http://www.iceplc.com ICE FX market report RSS Feed en-uk Copyright 2009, ICE Mon, 30 Nov 2009 10:15:50 GMT Mon, 30 Nov 2009 10:15:50 GMT http://www.iceplc.com/press/markets/301109.html We are suggesting that a trained eye is kept on the markets this week. Friday’s news that DubaiWorld (largely state-controlled asset company in Dubai) may potentially be halting its global debt repayments was a huge FX mover that could potentially hold repercussions going into the New Year. Action on the day largely constituted a sharp roll-around in risk FX with AUD, NZD, EUR and GBP amongst other currencies all feeling some pressure from a brief sell-off into funding currencies (USD, JPY, CHF). Market illiquidity and the fractional size of the actual debt at stake did however save the day though as investors decided to let the situation cool over the weekend rather than jump into heavy unwinding of leveraged positions (particularly in asset markets). Mon, 30 Nov 2009 10:15:50 GMT http://www.iceplc.com/press/markets/271109.html What was it we were noting both last week and the week before about the danger of distended hyper-liquidity in a super-dovish monetary environment? What was said was that all the hot money created by global Central Banks over the last year, once interest-rate yield curves begin to steepen, would suddenly become a bit more expensive and not so fun to splash around. What happened yesterday morning (which unfortunately we only just missed as we released our Market Report), being an announced ‘temporary’ halt from Dubai on its debt servicing (59billion Dollars of liabilities) is the perfect example of liquidity bingeing getting out of hand and going bad, even on the sovereign level. The Persian Gulf has had to apply for a delay in its debt servicing and repayments, which, although they have not yet defaulted, is a nightmare scenario for a big chunk of global investors all of whom know full well that current financial market gains are unsustainable. Fri, 27 Nov 2009 10:00:50 GMT http://www.iceplc.com/press/markets/261109.html EUR/GBP revved up for an explosion yesterday as EUR/USD pre-empted the pair with a throbbing burst above the critical 1.50 mark, trading up toward 1.51 before sailing back against the heat of heavy sovereign option barriers at the mark. Risk aversion was a part of the play, with equity indices and credit markets all performing well particularly after Tuesday’s good economic data from both German IFO and US Consumer Confidence figures. However, the jackhammer which rallied EUR bulls into action yesterday, as troops of bears also converted to the cause, were words from Trichet of the ECB that the Central Bank was planning on adjusting its 1-year refinancing rate from fixed to floating, very soon. What this means is that the ECB is both signalling an exit from emergency policy measures (one of which for the ECB was enabling its Banks to borrow at low fixed cost on a rolling basis – 1 percent to be precise) and also confirming that its interest rate is back on the curve as deposits with the Bank will benefit from the new floating rate. Thu, 26 Nov 2009 10:00:50 GMT http://www.iceplc.com/press/markets/251109.html We were looking for Sterling pressure yesterday, and we certainly got it as GBP/USD tested the 1.65 level with GBP/EUR also looking timid at the mid 1.10. Traders, without enough fuel to drive major pairs below current trading ranges, preferred, on the back of mediocre eco data, to merely test those ranges on the downside ahead of Q3 GDP released today. Business Investment figures for the UK were slightly better than anticipated, with Mortgage Approvals also at an 18 month high. However, what kept most of the market short Sterling (with most traders being fully aware that stonking asset prices are no reason in this climate to buy into a currency) was the Bank of England Inflation Report and a typically unsatisfying set of speeches. Wed, 25 Nov 2009 10:00:50 GMT http://www.iceplc.com/press/markets/241109.html Global equities performed well yesterday with funding currencies being driven lower as a result of generous plays by Wall Street and Asia in particular as EUR/USD tried up for the 1.50 mark once again before being beaten back by a mounting barrage of stops and options at the key big figure. In true fashion, this trajectory moved GBP/USD to the upside yesterday as anticipated, with GBP/EUR also seeing some narrow action to the 1.11 mark before both pairs fell at London close. As we called yesterday, some short-term buying of Pound pairs was likely off the back of a paucity of UK regional data and strong conditions in capital markets, however, the weight of economic data for today through to Thursday was inevitably going to lead a tail-off last night. GBP/USD was also touched both yesterday evening in Asia and this morning in Europe by some big names buying the USD. Some Swiss players are of particular note this morning swinging EUR/USD down to 1.49 flat as they short the EUR ahead of what should be a memorable day not only for the Pound but also for the Dollar. Tue, 24 Nov 2009 10:00:50 GMT http://www.iceplc.com/press/markets/231109.html EUR/USD starts the week in true form with the pair pushing up from a 1.48-close last Friday to the high 1.49 once again, as, in its hydra-like convulsions, the pair continues to reflect market sentiment over the potential yield curve for the EZ single currency and US Federal Reserve monetary policy. Comments from the European Central Bank over the weekend stoked the former as Trichet (President of the Bank) made some pretty hawkish protestations about the need to unwind unconventional monetary policy as soon as possible, with several tangible approaches to retraction being fully laid on the table. Demand for the EUR shot up in correspondence as traders dashed to front-run potential real money demand for the currency as its interest rate-curve begins to steepen further. In fact, a lot of the real money has already reacted (not that we could consider the sheer liquidity of EURUSD allowing mere speculative trades to force percent moves) as we have seen a lot of model funds and sovereign players buying the single currency very fast with many traders being forced to snap-shut the short-side of some huge stealth option plays on Friday night. Mon, 23 Nov 2009 10:00:50 GMT http://www.iceplc.com/press/markets/201109.html Sterling markets sank yesterday as expected – GBP/USD tested the 1.66 level before moving down into the 1.65 channel this morning whilst GBP/EUR and most notably GBP/JPY both sustained heavy losses both intraday and overnight. Reasoning, as postulated in our report of yesterday morning, was down to the twin forces of disappointing UK Retail Sales and stonkingly bad UK Public Debt figures. Both sets of data, as we mentioned earlier in the week, were going to be very important in continuing to indicate to global investors the possible time-frame for Sterling yield curves to start steepening. Fri, 20 Nov 2009 10:00:50 GMT http://www.iceplc.com/press/markets/191109.html Yesterday we commented that the most likely scenario for the November Bank of England minutes was a pretty neutral document which, if it was going to spur any movement would most likely lead to a small retraction for major Sterling pairs as traders continue to edge up the currency with a zig-zag – like caution. This view was proved correct as the minutes emerged unveiling seven votes from the MPC to expand the Bank’s QE plan by 25bn Sterling with a further two votes looking for both a halt in the programme and, on the other hand, an increase to 40bn. Essentially then, traders took this information as neutral for GBP – whilst it is now looking increasingly unlikely that the Bank will expand its QE programme either next month or going into next year, the view provided was not quite enough for a sustained rally across the Pound market. Fri, 19 Nov 2009 10:00:50 GMT http://www.iceplc.com/press/markets/181109.html EUR/USD continues to drive markets with some of the most erratic intra-day swings we’ve seen for a long time. Yesterday, after opening close to the pivotal 1.50 mark, the pair shot down towards 1.48 after comments from Trichet (President of the European Central Bank) shocked traders, the majority of whom are already very uncertain over whether to proceed in driving the Dollar down even further against a whole range of major currencies. Trichet unexpectedly vocalised an apparently stoic view of the ECB that it firmly supports a strong USD, not only for the sake of EZ exporters, but also for the continued benefit of emerging economies. (Basically, a strong Dollar means the US can import relatively cheaply, whilst a weaker Dollar entails the reverse). Trichet’s comments also spurred some quick-fire market-risk paring as the President glibly aired the fact that a number of EZ countries are currently in fiscal tatters and in need of continued support. Wed, 18 Nov 2009 10:00:50 GMT http://www.iceplc.com/press/markets/091109.html As was our sentiment on Friday morning, we saw the weekend begin with London and New York markets having been pretty flat on the day further to a Non-Farm Payrolls figure that disappointed considerably to the downside. Again, as was anticipated, the figure had no chance of rustling up what many market commentators in their heady exuberance had been calling for last week – big adjustments. The fact is evident that the US jobs market, much like that of the UK and indeed the EZ, has a ghostly pallor. It is not de facto that the recent unlocking of institutional credit markets, the swelling of equity valuations and a re-booming of house prices leads to a resumption in total economic normality across the globe. The -192k monthly figure for jobs lost in the US market is a stern reminder to the more discerning observer that its real economy (in other words the actual tangible summation of on the ground economic activity) is still sickly at best. As a result, the Dollar renaissance that would have come with a solid display of US jobs market strength is now nowhere to be seen…yet. Mon, 9 Nov 2009 11:40:50 GMT http://www.iceplc.com/press/markets/091106.html As we speculated yesterday morning, the potential medium and long-term implications of allowing too much cash and cheap borrowing to continue to thunder into the markets was simply too much for the Bank of England to ignore as it made its decision over continued QE yesterday. The Bank chose, instead of increasing its liquidity programme by an extra 50billion Pounds, as many had been calling for, to slip a non-descript extra 25billion into the markets instead. This was always going to the Bank’s best play as equally valid downside and upside views of the economy reached a crescendo this week – playing it safe was the only real option. If the Bank had swooped in with a raging 50bn figure it knows full well that it runs the risk of being criticised for unduly stoking swollen asset markets even further over coming months – this could create some vicious back-draft for the UK economy in coming years that the Bank would be heavily criticised for (much like Alan Greenspan being blamed for causing the boom-side of the credit crunch with his super-loose monetary policy outlook). However, if the Bank had tied up QE to a screaming halt yesterday bond markets would likely have panicked as a damaging torrent of volatility coursed through the financial system (this is aside the fact that many seem to truly believe that the UK needs more QE!). Fri, 6 Nov 2009 09:58:50 GMT http://www.iceplc.com/press/markets/091105.html Dragging of funds out of high-risk instruments and associated currencies drove FX market plays at the end of last week as US real economy data disappointed heavily to the downside. US New Home Sales was well down on the month, despite figures from the US financial sector continuing to surge in favour of the global recovery thesis, with tremoring ahead of the mammoth US Commercial lender CIT Group’s weekend bankruptcy also serving to dampen sentiment. EURUSD thereby drove down to the 1.47 flat mark as USD was bought back with the single currency and emerging market indices taking the hit. Sterling also, as a global Capital markets currency, saw some edge taken off towards the end of the week, though, some beefy speculative interest, particularly in GBP/EUR lifted the pair towards the end of the week, as a number of Asian players and US Investment Banks took interest. Thu, 5 Nov 2009 09:55:50 GMT http://www.iceplc.com/press/markets/091102.html Dragging of funds out of high-risk instruments and associated currencies drove FX market plays at the end of last week as US real economy data disappointed heavily to the downside. US New Home Sales was well down on the month, despite figures from the US financial sector continuing to surge in favour of the global recovery thesis, with tremoring ahead of the mammoth US Commercial lender CIT Group’s weekend bankruptcy also serving to dampen sentiment. EURUSD thereby drove down to the 1.47 flat mark as USD was bought back with the single currency and emerging market indices taking the hit. Sterling also, as a global Capital markets currency, saw some edge taken off towards the end of the week, though, some beefy speculative interest, particularly in GBP/EUR lifted the pair towards the end of the week, as a number of Asian players and US Investment Banks took interest. Mon, 2 Nov 2009 11:00:50 GMT http://www.iceplc.com/press/markets/091029.html Yesterday proved to yield an exceptionally interesting set of FX market plays. EUR/USD as we were calling for from last week, continued to topple as the much hyped risk-recovery trade, epitomised by a stampede of EUR buying fuelling emerging market yield plays, ground to a halt. As stated, it was pretty evident that this rebound was coming – first and foremost, in the current EZ economic climate a EURUSD level of above 1.50 is pretty untenable and secondly, it was clear that equity market runs of the last weeks were becoming a little overextended. Everyone out there who is in the know and who is buying substantial volumes of products at the moment is more than lucidly aware that the saccharin rebound of the last weeks in terms of global growth optimism has been stoked very heavily with astronomical volumes of cheap money and as such are all jumpy about the long-term potential for such moves. Thu, 29 Oct 2009 11:00:50 GMT http://www.iceplc.com/press/markets/091028.html Sterling roared against the euro yesterday but wiped out early gains against the US dollar after a surprisingly weak US consumer confidence figure pulled investors back into the liquidity and safety of the greenback. The sharp correction in the dollar saw cable fall more than a cent from levels reached earlier in the day, a rise which was mainly fueled by stronger than expected UK retail sales figures. Wed, 28 Oct 2008 11:20:50 GMT http://www.iceplc.com/press/markets/091022.html High-yield FX pairs continued an onward march yesterday with the recent market underdog, Sterling, taking some of the most impressive gains with GBP/USD moving to touch the 1.66 and GBP/EUR brushing the 1.11. Technical data does very vividly indicate though that these heavy moves are weighted more to the side of a pulling of Sterling shorting, rather than outright stronger interest although there is no denying that there is now at least the prospect of fundamentals improving. The latter would be the case more strongly if traders were happy about the fiscal health and the medium-term monetary outlook for the region – both would spur a binge on fixed income – but, currently, the former (market re-adjustments from hyper negative to neutral) still dominates. Thu, 22 Oct 2008 11:20:50 GMT http://www.iceplc.com/press/markets/091021.html Despite yesterday’s FX market fury which fired EUR/USD to the high 1.49 mark and pulled GBP/USD to the high 1.64 region, we remain highly sceptical of the way in which markets in general are being viewed at present. As EUR/USD continues to jump on risk appetite (as investors plough funds into emerging markets and as speculators and short-term currency traders follow these moves) GBP/USD is experiencing untold support, by proxy. At the same time it seems that general sentiment revolving around the UK economy is improving – yesterday saw slightly less disappointing Public Sector debt figures for the UK than anticipated. This was also bolstered by a pretty robust speech by BOE Governor, Mervyn King, pointing cautiously to regional economic recovery. These factors, in a global matrix where equity prices are tanking hard for the upside and hyper credit liquidity is growing once again, seem to indicate that all is well and good and to quote the Bank of Japan Deputy Governor Nishimura, speaking yesterday, 'do not expect the global economy to experience a big double dip'. Wed, 21 Oct 2008 11:20:50 GMT http://www.iceplc.com/press/markets/091020.html Market forces pushed Sterling to a 1 month high against a beleaguered US dollar yesterday as UK house prices, coupled with increasing strength in the global equity markets caused a wave of risk appetite. Sterling initially traded lower during the London session as a Bank of England policy maker began singing the praises of quantitative easing, and made some strong suggestions that the old lady should continue its programme through to the end of the year. However when Wall Street opened 1% up, European equities began to reverse and encouraged the purchase of riskier currencies. Tue, 20 Oct 2008 11:20:50 GMT http://www.iceplc.com/press/markets/091019.html As we pointed out mid last week, current conditions over Dollar demand in the market are having a huge proxy effect on Sterling pairs. Despite the fact that we saw the perfect marriage of UK sentiment and USD fundamentals last week converging for some extreme GBP/USD price action, the Dollar itself remains as the principal girding in the overall situation. To repeat what was noted at the end of the week, the US Federal Reserve, in retaining an exceptionally cautious stance on the strength of returning growth in region, actually seems pretty content in not doing its currency strength any favours whatsoever. In a global climate where yield curves on denominations are certainly back in play (one need only look at the strength of the AUD and NZD at the moment to see these – both having high interest rates attached to them) a Central Bank that appears to be at the back of the curve has to concede that its currency will invariably weaken. This is why GBP/USD went through heavy resistance around the 1.60 last week to stand at 1.62-1.63 today. Mon, 19 Oct 2008 11:20:50 GMT