FOREX: Is the British Pound Replacing Swiss Franc as the Anti-Euro?
By Ilya Spivak, Currency Strategist
26 September 2011 06:51 GMT
Talking Points
- US Dollar, Japanese Yen Ride Safety Demand as Stocks Slump in Asia
- British Pound Appears to be Replacing Swiss Franc as the Anti-Euro
- German IFO Report to Pass Unnoticed Barring Surprise to the Upside
- US Data May Offer Hope to Risky Assets, Dallas Fed Gauge in Focus
The US Dollar and Japanese Yen
continued to outperform on the back of safe-haven demand as stocks
slumped in overnight trade, with the MSCI Asia Pacific regional equity
index down over 2 percent to the lowest level in over a year. News wires
cited lingering EU debt crisis fears as the key driver of the selloff,
but we suspect the intensity of the move lower had at least as much to
do with the reopening of Japanese exchanges that were closed for the
Autumn Equinox on Friday and so didn’t give traders a chance to price in
Thursday’s sharp Wall Street slump until today. Curiously, the British Pound is following safety-linked currencies higher, suggesting traders are turning to Sterling as a replacement for the Swiss Franc in the role of regional alternative to the Euro.
The German IFO Survey
of business confidence headlines the economic calendar in European
hours, with expectations calling for sentiment to sour for the seventh
consecutive month to hit the lowest level since July 2009. While the
reading is far from encouraging, the down trend in the IFO gauge is
certainly nothing new or surprising for market participants. With this
in mind, the report’s identifiable near-term market-moving potential
seems to rest in its ability to surprise to the upside. Otherwise, with
the Euro already on the defensive amid renewed risk aversion heading into the European session, the data may pass largely unnoticed.
Indeed, S&P 500 stock index futures
have erased earlier gains to trade down by nearly a full percentage
point ahead of the opening bell on European exchanges, hinting that the
US Dollar and Japanese Yen are likely to continue to advance against
their major counterparts. If the sellers’ focus remains on Euro Zone
debt troubles, the same probably holds true for the British Pound. The
spotlight will turn to leading US economic data in the afternoon, with
the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Activity Survey
on tap. The latter gauge is more timely – reporting on September data
while the former gives a reading for August – and so seems likely to
generate more attention. This seems to suggest that risky assets may get
a bit of a respite in North American trade considering the Dallas Fed
reading is expected to improve a bit having slumped in the previous
month.
Asia Session: What Happened
|
GMT
|
CCY
|
EVENT
|
ACT
|
EXP
|
PREV
|
|
21:45
|
NZD
|
Trade Balance (NZ$) (AUG)
|
-641M
|
-321M
|
111M (R-)
|
|
21:45
|
NZD
|
Exports (NZ$) (AUG)
|
3.44B
|
3.44B
|
3.72B
|
|
21:45
|
NZD
|
Imports (NZ$) (AUG)
|
4.08B
|
3.78B
|
3.61B (R+)
|
|
21:45
|
NZD
|
Total Trade Balance YTD (NZ$) (AUG)
|
1084M
|
1400M
|
1295M (R-)
|
Euro Session: What to Expect
|
GMT
|
CCY
|
EVENT
|
EXP
|
PREV
|
IMPACT
|
|
8:00
|
EUR
|
German IFO - Business Climate (SEP)
|
106.5
|
108.7
|
Medium
|
|
8:00
|
EUR
|
German IFO - Current Assessment (SEP)
|
115.7
|
118.1
|
Medium
|
|
8:00
|
EUR
|
German IFO – Expectations (SEP)
|
97.3
|
100.1
|
Medium
|
|
8:00
|
EUR
|
Italian Consumer Confidence Index s.a. (SEP)
|
98.5
|
100.3
|
Low
|
Critical Levels
|
CCY
|
SUPPORT
|
RESISTANCE
|
|
EURUSD
|
1.3199
|
1.3535
|
|
GBPUSD
|
1.5358
|
1.5517
|
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To receive future articles by email, please contact Ilya at ispivak@dailyfx.com
DailyFX provides forex news on the economic reports and political events that influence the currency market.
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26 September 2011 06:51 GMT
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