Archive for ‘news’

February 20, 2012

The Countdown To The Eurozone Finance Ministers’ Meeting

At 1530GMT/ 1030 ET Europe’s finance ministers will meet and hopefully agree that Athens’ latest austerity efforts are good enough for them to receive their second bailout from the IMF/ EU and ECB. But as we start the European session we are seeing a bit of a pullback in risk after a strong start during the Asia session.

Right now this is a very normal pullback. The US is out on holiday today and as we enter European trading hours headline risk has massively increased, so investors are booking profits where they can. This has seen EURUSD back away from 1.3240 high and AUDUSD climb down from 1.08, although uptrends remain intact. While the markets lie in wait for the Eurozone finance ministers’ meeting later this afternoon we need to take our cue from the technical signals. In EURUSD any pullback to the 1.3150 level is normal, but below there then the fundamental back drop is likely to have changed for the worse (negative headlines from Greece or the Eurozone’s finance ministers’ meeting).

The outcome of today’s meeting is likely to define the performance of risk assets for the rest of the week. Right now the markets are not priced for an outright collapse of talks between Greece and the Eurozone finance ministers, but there are still many hurdles on the road to Greece paying its EUR14.5bn bond redemption payment on March 20th. Even the chair of the Eurogroup Juncker has said that ‘much negotiation’ is still needed.

Firstly at this meeting the PSI deal is expected to be agreed, the ECB’s position regarding the debt swap is also expected to be formalised and the Eurozone authorities need to be happy that Greece will implement the harshest austerity measures yet and will stick with its bailout conditions regardless of the outcome of April’s elections.

The PSI discussions took an interesting turn at the weekend. It was announced that the ECB would participate in the bond swap with Greece, but it would not face Collective Action Clauses (CACS), unlike other holders of Greek debt. Essentially European authorities can force losses on private bond holders but not on the ECB. I wrote about this yesterday and quoted Pimco chairman Bill Gross who said that this threatened the integrity not just of Greek bonds but of bonds across the entire Eurozone. But this has fallen on deaf ears this morning and Italian bonds have opened higher this morning (yields lower). Even Portugal, which has been targeted as the most at risk Eurozone nation after Greece, has seen its bond yields fall this morning. Thus, if today’s meeting finalises the details of the PSI negotiations then the market may concentrate on the CAC/ no CAC ECB debate, which has the potential to dampen sentiment.

There is also some confusion over whether Greece will get all of its bailout funds or if funds will be withheld until after the April elections. This is the line of action being pursued by the Dutch authorities. The other option is that a portion of Greek bailout funds are placed in an escrow account so that they are used to pay bond redemptions and can’t be used to fund public spending. This would limit Greece’s sovereignty over its own budgets, but would reduce the risk of a third or fourth bailout somewhere down the line.

So the discussions this afternoon could be long and messy and we don’t know for sure if Greece will get the funds it needs. But for now the markets believe it will hence the bullish tone to markets this morning and asset classes are moving higher in unison.

The China RRR cut on Saturday helped to boost sentiment during the Asia session as yet central bank pumps liquidity back into its economy. The US is out on holiday today and US stock markets are not open, so expect the emphasis to be squarely on Greece later.


February 20, 2012

Retail positioning


February 17, 2012

USD Lower With Risk Back On


USD softer against all of the G10 currencies except for the JPY after softer inflation data and amid hopes that the second Greek bailout will get the go-ahead on Monday. U.S. January CPI grew by less than expected with a headline reading of 0.2% m/m from the prior 0.0 (cons. 0.3%) and a core print of 0.2% m/m (prior 0.1%, cons. 0.2%). Global equity markets continue to rise as risk sentiment is supported by an optimistic view that Greece will avert a messy default. European markets are trading to the upside and US stock futures are suggesting a positive start to the day. UST yields are higher across the curve with the 10-yr Treasury yields back above the 2.00% level (currently around 2.02%). The Dollar Index remains inside of its daily ichimoku cloud but is now testing the cloud base after being rejected from the cloud top yesterday. The base of the cloud is just above the 79.00 level and will be a pivotal level on a daily closing basis.

EUR rising on optimism that a Greek deal can be reached on Monday. Italy’s Monti, Germany’s Merkel, and Greece’s Papademos held 3-way phone talks today and said that an agreement on Greece can be reached at the Feb. 20 Eurogroup meeting. ECB members were also on the wires with Weidmann reportedly saying that he did not support the decision to swap Greek bonds for new ones and Knot saying that the “sovereign debt crisis clearly demonstrates that the job is not yet done” but that the crisis is not one of the single currency. In other Europe news, German President Wulff resigned, becoming the second German president to quit in less than 2 years. The news was shrugged off by the markets as the role of the German president is to act as more of a figurehead while Chancellor Merkel handles most decision making. The euro was stronger across the board, most notably against the JPY. EUR/USD rose to test the 200-hour SMA which is around current levels of 1.3180/85.

JPY continues to decline as the market continues to adjust to the recent change in BOJ policy and weak fundamentals. Governor Shirakawa spoke overnight and said that Japan has a long way to go to beat deflation and that there is no ‘magic wand’ to boost Japanese growth. USD/JPY extended its ascent and approaches the 79.50 area which were the highs made in late October after the last round of massive intervention.

GBP slightly firmer after better than expected economic data reduced expectations of additional asset purchases. January retail sales unexpectedly rose by +1.2% m/m (cons. -0.3%) and +1.9% y/y (cons. -0.1%). GBP/USD advanced to current levels of around 1.5830 and sees the key 200-day SMA above at about 1.5915 which should be resistance in the near term.

CAD is higher against the buck after stronger than expected Jan. leading indicators and higher CPI. January headline CPI rose +0.4% m/m from the prior -0.6% (cons. +0.3%) and 2.5% y/y (prior 2.3%, cons. 2.3%) while core prices grew 0.2% m/m from the prior -0.5% (cons 0.1%) and 2.1% y/y (prior 1.9%, cons 1.9%). Leading indicators came in at 0.7% in Jan. (cons. 0.6%). Stronger oil also helped to support to Loonie with WTI crude currently over $103/barrel and up about +1.02% at time of writing. USD/CAD is trading firmly below the 200-day SMA but faces horizontal support around the 0.9925/30 zone which is the key downside pivot.

February 17, 2012

AUD/USD falling after US CPI

After being capped just beneath 1.0800 during early Asian session the AUD/USD declined, with an European bounce in the middle.

Stronger than expected US CPI data didn’t have the same effect of yesterday’s risk-on rally on blooming economic data. “The culprit is EUR/AUD which has been absolutely loaded with speculative shorts since the break of 1.29. They are getting squeezed at the moment”, says Adam Button, analyst at

According to analysts, resistances are at 1.0800, 1.0845 and 1.0895. On the downside, supports might act at 1.0745, 1.0655 and 1.0625. At the moment of writing, the AUD/USD keeps losing value, now at 1.0725.

February 17, 2012

Berlin split on Greek bail-out

A split has emerged in the German government over whether to grant Greece a second bail-out package with Wolfgang Schäuble, finance minister, pushing to let Athens default while Chancellor Angela Merkel  is firmly against , according to German and eurozone officials.

Mr Schäuble was said to have come to his hardline view in the light of haggling over Greece’s fresh austerity measures under a second rescue programme and the refusal of some Greek politicians to promise to back the deal after elections due in April….

see full article

February 17, 2012

USD/CAD falls below 0.9950 after Canadian CPI


The Loonie extended gains against the Greenback, after higher-than-expected domestic consumer price index data helped to lower prospects the BoC might cut interest rates.

USD/CAD dropped nearly 20 pips after the data, sliding through the 0.9950 support and printing a fresh 2-day low of 0.9940. At time of writing, USD/CAD is trading at the 0.9945 zone, recording a 0.2% loss on Friday.

As for technical levels, immediate supports for USD/CAD could be found at 0.9925 and 0.9900, while resistances might be faced at 0.9970, 1.0000/10 and 1.0040.

Canada’s consumer price index grew 0.4% in January and 2.5% YoY, surpassing the 2.3% that was expected. Core CPI climbed 0.2% in the same month and 2.1% over the year, exceeding the 1.9% forecast.

February 17, 2012

Retail Positioning


February 16, 2012

Report says ECB/Greek deal to be completed over weekend


Reuters reports on paper that says EZ central banks will exchange old Greek paper for new bonds and that the ECB Greek debt swap deal will be completed over the weekend. EUR/JPY back above 103.00. EUR/JPY 103.48 was the high from ytdy.GBP/JPY trades above 200 day MA at 124.23 but may be better to wait for pull back before riding the risk wave.

February 16, 2012

EUR/USD rises on Fed’s Bernanke speech

 Ben Bernanke’s speech at a community baking conference has raised the EUR/USD price to test the 20-hour MA resistance, at 1.3030.

In the speech, besides showing frustration on the slow US recovery, Bernanke is confident that low rates and stricter regulations will ultimately increase loan demand and bank profitability.

“The hourly chart shows price near its daily low, trading below a still bearish 20 SMA while indicators turned flat in oversold levels, with no signs of a stronger corrective movement at sigh, unless a recovery above mentioned 1.3030 area”, says analyst Ivan Delgado, adding resistances at 1.3065 and 1.3100. Supports might be found at 1.2970, 1.2930 and 1.2890.

February 16, 2012

Retail positioning

9:00 GMT