): -0.60 (0.27)

3.  Plan
Still waiting to play JPY short trades (78 should be good) and EURUSD long on pullbacks (wait for 1.29).

Briefing 121022

1.  Review.

I said: (121001) “EURUSD: the bias could be to the downside for the euro next week as fundamental and technical data continue to undermine the single currency. We believe that 1.25 will remain well supported as the ECB’s OMT programme has removed the tail risk that the currency bloc could collapse. We think there is still a lot negativity in the Euro that needs to be priced out. We are not returning soon to mid-low 1.20s, maybe mid-high 1.20s but more likely we settle above 1.30.” We settled here.
“GBPUSD: In an environment of elevated Eurozone stress we could see the dollar attract some safe haven demand this week, which could weigh on GBPUSD.” It did.
“USDJPY: we believe we are seeing bottoming behavior in USDJPY and it won't go lower. The USDJPY will move on what happens in the US and not in the Yen side of the equation. ,The JPY will remain sensitive to broader risk sentiment as well as US Treasury yields.” Yes, we are around 78
Bottom line - QE3 or not it won't change the current positive EUR situation materially”.
Trades
Closed EUR and AUD long.

2.  Analysis.

"Fundamental analysis"
Sunday: CNY CPI y/y 1.9% 1.9% 2.0%
Monday: USD Retail Sales m/m 1.1% 0.7% 1.2%
Tuesday: GBP CPI y/y 2.2% 2.2% 2.5%, EUR German ZEW Economic Sentiment -11.5 -14.6 -18.2
Wednesday: CNY GDP q/y 7.4% 7.4% 7.6%
Thursday: USD Unemployment Claims 388K 367K 342K, USD Philly Fed Manufacturing Index 5.7 1.3 -1.9
Friday: USD Existing Home Sales 4.75M 4.73M 4.83M
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.

USD: Data out of the US and UK surprised to the upside last week and gave some very encouraging signals that growth may have woken up from its summer slump. T-note yields at 1.8%. Earning season quite good, even with some disappointing data from Google, IBM and Intel.
CAD: Finance Minister Jim Flaherty said that Canada may have to revise down its economic outlook and that Canada is not immune to world economic challenges
EUR: The chief outcome of the EU Summit has been an agreement with Europe’s leaders that the ECB will eventually be the single body responsible for all banking supervision in the Eurozone. Germany solidifying its opposition to using the ESM (the EU500bn long term rescue fund) to directly re-capitalise the banks in Europe. Spain yield lower, Some think Spain may now wait until the next finance ministers’ meeting in mid-November before making a request for a credit line that would trigger the ECB’s OMT programme.
GBP: economic and . labour market produced a positive surprise
JPY:
CNY: good data from China. The growth outlook still faces a few hurdles and should not be greeted by traders with unbridled enthusiasm
Gold: Several of the big banks are currently very bullish on gold. From $2000 to $3000 in the next year or two are their calls. And it is mainly due to the money printing is good for gold price argument. They also know if there is a serious risk off event then gold goes down. Therefore the impression is that they are not only bullish on gold but also on the absence of such a big risk off event.

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No

"Technical analysis"
EURUSD: edging back towards 1.30. 1.2980 is good support ahead of 1.2850
GBPUSD: 1.60 , broken support at 1.6110 then 1.6050 and 1.5980.
USDJPY: flat in the week
AUDUSD: was given a boost by broader risk sentiment as the pair broke above the 200-day SMA and tested above the 1.04. A correction may be due.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Short	Short
AUD	Long	Long
EUR	Long	Long

"Market dynamics”
EURUSD: October flash PMI readings are released next week. The market expects these indices to move towards 50 but not get above this crucial level. But expect the markets to react to any positive PMI surprises from the Eurozone next week (1.31highs). We could be range bound in EURUSD for the medium term unless a big event – a Spanish aid request or volatility in Spain’s bond market – gives the market some direction.
US date due next week, with the key report being Friday’s advance GDP figures for 3Q. Any surprises in the economic data is likely to see the dollar respond more the impact on the risk environment rather than Fed expectations. Therefore better than expected readings may see the dollar softer on improving sentiment while misses could see dollar gains amid risk aversion.
GBPUSD: In an environment of elevated Eurozone stress we could see the dollar attract some safe haven demand this week, which could weigh on GBPUSD.
USDJPY: we believe we are seeing bottoming behavior in USDJPY and it won't go lower. The USDJPY will move on what happens in the US and not in the Yen side of the equation. ,The JPY will remain sensitive to broader risk sentiment as well as US Treasury yields.
Key events:
Sunday:
Monday:
Tuesday: CAD Overnight Rate 1.00% 1.00%, CNY HSBC Flash Manufacturing PMI 47.9
Wednesday: EUR German Flash Manufacturing PMI 48.1 47.4, EUR German Ifo Business Climate 101.7 101.4, USD FOMC Statement
Thursday: USD Unemployment Claims 366k 388K
Friday: USD Advance GDP q/q 1.8% 1.3%
Saturday:

Prices and Risk on/off view

RORO (30): 0.27 (-0.21)

3.  Plan
Still waiting to play JPY short trades (78 should be good) and EURUSD long on pullbacks (wait for 1.29).

Weekly Briefing 120924

1.  Review.

I said: ”Post the QE3 announcement the dollar is looking extremely oversold, so a pullback in risky assets in the coming days would not be unusual. However, we believe that the sell-off, especially in EURUSD could be fairly shallow due to the ECB action to reduce credit risk in the currency bloc (see more below). We believe this pair could trade in a 1.28- 1.35 range until the end of the year”. There was a pullback for risky assets.
EURUSD sitting at 1.297
“USDJPY: It is natural for USDJPY to react to a move in Treasury yields, also as market and sovereign risk levels have dropped then the yen tends to get sold off. Thus, the move higher in USDJPY is perfectly normal at this stage.” T notes dropped and pair is at the same level.
It seems like the fundamental winds are at the back of the euro which should support the euro on dips as there is still an overhang of euro shorts.
Trades
None

2.  Analysis.

"Fundamental analysis"
Tuesday: EUR German ZEW Economic Sentiment -18.2 -19.4 -25.5
Wednesday: USD Building Permits 0.8M 0.79M 0.81M, CNY HSBC Flash Manufacturing PMI 47.8 47.6
Thursday: EUR German Flash Manufacturing PMI 47.3 45.4 44.7, USD Philly Fed Manufacturing Index -1.9 -4.1 -7.1
Friday:
Saturday:
Sunday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
Fed: its QE3 programme will last until the unemployment rate drops to a level acceptable to the Fed (probably be somewhere south of 7%) or inflation rises above 3%. Lockhart indicated that the “immediate outlook for jobs” is the focus of the Fed and said that the potential risks associated with QE3 are “manageable”. Dallas Fed President Fisher who said that he sees a sharp rise in inflation expectations and long-term inflationary fears.
EUR: OMT is not yet triggered. There is hope that Spain will apply for a bailout after reports on Friday that Spanish officials were in negotiations with the EU. A sovereign bailout for Spain also has significance for the wider market as it would trigger the ECB’s OMT programme. Once this happens the ECB becomes a lender of last resort for the currency bloc
GBP:
JPY The BOJ surprised some by adding to their QE programme. With Qe3 in play, the JPY is emerging as a more attractive haven. Recent economic data that showed continued contraction in Europe and in China’s manufacturing sector spurred risk aversion which saw the JPY outperform the US
CNY:

Id	Driver	Comments	Immanency
1	On-going global recovery	Germany slow down. EZ growth low. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3%	No
6	Commodity rise	Falling prices are confirming slowdown	No

"Technical analysis"
EURUSD: 1.30, at top of the grid. Need a grid adjustment. Golden cross of the 200 sma
GBPUSD: testing the extreme of the trading range 1.54-1.60, at 1.62
USDJPY: broken the top of a recent range and broke above the 79.00 figure.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Short	Short
AUD	Long	Long
EUR	Long	Long

"Market dynamics”
EURUSD: we believe this pair could trade in a 1.28- 1.35 range until the end of the year. We expect to trade in a 1.2830 (200-day sma) – 1.3100 range in the coming days.
Practicalities will cause euro dips but they will be short and shallow. Spain is the biggest concern for euro markets at the moment. If it applies for a bailout in the next couple of weeks we could see the single currency and euro-based assets start to rise, if we don’t then they could just as easily sell off sharply.
Buy the dips if they are there. You can also sell the tops, but be aware that the train is going UP.
I think there is still a lot negativity in the Euro that needs to be priced out. We are not returning soon to mid-low 1.20s, maybe mid-high 1.20s but more likely we settle above 1.30.
GBPUSD:
USDJPY: we believe we are seeing bottoming behavior in USDJPY and it won't go lower. The USDJPY will move on what happens in the US and not in the Yen side of the equation. ,The JPY will remain sensitive to broader risk sentiment as well as US Treasury yields.
Bottom line - QE3 or not it won't change the current positive EUR situation materially.
Key events:
Monday: EUR German Ifo Business Climate 102.7 102.3
Tuesday: USD CB Consumer Confidence 62.9 60.6
Wednesday: USD New Home Sales 381K 372K
Thursday: USD Unemployment Claims 378K 382K
Friday:
Saturday:
Sunday:

Prices and Risk on/off view

RORO (30): +0.39 (1.21)

3.  Plan
Play JPY short trades and EURUSD long on pullbacks