FX & Money Markets Daily: Rebound In EURUSD
Today's Comment
Majors & Scandies
Yesterday sentiment in the financial markets was somewhat downbeat and market participants didn't seem to take too much comfort in the fact that the German ZEW index for August came in above consensus estimates. Although higher than expected the index didn't paint an optimistic picture of the outlook for the German economy in the coming months. Furthermore as data showed that US producer prices grew at the fastest pace in 17 years in July market sentiment deteriorated further. Thus the major US stock indices fell for the second day in a row and the USD dropped from a six-month high against the EUR. Technical indicators on EURUSD suggest that there is potential for a further rise towards 148,75-149 in the short term (corresponding to the peaks from November '07 and January and February of '08). However looking a bit further ahead there is no doubt that the trend on EURUSD is down. Thus overall we prefer to play EURUSD from the short side but as we feel that the timing for a selling recommendation is off at this point we prefer to maintain a neutral stance for now.
EURSEK rose rapidly yesterday as stop loss orders on short positions was triggered. The move was initiated as rumours emerged that Vattenfall was to make a bid for a British company. However at this point it remains unclear whether there is any truth to the rumours. Techincal indicators suggest that there could be further upside potential on the currency cross, but at this point we have chosen to maintain a neutral stance on the Swedish currency until the dust settles a bit.
Today doesn't offer too much exitement from a macro economic perspective. Thus it looks like we are in for a relatively quiet day.
Emerging Markets
As we mentioned yesterday we got a perfect start to the week on Monday. Almost every local currency gained against EUR and DKK. Yesterday the market went down again. TRY and ZAR were the worst performers - declining more than 1 percent against EUR and DKK. The reason for this move was probably declining equity markets globally.
Yesterday the US equity dropped again. Thus we expect some pressure on EM currencies from the morning. We do not have any very important EM data today. Maybe Polish PPI and Industrial Output can affect the PLN, but we expect the global sentiment (Oil and Equities) to be the most important factors to influence EM. We keep our recommendations.
Today's key events
- 10:30 BoE Minutes (GBP)
- 12:00 CBI Industrial Trends (GBP)
- 13:00 MBA mortgage applications (USD)
- 14:00 Producer prices (PLN)
- 14:00 Industrial production (PLN)
- 14:30 Retail sales (CAD)
- 01:50 Trade balance (JPY)
Jyske Core Positions - Recommendations
Jyske Markets - FX Research
http://www.jyskebank.dk/finansnyt
The analysis is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor for transactions made on the basis of the information or the estimates of the analysis. The estimates and recommendation of the analysis may be changed without notice. The analysis is for personal use of Jyske Bank's customers and may not be copied.
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