Make Money From Online Business: July 2008

UK interest rate swaps fall

Thursday, July 24, 2008 at 1:43 AM Posted by Dewa

Forex News UK interest rate swaps fall on the release of weaker than expected UK retail sales data for June, reported at -3.9% on the month and +2.2% on the year, versus forecasts of -3% and +4% and +3.5% and +8.1% previously. The 2-year swap rate, which had been around 5.837% prior to the data, drops to around 5.798%. The 10-year swap rate, which had been around 5.443% prior to the data, currently trades around 5.433%.

UK June retail sales were biggest monthly down

at 1:42 AM Posted by Dewa

Forex News UK June retail sales were down 3.9% on the month, the biggest monthly fall on record, as the sales data reversed the large 3.6% gain in May, the Office For National Statistics says. Sales were up 2.2% on the year, the weakest growth since February 2006. The data were weaker than expected, with economists expecting a 3.0% decline on the month, but a 4.0% increase on the year. Overall, in the second quarter, retail sales were up 0.6% from the previous quarter, sharply down from the 1.7% growth in the first quarter.

USD/PHP closes higher at 44.23

at 1:41 AM Posted by Dewa

Forex News USD/PHP closes higher at 44.23, regaining lost ground as corporates take advantage of pair's early fall to service USD requirements; volume heavy as USD/PHP rebounded after dipping to a 7-week low 43.83; pair expected to move within 44.50-44.00 range, although further weakness in oil price could take USD/PHP to 43.70 support; "Aside from corporates, banks also covered shorts," says a trader with one of the large local banks, adds "oil and inflation remain the key drivers."

USD/TWD ends at 2-week high

at 1:40 AM Posted by Dewa

Forex News USD/TWD ends at 2-week high of 30.418 vs 30.394 last close on buying by foreign banks, following short-covering by NDF players amid strong USD, also on demand from oil importers. Despite volume up slightly, "the trading range is still very narrow as investors remain cautious because the pair has been pegged in current level for some time," says local bank trader, noting although USD stronger against major currencies, pair's upside limited as exporters accelerate selling USD near month end. Tips pair to consolidate in 30.380-30.450 next session.

GBP/USD longs taken after Wednesday's post MPC

at 1:39 AM Posted by Dewa

Forex News GBP/USD longs taken after Wednesday's post MPC minutes rally are being unwound, says a trader. He thinks the prospect of a very weak retail sales report, DJN forecast is -3%, out at 0830 GMT, a dovish article on UK rates in today's Daily Telegraph, and overall strength of the USD are all weighing on sterling. GBP/USD now trades at 1.9875, over 1 cent down on the day, with talk of big stops below.

EUR/USD hits the day's low

at 1:39 AM Posted by Dewa

Forex News EUR/USD hits the day's low at 1.5652 after the July Ifo survey disappoints on all levels. The closely-watched business climate index slumps to 97.5 from a revised 101.2 in June and against the forecast of 100.2. This comes after the earlier-than-expected-release of flash euro zone PMI's also disappoint with services at a 5-year low 48.3 and manufacturing also firmly in contraction territory at 47.5.

Euribor contracts rise on the release

at 1:38 AM Posted by Dewa

Forex News Euribor contracts rise on the release of weaker-than-forecast German business sentiment data and euro-zone PMI data. Germany's July Ifo business sentiment forecast fell to 97.5, versus a forecast 100.2, and 101.3 previously. The euro-zone July PMI data also fell, with the composite index at 47.8, versus a forecast 48.7 and 49.3 previously, the manufacturing index at 47.5 versus a forecast 48.7 and 49.3 previously, and the services index at 48.3, versus a forecast 48.5 and 49.1 previously. December Euribor, which had been trading around 94.85, is currently up 0.045 at 94.865.

USD/JPY had almost its highest

at 1:37 AM Posted by Dewa

Forex News USD/JPY had almost its highest close for 2008 around 107.88, notes Mizuho Corporate Bank's Nicole Elliott. However, with the rate almost overbought, and bullish momentum very poor, she urges extreme caution. For Thursday morning Elliott looks for an upside probe towards 108.00, then a drift lower during the afternoon session. For a strategy she favors small shorts at market, with a stop above 108.75, for short term downside targets of 107.00 and 106.00. USD/JPY now at 107.78.

Euro-Zone PMIs Weaker Than Expected In July

at 1:36 AM Posted by Dewa

Forex News Private sector activity in the euro zone was weaker than expected in July, as the purchasing managers' index for the currency bloc was 47.8 compared with 49.3 a month earlier. A level above 50 signals an expansion in activity, while a level below 50 signals a contraction. July's reading is below forecasts for 48.7, and suggests growth at the start of 3Q is set to be slow. The manufacturing PMI was weaker than expected at 47.5 in July after 49.2 in June. It was forecast at 48.7. Service sector activity also weakened to 48.3 in July from 49.1 in June. It was expected to be 48.5.

European government bonds open higher

at 1:35 AM Posted by Dewa

Forex News European government bonds open higher Thursday, as with equity markets set to take a breather after Wednesday's rally. Markets look ahead to the release of Germany's Ifo business climate index for July, with business sentiment forecast at 100.2, versus 101.3 previously (0800 GMT). Also to euro-zone July PMI data, with the composite index seen at 48.7 versus 49.3 previously, the manufacturing index at 48.7 versus 49.3 previously, and the services index at 48.5 versus 49.1 (0800 GMT). September bunds are currently up 0.16 at 110.13.

Asian Summary

at 1:34 AM Posted by Dewa

Forex News USD/JPY hits 1-month high 107.99 early but soon pares gains to return to overnight levels as Japanese manufacturers repatriate earnings; USD/JPY last 107.85, flat vs late NY; EUR/USD at 1.5694 vs 1.5690, EUR/JPY at 169.28 vs 169.37. RBNZ surprises markets, cuts official cash rate to 8.0% from 8.25%, 1st cut since July 2003, indicates further easing on cards if domestic economy continues to slow; NZD/USD dragged lower, last 0.7423 vs 0.7495 before announcement. Singapore's central bank ups 2008 inflation forecast to 6%-7% from 5%-6% earlier, saying external developments continue to put inflationary pressure on economy; but MAS says policy stance remains "appropriate"; move weighs on USD/SGD, last 1.3611. Japan trade surplus down 88.9% Y/Y at Y138.6 billion in June, vs 63.9% decline tipped; adds to worries over economic outlook amid already shrinking corporate profits. Regional stock markets broadly higher on recent drop in oil prices; Nikkei ends +2.2%, Kospi +2.2%, HSI +0.6%, NZX-50 +2.7%, Shanghai +2.2%; Sensex down 1.0%. September Nymex crude last $124.59/bbl, up 15 cents.

AUD/USD may have hit peak in its cycle

at 1:31 AM Posted by Dewa

Forex News AUD/USD may have hit peak in its cycle with risk offshore investors may begin to unwind positions betting an RBA easing cycle is on the horizon, says CBA strategist Richard Grace. "You might get a few big players cutting their exposure to the peripheral currencies." Adds it's possible AUD has peaked, given the slowing economy and downturn in commodity prices. "It's a bit too early to be sure on that, but it's possible it has peaked in the cycle." Pair now 0.9587.

Indonesia central bank's priority remains fighting inflation

at 1:30 AM Posted by Dewa

Forex News Indonesia central bank's priority remains fighting inflation and doesn't believe more interest rate hikes will damp economic growth, says Governor Boediono in interview with Dow Jones; Indonesia's "aggregate demand is very strong," Boediono says, and therefore price "stability" is central bank's top priority. Comment indicate Bank Indonesia ready to hike rate later this year if inflation stays high; it expects inflation to be 11.5%-12.5% at year-end. Many analysts expect another 25bp hike in August to 9%; other than rate hike, central bank likely to continue selling USD/IDR to help reduce imported inflation.

AUD/USD likely to continue tracking EUR near term

at 1:29 AM Posted by Dewa

Forex News AUD/USD likely to continue tracking EUR near term, returning to 0.9800 territory, but weakening economy means pair will slip back to 0.9500 in 3Q, meaning parity is off the cards, says Barclays Capital strategist David Forrester. "We think the domestic data in Australia will start to point to a rate cut early next year, that's when the Aussie will start to come under a bit more pressure." Notes lower oil prices, hawkish Fed, weaker commodities weakening AUD, but strength behind USD also more fundamental given GSE legislation passed, also possible laws on oil speculation. "We continue not to be in the parity camp." AUD/USD now 0.9590.

USD/SGD falls as MAS raises 2008 inflation target

at 1:29 AM Posted by Dewa

Forex News USD/SGD falls as MAS raises 2008 inflation target to 6%-7% from 5%-6%, with pair sliding to 1.3600 vs 1.3630 just before forecast change announcement at 0400 GMT. Trader says higher inflation target reinforces MAS's strong SGD policy, possibly giving cue for pair to decline more after peaking at 1.3660 yesterday; "dollar/Sing is a not a bad sell at this level." Says pair may find next support near yesterday's low around 1.3570.

USD/CNY stays lower midday

at 1:27 AM Posted by Dewa

Forex News USD/CNY stays lower midday at 6.8281 in OTC trade vs 6.8297 yesterday close; tipped to consolidate in 6.8250-6.8350 range in afternoon. CNY strengthening despite USD's overnight gains because CNY still undervalued, today's lower-than-expected USD/CNY fixing, traders say; "policy makers may take the yuan's appreciation as a way to curb inflation," says Shenzhen-based dealer with local bank; expects further CNY appreciation in near term.

S'pore Ups Inflation Forecast;No Change In Policy

at 1:26 AM Posted by Dewa

Forex News Singapore's central bank Thursday surprisingly increased 2008 inflation forecast to 6%-7% vs 5%-6% earlier, saying external developments continue to put inflationary pressure on the import dependent economy. But, Monetary Authority of Singapore's MD Heng Swee Keat says policy stance remains "appropriate," indicating that MAS won't tighten exchange rate policy anytime soon. Trader says inflation revision could put downward pressure on USD/SGD. Pair now trading 1.3620 vs 1.3593 Asia close yesterday, little changed from 1.3630 early trade after central bank comments.

USD/TWD rises to 30.412 midday

at 1:25 AM Posted by Dewa

Forex News USD/TWD rises to 30.412 midday vs 30.394 last close on buying by importers, NDF players amid stronger USD as oil prices fall, says foreign bank trader. However, "as concerns over oil prices and U.S. credit crisis remain, the rise is not considered sustainable," she says, expects pair to rise in near-term if USD keeps gathering upward momentum. Tips pair in 30.390-30.420 band in afternoon.

AUD/USD Supports Starting To Look Fragile

Wednesday, July 23, 2008 at 7:24 PM Posted by Dewa

Forex News AUD/USD appears increasingly vulnerable after falling through 30-day moving average 0.9597, now 0.9588. Sue Trinh, FX strategist at RBC Capital Markets, says firmer USD, selling linked to a softer NZD, and signs of weakening commodity markets slowly eroding support for AUD/USD. Domestic debt markets also moving closer to pricing in one full rate cut over next year; there's currently a 40% probability of a cut in next year built into debt prices. If global growth slowdown builds, AUD/USD support will dissipate even further.

USD/PHP Extends Fall; Breaks 44.00

at 7:23 PM Posted by Dewa

Forex News USD/PHP extends fall on retreating oil prices, breaking key 44.00 psychological support; appears poised to test 43.75 next. Pair last at 43.86 after trading in moderate volume between 43.83-43.95 vs previous 44.02 close, a 7-week low. "We have yet to see the central bank in the market," says a local bank trader. "It looks like after yesterday's steep drop, the pair is poised to continue trading lower but in a tight range."

USD/MYR Tad Up, May Fall Later; 3.2300 Support

at 7:22 PM Posted by Dewa

Forex News USD/MYR at 3.2400, tad up vs 3.2380 previous close; dealers say pair may fall after June CPI rises faster than expected - June CPI +7.7% at 26-year high vs +6.7% tipped in Dow Jones poll. "The June inflation figure will add to the mounting pressure for Bank Negara to hike rates this Friday. The anticipation may lend some strength to the ringgit," says dealer; but adds pair's fall likely supported by broadly firmer USD. Tips support at 3.2300, resistance at 3.2450.

Drop In Oil Neutral For BOJ Policy

at 7:21 PM Posted by Dewa

Forex News Drop in oil prices brightens outlook for Japanese economy, but implications for monetary policy "probably neutral for now," since decline decreases both upside price risks and downside economic risks that BOJ has described, says Barclays Capital strategist Chotaro Morita. "Although there could be a strengthening bias toward rate hikes if the outlook for growth strengthens going forward, it will likely take some time yet to reach that conclusion." With market reacting to an earlier decline in yields on pessimism surrounding U.S. financial problems, surging oil prices, predicts market will stabilize with 10-year JGB yields in upper-1.6% level. So far today, 10-year yield +2.5 bps at 1.665%.

USD/CNY Likely To Rise On USD Strength O/N

at 7:21 PM Posted by Dewa

Forex News USD/CNY expected to rise as PBOC likely to set central parity higher on further USD strength overnight vs EUR, JPY; central parity eyed at 6.8320 vs 6.8279 yesterday; trading band likely at 6.820-6.840. Shanghai-based trader at local bank says USD/globals moves to be main factors for USD/CNY near term; "it's possible that the government will aim to keep the yuan in a particularly stable range before and during the Olympics."

USD/TWD May Rise On Oil Price Pullback

at 7:20 PM Posted by Dewa

Forex News USD/TWD likely to rise following continued pullback in oil prices, though expected rallies in local shares to limit pair's gains, says local brokerage trader. Also, Commercial Times report, citing Governor Perng Fai-nan saying central bank won't use stronger TWD to curb inflation, and June's export orders (growth rate slowest in 16 months) "may be negative cues for TWD in mid- to long-term. The pair is affected mostly by the direction of the USD in the short-term." Tips 30.370-30.430 vs 30.394 last close.

USD/SGD May Trade In 1.3620-1.3670 Range

at 7:19 PM Posted by Dewa

Forex News USD/SGD last bid 1.3630 vs 1.3593 on overnight gains in USD amid further falls in oil prices, hopes Fed may raise rates due to inflation concerns, trader says. Adds Singapore CPI has been holding steady for 3 straight months to June at 7.5%, indicating prices might have peaked. "This shows that central bank may not further tighten its monetary policy stance." Expects pair to trade in 1.3620-1.3670 range.

USD/KRW Down As Oil Drops; 1005-1015 Range Tipped

at 7:18 PM Posted by Dewa

Forex News USD/KRW trading lower at 1,009.35 vs 1,013.80 last close as oil prices drop overnight, foreigners buy local shares today, say traders. "The short-USD sentiment will likely become stronger given oil and stock market factors," says local bank trader. Another local bank trader says FX authorities appear to target the pair as low as 970.0, determined to intervene strongly to stop pair from touching 1,020.0; "I now expect the pair to drop below 1,000 within August." Tipped to trade in 1,005-1,015 band rest of session.

USD/PHP May Extend Decline; 43.75 Support

at 7:17 PM Posted by Dewa

Forex News USD/PHP may continue to fall after crude futures drop further, U.S. stocks modestly up overnight; pair's support at 43.75 after ending at 7-week low 44.02 yesterday, resistance at 44.25. "Given external developments, it's possible to see further peso gains. However, we could also expect the central bank to intervene in the market and corporate demand for the dollar to set in should the trend continue," says local bank trader.

Further NZD/USD Fall Depends On USD Moves

at 7:16 PM Posted by Dewa

Forex News NZD/USD "definitely has a downward bias" after RBNZ rate cut but further big moves to downside may be more difficult as a lot of market "is short Kiwi anyway", says HSBC dealer Daniel Brdanovic; "I think it's going to depend on what the U.S. dollar does overnight. We've had two days of the big dollar rallying, if that continues then sure, the Kiwi will be lower." Otherwise, expects market to play Kiwi vs EUR, AUD, GBP today. Puts initial resistance for NZD/USD at 0.7455, then 0.7485, with support target around 0.7390, which he thinks could be reached overnight. NZD/USD last 0.7441.

Many USD/JPY Sell Orders Above 108

at 7:15 PM Posted by Dewa

Forex News USD/JPY hovering around 107.90; rising above 108 "may be difficult" since there are "so many" selling orders from Japanese exporters, U.S. securities firms, says senior sales dealer at major Japan bank. Last 107.89 on EBS. Adds even if it rises above 108, selling orders lined up until 108.50, so ascent would be slow. Stop-loss buying orders above 108.50, unlikely to be breached in global day. If triggered, pair may rise to 108.75.

Japan June Trade Surplus Down 88.9% On Yr

at 7:14 PM Posted by Dewa

Forex News Japan trade surplus down 88.9% on year at Y138.6 billion in June, missing Dow Jones/Nikkei survey forecast for a 63.9% on-year decline. Decline in trade surplus adds to worries over economic outlook amid already shrinking corporate profits. High oil inflates import bill, while exports at risk of slowdown amid shrinking global demand. Looking ahead, still growing inflationary pressures increase risks to exports as could slow demand from emerging nations which had previously supported overall demand. In June, exports shrank 1.7%, first contraction in more than four-and-a-half years, while imports expanded 16.2%.

USD/KRW To Head Lower; Likely In 1007-1014 Band

at 7:13 PM Posted by Dewa

Forex News USD/KRW likely to extend losses into 3rd-straight session today given continued drop in oil prices. Also, foreign sale of local stocks likely weaker given positive Wall Street performance overnight. "The FX authorities have been sending the market a strong warning that it's determined to secure the KRW at 1,020 and have conducted smoothing operations over the past sessions," says local bank trader; tips pair to trade in 1,007-1,014 range today; still, trading volume to remain low as importers who need dollars for settlement reluctant to buy now given authorities' suspected intervention, adds trader. 1-month NDFs end around 1,011 in spot.

USD/JPY May Rise, No Reason To Buy JPY Now

at 7:11 PM Posted by Dewa

Forex News USD/JPY may rise as USD sentiment recovers due to falling oil prices, not-too-negative stock moves, says senior sales dealer at major Japan bank. Says Japan's interest rate among lowest, thus "there is no reason to buy the yen for now." Tips 107.60-108.50 range; pair last 107.95 on EBS. EUR/JPY may touch 170, he says, last 169.35 on EBS. EUR/USD may trade in 1.5650-1.5750 range; last 1.5690 on EBS. Adds there's no important economic indicators, speeches, thus oil prices, stock prices would be major trading factor.

EUR/USD May Slip Further On EU Data

at 7:10 PM Posted by Dewa

Forex News Key focus for EUR/USD is slew of Eurozone data due later Thursday, with pair likely to track lower on further evidence of slowing Eurozone, says Deutsche Bank strategist John Horner. Eurozone PMI, German IFO Business confidence among others all due. "We expect weakness in those numbers will weigh further on the Euro." Says ahead of then pair won't move much, with little in Asian trading to jolt either way. Pair now 1.5689.

asia review

at 7:09 PM Posted by Dewa

Forex News Regional stock markets likely to have positive cue after Wall Street's mild gains overnight, fall in oil prices below $125/bbl; strength in U.S. financial stocks may lift their Asian peers. Also, concerns about financial sector troubles could be eased after U.S. House of Representatives pass broad package of housing-related items; legislation includes $300 billion program to refinance troubled mortgages with federal insurance, new regulator for Fannie, Freddie, overhaul of Federal Housing Administration; bill now awaits Senate vote. USD likely to maintain positive tone as risk appetite improves, lower oil, hawkish comments from Philadelphia Fed's Plosser; after Tuesday's speech which highlighting worries over inflation, he reiterated those concerns Wednesday, suggesting in Bloomberg television interview that rates need to be raised sooner rather later.

USD/JPY at 107.93 vs 107.85 late NY, EUR/USD at 1.5692 vs 1.5690, EUR/JPY at 169.37 vs 169.25. RBNZ surprises markets by cutting official cash rate to 8.0% from 8.25%, first cut since July 2003, indicates further easing on the cards if domestic economy continues to slow; NZD/USD slumps, last 0.7450 from 0.7495 before decision; ABN Amro's Greg Gibbs indicates likely medium-term target now 0.7200. NZD/JPY crosses likely to be pressured down. On data front, Japan provisional trade statistics at 2350 GMT, Hong Kong trade at 0815 GMT. Later there's Germany's Ifo. UK retail sales, US jobless claims, existing home sales. New York Fed Pres Geithner, SEC Chairman Cox testify before House panel, BoE deputy governor Bean speaks.

RBA May Join RBNZ's Easing In Next 6 Months

at 7:08 PM Posted by Dewa

Forex News RBNZ cutting rates at time other central banks like Fed, ECB, BoE talking about prospect of tightening clearly displays that NZ is "in a different part of the economic cycle than many of the key trading partners," says Bank of New Zealand head of market economics Stephen Toplis; adds wouldn't be surprised if RBA followed suit with cut in next 6 months as Australia has same tight starting point for monetary conditions, signs domestic economy contracting, issues with credit crisis and cost of funds to banking sector. "Monetary conditions in New Zealand are really tight. So you can allow interest rates to fall and still be adopting quite tight monetary policy," which not the case in most other places.

U.S. Summary

at 7:07 PM Posted by Dewa

Forex News USD lifted on falling oil prices, more talk of need for U.S. rate hikes to curtail inflation, despite brief weakness on Fed's Beige Book, which showed slowing economy, elevated price pressure in June, early July. EUR/USD at 1.5690 in late NY, vs 1.5778 late Tuesday; USD/JPY at 107.85 late vs 107.33, EUR/JPY at 169.25 vs 169.32. Crude futures dropped to under $125 after U.S. weekly gasoline inventories show surprisingly strong pickup; September crude settled $3.98 lower at $124.44/bbl on Nymex, lowest since June 4. Philadelphia Fed's Plosser following Tuesday's speech which highlighting worries over inflation, reiterated those concerns Wednesday; suggested in Bloomberg television interview that rates need to be raised sooner rather later.

Treasurys down again, pressured by massive supply of government debt, recovering risk appetite; in late trading, 2-year note down 2/32 at 100 8/32 to yield 2.74%, 5-year down 6/32 to 99 14/32 to yield 3.50%, 10-year down 4/32 to 98 1/32 to yield 4.12%. House of Representatives pass broad package of housing-related items; legislation includes $300 billion program to refinance troubled mortgages with federal insurance, new regulator for Fannie, Freddie, overhaul of Federal Housing Administration. Stocks modestly higher; investors continue rotating out of oil, commodity stocks into financials, consumer stocks; DJIA +0.3%, Nasdaq +1.0%. Strength in financial equities took some of flight-to-quality momentum out of gold; Comex August gold down $25.70, settling at $922.80/oz on Nymex. LME copper futures finished lower on falling crude, recent USD gains; 3-month copper down $50 at $8080/ton bid.

AUD/USD Weighed Down By USD and RBNZ Rate Cut

at 7:05 PM Posted by Dewa

Forex News AUD/USD sluggish in early Asia trading as broadly firmer USD and RBNZ rate cut weighs sentiment. Richard Grace, head of FX strategy at CBA, says it is too soon to say AUD/USD is heading toward a major trend shift, but there is some unwinding of positions going on, especially following news Wednesday of mostly neutral 2Q inflation data. Local debt markets continue to unwind expectations of further RBA rate hikes. Focus is slowly switching to likely rate cuts in 2009. AUD/USD currently sitting on its 30-day moving average, so some support around 0.9600 likely. Last quoted at 0.9605.

NZ Shares To Gain On RBNZ's Preemptive Rate Cut

at 7:04 PM Posted by Dewa

Forex News NZ shares likely to get a boost after RBNZ cuts official cash rate, indicates more cuts to come; "obviously it is going to go a bit better, hopefully it is the start of something in the right direction," says UBS head of equities Campbell Stuart. Adds RBNZ move will bring in cashed-up investors who have been sitting on the sidelines, plus weaker NZD after rate cut will shine spotlight on currency sensitive stocks. Fisher & Paykel Healthcare (FPH.NZ), Fisher & Paykel Appliances (FPA.NZ), Fletcher Building (FBU.NZ) likely to benefit. Benchmark NZX-50 index closed up 1.8% at 3201.65 yesterday.

RBNZ To Cut More, Finance Sector Risks

at 7:03 PM Posted by Dewa

Forex News RBNZ official cash rate looks to be safely on track for 7.0% by March 2009, from 8.0% now, with few obstacles for that to be reached, says one economist at U.S. investment bank, asking not to be named. But even then, the rate will be above neutral, loosely defined as somewhere between 5.00% and 6.00%. With ongoing upheavals in NZ finance sector, there's likely downside risk to medium-term forecast for cash rate, economist says.

RBNZ Rate Cut Prudent In Current Conditions

at 7:02 PM Posted by Dewa

Forex News RBNZ decision to cut official cash rate "the right move" in current economic conditions, says ANZ economist Khoon Goh, noting tighter international credit conditions, higher cost of funds. "The Reserve Bank's cut today is more or less to prevent overall financial conditions from tightening further and we see that as a prudent move in the current environment." Notes RBNZ still has inflation worries, concerned about NZD falling too far too quickly, so expects bank to cut rates at remaining meetings this year before pausing to assess inflation, economic situation. "At the end of the day the OCR is at a pretty high level and has a long way to go still."

AUD/NZD Highest Since Dec 2000 On Dovish RBNZ

at 7:00 PM Posted by Dewa

Forex News AUD/NZD shoots to its highest levels since December 2000 after RBNZ indicated multiple interest rate cuts are in the works. Tony Morriss, FX strategist at ANZ, says RBNZ's dovish tone was surprising, saying they've clearly indicated more cuts are likely; given tone, it's surprising RBNZ didn't cut by more this time around. Only thing likely to stall further RBNZ cuts is if NZD overshoots to downside, thus easing monetary conditions, Morriss says. Also notable that RBNZ has entered into an easing phase while other advanced economies are signaling problems with inflation. AUD/NZD, now 1.2909, up from 1.2825 before RBNZ comments.

RBNZ To Dictate NZD Direction, Bias Weak

at 1:57 PM Posted by Dewa

Forex News RBNZ rate decision, statement due this morning will dictate NZD/USD direction but pair looks capped around 0.7540 regardless of central bank outcome, says ANZ Bank; notes freezing of NZ$554 million of investor funds by Hanover Finance, lower commodities and narrowing NZ-US yield differentials weighed on NZD overnight. "Sellers above 0.7550 are arriving and it would take some surprisingly hawkish words from (RBNZ Governor) Bollard this morning to deter them. Tips 0.7470-0.7530 range today, last 0.7516.

USD/CAD Going Nowhere Fast

at 1:56 PM Posted by Dewa

Forex News USD/CAD has been trapped in a C$0.9724 - C$1.0343 trading range since last Nov, thereby producing a neutral trend bias for the pair, says a report from RBC Capital Markets. "Based on the price patterns that have formed after USD/CAD reached a secular low of 0.9059 in Nov, we believe that a 'base-building' process is underway that will eventually lead to another rally in USD/CAD," RBC says. A clean break above resistance at C$1.0343 is required in order to affirm that thesis, it says. "Should the global economic growth outlook worsen and lead to a sustained correction in commodity prices, the odds of a rally in USD/CAD will increase," RBC says.

Fed Rhetoric, Fed Action Don't Necessarily Match

at 1:55 PM Posted by Dewa

Forex News "Fed rhetoric, in particular from the various bank presidents, has strongly suggested that a reversal in monetary policy accommodation is likely to occur sooner rather than later," Deutsche Bank says. Easy monetary policy may worsen the inflation outlook, but the problem is "that financial market conditions are not accommodative and that is ultimately what matters, more so than where real fed funds are," firm says. "Hence we believe that higher interest rates would only exacerbate the deep recession in housing and the ongoing massive contraction in financial institution balance sheets," so "Fed tightening may be further away than some envision."

Treasurys Watch Stocks

at 1:54 PM Posted by Dewa

Forex News RBNZ expected to hold rates steady but economists acknowledge chances of rate cut also good; 10 of 14 economists polled by Dow Jones Newswires tip official cash rate to remain unchanged but say it's likely to be a tight call with market pricing in 45% chance of rate cut. RBNZ caught between sharp economic slowdown, inflationary pressures; "There is no question the economy is in strife. But (the RBNZ) is equally in strife in achieving its inflation mandate," says BNZ head of research Stephen Toplis. Deutsche Bank chief economist Darren Gibbs, who tips easing this week, says economy weaker than central bank expects. Rate cut would mark first easing since 2003.

NZD/USD Falls To Near 3-Wk Lows

at 1:53 PM Posted by Dewa

Forex News NZD/USD slumps to near 3-week low 0.7498 in offshore trade, opens in vulnerable position ahead of this morning's much anticipated RBNZ rate review, which could deliver 1st rate cut in 5 years; Kiwi hurt by broad rally in USD, concerns about possible easing and jitters sparked by news yesterday of finance company Hanover Finance freezing around NZ$550 million of investor payments due to credit crisis; pair looks shaky, with next support of 0.7450 likely to go if RBNZ cuts today; while majority of analysts expect central bank to stay on hold, many concede decision is very close call with market pricing in just over 50% chance of easing. Decision due at 0900 NZT, 2100 GMT. Pair last 0.7504.

Dollar Rally Rolls On

at 1:52 PM Posted by Dewa

Forex News The dollar rallied for a second day Wednesday, helped by crude oil prices that remained vulnerable to more declines and a Beige Book from the Federal Reserve that suggested price pressures are elevated or rising. The euro fell to a two-week intra-day low of $1.5670, and the yen also retreated against the buck. Wednesday afternoon, the euro was at $1.5678 from $1.5778 late Tuesday. The dollar was at Y107.90 from Y107.33, while the euro was at Y169.17 from Y169.32, according to EBS. The U.K. pound was at $1.9987, from $1.9912, and the dollar was at CHF1.0391, from CHF1.0315 late Tuesday.

Dollar Jumps To Intraday Peak Vs Euro

at 1:50 PM Posted by Dewa

Forex News The dollar has touched an intraday high against the euro, reversing a kneejerk decline after the release of the latest Fed Beige Book, which basically indicated growth is slackening while price pressure is elevated. Such fluctuations aren't uncommon after the publication of economic reports, although the Biege Book isn't closely watched by forex traders. Nothing in the BB to upset investors, so the dollar resumed its advance. Recently, Wed afternoon, EUR/USD was at 1.5678 from 1.5778 late Tue. USD/JPY was at 107.94 from 107.33.

Beige Book Fails To Alter Rate Futures Sentiment

at 1:49 PM Posted by Dewa

Forex News Fed's Beige Book doesn't do much to generate price movement on futures across yield curve. Long-end Sep 30-yr and 10-yr Tsy note contracts remain lower and within day's trading range. Quarterly Eurodollar futures also lower, with Mar through Sep '09 contracts down by as much as 9.5 BP. Short-dated Aug fed-funds futures continue to price in only about 10% chance for FOMC to tighten to 2.25%, from current 2% yield. Nov still fully priced for 25 BP hike by Oct. 28-29 FOMC, with about 12% chance for further tightening to 2.25%.

Nymex Crude Rising On Oil Inventory Draw

at 1:48 PM Posted by Dewa

Forex News Futures have bounced around since the release of US oil and product inventory data this morning, as traders weighed a larger-than-expected drop in oil stocks against a big gain in gasoline inventories. The oil inventory draw is winning out, as oil futures briefly turned positive. September crude trades at $128.27/bbl, down 15c.

Funds Futures Fully Priced For 25 BP Autumn Hike

at 1:47 PM Posted by Dewa

Forex News Fed-funds futures traders seem content for now to fully price in 25 BP rate hike by the Oct. 28-29 FOMC meeting. Nov fed-funds futures contract has held for a while at 97.72, down 6.5 BP, fully factoring in expectations for 2.25% rate, with about 12% chance for further tigthening to 2.5%. At Tuesday's settlement, Nov priced in about 94% chance for 2.25% rate, with no expectations for 2.5%.

USD/CAD Edges Higher On CAD Cross Selling

at 1:44 PM Posted by Dewa

Forex News USD/CAD is edging higher and is currently around C$1.0110 despite USD softer tone vs majors as CAD in cross trading vs non-USD currencies. Market players are taking profits on earlier CAD gains on the crosses, one Toronto currency trader said. But trading flows are notably light, and USD/CAD will likely remain confined to recent ranges in coming sessions, he said. "By and large, the markets are very quiet, and we're not expecting any major movement out of the existing range," the trader said.

USD/JPY Vols Lower As Dollar Climbs

at 1:43 PM Posted by Dewa

Forex News Volatilities implied by USD/JPY currency options were lower Wed in NY after the dollar rose again against the yen. One-month at-the-money USD/JPY options implied volatilities were at 10.50%/11.10% down from 10.80%/11.10% in Tokyo and from 11.0%/11.60% in NY Tue. One month EUR/USD implied vols were at 8.90%/9.20% from 9.20%/9.45% in Tokyo and from 9.20%/9.60% in NY Tue. One month EUR/JPY implied vols were at 8.90%/9.40% from 9.25%/9.65% in Tokyo and 9.0%/9.50% in NY Tue. One-month quarter delta risk-reversals for USD puts/JPY calls were at 2.70%/3.40% versus 3.10%/3.40% in Tokyo and 3.0%/3.70% in NY Tue.

USD/KRW may fall from 1,017.6

Tuesday, July 22, 2008 at 11:12 PM Posted by Dewa

Forex News USD/KRW may fall from 1,017.6 last close on retreat in oil prices, export settlements, says trader and notes FX authorities' suspected USD-selling yesterday likely to damp long-USD bias today. 1-month NDFs end around 1,016. Pair tipped in 1,011-1,019 range. If foreigners reduce their volume of net-selling in domestic stock market, it can provide further downside pressure, says local bank trader; but adds, pair unlikely to post sharp losses due to USD-buying on dips.

USD May Rise; Excessive Fears For US Econ Recede

at 11:06 PM Posted by Dewa

Forex News USD now off highs on profit-taking, but may rise again vs EUR, JPY as drop in crude oil prices, pickup on Wall Street alleviate worries for U.S. economic outlook, says trader at Tokyo bank; adds, remarks from Philadelphia Fed President Plosser overnight raise speculation of near-term Fed rate hike, which could help boost USD. "The dollar is now on an upward trend." But sharp climbs in USD unlikely given lack of key events in Asia, fact that many already expect Asia stocks to rise. EUR/USD tipped 1.5750-1.5820 band for now; last 1.5790 on EBS. USD/JPY likely to move in 106.80-107.60 for now; last 107.23 on EBS. Plosser says last night that central bank may have to raise rates soon to keep price pressures under control, to "prevent recent inflation from continuing to plague the economy."

Aussie 2Q CPI May Show RBA Winning War On Prices

at 4:14 PM Posted by Dewa

Forex News Australian 2Q inflation set to remain well outside RBA's target band, but may show some cooling from previous quarter, buoying RBA in its push to win war on price pressures; Dow Jones Newswires survey shows 2Q headline CPI to rise 1.2% from 1.3% in 1Q, core CPI to climb 1.1% vs 1.25%. Still, such on-year prices rises would be well beyond RBA comfort zone with headline CPI likely growing 4.25% from 4.2% last quarter, and core growing 4.4% from 4.25% last. Data out later.

Expect EUR/USD Faces Downside Risks

at 4:12 PM Posted by Dewa

Forex News Expect stream of eurozone confidence surveys due in coming days to add to downside EUR risks, BNP Paribas FX strategists say. Initial support for EUR/USD likely at 1.5615 with focus returning to range bottom of 1.5300-1.5285 medium-term. Also driven down by firmer USD, supported by hawkish comments from Fed. Notes medium-term portfolio and longer-term flows turning EUR/USD negative. Pair has also broken below key 1.5825 trendline support suggesting more sustained pullback; last quoted at 1.5792.

asia review

at 4:10 PM Posted by Dewa

Forex News Regional stock markets have positive cue from DJIA's 1.2% rise, Nasdaq's 1.1% gain; lower oil prices also likely to help sentiment. Financial stocks should do well, in line with their U.S. peers, though that optimism could be slightly muted by $3.3 billion 2Q loss posted by Washington Mutual after the closing bell; shares down 3.1% in after hours trade. In FX markets, USD has positive tone after Philadelphia Fed's Plosser says higher rates may be needed to curb inflation, also Treasury Secretary Paulson's reiteration of the need for strong USD; gains in regional equities also likely to improve risk appetite, though there's some risk USD pullback after sharp gains overnight; USD/JPY last 107.27 vs 107.33 late NY, EUR/USD at 1.5787 vs 1.5778, EUR/JPY at 169.35 vs 169.32. On data front, there's Australia CPI at 0130 GMT, skilled vacancies index at 0100 GMT, Singapore CPI at 0500 GMT, Taiwan industrial output, export orders at 0800 GMT, Malaysia CPI at 0800 GMT. Later, there's BoE MPC minutes, EU industrial new orders, UK CBI industrial trends, U.S. MBA mortgage application, oil inventories, Fed Beige Book.

AUD/USD Support Pulls Back To 0.9660

at 4:08 PM Posted by Dewa

Forex News AUD/USD under some pressure on significant pullback in commodities prices and hawkish comments from Fed in offshore trade. ANZ senior currency strategist says focus on 2Q CPI due 0130 GMT with support for pair at 0.9660 with resistance at 0.9740. A major correction in commodities, stronger USD now significant backdrop for AUD. Notes uncertainty also surrounding CPI figures, which could provide some volatility for AUD trade on data release. Pair last 0.9720 from 0.9755 late yesterday in Australia.

U.S. Summary

at 2:03 PM Posted by Dewa

Forex News Dollar advanced across the board amid lower oil prices, hawkish comments on rates by Philly Fed President Plosser; greenback got early boost after Plosser warned inflationary pressures are "too high", hinting at rate hike; comments sparked losses in US interest rate futures as investors become more convinced that Fed hike could be near; plus dollar also had support from U.S. Treasury Secretary Paulson, who repeated his mantra that strong dollar important for nation's interests. "Those three things (lower oil prices and comments by the Fed official and Paulson) basically hit the market at the same time," said Carl Forcheski, FX strategist at Societe Generale in New York; "Combine that with the fact that the euro had trouble moving higher (in overnight trading) despite weak U.S. company earnings reports...and the stage was set for the dollar to rebound."

Late In New York, EUR/USD 1.5778 vs 1.5898 late Monday, USD/JPY 107.33 vs 106.72, EUR/JPY 169.32 vs 169.67, GBP/USD 1.9912 vs 1.9990, USD/CHF 1.0315 vs 1.0202. Lower oil prices lifted stocks, led by financials and consumer sector; Wachovia surged 27% despite a record 2Q loss, Bank of America +13%, while General Motors +9.4%. Apple fell 2.6% after warning its summer quarter may not live up to Wall Street's hopes. Dow +1.2%, Nasdaq +1.1%. Treasurys dropped on tough inflation talk, recovering equities, prospect of additional supply; 2-year yield +8.2 bp at 2.72%, 10-year +4.5 bp at 4.11%. Nymex August crude fell $3.09 to $127.95/bbl on receding fears over the course of Tropical Storm Dolly, stronger USD; Comex August gold fell $15.20 to $948.50/oz on broad decline in other commodities, lower oil prices.

ANZ Tips NZD/USD To Stay Heavy, Test 0.7540 Soon

at 1:42 PM Posted by Dewa

Forex News NZD/USD will remain heavy despite managing to limit downside momentum overnight, says ANZ Bank; expects 0.7550 to attract attention ahead of tomorrow's RBNZ rate decision as later in week large option strikes below this level roll off. Tips imminent test of 0.7540, last 0.7597. "Commodities, led by oil, have continued to free fall and must exert a gravitational pull on the AUD and the NZD."

USD/CAD Ends Sharply Higher

at 1:41 PM Posted by Dewa

Forex News USD/CAD is ending sharply higher, around C$1.0094, after a resurgent U.S. dollar, lower oil prices and softer-than-expected retail sales data for May all CAD. On Wed, Canadian consumer price index data for June will be released. Economists expect that core inflation was 1.6% on an annualized basis in June, from 1.5% in the previous month, while all-items inflation as 2.9%, from 2.2%.

NZD Down Early, Vulnerable To Rate Cut Risk Thu

at 1:40 PM Posted by Dewa

Forex News NZD/USD trades lower early after slipping to 11-day low of 0.7573 overnight on across-the-board USD gains; has recovered somewhat though rallies attracting selling interest as investors remain nervous of possible RBNZ rate cut tomorrow; with no local data on tap today Kiwi likely to remain trapped in ranges, unlikely to trade outside broad 0.7575 to 0.7750 range of past week. Bias remains to downside given continuing deterioration of domestic fundamentals, lower rates outlook. Last 0.7596 vs 0.7608 late in NZ yesterday.

USD Up On Declining Crude, Hawkish Plosser

at 1:39 PM Posted by Dewa

Forex News The dollar advanced across the board Tuesday as swooning oil prices led investors to adjust positions in favor of the U.S. currency. The greenback got an initial boost early in New York trading when Philadelphia Fed President Charles Plosser warned inflationary pressures are "too high", hinting at an interest rate hike. Lower prices for oil then extended the buck's rally as stop-loss orders were tripped. However, the dollar ran out of momentum during the afternoon session and yielded some of its intraday gains, but stayed above Y107 while the euro remained below $1.58. Tuesday afternoon in New York, the euro was at $1.5778 from $1.5898 late Monday. The dollar was at Y107.25 from Y106.72, while the euro was at Y169.27 from Y169.67, according to EBS. The U.K. pound was at $1.9910 from $1.9990, and the dollar was at CHF1.0310 from CHF1.0202 late Monday.

US Rate Futures Sink Further

at 1:37 PM Posted by Dewa

Forex News US rate futures are continuing to have a downbeat day, sliding further after 20-yr TIPS reopening. Quarterly Eurodollar futures down by as much as 12BP. For Tsy futures, Sep 30-yr bonds are under the most pressure, heading toward the 4.75% cash yield equivalent at 112-15, recently down 21+/32 at 113-28. Fed funds futures also weaker. Near-term Aug. contract little changed, but Nov. is showing odds for end-Oct. 2.25% rate at 94% vs. 74% at the day's highest price.

USD/JPY Vols Lower After Dollar Jumps

at 1:36 PM Posted by Dewa

Forex News Volatilities implied by USD/JPY currency options were lower Tue in NY after the dollar rose against the yen. One-month at-the-money USD/JPY options implied volatilities were at 11.0%/11.60%, down from 11.70%/12.0% in Tokyo and from 11.20%/11.70% in NY Mon. One month EUR/USD implied vols were at 9.20%/9.60% from 9.40%/9.80% in Tokyo and from 9.0%/9.40% in NY Mon. One month EUR/JPY implied vols were at 9.0%/9.50% from 9.45%/9.85% in Tokyo and 9.20%/9.70% in NY Mon. One-month quarter delta risk-reversals for USD puts/JPY calls were at 3.0%/3.70% versus 3.25%/3.55% in Tokyo and 3.30%/3.70% in NY Mon.

USD/CAD Higher As Oil Tumbles

at 1:35 PM Posted by Dewa

Forex News USD/CAD is around C$1.0085 after registering a high at C$1.0095, according to EBS, as another turn lower in oil creates another round of weakness in CAD, already buffeted by hawkish Fed rhetoric early in the session. Movements in crude oil have been leading other markets recently, and that encouraged a broad strengthening in USD, said one technical analyst in Toronto. CAD is being hit with a "double whammy," since it is pressured by USD strength as well as intrinsic weakness deriving from the retreat in commodities, he said. The break through resistance at C$1.0045 accelerated the move to the topside by triggering stop loss orders, he said. That area is the site of a recent trend line that should now serve as support for USD, with the next important resistance coming in around C$1.0140, he said.

Oil, Stocks, Fed Comments Weigh On Treasurys

at 1:34 PM Posted by Dewa

Forex News Treasurys are having a bad day. First hit by hawkish comments from Plosser, then U.S. stocks recover, further on falling oil, further curbing flows into government debt. Also weighs in is the massive $58 billion new Tsy securities to be sold this week, with the first coming up at 1 p.m. -- the $6 billion 20-year TIPS. The two-year note is down 4/32 to 100 10/32 to yield 2.70% while the 10-year note is down 8/32 to 95 13/32 to yield 4.10%.

HUF Could Weaken To 235-237 On CZK Fall

at 1:32 PM Posted by Dewa

Forex News HUF could weaken to 235-237 versus the EUR on CZK's 2% fall Tuesday against the EUR after the Czech central bank surprises markets with dovish comments, while market consensus had been for a rate hike to come later this year, says ING. EUR/HUF of 235-237 would still support Hungarian disinflation. Hungarian government bonds, nevertheless, may weaken in sync with HUF, as usual. The mid-term bond outlook remains positive, however, and any weakness in the coming weeks may be a good buying opportunity. EUR/HUF is at 229.90.

Dollar Extends Gains After Richmond Mfg Index

at 1:31 PM Posted by Dewa

Forex News The dollar recently extended an earlier advance vs the euro and yen Tue morning after the Richmond manufacturing index -16 from -12. Recently, EUR/USD was at 1.5854 from 1.5898 late Mon. USD/JPY was at 106.86 from 106.72, while EUR/JPY was at 169.43 from 169.67, according to EBS. GBP/USD was at 1.9981 from 1.9990, and USD/CHF was at 1.0228 from 1.0202 late Mon.

Technical Play Of The Day Is GBP/USD

at 1:29 PM Posted by Dewa

Forex News The dollar is testing intraday resistance at GBP2.0010. If a pullback from resistance takes out GBP2.0005 support the dollar would be vulnerable to a downtrend to the GBP1.9934-GBP1.9925 support band. If trades are stopped by a move above GBP2.0010 look for an intraday dollar rally to GBP2.0032.

Dollar's Overall Gains On Fed Speak Not Much

at 1:28 PM Posted by Dewa

Forex News The dollar reversed its overnight losses after some tough talk on inflation from Phila Fed Pres. Plosser, but it wasn't enough to drive the greenback much higher. It seems content for now to stay range-bound. Recently, EUR/USD was at 1.5887 from 1.5898 late Mon.

USD/HKD Extends Losses, Downward Bias Remains

at 12:08 AM Posted by Dewa

Forex News USD/HKD extends losses on more selling tracking weaker USD/JPY, says FX strategist with local bank. Pair last 7.7968 vs 7.7974 morning, lower than 7.7982 yesterday. "The pair may fall more as stabilized Hong Kong stocks attract capital inflows, lending support to the Hong Kong currency," strategist says. HSI up 0.4%. Tips pair in 7.7950-7.7990 range in near-term.

USD/TWD Rises More; May Cap At 30.40

at 12:06 AM Posted by Dewa

Forex News USD/TWD extends gains to 30.380 vs 30.373 midday, 30.363 last close in thin volume on modest foreign funds outflows on weak Taiwan shares (end down 0.3%), buying by oil importers, says foreign bank trader, tipping pair to trade range-bound in tight 30.370-30.400 band. Notes central bank suspected of having bought and sold in 30.350-30.390 band to stabilize FX market, which discouraged trade.

Asian Summary

Monday, July 21, 2008 at 11:59 PM Posted by Dewa

Forex News USD/JPY slips on Japanese exporter sales but in tight band ahead of U.S. earnings reports, particularly Wachovia and Washington Mutual, later; pair last 106.48 vs 106.72 late NY. EUR/JPY slips to 169.57 vs 169.67 late NY, with players reluctant to test 170.00. EUR/USD tad up at 1.5922 vs 1.5898. Mixed day for stock markets; Nikkei +3.0%, catching up with region's gains yesterday, when Tokyo closed, also on short covering in Nikkei futures once trade resumed after futures, derivatives markets temporarily suspended on technical glitch; JGB futures also not traded for most of day due to suspension.
Sensex +2.2% led by banks, ahead of confidence vote in parliament today to decide fate of coalition government, controversial nuclear energy deal. STI down 0.4%, Taipei down 0.3%, Shanghai down 0.6%. Not much on data front: Japan May all industry activity index +0.4% M/M. Taiwan jobless rate due 0800 GMT. Later in UK, Treasury Committee MPs question BoE's King on banking reform; in U.S., ICSC chain store sales are due, Redbook retail sales, Richmond Fed manufacturing index, ABC/Washington Post consumer confidence index, Treasury Secretary Paulson speaks in NY; Philadelphia Fed's Plosser speaks.

USD/JPY Direction Still Uncertain

at 11:55 PM Posted by Dewa

Forex News USD/JPY rising tad but likely to stick to tight band around 106-106.80 for now, says trader at Japanese trust bank. "The dollar/yen's temporary rise above 107 yesterday suggested the downward trend may be over for now, but there are still many selling orders around current levels, and uncertainty remains," he says. "Earnings results so far cannot be considered good, and players cannot let their guards down just yet," he adds. Focus now on further results such as Wachovia, Washington Mutual, after which players likely to shift attention back to economic fundamentals such as U.S. housing data due later in week, he says. USD/JPY last at 106.56 on EBS.

AUD Focus On US Earnings, Aussie 2Q CPI

at 11:54 PM Posted by Dewa

Forex News AUD/USD losing ground as USD inches forward, but clear focus in coming 24 hours on another slew of U.S. earnings, followed by 2Q CPI due Wednesday, says RBC strategist Sue Trinh. Notes some risk of CPI figures turning out softer than expected after latest PPI data surprised on downside; but highlights little correlation between two. "It should be one of the most anticipated CPI numbers out of Australia in some time." AUD/USD now 0.9755 from 0.9766.

Pft-Taking May Cap Further AUD/JPY Gains

at 11:50 PM Posted by Dewa

Forex News Offshore markets likely to continue to set the tone for AUD, but don't expect major moves as 2Q CPI Wednesday looms large, says Westpac strategist Robert Rennie. Notes AUD/JPY weaker on return of Japanese traders, keeping with pattern of buying pair when cheap, selling when expensive, hence any further gains likely limited. Expects AUD/JPY range of 103.60-104.20, now 103.945.

HKD Rates To Consolidate; No CPI Impact-StanChart

at 11:48 PM Posted by Dewa

Forex News Stanchart expects HKD rates to consolidate today, without much direction from USD rates market; notes Monday's gain in EFN yields, IRS rates, by 12-14bps across 2-10-year sector yesterday, as short-term money squeezed by upcoming IPO, higher U.S. Treasury yields. Says, stronger-than-expected CPI inflation (6.1% in June vs 5.8% consensus) not expected to have any material impact on HKD rates market. Longer term, overall flush liquidity situation would drive IRS rates down, leading to some narrowing of bond/swap spreads.

NZD/USD Trapped In Range Ahead Of RBNZ Decision

at 11:46 PM Posted by Dewa

Forex News NZD/USD trapped in tight range ahead of RBNZ's rate decision Thursday, says Sue Trinh, currency strategist at RBC Capital Markets; pair last at 0.7611 vs 0.7607 early in NZ. Says NZD also being held up by weak USD; tips short-term range of 0.7600-0.7630. But Kiwi likely to lose ground fast after RBNZ decision; is expecting rate cut "which is likely to see Kiwi tumbling toward that 0.7500 figure." Notes downside risk even if RBNZ stands pat as statement would be "sufficiently dovish and flag a September cut."

USD/JPY Vols Up As Spot Trades Lower From NY

at 11:36 PM Posted by Dewa

Forex News USD/JPY options volatilities rise as spot hovers at lower levels in Asia vs NY overnight, says options dealer; adds some Japan players buy back options they sold ahead of last weekend to protect themselves from time decay. 1-month ATM options implied vols at 11.7%/12.0% vs 11.2%/11.7% in NY. Adds since players remain concerned about U.S. financial markets, vols unlikely to fall sharply for now as players will be watching risks for USD to fall sharply, which causes vols to spike.

NZD Faces Further Rapid Depreciation

at 7:15 PM Posted by Dewa

Forex News While NZD/USD has recorded "significant depreciation" over 1H08, weak economic fundamentals suggest Kiwi has further to fall, says Macquarie Equities; adds though high interest rates have long benefitted Kiwi, this support set to erode. "with interest rates potentially being on par with other currencies in a reasonably short period of time, carry trades around the NZD could be unwound very quickly." Says this change in investment strategy, plus changing economic picture, could prompt rapid depreciation of NZD, which could remain weak for an extended period. NZD/USD last 0.7607.

USD/TWD Higher; Resistance Tipped At 30.400

at 7:10 PM Posted by Dewa

Forex News USD/TWD rises to 30.373 vs 30.363 last close as suspected buying by central bank, oil importers, short covering by NDF players dominate FX market, says local bank trader. Adds pair likely to continue rising rest of session with resistance tipped at 30.400; "the pair is likely to rise further today because Taiex seems to be extending losses"; Taiex last down 1.1%. Still, trading volume thin as players unsure if they should chase pair higher, on concerns central bank may intervene to prevent TWD from falling too much.

China Shrs May Rise On Regional Strength,Sentiment

at 6:36 PM Posted by Dewa

Forex news China shares may open up on strength in regional markets, improved sentiment following last 2 sessions' rises. Shanghai Composite Index to likely test psychological support of 2900 after ending +3.0% at 2861.42. "Some investors sought bargains on positive market sentiment, and they realize there is a big risk if they keep short positions at such low levels" after falls over recent months, says Gui Haoming at Shenyin Wanguo Securities. Analysts say upside may be limited as market looks for more cues from this week's Politburo meeting. Shenzhen index +3.4% to 852.77 yesterday.

USD/THB Steady; Likely Stuck In 33.30-33.40 Band

at 6:34 PM Posted by Dewa

Forex News USD/THB flat in light early trade as market awaits fresh factors; pair at 33.36 vs 33.35-33.36 quoted late yesterday in Asia. Continued portfolio outflows likely to lift pair, but expected intervention to probably cap near-term upside. "The central bank is expected to take action again to curb the baht's weakness should the pair rise to around 33.40 resistance," says Bangkok-based dealer. Likely stuck in tight 33.30-33.40 range rest of day.

USD/PHP Extends Gains; Initial Resistance 44.70

at 6:33 PM Posted by Dewa

Forex News USD/PHP continues yesterday's technical recovery from Friday's fall caused by Philippine central bank's aggressive interest rate hike late Thursday. Pair last at 44.69 after ending at 44.53 yesterday; band so far 44.60-44.69 on moderate volume. "The pair's failure to breach the 44.30 support in recent sessions means the pair will try to test the 44.70 resistance. And if that's broken, the next target is 45.05," says local bank trader.

JGB Futures Down Before Trading Suspended

at 6:13 PM Posted by Dewa

Forex News JGB futures falling in morning trade before system glitch stops trading on Tokyo exchange; no indication when trade will resume. Lead September futures contract down 0.38 at 136.18. Some selling bias in market due to heightening inflationary concerns in U.S. and ahead of CPI release Friday in Tokyo, UBS strategist Maki Shimizu says, but adds that overall, bullish tone in JGB market remains intact. "The theme has been on economic deceleration or financial uncertainty, rather than inflationary concerns, for the past month or so. Unless we keep economic growth at a certain level, inflation won't be a theme to be considered. We still think financial uncertainty is a much bigger matter in front of us." Tips lead September futures to move in range of 136.00-136.40 today, yield on 10-year cash bonds (so far untraded) to move in 1.58%-1.62% vs. 1.57% at Friday close.

USD/MYR Tad Down; Pegged At 3.2300-3.2450

at 6:12 PM Posted by Dewa

Forex News USD/MYR tad down at 3.2360 in quiet trade, vs 3.2365 previous close, as players sidelined ahead of CPI data, central bank rate decision later in week, dealers say. "Dollar/ringgit will probably hover around 3.2300 to 3.2450, with slight upside, because the market is not sure what Bank Negara will do" at Friday's rate meeting, while June CPI likely to be high, says dealer. June CPI due tomorrow, expected at +6.7% (would be a 26-year high), according to Dow Jones poll.

USD/TWD Likely Tad Down; 30.330-30.400 Band Eyed

at 6:10 PM Posted by Dewa

Forex News USD/TWD likely to fall slightly on weaker USD, possible central bank intervention to amid lingering inflationary concerns. Local bank trader tips pair in tight 30.330-30.400 band vs 30.363 last close; "there's no big news and Taiwan shares may be consolidating for the next few days, meaning there could be a lack of interest in trading the Taiwan dollar too."

USD/CNY May Fall On Weak Overnight USD

at 6:09 PM Posted by Dewa

Forex News USD/CNY may fall after USD weakened on international markets overnight, says Shanghai-based dealer with foreign bank. Tips central parity rate to be set around 6.8150, down from yesterday's close of 6.8300; tips pair to trade in 6.8100-6.8250 range. Adds, he expects trade to remain light; trading volumes have fallen since Jul. 14 when currency regulator started requiring export receipts to be placed in special accounts in order to vet legitimacy of underlying transaction. Dealers expect flows to return to normal in another week, as backlog of approvals start getting cleared.

HK CPI To Be Driven More By Rent, Transport

at 6:07 PM Posted by Dewa

Forex News Hong Kong June CPI pushed up by higher rents, energy and transport inflation, says Credit Suisse; June CPI +6.1% on-year vs May's +5.7%. Expects introduction of additional public housing rent waivers to distort year's average CPI downward by another 0.4 percentage point in 2008; says, "We expect Hong Kong's inflation to be increasingly driven by higher rents and transportation fares." Although food inflation in China may slowly moderate, may be offset by stronger CNY/HKD. Also, CPI private housing rent index expected to keep rising while higher energy prices, weakening USD expected to push fuel prices higher, thinks pass-through of higher fuel prices on public transportation underway.

Spot Gold Higher, Investors Seek Safe Haven

at 6:06 PM Posted by Dewa

Forex News Spot gold higher, EUR noses higher against USD, equities lower. "There's still plenty of money moving into gold," says Sydney-based trader. Platinum group metals find base. CFTC gold report shows open interest sharply higher, gold holdings in exchange traded funds are "massive." Market also nervous on tension between Israel and Iran. Unnamed Israeli official predicts U.S.-led strike on Iran between election and inauguration day. Gold to "grind higher," targets $980-$981/oz. Spot gold at $967.50, up $1.70 vs NY close, platinum at unchanged $1,832.

Large RBA Drain Likely Reflects Govt Transaction

at 6:04 PM Posted by Dewa

Forex News RBA open market operations show exchange settlement balance for Monday at A$752 million, lowest level since early days of credit crisis at August 9, 2007. However, central bank today injects A$710 million back into system, likely bringing ES balance back up to around A$1.5 billion, which roughly appears to be RBA's preferred ES balance level of recent months - up from A$700 million in pre-credit crisis days but well down from crisis peaks of A$7 billion. Large liquidity drain yesterday probably reflects big government transaction and is largely mechanical in nature; not necessarily a reflection of improved confidence in money markets or RBA's desire to rein in liquidity. 90-day bank bill rates down 2 bps at 7.74%.

USD/KRW Down; Tipped In 1,005-1,020 Band

at 6:04 PM Posted by Dewa

Forex News USD/KRW down on suspected USD-selling intervention by FX authorities, say traders; after opening higher at 1,019.5, pair briefly touches 1,016 and now trading around 1,017.45, vs 1,018 last close. Tipped in 1,005-1,020 range. FX authorities likely intervened, because if pair breaks above 1,020, authorities' recent efforts to support KRW would become useless, says local bank trader. Another trader says we'll have to wait and see how aggressively FX authorities are willing to intervene in market.

KLCI May Open Lower; 1090-1120 Range Tipped

at 6:01 PM Posted by Dewa

Forex News KLCI may extend yesterday's losses, taking cue from Wall Street's fall overnight but downside may be limited as mild bargain-hunting expected to emerge, say dealers. Benchmark index tipped to trade in 1090-1120 range vs Monday's close at 1103.48 (down 0.1%). "Plantation stocks may attract some bargain hunting as crude oil broke its four-day losing streak while oil and gas related stocks may attract fresh buying interest," says dealer. KLCI's technical indicators remain bearish though, likely to cap market's rise. Investors also expected to stay cautious ahead of June inflation data release(due Wednesday at 0900GMT), central bank monetary policy outlook Friday.

USD/SGD To Remain Heavy On Inflation Worries

at 6:00 PM Posted by Dewa

Forex News USD/SGD last bid 1.3511 vs 1.3502 Asia close yesterday, but SGD may gain on inflation worries, government saying there's strong pipeline of foreign investments, says trader. "Comments yesterday by (Senior Minister of State for Trade and Industry) Iswaran that Singapore is not facing stagflation is likely to keep the pair top heavy." Expects pair to trade in 1.3480-1.3550 range.

USD/PHP May Gain; Resistance At 44.75

at 5:25 PM Posted by Dewa

Forex News USD/PHP may continue yesterday's recovery after oil futures rose overnight, corporates take advantage of pair's recent fall to accumulate dollars for month-end financing requirements. Chinatrust Philippines Treasurer Roland Avante expects pair's resistance at 44.75 after ending at 44.53 yesterday (higher from 44.455 Friday), with support at 44.40. "The market's bias is to go long (on the dollar) since the peso has risen much in the past days (following the central bank's 50bp rate hike)," says Avante.

EUR/JPY Unlikely To Touch 170 In Global Day

at 5:24 PM Posted by Dewa

Forex News EUR/JPY trading close to all-time high of 169.91 (last 169.62), momentum upward due to Europe's high interest rates, but setting new high in global day unlikely, says senior sales dealer at major Japanese bank as no fresh trading material due, also "tons" of sell orders above 169.75. Players focus on Fed officials' speeches tomorrow; says if speeches have dovish tone, cross may rise to 170.50.

Base Metals Quiet; Eyeing Oil, FX For Cues

at 5:21 PM Posted by Dewa

Forex News Base metals have quiet start to week, lack of data releases leaves LME complex to look toward broader financial market for direction, says analyst Leon Westgate at Standard Bank. Notes LME copper "continues to be affected by a lack of direction, with the red metal consequently looking towards the currencies and oil markets for inspiration". Tightness in nearby spreads continues, deterring aggressive shorts. Tom-Next copper spread trades out to $35/ton backwardation, from $10 back. LME 3-month copper up $35 vs PM kerb at $8,120.

Spot Gold Firmer; Oil, USD Boost Sentiment

at 4:55 PM Posted by Dewa

Forex News Spot gold on firmer note than last week as combination of geopolitics, weather boost crude oil prices, dent dollar, says Kitco analyst Jon Nadler; notes positive reports of gold jewelry demand in Dubai surging 18% last month on lower prices. "The range for the moment is within the $955-$975/oz channel, but we would keep an eye on bank earnings reports and on the Weather Channel to stay one step ahead of the dollar and oil as the next few days unfold." Adds likely little fresh news on Iran after Geneva talks at weekend centering on nuclear ambitions. Iran has 2-week window to respond to high level talks. Spot gold at $966.20, up 40 cents vs NY close.

USD/KRW May Rise; Tipped At 1,015-1,025

at 4:54 PM Posted by Dewa

Forex News USD/KRW may rise from 1,018 last close on fund repatriation related to foreigners' recent stock selling, also import settlements, as long as FX authorities do not intervene aggressively to support KRW, traders say. 1-month NDFs end around 1,020.75. Pair tipped in 1,015-1,025 range. Today's focus is on how aggressively FX authorities will intervene in market to support KRW or if they'll just embark on smoothing operation (if they intervene at all), says local bank trader.

Nymex Crude Down As Tropical Storm Path Unclear

at 4:53 PM Posted by Dewa

Forex News Nymex crude oil futures drop into negative territory after U.S. forecasters say it's unclear how fast Tropical Storm Dolly will make landfall in the Gulf of Mexico and whether it'll hit the Texas coast or the northeastern coast of Mexico. If the storm continues at its current speed, it'll likely pack a smaller punch when it hits land, says U.S. NOAA. If it slows down and takes longer to get there, traveling over warm waters, the storm will likely grow much stronger, agency predicts. August crude now trading down 47 cents at $130.57/bbl.

AUD/USD To Trade 0.97-0.98 Ahead Of CPI

at 4:51 PM Posted by Dewa

Forex News AUD/USD expected to trade in 0.97-0.98 range ahead of 2Q CPI tomorrow, nabCaptial senior currency strategist John Kyriakopoulos says. Notes stronger-than-expected CPI likely to produce only "short-term" rise in AUD "since the slowing economy suggests the RBA won't hike again." However, lower-than-expected inflation might prompt traders to fully price in 25bp rate cut by early 2009, weighing on AUD. AUD/USD last 0.9764.

USD/JPY Tipped In Tight 106.00-106.80 Band

at 4:49 PM Posted by Dewa

Forex News USD/JPY may trade in 106.00-106.80 range, last at 106.48 on EBS, as players not willing to buy USD actively due to jitters over financial markets, but rapid decline also unlikely as oil prices recently calming down, says senior interbank dealer at major Japan bank. Adds, players will pay close attention to global stock, oil prices as no significant economic indicators from Japan, U.S., Europe scheduled. EUR/USD may trade in 1.5880-1.5950 range, last at 1.5912 while EUR/JPY may trade in 169.10-169.80 range, last at 169.46.

AUD/USD Likely To Regain 0.96 Handle

at 4:48 PM Posted by Dewa

Forex News Expect AUD/USD to regain 0.96 handle in near-term with 2Q CPI tomorrow presenting some downside risks, say BNP Paribas FX strategists. "Given the downside surprise in PPI (yesterday), it is likely that CPI could also come in a little lower than current expectations." Says given weaker growth environment, chances of RBA rate hike are "extremely slim". "Once commodity prices top off, the AUD is set for significant weakness." Pair last 0.9768.

Expect EUR/USD To Trade 1.5830-1.5940

at 4:47 PM Posted by Dewa

Forex News Expect EUR/USD to trade in range with modest upside bias, say BNP Paribas FX strategists. BNP notes signs of firmness in U.S. economy and warnings of euro zone slowdown largely being ignored at present, with focus mostly on ECB hawkish rhetoric. EUR curve "is likely to remain flat as the ECB shows little concern over growth." Expect 1.5830-1.5940 range. "Our preferred scenario suggests a test of 1.5940 followed by a break lower." Pair last 1.5919.

Expect USD To Firm Against JPY, CHF

at 4:46 PM Posted by Dewa

Forex News Expect USD to firm against low yielders on more recent supportive signs such as rebounding U.S. Treasury yields, firmer equities markets in past week, lower commodities prices and foreign inflows, BNP Paribas strategists say. Expect USD/JPY support at 106.20, USD/CHF support at 1.0145. USD/JPY resistance likely at 107.10. "If the rally in financials continues in the very near term we could see some near-term support to USD/JPY." Notes also inflation pressure building up. USD/JPY last 106.49, USD/CHF 1.0177.

Expect Aussie Yld Curve Shape To Hold

at 3:42 PM Posted by Dewa

Forex News Expect Australian bond yield curve to hold current levels though significant further reduction in inverse shape unlikely in near term, Westpac senior interest rate strategist Damien McColough says. Adds holding steepeners is "correct trade" but cautions extended cyclical steepening will not gain momentum until "RBA rhetoric turns dovish" which is "some time away." Bigger question remains whether curve can move sustainably into positive territory. "We would baulk at recommending that in the near term." Notes any domestic inflation fears will be reflected at short-end while offshore buying will support long end. 3-10 year yield spread last -8.5 bps.

Overview in Asian Session

at 3:40 PM Posted by Dewa

Forex News FX markets likely in tight range as traders look for new cues, though USD likely to maintain its weaker bias after EUR/USD moved above 1.59 overnight; pair last at 1.5927 vs 1.5898 late NY; USD/JPY at 106.41 vs 106.72, EUR/JPY at 169.47 vs 169.67. AUD/JPY may try for new 9-month highs today, pair last 103.97. Stocks have mildly negative cue from Wall Street after DJIA eases 0.3% with financials losing ground despite better-than-expected results from Bank of America. Apple down 10.9% after hours; though fiscal 3Q results beat expectations, market disappointed with conservative outlook.
American Express down 11.5% after hours after 2Q results come in below Street's view. Nasdaq ends down 0.1%. On data front, Japan all industry activity index is due at 2350 GMT, supermarket sales at 0500 GMT; Taiwan jobless rate at 0800 GMT. In UK, Treasury Committee MPs question BoE's King on banking reform, in U.S., ICSC chain store sales are due, Redbook retail sales, Richmond Fed manufacturing index, ABC/Washington Post consumer confidence index, Treasury Secretary Paulson speaks in NY; Philadelphia Fed's Plosser speaks. Wachovia, Washington Mutual, Yahoo! report earnings.

Aussie Bonds Likely To Firm On Catch-Up

at 2:58 PM Posted by Dewa

Forex News Australian bond futures at both ends of curve regain losses from previous session, expected to continue firming in Asian trade on softer regional equities markets, more response to weaker-than-expected upstream inflation pressures. Lehman Brothers chief economist Stephen Roberts says, "Quite clearly the producer price information (yesterday) was better than expected and we didn't get an awful lot of benefit from that because the equity market was having such a good day." Also, expects 3-10 year yield curve to continue becoming less inverse if 2Q CPI due tomorrow prints on consensus or lower; curve spread last at -8.5 bps; 3-year futures last +1 bp at 93.52 from yesterday's close, 10-years +1 bp at 93.605.

AUD/USD Firmer, To Struggle Above 0.9800

at 2:54 PM Posted by Dewa

Forex News AUD/USD firmer as commodities prices rise, with oil in particular gaining on tropical storm fears in Gulf of Mexico. Lehman Brothers chief economist Stephen Roberts expects pair to "make heavy weather" above 0.9800 but to remain supported around 0.9740 ahead of 2Q CPI due tomorrow. Notes risk CPI will be touch lower than consensus. "If it's at expectation or below, then you could see the Australian dollar come back just a touch." AUD/USD last 0.9773, from 0.9757 late yesterday.

U.S. Summary

at 2:16 PM Posted by Dewa

Forex News Dollar fell as FX markets had little to trade on, with euro benefitting from lower US stocks, higher oil prices; "The barrage of market-moving developments last week have left players a bit battle-worn, awaiting news to trade off of," said Michael Woolfolk, a senior FX strategist at The Bank of New York Mellon; "While the markets' attention remains on whether crude oil prices continue their plunge, the dollar will remain sensitive to stock prices and earnings releases."

Late Monday in New York, EUR/USD 1.5898 vs 1.5838 late Friday, USD/JPY 106.72 vs 106.96, GBP/USD 1.9990 vs 1.9972, USD/CHF 1.0202 vs 1.0225. EUR/JPY 169.67 vs 169.40, earlier hit record high of 169.89. Stocks fell after early rally in financials wilted mid-session, plus consumer-discretionary stocks pared some of last week's gain on higher oil prices; Bank of America +3.9% after 2Q earnings exceeded expectations; Fannie Mae added 5.5% but off early highs, while Freddie Mac fell 4.7%. Dow down 0.3%, Nasdaq down 0.14%, Philly semicons off 1.1%. Long-dated Treasurys rebounded as US stocks failed to hold on to early gains; 2-year yield +2.1 bp at 2.64%, 10-year down 2.2 bp at 4.06%. Nymex August crude rose $2.16 to $131.04/bbl - first rise in 5 sessions - as Dolly became first tropical storm of the year to enter the Gulf of Mexico. Comex August gold rose $5.70 to $963.70/oz on buying prompted by weaker USD, higher oil prices.

EUR/USD Continues To Rise; Likely Bid In Asia

at 2:15 PM Posted by Dewa

Forex News EUR/USD continues to rise early Wellington; pair pushed up overnight on higher oil prices, weaker Wall Street; last 1.5928 vs 1.5898 late overnight trade in New York, may remain bid in Asian session; but Brown Brothers Harriman FX strategists say while dollar remains vulnerable EUR/USD unlikely to tap new highs in coming days; adds FX markets seaching for direction after last week's developments, led by US government intervention to prop up mortgage giants Freddie Mac, Fannie Mae.

NZD/USD Down As Mkt Remains Wary Ahead Of RBNZ

at 1:45 PM Posted by Dewa

Forex News NZD/USD opens lower despite broad USD weakness overnight as traders appear wary of potential rate cut by RBNZ at Thursday's meeting; last 0.7607 vs 0.7618 late yesterday in NZ, fell to 1-week low of 0.7587 offshore. With U.S. stocks trading low, risk-averse investors not keen to pursue high yielders like Kiwi; main downside pressure on NZD appear to be coming from heightened risk of rate cut though most analysts picking RBNZ to stand pat. Grim domestic fundamentals also set to keep Kiwi heavy, support around 0.7550 could be tested next few days.

Dollar Weaker Vs Rivals With US Stocks

at 1:43 PM Posted by Dewa

Forex News The dollar is slipping with US stocks after oil closed higher. The euro recently rose above $1.5900 and the dollar is lower vs the yen. Mon afternoon in NY, EUR/USD at 1.5896 from 1.5838 late Fri. USD/JPY at 106.70 from 106.96 late Fri.

Rate Futures Mkt Recovers From Early Losses

at 1:43 PM Posted by Dewa

Forex News US interest rate futures climbed their way back from early losses Monday, settling unchanged to higher with stocks softer. Early Monday, the market had been weaker as stocks gained after a better-than-forecast Bank of America earnings report. Near-term fed funds futures were steady at settlement, with investors still seeing no rate move at the Aug. FOMC. Longer-term Nov. contract ticked lower, showing odds for a 25BP rate rise end-Oct. at 82% vs. 78% Fri. At the day's low price, odds for that had been as high as 94%. Quarterly 2008-2009 Eurodollar futures unchanged to 2.5BP higher.

EUR/USD Still Up, But Range-Bound

at 1:41 PM Posted by Dewa

Forex News EUR/USD continues to drift higher, though the lack of important US economic data or events leave the greenback with little chance of making any big moves, especially with US stock markets trading in narrow ranges. Recently, EUR/USD was at 1.5871 from 1.5838 late Fri.

USD/JPY Vols Lower After Dollar Slips

at 1:28 PM Posted by Dewa

Forex News Volatilities implied by USD/JPY currency options were lower Mon in NY after the dollar declined against the yen. One-month at-the-money USD/JPY options implied volatilities were at 11.20%/11.70% down from 11.40%/11.70% in Tokyo and from 11.80%/12.30% in NY Fri. One month EUR/USD implied vols were at 9.0%/9.40% from 9.40%/9.65% in Tokyo and from 9.40%/9.70% in NY Fri. One month EUR/JPY implied vols were at 9.20%/9.70% from 9.65%/10.10% in Tokyo and 9.90%/10.40% in NY Fri. One-month quarter delta risk-reversals for USD puts/JPY calls were at 3.0%/3.70% versus 3.25%/3.55% in Tokyo and 3.30%/4.0% in NY Fri.

HUF Seen Taking Over Role Of Monetary Policy

at 8:22 AM Posted by Dewa

Forex News The Hungarian forint is seen taking over the role of monetary policy in Hungary, Takarekbank says. Adds recent HUF appreciation tightened monetary conditions enough already and improved the inflation outlook for the next 12-to-18 months. If the HUF stabilizes at its recent strong levels and there are no new external price shocks, the hawkish monetary policy stance could change soon.

Canada Bonds Lower In Quiet Trading

at 8:21 AM Posted by Dewa

Forex News Canadian bonds are lower along with U.S. Treasurys in quiet trading after a better-than-expected earnings report from Bank of America. They are taking directions from U.S. Treasurys as they take direction from that market in the absence of any compelling domestic influences. The 10-year bond is yielding 3.75% vs 3.73% Mon.

Dollar Only Narrowly Slips On US Data

at 8:20 AM Posted by Dewa

Forex News The dollar slipped very slightly vs the euro and yen after June leading indicators was reported -0.1%. The index pointed to a further slide in activity in June, extending an unexpected decline the previous month. Mon morning in NY, EUR/USD at 1.5849 from 1.5838 late Fri. USD/JPY at 107.02 from 106.96, while EUR/JPY at 169.62 from 169.40, according to EBS. GBP/USD at 1.9945 from 1.9972, and USD/CHF at 1.0232 from 1.0225 late Fri.

Polish T-Bonds Lower Ahead Of June Net CPI

at 8:19 AM Posted by Dewa

Forex News Polish Treasury bonds are down ahead of June net inflation, traders say. A forecasted higher reading, 3.3% versus 3.2% in May, is likely to trigger more selling, and much depends on core markets as well, a local trader says. Average yield on 2-year paper is at 6.67% versus 6.65% late Friday, on 5-year at 6.52% vs 6.46%, on 10-year at 6.42% vs 6.35%. Zloty is a touch lower, but remains in the upward trend, is seen to test 3.20 against the euro. EUR/PLN now trades at 3.2178 from 3.2139 earlier Monday, USD/PLN at 2.0307 from 2.0228.

Hungary Ctrl Bk Drifting To Neutral Stance

at 8:18 AM Posted by Dewa

Forex News Hungary's central bank is slowly drifting to a neutral stance and tones down its hawkish rhetoric after a no change decision Monday, TD Bank says. Adds it's difficult to anticipate the bank's response to a potentially higher July inflation figure and the August inflation report but notes it's likely to keep rates unchanged this year. Recommends switching longer-dated bonds for 3-year benchmarks and expects the yield curve to normalize on the back of disinflation in 2H and a strong HUF.

Nymex Crude Trades Flat As Dolly Threat Wanes

at 8:17 AM Posted by Dewa

Forex News Dolly may be strengthening into a hurricane, but its hold over the oil market is weakening. Nymex crude is trading flat, after rising more than $3 at one point Monday on the tropical storm, which is expected to enter the Gulf of Mexico and strengthen this week. Dolly is seen as unlikely to hit major oil producing or refining regions. August crude trades at $129/bbl, up 12c.

USD/JPY Higher As US Stock Markets Gain

at 6:49 AM Posted by Dewa

Forex News The dollar is rising against the yen and shedding its overnight losses against the euro after US stocks opened higher, with the DJIA recently up 56 points. Monday morning in NY, USD/JPY at 107.05 from 106.96 late Fri, while EUR/USD at 1.5837 from 1.5838.

Swedish Rates Closer To Goldman View

at 6:47 AM Posted by Dewa

Forex News Sweden's two-year benchmark bond yield trades flat at 4.7%, while the ten-year yield is up six points to 4.45%. Goldman continues to expect the Swedish Riksbank to keep its key rate on hold at 4.5%. With markets pricing in higher rates in the near-term, says "this leaves us more dovish on rates" than the market. Says, however, "the more dovish than expected Riksbank minutes [last week] caused a repricing in Swedish rates bringing them closer to our view."

House Hearing On Weaker Dollar This Week

at 6:45 AM Posted by Dewa

Forex News House Financial Services Committee will hold a hearing this Thu to examine the impact of a weaker dollar on the U.S. economy, with a particular focus on oil and commodity price inflation. The hearing will also examine the policy implications of a weaker dollar, including the challenges it poses for the conduct of monetary policy in the U.S. and the importance of other countries' exchange rate and monetary policies. Speakers and witnesses have yet to be announced.

Dollar Negative News Outweighing Positive

at 6:45 AM Posted by Dewa

Forex News "A number of factors weigh against the USD in our view, with rising policy rates in much of the emerging world and stable policy throughout the G10 leaving the currency exposed to further erosion of interest rate support," say currency analysts at Credit Suisse in a research note, as the NY trading week begins. "There is one item of positive news for the USD to note this morning, however. Roche AG has offered to buy the portion of Genentech Inc. that it doesn't already own for $43.7bln."

USD A Bit Lower Ahead Of US Leading Indicators

at 6:43 AM Posted by Dewa

Forex News The dollar is modestly weaker against the euro amid oil prices that are moving up again, and little changed versus the yen as modest gains in global equities overnight kept risk appetite up. The main US data out Mon is leading economic indicators, due at 10 a.m. EDT. Early Mon in NY, EUR/USD at 1.5864 from 1.5838 late Fri. USD/JPY at 106.92 from 106.96, while EUR/JPY at 169.60 from 169.40, according to EBS. GBP/USD at 1.9967 from 1.9972, and USD/CHF at 1.0220 from 1.0225 late Fri.

European Summary

at 6:42 AM Posted by Dewa

Forex News Bond futures contracts headed lower Monday as European equity markets staged a recovery. Bunds extended Friday's steep price declines, while gilts outperformed, buoyed by weak UK housing data and dovish comments from MPC member David Blanchflower. With no key economic data on the agenda, bunds remained under pressure from rallying equity markets. At 1115 GMT, the September bund contract was down 0.45 at 110.40, within a 110.36-110.95 range. Meanwhile, December Euribor was down 0.005 at 94.815. September gilts surrendered early price gains as UK equities recovered lost ground.

The July Rightmove house price index, which fell by 2.0% on the year, offered early support, while known-dove Blanchflower warned of recession in the UK economy and suggested interest rates needed to fall. At 1115 GMT, September gilts were down 0.08 at 105.37, in a 105.30-105.84 range, while December short sterling was up 0.06 at 94.11. A quiet session for the foreign exchange markets with Japan closed for a national holiday. The euro strengthened against the US dollar to 1.5890 from 1.5840 in NY Friday, while sterling was little changed against the greenback at 1.9970 from 1.9972. USD/JPY slipped to 106.65 from 106.96 Friday. Oil traded around USD130.60, recovering some ground lost Friday as Tropical Storm Dolly looked set to disrupt supply from Mexico. European equity markets were up between 0.6%-0.9%.

EUR/GBP Can Move Above 0.80

at 6:40 AM Posted by Dewa

Forex News EUR/GBP has the potential to move above 0.80 in the near-term, according to BNP Paribas. As the UK risks falling into a recession, while the ECB hints that it's not willing to cut rates in the near future, EUR/GBP has the scope to break higher, the bank says. EUR/GBP now trades at 0.7955.

Weak US Data May Not Put USD On Back Foot

at 6:38 AM Posted by Dewa

Forex News While the market expects soft data out of the US this week, this won't necessarily put the USD on the back foot, with dismal data releases expected from the euro zone and the UK too, says Calyon. The possibility of "another hike (from the ECB) will provide little EUR solace to a market being buffeted by a series of negative signals on growth," the bank says. EUR/USD now trades at 1.5883, while GBP/USD is at 1.9963.

USD/THB Ends Flat; 33.25-33.40 Range Tipped

at 6:37 AM Posted by Dewa

Forex News USD/THB ends Asia trade almost unchanged after rangebound session, likely in wider but still tight 33.25-3.40 range tomorrow. Pair last quoted at 33.35-33.36 vs 33.33 late Friday after trading 33.26-33.36 band today. Local bank dealer says pair hit session lows on selling by German names, but demand from local branches of foreign banks allowed it to creep higher. Adds may be pressure on baht tomorrow as today's stock market rally likely to be followed by profit-taking, suggesting portfolio outflows.

Euro O/N Rates Money Hover Around ECB Rate

at 6:36 AM Posted by Dewa

Forex News Euro-zone overnight money market rates Monday are quoted broadly unchanged, between 4.23% and 4.28%, hovering around the ECB's minimum bid rate. Markets expect liquidity data later in the day as well as the ECB's call for its weekly tender. One-week money is quoted at 4.29%-4.34% range, with the closely watched three-month rate at within a 4.91%-4.96% range.

USD/IDR Ends Higher; 9,150-9,175 Eyed Tue

at 6:35 AM Posted by Dewa

Forex News USD/IDR ends higher at 9,165 vs 9,155 close after bouncing from intraday lows as stocks strengthened, while NDF bid/ask steady at 9,180/9,200. "I think there's some genuine demand" from local importers, oil companies. Pair likely capped at 9,175, may rebound down from there Tuesday as IDR sentiment still bullish especially among offshore investors; 9,150 to support, dealers say.

USD/MYR Down Late, 3.2300-3.2450 Tipped

at 6:35 AM Posted by Dewa

Forex News USD/MYR down at 3.2390 late in quiet, rangebound trade vs Friday's 3.2430 close as USD profit taking more than offsets mild bargain-hunting, say traders; but pair off day's low of 3.2340 on lingering political concerns. "Some mild buying of the ringgit on expectation that Bank Negara may hike interest rate by 25 basis points at the rate setting meeting Friday also helps the pair to trade below the last close," says one trader; thinks pair will trade within 3.2300-3.2450 range tomorrow in the absence of fresh leads.

USD/PHP Ends Higher, Rebounds From 2-Day Fall

at 6:34 AM Posted by Dewa

Forex News USD/PHP closes higher at 44.53 on last-minute profit-taking on PHP, which gained 2.3% in past two days on central bank's 50 bps rate hike; volume heavy as pair reversed early fall to 44.30; USD/PHP expected to move within 44.85-44.25, with overnight movement in Wall Street, oil prices key influence. "The momentum is still for (USD/PHP) selling towards 44. But after two days of (peso) gains and with the Dow Futures down, we had to take profit," says a local bank trader; overnight decline in U.S. markets, usually signals risk aversion, buoys USD/PHP.

AUD/JPY Should Hold Gains Offshore

at 6:32 AM Posted by Dewa

Forex News AUD/JPY's ascent to an 9-month high helped by thin liquidity and better tone in stocks, but positive open to European session means pair should hold their gains, says EasyForex trader Francisco Solar. Notes thin U.S. data calendar means AUD/USD will be flow driven, with good support at 0.9680. "You'd probably see it struggling to make new records above 0.9800 cents today." Now 0.9754. AUD/JPY now 104.145.

All Eyes Now On Aussie 2Q CPI

Sunday, July 20, 2008 at 7:38 PM Posted by Dewa

Forex News Weaker than expected 2Q PPI means "much now depends" on 2Q CPI Wednesday, but correlation between both sets of data isn't necessarily close, says RBC Senior Strategist Sue Trinh; "high rents, healthcare, petrol costs and food will keep CPI elevated." Adds RBA remains on hold, closely watching impact from soaring terms of trade. Notes strong AUD helping in price rise battle. AUD/USD now 0.9748, from 0.9728 post data.

Aussie Demand-Driven Inflation May Have Peaked

at 7:37 PM Posted by Dewa

Forex News Tentative signs now emerging that demand-driven inflation in Australia may have peaked, with slight downward risk to 2Q CPI, says Westpac Chief Economist Bill Evans; "it appears the demand driven upward push to inflation has peaked out." Notes softer than forecast 2Q PPI came on back of higher petrol costs not feeding through, coupled with weaker than expected construction costs. "It would appear we are starting to see some evidence that the slowing in the housing market in particular is starting to put some downward pressure on inflation."

Aussie PPI Sign Inflation Not As Bad As Feared

at 7:33 PM Posted by Dewa

Forex News Australian 2Q PPI underscores bigger picture that inflation is not as bad as some fear, leaving RBA on track to cut rates from early 2009, says NAB Chief Economist Alan Oster. "I'd broadly say this is consistent with the view that maybe inflation is not as bad as some people may have feared." Notes price pressures remain, driven by commodity prices, but says in short-term "market may have gotten a bit ahead of itself." Adds doesn't have much correlation with CPI due Wednesday.

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