Risk aversion has come back with a vengeance over the last 10 days driven by a host of concerns that continue to damage market sentiment
USD and JPY remain the best currency plays against the background of rising risk aversion and both currencies look well supported
Market concerns have not completely abated, although fears plaguing markets have receded, particularly on the US political front, with Obama’s State of the Union address, Geithner’s testimony on AIG and Bernanke’s reappointment all passing without too much incident
Showing posts with label Obama. Show all posts
Showing posts with label Obama. Show all posts
Friday, 29 January 2010
Saturday, 23 January 2010
MARKET UPDATE: Optimism Dissipates for Global Recovery
Optimism about strong recovery led by China – recall the fact that disappointment from the surprisingly weak US non-farm payrolls report in December was outweighed by strong Chinese trade data – has dissipated
Instead of rejoicing at China’s robust GDP report last week, which revealed a 10.7% rise in the fourth quarter of 2009, worries over whether China would have to move more aggressively to tighten monetary policy dominated investor’s thoughts
Further to this, US President Obama’s plan to limit the size and trading activities of financial institutions dealt another blow to financial stocks
Meanwhile, rumblings about Greece continue to weigh on markets and Greek debt spreads continued to widen even as global bond markets rallied
Obama’s announcement helped EUR/USD to avoid a break below 1.40, as there was a pullback in USD
The AUD was also hit by news that Australia’s Henry Tax Review would look to tax miners in the country. As a result AUD/USD dropped below 0.90 though this level is likely to provide good buying levels for those wanted to take medium term AUD long positions
The other G3 central bank to meet this week is the Bank of Japan but unless the Bank is seen to be serious about fighting deflation, USD/JPY may remain under downward pressure. USD/JPY, however, will find strong support around 88.84
These are the salient points kindly contributed by Mitul Kotecha, MD & Head of Global Currency Strategy at Calyon. To view the full discussion, please click here to visit the original post on his website The Econometer
Instead of rejoicing at China’s robust GDP report last week, which revealed a 10.7% rise in the fourth quarter of 2009, worries over whether China would have to move more aggressively to tighten monetary policy dominated investor’s thoughts
Further to this, US President Obama’s plan to limit the size and trading activities of financial institutions dealt another blow to financial stocks
Meanwhile, rumblings about Greece continue to weigh on markets and Greek debt spreads continued to widen even as global bond markets rallied
Obama’s announcement helped EUR/USD to avoid a break below 1.40, as there was a pullback in USD
The AUD was also hit by news that Australia’s Henry Tax Review would look to tax miners in the country. As a result AUD/USD dropped below 0.90 though this level is likely to provide good buying levels for those wanted to take medium term AUD long positions
The other G3 central bank to meet this week is the Bank of Japan but unless the Bank is seen to be serious about fighting deflation, USD/JPY may remain under downward pressure. USD/JPY, however, will find strong support around 88.84
These are the salient points kindly contributed by Mitul Kotecha, MD & Head of Global Currency Strategy at Calyon. To view the full discussion, please click here to visit the original post on his website The Econometer
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