* 27 Oct 11: 02:04 GMT (SGA) - FX NOW! EUR/USD FLOWS: Comments from Sarkozy sees EUR challenging the 1.4000 handle...
says that Europe had adopted a credible and ambitious response to the debt crisis and private sector participation will allow Greek debt to be reduced to 120% of GDP in 2020. Private holders of Greek debt have renounced 50% of its value and agreement on EFSF will leveraged it by 4 to 5 times. Agreement with the private sector is voluntary and default is excluded. China could pariticpate in EFSF
Two of the 3 tenets of Eurozone rescue plan are now addressed for and EUR is seen challenging the 1.4000 handle at time of writing. While option barriers are sighted, prices are too close not for stops hunters to make a run above. Stops are sighted at 1.4010-20 levels, C.L
* 27 Oct 11: 01:31 GMT (SGA) - FX NOW! EUR/USD FLOWS: EU leaders are close to a deal for 50% haircut on Greek debt...
..according to Reuters. EUR jumps from 1.3920 levels to above 1.3950. 1.4000 option barriers are eyed. C.L
* 27 Oct 11: 01:24 GMT (SGA) - FX NOW! EUR/USD, EUR/SGD FLOWS: EU banks will be forced to find about 106bn of extra capital
FT: Europe's banks will be forced to find about EUR 106bn of extra capital by the end of June, under a mandatory scheme agreed by European Union leaders. A recapitalisation plan overseen by the European Banking Authority will require around 70 banks to meet a higher 9 per cent threshold of the "highest quality capital", after revaluing sovereign debt at market rate.
Of the €106bn capital shortfall identified, EUR 79bn is attributable to the eurozone's so-called "peripheral" economies, with Greece (EUR 30bn) and Spain (EUR 26.2bn) topping the list, followed by Italy (EUR 14.7bn) and Portugal (EUR 7.8bn). Most of the capital required in Greece and Portugal is already covered by existing bailout programmes.
France has an EUR 8.8bn shortfall spread over four banks, compared to EUR 5.2bn for 13 lenders in Germany, a figure that is significantly below some analysts' predictions. The EBA will enforce a capital definition that is "largely based" on the stress tests it conducted last summer, which was closely linked to the "Basel III" standards. However there are some exemptions made for hybrid forms of capital - a key demand from some banks.The EBA will permit banks to include some forms of newly issued convertible capital, if it meets a "strict criteria". "Existing convertible capital instruments will not be eligible unless they will be converted into common equity by October-end 2012," the EBA added.
Recapitalisation hawks see the decision on capital definition and the rigour with which the EBA implements the deal as critical to making the scheme a success. EUR back above the 1.3900 handle on speculative interest, but nothing much to worry shorts. Levels above 1.3950 are likely to invite sustained selling by South Asian name, though another Asian name is said to be on the bids. EURSGD is still within a general range of 1.7600-1.7700 and elevated levels could invite fresh money. C.L
* 27 Oct 11: 01:08 GMT (SGA) - FX NOW! EUR/USD, EUR/JPY Flows - EU leaders still talking, not really delivering
The latest EU leaders summit has gone on well into the night, but while some progress has been made on bank recaps and EFSF leveraging there is still a shortage of detail and the thorny issue of Greek bond haircuts still has to be settled - the parameters look to be between 42% (which the IFF has allegedly offered) and 60% (or 50% depending on who you believe) which Germany is said to be pushing for, although we have heard an 'outlier' of 75% attributed to the IMF.
There is still a lot of talk of China being approached to add its considerable fire power to a special investment vehicle, this giving the EUR ongoing support although anyone who has been anywhere close to the FX markets over the last several months will be only too aware that China has plenty of EUR already!
There had been talk of an 01.00GMT press conference but that has slipped by which suggests that there's not a great deal new to tell us. Maybe the plan is to keep talking into the weekend so that the latest 'final' meeting said to be on Saturday can just be seen as the current one running a bit late?
* 27 Oct 11: 00:55 GMT (SGA) - FX NOW! USD/JPY, EUR/JPY FLOWS: MoF Azumi to closely monitor market "during the day"
DJ: Japan's Finance Minster complained on Thursday that speculators are using Europ debt crisis as an excuse to push the yen to record highs, and he continued to threaten action to weaken the currency. Jun Azumi also put pressure on the BoJ to do more to undercut the yen amid speculation the the centrasl bank may launch renewed easing efforts at its policy meeting later in the day.
"It is clear that speculators are rushing into the yen while watching the European situation, rather than the yen reflecting economic fundamentals "Azumi said. "I kept saying that we will take decisive steps against any excessive movements regarding market speculation, so I will closely monitor how the Tokyo market moves during the day."
Azumi also mentioned that BOJ is sufficiently aware of the situation and he expects them to have very positive discussions.
BOJ decision due to be out in the morning session, with the consensus being an unchanged rate but an increased asset buying program. Any future intervention will likely be undertaken by the BOJ alone, and there are talks that officials would first want to see the outcome of ongoing European debates before officially intervening. The pair reached a new low of 75.69 yesterday but has since recovered to trade firmly above 76.00. It must be reminded that the last time Japan intervened was on a Thursday as well. C.L
* 27 Oct 11: 00:29 GMT (SGA) - FX NOW! NZD/USD, AUD/NZD FLOWS: RBNZ retains mild tightening bias
Recap: Reserve Bank Governor Alan Bollard held the official cash rate at 2.5 per cent, as expected, saying Europe's sovereign debt crisis and the weakness in global financial markets continue to threaten the local recovery. "There is a real risk that the European sovereign debt crisis could cause a further slowing in global activity, putting downward pressure on New Zealand's commodity export prices," Bollard said in a statement. "Given the ongoing global economic and financial risks, it remains prudent to continue to keep the OCR on hold at 2.5 per cent for now."
If the global downturn's impact on New Zealand is only mild, "it is likely that gradually increasing pressure on domestic resources will require future OCR increases," Bollard said. - NZ Herald
The statement was less dovish that what the market expected and NZD prices spiked from 0.7920-0.798. Soon after, the 0.8000 handle was challenged and eventually broken. The major is likely to follow broader EUR movement for the rest of the session. Separately, New Zealand Trade balance for Sept came out at -751M compared to a consensus of -440M. C.L
* 27 Oct 11: 00:12 GMT (SGA) - FX NOW! USD/CAD, AUD/CAD FLOWS: Comments from BoC Mark Carney
Comments from BoC Mark Carney: Says that US QE has been net positive for Canada and criticism of Fed Chief Bernanke is unwarranted. It will take a few years for Europe to sort out the crisis and Canada believes in a freely floating system. Europe faces quite strong deleveraging and the impact will be felt in Canada and the US. Persistent Canadian dollar strength creates headwinds and Europe is a big risk to Canada.
This comments adds to the bearish tone emanated from the BoC in the earlier part of the week, where the economy is not seen recovering till 2013. USD/CAD is seen inching towards the 1.000 handle again, dragged down by a recovering EUR. 1.000 is the obvious support, with 0.9890 to come in after that.. C.L
says that Europe had adopted a credible and ambitious response to the debt crisis and private sector participation will allow Greek debt to be reduced to 120% of GDP in 2020. Private holders of Greek debt have renounced 50% of its value and agreement on EFSF will leveraged it by 4 to 5 times. Agreement with the private sector is voluntary and default is excluded. China could pariticpate in EFSF
Two of the 3 tenets of Eurozone rescue plan are now addressed for and EUR is seen challenging the 1.4000 handle at time of writing. While option barriers are sighted, prices are too close not for stops hunters to make a run above. Stops are sighted at 1.4010-20 levels, C.L
* 27 Oct 11: 01:31 GMT (SGA) - FX NOW! EUR/USD FLOWS: EU leaders are close to a deal for 50% haircut on Greek debt...
..according to Reuters. EUR jumps from 1.3920 levels to above 1.3950. 1.4000 option barriers are eyed. C.L
* 27 Oct 11: 01:24 GMT (SGA) - FX NOW! EUR/USD, EUR/SGD FLOWS: EU banks will be forced to find about 106bn of extra capital
FT: Europe's banks will be forced to find about EUR 106bn of extra capital by the end of June, under a mandatory scheme agreed by European Union leaders. A recapitalisation plan overseen by the European Banking Authority will require around 70 banks to meet a higher 9 per cent threshold of the "highest quality capital", after revaluing sovereign debt at market rate.
Of the €106bn capital shortfall identified, EUR 79bn is attributable to the eurozone's so-called "peripheral" economies, with Greece (EUR 30bn) and Spain (EUR 26.2bn) topping the list, followed by Italy (EUR 14.7bn) and Portugal (EUR 7.8bn). Most of the capital required in Greece and Portugal is already covered by existing bailout programmes.
France has an EUR 8.8bn shortfall spread over four banks, compared to EUR 5.2bn for 13 lenders in Germany, a figure that is significantly below some analysts' predictions. The EBA will enforce a capital definition that is "largely based" on the stress tests it conducted last summer, which was closely linked to the "Basel III" standards. However there are some exemptions made for hybrid forms of capital - a key demand from some banks.The EBA will permit banks to include some forms of newly issued convertible capital, if it meets a "strict criteria". "Existing convertible capital instruments will not be eligible unless they will be converted into common equity by October-end 2012," the EBA added.
Recapitalisation hawks see the decision on capital definition and the rigour with which the EBA implements the deal as critical to making the scheme a success. EUR back above the 1.3900 handle on speculative interest, but nothing much to worry shorts. Levels above 1.3950 are likely to invite sustained selling by South Asian name, though another Asian name is said to be on the bids. EURSGD is still within a general range of 1.7600-1.7700 and elevated levels could invite fresh money. C.L
* 27 Oct 11: 01:08 GMT (SGA) - FX NOW! EUR/USD, EUR/JPY Flows - EU leaders still talking, not really delivering
The latest EU leaders summit has gone on well into the night, but while some progress has been made on bank recaps and EFSF leveraging there is still a shortage of detail and the thorny issue of Greek bond haircuts still has to be settled - the parameters look to be between 42% (which the IFF has allegedly offered) and 60% (or 50% depending on who you believe) which Germany is said to be pushing for, although we have heard an 'outlier' of 75% attributed to the IMF.
There is still a lot of talk of China being approached to add its considerable fire power to a special investment vehicle, this giving the EUR ongoing support although anyone who has been anywhere close to the FX markets over the last several months will be only too aware that China has plenty of EUR already!
There had been talk of an 01.00GMT press conference but that has slipped by which suggests that there's not a great deal new to tell us. Maybe the plan is to keep talking into the weekend so that the latest 'final' meeting said to be on Saturday can just be seen as the current one running a bit late?
* 27 Oct 11: 00:55 GMT (SGA) - FX NOW! USD/JPY, EUR/JPY FLOWS: MoF Azumi to closely monitor market "during the day"
DJ: Japan's Finance Minster complained on Thursday that speculators are using Europ debt crisis as an excuse to push the yen to record highs, and he continued to threaten action to weaken the currency. Jun Azumi also put pressure on the BoJ to do more to undercut the yen amid speculation the the centrasl bank may launch renewed easing efforts at its policy meeting later in the day.
"It is clear that speculators are rushing into the yen while watching the European situation, rather than the yen reflecting economic fundamentals "Azumi said. "I kept saying that we will take decisive steps against any excessive movements regarding market speculation, so I will closely monitor how the Tokyo market moves during the day."
Azumi also mentioned that BOJ is sufficiently aware of the situation and he expects them to have very positive discussions.
BOJ decision due to be out in the morning session, with the consensus being an unchanged rate but an increased asset buying program. Any future intervention will likely be undertaken by the BOJ alone, and there are talks that officials would first want to see the outcome of ongoing European debates before officially intervening. The pair reached a new low of 75.69 yesterday but has since recovered to trade firmly above 76.00. It must be reminded that the last time Japan intervened was on a Thursday as well. C.L
* 27 Oct 11: 00:29 GMT (SGA) - FX NOW! NZD/USD, AUD/NZD FLOWS: RBNZ retains mild tightening bias
Recap: Reserve Bank Governor Alan Bollard held the official cash rate at 2.5 per cent, as expected, saying Europe's sovereign debt crisis and the weakness in global financial markets continue to threaten the local recovery. "There is a real risk that the European sovereign debt crisis could cause a further slowing in global activity, putting downward pressure on New Zealand's commodity export prices," Bollard said in a statement. "Given the ongoing global economic and financial risks, it remains prudent to continue to keep the OCR on hold at 2.5 per cent for now."
If the global downturn's impact on New Zealand is only mild, "it is likely that gradually increasing pressure on domestic resources will require future OCR increases," Bollard said. - NZ Herald
The statement was less dovish that what the market expected and NZD prices spiked from 0.7920-0.798. Soon after, the 0.8000 handle was challenged and eventually broken. The major is likely to follow broader EUR movement for the rest of the session. Separately, New Zealand Trade balance for Sept came out at -751M compared to a consensus of -440M. C.L
* 27 Oct 11: 00:12 GMT (SGA) - FX NOW! USD/CAD, AUD/CAD FLOWS: Comments from BoC Mark Carney
Comments from BoC Mark Carney: Says that US QE has been net positive for Canada and criticism of Fed Chief Bernanke is unwarranted. It will take a few years for Europe to sort out the crisis and Canada believes in a freely floating system. Europe faces quite strong deleveraging and the impact will be felt in Canada and the US. Persistent Canadian dollar strength creates headwinds and Europe is a big risk to Canada.
This comments adds to the bearish tone emanated from the BoC in the earlier part of the week, where the economy is not seen recovering till 2013. USD/CAD is seen inching towards the 1.000 handle again, dragged down by a recovering EUR. 1.000 is the obvious support, with 0.9890 to come in after that.. C.L
No comments:
Post a Comment