The second EU summit in less than a week kicks off today; and anticipation for a comprehensive solution to the debt crisis is ensuring a stronger day for equity markets and EURUSD alike. The Nikkei is broadly flat on the day, but the Shanghai Composite is +1.4% and Hang Seng +0.3%. Pre-summit nerves are however likely to keep EURUSD traders on their toes throughout the session as the first summit is only scheduled to begin at 17:00 GMT, with discussions expected to extend late into the evening. Rhetoric from European policymakers continues to lack consistency which is keeping the FX market jumpy, but the true test will be what agreements are announced in the formal communiqué later.
In other news, USDJPY dipped to a fresh post war low of 75.74 after yesterday’s US consumer confidence report came out much lower than expected. The October reading hit 39.8 (its lowest levels since March 2009) compared to estimates looking for 46.0; an outcome which has certainly bucked the trend of better US data of late. While USDJPY’s dip afterwards did take us to fresh lows, the size of the move itself was relatively modest as investors and speculators remain wary of triggering BoJ intervention. The latest BoJ 2-day meeting is scheduled to kick off today with an announcement expected early on Thursday, and Japanese officials have already made clear their willingness and means to intervene on JPY strength. The Nikkei newspaper has reported that further easing measures will also be discussed, perhaps in the form of an expansion of the asset purchase facility.
Yesterday the Bank of Canada held its own monetary policy meeting and as expected, kept rates unchanged at 1.00%. Importantly, the bank reverted to a neutral policy stance going forward, dropping its previous implied tightening bias while lowering growth forecasts for 2011 and 2012.
Coming up today, US durable goods orders and new homes sales are due out but expect these releases to take a back seat to comments and headlines from EU officials ahead of the EU summit.
By
M.Zohaib Gadit
Forex Trading Consultant
In other news, USDJPY dipped to a fresh post war low of 75.74 after yesterday’s US consumer confidence report came out much lower than expected. The October reading hit 39.8 (its lowest levels since March 2009) compared to estimates looking for 46.0; an outcome which has certainly bucked the trend of better US data of late. While USDJPY’s dip afterwards did take us to fresh lows, the size of the move itself was relatively modest as investors and speculators remain wary of triggering BoJ intervention. The latest BoJ 2-day meeting is scheduled to kick off today with an announcement expected early on Thursday, and Japanese officials have already made clear their willingness and means to intervene on JPY strength. The Nikkei newspaper has reported that further easing measures will also be discussed, perhaps in the form of an expansion of the asset purchase facility.
Yesterday the Bank of Canada held its own monetary policy meeting and as expected, kept rates unchanged at 1.00%. Importantly, the bank reverted to a neutral policy stance going forward, dropping its previous implied tightening bias while lowering growth forecasts for 2011 and 2012.
Coming up today, US durable goods orders and new homes sales are due out but expect these releases to take a back seat to comments and headlines from EU officials ahead of the EU summit.
By
M.Zohaib Gadit
Forex Trading Consultant
No comments:
Post a Comment
Feel free to comment.