Wakeup Call: Deflation In The U.S?

Daily Forex Fundamentals | Written by Saxo Bank | Feb 20 09 08:35 GMT |

Todays US CPI numbers will be very important (released at 13:30 GMT). If they show outrigth deflationary tendencies (negative numbers) then expect a sell-off in equities. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment GE PMI Manufacturing (FEB) 08:50 32.5 32.0 CA CPI YoY (JAN) 12:00 1.2% 1.2% US CPI YoY (JAN) 13:30 -0.1% 0.1% What's going on? UBS's business is under pressure. UBS just made a plea-bargain with the US government paying 780 mio. USD in penalty and handing out 250 names. After which the US government sued UBS again. This time 52,000 customers are in play. US labor market data yesterday was out worse than expected and Philly FED was very bad reading. This made US equity market trade lower. EUR is getting under pressure. Our outrageous claim is beginning to play out. Either the PIGS countries will have to bailed out by Germany or the EUR will break. FX FX Daily stance Comment EURUSD 0/- Looks heavy on risk aversion fears. 1.2570-75 needs to hold for 1.2670-80 else 1.2500-15 beckons EURJPY 0/- Risks slippage to 118.0 support. Below sees deeper correction to 117.25-30. Res 119.75-80 USDJPY 0 94.0 holds the key to further gains. Below and 93.30 attracts while 94.60 next resistance GBPUSD 0/+ Support at 1.4185-00 seen holding for rebound to 1.4300. Below risks fall to 1.4090-00 AUDUSD 0/- Fall through 0.64 suggests we target 0.6325. 0.6325-0.6440 range should cover Equities Equities Daily stance Comment DAX - Sell at the break of 4193 targeting 4124 initially, 4066 finally. S/L at 4277. FTSE - Sell at the break of 4001 targeting 3938. S/L at 4046. S&P500 - Nasdaq100 - Nikkei225 - Futures Commodities Daily Stance Comment Gold (XAUUSD) 0 Looking for further consolidation above 960-970 support before we attempt push to 1,000 Silver (XAGUSD) 0/- 14.00 looks like pivot point for n/term direction. Below sees 13.88, holding abv grinds to 14.38 Oil (CLJ9) - Lower inventories provide temporary relief. Res at 40.25 to hold for 38.0 test FX Options FX-Options Comment EURUSD: With spot unable to follow through lower and forming a classic bear trap, vols came under heavy selling pressure. This suggests more sideways activity between 1.2650-1.2750 before the resumption lower, if any. Strikes 1.2675/1.2700. GBPUSD: As with the EUR, vols have been sold off with spot higher. However, there continue to be buyers of gamma with a whipsaw spot. This currency too will trade sideways with violent corrections here and there. Strikes 1.4350. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. 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