27 listopadu 2009

27/11 Daily Comment

Ken Veksler, Senior Sales Trader, Saxo Bank

The world has turned on its ear overnight and its all down to one very important story that has by my estimations been blown a little out of proportion. Clearly everyone has heard and read about the Dubai debt fears and this sentiment has completely taken out any enthusiasm in the risk markets for now. This story couple with thin liquidity on the back of an absent US market and yearend profit fixing after tremendous equity market growth is leading to massive sell off’s across the board.

All the usual suspects in terms of risk currencies are suffering and without going into extended detail now is definitely not the time to panic. Only one thing can in some part allay current fears and that is an official comment of some sort out of Dubai.

Problem here though is the fact that that part of the world is in the middle of their most religious holiday period and no such statement is going to be forthcoming any time too soon. In equity terms we need 1062/65 to hold on the S&P for any semblance of risk appetite returning in the coming days otherwise we’ll quickly be down at 1042/30 and looking a whole lot worse.

A quick rundown of overnight action in the majors looks a little like this:

USDJPY: HORRIBLE! This pair continues lower and is now looking for 84.70 having traded as low as 84.90 overnight. Natural supply comes in at 86.50. No amount of jawboning is helping this cross and despite best efforts to scare the market into thinking of mass global intervention the Japanese government is powerless to do anything.

USDCAD: Trades to the upper end of the recent downward corridor helped in large part to gold gapping and oil following suit. I am still a seller (cautiously albeit) into 1.0800 with stops about 1% above looking for an orderly if not boring return into 1.0550/0480.

EURUSD: This thing is looking for and will soon find 1.4750 at which point I would think long and hard about initiating any new longs.

AUDNZD: Despite last night’s mess, this cross and my short are looking ok for now and continue to consolidate (run out of steam) on the top end.

GBPUSD: Refer below, but in short this thing is still a massive sell on rallies.

Of all those exposed most heavily to Dubai, the UK is worst off (refer below) and that in a major way explains the Cable decline overnight not least of which coupled with the broad based gains in the greenback overnight. Looking at the Dollar index we have recovered major losses and are now looking to press the top end of the recent downward channel in this index.

Gold also took a hit this morning gapping the better part of $20 with major stops being taken out of an overextended long market. Next target to the downside here 1125/30 and I must admit I have it firmly in my sights in the next 48 hours.

The view for the day is to stay the hell out of trouble and avoid the carnage that is presently the market. This thing is not over yet and the dust will only potentially begin to settle early next week.

European banks exposure to United Arab Emirates Billion of USD as of June 2009
Total 87.3

UK
49.5
France
11.3
Germany
10.2
Netherlands
4.7
Switzerland
4.3
Italy
1.9
Belgium
1.3
US
9.9
Japan
8.6

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