Market Brief

Asian equities have gained for a third straight day as worries over Dubai’s debt crisis have dissipated and the global recovery remains on track. The corresponding USD weakness has led EURUSD to retest 1.5100 levels, and most notably, pushed gold emphatically through the $1200 psychological barrier to touch highs of $1215.75. Yesterday’s European PMI data was broadly better than expected, whilst the US ISM Manufacturing disappointed; however the most significant drivers for FX markets were policy-maker comments from both sides of the Atlantic. EU President Juncker reassured markets that the likely knock-on effect of Dubai’s debt problems on the Eurozone were minimal, whilst the Fed’s Plosser remarked that the USD’s recent depreciation was not a concern; explaining that it was in part a reversal of the USD inflows seen during the financial crisis. Both sets of data and rhetoric reaffirm in our minds the case for further EURUSD appreciation in the weeks to come, and it seems highly plausible that we see 1.5200 by year end.

      Meanwhile the speculation about JPY intervention seems to have cooled marginally from this time yesterday after USDJPY’s reversion back above 87.00. Markets are still absorbing the implications of the new liquidity facility, but we remain vigilant for any new headlines concerning the currency specifically to take our cue on JPY direction from here.

      Looking ahead to today, the morning highlights include Norwegian PMI, UK PMI Construction and Eurozone PPI. Of the three, the most likely to have any impact on the FX markets is likely to be UK PMI; as GBP has been under pressure recently amid speculation that UK banks may be heavy exposed to Dubai debt. The large miss in UK PMI Manufacturing yesterday did little to improve the prospects for GBP, and another miss today could be severely negative on GBP sentiment. The afternoon’s schedule is light, but we look to the ADP Employment Report out of the US to provide an early insight into the more significant Non Farm Payroll numbers on Friday.

G10 Advancers and Decliners vs USD

NOK

0.06

width=11.8032786885246

NZD

0.06

width=11.8032786885246

AUD

0.02

width=3.9344262295082

CAD

0.01

width=1.9672131147541

width=9.83606557377049

DKK

-0.05

width=9.83606557377049

EUR

-0.05

width=15.7377049180328

CHF

-0.08

width=21.6393442622951

SEK

-0.11

width=55.0819672131148

GBP

-0.28

width=120

JPY

-0.61

 Global Indexes

 Current Level

 % Change

Nikkei 225 Index

9'608.94

+ 0.38

Hang Seng Index

22'377.85

+ 1.20

Shanghai Index

3'269.75

+ 1.06

FTSE 100 Index

5'312.17

+ 2.34

DAX Index

5'776.61

+ 2.68

SMI Index

6'372.08

+ 1.77

S&P future

1'107.50

- 0.08

 World Markets

 Current Level

 % Change

Gold

1'211.61

+ 1.25

Silver

19.23

+ 0.68

VIX

21.92

- 10.57

Crude wti

78.17

- 0.26

USD Index

74.55

+ 0.14

 Todays Calender

 Estimates

 Previous

 Country / GMT

Manufacturing PMI, index Nov

47.5

45.8

NOK/08:00

Construction PMI, index Nov

46.9

46.2

GBP/09:30

PPI, % m/m (y/y) Oct

0.0 (-6.8)

-0.4(-7.7)

EUR/10:00

Change in ADP private payrolls, thous Nov

-150

-203

USD/13:15

Currency Tech

AUDUSD
R 2: 0.9406
R 1: 0.9323
CURRENT: 0.9255
S 1: 0.9056
S 2: 0.8947

USDCAD
R 2: 1.0781
R 1: 1.0749
CURRENT: 1.0465
S 1: 1.0400
S 2: 1.0207

EURJPY
R 2: 133.61
R 1: 132.69
CURRENT: 131.50
S 1: 129.00
S 2: 126.91

USDMXN
R 2: 13.133
R 1: 13.089
CURRENT: 12.859
S 1: 12.790
S 2: 12.767