Monday, 26 October 2009

Rest of the week

The risk-seekers wheeled out fresh funds to plow into the market on Friday, with rather predictable results across markets: stocks and commodities up and bonds down. This translated to USD and JPY falling in the currency market, and the commodity currencies, Scandies and Euro catching a bid. While the response is no surprise, it is perhaps worth noting that the response in the USD is weaker than it has been in the past. For example, the S&P500 peaked at around 90 in early June, when EURUSD peaked out around 1.4335. Now we've seen a spectacular 19% rally from the July trough to current levels over 1025 and the EURUSD is trading at about the same level. The more risk-loving AUD has been a stronger performer, but is still up less than 2% above it's June high despite the massive rally in stocks. For Aussie, it is clear that an interruption in the former Chinese equity market parabola on all of the troubling rumblings about a potential Chinese asset bubble and the authorities attempts to deal with it, have dampened enthusiasm somewhat. Still, the bulls are still trying to bid the currency up for new highs versus the market since the mid-August peak and possibly challenge the pivotal 0.8500/20 area.

This week's economic calendar is relatively light. The highlights this week include the US confidence numbers on Tuesday and Friday and the German IFO on Wednesday. Here's a brief run-down of the salient events for the rest of the week:

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