FX Weekly: 9th January 2012

• Oil and Gold again the volatility leaders

• Market tension continues strongly into 2012 as European debt, US fiscal health, Chinese growth and geo-political tensions in the Middle-East lead the market themes

• The EUR directed focus last week but it was the high-beta currencies that were the weakest performers overnight after Sunday’s market open

• Over the past six weeks USD is higher against the Euro and down against JPY, but it has fallen against the higher yielding commodity currencies

• This week’s macro calendar centres more on Europe and China than the US

FX Weekly: 12th December 2011

• FX space largely unchanged last week as all currency pairs posted ±1% change against other G20 counterparts

• Gold prices were a shade lower, meeting strong support around $1670 per troy ounce

• Short-term, traders remain sceptical as to whether we have seen enough to reverse the crisis of confidence in the Euro-zone. Chances of an IMF program for either/both Italy and Spain has increased with news of an additional €200bn IMF fund

• Domestic demand is slowing in China as well as globally – prime data out this week could be the most market moving FX theme in the absence of revelations in Europe

FX Weekly: 5th December 2011

• Oil and Gold remain the most volatile contracts as risk tolerance reversed course. Commodity currencies and Scandies were the pack leaders last week in G20 FX – most strength seen against USD and JPY

• ECB expected to cut interest rates again (Thu) and provide additional liquidity. Political progress also a key focus – full fiscal union would be hugely EUR/USD positive

• Periodic Chinese activity data could be crucial if global economic slowdown is worse than feared

• On the political front, near-term focus is on Italy’s reform agenda to be unveiled today and on the new Spanish government’s program once it takes office on December 22nd

• Multiple central bank meetings coming up: RBA and BoC on Tuesday, followed by RBNZ, BoE and ECB on Thursday. The RBA could be market moving because a cut is fully priced but the bank may not ease so soon after its previous move