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Friday, February 4, 2011
Euro drops sharply as ECB dampens rate hike hope
Time All Day 17:00 17:00 18:30 18:30 18:30 20:00
Trichet: inflation expectations remain firmly anchored
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Events
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NZD NZD AUD EUR GBP EUR EUR USD USD USD USD USD
Employment Change q/q Unemployment Rate Trade Balance Final Services PMI Services PMI Retail Sales m/m Minimum Bid Rate Unemployment Claims Prelim Nonfarm Productivity q/q Prelim Unit Labor Costs q/q ISM Non-Manufacturing PMI Factory Orders m/m
-0.5% 6.8% 1.98B 55.9 54.5 -0.6% 1.00% 415K 2.6% -0.6% 59.4 0.2%
0.2% 6.5% 1.63B 55.2 51.2 0.6% 1.00% 420K 2.1% 0.4% 57.2 -0.2%
1.0% 6.4% 2.08B 55.2 49.7 -0.3% 1.00% 457K 2.4% -0.1% 57.1 1.3%
NEW YORK: The euro fell broadly on Thursday and could extend weakness after European Central Bank President Jean-Claude Trichet threw cold water on market expectations euro-zone interest rates would rise anytime soon. Trichet, speaking after the ECB's decision to keep interest rates at a record low 1 per cent as expected, said euro-zone inflation expectations remain "firmly anchored" and inflationary pressures over the medium to long term "should remain contained." His comments disappointed investors who had expected a more hawkish statement after recent inflation data came in above forecast. Expectations the ECB would lift interest rates sooner than the Federal Reserve had boosted the euro recent weeks. The euro fell nearly 2 cents on the day
to near $1.36, moving further away from a 12-week high of $1.3862 set on Wednesday. Key support now lies at $1.3570, this week's low, and a break would open the door for a slide below $1.35. "Trichet failed to deliver on expectations for a hawkish statement," said R i c h a r d Franulovich, senior currency strategist at Westpac in New York. "He merely repeated what he said in January, which is that inflation risks are balanced but could move to the upside. The markets were clearly looking for something more aggressive than that." The euro fell as low as $1.3616 on trad-
ing platform EBS and was last at $1.3645, down 1.1 per cent. Interest rate futures imply an 80 per cent chance of a 25 basis point rate
increase by August. Before the meeting, the market was fully pricing in a rate hike by then. The euro lost 1.2 per cent to 111.24 yen. It also traded sharply lower versus the Swiss franc and sterling. Adding to broad strength in the dollar was data showing the US services sector
Indian rupee ends steady; outlook ranged MUMBAI: The rupee ended little changed on Thursday with support from upbeat domestic shares, but dollar demand from oil importers prevented gains in the local unit. The partially convertible rupee ended at 45.60/61 per dollar, little changed from 45.62/63 per dollar at close on Wednesday. It had fallen to 45.65 in early trade. "The Sensex was strong today and the trade deficit figure also is good for rupee, but crude and inflation figure is worrying and so it seems that the market is confused," said Hari Chandramgathan, a senior foreign exchange dealer with Federal Bank. Bargain hunting lifted Indian shares for a second day on Thursday after the
market had skidded more than 12 per cent since the start of January, but traders said the bounce may be short-lived on risk averse global sentiment. India's food inflation accelerated for the second straight week on rising prices of onions and petrol, while trade deficit in December narrowed to $2.6 billion in December compared with $8.9 billion in November. "The December trade data was a huge positive. Now the question is whether it sustains or not," said Ananth Narayan G., head of fixed income, currencies and commodities South Asia at Standard Chartered Bank. Dealers said they expected the rupee to remain rangebound in the near term. "I expect the rupee to trade in
a range of 45.40/46.20 during this month," Chandramgathan of Federal Bank said. Foreign investors have pulled out $1.5 billion from Indian shares since the start of January following high inflation and rate increases. One-month offshore nondeliverable forward contracts were quoted at 46.77, weaker than the onshore spot rate, indicating a bearish outlook for the rupee. In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange was at 45.7875 per dollar while those on MCX-SX and United Stock Exchange ended at 45.79. Total traded volume was $4.4 billion. -Reuters
Sterling pares gains vs dlr, driven by weaker euro LONDON: Sterling pared gains versus the dollar on Thursday in a move driven largely by a sharp drop in the euro after European Central Bank President JeanClaude Trichet dampened expectations for a rate hike in the eurozone. Trichet's comments, which came after the ECB's decision to keep interest rates at a record low 1 per cent as expected, disappointed investors who had expected a more hawkish statement after recent inflation data came in above forecast. The pound had risen to a threemonth high versus the dollar in morning trade after UK services PMI data came in above expectations, bolstering the case for higher interest rates in the UK. The euro traded down around one per cent at a two-week low of 84.39 pence, falling below its 200-day moving average around 84.56. "Cable has been dragged lower by a fall in euro/dollar this after-
noon, but we expect it to remain well bid. Our year-end target is $1.70," said Chris Turner, head of currency strategy at ING Capital Markets. Sterling traded down around 0.3 per cent at $1.6140 in afternoon dealing after rising as high as $1.6279 on the UK PMI data. "We see further modest upside potential toward the mid $1.60s based on the BoE following through with a rate hike, possi-
also showed a record jump in input cost inflation in the services sector, which is likely to worry Bank of England policymakers who hold their rate-setting meeting next week. "We would hesitate at this stage to say that the recovery is back on track. With so much uncertainty about the underlying pace of growth, we still doubt that the MPC will want to risk tightening policy prematurely." said Vicky Redwood, Senior UK Economist at C a p i t a l Economics. Implied interest rate futures based on overnight index swaps were almost fully priced for a 25 basis point rate rise in May, up from around 40 per cent last week after a shock 0.5 per cent contraction in UK fourth quarter gross domestic product. Markets are also pricing in an 18 per cent chance that the BoE will hike rates as early as next week. -Reuters
Top Economic Events Events Bank Holiday Employment Change Unemployment Rate Non-Farm Employment Change Unemployment Rate Average Hourly Earnings m/m Ivey PMI
Forecast 18.9K 7.6% 138K 9.5% 0.2% 53.4
Previous 22.0K 7.6% 103K 9.4% 0.1% 50.0
Previous Day
grew in January at its fastest pace since August 2005 while new US claims for unemployment benefits fell sharply last week. US short-term interest rates futures suggest traders have raised their expectations that the Fed could raise rates at the end of the year in a bid to keep a lid on inflation. Investors' attention now shifts to Federal Reserve Chairman Ben Bernanke, who is due to speak at 1730 GMT. Some traders said the euro could rebound if Bernanke reaffirms the Fed's focus on boosting growth. The US government will release January nonfarm payrolls data on Friday. The dollar was last little changed at 81.58 yen, while an index of the dollar versus a basket of six currencies, rose 0.7 per cent to 77.689, rebounding from a 12-week low of 76.881 set on Wednesday. -Reuters
Rouble at new 9-mth high as oil tops $103 MOSCOW: The rouble hit a fresh nine-month peak against the dollar on Thursday as oil rose to its highest level since September 2008, potentially boosting revenue for the world's biggest crude producer. The Russian currency closed 8 kopecks firmer at 29.38 per dollar, having earlier hit 29.27 -- its strongest since May 2010. Versus the euro, the rouble appreciated 51 kopecks, or 1.3 per cent -- its biggest one-day gain in nearly nine months -- to hit a two-week peak of 40.16. The move came as Brent crude prices rose 0.7 per cent to top $103 after violent clashes in Egypt raised concern about supply disruptions and unrest across the Middle East. Analysts said an outflow of capital in January, which had balanced the effect of high oil prices, appeared to have subsided. Exporters also appeared to have stepped up rouble purchases, they said. "It seems that the market has returned to its normal state for such a high oil price," said Anton Nikitin, an analyst at Renaissance Capital. "Exporters have come back to life, money from non-residents has begun to flow and the seasonal outflow of capital, tradi-
Source CNY CAD CAD USD USD USD CAD
tional for January, has ended." The rouble's seven day correlation with Brent was at its strongest since mid-January, according to Reuters data, with higher oil prices pushing up the Russian unit versus the dollar with a 63 per cent probability. "The main driver is the oil price, but the investment and speculative interest in Russia may also come as an alternative to Middle East markets where the situation is tense," said a dealer at a major Western bank in Moscow. Versus the euro-dollar basket, used by the central bank to monitor the exchange rate, the rouble gained 27 kopecks to 34.22 - its strongest since August 2010, and entering the territory where the central bank carries out small-scale daily sales of dollars to smooth out currency market volatility. "Real rather than speculative currency flows have begun to dominate, which is having a positive effect," said Maria Pomelnikova, an analyst at Trust bank. "This may be due to an increase in the flow of export revenues and a fall in capital outflow," she said. Most analysts agree that Russia's economic fundamentals support further rouble appreciation in the medium term. -Reuters
Swissie falls vs dlr, euro ahead of ECB, Fed
Currencies Rate Name EUR-USD USD-CHF GBP-USD USD-CAD AUD-USD EUR-JPY EUR-GBP EUR-CHF GBP-JPY CHF-JPY Gold
Bid 1.3647 0.9489 1.6160 0.9883 1.0113 111.6000 0.8444 1.2946 132.2700 86.2100 1332.4300
As per 22.00 PST Ask High 1.3649 1.3828 0.9493 0.9496 1.6163 1.6277 0.9888 0.9896 1.0115 1.0141 111.6400 112.8300 0.8448 0.8531 1.2951 1.3036 132.3300 132.9300 86.2600 86.8400 1333.1000 1337.6500
Low 1.3646 0.9397 1.6157 0.9867 1.0091 111.6200 0.8442 1.2944 132.0000 86.1900 1327.9800
London Inter Bank Offered Rates (LIBOR) Karachi: The following are the London Inter-Bank Offered Rates (LIBOR). British Members Association Interest Settlement Rates. AT 11:00 LONDON TIME 03/02/2011 A USD GBP CAD EUR JPY O/N 0.23700 0.55688 0.95917 0.48125 SN 0.11063 1WK 0.25300 0.57313 1.00083 0.81250 0.11750 2WK 0.25800 0.57813 1.03667 0.83750 0.11813 1MO 0.26300 0.60438 1.08000 0.84938 0.13000 2MO 0.28750 0.67188 1.14917 0.90750 0.15563 3MO 0.31050 0.79063 1.21000 1.03250 0.19000 4MO 0.34950 0.87063 1.27833 1.09500 0.24438 5MO 0.40800 0.97438 1.34083 1.17875 0.30125 6MO 0.46125 1.09250 1.40917 1.27125 0.34625 7MO 0.51400 1.16975 1.49417 1.32625 0.39500 8MO 0.56600 1.25500 1.56750 1.38688 0.44313 9MO 0.62200 1.33813 1.63000 1.44125 0.48750 10MO 0.67500 1.41688 1.72250 1.49125 0.51438 11MO 0.72875 1.48500 1.80583 1.54125 0.54125 12MO 0.78860 1.55475 1.89917 1.60125 0.56750
Major Central Banks Overview Central Bank
Next Meeting
Bank of Canada March 1, 2011 Bank of England February 10, 2011 Bank of Japan February 14, 2011 European Central Bank March 3, 2011 Federal Reserve March 15, 2011 Swiss National Bank March 17, 2011 The Reserve Bank of Australia March 1, 2011
Last Change September 8, 2010 March 5, 2009 December 19, 2008 May 7, 2009 December 16, 2008 March 12, 2009 November 2, 2010
Current Interest Rate 1% 0.50% 0.10% 1% 0.25% 0.25% 4.75%
Division of National Bank of Pakistan (NBP) KARACHI, February 03,2011 Treasury Management Division of National Bank of Pakistan (NBP) Monday issued the following Exchange rates: Countries Selling Buying Buying TT & OD TT Clean OD/T.CHQ U.S.A. U.K. EURO CANADA SWITZERLAND AUSTRALIA SWEDEN JAPAN NORWAY SINGAPORE DENMARK SAUDI ARABIA HONG KONG CHINA KUWAIT MALAYSIA NEW ZEALAND QATAR U.A.E. KR WON THAILAND
85.65 138.62 118.10 86.68 91.07 86.47 13.33 1.05 14.96 67.25 15.84 22.84 11.00 13.06 306.17 28.14 66.10 23.52 23.32 0.08 2.77
85.45 138.30 117.83 86.48 90.86 86.27 13.29 1.05 14.93 67.10 15.81 22.79 10.97 13.03 305.45 28.08 65.95 23.47 23.26 0.08 2.77
85.27 137.98 117.54 86.25 90.62 86.04 13.26 1.04 14.89 66.92 15.76 22.73 10.94 13.00 304.65 28.00 65.78 23.40 23.20 0.08 2.76
ZURICH: The Swiss franc fell no surprise that markets and we against the euro and the dollar on are focusing on the Swiss franc Thursday as traders stayed cau- money market rates for now," tious ahead of speeches from the said UBS economist Reto Revaluation Rates heads of the European Central Huenerwadel in a research note. Treasury Bills / PIBs / FIBs Holding Applicable for February 03, 2011 KASB BMA ELXIR GSL ICSL JSCM AvgRate "From a low of around 60 Bank and the US Federal 12.35 12.30 12.30 12.20 12.65 12.35 12.36 basis points in the one-year, the 0-7days Reserve later in the day. 8-15dys 12.65 12.60 12.60 12.60 12.75 12.65 12.64 The euro could gain even more euro franc spread more than dou- 16-30dys 12.70 12.80 12.80 12.70 12.90 12.85 12.79 if Federal Reserve Chairman bled to close to 130 basis points 31-60dys 13.10 13.10 13.08 13.08 13.20 13.15 13.12 in early '11," Huenerwadel said. 61-90dys 13.37 13.35 13.38 13.38 13.38 13.38 13.37 Ben Bernanke, who is due to 13.50 13.50 13.45 13.50 13.50 13.50 13.49 Nonetheless, he said the 91-120dys speak only a few hours after 121-180dys 13.52 13.56 13.54 13.61 13.55 13.58 13.56 ECB chief Jean-Claude Trichet, spread did not look sustainable 181-270dys bly as early as May," said Lee 13.60 13.65 13.66 13.70 13.65 13.65 13.65 reaffirms that the bank's policy is in the longer term. A decline in 271-365dys Hardman, currency strategist at 13.75 13.70 13.76 13.74 13.75 13.75 13.74 14.08 14.10 14.10 14.00 14.05 14.00 14.06 still focusing on boosting the spread will make the euro 2-- years BTM-UFJ. 3-years 14.18 14.25 14.23 14.23 14.22 14.22 14.22 less attractive against the franc. growth. Activity in Britain's dominant 4-- years 14.18 14.25 14.24 14.25 14.22 14.20 14.22 The franc was 0.2 per cent 5-- years Spain is set to auction 3 to 4 services sector expanded at its 14.22 14.28 14.26 14.26 14.23 14.23 14.25 fastest pace in eight months in billion euros of 2013 and 2016 lower against the euro compared 6-- years 14.23 14.30 14.29 14.28 14.30 14.27 14.28 to the New York close, trading at 7-years 14.24 14.30 14.32 14.30 14.35 14.33 14.31 January as business recovered bonds, and strong demand for 8-- years 14.25 14.25 14.25 14.30 14.23 14.26 14.26 1.3000 francs per euro at 0813 after December's snow disrupthe issues could give a further 9-- years 14.26 14.15 14.19 14.20 14.20 14.21 14.20 tion. boost to the euro as fears of dete- GMT. The franc fell 0.2 per cent 10--years 14.27 14.27 14.27 14.29 14.25 14.29 14.27 Thursday's purchasing man14.60 14.45 14.60 14.65 14.55 14.70 14.59 rioration in the euro-zone debt against the dollar to 0.942 francs 15--years per dollar. -Reuters 20--years 14.80 14.60 14.75 14.90 14.75 14.85 14.78 agers' survey from Markit/CIPS crisis ease. The franc has come under pressure against the euro lately as the spread of short money EUR/GBP market rates widened with Period AUD/USD EUR/CHF EUR/JPY EUR/USD GBP/USD NZD/USD USD/CAD USD/CHF respect to the single currency, increasing the relative attractive- 1 week -0.51 0.23 0.48 -0.02 -0.69 -0.79 -0.45 0.81 ness of the euro. 1 month 0.30 0.46 0.75 0.84 0.37 0.48 0.60 -0.91 "With the ECB decision forth3 months 0.50 0.33 0.54 0.76 0.36 0.56 0.05 -0.39 SYDNEY/WELLINGTON: The Australian more clues on the bank's assessment of the glob0.69 0.32 0.71 0.93 0.54 0.62 -0.44 -0.69 dollar was boosted by stronger-than-expected al economy and its reaction to lower-than- coming and following the latest 6 months 'hawkish' comments from vari1 year 0.18 0.60 0.78 0.69 0.00 -0.02 -0.20 -0.01 trade numbers on Thursday, a big positive for expected local inflation. ous ECB members, it comes as 2 years -0.32 0.67 0.65 0.54 -0.05 -0.32 0.41 0.20 Support is now seen from $1.0053 with a the economy and a stark contrast to its New Zealand neighbour which shed half a cent on stronger bulwark set just below parity, while on Karachi Inter Bank Offered Rates (KIBOR) Thursday following a surprise jump in unem- the topside resistance begins at $1.0152 ahead of Karachi: The following are the Karachi Inter-Bank Offered Rates (KIBOR)03/02/2011 $1.0183. ployment. 1WEEK 2 WEEK 1 MONTH 3 MONTH 6 MONTH 9 MONTH 1YEAR 2YEARS The New Zealand dollar recouped some losses The Australian dollar edged up at $1.0104, off BID ASK BID ASK BID ASK BID ASK BID ASK BID ASK BID ASK BID ASK an overnight low of $1.0055. It hit a session high after diving more than half a cent to a session 12.60 13.10 13.30 13.55 13.60 13.85 13.70 14.20 13.80 14.30 14.00 14.50 of $1.0122 when trade data showed a surplus of low of $0.7716 following poor jobs data on ABLN 12.10 12.60 12.25 12.75 A$1.98 billion in December against a forecast of Thursday. The unemployment rate jumped to 6.8 JSBL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 A$1.6 billion. Australia boasted its ninth straight per cent, against an expectation of an unchanged ASPK 12.00 12.50 12.40 12.90 12.65 13.15 13.30 13.55 13.50 13.75 13.60 14.10 13.75 14.25 13.80 14.30 month of sizable trade surpluses as demand from at 6.4 per cent, as jobs were shed amid a slug- CIPK 12.20 12.70 12.40 12.90 12.55 13.05 13.40 13.65 13.60 13.85 13.80 14.30 13.90 14.40 14.10 14.60 China kept key commodity prices at dizzying gish recovery. 12.70 13.20 13.30 13.55 13.50 13.75 13.55 14.05 13.65 14.15 13.80 14.30 The kiwi, which traded around $0.7725 in late DBPK 12.40 12.90 12.65 13.15 heights, while dire weather had less impact on 12.70 13.20 13.45 13.70 13.60 13.85 13.70 14.20 13.85 14.35 13.90 14.40 session, had struck a two-month high of $0.7825 FBPK 12.05 12.55 12.35 12.85 shipments than feared. The Aussie also received a boost from build- on the back of a commodity price rally on FLAH 12.25 12.75 12.50 13.00 12.75 13.25 13.40 13.65 13.50 13.75 13.60 14.10 13.75 14.25 13.90 14.40 ing approvals, which showed a big jump of 8.7 Wednesday. HBPK 12.10 12.60 12.40 12.90 12.75 13.25 13.40 13.65 13.55 13.80 13.70 14.20 13.80 14.30 13.90 14.40 After breaking through support at $0.7744, the HKBP 12.10 12.60 12.40 12.90 per cent in December, beating a forecast of 1.8 12.75 13.25 13.40 13.65 13.55 13.80 13.65 14.15 13.80 14.30 13.90 14.40 per cent. "We've seen better economic data by kiwi base was now seen at $0.7700 with initial NIPK 12.10 12.60 12.50 13.00 12.90 13.40 13.30 13.55 13.40 13.65 13.50 14.00 13.60 14.10 13.70 14.20 way of building approvals and that seems to resistance at Wednesday's high. 12.85 13.35 13.40 13.65 13.50 13.75 13.60 14.10 13.70 14.20 13.80 14.30 Against the euro, the NZ dollar fell to HMBP 12.25 12.75 12.60 13.10 have buoyed the Australian dollar," said Gavin 12.75 13.25 13.30 13.55 13.50 13.75 13.50 14.00 13.75 14.25 13.85 14.35 Stacey, head of Australia and New Zealand NZ$1.7857 from NZ$1.7730 before the data. SAMB 11.90 12.40 12.30 12.80 The kiwi also weakened against the yen after the MCBK 11.90 12.40 12.30 12.80 research at Barclays Capital. 12.60 13.10 13.40 13.65 13.50 13.75 13.60 14.10 13.70 14.20 13.80 14.30 "The market has taken a positive cue from disappointing job data. NBPK 12.00 12.50 12.25 12.75 12.50 13.00 13.40 13.65 13.50 13.75 13.70 14.20 13.80 14.30 13.90 14.40 Market pricing for the next rate hike was those events." SCPK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Financial markets will now focus on the pushed back to October, as implied probability 12.70 13.20 13.40 13.65 13.55 13.80 13.65 14.15 13.80 14.30 13.90 14.40 Reserve Bank of Australia's quarterly monetary for July fell to 44 per cent and September to UBPL 11.80 12.30 12.40 12.90 AVE 12.08 12.58 12.39 12.89 12.70 13.20 13.38 13.63 13.52 13.77 13.64 14.14 13.77 14.27 13.87 14.37 policy due on Friday. Investors will look for about 88 per cent from fully priced. -Reuters
Aussie lifted by solid trade, kiwi hit by jobless
Currencies Correlation