Morning Adviser Europe 9/28/2010 5:58:00 AM

Fresh Fed Easing Scrutinised

By Geoffrey Yu

Tight ranges prevailed overnight in FX as investors digested fresh updates on potential policy paths for the Fed and the BoJ. A Wall Street Journal article released after the equity close gave the dollar a slight boost as debasement fears eased somewhat. The article suggested that any further quantitative easing by the Fed could be less heavy-handed than expected as officials continue to monitor the data as they weigh their next move. But it did not necessarily dissuade the notion that more easing is possible. Our US economists now think the fed funds target will not be hiked until Q3 2011, at least three months later than their original June 2011 forecast. In the aftermath of the latest FOMC decision, our economists do not think further quantitative easing will be necessary but they do acknowledge it is now a much closer call. We therefore lowered our one and three month dollar forecasts to reflect the increased risk of further potential Fed action. On the other side of the Pacific, Nikkei News has also reported the BoJ is mulling fresh policy steps ahead of its policy meeting in early October. There were no major headline US data releases and investor risk-seeking was muted with equities modestly lower and lower Treasury yields across the curve, which was partially spurred by a good 2-yr auction. But among G10 currencies the Australian dollar managed to gain versus the dollar as the relative monetary policy differential remains in Australia's favour. Upcoming data releases include Conference Board Consumer Confidence, S&P/CaseShiller home price data and the Richmond Fed manufacturing survey. EURUSD traded 1.3426-1.3472, USDJPY 84.18-84.34.

Research Spotlight "Is The World Getting Flatter?" UBS G10 FX Strategy Despite the slopes of bond curves across the advanced economies varying significantly at present, all of them have flattened noticeably over the past few months. While these have largely been bull flattening events, Australia's predominantly bear flattening - and historically more 'average' stage of the economic cycle - may be flagging a future where curves at each level of a country's official policy rate are flatter than they used to be. Please see the "Is The World Getting Flatter?" note on www.ubs.com/fx for details.

EUR Targets: EURUSD 1m 1.35, 3m 1.25 A downgrade of the subordinated debt of a prominent Irish bank highlighted widespread fears surrounding the Irish banking sector and the prospect of future downgrades remain. The FT reported that further updates on the situation would likely come on Thursday but it underscores the fact that sovereign and fiscal concerns remain unresolved and sovereign yields remain elevated. ECB President Trichet's comments at the Quarterly Hearing before the Committee on Economic and Monetary Affairs of the European Parliament largely echoed his recent comments as he reiterated again that inflation should moderate over the policy-relevant horizon despite a potential short-term increase. Trichet remains cautious on Eurozone growth and said current policy is accommodative and the current level of interest rates is appropriate. Ahead today, the German GfK survey is expected to register a slight gain to 4.2 from 4.1, while national and regional CPI numbers will be released across Germany..

JPY Targets: USDJPY 1m 85, 3m 85 Nikkei News reported during the US session that the BoJ would consider new policy measures at next month's policy meeting, if the recovery is under threat. Measures considered would include increased government bond buying and increasing funding to markets. However, any suggestion that increased JGB issuance would open the way for the government to increase stimulus were dismissed by the MoF overnight, with minister Noda warning that new bond issuance is undesirable for the extra budget. Japanese exports rose by less than expected to +15.8% y/y (cons. +19.0%) while imports came in slightly ahead of expectations. This slowdown in export growth adds more weight to BOJ's intervention policy as it highlights the negative effects that the stronger yen is having on the real economy. Small business confidence released overnight was also softer than prior at 48.4.

GBP Targets: GBPUSD 1m 1.59, 3m 1.47 Final Q2 GDP is due after the preliminary print slightly exceeded expectations at 1.2% q/q and 1.7% y/y. Consensus estimates are for no change. The IMF endorsed the UK's fiscal tightening plans as it greatly reduces the risk of a loss of confidence. The IMF noted that things were on the mend but also stressed that monetary policy will have to be nimble in the event of further downside risks. The October 20 fiscal austerity measures could point to further BoE easing, which policymakers hinted at in the latest BoE minutes. We adjusted our GBPUSD forecasts to reflect the shift in our dollar view but think fiscal austerity could keep the pound weak versus the Swiss franc and the Nordic currencies.

FX Technicals

AUDUSD little support till 0.9850 EURUSD BULLISH Stalled in front of 1.3511; a break here would expose 1.3692. Near-term support comes in at 1.3426 ahead of 1.3287 USDJPY NEUTRAL Holds support at 84.05; 85.93 and 82.88 mark the key near-term directional triggers. GBPUSD BULLISH The pair is expected to target 1.5999 key high with scope for 1.6253 next. Support is defined at 1.5642 ahead of 1.5503 USDCHF BEARISH Following the break of 0.9786, there is scope for next support at 0.9625. Resistance at 0.9983 ahead of 1.0183. AUDUSD BULLISH There is little resistance till 0.9850 key high with initial support defined at 0.9442 ahead of 0.9309 USDCAD NEUTRAL Remains heavy below 1.0380, keeping our focus on the downside. Initial support lies at 1.0192 ahead of 1.0108 EURCHF NEUTRAL Trading within 1.3391 and 1.2991 range. Break below 1.2991 would expose 1.2766 key low. EURGBP NEUTRAL Pullback from 0.8577 holds above 0.8390. Break of the latter would expose 0.8309 ahead of 0.8202 EURJPY BULLISH While support at 110.66 holds, expect the cross to target 114.74, ahead of 116.68 and 119.33. *NOTE: The trend for each currency pair as defined in the table is determined by our proprietary model and is independent of our discretionary interpretation of price action

Morning Adviser Asia 9/27/2010 9:03:00 PM

Fed Focus Persists

By Brian Kim

Eurozone concerns resurfaced on the back of a debt downgrade of an Irish financial institution but currency moves were largely quiet until a Wall Street Journal article after the equity close gave the dollar a slight boost. The article suggested that any further quantitative easing by the Fed could be less heavy-handed than expected as officials continue to monitor the data as they weigh their next move. But it did not necessarily dissuade the notion that more easing is possible. Our US economists now think the fed funds target will not be hiked until Q3 2011, at least three months later than their original June 2011 forecast. In the aftermath of the latest FOMC decision, our economists do not think further quantitative easing will be necessary but they do acknowledge it is now a much closer call. We therefore lowered our one and three month dollar forecasts to reflect the increased risk of further potential Fed action. There were no major headline US data releases and investor risk-seeking was muted with equities modestly lower and lower Treasury yields across the curve, which was partially spurred by a good 2-yr auction. But among G10 currencies the Australian dollar managed to gain versus the dollar as the relative monetary policy differential remains in Australia's favour. Upcoming data releases include Conference Board Consumer Confidence, S&P/CaseShiller home price data and the Richmond Fed manufacturing survey. EURUSD traded 1.3426-1.3506, USDJPY 84.12-84.39.

EUR Targets: EURUSD 1m 1.35, 3m 1.25 A downgrade of the subordinated debt of a prominent Irish bank highlighted widespread fears surrounding the Irish banking sector and the prospect of future downgrades remain. The FT reported that further updates on the situation would likely come on Thursday but it underscores the fact that sovereign and fiscal concerns remain unresolved and sovereign yields remain elevated. ECB President Trichet's comments at the Quarterly Hearing before the Committee on Economic and Monetary Affairs of the European Parliament largely echoed his recent comments as he reiterated again that inflation should moderate over the policy-relevant horizon despite a potential short-term increase. Trichet remains cautious on Eurozone growth and said current policy is accommodative and the current level of interest rates is appropriate.

JPY Targets: USDJPY 1m 85, 3m 85 BoJ Governor Shirakawa said the BoJ will take "timely and appropriate action on monetary policy as needed". Shirakawa also opened the door to potential intervention in non-USD crosses when he said "the yen has appreciated not only against the US dollar and the euro, but also against fellow East Asian currencies: for example, it has traded at levels close to its record high against the Korean won". Such intervention has not happened since 2000. Shirakawa also warned that if a central bank's purchases of government bonds is seen as a means of paying for fiscal expenditure, or as an act of debt monetisation, inflation expectations and government bond yields would rise. While a modest increase in inflation expectations may not be a bad thing as far as the Japanese economy is concerned, rising bond yields could lead to a substantial increase in the cost of servicing Japan's public debt. Japanese exports rose by less than expected to +15.8% y/y (cons. +19.0%) while imports came in slightly ahead of expectations. This slowdown in export growth adds more weight to BOJ's intervention policy as it highlights the negative effects that the stronger yen is having on the real economy.

GBP Targets: GBPUSD 1m 1.59, 3m 1.47 Final Q2 GDP is due after the preliminary print slightly exceeded expectations at 1.2% q/q and 1.7% y/y. Consensus estimates are for no change. The IMF endorsed the UK's fiscal tightening plans as it greatly reduces the risk of a loss of confidence. The IMF noted that things were on the mend but also stressed that monetary policy will have to be nimble in the event of further downside risks. The October 20 fiscal austerity measures could point to further BoE easing, which policymakers hinted at in the latest BoE minutes. We adjusted our GBPUSD forecasts to reflect the shift in our dollar view but think fiscal austerity could keep the pound weak versus the Swiss franc and the Nordic currencies.

FX Technicals EURUSD stalled at 1.3511 EURUSD BULLISH Stalled in front of 1.3511; a break here would expose 1.3692. Near-term support comes in at 1.3426 ahead of 1.3287 USDJPY NEUTRAL 85.93 and 82.88 have now become the key near-term directional triggers. GBPUSD BULLISH After the break of 1.5729, expect gains to extend towards 1.5999 key high. Support is defined at 1.5642 ahead of 1.5503 USDCHF BEARISH Following the break of 0.9786, there is scope for next support at 0.9625. Resistance at 0.9983 ahead of 1.0183. AUDUSD BULLISH Violation of 0.9600, psychological level, favours another bullish run towards 0.9850 key high. Near-term support is at 0.9442 ahead of 0.9309 USDCAD BEARISH Focus is back on 1.0108; break of the level would expose 0.9931. Near-term resistance holds at 1.0380 EURCHF NEUTRAL Trading within 1.3391 and 1.2991 range. Break below 1.2991 would expose 1.2766 key low. EURGBP BULLISH Upside potential held below 0.8609 ahead of 0.8774. Support defined at 0.8463 ahead of 0.8390 EURJPY BULLISH While support at 110.66 holds, expect the cross to target 114.74, ahead of 116.68 and 119.33. *NOTE: The trend for each currency pair as defined in the table is determined by our proprietary model and is independent of our discretionary interpretation of price action

Áttételesen mindenképp, de lehet, hogy tevőlegesen is. Az USA kötvényeket, pedig eddig is vette a FED, ami vicc. De az összest ők sem szippanthatják fel, így előbb, vagy utóbb a kötvénypiac kierőszakolja az erősebb dollárt.

szerintem mindenkepp, en ugyanis szinten ezen a velemenyen vagyok, es dolar erosodest vartam(volna)

az is lehet, hogy emogott az euro rally mogott a Fed gyengitese van egyfajta bujtatott intervencio kent

kotvenypiacanak nem tul jo, de az hosszu max, kozep tav, a gyenge dollar viszont szinte azonnal jobb neki mint az eros, persze ez csak az en szvsz.

A large auction of US 2-year notes sees record demand and the US suffers on the interest rate spread implications of the auction as investors try to front-run the Fed's anticipated buying of treasuries. More to come?

Today saw record demand at the US auction of 2-year treasuries ($36 billion with a final yield of 0.44% and a bid-to-cover of a whopping 3.78, a three-year high) despite record low yields as buyers anticipate a strong bout of Fed buying after last week's FOMC meeting in which Bernanke and company expressed dissatisfaction with current inflation levels and suggested they would do what is required to keep inflation levels at a level consistent with the Fed mandate. The strong auction kept US yields on the floor and this pressured the US dollar to new lows versus the Australia dollar in today's trade. USDJPY failed to rally as two-year yield spreads between the US and Japan have now shrunk to a hair over 20 bps. The Euro was less bid as some the USD as well as PIGS spreads were generally wider on the day, in line with the recent trend, but also as Moody's downgraded Anglo Irish Bank today. The news also emerged that the ECB at one point considered using some of its rescue funds for bailing out Ireland.

Az ECB ezt csinálja az ír,spanyol, görög, stb kötvények vásárlásával, pár hónapja, akkor nem az eurónak kéne szakadni most?:)

De nem tudok rá a kötni ,mert ami volt longom azt is elvette csak ugy szó nélkül az ADMIRÁL.

Oktoberi mini gáz szvsz betölti a rést.

ha ilyen meretu jatekpenz nyomas, indul akkor dodo 1.38 -> 1.5 -> es kitudja,...................

mar tobben ma is "ujra 1.6 dollar jon?" cimu kerdesekkel riogattak a mediaban.

kerdes kina mit szol ehhez???

http://www.portfolio.hu/cikkek.tdp?k=3&i=139038&is=1

Ez nem csak az már. A globalizáció, ütközik a nemzeti érdekekkel, a monetáris politikával. Csak egy eklatáns példa Japán kínlódása a jen által. De sorolhatnánk. Szóval van itt baj a paraván mögött dögivel.

Választási bohózat, és nem a magyar:))

A világ meg ugrál fel-le mint Pom-Pom az ágon:))

Lassan senki se marad Obi mellett a gazd. csapatból, csak Geithner:(

FDIC mégse lépi meg az új szabályozást, soroljam még. Csak kacagni nem tudok, az viszont baj.

De likviditás nélkül (szánalom a mai forgalom is) lehet bármilyen vonal, vagy ellenállás, röhögve átugratja egyetlen speki is.

Na ja, csak az a baj hogy "állítólag":))

Nézem a saját vonalkáimat, meg ezeket az "állítólagos" dolgokat, aztán lesz ami lesz:))

Állítólag 1.3509-nél van egy ellenállás, utána 1,38 felett. De innen kéne egy korrekció, persze normális piacon.

Viccet félre téve EurUsd 540 környékén van 1 vonalkám, amit falnak nézek most.

AudUsd 700 környékén van ua. meglátjuk.:))

Inkább majd zárd el az oxigénpalackot, amikor eszükbe jut a levegővétel.:))

Szóljak nekik:))

Levegő vétel nélkül adják a dollárt. Lassan levegőt kéne venni.

AudUsd short, amin járatom a gondolataimat, nagyon beárazzák ezt az okt. 4 0.25 kamaty emelést. Még kivárunk, de ha ráadásnak csinálna 1 double toppot akkor szép kilátások jöhetnek a kisgatyós részlegnek:))

http://www.napi.hu/default.asp?cCenter=article.asp&nID=459411&place=cikk_toplista

kíváncsi leszek, most mi lesz, szinte mindenki lefele varja, ilyenkor általában az ellentétes irány a helyes

(mind azt mar többször bizonyítottak a híres elemzőházak pár dologban)

szerk:mondjuk most nezem ez meg péntek reggeli hir, a rally elotti.