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Forex - USD/YEN, S&P Flow - risk off hits USD/YEN, but 81 expiry may prop
Written by article default Friday, 29 October 2010 06:32
USD/YEN is back under 81.00 as risk off sentiment wins over again - US stocks losing modest ground in NY yesterday. Lows just shy of 80.50 were posted in the Asia session, but the large 81.00 expiry for today's NY cut may pull some more bids should European markets test these lows. Intervention fears may well fend off any aggressive selling however, especially after some of the Finance Ministry rhetoric heard this week, though the medium term picture is for an eventual break lower down through 80.00 and the 79.70 (15yr) low. As we mentioned earlier in the week, corporate Japan is bracing itself for a strong Yen, with some budgeting for levels down at 70.00. SM
Forex - AUD/USD, AUD/YEN Flows - AUD/YEN 5-wk lows sold on risk aversion; any PBOC CNY talks
Risk aversion b4 weekend, with US GDP and any PBoC CNY reval rumours, given reports S Korean Pres Lee is optimistic of G20 trade pact. Focus on EU heads of state meeting for any division/agreement on revised EU Treaty, Greece, Portugal concerns. USD/YEN, Cross/YEN sold on risk aversion, with talks of Japanese banks, and Models, funds, US, European selling good amount of USD/YEN, Cross/YEN. USD/YEN hit lows 80.68, just 27 pips from its 15-year lows of 80.41. Eye any BoJ/MoF intervention after repeated "Bold" MoF Yoshihiko Noda FX warnings. AUD/USD hit 0.9743 lows, eye break of 0.9700 again, IMF seeing Aussie overvalued - more next. AUD weighed by expectation RBA may not hike next Tues Nov 2 - a "crowded" day with Fed FOMC/ US election as well. AUD/YEN hit fresh 5-week lows 78.65-70, since Sept 15 20010 lows of 77.86. WL
Forex - EUR/USD, USD/YEN Flows - EU Rompuy :to explore limited Treaty Change, tougher budget
EUR, GBP eye the final day of the 2-day EU Heads of State and Government meeting in Brussels, given talks of limited EU Treaty change and also EU Budget rules. EU President Herman Van Rompuy says EU leaders agree to endorse tougher EU Budget rules. Recommend creation of robust permanent crisis resolution mechanism and to explore limited treaty change, (as proposed by German Chan Angela Merkel+ supported by French Pres Nicolas Sarkozy). Agree to explore the role of private sector, IMF and strong conditionality in crisis mechanism. EU leaders agree essential that EU budget reflects consolidation efforts in member states. Agree pension reform impact on EU budget rules will be examined/ On FX, EUR/USD steady at 1.3925-30, with focus on above EU meeting and changes and on quantum of Fed QEII on Nov2-3. Offers at 1.3950/1.4000 to cap. Stops below 1.3880.WL