Overnight equity markets
Nikkei -0.43% 9’620.82
S&P500 +0.88% 1’340.68
Dow +0.65% 12’560.18
Nasdaq +1.14% 2’815.00
Overnight ranges
https://ibol81.ibb.ubs.com/fxdesktop/fxd_fxweb/fxwebapp/osrPopup.do
UBS Morning Adviser/Macro Keys/Swiss Daily Economic Comment
http://www.easyforexnews.net/uploads/2011/05/EMA20110519.pdf
http://www.easyforexnews.net/uploads/2011/05/MacroKeys190511.pdf
http://www.easyforexnews.net/uploads/2011/05/sd110519.pdf
Interest Rate Snapshot
Obviously the FED minutes the main event overnight, the minutes shed little new light on Fed policy except when it came to the discussion on exit strategy. So the bottom line here and the sequence might be as follows: Stop easing (end of QE2 and no QE3), Maintain size of the balance sheet for a “while”, then start tightening (begin normalisation process), Stop reinvesting principal payments from agent securities, Stop reinvesting principal payments from Treasury Securities, Begin conducting regular reverse repo and term deposit operations, Change the statements forward-looking language (drop “extended period”), Raise the Fed funds target range and the IOER rate and last but not least Start selling assets! From a timing point of view that might take longer than some expect in the market, there is much to do here, we shall see! Treasuries and futures a tad lower on the back of it but nothing significant. Bund futures will open 23 tics lower at 124.08, still in a bullish mode while trading above 123.82, buy the dip for a break through 124.63 which will trigger a rally up to 125.12 followed by 125.58.
UBS Investment Bank TRADERS SENTIMENT
…have a look at UBS Investment Bank’s FXWeb for all technical updates
EURUSD buy the dips 1.4220-40 sl 1.4170 for test above 1.4340
USDCHF should be toppy now 0.8810/20. sell there with an eye on next support at 0.8705/10
EURCHF play 1.2520 – 90 range
EURJPY prefer to sell ahed of 116.80 for a test back towrds 115.50, stops above 117.20
USDJPY buy here at 81.70 and add at 82.30 , stop 80.90, target 82.80
GBPUSD sell into 1.6200, target 1.6120 and a stop above 1.6240
EURGBP buy the dip 0.8810 target 0.8880, stop below 0.8770
Gold play a 1485-1505 range
Silver sell rallies 36.00/36.30, s/l 37.00, target 34.40
The Day Ahead in EM
Hong Kong: Unemployment rate for April is due at 0830GMT (previous 3.4%, Bloomberg consensus 3.3%), also its Composite interest rate for April is due (previous 0.24%).
Taiwan: GDP- constant price for Q1 is due at 0900GMT (previous 6.19%, Bloomberg consensus 6.20%).
Philippines: Balance of payments for April is due (previous $2020 mn).
Russia: Gold and FX reserve till May 13 is due (previous $524.7 bn).
Mexico: Global economic indicator IGAE for March (previous 4.66%, Bloomberg consensus 4.30%) and GDP constant for Q1 (previous 4.6%, Bloomberg consensus 5.0%) are due at 1300GMT.
Colombia: Industrial production (previous 2.4%, Bloomberg consensus 2.9%) and Retail sales (previous 13.2%, Bloomberg consensus 12.5%) for March are due at 2100GMT.
Gary Dhami,
UBS Investment Bank