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Forex - GBP/USD, GBP/YEN Flows - CBI (Irish) Honovan on EU/IMF loans to banks; Retail Sales
Written by article default Thursday, 18 November 2010 11:18
Did they or did they not? That is the question re bailout talks. Markets are digesting the series of comments coming out of Dublin, as to whether there is IMF/EU bailout or just "bank support plan". Irish CB Gov Patrick Honohan says any loan to Ireland will be at standard IMF rates. IMF provides loans and not bailouts. Loans will run into billions. On FX, GBP dipping to day lows of 1.5888, vs 1.5947 earlier, with EUR/GBP jumping to 0.8549 from 0.8525-30, while GBP/JPY lower at 132/25-30 from 132.60-70. Some focus on reports of UK Bank's GBP140bln exposure (see earlier flows) to Ireland. Good to watch for any downside risks for both EUR, GBP given the current concerns. EUR/USD offers 1.3600-10, with EUR selling likely to weigh on GBP. GBP, GBP/JPY weighed as Cross/JPY to dip on risk aversion. GBP/JPY eye break of 130, GBP eye 6-wk low 1.5840, with focus on UK retail sales data, and PSNCR at 0930GMT.
Forex - USD/JPY, USD INDEX Flows - Nikkei 5-m high above 10K; S Korea capital measures
Some risk appetite back for now, as Nikkei climbs back above the key 10,000. Nikkei +2.02% or +198.40pts at 10,010.06. Some focus on S Korea capital flows measures later at 0700GMT. S Korea finmin says govt to reintroduce withholding tax on foreigners' bond investment to cap hot money. On FX, interestingly, USD/KRW is lower at 1,134.60/30 from 1,141.50 - possibly buy the rumours, sell the facts news. But not surprised to hear BoK/ agents buying on dips to support 1,130 handle. USD/JPY at 83.25-30, offers at 83.50-60, bids at 83.00-10. USD INDEX at 78.763, interest to buy USD on dips, sell EUR, AUD, GBP on rallies given current eurozone crisis, and also on Fed QEII criticism even as Fed Chair Ben Bernanke defends.