Markets are generally steady ahead of New Year holidays. Broad based strength is also seen in the Japanese yen with EUR/JPY breaching 100 psychological level briefly while GBP/JPY tread water below 120. USD/JPY also dipped to as low as 77.29 so far but thin market consolidation helped stabilizing the rally in Yen. Exporter’s repatriation is cited as one of the reason for yen’s strength today. But it’s also believed that, after US’s criticism on yen intervention since August, there is no prospect of G7 coordinated intervention like that happened after the March disaster. The Japanese yen could extend rally as traders come back from holidays. Meanwhile, Euro would likely remain weak in near term. Funding from ECB’s three year LTRO has basically came back to the bank’s deposit. This week’s … Read entire article »

By: Sara Patterson In the year’s final day of trading the Australian and New Zealand Dollars rose against most of their major trading partners, recovering from one-week lows as Asian stocks rallied to increase demand for higher-yielding assets. The Australian Dollar, known fondly as the Aussie, rose 0.2 percent to $1.0155, up from $1.0044 at the close of yesterday’s US trading session. The currency also rose slightly against the Japanese Yen, from 78.69 to 78.71. The New Zealand Dollar posted similar gains, up 0.2 percent to 77.26 cents against the greenback. Despite these gains, the Australian Dollar is set to end 2011 lower 0.8 percent lower against the Dollar and 5.2 percent lower against the Yen. The New Zealand Dollar is also ending the year on a low note, down 1 percent … Read entire article »

Risk appetite was given a lift overnight on solid US data but was capped in Asian session following China manufacturing data. The preliminary reading of HSBC manufacturing PMI stayed in contraction region at 48.7 in December. Weakening external demand is starting to impact exports and the manufacturing sector. This was also reflected in exports which slowed in November for the third month. There are prospects of further easing measures from PBoC as markets are speculating a reserve ratio cut in early January. Focus will turn to the official PMI to be released this weekend. Dollar pared back some gains after yesterday’s Italian bond sales triggered rally. Dollar index is still hovering around 80.5 level as there is a lack of follow through buying above 80. Yen is seen mildly higher … Read entire article »

Euro extended its broad based decline after Italian bond auctions. Italy sold EUR 7.02b of 3- to 10-year bonds today, below maximum target of EUR 8.5b. Sales of 2022 bond hit max target of EUR 2.5b. Yield was just below the unsustainable 7% at 6.98% even though it dropped from November’s 7.56%. Yield on the three year bond due in 2014 dropped from November’s 7.89% to 5.62%. However, sales of 2014 and 2021 bonds fell short of the maximum target. This week’s result so far firstly suggested that short term funding stress was eased for Italy, but investors are still uncertain on the longer term outlook. Secondly, the fact that the three year bond auction sourly missed target raised much concern that the ECB’s EUR 489b three year LTRO fund … Read entire article »

By: Sara Patterson In Asian trading today the Euro hit a 10-year low against the Japanese Yen, resulting from stop-loss selling in the EUR/JPY pair. And, although analysts expect the single currency to stay weak in the coming days, there was some happy news coming from the region, specifically from Italy, where the Italian Treasury was able to pay significantly less for borrowing money on a six-month term than it did last month. Italy sold its expected 9 billion Euro of six-month treasury bills at an average yield of 3.251%, dramatically lower than the average yield of 6.504% that they received at November’s auction. The true test, however, will be during Italy’s sale of 10-year debt, which is scheduled for later on today. Italian 10-year government bonds are now yielding above … Read entire article »

By: Barbara Zigah The common currency Euro managed to remain above the recently struck 11-month low against the U.S. Dollar, even as traders keep a close watch on the outcome of the upcoming Italian sovereign debt auction. Markets will also watch for economic data out of Germany tomorrow, with the release of December’s Consumer Price Index, which will play on the Euro if the consensus call for a weakening of the CPI is realized. As reported at 2:06 p.m. (JST) in Tokyo, the Euo was trading at $1.3068 in Asian trading, hovering near the December 14th low of $1.2945. Some support is seen immediately at around $1.3050. Since early May, when the Euro hit its peak for the year, the common currency has lost nearly 12% of its value, and most analysts … Read entire article »

Yen strengthens mildly today after US Treasury criticized Japan’s intervention in a report to Congress. The US Treasury noted that it supported the G7 coordinated intervention to stabilize yen after devastating natural disaster back in March. However, it explicitly said that it didn’t support the invention from August through November. The reported noted that the intervention operated at a time “foreign exchange market activity and risk aversion were being predominantly influenced by financial developments elsewhere in the global economy that were impacting all of the major currencies”. And, yen’s volatility was lower than EUR/USD while exchange markets functioned normally. Also, the report noted that yen’s “real value” is “near its 15 year historical average.” Hence, the US Treasury concluded that intervention was not required and urged Japan to take ” … Read entire article »

Markets are still bounded in tight range today as trading activities were subdued with UK and Canada markets on holiday. US Conference Board Consumer Confidence jumped sharply from 55.2 to 64.5 in December, comparing to expectation of 58.5. SP Case-Shiller 20 cities home prices dropped more than expected by -3.4% yoy in October. Swiss UB consumption indicator dropped to 0.81 in November. From Japan, corporate service price index dropped -0.2% yoy in November. Housing starts dropped -0.3% yoy in November. ECB data showed the bank received record cash deposits of EUR 412b yesterday, beating prior record of EUR 384b set in June 2010. That’s also a large EUR 65b overnight increase comparing to EUR 347b the day before, and EUR 167b higher in the past two days alone. The data … Read entire article »

By: Sara Patterson Asian stocks were lower during Tuesday’s trading as investors expressed concern about the status of the Eurozone debt crisis in the coming quarter and weak holiday sales in the US. Weak retail sales in the US can directly impact Chinese manufacturing for the negative, Asian traders speculated. Markets were also affected by thin trading volumes during the holiday weekend which kept markets in Australia, New Zealand and Hong Kong closed yesterday. Tokyo lost 0.4 percent to 8,442.14 and the Shanghai Index, China’s benchmark, dropped nearly 1 percent to 2,314.4. Other open markets including Taipei, Singapore and Seoul also declined. Yuan Hits All-Time High Despite a worsening Asian stock market, the Chinese Yuan hit an all-time high in intraday trading on Monday, and the currency is expected to remain stable … Read entire article »

Markets are staying in tight range in Asia today in holiday mood. Europe will remain the focus in otherwise quiet trading. Italy’s 10 year bond yield breached 7% again last Friday, after Senate gave final approval to the EUR 30b austerity package. Italian bonds would likely remain pressured ahead of the auction of 2014, 2018, 2021 and 2022 bonds later this week and thus, limit Euro’s rebound attempt. Also, traders would remain cautious on taking too much position in Euro, either long or short, as SP could downgrade Eurozone nations any time this week. China and Japan agreed to promote direct trading of the Chinese Yuan and the Japanese Yen, without involving US dollar after a meeting between Chinese Premier Wen and Japan Prime Minister Noda. The governments said that … Read entire article »