USD and JPY Rise As Risk Aversion Returns

* The dollar and yen rose against most other key currencies on Monday as risk aversion increased. The OECD stated that the global economic outlook is extremely uncertain and governments still have much work to do to combat the global recession despite huge packages already committed. The Conference Board US leading economic indicator declined slightly more than expected. The Dow fell 289.60 points to 7,841.73 on worries about the economy and the state and cost of banking-sector bailout. The euro fell below the 1.30 support pressured by possible policy difference within the European Central Bank and its slow response to the deepening eurozone recession. Sterling dropped ahead of Wednesday’s UK budget announcement, which may include a provision of ₤60 billion for the UK bank bailout. The Australian and Canadian dollars fell on increased risk aversion and falling commodity prices. The Bank of Canada is likely to maintain its key interest rate at 0.50% on Tuesday. The Australian dollar was pressured by an unexpected decline in PPI increasing speculation of a Reserve Bank of Australia rate cut.

* The USD/JPY fell sharply on surging risk aversion. After breaking the 99-area support, the pair is now testing the diagonal support in the 97 area. If this support is broken, the USD/JPY may fall to the 94 area. Risk sentiment and the development in the stock market are likely to determine the USD/JPY direction.



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Financial and Economic News and Comments

US & Canada

* The Conference Board US leading economic index, measuring economic activity over the next three to six months, fell a slightly more-than-expected 0.3% in March after an upwardly revised 0.2% decline in February, according to data released by the Conference Board. The LEI has not increased since June. The coincident index, measuring current economic activity, was down 0.4%, following February’s downwardly revised 0.6% decrease. The lagging index was also down 0.4%, after February’s upwardly revised 0.3% decline. Europe

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Europe

* UK house prices rose 1.8% m/m in April, a third monthly rise, to £222,077 ($328,000), after a 0.9% m/m increase in March, Rightmove Plc reported. House prices declined 7.3% y/y.

Asia-Pacific

* Australia’s producer prices unexpectedly declined 0.4% q/q in Q1 2009 after a 1.3% q/q increase in Q4 2008, the Australian Bureau of Statistics reported. The producer-price inflation rate was at 4.0% y/y, decelerating from Q4’s 6.4% y/y. The Q1 PPI data gives the Reserve Bank of Australia’s scope to lower interest rates.

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* Japan’s leading economic index was revised down to 75.0 from a preliminarily reported 75.2 for February, final data from the Cabinet Office showed, following 76.7 in January. The coincident index was also revised down to 86.0 from a previously reported 86.8, after January’s 88.6. However, the lagging index was revised up to 90.6 from a preliminarily reported 90.5, but declined from 91.2 in January.

FX Strategy Update



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Источник: Hans Nilsson

20.04.2009