- USD While the USD has exhibited extreme volatility in recent weeks, the overall trend likely remains lower as easy Fed policy and sluggish private capital inflow weigh on the USD.
- EUR The EUR surged above 1.45 last week and retreated; while expect another run toward to the 200-day MA, a EUR/USD spike toward its record high appears very unlikely.
- JPY The BoJ’s rate cut has eased risks of a JPY surge, but the JPY remains vulnerable to risk appetite developments. Repatriation may keep the JPY firm in coming months despite collapsing exports.
- GBP Expectations for weak growth and sharply lower interest rates have pushed the GBP TWI to a record low. The GBP appears set to rebound versus the USD and EUR, at least temporarily.
- CHF The fundamental outlook remains negative for EUR/CHF with Switzerland’s huge c/a surplus providing CHF with support. The next level of significant support is formed by the Nov. 12 low of 1.4715.
- SEK EUR/SEK has stabilized. Additional stability in the financial markets would bode well for SEK. Support (10.7810) is formed by the 23.6% retracement of the rally from the 5/08 low to the 12/08 high.
- NOK The combination of oil finding support and the stability in financial markets may prevent EUR/NOK from posting further gains. Significant resistance has been formed (9.9250) by the Dec.18 high.
- CAD USD/CAD has moved down to reflect softer USD, in spite of still falling prices for energy and other exports. CAD is expected to underperform in Jan. as data deteriorates more than we’ve seen so far.
- AUD Light data slate in the fortnight ahead except private sector credit and the AiG PMIs. Expect January will bring increased flows to currencies like AUD with 4-handle on yields. 38.2% is at 0.7480.
- NZD No surprises from the 3Q GDP and BoP data. Surveys say expectations have stabilized after three negative GDP quarters but some believe the authorities desire orderly continuation of soft currency.
- MXN USD/MXN will likely trade close to 13.16 (55d ma) until renewed risk seeking behavior pushes the pair lower. MXN should underperform due to reliance on oil and the US economy.
- BRL The macro outlook is beginning to stabilize – despite a substantial sell-off in the BRL. Early in 2009, market conditions could prompt a USD/BRL move to 2.2942 (55d ma).
- ARS Despite more active risk seeking in early 2009, ARS is unlikely to benefit. The default in Ecuador should complicate Argentina’s capital account coincident with a shriveling of commodity exports.
- CLP Chile could benefit from higher metals prices with easier monetary stances around the world. USD/CLP has broken through important tests with potential for a move toward the 595 (50% retracement).
- CNY A drop in October FX reserves, if true, could be due to a combination of capital flow and non-flow factors such as FX valuation changes and will unlikely thwart CNY appreciation going forward.
- KRW Weekly FX swap auction cleared at a substantially lower rate of 2.36%, suggesting ease in USD funding pressure. USD/KRW topside resistance seen at 1,378 (55-day ma).
- TWD Increasing impetus for the CBC to maintain a more competitive local currency in light of record contractions in export orders and IP. USD/TWD biased toward 33.50 in the near term.
- INR Thin liquidity should keep USD/INR volatile towards year end. Seasonally strong inflows into 1Q09 and gradual improvement in risk appetite should support INR recovery towards the 46.0 level.
- HUF Held its own against the EUR and outperformed the other CE3 on the back of the IMF program. Expect this trend to continue, though PLN may outperform in 1H due to earlier ERM2 entry.
- TRY On a tentative lira recovery, the next key support for USD/TRY comes in at 1.449. Yet the TRY remains vulnerable to risk aversion. Expect continued outperformance vs. ZAR on back of likely IMF loan.
- PLN Continued to lose ground versus the other CE-3. While cash flow concerns are rising, the PM’s determination to adopt the euro in 2012 reinforces view for a convergence rally in 1H 2009.
- ZAR USD/ZAR has broken some key support, now targeting 9.15 where both the 100-MA and the 50% Fibonacci level coincide. Yet another bout of risk aversion could take the pair back to the 10.80 level.
Global Currency Overview - 12/26/08
December 26th, 2008 · No Comments
Tags: Forex Trading
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