US Data Helps Firm Risk Sentiment

Daily Forex Fundamentals | Written by AC-Markets | Feb 03 09 09:34 GMT |

Market Brief The Usd was weaker in the Asian session as yesterday's US data release surprised to the upside and support risk taking. The EurUsd traded from 1.2820 to 1.2914, while the UsdJpy was range bound between 89.30 and 89.98. US manufacturing ISM came in at 35.6 vs. 32.5 exp, prior reading 32.4, an inevitable correction from a very low and unwarranted level. However, as all the numbers are still in contraction territory and most components declining, we see improvement in risk appetite to be short lived. Asian regional indexes are mixed, with the Nikkei down slightly, but Shanghai gaining 2.44%. Currently European stocks are broadly higher. The RBA cut the cash rate 100bpts to 3.25% today. This easing was less clear cut and dry, with Bloomberg poll split between 100bpt cut and 75bpt cut. Also in Australia, the Government today announced its 2nd emergency fiscal package entitled the " Nation Building and Jobs Plan" estimated at roughly of 2% of GDP in 2009. The trade balance printed a surplus of $589m in Dec, a marked deterioration on the $979m surplus in November and significantly worst then the market had anticipated. We expect the RBA to continue easing with another 75bp worth of cuts in 2009. With a sizable current account deficit to financein the midst of deteriorating terms of trade, Australia is positioned to see a negative FX reaction to looser monetary policy. We expect AudUsd to retest trend lows. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.