Asian markets traded on a very soft tone as global equities suffered amid renewed fears over the US economy and beyond. The particular weakness in the banking sector also shows investors are not yet convinced funding problems have been resolved. However, macro numbers were the driving force as a toxic mix of higher price pressures and weak employment statistics pointed to stagflation. Continue reading →

The Swiss franc opened on a soft note in Europe as investors began to price in a strengthening in official resolve to combat the currency’s strength. Yesterday afternoon the Swiss government launched a package of measures for industries affected by the exchange rate and also confirmed the SNB’s authority to set a floor on EURCHF single-handedly if it sees fit to do so. However, government consultation will still be needed if the SNB wishes to impose capital controls at some point in the future. Continue reading →

After yesterday’s rather uninspiring performance by the heads of government of France and Germany, investor attention will turn to the Swiss government, along with the SNB, to see whether measures will be announced to counter franc appreciation. Although no specific times or measures have been flagged, press reports point to a possible exchange rate floor. Continue reading →

Risk appetite remained relatively firm during the Asia session as investors look ahead to the Sarkozy-Merkel summit later today for further policy guidance. A Wall Street Journal article published overnight noted that the two countries are being forced to reconsider the possibility of Eurobonds as the prospect of fiscal union moves up the agenda, though political obstacles remain strong and we remain cautious on over-expecting a positive result from today. Continue reading →

After a strong risk rally yesterday, markets drifted off the highs overnight, with the dollar stronger across the board. Price action was relatively subdued however, and we await European trading to better gauge investor sentiment. Yesterday, better-than-expected macro data and improved sentiment towards European financials both contributed. Continue reading →

Markets stabilised overnight after further heavy selling yesterday. The AUD came under pressure after disappointing labour data but soon reversed its losses. Yesterday, increasing stress in the European banking sector together with increased global growth worries, put risk sentiment back under pressure. French industrial output data disappointed. Continue reading →

Markets reacted positively to Tuesday’s FOMC statement. While officials did pledge to use additional policy tools as appropriate and embellished the “exceptionally low” rate commitment to indicate low rates are likely to be warranted “at least through mid-2013″, they also acknowledged increased downside risks to growth. Equity markets initially fell on the dovish outlook but later rallied after the rates commitment. Asian equities rallied and high-beta risk currencies gained, with AUD and NZD in particular recovering some lost ground. EURUSD traded 1.4398-1.4196, USDJPY 77.31-76.71. Continue reading →

Risk aversion rose further Monday in New York in response to Standard and Poor’s downgrade late Friday of the US’s long-term credit rating to AA+ from AAA. Continue reading →

FX markets got off to a shaky start in Asia after Standard and Poor’s downgraded the US long term credit rating from AAA to AA+ late on Friday evening. The outlook is negative and the ratings agency warned that further action could be taken in the next two years. USDCHF fell sharply to a new record low of 0.7480. Continue reading →

USDJPY continued to slip lower during the Asia session, as Japanese officials said they would now like to take some time to assess the impact of yesterday’s intervention. EURUSD traded 1.4055-1.4165, USDJPY 78.43-79.41. Continue reading →

Global risk aversion continued to rise during the Asia session after a day of further sovereign spread widening inside the Eurozone, and a poor session for US stocks. EURUSD traded 1.4162-1.4223 and USDJPY traded 77.01-77.40. Continue reading →