CURRENCY WEEKLY MARKET RECAP, WEEK AHEAD, AND SCHEDULE

WEEKLY MARKET RECAP, WEEK AHEAD, AND SCHEDULE
Sunday 15 February 2009


€

The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.2720 level and was capped around the $1.3095 level. The pair loat about 80 pips last week. The House passed a US$ 789 billion fiscal stimulus. Chicago Fed’s Evans wants to see more plans enacted before the Fed purchases long-term Treasuries. Geithner unveiled a plan to remove US$ 500 billion in bad assets from banks’ balance sheets and said the Fed may purchase up to US$ 1 trillion in asset-backed securities. Geithner also said mortgage relief could amount to US$ 50 billion. G7 officials meet in Roma this weekend and may discuss exchange rates. Congress is trying to finalize the US$ 789 billion fiscal stimulus.
ECB’s Ordonez is eyeing a 50bps cut in March and ECB’s Quaden said rates can go below two per cent. Europe inched closer to a “bad bank(s).” Eurogroup’s Juncker called for more cohesion among member countries. Germany ’s Bundestag passed another €50 billion in stimulus. ECB’s Bini-Smaghi said some of Europe may see an “L”-shaped recovery. ECB’s Liikanen, Papademos, and Tumpell-Gugerell noted rates may need to come down further.

Data released in the U.S. last week saw the December trade deficit decline to a six-year low at –US$ 39.9 billion with the 2008 total at –US$ 677.1 billion; the University of Michigan consumer sentiment index improved to 56.2; January retail sales were up 1.0% m/m and 0.9%; weekly initial jobless claims were off 8,000 to 623,000; December business inventories were off 1.3%; and single-family home prices fell 12.4% y/y in Q4.
Data released in the eurozone last week saw the EMU-16 Ifo economic climate index decline to an all-time low; the December trade surplus narrow to €10.7 billion; EMU-15 Q4 GDP growth was off 1.5% q/q; German Q4 GDP growth 2.1% q/q; and December industrial production was off 2.6% m/m and 12.0% y/y.
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Technical Outlook



Last week’s high (1) was just below the 38.2% retracement of the 1.4866-1.2328 range and last week’s low (2) was below the 23.6% retracement of the same range. The 1.2927/ 1.3204/ 1.3359/ 1.3597/ 1.3745/ 1.3896/ 1.4183 levels represent upside resistance targets while the 1.2548/ 1.2328 levels represent downside support targets.


¥/ CNY

The yen depreciated marginally vis-à-vis the U.S. dollar last week as the greenback tested offers around the ¥92.40 level and was supported around the ¥90.10 level. The pair gained about 5 pips last week. The Nikkei 225 stock index gained 0.96% on Friday to close at ¥7,749.40. PM Aso is embattled and the LDP may lose its stronghold on Japanese politics for the first time in 50 years. Economy chief Yosano said more fiscal stimulus is possible. Finance chief Nakagawa called for “decisive” action against the strong yen and railed against “competition in currency devaluation.” BoJ’s Policy Board convenes this week and may increase asset purchases.

Data released in Japan this week saw preliminary December machine tool orders off 1.7% m/m and 84.4% y/y; January corporate bankruptcies were up 16%; January bank lending rose 3.7% y/y; the January Economy Watchers’ survey print at 17.1; January consumer confidence printed at 26.4; and January annualized wholesale inflation were off 0.2% y/y.



Last week’s high (1) was just below the 23.6% retracement of the 110.64-87.09 range and last week’s low (2) was near a multi-month low. Upside resistance targets remain the 92.65/ 95.55/ 98.43 levels while downside support targets remain the 88.88/ 87.09/ 84.20 levels.


The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8392 in the over-the-counter market, up from CNY 6.8334. The government cited slowing consumer expectations and consumption.
Data released in China last week saw January exports decline 17.5% y/y with imports off 43.1%; January PPI was off 1.3% m/m; January CPI was up 1.0% y/y; January bank lending was up CNY 1.62 trillion; and January M2 money supply growth accelerated.


₤

The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.4135 level and was capped around the $1.4985 level. The pair lost about 435 pips last week. BoE boss King said the central bank may purchase gilts to boost the money supply and counter the “deep recession.” BoE now sees inflation at 0.5% in two years and a rapid decline in GDP growth this year. The quarterly inflation report was much more dovish than expected and a March cut remains likely. Quantitative easing is possible at the March MPC meeting. Brown railed against bankers’ bonuses. BoE launched an asset purchase facility last week with a ₤50 billion budget. FX chief Paul Fisher joins the MPC on 1 March.


Data released in the U.K. last week saw January jobless benefit claims reach their highest level in nearly one decade at 1.233 million with ILO unemployment at 6.3%; BRC like-for-like January sales were up 1.1% y/y; RICS reported the decline in house prices quickened in January; the U.K.’s global trade gap narrowed to ₤7.367 billion; and December construction orders were off 9% in the three months to December.



Last week’s high (1) was below the 23.6% retracement of the 2.0156-1.3501 range and last week’s low (2) was a multi-decade low. Upside resistance targets include the 1.4720/ 1.5071/ 1.5475/ 1.6043 levels while downside support targets include the 1.3682/ 1.3501/ 1.2810 levels.


CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the CHF 1.1500 level and was capped around the CHF 1.1780 level. The pair lost about 5 pips last week. The Swiss government proposed a second economic stimulus worth CHF 700 million.

Data released in Switzerland last week saw January headline CPI fall 0.1% with core inflation up 1.3%; January producer and import prices were off 0.8% n/n and 0.9% y/y; and Swiss consumer sentiment improved to -23 in January.




Last week’s high (1) was just above the 23.6% retracement of the 1.0010-1.2298 range and last week’s low (2) was above the 38.2% retracement of the same range. Upside resistance targets include the 1.1672/ 1.1758/ 1.1843 levels while downside support targets include the 1.1562/ 1.1424/ 1.1285/ 1.1154/ 1.0972 levels.


CAD

The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.2545 level and was supported around the C$ 1.2125 level. The pair gained about 160 pips last week. Finance minister Flaherty said the loonie’s recent weakness will “make a difference going forward” in resolving the trade deficit. BoC chief Carney was criticized for being too optimistic in recent forecasts. BoC last month said the economy should contract 1.2% last month and expand 3.8% in 2010.

Data released in Canada last week saw the December trade deficit was –C$ 460 million, the largest deficit since March 1976; December new housing prices were off 0.1%; and December new home construction was off 11% to an annualized 153,500.



Last week’s high (1) was above the 23.6% retracement of the 0.9818-1.3006 range and last week’s low (2) was above the 38.2% retracement of the same range. Upside resistance targets include the 1.2382/ 1.2462/ 1.2673/ 1.2752 levels while downside support targets include the 1.2235/ 1.2053/ 1.1788/ 1.1412 levels.



AUD

The Australian dollar depreciated vis-à-vis the U.S. dollar last week as the Aussie tested bids around the US$ 0.6430 level and was capped around the US$ 0.6850 level. The pair lost about 190 pips last week. RBA boss Stevens railed against asset bubbles. Parliament passed a A$42 billion fiscal stimulus.

Data released in Australia last week saw the January leading indicator of employment decline to -0.321, the fourteenth consecutive fall; December housing finance expanded 6.4% m/m; ANZ job advertisements fell 6.3% m/m in January; January business confidence fell to -32; January unemployment climbed to 4.8%; and the NAB quarterly business conditions survey was very weak.


Technical Outlook



Last week’s high (1) was above the 38.2% retracement of the 0.6007-0.7266 range and last week’s low (2) was below the 61.8% retracement of the same range. Upside resistance targets include the 0.6637/0.6785/ 0.6914/ 0.6969/ 0.7262 levels while downside support targets include the 0.6488/ 0.6305/ 0.6007 levels.


SCHEDULE


Sunday, 15 February 2009
all times GMT
(last release in parentheses)

2130 NZ January performance of services index
2145 NZ Q4 producer prices, inputs (3.7% q/q)
2145 NZ Q4 producer prices, outputs (2.8% q/q)
2350 Japan Q4 gross domestic product (-0.50% q/q)
2350 Japan Q4 gross domestic product, annualized (-1.80%)
2350 Japan Q4 gross domestic product deflator (-1.60% y/y)

Monday, 16 February 2009
all times GMT
(last release in parentheses)

N/A Japan January nationwide department store sales (-9.40% y/y)
N/A Germany January wholesale price index (-3.0% m/m)
N/A Germany January wholesale price index (-3.3% y/y)
0001 UK February Rightmove house prices (-1.90% m/m)
0001 UK February Rightmove house prices (-7.30% y/y)
0400 Australia Reserve Bank of Australia official Ryan speaks
0400 Japan January Tokyo-area condominium sales (-18.20% y/y)
0430 Japan December industrial production (-9.6% m/m)
0430 Japan December industrial production (-20.6% y/y)
0430 Japan December capacity utilization (-9.40% m/m)
1330 Canada December manufacturing shipments (-6.40% m/m)
1330 Canada December international securities transactions (-C$4.3 billion)
2350 Japan December tertiary industry index (-0.90% m/m)

Tuesday, 17 February 2009
all times GMT
(last release in parentheses)

0030 Australia February Reserve Bank of Australia board minutes
0600 Japan January machine tool orders (-84.4% y/y)
0815 CH December retail sales (-1.40% y/y)
0930 UK January consumer price index (-0.40% m/m)0930 UK January consumer price index (3.10% y/y)
0930 UK January consumer price index, core (1.10% y/y)
0930 UK December DCLG house prices (-8.60% y/y)
0930 UK January retail price index (-1.40% m/m)
0930 UK January retail price index (0.90% y/y)
1000 Germany February ZEW survey, economic sentiment (-31)
1000 Germany February ZEW survey, current situation (-77.1)
1000 Eurozone February ZEW survey, economic sentiment (-30.8)
1000 Eurozone December trade balance (-€4.9 billion)
1330 US February Empire State manufacturing index (-22.2)
1400 US December net long-term TIC flows (-US$ 21.7 billion)
1400 US December total net TIC flows (US$ 56.8 billion)
1800 US February NAHB housing market index (8)
1800 US St. Louis Federal Reserve President Bullard speaks
2220 Australia Reserve Bank of Australia Assistant Governor Edey speaks
2330 Australia December Westpac leading index (-1.00% m/m)

Wednesday, 18 February 2009
all times GMT
(last release in parentheses)

N/A UK February CBI industrial trends survey
0030 Australia Q4 wage cost index (0.90% q/q)
0030 Australia Q4 wage cost index (4.10% y/y)
0030 Australia January balance of payments imports (-2.00% m/m)
0400 Japan Bank of Japan Policy Board meeting
0500 Japan December leading index (79.8)
0500 Japan December coincident index (92.3)
0930 UK Bank of England MPC meeting minutes
1000 Eurozone December construction output (-1.10% m/m)
1000 Eurozone December construction output (-4.70% y/y)
1200 US MBA mortgage applications
1330 US January import price index (-4.2% m/m)
1330 US January import price index (-9.3% y/y)
1330 US January housing starts (550,000)
1330 US January building permits (547,000)
1330 Canada December wholesale sales (-1.60% m/m)
1400 US Cleveland Federal Reserve President Pianalto speaks
1415 US January industrial production (-2.0%)
1415 US January capacity utilization (73.6%)
1730 US Federal Reserve President Bernanke speaks
1830 US Chicago Federal Reserve President Evans speaks
1900 US Federal Open Market Committee meeting minutes
2350 Japan Foreign purchases of Japanese equities and bonds
2350 Japan Japanese purchases of foreign equities and bonds

Thursday, 19 February 2009
all times GMT
(last release in parentheses)

0715 CH January trade balance
0900 Italy December trade balance
0930 UK January public sector net cash requirement (₤44.2 billion)
0930 UK January public sector net borrowing (₤14.9 billion)
0930 UK January M4 money supply
1000 CH February ZEW survey, expectations (-66.7)
1330 US January producer price index (-1.90% m/m)
1330 US January producer price index (-0.90% y/y)
1330 US January PPI, ex-food and energy (0.20% m/m)
1330 US January PPI, ex-food and energy (4.30% y/y)
1330 US Weekly initial jobless claims
1330 US Continuing jobless claims
1330 Canada January leading indicators (-0.60% m/m)
1500 US Philadelphia Federal Reserve manufacturing index (-24.3)
1500 US January leading indicators (0.30%0
2200 Australia Reserve Bank of Australia Stevens speaks
2350 Japan December all-industry activity index (-2.30% m/m)

Friday, 20 February 2009
all times GMT
(last release in parentheses)

N/A Japan January supermarket sales (-2.80% y/y)
N/A France February PMI, manufacturing
0500 Japan Bank of Japan monthly report
0700 Japan January convenience store sales (6.10% y/y)
0745 France January consumer price index (-0.20% m/m)
0745 France January consumer price index (1.00% y/y)
0745 France February business confidence (73)
0900 Italy December industrial orders
0900 Italy December industrial sales
0930 UK January retail sales (1.60% m/m)
0930 UK January retail sales (4.00% y/y)
1200 Canada January consumer price index (-0.70% m/m)
1200 Canada January consumer price index (1.20% y/y0
1200 Canada January CPI, core (-0.40% m/m)
1200 Canada January CPI, core (2.40% y/y)
1330 US January consumer price index (-0.70% m/m)
1330 US January consumer price index (0.10% y/y)
1330 US January CPI, core (0.0% m/m)
1330 US January CPI, core (1.80% y/y)