Overnight equity markets
Nikkei -0.70% 9’448.21
S&P500 -1.40% 1’270.98
Dow -1.42% 11’951.90
Nasdaq -1.53% 2’643.73
Overnight ranges
https://ibol81.ibb.ubs.com/fxdesktop/fxd_fxweb/fxwebapp/osrPopup.doA
UBS Investment Bank TRADERS SENTIMENT
…have a look at UBS Investment Bank’s FXWeb for all technical updates
EURUSD Sell rally into 1.4375-80, stop/loss above 1.4450 for test lower
USDCHF Buy the dip 0.8410/20 , stop/loss below 0.8380, targeting 0.8500
EURCHF Sell ahead of 1.2160/80, targeting 1.2050
EURJPY Sell rallies towards 115.80, stop/loss 116.30, targeting 114
USDJPY Buy 80.40, stop/loss 80.10, targeting 81.00
GBPUSD Play the range 1.6180 – 1.6280
EURGBP Sell 0.8860, stop/loss 0.8890, targeting 0.8780
Gold Play the range 1525/45
Silver Buy dips 35.30/50, stop/loss 34.80, targeting 36.80
UBS Morning Adviser/Macro Keys/The week ahead
http://www.easyforexnews.net/wp-content/uploads/2011/06/EMA20110613.pdf
http://www.easyforexnews.net/wp-content/uploads/2011/06/MacroKeys130611.pdf
http://www.easyforexnews.net/wp-content/uploads/2011/06/WA20110610.pdf
Interest Rate Snapshot
EUR: Slow start on the forex forwards side, small interest to buy-sell 2 months euros around this morning driven by trust rolls. Further out the curve is neutral, AUD holiday today which doesn’t help the liquidity in the market either. Eonia fixed at 1.549% last Friday. For today we have ECB’s Trichet and Draghi speaking. Next highlight to watch tomorrows allotment results of the 1 week and 1 month ECB tenders (102bln expiry in 1 week, 80.65bln expiry in 1 months) . We have BOJ policy meeting today and tomorrow the market is expecting BOJ set up new loan facility 1 tril or so especially for venture capital which is a kind of replacement of current loan facility for corporate hence the impact to market liquidity would be limited.
The Day Ahead in EM
Turkey: Current Account balance for April is due at 0700GMT (Previous -$9.8 bn, Bloomberg consensus -$7.6 bn)
Hong Kong: Industrial Production (Previous 5.7%) and PPI (Previous 7.6%) for Q1 are due at 0830GMT.
Mexico: Industrial Production for April is due at 1300GMT (Previous 4.2%, Bloomberg consensus 2.5%)
Brazil: Trade balance (FOB) – weekly till June 12 is due at 1400GMT (Previous $783 mn)
Israel: Trade Balance for May is due (Previous -$1619 mn).
The Week Ahead in EM
EMEA
TRY: Current account (13 Jun: 0700 GMT) (Previous -$9.8 bn, Bloomberg consensus -$7.6bn)
The ruling AKP is expected to win 45-50% of the national vote. Barring a large surprise, though, attention could quickly turn to the current account deficit. An upward surprise could quickly weigh on sentiment. We remain long USDTRY through options.
PLN: CPI (Previous 4.5%, Bloomberg consensus 4.6%), Wages (Previous 5.9%, Bloomberg consensus 5.4%) (15 Jun: 1200 GMT, 16 Jun: 1200 GMT)
The NBP has signalled it will pause at its 6 July meeting, but robust CPI/wage data could generate expectations of a hike and benefit the PLN. We are long PLN vs. EUR and HUF.
ASIA
CNY: Monthly data (Jun 14, 02.00GMT)
This week’s trade data were encouraging, but concern remains regarding the resilience of Chinese growth as well as inflation pressures. We expect little impact on the CNY, which continues on its slow but steady revaluation path.
INR: Policy Rate (June 16, 06.30GMT) (Previous 7.50%, Bloomberg consensus 7.25%)
While growth has moderated, the deterioration in the May trade balance and inertia in a number of inflation indicators are expected to motivate another 25bp hike in policy rates. We are long INRTWD, but will watch the equity market reaction closely.
PHP: Overnight Borrowing Rate (June 16, 08.00GMT) (Previous 4.50%, Bloomberg consensus 4.75%)
UBS looks for a 25bp hike to 4.75%, in line with consensus. We have been sidelined on the PHP recently given lackluster carry and the deteriorating trade balance, though hawkish rhetoric could lend support near term.
LATAM
CLP: Policy rate (June 14, 21.00GMT) (Previous 5.00%, Bloomberg consensus 5.25%)
Our economist expects another 25bp hike, in line with consensus, but sees some risk of a pause on signs of slowing economic activity. We prefer to wait until after the rate decision and China data before deciding whether or not to re-enter CLP longs after taking profit on our CLP vs G2 trade this week.
COP: Policy rate (June 17) (Previous 4.00%, Bloomberg consensus 4.25%)
Most analysts expect another 25bp hike given recent growth and inflation signals. We are bearish on the COP as we see upside somewhat limited by the risk of additional official currency measures.
Gary Dhami
UBS Investment Bank