Asian Highlights – January 3 2012
* Thin Asia markets, with Japan and China still away. EUR/USD started on the defensive, with EUR/AUD hitting new lows and EUR/JPY near its 11-year lows. Concerns whether there will be eurozone break-up in 2012, if 1 or 2 countries will leave euro weighed on EUR/USD at 1.2935-40.
* EUR/AUD hit all time lows around 1.26 lows, as AUD/USD hit highs of 1.0297, up from 1.0238-40. EURUSD then rebounded, as Germans, Europeans banks tripped stops above – triggering short-squeeze as stops hit above 1.2950/1.2980 to 1.2988-90 level. Offers at 1.2980-00 capped the topside. Support at 1.2950 again and then 1.29 lows. Stoploss below 1.2900. Focus on 1-year 3-m lows of 1.2855 – though good to note record EUR shorts as seen in CFTC data – thus the short-squeeze.
* GBP/USD edging up to 1.5557 highs, though EUR/GBP a tad firmer today, from 0.8338 to 0.8360. Offers at 0.8370-90. Focus still on the 11-m lows around 0.83 lows on eurozone concerns.
* USD/JPY markets thin with Japan away, but focus on the 6-week lows around 76.84-86, with the pair trading below 77.00. Speculation that rumoured Kampo/ pension funds bids now lowered to 76.50-60 from 77.00-20. No signs of BoJ/MoF – likely to be cautious about intervention after the US Treasury Criticism on unilateral Japan FX action. Stops below 76.50, offers at 77.10-20.
* EUR/JPY big mover – eye the 11-year lows of 99.30-35, lowest since Dec 14 2000 98.32, as EUR/JPY offered the clear break of 100.00. Focus on 99.00 handle, offers at 99.80-00.
* EUR/CHF at 1.2175-80, some focus on report that wife of SNB chief sold CHF few days before SNB imposed the EUR/CHF floor of 1.2000, CHF devaluation on Sept 6. Though no wrongdoing seen. Talks of huge stoploss below 1.2115/1.2100, good to watch for any SNB rumours again. EUR/CHF eye test of 1.2100 – focus on SNB bids.
* EUR/CHF weighed by eurozone concerns and M.E. geopolitical risks as Iran successfully test-fired missiles. Oil prices firmer on concerns over M.E. tensions. USD/CHF at 0.9385-90. offers at 0.9400-20/0.9450.
* USD INDEX holding just above key 80.000, at 80.074. weighed by firmer EUR, AUD, GBP. Eye test of 80.50/81.00.
News Highlights :
* Daily Mail : Eurozone will start disintegrating this year and will almost certainly collapse within the next decade, a think tank Centre For Economics And Business Research (CEBR) warned.
* Telegraph piece by AEP: The shrinking AAA core will leave Germany propping up the EFSF bail-out fund, until the weight of contingent liabilities endangers Germany itself…. The shrewd, equivocating, ice-cold Chancellor will quietly oust arch-europhile Wolfgang Schauble and let the Project die, always pretending otherwise
* FT : Spain’s new govt warned the latest national budget deficit could exceed last week’s upward revision as it sets the stage for another round of austerity measures.
* Daily Mail: The eurozone looks set to crash back into recession this year after a dismal end to 2011 for its manufacturers. Factory output collapsed in the final quarter of the year as the failure of European leaders to tackle the single currency debt crisis took its toll.
* Sky News: PM David Cameron has pledged to use the “global drama” of the Olympics and the Queen’s Diamond Jubilee to help get Britain back on track. In his New Year message the Prime Minister said: “This will be the year Britain sees the world and the world sees Britain.
* Irish Times : The Coalition will have difficulty in keeping to its promise not to adjust tax bands and credits in Government and will also need to rely on cuts in social protection to provide the “bulk of savings”, troika officials monitoring Ireland’s bailout programme have determined.
* AIG/PriceWaterHouseCoopers PMI rose 2.4pts in Decembe to 50.2, its highest level since June and above the key 50.0.
* Official China PMI for Dec recovered above the key 50.0 level as well, to 50.3. vs 49 in November.
* NKS: METI Yukio Edano said in NKS that keeing TEPCO under long-term government control is not an option, stressing that the aim is to get the utility back on its feet as soon as possible.
* Washington Examiner: The successful test-firing of 2 long-range missiles by Iran’s navy and claims of a breakthrough in the country’s nuclear program have increased the probability that 2012 will see a dangerous showdown between US and its allies and a government in Tehran feeling squeezed by internal and external pressures, analysts said.
* NKS: Japanese banks could face pressure to expand their capital buffers, depending on stress test results to be disclosed as early as this summer by IMF.
* FT : Hedge funds had increased their bets against EUR to a record level in the last week of 2011.
Nikkei and JGBs
Japan markets closed for Exchange Holiday.
