Portfolio

European session FX pre-open

By Francisco Miñana

Date: Friday 06 Jul 2012

European session FX pre-open

This is a foreign exchange (forex) market update at the European session pre-open.

Main headlines:

Three central banks take action in sign of alarm - Reuters

IMF Poised to Cut Global Growth Forecast From April’s 3.5%, Lagarde Says - Bloomberg

Central Banks Deliver Salvo as Growth Weakens - Bloomberg

Spanish, Italian Bonds Slide as ECB Refrains From Non-Standard Measures - FT

June US Job Gain Probably Not Enough to Avert Worst Quarter Since 2010 - Bloomberg

Even a Good Jobs Report Could Put the Fed in Play - CNBC

Slowing emerging markets face debt hangover - FT

Americas wrap up:

Obama Hits China Over Auto Duties - WSJ

Romney campaign's missteps have some Republicans grumbling - Reuters

Retail real estate recovery taking hold: research firm - Reuters

U.S. bankruptcies on pace to fall to pre-2008 level - Reuters

June auto sales point to best year since 2007 - Reuters

JPMorgan Told to Explain Withholding E-Mails - Bloomberg

Amazon Planning Smartphone to Vie With Apple - Bloomberg

Drug war fury awaits Mexico's Peña Nieto - Reuters

Argentina bans buying dollars as a way to save - Reuters

Asia wrap up:

Asia Stocks, Euro Fall on Payroll Data - Bloomberg

China Swaps Fall Most in Month After Rate Cut, Yuan Drops: Shanghai Mover - Bloomberg

Chinese Scholars Call for Revision of One-Child Policy - WSJ

Singh’s Adviser Warns Against Changing Way India Taxes Foreign Investors - Bloomberg

India to give free medicine to millions - FT

Japan PM tells Lagarde Europe woes, yen rise hurting economy - Reuters

Japan Could Run Out of Cash by October: Minister - CNBC

Fukushima Disaster Was Man-Made, Probe Finds - Bloomberg

Samsung Shares Drop, Q2 Sales Miss Estimates - Bloomberg

Temasek warns of investment volatility - FT

European preview:

Greece drops demand to ease bailout terms - FT

Wealthy hit hardest as France raises taxes - FT

Ireland Hails T-Bill Sale as Milestone - WSJ

Euro Set for Week Loss Before Factory Data That May Add to Slowdown Signs - Bloomberg

Euro the big loser after central banks intervene - FT

Euro-Zone Shark Still Has Its Appetite - WSJ

Statoil Threatens to Shut Norway's Oil Production - WSJ

Denmark Central Bank Cuts Interest Rates - WSJ

Forex action

EUR: The euro crosses move sideways after yesterday’s deep losses. As expected the ECB cut its interest rates by 25 basis points. Deposit rates were brought to zero while Draghi talked down sovereign debt purchases. EUR-USD inches a little bit higher respecting the support zone close to 1.2360. EUR-JPY trades now below 99.

GBP: The sterling crosses followed the euro down on the day that the BOE increased its asset purchase programme by £50bn. Cable holds above the 1.5500 support area, while GBP-JPY trades close to 123.80. EUR-GBP is still moving below the 0.8000 psychological zone.

CHF: Euro weakness hit the Swiss trade yesterday. USD-CHF rallied past the 0.9600 resistance level and reached recent highs at 0.97170. The key 0.97360 resistance zone is at sight. Meanwhile we saw few changes in the EUR-CHF that shows its familiar stickiness close to the 1.2000 floor that the SNB is determined to defend.

Nordics: The NOK is lagging behind the SEK that continues to show its strength across the board. Lack of action by the Riksbank helped the EUR-SEK to break the 8.70 support level and reach a 12 year minimum. The NOK is weaker when compared to the SEK. Norway’s Statoil employees strike is also taking its toll on the NOK.

USD & JPY: The greenback and the yen gained after yesterday’s central banks decisions. USD-JPY is capped by the 80 resistance zone. Volatility could be the name of the game. Non-farm payrolls in the US are expected for today. Labour data could exacerbate the above mentioned volatility.

CAD, AUD & NZD: The three dollars consolidate after yesterday’s rally due to new monetary stimuli in China. AUD, NZD and CAD reached recent monthly highs against the USD and the JPY. AUD-USD retraces after breaching the 1.03 resistance zone. Meanwhile, USD-CAD takes a pause on its way towards the parity zone. The cross has found an important hurdle in the 1.0100 support area.

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